<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-13264
TRIGEN ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3378939
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Water Street
White Plains, New York 10601
(Address of principal executive offices) (Zip Code)
(914) 286-6600
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
There were 11,508,223 shares of the Registrant's Common Stock outstanding
as of May 15, 1996.
<PAGE>
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
Quarter Ended March 31, 1996
Part I - Financial Information: Page
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1996 and 1995 (Unaudited) 2
Condensed Consolidated Balance Sheets as of March 31, 1996
(Unaudited)and December 31, 1995 3
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1996 and 1995 (Unaudited) 4
Notes to Condensed Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-8
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1996 and 1995
Unaudited
(All amounts in thousands, except per share data)
1996 1995
<S> <C> <C>
Revenues
Energy revenues $82,359 $ 63,623
Fees earned and other operating revenues 3,860 1,553
------- --------
Total revenues 86,219 65,176
Operating expenses
Fuel and consumables 47,808 32,504
Production and operating costs 13,161 12,100
Depreciation 4,193 4,043
General and administrative 8,914 6,527
------- -------
Total operating expenses 74,076 55,174
Operating income 12,143 10,002
Other income (expense):
Interest expense (4,669) (4,989)
Other income, net 419 537
------- ------
Income before minority interests and income tax
expense 7,893 5,550
Minority interests in earnings of consolidated entities (801) (37)
------ ------
Income before income tax expense 7,092 5,513
Income tax expense 2,911 2,255
------- ------
Net income $ 4,181 $3,258
======= ======
Net income per share $ .36 $ .29
======= ======
Average shares outstanding 11,470 11,373
======= ======
Dividends per share $ .035 $ .035
======= =======
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 14,091 $ 9,984
Accounts receivable:
Trade (less allowance for doubtful
accounts of $783 in 1996 and $697
in 1995) 36,809 36,275
Other 3,254 1,922
Inventories 5,743 6,239
Prepaid costs and other current assets 4,639 6,890
------- -------
Total current assets 64,536 61,310
Non-current cash and cash equivalents 10,016 10,191
Property, plant and equipment, net 343,436 341,188
Investment in non-consolidated partnerships 8,701 6,548
Intangible assets, net 15,464 15,088
Deferred costs and other assets, net 19,669 20,581
------- -------
Total assets $ 461,822 $ 454,906
======= ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,929 $ 5,924
Accrued fuel 16,085 16,806
Accrued expenses and other current liabilities 22,923 16,718
Short-term debt 4,100 14,165
Current portion of long-term debt 14,070 7,415
------- ------
Total current liabilities 61,107 61,028
Long-term debt 222,111 223,371
Other liabilities 9,236 9,229
Deferred income tax liabilities 28,054 25,222
------- -------
Total liabilities 320,508 318,850
Minority interests in consolidated entities 16,940 17,226
Stockholders' equity:
Preferred stock-$.01 par value (authorized
and unissued 15,000,000 shares) ---- ----
Common stock-$.01 par value (authorized
60,000,000 shares; issued 11,518,815 shares
in 1996, 11,416,418 shares in 1995) 115 114
Additional paid-in capital 102,683 100,788
Retained earnings 21,848 18,070
Treasury stock, at cost (13,556 shares in
1996, 7,268 shares in 1995) (272) (142)
Total stockholders' equity 124,374 118,830
-------- --------
Total liabilities and stockholders' equity $461,822 $454,906
======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIGEN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
Unaudited
(All amounts in thousands)
1996 1995
<S> <C> <C>
Increase (decrease) in cash and cash equivalents:
Net cash provided by operating activities $16,695 $12,422
-------- --------
Cash flows from investing activities:
Sale of marketable securities ---- 7,786
Capital expenditures (6,385) (2,781)
Investment in non-consolidated partnerships, net (2,153) (737)
------- -------
Net cash (used in) provided by investing activities (8,538) 4,268
------- -------
Cash flows from financing activities:
Short-term debt, net (10,065) (7,600)
Proceeds of long-term borrowings 7,000 ----
Payments of long-term borrowings (1,605) (615)
Dividends (403) (399)
Issuance of common stock 859 ----
Repurchase of common stock (130) ----
Sale of interest rate caps 1,003 ----
Distribution to minority interests (884) ----
------ ------
Net cash (used in) financing activities (4,225) (8,614)
------- -------
Net increase in cash and cash equivalents 3,932 8,076
Cash and cash equivalents at beginning of period 20,175 19,837
------ ------
Cash and cash equivalents at end of period $24,107 $27,913
======= =======
Cash and cash equivalents at end of period:
Current cash and cash equivalents $14,091 $17,083
Non-current cash and cash equivalents 10,016 10,830
------- -------
Cash and cash equivalents at end of period $24,107 $27,913
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (net of amounts capitalized) $4,325 $4,378
====== ======
Income taxes $1,054 $2,273
====== ======
Non-cash investing activity:
Acquisition of subsidiary $1,037 $ ----
====== ======
Non-cash financing activity:
Issuance of common stock for acquisition of
subsidiary $1,037 $ ----
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Trigen Energy Corporation (the "Company") develops, owns and operates
community energy systems and cogeneration facilities at 13 locations in the
United States and Canada. The Company believes that it is the leading
commercial owner and operator of community energy systems in North America.
A community energy system consists of a central production plant that
distributes steam, hot water and/or chilled water to customer buildings through
underground distribution pipelines. Steam, hot water and/or chilled water are
sold by the Company to over 1,500 customers, including colleges and
universities, office buildings, hotels, civic and cultural landmarks, housing
complexes, industrial plants and hospitals. Cogenerated electricity produced
by the Company is used by the Company in eight of its systems and is sold to
one steam customer and to local utilities in three communities.
The consolidated financial statements of Trigen Energy Corporation and its
subsidiaries presented herein are unaudited. However, such information
reflects all adjustments, consisting of normal recurring adjustments, which
are, in the opinion of management, necessary to present fairly the financial
position as of March 31, 1996, and the results of operations and the cash flows
for the three months ended March 31, 1996 and 1995. The results of operations
and cash flows for the three month period ended March 31, 1996 are not
indicative of those to be expected for the year ending December 31, 1996.
These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 1995 included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company's operations are primarily the production and distribution of
steam, hot water, electricity and chilled water. Approximately 60% of total
revenue is derived from long-term contracts. The Company's heating and cooling
revenues and consequently its operating profits are subject to seasonal
fluctuation due to peak heating demand in the winter and peak cooling demand
in the summer.
For the quarter ended March 31, 1996, the Company reported net income of
$4.2 million or $0.36 per share compared to $3.3 million or $0.29 per share for
the comparable 1995 period.
Results of Operations
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995
Revenues
Revenues were $86.2 million for the three months ended March 31, 1996, an
increase of $21.0 million, from $65.2 million in the corresponding period in
1995, due principally to two acquisitions consummated in September 1995, which
contributed approximately half of the increase, a colder winter in 1996
compared to 1995 and the increased price of fuel.
<PAGE>
Operating Expenses
The Company's cost of sales includes fuel and consumables, production and
operating costs and depreciation expense and is affected primarily by its costs
for fuel, chemicals, water and other commodities. Because the Company's rates
typically enable it to pass through fuel and most commodity prices, changes in
such prices have little impact on operating income. The Company's cost of
sales and its operating income are also affected by its efficiency in
converting fuel to steam, hot water, electricity and chilled water and its
ability to minimize costs through automation and enhanced process control
efforts. Cost of sales as a percentage of revenues increased from 74.6% of
revenues in 1995 to 75.6% of revenues in 1996.
Fuel and consumable costs were $47.8 million, or 55.4% of revenues in
1996, compared to $32.5 million, or 49.9 % of revenues in 1995, an increase of
$15.3 million. This increase is due to the impact of the two acquisitions, the
increased price of fuel and the use of less efficient backup production
equipment to meet demand during the periods of extreme cold.
Production and operating costs are those costs of operating the Company's
facilities other than fuel and consumables, and include labor and supervisory
personnel, repair and maintenance costs and plant operating costs.
The increase resulting from the two acquisitions was offset by cost savings and
labor productivity improvements. Production and operating costs increased to
$13.2 million in 1996 from $12.1 million in 1995, and as a percentage of
revenues decreased to 15.3% in 1996 compared to 18.6% in 1995.
Depreciation expense was $4.2 million in 1996 compared to $4.0 million in
1995, an increase of $0.2 million due predominately to the two acquisitions.
General and administrative expenses represent on-site management and other
overhead costs incurred for existing operations, as well as the Company's
marketing and corporate management costs, and development expenses. General
and administrative costs increased to $8.9 million, or 10.3% of revenues in
1996 from $6.5 million or 10.0% of revenues, in 1995. This is primarily due
to additional staff and development and marketing costs and the impact of the
two acquisitions.
Operating Income
Operating income was $12.1 million, or 14.1% of revenues, in 1996 compared
to $10.0 million, or 15.3% of revenues, in 1995. Increased general and
administrative expenses offset by cost savings, primarily from efficiency and
labor productivity, higher revenues, and the impact of the two acquisitions,
resulted in improved operating income of $2.1 million.
Interest Expense; Other Income
Interest expense decreased to $4.7 million in 1996 from $5.0 million in
1995, primarily due to lower average interest rates on indebtedness.
Income Tax Expense
The Company's effective tax rate is determined primarily by the federal
statutory rate of 35%, and state and local income taxes. The effective income
tax rate of 41.0% is consistent with the rate in 1995.
<PAGE>
Liquidity and Capital Resources
Liquidity
The Company had cash and cash equivalents of $24.1 million at March 31,
1996 and $20.2 million at December 31, 1995, an increase of $3.9 million. The
Company had short-term indebtedness outstanding of $4.1 million at March 31,
1996 compared to $14.2 million at December 31, 1995, a reduction of $10.1
million. These changes were primarily due to the use of cash on hand at
December 31, 1995 and cash generated from operations during the quarter.
Certain of the Company's debt agreements restrict payments by its
subsidiaries, which are the primary obligors, to the Company unless the
payments are for specified purposes or the subsidiary meets certain financial
covenants. Restricted cash and cash equivalents of $16.0 million at March 31,
1996 included $6.4 million for debt service and reserve funds, $2.6 million for
operations and maintenance reserves, $3.7 million available for subsidiary
operating purposes and $3.3 million for certain construction projects.
Restricted funds may be invested only in certain securities. At March 31,
1996, the Company had unused lines of credit available consisting of $10.1
million under a United Thermal Corporation ("UTC") revolving credit facility
and $39.5 million under a corporate revolving credit facility.
On February 20, 1996, the Company declared a dividend of $.035 per share
of common stock to holders of record as of March 29, 1995, payable April 15,
1996.
Cash Flow
During the three months ended March 31, 1996, cash provided by operating
activities was $16.7 million compared to $12.4 million for the comparable
period in 1995. Net cash used in investing activities was $8.5 million for the
three months ended March 31, 1996 primarily due to capital expenditures of $6.4
million and the initial equity investment of $2.0 million in the Grays Ferry
Cogeneration Facility. Net cash used in financing activities was $4.2 million
in 1996 principally reflecting debt repayments.
Debt
At March 31, 1996, the Company's long-term debt (including the current
portion) was $236.2 million or 61.9% of total capital, at a weighted
average annual interest rate of approximately 7.07% (based on 3 month LIBOR of
5.47% per year) and an average remaining maturity of 6.9 years.
Certain of the Company's debt is variable rate or rate capped. Based upon
the debt balances at March 31, 1996, a change in the LIBOR rate of .25% would
have a corresponding change in interest expense of approximately $300,000 per
year when three month LIBOR is under 6.25% ranging to approximately $100,000
per year when three month LIBOR is over 7.25%.
<PAGE>
Future Capital Expenditures
The Company's planned capital expenditures for upgrades, expansions,
environmental matters and other improvements are material. The Company
believes that cash provided by operations net of debt service, cash balances
at March 31, 1996 and available credit facilities will be sufficient to finance
its capital program and several new development projects.
On January 18, 1996 the Company acquired Ewing Power Systems, Inc. for
$1.0 million of common stock.
On March 11, 1996, a wholly-owned subsidiary of the Company became a
one-third partner in the Grays Ferry Cogeneration Facility. Under the terms of
the Partnership Agreement, in addition to its initial equity investment, the
Company is required to contribute $10 million when construction is completed,
which is expected in the last quarter of 1997.
<PAGE>
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
10.1 - Acquisition Agreement dated March 1, 1996 among Adwin
(Schuylkill) Cogeneration, Inc., O'Brien (Schuylkill)
Cogeneration, Inc., and Trigen-Schuylkill Cogeneration,
Inc.
10.2 - Amended and Restated Partnership Agreement of
Grays Ferry Cogeneration Project dated March 1, 1996
among Adwin Schuylkill) Cogeneration, Inc., O'Brien
(Schuylkill) Cogeneration, Inc., and Trigen-Schuylkill
Cogeneration, Inc.
11 - Computation of Earnings Per Share
(b) No reports on Form 8-K were filed for the three months
ended March 31, 1996.
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIGEN ENERGY CORPORATION
/s/ Thomas R. Casten
Thomas R. Casten
President and Chief Executive Officer
/s/ David H. Kelly
David H. Kelly
Chief Financial Officer
/s/ Daniel J. Samela
Daniel J. Samela
Controller
Date: May 15,1996
/TEXT
<PAGE>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<DESCRIPTION>ACQUISITION AGREEMENT
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is entered into this 1st day of March, 1996, by
and among ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania corporation
("Adwin"), O'BRIEN (SCHUYLKILL) COGENERATION, INC., a Delaware corporation
("O'Brien"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a Pennsylvania
corporation (the "Purchaser"). (Adwin and O'Brien are sometimes hereinafter
referred to collectively as the "Partners.")
BACKGROUND
WHEREAS, on October 29, 1991, the Partners entered into a Partnership
Agreement to form Grays Ferry Cogeneration Partnership, a Pennsylvania general
partnership (hereinafter the "Partnership"), which Partnership Agreement was
amended by the First Amendment to Partnership Agreement, dated September 17,
1993, the Second Amendment to Partnership Agreement dated September 27, 1994,
and the Third Amendment to Partnership Agreement dated January 23, 1996; and
WHEREAS, the Partnership was formed to develop a cogeneration facility to
be located at 2600 Christian Street, Philadelphia, Pennsylvania, such facility
to be known as the "Grays Ferry Cogeneration Project" (the "Project"); and
WHEREAS, on September 17, 1993, the Partnership and Philadelphia United
Power Corporation ("PUPCO") entered into an Amended and Restated Project
Services and Development Agreement (the "Project Services Agreement"); and
WHEREAS, on September 17, 1993, PUPCO, Trigen-Philadelphia Energy
Corporation (then known as Philadelphia Thermal Energy Corporation) ("Trigen-
Philadelphia"), Adwin Equipment Company ("AEC"), and O'Brien Environmental
Energy, Inc. entered into an Amended and Restated Steam Venture Agreement (the
"Steam Venture Agreement"); and
WHEREAS, Purchaser desires to purchase a one-third interest in the
Partnership, pursuant to the terms of this Agreement; and
WHEREAS, in consideration of the Purchaser's purchase of a one-third
interest in the Partnership, PUPCO has agreed to terminate its option to
purchase an interest directly from the Partnership; and
WHEREAS, contemporaneously with the closing under this Acquisition
Agreement, the Purchaser desires to be admitted to the Partnership as an equal
partner, and Adwin and O'Brien desire that the Purchaser be so admitted, with
each of Adwin, O'Brien and the Purchaser having a one-third interest in the
Partnership following the consummation of the transactions contemplated by this
Agreement; and
WHEREAS, as a condition to the closing hereunder, the parties contemplate
that the Partnership Agreement shall be amended by an Amended and Restated
Partnership Agreement that will be executed by all of the parties hereto, which
Amended and Restated Partnership Agreement is attached as Exhibit A to this
Agreement (the "Restated Partnership Agreement"); and
WHEREAS, in connection with the execution of this Agreement, the
Partnership, the Partners, PUPCO and Trigen-Philadelphia desire to clarify
certain matters contained in the Project Services Agreement and the Steam
Venture Agreement; and
WHEREAS, the parties have agreed that the Purchaser's participation in the
Partnership shall be on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Transaction.
1.1 Purchase Price; Purchaser Partnership Interest. On the Closing
Date (as hereinafter defined), the Purchaser shall pay an aggregate amount of
$2,000,000 (the "Purchase Price") for a one-third interest in the Partnership,
one-half of which shall be paid to O'Brien and one-half to Adwin. Upon paying
the Purchase Price hereunder, the Purchaser shall receive a one-third interest
in the Partnership as provided in the Restated Partnership Agreement (the
"Partnership Interest").
1.2 Certain Understandings with Regard to the Project Services
Agreement. PUPCO and the Partnership agree that the Project Services Agreement
is clarified as follows:
(a) Sections 19.1, 19.4, 19.5, 19.6 and 19.7 are no longer
effective.
(b) Section 19.2 shall be interpreted as if the Equity Purchase
Option (as defined in the Project Services Agreement) has been exercised.
(c) Section 19.3 remains in full force and effect.
1.3 Certain Payments to PUPCO Under the Steam Venture Agreement. The
Partnership shall continue to pay PUPCO the quarterly development fees of
$150,000 per month described in Section 7D(i) of the Steam Venture Agreement
through the date of commercial operation of the Project.
1.4 Fees Due PUPCO at Financial Closing. The Partnership agrees that
the following fees due PUPCO shall be paid on the Financial Closing Date (as
defined in the Restated Partnership Agreement): (a) the $600,000 fee identified
in Section 7F of the Steam Venture Agreement, (b) the reimbursement of $55,176
in legal costs and $300,000 in past due development fees due PUPCO under the
Steam Venture Agreement and, (c) development costs associated with the
alternative natural gas pipeline in the amount of $259,200.
1.5 Restated Partnership Agreement. In connection with the
consummation of the transactions contemplated hereby and as a condition
precedent thereto, the Restated Partnership Agreement shall be executed by all
of the parties hereto at Closing.
1.6 Construction Manager. The Purchaser acknowledges that the
Partnership will retain NRG Energy, Inc. ("NRG") as the Construction Manager of
the Project, pursuant to the terms of a Construction Management Agreement dated
February 20, 1996, entered into by and between the Partnership and NRG with
respect thereto.
2. Closing. The closing of the transactions contemplated by this
Agreement shall be held at the offices of Ballard Spahr Andrews & Ingersoll,
counsel for Adwin, on or before the Financial Closing Date, but in no event
later than March 9,1996 (the "Expiration Date"), or at such other place as the
parties may agree (the "Closing"). (The date of the Closing shall be referred to
herein as the "Closing Date.") Ballard Spahr Andrews & Ingersoll shall serve as
Escrow Agent for the parties pursuant to a letter agreement among Ballard Spahr
Andrews & Ingersoll, the Partners and the Purchaser dated the same date as this
Agreement (the "Escrow Agreement"). All Deliverables received from the parties
by the Escrow Agent, pursuant to Section 9 of this Agreement on the Closing
Date, shall be held in escrow until delivered or disposed of by the Escrow Agent
in accordance with the terms of the Escrow Agreement.
3. Joint Representations and Warranties of the Partners. For purposes of
the following representations and warranties which are based on the Partners'
knowledge, the knowledge of the Partners shall be deemed to include, but is not
necessarily limited to, that of Reed Wills, who was formerly employed by O'Brien
Environmental Energy, Inc. The Partners, jointly and severally, represent and
warrant to the Purchaser as follows:
3.1 Organization and Standing; Qualification. The Partnership is a
general partnership duly constituted, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania. The Partnership has all
requisite partnership power and authority under its Partnership Agreement to:
(a) own or lease its properties and assets; (b) conduct its business as
currently conducted; (c) develop, construct, own, operate and manage the
Project, as contemplated by the Restated Partnership Agreement; and (d) enter
into and perform this Agreement and all other agreements entered into in
connection with the transactions contemplated hereby. Copies of the
Partnership's Partnership Agreement, as amended or restated to date, have been
delivered by the Partnership to the Purchaser and are complete and correct. The
Partnership has not qualified to do business in any other jurisdiction and
neither the ownership of its properties nor the conduct of its business requires
such qualification.
3.2 Conflict with Partnership Documents. None of the execution,
delivery and performance of, and compliance with, this Agreement nor the
consummation of the transactions contemplated hereby will (with or without the
giving of notice or lapse of time, or both) contravene or violate the
Partnership Agreement, or, to the best knowledge of the Partners, conflict with,
result in a breach or violation of, be in conflict with, entitle any party to
terminate, or constitute a default with respect to, any contract, bond, note,
indenture or other agreement or any restriction on the Project, the Partnership,
or its properties or assets, or any judgment, decree, order, statute, rule or
regulation to which the Project, the Partnership, or its properties or assets,
are subject or by which they may be bound, or result in the creation of any
liens, mortgages, pledges, prior assignments, encumbrances, claims, charges,
restrictions or security interests of any kind or character (collectively,
"Encumbrances") upon the Project, the Partnership or any of its properties or
assets. The Partnership is not a party to, nor subject to, nor bound by any
judgment, injunction or decree of any court or governmental authority and no
judgment, action or proceeding in law is pending or, to the knowledge of the
Partners, threatened against or involving the Partnership, which may restrict or
interfere with the performance of this Agreement by the Partnership.
3.3 Investments. The Partnership does not own any material amount of
stock in and has made no material equity investment in or material acquisition
of any other interest in, nor has it made any material advances or loans to, any
corporation, association, partnership, joint venture or other entity.
3.4 Financial Statements. Attached hereto as Exhibit B are copies of
the Partnership's unaudited financial statements as of and for each of the
calendar years ended December 31, 1995, and 1994 (December 31, 1995 being
hereinafter referred to as the "Balance Sheet Date"), with each of the financial
statements consisting of a balance sheet as of December 31 of each such year, an
Income Statement as of December 31 of each such year, and a General Ledger for
the years then ended. Attached hereto as Exhibit C is a copy of an unaudited
financial statement of the Partnership for the two-month period ended February
29, 1996, and a General Ledger for the period then ended. (Exhibits B and C are
hereinafter referred to as the "Financial Statements.") To the best knowledge of
the Partners, the Financial Statements are true, correct and complete in all
material respects and, to the best knowledge of the Partners, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis for the period covered by such statements, and, to the best
knowledge of the Partners, fairly and accurately present the financial condition
and operating results of the Partnership as of the dates and for the period
thereof. To the best knowledge of the Partners, all transactions between the
Balance Sheet Date and the Closing Date shall be or have been accounted for on
the Partnership's books and records of original entry in accordance with
generally accepted accounting principles, consistently applied.
3.5 Business Condition: Absence of Certain Changes. Since February
29, 1996, there has not been:
(a) Any material adverse change in the financial condition,
properties, assets, liabilities, business operations or, to the knowledge of the
Partners, prospects of the Partnership taken as a whole (hereinafter referred to
as the Partnership's "Business or Condition");
(b) Any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the Partnership's Business
or Condition;
(c) Any declaration, setting aside, or payment of any
distribution (whether in cash, securities, property or otherwise) by the
Partnership;
(d) Any discharge or satisfaction of any Encumbrance, or any
payment or satisfaction of any liability, absolute or contingent, other than
those performed in the ordinary course of business;
(e) Any secured or unsecured borrowing or any guaranty of the
borrowing of any money by the Partnership or the issuance or creation of (or any
commitment with respect thereto) any bonds, debentures, notes or other
obligations for the payment of money by the Partnership, other than those
performed in the ordinary course of business;
(f) Any loans or advances made by the Partnership to any person
or entity;
(g) Any cancellation, modification or waiver of any evidence of
indebtedness for borrowed money held by the Partnership;
(h) Any change in any method of accounting or accounting practice
of the Partnership;
(i) Any sale, assignment, transfer, mortgage, pledge or other
Encumbrance by the Partnership of any assets (real, personal or mixed, tangible
or intangible), or waiver by the Partnership of any rights of the Partnership;
or
(j) Any agreement or commitment by the Partnership to take any
of the actions described in clauses (c) through (i) above, except those actions
required in connection with the Financial Closing.
3.6 Permits. Except as set forth in Schedule 3.6, and specifically
excluding building permits, the Partnership has, to the best of the Partners'
knowledge, all governmental permits, licenses and authorizations issued by any
federal, state or local governmental authority (hereinafter referred to,
collectively, as the "Permits") that are required to commence construction of
the Project. To the best of the Partners' knowledge, all such Permits were
validly issued and are in full force and in effect, have not been suspended or
revoked, nor are there proceedings pending or threatened to suspend or revoke
any of such Permits.
3.7 Contracts.
(a) Schedule 3.7 sets out a list of the material contracts to
which the Partnership is currently a party.
(b) The Partners have delivered to the Purchaser a true, correct
and complete copy of (or, if oral, a true, correct and complete description of)
each material agreement, contract, plan, instrument, arrangement and commitment
listed on Schedule 3.7, including all amendments thereto, whether written or
oral. To the best of Partners' knowledge, all of such agreements were duly
authorized and approved by appropriate action of the Partnership and, to the
best of the Partners' knowledge, each such agreement is valid and in full force
and effect. To the best of the Partners' knowledge, neither the Partnership nor
the Partners is in default under any such agreement in a manner which could have
a material adverse effect on the Project, the Partnership or the Partnership's
future activities, and, to the best of Partners' knowledge, there exists no
condition or event which, with the lapse of time or notice, would constitute any
such default by the Partnership. To the best of the Partners' knowledge, there
is no outstanding notice of cancellation or termination in connection with any
such agreement.
3.8 Environmental Reports. To the best of the Partners' knowledge,
the Partners have delivered to the Purchaser all environmental reports
commissioned by the Partners regarding the Project.
3.9 Liabilities. Except as and to the extent reflected or reserved
against in the Financial Statements, and except those incurred subsequent to the
Balance Sheet Date that are fully recorded and reflected on the books of
original entry of the Partnership, to the best of the Partners' knowledge, the
Partnership does not have any liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise.
3.10 Books and Records. The books and accounts and other records of
the Partnership relating to the Project and the Partnership's properties and
assets are complete and correct in all material respects and have been
maintained in accordance with good business practices. All transactions of the
Partnership relating to the Project and the properties and assets of the
Partnership have been recorded in all material respects in such books and
records. The Partnership's principal place of business is 300 Stevens Drive,
Lester, Pennsylvania.
3.11 Compliance with Laws. To the best of the Partners' knowledge,
the Partnership is in compliance with all existing requirements of all laws,
statutes, rules, regulations and orders, federal, state and local, and all
existing requirements of all governmental bodies or agencies having jurisdiction
over the Project, the Partnership, its properties or assets, except where such
failure to be in compliance will not have a material adverse effect on the
Partnership's Business or Condition or on its ability to perform its obligations
under this Agreement or any other agreement to which it is a party. To the best
of the Partners' knowledge, neither the Partnership nor the Project are in
violation of, nor have they received any notice of any violation or alleged
violation of, or claim under any federal, state or local law, statute, rule,
regulation or order, nor do the Partners have any knowledge of any pending or
threatened governmental proceeding or investigation.
3.12 Employees. The Partnership does not now have nor has it ever
had any employees or any commitment to hire or engage any employees.
3.13 Litigation. The Partnership is not a party to, nor, to the
knowledge of the Partners, threatened with any suit, action, arbitration or
other legal or governmental proceeding relating to or affecting the Project, the
Partnership or its properties or assets. There is no material judgment, decree,
award or order outstanding or unsatisfied against the Partnership relating to or
affecting the Project, the Partnership or its properties or assets, nor, to the
knowledge of the Partners, is there any basis for any such suit, action,
arbitration or other legal or governmental proceeding. To the best of the
Partners' knowledge, no notice, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed, and no investigation,
review or proceeding is pending or, to the best of the Partners' knowledge,
threatened, of any kind, by any person, firm or entity, with respect to the
Project, the Partnership or its properties or assets.
3.15 Exhibits and Schedules. To the best of the Partners' knowledge,
all exhibits, schedules and other documents relating to the Partnership which
are attached to this Agreement are accurate and shall constitute an integral
part of this Agreement with the same force and effect as if such exhibits,
schedules and documents were set forth in their entirety herein.
4. Individual Representations and Warranties of the Partners. For
purposes of the following individual representations and warranties made by
O'Brien which are based on the knowledge of O'Brien, such knowledge shall be
deemed to include, but is not necessarily limited to, the knowledge of Reed
Wills, who was formerly employed by O'Brien Environmental Energy, Inc. Each
Partner individually (but not jointly and severally) represents and warrants to
the Purchaser as follows:
4.1 Organization and Standing; Qualification. Such Partner is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation. Such Partner has all requisite corporate power
and authority to own or lease its properties and assets, to conduct its business
as currently conducted and to enter into and perform this Agreement and all
other agreements entered into by it in connection with the transactions
contemplated hereby. Copies of the Articles or Certificate of Incorporation, as
amended to date, and By-Laws, as amended to date, of such Partner have been
delivered to the Purchaser and are complete and correct. Such Partner, if such
Partner is Adwin, is not qualified to do business as a foreign corporation in
any jurisdiction and neither the ownership of its properties nor the conduct of
its business requires such qualification. If such Partner is O'Brien, it is
qualified to do business in Pennsylvania.
4.2 Authority, Binding Effect. Such Partner has the full corporate
power and authority to make, execute, deliver and perform this Agreement, and
the other instruments and documents required or contemplated hereunder to which
it is a party, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement, and all documents and instruments required to be
executed, delivered and performed hereunder or thereunder by such Partner, have
been duly and validly authorized and approved by all necessary action by it, and
have been duly and validly executed and delivered by such Partner. This
Agreement constitutes, and all other documents and instruments to be executed,
delivered, and performed hereunder by such Partner will constitute, the valid
and binding obligation of such Partner, enforceable against it in accordance
with their respective terms.
4.3 Performance of this Agreement. Such Partner is not a party to,
nor subject to, nor bound by any judgment, injunction or decree of any court or
governmental authority and no judgment, action or proceeding in law is pending
or, to the knowledge of such Partner, threatened against or involving such
Partner, which may restrict or interfere with the performance of this Agreement
by such Partner.
4.4 Compliance with Laws. To the best of such Partner's knowledge, it
is in compliance with all existing requirements of all laws, statutes, rules,
regulations and orders, federal, state and local, and all existing requirements
of all governmental bodies or agencies having jurisdiction over it or its
properties or assets, except where such failure to be in compliance will not
have a material adverse affect on such Partner's business or financial condition
or on its ability to perform its obligations under this Agreement or any other
agreement to which it is a party. To the best knowledge of such Partner, it has
received no notice of any violation of, or claim under any federal, state or
local law, statute, rule, regulation or order, nor does it have any knowledge of
any pending or threatened governmental proceeding or investigation.
4.5 No Consents. Except as set forth on Schedule 4.5, no consent of
any governmental or judicial authority or agency, or of any bank, other
financial institution or other third party, is required in connection with the
execution and delivery by such Partner of this Agreement and the other documents
and instruments required or contemplated herein or the consummation of the
transactions contemplated hereunder by such Partner.
4.6 Ownership of Partnership Interests. The only ownership interests
in the Partnership in existence on the date hereof are those owned by the
Partners, each of which owns a one-half interest in the Partnership. Upon the
consummation of the transactions contemplated hereby, each of Adwin, O'Brien and
the Purchaser shall own a one-third interest in the Partnership. The
partnership interests outstanding on the date hereof have been, and such
Partner's portion of the Partnership Interest, when delivered in accordance with
the terms of this Agreement and based upon the representations of Purchaser set
forth in Sections 5.7 and 5.8, will be issued in compliance with applicable
federal and state securities laws. No action has been taken by the Partnership,
the Partners or, to the best of the Partners' knowledge, any third party that
would cause the Partnership to be deemed to be a publicly-traded partnership
within the meaning of Section 7704(b) of the Internal Revenue Code of 1986, as
amended. Neither the Partnership nor such Partner has issued, nor is the
Partnership or such Partner bound by, any outstanding subscriptions, options,
warrants, contracts, calls, rights or commitments of any character relating to
the issuance of or granting of a right in or to acquire any interest of or in
the Partnership, whether equitable or otherwise, nor, to the knowledge of such
Partner, is there any basis for any third party making a claim to or against its
interest in the Partnership.
4.7 Partnership Contributions and Loans. Except as set forth on
Schedule 4.7 hereto, such Partner has not made any capital contributions to the
Partnership, loaned any money to the Partnership, borrowed any money from the
Partnership, guaranteed any obligation of the Partnership or been the
beneficiary of any guarantee made by the Partnership.
4.8 Partnership Interest. Following the consummation of the
transactions contemplated hereby, such Partner shall have transferred to the
Purchaser title to one-half (1/2) of the Partnership Interest conveyed
hereunder, free and clear of any liens, claims or encumbrances, excepting only
those created or granted by or arising through the Purchaser.
4.9 Litigation. Such Partner is not a party to, nor to its knowledge,
threatened with any suit, action, arbitration or other legal or governmental
proceeding relating to or affecting the Project, the Partnership or its
properties or assets. There is no material judgment, decree, award or order
outstanding or unsatisfied against such Partner relating to, or affecting, the
Project, the Partnership, or its properties or assets, nor to the knowledge of
such Partner, is there any basis for any such suit, action, arbitration or other
legal or governmental proceeding. To the best knowledge of such Partner, no
notice, citation, summons or order has been issued, no complaint has been filed,
no penalty has been assessed, and no investigation, review or proceeding is
pending, or to the best of such Partner's knowledge, threatened, of any kind, by
any person, firm or entity, with respect to the Project, the Partnership or its
properties or assets.
5. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Partners as follows:
5.1 Organization; Existence and Authority. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. The Purchaser has all requisite corporate
power and authority to own or lease its properties and assets, to conduct its
business as currently conducted and to enter into and perform this Agreement and
all other agreements entered into in connection with the transactions
contemplated hereby. Copies of the Purchaser's Articles of Incorporation, as
amended to date, and By-Laws, as amended to date, have been delivered by the
Purchaser to the Partners, and are complete and correct.
5.2 Authority; Binding Effect. The Purchaser has the full
corporate power and authority to make, execute, deliver and perform this
Agreement, and the other instruments and documents required or contemplated
hereunder, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement, and all documents and instruments required to be
executed, delivered and performed hereunder or thereunder by the Purchaser, have
been duly and validly authorized and approved by all necessary action by it, and
have been duly and validly executed and delivered by the Purchaser. This
Agreement constitutes, and all other documents and instruments to be executed,
delivered and performed hereunder or thereunder by the Purchaser shall
constitute, the valid and binding obligation of the Purchaser, enforceable
against it in accordance with its terms.
5.3 Conflict with Documents. Neither the execution, delivery and
performance of, and compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will (with or without the giving of notice of
lapse of time, or both) contravene or violate the Articles of Incorporation or
By-Laws of the Purchaser, or, to the best knowledge of Purchaser, conflict with,
result in a breach or violation of, entitle any party to terminate, or
constitute a default with respect to any contract, bond, notice, indenture or
other agreement or any restriction on the Purchaser or its properties or assets,
or any judgment, decree, order, statute, rule or regulation to which the
Purchaser or its properties or assets are subject or by which they may be bound
or result in the creation of any Encumbrance upon the Purchaser or any of its
properties or assets. The Purchaser is not a party to, nor subject to, nor
bound by any judgment, injunction or decree of any court or governmental
authority and no judgment, action or proceeding in law is pending or, to the
knowledge of the Purchaser, threatened against or involving the Purchaser, which
may restrict or interfere with the performance of this Agreement by the
Purchaser.
5.4 Litigation. The Purchaser is not a party to nor, to its
knowledge, threatened with any suit, action, arbitration or other legal or
governmental proceeding relating to or affecting it or its properties or assets.
There is no material judgment, decree, award or order outstanding or unsatisfied
against the Purchaser relating to or affecting it or its properties or assets,
nor, to the knowledge of the Purchaser, is there any basis for any such suit,
action, arbitration or other legal or governmental proceeding. To the best of
Purchaser's knowledge, no notice, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed, and no investigation,
review or proceeding is pending or, to the best of the Purchaser's knowledge,
threatened, of any kind, by any person, firm or entity, with respect to the
Purchaser, its properties or assets.
5.5 Compliance with Laws. To the best knowledge of Purchaser's
knowledge, Purchaser is in compliance with all existing requirements of all
laws, statutes, rules, regulations and orders, federal, state and local, and all
existing requirements of all governmental bodies or agencies having jurisdiction
over it or its properties or assets, except where such failure to be in
compliance will not have a material adverse affect on the Purchaser's business
or financial condition or on its ability to perform its obligations under this
Agreement or any other agreement to which it is a party. To the best knowledge
of Purchaser, the Purchaser has received no notice of any violation or alleged
violation of, or claim under any federal, state or local law, statute, rule,
regulation or order, nor does the Purchaser have knowledge of any pending or
threatened governmental proceeding or investigation.
5.6 No Consents. Except as set forth on Schedule 5.6, no consent
of any governmental or judicial authority or agency, or of any bank, other
financial institution or other third party, is required in connection with the
execution and delivery by the Purchaser of this Agreement and the other
documents and instruments required or contemplated herein or the consummation of
the transactions contemplated hereunder by the Purchaser.
5.7 No Distribution. The Partnership Interest being acquired by
the Purchaser hereunder is being acquired for its own account for investment and
not with a view to distribution or resale of such Partnership Interest to
others, and Purchaser recognizes that it may not transfer such Partnership
Interest in violation of securities laws.
5.8 Requisite Knowledge, Undertaking of Risks. The Purchaser
possesses the requisite knowledge and experience in business and financial
matters to be capable of evaluating the merits and risks of investment in the
Partnership, and is not relying on any representations and warranties of the
Partners except those explicitly set out herein. The Purchaser recognizes that
participation in the Partnership involves a substantial degree of risk, and that
it may lose some or all of its investment in the Partnership.
6. Covenants of the Partners. The Partners covenant to and with the
Purchaser as follows:
6.1 Conduct of Business. From the date hereof through the
Financial Closing Date, the Partnership and each of the Partners will conduct
their operations according to their normal course of business, including without
limitation their reasonable efforts to preserve intact their respective business
organizations, and to maintain satisfactory relationships with third parties
having business relationships with them. The Partners shall confer on a regular
and frequent basis with the Purchaser to report operational matters of a
material nature and to report the general status of the ongoing operations of
the business of the Partnership. The Partners shall promptly notify the
Purchaser of: (a) any fact or event, the existence or occurrence of which would
render any of the Partners' representations or warranties untrue or inaccurate;
(b) any fact or event, the existence or occurrence of which would have a
material adverse impact on the Project, the Partnership or the Partnership's
future activities; (c) any unexpected emergency or other material change in the
normal course of business or in the operations of the business of the
Partnership or the Partners; and (d) any investigation or review, pending or
threatened, by any governmental entity involving any material business, asset or
property of the Partnership or the Partners. The Partners shall keep the
Purchaser fully informed of all developments with respect to any such facts and
events and shall permit the Purchaser's representatives access to all materials
prepared in connection therewith or relevant thereto.
6.2 Forbearance by the Partnership. Prior to the Financial Closing
Date, the Partners shall be required to obtain the Purchaser's approval of major
decisions affecting the Partnership. These "Major Decisions" shall include, but
are not necessarily limited to, a decision to do any of the following:
(a) Issue additional partnership interests or any options,
warrants or other rights to acquire an interest in the Partnership;
(b) Declare or pay any distribution;
(c) Sell any of its properties or assets;
(d) Extend credit, or issue, incur or prepay any indebtedness for
borrowed money;
(e) Mortgage, pledge or otherwise encumber any of its properties
or assets;
(f) Make any investment in third parties of a capital nature
either by purchasing stock or securities, contributing to capital, transferring
property or otherwise;
(g) Enter into any employment agreement or any incentive
compensation, profit sharing, partnership interest purchase, option, savings,
consulting, deferred compensation, retirement, pension or other employee benefit
plan or arrangement with or for the benefit of any Partner, officer, employee or
other person;
(h) Terminate or voluntarily allow to lapse any insurance policy
naming the Partnership as a beneficiary or a loss payee unless, simultaneously
with such termination or lapse, replacement policies providing substantially the
same coverage are in full force and effect;
(i) Amend the Partnership Agreement; or
(j) Enter into any agreement to do any of the things described in
clauses (a) through (i) above.
6.3 Investigations and Purchaser Due Diligence. Purchaser
acknowledges that it has had the opportunity to conduct due diligence regarding
the proposed acquisition of the Partnership Interest, and to investigate the
business and properties of the Partnership, as well as its financial and legal
condition. Purchaser has satisfied itself with respect to such investigations.
Notwithstanding completion of Purchaser's due diligence, no investigation by or
on behalf of the Purchaser heretofore or hereafter made shall affect the
representations and warranties of the Partners contained herein, and such
representations and warranties shall survive any such investigation as and to
the extent provided in this Agreement.
6.4 Negotiations with Others. From the date hereof through the
Financial Closing Date, the Partners shall not, directly or indirectly, without
the prior written consent of the Purchaser, initiate or engage in discussions or
negotiations with any corporation, partnership, person or other entity (other
than the Purchaser) concerning any sale of an interest in the Partnership or any
merger, sale of assets, or similar transaction involving the Partnership.
7. Conditions of the Purchaser to the Breaking of Escrow. The
obligations of the Purchaser under this Agreement, and the authority of the
Escrow Agent to break escrow, are subject to the satisfaction and fulfillment,
or waiver by the Purchaser, at or before the Expiration Date, of each of the
following conditions:
7.1 Bankruptcy Court Approval Opinion. The Purchaser shall have
received from counsel to O'Brien reasonably satisfactory to the Purchaser an
opinion to the effect that the approval of the bankruptcy court is not necessary
or required for the execution, delivery and/or performance by O'Brien of this
Agreement or the other instruments and documents required or contemplated
hereunder to perform O'Brien's obligations hereunder or to consummate the
transactions contemplated hereby, or, if required, any necessary approval has
been obtained.
7.2 Financial Closing. The Financial Closing shall have been
consummated on terms satisfactory to Purchaser.
7.3 Deliverables. Escrow Agent shall have received, on behalf of
Purchaser, the documents required to be delivered to Purchaser under Section 9.1
below.
7.4 Payments Due PUPCO. PUPCO shall have received at Financial
Closing those payments due PUPCO under Section 1.4 hereof.
7.5 Letter of Credit or Corporate Guaranty. The Escrow Agent shall
have received a letter of credit or a corporate guaranty securing the Project
Equity Contribution under the Restated Partnership Agreement of each of the
Partners in a form satisfactory to the Lenders under the Credit Agreement.
7.6 Certain Consents. The Lender shall have received Consents
executed by the Partners and other necessary parties with respect to the Steam
Purchase Agreement, the Steam Venture Agreement, the Project Services Agreement,
and the Dock Facility Services Agreement in form satisfactory to Lender.
7.7 Opinion. Insofar as counsel to O'Brien delivers an opinion to
the Lenders on the Financial Closing Date (as each such term is defined in the
Restated Partnership Agreement) which addresses matters of law which are also
addressed directly or by implication in the opinion delivered at the Closing by
O'Brien's general counsel, Purchaser shall receive the permission of counsel
delivering such opinion to the Lenders to rely on the portions of such opinion
addressing such matters of law.
7.8 Lien Searches. To the extent lien searches are received prior
to the Financial Closing, they shall not reveal anything inconsistent with the
representations and warranties made by the Partners herein.
8. Conditions of the Partners to the Breaking of Escrow. The
obligations of the Partners under this Agreement, and the authority of the
Escrow Agent to break escrow, are subject to the satisfaction and fulfillment,
or waiver by the Partners, at or before the Expiration Date, of each of the
following conditions:
8.1 Financial Closing. The Financial Closing shall have been
consummated on terms satisfactory to each of the Partners.
8.2 Deliverables. The Escrow Agent shall have received, on behalf
of the Partners, documents required to be delivered to the Partners under
Section 9.2 below.
8.3 Letter of Credit. The Escrow Agent shall have received a
letter of credit from Purchaser in a form satisfactory to the Lenders under the
Credit Agreement guaranteeing the Project Equity Contribution of Purchaser under
the Restated Partnership Agreement.
8.4 Certain Consents. The Lender shall have received Consents
executed by the Purchaser and other necessary parties with respect to the Steam
Purchase Agreement, the Steam Venture Agreement, the Project Services Agreement,
and the Dock Facility Services Agreement in form satisfactory to Lender.
8.5 Opinion. Insofar as counsel to O'Brien delivers an opinion
to the Lenders on the Financial Closing Date (as each such term is defined in
the Restated Partnership Agreement) which addresses matters of law which are
also addressed directly or by implication in the opinion delivered at the
Closing by O'Brien's general counsel, Adwin shall receive the permission of
counsel delivering such opinion to the Lenders to rely on the portions of such
opinion addressing such matters of law.
9. Closing; Deliverables at Closing. All Deliverables required of the
Purchaser and the Partners set out below shall be delivered on or before the
Closing to Escrow Agent and Escrow Agent shall hold the Deliverables in escrow
until such time as the conditions to the breaking of escrow set out in
Paragraphs 7 and 8 herein have been fulfilled. If the conditions to the
breaking of escrow set out in Paragraphs 7 and 8 have not been satisfied by the
Expiration Date, or if this Agreement is terminated by mutual consent of the
Purchaser and the Partners under Section 10 hereof, Escrow Agent shall return
all Deliverables to the parties, pursuant to the terms of the Escrow Agreement,
and the rights and obligations of the parties shall be determined in accordance
with Paragraph 11 herein. Upon satisfaction of all of the conditions to the
breaking of escrow set out in Paragraphs 7 and 8 or upon such termination,
Escrow Agent shall deliver or dispose of the Deliverables in accordance with the
terms of the Escrow Agreement.
9.1 Deliverables from the Partners. At or prior to the Closing,
the Partners shall execute and/or deliver to the Escrow Agent:
(a) Restated Partnership Agreement. The Restated Partnership
Agreement, in the form of Exhibit A hereto, duly executed by the Partners.
(b) PUPCO Side Letter. A side letter agreement dated date the
hereof, duly executed by the Partnership, the Partners, the Purchaser and PUPCO
(the "PUPCO Side Letter").
(c) Acknowledgment. An acknowledgment letter dated the date
hereof duly executed by Trigen-Philadelphia, PUPCO, AEC, O'Brien and the
Partnership.
(d) Updated Balance Sheet. An updated, unaudited balance
sheet of the Partnership, effective as of February 29, 1996.
(e) Opinion Letter. An opinion of counsel to each of the
Partners, dated the Closing Date, in the form set forth in Exhibit D hereto.
(f) Certificate Regarding Continuous Validity of
Representations and Warranties. A certificate executed by the respective
President or Chief Executive Officer of each of the Partners certifying that all
representations and warranties of such Partner made in or pursuant to this
Agreement are true and correct at and as of the Closing Date.
(g) Certificate Regarding Fulfillment of Obligations and
Conditions. A certificate from each of the Partners signed by its respective
President or Chief Executive Officer certifying that such Partner has performed,
observed, and complied with all the obligations and conditions required of it by
this Agreement to be performed, observed or completed at or prior to the Closing
Date.
(h) Other Documents. (i) A Certificate of Good Standing with
respect to each of the Partners from the Secretary of State of its
incorporation; (ii) certified copies of resolutions duly adopted by the Board of
Directors of each of the Partners respectively authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein by such Partner; (iii) certified copies of the Articles of Incorporation
and by-laws, as amended, of each of the Partners; and (iv) the Escrow Agreement
in a form satisfactory to the Escrow Agent, Purchaser, and the Partners.
(i) Consents of Third Parties. The consents or approvals of
any third parties whose consent is required for each of the Partners to
consummate the transactions contemplated by this Agreement.
(j) Governmental Approvals. All necessary consents,
authorizations and approvals of all governmental agencies, commissions and
similar bodies, the consent, authorization or approval of which is required
under any applicable law, rule, order or regulation for the consummation by each
of the Partners of the transactions contemplated by this Agreement.
9.2 Deliverables from the Purchaser. At or prior to the Closing,
the Purchaser shall execute and/or deliver to the Escrow Agent:
(a) Restated Partnership Agreement. The Restated Partnership
Agreement, in the form of Exhibit A hereto, duly executed by the Purchaser.
(b) Purchase Price. The sum of $2,000,000, $1,000,000 of
which shall be represented by a cashier's check, payable to O'Brien, drawn on a
bank reasonably acceptable to O'Brien, and $1,000,000 of which shall be
represented by a cashier's check payable to Adwin, drawn on a bank reasonably
acceptable to Adwin, representing the amount of the Purchase Price to be paid by
the Purchaser under Section 1. 1.
(c) PUPCO Side Letter. The PUPCO Side Letter, duly executed
by the Partnership, the Partners, the Purchaser and PUPCO.
(d) Opinion Letter. An opinion of counsel to the Purchaser,
dated the Closing Date, in the form set forth in Exhibit I hereto.
(e) Certificate Regarding Continuing Validity of Purchaser's
Representations and Warranties. A Certificate executed by the President of
Purchaser certifying that all representations and warranties of the Purchaser
made in or pursuant to this Agreement are true and correct at and as of the
Closing Date.
(f) Certificate Regarding Fulfillment of Obligations and
Conditions. A Certificate signed by the President of Purchaser certifying that
Purchaser has performed, observed and complied with all the obligations and
conditions required by this Agreement to be performed, observed, or complied
with prior to the Closing Date.
(g) Other Documents. Purchaser shall have delivered to the
Escrow Agent:
(i) A certificate of Good Standing with respect to the
Purchaser from the Secretary of the Commonwealth of Pennsylvania;
(ii) Certified copies of resolutions duly adopted by the
Board of Directors of the Purchaser, authorizing the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein;
(iii) Certified copies of the Articles of Incorporation
and by-laws, as amended, of the Purchaser; and
(iv) The Escrow Agreement in a form satisfactory to the
Escrow Agent, Purchaser and the Partners.
(h) Consents of Third Parties. The consents or approvals of
any third parties whose consent is required for the Purchaser to consummate the
transactions contemplated by this Agreement.
(i) Governmental Approvals. All necessary consents,
authorizations and approvals of all governmental agencies, commissions and
similar bodies, the consent, authorization or approval of which is required
under any applicable law, rule, order or regulation for the consummation by the
Purchaser of the transactions contemplated by this Agreement.
10. Termination. This Agreement and the transactions contemplated
hereby may be terminated as follows:
10.1 Mutual Termination. By written mutual consent of the
Purchaser and the Partners on or prior to the Expiration Date.
10.2 Expiration Date. By the Purchaser, on the one hand, or by the
Partners, on the other hand, if the conditions to the breaking of escrow set out
in Sections 7 and 8 hereby have not been satisfied by the Expiration Date.
11. Effect of Termination. If this Agreement and the transactions
contemplated hereby are terminated on or before the Expiration Date, then,
except as set forth in this Section 11, no party hereto shall be liable to any
other party hereto under this Agreement or otherwise and this Agreement shall
become void and be without any force of effect. Notwithstanding the foregoing,
upon any such termination, the rights and obligations of the parties shall be
governed by the other agreements in effect between and among them, including,
without limitation, the Project Services Agreement, the Steam Venture Agreement,
and the Escrow Agreement.
12. Survival. The right to make a claim for breach of the
representations and warranties made as of the Closing Date shall survive the
Closing Date for a period of three years from and after the Closing Date, with
the exception of those representations and warranties set out in Sections 3.1,
3.2, 4.1, 4.2, 4.8, 5. 1, and 5.2, as to which the right to make a claim shall
survive for a period as is provided under applicable Pennsylvania law. Any
claim by the Purchaser for indemnification under Section 13 for a breach of any
representation or warranty made as of the Closing Date, or by the Partners under
Section 14 for a breach of any representation or warranty made as of the Closing
Date, must be made on or prior to the date on which the survival period for such
representation or warranty expires, it being understood that the indemnity
obligations of the Purchaser and the Partners, as the case may be, with respect
to claims that are asserted on or prior to such expiration date shall survive
such expiration date.
13. Indemnification of the Purchaser.
13.1 Indemnification of the Purchaser. The Partners shall, up to an
aggregate maximum of $3,000,000 per Partner, indemnify, defend and hold harmless
Purchaser (and its directors, officers, employees and affiliates) from and
against any and all "Purchaser Losses" as hereafter defined. "Purchaser Losses"
means any and all claims, liabilities, losses, damages, reasonable costs and
expenses, including reasonable attorneys' fees and court costs incurred (i) by
the Partnership where the result is a diminution of the Fair Value (as defined
in the Restated Partnership Agreement) of the Purchaser's interest in the
Partnership including, without limitation, a diminution in cash distributions,
or (ii) by the Purchaser, that results in either case, from the breach of a
representation or warranty of a Partner under this Agreement. The $3,000,000
limit per Partner shall apply even if the aggregate indemnity obligation of such
Partner for joint representations and warranties made under Section 3 herein,
plus its liability for individual representations and warranties made under
Section 4, exceeds $3,000,000. Notwithstanding the foregoing, no
indemnification obligation of any Partner for Purchaser Losses shall arise under
this Section 13.1 until such time as the Purchaser Losses, in the aggregate,
exceed $300,000.
13.2 Notice of Claims by the Purchaser. Within ten business days
after the Purchaser receives notice of any claim, in respect of which the
Partners may be liable under this Section 13, the Purchaser shall give written
notice thereof to the Partners. The Purchaser may at its option give notice and
claim indemnity under this Section 13 as soon as a claim has been threatened by
a third party, regardless of whether a loss has been suffered, so long as the
Purchaser shall in good faith determine that such claim is not frivolous and
that the Purchaser may be liable or otherwise incur a loss as a result thereof
and shall give notice of such determination to the Partners. The Purchaser
shall permit the Partners, at the sole option and expense of the Partners, to
assume the defense of any such claim by counsel satisfactory to the Purchaser
and to settle or otherwise dispose of the same. In any such event, the
Purchaser will cooperate with the Partners and may at all times participate in
such defense, at its own expense; provided, however, that the Partners shall
not, in defense of any such claim, except with the prior written consent of the
Purchaser, consent to the entry of any judgment or enter into any settlement
that does not include the giving by the claimant or plaintiff in question to the
Purchaser a release of all liabilities in respect of such claims, or that does
not result solely in the payment of money damages by the Partners.
13.3 Purchaser's Remedy Upon Dissolution. As Purchaser's
exclusive remedy for Purchaser Losses under Section 13.1, Purchaser shall have
the right, upon liquidation of the assets of the Partnership pursuant to Section
24 of the Restated Partnership Agreement, to receive priority payment of any Net
Indemnity Obligations, as defined below, which are owed to it by either Adwin
and/or O'Brien pursuant to the provisions of Section 13.1. For purposes of this
Section, "Net Indemnity Obligations" shall mean all Purchaser Losses under
Section 13.1, the amount of which shall have been established by mutual
agreement or a final, nonappealable judgment of a court of competent
jurisdiction, and which shall represent the excess of the indemnity obligations
of Adwin and/or O'Brien owed Purchaser under Section 13.1, over any indemnity
obligations owed by Purchaser to Adwin and/or O'Brien pursuant to Section 14.1.
Such "Net Indemnity Obligations" shall be deducted from the Unreimbursed
Development Costs otherwise due Adwin and/or O'Brien under Section 24 of the
Restated Partnership Agreement, and shall be paid prior to the reimbursement of
such Unreimbursed Development Costs due Adwin and/or O'Brien, pursuant to the
provisions of Section 24 of the Restated Partnership Agreement. The indemnity
cap, calculation of Net Indemnity Obligation, and calculation of Net Indemnity
Amount shall be applied and made on a per Partner basis, and neither Partner
shall be liable for the other Partners' indemnity obligation. In the event of a
dispute over any indemnity claims of Purchaser, the parties agree to mediate the
dispute initially pursuant to the Commercial Mediation Rules of the American
Arbitration Association, but if such mediation efforts have not produced a
settlement within ninety (90) days, any party may refer the matter to a court of
competent jurisdiction for resolution.
14. Indemnification of the Partners.
14.1 Indemnification of the Partners. The Purchaser shall, up to
an aggregate maximum of $3,000,000, indemnify, defend and hold harmless the
Partners (and their respective directors, officers, employees and affiliates)
from and against any and all "Partner Losses" as hereafter defined. "Partner
Losses" means any and all claims, liabilities, losses, damages, reasonable costs
and expenses, including reasonable attorneys' fees and court costs and expenses
incurred (i) by the Partnership where the result is a diminution of the Fair
Value (as defined in the Restated Partnership Agreement) of the Partners'
interest in the Partnership including, without limitation, a diminution in cash
distributions, or (ii) by the Partners, that results in either case, from the
breach of a representation or warranty of the Purchaser under this Agreement.
Notwithstanding the foregoing, no indemnification obligation of the Purchaser
for Partner Losses shall arise under this Section 14.1 until such time as the
Partner Losses, in the aggregate, exceed $300,000.
14.2 Notice of Claims by the Partners. Within ten business days
after the Partners receive notice of any claim, in respect of which the
Purchaser may be liable under this Section 14, the Partners shall give written
notice thereof to the Purchaser. The Partners and the Partnership may at their
option give notice and claim indemnity under this Section 14 as soon as a claim
has been threatened by a third party, regardless of whether an actual loss has
been suffered, so long as the Partners shall in good faith determine that such
claim is not frivolous and that the Partners may be liable or otherwise incur a
loss as a result thereof and shall give notice of such determination to the
Purchaser. The Partners shall permit the Purchaser, at its sole option and
expense, to assume the defense of any such claim by counsel satisfactory to the
Partners and to settle or otherwise dispose of the same. In any such event, the
Partners will cooperate with the Purchaser and may at all times participate in
such defense, at its own expense; provided, however, that the Purchaser shall
not, in defense of any such claim, except with the prior written consent of the
Partners, consent to the entry of any judgment or enter into any settlement that
does not include the giving by the claimant or plaintiff in question to the
Partners a release of all liabilities in respect of such claims, or that does
not result solely in the payment of money damages by the Purchaser.
14.3 The Partners' Remedy Upon Dissolution. As the Partners'
exclusive remedy for Partner Losses under Section 14.1, the Partners shall have
the right, upon liquidation of the assets of the Partnership pursuant to Section
24 of the Restated Partnership Agreement, to collect from Purchaser's share of
distributions under Section 24.01(e) of the Restated Partnership Agreement any
"Net Indemnity Amounts Owed by Purchaser," as defined below, owed to the
Partners by Purchaser pursuant to the provisions of Section 14.1. For the
purposes of this Section, "Net Indemnity Amounts Owed by Purchaser" shall mean
the excess of all Partner Losses under Section 14.1 owed to the Partners by
Purchaser over any indemnity amounts owed by the Partners to Purchaser pursuant
to the provisions of Section 13.1. Such "Net Indemnity Amounts Owed by
Purchaser" shall be established through either mutual consent of the parties, or
by a final, nonappealable order of a court of competent jurisdiction, and once
established, shall be deducted from the Capital Account of Purchaser, pursuant
to the provisions of Section 24.01(e) of the Restated Partnership Agreement. In
the event of a dispute over any indemnity claims of the Partners, the parties
agree to mediate the dispute initially pursuant to the Commercial Mediation
Rules of the American Arbitration Association, but if such mediation efforts
have not produced a settlement within ninety (90) days, any party may refer the
matter to a court of competent jurisdiction for resolution.
15. Agreement to Consummate, Further Assurances. Subject to the terms
and conditions herein provided, including the termination rights under Section
10 hereof, each of the parties hereto agrees to use commercially reasonable
efforts to do all things necessary, proper or advisable under this Agreement
(including satisfaction of the conditions set forth in Sections 7 and 8 hereof),
applicable laws and regulations to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated by this Agreement,
including without limitation the acquisition of all consents, authorizations,
orders and approvals of any governmental commission, board of other regulatory
body required in connection therewith. The parties hereto shall execute and
deliver all such other instruments and take all such other actions as any party
may reasonably request from time-to-time, before or after the date hereof and
without any further consideration, in order to effectuate the transactions
provided for herein. The parties shall cooperation fully with each other and
with their respective counsel in connection with any steps required to be taken
as part of their respective obligations under this Agreement.
16. Miscellaneous.
16.1 Amendments. No change, amendment, waiver or modification of
any provisions of this Agreement will be effective unless it is in writing and
signed by the party against whom enforcement of the waiver, change or amendment
is sought.
16.2 Waiver. No waiver of any right under this Agreement will be
deemed effective unless contained in writing signed by the party charged with
such waiver, and no waiver of any right arising from any breach or failure to
perform will be deemed to be a waiver of any future such right or of any right
arising under this Agreement.
16.3 Successors and Assigns. None of the parties hereto may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of all of the other parties hereto. Except as otherwise
expressly provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and permitted assigns.
16.4 Titles. The titles of the Sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in
construing the terms and provisions hereof.
16.5 Notices. All notices, requests, demands and other
communications required or permitted to be made hereunder shall be in writing
and shall be deemed duly given if hand delivered against a signed receipt
therefor, sent by registered or certified mail, return receipt requested, first
class postage prepaid, or sent by nationally recognized overnight delivery
service, in each case addressed to the party entitled to receive the same at the
address specified below:
(a) If to Adwin, then to:
William J. Brady, Vice President
Adwin (Schuylkill) Cogeneration, Inc.
300 Stevens Drive
Suite 155
Lester, PA 19113
With a copy, sent in the manner prescribed above, to:
John Halderman, Esquire
PECO Energy Company
2301 Market Street
Philadelphia, PA 19101
(b) If to O'Brien, then to:
Peter Ford
O'Brien (Schuylkill) Cogeneration, Inc.
225 South Eighth Street
Philadelphia, PA 19106
With a copy, sent in the manner prescribed above, to:
Robert J. Rauch, Esquire
17 Glen Andrew Road
White Sulphur Springs, WV 24986
(c) If to the Purchaser, then to:
Steve Smith, President
Trigen-Schuylkill Cogeneration, Inc.
2600 Christian Street Schuylkill Station
Philadelphia, PA 19146
With a copy, sent in the manner prescribed above, to:
Barnett Satinsky, Esquire
Fox, Rothschild, O'Brien & Frankel
2000 Market Street
10th Floor
Philadelphia, PA 19103
And, with an additional copy, sent in the manner prescribed above, to:
Eugene E. Murphy, Esquire
Trigen Energy Corporation
1 Water Street
White Plains, NY 10601
Any party may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section providing for the giving of notice. Notice shall be deemed to be
effective, if personally delivered, when delivered; if mailed, at midnight on
the third business day after being sent by registered or certified mail; and if
sent by nationally recognized overnight delivery service, on the next business
day following delivery to such delivery service.
16.6 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
16.7 Exhibits; Schedules. All exhibits and schedules to this
Agreement are hereby incorporated by reference into, and made a part of, this
Agreement.
16.8 Execution; Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories hereto.
16.9 Expenses. Whether or not the transactions contemplated by this
Agreement shall be consummated and except as otherwise provided herein, each
party shall pay its own expenses incident to the negotiation, execution and
performance of this Agreement and the transactions contemplated hereby. The
Partnership shall each be solely responsible for, and shall timely pay in
accordance with applicable law, all transfer taxes and other similar taxes, in
either case, imposed by any taxing authority, federal, state or local, with
respect to the Partnership Interest issued to the Purchaser under this Agreement
(if any).
16.10 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto shall constitute the full and entire understanding and
agreement among the parties with regard to the subject matter hereof and
thereof, and supersede all prior agreements, understandings, inducements or
conditions, express or implied, oral or written, except as herein contained.
The express terms hereof shall control and supersede any course of performance
and/or usage of trade inconsistent with any of the terms hereof.
16.11 Governing Law. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania.
16.12 Conflict Among Documents. In the event of any conflict
between or among the terms of this Agreement and the terms of the Project
Services Agreement or the Steam Venture Agreement, such conflict shall be
controlled and governed by the terms of this Agreement. In the event of any
conflict between any other documents, the later dated document shall control and
govern. All terms and provisions of the Project Services Agreement and the
Steam Venture Agreement that are not expressly amended or modified by this
Agreement or any other document entered into by the parties after the date
thereof shall remain in full force and effect.
IN WITNESS WHEREOF, the authorized representatives of each party hereby
executes this Agreement as of the date first set forth above.
ADWIN (SCHUYLKILL) O'BRIEN (SCHUYLKILL)
COGENERATION, INC. COGENERATION, INC.
By:______________________ By:________________________________
Date:____________________ Date: ______________________________
TRIGEN-SCHUYLKILL
COGENERATION, INC.
By:_______________________
Date:_____________________
Agreeing and intending to be legally bound only with respect to Sections 1.2
through 1.4 of this Agreement as of the date of this Agreement:
PHILADELPHIA UNITED POWER GRAYS FERRY COGENERATION
CORPORATION PARTNERSHIP
By: ________________________ By: Adwin (Schuylkill)
Cogeneration, Inc.
By:____________________
AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
GRAYS FERRY COGENERATION PARTNERSHIP
This Amended and Restated Partnership Agreement ("Agreement") is
executed this _____ day of March, 1996, by and among O'BRIEN (SCHUYLKILL)
COGENERATION, INC., a Delaware corporation, with its principal offices located
at 225 South Eighth Street, Philadelphia, Pennsylvania (hereinafter "O'Brien"),
ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania corporation, with its
principal offices located at 300 Stevens Drive, Airport Business Center, Lester,
Pennsylvania (hereinafter "Adwin"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a
Pennsylvania corporation, with its principal offices located at 2600 Christian
Street, Philadelphia, Pennsylvania (hereinafter "Trigen"). All three parties
are sometimes collectively referred to as "the Partners."
BACKGROUND
A. As of October 29, 1991, O'Brien and Adwin Equipment Company ("AEC"),
the parent company of Adwin, formed a general partnership known as the Grays
Ferry Cogeneration Partnership (the "Partnership") pursuant to a Partnership
Agreement of Grays Ferry Cogeneration Partnership dated as of such date, which
agreement was amended by the First Amendment to Partnership Agreement of Grays
Ferry Cogeneration Partnership dated as of September 17, 1993, and the Second
Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership,
dated September 27, 1994 (collectively the "Partnership Agreement").
B. AEC has assigned all of its right, title and interest in and to the
Partnership to Adwin pursuant to the Third Amendment to Partnership Agreement of
Grays Ferry Cogeneration Partnership, dated January 23, 1996, and,
simultaneously therewith, Adwin has been admitted to the Partnership as a
Partner, has assumed the Managing Partner position, and AEC has withdrawn from
the Partnership as a Partner.
C. O'Brien is a wholly owned subsidiary of O'Brien Environmental
Energy, Inc., which is a corporation involved in the development, ownership,
operation, and management of cogeneration facilities which produce steam and
electric power for sale to industrial and commercial users and public utilities.
D. Adwin is a wholly owned subsidiary of AEC, which, in turn, is a
wholly owned subsidiary of Eastern Pennsylvania Development Company, which, in
turn, is a wholly-owned subsidiary of PECO Energy Company ("PECO").
E. Philadelphia United Power Corporation ("PUPCO") has agreed to
terminate its option to purchase a one-third interest in the Partnership in
consideration of Trigen's purchase of such interest directly from the
Partnership.
F. The terms of the acquisition of the Partnership interest by Trigen
are set out in the Acquisition Agreement among Adwin, O'Brien, and Trigen dated
March 1996 (the "Acquisition Agreement").
G. Adwin, O'Brien and Trigen wish to amend and restate the Partnership
Agreement in its entirety for the purpose of continuing development of a
qualifying cogeneration facility to be located at the Schuylkill Station of the
Trigen-Philadelphia Energy Corporation ("TPEC") in Philadelphia, Pennsylvania,
and to provide for the ownership, operation and maintenance of said cogeneration
facility by the Partnership once completed.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the sufficiency of which is acknowledged by all parties, Adwin, O'Brien
and Trigen, intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS
Except as otherwise expressly stated, the singular includes the plural
and the plural includes the singular; a reference to any law or rule includes
any amendment or modification to such law or rule and all regulations, rulings
and other governmental interpretations promulgated thereunder; a reference to
any person includes such person's permitted successors and permitted assigns;
the words "include," "includes" and "including" are not limiting, and references
to any document includes all amendments, modifications and supplements thereto.
The capitalized terms used in this Agreement shall have the meanings set
forth below:
"Affiliate" means, with respect to any Partner, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with (including, but not limited to, any Person that, directly or indirectly, is
a beneficial owner of fifty percent (50%) or more of any class of equity
securities of) such Partner.
"Affiliated Party Decision" is defined in Section 7.03.
"As Adjusted" means with respect to any dollar amount specified as such
in the Agreement, such dollar amount as adjusted for inflation on an annual
basis measured by the change in the Consumer Price Index (Philadelphia, for all
Urban Consumers) (1982 - 1984 equals 100) since the execution and delivery of
this Agreement.
"Agreement Date" means the date of this Agreement.
"Capital Account" means the account maintained for each Partner pursuant
to Section 12.
"Carrying Value" of any asset means its adjusted basis for federal
income tax purposes, except that the initial carrying Value of any property
contributed to the Partnership by a Partner shall be its Fair Value at the time
of contribution. Carrying Value of assets shall be adjusted to Fair Value at
the following times: (i) acquisition of an additional interest in the
Partnership by a new or existing Partner in exchange for more than a de minimis
capital contribution, (ii) disposition by the Partnership of assets to a Partner
in exchange for more than a de minimis amount of money or Partnership property
as consideration for an interest in the Partnership, and (iii) upon liquidation
of the Partnership. Carrying Value of an asset shall be reduced for
depreciation, amortization, and other cost recovery deductions allowable for
federal income tax purposes, but to the extent that the Carrying Value of an
asset differs from its adjusted tax basis, such Carrying Value shall be reduced
by the same ratio used to compute depreciation of the asset's adjusted basis for
tax purposes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Credit Agreement" means the Construction and Term Loan Agreement
between the Lenders and the Partnership dated March ,1996.
"Disbursable Assets" means the sum of (a) all Gross Receipts of the
Partnership less Operating Expenses plus (b) any other assets of the Partnership
that the Partnership determines to be in excess of the current needs of the
Partnership.
"Disinterested Partner" is defined in Section 7.02.
"Electric Contract" means collectively (1) the Agreements for Purchase
of Electric Output (Phase 1) and (Phase 2) dated as of July 8, 1992, between the
Partnership and PECO, and (2) the Phase 1 and Phase 2 Contingent Capacity
Purchase Addendums, dated as of September 17, 1993, between the Partnership and
PECO, as well as the Letter Agreement, dated March 30, 1995, pursuant to which
PECO tendered its Activation Notice under Section 3.3 of the Phase 1 and Phase 2
Electric Capacity Contracts, as the foregoing Agreements may be amended,
modified, or supplemented from time-to-time.
"Event of Default" is defined in Section 20.
"Fair Value" of any property, other than of interests in the
Partnership, means the fair market value of such property as determined by the
Partners through the same procedure provided for in Section 22.04.
"FERC" means the Federal Energy Regulatory Commission.
"Financial Closing Date" means the date on which the Partnership closes
on construction financing for the Project.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Gross Receipts" means, collectively, all receipts from operations of
the Partnership, receipts from the sale, exchange, transfer, assignment or other
disposition of property of the Partnership, proceeds of insurance and receipts
from any other source by the Partnership.
"Lenders" means Chase Manhattan Bank, N.A., and such other participating
lenders as are signatories to the Credit Agreement, or participate in any
additional financing or re-financing of the Project.
"Major Decision" has the meaning set forth in Section 7.04.
"Management Committee" means the committee established pursuant to
Section 7.01(b).
"Managing Partner" means the Partner responsible for day-to-day
administration of the Partnership's business, as more fully described in Section
6.01.
"Operating Expenses" means all expenses necessary for the construction,
repair, operation and maintenance of the Project including, without limitation,
payments, if any, required to be made to any Affiliate of the Partnership
pursuant to the Project Documents, debt service, capital expenditures, amounts
used for the creation or restoration of reserves, and taxes.
"Overdue Rate" means the prime rate of The Chase Manhattan Bank, N.A.,
as announced from time-to-time, plus three percent.
"Partner" means each of Adwin, O'Brien and Trigen, as long as it remains
a Partner of the Partnership and each other Person or entity who becomes a
partner of the Partnership pursuant to the terms of this Partnership Agreement.
"Partnership" means the Grays Ferry Cogeneration Partnership, the
partnership formed by the Partners pursuant to this Agreement.
"Partner Percentage" means the respective percentage interest of each
Partner in the Partnership, initially as set forth in Section 3.01, as such
percentage may be adjusted in connection with the assignment, from time-to-time,
by a Partner of its interest in the Partnership pursuant to the terms hereof.
"PECO" means the PECO Energy Company, a Pennsylvania corporation, its
successors and permitted assigns.
"Person" means any individual, corporation, partnership, association,
joint stock company, limited liability company, unincorporated organization, or
other entity.
"Project" means the cogeneration facility to be developed, constructed,
owned and operated by the Partnership, located at 2600 Christian Street,
Philadelphia, Pennsylvania, of at least 150 megawatts of nominal capacity.
"Project Documents" means the Credit Agreement, all agreements, permit
applications, final permits, surety bonds, and other documents material to the
development, financing, construction and operation of the Project, including,
without limitation, those set out in Exhibit B.
"Project Equity Contribution" means the amount required by the Lenders
for the construction of the Project to be contributed as equity by the Partners
to the Partnership.
"Project Services and Development Agreement" means the Amended and
Restated Project Services and Development Agreement, dated as of September 17,
1993, by and between the Partnership and PUPCO, as clarified by the Acquisition
Agreement and as further amended, modified or supplemented from time-to-time
pursuant to the terms thereof.
"PUPCO" means Philadelphia United Power Corporation, a Delaware
Corporation, its successors and permitted assigns.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.
"Steam Venture Agreement" means the Amended and Restated Steam Venture
Agreement, dated September 17, 1993, by and among AEC, O'Brien Environmental
Energy, Inc., TPEC and PUPCO (which Agreement has been assigned by AEC and
O'Brien Environmental Energy, Inc. to the Partnership), as clarified by the
Acquisition Agreement and as the same may be further amended, supplemented, and
modified from time-to-time pursuant to the terms thereof.
"TPEC" means Trigen-Philadelphia Energy Corporation, formerly known as
Philadelphia Thermal Energy Corporation, its successors and permitted assigns.
"Turnkey Contractor" means Westinghouse, or such substitute contractor
as may be engaged by the Partnership to complete construction of the Project.
"Unreimbursed Development Costs" means those costs to develop the
Project incurred by O'Brien and AEC and/or Adwin, as set out in Exhibit A.
"Westinghouse" means Westinghouse Electric Corporation, its successors
and assigns.
"Work Product" means all work products produced by, or on behalf of, a
Partner prior to the Agreement Date that relate to the development, construction
and operation of the Project, including without limitation, engineering drawings
and feasibility studies, plans and specifications, construction cost estimates,
financial studies, surveys, and governmental approvals and permits.
SECTION 2. FORMATION OF PARTNERSHIP
2.01 Adwin and O'Brien hereby continue the Partnership for the purposes
set forth in this Agreement, and Trigen hereby joins the Partnership for said
purposes. The Partnership will be governed by the Uniform Partnership Act of
the Commonwealth of Pennsylvania ("the Act) as from time-to-time amended.
2.02 A duly executed application for registration of fictitious name
will be filed with the offices of the Secretary of State of Pennsylvania. The
Managing Partner shall execute and cause to be filed amended applications for
registration of fictitious name and shall take any and all other actions as may
be necessary or advisable to perfect and maintain the Partnership as qualified
to do business in accordance with this Agreement in any state which may be
required from time-to-time.
2.03 The name of the Partnership is Grays Ferry Cogeneration
Partnership.
2.04 The principal office of the Partnership shall be located at the
offices of the Managing Partner.
2.05 Title to any assets acquired to effectuate or implement the
purposes of the Partnership shall be held in the name of the Partnership or at
any time, from time-to-time, in the name of a nominee of the Partnership
selected by the Managing Partner and approved by the other Partners. The
Managing Partner shall obtain such documents as may be necessary to reflect the
Partnership's ownership of such assets.
SECTION 3. PARTNER PERCENTAGES; CAPITAL CONTRIBUTIONS
3.01 The Partner Percentage of each Partner is set forth below:
Partner Partner Percentage
Adwin 33 1/3%
O'Brien 33 1/3%
Trigen 33 1/3%
3.02 Simultaneously with the execution of this Agreement, Adwin and
O'Brien shall be deemed to have contributed to the capital of the Partnership
the Unreimbursed Development Costs set out in Exhibit A.
3.03 Trigen will have no obligation to contribute to development
expenses paid prior to the Financial Closing Date. Certain development costs
listed in Schedule 3.03 have been incurred, but not paid prior to Financial
Closing Date. These will be paid by the Partnership at or after the Financial
Closing Date.
3.04 Each Partner shall contribute Ten Million Dollars ($10,000,000) as
its share of the Project Equity Contribution, for a total of Thirty Million
Dollars ($30,000,000). Such Project Equity Contributions shall be made after
all construction loan proceeds under the Credit Agreement have been utilized, or
at such time as is required by the Lenders under the Credit Agreement, and prior
to any drawdowns under the subordinated debt to be provided by Westinghouse.
On, or prior to, the Financial Closing Date, each Partner shall post one or more
letters of credit, corporate guarantees or other security, in each case
acceptable to the Lenders, to secure its obligation under this paragraph.
3.05 (a) Following completion of the Project and except as provided in
subparagraph (b), any subsequent equity contributions shall be subject to the
unanimous approval of the Partners, and unless otherwise agreed, shall be in
accordance with the Partner Percentage of each Partner.
(b) In the event that one or more Partners fail to make part or
all of any subsequent equity contributions approved pursuant to subparagraph (a)
or approved by the Management Committee in order to avoid default under the
Project Documents, or which, in the reasonable judgment of the Management
Committee, may be necessary to avoid default under such Project Documents, the
interest of each such non-contributing Partner shall be subject to the following
restrictions until such time as the default is cured:
(i) loss of all voting rights under this Agreement, and
(ii) suspension of all distributions to which such Partner
would otherwise be entitled, with the stipulation that such distributions shall
be placed in escrow by the Management Committee until such time as the default
is either cured or the interest of the non-contributing Partner is purchased
pursuant to the procedures set out below.
(c) A non-contributing Partner under this Section 3.05 shall have
six (6) months from the date the Management Committee sets for payment of the
subsequent equity contribution to cure any default. Cure shall consist of
payment in full of the subsequent equity contribution required of the Partner
plus interest on the unpaid amount at the Default Rate applicable to late
payments under the Credit Agreement. If any such Partner has failed to cure the
default within said six (6) month period, the remaining Partners shall have the
opportunity, pro rata to their respective Partner Percentages, to purchase the
Partnership interest of the non-contributing Partner, pursuant to the provisions
of Section 22, except that the purchase price shall equal the amount of the
subsequent equity contribution which the non-contributing Partner failed to
make.
(d) As a condition to participating in any such buyout, a Partner
shall have paid to the Partnership, pro rata to its Partner Percentage, that
part of the capital shortfall created by the non-contributing Partner either
through an additional equity contribution to the Partnership (which shall be
added to the Partner's Capital Account) or, if approved by the Management
Committee, and permitted by the Credit Agreement, through a loan to the
Partnership. To the extent that a Partner fails to pay its pro rata share of
the subsequent equity contribution required of the non-contributing Partner, the
remaining Partners shall have the opportunity, pro rata to their respective
Partner Percentages, to make up the shortfall, and thereby be eligible to
participate in the purchase of the noncontributing Partner's interest should a
cure not be effected by such non-contributing Partner within the six (6) months
set out herein. If none of the Partners make up the shortfall created by the
non-contributing Partner, the contributing Partners shall take such action as
they deem appropriate.
(e) In addition to its other obligations under subparagraphs (a)
and (b) of this Section, each Partner agrees to contribute additional capital to
the Partnership pursuant to the provisions of this Section 3.05 to satisfy
obligations owed third parties if, as a result of such obligations, the
Partnership's liabilities exceed its assets.
SECTION 4. PURPOSE AND POWERS
4.01 The purpose of the Partnership is to develop, construct, own,
maintain, and operate the Project. Unless all of the Partners otherwise agree,
the Project shall at all times be a qualifying cogeneration facility" within the
meaning of section 3(18)(B) of the Federal Power Act, as amended by Section 201
of PURPA and the applicable rules and regulations of FERC.
4.02 The Partnership shall have the following powers:
(a) To buy, lease, own or sell any personal or real property
useful or necessary for the development, construction and operation of the
Project;
(b) To borrow money and issue evidences of indebtedness in
furtherance of any or all of the objects of the Partnership's business or for
the refinancing of any indebtedness, and to secure the same by mortgage, pledge
or other liens on any or all of the Partnership's property;
(c) To enter into, perform and carry out contracts of any
kind necessary to, or in connection with, or incidental to, the accomplishment
of the foregoing purposes;
(d) Negotiate for and conclude agreements for the sale,
exchange or other disposition of all, or substantially all, of the property of
the Partnership;
(e) Make Permitted Investments of Partnership funds, as such
Permitted Investments are defined in the Credit Agreement;
(f) Bring or defend actions at law or in equity;
(g) Sell, purchase, cancel, or otherwise dispose
of, the interest of any Partner in the Partnership in accordance with the terms
of this Agreement; and
(h) Undertake any other action or thing reasonably necessary
to carry out the purposes set forth in this Agreement.
4.03 Partners may not engage in or possess interests in business
ventures of any kind other than in accordance with this Agreement. Affiliates
of a Partner may engage in or possess interests in other business ventures of
any kind for their own account including, without limitation, owning or
participating in or serving as a partner or other owner of other entities that
own, either directly or through interests in other Persons, projects similar to,
or that compete with, the Project. Neither the Partnership nor any of the
Partners shall have any rights by virtue of this Agreement in, or to, such other
business ventures or to the income or profits derived from Affiliate activities.
SECTION 5. DESCRIPTION OF THE PROJECT;
RELEASE OF CERTAIN PRIOR FINANCIAL COMMITMENTS
5.01 Initially, the Project will consist of a Westinghouse 501D5A
Econopac combustion turbine, a heat recovery steam generator, a condensing-
extraction steam turbine which, in combination with the combustion turbine, is
expected to be capable of generating 170 MW at 90 degrees Fahrenheit, and an
auxiliary boiler whose capacity shall be approximately 730,000 pounds of steam
per hour, and shall be capable of burning both No. 2 oil and natural gas.
SECTION 6. MANAGEMENT OF PARTNERSHIP BUSINESS;
ROLE OF THE MANAGING PARTNER
6.01 (a) The day-to-day responsibility to administer the business of the
Partnership shall be vested in the Managing Partner, pursuant to guidelines and
policies issued by the Management Committee established by Section 7.01(b)
herein. The Managing Partner shall report on a regular basis to the Management
Committee. The intent of the Partners is that policy decisions be referred to
the Management Committee by the Managing Partner, but that the Managing Partner
perform all administrative or ministerial duties of the Partnership within the
guidelines and policies approved by the Management Committee and the annual
budget approved by the Partnership. Subject to any requirement under Section
7.02 that a Disinterested Partner handle such activities, the Managing Partner
shall have the authority and responsibility to undertake the following actions
without the need to seek approval from the Management Committee:
(i) prepare for the Partnership an annual budget for approval
by the Partners (to be presented to the Partnership no later than ninety (90)
days prior to the beginning of each year), which budget shall include a
narrative description of construction, repair, operating and maintenance
activities proposed to be undertaken by the Partnership during such year and a
description of such other information, plans, agreements and other matters as
are necessary to inform the Partners of matters materially relevant to the
operation and management of the Partnership and the Project during such year;
(ii) recommend staffing and compensation to the Management
Committee for consultants, attorneys, accountants and other professionals
utilized by the Partnership;
(iii) pursue all permits required for the development,
financing, construction and operation of the Project;
(iv) except as specifically provided herein with respect
to transactions with Affiliates, negotiate and administer the Partnership's
obligations under the Project Documents;
(v) provide the other Partners with copies of new
Project Documents promptly after each has been executed by the Partnership;
(vi) promptly notify the other Partners of any material
impediments to the expected completion of construction of the Project within the
proposed capital budget which is attached hereto as Schedule 6.01;
(vii) monthly notify the Partnership of any anticipated
deviations of five percent (5%) or more from any line item of the annual
approved budget;
(viii) invest and re-invest the funds of the Partnership in
accordance with Section 4.02(e);
(ix) execute and deliver in accordance with the terms of
this Agreement, on behalf of the Partnership, construction contracts,
instruments for the transfer of real property, loan agreements, any and all
instruments and documents which shall be required by the Lenders, or any other
document or instrument in any way related thereto or necessary or appropriate in
connection therewith;
(x) provide all required risk management services,
including development of an indemnity program and maintenance of adequate
insurance to insure compliance by the Partnership with the Project Documents;
(xi) provide administration of the Partnership including,
without limitation, its accounting requirements, and administration for the
Project while under construction and, after completion, for its operation;
(xii) handle all public relations matters; and
(xiii) handle all environmental, regulatory and contractual
reporting requirements.
(b) Any Person dealing with the Partnership may rely (without duty
of further inquiry) upon a certificate signed by the Managing Partner as to the
identity of any Partner; the existence or nonexistence of any fact or facts
which constitute a condition precedent to acts by the Partnership or which are
in any other manner germane to the affairs of the Partnership; the Persons who
are authorized to execute and deliver any instrument or document of the
Partnership; and any act or failure to act by the Partnership or any other
matter whatsoever involving the Partnership; subject in each case to any
requirements under Section 7.02 that a Disinterested Partner handle such
activity.
(c) Subject to the Managing Partner's compliance with Sections 7
and 17 herein, the signature of the Managing Partner shall be sufficient to
convey title to any assets or property owned by the Partnership, or to lease,
mortgage, lien or encumber the same, and all of the Partners agree that a copy
of this Agreement may be shown to the appropriate parties in order to confirm
the same, and further agree that the signature of the Managing Partner shall be
sufficient to execute any "statement of partnership" or other documents
necessary to effectuate this or any other provision of this Agreement or to
satisfy any requirement of the Act or of other applicable law.
(d) The Managing Partner may not, except with approval of the
Partnership under Section 7.04:
(i) Knowingly take any action in contravention of this
Agreement;
(ii) Deal with or assign rights in any Partnership
property for other than Partnership purposes;
(iii) Confess judgment against the Partnership or make an
assignment for the benefit of creditors;
(iv) Take any action which would make it impossible to
carry on the business of the Partnership; or
(v) Cause the Partnership to cease to be a partnership
for any reason, including federal income tax purposes.
6.02 Adwin shall serve as the Managing Partner until the Financial
Closing Date, at which time, it shall automatically be replaced by O'Brien.
O'Brien shall serve as the Managing Partner until care, custody and control of
the Project is turned over to the Partnership by the Turnkey Contractor, (or at
such earlier time as the Management Committee determines is necessary to avoid
ownership problems under PURPA), at which point O'Brien will automatically be
replaced by Trigen as the Managing Partner. Trigen shall continue to serve as
the Managing Partner until it resigns or is replaced pursuant to Section 6.03,
or until it ceases to be a Partner.
6.03 If an Event of Default by the Managing Partner occurs, the
non-Managing Partners may elect to remove the Managing Partner by serving notice
of the election on the Managing Partner. If, at the time of removal, there is
only one other Partner, such Partner will become the Managing Partner. If there
is more than one non-Managing Partner, the non-Managing Partners shall jointly
agree on a substitute Managing Partner. The substituted Managing Partner shall
be formally designated by an amendment to this Agreement signed by all the
non-Managing Partners.
6.04 Notwithstanding any other provision of this Agreement, no
Partner shall become Managing Partner or remain in such position if fulfillment
of such responsibilities will jeopardize the Project's qualifying facility
status under PURPA.
6.05 Any Partner (including the Managing Partner) may appoint,
employ, or contract with any Person to assist it in fulfilling its duties
hereunder, but may not delegate its powers, rights or obligations hereunder to
such Person, and only so long as any such appointment, employment, contract, or
other dealing is at no cost to the other Partners or to the Partnership.
6.06 Each Partner hereby makes, constitutes, and appoints the
Managing Partner its true and lawful attorney-in-fact for the express purposes
contained in this Section 6.06 (and no others) and authorizes it to act in its
name, place, and stead and for its use and benefit, to sign, execute, certify,
acknowledge, swear to, file, publish and record (i) all amended name
certificates to be filed by the Partnership under the laws of any jurisdiction
in which the Partnership is doing business;(ii) any amendments and the
instruments described in clause (i), as now or hereafter amended, which are
required to admit any substituted Partner in accordance with the terms of this
Agreement; and (iii) all certificates of cancellation and other instruments
which shall be required by applicable law to effect the dissolution and
termination of the Partnership; provided that any such actions are taken in
accordance with the terms and provisions of this Agreement. The power of
attorney granted herein may be exercised by any such attorney-in-fact by listing
the Partners executing any agreement, certificate, instrument, or other document
with the single signature of any such attorney-in-fact acting as attorney-in-
fact for such Partners.
6.07 To reimburse the Managing Partner for all of its incurred in
performing its responsibilities Partnership shall provide the Managing Partner
fee of One Hundred Fifty Thousand Dollars Adjusted, which fee shall be pro-rated
on a monthly basis for any periods less than a year during which a Partner
serves as Managing Partner. Third party expenses, including legal and
accounting costs, shall be payable by the Partnership, consistent with the
annual budget approved by the Partners.
SECTION 7. PARTNERSHIP DECISION MAKING; MAJOR DECISIONS
7.01 (a) For those decisions requiring a vote of the Partners
(i.e., those decisions for which the Managing Partner does not have sole
authority under paragraph 6.01), the Partners shall have a vote equal to their
respective Partner Percentage. The Partnership shall execute its decision
making through a Management Committee, established pursuant to sub-paragraph
(b)below.
(b) The Management Committee shall consist of one non-voting
General Manager appointed by the Managing Partner, and one voting member from
each of Adwin, O'Brien and Trigen. The Management Committee shall be chaired by
the General Manager, and shall meet quarterly at the offices of the Managing
Partner, or at such other location as may be mutually agreeable. The agenda for
each meeting of the Management Committee will consist of an Operations Report
(which shall address Project availability, efficiency, net production, equipment
runtime, PURPA calculations, equipment condition, permit compliance, and
explanation of any downtime), a Financial Report (which shall address net
income, balance sheet, available cash, deviations from approved budgets, loan
balances, and recommendations for distributions), a Third Party Relationships
Report (which shall address relations with lenders, customers,
contractors/vendors, permitting and regulatory bodies, neighbors and the press),
and a Major Decision Report, with recommendations on Major Decisions to be made.
Minutes of the meetings of the Management Committee shall be maintained by the
General Manager and a copy served on each Partner within five (5) business days
after any meeting of the Committee. The General Manager shall ensure that
(1) unaudited annual financial statements are ready for review and approval by
the end of February of each year and that audited financial statements are ready
for approval by the end of March of each year, (2) annual tax returns are ready
for review and approval by April 1 of each year, and (3) annual staffing plans
and proposed annual budgets are ready for review by October 1 of each year. To
the extent possible, the Management Committee will seek to make "Major
Decisions" (as defined in Section 7.04) by consensus. In the absence of a
consensus, the provisions of Section 7 shall control.
(c) Special meetings of the Management Committee may be
called by Partners holding at least thirty-three and one-third percent (33 1/3%)
of the voting interests in the Partnership upon reasonable written or telephonic
notice to the other Partners. Meetings of the Management Committee shall be
authorized if a quorum representing fifty-one percent (51%) or more of the
voting interests in the Partnership is represented either in person or by proxy.
Any meeting of the Management Committee may be held by conference telephone or
similar telecommunications arrangement whereby all Partners in attendance may
hear one another. Any action that may be taken at a meeting of the Partners may
be taken, without a meeting, by the unanimous written consent of those Partners
holding voting interests sufficient to approve such action pursuant to the terms
of this Agreement.
7.02 To avoid the appearance of any conflict of interest, the Management
Committee shall assign primary responsibility for the negotiation and monitoring
of any agreements, or amendments thereto, between the Partnership and a Partner
(or an Affiliate thereof) to a Disinterested Partner unless there is no
Disinterested Partner. For purposes of this Agreement, a "Disinterested
Partner" as to a particular decision is one which neither (1) is a contracting
party or an Affiliate of such contracting party with respect to said decision,
nor (2) has a financial interest in the agreement that is the subject of the
decision which is materially different from the financial interest of the
remaining Partners or the Partnership, due to a separate agreement with the
contracting party or its Affiliate. The Disinterested Partner shall have no
authority to make final decisions with respect to said agreements, but shall
have the primary responsibility for negotiating or monitoring the terms of such
agreements or amendments, subject to approval by the Partnership, as set out in
Sections 7.03 and 7.04. If the Managing Partner is not a Disinterested Partner
and is, therefore, not assigned to any such negotiation or monitoring
responsibility, it shall nevertheless assist and consult with the assigned
Disinterested Partner, including attendance at negotiation sessions, if
requested.
7.03 With the exception of those decisions set out in Sections 7.04, any
decision which is supported by fifty-one percent (51%) or more of the voting
interests of the Partners shall be deemed to be a decision or act of the
Partnership. Unless there is no Disinterested Partner, and notwithstanding any
provisions herein to the contrary, the vote of a majority of the voting
interests held by the Disinterested Partners (or the unanimous consent of the
voting interests held by the Disinterested Partners for decisions covered by
Section 7.04) shall be required for those actions of the Partnership which
specially affect the interests of one Partner, either because such Partner or an
Affiliate thereof has a separate contract with the Partnership involving such
decision or has a financial interest in the decision which is materially
different from the financial interests of the remaining Partners or the
Partnership, due to a separate agreement with the contracting party or its
Affiliate (such a decision is hereinafter referred to as "Affiliated Party
Decision"). Without limiting the foregoing, an Affiliated Party Decision shall
include waivers, elections, default notices and the initiation of enforcement
actions under, and the execution, modification, or termination of, contracts
between the Partnership and a Partner or Affiliate of such Partner.
7.04 Any of the actions specified below (each, a "Major Decision") may
be taken only if agreed upon by a unanimous vote of the Disinterested Partners
with respect to any such decision if such decision involves an "Affiliated Party
Decision"; otherwise, the unanimous vote of all Partners shall be required. The
following actions shall be covered by this paragraph:
(a) Any action which would change or materially or adversely affect the
purpose or business of the Partnership as specified in Section 4;
(b) Any issuance of additional interests in the Partnership or the
admission of any Person as a Partner;
(c) Any material modification to the Project Documents, including any
modification which involves an expenditure or incurrence of liability, or a
potential liability, on the part of the Partnership in excess of an annual
aggregate total of Two Hundred Thousand Dollars ($200,000), As Adjusted;
(d) Any execution by the Partnership of any unbudgeted agreement with a
term greater than one year or involving the expenditure or incurrence of
liability, or a potential liability, in excess of one Hundred Thousand Dollars
($100,000), As Adjusted, in the aggregate;
(e) Any sale, assignment, or grant of mortgage or other encumbrance
involving all or substantially all of the assets of the Partnership; provided,
however, that this clause shall not apply to the leasing or installment purchase
of office and related equipment and vehicles;
(f) The incurring of unbudgeted indebtedness, or a potential
indebtedness, by the Partnership in excess of One Hundred Thousand Dollars
($100,000), As Adjusted, per occurrence or Five Hundred Thousand ($500,000), As
Adjusted, in the aggregate on an annual basis;
(g) The determination of compensation for professionals and consultants
retained by the Partnership;
(h) Any material modifications to an insurance and indemnity program
for the Partnership, including any modification which involves an expenditure or
the incurrence of liability, or a potential liability, in excess of Two Hundred
Thousand Dollars ($200,000), As Adjusted, in the aggregate;
(i) Approval of the annual operating budget for any calendar year and
approval of any action or actions, which in the aggregate result is an increase
of greater than five percent (5%) in the expenditures or a decrease of greater
than five percent (5%) in the revenues of or to the Partnership as set forth in
the approved annual operating budget;
(j) The dissolution of the Partnership, except under Section 21.01(iv);
(k) Disposition of assets of the Partnership upon dissolution or
termination of the Partnership;
(1) The distribution of cash or other assets to the Partners, the
establishment of any reserves not required by the Lenders or the determination
of Disbursable Assets;
(m) The merger or consolidation of the Partnership with or into any
Person; and
(n) The decisions identified in Section 6.01(d).
7.05 Whenever any Partner is requested to evidence its approval of or
agreement to any decision or action of any nature whatsoever that requires
consent of the Partners, the Partner to whom such request has been made shall
respond to such request with reasonable promptness. Commensurate with the
nature of the approval, action or agreement being sought, the Partner to whom
the request is made shall advise the requesting Partner(s) of its approval or
its reasons for withholding the same. If the request for approval, agreement or
other action is in writing, the response must also be in writing.
SECTION 8. TERM; TERMINATION
8.01 The Partnership shall continue in existence until the first to
occur of the following events: (a) the date determined by unanimous decision of
the Partners to dissolve the Partnership; (b) the sale of all or substantially
all of the assets of the Partnership; (c) the withdrawal by any Partner
resulting in less than two remaining Partners, unless, if there is a sole
remaining Partner, a second Partner is admitted within the time required by
applicable law; (d) the occurrence of an event specified under applicable law
resulting in a dissolution of the Partnership unless, pursuant to applicable
law, the Partners elect to continue the business of the Partnership; (e)
December 31, 2035; or (f) the dissolution of the Partnership due to an Event of
Default or otherwise in accordance with this Agreement.
8.02 Upon termination of this Agreement, none of the Partners shall have
any further liability to each other, except any liability which expressly
survives pursuant to Section 30.02 of this Agreement.
SECTION 9. SCOPE OF AUTHORITY
9.01 Except as otherwise expressly provided in this Agreement, no
Partner shall have any authority to bind or act for, or in the name of, or
assume any obligations or responsibilities on behalf of, the other Partners or
the Partnership. Neither the Partnership nor any Partner shall be responsible
or liable for any indebtedness of a Partner, whether incurred or arising before
or after the execution of this Agreement, except those responsibilities,
liabilities, indebtedness or obligations expressly assumed by such Partner or
the Partnership in writing. This Agreement shall not be deemed to create a
general partnership among the Partners with respect to any activities
whatsoever, other than activities within the scope and purpose of the
Partnership.
SECTION 10. INDEMNIFICATION
10.01 Each Partner hereby indemnities and holds harmless the
Partnership as well as the other Partner(s) and their or its Affiliates,
officers, directors, employees and agents from and against any and all claims,
demands, losses, damages, liabilities, lawsuits and other proceedings, judgments
and awards, and costs and expenses (including but not limited to reasonable
attorneys' fees) arising directly or indirectly, in whole or in part, out of any
breach of the provisions of this Agreement by such Partner or its Affiliate,
director, officer, employee or agent.
10.02 Except as provided in non-waivable provisions of applicable
law:
(a) The Partnership hereby indemnities each Partner (and its officers,
directors, employees and agents) from and against any liability resulting from
any act omitted or performed by such Partner (or its officer, director, employee
or agent) in good faith on behalf of the Partnership and in a manner reasonably
believed by such Partner (or its officer, director, employee, or agent) to be
within the scope of the authority conferred upon such Partner by this Agreement
and in the best interests of the Partnership.
(b) No Partner (and no officer, director, employee or agent of a
Partner) shall be liable, responsible or accountable, in damages or otherwise,
to the Partnership or the Partners for or as a result of any act, omission or
error in judgment which was taken, omitted or made by it in good faith on behalf
of the Partnership and in a manner reasonably believed by it to be within the
scope of the authority granted to it by this Agreement and in the best interests
of the Partnership. A Partner may consult with such legal or other professional
counsel as it may select. Any action taken or omitted by it in good faith
reliance on, and in accordance with, the opinion or advice of such counsel shall
afford full protection and justification to it with respect to the action taken
or omitted.
(c) The Partnership may reimburse a Partner for all expenses, including
reasonable legal fees, and losses in connection with any suit or action
involving Partnership business (but not in connection with any action brought by
one Partner against another). Any such indemnification and advancement of
expenses agreed to by the Partnership shall not be exclusive of any other right
available to the Partners, unless otherwise provided in extending the offer
thereof. The Partnership shall purchase and maintain insurance on behalf of the
Partners against liability.
SECTION-11. LIMITATION OF LIABILITIES
11.01 No Partner, except as provided in Section 3.05, shall be
liable to any third Person for losses, liabilities or obligations of the
Partnership (except as otherwise expressly agreed to in writing by such Partner)
unless the assets of the Partnership shall first have been exhausted.
11.02 Unless otherwise decided by the Partnership, the Partnership
shall not enter into any contract, lease, sublease, note, deed of trust, or
other agreement unless there is contained in such instrument an appropriate
provision which (a) limits the claims of all parties to, and beneficiaries
under, such instrument to the assets of the Partnership and (b) expressly waives
any rights of such parties and other beneficiaries to proceed against the
Partners individually. To the extent the Partnership has entered into any
contract, lease, sublease, note or other agreement in violation of this
requirement prior to the date of this Agreement, the Partners hereby waive any
violation of the provisions of this section.
11.03 Unless due to a Partner's willful misconduct, gross
negligence, actions taken in bad faith, or actions taken by a Partner for which
there was no basis for the Partner to form a reasonable belief that such actions
were in compliance with the Affiliated Party Decision requirements of Section
7.03, in no event shall any Partner be liable to any other Partner for indirect,
incidental, special or consequential damages including, but not limited to loss
of revenue, loss of profit, cost of capital, or loss of opportunity, regardless
of whether such liability arises out of contract, tort (including negligence),
strict liability, or otherwise.
SECTION 12. CAPITAL ACCOUNTS
12.01 A separate "Capital Account" shall be maintained for each
Partner in accordance with applicable United States Treasury regulations. Upon
execution of this Agreement, the Capital Accounts of Adwin and O'Brien shall
consist of the Unreimbursed Development Costs set out in Exhibit A plus their
respective shares of the Project Equity Contribution set out in Section 3.03.
The Capital Account of Trigen shall consist of its share of the Project Equity
Contribution. The resulting initial Capital Accounts of the Partners are set
out in Exhibit A. Following execution of this Agreement, the Capital Account of
each Partner shall be:
(a) increased by (i) the amount of cash and Fair Value of any property
(net of liabilities assumed by the Partnership and liabilities to which the
property is subject) contributed by such Partner to the Partnership pursuant to
this Agreement; (ii) the items of income and gain allocated to such Partner in
accordance with Section 13.01; and (iii) any positive adjustment to such Capital
Account by reason of an adjustment to the Carrying Value of Partnership Assets;
(b) decreased by (i) the amount of cash and Fair Value of any property
(net of liabilities assumed by the Partner and liabilities to which the property
is subject) distributed to such Partner by the Partnership pursuant to this
Agreement; (ii) the items of loss and deduction allocated to such Partner in
accordance with Section 13.01; and (iii) any negative adjustment to such Capital
Account by reason of an adjustment to the Carrying Value of Partnership Assets.
12.02 Immediately prior to the distribution of any property (other
than cash) to a Partner, the Capital Account of each Partner shall be increased
or decreased, as the case may be, to reflect the manner in which the unrealized
income, gain, loss and deduction inherent in such property (that has not
previously been reflected in the Capital Accounts of the Partners) would be
allocated among the Partners in accordance with GAAP as if there had been a
taxable disposition of such property for its Fair Value.
SECTION 13. ALLOCATION
13.01 For purposes of making allocations to Capital Accounts, all
items of income, gain, loss, deduction and credit of the Partnership shall be
allocated among the Partners in accordance with their respective Partner
Percentages.
13.02 Any allocation pursuant to Section 13.01 will, however, be
subject to any adjustment required to comply with Sections 704(b) and 704(c) of
the Code and the Treasury Regulations thereunder including, without limitation,
adjustments with respect to any nonrecourse deduction or minimum gain chargeback
within the meaning of Treasury Regulation Section 1.704-2. Any special
allocations of items pursuant to this Section 13.02 shall be taken into account,
to the extent permitted by the Treasury Regulations, in computing subsequent
allocations of income, gain, loss or deductions pursuant to Section 13.01 or
13.03 so that the net amount of any items so allocated and all other items
allocated to each Partner over the life of the Partnership shall, to the extent
possible, be equal to the amount that would have been allocated to each Partner
pursuant to Section 13.09-had such special allocation not occurred.
13.03 For purposes of making allocations for federal, state, and
local income tax purposes, all items of income, gain, loss, deduction and credit
realized by the Partnership shall, for each fiscal period, be allocated, among
the Partners in the same manner as the correlative items of income, gain, loss,
deduction and credit were allocated pursuant to Section 13.01.
SECTION 14. DISTRIBUTIONS TO PARTNERS
14.01 Subject to Section 24, and as permitted by the Partnership's
Lenders, the Partnership shall distribute its Disbursable Assets. if any, for
each fiscal quarter to the Partners simultaneously in accordance with the
Partner Percentage of each Partner.
SECTION 15. BOOKS, RECORDS AND ACCOUNTS
15.01 The Partnership shall maintain, at its principal office, full
and accurate accounts and financial records which all Partners shall have the
right to inspect and examine during reasonable business hours. In addition,
each Partner may designate a Person or Persons to inspect, examine and audit
such accounts and financial records and to make copies of documents deemed
appropriate during regular business hours at such Partner's sole cost and
expense. The Managing Partner shall keep or cause such books to be kept and
shall fully and accurately enter all transactions of the Partnership in the
books. Such books and records of account shall be maintained on the accrual
basis and shall be adequate to provide each Partner with all financial
information that may be needed by such Partner or any of its Affiliates for
purposes of satisfying the financial and tax reporting obligations of such
Partner or Affiliate. Such books shall be closed and balanced at the end of
each fiscal year. The Managing Partner will furnish financial statements,
prepared in accordance with GAAP, to each Partner within thirty (30) days
following the end of each quarter. On or before March 1 of each year, the
Partnership will furnish each Partner, for the prior calendar year, audited
financial statements of the Partnership. At the request of any Partner, the
Partnership shall give specific answers to questions upon which information is
desired from time-to-time relative to the income, assets, liabilities,
contracts, operations, condition of the property, status of any loans and any
other data with respect to the Partnership or its property.
15.02 The Partnership shall engage as independent auditors for the
Partnership the firm recommended by the Managing Partner, and approved by the
Management Committee. The independent auditors shall at the end of each fiscal
year (i) audit the records and accounts of the Partnership and (ii) render their
opinion on the statements of financial condition of the Partnership as of the
end of each fiscal year and related statements of income and changes in
financial condition for each fiscal year.
SECTION 16. TAX RETURNS; TAX ACCOUNTING; TAX ELECTIONS
16.01 It is the intention of the parties that the relationship
created by this Agreement will, for federal, state, local and foreign tax
purposes, be treated as a partnership. The Partners agree to take all action,
including the amendment of this Agreement and the execution of other documents,
as may be required to qualify for and receive such tax treatment. Subject to
the provisions of Section 16.04, all of the Partnership's elections for federal
and state tax purposes, except those specifically reserved by the Code to be
made by the individual Partners, shall be determined by the "Tax Matters
Partner" (as defined in Section 16.05) and approved by the other Partners.
Subject to the provisions of this Section 16.01, the
Partnership's federal and state tax returns of the Partnership shall be
reviewed and approved by each Partner. Any Partner who objects to the
presentation of any Partnership item on any such return shall so notify the
Managing Partner in writing within fifteen (15) days after the date on which the
income tax return in question was furnished to such Partner by the Partnership's
independent auditors. Such notice shall set forth in reasonable detail the
nature of, and basis for, each such objection. copies of such notice shall be
provided to the other Partners and to the independent auditors. If the Partners
cannot agree upon a mutually satisfactory resolution of any disputed item, any
Partner who objects to the majority decision of the Partners shall be entitled
to take an inconsistent position with respect to any unresolved items on its own
income tax return. In all other respects each Partner shall report the results
of the operation of the Partnership on its own returns in a manner consistent
with the manner in which such results were reported by the Partnership.
16.02 Income tax returns of the Partnership shall be prepared by the
independent auditors. Copies of all income tax returns of the Partnership shall
be furnished to each of the Partners for review and approval by April 1 of each
year for filing such returns, including extensions, if any. If any Partner
shall fail to approve any such return, an application for an extension of time
to file shall be timely filed. If all Partners fail to approve the return prior
to the expiration of the extension period, the Managing Partner shall file the
return as approved by a majority-in-interest of the Partners, subject to the
provisions of Section 16.01.
16.03 The fiscal year and the tax year of the Partnership shall end
on December 31 of each year.
16.04 The Partnership shall, if requested by any Partner, make the
election provided under Section 754 of the Code.
16.05 The Managing Partner is hereby designated as the "Tax Matters
Partner," pursuant to Section 6231 of the Code and the applicable regulations
thereunder.
16.06 Prompt notice shall be given to the Partners upon receipt of
notice that the Internal Revenue Service or any other taxing authority intends
to examine Partnership tax returns for any period. The Tax Matters Partner
shall promptly supply to the other Partners copies of any communications with
any taxing authority relating to any audit of any tax returns filed by or on
behalf of the Partnership which involve any material issue and shall take such
other steps as may be appropriate to keep the
other Partners fully informed about the course of the audit and any other
administrative or judicial proceeding relating thereto. The Tax Matters Partner
shall not settle any material claim for additional taxes, interest or penalties,
or other adjustments to the Partnership's tax returns without first obtaining
the approval of the Management Committee.
SECTION 17. BANK ACCOUNTS
17.01 Except as otherwise required by the Lenders, all funds shall
be deposited in the name of Partnership in such account or accounts as shall be
designated by the Managing Partner. Except as provided below or as otherwise
required by the Partnership's Lenders, all withdrawals therefrom shall be made
upon checks signed (i) by the chief executive officer, the chief operations
officer, or the chief financial officer of the Managing Partner and (ii) by such
additional person or persons as shall be designated by the Managing Partner from
time-to-time. Any withdrawal in excess of Twenty Thousand Dollars ($20,000)
which is out of the ordinary course of business of the Partnership or outside
the scope of the approved annual budget, shall be approved in writing by the
Managing Partner and at least one other Partner. The Managing Partner shall
have no authority to approve withdrawals to itself or its Affiliates that are
outside the scope of the approved annual budget, without the approval of the
Partnership, which decision shall not be unreasonably delayed.
SECTION 18. TRANSFER OF A PARTNER'S INTEREST
18.01 No Partner may sell, assign or encumber all or any part of its
interest in the Partnership unless each of the conditions set forth herein are
satisfied or waived by consent of the Partners; provided, however, that each
Partner may transfer all or a portion of its interest in the Partnership to an
Affiliate without the consent of, but with notice to the other Partner(s);
provided, however, that such transfer does not cause the Project to lose its
status as a "qualifying cogeneration facility" under PURPA. Notwithstanding any
other provision of this Agreement, no Partner may sell or assign all or any part
of its interest in the Partnership if such sale or assignment would result in a
total of more than three (3) Partners in the Partnership, unless to remedy a
failed capital call under Section 3.05, or to remedy a potential violation of
the ownership requirements under PURPA, pursuant to Section 18.02 below.
18.02 If it is determined that the ownership of interests in the
Partnership by any Partner would cause the Project to cease being a "qualifying
cogeneration facility" under PURPA or would cause the Partnership to be
regulated pursuant to the Public Utility Holding Company Act, each Partner
agrees, consistent with the provisions of the Agreement, to reduce its
Partnership Interest, pro rata to its Partner Percentage, to a level which
avoids loss of "qualifying facility" status. Each Partner agrees that it will
not transfer any interest in the Partnership, the result of which transfer would
cause a loss of "qualifying facility" status. No transfer shall be allowed or
be effective unless an opinion of counsel satisfactory to the Partners and the
Partnership or other evidence satisfactory to the Management Committee is
obtained stating that such transfer would not (i) cause the Partnership to be
classified as an entity other than a partnership for purposes of the Code or to
be treated as a publicly traded partnership within the meaning of Section 7704
of the Code, (ii) require registration under the Securities Act of 1933 and
would not violate or cause the Partnership to violate any applicable law, and
(iii) adversely affect the status of the Project as a qualifying facility under
PURPA.
18.03 As a condition to the transfer of any interest, the transferee
shall execute and deliver to each remaining Partner an instrument pursuant to
which it agrees to be bound by the terms of this Agreement and such additional
instruments and documents as may be reasonably required by the remaining
Partners.
SECTION 19. FIRST RIGHT OF PURCHASE
19.01 If, at any time, any Partner desires to sell all or any
portion of its interest (other than a sale by a Partner to any Affiliate), such
Partner shall give the other Partners notice of its intention to seek a
purchaser for such interest promptly after making the determination to do so.
Such Partner, upon securing a bona fide offer to purchase such interest intended
to be sold shall give the other Partners notice of (a) the price (which shall be
a dollar sum), (b) the identity of the proposed purchaser (if then known to the
seller) and (c) all other terms of sale. The Remaining Partners shall have the
right pro rata to their Partner Percentage, during the forty-five (45) day
period after the giving of the notice of the proposed sale and its terms to
enter into an agreement to purchase all of the interest specified in the notice
(which price shall be prorated if the Remaining Partners want to purchase only a
portion of the interest being offered for sale) and upon the terms set forth in
the notice. In the event less than all of the Remaining Partners determine to
purchase the interest to be sold within the said forty-five (45) day period,
those Remaining Partners who elect to purchase shall have the right within the
ten (10) day period to purchase the interest to be sold in the same proportion
as the Partner Percentage of each purchasing Remaining Partner bears to the
total Partner Percentage of all such purchasing Remaining Partners. If none of
the Remaining Partners elect to purchase the seller Partner's interest to be
sold within the said time periods, the selling Partner shall be free for a
period of thirty (30) days thereafter to sell the interest to be sold to the
proposed purchaser on the same terms and conditions contained in the notice to
the Remaining Partners of the proposed sale. if the said sale is not effected
within the said thirty (30) day period, any subsequent sale must again comply
with the requirements of this Section. Settlement under any purchase agreement
entered into by one or more of the Remaining Partners pursuant to this Section
shall occur within ninety (90) days of the execution of a written purchase
agreement.
SECTION 20. EVENTS OF DEFAULT
20.01 Each of the following shall be considered to be an "Event of
Default" by a Partner:
(a) such Partner shall be named a debtor in any petition, whether
voluntary or involuntary, in any bankruptcy or insolvency proceeding, whether
state or federal, and such petition is not stayed or dismissed within sixty
days;
(b) such Partner shall enter into an assignment for the benefit of
creditors;
(c) such Partner shall have a receiver appointed to administer its
interest in the Partnership;
(d) such Partner shall have its Partnership interest seized by a
general creditor;
(e) it shall become unlawful for such Partner to carry on the
business of owning an interest in the Partnership;
(f) Except for a failure to make a capital call pursuant to
Section 3.05, such Partner defaults in the performance of, or fails to comply
with, any material obligation or agreement set out in this Agreement, and has
not cured such default within thirty (30) days after notice from any of the
remaining Partners of such default;
(g) such Partner commits fraud, is convicted of a crime, or
violates the Affiliated Party provisions of Section 7.02; or
(h) such Partner is either dissolved or liquidated.
20.02 Upon the occurrence of an Event of Default, the nondefaulting
Partner(s) may, in addition to all other remedies at law or in equity to which
such Partner(s) may be entitled, elect to purchase the defaulting Partner's
interest in the Partnership pursuant to the provisions of Section 22.
SECTION 21. DISSOLUTION
21.01 The Partnership shall dissolve upon the first to occur of (i)
termination of the Partnership pursuant to Section 8.01, (ii) such time as the
last Project Document expires by its terms and no longer requires, or
prospectively could require, administration by the Partnership, (iii) upon the
withdrawal of a Partner or upon the occurrence of an Event of Default as to a
Partner under Sections 20.01(a), (b), (c), (d), or (e), unless all of the
remaining, non-defaulting Partners agree, in writing, to continue the business
of the Partnership, or (iv) upon an Event of Default as to a Partner under
Section 20.01(f) if the non-defaulting Partners elect to dissolve the
Partnership.
SECTION 22. PURCHASE OF DEFAULTING PARTNER'S INTEREST
22.01 Upon the occurrence of any Event of Default by any Partner
(the "Defaulting Partner"), the other Partner(s) (the "Remaining Partner(s)")
shall have the right to acquire the Partnership interest of the Defaulting
Partner for cash, in proportion to the respective Partner Percentage of the
Remaining Partners, or if only one Partner remains, all of the Defaulting
Partner's interest, at a price determined pursuant to the procedure set forth in
Section 22.04. If any Remaining Partner should elect not to purchase its pro
rata share of the Defaulting Partner's interest, the Remaining Partner(s) may
purchase the pro rata share of the Defaulting Partner's interest to which the
Partner who chooses not to participate in the buy out of the Defaulting
Partner's interest would otherwise be entitled. The Remaining Partner(s) may
notify the Defaulting Partner at any time within thirty (30) days of their
knowledge of an Event of Default of its or their election to institute the
procedures set forth in Section 22.04. Upon receipt of notice of the
determination of the Net Fair Market Value of the Defaulting Partner's
Partnership interest, the Remaining Partner(s) may notify the Defaulting Partner
of its or their election to purchase the interest of the Defaulting Partner.
22.02 The closing of any purchase pursuant to this Section 22 shall
take place at the principal office of the Partnership, unless otherwise mutually
agreed by the Remaining Partner(s), on a date specified by the Remaining
Partner(s) that is not less than ten (10) days following receipt of notice of
determination of the Net Fair Market Value of the Defaulting Partner's
Partnership interest pursuant to Sections 22.04 or 22.05. Upon closing of such
purchase, the Remaining Partner or Partners may elect to offset against the
purchase price the amount of any loss, damage or injury, the amount of which has
been established by a final nonappealable judgment, suffered by it or incurred
as a result of the default of the Defaulting Partner.
22.03 The right of a single Remaining Partner to elect to acquire
the entire interest of the Defaulting Partner as set forth in this Section 22,
is independent of the Remaining Partner's right to elect to dissolve and
terminate the Partnership pursuant to Section 21 of this Agreement by sixty (60)
days written notice to the Defaulting Partner.
22.04 The "Net Fair Market Value" of an interest in the Partnership
for purposes of a purchase pursuant to this Section 22 shall be determined as
follows:
(a) The Partners shall first attempt to agree upon the "Net Fair
Market Value" of the Partnership as a whole. The "Net Fair Market Value" of the
Partnership shall mean the cash price at which a sophisticated purchaser would
purchase, and a sophisticated seller would sell, one hundred percent (100%) of
the interests in the Partnership, with neither party being under any compulsion
to effect such transaction and with both parties being reasonably informed as to
all material facts.
(b) In the event the Partners are unable to mutually agree upon
the Net Fair Market Value of the Partnership for purposes of Section 22.04
within thirty (30) days of the date the remaining Partners notify the Defaulting
Partner to institute the procedures set forth in Section 22.04, the Partners
shall then attempt to agree upon the appointment of two disinterested appraisers
who shall be members of the American Institute of Appraisers. If the Partners
are unable to agree upon the selection of two appraisers within seventy five
days, then each Partner shall, within ten (10) days thereafter, select a single
appraiser so qualified and such two appraisers shall select a third appraiser so
qualified. Each appraiser so selected shall furnish the Partners with a written
appraisal within ninety (90) days of the selection, setting forth such
appraiser's determination of the Net Fair Market Value of the Partnership. The
average of the two closest valuations of such appraisers shall be treated as the
Net Fair Market Value of the Partnership, and such amount shall be final and
binding on the Partners. The cost of such appraisal shall be an expense of the
Defaulting Partner.
(c) The Net Fair Market Value of the Defaulting Partner's Interest
to be purchased pursuant to this Section 22 shall equal the greater of the
positive balance, if any, in the defaulting Partners "Adjusted Capital Account"
or $100. For this purpose, the Defaulting Partner's Adjusted Capital Account
shall equal such Partner's Capital Account on the date of the valuation of the
Net Fair Market Value plus or minus the net gain or loss which would have been
credited or debited to such account if: (i) the Partnership's assets had been
sold on such date at a price equal to the Net Fair Market Value of the
Partnership and (ii) the net gain or net loss so determined were allocated among
the Partners in accordance with the provisions of Section 13.
SECTION 23. WINDING UP
23.01 Upon dissolution of the Partnership pursuant to Section 21 the
Partnership shall immediately commence to wind up its affairs and the Managing
Partner shall proceed with reasonable promptness to liquidate the business of
the Partnership and take account of the assets and liabilities of the
Partnership as promptly as is consistent with obtaining the Fair Value of such
assets. During the period of the winding up of the affairs of the Partnership,
the rights and obligations of the Partners set forth herein with respect to the
management of the Partnership shall continue. For purposes of winding up, the
Managing Partner shall continue to act as such subject to Section 7.02, unless
Section 6.04 applies.
SECTION 24. DISTRIBUTIONS ON TERMINATION
24.01 The proceeds from a liquidation, together with assets
distributed in kind, shall be applied and distributed in the following order:
(a) First, to the payment of debts and liabilities of the third-
party creditors of the Partnership, in the order of priority provided by law and
to the expenses of liquidation;
(b) Second, to the establishment of any reserve that the
Partnership may deem reasonably necessary for any contingent or unforeseen
liabilities of the Partnership or of the Partners arising out of or in
connection with the Partnership. Such reserves shall be paid to a trust to be
held for the purpose of disbursing such reserves in payment of any
contingencies, and, at the expiration of such period as the Partnership shall
deem advisable, to distribute the balance thereafter remaining in the manner
provided by this Section 25;
(c) Third, to the payment of any net indemnity obligations owed
Trigen by either Adwin and/or O'Brien under Section 13 of the Acquisition
Agreement, subject to the requirement that any such indemnity payments be
deducted from the Unreimbursed Development Costs otherwise payable to Adwin
and/or O'Brien under subparagraph (d) below;
(d) Fourth, to the payment of any Unreimbursed Development Costs
as set out in Exhibit A (as adjusted pursuant to subparagraph (c)), pro rata to
the amounts owed to individual Partners;
(e) Fifth, to the payment of any indebtedness owed to the Partners
by the Partnership, pro rata to the amounts owed to individual Partners;
(f) Any balance then remaining shall be distributed to the
Partners (i) to the extent of the positive balances of their Capital Accounts
(after adjustments, if any, for payments under (c) and (d) and any net indemnity
payments owed Adwin and O'Brien by Trigen pursuant to Section 14 of the
Acquisition Agreement, which amounts, if any, shall be deducted from Trigen's
Capital Account and credited to Adwin's and O'Brien's Capital Accounts, as the
case may be), as determined after taking into account all adjustments to Capital
Accounts for the Partnership taxable year during which the liquidation occurs,
in the proportion of such positive balances and (ii) any excess over Capital
Account balances being distributed according to the Partner Percentage of each
Partner, by the end of such taxable year or, if later, within ninety (90) days
after the date of such liquidation. For purposes of determining Capital
Accounts on liquidation, all unrealized gains, losses and accrued income and
deductions are treated as realized and recognized immediately before the date of
distribution; and
(g) Every reasonable effort shall be made to dispose of the assets
of the Partnership so that all distributions may be made to the Partners in
cash. To the extent such assets are not disposed of for cash, they will be
offered to each Partner and the Partner offering the highest cash price for such
assets shall have the right to purchase them, and the proceeds from such sale(s)
distributed to the Partners as otherwise provided herein.
SECTION 25. DOCUMENTS AND RECORDS
25.01 All documents and records of the Partnership including,
without limitation, all financial records, vouchers, canceled checks and bank
statements shall be delivered to the Managing Partner upon termination of the
Partnership. Unless otherwise approved by the Partnership, the Managing Partner
shall retain such documents and records for a period of not less than seven (7)
years and shall make such documents and records available during normal business
hours to the other Partners for inspection and copying at the other Partners'
cost and expense; provided, however, that if there is an audit or threat of
audit, such documents and records shall be retained until the audit is completed
and any tax liability finally determined.
SECTION 26. COMPLIANCE WITH LEGAL REQUIREMENTS
26.01 This Agreement, and the obligations and rights of the Partners
under this Agreement, shall be construed and applied, so as to be in conformity
with all environmental, regulatory and other laws and rules and regulations of
governmental bodies applicable to the Partnership, or any Partner, or any
Affiliate of a Partner. In the event that this Agreement, or the performance by
any party of its obligations hereunder, shall conflict-with, or be contrary to,
any such law, rule or regulation, the parties agree to negotiate in good faith
to amend or modify this Agreement so as to comply with such law, rule or
regulation. In furtherance thereof, the Partners acknowledge their intent to
have the Project be and remain a "qualifying cogeneration facility" under PURPA.
Accordingly and except for the provisions of Section 18.02 as to the transfer of
interests in the Partnership to maintain "qualifying cogeneration facility"
status, if the operation of any provision in this Agreement results or, with the
passage of time, will result in the loss of such "qualifying cogeneration
facility" status, the Partners agree to negotiate in good faith to amend or
modify this Agreement so as to retain and continue such "qualifying cogeneration
facility" status.
SECTION 27. RESOLUTION OF DISPUTES
27.01 In the event of a dispute under this Agreement involving (1)
the legal interpretation of the terms of this Agreement, or (2) an amount of
money owed a Partner under this Agreement:
(a) Each Partner involved in the dispute and/or the Partnership
shall appoint a senior manager from its management, or in the case of the
Partnership, the Chief Executive officer of the Managing Partner, or of a
Disinterested Partner if required under Section 7.02, who shall meet within ten
(10) days of notice of such a dispute in an effort to resolve the matter.
(b) If the matter has not been resolved within ten (10) days of
the first meeting of the managers, or if the managers fail to meet within ten
(10) days, the parties will attempt in good faith to resolve the dispute or
claim by mediation administered by the American Arbitration Association ("AAA")
under its Commercial Mediation Rules, before resorting to arbitration. Either
party may initiate mediation by filing a submission to mediation with the AAA.
The mediation shall be conducted in Philadelphia, Pennsylvania.
(c)(i) If the matter has not been resolved pursuant to mediation
within sixty (60) days of the initiation of mediation, or if either party fails
to participate in the mediation, the controversy shall be resolved by binding
arbitration under the commercial Arbitration Rules of the American Arbitration
Association. Where no disclosed claim or counterclaim exceeds One Million
Dollars ($1,000,000), exclusive of interest and arbitration costs, the
arbitration shall be heard and determined by one neutral arbitrator. Where any
disclosed claim or counterclaim exceeds One Million Dollars ($1,000,000),
exclusive of interest and arbitration costs, the arbitration shall be heard and
determined by three neutral arbitrators and shall be conducted under the
Supplementary Procedures of Large, Complex Disputes then in effect.
(ii) Either party may initiate arbitration under this Section 27.01
by filing a demand for arbitration with the AAA or the parties may jointly
initiate arbitration by filing a submission to arbitration. The arbitration
shall be conducted as a common law arbitration under Pennsylvania law, 42 Pa.
Cons. Stat Ann. Section 7341, and judgment upon the award rendered by the
arbitrators) may be entered by any court having Jurisdiction thereof. The
arbitrator(s) shall have no authority to award punitive or treble damages. The
arbitration process shall be concluded not later than three (3) months after the
date that it is initiated and the award of the arbitrator(s) shall be
accompanied by a reasoned opinion if requested by either party. The arbitration
shall be conducted in Philadelphia, Pennsylvania.
(d)(i) All deadlines specified in this Section 27 may be extended
by mutual agreement of the parties.
(ii) The procedures specified in this Section 27 shall be the sole
and exclusive procedures for the resolution of disputes covered by this Section
27; provided, however, that a party may seek a preliminary injunction or other
preliminary judicial relief if, in its judgment, such action is necessary to
avoid irreparable damage or to preserve the status quo. Despite such action,
the parties will continue to participate in good faith in the procedures
specified in this Section 27.
All applicable statutes of limitations and defenses based upon the
passage of time shall be tolled while the procedures specified in this section
27 are pending. The parties will take such actions, if any, required to
effectuate such tolling.
All negotiations pursuant to this Section 27 shall be confidential and
shall be treated as compromise and settlement negotiations for purposes of the
Federal Rules of Evidence and state rules of evidence.
(e) (i) Pending final resolution of any dispute, the parties shall
continue to fulfill their respective obligations under this Agreement.
(ii) During any dispute concerning the payment of money due under
the Agreement, the amount in controversy shall not be paid unless and until the
dispute is resolved in favor of the party claiming entitlement to the disputed
payment.
SECTION 28. NOTICES
28.01 All notices, requests and other communications to any Partner
shall be in writing (including bank wire, telecopier or similar writing) and
shall be given to such party at its address or telecopier number set forth at
the heading of this Agreement or such other address or telecopier number as such
Partner may specify for the purpose by notice to such Partner. Each such
notice, request or other communication shall be effective (a) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in this Section and the appropriate answer back is received, (b) if given by
mail, seventy-two (72) hours after such communication is deposited in the mail
with first class postage prepaid, addressed as required, or (c) if given by any
other means, when delivered at the address specified in this section.
SECTION 29. CONFIDENTIALITY
29.01 (a) Confidential Information consists of:
(i) information identified at the time of disclosure as
confidential, proprietary or secret by the provider or its partners, employees,
agents, attorneys or consultants;
(ii) information involving the economic plans, development,
construction, permitting, financing, equipment procurement, fuel procurement,
power sales, feasibility assessments of, or parties involved with, the Project;
(iii) the terms or proposed terms of any existing or proposed
agreement between or among the Partners; and
(iv) analyses, computations, studies, documents and records,
prepared by either party or its employees, agents or representatives which
contain or otherwise reflect or are generated from information furnished by the
other party, its partners, employees, agents, attorneys or consultants with
respect to the Partnership or the Project.
(b) Confidential Information shall not include:
(i) information which is in the public domain at the time of
disclosure;
(ii) information which becomes publicly known through no wrongful
act of the receiver, its Affiliates, attorneys, consultants or other third
party;
(iii) information which is or becomes known to the receiver from a
third party without a similar confidentiality obligation to the provider, and
without breach of this Agreement;
(iv) information which is approved for release in writing by the
provider; or
(v) information which the Partners unanimously agree should be made
public as part of the financing or development or operation of the Project.
29.02 Confidential Information may be disclosed as required to carry
out the purpose of the Partnership; provided, however, that any Confidential
Information disclosed, to or obtained by, any Partner with respect to the
Project and all other Confidential Information obtained by any Partner shall be
held in the strictest confidence by the receiver. The receiver shall not
disclose, make public, or disseminate in any way any Confidential Information
except as expressly permitted by this Agreement. The receiver shall take the
strictest precautions to protect against unauthorized and inadvertent disclosure
of Confidential Information and shall not disclose Confidential Information to
any party without the prior written consent of the provider.
SECTION 30. GENERAL CONTRACT TERMS
30.01 Further Assurances. Each of the Partners will execute and
deliver such further instruments, and do such further acts and things as may be
reasonably requested to carry out the intent and purposes of this Agreement.
30.02 Survival. All payment obligations which shall have arisen
under this Agreement shall survive termination of this Agreement. The
indemnification obligations of the Partners under this Agreement shall survive
termination of this Agreement.
30.03 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania. Subject to the
provisions of Section 27, for the purposes of any suit, action or proceeding
arising out of the Project, this Agreement, or any of the Project Documents,
each Partner hereby consents and submits to the exclusive jurisdiction and venue
of any of the courts of the Commonwealth of Pennsylvania and the United States
District Court for the Eastern District of Pennsylvania and irrevocably agrees
that service of process by certified mail, return receipt requested addressed as
provided in Section 28 shall be deemed in every respect effective and valid
personal service of process. Each Partner irrevocably waives any objection
which it may now or hereafter have to the laying of venue in such courts and any
claim that such suit, action or proceeding has been brought in an inconvenient
forum.
30.04 Complete Agreement; Amendments. This Agreement represents the
complete agreement and understanding of the parties with respect to the Project
and there are no other agreements, oral or written, with respect to the subject
matter hereof. With the exception of an amendment pursuant to Section 6.03,
this Agreement may not be modified or amended except by written consent of all
Partners.
30.05 Successors in Interest. All provisions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by and
against the successors and permitted assigns of any of the parties to this
Agreement.
30.06 Severability. Each provision of this Agreement shall be
considered severable, and if for any reason any provision which is not essential
to the effectuation of the basic purposes of the Agreement is determined to be
invalid and contrary to any existing or future law, such invalidity shall not
impair the operation of or affect those provisions of this Agreement that are
valid.
IN WITNESS WHEREOF, the Partners have executed this Amended and
Restated Partnership Agreement as of the date written above.
O'BRIEN (SCHUYLKILL) COGENERATION, TRIGEN-SCHUYLKILL
INC. COGENERATION, INC.
By:_____________________________ By:____________________
_______________________ _______________________
Date Date
ADWIN (SCHUYLKILL) COGENERATION, INC.
_____________________________________
By:
_____________________________________
Date
<TABLE>
<CAPTION>
EXHIBIT 11
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
Computation of Earnings Per Share
(All amounts in thousands, except share and per share data)
Three Months Ended March 31,
1996 1995
<S> <C> <C>
Earnings Per Share - Primary
Net income $4,181 $3,258
======== ========
Weighted average number of common
and common equivalent shares applicable
to primary earnings per share calculation 11,469,658 11,372,725
Dilutive effect of stock options 77,516 95,293
---------- ----------
Weighted average number of shares outstanding 11,547,174 11,468,018
========== ==========
Net income per share - primary $0.36 $0.28
===== =====
Earnings Per Share - Assuming Full Dilution
Net income $4,181 $3,258
Plus: Interest on convertible subordinated debt
(net of taxes) 157 109
------- -------
Net income for fully diluted earnings per share
calculation $4,338 $3,367
====== ======
Weighted average number of common
and common equivalent shares applicable
to fully diluted earnings per share calculation
Weighted average number of shares outstanding 11,469,658 11,372,725
Shares issuable upon conversion of subordinated debt 334,012 250,000
Dilutive effect of stock options 100,490 95,293
---------- ----------
11,904,160 11,718,018
========== ==========
Net income per share assuming full dilution $0.36 $0.29
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q for quarter ending March 31, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> MAR-31-1996
<CASH> $24,107
<SECURITIES> 0
<RECEIVABLES> $37,592
<ALLOWANCES> $783
<INVENTORY> $5,743
<CURRENT-ASSETS> $64,536
<PP&E> $394,831
<DEPRECIATION> $51,395
<TOTAL-ASSETS> $461,822
<CURRENT-LIABILITIES> $61,107
<BONDS> $222,111
0
0
<COMMON> $115
<OTHER-SE> $124,259
<TOTAL-LIABILITY-AND-EQUITY> $461,822
<SALES> 0
<TOTAL-REVENUES> $86,219
<CGS> 0
<TOTAL-COSTS> $74,076
<OTHER-EXPENSES> $296
<LOSS-PROVISION> $86
<INTEREST-EXPENSE> $4,669
<INCOME-PRETAX> $7,092
<INCOME-TAX> $2,911
<INCOME-CONTINUING> $4,181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $4,181
<EPS-PRIMARY> $.36
<EPS-DILUTED> $.36
</TABLE>
