SEC FILE NO. 70-7828
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CERTIFICATE PURSUANT TO
RULE 24
OF PARTIAL COMPLETION OF
TRANSACTIONS
ENERGY INITIATIVES, INC.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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In The Matter of )
)
ENERGY INITIATIVES, INC. ) Certificate Pursuant
) to Rule 24 of Partial
SEC File No. 70-7828 ) Completion of
) Transactions
(Public Utility Holding )
Company Act of 1935) )
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TO THE MEMBERS OF THE SECURITIES AND EXCHANGE COMMISSION:
The undersigned, Energy Initiatives, Inc. ("EI"),
hereby certifies pursuant to Rule 24 of the Rules and Regulations
under the Public Utility Holding Company Act of 1935 (the "Act")
that certain of the transactions proposed in the Application on
Form U-1, as amended, filed in SEC File No. 70-7828, have been
carried out in accordance with the Commission's Order, dated June
19, 1991 (HCAR No. 35-25335) and Supplemental Orders, dated
October 20, 1992 (HCAR No. 35-25657) and February 22, 1994 (HCAR
No. 35-25991) with respect thereto, as follows:
1. On May 9, 1994, Old State Selkirk Associates L.P., Old
State Selkirk Holdings II L.P. and Old State Selkirk Fuel
Management L.P. (collectively, "Old State") sold their interests
in the two-phase, 79.9 megawatt ("MW") and 265 MW cogeneration
facility located in Selkirk, New York (the "Project") to Makowski
Selkirk Holdings, Inc. ("MSHI"). Such interests (the
"Interests") consisted principally of a limited partnership
interest in Selkirk Cogen Partners, L.P. ("Cogen Partnership"),
which owns the Project, and a limited partnership interest in
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Bowdoin Fuel Services, L.P. ("Fuel Partnership"), which had
agreed to perform certain fuel management activities for Cogen
Partnership pursuant to a Fuel Management Agency Agreement ("FMA
Agreement"). The transfer of the Interests by Old State to MSHI
was made expressly subject to the option granted by Old State to
EI pursuant to the Option Agreement, dated as of June 28, 1991,
as amended by the First Amendment, Waiver and Consent dated as of
October 23, 1992, between Old State and EI ("Option Agreement").
2. On May 9, 1994, EI entered into a Second Amendment
("Second Amendment") to the Option Agreement with MSHI, pursuant
to which EI consented to the sale by Old State to MSHI of the
Interests, as described above, and MSHI agreed to assume Old
State's obligations to EI under the Option Agreement.
3. On May 9, 1994, the partnership agreement of Cogen
Partnership was further amended and restated principally to
reflect the withdrawal of Old State and admission of MSHI as a
limited partner, and the admission of affiliates of Cogen
Technologies, Inc. as a limited and general partner.
4. (A) Furthermore, on May 9, 1994, the construction
financing for the Project, which was obtained pursuant to a
Construction and Term Loan Agreement dated as of October 23, 1992
("Financing Agreement"), was refinanced with the proceeds from
the sale of two series of first mortgage bonds issued by a
wholly-owned, special purpose subsidiary of Cogen Partnership and
guaranteed by Cogen Partnership. (B) A group of banks for which
The Chase Manhattan Bank, N.A. ("Chase") acts as agent has also
provided short-term bridge financing and a working capital
facility for Cogen Partnership. The bridge financing is
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supported by the equity commitments of the partners of Cogen
Partnership. Accordingly, on May 9, 1994, EI delivered to Chase
on behalf of the bridge bank lenders an appropriate amendment to
the letter of credit issued by Mellon Bank, N.A., which EI
originally furnished to Chase, then acting as agent under the
Financing Agreement, on October 23, 1992 conforming the letter of
credit to the terms of the bridge financing. The letter of
credit face amount of $7.6 million and expiration date of
December 31, 1994 have not changed.
5. Finally, as described in the Application, the Fuel
Partnership was formed, and the FMA Agreement entered into, in
order to comply with the requirements of the Financing Agreement.
However, the Financing Agreement was terminated on May 9, 1994,
and the terms of the first mortgage bonds (and underlying
indenture) described above do not have similar restrictions
respecting fuel management activities by Cogen Partnership.
Accordingly, on May 9, 1994, the FMA Agreement between Cogen
Partnership and Fuel Partnership was terminated, and Fuel
Partnership is expected to be dissolved.
6. The following exhibits are filed herewith:
A-2(a) - Second Amendment dated as of May 1, 1994
to Option Agreement.
A-3(a) - Amendment No. 1 to Letter of Credit.
A-7(a) - Third Amended and Restated Agreement of
Limited Partnership of Cogen
Partnership.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANY HAS DULY
CAUSED THIS STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
ENERGY INITIATIVES, INC.
By:
B. L. Levy, President
Date: May 20, 1994
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EXHIBITS TO BE FILED BY EDGAR
Exhibits:
A-2(a) - Second Amendment dated as of May 1, 1994
to Option Agreement.
A-3(a) - Amendment No. 1 to Letter of Credit.
A-7(a) - Third Amended and Restated Agreement of
Limited Partnership of Cogen
Partnership.
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Exhibit A-2(a)
EXECUTION COPY
Second Amendment, dated as of May 1, 1994 ("Second
Amendment"), between Energy Initiatives, Inc. ("EII") and
Makowski Selkirk Holdings, Inc. ("MSHI"), to Option Agreement,
dated as of June 28, 1991, as amended by the First Amendment,
Waiver and Consent, dated as of October 23, 1992 (as so amended,
the "Option Agreement"), among EII, Old State Selkirk Associates
L.P. ("OS"), Old State Selkirk Holdings II L.P. ("OSII") and Old
State Selkirk Fuel Management L.P. ("OS Gas"), as predecessors in
interest to MSHI (terms used herein and not otherwise defined
having the meanings set forth in the Option Agreement).
WHEREAS, pursuant to that certain Purchase Agreement,
dated as of April 1, 1994 ("Purchase Agreement"), between MSHI
and Old State, MSHI is on the date hereof purchasing from Old
State all of Old State's right, title and interest in and to the
Assignable Interests subject to EII's rights under the Option
Agreement;
WHEREAS, by letter dated April 8, 1994 ("Consent
Letter"), EII has agreed to consent to MSHI's purchase of the
Assignable Interests pursuant to the Purchase Agreement on the
terms and conditions set forth in the Consent Letter; and
WHEREAS, such conditions included, among other things,
the execution of a second amendment to the Option Agreement to
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reflect where necessary or appropriate (x) the fact that MSHI is
the owner of the Assignable Interests and (y) the transactions
contemplated by the senior debt refinancing ("Bond Refinancing")
occurring on or about the date hereof of Selkirk Cogen Partners,
L.P. ("Cogen Partnership") including the execution and delivery
of the Third Amended and Restated Agreement of Limited
Partnership of substantially even date herewith of Cogen Partner-
ship ("Cogen Partnership Agreement").
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
6. MSHI Representations. MSHI hereby makes, as of the
date hereof, the representations and warranties to EII set forth
in Annex A hereto, which representations and warranties shall be
deemed to be incorporated into, and be a part of, the Option
Agreement, as if expressly set forth therein.
7. Option Agreement Amendments. The Option Agreement
is hereby amended by deleting Section 7(vi) in its entirety, by
deleting the reference to clause "(i)" in the fourth line of
Section 8(a), and by adding the following as a new clause (xi) of
Section 8(a):
(xi) Each representation and warranty of MSHI
contained in paragraph 1 of the Second Amendment
dated as of May 1, 1994 ("Second Amendment") to
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the Option Agreement shall have been true and
correct in all material respects when made and
shall be true and correct in all material respects
at and as of the date of the Option Exercise
Closing as if made on such date, and each
representation and warranty made in Section 3(a)
of the Option Amendment (other than those
representations and warranties relating to the Old
State entities as shown omitted on Annex B
attached to the Second Amendment and except (I)
for the representation in Section 3(j) of the
Option Agreement and (II) as indicated on Schedule
8 hereto) shall be true and correct in all
material respects at and as of the date of the
Option Exercise Closing as if made on such date,
and EII shall have received a certificate to such
effect of the President or any Vice President of
MSHI. For purposes of this clause (xi), "knowl-
edge" of Old State wherever used in Section 3(a)
shall mean knowledge of MSHI.
8. Old State References. The parties agree that (i)
each reference in Section 8 of the Option Agreement to OS, OSII
or Old State shall be deemed to mean MSHI; (ii) in lieu of the
law firms specified in Section 8(a)(iii), MSHI may deliver
opinions of Dickstein, Shapiro & Morin and such other firm or
firms as are reasonably acceptable to EII; and (iii) the Consents
expressly referred to in Section 8(a)(vi) shall be deemed to mean
that certain Second Amended and Restated Consent and Agreement
dated as of May 1, 1994 among Cogen Partnership and the partners
in Cogen Partnership ("Restated Consent").
9. Amendment to Proxy. Section 7(iii) of the Option
Agreement, as heretofore amended, is hereby further amended to
read in its entirety as follows:
(iii) MSHI hereby grants to EII an irrevocable
proxy coupled with an interest to cast any and all
votes and to make any and all elections and to take any
and all actions on behalf of MSHI under the Cogen
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Partnership Agreement (as defined in the Second
Amendment) and each other Operative Document, including
without limitation in respect of any amendment, modi-
fication or waiver of any provision thereof. Without
limitation of the foregoing, in the event that MSHI is
requested by any person to cast any such vote or make
any such election or take any such action, MSHI shall
immediately notify EII who shall have the right as
aforesaid to do so on MSHI's behalf. MSHI agrees to
advise Cogen Partnership and each other appropriate
person of the rights conveyed to EII under this Section
7(iii) and to instruct each such person to abide by any
and all such votes, elections and actions by EII as if
made by MSHI. MSHI shall be bound by any and all
votes, elections and actions cast or taken by EII on
its behalf as if made by MSHI, and MSHI shall have no
recourse against EII for any such vote, election or
action (or the failure of EII to cast any vote, make
any election or take any action) except in the case of
EII's bad faith or wilful misconduct. MSHI
acknowledges and affirms that, by executing and
delivering a signature page hereto, EII has been
constituted and appointed, with full power of substitu-
tion, as the attorney-in-fact for MSHI, with power and
authority to act in its name and on its behalf in the
execution and acknowledgement of all documents and
instruments relating to the aforesaid proxy or to give
effect thereof. MSHI further acknowledges and affirms
that such Power of Attorney is a special power of
attorney coupled with an interest, is irrevocable, and
shall survive any merger or consolidation involving
MSHI, or the dissolution of MSHI.
10. EII Waiver re Purchase Agreement. EII hereby
waives compliance by OS and OSII, and waives the effects of
noncompliance by OS and OSII, with Section 7(i) of the Option
Agreement to the extent necessary to enable Old State to sell the
Assignable Interests to MSHI pursuant to the Purchase Agreement.
The foregoing consent shall be effective upon the last to occur
of the following:
(a) Receipt by EII of a copy of a fully executed
Assignment and Assumption in substantially the form of
Annex H hereto and such other evidence reasonably
satisfactory to EII of the transfer of the Assignable
Interests to MSHI free and clear of all Liens (except
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the right of first offer set forth in the Cogen
Partnership Agreement), and receipt by EII of the
opinions of counsel to Old State and MSHI contemplated
in the Purchase Agreement;
(b) execution and delivery by MSHI of this Second
Amendment;
(c) execution and delivery by MSHI of an
Assumption Agreement in substantially the form of Annex
C hereto;
(d) execution and delivery by MSHI of a New
Pledge Agreement in substantially the form of Annex D
hereto;
(e) receipt by EII of a legal opinion of
Dickstein, Shapiro & Morin to the effect of paragraphs
1-6 and 8 of Exhibit F-1 to the Option Agreement and
further stating that to such counsel's knowledge MSHI
has not taken any act to create a Lien upon the
Assignable Interests, and otherwise in form and
substance reasonably satisfactory to EII;
(f) execution and delivery by MSHI of a restated
Escrow Agreement in substantially the form of Annex E
hereto; and
(g) receipt by EII of $60,000 in respect of its
legal fees incurred in connection with this Second
Amendment and the Bond Refinancing
11. EII Waiver re Bond Refinancing. EII hereby
consents to the execution and delivery by MSHI of the Cogen
Partnership Agreement and the New ECA (as defined in paragraph 7
below). In connection with said transactions, MSHI is,
concurrently with the execution and delivery hereof, delivering
to EII a certificate of Cogen Partnership and the Managing
General Partner thereof affirming for the benefit of EII each of
the representations made to the Cogen Partners (as defined in the
Cogen Partnership Agreement) by Cogen Partnership and the
Managing General Partner in the Capital Contribution Agreement
(as defined in the Cogen Partnership Agreement). The foregoing
consent shall be conditioned on the execution and delivery by the
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parties thereto of the Restated Consent in substantially the form
of Annex F hereto and the Second Amended and Restated Board
Representation Agreement in substantially the form of Annex G
hereto ("Board Rep. Agreement").
12. Contributions to Cogen Partnership.
(a) As memorialized in Section 4 of the First
Amendment, EII agreed to contribute to Cogen
Partnership on behalf of OS the entire OSII Equity
Share ($8,781,093) as follows: $1,181,093 at the
Project Finance Closing and the balance, $7.6 million
(the "Remaining Equity"), pursuant to the terms of the
Capital Contribution Agreement dated as of October 23,
1992 ("Original CCA"). The parties acknowledge that
said $1,181,093 was contributed by EII an or about
October 23, 1992, and, in addition, EII delivered a
letter of credit in the face amount of $7.6 million to
the Chase Manhattan Bank, N.A., as agent for Cogen
Partnership's construction lenders ("Original L/C"), to
secure payment of the Remaining Equity.
(b) In connection with the Bond Refinancing, (x)
the Original CCA is being terminated and the Original
L/C is being returned to EII; and (y) MSHI is entering
into an Equity Contribution Agreement, dated as of May
1, 1994 ("New ECA"), among the partners in Cogen
Partnership and Bankers Trust Company, as Depository
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Agent, pursuant to which MSHI will be obligated to
contribute to Cogen Partnership the Remaining Equity
and to deliver a letter of credit to the Depository
Agent in the face amount of the Remaining Equity.
(c) EII agrees to contribute the Remaining Equity
on behalf of MSHI as follows:
(i) pursuant to the terms of the New ECA, or
(ii) at such other times as may be required
pursuant to Section 4(b) of the Cogen Partnership
Agreement.
EII also agrees to provide the letter of credit (or
cash collateral) on behalf of MSHI required under the
New ECA as security for MSHI's obligations thereunder,
it being understood that, without limitation of Section
7(iii) of the Option Agreement, as hereinabove amended,
EII shall have the exclusive right to elect the form of
the support instrument in accordance with the terms of
the New ECA from time to time and, in the event that
cash collateral is provided, to direct the investment
thereof and receive all income thereon.
(d) The parties hereby confirm that the $1,181,093
contributed to Cogen Partnership by EII as hereinabove
described, together with the Remaining Equity and any
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additional equity contributed by EII on MSHI's behalf
to Cogen Partnership (such as pursuant to Section 4(c)
of the Cogen Partnership Agreement), shall be
considered "equity contributed by EII to the Phase II
Entity" within the meaning of clause (y) of the defini-
tion of Reimbursement Amount in Section 9(b)(iii) of
the Option Agreement.
(e) Any discretionary capital contributions which
EII, pursuant to the proxy granted under Section 7(iii)
of the Option Agreement, elects on behalf of MSHI to
make under the Cogen Partnership Agreement shall be
made by EII on behalf of MSHI.
13. Except as expressly amended hereby, all of the
terms and provisions of the Option Agreement are and shall remain
in full force and effect. MSHI expressly acknowledges and agrees
that the consents and waivers included herein are limited as
expressly provided herein and are not, and shall not be construed
to be, a waiver of any other provision of, or other non-
compliance by MSHI with any provision of, the Option Agreement or
any document related thereto.
14. This Second Amendment shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the substantive law of the State of New York
without giving effect to any conflict of law principles.
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15. This Second Amendment may be executed in several
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this
Second Amendment as of the date first written above.
ENERGY INITIATIVES, INC.
By:______________________________
Name:
Title:
MAKOWSKI SELKIRK HOLDINGS, INC.
By:______________________________
Name:
Title:
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Exhibit A-3(a)
TELEX
THE CHASE MANHATTAN BANK, N.A.
AS AGENT
ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10080
ATTN: RICHARD GRANT
PROJECT FINANCE DEPARTMENT
TEST
MAY 6, 1994
AMENDMENT NO. 001
WE HEREBY AMEND OUR IRREVOCABLE LETTER OF CREDIT NO.
S819984 IN YOUR FAVOR FOR THE ACCOUNT OF ENERGY INITIATIVES, INC.
AS FOLLOWS:
16. THE WORDS "IN THE FORM OF EXHIBIT A HERETO" ARE
HEREBY INSERTED IN THE 8TH LINE OF THE FIRST PARAGRAPH, BETWEEN
THE WORD "SIGHT" AND THE PHRASE "ACCOMPANIED BY THIS LETTER OF
CREDIT".
17. THE PHRASE "EXHIBIT A" APPEARING AT THE END OF THE
9TH LINE OF THE FIRST PARAGRAPH IS DELETED AND REPLACED WITH THE
PHRASE "EXHIBIT B".
18. IMMEDIATELY BEFORE THE LAST SENTENCE OF THE FIRST
PARAGRAPH, THE FOLLOWING SENTENCE IS INSERTED: "THE STATED
AMOUNT SHALL AUTOMATICALLY BE REDUCED UPON ANY DRAWING HEREUNDER
BY THE AMOUNT OF SUCH DRAWING".
19. FOLLOWING THE SECOND PARAGRAPH, THE FOLLOWING
PARAGRAPH IS ADDED:
"PRESENTATION OF ANY SUCH SIGHT DRAFT AND DRAWING
CERTIFICATE SHALL BE MADE AT OUR OFFICE LOCATED AT MELLON BANK,
N.A., 3 MELLON BANK CENTER, ROOM 2329, PITTSBURGH, PA 15259. IF
A DRAWING IS MADE BY YOU HEREUNDER AT OR PRIOR TO 2:00 P.M., NEW
YORK TIME, ON A BUSINESS DAY, AND PROVIDED THAT SUCH DRAWING AND
THE DOCUMENTS PRESENTED IN CONNECTION HEREWITH CONFORM TO THE
TERMS AND CONDITIONS HEREOF, PAYMENT SHALL BE MADE TO YOU OF THE
AMOUNT SPECIFIED IN IMMEDIATELY AVAILABLE FUNDS, BY THE CLOSE OF
BUSINESS ON THE NEXT FOLLOWING BUSINESS DAY, BY A TRANSFER TO
YOUR ACCOUNT SPECIFIED IN THE SIGHT DRAFT PRESENTED IN CONNECTION
WITH SUCH DRAWING. IF A DRAWING IN RESPECT OF A PAYMENT IS MADE
BY YOU HEREUNDER AFTER 2:00 P.M., NEW YORK TIME, ON A BUSINESS
DAY, AND PROVIDED THAT SUCH DRAWING AND THE DOCUMENTS PRESENTED
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IN CONNECTION HEREWITH CONFORM TO THE TERMS AND CONDITIONS
HEREOF, PAYMENT SHALL BE MADE TO YOU OF THE AMOUNT SPECIFIED, IN
IMMEDIATELY AVAILABLE FUNDS, BY 2:00 P.M. NEW YORK TIME, ON THE
SECOND FOLLOWING BUSINESS DAY, IN THE MANNER AND AT THE LOCATION
SET FORTH IN THE PRECEDING SENTENCE. AS USED HEREIN, BUSINESS
DAY SHALL MEAN ANY DAY OTHER THAN A SATURDAY, SUNDAY OR DAY ON
WHICH BANKING INSTITUTIONS IN THE COMMONWEALTH OF PENNSYLVANIA
ARE AUTHORIZED OR REQUIRED BY LAW TO BE CLOSED.
20. THE NEW EXHIBIT A REFERRED TO IN ITEM 1 ABOVE, AND
THE NEW EXHIBIT B REFERRED TO IN ITEM 2 ABOVE ARE SET FORTH
BELOW.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
EXHIBIT A
SIGHT DRAFT
(DATE)
MELLON BANK, N.A.
ATTENTION: LETTER OF CREDIT DEPARTMENT
REFERENCE NO.:
RE: IRREVOCABLE LETTER OF CREDIT NO. S819984
ON SIGHT
PAY TO THE CHASE MANHATTAN BANK, N.A., AS AGENT, IN IMMEDIATELY
AVAILABLE FUNDS _________________________ U.S. DOLLARS (U.S.D.
______________) BY THE CLOSE OF BUSINESS ON THE NEXT BUSINESS
DAY, IF THIS SIGHT DRAFT IS PRESENTED AT OR PRIOR TO 2:00 P.M.,
NEW YORK TIME, PURSUANT TO IRREVOCABLE LETTER OF CREDIT NO.
S819984, OTHERWISE BY 2:00 P.M., NEW YORK TIME, ON THE SECOND
SUCCEEDING BUSINESS DAY BY TRANSFER TO ACCOUNT NUMBER
________________ AT ____________________.
THE CHASE MANHATTAN BANK, N.A.
AS AGENT
BY:______________________________
NAME:
TITLE:
EXHIBIT B
DRAWING CERTIFICATE
(INSERT DATE OF DRAWING)
MELLON BANK, N.A., TRADE OPERATIONS, THREE MELLON BANK CENTER,
ROOM 2329, PITTSBURGH, PA 15259
RE: IRREVOCABLE LETTER OF CREDIT NO. S819984
(THE "LETTER OF CREDIT")
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THE UNDERSIGNED, AN AUTHORIZED OFFICER OF THE CHASE
MANHATTAN BANK, N.A., HEREBY CERTIFIES TO MELLON BANK, N.A. (THE
"BANK") AS FOLLOWS:
1. THE CHASE MANHATTAN BANK, N.A,, AS AGENT FOR THE
LENDERS UNDER, AND AS DEFINED IN, THE LOAN AGREEMENT DATED AS OF
MAY 1, 1994 AMONG SELKIRK COGEN PARTNERS, L.P., THE LENDERS (AS
DEFINED THEREIN) AND THE CHASE MANHATTAN BANK, N.A., AS AGENT
(THE "LOAN AGREEMENT") IS THE BENEFICIARY (THE "BENEFICIARY")
UNDER THE LETTER OF CREDIT AND THE PERSON EXECUTING THIS
CERTIFICATE ON BEHALF OF THE BENEFICIARY IS DULY AUTHORIZED TO DO
SO. EXCEPT AS OTHERWISE SPECIFIED HEREIN, ALL CAPITALIZED TERMS
USED HEREIN AND NOT HEREIN DEFINED SHALL HAVE THE MEANINGS
ASSIGNED TO SUCH TERMS IN THE EQUITY CONTRIBUTION AGREEMENT DATED
AS OF MAY 1, 1994 AMONG SELKIRK COGEN PARTNERS, L.P., MAKOWSKI
SELKIRK HOLDINGS, INC., COGEN TECHNOLOGIES SELKIRK GP, INC.,
COGEN TECHNOLOGIES SELKIRK, L.P., AND THE BENEFICIARY, AS AMENDED
FROM TIME TO TIME, (THE "EQUITY CONTRIBUTION AGREEMENT").
2. [INSERT ONE OF THE FOLLOWING]
(VERSION 1) IT IS ON OR AFTER THE SECOND BUSINESS DAY PRIOR TO
THE EQUITY CONTRIBUTION DATE AND MAKOWSKI SELKIRK HOLDING, INC.
HAS NOT MADE ITS EQUITY CONTRIBUTION IN ACCORDANCE WITH THE TERMS
OF THE EQUITY CONTRIBUTION AGREEMENT.
(VERSION 2) AN EVENT OF DEFAULT UNDER THE LOAN AGREEMENT HAS
OCCURRED AND IS CONTINUING.
(VERSION 3) THE LONG-TERM UNSECURED SENIOR DEBT RATING OF THE
BANK, AS DETERMINED BY MOODY'S INVESTORS SERVICE, INC., OR
STANDARD & POORS RATINGS GROUP IS LESS THAN "A" AND AS OF THE
DATE HEREOF, MAKOWSKI SELKIRK HOLDINGS, INC. HAS NOT DELIVERED TO
THE BENEFICIARY, (A) A LETTER OF CREDIT IN SUBSTITUTION HEREOF
ISSUED BY AN ACCEPTABLE BANK (AS DEFINED IN THE LOAN AGREEMENT)
AND OTHERWISE ACCEPTABLE TO THE AGENT, OR (B) CASH COLLATERAL IN
AN AMOUNT EQUAL TO THE STATED AMOUNT.
(VERSION 4) IT IS ON OR AFTER DECEMBER 1, 1994 AND MAKOWSKI
SELKIRK HOLDINGS, INC. HAS NOT DELIVERED TO THE BENEFICIARY (A) A
LETTER OF CREDIT IN SUBSTITUTION HEREOF WITH AN EXPIRATION DATE
OF JANUARY 21, 1995 ISSUED BY AN ACCEPTABLE BANK (AS DEFINED THE
LOAN AGREEMENT) AND OTHERWISE ACCEPTABLE TO THE AGENT OR, (B)
CASH COLLATERAL IN AN AMOUNT EQUAL TO THE FACE AMOUNT OF THIS
LETTER OF CREDIT.
THE BENEFICIARY IS MAKING A DRAWING UNDER THE LETTER OF
CREDIT IN THE AMOUNT OF (INSERT THE AMOUNT OF DRAWING).
IN WITNESS WHEREOF, THE BENEFICIARY HAS EXECUTED AND
DELIVERED THIS DRAWING CERTIFICATE AS OF THE __ DAY OF _______,
19__.
THE CHASE MANHATTAN BANK, N.A., AS AGENT
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BY:______________________________
NAME:
TITLE:
THIS TELEX IS THE OPERATIVE INSTRUMENT
NO MAIL CONFIRMATION FOLLOWS.
MELLON BANK, TRADING BANKING OPERATIONS
THREE MELLON BANK CENTER, PITTSBURGH, PA 15259-0003
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Exhibit A-7(a)
________________________________________
SELKIRK COGEN PARTNERS, L.P.
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
________________________________________
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SELKIRK COGEN PARTNERS, L.P.
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
This THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP (this "Agreement"), entered into as of the 1st day of
May, 1994, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, Selkirk Cogen Partners, L.P. (the "Partnership")
was established pursuant to a Certificate of Limited Partnership
filed with the Secretary of State of the State of Delaware
following the execution and delivery of an Agreement of Limited
Partnership, dated as of December 15, 1989 (the "Original
Agreement"), by and among JMC SELKIRK, INC., a Delaware
corporation, as general partner, OLD STATE MANAGEMENT CORP., a
Massachusetts corporation ("OSM"), as both general partner and
limited partner, and MAKOWSKI SELKIRK, INC., a Delaware
corporation ("MSI"), as limited partner;
WHEREAS, the Original Agreement was amended and restated
as of June 15, 1990 (the "First Amended Agreement") to admit
JMCS I INVESTORS, L.P., a Delaware limited partnership ("JMCSI"),
as a general partner and OLD STATE SELKIRK ASSOCIATES L.P., a
Delaware limited partnership ("OSSA"), as a limited partner, and
to reflect the withdrawal of OSM and MSI from the Partnership;
WHEREAS, the First Amended Agreement was further amended
and restated as of October 23, 1992 (the "Second Amended
Agreement") to provide, among other things, for the merger of
Selkirk Cogen Partners II, L.P. ("SCP II") into the Partnership,
with the Partnership as the surviving entity, pursuant to a
Merger Agreement dated October 23, 1992 by and between the
Partnership and SCP II;
WHEREAS, OSSA has transferred all of its interest as a
limited partner in the Partnership to MAKOWSKI SELKIRK HOLDINGS,
INC., a Delaware corporation ("MSH"), and the parties desire to
admit MSH as a limited partner;
WHEREAS, the parties desire to admit Cogen Technologies
Selkirk GP, Inc., a Texas corporation ("Cogen GP"), to the
Partnership, as a general partner, and Cogen Technologies Selkirk
L.P., a Delaware limited partnership ("Cogen LP" and, together
with Cogen GP, the "Cogen Partners"), to the Partnership, as a
limited partner;
WHEREAS, JMCSI desires to convert a portion of its
interest in the Partnership to a limited partner's interest;
WHEREAS, the parties desire to continue the Partnership
under and pursuant to the Revised Uniform Limited Partnership Act
of the State of Delaware (the "Act") and further to amend and
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restate in full the Second Amended Agreement in order to set out
more fully the respective rights, obligations and duties of the
partners following the admission of the Cogen Partners into the
Partnership;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements made herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
Unless otherwise required by the context, the terms
defined in this Section 1 shall, for all purposes of this
Agreement, have the respective meanings set forth below:
(a) Act. The Delaware Revised Uniform Limited
Partnership Act, as amended, or any successor statute.
(b) Additional Contribution. Has the meaning set
forth in Section 4(c)(iv)(4).
(c) Additional Limited Partners. The Limited
Partners admitted to the Partnership pursuant to Section 14.
(d) Adjusted Capital Account Deficit. With respect
to 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 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 sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5),
and (6).
The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(e) Adjustment Application Method. The application
of Remaining Distributable Cash in the following order:
(i) first, against each Semi-Annual Period
Deficiency Amount, after an adjustment thereto which reflects,
for the period commencing on the day next succeeding the most
recent Semi-Annual Payment Date through the Semi-Annual Payment
Date to which such Semi-Annual Period Deficiency Amount relates,
a semi-annual rate of return thereon of 10.15%, and in the order
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of the first to the last Semi-Annual Period in the corresponding
Test Period (Projected), until each such Semi-Annual Period
Deficiency Amount is paid in full, and
(ii) after the application provided for in
clause (i), then Remaining Distributable Cash will be applied
ratably against each of the Level I Distributions then scheduled
to be distributed to the Partners in the corresponding Test
Period (Projected) (as reduced by the application provided in
clause (i)), after an adjustment thereto which reflects, for the
period commencing on the day next succeeding the most recent
Semi-Annual Payment Date through the Semi-Annual Payment Date to
which such Level I Distribution relates, a semi-annual rate of
return thereon of 10.15%, until such Level I Distributions in the
Test Period (Projected) are reduced to zero. For an example of
the computation of the Adjustment Application Method, see
Schedule V.
(f) Administrative Services Agreement. The Project
Administrative Services Agreement, by and between the Partnership
and JMCS I Management, Inc., as Project Management Firm, dated as
of June 15, 1990, as amended by the First Amendment, dated as of
October 23, 1992, and as further amended by the Second Amendment,
dated as of the date of this Agreement, attached hereto as
Exhibits A-1, A-2 and A-3, respectively, as such agreement may
from time to time be amended, restated or otherwise modified in
accordance with its terms and the terms of this Agreement.
(g) Affiliate. When used with reference to a
specified Person, (i) any Person directly or indirectly
controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling 10% or more of the
outstanding voting securities of such Person, (iii) any officer,
director, general partner or trustee of such Person or of any
Person specified in (i) or (ii) above, and (iv) any company in
which any officer, director, general partner or trustee specified
in (iii) above is an officer, director, general partner or
trustee.
(h) Agreed Allocations. Has the meaning set forth
in the first sentence of Section 6(b)(xv) hereof.
(i) Agreement. This Third Amended and Restated
Agreement of Limited Partnership, as originally executed and as
amended from time to time, as the context requires. Words such
as "herein", "hereinafter", "hereof", "hereto", "hereby" and
"hereunder", when used with reference to this Agreement, refer to
this Agreement as a whole, unless the context otherwise requires.
(j) Agreement Date Capital Contribution. Has the
meaning set forth in Section 4(a) hereof.
(k) Annual Period. A twelve-month period ending on
June 26 or December 26 of any year.
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(l) Appraisal Procedure. A procedure whereby two
independent appraisers, one chosen by the Managing General
Partner and one by the Cogen Representative, shall agree upon the
determinations then the subject of appraisal. The Managing
General Partner or the Cogen Representative, 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 Section
13(m)(ii)(x)) 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 Section 13(m)(ii)(x)) 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 Section 13(m)(ii)(x)) 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 Section 13(m)(ii)(x)) 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
Cogen Partners; otherwise the average of all three determinations
shall be binding and conclusive on the Managing General Partner
and the Cogen Partners. If the Managing General Partner or the
Cogen Representative 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
Cogen Partners. The expenses of the appraisal procedure shall be
borne solely by the Partnership.
(m) Arrearage Rate. A semi-annual rate of return
equal to 11.15%.
(n) Arrears Account. Has the meaning set forth in
Section 6(a)(v) hereof.
(o) Bankrupt or Bankruptcy. When used with
reference to a specified Person, (i) that such Person has
(A) made an assignment for the benefit of creditors; (B) filed a
voluntary petition in bankruptcy; (C) been adjudged a bankrupt or
insolvent, or had entered against such Person an order of relief
in any bankruptcy or insolvency proceeding; (D) filed a petition
or an answer seeking for such Person any reorganization,
arrangement, composition, readjustment, liquidation, dissolution
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or similar relief under any statute, law, or regulation or filed
an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against such Person in
any proceeding of such nature; or (E) sought, consented to, or
acquiesced in the appointment of a trustee, receiver, or
liquidator of such Person or of all or any substantial part of
such Person's properties; (ii) ninety (90) days have elapsed
after the commencement of any proceeding against such Person
seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute,
law, or regulation and such proceeding has not been dismissed; or
(iii) ninety (90) days have elapsed since the appointment without
such Person's consent or acquiescence of a trustee, receiver or
liquidator of such Person or of all or any substantial part of
such Person's properties and such appointment has not been
vacated or stayed or the appointment is not vacated within 90
days after the expiration of such stay.
(p) Basic Contribution. Has the meaning set forth
in Section 4(c)(iv)(4).
(q) Bridge Bank Facility. Has the meaning assigned
to such term in the Indenture.
(r) Business Day. Has the meaning assigned to such
term in the Equity Depositary Agreement.
(s) Capital Account. With respect to any Partner,
the Capital Account maintained for each 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, Phantom
Income, and any items in the nature of income or gain that are
specially allocated pursuant to Section 6(b)(ix) through (xv)
hereof, and the amount of any Partnership liabilities assumed by
such Partner or which are secured by any Partnership Property
distributed to such Partner.
(ii) To each Partner's Capital Account there
shall be debited the amount of cash and the Gross Asset Value of
any Partnership Property distributed to such Partner pursuant to
any provision of this Agreement, such Partner's distributive
share of Operating Losses, Depreciation, Organizational and
Start-Up Expenses, Losses and any items in the nature of expenses
or losses that are specially allocated pursuant to Section
6(b)(ix) through (xv) hereof, and the amount of any liabilities
of such Partner assumed by the Partnership or which are secured
by any property contributed by such Partner to the Partnership.
(iii) In the event all or any 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),
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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 paragraphs (i) and (ii) hereof, there shall be
taken into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
(v) Each Partner's Capital Account shall in all
other respects be maintained in accordance with the provisions of
Regulations Section 1-704.1(b).
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such
Regulations.
(t) Capital Contribution. With respect to any
Partner, the 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 by such Partner pursuant to this
Agreement. The principal amount of a promissory note which is
not readily traded on an established securities market and which
is contributed to the Partnership by the maker of the note shall
not be included in the Capital Account of any Partner until the
Partnership makes a taxable disposition of the note or until (and
to the extent) principal payments are made on the note, all in
accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2).
(u) Capital Contribution Agreement. The Capital
Contribution Agreement dated as of April 28th, 1994 among the
Partnership, the Managing General Partner, JMCSI, Cogen GP and
Cogen LP, as said agreement is from time to time amended,
restated or otherwise modified in accordance with its terms.
(v) Capital Contribution Date. The date on which
Committed Capital Contributions (as defined in Section 4(b)) are
required to be made to the Partnership under the Equity
Contribution Agreement.
(w) Certificate. The Certificate of Limited
Partnership of the Partnership filed with the Office of the
Secretary of State of the State of Delaware, as in effect from
time to time.
(x) Class A Limited Partner. Makowski Selkirk
Holdings, Inc., a Delaware corporation, and upon the exercise of
the option granted in the EII Option Agreement described in
Section 19(e), the Class A Limited Partner (EII). "Class A
Limited Partner(s)" includes the original Class A Limited Partner
and any Substituted Limited Partner or Partners which acquires
all or part of its Partnership Interest.
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(y) Class A Limited Partner (EII). Upon the
exercise of the option described in Section 19(e) and its
admission to the Partnership as the Class A Limited Partner in
substitution for Makowski Selkirk Holdings, Inc., EII, in its
capacity as a limited partner of the Partnership. The "Class A
Limited Partner (EII)" shall include any single Substituted
Limited Partner which acquires all of the Partnership Interest
held by the Class A Limited Partner(s). If there is more than
one Class A Limited Partner, the Class A Limited Partner (EII)
shall mean one Class A Limited Partner designated by EII (or if
EII is no longer a Class A Limited Partner, then designated by
the Class A Limited Partner which holds the largest Partnership
Interest).
(z) Code. The Internal Revenue Code of 1986, as
amended (or any corresponding provision or provisions of any
successor law).
(aa) Cogen GP. Cogen Technologies Selkirk GP, Inc.,
a Texas corporation, in its capacity as a general partner of the
Partnership, but not in its capacity as a limited partner of the
Partnership following the conversion of the Partnership Interest
of Cogen Technologies Selkirk GP, Inc. to a limited Partnership
Interest in accordance with Section 13(l). "Cogen GP" shall not
include any Substituted Limited Partner or Partners which acquire
all or a part of the Partnership Interest of Cogen Technologies
Selkirk GP, Inc.
(ab) Cogen LP. Cogen Technologies Selkirk, L.P., a
Delaware limited partnership (doing business in Texas as Cogen
Technologies Selkirk (Delaware), L.P.), and its permitted
successors and assigns as provided in Section 13.
(ac) Cogen Partners. Cogen Technologies Selkirk GP,
Inc. and Cogen LP. "Cogen Partners" includes the original Cogen
Partners and any Substituted Limited Partner or Partners which
acquire all or part of the Partnership Interest of a Cogen
Partner.
(ad) Cogen Representative. Cogen Technologies
Selkirk GP, Inc., or in the event that it is no longer a Partner,
then the Cogen Partner holding the largest Preferred Percentage
Interest.
(ae) Collateral Agent. "Collateral Agent" shall
have the meaning assigned to such term in the Indenture.
(af) Company. Selkirk Cogen Funding Corporation, a
Delaware corporation, and its successors and assigns.
(ag) Consent of the General Partners. For so long
as the Management Committee shall be in existence, the
affirmative vote or consent of Voting Representatives
representing all of the General Partners shall constitute the
"Consent of the General Partners" for purposes of this Agreement.
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Upon the dissolution of the Management Committee, the consent of
the Managing General Partner alone shall constitute the "Consent
of the General Partners."
(ah) Consent of the Partners. Both the Consent of
the General Partners and the vote or written consent of Limited
Partners holding at least 96% of the total Voting Interests.
(ai) Debt Depositary Agreement. The Deposit and
Disbursement Agreement effective as of the among the Company,
the Partnership, the Trustee, the Collateral Agent and the
Depositary Agent, as amended, restated or otherwise modified and
in effect from time to time, except for any such amendment,
restatement or modification which has not been approved by the
Management Committee to the extent required by Section 8(i).
(aj) Debt Service. "Debt Service" shall have the
meaning assigned to such term in the Indenture.
(ak) Debt Service Coverage Ratio. "Debt Service
Coverage Ratio" shall have the meaning assigned to such term in
the Indenture.
(al) Default Rate. An annual rate of interest or
return, as the case may be, equal to (i) the prime rate of Bay
Bank, N.A. as in effect from time to time, or in the absence of
such entity's prime rate, the prime rate from time to time in
effect of, in the following order of choice, Bankers Trust
Company, The Chase Manhattan Bank, N.A. or Chemical Bank (as
announced by their respective New York City offices) plus
(ii) 6%.
(am) Depositary Agent. "Depositary Agent" shall
have the meaning assigned to such term in the Debt Depositary
Agreement.
(an) Depreciation. For each fiscal year or other
period, an amount equal to the depreciation, amortization, or
other cost recovery deduction allowable with respect to an asset
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 either (i) 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, or (ii) an amount determined as provided in
Regulation Section 1.704-3T(d); provided, however, that if the
federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero and is not otherwise
provided for, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method
selected by the Managing General Partner. The Partnership will
use whichever method maximizes the present value of Depreciation
to the Partners making Committed Capital Contributions, and
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intends to use the "remedial method" set forth in Regulations
Section 1.704-3T(d), because the "ceiling rule" of Regulations
Section 1.704-3(b)(1) would limit the amount of Depreciation
allocable under the "traditional method" set forth in Regulations
Section 1.704-3(b)(1).
(ao) Determination Date. The day on which the
Special Agent receives any funds for deposit in the Special
Account as specified in the Funds Receipt Notice related to such
receipt of funds.
(ap) Distributable Cash. "Distributable Cash" means
(i) on or prior to the Flip Date, for each Semi-Annual Period,
without duplication, all funds which are, or pursuant to the
terms of the Debt Depositary Agreement may then be, disbursed,
transferred to or otherwise distributed to the Partnership from
the Partnership Distribution Fund in accordance with the
provisions of the Debt Depositary Agreement, excluding any
amounts thereof constituting Net Cash from Sales or Net Cash from
Loss required to be distributed in accordance with Section
6(a)(vii)(2) or (3) and deemed to be Net Cash from Sales or Net
Cash from Loss, as applicable, in accordance with the last
sentence of Section 6(a)(x); and (ii) subsequent to the Flip
Date, for any period, the amount of total cash receipts of the
Partnership from all sources, less the sum of disbursements of
the Partnership for Operating Expenses, capital expenditures
related to the Project, servicing of Partnership debt and
allowances, as determined by the Managing General Partner, for
reserves for working capital, Project maintenance and other
contingencies consistent with the purposes of the Partnership and
any Financing Agreements.
(aq) EII. Energy Initiatives, Inc., a Delaware
corporation, or any majority-owned direct of indirect subsidiary
thereof or of General Public Utilities Corporation which acquires
the Partnership Interest of the Class A Limited Partner upon the
exercise of the option granted under the EII Option Agreement
described in Section 19(e).
(ar) Equity Commitment. Any binding commitment
entered into by a Partner in accordance with Section 4(b) or 4(c)
hereof in connection with the execution and delivery of a
Financing Agreement (or modification or amendment thereof), for
the benefit of the Partnership or the financial institution or
institutions which are parties to any Financing Agreement, or
both, to make Capital Contributions to the Partnership at a later
date. "Equity Commitment" includes, without limitation, the
commitment of Cogen GP, Cogen LP and the Class A Limited Partner
to make the Committed Capital Contribution (as defined in Section
4(b)) and its related Equity Support (as defined in the
Indenture) delivered by each Partner to the Agent (as defined in
and in accordance with the Equity Contribution Agreement).
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(as) Equity Contribution Agreement. "Equity
Contribution Agreement" shall have the meaning assigned to such
term in the Indenture.
(at) Equity Coverage Ratio. For any period, without
duplication, the ratio of (i)(A) the sum of all Project Revenues
of the Project for such period minus (B) the sum of (1) the
aggregate amount of Operating Expenses for such period plus
(2) the Major Maintenance Requirement for such period plus
(3) the amounts specified in clause (i)(B)(3) of the definition
of "Debt Service Coverage Ratio" in the Indenture payable by the
Partnership for such period to (ii) the sum of (A) Debt Service,
and any cash payments under capitalized leases and similar cash
payments in respect of lease-equivalent financing transactions,
payable by the Partnership for such period plus (B) the Level I
Distribution scheduled to be paid with respect to such period,
plus (C) the aggregate amount of overdue Debt Service payments
from previous periods plus (D) the amount, if any, by which the
balance in the Arrears Account as of the first day of such period
exceeds (x) the total funds on deposit in the Suspension Sub-fund
(as defined in the Debt Depositary Agreement) as of the first day
of such period, minus (y) the total funds on deposit in the
Suspension Sub-fund as of the most recent day on which the
balance in the Arrears Account was zero, all as determined on a
cash basis in accordance with GAAP. For an example of the
computation of the Equity Coverage Ratio, see Schedule V.
(au) Equity Depositary Agreement. The Equity
Depositary Agreement dated as of the among the Partnership, each
Partner and Citibank, N.A., as Special Agent, which provides, in
part, for the establishment and maintenance of one or more
accounts to which all funds disbursed from the Partnership
Distribution Fund shall be directly disbursed, transferred and/or
remitted, to the exclusion of any other account or destination,
and from which the Special Agent shall make distributions and
payments as provided for in this Agreement, as such Equity
Depositary Agreement is amended, restated or otherwise modified
and in effect from time to time.
(av) Event of Loss. Any of the following events:
(i) loss of the Project or the use thereof (in its entirety or of
a substantial portion thereof such that the then remaining
portion of the Project cannot practically be utilized for the
purposes intended) due to destruction, damage beyond repair or
rendition of the Project permanently unfit for normal use by the
Partnership for any reason whatsoever; (ii) any damage to the
Project which results in an insurance settlement with respect to
the Project on the basis of a total loss; (iii) the condemnation,
confiscation or seizure of, or requisition of title to, or the
use of the Project (in its entirety or of a substantial portion
thereof such that the then remaining portion of the Project
cannot practically be utilized for the purposes intended); or
(iv) the election by the Partnership not to rebuild or restore
the Project following loss or condemnation in accordance with
Section 6.10(f) of the Indenture.
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(aw) Extraordinary Special Event. Has the meaning
set forth in Section 9(b) hereof.
(ax) Fair Market Sales Value. 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, or any Partner, giving due consideration, in the
determination of such fair market sale 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
Project. The Managing General Partner and the Cogen
Representative 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.
(ay) Financing Agreement(s). The definitive
agreements at any time in force and effect between financial
institution(s) or other Person(s), on the one hand, and the
Partnership or the Partnership and the Company, on the other,
pursuant to which such institution(s) or other Person(s) agree,
subject to the conditions set forth therein, to lend money to, or
purchase the debt securities of, the Partnership or the Company,
the proceeds of which shall be used to finance (or refinance) all
or a portion of the costs of acquisition, construction,
operations or capital improvements in respect of the Project, and
all mortgages, indentures, security agreements and related
documents executed and delivered by the Partnership or the
Company in connection therewith. "Financing Agreements" shall
include, without limitation, the Indenture and any other Senior
Debt Document.
(az) Flip Date. The later to occur of the
(i) eighteenth anniversary of the date of Project Completion and
(ii) the date on which, after taking into account cash
distributions made prior to and on such date, all Level I
Distributions have been paid to the Partners and the balance in
the Arrears Account is zero.
(ba) Fuel Management Activities. Those transactions
necessary or appropriate to effect (a) sales of natural gas
service under the Partnership's Gas Contracts (as defined in the
Indenture) by, or on behalf of, the Partnership to third parties
under circumstances whereby the Partnership reasonably expects to
be able to procure adequate alternative fuel supplies at prices
not in excess of the sales price for such natural gas and provide
adequate alternative fuel transportation arrangements in order to
operate the Project, (b) other sales of natural gas to be
supplied under the Partnership's Gas Contracts (as defined in the
Indenture) by, or on behalf of, the Partnership to third parties
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which are not required to fuel the Project or which are in
amounts necessary to satisfy the minimum take requirements under
the Partnership's long-term gas purchase contracts during periods
of low dispatch, (c) spot purchases of fuel reasonably intended
for use at the Project, (d) non-permanent assignments (other than
as security) of the unutilized gas transportation capacity under
the Partnership's long-term gas transportation contracts made in
accordance with the terms and conditions of gas tariffs (as
modified from time to time) of the transporters under such
contracts contained in or made part of such contracts and (e) any
future or forward contract or option or similar arrangements with
respect to or relating to natural gas or oil to be supplied under
the Partnership's Gas Contracts (as defined in the Indenture) or
reasonably intended for use at the Project between the
Partnership (or its agent) and one or more other Persons
providing for the transfer or mitigation of commodity or price
risks either generally or under special contingencies (provided
that, except for the 1994-1995 winter season, the Partnership's
maximum liability under any such arrangements described in this
clause (e) shall not exceed $2 million).
(bb) Funds Receipt Notice. The written notice of
the Special Agent to the Cogen Representative that advises the
Cogen Representative that the Special Agent has received funds
from the Partnership Distribution Fund or any other source and
that such funds are immediately available funds and that states
the date of such receipt and the amount of funds it has so
received and which are then so available.
(bc) GAAP. Generally accepted accounting principles
in the United States as in effect from time to time.
(bd) Gains and Losses. 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;
provided, however, that such gain or loss shall be computed by
reference to Gross Asset Value rather than adjusted tax basis of
such property.
(be) General Partners. JMC Selkirk, Inc., a
Delaware corporation, JMCS I Investors, L.P., a Delaware limited
partnership, and Cogen Technologies Selkirk GP, Inc., a Texas
corporation, each in its capacity as a general partner of the
Partnership, and such other Persons as are admitted to the
Partnership as Substituted General Partners or successor Managing
General Partners and are named as General Partners in any
amendment to this Agreement. Reference to a "General Partner"
shall be to any one of the General Partners.
(bf) Gross Asset Value. 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
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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 gross fair market values,
as determined by the Management Committee, as of the following
times: (A) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (B) the distribution by
the Partnership to a Partner of more than a de minimis amount of
Partnership Property as consideration for an interest in the
Partnership; and (C) the liquidation of the Partnership within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (A) and
(B) above shall be made only if the Management Committee
reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership. For purposes of this Agreement and
Regulations Section 1.704-1(b)(2)(iv)(f), the Gross Asset Values
of the Project as of May 9, 1994 (in the case of Unit 1 of the
Project) and as of the Capital Contribution Date shall be as set
forth on Schedule VI;
(iii) The Gross Asset Value of any Partnership
asset distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership
assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and to Section 1(s) hereof; provided,
however, that Gross Asset Values shall not be adjusted pursuant
to this paragraph (iv) to the extent the Managing General Partner
determines that an adjustment pursuant to subparagraph (ii)
hereof is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant
to this paragraph (iv).
(bg) Incapacity or Incapacitated. With reference to
a General Partner, the occurrence of any event described in
Sections 17-402(a)(4) through 17-402(a)(10) of the Act.
(bh) Indenture. The Trust Indenture dated as of the among
the Company, the Partnership and Bankers Trust Company,
as Trustee, as amended, restated or otherwise modified
and in effect from time to time, except for any such
amendment, restatement or modification which has not been
approved by the Management Committee to the extent
required by Section 8(i).
(bi) Independent Engineer. Has the meaning assigned
to such term in the Indenture.
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(bj) JMC Selkirk. JMC Selkirk, Inc., a Delaware
corporation, and its permitted successors and assigns as provided
in Section 13.
(bk) JMCSI. JMCS I Investors, L.P., a Delaware
limited partnership, and its permitted successors and assigns as
provided in Section 13.
(bl) Level I Distributions. Each of the
semi-annually scheduled distribution amounts set forth on
Schedule III hereto, as such amounts may be reduced in accordance
with Section 6(a)(vi) or otherwise adjusted in accordance with
Section 6(a)(viii).
(bm) Limited Partners. The Class A Limited Partner,
Cogen LP and JMCSI, each in its capacity as a limited partner of
the Partnership, and such other Persons as are admitted to the
Partnership as Substituted Limited Partners or Additional Limited
Partners and are named as Limited Partners in any amendment to
this Agreement. Reference to a "Limited Partner" shall be to any
one of the Limited Partners.
(bn) Major Action(s). With respect to the rights of
the Class A Limited Partner under Section 12(c) hereof, any
action to be taken by or on behalf of the Partnership to:
(A) enter into, modify, amend, renew, substitute for or terminate
any Financing Agreement or other Project Contract, whether or not
approved by the Management Committee or the General Partners
(other than any Project Contract entered into by the Partnership
the cost or value of which is equal to or less than $25,000),
(B) retain the Partnership's independent public accountants,
(C) finance or refinance (whether or not on a secured basis) all
or a substantial portion of the Project, (D) make a major capital
expenditure or improvement (or series of related expenditures or
improvements), if the cost thereof would exceed $30 million, or
(E) merge, consolidate, or enter into any other business
combination of the Partnership and its assets with any other
entity, or transfer, convey, or sell all or substantially all of
the assets of the Partnership.
(bo) Major Maintenance Requirement. Has the meaning
assigned to such term in the Indenture.
(bp) Management Committee. The Management Committee
established pursuant to the provisions of Section 8(e).
(bq) Managing General Partner. JMC Selkirk, Inc., a
Delaware corporation, in its capacity as the managing general
partner of the Partnership, and any successor Managing General
Partner appointed pursuant to the provisions of Sections 9(e)
or 10.
(br) Net Cash from Loss. As the context may
require, the net cash proceeds received by the Partnership due to
any destruction or damage to, or any condemnation, confiscation
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or seizure of, or requisition of title to or use of, all or any
portion of the Project (excluding in each case any such net cash
proceeds in an amount not exceeding $500,000 with respect to any
single event, 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 Section 8(c)(v) of this Agreement, except proceeds of
business interruption or delayed opening insurance, and (ii) all
awards and proceeds of a condemnation with respect to the
Project), less (A) any portion thereof which equals the amount of
Capital Contributions made by any Partner(s) in accordance with
Section 4(c) in connection with the event giving rise to such net
cash proceeds and (B) any portion thereof used to (x) redeem or
otherwise repay outstanding indebtedness of the Partnership or
the Company as required under any Financing Agreement,
(y) establish reserves or (z) 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 condemnation were received.
(bs) Net Cash From Sales. As the context may
require, the net cash proceeds from all sales and other
dispositions (excluding (A) dispositions giving rise to Net Cash
from Loss or (B) dispositions in the ordinary course of business
or with respect to any involuntary conversion of assets, in each
case having a book value not exceeding $500,000), less any
portion thereof used to (x) redeem or otherwise repay outstanding
indebtedness of the Partnership or the Company as required under
any Financing Agreement, (y) establish reserves or (z) pay the
cost of replacing obsolete or no longer useful property in
respect of which sales proceeds were received.
(bt) Non-Material Agreement. Has the meaning set
forth in the last sentence of Section 8(i)(viii).
(bu) Nonrecourse Deductions. Has the meaning set
forth in Regulations Section 1.704-2(b)(1). The amount of
Nonrecourse Deductions for a Partnership fiscal year equals the
net increase, if any, in the amount of Partnership Minimum Gain
during that fiscal year, determined according to the provisions
of Regulations Section 1.704-2(c).
(bv) Notice or Notification. A writing, containing
the information required by this Agreement to be communicated to
any Person, dispatched in accordance with Section 19(a);
provided, however, that any written communication containing such
information sent to such Person and actually received by such
Person shall constitute Notification or Notice for all purposes
of this Agreement.
(bw) Notice Certificate. A certificate of the Cogen
Representative directed to the Special Agent which shall state,
in substantial part, that (i) a Ratio Shortfall Event has
occurred, and (ii) notwithstanding the distributions contemplated
to be made pursuant to Section 6(a) hereof, all Remaining
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Distributable Cash shall be distributed by the Special Agent in
accordance with Section 6(a)(vi) as directed in such Notice
Certificate.
(bx) Operating Expenses. Has the meaning assigned
to such term in the Indenture.
(by) Operating Profits and Operating Losses. For
each fiscal year or other period, an amount equal to the
Partnership's taxable income or loss for such year or period,
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), and all
nonrecourse deductions (within the meaning of Section
1.704-2(b)(1) of the Regulations) shall be included in taxable
income or loss), with the following adjustments:
(i) Any 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 Section 1(by) shall be added to such taxable
income or loss;
(ii) Any expenditures of the Partnership
described in Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Operating Profits or Operating Losses pursuant to this
Section 1(by), shall be subtracted from such taxable income or
loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to Section 1(bf)(ii)
hereof, the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes
of computing Profits or Losses;
(iv) Gain or Loss resulting from any
disposition of Partnership Property with respect to which gain or
loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken into
account Depreciation for such fiscal year or other period,
computed in accordance with Section 1(an) hereof; and
(vi) Notwithstanding any other provisions of
this Section 1(by), any items which are specially allocated
pursuant to Section 6(b)(iv) through (xv) hereof shall not be
taken into account in computing Operating Profits or Operating
Losses.
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(bz) Original Partners. JMC Selkirk, JMCSI and the
Class A Limited Partner and any Substituted General Partner(s) or
Substituted Limited Partner(s) which acquires all or a part of
the Partnership Interest of any Original Partner.
(ca) Original Percentage Interest. The interest of
each of the Original Partners in certain distributions, expressed
as a percentage and set forth on Schedule I.
(cb) Partner Nonrecourse Debt. Has the meaning set
forth in Section 1.704-2(b)(4) of the Treasury Regulations.
(cc) Partner Nonrecourse Debt Minimum Gain. An
amount, with respect to each Partner Nonrecourse Debt, equal to
the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the
Treasury Regulations.
(cd) Partner Nonrecourse Deductions. Has the
meaning set forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of
the Treasury Regulations.
(ce) Partners. Collectively, the General Partners
and the Limited Partners. Reference to a "Partner" shall be to
any of the Partners.
(cf) Partnership. The limited partnership continued
by this Agreement, as such limited partnership may from time to
time be constituted.
(cg) Partnership Distribution Fund. The fund by
that name established at Section 2.2 of the Debt Depositary
Agreement and further referenced in, among other provisions,
Section 3.15 of the Debt Depositary Agreement, and each sub-fund
therein, including without limitation the Distribution Sub-Fund
and the Suspension Sub-Fund, and all successor, additional and/or
substitution funds thereof and therefor.
(ch) Partnership Interest or Interest. The entire
right, title and interest of a Partner in the Partnership, its
assets, income and business, profits and losses and any
distributions pursuant to Sections 6(a) and 15(c), all as
provided in this Agreement.
(ci) Partnership Minimum Gain. Has the meaning set
forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury
Regulations.
(cj) Partnership Year. The fiscal year of the
Partnership, which shall be the tax year of the Partnership for
federal income tax purposes under the Code.
(ck) Person. Any individual, partnership,
corporation, trust, IRA or other entity.
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(cl) Phantom Income (Expense). For any period,
without duplication, an amount equal to (i) the sum of (x) the
principal payments on all partnership debt (including the Secured
Bonds, any Additional Permitted Indebtedness (as defined in the
Indenture), and the GE Adjustment Account (as defined in the Debt
Depositary Agreement), (y) all payments into reserve accounts
(including the Debt Service Reserve Fund, the Major Maintenance
Reserve Fund and the Gas Contract Extension Fund) under the Debt
Depositary Agreement other than the Partnership Distribution
Fund, to the extent such payments are not currently deductible
from taxable income, and (z) all other capitalized expenditures
which are not currently deductible from taxable income; less
(ii) the sum of all payments out of a reserve account referred to
in clause (y) above which are either currently deductible from
taxable income or which are distributable to the Partners. Thus,
for example, in any fiscal year in which Net Cash from Loss and
Net Cash from Sales are zero and all amounts deposited into the
Partnership Distribution Fund are distributed to the Partnership
in accordance with the provisions of Section 6.22 of the
Indenture, "Phantom Income" will equal the Partnership's taxable
income (determined without regard to Depreciation) less
Distributable Cash.
(cm) Preferred Percentage Interest. Each Partner's
interest in certain distributions, expressed as a percentage and
set forth on Schedule I.
(cn) Principal Project Contracts. The Partnership's
Steam Sales Agreement, the Construction Contract, the ConEd Power
Purchase Agreement, the NIMO Power Purchase Agreement, the
Transmission Services Agreement, the Site Lease, the Gas Supply
Contracts and the Operation and Maintenance Agreement (in each
case as defined in the Indenture), as the same may be amended,
restated or otherwise modified and in effect from time to time in
accordance with the terms thereof and hereof.
(co) Prior Fiscal Years. All references in Section
6(b) to "prior fiscal years" (or any shorter period) shall not
refer to any fiscal year or other period prior to the .
(cp) Priority Return. Has the meaning set forth in
Section 4(c)(iv) hereof.
(cq) Project. All of the property and assets which
comprise the electric and steam generation facility of
approximately 79.9 megawatts located in Selkirk, New York, and a
second electric and steam generation facility of approximately
265 megawatts located adjacent to the said 79.9 megawatt
facility, and all related steam, gas and electric lines, boiler
facilities and other equipment, including, without limitation,
the real, personal and mixed property (whether tangible or
intangible) owned and operated or to be owned and operated by the
Partnership for the cogeneration of electric power and steam and
other businesses incident thereto.
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(cr) Project Completion. The earlier of (i) the
date on which Provisional Acceptance of Unit 2 has occurred in
accordance with and as defined in the Engineering, Procurement
and Construction Contract for Unit 2 dated October 21, 1992
between the Partnership and Bechtel Construction of Nevada and
Bechtel Associates Professional Corporation and (ii) the date on
which the Partnership has accepted Unit 2 in accordance with
Section 6.12 of the Indenture for purposes of achieving
Commercial Operation (as defined in the Indenture).
(cs) Project Contracts. The Partnership's Steam
Sales Agreement, the Construction Contract, the Con Ed Power
Purchase Agreement, the NIMO Power Purchase Agreement, the NIMO
License Agreement, the Transmission Services Agreement, the Site
Lease, the Utilities Building Lease Agreement, the Water Supply
Agreement, the Operation and Maintenance Agreement, the
Interconnection Agreement, the Existing Facility Interconnection
Agreement, the Project Agreement Consents, the Gas Transportation
Contracts, the Gas Precedent Agreements, the Back-Up Gas Supply
Contract, the Back-Up Gas Supply Contract Guarantee, the Gas
Supply Contracts, the Long-Term Fuel Management Contracts, the
PILOT Agreement, the Tennessee Supplemental Agreements, the
TransCanada Assurances Agreement, the IDA Documents, the Grant of
Easements, the Waldenmaier Easement Agreement, the Paramount
Intercreditor Agreement and the Paramount Indemnity Agreement (in
each case as defined in the Indenture); and the Administrative
Services Agreement, the Capital Contribution Agreement, the
Equity Depositary Agreement and each of the Senior Debt
Documents; and any other contract or commitment entered into by
the Partnership in connection with the furnishing of goods or the
performance of services relating to the Project; in each case as
the same may be amended, restated or otherwise modified and in
effect from time to time in accordance with the terms thereof and
hereof.
(ct) Project Management Firm. JMCS I Management,
Inc., acting in such capacity pursuant to the Administrative
Services Agreement.
(cu) Project Revenues. Has the meaning assigned to
such term in the Indenture.
(cv) Projected Debt Service Coverage Ratio and
Projected Debt Service Ratio (Six Month). Have the meanings
assigned to such terms in the Indenture.
(cw) Projected Equity Coverage Ratio. A projection
of the Equity Coverage Ratio for any Annual Period or Semi-Annual
Period, determined in accordance with Section 6(a)(vi).
(cx) Prudent Utility Practice. At a particular
time, those practices, methods, acts and omissions generally
engaged in or approved by the United States electric utility
industry for the operation and maintenance of facilities of
similar design and construction as, and otherwise at such time
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similarly situated to, the Project, as are known at the time the
decision in question is made, which, in the exercise of
reasonable judgment in light of the facts known at the time the
decision in question is made, would have been expected to
accomplish the desired result at a reasonable cost consistent
with law, regulation, reliability, safety and expediency.
(cy) Ratio Shortfall Event. The determination and
calculation as of any Determination Date that either (i) the
Equity Coverage Ratio for the Test Period (Actual) or (ii) the
Projected Equity Coverage Ratio for the first Semi-Annual Period
or any of the remaining Annual Periods in the Test Period
(Projected) is less than 1.33 to 1.00. For an example of the
computation of a Ratio Shortfall Event, see Schedule V.
(cz) Regulations or Treasury Regulations. Income
Tax Regulations promulgated pursuant to the Code.
(da) Regulatory Allocations. Has the meaning set
forth in the first sentence of Section 6(b)(xiv) hereof.
(db) Remaining Distributable Cash. As of any
Determination Date, the amount of Distributable Cash remaining
after making the distributions described in paragraphs (iii)(1)
and, if applicable, (v)(1), of Section 6(a).
(dc) Rescission Notice. Has the meaning set forth
in Section 4(c)(iv)(4).
(dd) Residual Percentage Interest. Each Partner's
interest in Partnership distributions after the Flip Date,
expressed as a percentage, and set forth in Schedule I.
(de) Restricted Interest. Has the meaning set forth
in the last sentence of Section 13(a).
(df) Section 4(c) Contribution. Has the meaning set
forth in Section 4(c)(iv).
(dg) Section 6(a)(iii)(2) Return. Has the meaning
set forth in the penultimate sentence of Section 6(a)(iii)(2).
(dh) Secured Bonds. The First Mortgage Bonds of the
Company issued under the Indenture (including any bonds exchanged
therefor in a registered exchange offer).
(di) Semi-Annual Payment Date. The last day of each
Semi-Annual Period.
(dj) Semi-Annual Period. A six-month period ending
on June 26 or December 26 of any year.
(dk) Semi-Annual Period Deficiency Amount. With
respect to each Semi-Annual Period in the Test Period (Projected)
that corresponds to a Ratio Shortfall Event, an amount which when
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subtracted from the Level I Distributions scheduled for
distribution to the Partners during such Semi-Annual Period would
result in the Projected Equity Coverage Ratio for such
Semi-Annual Period otherwise being equal to 1.33 to 1.00.
(dl) Senior Debt Documents. The Indenture and any
of the other documents executed by the Company or the Partnership
in connection with the issuance and sale by the Company of the
Secured Bonds, including, without limitation, the Bridge Bank
Facility, the Credit Bank Working Capital Facility, the Credit
Bank Reimbursement Facility and the Collateral Documents (in each
case as defined in the Indenture), and the Debt Depositary
Agreement, as the same may be amended, restated or otherwise
modified and in effect from time to time, except for any such
amendment, restatement or modification which has not been
approved by the Management Committee to the extent required by
Section 8(i). Where this Agreement incorporates by reference
defined terms used in, or specific provisions of, a Senior Debt
Document that at any time hereafter is terminated or has expired,
this Agreement shall be deemed to refer to such defined terms or
specific provisions as in effect immediately before the
termination or expiration of such Senior Debt Document, unless
the context clearly requires otherwise.
(dm) [Intentionally left blank.]
(dn) Special Account. That certain account
maintained at Citibank, N.A. and styled "Special Account" as
established pursuant to the Equity Depositary Agreement, any
sub-accounts thereof and such other and subsequent accounts
hereafter established and maintained pursuant to the Equity
Depositary Agreement.
(do) Special Agent. Citibank, N.A., a national
banking association, which is appointed and acting as the Special
Agent pursuant to the Equity Depositary Agreement, and each and
all of its permitted successors, assigns and agents.
(dp) Special Consent of the Limited Partners. The
vote or written consent of Limited Partners other than the
Class A Limited Partner holding (A) if such vote or consent is
made prior to the Flip Date, at least 51% of the total Voting
Interests held by all of the Limited Partners (except for the
Class A Limited Partner) or (B) if such vote or consent is made
on or after the Flip Date, at least 66 2/3% of the total Voting
Interests held by all of the Limited Partners (except for the
Class A Limited Partner).
(dq) Special Contributing Partner. Has the meaning
set forth in Section 4(c)(iv) hereof.
(dr) Special Event. Has the meaning set forth in
Section 9(a) hereof.
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(ds) Stipulated Redemption Value (Loss-Preferred);
Stipulated Redemption Value (Loss-Original). For any Semi-Annual
Period, the amount set forth on Schedule IV hereto, as such
amounts may be adjusted in accordance with Section 6(a)(viii).
(dt) Stipulated Redemption Value (Redemption). For
any Semi-Annual Period, the amount set forth on Schedule IV
hereto, as such amounts may be reduced in accordance with Section
6(a)(vi) or otherwise adjusted in accordance with Section
6(a)(viii).
(du) Substituted General Partner. Any Person
admitted to the Partnership as a General Partner pursuant to the
provisions of Section 10(c) or 13(f).
(dv) Substituted Limited Partner. Any Person
admitted to the Partnership as a Limited Partner pursuant to the
provisions of Section 13(f).
(dw) Suspension Sub-Fund. Has the meaning assigned
to such term in the Debt Depositary Agreement.
(dx) Termination Reduction. Has the meaning set
forth in Section 6(b)(vi)(3) hereof.
(dy) Test Period (Actual). Any period consisting of
six consecutive months, ending on the last day of the month
immediately preceding the month in which any Determination Date
occurs; provided, however, that until the sixth month anniversary
of Project Completion, the Test Period (Actual) shall be such
shorter period as shall commence with the first day of the
calendar month following the month in which Project Completion
occurs.
(dz) Test Period (Projected). Any period consisting
of an initial Semi-Annual Period and four consecutive Annual
Periods, commencing with the Semi-Annual Period next succeeding
the Semi-Annual Period in which any Determination Date occurs.
(ea) Trustee. Has the meaning assigned to such term
in the Indenture.
(eb) Unallocated Section 6(a)(iii)(2)(A)
Distribution Rights. With respect to each Partner as of a given
date, the excess, if any, of (i) the aggregate amount of
distributions such Partner has received under Section
6(a)(iii)(2)(A) and would receive under such section if the
Partnership on such date were liquidated under Section 15(c) and
no amounts were held in reserve by the Managing General Partner
under Section 15(c)(i)(2) or 15(c)(v), based solely upon the
Section 6(a)(iii)(2) Return (and without regard to such Partner's
Unreturned Special Investment); over (ii) the aggregate amount of
all profits specially allocated to such Partner in prior periods
under Section 6(b)(i)(6).
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(ec) Unanimous Consent of the Partners. The vote or
written consent of all of the Partners.
(ed) Unreturned Capital Contributions. In respect
of any Partner, the excess of (A) the aggregate Capital
Contributions made by such Partner prior to the date of
determination over (B) the aggregate amount distributed to such
Partner pursuant to Section 6(a) prior to the date of
determination.
(ee) Unreturned Special Investment. Has the meaning
set forth in Section 6(a)(iii)(2) hereof.
(ef) Voting Interest. As to any Partner at the time
any vote, approval or consent of the Partners is determined, the
number of votes obtained by multiplying 100 times (A) in the case
of a vote, approval or consent made prior to the Flip Date, a
fraction the numerator of which is the aggregate Capital
Contributions made by such Partner (and any predecessor Partner
in respect of such Partner's Partnership Interest) at any time
prior to the date of determination and the denominator of which
is the aggregate Capital Contributions made by all Partners (and
any predecessor Partners) at any time prior to the date of
determination, in each case without regard to any distributions
or allocations made in accordance with Section 6 or (B) in the
case of a vote, approval or consent made on or after the Flip
Date, such Partner's Residual Percentage Interest. For purposes
of determining the Voting Interest of any Partner prior to the
Capital Contribution Date, any Committed Capital Contribution (as
defined in Section 4(b)) to be made by a Partner shall be
included as a Capital Contribution of such Partner.
Notwithstanding the foregoing definition of "Voting Interest", if
at any time a Class A Limited Partner shall be a "public utility
holding company" or a regulated "subsidiary company" of a "public
utility holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, and provided that the
Partnership is not an "exempt wholesale generator" within the
meaning of the Energy Policy Act or is not otherwise exempt from
regulation under the Public Utility Holding Company Act of 1935,
as amended, the Voting Interest of such Class A Limited Partner
shall not exceed 4.9% of all of the Voting Interests of the
Partners, and the Voting Interests of the remaining Partners
which are not a "public utility holding company" or a regulated
"subsidiary company" of a "public utility holding company" shall
be increased proportionately.
(eg) Voting Representative. Has the meaning
assigned to such term in Section 8(e).
2. Organization.
(a) Formation and Continuation. The Partnership
has been formed, and the Partners elect to continue the
Partnership, under the Act, and the rights and liabilities of the
Partners shall be as therein provided, except as otherwise
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expressly provided herein. The name of the Partnership shall be
"Selkirk Cogen Partners, L.P." The business may, however, be
conducted under any other name or names selected by the Managing
General Partner. The Managing General Partner shall provide
Notice to the Partners of any change in the Partnership's name.
(b) Place of Business. The principal place of
business of the Partnership shall be Creble Road, County
Route 55, Selkirk, New York. Such place of business may be
changed by the Managing General Partner to any other place, and
the Partnership may maintain additional offices at any other
place or places as the Managing General Partner may deem
advisable. The Managing General Partner shall provide Notice to
the Partners of any change in the Partnership's principal place
of business.
(c) Term. The term of the Partnership commenced on
the date on which the Certificate was first filed in the Office
of the Secretary of State of the State of Delaware and shall
continue until December 31, 2032, unless sooner terminated in
accordance with the provisions of Section 15 or as otherwise
provided by law.
(d) Registered Office and Registered Agent. The
registered office of the Partnership in the State of Delaware and
the registered agent of the Partnership in the State of Delaware
for service of process shall be Corporation Service Company,
1013 Centre Road, Wilmington, Delaware 19805.
3. Partnership Purposes and Powers.
The purpose of the Partnership shall be to plan, design,
develop, implement, construct, finance, own and operate the
Project, to purchase fuel for the Project and to sell the
electricity and steam produced by the Project, and to engage in
any and all other activities related, necessary, appropriate or
incidental thereto, including, without limitation, Fuel
Management Activities, and to conduct such other lawful
activities as may be necessary or appropriate to promote the
business of the Partnership and to do any and all things
necessary and appropriate to accomplish the foregoing.
The Partnership shall have the power to do any and all
acts necessary, appropriate, proper, advisable, incidental or
convenient to or for the furtherance of the purposes and business
described herein and for the protection and benefit of the
Partnership, and shall have, without limitation, any and all of
the powers that may be exercised on behalf of the Partnership by
the Managing General Partner, the Management Committee and the
General Partners pursuant to Section 8. The Partnership, and the
Managing General Partner on behalf of the Partnership, may file
and prosecute applications with governmental authorities for the
furtherance and accomplishment of the purposes and businesses of
the Partnership, and may enter into and perform the Capital
Contribution Agreement, the Senior Debt Documents and the Project
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Contracts as in effect as of the date hereof, and any instruments
or documents expressly required therein to be executed by or on
behalf of the Partnership on, as of or before the date of this
Agreement (collectively, the "Transaction Documents"), without
any further act, vote or approval of any Partner notwithstanding
any other provision of this Agreement, the Act or other
applicable law, rule or regulation. The Managing General Partner
is hereby authorized to enter into and cause the Partnership to
perform on behalf of the Partnership the Transaction Documents,
but such authorization shall not be deemed a restriction on the
power of the Managing General Partner to enter into and cause the
Partnership to perform other agreements on behalf of the
Partnership in accordance with the provisions of this Agreement.
4. Capital Contributions.
(a) Agreement Date Capital Contributions. The
Capital Contribution of each of the Partners on May 9, 1994,
which has been paid in full, is set forth opposite such Partner's
name on Schedule I hereto (collectively, the "Agreement Date
Capital Contributions"). No Partner shall be deemed to have made
any Capital Contribution prior to such date other than its
Agreement Date Capital Contribution.
(b) Committed Capital Contributions. In connection
with the Partnership's consummation of the transactions
contemplated by the Senior Debt Documents, Cogen GP, Cogen LP and
the Class A Limited Partner have entered into the Equity
Commitments provided under the Equity Contribution Agreement.
Each such Partner shall make an additional Capital Contribution
(a "Committed Capital Contribution") to the Partnership, upon the
satisfaction of any conditions precedent set forth in the Equity
Contribution Agreement, in the amount and at the time provided
therein. The procedures for issuing written requests for such
Committed Capital Contributions and the date, method and place of
payment therefor shall be as set forth in the Equity Contribution
Agreement.
(c) Continuing Capital Contributions.
(i) In the event that, at any time or times
during the construction of the Project or after the completion
thereof, the Managing General Partner shall determine that the
Partnership requires or will require additional capital for the
completion of construction or operation of the Project
(including, without limitation, for the cure of any default under
the Equity Contribution Agreement which is predicated upon a
Partner Default, as defined in Section 5(a), or for the
redemption of Partnership Interests under Section 13(m) of this
Agreement) in excess of funds available under the Financing
Agreements and the Equity Commitments which the Partners are
obligated to provide under Section 4(b), the Managing General
Partner may submit to each Partner for its written consent a
written schedule that details the proposed amounts and timing of
(or, in the case of contingent commitments in connection with any
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Financing Agreements, the conditions and other limitations with
respect thereto) one or more installments of Capital
Contributions determined by the Managing General Partner to be
required for such purpose (a "Capital Contributions Schedule");
provided, however, that such Capital Contributions Schedule shall
not provide in any calendar month for Capital Contributions in
excess of the amount reasonably estimated to be required for any
such month.
The Managing General Partner shall provide to the
Partners as much prior notice as is reasonably practicable under
the circumstances of the anticipated requirements of the
Partnership for additional capital under this Section 4(c), in
order to enable any Partner (or the Affiliate of any Partner or,
if such Partner is the Class A Limited Partner, Energy
Initiatives, Inc. or any Affiliate thereof) subject to regulatory
restriction to obtain the requisite governmental authorization or
consent to make, or agree to make, such additional Capital
Contributions. In the event that the Managing General Partner
shall submit a Capital Contributions Schedule to the Partners,
any Partner (other than a defaulting Partner as defined in
Section 5(a) hereof) (or the Affiliate of any Partner or, in case
such Partner is the Class A Limited Partner, Energy Initiatives,
Inc. or the Affiliate thereof) which is required by applicable
law, prior to making (or entering into a commitment to make) the
Capital Contributions specified on such schedule, to obtain the
authorization or consent of, or to make any filing or declaration
with, any governmental body may, within five (5) Business Days of
the receipt of such Capital Contributions Schedule, send Notice
to the other Partners of such requirement, stating its intention
to timely and diligently seek such authorization or consent, or
make such filing or declaration (a "Regulated Partner Notice").
Upon receipt of a Regulated Partner Notice, the Managing General
Partner shall extend the time-period for soliciting the Unanimous
Consent of the Partners to the Capital Contributions Schedule for
at least 150 days beyond the date of the Regulated Partner Notice
(the "Deferral Period"). In the event of extraordinary
circumstances which necessitate actions by the Partners before
the end of the Deferral Period, as determined in the reasonable
discretion of the Managing General Partner, the Managing General
Partner may specify a date before the expiration of the Deferral
Period as the latest date by which the Partners may deliver their
written consent to such schedule.
(ii) If a Capital Contributions Schedule
submitted to the Partners in accordance with Section 4(c)(i) is
approved by the Unanimous Consent of the Partners, each Partner
shall (in accordance with the provisions of Section 4(c)(iv)),
upon receipt of a written request therefor from the Managing
General Partner, on or before the due date stated in such
request, contribute to the capital of the Partnership an amount
equal to its Preferred Percentage Interest, multiplied by the
aggregate amount of Capital Contributions comprising an
installment specified on such Capital Contributions Schedule (a
"Mandatory Capital Call" and any Capital Contributions made by,
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or on behalf of, a Partner pursuant to a Mandatory Capital Call,
a "Mandatory Contribution").
(iii) If a Capital Contributions Schedule
submitted to the Partners in accordance with Section 4(c)(i) does
not receive the Unanimous Consent of the Partners, then the
Managing General Partner may, from time to time, issue a written
request to each Partner to contribute (or enter into a binding
and irrevocable commitment to contribute) to the capital of the
Partnership an amount equal to its Preferred Percentage Interest
multiplied by the aggregate amount of Capital Contributions
comprising one or more installments specified on such Capital
Contributions Schedule (a "Discretionary Capital Call" and any
Capital Contributions made by, or on behalf of, a Partner in
respect of its own Preferred Percentage Interest pursuant to a
Discretionary Capital Call, a "Discretionary Contribution"). Any
Partner other than the Managing General Partner (a
"Non-Contributing Partner") may, within five (5) Business Days of
the receipt of such Discretionary Capital Call, deliver to the
Partnership a Notice that it elects not to make (or commit to
make) the Capital Contribution specified therein. If there shall
be any defaulting Partner (as defined in Section 5(a)) on the
date a Discretionary Capital Call is issued or if any Partner
shall not deliver to the Partnership a Notice that it elects to
participate in such Discretionary Capital Call within five (5)
Business Days of receipt thereof, such defaulting or
non-responding Partner shall be deemed to be a Non-Contributing
Partner. If there shall be a Non-Contributing Partner in respect
of a Discretionary Capital Call, the Managing General Partner
shall provide notice to the Partners (other than the
Non-Contributing Partner) of such Non-Contributing Partner's
election not to make (or commit to make) such Capital
Contribution, subject to Section 4(c)(iv), and the Partners other
than the Non-Contributing Partner may (but shall not be required
to) make (or commit to make) additional Capital Contributions
which, in the aggregate, do not exceed the amount of the Capital
Contribution of the Non-Contributing Partner specified in such
Discretionary Capital Call (such additional Capital Contribution
of each Partner being hereinafter referred to as an "Excess
Contribution"). All Partners other than the Non-Contributing
Partner(s) shall, subject to Section 4(c)(iv), have the right to
participate in funding the amount of the Capital Contribution of
the Non-Contributing Partner(s) specified in such Discretionary
Capital Call on a pro rata basis in accordance with the ratio
obtained by dividing (1) each such Partner's Preferred Percentage
Interest by (2) the sum of the Preferred Percentage Interest of
all Partners (exclusive of the Non-Contributing Partner(s));
provided, however, that if any such Partner elects not to make
(or commit to make) an Excess Contribution in the full amount to
which it is entitled on the foregoing basis, the other Partners
(exclusive of the Non-Contributing Partner(s)) may increase their
respective Excess Contributions to fund the shortfall as agreed
by such other Partners. The determination of the amount of each
Partner's (other than Non-Contributing Partner(s)) Excess
Contribution proposed to be made in accordance with this Section
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4(c)(iii) shall be completed no later than thirty (30) days prior
to the date specified in the Discretionary Capital Call as the
due date (or commitment date) for the payment of such Capital
Contribution.
(iv) Any Partner (a "Special Contributing
Partner") making a Mandatory Contribution, a Discretionary
Contribution, an Excess Contribution, an Additional Contribution
or a Basic Contribution, pursuant to a Mandatory Capital Call or
a Discretionary Capital Call (any of the foregoing being referred
to as a "Section 4(c) Contribution") shall be entitled to receive
priority distributions in respect of such Section 4(c)
Contribution in accordance with Section 6(a)(iii)(2). For
purposes of Section 6(a)(iii)(2), the "Priority Return" to which
such Special Contributing Partner shall be entitled shall be
determined as follows:
(1) Each Special Contributing Partner
shall inform the other Partners of its offered cost of capital to
the Partnership (expressed as an annual percentage rate of
return, compounded on each Semi-Annual Payment Date) in a written
Notice to the other Partners ("Priority Return Notice"),
delivered not less than thirty (30) days prior to the date
specified in the Mandatory Capital Call or Discretionary Capital
Call, as the case may be, as the due date (or commitment date)
for the payment of such Capital Contribution; provided that, if a
Partner shall have delivered a Regulated Partner Notice in
respect of a Mandatory Capital Call or Discretionary Capital
Call, any other Partner may deliver a Priority Return Notice at
any time during the last sixty (60) days of the Deferral Period.
(2) During the first five (5) Business
Days of the 30-day period (or, if applicable, the 60-day period)
referred to in clause (1) above (the "Evaluation Period"), the
Special Contributing Partners may consult among themselves and
any such Partner may, by written Notice to the other Partners
delivered within such Evaluation Period, elect to reduce or
increase (but not above the highest offered cost of capital set
forth in the applicable Priority Return Notices) the offered cost
of capital stated in its Priority Return Notice.
(3) At the expiration of the Evaluation
Period, unless any Non-Contributing Partner shall deliver a
Rescission Notice (as defined in clause (4) below), the Special
Contributing Partner which has, in accordance with clause (1) or
(2) above, proposed the lowest Priority Return in respect of the
Mandatory Capital Call or Discretionary Capital Call shall be
obligated to make its Section 4(c) Contribution in the amount
determined in accordance with Section 4(c)(ii) or (iii), or in
such greater amount as such Partner shall, in its sole
discretion, elect and shall be entitled to receive the Priority
Return thereon stated in its Priority Return Notice or modified
Priority Return Notice under clause (1) or (2) above. The
Special Contributing Partner, if any, which has proposed the next
lowest Priority Return shall be obligated to make its Section
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4(c) Contribution in the amount determined in accordance with
Section 4(c)(ii) or (iii) or in such greater amount as such
Partner shall, in its sole discretion, elect (but in no event
greater than the amount of the Mandatory Capital Call or
Discretionary Capital Call as shall then remain unfunded) and
shall be entitled to receive the Priority Return thereon stated
in its Priority Return Notice or modified Priority Return Notice
under clause (1) or (2) above. The foregoing provisions shall
apply to each successive Special Contributing Partner until the
amount of the Mandatory Capital Call or Discretionary Capital
Call is fully funded. In the event that two or more Special
Contributing Partners have proposed the same Priority Return as
of the expiration of the Evaluation Period, such Special
Contributing Partners shall be considered as a class in the
application of the foregoing provisions of this clause (3), and
the amount of Section 4(c) Contributions permitted to be made by
such class shall be allocated among the Special Contributing
Partners in proportion to the amount which each such Special
Contributing Partner has agreed to contribute in accordance with
Section 4(c)(ii) or (iii).
(4) Any Non-Contributing Partner(s) in
respect of a Discretionary Capital Call shall have the right,
exercisable within five (5) Business Days after the expiration of
the Evaluation Period, to rescind its election not to participate
in the funding of such Discretionary Capital Call (a "Rescission
Notice"). Such Rescission Notice shall state (x) that the amount
proposed to be contributed by or on behalf of such Partner is
equal to at least the product of its Preferred Percentage
Interest, multiplied by the aggregate amount of Capital
Contributions specified in the Discretionary Call (such Partner's
"Basic Contribution"), (y) whether the amount proposed to be
contributed by or on behalf of such Partner is greater than its
Basic Contribution (the amount proposed to be contributed in
excess of the Basic Contribution is referred to as the
"Additional Contribution"), and (z) the Priority Return
applicable thereto, which shall be less than the lowest Priority
Return set forth in any Special Contributing Partner's Priority
Return Notice or modified Priority Return Notice under clause (1)
or (2) above. Such Non-Contributing Partner shall be entitled to
contribute the Additional Contribution (which may include the
balance of the entire Discretionary Capital Call), and the
Special Contributing Partner(s) shall not be entitled to
contribute such Additional Contribution; provided, however, that
the Special Contributing Partner(s) shall have the right, by
providing notice thereof not later than five (5) Business Days
after receipt of the Rescission Notice, to contribute all or any
portion of the Additional Contribution, in which case the entire
Discretionary Contribution made by such Special Contributing
Partner(s) in respect of the Discretionary Capital Call shall be
subject to the same Priority Return proposed in the Rescission
Notice.
(5) In the event that any Special
Contributing Partner(s) does not elect to contribute all or any
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portion of the Additional Contribution in accordance with
clause (4), the amount of Capital Contributions permitted to be
made by such Special Contributing Partner(s), after giving effect
to clause (4) and the Priority Return which such Partner(s) are
entitled to receive thereon shall be determined in accordance
with clause (3) above.
A Non-Contributing Partner which is subject to a
regulatory restriction (as described in Section 4(c)(i)) may
condition its Rescission Notice on the receipt of all necessary
governmental authorizations and consents, in which case the
Partners shall agree upon the timing and method of such
Non-Contributing Partner's Capital Contribution consistent with
the provisions of Section 4(c)(i) and this Section 4(c)(iv).
(v) This Section 4(c)(v) shall apply in the
event that a Capital Contributions Schedule is (A) predicated
upon the Partnership's need for additional capital in order
(1) to remedy any condition which constitutes a default or an
event of default (whether or not waived) under any of the
Financing Agreements, (2) to obtain an extension or modification
to the terms of the secured indebtedness of the Partnership under
any of the Financing Agreements in lieu of the exercise by any
secured party of its rights to foreclosure or otherwise realize
upon the collateral subject to such Financing Agreements, or
(3) to avoid any threatened Bankruptcy of the Partnership, or
(B) made at any time after the second anniversary of the date of
commencement of commercial operation of the second phase of the
Project (as determined in accordance with the Partnership's power
sale contract for such second phase), if the Debt Service
Coverage Ratio, calculated on a rolling average basis for the
prior four consecutive fiscal quarters, has been less than 1.1 to
1.0; provided, however, that this Section 4(c)(v) shall not apply
to Cogen GP during any period in which Cogen GP has assumed the
duties of the Managing General Partner under Section 9(e) after
the events described in the foregoing clause (A) upon which the
application of this Section 4(c)(v) is based have occurred or
after the Capital Contributions Schedule described in clause (B)
upon which the application of this Section 4(c)(v) is based has
been delivered. Any Partner in respect of a Capital Contribution
to which this Section 4(c)(v) applies shall have the right to
request the Managing General Partner, on behalf of the
Partnership, to commence a negotiation with the Project
Management Firm to amend or modify the Billing Schedule attached
to the Administrative Services Agreement. In such case, the
Managing General Partner shall cause the Project Management Firm
to enter into good faith negotiations with a view towards an
appropriate reduction, in light of the Partnership's need for
additional capital, of the then effective hourly rates of the
Project Management Firm provided under such Billing Schedule;
provided that any such reduction shall (x) be consistent with the
full recovery by the Project Management Firm of its actual costs,
properly allocated overhead expense and such additional
compensation as shall be deemed by the Consent of the Partners to
be reasonable under the circumstances, and (y) have a limited
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duration which does not extend beyond the date on which all
distributions to be made to be the Partners pursuant to Section
6(a) in respect of the Capital Contribution to which this
Section 4(c)(v) applies (including, if applicable, the Section
6(a)(iii)(2) Return) have been made; and provided, further, that
if, within thirty (30) days of the date the related Capital
Contributions Schedule is distributed an appropriate reduction is
not approved by the Consent of the Partners as herein provided,
then the rates in effect shall be automatically reduced (until
such further agreement is reached) to hourly rates that reflect a
full recovery of the Project Management Firm's actual costs,
including properly allocated overhead, plus additional
compensation equal to twenty percent (20%) of such costs. Each
Partner shall be entitled to participate in such negotiation with
the Project Management Firm, and any amendment to the Billing
Schedule resulting from such negotiation shall be subject to the
Consent of the Partners.
(vi) Regulatory Approvals. If (1) a Partner
has delivered a Regulated Partner Notice in respect of a Capital
Contributions Schedule submitted to the Partners in accordance
with Section 4(c)(i), (2) the Managing General Partner
accelerates the date for Partner approval or disapproval thereof
prior to the expiration of the Deferral Period and (3) the
Partner which has delivered the Regulated Partner Notice has been
unable, prior to the date required by the Managing General
Partner for Partner approval or disapproval of such Capital
Contributions Schedule, to obtain the requisite governmental
authorization, consent or the effectiveness of the requisite
filing or declaration, but does so prior to the expiration of the
Deferral Period, such Partner shall have the right during the
remaining balance of the Deferral Period to rescind its status as
a Non-Contributing Partner in respect of the applicable
Discretionary Capital Call, upon (A) payment to each Special
Contributing Partner of (x) the full amount of any Excess
Contribution made by such Special Contributing Partner on account
of the rescinding Partner, plus (y) a return on any such Excess
Contribution made by such Special Contributing Partner, or
committed to be made by it pursuant to any Equity Commitment of a
specified dollar amount (net of any return the Special
Contributing Partner earns on collateral posted to secure such
Equity Commitment), at the Default Rate, computed from the date
of such payment or commitment by the Special Contribution Partner
through the date of payment under this Section 4(c)(vi), plus
(z) all other reasonable transaction costs and expenses incurred
by such Special Contributing Partner in connection with such
Excess Contribution or Equity Commitment to make such Excess
Contribution to the extent that any of the same would not have
been incurred had such Special Contributing Partner not made such
Excess Contribution and (B) if applicable, such rescinding
Partner's entering into the requisite Equity Commitment in
respect of its proportionate share of the Capital Contributions
specified in such Discretionary Capital Call, together with the
full release of each Special Contributing Partner under such
Equity Commitments to the extent of the Excess Contribution
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committed to be made on account of the rescinding Partner's
Preferred Percentage Interest.
(d) Crediting to Capital Accounts. The Agreement
Date Capital Contributions of each Partner shall be credited to
such Partner's Capital Account, and all amounts received by the
Partnership from any Partner pursuant to Section 4(b) or 4(c),
whether received prior to, on or after the due date specified in
Section 4(e), shall be credited to such Partner's Capital Account
as of the date received. Any payments made by a Partner pursuant
to any Equity Commitment, or on behalf of or for the account of a
Partner under any guarantee or similar obligation of its
Affiliate or drawing under a letter of credit or equivalent
security delivered in connection with any Equity Commitments,
directly to a Pledgee (as defined in Section 13(h)) in accordance
with the terms of such Equity Commitment shall be deemed to be a
Capital Contribution made to the Partnership by such Partner
under Section 4(b) or 4(c), as applicable.
(e) Overdue Payments. All amounts received by the
Partnership pursuant to Section 4(b) or 4(c) from a Partner after
the due date specified in the written request therefor delivered
in accordance with Equity Commitments or by the Managing General
Partner pursuant to Section 4(c)(ii) or (iii) (the "due date")
shall be accompanied by interest on such overdue amounts, which
interest shall be payable to the Partnership and shall accrue
from and after such due date at a rate equal to the lesser of the
Default Rate and the maximum rate permitted by applicable law.
(f) Partnership Capital. Except as otherwise
provided in Section 4(c)(ii), (iii) or (iv), no Partner shall be
required to make any Capital Contribution to the Partnership
other than the Agreement Date Capital Contribution and, if
applicable, the Committed Capital Contribution. Except to the
extent otherwise provided in the Act, no Limited Partner shall be
responsible for obligations or liabilities of the Partnership.
None of the Partners shall be paid interest on any Capital
Contribution. Except as otherwise specifically provided herein,
the Partnership shall not redeem or repurchase any Partnership
Interest and no Partner shall have the right to withdraw, or
receive any return of, its Capital Contributions, and no Capital
Contributions may be returned in the form of property other than
cash.
(g) Debt Service Reserve Fund Letter of Credit.
The Cogen Partners collectively shall be entitled to provide one
or more letters of credit satisfying the requirements for a Debt
Service Letter of Credit (as defined in the Indenture) under the
Debt Depositary Agreement (all such letter(s) of credit provided
by a Partner, together with any replacement or substitute
letter(s) of credit provided by such Partner, being referred to
collectively as such Partner's "Partner Debt Service L/C") in an
aggregate stated amount not to exceed 50% of the total Debt
Service Reserve Requirement (as defined in the Indenture) in
effect from time to time; the allocation of the foregoing right
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among the Cogen Partners shall be in proportion to their
respective Preferred Percentage Interests or as otherwise agreed
by such Partners. The Original Partners collectively shall be
entitled to provide one or more Partner Debt Service L/C's in an
aggregate stated amount not to exceed 50% of the total Debt
Service Reserve Requirement in effect from time to time; the
allocation of the foregoing right among the Original Partners
shall be in proportion to their respective Original Percentage
Interests or as otherwise agreed by such Partners.
Notwithstanding the foregoing provisions of this Section 4(g),
any Partner may, by separate agreement and upon Notice delivered
to the Partners, agree to assign all or a portion of its right to
provide a Partner Debt Service L/C to another Partner for such
time-period(s) and upon such terms as the assigning Partner may,
in its discretion, determine. As a condition to the exercise of
the right to provide a Partner Debt Service L/C and the attendant
right to be advanced the cash funds in the Debt Service Reserve
Fund equal to the stated amount of such Partner Debt Service L/C,
each providing Partner shall be obligated both to:
(i) pay the Partnership (by delivery to the
Depositary Agent for deposit in such account as may be specified
by the Managing General Partner in the invoice described below)
on a semi-annual basis an amount equal to the investment income
that would have been earned by the Partnership had the cash funds
withdrawn by the providing Partner from the Debt Service Reserve
Fund (as defined in the Debt Depositary Agreement) upon the
posting of its Partner Debt Service L/C (such cash funds, as
reduced by the aggregate amount of any drawings under such
providing Partner's Partner Debt Service L/C by the Depositary
Agent, the "Withdrawn Amount") been retained in the Debt Service
Reserve Fund and invested as permitted under the Debt Depositary
Agreement, as determined by the Managing General Partner based on
the Partnership's average investment income on funds held in the
Debt Service Reserve Fund (or if there shall be no cash or
investments then held in the Debt Service Reserve Fund, on funds
held in the Principal and Interest Funds) under the Debt
Depositary Agreement during the corresponding time-period (based
on the date(s) such funds were actually disbursed and/or repaid)
and set forth in an invoice delivered to the providing Partner,
plus interest on such amount at the Default Rate to the extent
not paid within fifteen (15) days after receipt of such invoice,
and
(ii) repay to the Partnership the aggregate
Withdrawn Amount, plus interest on such amount at the Default
Rate to the extent not paid within fifteen (15) days after
receipt of a demand therefor from the Managing General Partner,
upon the earliest to occur of (x) the expiration of such Partner
Debt Service L/C, (y) the date on which the Partnership is no
longer required to maintain in the Debt Service Reserve Fund the
Debt Service Reserve Requirement with respect to that portion of
the Partnership's indebtedness for which the Partner Debt
Service L/C was originally posted, and (z) such providing
Partner's election to repay the aggregate Withdrawn Amount.
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Any amounts paid to the Partnership under clause (ii) on
or after the Flip Date which are not then required to be
maintained in the Debt Service Reserve Fund for application in
accordance with the Debt Depositary Agreement shall be deemed to
be Section 6(a)(ix) Proceeds (as defined in Section 6(a)(ix)).
All funds advanced to a Partner from the Debt Service Reserve
Fund pursuant to this Section 4(g) shall be treated as loans from
the Partnership to such Partner and not as distributions under
Section 6(a) or otherwise.
Each Partner Debt Service L/C shall (I) meet the
requirements of the definition of "Debt Service Letter of Credit"
in the Indenture as in effect at the time of issuance;
(II) provide that the issuing bank shall deliver to the Managing
General Partner copies of all written notices required to be
delivered by the issuing bank to the Depositary Agent (and upon
receipt of any such notice, the Managing General Partner shall
promptly forward copies thereof to each Partner); provided,
however, that if a Partner Debt Service L/C satisfying the
requirements of clause II is not available in the national
marketplace on commercially reasonable terms and at a cost that
is not excessive to the providing Partner, the requirements of
said clause II shall, upon the providing Partner's Notice of such
circumstances to each Partner, be waived; (III) if such Partner
Debt Service L/C is in replacement or substitution for a partner
Debt Service L/C previously delivered to the Depositary Agent, be
in a stated amount equal to the Withdrawn Amount under the letter
of credit to be replaced or substituted at the time of the
replacement or substitution, less any cash then being repaid by
such Partner to the Partnership under clause (ii) of this Section
4(g); and (IV) either (A) automatically extend for not less than
a six-month period unless the issuing bank provides at least
30 days prior written notice of termination to the Depositary
Agent or (B) require the issuing bank to provide the Depositary
Agent with at least 30 days prior written notice of termination;
provided, however, that if a Partner Debt Service L/C satisfying
the requirements of this clause (IV) is not available in the
national marketplace on commercially reasonably terms and at a
cost that is not excessive to the providing Partner, the
requirements of this clause (IV) shall, upon the providing
Partner's Notice of such circumstances to each Partner, be
waived. Notwithstanding the immediately preceding sentence, in
the event that the Depositary Agent objects to the inclusion in
any Partner Debt Service L/C, which otherwise satisfies clause
(I) of such sentence, of any other provision required hereunder
(including, without limitation, pursuant to clauses (II), (III)
or (IV) of the immediately preceding sentence), the providing
Partner shall not be obligated to satisfy such other requirement,
if such providing Partner delivers Notice of such circumstances
to each Partner at the time if furnishes a draft of the Partner
Debt Service L/C to the Management Committee under clause (x) of
the last sentence of this paragraph and the Depositary Agent does
not withdraw its objection prior to the date on which the Partner
Debt Service L/C is issued. The Managing General Partner shall
deliver to the Depositary Agent in accordance with the provisions
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of the Debt Depositary Agreement (with copies provided to each of
the Partners) an instruction requiring the Depositary Agent to
draw upon any Partner Debt Service L/C in the full amount
thereof: (A) on or before the 20th day prior to its expiration,
or (B) if the Partnership is no longer required to maintain in
the Debt Service Reserve Fund Debt Service Reserve Requirement
with respect to that portion of the Partnership's indebtedness
for which the Partner Debt Service L/C was originally posted.
Any Partner desiring to furnish a Partner Debt Service L/C shall:
(x) furnish a draft thereof to the Management Committee no later
than five Business Days prior to the proposed issuance date (or,
if there shall be no Management Committee, to each Partner); and
(y) a copy thereof to each Partner promptly after issuance.
5. Default Partner; Other Deemed Withdrawals.
(a) Deemed Withdrawal Upon Partner Default. For
purposes of this Agreement, a "Partner Default" shall mean:
(i) a default by any Partner in the performance of its
obligations to make any Capital Contribution to the Partnership
which such Partner has committed to make in accordance with the
terms of Section 4(b) or 4(c) or (ii) a default by any Partner or
its Affiliate in the performance of any other obligation under
any Financing Agreement to which it is a party, which default
would, with the giving of notice or lapse of time or both, unless
cured or waived, cause the Partnership to be in default under any
of the Financing Agreements or (iii) a default by any Partner
which has provided a Partner Debt Service L/C in the performance
of its obligations under Section 4(g). In the event a Partner
Default shall occur as to any Partner and such default shall
continue uncured for a period of fifteen (15) days after the
giving of Notice by the Managing General Partner to all of the
Partners of such default by any such Partner (a "defaulting
Partner") (or if the Managing General Partner or an Affiliate
thereof shall be the defaulting Partner, then any other Partner
may provide such Notice), or for such extended cure period as may
be approved by the Managing General Partner (or if the Managing
General Partner or an Affiliate thereof shall be the defaulting
Partner, by the Consent of the Partners) (such cure periods to be
uniformly applied to all Partners), then such defaulting Partner
shall be deemed to have withdrawn from the Partnership effective
as of the sixteenth day after such Notice or the day after
expiration of the extended cure period, as the case may be.
Notwithstanding the foregoing provisions of this Section 5(a), no
defaulting Partner which is a General Partner shall be deemed to
have withdrawn from the Partnership if such withdrawal would
constitute an "Event of Default" under any Senior Debt Document.
(b) Grace Period. After the receipt of a notice of
default pursuant to Section 5(a) and prior to the curing of any
such default as provided in Section 5(c) or the deemed withdrawal
of the defaulting Partner as provided in Section 5(a), a
defaulting Partner shall continue to be a Partner and shall
continue to be obligated to make all Capital Contributions which
such Partner has committed to make in accordance with the terms
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of Section 4(b), Section 4(c) or any Equity Commitment to which
it is a party, as the case may be; provided, however, that,
unless and until such default shall be cured as provided in
Section 5(c), (i) such defaulting Partner shall not have any vote
in matters to be acted upon by the Partners or by the General
Partners (in such capacity or through the Management Committee);
and (ii) the defaulting Partner shall have no right to receive
any allocations which are attributable to its Partnership
Interest and made in accordance with Section 6(b) hereof, and no
distribution shall be made to the defaulting Partner under
Section 6(a) hereof; provided, further, that upon the cure of any
default, the voting rights and the rights to receive allocations
and distributions described in the preceding clauses (i) and (ii)
shall be reinstated, and if such default has been cured within
the fifteen-day period specified in Section 5(a) such defaulting
Partner shall be entitled to receive such allocations and
distributions previously suspended, as if such default had not
occurred. Notwithstanding any other provision hereof, the
obligation of a Partner to make any Capital Contribution which
such Partner has committed to make in accordance with the terms
of Section 4(b), Section 4(c) or any Equity Commitment to which
it is a party shall not be reduced as a result of such Partner's
previous failure to make any Capital Contribution.
(c) Cure. A defaulting Partner shall be deemed to
have cured all defaults under Section 5(a) when it has fulfilled
its obligations upon which such Partner Default is predicated
prior to the end of the period for cure as provided in Section
5(a) or, in the case of a defaulting Partner subject to the last
sentence of Section 5(a) which is not deemed to have withdrawn
from the Partnership, at any time.
(d) Contingent Obligation of the Partnership to
Repay Withdrawn Partner's Capital Contributions. A Partner which
is deemed to have withdrawn from the Partnership pursuant to
Section 5(a) shall be entitled to receive payment from the
Partnership of an amount equal to the sum of (i) such Partner's
Unreturned Capital Contributions, as of the effective date of
withdrawal, and (ii) any amounts paid by such withdrawn Partner
after the date of its withdrawal in accordance with Section 5(e),
which amount shall be payable by the Partnership in installments
on the dates on which distributions are thereafter made to the
Partners, the amount of each such installment to equal the
Distributable Cash that would have been payable to such withdrawn
Partner on such distribution date pursuant to Section 6(a) if it
had not been deemed to have withdrawn pursuant to Section 5(a),
until the total amount payable under this Section 5(d) shall be
paid in full. The Managing General Partner may, with the Consent
of the Partners, cause the Partnership to pay to any Partner
which is deemed to have withdrawn pursuant to Section 5(a) any
balance owed such withdrawn Partner under this Section 5(d) in a
lump-sum payment.
(e) Consequences of Withdrawal. Any former Partner
that shall have withdrawn, or been deemed to have withdrawn, from
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the Partnership pursuant to the provisions of Section 5(a), 10,
11(d) or 12(c) shall remain obligated to the Partnership (except
as otherwise provided in the last sentence of this Section 5(e))
after the date of its withdrawal for all Capital Contributions it
is required to make under Equity Commitments entered into by such
Partner in accordance with Section 4(b), together with any
Capital Contributions which such former Partner has committed to
make under any Equity Commitments entered into by such Partner
pursuant to Section 4(c), and all Capital Contributions which
such former Partner has otherwise committed to make pursuant to
Section 4(c), prior to the date of its withdrawal, except that
such withdrawn Partner shall not be obligated for Capital
Contributions attributable to any portion of its former
Partnership Interest which has been transferred to another person
admitted to the Partnership pursuant to the provisions of Section
14(a). If any Partner(s) (the "Curing Partner(s)") shall
pursuant to Section 4(c) make, or commit to make Capital
Contributions under Equity Commitments, in order to effect a cure
of a Partner Default (as defined in Section 5(a)) in respect of a
withdrawn Partner, such withdrawn Partner shall be obligated to
pay to the Curing Partner(s) all amounts constituting such
Capital Contributions, and the Curing Partner(s) shall, to the
extent not prohibited under the Financing Agreements, be entitled
to be subrogated to the rights of the Partnership under any
guarantee or other support instrument provided by such withdrawn
Partner or its Affiliate in respect of such Equity Commitments.
In addition, (i) any former General Partner which
has withdrawn, or been deemed to have withdrawn, from the
Partnership pursuant to the provisions of Section 5(a) or 10
shall remain subject to the provisions of Section 10(d), and
(ii) any former Limited Partner which has withdrawn, or been
deemed to have withdrawn from the Partnership pursuant to the
provisions of Section 5(a) or 11(d) shall remain subject to the
provisions of Section 11(d).
(f) Limitation on Withdrawal; Allocation of
Partnership Interests. Except as expressly permitted or required
under Section 5(a), 10(b), 11(d), 12(c) or 13(m) hereof, or in
connection with the assignment of all of a Partner's Partnership
Interest in accordance with Section 10(a) or 13(a), no Partner
shall have the right to withdraw from the Partnership. If a
Partner becomes, or is deemed to have become, a withdrawn Partner
in accordance with Section 5(a), 12(c) or 13(m), or in
contravention of this Agreement, the Partnership Interest of such
withdrawn Partner as of the date of withdrawal may be allocated
among the Partners remaining in the Partnership on the basis
agreed to by all remaining Partners. If the remaining Partners
are unable to reach such agreement, the Partnership Interest of
the withdrawn Partner shall be allocated among those remaining
Partners in the ratio which each individual remaining Partner's
aggregate Capital Contributions made, and committed to be made in
accordance with Section 4(b) or 4(c), by such Partner (and any
predecessor Partner in respect of such Partner's Partnership
Interest) prior to the date of determination bears to the total
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amount of Capital Contributions made by all Partners (including
predecessor Partners but excluding the withdrawn Partner) prior
to the date of determination; provided, however, that no part of
the Partnership Interests held by the Cogen Partners shall be
allocated to the Class A Limited Partner without its written
consent. Nothing in this Section 5(f) shall be construed as
preventing admission of an Additional Limited Partner or Partners
to the Partnership in accordance with Section 14(a) in order to
meet the cash needs of the Partnership resulting from the
withdrawal of a Partner or Partners.
6. Distributions; Allocations of Profits and Losses.
(a) Distributions.
(i) Distributable Cash on or Before the Flip
Date. During the period ending with the Flip Date, the Managing
General Partner shall, as soon as Distributable Cash becomes
available for distribution to the Partnership in accordance with
the terms of the Senior Debt Documents, cause all Distributable
Cash to be disbursed directly from the Partnership Distribution
Fund to the Special Account, from which the Special Agent shall
distribute Distributable Cash to the Partners in the manner
provided in this Section 6(a) and the Equity Depositary
Agreement. Within five (5) Business Days after each Semi-Annual
Payment Date or as soon thereafter as practically possible, the
Cogen Representative shall submit to the Managing General Partner
and the Class A Limited Partner a statement of the amounts of
Distributable Cash to be disbursed by the Special Agent during
the current Semi-Annual Period as provided in paragraphs (v)(1),
if applicable, and (iii)(1) of this Section 6(a).
(ii) No Distributions Prior to the Capital
Contribution Date. No distributions shall be made pursuant to
this Section 6(a) from Distributable Cash deposited in the
Special Account prior to the Capital Contribution Date.
(iii) Distributions After the Capital
Contribution Date and Prior to the Flip Date. Except as provided
in paragraphs (v), (vi) and (vii) of this Section 6(a) and
Section 15(c), commencing with the Semi-Annual Period in which
the Capital Contribution Date occurs, Distributable Cash for each
Semi-Annual Period prior to the Flip Date, including the pro
rated portion of the Semi-Annual Period in which the Flip Date
occurs, shall be distributed as follows:
(1) First, (A) 99% to the Partners in
accordance with their respective Preferred Percentage Interests,
and (B) 1% to the Original Partners in accordance with their
respective Original Percentage Interests, until the total
distributions made pursuant to clause (A) of this paragraph
(iii)(1) are equal to the Level I Distribution for such
Semi-Annual Period.
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(2) Second, to the Special Contributing
Partners (as defined in Section 4(c)(iv) hereof), if any, until
the total distributions made pursuant to this paragraph (iii)(2)
are equal to the sum of (A) first, an aggregate annual return
equal to such Partners' Section 6(a)(iii)(2) Return (as defined
below) and (B) second, the aggregate Section 4(c) Contributions
of all Special Contributing Partners, determined as of the time
immediately before the distributions hereunder are made. Any
such distributions shall be apportioned among the Special
Contributing Partners in the same ratios as their "Unreturned
Special Investment" (as defined in the immediately succeeding
sentence), determined as of the time immediately before such
distributions are made, bear to one another. The "Unreturned
Special Investment" in respect of any Special Contributing
Partner as of any distribution date shall equal the excess of
(I) the sum of the total amount of Section 4(c) Contributions
which such Partner has made pursuant to Section 4(c), plus such
Partner's Section 6(a)(iii)(2) Return (determined as of the time
immediately before the distributions on such date are made), over
(II) the aggregate amount distributed to such Partner pursuant to
this paragraph (iii)(2). A Partner's "Section 6(a)(iii)(2)
Return" shall equal that amount which such Partner is entitled to
receive under Section 4(c)(iv) in respect of Section 4(c)
Contributions, determined by application of the Priority Return
to which each such Section 4(c) Contribution is subject in
accordance with Section 4(c)(iv) to the amount of such Section
4(c) Contribution which, as of the date of determination, has not
been returned through distributions under this paragraph
(iii)(2). For purposes of the preceding sentence, amounts
distributed to a Partner under clause (B) above shall be deemed
to be applied to its Section 4(c) Contributions in the
chronological order of the respective contribution dates.
(3) Third, 99% to the Original Partners
in accordance with their respective Original Percentage
Interests, and 1% to the Partners in accordance with their
respective Preferred Percentage Interests.
(iv) Distributions Subsequent to the Flip Date.
Subject to Section 6(a)(viii)(6) hereof, on the Flip Date, after
making the distributions necessary to cause the Flip Date to
occur, and thereafter, the Managing General Partner shall, no
less frequently than semi-annually, cause all Distributable Cash
to be distributed as follows:
(1) First, to the Special Contributing
Partners (as defined in Section 4(c)(iv) hereof), if any, until
the total distributions made pursuant to paragraph (iii)(2) and
this paragraph (iv)(1) are equal to the sum of (A) first, such
Partners' Section 6(a)(iii)(2) Return and (B) second, the
aggregate Section 4(c) Contributions of all Special Contributing
Partners, determined as of the time immediately before the
distributions hereunder are made. Any such distributions shall
be apportioned among the Special Contributing Partners in the
same ratios as their "Unreturned Special Investment", determined
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as of the time immediately before such distributions are made,
bear to one another.
(2) Second, to the Partners in accordance
with their respective Residual Percentage Interests, except as
provided in Section 15(c).
(v) Arrears Account. The Partnership records
shall contain an arrears account with respect to the Level I
Distributions (the "Arrears Account"). If, as of any Semi-Annual
Payment Date, the distributions to the Partners pursuant to
clause (A) of paragraph (iii)(1) of this Section 6(a) during the
current Semi-Annual Period have been less than an amount equal to
the Level I Distribution for the subject Semi-Annual Period, the
amount of such deficiency shall be entered as an increase to the
balance of the Arrears Account. The Arrearage Rate shall be
applied to any outstanding balances in the Arrears Account, and
the amount so calculated shall be added to such balances at the
end of each Semi-Annual Period, or, in the event of a payment in
accordance with paragraph (v)(1) below, a pro rata portion
thereof. On any distribution date on which the Arrears Account
has a positive balance, then notwithstanding paragraph (iii) of
this Section 6(a), Distributable Cash otherwise distributable
pursuant to such paragraph shall be distributed:
(1) First, to the Partners in accordance
with their respective Preferred Percentage Interests, until the
total distributions made pursuant to this paragraph (v)(1) equal
the then balance of the Arrears Account, and the balance of the
Arrears Account shall be decreased by the amount so distributed
to the Partners.
(2) Second, to the Partners, Special
Contributing Partners, and Original Partners as provided in
paragraph (iii) of this Section 6(a).
(vi) Accelerated Level I Distributions. If
(x) as of any Determination Date, the sum of distributions
previously made during the current Semi-Annual Period and
Distributable Cash then held in the Special Account is sufficient
to reduce the balance of the Arrears Account to zero and to
distribute to the Partners the amount that is currently
distributable to the Partners pursuant to paragraph (iii)(1) of
this Section 6(a), (y) a Ratio Shortfall Event is determined to
have occurred, and (z) thereafter the Cogen Representative timely
provides to the Special Agent (with a copy to the Managing
General Partner) a Notice Certificate with respect to such
Determination Date, then notwithstanding paragraphs (iii)(2),
(iii)(3) and (v)(2) of this Section 6(a), Remaining Distributable
Cash shall be distributed during the remaining portion of the
current Semi-Annual Period as provided in this Section 6(a)(vi).
The Cogen Representative and the Managing General Partner (upon
its receipt of the former's Notice Certificate) shall each
promptly deliver a copy of such Notice Certificate to the Class A
Limited Partner, provided that the failure of the Cogen
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Representative or the Managing General Partner so to deliver a
copy of its Notice Certificate shall not preclude its exercise of
the rights granted under this Section 6(a)(vi).
(1) If, as of the applicable
Determination Date, the Equity Coverage Ratio for the Test Period
(Actual) or the Projected Equity Coverage Ratio for the first
Semi-Annual Period or any of the remaining Annual Periods in the
Test Period (Projected) is (A) less than 1.33 to 1.00 but equal
to or greater than 1.23 to 1.00, then Level I Distributions
subsequently scheduled to be distributable to the Partners with
respect to the Test Period (Projected) shall be and become
immediately distributable to the Partners, in accordance with
their respective Preferred Percentage Interests, in an amount
equal to 65% of all Remaining Distributable Cash, unless
clause (B) below is applicable with respect to any other period
or (B) less than 1.23 to 1.00, then Level I Distributions
subsequently scheduled to be distributable to the Partners with
respect to the Test Period (Projected) shall be and become
immediately distributable to the Partners, in accordance with
their respective Preferred Percentage Interests. In the case of
both clause (A) and clause (B), the amount of Remaining
Distributable Cash distributed in accordance with this paragraph
(vi)(1) shall equal the lesser of (x) 100% of the Remaining
Distributable Cash for such period (or 65% of the Remaining
Distributable Cash if clause (A) above is applicable) and (y) the
amount of the Remaining Distributable Cash sufficient to reduce,
as provided in the next succeeding sentence, the subsequently
scheduled Level I Distributions in the applicable Test Period
(Projected) to zero. All Remaining Distributable Cash
distributed in accordance with this paragraph (vi)(1) shall be
applied to reduce subsequently scheduled Level I Distributions in
accordance with the Adjustment Application Method, and the
Stipulated Redemption Values (Redemption) set forth on
Schedule IV shall be correspondingly adjusted.
(2) If, after making the distributions of
the Remaining Distributable Cash pursuant to paragraph (vi)(1),
there exists additional Remaining Distributable Cash, such
Remaining Distributable Cash shall be distributed as provided in
paragraph (iii)(2) and (iii)(3) of this Section 6(a).
The Cogen Representative is hereby unconditionally and
irrevocably authorized, to the exclusion of the Managing General
Partner and on behalf of the Partnership, to deliver Notice
Certificates to the Special Agent and to submit the other
instructions to the Special Agent contemplated under this Section
6(a) and the Equity Depositary Agreement, all in accordance with
the provisions hereof and thereof. The following provisions
shall apply with respect to the determination of the existence or
non-existence of a Ratio Shortfall Event:
(I) The Managing General Partner shall
furnish or cause to be furnished to the Cogen Representative all
such information as the Cogen Representative shall reasonably
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request in order to calculate the ratios and amounts provided for
in this paragraph (vi), including without limitation to determine
the need for any changes in assumptions described in subparagraph
(IV) below, and the Managing General Partner will use reasonable
efforts to assure that such information is current, complete and
accurate and furnished to the Cogen Representative at a time and
with reasonably sufficient time that permits the Cogen
Representative to determine whether a Ratio Shortfall Event has
occurred as of each Determination Date and prior to the time that
an applicable Notice Certificate is required to be delivered by
it to the Managing General Partner. In furtherance of the
foregoing, but not in limitation of the generality thereof, the
Managing General Partner will furnish and cause to be furnished
to the Cogen Representative (x) all information, reports,
statements and the like that each of the Partnership and the
Company is required to deliver to the Trustee, Collateral Agent,
Depositary Agent and Independent Engineer pursuant to the Senior
Debt Documents, and such information, reports, statements and the
like will be forwarded to the Cogen Representative at the same
time as forwarded pursuant to the Senior Debt Documents and
(y) monthly financial statements of the Partnership and the
Company.
(II) If, with respect to any Determination
Date, the Cogen Representative determines that a Ratio Shortfall
Event has occurred, then no later than by the end of the fifth
Business Day following the Business Day on which the Cogen
Representative receives the Funds Receipt Notice relating to such
Determination Date, the Cogen Representative shall, if it intends
to deliver to the Special Agent a Notice Certificate in respect
of such Determination Date, deliver a Notice to the Managing
General Partner and the Class A Limited Partner together with a
copy of such proposed Notice Certificate. The Cogen
Representative and the Managing General Partner (upon its receipt
of the former's Notice) shall each promptly deliver such Notice
to the Class A Limited Partner, provided that the failure of the
Cogen Representative or the Managing General Partner so to
deliver a copy of its Notice shall not preclude its exercise of
the rights granted under this Section 6(a)(vi). If the Managing
General Partner does not object to the proposed Notice
Certificate by Notice to the Cogen Representative within two (2)
Business Days of the receipt thereof, the Cogen Representative
shall be entitled to deliver such Notice Certificate to the
Special Agent.
(III) If within the time period provided
in the last sentence of subparagraph (II), the Managing General
Partner objects to the determination and/or directions of the
Cogen Representative in any proposed Notice Certificate delivered
to it in accordance with subparagraph (II), whether regarding the
determination of the occurrence of a Ratio Shortfall Event or the
instructions regarding the resulting Adjustment Application
Method or otherwise, then the Managing General Partner and the
Cogen Representative agree to meet promptly and endeavor in good
faith to resolve such disagreement within seven (7) Business Days
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following the delivery of the Cogen Representative's Notice to
the Managing General Partner in accordance with subparagraph
(II). If the Managing General Partner and the Cogen
Representative are unable to reach agreement within such time
period, the dispute shall be referred to the Independent Engineer
for resolution, and the Cogen Representative shall only be
entitled to deliver the proposed Notice Certificate (as it may be
modified by the determination of the Independent Engineer) to the
Special Agent upon a determination by the Independent Engineer,
communicated in writing to each of the Managing General Partner,
the Class A Limited Partner and the Cogen Representative,
confirming the occurrence of a Ratio Shortfall Event and the
resulting Adjustment Application Method. In resolving any
dispute referred to it in accordance with the provisions of this
subparagraph (III) and subparagraph (IV), the Independent
Engineer shall be instructed to adhere strictly to the terms of
this Agreement in the calculation of the ratios and amounts
provided for in this paragraph (vi).
(IV) Each of the Partners agrees that the
numerator components of the Projected Equity Coverage Ratio for
any Annual Period or Semi-Annual Period in a Test Period
(Projected) will be determined by using the corresponding
numerator components of the Projected Debt Service Coverage Ratio
and the Projected Debt Service Coverage Ratio (Six Month)
calculated by the Independent Engineer in the most recent
Engineer's Annual Report (as defined in the Indenture), adjusted
to reflect any subsequent changes in the assumptions used in such
calculation necessary to conform such assumptions in all material
respects to the Project Contracts and the historical operating
results of the Project, as such adjustments are made in the
calculation of such ratios in accordance with Section 6.22 of the
Indenture. Such adjustments will be carried forward through the
applicable Test Period (Projected), unless mutually agreed by the
Cogen Representative and the Managing General Partner. Any
disputes concerning the occurrence of a Ratio Shortfall Event and
the resulting Adjustment Application Method, including without
limitation, any dispute concerning necessary adjustments to
assumptions used to calculate such numerator components of the
Projected Debt Service Coverage Ratio and Projected Debt Service
Coverage Ratio (Six Month) contained in the most recent
Engineer's Annual Report with respect to any Annual period or
Semi-Annual Period in the applicable Test Period (Projected),
will be referred to the Independent Engineer for resolution.
Further, each of the Partners acknowledges that such numerator
components of the Projected Equity Coverage Ratios specified in
paragraph (vi)(1) of this Section 6(a) are based upon the
specified levels of Projected Debt Service Coverage Ratios (Six
Month) initially provided for in Section 6.22 of the Indenture.
In furtherance of the foregoing, each of the Partners agrees that
in the event any of the specified levels for Projected Debt
Service Coverage Ratios (Six Month) initially provided for in
said Section 6.22 is amended, then the Managing General Partner
and the Cogen Representative are authorized to meet and adjust,
to their reasonable mutual approval, the ratios specified in
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paragraph (vi)(1) of this Section 6(a) in a manner consistent
with, and corresponding to, the effect of any such amendments to
said Section 6.22.
(V) If, with respect to any Determination
Date, the Managing General Partner determines, based on the same
information provided the Cogen Representative under subparagraph
(I) above, that a Ratio Shortfall Event has occurred and that the
Cogen Representative has failed timely to deliver a Notice of its
intent to deliver to the Special Agent a Notice Certificate in
respect of such Determination Date, the Managing General Partner
may, by Notice to the Cogen Representative, indicate that, for
purposes of Section 13(m)(y), the Cogen Representative has
elected to forego delivery of a Notice Certificate. If the Cogen
Representative contests the determination by the Managing General
Partner of the occurrence of a Ratio Shortfall Event, the dispute
shall be resolved in accordance with the procedures set forth in
subparagraphs (III) and (IV) above.
(VI) In no event shall the Managing
General Partner or any other Partner have any right to advise,
direct, instruct or otherwise communicate to the Special Agent,
and the Special Agent shall not be obligated or required to
respond or act upon any such instructions or other
communications. Each of the Partners agrees that notwithstanding
any other provision contained herein to the contrary, the Special
Agent can rely exclusively upon the information and instructions
set forth in each Notice Certificate or other instruction
contemplated under this Section 6(a) and the Equity Depositary
Agreement submitted by the Cogen Representative in making
distributions from the Special Account.
(vii) Net Cash From Sales; Net Cash from Loss.
Except as provided in Section 15(c), and subject to Section
6(a)(x), any Net Cash From Sales or Net Cash from Loss shall be
distributed as follows:
(1) On or prior to the Flip Date, subject
to subparagraph (vii)(3), below, any (A) Net Cash from Sales in
an amount up to $4.0 million in respect of any event or series of
related events, not in excess of a cumulative amount equal to
$10.0 million whether or not in respect of any event or series of
related events, and (B) Net Cash from Loss in an amount up to
$4.0 million in respect of any event or series of related events,
shall be distributed as Distributable Cash in accordance with
paragraphs (iii), (v) and (vi) of this Section 6(a).
(2) Upon receipt by the Partnership of any
Net Cash from Sales or Net Cash from Loss described in
subparagraph (vii)(1), above, or in the case of any Loss
described in Section 6(a)(viii)(4)(III) which is not treated as
an Additional Adjustment Event under that Section (because the
amount of loss is less than or equal to $4.0 million), then
notwithstanding the provisions of paragraphs (iii)(2) and
(iii)(3) of this Section 6(a), Distributable Cash for any
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Semi-Annual Period in excess of the amounts required to be
distributed under paragraphs (v)(1), if applicable, (iii)(1) and
(vi), if applicable, shall, first, be distributed to the
Partners, in accordance with their respective Preferred
Percentage Interests, until the total distributions pursuant to
this subparagraph (vii)(2) equal (x) the net present value of the
difference, if any, between the tax depreciation which would have
been allowable with respect to the property subject to the
disposition or loss giving rise to such Net Cash from Sales Net
Cash from Loss, or Loss, as applicable, and the sum of (I) any
Loss allocable under Section 6(b)(viii) hereof in accordance with
the Partners' Preferred Percentage Interests and (II) any tax
depreciation with respect to any replacement property which will
be depreciated on the same basis as the property disposed of or
lost (using a time value rate of 13%), multiplied by (y) 56.25%.
(3) On or prior to the Flip Date, any
(A) Net Cash from Sales in an amount exceeding $4.0 million in
respect of any event or series of related events, or in a
cumulative amount exceeding $10.0 million whether or not in
respect of any event or series of related events, and (B) Net
Cash from Loss in an amount exceeding $4.0 million in respect of
any event or series of related events (other than an Event of
Loss), shall (I), first, be distributed to the Partners, in
accordance with their respective Preferred Percentage Interests,
in an amount up to the applicable Stipulated Redemption Value
(Redemption) set forth in Schedule IV hereto, and (II) second,
any such Net Cash from Sales or Net Cash from Loss in excess of
such Stipulated Redemption Value (Redemption) shall be
distributed to the Original Partners, in accordance with their
respective Original Percentage Interests; provided, however, that
if the aggregate amounts of such Net Cash from Sales or Net Cash
from Loss shall be less than the applicable Stipulated Redemption
Value (Redemption), the Level I Distributions and Stipulated
Redemption Values (Redemption) shall be adjusted as provided in
paragraph (viii) of this Section 6(a).
(4) On or prior to the Flip Date, any Net
Cash from Loss in respect of an Event of Loss shall be
distributed (A) to the Partners in accordance with their
respective Preferred Percentage Interests, until the aggregate
amount received by the Partners pursuant to this clause (A) is
equal to the applicable Stipulated Redemption Value (Redemption),
and then (B) to the Partners in accordance with their respective
Preferred Percentage Interests, until the aggregate amount
received by such Partners pursuant to this clause (B) is equal to
the applicable Stipulated Redemption Value (Loss-Preferred), and
then (C) to the Original Partners in accordance with their
respective Original Percentage Interests, until the aggregate
amount received by such Original Partners pursuant to this clause
(C) is equal to the applicable Stipulated Redemption Value
(Loss-Original), and then (D) any such Net Cash From Loss in
excess of such amount shall be distributed to the Partners in
accordance with their respective Residual Percentage Interests.
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(5) Subsequent to the Flip Date, any Net
Cash From Sales or Net Cash from Loss shall be distributed to the
Partners in accordance with their respective Residual Percentage
Interests.
(viii) Level I Distributions; Stipulated
Redemption Values; Adjustments.
(1) The Level I Distributions and the
Stipulated Redemption Values (Redemption) (and, if applicable,
the Stipulated Redemption Values (Loss-Preferred) and Stipulated
Redemption Values (Loss-Original)) set forth on Schedules III and
IV, respectively, have been determined based on the assumptions
related to the Project set forth in Schedule II. The Level I
Distributions and the Stipulated Redemption Values (Redemption)
shall be recomputed and adjusted:
(A) in accordance with this Section
6(a)(viii) as of the date of Project Completion, or as soon
thereafter as practical based on a final cost accounting; and
(B) in accordance with this Section
6(a)(viii), on or subsequent to the date on which the adjustment
described in Clause (A) above is finally determined, whenever an
Additional Adjustment Event (as defined in subparagraph (4)
below) shall occur which shall not have been taken into account
in a prior recomputation and adjustment of the Level I
Distributions and the Stipulated Redemption Values (Redemption).
Each of the events described in clauses (A) and (B) above
which requires a recomputation and adjustment of the Level I
Distributions and the Stipulated Redemption Values (Redemption)
is referred to as an "Adjustment Event".
(2) All adjustments to the Level I
Distributions and the Stipulated Redemption Values (Redemption)
set forth in Schedules III and IV, respectively, shall be made
using the same calculation and methodology as used in determining
the initial amounts set forth in Schedules III and IV as of the
date of this Agreement, and, to the extent feasible, the same
computer programs shall be utilized in such determination. The
financial projections used in determining such initial amounts
prepared by the Partnership's financial advisor, which reflect
the assumptions stated in Schedule II as of the date of this
Agreement and are derived from such computer programs, are
attached to Schedule II (the "Investment Model"). All
adjustments to Schedules III and IV shall minimize any resulting
increase or maximize any resulting decrease in the present value
of the Level I Distributions remaining to be made from and after
the Adjustment Event, discounted at the discount rate stated in
item (r) of Schedule II, subject in all events to preserving the
Net Economic Return (as defined below). To the extent
consistent, and only to the extent consistent, with the preceding
sentence, the Level I Distributions, as so adjusted, shall be
designed so as not to alter materially the pattern (consisting of
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the relative timing and amounts) of the Level I Distributions for
the period remaining prior to the Flip Date.
In recomputing the Level I Distributions and Stipulated
Redemption Values (Redemption), (x) all prior Level I
Distributions shall be taken into account as if made,
notwithstanding any amounts in the Arrears Account or any
reduction with respect to a particular Partner under Section
6(a)(xi) hereof; (y) all distributions made with respect to the
Partners' Preferred Percentage Interests (including pursuant to
paragraphs (vi) or (vii) of this Section 6(a)) shall be taken
into account as Level I Distributions; and (z) the amount of
Depreciation available to the Partnership shall be appropriately
adjusted.
"Net Economic Return" shall mean the satisfaction of each
of the following: (i) the nominal after-tax yield at the rate
stated in item (m) of Schedule II, computed on a multiple
investment sinking fund basis using a 0% sinking fund rate as
stated in item (n) of Schedule II, on the Preferred Investment,
and (ii) the Minimum After-Tax Cash Flow and (iii) the Maximum
Pay-Back Period. "Preferred Investment" shall mean the
"Investment Balance" (as so designated in the Investment Model).
"Minimum After-Tax Net Cash Flow" shall mean a minimum of an
aggregate amount of "after-tax net cash flow" (as so designated
in the Investment Model) projected to be earned through the Flip
Date equal to the amount stated in item (t) of Schedule II.
"Maximum Pay-Back Period" shall mean a pay-back period not more
than 110% of the number of years stated in item (u) of
Schedule II equal to the period of time, commencing with the
Capital Contribution Date, over which the aggregate amount of
scheduled Level I Distributions totals the original Preferred
Investment.
(3) To the extent that any of the
assumptions stated in items (b) through (k) and item (s) of
Schedule II is incorrect or incomplete as of the date of Project
Completion, the Adjustment Notice described in subparagraph (5)
below shall set forth those changes to the assumptions stated in
items (b) through (k) and item (s) of Schedule II (and only such
assumptions) as are required to make such assumptions accurate or
complete as of the date of Project Completion.
(4) The following events ("Additional
Adjustment Events") shall be reflected in changes to the
assumptions (and only the assumptions) stated in items (b)
through (k) and (s) of Schedule II (as modified in accordance
with subparagraph (3) above) to determine adjustments to the
Level I Distributions and the Stipulated Redemption Values
(Redemption) in accordance with subparagraph (2) above, it being
agreed that, except insofar as such assumptions have been
previously modified in connection with prior Adjustment Events,
and except insofar as such assumptions are required to be
modified as the result of the immediate Additional Adjustment
Event, the assumptions set forth in Schedule II shall always be
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the basis for any adjustment to Schedules III and IV, whether or
not such assumptions shall then be accurate in whole or in part:
(I) The withdrawal or deemed
withdrawal of any Partner holding a Preferred Percentage Interest
pursuant to the provisions of Section 5(a), 12(c) or 13(m);
(II) The receipt by the Partnership
of Net Cash from Sales or Net Cash from Loss in an amount that,
pursuant to Section 6(a)(vii)(3), requires adjustments to be made
under this Section 6(a)(viii);
(III) The occurrence of any
destruction or damage to, or any condemnation, confiscation or
seizure of, or requisition of title to or use of, all or any part
of the Project not described in Section 6(a)(viii)(4)(II) in an
amount exceeding $4.0 million after subtracting therefrom (x) the
proceeds of insurance received by the Partnership or the Managing
General Partner from any insurer pursuant to the insurance
maintained under Section 8(c)(v) of this Agreement, except
proceeds of business interruption or delayed opening insurance,
and (y) all awards and proceeds of a condemnation with respect to
the Project in respect of any event or series of related events;
and in any event, the redemption, in whole or in part, of the
Secured Bonds following the occurrence of any event described in
this Section 6(a)(viii)(4)(III);
(IV) The incurrence by the
Partnership of (x) any indebtedness described in Clause (C) or
(D) of Section 8(i)(vi), or (y) any other indebtedness for which
Management Committee approval is required under Section 8(i)(vi);
(V) The amendment of any Senior Debt
Document, if such amendment requires the Partnership (x) to set
aside monies in any additional reserve fund not contemplated by
the Senior Debt Documents as in effect on May 9, 1994 or (y) to
increase the amounts required to be maintained in any reserve
fund contemplated by the Senior Debt Documents as in effect on
May 9, 1994 above the levels that would have been required to be
so maintained under the Senior Debt Documents before giving
effect to such amendment, or (z) if such amendment requires all
or any portion of the debt subject thereto to be owed to or
guaranteed by any Partner or its Affiliate;
(VI) A change in the Partnership tax
year, at any time after the Partnership's tax year ending
December 31, 1995; and
(VII) A termination of the tax year
of the Partnership under Section 708(b) of the Code, if any
Partner other than the Partner whose transfer resulted in the
termination (and such other Partner's transferee) (i) will not be
allocated, under Section 6(b)(vi)(3) hereof, all of the
Depreciation which would have been allocated to such Partner for
such tax year but for such termination by the end of the first
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full fiscal year following the year of such termination, or
(ii) will not in any remaining year be allocated all of the
Depreciated which would have been allocated to such Partner for
such year; provided, however, that this subparagraph (VII) shall
not operate with respect to the exercise by EII of the option
described in Section 19(e).
(5) As soon as practicable after the
occurrence of an Adjustment Event becomes known, the Managing
General Partner shall give Notice to all of the Partners of the
occurrence of such an event and shall provide all relevant
information to the Cogen Representative (unless the Adjustment
Event results from the redemption of the Cogen Partners under
Section 13(m)) for preparing the Adjustment Notice described
below. The Cogen Representative (or if the Adjustment Event
results from the redemption of the Cogen Partners under Section
13(m), the Managing General Partner) shall promptly prepare a
notice (an "Adjustment Notice") containing the information
specified in the next sentence, and submit the same to all of the
Partners. Each Adjustment Notice shall (i) specify the
recomputed Level I Distributions and changes required in the
Stipulated Redemption Values (Redemption) set forth in Schedules
III and IV; (ii) specify in reasonable detail the nature of the
Adjustment Event that has occurred; (iii) in the case of an
Adjustment Event described in subparagraph (1)(A) above, contain
the information required therein; and (iv) state that the Level I
Distributions as recomputed represent the minimum increase or
maximum decrease in the Level I Distributions that can be made in
conformity with subparagraph (2) above. The recomputed Level I
Distributions and changes required in the Stipulated Redemption
Values (Redemption) set forth in each Adjustment Notice shall be
effective beginning with the first Semi-Annual Payment Date
following receipt thereof by the Managing General Partner (the
"Effective Date").
If the Managing General Partner contests the adjustments
set forth in an Adjustment Notice, and the Cogen Representative
and the Managing General Partner cannot reach a resolution within
30 Business Days after receipt of the Adjustment Notice by the
Managing General Partner, the Managing General Partner shall have
the right to deliver to the Cogen Representative an opinion of a
recognized independent financial advisor (which advisor shall be
experienced in the performance of financial analyses in similar
transactions and shall be reasonably acceptable to the Cogen
Representative), within 120 days after receipt of such Adjustment
Notice, that any increase in the present value of Level I
Distributions resulting from such an adjustment can be reduced,
or any decrease in such present value can be increased, while
fully meeting the constraints described in subparagraph (2)
above. If such opinion is delivered, then the adjustments
proposed in such opinion shall be binding upon the Partnership as
of the Effective Date; otherwise the Adjustment Notice delivered
by the Cogen Representative shall be binding upon the
Partnership. Any reasonable out-of-pocket costs associated with
such adjustments shall be for the account of the Partnership.
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(6) The Partners acknowledge that the
actual allocation of taxable income (loss) to the Partners
holding Preferred Percentage Interests may be different than that
assumed in determining the Level I Distributions set forth on
Schedule III, as it may be amended from time to time, due to
inaccuracies in the assumptions used regarding the amounts and
timing of cash required to be deposited in the Maintenance
Reserve Fund (as defined in the Indenture) in accordance with the
Senior Debt Documents and the recovery of such amounts as either
an expense or depreciation deduction. Accordingly, as of the
Flip Date a true-up of the impact of such inaccuracies will be
calculated as follows: The Managing General Partner shall
prepare a schedule (the "Cumulative Balance Schedule") of the
amounts and timing of deposits into the Maintenance Reserve Fund
and expenditures from the Maintenance Reserve Fund and the net
tax impact thereof actually experienced by the Partnership during
the period prior to the Flip Date. The Cumulative Balance
Schedule shall be in the form attached as Schedule IX hereto,
which presents the same information as assumed for purposes of
the Investment Model as of the date hereof; Schedule IX shall be
amended following each Adjustment Event (as defined in Section
6(a)(viii)) to set forth any changes in the assumed net tax
impact after such Adjustment Event. The Cumulative Balance
Schedule shall set forth the difference in each period between
the assumed net tax impact and the actual net tax impact plus a
rate of return on such difference at an annual rate per year of
13.0%, compounded semiannually, from the end of such period to
the Flip Date (the "Maintenance Differential") and shall compute
the cumulative balance of the sum of all of the Maintenance
Differentials (the "Cumulative Balance").
(A) If the Cumulative Balance is a
positive number, (I) the Partnership shall make a special
distribution ("Preferred Additional Distribution") to the
Partners as follows: 100% of Distributable Cash shall be
distributed to the Partners in accordance with their respective
Preferred Percentage Interests until 77.8917% of the aggregate
amount received by the Partners pursuant to this Clause (I) is
equal to such positive Cumulative Balance, and (II) Distributable
Cash in excess of such amounts shall be distributed to the
Partners in accordance with Section 6(a)(iv) hereof.
(B) If the Cumulative Balance is a
negative number, (I) Distributable Cash shall first be
distributed to the Special Contributing Partners to the extent
provided in Section 6(a)(iv)(1) hereof, and then (II) the
Partnership shall make a special distribution ("Preferred
Deduction") to the Original Partners as follows: 100% of
Distributable Cash shall be distributed to the Original Partners
in accordance with their respective Original Percentage Interests
until 22.1083% of the aggregate amount received by such Partners
pursuant to this Clause (II) is equal to (the absolute value of)
such negative Cumulative Balance, and (III) Distributable Cash in
excess of such amounts shall be distributed to the Partners in
accordance with their Residual Percentage Interests.
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(C) Absent manifest error, the
Cumulative Balance Schedule thereafter delivered to the Partners
by the Cogen Representative shall be binding. Any Preferred
Deduction required to be made to the Original Partners shall,
notwithstanding Section 6(a)(iv), be funded from the first
Distributable Cash available after the delivery of the Cumulative
Balance Schedule to the Partners; provided, however, that the
maximum amount of the Preferred Deduction that may be paid in any
one year shall not exceed (x) total Distributable Cash for that
year minus (y) that amount of Distributable Cash which, if
distributed to all of the Partners pursuant to Section 6(a)(iv)
in accordance with their respective Residual Percentage
Interests, would result in zero net after-tax cash flow for the
Cogen Partners for that year using a nominal 36% tax rate.
Distributable Cash remaining in any year after the payments to
the Original Partners described in the preceding sentence shall
be distributed in accordance with Section 6(a)(iv). If any
portion of the Preferred Deduction is not paid to the Original
Partners in the first year after the Flip Date, the remaining
Preferred Deduction shall be paid from the next available
Distributable Cash. Any Preferred Additional Distribution
required to be made to the Partners shall be funded from the
first Distributable Cash available after the delivery of the
Cumulative Balance Schedule to the Partners; provided, however,
that the maximum amount of the Preferred Additional Distribution
that may be paid in any one year shall not exceed (1) total
Distributable Cash for that year minus (2) that amount of
Distributable Cash which, when distributed to all of the Partners
pursuant to Section 6(a)(iv) in accordance with their respective
Residual Percentage Interests, would result in zero net after-tax
cash flow for the Original Partners for that year using a nominal
36% tax rate. Distributable Cash remaining in any year after the
payments to the Partners described in the preceding sentence
shall be distributed in accordance with Section 6(a)(iv). If any
portion of the Preferred Additional Distribution is not paid in
the first year after the Flip Date, the remaining Preferred
Additional Distribution shall be paid from the next available
Distributable Cash.
(ix) Special Distribution of Cash from Reserves
after the Flip Date. If on the Flip Date or at any time
thereafter, funds of the Partnership previously deposited in any
reserve or sinking fund required to be maintained under the
Senior Debt Documents (including, without limitation, the Debt
Service Reserve Fund, the Principal Fund, the Interest Fund and
the Gas Contract Extension Fund (in each case as defined in the
Indenture)) are released to the Partnership, then, except as
provided in Section 15(c), the amounts so released ("Section
6(a)(ix) Proceeds") shall, notwithstanding Section 6(a)(iv), be
distributed solely to the Original Partners in accordance with
their respective Original Percentage Interests.
(x) Identification of Net Cash from Sales, Net
Cash from Loss and Section 6(a)(ix) Proceeds. The Partners
acknowledge that Net Cash from Sales, Net Cash from Loss and
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Section 6(a)(ix) Proceeds may, following receipt thereof by the
Partnership, be commingled with other funds of the Partnership or
set aside in funds required to be maintained by the Partnership
under the Senior Debt Documents or otherwise, such that the
identification of that portion of Distributable Cash for any
period representing Net Cash from Sales, Net Cash from Loss or
Section 6(a)(ix) Proceeds may be impracticable. Accordingly, the
Partnership shall be deemed to have received (i) Net Cash from
Sales upon the deposit in the Project Revenue Fund (as defined in
the Debt Depositary Agreement) of the cash proceeds from any sale
or other disposition generating Net Cash from Sales, (ii) Net
Cash from Loss upon the release of Casualty Proceeds or Eminent
Domain Proceeds (in each case as defined in the Debt Depositary
Agreement) constituting Net Cash from Loss from (x) a segregated
account maintained within the Project Revenue Fund in accordance
with the Debt Depositary Agreement or (y) the Restoration Fund in
accordance with the Debt Depositary Agreement and (iii) Section
6(a)(ix) Proceeds upon the release of such proceeds from the
applicable reserve or sinking fund. Promptly following the
deemed receipt of Net Cash from Sales, Net Cash from Loss or
Section 6(a)(ix) Proceeds, the Managing General Partner shall
deliver Notice thereof to the Cogen Representative and the
Class A Limited Partner and, if such receipt occurs prior to the
Flip Date, the Cogen Representative shall deliver Notice thereof
to the Special Agent. Thereafter, the first cash proceeds which
become available for distributions pursuant to this Section 6(a),
in excess of the amounts, if any, then required to be distributed
under paragraphs (v)(1), if applicable, (iii)(1) and (vi), if
applicable, shall be deemed to be Net Cash from Sales, Net Cash
from Loss or Section 6(a)(ix) Proceeds, as the case may, and
distributed as required under paragraphs (vii) or (ix), until the
total amounts so distributed equal the Net Cash from Sales, Net
Cash from Loss or Section 6(a)(ix) Proceeds identified in the
Managing General Partner's Notice.
(xi) Special Offset. Notwithstanding any other
provision of this Section 6(a) to the contrary, the amount
payable under Section 6(a)(iii), (iv) or (vi) to any Partner
whose transfer (x) resulted in a termination under Code Section
708(b), and (y) produced an Additional Adjustment Event under
Section 6(a)(viii)(4)(VII), shall be reduced (as quickly as
possible, but not below zero) by the present value of the
increase (if any) in the amount of the Level I Distribution under
Section 6(a)(viii), based on the same assumptions as were used to
recalculate such Level I Distribution under Section 6(a)(viii).
(b) Allocation of Certain Profits and Losses.
(i) Operating Profits. Operating Profits of
the Partnership on or prior to the Flip Date shall be allocated
among the Partners as follows:
(1) First, to the General Partners in
proportion to and to the extent of the excess, if any, of (x) the
cumulative Operating Losses allocated to them for all prior
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fiscal years under paragraph (ii)(4) of this Section 6(b), over
(y) the cumulative amount of Operating Profits allocated to them
under this paragraph (i)(1).
(2) Second, to the Limited Partners in
proportion to and to the extent of the excess, if any, of (x) the
cumulative Operating Losses allocated to them for all prior
fiscal years under paragraph (ii)(3) of this Section 6(b), over
(y) the cumulative amount of Operating Profits allocated to them
under this paragraph (i)(2).
(3) Third, to the General Partners in
proportion to and to the extent of the amount equal to the
excess, if any, of (x) the cumulative Operating Losses allocated
to them for all prior fiscal years under paragraph (ii)(2) of
this Section 6(b), over (y) the cumulative amount of Operating
Profits allocated to them under this paragraph (i)(3).
(4) Fourth, to the Partner(s) in
proportion to and to the extent of the amount equal to the
excess, if any, of (x) the cumulative Operating Losses allocated
to them for all prior fiscal years under paragraph (ii)(1) of
this Section 6(b), over (y) the cumulative amount of Operating
Profits allocated to them under this paragraph (i)(4).
(5) Fifth, 99% to the Partners in
accordance with their Preferred Percentage Interests, and 1% to
the Original Partners in accordance with their Original
Percentage Interests, until each such Partner has been allocated
on a cumulative basis pursuant to this paragraph (i)(5) an amount
of Operating Profits equal to the aggregate amount of
Distributable Cash each has received since May 9, 1994 pursuant
to subsection 6(a)(iii)(1).
(6) Sixth, 100% to the Partners in
accordance with their Preferred Percentage Interests until each
such Partner has been allocated on a cumulative basis pursuant to
this paragraph (i)(6) an amount of Operating Profits equal to the
aggregate amount of Distributable Cash each has received since
May 9, 1994 pursuant to subsections 6(a)(v)(1), 6(a)(vi), and
6(a)(vii)(2).
(7) Seventh, Operating Profits, to the
extent of the sum of all Partners' Unallocated Section
6(a)(iii)(2)(A) Distribution Rights, shall be allocated to such
Partners, based upon the ratio that each such Partner's
Unallocated Section 6(a)(iii)(2)(A) Distribution Rights bears to
such sum.
(8) Eighth, 99% to the Original Partners
in accordance with their Original Percentage Interests, and 1% to
the Partners in accordance with their Preferred Percentage
Interests.
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(9) Notwithstanding any other provision of
this paragraph 6(b)(i), the allocations of Operating Profits
hereunder shall take into account the amount by which the
distributions to any Partner are reduced under Section 6(a)(xi)
hereof, so that, to the maximum extent practicable, the
allocations of Operating Profits hereunder shall reflect the
amount of Distributable Cash received by each Partner.
(ii) Operating Losses. Operating Losses of the
Partnership on or prior to the Flip Date shall be allocated among
the Partners as follows:
(1) First, if applicable, to the
Partner(s) who funded or paid for such Operating Losses, in
proportion to the amount of such funding.
(2) Second, to the General Partners in
proportion to the amounts of their positive Capital Accounts,
until the Capital Accounts of the General Partners equal zero.
(3) Third, to the Limited Partners in
proportion to the amounts of their positive Capital Accounts,
until the Capital Accounts of the Limited Partners equal zero.
(4) Fourth, 1% to Cogen GP (so long as it
is a General Partner) and the balance to the other General
Partners in accordance with their Preferred Partnership
Interests.
(iii) Allocations After the Flip Date. Except
to the extent set forth in the following sentence, after the Flip
Date, Operating Profits, Operating Losses, Phantom Income
(Expense), Gains, Losses and Depreciation shall be allocated to
the Partners in accordance with their Residual Percentage
Interests. Notwithstanding the foregoing, after the Flip Date:
(1) Operating Profits, to the extent of
any Preferred Additional Distribution or Preferred Deduction
under Section 6(a)(viii)(6) hereof, shall be allocated to the
Partners receiving such distributions in proportion to the amount
received by each such Partner;
(2) Operating Profits, to the extent of
the sum of all Partner's Unallocated Section 6(a)(iii)(2)(A)
Distribution Rights, shall be allocated to such Partners, based
upon the ratio that each such Partner's Unallocated Section
6(a)(iii)(2)(A) Distribution Rights bears to such sum; and
(3) Any Depreciation described in
paragraph (vi)(2) of this Section 6(b) shall be allocated as
provided therein.
(iv) Phantom Income (Expense). 100% of the
Phantom Income (Expense) on or prior to the Flip Date shall be
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allocated to the Partners in accordance with their Preferred
Percentage Interests.
(v) Allocation of Organizational and Start-Up
Expenses. Organizational and start-up Expenses shall be
allocated to the Partners in the same manner as Depreciation is
allocated in the next paragraph.
(vi) Depreciation.
(1) Except as provided in subparagraph (2)
or (3) of this paragraph, Depreciation and Amortization with
respect to the Project, including Nonrecourse Deductions
attributable thereto, shall be allocated as follows:
(A) First, to the Partners in
accordance with their Preferred Percentage Interests until the
Capital Account balance of any Partner equals zero.
(B) Second, to the Partners in
accordance with their Preferred Percentage Interests unless and
except to the extent such allocation would create or increase an
Adjusted Capital Account Deficit for any Partner. If some but
not all Partners would have Adjusted Capital Account Deficits as
a consequence of such allocations, the foregoing limitation shall
be applied on a Partner by Partner basis so as to allocate the
maximum permissible amount of Depreciation and Amortization under
this Section 6(b)(vi)(1)(B).
(C) Third, to the Partners with
positive Capital Accounts in proportion to their Capital
Accounts.
(D) Fourth, 1% to Cogen GP (so long
as it is a General Partner) and the balance to the other General
Partners in accordance with their Preferred Partnership Interests
to the extent that such Depreciation does not constitute a
Nonrecourse Deduction or Partner Nonrecourse Deduction.
(2) All Depreciation with respect to
assets acquired and currently deductible expenditures
attributable to reserves (other than reserves associated with
Debt Service) funded, in either case, prior to the Flip Date
shall be allocated in accordance with Code Section 704(b) between
the Partners based upon how the basis of the asset or reserve
account 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 or expenses (deducted
before or after the Flip Date) with respect to an asset or
reserve funded out of Phantom Income prior to the Flip Date shall
be allocated to the Partners in accordance with their Preferred
Percentage Interests.
(3) To the extent that the amount of
Depreciation otherwise allowable to the Partnership for any
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fiscal year is reduced as the result of a termination under Code
Section 708(b) (a "Termination Reduction"), the amount of
Depreciation allocable to the Partner whose transfer resulted in
the termination (and, if necessary, such Partner's transferee)
for such fiscal year (and, if necessary, for succeeding fiscal
years) shall be reduced (but not below the amount of phantom
income allocable to such Partner pursuant to Section 6(b)(iv)
hereof) by the amount of such Termination Reduction, so that, to
the maximum extent practicable, all other Partners will be
allocated the same amount of Depreciation they would have been
allocated if the Termination had not occurred; provided, however,
that this subparagraph shall not operate to reduce any
Depreciation allocable to EII as a result of its exercise of the
option described in Section 19(e). All subsequent Depreciation
allowable solely as a result of and in excess of what would have
been allowable but for the termination shall be allocated to the
Partner(s) (or to his or its successor(s) in interest) whose
allocable share of Depreciation was reduced as a result of the
preceding sentence.
(vii) Gains.
(1) Upon the sale, transfer, or other
disposition of any property the proceeds of which are distributed
pursuant to subsection 6(a)(vii)(1) hereof, any gain realized by
the Partnership shall be allocated to the Original Partners in
accordance with their Original Percentage interests.
(2) Upon the sale, transfer or other
disposition of any property the proceeds from which are
distributed pursuant to subsection 6(a)(vii)(3) or (4) hereof,
any Gain realized by the Partnership shall be allocated as
follows:
(A) First, 100% to the Partners in
accordance with their Preferred Percentage Interests until the
Capital Account balance of each Partner equals the amount of Net
Cash from Sales to be received by such Partner pursuant to
subsection 6(a)(vii)(3) hereof.
(B) Second, 100% to the Original
Partners in accordance with their Original Percentage Interests.
(viii) Losses. Upon the sale, transfer or
other disposition of any property the proceeds from which are
distributed pursuant to subsection 6(a)(vii) 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:
(1) First, to the Partners, if any, who
have made Capital Contributions pursuant to Section 4(c) hereof,
in an amount equal to the sum (for all Partners) of the lesser of
(x) each such Partner's aggregate contributions under Section
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4(c) or (y) each such Partner's Capital Account, in proportion to
each such Partner's share of such amount.
(2) Second, pro rata to the Partners in
proportion to the amounts of their positive Capital Accounts
until the Capital Accounts of the Partners equal zero.
(3) Third, to the Partners in accordance
with their Preferred Percentage Interests unless and except to
the extent such allocation would create or increase an Adjusted
Capital Account Deficit for any Partner.
(4) Fourth, 1% to Cogen GP (so long as it
is a General Partner) and the balance to the other General
Partners in accordance with their Preferred Percentage Interests.
(ix) Minimum Gain Chargeback. Notwithstanding
any other provision in this Section 6(b), if there is a net
decrease in Partnership Minimum Gain or Partner Nonrecourse Debt
Minimum Gain (determined in accordance with the principles of
Regulations Sections 1.704-2(g)or 1.704-2(i)(3), during any
Partnership taxable year, the Partners shall be specially
allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to each
Partner's share of such decrease. The items to be so allocated
shall be determined in accordance with Regulations Sections
1.704-2(f) and 1.704-2(i)(4). This paragraph (ix) is intended to
comply with the minimum gain chargeback requirements in such
Regulation Sections and shall be interpreted consistently
therewith.
(x) 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.
(xi) Partner Nonrecourse Deductions. Notwith-
standing paragraphs (iii), (iv), (vi) or (vii) of this Section
6(b), 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.
(xii) Section 754 Adjustments. To the extent
an adjustment to the adjusted tax basis of any Partnership asset
pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Treasury Regulations Section
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1.704-1(b)(2)(iv)(m)(2) or Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as the result of a distribution to a Partner in
complete liquidation of its Interest, the amount of such
adjustment to Capital Accounts shall be treated as an item of
Gain (if the adjustment increases the basis, of the asset) or
Loss (if the adjustment decreases such basis) and such Gain or
Loss shall be specially allocated to the Partners in accordance
with their interests in the Partnership, in the event Treasury
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Partner to whom such distribution was made in the event Treasury
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(xiii) Gross Income Allocation.
(1) To the extent all or any portion of
any payment to the Managing General Partner or an Affiliate of
the Managing General Partner in any year (other than a
distribution made pursuant to Section 6(a) hereof) is treated as
a non-deductible distribution to such Partner or Affiliate, the
Managing 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.
(2) In the event any Partner has a deficit
Capital Account at the end of any Fiscal Year which is in excess
of the sum of (i) the amount such Partner is obligated to restore
pursuant to any provision of this Agreement, and (ii) the amount
such Partner is deemed to be obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5)
of the Regulations, each such Partner shall be specially
allocated items of Partnership income and gain in the amount of
such excess as quickly as possible, provided that an allocation
pursuant to this Section 6(b)(xiii)(2) shall be made only if and
to the extent that such Partner would have a deficit Capital
Account in excess of such sum after all other allocations
provided for in this Section 6(b) have been made as if Section
6(b)(x) hereof and this paragraph (xiii) were not in the
Agreement.
(xiv) Allocations Relating to Taxable Issuance
of Partnership Interests. Any income, gain, loss, or deduction
realized as a direct or indirect result of the issuance of an
Interest by the Partnership to a Partner (the "Issuance Items")
shall be allocated among the Partners so that, to the extent
possible, the net amount of such Issuance Items, together with
all other allocations under this Agreement to each Partner, shall
be equal to the net amount that would have been allocated to each
such Partner if the Issuance Items had not been realized. For
example, any original issue discount or imputed interest income
under Code Sections 483 or 1274 shall be allocated to the Partner
making such contribution.
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(xv) Curative Allocations. The allocations set
forth in paragraphs (ix) through (xii) and subparagraph (xiii)(2)
of this Section 6(b) shall be referred to as the "Regulatory
Allocations" and paragraphs (i) through (viii), (xiii)(1) and
(xiv) shall be referred to as the "Agreed Allocations." The
Regulatory Allocations are intended to comply with certain
requirements of Regulations Section 1.704-1(b). It is the intent
of the Partners that, to the extent possible all Regulatory
Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of
Partnership income, gain, loss, or deduction pursuant to this
paragraph. Notwithstanding any other provisions of this Section
6(b) (other than paragraphs (ix) and (x) hereof), any Regulatory
Allocations that have taken place shall be taken into account in
allocating other Operating Profits, Operating Losses, Gains,
Losses, Phantom Income, and Depreciation and other items, so
that, to the extent possible, the net amount of such other
allocations and the Regulatory Allocations to each Partner shall
equal the net amount that would have been allocated to each
Partner pursuant to the Agreed Allocations if the Regulatory
Allocations had not occurred.
(xvi) Property Subject to 704(c) and 704(b).
In the case of any Partnership asset the Gross Asset Value of
which differs from its adjusted tax basis, income, gain, loss and
deduction with respect to such asset shall, solely for tax
purposes, be allocated in accordance with the principles of Code
Sections 704(b) and 704(c) to take account of such difference.
Thus, for example, income tax depreciation with respect to the
income tax basis of any asset that is funded (either directly or
through repayment of a Partnership borrowing) by a Partner's
Capital Contribution shall be allocated to that Partner by reason
of the allocation in subsection 6(b)(vi) of Depreciation to that
Partner.
(xvii) Limitation. Notwithstanding anything to
the contrary in this Section 6(b), no allocation under this
Section 6(b) shall be made to a Partner that would cause such
Partner to have, or that would increase, an Adjusted Capital
Account Deficit.
(xviii) Ordering Rules. For purposes of
Section 6(b) hereof, the following ordering rules shall apply:
(1) First, all distributions of
Distributable Cash under Section 6(a) shall be deemed to have
been made.
(2) Next, Operating Profits and Operating
Losses and items other than Gain and Loss shall be allocated in
accordance with Section 6(b) hereof.
(3) Finally, Gain or Loss from the sale or
other disposition of Partnership property shall be allocated in
accordance with this Section 6(b).
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(xix) Excess Nonrecourse Liabilities. Each
Partner's share of "excess nonrecourse liabilities," as that term
is defined in Regulations Section 1.752-3(a)(3), shall be based
on such Partner's Preferred Percentage Interest.
(xx) Notwithstanding the date of this Agreement
as of May 1, 1994, all income, gain, credits, deductions,
profits, and losses realized by the Partnership prior to May 9,
1994, shall be allocated to the partners under the Second Amended
Agreement pursuant to the terms thereof, based on the interim
closing of the books method.
7. Accounting and Taxation.
(a) Fiscal Year. The fiscal year of the
Partnership shall be the tax year of the Partnership for federal
income tax purposes under the Code.
(b) Books and Records. The books and records of
account for the Partnership shall be kept and maintained at the
executive offices of the Partnership as set forth in Section 2(b)
or at such other place as the Managing General Partner shall
determine. The financial records for the Partnership shall be
maintained on an accrual basis and audited by the independent
certified public accountants of the Partnership at the end of
each fiscal year. A current list of the names and addresses of
the Partners, copies of the Partnership's federal, state and
local income tax returns and reports for the three most recent
fiscal years and copies of this Agreement and any amendments
hereto shall be maintained at the office of the Partnership. Any
Partner or its duly authorized representative shall have the
right to inspect and examine the Partnership's books and records,
tax returns, information regarding the business and financial
condition of the Partnership and other information regarding the
affairs of the Partnership upon reasonable notice during business
hours. Each Partner shall have the right to have the
Partnership's books and records examined or audited by the
Partnership's independent certified public accountants at such
times and in such manner as any such Partner shall reasonably
request; provided, however, that, if such examination or audit
shall be in addition to the annual audit of the Partnership's
books and records, the Partner requesting such examination or
audit shall bear the fees and expenses of such examination or
audit, including the costs associated with the services of any
personnel of the Project Management Firm assisting in such
examination or audit, subject to the exception that, if any
material inaccuracy in the Partnership's books and records is
discovered as the result of such examination or audit, the fees
and expenses of the examination or audit shall be borne by the
Partnership.
(c) Financial Statements.
(i) As soon as practicable following the end of
each fiscal year of the Partnership, but in no event later than
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120 days after such fiscal year end, the Managing General Partner
shall cause to be prepared and delivered to each Partner: (A) an
audited consolidated balance sheet of the Partnership and the
Company and related consolidated statements of income, cash
flows, changes in Partner's equity for such fiscal year and each
Partner's Capital Account as of the end of such fiscal year, all
of which shall be prepared on a basis consistent with that used
in the preparation of the corresponding figures for the preceding
fiscal year, in accordance with GAAP, together with a report
thereon of the certified public accountants of the Partnership;
and (B) such federal, state and local income tax returns and such
other accounting, tax information and schedules as shall be
necessary for the preparation by each Partner on or before three
months plus fifteen (15) days after the end of each fiscal year
of its income tax return for such fiscal year. Prior to filing
any federal or state income tax return or statement for the
Partnership, the Managing General Partner shall provide Cogen GP
with at least 30 Business Days prior Notice thereof and the
opportunity to review and approve such return; provided, however,
that if the Managing General Partner and Cogen GP have not agreed
to the filing of any such return or statement by the date it is
required to be filed (taking into account any extensions
available to the Partnership) the Managing General Partner may
file such return or statement as, in its judgment, shall be
necessary.
(ii) As soon as practicable and in any event
within 60 days after the end of the first, second and third
fiscal quarters of each fiscal year of the Partnership, the
Managing General Partner shall cause to be prepared and delivered
to each Partner an unaudited consolidated balance sheet of the
Partnership and related consolidated statements of income, cash
flows, and each Partner's Capital Account, all of which shall be
prepared on a basis consistent with that used in the preparation
of corresponding figures for the preceding fiscal year, in
accordance with GAAP, subject to normally recurring year-end
adjustments. The Managing General Partner shall also caused to
be delivered to the Cogen Representative the financial and other
information described in the last sentence of Section
6(a)(vi)(I), at the times specified therein.
(d) Tax Elections. The parties intend that the
Partnership shall be treated as a "limited partnership" for
federal and state tax purposes. All of the Partnership elections
for state and federal income tax purposes shall be determined by
the Managing General Partner, except those specifically reserved
by the Code to be made by the individual Partners.
(e) Bank Accounts. The bank accounts of the
Partnership shall be maintained in accordance with the
requirements of the Senior Debt Documents and the Equity
Depositary Agreement, for so long as such documents shall be in
force and effect, and withdrawals from such bank accounts shall
be made only in accordance with such requirements. Otherwise,
the bank accounts of the Partnership shall be maintained in such
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banking institutions as the Managing General Partner shall
determine, and withdrawals shall be made only in the regular
course of partnership business on such signature or signatures as
the Managing General Partner may determine. The funds of the
Partnership shall not be commingled with the funds of any other
Person.
(f) Tax Matters Partner. The tax matters partner
(within the meaning of Section 6231(a)(7) of the Code) of the
Partnership shall be the Managing General Partner. All
reasonable expenses incurred by the tax matters partner in its
duties as tax matters partner shall constitute expenses of and be
paid by the Partnership.
(g) Special Basis Adjustment. In connection with
any transfer or assignment of a Partnership Interest, and in
connection with any transfer or assignment of any direct or
indirect interest in a Partner which is a partnership for federal
income tax purposes and for which an election to adjust the basis
of such partnership's property in the manner provided in Sections
734(b) and 743(b) of the Code is in effect, the Managing General
Partner, upon the written request of the transferee or assignee
(or, in the case of transfer or assignment of a direct or
indirect interest in a Partner which is a partnership for federal
income tax purposes, such Partner), shall cause the Partnership,
on behalf of the Partnership and at the time and in the manner
provided in Regulations Section 1.754-1(b), to make an election
to adjust the basis of the Partnership's property in the manner
provided in Sections 734(b) and 743(b) of the Code. Such
transferee or assignee (or, in the case of transfer or assignment
of a direct or indirect interest in a Partner which is a
partnership for federal income tax purposes, such Partner) shall
pay all costs incurred by the Partnership in connection with the
election to adjust such basis including, without limitation,
reasonable appraisal costs, reasonable attorneys' and
accountants' fees. Any ongoing reasonable administrative costs
incurred to maintain the special tax basis accounts for such
transferees, assignees or Partners shall be paid on a pro rata
basis by all such transferees, assignees or Partners, based on
the ratio of each such Partner's Preferred Percentage Interest to
the sum of such Interests. Any amounts paid by such assignees,
transferees and Partners pursuant to this Section 7(g) shall not
be treated as Capital Contributions for purposes of Section 6(a)
and 15(c), and any items of loss, deduction or credit
attributable to such payments and costs will be specially
allocated to the Partner required to pay them under this Section
7(g).
(h) Partner-Level Tax Terminations. Each Partner
which is itself a partnership agrees that it will notify each of
the other Partners immediately or as soon thereafter as
practicable upon becoming aware that it has undergone a technical
termination under Section 708(b)(1)(B) of the Code.
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8. Management of Partnership Business; Rights, Duties
and Liabilities of General Partners.
(a) General Partners' Authority. Except for such
powers as shall be expressly granted to or reserved for the
Limited Partners under this Agreement or as otherwise required by
applicable law, the General Partners shall have full, exclusive
and complete authority in the management and control of the
Partnership's business and assets and shall have all rights and
powers generally conferred by law or necessary or advisable in
connection therewith; provided, however, that (i) the authority
of the General Partners to manage the business and affairs of the
Partnership shall be exercised only by the Managing General
Partner and the Management Committee as provided herein, and
(ii) except through its participation on the Management Committee
as provided herein, or pursuant to authority granted under
Sections 6(a)(vi), 9(c) and 9(d) hereof, no General Partner other
than the Managing General Partner pursuant to the authority
granted under this Agreement shall have any control over the
Partnership's business or affairs or the authority to take any
action which binds the Partnership. The day-to-day business and
affairs of the Partnership shall be carried out by the Project
Management Firm, which shall act pursuant to the Administrative
Services Agreement and under the supervision of the Managing
General Partner. Any action taken by the Managing General
Partner or the Management Committee pursuant to the authority
granted under this Agreement, or by Cogen GP pursuant to Sections
9(c) or 9(d), or by the Cogen Representative pursuant to the
authority to give notices and instructions to the Special Agent
granted under Section 6(a), shall constitute the act of and serve
to bind the Partnership. The General Partners and the Limited
Partners hereby consent to the exercise by the Managing General
Partner and the Management Committee of the powers conferred on
each of them by this Agreement.
(b) Specific Rights and Powers. Except to the
extent any such rights or powers may be limited or restricted by
the express provisions of this Agreement, the Act or other
applicable law, the Managing General Partner shall have all
specific rights and powers required for, or appropriate to, the
management of the Partnership's business. Without limiting the
generality of the foregoing, the Managing General Partner shall
have the right and power to execute and deliver on behalf of the
Partnership each of the Transaction Documents to which the
Partnership is a party and to cause the Partnership to do all
things necessary or appropriate to perform its obligations
thereunder.
(c) Duties and Obligations of Managing General
Partner.
(i) The Managing General Partner shall, at the
expense of the Partnership, take all actions and perform all
duties and obligations which may be reasonably within its control
and necessary or appropriate in connection with the management,
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conduct and operation of the business and affairs of the
Partnership's business, in accordance with the provisions of this
Agreement, applicable laws and Prudent Utility Practice.
(ii) The Managing General Partner shall take
such action as may be necessary or appropriate in order to form
or qualify the Partnership under the laws of any jurisdiction in
which the Partnership is doing business or in order to continue
in effect such formation or qualification. The Managing General
Partner shall file or cause to be filed for recordation in the
office of the appropriate authorities of Delaware, and in the
proper offices in each other jurisdiction in which the
Partnership is qualified or the conduct of its business otherwise
requires, such certificates (including fictitious name
certificates) and other documents as are required by the
applicable statutes, rules or regulations of any such
jurisdiction.
(iii) The Managing General Partner shall
prepare or cause to be prepared and shall file on or before the
due date (or any extension thereof) any federal, state or local
tax returns required to be filed by the Partnership. The
Managing General Partner shall cause the Partnership to pay any
taxes payable by the Partnership, to the extent of funds of the
Partnership available therefor. The Managing General Partner
shall also take such action as may be reasonably within its
control and necessary or appropriate in order to maintain the
status of the Partnership as a partnership for federal income tax
purposes.
(iv) At the expense of the Partnership, the
Managing General Partner shall maintain or cause to be maintained
the books and records required by Section 7 and, at the expense
of the Partnership, cause the same to be examined and reports to
be furnished to the Partners as required by Section 7.
(v) At the expense of the Partnership, the
Managing General Partner shall cause the Partnership to carry and
maintain the insurance, with such insurers, with deductibles and
in such form and amounts, as described in Schedule VII hereto.
(vi) The Managing General Partner acknowledges
its responsibility to conduct the business and affairs of the
Partnership in accordance with Prudent Utility Practice and in a
manner that could reasonably be expected to be in the best
interests of the Partnership as a separate legal entity and not
materially detrimental to the interests of any Partner, subject
in all cases to the consents, acknowledgments and waivers given
by the Partners, the General Partners or the Management Committee
pursuant to this Agreement.
(vii) Whenever in this Agreement any General
Partner is permitted or required to make a decision (i) in its
"sole discretion" or "discretion" or under a grant of similar
authority or latitude, the General Partner shall be entitled to
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consider only such interests and factors as it desires, including
its own interests, and (subject to the proviso below) shall have
no duty or obligation to give any consideration to any interest
of or factors affecting the Limited Partners, or (ii) in "good
faith", the General Partner shall act under such express standard
and shall not be subject to any other or different standards
imposed by this Agreement or any other agreement contemplated
herein or by applicable law or in equity or otherwise; provided,
however, that in all cases the General Partner shall consider,
and so far as it can reasonably determine act in accordance with,
the best interests of the Partnership as a separate legal entity
and not in a manner materially detrimental to the interest of any
Partner. In the application of any discretion granted the
Managing General Partner hereunder to extend the time required
for the performance of any Partner's obligation or to determine
the timing and amounts of payments to be made to any Partner by
the Partnership, the Managing General Partner shall treat all
Partners uniformly and shall not discriminate among them.
(d) Limitations on General Partners' Authority.
Neither the Managing General Partner nor any other General
Partner shall have the authority to do any act prohibited by law
or this Agreement, nor shall any such Person have any authority,
on behalf of the Partnership, to:
(i) Permit or cause the funds of the
Partnership to be commingled with the funds of any other Person
other than the Company.
(ii) Permit the Partnership to operate in such
manner as (A) to be classified as an "investment company" for
purposes of the Investment Company Act of 1940 (as amended from
time to time) or (B) to result in the Project's failure to be
(x) a "qualifying facility" as defined in the Public Utility
Regulatory Policies Act of 1978 and the applicable regulations of
the Federal Energy Regulatory Commission thereunder or (y) if the
Project is not a "qualifying facility," an "exempt wholesale
generator" as defined in Section 32 of the Public Utility Holding
Company Act of 1935, as amended, and the applicable regulations
of the Federal Energy Regulatory Commission and the Securities
and Exchange Commission thereunder, unless (in the case of
clauses (x) and (y)) such failure is not within the control of
the Partnership.
(iii) Admit another person as an Additional
Limited Partner, Substituted General Partner or Substituted
Limited Partner of the Partnership except as otherwise provided
in this Agreement.
(iv) Subject to the rights granted each Partner
(including the General Partners) under Section 4(g), borrow money
from the Partnership, either directly or through an Affiliate.
(v) Cause the Partnership to enter into
agreements with itself or any of its Affiliates subject to the
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provisions of Section 8(k), or amend any such agreement
(including, without limitation, the Administrative Services
Agreement), without the Consent of the Partners.
(vi) Permit the Partnership to be charged with
any overhead or salaries of any of the General Partners or any of
their Affiliates, except to the extent contemplated by the
Administrative Services Agreement.
(vii) Subject to the rights granted each
Partner (including the General Partners) under Section 4(c) and
the rights granted Cogen GP under the last sentence of Section
9(c) and Section 9(d), loan, or permit any other Partner or any
Affiliate of a Partner to loan, money to the Partnership.
(viii) Cause the Partnership to take any action
requiring the Consent of the Partners, the Special Consent of the
Limited Partners or the Unanimous Consent of the Partners
pursuant to Section 12 hereof, or the Consent of the General
Partners under any other provision of this Agreement, unless the
appropriate consent to such action shall first have been
obtained.
(e) Management Committee; Appointment of
Representatives. The General Partners hereby establish a
Management Committee (the "Management Committee"), which shall
have the powers expressly provided in this Agreement, including,
without limitation, the right to approve the specific matters
identified in Section 8(i) below. Each General Partner shall
appoint one individual to represent it on the Management
Committee (such General Partner's "Representative"). Each
General Partner shall also appoint one or more individuals
("Alternate Representatives") with the power of substitution and
authority to act in place of such General Partner's
Representative in case of the unavailability thereof. Each
Representative and Alternate Representative shall be duly
authorized to act on behalf of and to bind the appointing Partner
as a general partner of the Partnership. All actions shall be
taken by such individuals in their capacity as duly authorized
agents of the appointing General Partner. Notwithstanding the
number of Representatives or Alternate Representatives attending
any Management Committee meeting, each General Partner shall have
only one vote at such meeting exercisable through its
Representative or one of its Alternate Representatives (such
General Partner's "Voting Representative" for such meeting). Two
or more General Partners may designate a single individual to
serve as their Voting Representative; and, upon the occurrence
and continuation of an event of default under the Senior Debt
Documents the Voting Representative from time to time designated
by JMC Selkirk shall be deemed to be the Voting Representative
designated by JMCSI and JMCSI shall not be entitled to cast any
vote as a General Partner. At any such meeting, voting may occur
by voice vote or written consent, in each case, by only the
Voting Representatives. As of the date hereof, each General
Partner's Representatives and Alternate Representatives are those
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listed on Schedule VIII hereto. Each General Partner reserves
the right to terminate any one or more of its Representatives or
Alternate Representatives, as the case may be, and to appoint
successors and substitutes therefor, from time to time, subject
to the reasonable approval of the other General Partners, and any
such change shall, subject to such approval, be effective upon
such General Partner's delivering a Notice of such change to the
other General Partners. The Class A Limited Partner (EII) shall
be entitled to designate one individual to attend all meetings of
the Management Committee, participate in all discussions thereat,
but without the power to vote, and exercise the other privileges
provided to the Class A Limited Partner (EII) under this Section
8(e) and Sections 8(f) through (j). Nothing contained in this
Section 8(e) or in Section 8(f) through (j) shall be deemed to
limit in any way the rights and privileges granted to the Class A
Limited Partner under any other provision of this Agreement
(including, without limitation, under Section 12). Upon the
receipt or delivery by the Managing General Partner of any Notice
required to be delivered by any Voting Representative or General
Partner to other Voting Representatives or General Partner under
this Section 8 or Section 9 the Managing General Partner shall
promptly deliver such Notice to the Class A Limited Partner
(EII).
Upon the voluntary or mandatory conversion of all of
Cogen GP's general Partnership Interest into a limited
Partnership Interest in accordance with Section 13(l), (i) the
Management Committee established under this Section 8(e) shall
automatically be dissolved, (ii) the provisions of this Section
8(e) and Sections 8(f) through (j) and Section 9 shall for all
purposes of this Agreement cease to be effective, and (iii) the
Managing General Partner shall thereafter be vested with all of
the powers and authority accorded to the Management Committee and
the other General Partners under said Sections 8(e) and 8(f)
through (j) and Section 9.
(f) Meetings. Meetings of the Management Committee
shall be held periodically, but no less frequently than every 90
days, on such dates, at such times and at such locations as the
Managing General Partner shall from time to time determine,
taking into account the convenience of all Voting
Representatives. During any period in which a Special Event
shall have occurred and be continuing, the Management Committee
shall meet more frequently, as appropriate. Any Voting
Representative, the Managing General Partner or the Class A
Limited Partner (EII) may call a meeting of the Management
Committee. Notice of any such meeting shall include a statement
of the matters proposed to be considered at such meeting and
shall be given to all Voting Representatives and the Class A
Limited Partner (EII) by the Person calling the meeting, under
normal circumstances at least 14 days prior to the meeting,
although shorter notice of a meeting (but not less than 24 hours)
may be given if the circumstances so require. All Notices of
Management Committee meetings shall be given either in writing,
or by telephone if immediately followed by written confirmation,
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and no meeting of the Management Committee shall be held unless
all Voting Representatives are present, represented in person or
by telephone conference call. Each General Partner agrees to use
reasonable efforts to cause its Representative or an Alternate
Representative to attend, in the manner provided for herein, all
duly called meetings of the Management Committee. If after
proper Notice, any General Partner fails to cause its
Representative or Alternate Representative to attend a meeting of
the Management Committee, the Managing General Partner may give
Notice to all Voting Representatives and the Class A Limited
Partner (EII) of a new meeting, setting forth the action proposed
to be taken thereat. If any General Partner fails to cause its
Representative or Alternate Representative to attend such new
meeting, the General Partners represented at such meeting in
attendance may approve the action proposed, acting by unanimity.
Members of the Management Committee may participate
in any meeting by means of telephone conference call or similar
communications equipment so long as all Persons participating in
the meeting can hear each other simultaneously. If required, the
Management Committee may act by written consent without a
meeting.
(g) Rules and Regulations. From time to time, the
Management Committee may adopt such rules and regulations
consistent with this Agreement with respect to the operation and
governance of the Management Committee (the "Rules and
Regulations"). The Rules and Regulations may, among other
things, govern the conduct of meetings of the Management
Committee. Neither the adoption of any Rules and Regulations in
accordance with this Section 8(g) nor the adoption of any
amendment or supplement to such Rules and Regulations shall be
deemed an amendment to this Agreement. Any reference in this
Agreement to the Rules and Regulations shall be deemed to be a
reference to the same as amended or supplemented and in effect
from time to time.
(h) Voting.
(i) Any action, approval or consent of the
Management Committee shall require the prior affirmative vote or
written consent of Voting Representatives representing all of the
General Partners, except as otherwise provided in Section 8(f)
and this Section 8(h).
(ii) If (x) at any meeting of the Management
Committee the Voting Representatives fail to reach unanimous
agreement on any matter, or (y) any of the Voting Representatives
fails affirmatively to approve a Notice of the Managing General
Partner requesting the written consent of the Management
Committee within 10 Business Days of the delivery of such Notice
(and no Voting Representative has called a special meeting of the
Management Committee for the purpose of acting on such matter
within such 10 Business Day period), the Managing General Partner
may give Notice of the disagreement to all the Voting
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Representatives and the Class A Limited Partner (EII) and make a
recommendation for a resolution of such disagreement, using any
means reasonable in the circumstances. If no Voting
Representative indicates its disapproval of the recommended
action by Notice to the Managing General Partner within two
Business Days after the receipt of the Managing General Partner's
Notice, using the same or other reasonable means, the Managing
General Partner shall be authorized, subject to the provisions of
Section 12, to take such action without the approval of the
Management Committee.
(i) Actions Requiring Management Committee
Approval. During the period prior to the Flip Date, the Managing
General Partner shall not cause the Partnership to take any of
the following actions, without the prior approval of the
Management Committee:
(i) Any material expansion or contraction of
the Partnership's business or engaging in any business or
activity other than the construction, ownership, financing and
operation of the Project and activities reasonably incidental
thereto (including, without limitation, Fuel Management
Activities).
(ii) The merger, consolidation or other
business combination of the Partnership or its assets with or
into any other Person, or the sale, transfer or conveyance of all
or substantially all of the Partnership's assets, or the
interests therein, to any other Person.
(iii) The sale, exchange, liquidation or
disposition of any substantial portion of the Project other than
(A) property or assets which are obsolete or no longer useful, or
(B) in the ordinary course of business, including without
limitation sales of the Project's electrical and thermal energy
output and sales in the course of Fuel Management Activities, or
(C) the conveyance of property constituting interconnection
facilities and related real property rights pursuant to the
Interconnection Agreement (as defined in the Indenture), or
(D) the transfer of the Boiler Facilities pursuant to the Steam
Sales Agreement (in each case as defined in the Indenture).
(iv) The Partnership's (i) application 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) admission in writing of
its inability to pay its debts as such debts become due,
(iii) making a general assignment for the benefit of its
creditors, (iv) commencing a voluntary case under the Federal
Bankruptcy Code, or (v) filing a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of
debts.
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(v) Any transaction entered into by the
Partnership with a General Partner or any Affiliate of a General
Partner of the Partnership (other than the Company) for the
furnishing of goods or the performance of services, except
transactions contemplated by the Administrative Services
Agreement (excluding any amendment, supplement or renewal
thereof) and any transaction involving the payment or
reimbursement of amounts to or by the Partnership contemplated by
Sections 4(c), 4(g), 5(d), 6(a), 8(c), 9(c), 9(d), 12(c)(iii) or
13(m) or any provision of this Agreement of similar effect.
(vi) The incurrence, assumption or guarantee
of any indebtedness other than: (A) indebtedness of the
Partnership or the Company incurred under the Senior Debt
Documents; (B) indebtedness of the Partnership incurred under the
Project Contracts; (C) additional senior indebtedness permitted
to be incurred under Section 6.16(a)(viii) and (b)(ii) of the
Indenture, the proceeds of which will be used to finance
enhancements/modifications to the Project; (D) additional
subordinated indebtedness, in an original principal amount not to
exceed $10 million, permitted to be incurred under Section
6.16(a)(ii) of the Indenture, provided that such additional
subordinated indebtedness is incurred prior to Project Completion
(and upon repayment (in whole or in part), may not be reborrowed)
and the proceeds thereof are used to finance construction costs
over-runs; (E) other indebtedness or guaranties as permitted
under Sections 6.16 and 6.18 of the Indenture and (F) the
obligation to make payments to a withdrawn Partner under Sections
5(d) and 12(c)(iii).
(vii) The creation of any lien on or otherwise
affecting any Partnership property other than liens permitted
under Section 6.17 of the Indenture.
(viii) Entering into any new Project Contract
other than: (A) Project Contracts incident to Fuel Management
Activities; (B) any Project Contract under which the aggregate
amount to be paid or received by the Partnership in any fiscal
year is reasonably expected to be less than $2 million; (C) any
Project Contract for goods or services related to a modification
to the Project which is required to be made in order to comply
with any law, regulation or governmental approval, unless the
aggregate amount to be paid by the Partnership thereunder is
reasonably expected to exceed $10 million or, together with the
aggregate amounts to be paid by the Partnership under other
contracts relating to the same change in law, to exceed $15
million; (D) any Financing Agreement related to the incurrence,
assumption or guarantee of indebtedness for which the approval of
the Management Committee is not required under Section 8(i)(vi);
(E) any contract in substitution for a Project Contract, the
termination, suspension of performance or breach of which has
resulted in a "Default" under the Indenture, if entering into
such substitute contract satisfies the criteria under the
Indenture for curing such "Default" (including without limitation
any such substitute contract resulting from the exercise by
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Cogen GP of its rights under Section 9(c) and 9(d)); and (F) any
Replacement Gas Contract (as defined in the Indenture) proposed
to be executed no earlier than one year prior to the date on
which funding of the Gas Contract Extension Fund (as defined in
the Indenture) is required to commence under the Indenture, if
entering into such Replacement Gas Contract satisfies the
criteria under the Indenture for eliminating or reducing amounts
that would otherwise be required to be deposited in such Gas
Contract Extension Fund in accordance with the Indenture (and the
Managing General Partner is obligated to enter into any such
Replacement Gas Contract satisfying such criteria which becomes
available to the Partnership during such one-year period).
Project Contracts described in clauses (A) through (D) above are
referred to as "Non-Material Agreements."
(ix) Any termination, or any amendment or
modification (except for any such amendment or modification which
is ministerial or procedural) of any Project Contract or any
Senior Debt Document other than: (A) Non-Material Agreements;
(B) any such termination, amendment or modification required in
order to comply with any law, regulation or governmental
approval, or pursuant to a change in tariffs or similar regulated
rates incorporated into a Project Contract; (C) any amendment as
a result of the implementation of provisions for adjustments to
price under the terms of a Project Contract or for mandatory
adjustments to dedicated lands under the terms of the Paramount
Contract (as defined in the Indenture); and (D) any such
termination, amendment or modification in respect of the Back-Up
Gas Supply Contract (as defined in the Indenture). If the
Management Committee is unable to agree on any such termination,
amendment or modification requiring its approval under this
Section 8(i)(ix) within the time-periods provided in Section
8(h)(ii), and the Managing General Partner demonstrates that
(1) the proposed action would satisfy the criteria established
under Section 6.20 of the Indenture for taking such action and
(2) after taking into account such action, the Projected Debt
Service Coverage Ratio (as defined in the Indenture) will equal
or exceed a minimum of 1.5 to 1.0 in each year remaining until
the Flip Date, and will average not less than 1.75 to 1.00 on an
annual basis over the entire period remaining until the Flip
Date, the Managing General Partner may proceed to implement such
action without the approval of the Management Committee.
(x) Except for claims constituting billing
disputes under the Project Contracts, compromise, settle or
abandon any action, proceeding or debt due to, or owed by or
asserted against the Partnership, if the aggregate amount to be
paid, or waived or forgiven, by the Partnership under such
compromise, settlement or abandonment exceeds $2 million.
(xi) The election by the Partnership not to
rebuild or restore the Project following loss or condemnation in
accordance with Section 6.10(f) of the Indenture.
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(xii) Any other action which the Partnership is
prohibited from taking under the Senior Debt Documents.
(j) Annual Budget; Capital Expenditures.
(i) The annual operating and maintenance budget
for the Project, including provision for major maintenance and
overhaul expenditures (the "Annual Budget"), shall be prepared by
the Project Management Firm and submitted to the Management
Committee for its review and comment at least 14 days prior to
submission of such proposed Annual Budget to the Independent
Engineer. In the event that the Management Committee is unable
to reach agreement on the Annual Budget, (i) the Annual Budget
proposed by the Managing General Partner shall be submitted to
the Independent Engineer at the time required in order to enable
the Independent Engineer to prepare and submit its Engineer's
Annual Report as contemplated under the Indenture, and (ii) the
Managing General Partner shall deliver Notice of such
disagreement to the Class A Limited Partner (EII). At any time,
each Voting Representative shall have the right to consult with
the Independent Engineer. The Annual Budget contained in the
Engineer's Annual Report shall be deemed final when submitted to
the Trustee in accordance with the Indenture. Each of the
Managing General Partner and Cogen GP shall have the right,
following notice and consultation with the Management Committee,
to cause the Partnership to exercise the right to remove the
Independent Engineer and substitute an Eligible Successor (as
defined in the Indenture) to perform in such capacity, all in
accordance with the requirements and procedures set forth in the
Indenture.
(ii) At such time as there shall be no
outstanding indebtedness of the Partnership or the Company under
the Senior Debt Documents, the Managing General Partner shall
submit the Annual Budget to the Management Committee for its
review and approval at least 45 days prior to the beginning of
the next fiscal year of the Partnership. If, after the Flip
Date, the Managing General Partner proposes to cause the
Partnership to undertake any capital expenditure in an amount
reasonably expected to exceed $30 million (other than a capital
expenditure which is required to be made in order to comply with
any law, regulation or governmental approval) (a "Voluntary
Capital Expenditure"), the Managing General Partner shall submit
a description of such Voluntary Capital Expenditure to the
Management Committee for its prior review and approval. In the
event that the Management Committee is unable to reach agreement
on the Annual Budget or any Voluntary Capital Expenditure
submitted by the Managing General Partner under this Section
8(j)(ii), the Annual Budget or Voluntary Capital Expenditure, as
the case may be, proposed by the Managing General Partner shall
be submitted to an independent engineer retained by the
Partnership, with the approval of the Management Committee, for
the purpose of making a binding determination as to the matters
in dispute, based on the standard of Prudent Utility Practice.
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(k) Transactions With Affiliates. The Managing
General Partner is authorized to execute and deliver on behalf of
the Partnership the Second Amendment to the Administrative
Services Agreement in the form attached hereto as Exhibit A-3, to
cause the Partnership to pay the fees, expenses and other
compensation to the Project Management Firm required to be paid
or reimbursed by the Partnership in accordance with the
provisions of the Administrative Services Agreement and otherwise
to exercise all rights and perform all obligations of the
Partnership set forth in the Administrative Services Agreement.
The Managing General Partner is also authorized to pay and
reimburse from Partnership assets any and all reasonable
out-of-pocket costs and expenses incurred by the Managing General
Partner in connection with the management and supervision of the
Partnership business. Except as otherwise permitted by this
Agreement, no General Partner or any Affiliate of a General
Partner or of the Partnership (other than the Company) shall
enter into any transaction with the Partnership which may
significantly benefit such General Partner or any such Affiliate
in its independent capacity (including, without limitation, any
amendment, supplement or renewal of the Administrative Services
Agreement), unless such transaction has received the Consent of
the Partners. Notwithstanding any provision of this Agreement to
the contrary, no Partner shall acquire or hold, or permit any of
its Affiliates to acquire or hold, any of the Secured Bonds.
(l) Limitation on Liability of General Partners to
the Limited Partners and the Partnership; Indemnification.
(i) No General Partner shall be required to
devote all of its time or business efforts to the affairs of the
Partnership, but the Managing General Partner shall devote so
much of its time and attention to the Partnership as is necessary
and advisable to manage the business and affairs of the
Partnership. Anything in this Agreement to the contrary
notwithstanding, no General Partner shall be liable for the
return of the Capital Contribution made with respect to any
Partnership Interest or for any portion thereof, it being
expressly understood that any return of capital shall be made
solely from the assets of the Partnership; nor shall any General
Partner be required to pay to the Partnership or to the Limited
Partners any capital deficit of any Partner upon dissolution or
otherwise.
(ii) No General Partner, or any of their
respective employees, agents, partners or Affiliates, including
without limitation such General Partner's Representative,
Alternate Representative(s) and Voting Representative on the
Management Committee, or the Cogen Representative in respect of
the exercise of the authority granted to it to deliver notices
and instructions to the Special Agent under Section 6(a) and
Adjustment Notices under Section 6(a)(viii) (hereinafter
collectively referred to as "Indemnitees"), shall have any
liability, responsibility, or accountability in damages or
otherwise to the Partners, the Partnership, its receiver, or
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trustee, except for any actions or inactions constituting fraud,
gross negligence or willful misconduct; provided, however, that
nothing in this Section 8(l)(ii) shall be deemed to affect the
determination whether a Special Event described in Section
9(a)(i) has occurred and is continuing or the exercise of the
rights granted Cogen GP under Section 9(c), 9(d) or 9(e). The
Partnership, its receiver or trustee agrees to indemnify, pay,
protect, and hold harmless each Indemnitee on the demand of and
to the satisfaction of such Indemnitee from and against, any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, proceedings, costs, expenses, and
disbursements of any kind or nature whatsoever, including,
without limitation, all costs and expenses of defense, appeal,
and settlement of any and all suits, actions or proceedings
instituted against such Indemnitee and all costs of investigation
in connection therewith (collectively referred to as
"liabilities" for the remainder of this Section 8(l)(ii)) that
may be imposed on, incurred by, or asserted against an Indemnitee
in any way relating to or arising out of, or alleged to relate to
or arise out of, (A) any action or inaction on the part of the
Partnership, or on the part of a General Partner as a general
partner of the Partnership, or on the part of any employee,
agent, partner, Representative, Alternative Representative,
Voting Representative or Affiliate of a General Partner acting on
behalf of such General Partner, or on the part of the Cogen
Representative in respect of the exercise of the authority
granted to it to deliver notices and instructions to the Special
Agent under Section 6(a) and Adjustment Notices under Section
6(a)(viii), except to the extent such liabilities result from
such Indemnitee's own fraud, gross negligence or willful
misconduct , or (B) any action taken by a General Partner with
the Consent of the Partners or the Unanimous Consent of the
Partners. If any action, suit, or proceeding shall be pending or
threatened against the Partnership or an Indemnitee relating to
or arising, or alleged to relate to or arise, out of any action
or inaction, the Indemnitee shall have the right to employ, at
the expense of the Partnership, separate counsel of their choice
in such action, suit, or proceeding. The satisfaction of the
obligations of the Partnership under this Section 8(l)(ii) shall
be from and limited solely to the assets of the Partnership, and
the Partners shall not have any personal liability on account
thereof, nor shall the Partners be obligated to make a Capital
Contribution by reason thereof.
(iii) Advances from Partnership funds to an
Indemnitee for legal expenses and other costs incurred as a
result of any legal action initiated against an Indemnitee by any
Person are permissible if (A) the Managing General Partner first
makes a good faith determination that such Indemnitee is entitled
to indemnification in accordance with Section 8(l)(ii) above and
(B) such Indemnitee undertakes to repay any funds advanced
pursuant to this Section 8(l)(iii) in cases in which such
Indemnitee would not be entitled to indemnification under Section
8(l)(ii) above. If the Indemnitee shall furnish the Partnership
with an undertaking as set forth in this Section 8(l)(iii), the
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Indemnitee shall thereafter have the right to bill the
Partnership for, or otherwise request the Partnership to pay, at
any time and from time to time after such Indemnitee has become
obligated to make payment therefor, any and all amounts for which
such Indemnitee believes in good faith that such Indemnitee is
entitled to indemnification under Section 8(l)(ii). The
Partnership shall pay any and all such bills and honor any and
all such requests for payment within sixty (60) days of the time
any such bill or request is received. In the event that a final
determination is made that the Partnership is not so obligated in
respect of any amount paid by it, such Indemnitee will refund
such amount within sixty (60) days of such final determination;
and in the event that a final determination is made that the
Partnership is so obligated in respect of any amount not paid by
the Partnership to a particular Indemnitee, the Partnership will
pay such amount to such Indemnitee within sixty (60) days of such
final determination.
9. Special Events.
(a) Definition of Special Events. The Managing
General Partner shall provide prompt Notice to the Management
Committee of the occurrence of any of the following conditions or
events ("Special Events") and, in the case of paragraph (i)
below, of any event or condition which (with the giving of notice
or the lapse of time, or both) would result in the occurrence of
a Special Event described therein:
(i) At any time prior to the Flip Date, a
material default by the Managing General Partner in the
performance of its obligations hereunder (including, without
limitation, the failure to obtain Management Committee consent or
the Consent of the General Partners to actions requiring such
consent), or a material default by the Project Management Firm in
the performance of its obligations under the Administrative
Services Agreement, if in either case such default shall continue
uncured for a period of 30 days after written Notice thereof from
any General Partner to the Managing General Partner or Project
Management Firm, as the case may be; provided, that if the
Managing General Partner or the Project Management Firm has
initiated action to cure such a default that is reasonably
susceptible to cure within such 30 days but, despite its best
efforts, has been unsuccessful, then such 30-day period shall be
extended for an additional period (not to exceed 60 days from the
original Notice) for so long as the Managing General Partner or
Project Management Firm is continuing in good faith to take
action to complete a cure. As to the Managing General Partner,
the foregoing Special Event shall be limited to obligations of
the Managing General Partner set forth in this Agreement which
can reasonably be expected to be within the control of the
Managing General Partner.
(ii) At any time prior to the Flip Date, the
occurrence of an Event of Loss, if the restoration or repair of
the Project cannot be accomplished on a Commercially Feasible
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Basis (as defined in the Indenture), as determined in accordance
with Section 6.10 of the Indenture.
(iii) Bankruptcy of the Managing General
Partner or the Partnership or a dissolution of the Partnership
resulting in the liquidation of its assets.
(iv) At any time prior to the Flip Date, the
acceleration of the obligations of the Company and the
Partnership in respect of the Secured Bonds pursuant to the
Indenture.
(v) At any time prior to the Flip Date, the
occurrence of any condition or event which, with the giving of
notice or the lapse of time or both, would become an "Event of
Default" as defined in any Senior Debt Document.
(vi) At any time prior to the Flip Date, during
any period of 18 consecutive months, there shall at all times
exist a positive balance in the Arrears Account.
(b) Extraordinary Special Events. Each of the
following Special Events occurring prior to the Flip Date shall
constitute an "Extraordinary Special Event":
(i) each event described in Section 9(a)(ii)
through (iv) above;
(ii) an event described in Section 9(a)(i)
above, if the material default of the Managing General Partner or
the Project Management Firm which serves as a basis for such
Special Event continues unremedied for a period of 120 days from
the original Notice of default (unless, but for the occurrence of
deadlock within the Management Committee after such event becomes
a Special Event, such default could reasonably have been expected
to have been remedied within such 120-day period without having a
material adverse effect on the Partnership);
(iii) an event described in Section 9(a)(vi)
above which continues for a period of 24 consecutive months, if
the Debt Service Coverage Ratio last computed in accordance with
the Indenture, for the six-month period ending on the last day of
the month preceding the month in which the last Semi-Annual
Payment Date in such 24-month period occurs, is more than 10
basis points below the minimum Debt Service Coverage Ratio
required to be met under Section 6.22 of the Indenture for
distributions; and
(iv) an event described in Section 9(a)(vi)
above which continues for a period of 48 consecutive months.
(c) Consequences of Special Events. For so long as
a Special Event has occurred and is continuing, the Managing
General Partner shall consult with the Management Committee
concerning all aspects of the management of the Project (other
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than routine operational matters delegated in the ordinary course
to the Project Management Firm or the Operator) and to obtain the
approval of the Management Committee, acting by a unanimous vote
or written consent of all of the Voting Representatives, prior to
taking any non-routine action on behalf of the Partnership. (For
this purpose, the approval of the Annual Budget and the
execution, termination and modification of Non-Material
Agreements (other than (i) contracts for Fuel Management
Activities on a spot basis and (ii) any other contract under
which the Partnership is not reasonably expected to receive or
pay an amount in excess of $250,000 individually or, for all such
contracts in the aggregate, the amounts budgeted therefor in the
Annual Budget) shall be deemed a non-routine action).
Notwithstanding the foregoing, if (x) a Special
Event described in Section 9(a)(v) is reasonably susceptible to
cure within the time-period provided under the relevant Senior
Debt Document prior to such event's becoming an "Event of
Default" under such Senior Debt Document, (y) such time-period is
no longer than 30 days and (z) the Management Committee has been
unable due to deadlock to effect a cure of the same within seven
(7) Business Days prior to the end of such time-period, then the
Managing General Partner and the Project Management Firm shall be
vested with such discretionary authority as is reasonably
required to implement its proposed plan of action to effect a
cure, subject to the rights of Cogen GP described in the next
sentence. If a Special Event described in the foregoing clauses
(x), (y) and (z) is continuing, Cogen GP shall have the exclusive
right, exercisable during the last three Business Days prior to
the expiration of such time-period, to take any action which the
Managing General Partner would be authorized to take to cure such
Special Event. Prior to exercising the right described in the
immediately preceding sentence, Cogen GP shall deliver Notice of
its intention so to exercise to the Managing General Partner;
after commencing the exercise of such right, Cogen GP shall as
soon thereafter as practicable deliver a copy of the foregoing
Notice to the Class A Limited Partner (EII). Any sums reasonably
expended by Cogen GP in the exercise of the rights granted under
the preceding sentence or Section 9(d) below shall be reimbursed
to Cogen GP from the first proceeds of Distributable Cash,
together with accrued interest thereon at the Default Rate, prior
to any distributions in accordance with Section 6(a).
(d) Additional Cogen GP Rights. If, with respect
to any Special Event described in Section 9(a)(v), the relevant
Senior Debt Document provides for a cure period in excess of
30 days (including extensions) and such Special Event continues
unremedied through the date which is 30 days prior to the date
such event would become an "Event of Default" under the relevant
Senior Debt Document, Cogen GP may, in its discretion, elect to
exercise the following rights: Upon written Notice to the
Managing General Partner (with a copy to the Class A Limited
Partner (EII), Cogen GP may assume exclusive responsibility (to
the exclusion of the Management Committee) for the direction and
control of all actions of the Partnership reasonably related to
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remedying such Special Event and for this purpose shall be
authorized (as a General Partner) to act for and in the name of
the Partnership. The rights accorded to Cogen GP under this
Section 9(d) may be exercised for so long as the Special Event
giving rise to such rights continues unremedied. Once such
Special Event is remedied, and provided that no other Special
Event described in Section 9(a)(v) has occurred or can be
reasonably expected to occur within the next six months, the
Managing General Partner may resume the exclusive authority
granted to it herein as the Managing General Partner, unless
(x) such Special Event has become an Extraordinary Special Event
described in Section 9(b)(i) and (y) the Managing General Partner
has not demonstrated to the reasonable satisfaction of Cogen GP
its capability to resume the functions of the Managing General
Partner.
(e) Removal of Managing General Partner. During any
period in which an Extraordinary Special Event shall have
occurred and be continuing, Cogen GP shall have the right, upon
Notice given to all Partners (but without the consent of any
Partner), to cause (i) the removal of JMC Selkirk as the Managing
General Partner, (ii) the appointment of itself as the successor
Managing General Partner, and (iii) the termination of the
Administrative Services Agreement in accordance with its terms or
the assignment of the rights and obligations of the Project
Management Firm thereunder to an Affiliate of Cogen GP (in which
event Exhibit B to the Administrative Services Agreement shall be
promptly amended to incorporate a billing schedule containing the
rates to be charged by the appropriate personnel of such
Affiliate as negotiated in good faith between the Affiliate and
the Management Committee and subject to the Consent of the
Partners as provided under Section 8(k)), in each case effective
as of the date of such Notice. Following its removal as Managing
General Partner under this Section 9(e), JMC Selkirk shall
continue to be a General Partner and its Partnership Interest
shall not be affected in any way. Nothing in this Section 9(e)
shall be deemed to restrict or otherwise affect the right of
Cogen GP to succeed to the capacity of the Managing General
Partner if JMC Selkirk shall become Incapacitated in accordance
with Section 10(b).
10. Withdrawal and Substitution of General Partners.
(a) Withdrawal of a General Partner. No General
Partner may withdraw voluntarily from the Partnership or assign
or otherwise transfer its general Partnership Interest (except as
provided in this Section 10(a) and Section 10(c) with respect to
the Managing General Partner and except in the case of an
Incapacitated General Partner as provided in Section 10(b)), but
a General Partner (other than the Managing General Partner) may
convert all or any part of its general Partnership Interest to a
limited Partnership Interest and thereafter assign such limited
Partnership Interest in accordance with Section 13(a), if
(x) another General Partner remains and (y) such assignment would
not constitute a "default" an "Event of Default" under any Senior
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Debt Document or Project Contract. A General Partner who
converts all of its general Partnership Interest to a limited
Partnership Interest shall be deemed to have withdrawn as a
General Partner. In the event of the Incapacity or other
withdrawal of any General Partner, the remaining General Partners
or General Partner, if there be one, is hereby permitted and
directed to carry on the business of the Partnership. The
Managing General Partner may only withdraw voluntarily from the
Partnership upon the admission of a successor Managing General
Partner, following compliance with all of the following
procedures:
(i) The Managing General Partner shall, sixty
(60) days prior to such withdrawal, or such lesser number of days
as the Managing General Partner deems reasonable under the
circumstances, have given written notice to all Partners that it
proposes to withdraw and that there shall be substituted in its
place a Person to be designated by it and described in such
notice.
(ii) Enclosed with the written notice shall be
a certificate, duly executed by or on behalf of such proposed
successor Managing General Partner, to the effect that such
successor Managing General Partner (x) is experienced in
performing (or employs sufficient personnel who are experienced
in performing) functions that the Managing General Partner is
required to perform under this Agreement and (y) is willing to
become the Managing General Partner under this Agreement and will
assume all duties and responsibilities hereunder, without
receiving any compensation for services from the Partnership
other than the reimbursement amounts provided under the second
sentence of Section 8(k).
(iii) The appointment of any successor Managing
General Partner pursuant to this Section 10(a) shall require the
Unanimous Consent of the Partners. If any successor proposed by
the Managing General Partner does not receive the Unanimous
Consent of the Partners within thirty (30) days of written notice
of withdrawal, the Managing General Partner may, at its option,
rescind its proposed withdrawal or designate one or more other
proposed successors, which successor(s) shall also be subject to
the foregoing requirements.
(iv) The withdrawing Managing General Partner
shall cooperate fully with the successor Managing General Partner
so that the responsibilities of the withdrawing Managing General
Partner may be transferred to the successor Managing General
Partner with as little disruption of the Partnership's business
and affairs as practicable.
(v) The withdrawal of the Managing General
Partner and the appointment of the successor Managing General
Partner shall be prohibited if the same would constitute a
"Default" or an "Event of Default" under any Senior Debt Document
or other Project Contract; and to the extent required by any
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Senior Debt Document, the successor Managing General Partner
shall pledge its general Partnership Interest as provided in
Section 13(h).
(vi) The foregoing provisions of this Section
10(a) shall not apply to the removal of JMC Selkirk as the
Managing General Partner in accordance with Section 9(e).
(b) Incapacity of a General Partner.
(i) In the event of the Incapacity of a General
Partner, such Incapacitated General Partner shall be deemed to
have withdrawn as a General Partner of the Partnership, unless
such withdrawal would constitute a "Default" or an "Event of
Default" under any Senior Debt Document or other Project
Contract. Unless such Incapacitated General Partner shall be the
last remaining General Partner, in which case Section 10(b)(ii)
shall govern, the rights of such General Partner to share in the
profits and losses of the Partnership, to receive distributions
and to assign its Partnership Interest pursuant to Section 13(a)
or request the substitution of a Substituted General Partner or a
Substituted Limited Partner pursuant to Section 13(f) shall, on
the happening of such an event, devolve on its successor,
executor, administrator, guardian or other legal representative
for the purpose of settling its estate or administering its
property, or in the event of the death of one whose interest is
held in joint tenancy, pass to the surviving joint tenant,
subject to the terms and conditions of this Agreement, and the
Partnership shall continue as a limited partnership. However,
such successor or personal representative shall become a
Substituted General Partner or a Substituted Limited Partner only
as provided in Section 13(f) with respect to an assignee of a
Partner's Partnership Interest.
(ii) In the case of the Incapacity of the
Managing General Partner, Cogen GP (or in the event that Cogen GP
shall have converted all of its Partnership Interest to that of a
Limited Partner, or shall elect not to become the Managing
General Partner, then any remaining General Partner) shall assume
all powers of the Managing General Partner as set forth in this
Agreement. If the last remaining General Partner shall become
Incapacitated, the Limited Partners may, by Unanimous Consent of
the Partners, agree in writing to continue the business of the
Partnership and designate a successor as Managing General Partner
within ninety (90) days of the date of such Incapacitated General
Partner's withdrawal from the Partnership. Such proposed
successor Managing General Partner shall be admitted as a
successor Managing General Partner, as of the date of the last
remaining General Partner's Incapacity, pursuant to Section 10(c)
hereof upon execution and delivery to the Partnership of the
certificate and undertaking described in Section 10(a)(ii) above.
(c) Admission of a Successor Managing General
Partner.
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(i) Without prejudice to the rights of
Cogen GP under Sections 9(d) and 9(e), no successor Managing
General Partner shall be admitted to the Partnership, unless the
Unanimous Consent of the Partners to such admission shall have
been obtained and the successor Managing General Partner shall
have furnished to the Partnership an opinion of counsel in form
satisfactory to the Limited Partners satisfying the requirements
of Section 13(f)(v). Upon the admission of any successor
Managing General Partner pursuant to Section 10(a) or (b), as the
case may be, this Agreement and the Certificate shall be amended
to reflect the admission of a successor Managing General Partner,
and (except as provided in Section 9(e)) the then existing
Partnership Interest of the withdrawing Managing General Partner
or Incapacitated Managing General Partner shall devolve upon such
successor Managing General Partner.
(ii) Except as otherwise provided in Section
9(e), the designation of any Person as a successor Managing
General Partner shall be deemed to have occurred immediately
prior to the effective date of the withdrawal or Incapacity of
the last remaining General Partner, and such successor Managing
General Partner shall continue the business of the Partnership
without dissolution.
(iii) The Partnership Interests of the Limited
Partners shall not be affected by the admission of such successor
Managing General Partner or any transfer of the Managing General
Partner's Partnership Interest.
(d) Liability of a Withdrawn General Partner. If
pursuant to Sections 10(a) or (b) hereof, a General Partner shall
withdraw from the Partnership, or if pursuant to Section 13(f) a
Substituted General Partner or Substituted Limited Partner shall
be admitted to the Partnership in substitution for all or part of
such General Partner's Partnership Interest, such General Partner
shall nevertheless remain liable for obligations and liabilities
suffered or incurred by the Partnership prior to the time such
withdrawal or admission shall have become effective, but, subject
to the provisions of Section 5(e), it shall be free of any
obligation or liability incurred on account of the activities of
the Partnership from and after the time such withdrawal or
admission shall have become effective.
11. Liability and Rights of the Limited Partners.
(a) Limitation of Limited Partners' Liabilities.
Except as otherwise provided in the Act, a Limited Partner shall
not be liable for the obligations of the Partnership.
(b) No Control of Business or Right to Act for
Partnership. The Limited Partners shall not take part in or
interfere in any manner with the management or control of the
business of the Partnership, nor shall the Limited Partners have
any right or authority to act for or bind the Partnership.
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(c) No Priority. In connection with any
distribution, whether upon winding up of the Partnership or
otherwise, and whether or not such distribution shall constitute
a return of capital, the Limited Partners shall not have the
right to demand or receive property other than cash, although the
Managing General Partner may distribute property other than cash.
(d) Death, Bankruptcy or Incapacity of Limited
Partner. The death, Bankruptcy, dissolution or adjudicated
incompetency of a Limited Partner shall not cause a dissolution
of the Partnership, but the rights of such Limited Partner to
share in the profits and losses of the Partnership, to receive
distributions and to assign its Partnership Interest pursuant to
Section 13(a) or request the substitution of a Substituted
Limited Partner pursuant to Section 13(f) shall, on the happening
of such an event, devolve on its successor, executor,
administrator, guardian or other legal representative for the
purpose of settling its estate or administering its property, or
in the event of the death of one whose interest is held in joint
tenancy, pass to the surviving joint tenant, subject to the terms
and conditions of this Agreement, and the Partnership shall
continue as a limited partnership. However, such successor or
personal representative shall become a Substituted Limited
Partner only as provided in Section 13(f) with respect to an
assignee of a Limited Partner's Partnership Interest. The estate
of the Limited Partner shall be liable for all the obligations of
the deceased, Bankrupt, dissolved or incapacitated Limited
Partner.
12. Actions Requiring Limited Partner Approval.
(a) Meetings of the Partnership. Meetings of the
Partnership may be called by the Managing General Partner upon at
least fifteen (15) days' Notice (or such shorter Notice as shall
be necessary in exigent circumstances), which Notice shall
include an agenda of the matters proposed to be discussed at such
meeting. Meetings of the Partnership shall be called by the
Managing General Partner upon the written request of Partners
holding at least 5% of the total Voting Interests. Any such
meeting shall be held not less than fifteen (15) days nor more
than sixty (60) days after the receipt of such request. The
written consent of Partners holding the requisite Voting
Interests required for the approval of any action hereunder is
sufficient in lieu of a formal meeting or vote.
(b) Actions by Limited Partners.
(i) The following actions by or on behalf of
the Partnership require the Unanimous Consent of the Partners:
(A) the admission of a successor Managing General Partner in
accordance with Section 10(a) or (b); (B) the adoption of any
amendment to this Agreement other than an amendment described in
Section 16(a); and (C) the admission of an Additional Limited
Partner to the extent required by the first paragraph of
Section 14(a).
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(ii) The following actions by or on behalf of
the Partnership require the Consent of the Partners: (A) any
transaction between the Partnership and a General Partner or the
Affiliate of a General Partner or the Partnership which requires
the prior Consent of the Partners under Section 8(k); (B) any
amendment to the Billing Schedule under the Administrative
Services Agreement in accordance with Section 4(c)(v); (C) the
extension of the cure period to be provided to a defaulting
Partner in the circumstances specified in Section 5(a); and
(D) the approval of an assignment of a Partnership Interest in
the circumstances specified in Section 13(a)(A).
(iii) The following actions by or on behalf of
the Partnership require the Special Consent of the Limited
Partners:
(A) any material expansion or contraction
of the Partnership's business or engaging in any business or
activity other than the construction, ownership, financing and
operation of the Project and activities reasonably incidental
thereto (including, without limitation, Fuel Management
Activities);
(B) the merger, consolidation or other
business combination of the Partnership or its assets with or
into any other Person, or the sale, transfer or conveyance of all
or substantially all of the Partnership's assets, or the
interests therein, to any other Person;
(C) the sale, exchange, liquidation or
disposition of any substantial portion of the Project having a
fair market value in excess of $5.0 million in the aggregate in
any one year and with respect to any single item of property with
a fair market value in excess of $1.0 million, other than any
such disposition which is not required to be approved by the
Management Committee under Section 8(i)(iii) (whether or not the
Management Committee shall then be in existence);
(D) the incurrence, assumption or
guarantee of any indebtedness in an outstanding principal amount
exceeding $30 million other than (I) any such indebtedness which
is not required to be approved by the Management Committee under
Section 8(i)(vi) (whether or not the Management Committee shall
then be in existence), (II) new indebtedness incurred in
connection with the refinancing of outstanding indebtedness of
the Partnership or the Company but only to the extent that the
proceeds of such new indebtedness are used to refinance the
indebtedness being replaced, to pay transaction costs in
connection with the refinancing, to fund reserves or to make
distributions to the Partners in accordance with Section 6(a),
(III) indebtedness the proceeds of which will be used to finance
enhancements/modifications to the Project which are required in
order to comply with any law, regulation or governmental
approval, (IV) the obligation to make payments to a withdrawn
Partner under Section 5(d) or 12(c)(iii) and (V) at such time as
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the Partnership shall no longer be subject to the restrictions
imposed under Section 6.16 of the Indenture, indebtedness to fund
working capital requirements or obligations under letters of
credit required to be provided under the Project Contracts; and
(E) any termination, or any amendment or
modification of, any Principal Project Contract which could
reasonably be expected to materially and adversely affect the
Partnership, the Project, the interests of the Limited Partners
or projected levels of Distributable Cash, other than (I) any
such termination, amendment or modification required in order to
comply with any law, regulation or governmental approval, or
pursuant to a change in tariffs or similar regulated rates
incorporated into a Principal Project Contract, (II) any
amendment as a result of the implementation of provisions for
adjustments to price or reserves under the terms of a Principal
Project Contract, and (III) any such termination, amendment or
modification which is not required to be approved by the
Management Committee under Section 8(i)(ix) or which could be
effected by the Managing General Partner under the last sentence
of Section 8(i)(ix) (whether or not the Management Committee
shall then be in existence).
(iv) In the event that Cogen Technologies
Selkirk GP, Inc. shall, having converted all of its general
Partnership Interest to a limited Partnership Interest in
accordance with Section 13(l), be a Limited Partner, any action
by or on behalf of the Partnership described in Section 8(i)(iv)
shall require the written consent of Cogen Technologies
Selkirk GP, Inc. (but not any Substituted Limited Partner which
acquires the Partnership Interest of Cogen Technologies
Selkirk GP, Inc.).
(v) Each Limited Partner, by the execution and
delivery of this Agreement, expressly acknowledges and agrees
that neither the Limited Partners as a group, nor any class
thereof, shall have any special voting rights with respect to any
matter, notwithstanding any provision of the Act, except as
expressly provided in this Section 12(b).
(c) Withdrawal upon the Adoption of Major
Action(s). The Managing General Partner shall deliver to the
Class A Limited Partner at least five (5) Business Days' prior
written notice of any action proposed to be taken by the
Partnership which constitutes a Major Action specified in clause
(B), (C), (D) or (E) of the definition set forth in Section
1(bn). In the event that any General Partner (or the Management
Committee) causes the Partnership to adopt any Major Action which
the Class A Limited Partner (a "Dissenting Partner") declines to
vote in favor of (to the extent that any provision of this
Agreement entitles such Class A Limited Partner to vote thereon),
or otherwise objects to:
(i) The Dissenting Partner shall have the
right, exercisable within ten (10) Business Days after the
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adoption by the Partnership of any such Major Action specified in
clause (B), (C), (D) or (E) of the definition set forth in
Section 1(bn), or within ten (10) Business Days after the
Dissenting Partner acquires knowledge of the adoption of any such
Major Action specified in clause (A) thereof, to give written
notice to the Managing General Partner of its intention to
withdraw from the Partnership.
(ii) If the Managing General Partner (or the
Management Committee) does not, within five (5) Business Days
from the date of the delivery of the Dissenting Partner's notice,
cause the Partnership to rescind the adoption of the Major Action
which is the subject of the Dissenting Partner's notice, the
Dissenting Partner shall have the right, exercisable within five
(5) Business Days following the expiration of the foregoing five
(5) Business Day period, to give written notice to the Managing
General Partner that it has elected to withdraw from the
Partnership, effective as of the date such notice is delivered,
to require the Partnership to redeem all of its Partnership
Interest, and to receive the withdrawal compensation specified in
clause (iii) below. Upon such withdrawal, the Dissenting Partner
shall not have any vote in matters to be acted upon by the
Partners.
(iii) In the event that a Dissenting Partner
delivers the notice referred to in Section 12(c)(ii) above, the
Managing General Partner shall, within thirty (30) days following
the delivery of such notice, cause the Partnership to redeem all
of the Partnership Interest of the Dissenting Partner and
obligate itself to pay to the Dissenting Partner a redemption
price equal to the excess of (A) the sum of the total Capital
Contributions which the withdrawing Dissenting Partner has made
through the date of such redemption (including any payments made
by such withdrawing Partner after the date of its withdrawal in
accordance with Section 5(e)), plus an amount equal to a 12%
annual rate of return, compounded monthly, on (x) such total
Capital Contributions and other payments, computed from the
date(s) of contribution, and (y) the unfunded portion of any
Equity Commitments of a specified dollar amount which such
Partner has delivered, computed from the date(s) of such
commitments, over (B) the sum of the aggregate amounts
distributed to such withdrawing Partner pursuant to Section 6(a)
through the redemption date, plus an amount equal to an assumed
12% annual rate of return on such distributions computed from the
date(s) of distribution. For purposes of clause (B), any amounts
distributed to such withdrawing Partner before May 1, 1994, shall
be excluded. The Managing General Partner may, with the Consent
of the General Partners, cause payment of the foregoing
redemption price to be made in cash on the redemption date or by
delivery to the withdrawing Partner of a promissory note, bearing
interest at an annual rate equal to the effective borrowing rate
of the Partnership from time to time under the Financing
Agreement(s), compounded monthly, providing for the payment of
such redemption price (including accrued interest) in cash
installments, payable on the dates on which distributions are
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thereafter made to the Partners, from Distributable Cash
otherwise available for distribution to Partners in accordance
with Section 6(a), the amount of each such installment payment to
equal Distributable Cash that would have been payable to such
withdrawn Partner on such distribution date pursuant to 6(a), if
its Partnership Interest had not been redeemed pursuant to this
Section 12(c)(iii), until the total amount payable under this
Section 12(c)(iii) shall be paid in full. If the Indenture shall
be in effect on the date on which a Partner withdraws under this
Section 12(c)(iii), the obligations of the Partnership under a
promissory note delivered to such withdrawn Partner by the
Partnership shall be subordinated to the obligations under the
Indenture in accordance with the terms thereof.
(iv) The exercise by any Dissenting Partner of
the withdrawal and redemption right set forth in this Section
12(c) shall be in lieu of all other remedies which may be
available under this Agreement or any provision of applicable law
to the Dissenting Partner in connection with the adoption by the
Partnership of a Major Action.
13. Transfer of Partnership Interests.
(a) Assignment of Partnership Interests. Subject
to any restrictions on transferability which may, at any time, be
imposed by applicable law or contained elsewhere in this
Agreement, including without limitation, restrictions on
transferability contained in Section 10 and Section 13(b), (f)
and (j), a Partner (other than the Managing General Partner) may
assign, pledge or otherwise transfer in writing its Partnership
Interest (or any portion thereof), provided, that: (A) to the
extent required by the penultimate sentence of this Section
13(a), the assignment has been approved by the requisite
Partners; (B) the assignor Partner supplies the Managing General
Partner with the information necessary to enable the Managing
General Partner to file IRS Form 8308, as required under section
6050K of the Code and the Treasury Regulations promulgated
thereunder; (C) the assignor Partner, at its cost and expense,
provides to the Partnership an opinion of counsel satisfying the
requirements of Section 13(f)(v); and (D) if such a Partner is a
General Partner, the requirements of the first paragraph of
Section 10(a) are satisfied. Subject to Section 10(a), any
assignment, pledge, or transfer by a Partner of all or any
portion of its Partnership Interest which constitutes a
Restricted Interest (as defined in the next sentence), except to
an entity which is (x) its successor by merger, consolidation or
a sale of all or substantially all of its assets, or (y) an
assignee, pledgee, mortgagee, trustee or secured party, to the
extent that any such assignment, pledge or transfer of a security
interest is required by the Financing Agreement(s) shall (I) in
the case of a transferor Partner which is an Affiliate of
JMC Selkirk, require the Consent of the General Partners and of
the Class A Limited Partner (EII); (II) in the case of a
transferor Partner that is a Class A Limited Partner (other than
Makowski Selkirk Holdings, Inc.) require the consent in writing
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of one General Partner; (III) if there shall be only one General
Partner, or if all General Partners shall be Affiliates, and the
proposed transfer is by such General Partner or an Affiliate of
such General Partner(s), require the Consent of the Partners; and
(IV) in all other cases, require the Consent of the General
Partners. Each Partner which is a Partner as of the date of this
Agreement shall be deemed to hold 21% of its Preferred Percentage
Interest and the related Residual Percentage Interest and
Original Percentage Interest, if any, as of such date as a
"Restricted Interest" that may only be assigned, pledged or
transferred by such Partner or any subsequent transferee of such
Restricted Interest in accordance with the immediately preceding
sentence of this paragraph.
(b) Certain Limitations on Transferability. Not-
withstanding the provisions of Section 13(a), the following
additional limitations shall apply to certain transfers of
Partnership Interests:
(i) No Partner may assign, pledge or otherwise
transfer, or agree to assign, pledge or otherwise transfer,
directly or indirectly, all or any part of its respective
Partnership Interest, and the Managing General Partner agrees not
to approve such assignment, pledge, or transfer, if the effect
thereof would be to (A) cause the Partnership, the Partners or
any of their respective Affiliates to be required to register as
a public utility holding company, or otherwise to become subject
to regulation, under the Public Utility Holding Company Act of
1935, as amended, or (B) result in the loss of a material permit
of the Project or a default under or termination of a Project
Contract or any Senior Debt Document.
(ii) The Partners, on behalf of themselves and
their Affiliates, covenant and agree that no Partner may assign,
pledge or otherwise transfer, or agree to assign, pledge or
otherwise transfer, directly or indirectly, all or any part of
its respective Partnership Interest, and each General Partner
agrees not to approve such assignment, pledge or transfer, if the
effect thereof would be to cause the Partnership to lose its
status as a qualifying co-generation facility under the Public
Utility Regulatory Policies Act of 1978 by virtue of the
ownership by one or more "electric utilities" or "electric
utility holding companies" within the meaning of the Federal
Power Act (a "utility purchaser") of 50% or more of the equity
interests or stream of benefits in the Project. The Class A
Limited Partner shall have the right to assign, pledge or
otherwise transfer, directly or indirectly, all or a part of its
Partnership Interest to one or more utility purchasers. The
other Partners, on behalf of themselves and their Affiliates,
covenant and agree for the benefit of the Class A Limited Partner
not to make any assignment, pledge or transfer, directly or
indirectly, of their respective Partnership Interests which would
have the effect of impairing the rights granted to the Class A
Limited Partner in the foregoing sentence.
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(iii) Each Partner agrees to execute, upon
request of the Managing General Partner such certificates or
other documents and perform such acts as the Managing General
Partner deems appropriate to preserve the status of the
Partnership as a limited partnership after the completion of any
assignment of a Partnership Interest (or portion thereof)
pursuant to this Section 13. For purposes of this Section
13(b)(iii), any transfer of all or a part of a Partnership
Interest, whether voluntary or by operation of law, shall be
considered an assignment.
(iv) Each assigning Partner agrees to pay all
reasonable expenses, including attorneys' fees, incurred by the
Managing General Partner or the Partnership in connection with
such assignment.
(v) Before the Capital Contribution Date, no
Limited Partner may assign or agree to assign, directly or
indirectly, all or any part of its respective Partnership
Interest except (i) to an entity described in clause (x), (y) or
(z) of Section 13(a)(I) or (ii) for any hypothecation, pledge or
similar security device. Before or after the Capital
Contribution Date, no General Partner may assign, pledge or
otherwise transfer, or agree to assign, pledge, or otherwise
transfer, directly or indirectly, all or a portion of its
respective Partnership Interest as a General Partner, except as
otherwise permitted by Sections 10(a) and 13(h). The provisions
of this paragraph (v) shall not apply to the transfer of the
Partnership Interest of the Class A Limited Partner in accordance
with the option described in Section 19(e).
(vi) None of the Cogen Partners shall assign or
agree to assign, pledge or otherwise transfer, directly or
indirectly, all or any part of its respective Partnership
Interest to a direct competitor of J. Makowski Associates, Inc.
or any of its Affiliates (collectively, "JMAI") without the prior
written consent of JMC Selkirk, which consent may be granted or
withheld by JMC Selkirk without any obligation on its part to act
in the interest of the Partnership or the other Partners but
shall nevertheless not be unreasonably withheld (and for this
purpose JMC Selkirk's withholding of its consent based upon the
access to proprietary or confidential information about the
Project which would be accorded the proposed assignee shall not
be deemed unreasonable). A "direct competitor of JMAI" shall
mean (x) any Person which owns a controlling interest in, or
otherwise by contract exercises control over the management and
operation of, any non-utility electric generating project located
within New England or New York and (y) any Affiliate of a person
described in clause (x); provided, that no Person shall be deemed
to be a "direct competitor of JMAI" if it is a Person which
engages primarily in the business of providing financing or
non-managerial services to electric generating projects.
(vii) Any assignment, pledge or other transfer
of a portion of the Partnership Interest of any Partner shall
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include the portion of the transferring Partner's Preferred
Percentage Interest equal to the portion of such Partner's
Partnership Interest so transferred and the proportionate share
of the transferring Partner's related Residual Percentage
Interest and, if applicable, Original Percentage Interest.
(c) Assignee's Rights. Any purported assignment of
a Partnership Interest (or a portion thereof) which is not in
compliance with this Agreement is hereby declared to be null and
void and of no force or effect whatsoever.
(d) Allocation of Profits, Losses and Distributions
Subsequent to Assignment. All income, gains, credits,
deductions, profits and losses of the Partnership attributable to
any Partnership Interest acquired by reason of a permitted
assignment and any distributions made with respect thereto shall
be allocated (A) in respect of the portion of the Partnership
Year ending on the effective date of the assignment, to the
assignor, and (B) in respect of subsequent periods, to the
assignee. The "effective date" of an assignment of a Partnership
Interest under the provisions of Section 13(a) shall be the first
day of the month in which the final condition precedent to such
assignment has been fulfilled (if such final condition precedent
is satisfied on or before the fifteenth day of such month) or the
first day of the month immediately following the month in which
the final condition precedent to such assignment has been
fulfilled (if such final condition precedent is satisfied after
the fifteenth day of such month).
(e) Satisfactory Written Assignment Required.
Anything herein to the contrary notwithstanding, both the
Partnership and the Managing General Partner shall be entitled to
treat the assignor of all or part of a Partnership Interest as
the absolute owner thereof in all respects, and shall incur no
liability for distributions made in good faith to it, until such
time as a written assignment that complies with the requirements
of this Section 13 has been received by the Managing General
Partner and becomes effective as hereinabove provided.
(f) Substituted General Partner; Substituted Limited
Partner. In addition to the requirements of Sections 10(a),
13(a) and 13(b), the assignee of any Partner's Partnership
Interest (or any portion thereof), may only become a Substituted
General Partner or Substituted Limited Partner, in place of its
assignor, to the extent of the Partnership Interest assigned, if
all of the following conditions are satisfied:
(i) a duly executed and acknowledged written
instrument of assignment, approved by the Managing General
Partner, is filed with the Partnership setting forth the
intention of the assignor that the assignee become a Substituted
Limited Partner or Substituted General Partner in its place to
the extent of the Partnership Interest assigned;
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(ii) the assignee executes an irrevocable power
of attorney, satisfactory to the Managing General Partner,
appointing the Managing General Partner as the assignee's lawful
attorney-in-fact for the purposes specified in Section 17;
(iii) the assignor and assignee execute and
acknowledge such other instruments, in form and substance
satisfactory to the Managing General Partner, as desirable to
effect such substitution;
(iv) prior to the substitution, the assignee
pays all reasonable expenses, including attorneys' fees, incurred
by the Managing General Partner or the Partnership in connection
with such substitution;
(v) an opinion from counsel to the assignee
(which counsel and opinion shall be satisfactory to the Managing
General Partner) is furnished to the Partnership stating that, in
the opinion of said counsel, such substitution will not
(A) adversely affect the status of the Partnership as a
partnership for federal income tax purposes; (B) cause a
termination of the Partnership for purposes of the Code (except
that the opinion described in this clause (B) shall not be
required for the bona fide hypothecation, pledge or other similar
security instrument granted in respect of a Partnership Interest,
or the admission of any assignee, pledgee or secured party under
such instrument as a Substituted Limited Partner following the
foreclosure under such security instrument); (C) cause the
Partnership to become a "Publicly Traded Partnership", or the
Partnership Interest to be considered to be "publicly traded",
within the meaning of Section 7704 of the Code; (D) violate, or
cause the Partnership to violate, any applicable law or
governmental rule or regulation, including, without limitation,
any applicable federal or state securities law; or (E) cause the
Partnership, the Partners or any Affiliate to be required to
register as a public utility holding company, or otherwise to
become subject to regulation, under the Public Utility Holding
Company Act of 1935, as amended. The parties acknowledge that
the EII Consent referred to in Section 19(e) waives the
obligation to deliver the opinions referred to in clauses (A),
(B) and (C) of this Section 13(f)(v); and
(vi) the assignee shall execute a counterpart
signature page to the Equity Depositary Agreement and agree to be
bound by all of the provisions thereof.
(g) Substitution Required for Vote. Unless and
until an assignee of all or part of a Partnership Interest
becomes a Substituted Limited Partner or Substituted General
Partner, such assignee shall not be entitled to exercise any vote
with respect to such interest. The effective date of a
substitution shall be the date of the agreement amending this
Agreement effectuating such substitution.
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(h) Consent to Assignment. By executing and
delivering this Agreement, each Partner shall be deemed to have
consented: (i) to the pledge (x) by each General Partner of its
general Partnership Interests, (y) by JMC Selkirk Holdings, Inc.,
the sole shareholder of the Managing General Partner, of all of
the issued and outstanding shares of capital stock of the
Managing General Partner and (z) by the shareholders of Cogen GP
of all of the issued and outstanding shares of the capital stock
of Cogen GP, in each case to the Collateral Agent (together with
all successors thereto and all holders of secured indebtedness of
the Partnership and, if applicable, the agent or trustee of such
holders, the "Pledgee") as security for the obligations of the
Partnership and the Company under the Senior Debt Documents (the
security agreements evidencing the pledges described in clauses
(x), (y) and (z) being referred to as the "Pledge Documents");
and (ii) notwithstanding any other provision hereof and not
subject to any restriction set forth herein, to the exercise by
the Pledgee, upon the occurrence of an event of default under the
Senior Debt Documents, of the rights and remedies set forth in
the Pledge Documents, including, without limitation, (A) the
right to exercise the voting and consensual rights and other
powers of the assigning Partner as set forth in this Agreement to
the extent provided in the applicable Pledge Document, and the
right to vote the shares of the capital stock of the Managing
General Partner or of Cogen GP to the extent set forth in the
applicable Pledge Document; and (B) the right to foreclose upon
the collateral subject to the security interests granted under
the Pledge Documents and to cause the Pledgee or any third party
purchaser of such collateral to become a Substituted General
Partner to the extent provided in the applicable Pledge Document;
and (iii) to the provisions of the next succeeding sentence.
Notwithstanding any provision of this Agreement to the contrary,
during any period in which the Pledgee shall, following the
occurrence of an event of default under any Senior Debt Document,
be exercising the rights and remedies provided under any Pledge
Document, no Limited Partner shall be entitled to exercise any
voting or consensual rights granted to such Limited Partner under
any provision of this Agreement, including without limitation
under Section 12, and the then Managing General Partner shall
have no duty under Section 8(c) to consider whether any action to
be taken by it during such period is in the best interests of the
Partnership as a separate legal entity and not materially
detrimental to the interest of any Partner.
(i) Further Assignment. A Person who is the
assignee of all or any portion of the Partnership Interest of a
Partner, but who does not become a Substituted Limited Partner or
Substituted General Partner, as the case may be, and desires to
make a further assignment of any such Partnership Interest, shall
be subject to all the provisions of this Section 13 to the same
extent and in the same manner as any Partner desiring to make an
assignment of its Partnership Interest.
(j) Right of First Offer. Notwithstanding any
other provision of this Section 13, if any Partner (the
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"transferor Partner") proposes to transfer, other than to an
entity described in clauses (x), (y) or (z) of Section 13(a), all
or a part of its Partnership Interest (the "Interest") such
transferor Partner shall, prior to offering to sell or soliciting
any offers for the transfer of such Interest, give Notice thereof
to all of the other Partners. Each Partner other than the
transferor Partner shall have a right of first offer, exercisable
within thirty (30) days of receipt of such Notice (the "Offer
Period"), to submit a proposal to purchase the Interest for a
specified cash purchase price (a "Proposal"). Any Partner which
is (or the Affiliate of which is, or if such Partner is the
Class A Limited Partner, Energy Initiatives, Inc. or any
Affiliate thereof) subject to regulatory restriction to obtain
the requisite governmental authorization or consent to purchase,
or agree to purchase, the Interest, or to make any filing or
declaration in connection therewith, may condition its proposal
(a "Regulated Partner Proposal") on the receipt of all necessary
governmental authorizations and consents, provided that such
Partner (or its Affiliate, or Energy Initiatives, Inc. or its
Affiliate) timely and diligently seeks such authorization or
consent or makes such filing or declaration. If one or more
Partners elects to submit a Proposal (whether or not a Regulated
Partner Proposal), the transferor Partner shall have a period of
ten (10) days to respond in writing to the Proposal(s), and shall
be free, in its sole discretion, to accept any one or none of
such Proposals; provided, that if such a Proposal is accepted the
transferor Partner shall accept the Proposal having the most
favorable price and other material terms as determined in its
good faith reasonable judgment; and provided, further, that for
purposes of evaluating several Proposals which include a
Regulated Partner Proposal, the transferor Partner shall have the
right (but shall in no event be obligated) to take into account
that such Regulated Partner Proposal is conditioned on the
receipt of regulatory approvals and that consummation thereof may
be delayed an additional 60 days (as provided below), if and only
if the price proposed in such Regulated Partner Proposal does not
exceed 105% of the highest price proposed in the Proposals
submitted by all other Partners. If the transferor Partner
accepts a Proposal, the transferor Partner and the offering
Partner ("Offeror") shall be bound to consummate the transaction
in accordance with the Proposal, subject to the requirements of
Section 13(a), (b) and (f), as promptly as practicable (subject,
in the case of a Regulated Partner Proposal, to the receipt of
all necessary authorizations or consents). If the transferor
Partner accepts a Proposal and the transaction is not consummated
through no fault of the transferor Partner within 30 days of the
delivery of the Proposal so accepted (90 days in the case of a
Regulated Partner Proposal), the transferor Partner shall, for a
period of 270 days thereafter, be free to transfer the Interest,
subject to the requirements of Section 13(a), (b) and (f). After
such 270-day period, the transferor Partner shall not transfer
the Interest without again complying with the provisions of this
Section 13(j).
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In the event the transferor Partner rejects
each Proposal, the transferor Partner may, within the 270 days
after the expiration of the Offer Period, transfer the Interest
on terms (including price and other terms and conditions) that
are in its good faith reasonable judgment more favorable to the
transferor Partner than the terms contained in each Proposal,
subject to the requirements of Section 13(a), (b) and (f). The
transferor Partner may not, following the expiration of such
270-day period following the expiration of the Offer Period,
transfer the Interest without again complying with the provisions
of this Section 13(j).
If none of the Partners or the Partnership, as
the case may be, submits a Proposal during the Offer Period, the
transferor Partner shall be free, subject to the requirements of
Section 13(a), (b) and (f), to transfer the Interest in any
manner and to any person for a period of 270 days following the
expiration of the Offer Period. After such 270-day period,
transferor Partner may be, shall not transfer the Interest
without again complying with the provisions of this Section
13(j).
The right of first offer contained in this
Section 13(j) shall not apply to any transfer of the Partnership
Interest of the Class A Limited Partner to EII upon exercise of
the option described in Section 19(e) or to OSSA or its designees
upon exercise of the second option described in Section 19(e).
(k) Allocation of Unreturned Capital Contributions.
Upon the effective date of any assignment pursuant to this
Section 13, the Unreturned Capital Contributions attributable to
the Partnership Interest being assigned by the assigning Partner
shall be allocated for purposes of this Agreement to the assignee
acquiring such Partnership Interest.
(l) Voluntary Conversion of General Partner's
Partnership Interest; Mandatory Conversions of Cogen GP's
Partnership Interest. Any General Partner (other than the
Managing General Partner) shall have the right at any time to
convert all or a portion of its general Partnership Interest into
a limited Partnership Interest, subject to the requirements of
Section 10(a). If Persons who, as of the date of this Agreement,
are the beneficial owners (indirectly through their beneficial
ownership of the equity interests in the Cogen Partners) of 80%
of the Preferred Percentage Interests held by the Cogen Partners
as of date of this Agreement shall cease, at any time after the
date of this Agreement, to be the beneficial owners of more than
10% of the Preferred Percentage Interests held by the Cogen
Partners, then all of the remaining general Partnership Interest
of Cogen GP shall automatically be converted into a limited
Partnership Interest. Upon the conversion of any of Cogen GP's
general Partnership Interest to a limited Partnership Interest,
the Managing General Partner shall deliver Notice thereof to each
Partner and, if applicable, shall cause the Certificate to be
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amended promptly to reflect that Cogen GP is no longer a General
Partner.
(m) Redemption of Interests of Cogen Partners. The
Partnership shall have the right, but not the obligation, to
redeem all (but not less than all) of the Partnership Interests
of the Cogen Partners under the following circumstances: (i) at
any time after the Flip Date (but only if JMC Selkirk (or an
Affiliate thereof) or Cogen GP (or an Affiliate thereof) is
acting as Managing General Partner at such time), at a cash
redemption price equal to the Fair Market Sales Value of such
Partnership Interests or (ii) if (x) Cogen GP is exercising the
powers of the Managing General Partner in accordance with Section
9(d), as a result of the occurrence of a Special Event described
therein, or in accordance with Section 9(e), as a result of the
occurrence of an Extraordinary Special Event, or (y) the
Partnership has been required to make accelerated payments of
Level I Distributions in accordance with Section 6(a)(vi) in
respect of more than four consecutive Semi-Annual Periods (except
that, for purposes of this clause (y), Cogen GP shall not have
elected (as determined in accordance with Section 6(a)(vi)(V)) to
forego delivery of a Notice Certificate to the Special Agent in
respect of more than two Semi-Annual Periods in which a Ratio
Shortfall Event has occurred), then at a cash redemption price
equal to the higher of the then Fair Market Sales Value of such
Partnership Interest and the Stipulated Redemption Value
(Redemption) for the Cogen Partners shown on Schedule IV hereto;
provided, that, in each case, at least 60 days' Notice shall be
given by the Partnership to the Cogen Partners prior to such
redemption and the closing on the redemption shall be within
90 days of such Notice, and provided, further, that in the case
of a redemption described in clause (ii)(x) above, a preliminary
(and revocable) Notice of the intent to redeem shall be given
within 60 days following the occurrence of the underlying event
and a final (and irrevocable) Notice of redemption shall be given
within 150 days following such occurrence. The Cogen
Representative may, within 10 Business Days after any third
consecutive Semi-Annual Period in which the Partnership has been
required to make accelerated payments of Level I Distributions in
accordance with Section 6(a)(vi), request that the Managing
General Partner and the Cogen Representative proceed as
expeditiously as practicable to determine the Fair Market Sales
Value and endeavor to complete such determination prior to the
next succeeding Semi-Annual Payment Date, and the Managing
General Partner shall comply with such request, whether or not
the Partnership shall have delivered a Notice of proposed
redemption under this Section 13(m).
Any redemption described in clause (ii) of this
Section 13(m) shall require the prior written consent of the
Class A Limited Partner, unless (I) the redemption price to be
paid to the Cogen Partners is to be funded solely from Section
4(c) Contributions, (II) the Priority Return received by the
Special Contributing Partner(s) in respect of such Section 4(c)
Contributions is no greater than an annual return of 20.3%,
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(III) the redemption is an Adjustment Event as defined in Section
6(a)(viii), and (IV) after giving effect to such redemption, the
reasonably anticipated distributions to be made to the Class A
Limited Partner(s) pursuant to Section 6(a)(iii)(3) prior to the
Flip Date are not less than the reasonably anticipated
distributions that would have been made to the Class A Limited
Partner(s) had such redemption not been effected. In order to
meet the condition specified in clause (IV) aforesaid, each
Special Contributing Partner shall be entitled to propose, in its
Priority Return Notice, that all or any portion of distributions
otherwise payable to such Partner under Section 6(a)(iii)(2) for
any Semi-Annual Period prior to the Flip Date may be deferred to
future periods (all as specified in such notice).
14. Admission of Additional Limited Partners.
(a) Additional Limited Partners. The Managing
General Partner may admit one or more Additional Limited Partners
to the Partnership at any time or times solely in accordance with
the provisions of this Section 14(a). Upon the admission of any
Additional Limited Partner, the Partnership Interest to be held
by such Additional Limited Partner shall, unless otherwise
determined by the Unanimous Consent of the Partners, be obtained
by reducing the Partnership Interests of the Original Partners
(except for the Managing General Partner), including their
respective Preferred Partnership Interests and related Original
Percentage Interests and Residual Percentage Interests, in
proportion to their respective Partnership Interests immediately
prior to such admission. No Additional Limited Partners may be
admitted unless each of the following conditions are satisfied:
(i) In no event shall the aggregate Original
Percentage Interests, Preferred Percentage Interests and Residual
Percentage Interests held by the Class A Limited Partner(s) be
reduced as a result of such admission, without the prior consent
of the Class A Limited Partner(s).
(ii) The cash or cash equivalents payment to be
made to the Partnership by an Additional Limited Partner in
consideration for the Partnership Interest to be held by such
Additional Limited Partner shall not, without the prior written
consent of each of the Original Partners, be less than the
product obtained by multiplying the Preferred Percentage Interest
to be held by such Additional Limited Partner by the aggregate
amount of the Capital Contributions made by all Partners
including the Additional Limited Partner through the date of such
admission (reduced by the aggregate amount of distributions made
to all Partners in accordance with Section 6(a) through the date
of such admission);
(iii) The admission of the Additional Limited
Partner shall satisfy the limitations with respect to transfers
of Partnership Interests set forth in Section 13(b), as if such
Additional Limited Partner were a transferee of a Partner; and no
Additional Limited Partner shall be admitted to the Partnership,
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if such admission would have the effect of impairing the rights
granted to the Class A Partner in the penultimate sentence of
Section 13(b)(ii); and
(iv) The Additional Limited Partner shall have
complied with all of the requirements for the admission of a
Substituted Limited Partner set forth in Section 13(f).
15. Dissolution; Winding Up and Liquidation.
(a) Events Causing Dissolution. The Partnership
shall be dissolved upon the happening of any of the following
events:
(i) The withdrawal (as defined in Section
17.402(a) of the Act) of the last remaining General Partner;
provided, however, that at the time of such withdrawal of the
last remaining General Partner, the Partners may unanimously
elect, within ninety (90) days thereafter, to continue the
business of the Partnership and to designate a successor General
Partner in accordance with Section 17-801 of the Act;
(ii) The happening of any other event causing
the dissolution of the Partnership under the laws of the State of
Delaware; or
(iii) The expiration of its term.
Dissolution of the Partnership shall be
effective on the day the event occurs giving rise to the
dissolution, but the Partnership shall not terminate until the
Certificate has been cancelled and the assets of the Partnership
have been distributed as provided herein.
(b) Capital Contributions Upon Dissolution. Except
as otherwise provided in this Agreement, (x) each Partner shall
look solely to the assets of the Partnership for all
distributions with respect to the Partnership and its Capital
Contributions thereto, and shall have no recourse therefor (upon
dissolution or otherwise) against any other Partner and (y) no
Partner shall have any priority over any other Partner as to the
return of its Capital Contributions, distributions, or
allocations.
(c) Liquidation.
(i) Upon dissolution of the Partnership, the
Managing General Partner, or if there is none, a liquidating
agent selected by the Partners, shall liquidate the assets of the
Partnership as promptly as is consistent with obtaining the fair
market value thereof, and apply and distribute the proceeds
thereof;
(1) First, to creditors, in the order of
priority provided by law;
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(2) Second, to the establishment of any
reserves for contingencies which the Managing General Partner (or
liquidating agent, as the case may be) may consider reasonably
necessary;
(3) Third, to the Partners in accordance
with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
(ii) Notwithstanding the foregoing, in the
event the Managing General Partner (or liquidating agent, as the
case may be) shall reasonably determine that an immediate sale of
part or all of the Partnership assets would cause undue loss to
the Partners, the Managing General Partner (or liquidating agent,
as the case may be), in order to avoid such loss, may, after
giving Notification to the Partners, to the extent not then
prohibited by the limited partnership law of any jurisdiction in
which the Partnership is then formed or qualified and applicable
in the circumstances, either defer liquidation of and withhold
from distribution for a reasonable time any assets of the
Partnership except those necessary to satisfy the Partnership's
debts and obligations, or distribute the assets to the Partners
in kind.
(iii) After the proceeds of the liquidation of
the assets of the Partnership have been distributed, the Managing
General Partner (or liquidating agent, as the case may be) shall
cause the Certificate of Limited Partnership of the Partnership
to be cancelled.
(iv) Liquidating distributions must be made by
the earlier of (A) the end of the fiscal year in which the
liquidation occurs or (B) ninety (90) days after the date of the
liquidation.
(v) Notwithstanding anything contained in this
Agreement to the contrary, in the reasonable discretion of the
Managing General Partner (or liquidating agent, as the case may
be), for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the
Partnership or of the General Partners arising out of or in
connection with the Partnership, a pro rata portion of the
distribution that would otherwise be made to the Partners
pursuant to this Section 15(c) may be: (1) distributed to a
trust established for the benefit of the Partners for the
purposes of liquidating Partnership assets, collecting amounts
owed to the Partnership, and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General
Partners arising out of or in connection with the Partnership; or
(2) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the
Partnership. The assets of any such trust or reserve shall be
distributed to the Partners, from time to time, in the reasonable
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discretion of the Managing General Partner (or liquidating agent,
as the case may be), in the same proportions as the amount
distributed to such trust by the Partnership, or held in such
reserve, would otherwise have been distributed to the Partners
pursuant to this Agreement.
(d) Compliance With Certain Requirements of
Regulations; Deficit Capital Accounts. In the event the
Partnership is "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to this Section 15 to the Partners who have positive
Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in
its Capital Account (after giving effect to all contributions,
distributions, and allocations for all fiscal years, including
the fiscal year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the
capital of the Partnership with respect to such deficit, and such
deficit shall not be considered a debt owed to the Partnership or
to any other Person for any purpose whatsoever.
(e) Deemed Distribution and Recontribution. Not-
withstanding any other provision of this Section 15, in the event
the Partnership is liquidated within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations but no event of
dissolution under Section 15(a) hereof has occurred, the property
shall not be liquidated, the Partnership's liabilities shall not
be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, solely for federal income tax purposes, the
Partnership shall be deemed to have distributed its property in
kind to the Partners, who shall be deemed to have assumed and
taken subject to all Partnership liabilities, all in accordance
with their respective Capital Accounts. Immediately thereafter,
the Partners shall be deemed to have recontributed the property
in kind to the Partnership, which shall be deemed to have assumed
and taken subject to all such liabilities.
(f) Final Accounting. Upon the dissolution of the
Partnership, a proper accounting shall be made by the
Partnership's independent public accountants from the date of the
last previous accounting to the date of dissolution.
16. Amendment of Agreement of Limited Partnership.
(a) Amendments Not Requiring Agreement of Partners.
This Agreement may be amended by the Managing General Partner,
without the consent of any of the Partners (i) to effect changes
of a ministerial nature that do not materially and adversely
affect the rights of the Partners; (ii) to give effect to the
admission of Substituted General Partners, Substituted Limited
Partners or Additional Limited Partners in accordance with the
procedures set forth in this Agreement; (iii) to add to the
duties or obligations of the Managing General Partner or
surrender any right or power granted to the Managing General
Partner herein, in either case, for the benefit of the Partners;
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provided, that any such additions or surrenders shall only be
effective with respect to the Managing General Partner which made
the same and shall be rescinded at the time of the appointment of
a successor Managing General Partner in accordance with Section
9(e) or 10(c); (iv) to cure any ambiguity, to correct or
supplement any provision herein that may be inconsistent with any
other provision herein, or to make any other provision with
respect to matters or questions arising under this Agreement that
will not be inconsistent with the provisions of this Agreement;
(v) to preserve the Partnership's status as a Partnership and not
as an association taxable as a corporation for federal income tax
purposes; provided, however, that such amendment does not
materially and adversely affect the rights or interests of any of
the Partners and that the Managing General Partner obtain an
opinion of counsel to the Partnership; and (vi) to change the
name of the Partnership; provided, however, that no amendment
shall be adopted pursuant to this Section 16(a) unless the
adoption thereof (1) is for the benefit of or not adverse to the
interests of the Partners, as determined in good faith by the
Managing General Partner; (2) is consistent in all material
respects with the other provisions hereof; (3) does not affect
the allocation and distribution provisions of Section 6 in a
manner adverse to any Partner; (4) does not alter the purposes of
the Partnership; and (5) does not adversely affect the limited
liability of the Limited Partners or the status of the
Partnership as a partnership for federal income tax purposes.
(b) Amendments Requiring Agreement of Partners.
Amendments to this Agreement may be proposed by the Managing
General Partner or by Partners holding 5% or more of the total
outstanding Voting Interests. Following such proposal, the
Managing General Partner shall submit to the Partners a verbatim
statement of any proposed amendment. The Managing General
Partner shall include in any such submission the Managing General
Partner's recommendations as to the proposed amendment. Any
amendment to this Agreement other than those permitted pursuant
to Section 16(a) above must be approved by the Unanimous Consent
of the Partners. Without the written consent of the Managing
General Partner, no amendment to this Agreement may alter the
rights, powers or duties of the Managing General Partner as set
forth in Sections 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 or 17 or
this Section 16(b).
(c) Additional, Substituted or Successor Partners.
(i) Each Additional Limited Partner,
Substituted Limited Partner, Substituted General Partner and
successor Managing General Partner shall become a signatory
hereof by signing such number of counterpart signature pages to
this Agreement and such other instrument or instruments, and in
such manner, as the Managing General Partner shall determine. By
so signing, each Additional Limited Partner, Substituted Limited
Partner, Substituted General Partner or successor Managing
General Partner, as the case may be, shall be deemed to have
adopted, and to have agreed to be bound by, all the provisions of
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this Agreement; provided, however, that no such counterpart shall
be binding until it shall have been accepted by the Managing
General Partner as herein provided.
(ii) If this Agreement shall be amended as a
result of adding or substituting a Partner, the amendment to this
Agreement shall be signed by or on behalf of all the Partners and
by or on behalf of the Person to be substituted or added and if a
Partner is to be substituted, by or on behalf of the assigning
Partner. If this Agreement shall be amended to reflect the
removal or withdrawal of a General Partner when the business of
the Partnership is being continued, such amendment shall be
signed by the removed or withdrawing General Partner and by the
remaining and/or successor General Partner. The Managing General
Partner shall deliver Notice to all of the Partners of any
amendment to this Agreement as a result of adding or substituting
a Partner.
(d) Recording of Amendment. In making any
amendments, there shall be prepared and filed for recordation by
the Managing General Partner such documents and certificates as
shall be required to be prepared and filed under the Act and
under the laws of the other jurisdictions in which the
Partnership is then formed or qualified.
17. Power of Attorney.
Each Limited Partner hereby acknowledges and
reaffirms that, by executing and delivering a signature page
hereto, the Managing General Partner has been constituted and
appointed, with full power of substitution, as the
attorney-in-fact for such Partner, with power and authority to
act in his or its name and on his or its behalf in the execution,
acknowledgment and filing of documents relating to the
Partnership and its business including, but not limited to, the
following:
(a) This Agreement, as well as any amendments
hereto (subject to the provisions of Section 16).
(b) Any other instrument which may be required to
be filed by the Partnership under appropriate state law or by any
governmental agency or which the Managing General Partner deems
it in the best interest of the Partnership to file.
(c) Any documents which may be required to effect
the continuation of the Partnership, the admission of Substituted
Limited Partners, Substituted General Partners or Additional
Limited Partners, or the dissolution and termination of the
Partnership, provided such continuation or dissolution and
termination are in accordance with the specific terms of this
Agreement.
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Each Limited Partner further acknowledges and
reaffirms that such Power of Attorney granted to the Managing
General Partner:
(i) is a special power of attorney coupled
with an interest, is irrevocable, and shall survive the death,
disability or dissolution of the Partner;
(ii) may be exercised by the Managing General
Partner either by signing separately as attorney-in-fact for the
Partner or, after listing all of the Partners executing and/or
acknowledging any instrument, by a single signature of the
Managing General Partner acting as attorney-in-fact for all of
the Partners; and
(iii) shall survive the delivery of an
assignment by a Partner of the whole or any portion of its
Partnership Interest; except that where the whole of a Partner's
Partnership Interest has been transferred and the transferee is
to become a Substituted Limited Partner or Substituted General
Partner pursuant to the provisions hereof, the Power of Attorney
of the assignor shall survive the delivery of such assignment for
the purpose of enabling the Managing General Partner to execute,
acknowledge and file any instrument necessary to effect such
substitution.
18. Dispute Resolution.
In the event the Partners dispute or are unable to
reach agreement on any matter set forth in this Agreement, or a
dispute resulting in deadlock of the Management Committee remains
unresolved for thirty (30) days (except in either case for a
dispute which, by the express terms of this Agreement, is
required to be referred to the Independent Engineer or, if there
shall be no outstanding indebtedness of the Partnership or the
Company under the Senior Debt Documents, an independent engineer
retained by the Partnership with the approval of the Management
Committee), any Partner party to the dispute may commence an
arbitration proceeding for purposes of resolving the dispute.
The proceeding shall be commenced by the moving party serving
notice upon the other Partners of its request for arbitration
providing reasonable detail regarding the dispute (an
"Arbitration Notice"). Within ten (10) days from receipt of such
Arbitration Notice, the other party may set forth in writing
delivered to each other Partner additional related issues to be
arbitrated, described in reasonable detail. Within twenty-five
(25) days following delivery of an Arbitration Notice, each party
to the dispute shall identify to the other a proposed arbitrator.
Each proposed arbitrator shall (a) be knowledgeable in the
subject of power plant operations and (b) have no interest in or
affiliation with either of the parties either by ownership,
contractual relationship or present or past employment. The two
arbitrators so selected shall select a third arbitrator who shall
satisfy the requirements of clause (b) above. In the event that
one of the parties fails to select its designated arbitrator as
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specified herein within thirty (30) days of receiving written
notice from the other party that such other party has selected
its designated arbitrator, then the arbitration provided for
herein shall be conducted by the one (1) arbitrator so
designated. In the event that the arbitrators selected by the
parties are unable to agree on a third member of the panel within
sixty (60) days after their selection, such individual shall be
designated by the American Arbitration Association. Upon final
selection of the entire panel, the arbitrators shall as
expeditiously as possible render a decision on the matter or
matters submitted for arbitration. To the extent applicable,
based upon the nature of the dispute, the arbitrators shall be
instructed to render their decision based upon the standard of
Prudent Utility Practice. The decision of the arbitrators shall
be final and binding on all parties. The arbitration shall be
conducted at Boston, Massachusetts, or such other place as the
parties may agree, and in accordance with the commercial dispute
rules of the American Arbitration Association then in force and
effect, as modified by the arbitrators to enable the proceeding
to be resolved as expeditiously, efficiently and economically as
practicable under the circumstances, and such modifications shall
be within the arbitrators' sole and unreviewable discretion.
Upon the determination of any such dispute, the
arbitrators shall bill the costs attributable to such binding
arbitration to the Partnership; provided, however, that the
arbitrators shall be empowered to apportion such costs between
the parties if they deem it appropriate.
The parties hereto intend that once arbitration is
invoked pursuant to this Section 18, the matters set for
arbitration shall be decided as set forth herein, and they shall
not seek to have this Section 18 rendered unenforceable or to
have such matter decided in any other way; provided, however,
that nothing herein shall prevent the parties from negotiating a
settlement of any issue at any time.
19. General.
(a) Notice. Every notice, call or statement
provided for in this Agreement shall be in writing directed to
the party to whom given, made or delivered at such party's
address, telecopy, or telex number as set forth on Schedule VIII.
Each party may change its address from time to time by giving
written notice of such to the other parties as provided herein.
Any notice, consent, statement or other document made, given or
delivered hereunder shall become effective when received (and, in
the case of a telecopy, confirmed by telephone) by the addressee.
(b) Partnership Opportunity. Neither being a party
to this Agreement nor participating in the implementation and
development of the Project shall in any way restrain any of the
Partners or their officers, directors, partners, shareholders,
employees or Affiliates from engaging in any other present or
future business activities, whether or not any such activity is
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competitive with the business of the Partnership, or in any way
preclude or restrict any of them from entering into a joint
venture, partnership or other business arrangement with one or
more of the Partners.
None of the Partners or their respective
officers, directors, partners, shareholders, employees or
Affiliates shall under any circumstance be obligated or bound to
offer or present to the Partners any business opportunity offered
to such officers, directors, shareholders, employees or
Affiliates as a prerequisite to the acquisition of or investment
in such business opportunity by any of them.
(c) Confidentiality. Except as otherwise provided
in this Section 19(c), all written information obtained by any
Partner and its respective employees, agents and other
representatives from another Partner concerning the Partnership
or this Agreement which has been labelled as confidential or
proprietary shall be considered confidential, shall be treated
with the same standards of care as the recipient's own
proprietary information of like kind and nature and shall not be
divulged without the prior written consent of the Partner which
provided the information. In addition, no Partner shall
(i) except in connection with the development and implementation
of the Partnership, use any such confidential information (other
than its own) or any information developed by or on behalf of the
Partners for the Partnership or (ii) disclose, reveal, or
otherwise make any such confidential information (other than its
own) or any information developed by or on behalf of the Partners
in connection with the implementation and development of the
Partnership available to any unauthorized third person without
the prior written consent of the Managing General Partner. No
information shall be subject to such restriction if such
information (x) is received by the restricted Partner from a
source other than the other Partners and such source, to the
restricted Partner's knowledge, is not similarly restricted;
(y) is, or becomes, public information without any breach of the
confidentiality obligations of this Section 19(c); or (z) is
required by law or legal process to be disclosed.
The restrictions contained in this Section
19(c) shall survive any termination of this Agreement or the
withdrawal of any Partner for a period of three years from the
date of such termination or withdrawal. If such three-year
period is held to be invalid or unenforceable, it is the
intention of the parties that such three-year period be reduced
to a period which is valid and enforceable under applicable law
as determined by a court of competent jurisdiction.
(d) Certain Remedies. The Partners acknowledge
that any breach by any Partner of the restrictions and
obligations set forth in Section 19(c) will result in immediate
and irreparable harm to the other Partners and will cause damage
to such other Partners in amounts difficult to ascertain
immediately. Accordingly, upon any such breach by any Partner,
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each non-breaching Partner shall be entitled to obtain injunctive
relief with respect to such breach, as well as all other legal or
equitable remedies to which such Partner may be entitled. If
such non-breaching Partner or Partners shall institute any action
or proceeding to enforce the provisions of Section 19(c), the
breaching Partner shall not urge in any such action the defense
that a remedy at law exists.
Notwithstanding the foregoing or any other
provision of this Agreement, no Partner or its subsidiaries or
Affiliates shall have any liability to any other Partners or
their subsidiaries or Affiliates for any special, indirect,
incidental or consequential loss or damage whatsoever, or any
direct or special, indirect, incidental or consequential
(including, without limitation, lost profits or lost investment
opportunity) liability in connection with its work product
generated under this Agreement, whether such liability arises in
contract, tort (including negligence and strict liability) or
otherwise.
(e) Entire Agreement. This Agreement (including
the attached Schedules and Exhibits) and the Equity Depositary
Agreement represent the full and complete agreement of the
parties with respect to the subject matter hereof and thereof and
supersedes all prior agreements (whether written or oral) between
the parties with respect to the subject matter hereof. Each of
the Partners acknowledges that concurrently with the execution of
this Agreement, (i) the Partnership, the General Partners and
Energy Initiatives, Inc. are entering into a Consent and
Agreement (the "EII Consent") related to that certain Option
Agreement dated as of June 28, 1991, as amended, among the
Class A Limited Partner and Energy Initiatives, Inc. (the "EII
Option Agreement"), (ii) MSH is entering into a second option
agreement with OSSA; and (iii) MSH is pledging its Partnership
Interest to EII.
(f) Benefit and Burden; Assignment. All terms of
this Agreement shall be binding upon, and inure to the benefit
of, the parties and their respective representatives, successors
and assigns. This Agreement may not be assigned except as set
forth in Section 10 or Section 13.
(g) Severability. If any provision of this
Agreement or any covenant, obligation or agreement contained
herein is determined by a court to be invalid or unenforceable,
such determination shall not affect any other provision,
covenant, obligation or agreement, each of which shall be
construed and enforced as if such invalid or unenforceable
portion were not contained herein. Such invalidity or
unenforceability shall not affect any valid and enforceable
application thereof, and each such provision, covenant,
obligation or agreement shall be deemed to be effective,
operative, made, entered into or taken in the manner and to the
full extent permitted by law.
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(h) Headings. The headings in this Agreement are
inserted for convenience and reference only and are not to be
used in construing or interpreting any provision of this
Agreement.
(i) Applicable Law. This Agreement shall be deemed
to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed, interpreted and enforced in
accordance with the laws of the State of Delaware.
(j) Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
(k) Modification. No change or modification of
this Agreement shall be valid unless the same is in writing and
conforms to the provisions of Section 16 hereof. No waiver of
any provision of this Agreement shall be valid unless in writing
and signed by the parties against whom it is sought to be
enforced. The failure of any party at any time to insist upon
strict performance of any condition, promise, agreement or
understanding set forth herein shall not be construed as a waiver
or relinquishment of the right to insist upon strict performance
of the same or other condition, promise, agreement or
understanding at a future time.
(l) Class A Limited Partner Proxy. The Partners
acknowledge the granting of the irrevocable proxy ("Proxy") by
the Class A Limited Partner to EII under the Second Amendment,
dated as of the date hereof, to the Option Agreement, and
accordingly, the Partners each hereby acknowledge and agree that
any and all votes, consents and actions (each an "Act") cast,
made or taken by or on behalf of the Class A Limited Partner
under or pursuant to the Partnership Agreement may only be made
by EII as proxy for the Class A Limited Partner until such time
as the Partners are notified by joint written instructions of the
Class A Limited Partner and EII that the Proxy has been
terminated. Further, until such termination notice is delivered,
no Partner shall incur any liability to the Class A Limited
Partner for failing to abide by an Act of the Class A Limited
Partner other than pursuant to the Proxy.
(m) The Partnership will maintain an environmental
compliance manual acceptable to the Cogen Representative and
substantially in the form as provided to Cogen Technologies by
the Partnership on or about March 30, 1994.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be signed by their duly authorized officers on the
day and year first above written.
GENERAL PARTNERS: LIMITED PARTNERS:
JMC SELKIRK, INC. MAKOWSKI SELKIRK HOLDINGS, INC.
By: By:
Name: Name:
Title: Title:
JMCS I INVESTORS, L.P. COGEN TECHNOLOGIES
SELKIRK, L.P.
By: JMC Selkirk Holdings, By: Cogen Technologies Selkirk
Inc., a General Partner LP, Inc., a General Partner
By: By:
Name: Name:
Title: Title:
COGEN TECHNOLOGIES
SELKIRK GP, INC.
By: _____________________
Name:
Title:
106
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WITHDRAWING PARTNER:
OLD STATE SELKIRK
ASSOCIATES L.P.
By: Old State Selkirk
Partners L.P., a
General Partner
By: Old State Selkirk
Holdings L.P.,
a General Partner
By: Old State Management
Corp., a General Partner
By:
Name:
Title:
107
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