Exhibit 3.1
EXECUTION COPY
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Second Amended and Restated Agreement of Limited
Partnership
of
PROJECT ORANGE ASSOCIATES, L.P.
A Delaware Limited Partnership
Dated as of December 16, 1992
among
G.A.S. ORANGE PARTNERS, L.P.,
NCP SYRACUSE, INC.
and
SYRACUSE ORANGE PARTNERS, L.P.
TABLE OF CONTENTS
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Page
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ARTICLE I Definitions....................................................... 2
ARTICLE II General Provisions................................................ 15
2.1. Information....................................................... 15
2.2. Continuation of the Partnership................................... 15
2.3. Name.............................................................. 16
2.4. Purpose........................................................... 16
2.5. Place of Business................................................. 16
2.6. Partners' Name and Addresses...................................... 17
2.7. Title to Partnership Property..................................... 17
2.8. Registered Office and Registered Agent............................ 17
2.9. Organization Certificates......................................... 17
2.10. Duration of the Partnership....................................... 18
2.11. Development Fees.................................................. 18
2.12. Orange Partners' Fees............................................. 19
2.13. NCP Syracuse Fees................................................. 20
2.14. Fees Excluded from Flip Point Calculation......................... 21
2.15. Certain Obligations Assumed....................................... 21
ARTICLE III Capital of the Partnership........................................ 22
3.1. Capital Contributions to the Partnership.......................... 22
3.2. Loans by Partners................................................. 23
ARTICLE IV Management of the Partnership..................................... 24
4.1. Management........................................................ 24
4.2. Transactions with Related Parties; Fiduciary Duties, etc.......... 37
4.3. Right of Public to Rely on Authority of the Managing
General Partner................................................... 40
4.4. Liability of the General Partners; Indemnification of
Partners.......................................................... 41
4.5. Limitations on Limited Partners................................... 42
4.6. Rights of Partners................................................ 43
4.7. Liability of Limited Partners..................................... 43
4.8. Limitation of Liability........................................... 43
ARTICLE V Representations, Warranties and Covenants of the Partners......... 44
(i)
5.1. General Representations and Warranties........................44
5.2. Covenants of Partners.........................................45
5.3. Representations and Warranties of the Developer General
Partner......................................................45
5.4. Covenant of the Developer and General Partner.................47
5.5. Representations, Warranties and Covenants of the Managing
General Partner..............................................47
ARTICLE VI Capital Accounts, Distributions and Allocations...............48
6.1. Establishment of Capital Accounts.............................48
6.2. Distributions of Cash Items...................................50
6.3. Allocations of Tax Items......................................52
6.4. Recharacterization of Fees and Guaranteed Payments............55
6.5. Conformity with Treasury Regulations..........................55
6.6. Negative Capital Accounts.....................................57
6.7. Additional Reserves...........................................57
6.8. Pre-Operating Reserves........................................58
6.9. Application of Project Cost Excess and Certain Other Funds....58
ARTICLE VII Transfer of Partnership Interests; Removal of a General Partner;
Admission of Additional Partners.............................59
7.1. Substitution and Transfer of Certain Interests................59
7.2. Death, Bankruptcy or Dissolution of a Limited Partner.........63
7.3. Transfer of a General Partner's Interest......................63
7.4. Removal or Deemed Withdrawal of a General Partner.............66
ARTICLE VIII Dissolution and Liquidation...................................68
8.1. Events of Dissolution.........................................68
8.2. Priority on Liquidation.......................................69
8.3. Statements on Liquidation.....................................70
8.4. Return of Capital; Partition..................................70
ARTICLE IX Records and Accounting........................................70
9.1. Books and Records.............................................70
9.2. Required Reports to Partners..................................71
9.3. Partnership Bank Accounts.....................................72
9.4. Annual Tax Returns............................................72
9.5. Actions in Event of Audit.....................................73
9.6. Costs.........................................................74
ARTICLE X Miscellaneous..................................................
(ii)
10.1. Notices........................................................... 75
10.2. Power of Attorney................................................. 75
10.3. Amendment......................................................... 76
10.4. Partition......................................................... 77
10.5. No Waiver......................................................... 77
10.6. Entire Agreement.................................................. 78
10.7. Creditors......................................................... 78
10.8. Agreement in Counterparts......................................... 78
10.9. Captions.......................................................... 78
10.10. Successors and Assigns............................................ 78
10.11. Governing Law..................................................... 78
10.12. Equitable Remedies................................................ 79
10.13. Partial Invalidity................................................ 79
10.14. Consent to Jurisdiction, Venue and Service of Process............. 79
Schedules
Schedule I Names and Addresses of General Partners and Limited Partners
Schedule II Capital Contributions
Schedule III Material Project Documents
(iii)
Exhibits
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Exhibit A [Deleted]
Exhibit B Calculation of Flip Point
Exhibit C Boiler Expenses and Reserves
Exhibit D Tranche Thresholds
Exhibit E [Deleted]
Exhibit F List of Agreements and Permits
Exhibit G Legal Proceedings
Exhibit H List of Claims
Exhibit I Certain Information to be Distributed to Partners
(iv)
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of December 16, 1991 by and among G.A.S. Orange Partners, L.P., a Delaware
limited partnership ("Orange Partners"); NCP Syracuse. Inc., a Delaware
corporation ("NCP Syracuse"); and Syracuse Orange Partners, L.P., a Delaware
limited partnership ("Syracuse Partners").
RECITALS:
WHEREAS, Project Orange Associates, L..P., a Delaware limited
partnership (the "Partnership") was formed on May 23, 1988 by the filing of a
certificate of limited partnership with the Secretary of State of the State of
Delaware;
WHEREAS, the Partnership was formed for the purpose of developing,
owning, constructing, and operating a gas-fired cogeneration facility to be
located near Syracuse University in Syracuse, New York (the "Project"),
consisting of: (i) an approximately 80 MW (net) cogeneration plant comprising
two natural gas fired General Electric LM 5000 turbine generator sets and
accompanying steam and condensate return facilities (the "Cogeneration
Facility") to be constructed on property leased from Syracuse University (the
"University") in Syracuse, New York; (ii) an existing steam generating plant to
be operated under contract with the University (the "Existing Plant"); (iii) a
120,000,000 MMBtu prepaid natural gas fuel supply; and (iv) a Project-owned
natural gas transmission pipeline (the "Project Pipeline");
WHEREAS, the then-partners of the Partnership amended and restated its
original Agreement of Limited Partnership pursuant to the First Amended and
Restated Agreement of Limited Partnership dated as of April 5, 1991;
WHEREAS, the Partners now desire to amend and restate the aforesaid
First Amended and Restated Agreement of Limited Partnership and to continue the
existence of the Partnership for the purposes herein described;
NOW, THEREFORE, the parties agree as follows:
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ARTICLE I
Definitions
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As used herein, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
Act: The Delaware Revised Uniform Limited Partnership Act, as it may be
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amended from time to time, and any successor to such act.
Acceptable Counsel: has the meaning set forth in Section 7.1(a) (iv).
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Accountants: Deloitte & Touche or such other major and nationally
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recognized firm of independent public accountants as the Managing General
Partner may designate.
Additional Reserves: any Partnership reserves which are funded after the
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Term Loan Date other than reserves which are required by the Financing
Agreement.
Adjusted Basis: at any time relevant herein, the Partnership's basis for
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determining gain or loss from the sale or other disposition of any Partnership
asset (determined under Code section 1012 or other applicable sections of Code
Subchapters O, K, C and P), adjusted as provided in Code section 1016.
Affiliate: with respect to a specified Person, a Person who, directly or
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indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with, the Person specified.
Affiliate Contract: has the meaning set forth in Section 4.2(b).
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Agent: has the meaning set forth in the Financing Agreement, as it may be
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amended from time to time, or any Person performing similar functions under any
successor or subsequent agreement governing long term indebtedness of the
Partnership.
Agreement: this Second Amended and Restated Agreement of Limited
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Partnership, as it may be amended or restated from time to time.
Available Cash: with respect to any period commencing on or after the Term
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Loan Date, the sum of cash applied to fund Additional Reserves during that
period; plus (ii) all other cash available to the Partnership at the end of that
period for distribution to the Partners after (a) payment of all debt service
and other expenses (including, without limitation, payments due on or with
respect to Partner Loans, Project Costs, operating and maintenance expenses,
general and administration expenses, insurance costs and expenses, Partnership
gross receipts and property taxes and all other Partnership expenses), (b)
satisfaction of liabilities as they become due, and (c) cash applied to fund
such reserves as are required by the Financing Agreement.
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Bankruptcy: with respect to the Partnership or a Partner therein, shall
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mean (a) an adjudication that the Partnership or such Partner is bankrupt or
insolvent, or the entry of an order for relief under the Federal Bankruptcy Code
or any other applicable bankruptcy or insolvency law, (b) its inability to pay
its debts as they mature, (c) the making by it of an assignment for the benefit
of creditors or the dissolution and winding up of its affairs, (d) the filing by
it of a petition in bankruptcy or a petition for relief under any section of the
Federal Bankruptcy Code or any other applicable bankruptcy or insolvency statute
or an answer by it to an involuntary petition filed against it admitting or
failing to deny the allegations of any such petition, (e) the commencement
against it of any proceedings under the Federal Bankruptcy Code (unless such
proceedings are stayed or dismissed within ninety (90) days from the date of
filing thereof), (f) the appointment of a trustee, conservator or receiver for
all or a substantial part of its assets (unless such appointment is vacated or
stayed within ninety (90) days from its effective date), or (g) with respect to
a Partner, the acquisition by a creditor of such Partner, or by any other party
acting on behalf of such creditor, of any rights with respect to such Partner's
partnership interest in the Partnership or a right to Partnership profits (other
than in accordance with any pledge agreement required by the Financing Agreement
or any subsequent financing arrangement of the Partnership), if such acquisition
shall continue for a period of 90 days.
Capacity Expansion: has the meaning assigned in Section 4.1(f) (v).
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Capital Account: the account for each Partner on the books of the
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Partnership created and maintained as provided in Section 6.1, with only one
Capital Account being maintained for any Person acting as both a General and a
Limited Partner.
Capital Contribution: with respect to any Partner, the amount of money and
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the Net Agreed Value of any property (other than money) contributed to the
Partnership pursuant to the terms of this Agreement with respect to that
Partner's Interest.
Carrying Value: as of the time of determination. (i) with respect to
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Contributed Property, the Fair Market Value of such property on the date of
contribution reduced (but not below zero) by all depreciation, depletion, and
amortization charged to the Capital Accounts pursuant to Section 6.1(b) with
respect to such property and (ii) with respect to any other property, the
Adjusted. Basis of such property.
Code: the United States Internal Revenue Code of 1986, as amended from time
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to time.
Consent: the written consent of a Person. When used as a verb, such term
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shall have a correlative meaning.
Construction Account: shall have the meaning specified in the Financing
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Agreement.
Construction Contract: the Amended and Restated Cogeneration Facility
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Turnkey Construction Contract dated as of April 5, 1991, between the Partnership
and Century Contractors West inc., as the same may be amended from time to time
in accordance with this Agreement.
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Construction Loan: has the meaning set forth in the Financing Agreement as
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in effect on the Initial Funding Date.
Consumer Price Index: The Consumer Price Index of the U.S. Department of
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Labor Bureau of Labor Statistics, All Urban Consumers, U.S. city average. All
Items, 1982-84=100, or, if such index is no longer published, a similar
mechanism for determining adjustments to prices to reflect general price changes
as agreed to by the General Partners.
Contingent Payments: has the meaning assigned in Section 2.11(b)
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Contributed Property: any property or other consideration (other than cash)
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contributed by a Partner to the Partnership, including property owned by the
Partnership as of the date of this Agreement.
Control: the possession. directly or indirectly of the power to direct or
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cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. A Person shall be
conclusively presumed to have Control of another Person if it is a general
partner of such other Person and such other Person is a partnership or a limited
partnership; provided, however, that Orange Partners shall not be deemed to be
in Control of the Partnership for purposes of this Agreement so long as NCP
Syracuse is the Managing General Partner.
Deferred Fees: any fees payable to the Developer General Partner pursuant
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to the provisions of Section 2.11(a) or 2.12(a) which are deferred either in
accordance with such provisions or pursuant to the Financing Agreement and which
remain outstanding and unpaid.
Developer Entities: collectively, the Developer General Partner, G.A.S.
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Orange Development, Inc. and the Partnership.
Developer General Partner: G.A.S. Orange Partners, L.P. in its capacity as
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a General Partner.
DGP Adverse Effect: an impact which is reasonably likely to be adverse to
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the interest of the Developer General Partner with respect to any of (i) the
amount of Project Cost Excess, (ii) the relative amounts or percentages of
Available Cash or Net Capital Receipts distributable as between the Investor
Group and the Developer General Partner in or with respect to any period, (iii)
the relative amounts or percentages of Profit or Loss allocable as between the
Investor Group and the Developer General Partner in or with respect to any
period, (iv) the date on which either Flip Point occurs, or (v) the likelihood
that the capacity of the Project to generate and sell electricity in excess of
80 Megawatts can be achieved.
Disability: death, adjudication of incompetency, Bankruptcy, or
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dissolution; "Disabled" means to be under a Disability.
Equity Backstop Amount: has the meaning set forth in the Financing
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Agreement as in effect on the Funding Date.
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Equity Funding Date: the date that NCP Syracuse, Syracuse Partners, or any
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guarantor of their respective obligations under that certain Funding Guaranty
for the benefit of the Agent and the Banks dated as of April 5, 1991 are
required to provide equity funds to be applied to the payment of Construction
Loans pursuant to Section 5.19(a) of the Financing Agreement.
Fair Market Value: the value of the particular asset or interest in
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question determined on the basis of an arm's-length transaction for cash between
an informed and willing seller (under no compulsion to sell) and an informed and
willing purchaser (under no compulsion- to purchase) taking into account, among
other things, the anticipated cash flow, taxable income and taxable loss
attributable to the asset or interest in question. If the Partners seeking to
determine such Fair Market Value cannot agree as to such value between or among
themselves, upon notice of any such Partner, such Partners shall meet to appoint
a mutually acceptable independent appraiser having recognized qualifications
necessary in order to make such determination and whose fees and expenses,
unless otherwise provided in this Agreement, shall be shared equally by the
Partners affected by such determination. If such Partners shall be unable to
agree on such an appraiser within 20 days of such notice, such value shall be
determined by a panel of three independent appraisers having such qualifications
selected on or prior to the 40th day of such notice, one of whom shall be
selected by the selling or transferring Partner or Partners, another of whom
shall be selected by the purchasing or acquiring Partner or Partners, and the
third of whom shall be selected by such other two appraisers or, if such other
two appraisers shall be unable to agree upon a third appraiser within 20 days of
their selection, by the American Arbitration Association or its successors. The
appraiser or appraisers appointed pursuant to the foregoing procedure shall be
instructed to determine such value within 45 days after such appointment and
such determination shall be final and binding upon the Partners. If three
appraisers shall be appointed, the determination of the appraiser that differs
most from the average of the other two appraisers shall be excluded, the
remaining two determinations shall be averaged and such average shall constitute
the determination of the appraisers. Unless otherwise provided in this
Agreement, in the case of a panel of three appraisers, the fees and expenses of
each of the two appraisers appointed by the Partners affected by such
determination shall be paid by such Partners and the fees and expenses of the
third appraiser shall be divided equally by or among all the Partners affected
by such determination, except that if such determination is being undertaken as
a result of a breach by under this Agreement, such breaching Partner shall pay
all such fees and expenses.
Fee Excess: means the excess, if any, of $2,870,000 over the amount paid to
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secure a full and complete release, in form and substance satisfactory to the
Agent, of the Partnership, any Affiliate (as defined in the Financing Agreement)
and the Project from liability for payment of fees pursuant to that certain
letter agreement between Gas Alternative Systems, Inc. and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
Jennrette Securities Corporation, dated August 22, 1989.
Financing Agreement: the Financing Agreement, dated as of April 5, 1991, by
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and among the Partnership, each of the Banks (as defined in such Financing
Agreement), and Algemene Bank Nederland N.V., Cayman Islands Branch, as Agent
for such Banks, related to the Project, as amended, supplemented or otherwise
modified or replaced and in effect from time to time.
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Financing Documents: the "Financing Documents," as defined in the Financing
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Agreement.
First Flip Point: the first day on which the Investor Group has achieved a
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19% after-tax internal rate of return calculated according to the rules and
methodology set forth in Exhibit B.
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First Restatement: has the meaning assigned in Section 5.3(a).
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Fiscal Year: the taxable year for Federal income tax purposes determined
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under Section 706 of the Code and the ax Regulations promulgated thereunder.
Flip Points: collectively, the First Flip Point and the Second Flip Point.
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Each of the First Flip Point and the Second Flip Point is referred to as a Flip
Point.
Gain or Loss on Disposition: the gain or loss for Federal income tax
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purposes, arising from a sale, exchange or other taxable disposition of the
Project, or any material portion thereof (excluding, however, any gain or loss
from sales of services or property in the ordinary course of the business of the
Partnership),
Gas Sales Contract: the Restated Gas Sale and purchase Agreement-dated as
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of March 18, 1991 between the partnership and Noranda Inc., as from time to time
amended and in force.
General Partner: any Person now or hereafter admitted as a general partner
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in the Partnership.
Governmental Authority: any Federal, state, local or other body, whether
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administrative, legislative, executive or judicial, or any quasi-governmental
body, in any event having jurisdiction over the Project, a Partner or the
Partnership.
Governmental Requirements: requirements contained in any law, ordinance,
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regulation, rule, order, writ, judgment, or direction promulgated by any
Governmental Authority.
Initial Funding Date: the date upon which the initial disbursement of
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Construction Loan funds is made under the Financing Agreement.
Interest: at any time, the interest of a Partner in the Partnership,
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including but not limited to its right to Partnership capital, allocations and
distributions.
Investor Group: Syracuse Partners and NCP Syracuse as a group.
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Keep Requirement: has the meaning set forth in Section 5.5(b).
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Labor Costs: the actual labor costs of NCP Employees for work performed on
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the Project, calculated as set forth in Section 2.13(c).
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Limited Partner: any Person now or hereafter admitted as a limited partner
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in the Partnership.
Loss: see definition of Profit or Loss.
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Loss on Disposition: see definition of Gain or Loss on Disposition.
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Major Decisions: decisions concerning any of the matters described in
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Sections 3.1(b), 4.1(d)(xviii), 4.1(f)(i)(A), 4.1(f)(i)(B), 4.1(f)(i)(C),
4.1(f)(i)(D), 4.1(f)(i)(E), 4.1(f)(ii), 4.1(f)(iii), 4.1(f)(iv), 4.1(f)(v),
4.1(f)(vi), 4.1(f)(vii), 4.1(f)(viii), 4.1(f)(ix), 4.2, and 10.3(b)
Majority in Interest of Limited Partners: at any time, Limited Partners
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owning Interests which entitle them to more than 50% of a hypothetical
distribution of one dollar of Available Cash made at that time (taking into
account whether or not a Flip Point has occurred but otherwise assuming that the
aggregate prior distributions that year are at least $1.00 less than any Tranche
1 Threshold for that year).
Managing General Partner: NCP Syracuse, Inc or such other General Partner
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as shall be the Managing General Partner pursuant to this Agreement or as the
General Partners may designate from time to time to be the Managing General
Partner.
Material Project Documents: collectively,
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(i) the documents listed in Schedule III
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(ii) any amendment, modification, or supplement thereto entered into by the
Partnership in accordance with the terms of this Agreement,
(iii) any agreement or document entered into or issued in substitution or
as a replacement for any of the documents listed on Schedule III, and
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(iv) any other document related to the Project which both General Partners
may agree to designate as a "Material Project Document" from time to time by
amending Schedule III hereto.
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Minimum Gain Attributable to Partner Nonrecourse Debt: with respect to any
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Partner Nonrecourse Debt, an amount equal to the increase, if any, in Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
nonrecourse liability of the Partnership, as defined in Treasury Regulations (S)
1.704-1T(b) (4) (iv) (c)
Minimum Gain: shall have the meaning set forth in Treasury Regulations (S)
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l.704-1T(b) (4) (iv) (c).
NCP Employees: all persons employed by any of the NCP Officer Companies,
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or any other corporation or entity that is beneficially 50% or more owned by any
of them, other than NCP Officers.
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NCP Officers: all persons who are officers or directors of any of the NCP
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Officer Companies.
NCP Officer Companies: NCP Syracuse, North Canadian Power Incorporated
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and North Canadian Oils Limited.
Net Agreed Value: (i) in the case of cash, the amount thereof, (ii) in the
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case of any Contributed Property, the Fair Market Value of such Contributed
Property at the time of contribution reduced by any indebtedness either assumed
by the Partnership upon such contribution or to which such Contributed Property
is subject when contributed and (iii) in the case of any property (other than
cash) distributed to a Partner, the Fair Market Value of such property at the
time of such distribution reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution.
Net Capital Receipts: the proceeds of any sale, exchange or other
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disposition of the Project or any material portion thereof (excluding, however,
proceeds from sales of services or property in the ordinary course of the
business of the Partnership), the proceeds of any refinancing of any
indebtedness of the Partnership, or any insurance or condemnation proceeds, in
each instance less the amount of expenses incurred in connection therewith, any
obligations paid with the proceeds of any disposition of the Project or of any
refinanced debt, the cost of restoration and repair or replacement of any
property damaged by casualty or taken in condemnation, and the cost of
construction of any improvement for which such insurance or condemnation
proceeds are used.
Operative Documents: has the meaning set forth in the Financing Agreement
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as in effect on the
date hereof.
Partners: the General Partners and the Limited Partners collectively.
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"Partner" means any one of the Partners.
Partner Loans: any loan made by a Partner or an Affiliate of a Partner to
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the Partnership.
Partner Pledge and Security Agreement: means a Pledge and Security
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Agreement executed by a Partner pursuant to the requirements of the Financing
Agreement.
Partnership: Project Orange Associates, L.P. , the subject of this
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Agreement.
Partner Nonrecourse Debt: shall have the meaning set forth in Treasury
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Regulations (S)1.704-1T(b)(4)(iv)(k)(4).
Person: any individual, firm, corporation, trust, partnership or other
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entity.
Post-Flip Interest: the following interests of the Partners:
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(i) if the First Flip Point occurs before the Pro Forma End Date, then from
and after the occurrence of the First Flip Point and until the occurrence of the
Second Flip Point the Post-Flip Interests of the Partners will be:
Orange Partners (in its capacity as 1%
Developer General Partner)
Orange Partners (in its capacity as a Limited 49%
Partner)
NCP Syracuse 1%
Syracuse Partners 49%
(ii) if the First Flip Point occurs after the Pro Forma End Date, then from
and after the occurrence of the First Flip Point the Post-Flip Interests of the
Partners will be:
Orange Partners (in its capacity as 1%
Developer General Partner)
Orange Partners (in its capacity as a Limited 74%
Partner)
NCP Syracuse 1%
Syracuse Partners 24%
(iii) after the Second Flip Point occurs (regardless of when it occurs), the
Post-Flip Interests of the Partners will be:
Orange Partners (in its capacity as 1%
Developer General Partner)
Orange Partners (in its capacity as a Limited 74%
Partner)
NCP Syracuse 1%
Syracuse Partners 24%
Pre-Operating Reserves: means any reserves established by the Partnership
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or set aside in the Construction Account on or prior to the Term Loan Date,
including (i) the
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undisbursed portion of the Tenneco Letter of Credit (as defined in the Financing
Agreement), (ii) Construction Loan proceeds that may be diverted from
construction management fees due under Section 2.12(a) to reduce aggregate Net
Demand Charges (as provided in clause (i) of the definition of Project Costs),
or (iii) undisbursed Construction Loans to the extent held back for the payment
of the claim provided for in clause (t) of the definition of Project Costs, but
excluding the $1,000,000 working capital reserve required to be funded under the
Financing Agreement.
Problem: has the meaning set forth in Section 4.2(c) (i)
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Pro Forma End Date: the date twenty years after the Term Loan Date.
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Profit or Loss: the income or loss of the Partnership for Federal income
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tax purposes, other than Gain or Loss on Disposition.
Prohibited Transferees: has the meaning set forth in Section 7.1(a) (iii).
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Project: see the recitals to this Agreement.
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Project Budget: has the meaning set forth in the Financing Agreement, as
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in force on the Initial Funding Date.
Project Cost Excess: the excess, if any, measured as of the Term. Loan
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Date, of Project Funds over the sum of (i) the $1,000,000 working capital
reserve required to be funded under the Financing Agreement plus (ii) Project
Costs other than the Contingent Payments and any Deferred Fees.
Project Costs: has the meaning assigned to that term in the Financing
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Agreement.
Project Funds: means the sum of (i) $205,000,000 plus (ii) any Contractor
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Delay Damages (as defined in the Financing Agreement) plus (iii) any Pipeline
Contractor Delay Damages (as defined in the Financing Agreement) plus (iv) any
Project Revenues (as defined in the Financing Agreement) earned (whether or not
received) prior to the Term Loan Date plus (v) all Additional Guarantor Funds
(as defined in the Financing Agreement) plus (vi) all other amounts received by
or accrued to the Partnership prior to the Term Loan Date.
Proposed Resolution: has the meaning set forth in Section 4.2(c) (iv).
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PUHCA: the Public Utility Holding Company Act of 1935 as it may be amended
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from time to time, and the rules and regulations promulgated thereunder by the
Securities and Exchange Commission.
PURPA: the Public Utility Regulatory Policies Act of 1978, as it may be
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amended from time to time, and the rules and regulations promulgated thereunder
by the Federal Energy Regulatory Commission.
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Recapture Income: any gain recognized upon the disposition of a Partnership
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asset that is not capital gain because such gain represents the recapture (under
Section 1245 or Section 1250 of the Code or otherwise) of deductions previously
taken for Federal income tax purposes with respect to such asset.
Related Party: with respect to a specified Person, includes any Person (i)
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who is an Affiliate of the specified Person, (ii) who directly or indirectly,
through one or more intermediaries, owns a 10 or greater equity interest in the
specified Person, (iii) in whom the specified Person directly or indirectly,
through one or more intermediaries, owns a 10% or greater equity interest,
and/or (iv) with respect to whom there is a third Person who directly or
indirectly, through one or more intermediaries, owns a 10% or greater equity
interest in such Person and in the specified Person.
Required Opinion: has the meaning set forth in Section 7.1(a) (iv).
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Second Flip Point: the first day on which the Investor Group has achieved
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a 20% after-tax internal rate of return calculated according to the rules and
methodology set forth in Exhibit B.
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SOP Adverse Effect: an impact which is reasonably likely to result in a
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change on a material basis in (i) the relative amounts or percentages of
Available Cash or Net Capital Receipts distributable as between SOP and the
other Partners in or with respect to any period, (ii) the relative amounts or
percentages of Profit or Loss allocable as between SOP and the other Partners in
or with respect to any period, or (iii) the date on which either Flip Point
occurs.
Steam Sale Agreement: has the meaning assigned in the Financing Agreement.
--------------------
Syracuse Investment: means Syracuse Investment, Inc., a Delaware
-------------------
corporation and a wholly-owned subsidiary of North Canadian Power Incorporated.
Tax Returns: (a) the annual Federal income tax return of the Partnership,
-----------
whether on Form 1065 or such other form as may hereafter be prescribed by the
Internal Revenue Service, and (b) any return or report which the Partnership is
required to file with the taxing authorities of any State or political
subdivision thereof.
Term Loan: has the meaning assigned in the Financing Agreement as in effect
---------
on the date hereof.
Term Loan Date: means the date that the Construction Loans are converted to
--------------
Term Loans.
Third Party Fees: all fees and expenses incurred by or on behalf of the
----------------
Partnership for third-party accounting, tax preparation and audit services and
third-party legal, consulting, other professional services and other services,
except fees and expenses incurred for services that the Managing General Partner
is required to provide in the performance of its responsibilities or the
discharge of its duties under this Agreement.
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Tranche 1 Threshold: for any particular fiscal year the number of dollars
-------------------
set forth opposite that year on Exhibit D in the column headed "Tranche 1
---------
Threshold."
Tranche 2 Amount: for any particular fiscal year, the number of dollars
----------------
set forth opposite that year on Exhibit D in the column headed "Tranche 2
---------
Amount."
Transfer: the sale, transfer, assignment, hypothecation, pledge or other
--------
disposition, and, when used as a verb, "Transfer" shall have a correlative
meaning.
Transferee: a Person who takes all or part of an Interest by means of a
----------
Transfer.
Transferor: a Person whose Interest is Transferred in whole or in part.
----------
Treasury Regulations: the regulations promulgated by the Department of the
--------------------
Treasury under the Code in effect from time to time.
Unrealized Gain Attributable to a Partnership Property: as of any date of
------------------------------------------------------
determination, the excess, if any, of the Fair Market Value of such property as
of such date of determination over the Carrying Value of such property as of
such date of determination.
Unrealized Loss Attributable to a Partnership Property: as of any date of
------------------------------------------------------
determination, the excess, if any, of the Carrying Value of such property as of
such date of determination over the Fair Market Value of such property as of
such date of determination.
ARTICLE II
General Provisions
------------------
2.1. Formation. The Partnership was formed as a Delaware limited
---------
partnership pursuant to the terms of the Act by filing a certificate of limited
partnership with the Secretary of State of the State of Delaware on May 23,
1988.
2.2. Continuation of the Partnership. The Partners agree to continue the
-------------------------------
Partnership as a limited partnership pursuant to the terms of the Act and this
Agreement. Upon execution hereof, and without any further action, NCP Syracuse
continues as a General Partner, Syracuse Partners continues as a Limited Partner
and Orange Partners continues as a General Partner and a Limited Partner. It is
the intent and purpose this Agreement that the Partnership be a limited
partnership meeting the definition of "partnership" contained in Section 7701 of
the Code and the regulations promulgated thereunder. All rights, liabilities and
obligations of the General Partners and the Limited Partners, both as among
themselves and as to Persons not parties to this Agreement, shall be as provided
in the Act, except as expressly provided herein. Notwithstanding the foregoing
provisions, the provisions of Section 3.1, or any other provision of this
Agreement, prior to the Initial Funding Date: (i) no Partner shall have (A) any
obligation to make a Capital Contribution to the Partnership, (B) any other
obligation to the Partnership or another Partner
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under any provision of this Agreement, or (C) any obligation to pay funds to the
Agent under the Financing Agreement and (ii) NCP Syracuse shall not take any
action in its capacity as Managing General Partner except with the prior
agreement of the Developer General Partner.
2.3. Name. The name of the Partnership is and shall be "Project Orange
----
Associates, L.P." The Managing General Partner shall execute and cause to be
filed on behalf of the Partnership such partnership or assumed or fictitious
name certificate or certificates as may from time to time be required by law to
be published or filed in connection with the continuation, qualification and
operation of the Partnership.
2.4. Purpose. The sole purpose of the Partnership shall be to develop,
-------
construct, own, operate, manage, lease and sell the Project and the properties
incidental thereto and to enter into such banking agreements, partnerships,
joint ventures, credit agreements, capital or equity contribution agreements,
assignments, pledges and security agreements and to undertake any and all other
acts and things, and to execute and deliver any and all other agreements,
instruments and documents, necessary, proper, convenient or advisable to carry
out such purpose, including without limitation: (i) to acquire by purchase,
lease or otherwise, any real or personal property; and (ii) to prepay in whole
or in part, refinance, restructure, recast, increase, renew, modify or extend
any loan as contemplated by this Agreement. The name and funds of the
Partnership shall be used only for Partnership purposes.
2.5. Place of Business. The principal place of business of the Partnership
-----------------
shall be at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Managing
General Partner may, at any time and from time to time, change the location of
the Partnership's principal place of business, upon written notice of such
change to the Partners, and may establish such. additional place or places of
business of the Partnership as the Managing General Partner may from time to
time determine; provided, however, that the Managing General Partner shall not
(i) establish any Partnership office in any state other than New York State if
as a result of such action any of the partners or the Partnership will be
required to file tax returns or be subject to taxation in such other state, or
(ii) move the Partnership's principal place of business outside of New York
State.
2.6. Partners' Names and Addresses. The names and addresses of the
General Partners and Limited Partners are set forth on Schedule I attached
----------
hereto.
2.7. Title to Partnership Property. All property owned by the
-----------------------------
Partnership, whether real or personal, tangible or intangible, shall be deemed
owned by the Partnership as an entity, and no Partner, individually, shall have
any ownership of such property. The Partnership may hold any of its assets in
its own name or in the name of its nominee, which nominee may be one or more
individuals, corporations, partnerships, trusts or other entities.
2.8. Registered Office and Registered Agent. The address of the registered
--------------------------------------
office of the Partnership in the State of Delaware is ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The registered agent for service of process in the State
of Delaware is United Corporate Services, Inc. The Managing General Partner may,
at any time and from time to time, change the location of such office or such
agent, upon written notice of such changes to the Partners, and upon filing
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any necessary amendment to the Partnership's certificate of limited partnership
or taking any other action required by the Act.
2.9. Organization Certificates. The Managing General Partner shall cause
------------------------
to be executed and filed:
(a) all such amendments or supplements to the Partnership's certificate of
limited partnership required by the Act in connection with the transactions
described herein; and
(b) all such further certificates, notices, statements or other instruments
required by law for the formation, qualification or operation of a limited
partnership in all jurisdictions where the Partnership may elect to do business,
or otherwise necessary to carry out the purposes of this Agreement.
2.10. Duration of the Partnership. The Partnership shall continue until
---------------------------
December 31, 2040, unless sooner dissolved in accordance with the provisions of
this Agreement.
2.11. Development Fees. (a) The Partnership shall pay to Orange Partners a
----------------
development fee equal to the sum of: (i) the amount, if any, set forth as the
amount of such fee on the line designated "Developer's Fee" in the Project
Budget approved by the Agent as of the Initial Funding Date, payable on the
later of the Initial Funding Date or the date when Construction Loans under the
Financing Agreement cease to be limited to the Equity Backstop Amount; (ii) the
amount, if any, of the Fee Excess, payable as soon as permitted by Agent after
the determination of the Fee Excess; (iii) $700,000, payable from and to the
extent of funds available therefor in accordance with Section 6.9; and (iv) the
amount, if any, determined in clause (m) of the definition of Project Costs,
payable if and to the extent provided in such clause and Section 6.9.
(b) There are certain contingent development costs and fees which the
Partnership shall pay on the terms set forth herein, specifically, an amount
equal to 110 percent of the amount of any escalation payable to Century
Contractors West, Inc. pursuant to Section 4.3 of the Construction Contract (the
"Century Amount"), an amount equal to the excess of $3,508,000 over the Century
Amount to Orange Partners and Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ (to be divided
between them in such ratio as they may advise the Managing General Partner),
$242,000 to North Canadian Power Incorporated, and $250,000 to Entek Research,
Inc. (each individually, a "Contingent Payment," and collectively, the
"Contingent Payments"). If and to the extent funds not exceeding $4,000,000 are
available thereof or in accordance with Section 6.9, the Partnership shall pay
the Contingent Payments to Orange Partners, North Canadian Power Incorporated,
Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇, and Entek Research, Inc., to be divided among
them in proportion to the maximum amount of each such entity's Contingent
Payment.
(c) Any fees paid to a Partner pursuant to this Section 2.11 shall be
treated as payments made by the Partnership to the recipient thereof in its
capacity other than as a Partner within the meaning of Code Section 707(a).
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2.12. Orange Partner Fees. (a) The Partnership shall pay to Orange
-------------------
Partners construction management fees the amount of $2,000,000, which shall be
paid in 20 consecutive installments of $100,000 per month, the first installment
of which shall be paid on the later of the Initial Funding Date or the date when
Construction Loans under the Financing Agreement cease to be limited to the
Equity Backstop Amount, with subsequent installments to be paid on the tenth day
of each calendar month thereafter until a total of 20 installments have been
paid; provided, however, that if the Term Loan Date occurs before all 20
installments have been paid, the Partnership shall pay to Orange Partners on the
Term Loan Date the amount of the unpaid installments; provided further, however,
that to the extent that any such fees are not paid to Orange Partners prior to
the Term Loan Date as provided for in clause (i) of the definition of Project
Costs, such unpaid portion of such fees shall be deferred and shall be payable
in accordance with Section 6.9.
(b) Orange Partners shall receive from the Partnership a consulting fee at
the rate of $75,000 per quarter, which shall begin to accrue on the Term Loan
Date, payable quarterly in arrears, beginning on the first day of the first
calendar quarter after the calendar quarter in which the Term Loan Date occurs,
continuing on the first day of each calendar quarter thereafter until the First
Flip Point occurs; provided, however, that as of January 1 of each year after
the year in which the Term Loan Date occurs, the quarterly consulting fee for
that year shall be equal to the greater of (i) the quarterly consulting fee in
effect for the immediately preceding calendar year, or (ii) the product of (x)
the quarterly consulting fee in effect during the calendar year in which the
Term Loan Date occurs multiplied by (y) the fraction having a numerator equal to
the Consumer Price Index as of December 31 of the immediately preceding calendar
year and a denominator equal to the Consumer Price Index as of December 31 of
the calendar year preceding the calendar year in which the Term Loan Date
occurs. To the extent that the Partnership does not have sufficient cash in any
calendar year to pay all of the fees due pursuant to Sections 2.12(b) and
2.13(b), such fees shall be paid pari passu from the cash available therefor and
---- -----
the unpaid portion shall be deferred without interest and paid pari passu before
---- -----
any distributions of Available Cash are made to the Partners.
2.13. NCP Syracuse Fees. (a) The Partnership shall pay to NCP Syracuse a
-----------------
construction management fee in the amount of $1,000,000, which shall be paid in
20 consecutive installments of $50,000 per month, the first installment of which
shall be paid on the later of the Initial Funding Date or the date when
Construction Loans under the Financing Agreement cease to be limited to the
Equity Backstop Amount, with subsequent installments to be paid on the tenth day
of each calendar month thereafter until a total of 20 installments have been
paid; provided, however, that if the Term Loan Date occurs before all 20
installments have been paid, the Partnership shall pay to NCP Syracuse on the
Term Loan Date the amount of the unpaid installments. The payment of the
construction management fee will cover all services provided and all out-of-
pocket expenses (other than Third Party Fees paid by NCP Syracuse on behalf of
the partnership) incurred by or on behalf of NCP Syracuse in the performance of
its responsibilities as Managing General Partner prior to the Term Loan Date.
(b) NCP Syracuse shall, so long as it remains the Managing General Partner,
receive from the Partnership a management fee at the rate of $77,500 per
quarter, which shall begin to
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accrue on the Term Loan Date, payable quarterly in arrears, beginning on the
first day of the first calendar quarter after the calendar quarter in which the
Term Loan Date occurs, and continuing on the first day of each calendar quarter
thereafter; provided, however, that as of January 2. of each year after the year
in which the Term Loan Date occurs, the quarterly management fee for that year
shall be equal to the greater of (i) the quarterly management fee in effect for
the immediately preceding calendar year, or (ii) the product of (x) the
quarterly management fee in effect during the calendar year in which the Term
Loan Date occurs multiplied by (y) the fraction having a numerator equal to the
Consumer Price Index as of December 31 of the immediately preceding calendar
year and a denominator equal to the Consumer Price Index as of December 31 of
the calendar year preceding the calendar year in which the Term Loan Date
occurs. To the extent that the Partnership does not have sufficient cash in any
calendar year to pay the entire fee due pursuant to Sections 2.12(b) and
2.13(b), such fees shall be paid pari passu from the cash available thereof or
---- -----
and the unpaid portion shall be deferred without interest and paid pari passu
before any distributions of Available Cash are made to the Partners. The payment
of the management fee will cover all services provided by NCP Officers and all
overhead costs of the NCP Officer Companies, but shall not include (i) Labor
Costs, (ii) direct out-of-pocket expenses incurred by or on behalf of NCP
Syracuse in the performance of its responsibilities as Managing General Partner
after the Term Loan Date or (iii) Third Party Fees paid on behalf of the
Partnership by NCP Syracuse.
(c) The Partnership shall reimburse NCP Syracuse for an amount equal to
220% of Labor Costs incurred after the Term Loan Date, 110% of the actual direct
out-of-pocket expenses (other than Third-Party Fees) incurred by or on behalf of
NCP Syracuse after the Term Loan Date, and 100% of Third Party Fees paid by NCP
Syracuse on behalf of the partnership for services rendered after the Term Loan
Date. For purposes of this paragraph, Labor Costs shall be computed as follows:
(i) each NCP Employee shall prepare time sheets no less frequently than twice
per month and will account for all of his or her time spent on all projects
including the Project; (ii) NCP Syracuse will divide the annual salary of each
NCP Employee that works on the Project by 2,080 hours to determine the hourly
rate of each such employee; (iii) for each NCP Employee that works on the
Project, NCP Syracuse will multiply the total number of hours worked by such
person each month on the Project by his or her hourly rate (as determined
pursuant to clause (ii) above) and (iv) the Labor Costs shall be the aggregate
of the amounts so computed for all such NCP Employees. Each month NCP Syracuse
shall provide the Developer General Partner with invoices or other reasonable
evidence of the payment and nature of all direct out-of-pocket expenses for
which NCP Syracuse receives reimbursement from the Partnership.
(d) All Partnership expenses (including Third-Party Fees) not required to
be borne by or reimbursed to NCP Syracuse pursuant to paragraph (c) of this
Section 2.13 shall be paid by the Partnership from Partnership funds.
(e) Any fees paid pursuant to this Section 2.13 shall be treated as
payments made by the Partnership to NCP Syracuse in its capacity other than as a
Partner within the meaning of Code Section 707(a).
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2.14. Fees Excluded from Flip Point Calculation. Notes paid pursuant to
-----------------------------------------
Section 2.11 or 2.13 shall be included in the calculation of the Flip Points.
2.15. Certain Obligations Assumed. The Partnership hereby assumes the
---------------------------
claims described in Exhibit H, to the extent not heretofore assumed.
---------
ARTICLE III
Capital of the Partnership
--------------------------
3.1. Capital Contributions to the Partnership. (a) At or prior to the date
----------------------------------------
hereof, Orange Partners has made a Capital Contribution of property described in
Schedule II hereto. The Net Agreed Value of this Capital Contribution is
-----------
$3,333,333. On the Equity Funding Date, NCP Syracuse and Syracuse Partners shall
make an aggregate cash capital Contribution of $30,000,000, of which the Net
Agreed Value shall be $30,000,000; provided, however, that the Partners agree
that if and to the extent that NCP Syracuse, Syracuse Partners, the partners of
Syracuse Partners, North Canadian Power Incorporated or North Canadian Oils
Limited pay any of the funds required to be paid by the Partnership in repayment
of Construction Loans pursuant to Section 5.19(a) of the Financing Agreement
directly to the Agent and not through the Partnership, such payment shall be
treated for all purposes as having been made to the Partnership as a cash
Capital Contribution on behalf of NCP Syracuse and Syracuse Partners in full or
partial satisfaction (as the case may be) of the obligations of NCP Syracuse and
Syracuse Partners to make cash Capital Contributions as set forth in this
Section 3.1. If the funds required under Section 5.19(a) of the Financing
Agreement are paid directly to the Agent and the amount so paid is less than
$30,000,000, the difference shall be deposited in an Excluded Account (as
defined in the Financing Agreement) and said in accordance with Section 6.9.
(b) No Partner shall be required or permitted to make Capital Contributions
otherwise than pursuant to Section 3.1(a) without the Consent of all Partners.
(c) No Partner shall have the right to withdraw or reduce its Capital
Contribution except in accordance with this Agreement. Notwithstanding the
foregoing, Syracuse Partners may transfer all or any portion of its obligation
to make the Capital Contribution required in Section 3.1(a) in connection with
any Transfer of all or any portion of its Interest pursuant to Section 7.1. No
interest shall accrue on any Capital Contribution. No Partner shall have the
right to demand or receive property, other than cash, in return for its Capital
Contribution or have priority over any other Partner, either as to the return of
Capital Contributions or as to Profits or Losses or distributions, except as
specifically provided in this Agreement.
3.2. Loans by partners. (a) No Partner shall be required to lend any money
-----------------
to the Partnership.
(b) If the Partnership's funds are insufficient to meet its costs,
expenses, obligations, liabilities and charges, or to make any expenditure
authorized by this Agreement, upon request
-17-
made by the Managing General Partner that of the Partners, any Limited Partner
or General Partner may (but shall not be required to) advance such funds to the
Partnership. Each Partner agreeing to make a Partner Loan shall have the right,
but not the obligation, to participate in the total Partner Loan according to
the ratio that its interest in the Partnership bears to the interests in the
Partnership held by all Partners participating in the Partner Loan; for these-
purposes, before the First Flip Point, Orange Partners' interest in the
Partnership shall be deemed to be 10% (1% in its capacity as Developer General
Partner and 9% in its capacity as a Limited Partner), NCP Syracuse's interest
shall be deemed to be 1% and Syracuse Partners' interest shall be deemed to be
89%. All amounts so advanced shall take the form of a loan, which shall bear
interest at a variable rate (not in excess of the maximum rate allowed by law)
equal to the rate applicable to the Partnership's Term Loans from time to time
plus 5% per annum and be on terms and conditions substantially the same as if
such loan had been made by an unrelated third party to the Partnership, except
that no distributions shall be made to the Partners pursuant to Section 6.2(a),
(b), (c), (d) or (e) until all Partner Loans have been repaid in full.
(c) The proceeds of a Partner Loan shall not be added to, or otherwise
affect, the Capital Account of the Partner making, or whose Affiliate is making,
such loan.
(d) Prior to requesting any Limited Partner or General Partner to advance
funds to the Partnership as a Partner Loan, the Managing General Partner shall,
first, obtain the maximum amount of such required funds which are available to
the Partnership under the terms of the Financing Agreement and, second, use
reasonable efforts to obtain such required funds from an institutional investor
on terms and conditions more favorable to the Partnership than a Partner Loan.
(e) If any Partner Loan is outstanding, the Managing General Partner shall
use its best efforts to refinance such loans with an institutional investor on
terms and conditions more favorable to the Partnership than such Partner Loans.
(f) Unless both General Partners Consent, all Partnership borrowings,
including Partner Loans, shall be on terms without recourse to any Partner or
Affiliate of any Partner.
ARTICLE IV
Management of the Partnership
-----------------------------
4.1. Management. (a) Except as otherwise provided in this Agreement, the
----------
Managing General Partner shall have, in accordance with the Act and the
provisions of this Agreement, exclusive management and control of the business
of the partnership and all decisions regarding the management and affairs of the
Partnership shall be made by the Managing General Partner. Except as otherwise
provided in this Agreement, the General Partners shall have all the rights and
powers of general partners as provided in the Act and as otherwise provided by
law, and any action taken by the Managing General Partner, or when required by
the terms hereof by both
-18-
General Partners, on behalf of the Partnership shall constitute the act of and
serve to bind the Partnership. Except as otherwise expressly provided herein,
the Developer General Partner shall not bind the Partnership without the prior
Consent of the Managing General Partner.
(b) Each of the General Partners shall devote such time to the Partnership
business as each shall reasonably deem to be necessary to accomplish its
respective obligations hereunder to supervise the Partnership business and
affairs in an efficient manner, but nothing contained in this Agreement shall
preclude the employment of any agent or other third party to operate and manage
all or any portion of the property, business or operations of the Partnership,
subject to the control of the Managing General Partner or, when required by the
terms hereof, by both General Partners. Nothing in this Agreement shall entitle
any General Partner to receive reimbursement or otherwise charge the Partnership
for such employment costs to the extent such agent or other third party is
performing activities for which such General Partner is entitled to receive a
fee pursuant to Section 2.12 or 2.13.
(c) Both General Partners shall participate in the Partnership as their
respective sole and exclusive functions, except that NCP Syracuse may also serve
as the General Partner of Syracuse Partners if and for so long as the functions
of Syracuse Partners are limited to (i) its participation as a Limited Partner
and (ii) its participation as a passive investor in one or more other investment
activities none of which exposes the Interests of NCP Syracuse or Syracuse
Partners to claims of creditors. Neither the Partnership nor any Partner shall
have any right by virtue of this Agreement or the Partnership relationship
created hereby in or to any other ventures or activities engaged in by any
Affiliate of any Partner or to the income or proceeds derived therefrom, another
pursuit of such ventures or activities by any Partner's Affiliate shall not be
deemed wrongful or improper: No Partner nor any Affiliate of a Partner shall be
obligated to present any particular investment opportunity to the Partnership.
unless related or potentially related to any expansion of the Project (which
such expansion shall be deemed a Partnership opportunity) even if such
opportunity is of a character which, if presented to the Partnership, could be
taken by the Partnership, and each of them shall have the right to take for its
own account (individually or otherwise) or to recommend to others any such
particular investment opportunity.
(d) In furtherance of the purposes of the Partnership as set forth in this
Agreement, but subject to subsections (e), (f) and (g) of this Section 4.1 and
any other limitations on the power or authority of the Managing General Partner
set forth elsewhere in this Agreement, the Managing General Partner is hereby
granted the right, power arid authority to do on behalf of the Partnership all
things which, in its sole and reasonable judgment, are necessary, proper or
desirable to carry out its duties and responsibilities hereunder, including, but
not limited to, the following:
(i) to borrow money and, as security therefor, to mortgage, pledge or
otherwise encumber any and all assets of the Partnership, including the rights
of the Partnership under any agreements;
(ii) to cause to be paid all amounts due and payable by the Partnership to
any Person and to collect all amounts due to the Partnership;
-19-
(iii) to employ such agents, employees, managers, accountants, attorneys,
consultants and other Persons, as shall be necessary or appropriate to carry
out the business and affairs of the Partnership;
(iv) to pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend or compromise upon such terms as it may determine and upon
such evidence as it deems sufficient, any obligation, suit, liability, cause
of action or claim, including taxes, either in favor of or against the
Partnership;
(v) to pay any and all reasonable fees and to make any and all reasonable
expenditures which it deems necessary or appropriate in connection with the
management of the affairs of the Partnership, and to enforce all rights of the
Partnership; provided, however, that the Managing General Partner shall not
use Partnership funds to pay fees or expenses which are required to be borne
by the Managing General Partner under Section 2.13(b);
(vi) to permit and record an assignment by a Limited Partner, and to admit
an assignee of a Limited Partner as a substitute Limited Partner, pursuant to
and subject to the terms hereof;
(vii) to prosecute, protect and defend, or cause to be protected and
defended, all patents, patent rights, trade names, trademarks and service
marks, and all applications with respect thereto, which may be held by the
Partnership, to take all reasonable and necessary actions to protect the
secrecy of and the proprietary rights with respect to any trade secrets, know-
how, secret processes or other proprietary information and to prosecute and
defend all rights of the Partnership in connection therewith;
(viii) to enter into, execute, acknowledge and deliver any and all
contracts, agreements or other instruments necessary or appropriate to carry
on the business of the Partnership as set forth herein;
(ix) to prepare and file any and all tax returns that may be required by
applicable law, and to cause to be paid any and all taxes, charges and
assessments that may be levied, assessed or imposed upon the Partnership or
any of its assets;
(x) to establish and maintain reasonable reserves for the operating
expenses of the Partnership (including repair and restoration expenses for the
Existing Plant), and for repairs, maintenance, capital improvements required
by changes in environmental laws or other Governmental Requirements and
capital replacements, all consistent with good business practice in the steam
production and electric power generation businesses;
(xi) to establish and maintain one or more accounts for the Partnership in
such financial institutions as the Managing General Partner may from time to
time designate;
(xii) to prepare internal audits of the Partnership establish and maintain
accounting records, and make periodic distributions to the Partners in
accordance with the provisions of this Agreement;
-20-
(xiii) to engage :n any kind of activity and to execute, perform and carry
out contracts of any kind necessary to, or in connection with or convenient or
incidental to, the accomplishment of the purposes of the Partnership, so long
as such activities and contracts may be lawfully carried on or performed by a
partnership under applicable law;
(xiv) to execute and deliver on behalf of the Partnership any documents
required to be executed and delivered by the Partnership pursuant to the
closing of the financing relating to the development, construction, ownership,
operation, management, lease and sale of the Project, including, but not
limited to, the Financing Agreement and all documents and certificates
required or otherwise necessary or convenient to be executed by the
Partnership in connection with the transactions contemplated thereby;
(xv) to apply for, file, prosecute, obtain, appeal, and challenge any
permit, approval, authorization, filing or consent issued by any Governmental
Authority, to otherwise communicate with any Governmental Authority, to
prosecute, protect and defend any such permit, approval, authorization, filing
or consent (including entering into any settlement or consent thereof or
thereto);
(xvi) to apply for, obtain, pay premiums upon maintain and otherwise
manage and administer all policies of insurance for the Partnership;
(xvii) to manage the supply and consumption of fuel under the terms of any
gas sales, purchase, and transportation agreements which the Partnership may
be party to from time to time; and
(xviii) to engage in any kind of activity and execute, perform and carry
out contracts of any kind necessary to, or in connection with or convenient or
incidental to, the expansion of the Project to enable it to produce and sell
more than 80 megawatts of power, if prudent to do so.
With respect to employment of attorneys, consultants and other
professionals for the Partnership, management of Project construction and
operation, designation of negotiation with suppliers, and relations with
Governmental Authorities, the Managing General Partner will, as appropriate,
consult with the Developer General Partner, from time to time, for the purpose
of obtaining the advice and counsel of the Developer General Partner; provided,
however, that the failure of the Managing General Partner to do so shall not
limit the rights and powers conferred upon the Managing General Partner herein.
The Managing General Partner shall, after such items are available,
promptly (and in any event within twenty (20) days) send to the Developer
General Partner and each Limited Partner copies of (i) all reports with respect
to Project construction or operations which are prepared pursuant to the
Financing Agreement or any other Material Project Document, (ii) all reports
with respect to Project construction, operations or finances sent by the
Managing General Partner, the Partnership or Syracuse Partners to partners in
Syracuse Partners, (iii) all internal management reports of the Managing General
Partner or the Partnership (that is, all reports prepared by or for the Board of
Directors, chief executive officer or chief financial officer of the
-21-
Managing General Partner), (iv) all memoranda and reports prepared for or sent
to the Managing General Partner or the Partnership by outside professionals
retained by or on behalf of the Partnership including, without limitation,
accountants, lawyers and consultants), (v) all notices received or sent by the
Managing General Partner or the Partnership pursuant to any Material Project
Document or any other material agreement to which the Partnership is a party or
which affects the Project, (vi) all written agreements or amendments entered
into by or on behalf of the Partnership after the Initial Funding Date and (vii)
all materials described on Exhibit I attached hereto. The Managing General
Partner shall promptly notify the Developer General Partner of any material
disputes or problems arising in connection with any Material Project Documents
or with respect to the Project. The Managing General Partner shall provide each
Partner with access at any time during normal business hours to all books,
records, files and correspondence of the Partnership or pertaining to the
Project and with access to the Project and all, real and personal property
comprising the Project. In addition, the Managing General Partner shall arrange
for the Accountants and any other Partnership accountants, attorneys and
consultants to be available to speak to, and to respond to reasonable inquiries
from, any Partner, and shall provide each Partner with access to NCP Employees
(to the extent such employees are involved in the management of the Project) and
any employees of the Partnership to discuss any matters relating to the
Partnership or the Project.
(e) With respect to all of its obligations, powers and responsibilities
under this Agreement, the Managing General partner is authorized to execute and
deliver, for and on behalf of the Partnership, such notes and other evidences of
indebtedness, contracts, agreements, assignments, deeds, leases, loan
agreements, mortgages and other security instruments and agreements as it deems
proper, all on such terms and conditions as it deems proper but subject to the
limitations on the powers of the Managing General Partner contained in
subsections (d), (f) and (g) of this Section 4.1 and elsewhere in this
Agreement.
(f) Notwithstanding the other provisions of this Agreement, the Managing
General Partner shall not, without (l) the Consent to the specific act by the
Developer General Partner, which Consent shall not be unreasonably withheld (it
being agreed that the Developer General Partner's Consent shall not be deemed
unreasonably withheld if the Developer General Partner believes in good faith
that granting such Consent might have a DGP Adverse Effect) or delayed and (2)
prior to the First Flip Point, the Consent to the specific act (if such act is
an act described in Section 4.1(f)(i)(A)-(C) or 4.1(f)(iv)-(ix)) by Syracuse
Partners, which Consent shall not be unreasonably withheld (it being agreed that
Syracuse Partners' Consent shall not be deemed unreasonably withheld if Syracuse
Partners believes in good faith that granting such Consent might have an SOP
Adverse Effect) or delayed, have the authority to:
(i) take any of the following actions:
(A) except as permitted under Section 4.1(f)(i)(E), replace,
terminate, amend, modify, supplement, or exercise any option to prepay
any indebtedness arising under, or materially extend or materially
waive any provision or requirement under, any of the Material Project
Documents if such action will have a DGP Adverse Effect or SOP Adverse
Effect, as the case may be; provided,
-22-
however, that the Managing General Partner shall not take any of the
actions described in this subclass (A), whether or not it would have a
DGP Adverse Effect or SOP Adverse Effect, as the case may be, without
giving the Developer General Partner or SOP, as the case may be,
reasonable prior written notice of such action to enable the Developer
General Partner or SOP, as the case may be, to consult with the
Managing General Partner with respect thereto;
(B) cause or permit the Partnership to incur indebtedness
(including any refinancing) other than: (I) indebtedness for money
borrowed pursuant to the Financing Agreement as in effect on the
Initial Funding Date including indebtedness incurred prior to the Term
Loan Date as contemplated in the Project Budget; (II) indebtedness
resulting from money borrowed for working capital necessary in the
reasonable discretion of the Managing General Partner in connection
with the operation of the Project so long as the aggregate outstanding
principal amount of such indebtedness does not exceed $2,000,000
(except that such limitation shall not apply to loans, the proceeds of
which are applied to finance capital improvements to the Project which
are required as the result of changes in applicable environmental laws
or Governmental Requirements) at any time; and (III) indebtedness for
any obligations incurred in the ordinary course of the Partnership's
business subsequent to the Term Loan Date which is not indebtedness
for money borrowed
(C) fund any reserves for the Partnership other than such reserves
as (I) are required under the Financing Agreement, (II) the Managing
General Partner determines to be reasonable, provided that the total
reserves funded pursuant to this clause shall not exceed Two Million
Dollars ($2,000,000) at any time (except that such limitation shall
not apply to reserves for capital improvements required as the result
of changes to applicable environmental laws or Governmental
Requirements if, after using reasonable efforts, the Managing General
Partner determines in good faith that the Partnership will be unable
to obtain financing for such improvements), (III) are earmarked for
boiler repair and/or replacement so long as the aggregate of the
amount expended (other than out of existing reserves established
specifically therefor) and/or reserved for such purposes during any
twelve month period after the Term Loan Date does not exceed the
amount provided therefor for that twelve month period on Exhibit C,
(IV) are permitted under Section 8.2 if the Partnership is then in the
process of liquidation, or (v) the General Partners may both from time
to time reasonably determine to be appropriate; provided, however,
that the Managing General Partner shall not fund any Additional
Reserves, other than reserves which are required under the Financing
Agreement, if and to the extent that after funding such reserves the
Partnership will not have sufficient Available Cash to make
distributions to each Partner during that fiscal year which at least
equal the product of (x) the maximum Federal income tax rate
applicable to individuals that year multiplied by (y) the amount of
Partnership taxable income allocable to that Partner that year;
-23-
(D) exercise any right of the Partnership under the Financing
Agreement to reduce the amount of any type of loan commitment or loan
availability; or
(E) prior to the Term Loan Date, cause or permit the Partnership to
incur any obligation which is not provided for in the Project Budget
and which entails the payment of money in excess of $50,000 as to any
one item or $800,000 in the aggregate;
provided, however, that, notwithstanding the foregoing provisions, (1) if
within a reasonable time after the giving of the notice required under
Section 4.1(i) the Managing General Partner has not received the Consent of
the Developer General Partner to any proposed action which is required to
comply with the terms of, or to cure a material default under, any of the
Material Project Documents, or to comply with any Governmental Requirements
regarding the same (and any such action shall be conclusively presumed to
have been so required if the Managing General Partner shall have received
an opinion to such effect from reputable independent counsel), then the
Managing General Partner may take such proposed action upon notice to the
Developer General Partner that it is acting without the Consent, and over
the objections, if any, of the Developer General Partner in that particular
instance, but any similar future action will be subject to the Consent
requirement of this Section 4.1(f) (i) and (2) if within a reasonable time
after the giving of the notice required under Section 4.1(i) the Managing
General Partner has not received the Consent of Syracuse Partners to any
proposed action which is required to cure a material default under any of
the Material Project Documents, or to comply with any Governmental
Requirements (and any such. action shall be conclusively presumed to have
been so required if the Managing General Partner shall have received an
opinion to such effect from reputable independent counsel), then the
Managing General Partner may take such proposed action upon notice to
Syracuse Partners that it is acting without the Consent, and over the
objections, if any, of Syracuse Partners in that particular instance
(provided, that Syracuse Partners shall be. entitled to reasonably withhold
its Consent to the cure of a material default under any of the Material
Project Documents), but any similar future action will be subject to the
Consent requirement of this Section 4.1(f) (i);
(ii) Transfer the Project or any interest therein except in accordance with
the terms of this Agreement;
(iii) cause or permit the dissolution of the Partnership;
(iv) (A) cause or permit the sale of all or substantially all of the
Partnership's assets (unless to be replaced with assets to perform
substantially similar functions) or (B) prior to the First Flip Point,
Transfer any of the Partnership's material assets, other than (1) Transfers in
the ordinary course of business, (2) Transfers which, when taken together with
all other such Transfers in the previous 12 calendar months, aggregate less
than $250,000 and have no material adverse effect on the performance of the
Project, (3) Transfers of assets which, in the Managing General Partner's
reasonable judgment, are obsolete to the business of the
-24-
Partnership, (4) Transfers of assets that are replaced by comparable assets of
materially equivalent value and utility that (X) have a value of less than
$1,000,000, (Y) are required, in the Managing General Partner's reasonable
judgment, to be replaced to comply with any Governmental Requirements, or (Z)
are, in the Managing General Partner's judgment, reasonably necessary
replacements or (5) any Transfer of the Project Pipeline (provided, that such
Transfer could not reasonably be expected to result in any DGP Adverse Effect
or any SOP Adverse Effect); or
(v) prior to the First Flip Point, make capital expenditures aggregating in
excess of $400,000 in any 12 calendar months or enter into any contracts
involving greater than $100,000 of expenditures per contract per year, in each
case that are not reflected in the pro forma financial statements delivered to
each of the Partners on the date hereof, other than (A) expenditures or
contract reasonably necessary to comply with Governmental Requirements, the
Financing Documents or the Project Documents (as defined in the Financing
Agreement), (B) expenditures reasonably required in the context of emergencies
or (C) expenditures reasonably required to expand the electrical generating
capacity of the Project by means of modifications or enhancements to existing
equipment in connection with obtaining an additional power sales agreement
providing for the sale of such capacity and energy (the "Capacity Expansion");
provided, however. that with respect to the Capacity Expansion, (X) the
Developer General Partner and Syracuse Partners each receives a report from
▇▇▇▇▇ & Root USA, Inc., or from such other engineering firm as shall be
reasonably selected by Syracuse Partners, which report shall be in form and
scope reasonably acceptable to the Developer General Partner and Syracuse
Partners and shall reach the conclusion that the Capacity Expansion is based
on good engineering practices and could not reasonably be expected to result
in a DGP Adverse Effect or an SOP Adverse Effect and (Y) the Managing General
Partner shall have caused to be provided to each of the Developer General
Partner and Syracuse Partners such other confirmation thereof as either of
them shall have reasonably requested as to the absence of a DGP Adverse Effect
or SOP Adverse Effect, respectively; and provided, further, that if either the
Developer General Partner or Syracuse Partners gives or is deemed to have
given its consent to the Capacity Expansion pursuant to this Agreement but
does not elect to participate in the financing of the Capacity Expansion, it
shall cooperate reasonably and in good faith with the other Partners to effect
such financing (including the admission of new Limited Partners, provided that
the relative voting and consent rights of each of the Developer General
Partner and Syracuse Partners hereunder in relation to the voting and consent
rights of the other Partners are not adversely affected) so long as such
financing could not reasonably be expected to result in a DGP Adverse Effect
or an SOP Adverse Effect;
(vi) Prior to the first Flip Point, make any elective filing (other than
routine filings in the ordinary course of business or filings mandated by
Governmental Requirements) with the Federal Energy Regulatory Commission, or
any successor thereto, with respect to the Project;
(vii) Prior to the First Flip Point, make any election under any of the
Material Project Documents. or take any action, to sell capacity or energy
produced by the Project in excess of 80MW (except in connection with the
Capacity Expansion);
-25-
(viii) Prior to the First Flip Point, elect not to defer payments to
Noranda, Inc. pursuant to Section 3.7 of the Gas Sales Contract; or
(ix) Prior to the First Flip Point. take any action which could
reasonably be expected to materially adversely affect the continued validity
of the Canadian export licenses required for the export from Canada of natural
gas to be supplied to the Project pursuant to the Fuel Supply Agreements (as
defined in the Financing Agreement).
(g) Notwithstanding the other provisions of this Agreement, no General
Partner shall, without the Consent to the specific act by the other General
Partner and a Majority in Interest of the Limited Partners (and in the case of
clauses (i), (ii). (iv), (v), (vi), (vii), (viii), (ix) and (x) below prior to
the First Flip Point, Syracuse Partners), have the authority to:
(i) perform any act in contravention of this Agreement;
(ii) perform any act which would make it impossible to carry on the
ordinary business of the Partnership;
(iii) confess a judgment against the Partnership or in the case of the
Managing General Partner, confess a judgment against itself if it would be
entitled to indemnification with respect thereto pursuant to Section 4.4
hereof or otherwise by operation of law, unless prior to or simultaneously
with confessing any such judgment the Managing General Partner waives in
writing any such right to indemnification;
(iv) possess Partnership property or assign its rights in specific
Partnership property, for other than a Partnership purpose;
(v) admit a Person as an additional or substitute General Partner,
except in accordance with the terms of this Agreement;
(vi) change the nature of the Partnership's business;
(vii) remove any General Partner, except in accordance with the terms of
this Agreement;
(viii) admit a Person as an additional or substitute Limited Partner,
except in accordance with the terms of this Agreement;
(ix) prior to the First Flip Point, take any action with respect to the
Partnership described in clauses (a) through (f) of the definition of
"Bankruptcy" herein (or consent thereto, as the case may be); or
(x) consolidate the Partnership with or merge the Partnership into any
other Person.
(h) On and after the Second Flip Point (or the First Flip Point if it
occurs after the Pro Forma End Date), all claims, disputes and other matters in
question (collectively, "disputes") between the General Partners arising out of,
or relating to, a Major Decision, shall be submitted
-26-
to a meeting in person (or by telephone) of the President or Chief Executive
Officer of each General Partner (or in the case of the Developer General
Partner, of its general partner) or its designee who shall be an employee or
officer of such General Partner or its Affiliate. Such a meeting shall be held
within 30 days after request in a notice given by either General Partner to the
other. In the event that any such dispute is not resolved at the meeting
referred to in the preceding sentence, at the request of either party the
General Partners will agree to promptly meet with a mediator acceptable to both
General Partners for mediation with respect to such dispute. If such
disagreement is not resolved within 30 days after the meeting referred to in the
first sentence of this paragraph (i) or in any event 90 days following the
notice for such meeting (whether or not a mediator has been engaged), either
party may submit such dispute to binding arbitration, in which event such
dispute shall be settled by arbitration and such arbitration shall be conducted
on an expedited basis consistent with the commercial arbitration rules of the
American Arbitration Association (the "Rules"). Such arbitration shall be
effected by a panel of three arbitrators selected as hereinafter provided and
shall be conducted in New York, New York in accordance with the Rules existing
at the date thereof. The dispute shall be submitted to three arbitrators who are
listed on the commercial panel of the American Arbitration Association, one
arbitrator being selected by the Managing General Partner, one arbitrator being
selected by the Developer General Partner, and the third being selected by the
two arbitrators so selected. In the event that either General Partner, within 10
days after any notification of any demand for arbitration hereunder, shall not
have selected its arbitrator and given notice thereof to the other, such
arbitrator shall be selected by the American Arbitrator. Association. Judgment
may be entered on any decision rendered by the arbitrators in any Federal or
state court having jurisdiction. In the event that the arbitrators determine by
a majority vote that the claim or defense of either party in the arbitration was
meritless (that is, without justifiable merit), they .may, by majority vote,
require that the party at fault pay or reimburse the other party for any or all
of the following: (a) all fees and expenses of the arbitrators. (b) attorneys'
and experts' fees and expenses, and (c) any other reasonable out-of-pocket
expenses incurred by such other party in connection with the arbitration
proceeding.
(i) The Managing General Partner shall give the Developer General Partner
and Syracuse Partners as much advance notice as is practicable under the
circumstances before taking any action or making any determination involving a
Major Decision (except that the Managing General Partner shall give the
Developer General Partner and Syracuse Partners at least 30 days prior written
notice of any action proposed to be taken pursuant to Section 4.1(f), or such
lesser notice, the period of which is specified at the time of such notice, as
is reasonably determined by the Managing General Partner to be the maximum
available under the circumstances without significant potential risk to the
Partnership, it being further agreed that if the Developer General Partner or
Syracuse Partners (in those cases where the Consent of Syracuse Partners is
required pursuant to the terms hereof), as the case may be, does not advise the
Managing General Partner of its Consent to or disapproval of the proposed action
within such 30 day or specified lesser notice period, then the Developer General
Partner or Syracuse Partners, as the case may be, shall be deemed to have given
its Consent to the action set forth in the notice, but not to any similar act in
the future that is not specified in the notice); provided, however, that if the
Developer General Partner or Syracuse Partners (in those cases where the Consent
of Syracuse Partners is required pursuant to the terms hereof), as the case may
be, fails
-27-
to respond to any notice within 30 days or such specified lesser notice period,
the Developer General Partner or Syracuse Partners, as the case may be, shall be
deemed to have given its Consent to the Major Decision proposed to be taken by
the Managing General Partner.
4.2. Transactions with Related Parties; Fiduciary Duties; Etc. (a) With
--------------------------------------------------------
respect to Partnership affairs, the General Partners shall always act as
fiduciaries for the benefit of the Partnership. No agreement between the
Partnership and any Partner or Related Party of a Partner shall be binding upon
the Partnership, and no General Partner shall have the authority to enter into
any such agreement on behalf of the Partnership, unless such Agreement is
Consented to by both General Partners (and, in the case of agreements between
the Partnership and the Managing General Partner or any Related Party thereof
prior to the First Flip Point, Consented to by Syracuse Partners). The General
Partners and Syracuse Partners hereby Consent to the Gas Sales Contract. Each
Partner acknowledges that Noranda Inc.. North Canadian Power North Incorporated,
Canadian Oils Limited, North Canadian Marketing Corporation and Canadian Hunter
Exploration Ltd. are each a Related Party of NCP Syracuse and Syracuse Partners.
(b) Notwithstanding anything in this Agreement to the contrary and subject
to the other provisions of this paragraph (b) and paragraphs (c) and (d) of this
Section 4.2, The Managing General Partner shall administer on behalf of the
Partnership any agreement approved by the Developer General Partner (and, when
required, Syracuse Partners) to which the Partnership and any Related Party of
the Managing General Partner are parties (an "Affiliate Contract"). The Managing
General Partner covenants and agrees that in dealing with its related Party with
respect to any matters concerning an Affiliate Contract, the Managing General
Partner shall conduct itself as if it were dealing on an arm's-length basis with
an unrelated third party and shall comply with the provisions of paragraphs (c)
and (d) of this Section 4.2.
(c) In the event of a dispute or a breach by any Party to an Affiliate
Contract or a force majeure event under an Affiliate Contract (other than an
event of Force Majeure under the Gas Sales Contract which is discussed in
paragraph (d) below), the Managing General Partner shall act only in accordance
with the following procedures, except as such procedures may be modified by
agreement of the General Partners in any applicable situation:
(i) The Managing General Partner shall provide the Developer General
Partner and, prior to the First Flip Point, Syracuse Partners with telephonic
or personal notice immediately, and in any event within two business days of
becoming aware of the dispute, breach or force majeure event (collectively,
the "Problem"), and written notice (the "AC Notice") detailing the Problem
within five business days of becoming aware of the Problem.
(ii) The Managing General Partner shall act diligently to resolve the
Problem within a period of time beginning on the date that the Managing
General Partner becomes aware of the Problem and ending on the day that is the
earlier to occur of (A) 30 days after the date of the AC Notice or (B) 10 days
prior to the date on which the Partnership is required to take any action or
exercise any option or right under the terms of the Affiliate Contract or
pursuant to applicable law in order to preserve such right or option, or such
later day as may be agreed to by the Developer General Partner and, prior to
the First Flip Point, Syracuse Partners.
-28-
(iii) The Managing General Partner shall keep the Developer General
Partner and, prior to the First Flip Point, Syracuse Partners advised of the
status of the Problem and its efforts to resolve the Problem including all
meetings and the various resolutions proposed to resolve the Problem. If the
Agent participates in any of the meetings with the Related Party during the
period described in (ii) above, the Developer General Partner and, prior to
the First Flip Point, Syracuse Partners shall have the same right of
participation.
(iv) If the Managing General Partner has worked out a proposed resolution
(the "Proposed Resolution") to the Problem, the Managing General Partner shall
discuss such Proposed Resolution with the Developer General Partner, the Agent
and, prior to the First Flip Point, Syracuse Partners. The Managing General
Partner shall be required to secure the approval of the Developer General
Partner and, prior to the First Flip Point, Syracuse Partners to the Proposed
Resolution before implementing the Proposed Resolution, which approval shall
not be unreasonably withheld. If the Agent has approved the Proposed
Resolution (as required under the Financing Agreement or any successor or
subsequent such agreement defining the responsibilities of the Agent) and the
Proposed Resolution does not have a DGP Adverse Effect or SOP Adverse Effect,
as the case may be, the Developer General Partner and Syracuse Partners (to
the extent Syracuse Partners' approval is required) shall be deemed to have
approved the Proposed Resolution. If the Proposed Resolution does have a DGP
Adverse Effect or SOP Adverse Effect, as the case may be, the Developer
General Partner and, prior to the First Flip Point, Syracuse Partners shall be
entitled to conduct further discussions with the Agent of modification of the
Proposed Resolution, it being agreed that final approval of the Proposed
Resolution (as it may be modified) by the Agent shall be binding on the
Managing General Partner, the Developer General Partner and Syracuse Partners.
(v) If the Managing General Partner is not successful in working out a
Proposed Resolution within the period provided in clause (ii) above, the
Developer General Partner, the Agent and, prior to the First Flip Point,
Syracuse Partners (or the Developer General Partner .and, prior to the First
Flip Point, Syracuse Partners alone if there no longer is an Agent) shall have
the right in good faith jointly to work out the Problem and/or jointly to
enforce the rights and remedies available to the Partnership with respect to
the Affiliate Contract, including but not limited to, the right to retain
attorneys, at the Partnership's expense, to advise the Developer General
Partner and, prior to the First Flip Point, Syracuse Partners as to the
Partnership's rights under such contract, to commence and control the
prosecution of any lawsuit, arbitration or other action or proceeding in the
name and on behalf of the Partnership, to control the defense of any lawsuit
against the Partnership with respect to claims arising under such Affiliate
Contract, and to waive, extend, modify, amend, terminate or exercise any right
or other options of the Partnership which are the subject of such suit or
claim; provided, however, that the Developer General Partner and, prior to the
First Flip Point, Syracuse Partners shall act ~n a manner consistent with
their fiduciary duty to the other Partners notwithstanding the fact that any
particular course of action may have a DGP Adverse Effect or SOP Adverse
Effect, as the case may be; and provided, further, that the Developer General
Partner and, prior to the First Flip Point, Syracuse Partners shall keep the
Managing General Partner advised as to the progress of any actions taken by
the
-29-
Developer General Partner and, prior to the First Flip Point, Syracuse
Partners and of the terms of any settlement to enable the Managing General
Partner to consult with the Developer General Partner and, prior to the First
Flip Point, Syracuse Partners regarding the actions and/or proposed
settlement.
(d) In the event of an event of Force Majeure under the Gas Sales Contract,
the Managing General Partner shall act only in accordance with the following
procedures, except as such procedures may be modified by agreement of the
General Partners and, prior to the First Flip Point, Syracuse Partner in any
applicable situation:
(i) The Managing General Partner shall provide the Developer General
Partner and, prior to the First Flip Point, Syracuse Partners with telephonic
or personal notice detailing the force majeure event (the "Event") immediately
and in any event within two business days of becoming aware of the Event and
written notice within five business days of becoming aware of the Event.
(ii) The Managing General Partner shall use its best efforts to devise a
course of action to deal with the Event. The Managing General Partner shall
set up a meeting with the Developer General Partner, the Agent and, prior to
the First Flip Point, Syracuse Partners to determine how to proceed. The
Managing General Partner and the Developer General Partner and, prior to the
First Flip Point, Syracuse Partners shall cooperate with one another and with
the Agent and shall follow the course of action approved by the Agent. If
there is no Agent, the Developer General Partner, the Managing General Partner
and, prior to the First Flip Point, Syracuse Partners shall endeavor in good
faith to agree upon a course of action. If they cannot agree within 10 days
after the giving of the written notice provided for in clause (i) above, they
shall submit the question to arbitration using the procedures set forth in
Section 4.1(h) (provided, that if such arbitration takes place prior to the
First Flip Point, then such arbitration shall be conducted before a single
arbitrator who shall determine, following an arbitration conducted in
accordance with the rules of the American Arbitration Association, how the
Partnership is to proceed), it being agreed that the arbitrators may take into
account the effect of any DGP Adverse Effect or SOP Adverse Effect, as the
case may be, and any other adverse effects of any proposed course of action in
determining how the Partnership is to proceed.
4.3. Right of Public to Rely on Authority of the Managing General Partner.
--------------------------------------------------------------------
No Person shall be required to determine the authority of the Managing General
Partner to undertake any act or execute any contract on behalf of the
Partnership, or to see to the application or distribution of revenues or
proceeds paid to the Managing General Partner as a representative of the
Partnership.
4.4. Liability of the General Partners; Indemnification of Partners. (a)
--------------------------------------------------------------
No General Partner or its Affiliates shall be liable to the Partnership or to
any Partner for any loss suffered by the Partnership or any Partner which arises
out of any action or inaction of any General Partner or its Affiliates if such
General Partner or its Affiliates, in good faith, determined that such course of
conduct was in the best interests of the partnership (and, in the case of any
affirmative action taken on behalf of the Partnership. the General Partner
reasonably believed such action to
-30-
be within the scope of the authority granted to it by this Agreement) and such
course of conduct did not constitute gross negligence, willful misconduct or
breach of fiduciary duty of the General Partner or its Affiliates or a material
breach of this Agreement by such General Partner; provided, however, that no
General partner shall be liable to any other Partner for any matter for `which
it has received the Consent of such other Partner. No General Partner shall be
liable to any Limited Partner or any beneficial owner of any Limited Partner for
any uninsured liability, loss or expense to the Partnership, including without
limitation reasonable attorneys' fees, litigation costs, settlement amounts and
judgments, attributable to the negligence or willful misconduct of the
contractor under the Construction Contract.
(b) The General Partners shall be indemnified by the Partnership against
any liability, loss or expense, including without limitation reasonable
attorney's fees, litigation costs, settlement amounts and judgments, incurred by
any of them for any act or omission to act performed or omitted in good faith
and reasonably believed by such General Partner to be within the scope of the
authority granted to it by this Agreement and in the best interests of the
Partnership unless it constituted gross negligence, willful misconduct or (in
the case of the Managing General Partner), breach of fiduciary duty of such
Partner or a material breach of this Agreement by the Managing General Partner.
Any indemnity under this Section 4.4(b) shall be paid from, and only to the
extent of, the assets of the Partnership, and no Partner shall have any personal
liability therefor. Notwithstanding the foregoing, however, in any situation
where an indefinable claim has been asserted against more than one Partner, all
such Partners shall use the services of the same firm of attorneys (which firm
shall be selected by the Managing General Partner, subject to the reasonable
approval of the other Partners against whom-such claim shall have been asserted)
in the defense against such claim, except to the extent of a conflict of
interest between such Partners on any issue related to the defense against such
claim.
(c)(i) Each partner shall indemnify the other Partners (including any other
General Partners) on an after-tax basis for any reduction in the other Partners'
benefits participation in the Partnership which is caused directly or indirectly
by the indemnifying Partner's gross negligence, willful misconduct or breach of
fiduciary duty or material breach of the Partnership Agreement; provided,
however, that no Partner shall be liable to any other Partner for any matter
which has received the Consent of such other Partner or for any loss caused by
such other Partner's own gross negligence or misconduct.
(ii) If the Indemnifying Partner and the Partners entitled to
indemnification under Section 4.4(c) (the "Indemnified Partners") agree to
settle the indemnity by means of a Transfer of a portion of the Indemnifying
Partner's (or a related General Partner's or Limited Partner's) Interest, the
transferring Partner shall further indemnify the Indemnified Partners from any
liabilities which may be associated with the transferred Interest which arose
prior to the date of the Transfer and were not disclosed as of the date of the
Transfer.
(d) Syracuse Partners shall be jointly and severally liable with NCP
Syracuse for any liability of NCP Syracuse to any other Partner pursuant to this
Section 4.4; provided, however, that the liability of Syracuse Partners for
actions of NCP Syracuse under this Section 4.4 shall be limited to such portion,
if any, of its Interest (including but not limited to its interest in
-31-
Partnership distributions) as is equal to the excess, if any, of (i) the greater
of (A) the aggregate percentage of distributions in the Partnership beneficially
held, directly or indirectly, by NCP Syracuse and its Affiliates (other than
Syracuse Partners) or (B) the amount of the Keep Requirement over (ii) the
portion of the amount of the Keep Requirement inuring to NCP Syracuse either
directly as Managing General Partner or through its direct interest in Syracuse
Partners.
4.5. Limitations on Limited Partners. No limited Partner shall, in its
-------------------------------
capacity as a Limited Partner: (a) be permitted to take part in the management
or control of the business or affairs of the Partnership; (b) have any voice in
the management or operation of any Partnership property; (c) have the authority
or power in its capacity as a Limited Partner to act as agent for or on behalf
of the Partnership or any other Partner, to do any act which would be binding on
the Partnership or any other Partner, or to incur any expenditures on behalf of
or with respect to the Partnership; or (d) hold itself out as having any status
other than that of a Limited Partner or as having rights, powers or privileges
other than those provided by law or this Agreement. The exercise by any Limited
Partner of any rights granted pursuant to any Direction of this Agreement shall
not be deemed to constitute management or control of the Partnership business or
otherwise violate the immediately foregoing sentence. Any Limited Partner who
acts in contravention of this Agreement and thereby causes itself to be deemed a
general partner for liability purposes shall under no circumstances be construed
as receiving a grant of power to act or authority to act in such capacity under
this or any other provision of this Agreement.
4.6. Rights of Partners. In addition to those rights provided by this
------------------
Agreement, the Partners have those rights provided to them by the Act (except as
otherwise provided herein) and all Partners shall have the right to:
(i) Have the Partnership books kept at the principal place of business of
the Managing General Partner at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or, if the Managing General Partner so elects, at the
Partnership's principal place of business, and at all reasonable times to
inspect and copy any of them; and
(ii) Have on demand true and full information of all matters affecting
the Partnership, and a formal account of the Partnership's affairs whenever
circumstances render it just and reasonable.
4.7. Liability of Limited Partners. Except to the extent otherwise
-----------------------------
provided in Section 4.4 or Section 6.6, so long as it complies with the
provisions of Section 4.5, the liability of each Limited Partner for the losses,
debts and obligations of the Partnership shall be limited to such Limited
Partner's Capital Contribution and its share of any undistributed distributions;
provided, however, that under applicable partnership law, a Limited Partner may
be liable to the Partnership to the extent of previous distributions made to it
in the event that the Partnership does not have sufficient assets to discharge
its liabilities.
4.8. Limitation of Liability. Notwithstanding any other provision of this
-----------------------
Agreement or the Act, no General Partner and no Affiliate of any General
Partner, shall be liable to any Partner (including any General Partner) or the
Partnership for incidental, special or consequential
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damages of any kind, whether a claim is based upon this Agreement, contract,
tort (including negligence), strict liability or other theory of law.
ARTICLE V
Representations, Warranties and Covenants of the Partners
---------------------------------------------------------
5.1. General Representations and Warranties. Each of the Partners
--------------------------------------
represents and warrants as of the date hereof, as follows:
(a) That it is a duly formed and validly existing corporation or limited
partnerships as the case may be, under the laws of the state of its
incorporation or formation, and that it is or will be duly qualified to operate
as a foreign corporation or limited partnership, as the case may be, in all
states requiring such qualification in order to own its assets and properties
and to carry on its business in the jurisdictions where it owns or leases or
will own or lease such assets or properties or carries on or will carry on such
business, except where the failure so to qualify would not have a material
adverse effect on the results of operations or financial condition of the
Partnership.
(b) The execution, delivery and performance by it of this Agreement (i)
have been duly authorized by all necessary corporate or partnership action, as
the case may be, (ii) do not contravene any material provision of any material
indenture, agreement or other instrument to which it is a party, or by which it
or any of its properties is bound, and (iii) do not and will not conflict with,
result in a breach of or constitute (with notice or lapse of time or both), a
default under any such indenture, agreement or other instrument.
(c) This Agreement has been duly authorized, executed and delivered by it
and constitutes the legal, valid and binding obligation of it, except insofar as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by moratorium laws
from time to time in effect or general equitable principles.
(d) The execution, delivery and performance by it of this Agreement do not
violate any provision of any Governmental Requirement or award presently in
effect having applicability to the Partnership or to it, except those the
violation of which would not have a material adverse effect on the Partnership
or on it.
(e) There are no actions, suits or proceedings pending or, to its
knowledge, threatened against it in any court or by or before any Governmental
Authority, or any arbitrator, in which there is a reasonable possibility of an
adverse decision which could materially and adversely affect its ability to
perform its obligations under this Agreement.
5.2. Covenants of Partners. Each of the Partners covenants and agrees with
---------------------
the Partnership and the other Partners for the term of this Agreement, as
follows:
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(a) It shall forward to the General Partners a copy of any notice received
by it of any default under any agreement or instrument to which the Partnership
is a party or by which it is bound.
(b) It will not knowingly take any action that would cause the Partnership
to be treated for Federal income tax purposes other than as a partnership as
defined in Code section 7701(a)(2) as in effect on the date hereof.
(c) It has not taken and will not take any action that may adversely affect
the status of the Project as a qualifying cogeneration facility under PURPA, or
which may cause the Partnership or any Partner to be a "public utility holding
company" within the meaning of PUHCA.
5.3. Representations and Warranties of the Developer General Partner. The
---------------------------------------------------------------
Developer General Partner represents and warrants as of the date hereof, as
follows:
(a) The Developer General Partner (i) has all requisite power and authority
to own or hold under lease the property which it owns or holds under lease and
to transact the business it has transacted and proposes to transact and (ii) had
at the time of execution or issuance all requisite power and authority to enter
into and perform all the agreements listed in Exhibit F to which the Developer
---------
General Partner is a party and to obtain and comply with all of the permits
listed in Exhibit F which were issued to the Developer General Partner or the
---------
Partnership and to execute on behalf of the Partnership, in its capacity as a
general partner of the Partnership, all of the agreements listed in Exhibit F
---------
which were executed on behalf of the Partnership prior to the date on which the
First Amended and Restated Agreement of Limited Partnership dated as of April 5,
1991, was executed and delivered (the "First Restatement Date").
(b) Gas Orange Development, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite power and authority to own or hold under lease the property that
it purports to own or hold under lease, respectively, to transact the business
that it has transacted and proposes to transact and to execute on behalf of the
Developer General Partner all of the agreements listed in Exhibit F to which the
---------
Developer General Partner is a party and to execute on behalf of the Developer
General Partner, in its capacity as a general partner of the Partnership, all of
the agreements listed in Exhibit F which were executed by the Developer General
---------
Partner on or prior to the First Restatement Date on behalf of the Partnership.
(c) True and complete copies of every material agreement that existed as of
the First Restatement Date and which were required to be obtained or entered
into by the Partnership in order to close under the Financing Agreement and to
conduct its business that were known as of such date to the Developer Entities
have been provided to North Canadian Power Incorporated, directly or through its
consultant, PDC Consulting Partners. To the best of the knowledge of the
Developer General Partner, subject to prospective or pending proceedings or
applications disclosed in Exhibit M to the Financing Agreement, each of the
---------
Operative Documents to which any of the Developer Entities was a party as of
such date was in full force and effect as of such date, and no default existed
thereunder on the part of any party thereto. Except for the agreements disclosed
on Schedule III or Exhibit F and any agreements to which NCP Syracuse is
---------
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a signatory (for itself or on behalf of the Partnership), no other material
agreements entered into by any of the Developer Entities on or prior to the
First Restatement Date will be binding upon or subject the Partnership to any
obligations after the Initial Funding Date or grant any Person an interest in
the Partnership.
(d) Except as disclosed on Exhibit G, there are no material actions, suits,
---------
investigations or proceedings pending or, to the knowledge of the Developer
Entities, threatened against or affecting any of the Developer Entities or any
property of the Partnership in any court or before any arbitrator of any kind or
before or by any Governmental Authority; and none of the Developer Entities is
in default with respect to any order of any court, arbitrator or Governmental
Authority. None of the Developer Entities is in violation of any statute or the
rule or regulation of any Governmental Authority affecting the Project, the
violation of which might materially and adversely affect the business.
operations or properties of the Partnership.
(e) As of the First Restatement Date, the Partnership was not liable for
any material debt or subject to any material claim of any sort other than debts
and claims that are listed on Exhibit H which have been or are hereby expressly
---------
assumed by the Partnership) or that exist or will arise under the agreements
listed on Exhibit F. The aggregate value of non-material debts and/or claims was
---------
not greater than $100,000.
(f) To the best of the knowledge of the Developer Entities, as of the First
Restatement Date they provided to North Canadian Power Incorporated, either
directly or through its consultant, PDC Consulting Partners, all material
information relating to the Project and in their possession which was requested
by an officer of North Canadian Power Incorporated or by PDC Consulting
Partners.
5.4. Covenant of the Developer General Partner. During the term of this
-----------------------------------------
Agreement, the Developer General Partner shall cooperate, as requested by NCP
Syracuse, in assisting the Partnership in procuring whatever permits need be
obtained after the Initial Funding Date in order to own, construct or operate
the Project and in securing the execution of any agreements which need to be
entered into by the Partnership after the Initial Funding Date in connection
with the Partnership's ownership, construction, operation or maintenance of the
Project.
5.5. Representations. Warranties and Covenants of the Managing General
-----------------------------------------------------------------
Partner. The Managing General Partner hereby represents and warrants as of the
-------
date hereof, and covenants and agrees with the Partnership and the other
Partners for the term of this Agreement, as follows:
(a) NCP Syracuse is, and during the term of this Agreement shall continue
to be, (i) a wholly owned subsidiary of North Canadian Power Incorporated, a
California corporation, and (ii) together with Syracuse Investments, the sole
general partners of Syracuse Partners.
(b) NCP Syracuse currently owns, and during the term of this Agreement
shall continue at all times to own, directly and indirectly through its
ownership of an interest in Syracuse Partners, an interest in the distributions
of Available Cash of the Partnership own or would entitle it to receive,
directly or indirectly, a percentage of a hypothetical distribution of one
dollar of Available Cash made at that time (assuming that the aggregate prior
distributions
-35-
during the year in question are at least $1.00 less than the Tranche 1 Threshold
for such year) that is (x) not less than 9.9 percent or to the First Flip Point,
or (y), except as permitted by clause (z) below, not less than 5.9 percent after
the First Flip Point and so long as Orange Partners' exonerate Post-Flip
Interest is 50 percent or (z) not less than 3.4 percent after the Second Flip
Point (or the First Flip Point, if it occurs after the Pro Forma End Date) and
so long as Orange Partners' aggregate Post-Flip Interest is greater than 50
percent (the "Keep Requirement").
(c) NCP Syracuse was not aware as of the First Restatement Date of any
material information relating to the Project which was requested by North
Canadian Power Incorporated, either directly or through its consultant, PDC
Consulting Partners, and was not provided by the Developer Entities.
ARTICLE VI
Capital Accounts, Distributions and Allocations
-----------------------------------------------
6.1. Establishment of Capital Accounts. (a) A separate Capital Account
---------------------------------
shall be maintained for each Partner. The Capital Account of each Partner shall
be (x) increased by the amount of money contributed by that Partner (or treated
as contributed pursuant to Section 3.1(a)) to the Partnership and the Net Agreed
Value of any Contributed Property contributed to the Partnership by such Partner
plus all Profit and Gain on Disposition adjusted in accordance with Section
6.1(b) and allocated to the Partner in the same manner as provided in Section
6.3 (but without regard to Section 6.3(d)), 6.4 or 6.5 and all contributions
deemed made pursuant to this Agreement, and (y) decreased by the sum of (i) all
Loss and Loss on Disposition computed in accordance with Section 6.1(b) and
allocated to the Partner in the same. manner as provided in Section 6.3 (but
without regard to Section 6.3(d)), 6.4 or 6.5 and (ii) all cash and the Net
Agreed Value of any property distributed by the Partnership to such Partner
pursuant to Sections 6.2 and 8.2 and all distributions deemed made pursuant to
this Agreement. Notwithstanding anything to the contrary contained herein, the
Capital Account of a Partner shall be determined and maintained throughout the
full term of the Partnership in all events in accordance with the rules set
forth in Treasury Regulations (S) 1.704-1(b)(2)(iv) to the extent that any
provision of this Agreement is inconsistent with the requirements of Treasury
Regulations (S) 1.704-1(b)(2)(iv), such Treasury Regulations shall control. Any
reference in this Agreement to the Capital Account of a Partner shall be deemed
to refer to such Capital Account as the same may be credited or debited from
time to time as set forth above.
(b) For purposes of computing the amount of any item of income, gain, loss or
deduction to be reflected in Capital Accounts (including, without limitation,
all Profit, Loss, and Gain or Loss on Disposition), the determination,
recognition and classification of each such item shall be the same as its
determination, recognition and classification for Federal income tax purposes,
except that:
-36-
(i) Any deductions for depreciation, depletion or amortization
attributable to a Contributed Property shall be determined as if the Adjusted
Basis of such Partnership asset on the date it was acquired by the Partnership
was equal to the Carrying Value of such Partnership asset as of such date;
(ii) Any income, gain or loss attributable to the taxable disposition of
any Partnership asset shall be determined by the Partnership as if the Adjusted
Basis of such Partnership asset as of such date of disposition was equal to the
amount of the Carrying Value of such Partnership asset as of such date;
(iii) If the Managing General Partner determines to make any distribution to
a Partner in other than cash (including liquidating distributions pursuant to
Section 8.2), the Capital Account of each Partner, immediately prior to such
distribution, shall be appropriately adjusted upward or downward to reflect the
portion of any Unrealized Gain or Unrealized Loss attributable to the
distributed property that would be allocated to such Partner if the distributed
property were sold for its Fair Market Value on the date of the distribution in
a taxable disposition;
(iv) All fees and other expenses incurred by the Partnership to promote
the sale of (or to sell) an interest in the Partnership that can neither be
deducted nor amortized under Section 709 of the Code as treated as items of
deduction;and
(v) The computation of all items of income, gain, loss and deduction shall
be made without regard to any election under Section 754 of the Code which may
be made by the Partnership except to the extent required by Treasury Regulations
(S) 1.704-1(b)(2)(iv)(m)) and, as to those items described in Section 705
(a)(1)(B) or Section 705 (a)(2)(B) of the Code, without regard to the fact that
such items are not ineludible in gross income or are neither currently
deductible nor capitalizable for Federal income tax purposes.
(c) A transferee of a Partnership interest shall succeed to the Capital
Account attributable to the transferred interest, and there shall be no
adjustment to the Capital Accounts as a result of such Transfer except as
otherwise required under Treasury Regulations 1.704-1. However, if the Transfer
causes a termination of the Partnership under Section 708(b)(l)(B) of the Code,
Partnership property shall be deemed to have been distributed in liquidation of
the Partnership to the Partners existing immediately subsequent to the Transfer.
and recontributed by such Partners in reconstitution of the Partnership. Upon
such recontribution, the Partnership properties shall be treated as Contributed
Property and the Capital Accounts of the Partners in such reconstituted
Partnership shall be maintained in accordance with the principles of this
Article VI.
(d) The Managing General Partner shall, at the request of any Partner
benefited thereby, make the election provided for in Section 754 of the Code on
behalf of the Partnership with respect to any taxable year. In the event such
election is made, thereafter the Managing General Partner may, in its sole and
absolute discretion, seek to revoke any such election.
6.2. Distributions of Cash Items.
---------------------------
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(a) Initial Distribution. On the Term Loan Date or as soon thereafter
--------------------
as funds are available, the Partnership shall pay to Orange Partners and
Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇, in such ratio as they may advise the Managing
General Partner, as additional development and legal fees the amount, if any, by
which (i) the Project Cost Excess exceeds (ii) the amount necessary to pay all
items of higher priority then outstanding in accordance with Section 6.9 .
(b) Before the Pro Forma End Date. Until the occurrence of the earlier of
-----------------------------
the Pro Forma End Date or the First Flip Point, Available Cash for each calendar
year shall be distributed, subject to the further provisions of this Section
6.2, as follows:
(i) 89% to Syracuse Partners, 1% to NCP Syracuse. 1% to Orange
Partners (in its capacity as Developer General Partner), and 9% to Orange
Partners (in its capacity as a Limited Partner) until an amount equal to the
Tranche 1 Threshold for that year has been distributed pursuant to this clause
(i);
(ii) Next, 19% to Syracuse Partners, 1% to NCP Syracuse, 1% to Orange
Partners (in its capacity as Developer General Partner), and 79% to Orange
Partners (in its capacity as a Limited Partner) until an amount equal to the
Tranche 2 Amount for that year has been distributed pursuant to this clause
(ii); and
(iii) Any remaining Available Cash for the year shall be distributed
49% to Syracuse Partners, 1% to Orange Partners (in its capacity as the
Developer General Partner), 1% to NCP Syracuse, and 49% to Orange Partners (in
its capacity as a Limited Partner).
(c) After the Pro Forma End Date if First Flip Point Not Achieved.
-------------------------------------------------------------
If the First Flip Point has not occurred prior to the Pro Forma End Date, then
for all calendar quarters beginning after the Pro Forma End Date, Available Cash
shall be distributed 89% to Syracuse Partners, 1% to NCP Syracuse, 1% to Orange
Partners (in its capacity as the Developer General Partner), and 9% to Orange
Partners (in its capacity as a limited Partner) until the occurrence of the
First Flip Point.
(d) After the First Flip Point. Notwithstanding paragraphs 6.2(b)
--------------------------
and 6.2(c), after sufficient allocations or distributions have been made to
reach the First Flip Point, Available Cash shall be distributed to the Partners
in proportion to their Post-Flip Interests, it being intended that (i) if on any
distribution date the Available Cash exceeds the amount needed to achieve the
First Flip Point, all cash distributed that day which exceeds the amount of cash
that must be distributed pursuant to the other applicable provisions of this
Section 6.2 in order to achieve the First Flip Point shall be distributed to the
Partners pursuant to this paragraph (d) in proportion to the Partners' then
applicable Post-Flip Interests, and (ii) if on any distribution date the
Available Cash exceeds the amount needed to achieve the Second Flip Point, all
cash distributed that day which exceeds the amount of cash that must be
distributed pursuant to this paragraph or any other applicable provisions of
this Section 6.2 in order to achieve the Second Flip Point shall be distributed
to the Partners pursuant to this paragraph (d) in proportion to the Partners'
Post-Flip Interests applicable after the achievement of the Second Flip Point.
-38-
(e) Determination of Available Cash. Available Cash shall be the determined
-------------------------------
by Managing General Partner as of the end of each calendar quarter and shall be
computed as if all expenses accrued as of the end of the period had been paid in
cash, and all income accrued as of the end of the period had been received in
cash. Available Cash as so determined shall, to the extent the cash is actually
available for distribution (and taking into account the provisions of Section
6.7(a)) be distributed at such times and in such amounts as the Managing General
Partner shall determine but not less often than annually, and if not otherwise
restricted by any Material Project Document, within 30 days after the close of
each fiscal quarter of the Partnership. Subject to the provisions of any
applicable agreement to which the Partnership is a party, Available Cash to the
extent of any Net Capital Receipts shall be distributed as soon as reasonably
practicable after such Net Capital Receipts arise.
(f) Adjustments to Distributions. Quarterly distributions pursuant to
----------------------------
paragraph 6.2(b) shall be made by the Partnership in proportion to each
Partner's share of the total distributions that are expected to be made pursuant
to paragraph 6.2(b) for the entire fiscal year, using appropriate and reasonable
assumptions made by the Managing General Partner concerning the Partnership's
financial results for the entire year. Any resulting overpayments or
underpayments will be adjusted in the next quarterly distribution, without
interest.
6.3. Allocations of Tax Items.
------------------------
(a) Special Allocations. For any fiscal year in which a distribution is
-------------------
made to any Partner pursuant to paragraphs 6.2(b)(ii), 6.2(b)(iii), 6.2(c),
6.2(d) or 6.7(d), an amount of gross revenues equal to the amount so distributed
shall be specially allocated to that Partner. The Partnership's construction
period interest expenses accrued prior to the Term Loan Date attributable to
financing the prepaid gas supply shall be specially allocated to the Limited
Partners in the ratio of 92.8% to Orange Partners and 7.2% to Syracuse Partners
until an aggregate of $3,333,333 of such expenses has been specially allocated
to Orange Partners pursuant to this paragraph (a)
(b) Profits. Profits, as calculated after appropriate increase or decrease
-------
for the special allocations of gross revenues and expenses provided for in
paragraph 6.3(a), shall be allocated as follows:
(i) for any fiscal year up to the fiscal year in which the First Flip Point
occurs, 89% to Syracuse-Partners, 1% to NCP Syracuse, 1% to Orange Partners (in
its capacity as Developer General Partner) and 9% to Orange Partners (in its
capacity as a Limited Partner); and
(ii) for each fiscal year beginning with the year in which the First Flip
Point occurs, Profits shall be allocated to the Partners (subject to Section
6.3(d) hereof) so that after the allocation of Profits for the year, the Capital
Account balances of the Partners (whether positive or negative) as of the end of
the year (determined after deducting any distributions which would be made other
than according to the Post-Flip Interests) shall be proportional to their
relative Post-Flip Interests. If the allocation required to be made pursuant to
the preceding sentence would not be sufficient to make the Capital Accounts
proportional to the Post-Flip Interests, Profits shall instead be allocated so
as to minimize the aggregate
-39-
differences between, for each Partner, (A) the percentage that the Capital
Account balance of that Partner is of the total Capital Account balance of all
Partners, and (B) that Partner's Post-Flip Interest.
(c) Losses. Losses, as calculated after appropriate increase or decrease for
the special allocations of gross revenues and expenses provided for in paragraph
6.3(a), shall be allocated as follows:
(i) first, for any fiscal year up to the year in which the First Flip
Point occurs, 89% to Syracuse Partners, 1% to NCP Syracuse, 1% to Orange
Partners (in its capacity as Developer General Partner), and 9% to Orange
Partners (in its capacity as a Limited Partner);
(ii) for each fiscal year beginning with the year which the First Flip
Point occurs, Loss shall be allocated to the Partners (subject to paragraph
6.3(d) so that after the allocation of Loss for the year, the Capital Account
balances of the Partners (whether positive or negative) as of the end of the
year (determined as deducting any distributions which would be made other than
according to the Post-Flip Interests) shall be proportional to their relative
Post-Flip Interests. If the allocation required to be made pursuant to the
preceding sentence would not be sufficient to make the Capital Accounts
proportional to the Post-Flip Interests, Losses shall instead be allocated so
as to minimize the aggregate differences between, for each Partner, (A) the
percentage that the Capital Account balance of that Partner is of the total
Capital Account balance of all Partners, and (B) that Partner's Post-Flip
Interests. If at the time of any allocation of Losses pursuant to this clause
(ii) one or more Partners have positive Capital Account balances and one or
more Partners have negative Capital Account balances, Losses will first be
allocated to the Partners having positive Capital Account balances (and among
them in accordance with the preceding provisions of this clause (ii)) until
their Capital Account balances are reduced to zero.
(d) Contributed Property. In the case of a Contributed Property, item of
--------------------
gain, loss or deduction attributable thereto (including depreciation on, and
gain or loss with respect to the disposition of, the Contributed Property) shall
be allocated, for Federal income tax purposes, first, among the Partners in a
manner that takes into account the variation at the time of contribution between
the Carrying Value of such property and its Adjusted Basis (in accordance with
Section 704(c) of the Code) and second, any such remaining items shall be
allocated in accordance with Sections 6.3(b), 6.3(c), 6.3(e), 6.3(f) or 6.5, as
appropriate. Each Partner contributing Contributed Property to the Partnership
shall promptly advise the Partnership as to its Adjusted Basis in such
Contributed Property at the time of contribution to the Partnership.
(e) Gain on Disposition. Gain on Disposition shall be allocated first,
-------------------
toPartners in proportion to and to the extent of any deficit balances in their
respective Capital Accounts until all such Capital Accounts shall have been
restored to zero, and second, to the Partners in such amounts as shall cause
their Capital Account balances, prior to the distribution of Net Capital
Receipts, to be equal to the amounts that would be distributed to each Partner
if the Net Capital Receipts were distributed in accordance with the requirements
of Section 6.2(e).
-40-
(f) Loss on Disposition. Loss on Disposition shall be allocated first, to
-------------------
the Partners in proportion to and to the extent of any positive balances in
their respective Capital Accounts until such Capital Accounts have been reduced
to zero, and second, to the General Partners in accordance with the requirements
of Section 6.3(c).
(g) Recapture Income. To the extent of any Recapture Income resulting from
----------------
sale or other taxable disposition of a Partnership asset, the amount of any gain
from such disposition allocated to each of the Partners pursuant to the above
provisions shall be deemed to be Recapture Income to the extent such Partner (or
a predecessor in interest) has been allocated or has claimed any deduction
directly or indirectly giving rise to the treatment of such gain as Recapture
Income.
(h) Interim Allocations. The Partnership shall make an interim closing of
-------------------
books for purposes of determining the allocations and distributions required
under this Article VI in the event of any Transfer of a Partnership interest
during a taxable year.
6.4. Recharacterization of Fees and Guaranteed Payments. Notwithstanding
--------------------------------------------------
the provisions of Section 6.3, if any fees, interest or other amounts paid or
payable to any General Partner or any of its Affiliates pursuant to this
Agreement are deducted by the Partnership in reliance on Sections 707(a) or
707(c) of the Code, and such fees, interest nor other amounts are disallowed as
deductions to the Partnership and are recharacterized as Partnership
distributions, then there shall be allocated to such General Partner, prior to
the allocations pursuant to Section 6.3, an amount of Partnership gross income
for the year in which such fees, interest or other amounts are treated as
Partnership contributions equal to such fees, interest or other amounts treated
as distributions.
6.5. Conformity with Treasury Regulations. (a) In accordance with and
pursuant to Treasury Regulations (S) 1.704-1T(b)(4)(iv)(e) and (h)(4), if there
is a net decrease in either the Partnership's Minimum Gain or Minimum Gain
Attributable to Partner Nonrecourse Debt or both during any taxable year, all
Partners (including each General Partner) with deficit Capital Account balances
at: the end of such year as determined immediately prior to the allocation of
Profit and Loss for such year) in excess of the amount they are obligated to
restore (or deemed obligated to restore under the Treasury Regulations) on a
liquidation of the Partnership or such Partner's interest in the Partnership
shall be allocated, before any other allocation is made of Partnership items for
such taxable year, items of income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such excess or, if greater, all Partners
(including each General Partner) shall be allocated, before any other allocation
is made of Partnership items for the taxable year, items of income and gain for
such year, and if necessary, subsequent years, in an amount equal to the portion
of such Partner's share of the net decrease in Minimum Gain or Minimum Gain
Attributable to Partner Nonrecourse Debt or both that is allocable to the
disposition of Partnership property subject to such debt, as determined pursuant
to Treasury Regulations (S) 1.704-1T(b)(4)(iv)(e)(2) and (h)(4) To the extent
that the Partnership shall have insufficient income and gain in any taxable year
to make the allocations required under this Section 6.5(a) in any year in which
there has been a net decrease both in Minimum Gain and in Minimum Gain
Attributable to Partner Nonrecourse Debt, any such insufficiency
-41-
shall be attributed, first, to the decrease in Minimum Gain Attributable to
Partner Nonrecourse Debt, and second, to the decrease in Minimum Gain.
(b) It is the intent of the parties to this Agreement that the chargeback
provisions provided herein satisfy the "allocation of nonrecourse deductions"
rules provided in Treasury Regulations (S)1.704-1T(b)(4)(iv). It is further
intended that the allocations under this. Article VI shall effect an allocation
for Federal income tax-purposes in a manner consistent with Sections 704(b) and
704(c) of the Code and comply with any limitations or restrictions therein. If
for any reason the allocations contained in this Agreement shall conflict with
the allocation rules under the Treasury Regulations promulgated under Section
704 of the Code, the Partners acknowledge that such Treasury Regulations shall
control, except that if the application of the Treasury Regulations would cause
distributions on liquidation to vary from what they would have been had all
distributions been made pursuant to the rules of Section 6.2, the Partnership
shall make special allocations of gross income, as promptly as possible,
calculated so as to cause the liquidating distributions, when made, to
correspond with the distributions required by Section 6.2.
6.6. Negative Capital Accounts. Notwithstanding anything to the
-------------------------
this contrary inAgreement including. without limitation, Sections 3.1(b), 4.4,
4.7 and 8.4, on a liquidation of the Partnership, each Partner shall be
obligated to pay to the Partnership (within the time frame prescribed under
Treasury Regulations (S)1.704-1(b)(2)(ii)(b)(3)) any deficit amount in its
Capital Account (such Account to be determine after the allocation of all items
provided for in this Article VI).
6.7. Additional Reserves. (a) If any cash must be contributed to fund
-------------------
an Additional Reserve, for the fiscal year in which the funding occurs the
Partners will be deemed to have received as distributions, and will be deemed to
have contributed to the Partnership, the amount funded, and such deemed
transactions shall be reflected in the Capital Accounts (by a reduction in the
Capital Accounts to reflect the distribution, and by a corresponding increase in
the Capital Accounts to reflect the contribution). Accordingly, the funding of
Additional Reserves shall have no impact on after-tax rates of return for
purposes of determining the occurrence of the Flip Points.
It is the intent of this provision that for purposes of determining the
amount distributable to each Partner for each year pursuant to Section 6.2, no
distinction shall be made between actual and deemed distributions, so that
Partners shall share in actual and deemed distributions for the same year in the
same ratio, and their relative rights of participation in actual and deemed
distributions shall be calculated based on the aggregate of all such
distributions.
(b) Each Additional Reserve shall be designated for a specific purpose and
funds in that reserve will be applied only for the specified purpose. As soon as
it reasonably appears to the Managing General Partner that a specific Additional
Reserve is overfunded or not needed for the purpose for which it was
established, it shall cause the excess funds in that Additional Reserve to be
distributed to the Partners.
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(c) Any distribution from a specific Additional Reserve, including earnings
thereon, (i) shall, except as required by paragraph (d) of this Section 6.7, be
distributed to the Partners in the proportion that they funded that specific
Additional Reserve in accordance with the requirements of paragraph (a) of this
Section 6.7, (ii) shall not be subject to the general rules of Sections 6.2, 6.3
and 6.5 and (iii) shall be taken into account in calculating the Flip Points
only when actually made.
(d) Earnings on each specific Additional Reserve shall be allocated to the
Partners as of the last day of each calendar quarter in the ratio of their
respective accredited interests in such reserve as of the last day of the
immediately preceding calendar year.
(e) Rules similar to the rules in this Section 6.7 applicable to Additional
Reserves shall apply to amounts (i) not distributed to the Partners but instead
used to make capital expenditures as to any item or related items exceeding
$100,000 or (ii) expended from Additional Reserves for capital expenditures.
Depreciation on, and the tax basis of, such capital expenditures shall be
allocated in the proportion that the Partners funded the expenditure (that is,
in the proportion they would have shared in any reserve applied for the purpose
if it had been distributed or in the average proportion they would have shared
in all distributions for the year if the funds, other than reserves, so applied
had been distributed).
6.8. Pre-Operating Reserves. Each Pre-Operating Reserve shall be
----------------------
established for the specific purpose designated by the Agent and funds in that
reserve shall be applied only for the specified purpose. Whenever and to the
extent that a specific Pre-Operating Reserve is overfunded or not needed for the
purpose for which it was established, the Managing General Partner shall cause
the excess funds in that Pre-Operating Reserve to be paid or distributed in the
priority provided in Section 6.9, but only if and to the extent permitted under
the terms of the Financing Agreement.
6.9. Application of Project Cost Excess and Certain Other Funds. Project
----------------------------------------------------------
Funds representing Project Cost Excess and Pre-Operating Reserves released by
Agent to the Partnership as contemplated by Section 7.1 of the Financing
Agreement shall be deposited in an Excluded Account (as defined in the Financing
Agreement) and applied promptly in the following order of priority: first, to
the payment of interest on and principal of any loans made by Partners to
satisfy obligations of the Partnership pursuant to Section 5.19 (b) of the
Financing Agreement; next to pay any Deferred Fees pursuant to Section 2.11(a);
next to pay any Deferred Fees Pursuant to Section 2.12(a); next to pay
Contingent Payments in accordance with Section 2.11(b); and any balance to the
Developer General Partner and Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ pursuant to
Section 6.2(a) to be divided between them in such ratio as they may advise the
Managing General Partner.
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ARTICLE VII
Transfer of Partnership Interests; Removal of a
General Partner: Admission of Additional Partners
-------------------------------------------------
7.1. Substitution and Transfer of Certain Interests.
----------------------------------------------
(a) Transfer of Interest of Limited Partner. Except for the pledge made
---------------------------------------
under a Partner Pledge and Security Agreement, a Limited Partner may not make a
voluntary Transfer of its interest unless:
(i) the Managing General Partner shall have previously consented to the
Transfer, such consent not to be unreasonably withheld or delayed;
(ii) the Transfer would not constitute a violation of or default under the
Financing Agreement;
(iii) the Transfer is not directly or indirectly to Niagara Mohawk Power
Corporation, Hydra-Co. Enterprises, Inc. or Energy Investor's Fund or to an
individual (collectively, the "Prohibited Transferees") unless the Developer
General Partner gives its Consent to such Transfer;
(iv) counsel selected by, or reasonably acceptable to, the Managing
General Partner ("Acceptable Counsel"), shall have rendered its opinion, in form
(and with assumptions) reasonably acceptable to the Managing General Partner,
that such Transfer (A) may be effected without registration under the Securities
Act of 1933, (B) would not require registration or qualification by the
Partnership with respect to the Transfer under, and would not result in a
violation of, any applicable state securities laws, (C) would not result in a
termination of the Partnership under the Code, (D) would not result in the
Partnership being treated as an association taxable as a corporation under the
Code, (E) would not result in the Partnership or any Affiliate of a Partner
becoming subject to regulation under PUHCA or becoming otherwise subject to
increased regulatory burdens, (F) would not resulting the Project ceasing to be
exempt from regulation as a result of changing its status as a "qualifying
facility" under PURPA, (G) would not constitute a violation of-or default under
the Financing Agreements and as to such other matters as are reasonably required
by the Managing General Partner based on the requirements of Material Project
Documents (such opinion being herein referred to as the "Required Opinion"); and
(v) in the case of a Transfer by Syracuse Partners. the Managing General
Partner's interest in distributions of Available Cash after such Transfer
(including its indirect interest in distributions of Available Cash through its
ownership of an interest in Syracuse Partners) would not be less than the Keep
Requirement.
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(b) Partnership Interest in Syracuse Partners. A partner in
-----------------------------------------
SyracusePartners may not make a voluntary Transfer of its interest in Syracuse
Partners unless:
(i) the Managing General Partner has given its Consent to the Transfer,
such Consent not to be unreasonably withheld or delayed (provided, that a
limited partner in Syracuse Partners shall not be required to obtain the Consent
of the Managing General Partner, in its capacity as general partner hereunder,
pursuant to this clause (i) in order to Transfer all or a portion of its limited
partner interest in Syracuse Partners (but the provisions of clauses (ii)
through (vi) shall remain applicable))
(ii) the Transfer would not constitute a violation of or default under
the Financing Agreement;
(iii) the Transfer is not directly or indirectly to any of the
Prohibited Transferees or the Developer General Partner has given its Consent to
such Transfer;
(iv) the Managing General Partner has received the Required Opinion from
Acceptable Counsel; (v) there are not more than 10 holders of beneficial
interests in Syracuse Partners other than the Managing General Partner; and
(vi) the Managing General Partner's percentage interest in distributions
of Available Cash after such Transfer (including its indirect interest in
distributions of Available Cash through its ownership of an interest to Syracuse
Partners) would not be less than the Keep Requirement.
(c) ▇▇▇▇ ▇. ▇▇▇▇▇▇; Orange Development.
----------------------------------
(i) ▇▇▇▇ ▇. ▇▇▇▇▇▇ may not make a voluntary Transfer of stock of Orange
Development without the prior Consent of the Managing General Partner and, prior
to the First Flip Point, Syracuse Partners, which Consent may be withheld in the
sole and absolute discretion of the Managing General Partner and Syracuse
Partners, respectively; provided, that the Consent of Syracuse Partners shall
not be required (1) for any transfer of such stock to a member of ▇▇▇▇ ▇.
▇▇▇▇▇▇'▇ immediate family (but such family member may not further transfer such
stock without Syracuse Partners' Consent prior to the First Flip Point) or to a
trust, the beneficiaries of which are ▇▇▇▇ ▇. ▇▇▇▇▇▇, his estate and/or one or
more members of his immediate family or (2) if the partnership interest of
Orange Development in the Developer General Partner has been converted into a
limited partner interest in the Developer General Partner.
(ii) ▇▇▇▇ ▇. ▇▇▇▇▇▇ may not make a voluntary Transfer of the limited
partnership interest in the Developer General Partner owned by him or the
grantor trust (the "Trust") set up by him unless: (A) the Managing General
Partner has given its Consent to the Transfer, such Consent not to be
unreasonably delayed and only to be withheld if the Managing General Partner
determines that such Transfer is in violation of the Financing Agreement or the
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remaining conditions of this clause (ii); (B) the Transfer is not directly or
indirectly to one of the Prohibited Transferees or the Managing General Partner
gives its Consent to such Transfer; (C) the Managing General Partner has
received the Required Opinion from Acceptable Counsel; and (D) the combined
interests of ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Trust in Orange Partners equal or exceed 20
percent of the total partnership interests in Orange Partners.
(d) Other Beneficial Owners of Orange Partners .
------------------------------------------
(i) No other beneficial owner of a limited partnership interest in
Orange Partners may make a voluntary Transfer of such interest which would
constitute an Event of Default under the Financing Agreement. The Developer
General Partner agrees to cause a provision to the following effect to be
included at all times in the partnership agreement of each of Orange Partners
and Orange Partners, L.P., a Delaware limited partnership, so long as it is a
partner of Orange Partners: "Any voluntary transfer of a beneficial interest in
the partnership in violation of the Financing Agreement shall be null and void
and of no effect."
(e) Unless a Transferee of an Interest becomes a substituted Limited
Partner in accordance with the provisions of this Section 7.1(e), it shall not
be entitled to any of the rights granted to a Limited Partner hereunder, other
than the right to receive all or part of the share of the Profits, Losses, cash
distributions or returns of capital to which its assignor would otherwise be
entitled. A Transferee of the interest of a Limited Partner, or any portion
thereof, shall become a substituted Limited Partner entitled to all the rights
of a Limited Partner if, and only if:
(i) the Transferor indicates its intent to give the Transferee such
right subject to this Agreement;
(ii) both General Partners Consent to such substitution;
(iii) in the opinion of counsel acceptable to both General Partners,
such substitution would not result in the Partnership being treated as an
association taxable as a corporation under the Code;
(iv) the Transferee pays to the Partnership all costs and expenses
incurred in connection with such substitution, including specifically, without
limitation, costs incurred in amending the Partnership's then current
Certificate of Limited Partnership; and
(v) the Transferee executes and delivers such instruments, in form and
substance satisfactory to both General Partners as the General Partners may deem
necessary or desirable to effect such substitution and to confirm the agreement
of the assignee to be bound by all of the terms and provisions of this
Agreement.
(f) The partnership and the General Partners shall be entitled to treat
the record owner of any limited Partner Interest as the absolute owner thereof
in all respects, and shall incur no liability for distributions of cash or other
property made in good faith to such owner until such time as the assignment is
completed in accordance with the provisions of this Agreement and a
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written assignment of such Interest has been received and accepted by the
Managing General Partner and recorded on the books of the Partnership. In no
event shall any Interest in the Partnership or any portion thereof,
retransferred to a minor or incompetent, and any such attempted Transfer shall
be void and ineffectual and shall not bind the Partnership or the General
Partners.
7.2. Death, Bankruptcy or Dissolution of a Limited Partner. (a) The-
-----------------------------------------------------
Disability or legal incapacity of a Limited Partner shall not dissolve or
terminate the Partnership.
(b) If a Limited Partner who is an individual does not, by written
instrument, designate a Person to become a Transferee of his Partnership
interest upon his death or legal incapacity, then his personal representative
shall have all the rights of such former Limited Partner with respect to such
Partnership interest for the purpose of settling or managing his estate, and
such power as the decedent or incompetent possessed to Transfer his Partnership
interest to a Transferee and to join with such Transferee in making application
to substitute such Transferee as a substitute Limited Partner.
(c) Upon the Bankruptcy, dissolution or other cessation of existence of
a Limited Partner, an authorized representative of such former Limited Partner
shall have all the rights of a Partner for the purpose of effecting the orderly
winding up and disposition of the business of such Limited Partner and such
power as such Limited Partner possessed to designate a successor as a Transferee
of its Partnership interest and to join with such Transferee in making
application to substitute such Transferee as a Limited Partner.
7.3. Transfer of a General Partner's Interest.
----------------------------------------
(a) Except for the pledge made under a Partner Pledge and Security
Agreement, no General Partner may (i) voluntarilyTransfer all or any part of its
Interest (but nothing herein shall restrict a Transfer which is made
involuntarily or by operation of law), unless the other General Partner (and in
the case of the Developer General Partner, Syracuse Partners, provided that the
Consent of Syracuse Partners shall not be required if the Interest to be
Transferred shall have been converted into a Limited Partner interest in the
Partnership (and each of the Partners hereby agrees, if requested by the
Developer General Partner, to enter into such amendments hereto as may be
reasonably required to effect such conversion)) shall have Consented to such
Transfer, the granting or denying of such Consent being within the sole and
absolute discretion of such other General Partner (and Syracuse Partners, if
applicable), or (ii) permit a Transfer of all or any part of any direct or
indirect interest in such General Partner if the Transfer will result in a
violation of or default under the Financing Agreement or any other Material
Project Document.
(b) Subject to paragraph (a) of this Section 7.3, upon giving 120 days'
notice to the other Partners, the Developer General Partner (but not the
Managing General Partner) may voluntarily withdraw from the Partnership or
Transfer its Partnership interest, but only if:
(i) in the event that it is the sole General Partner, another Person has
agreed to serve as successor General Partner to such withdrawing or Transferring
General Partner and such
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succeeding Person has satisfied the terms and conditions set forth in paragraph
(c) of this Section 7.3;
(ii) such Transfer will not result in the Partnership or any Affiliate (A)
becoming subject to regulation under PUHCA, or (B) becoming otherwise subject to
increased regulatory burdens;
(iii) in the opinion of counsel acceptable to the remaining General Partner,
such withdrawal or Transfer will not result in the Partnership being treated as
an association taxable as a corporation under the Code;
(iv) such withdrawal or Transfer will not result in the Project's ceasing to
be a "qualifying cogeneration facility" as defined in PURPA; and
(v) such withdrawal or Transfer will not cause a violation of or default
under the Financing Agreement or any other Material Project Document.
(c) A Person shall be admitted as a successor General Partner only if the
following terms and conditions are satisfied:
(i) the admission of such Person shall have been Consented to by the other
General Partners and a Majority in Interest of Limited Partners, which Consent
may be withheld in the discretion of each General Partner but which shall not be
unreasonably withheld in the case of the Limited Partners unless the admission
of such successor General Partner pursuant to this Section 7.3(c) would result
in the Partnership having a General Partner whose admission to the Partnership
pursuant to another Section of this Agreement would have required the Consent of
a Majority in Interest of Limited Partners and the giving of such Consent
pursuant to such other Section would not have been subject to a "reasonableness"
standard thereunder);
(ii) such Person shall have accepted and agreed to be bound by all the terms
and provisions of this Agreement by executing a counterpart hereof and such
other documents or instruments as may be required or appropriate in order to
effect the admission of such Person as a General Partner;
(iii) a certificate evidencing the admission of such Person as a General
Partner shall have been filed for recordation in all places required by law;
(iv) if the successor General Partner is a corporation, it shall have
provided to the Partnership a certified copy of a resolution of its Board of
Directors authorizing it to become a General Partner and to execute and deliver
this Agreement and the documents or instruments referred to in clause (ii)
above;
(v) the Person shall have delivered a Required Opinion of Acceptable Counsel
which shall include an opinion of such counsel to the effect that such successor
General Partner
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possesses all requisite power and authority, corporate and otherwise, to be a
General Partner of the Partnership; and
(vi) where the provisions of Section 7.4(a) or (b) are relevant, the
provisions of Section 7.4 (c) have been satisfied.
(d) The Partnership shall be entitled to treat the record owner of any
general partner Interest as the absolute owner thereof in all respects, and
shall incur no liability for distributions of cash or other property made in
good faith to such owner until such time as the assignment is completed in
accordance with the provisions of this Agreement and a written assignment of
such Interest has been received and accepted by the Managing General Partner and
recorded on the books of the Partnership. In no event shall any Interest, or any
portion thereof, be Transferred to a minor or incompetent, and any such
attempted Transfer shall be void and ineffectual and shall not bind the
Partnership or the General Partners.
7.4. Removal or Deemed Withdrawal of a General Partner. (a) Removal
------------------------------------------------ -------
of General Partner for Cause. A General Partner may be removed upon the
----------------------------
Consent of any other General Partner, if the General Partner is found by a court
of competent jurisdiction to have committed any fraud, or is found by such court
to be guilty of any willful misconduct, in the management of the Partnership or
to have materially breached this Agreement or its fiduciary duty to any other
Partner in any material respect. Any such removal (A) shall be effective upon
notice by any remaining General Partner to all other Partners, or (B) may, at
the request of such remaining General Partner, be ordered by the court which
makes the finding for such removal or upon which such removal is based
(provided, that such removal shall not be effective until 60 days after each
Partner shall have been given notice of such removal) The right of a General
Partner to remove the other General Partner is in addition to and not in
limitation or substitution of any other rights, claims and remedies such General
Partner may have against the General Partner so removed for actions prompting
the removal. Any failure to or delay by such General Partner in removing the
other General Partner shall not in any way constitute a waiver of the rights
herein granted or limit or restrict any other rights available to such General
Partner.
(b) Deemed Withdrawal. Upon the occurrence with respect to a General
-----------------
Partner of an event (other than Bankruptcy) which under the Act causes the
dissolution of a limited partnership, such General Partner shall be deemed to
have offered its resignation as a General Partner, and unless all of the
remaining Partners shall otherwise Consent, such General Partner shall be deemed
to have withdrawn as a General Partner effective upon such Bankruptcy or other
event. In the event of (i) the Bankruptcy of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Orange Development
or the Developer General Partner or (ii) any Transfer by ▇▇▇▇ ▇. ▇▇▇▇▇▇, Orange
Development, the Developer General Partner, or any beneficial owner of any of
the foregoing which constitutes an Event of Default under the Financing
Agreement, the Developer General Partner shall be deemed immediately to have
resigned and withdrawn as a General Partner, effective upon such Bankruptcy or
Transfer, as in case may be. If and when such Event of Default shall have been
cured and/or waived by the Agent and in the case of Bankruptcy, the Managing
General Partner shall have given Consent, the Developer General Partner shall be
reinstated as a General Partner. Upon the occurrence with respect to NCP
Syracuse or North Canadian Power Incorporated of a
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Bankruptcy or in the event of a breach of Section 5.5(b), NCP Syracuse shall be
deemed to have offered its resignation as a General Partner, and unless the
Developer General Partner shall otherwise Consent, NCP Syracuse shall be deemed
to have withdrawn as a General Partner effective upon such Bankruptcy.
(c) Conversion of General Partner's Interest. Upon the removal or deemed
----------------------------------------
withdrawal of a General Partner as a general partner of the Partnership pursuant
to paragraph (a) or (b) of this Section 7.4, such former General Partner's
Interest shall be forthwith converted into that of a Limited Partner, and such
former General Partner shall continue to share in Profits and Losses, Available
Cash and Net Capital Receipts the same proportions as if such former General
Partner had not been removed or withdrawn; provided, that in the case of the
removal of the Managing General Partner pursuant to paragraph (a) of this
Section 7.4 and the selection of a Person other than the Developer General
Partner as the Managing General Partner, a one percent (1%) Interest in the
Partnership shall be transferred by the former Managing General Partner to the
successor Managing General Partner, rather than being converted into a Limited
Partner Interest, in consideration for which transfer the former Managing
General Partner shall be paid by the successor Managing General Partner an
amount mutually agreed between them as being the Fair Market Value of each
Interest (or. if they are unable to agree on such Fair Market Value, such value
shall be determined pursuant to the appraisal procedure set forth in the
definition of "Fair Market Value"). If a conversion of the General Partner's
Interest to a Limited Partner's Interest occurs, upon the effects of the events
giving rise to such removal having been fully cured (in the case of the Managing
General Partner) or upon the effective date of such conversion (in the case of
the Developer General Partner), such former General Partner shall be entitled in
its capacity as a Limited Partner to participate in occasions which require the
Consent of all or some of the Limited Partners.
(d) Effect of Removal or Withdrawal. Except as otherwise provided in
-------------------------------
Section 7.4(a) or Section 7.4(b), in the event of the removal or withdrawal of a
General Partner for any reason whatsoever, the remaining General Partner shall
automatically, without any further action on the part of any Partner, become
fully vested with all of the rights, power and authority granted to both the
Managing General Partner and the Developer General Partner by Article IV and any
other provision of this Agreement (including, but not limited to, the power of
attorney granted in Section 10.2 hereof) to the same extent as if the remaining
General Partner were designated as both the Managing General Partner and the
Developer General Partner, except for purposes of any provision of this
Agreement which provides for the allocation of items of Partnership income or
expense or the distribution of Available Cash or Net Capital Receipts to the
withdrawing General Partner.
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ARTICLE VIII
Dissolution and Liquidation
---------------------------
8.1. Events of Dissolution.(a) The Partnership shall be dissolved upon the
---------------------
earliest to occur of the following:
(i) a date designated in writing by all of the General Partners and
Consented to by a Majority in Interest of the Limited Partners;
(ii) the sale or other disposition of all or substantially all of the
Partnership's assets, except that if non-cash consideration is received the
Partnership shall not dissolve until such consideration is converted into cash;
(iii) the incurring of (x) damage to or destruction of the Project to such an
extent that all of the General Partners shall determine that repair or
reconstruction thereof would not be feasible or would not be economically
advisable, or (y) the taking of the Project or a part thereof by any
Governmental Authority to such an extent that all of the General Partners shall
determine that the continuation of the business of the Partnership would not be
feasible or would not be economically prudent;
(iv) the sale or other disposition of the Project as the result of any
foreclosure of a lien or similar event;
(v) the Bankruptcy or withdrawal: of the sole remaining General Partner,
unless within ninety (90) days thereafter each of the remaining Partners Consent
to continue the Partnership and appoint a substitute General Partner; or
(vi) the expiration of the term of the Partnership pursuant to Section 2.10
of this Agreement.
(b) Dissolution of the Partnership shall be effective on the day on which
the event occurs giving rise to the dissolution, but the Partnership shall not
terminate until the Partnership's certificate of limited partnership shall have
been cancelled and the assets of the Partnership shall have been distributed as
provided herein. Notwithstanding the dissolution of the Partnership, prior to
the termination of the Partnership, as aforesaid, the business of the
Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement. Upon dissolution, the Managing General Partner shall
liquidate the assets of the Partnership, apply and distribute the proceeds
thereof as contemplated by this Agreement and cause the cancellation of the
Partnership's certificate of limited partnership.
8.2. Priority on Liquidation. The Managing General Partner shall to the
-----------------------
extent feasible, liquidate the assets of the Partnership as promptly as shall be
practicable. allowing reasonable time for the process of winding up and
liquidation so as to minimize the normal losses attendant upon a liquidation of
assets. The proceeds of such liquidation shall be applied
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first, to the payment of the matured debts and liabilities of the Partnership C
-----
including principal and accrued interest on Partner Loans, and the costs and
expenses of dissolution and liquidation of the Partnership); second, to the
------
setting up of any reserves which the Managing General Partner may deem
reasonably necessary for contingent or unforeseen liabilities of the Partnership
(any such reserves shall be Additional Reserves and governed by Section 6.7);
and third, to the Partners in the manner provided for Available Cash pursuant to
-----
Sections 6.2 and 6.9 hereof.
8.3. Statements on Liquidation. The Managing General Partner shall
-------------------------
furnish each of the Partners with a statement which shall set forth the assets
and liabilities of the partnership as of the date of the dissolution and as of
the date of complete liquidation, the share of each Partner thereof, and a
reasonably detailed report of the manner or disposition of the assets of the
Partnership.
8.4. Return of Capital; Partition. No Partner shall have any right to
-------------------------
receive its Capital Contribution or any profit of the Partnership, or to obtain
a partition of assets of the Partnership, other than as provided in this
Agreement. The General Partners shall not be personally liable for the return of
the Capital Contributions of the Limited Partners, or any portion thereof, it
being expressly understood that any such return shall be made solely from
Partnership assets.
ARTICLE IX
Records and Accounting
----------------------
9.1. Books and Records. The Managing General Partner or a representative
-----------------
appointed by the Managing General Partner shall maintain or cause to be
maintained at the principal place of business of the Partnership referred to in
Section 2.5 or at the principal place of business of the Managing General
Partner, as provided in Section 4.6. full, correct and complete copies of this
Agreement and the Partnership's certificate of limited partnership and of all
amendments and supplements hereto and thereto, full, correct and complete copies
of each agreement between the Partnership and any General Partner or Related
Party of a General Partner, and each other material agreement of the
Partnership, and in each case copies of all amendments thereof and supplements
thereto, and full and accurate books of the Partnership showing all receipts and
expenditures, assets and liabilities, profits and losses, and all other books,
records and information required by the Act as necessary for recording the
Partnership's business and affairs, together with a current list of the full
name and last known business address of each Partner, and executed copies of all
powers of attorney pursuant to which the Partnership's certificate of limited
partnership or any certificate of amendment thereto has been executed, and
copies of the Partnership's Federal, state and local income tax returns and
reports, if any, for seven years. The Partnership's general ledger shall be
maintained on an accrual basis in accordance with generally accepted accounting
principles. Books and records shall be maintained until six years after the
termination and liquidation of the Partnership. Each Partner and its duly
authorized representative(s) shall have the right at such Partner's expense, at
all reasonable times during normal business hours and upon at least one day's
prior notice, to inspect and make copies of
-52-
extracts from all of the partnership's documents, books and records, including,
without limitation, all documents, books and records necessary to enable such
Partner to defend any tax audit or related proceeding.
9.2. Required Reports to Partners. The Managing General Partner shall-
---------------------------
prepare and furnish or cause to be-prepared and furnished to each of the
Partners the following reports and information provided, that in the case of
clause (e) below, so long as NCP Syracuse is Managing General Partner-and
managing general partner of Syracuse Partners and Metlife Capital Corporation is
a limited partner of Syracuse Partners, the Managing General Partner shall also
simultaneously furnish to Metlife Capital Corporation the information described
in clause (e))
(a) Within 45 days after the end of each of the first three fiscal
quarters of each Fiscal Year, an unaudited balance sheet as of the end of such
quarter, and unaudited statements of profit and loss, changes in Partners'
capital, and change in cash flows of the Partnership for the quarter then ended
and in the case of the second and third such quarters, for the Fiscal Year to
date, all prepared in accordance with generally accepted accounting principals;
(b) Within 90 days after the end of each Fiscal Year, audited financial
statements of the Partnership (which shall include a balance sheet at the end of
such year, statements of profit and loss, changes in Partners capital and change
:n cash flows of the Partnership for the year then ended, and a description of
any material transactions between the Managing General Partner or any of its
Affiliates and the Partnership (other than pursuant to the Gas Sales Contract)
not previously disclosed in writing) for such Fiscal Year prepared in accordance
with generally accepted accounting principles and accompanied by the
accountants' report on their examination of such financial statements;
(c) Within 90 days after the end of each Fiscal Year, Form K-l, or any
similar form as may be required by the Code or the Internal Revenue Service for
the preparation of the Partners' Federal income tax returns;
(d) Promptly upon receipt by the Managing General Partner of the same,
copies of any management reports prepared for the Partnership by the
Accountants;
(e) Within forty (40) days after the end of each month. (i) unaudited
statements of profit and loss for such month and an unaudited balance sheet as
of the end of such month and (ii) a summary of electrical output, steam
delivered, plant availability, fuel used and periods of curtailment or shutdown;
and
(f) Forthwith upon the request of any Partner, such other information
bearing on the financial condition and operations of the Partnership and the
status, condition and operations of the Project as such Partner may from time to
time reasonably request.
9.3. Partnership Bank Accounts. The Managing General Partner shall have
-------------------------
authority to open bank accounts and designate signatories with respect thereto
on behalf of the Partnership and may authorize an agent to open such bank
accounts as it shall deem necessary or desirable
-53-
for the management and conduct of the Partnership's business; provided, however,
that the funds of the Partnership shall not be commingled with any funds of any
Partner or of any other Person.
9.4. Annual Tax Returns. (a) The Managing General Partner is
------------------
designated the "Tax Matters Partner" for Federal income tax purposes pursuant to
Section 6231 of the Code with respect to all taxable years of the Partnership
and is authorized to do whatever is necessary to qualify as such. The Tax
Matters Partner shall cause the Accountants to prepare, and shall timely file,
or cause the timely filing of, all Tax Returns required by any Governmental
Authority.
(b) The Tax Matters Partner shall do all acts, make all elections, and take
whatever reasonable steps are required to maximize in the aggregate, the
Federal, state and local income tax advantages available to the Partnership
(provided that in the case of a tax reporting position, such position can be
supported by a "more likely than not" tax opinion of reputable tax counsel) and
shall defend all tax audits and litigation with respect thereto. The Tax Matters
Partner shall maintain the books, records and Tax Returns of the Partnership in
a manner consistent with the acts, elections and steps taken by the Partnership;
provided however, that a draft tax information return of the Partnership in the
form which the Tax Matters Partner proposes to file shall be delivered to the
other General Partner no later than 10 days prior to filing for its comment and
review, it being agreed that the Tax Matters Partner shall, consistent with its
oblations and responsibilities under this Agreement, make the final decision
regarding the filing of the return.
9.5. Actions in Event of Audit. Except as otherwise-provided herein, the
-------------------------
Managing General Partners's designation as the Tax Matters Partner pursuant to
Section 9.4(a) is effective only for the purpose of activities performed under
the Agreement pursuant to the provisions of the Code and any comparable
provision of state or local law and shall be subject to the following terms and
conditions:
(a) The Tax Matters Partner, as an authorized representative of the
Partnership, shall direct the defense of any claims made by federal, state or
local tax authorities ("Tax Authorities") to the extent that such claims relate
to the adjustment of Partnership items at the Partnership level. The Tax Matters
Partner shall (and in any event within ten (10) days after receipt) deliver to
each Partner a copy of all notices, communications, reports or writings of any
kind (including, without limitation, any notice of beginning of administrative
proceedings or any report explaining the reasons for a proposed adjustment)
received from the Tax Authorities relating to or potentially resulting in an
adjustment of Partnership items. The Tax Matters Partner shall consider in good
faith any suggestions made by any Partner or its counsel regarding the conduct
of any related administrative or judicial proceedings.
The Tax Matters Partner shall keep each Partner advised of all material
developments with respect to any proposed adjustment which come to its
attention, including, without limitation, the scheduling of all conferences with
the Tax Authorities. Each Partner shall be entitled, at its own expense, to
attend all meetings with the Tax Authorities and to review in advance (subject
to giving comments in response thereto to the Tax Matters Partner within such
period as the Tax Matters Partner may designate (but in no event less than five
(5) business days)), any material written information including, without
limitation, any pleadings, memoranda or similar items) to be submitted to the
Tax Authorities. addition to the right of a Partner to
-54-
attend any such meetings, a Partner may participate in such meeting subject to
such control and direction of the Tax Matters Partner as may be reasonable under
the circumstances taking into account, without limitation, the tax implications
to each Partner.
Without first obtaining the written consent of a Majority in Interest of
the Limited Partners, the Tax Matters Partner shall not, with respect to any
proposed adjustment of a Partnership item which materially and adversely affects
the Partners, (A) enter into a settlement agreement which purports to bind
Partners other than the Tax Matters Partner (including, without limitation, any
stipulation consenting to an entry of decision by the Tax Court) , or (B) enter
into an agreement or stipulation extending the statute of limitations.
(b) If notice of an administrative proceeding under Section 6223 of the
Code (or any comparable provision of state or local law) is received by a
Partner, such Partner shall notify the Tax Matters Partner of the treatment of
any Partnership item on the Partner's income tax return which is or may be
inconsistent with the treatment of that item on the Partnership return.
(c) No Partner shall enter into any settlement agreement with any taxing
authority with respect to any Partnership item unless and until such Partner
shall have first notified the Tax Matters Partner in writing of the proposed
agreement and its terms at least thirty (30) days prior to entering into such
settlement.
(d) The Tax Matters Partner or any Partner shall notify all Partners of
any intention to file a petition with the Tax Court for a redetermination of any
Partnership item within ten (10) days from the date of the Notice of Final
Partnership Administrative Adjustments.
9.6. Costs. The Partnership shall indemnify and reimburse the
-----
Tax Matters Partner for all Third Party Fees and other claims, liabilities,
losses and damages borne by the Tax Matters Partner, which were incurred in
connection with any of its duties under Sections 9.4 and 9.5, except to the
extent caused by the gross negligence or willful misconduct of the Tax Matters
Partner. The payment of expenses to which indemnification applies shall be
deemed an expense of the Partnership. Neither the Tax Matters Partner nor any
other Person (other than the partnership) shall have any obligation to provide
funds for any of the actions required by Sections 9.4 and 9.5. The taking of any
action and the incurring of any expense by the Tax Matters Partner in connection
with any such proceeding, except to the extent required by law, is a matter in
the reasonable discretion of the Tax Matters Partner.
ARTICLE X
Miscellaneous
-------------
10.2. Notices. Any and all notices, elections or demands permitted or
-------
required hereunder shall be in writing, signed by the Partner giving such
notice, election or demand and shall be delivered personally, or sent by
registered or certified mail, or by a nationally recognized courier service, to
the other Partner or Partners, at its address set forth in Schedule I or at
such other
-55-
address as may be supplied by written notice given in conformity with the terms
of this Section 2.0.1; provided, however, that copies of all notices to Orange
Partners shall also be sent in the same manner to ▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq., or to such
other firm or Person as Orange Partners may designate by written notice given in
conformity with this Section 10.1. The date of receipt shall be the effective
date of such notice. Any notice that a Partner demands inspection of the books
and records of the Partnership may be made to the address described above by
telecopy, telex or telegram.
10.2. Power of Attorney. (a) Each Limited Partner, including and
additional or substituted Limited Partner, by the execution of this Agreement or
any counterpart hereof, does hereby irrevocably constitute and appoint the
Managing General Partner (and Orange Partners in case of the withdrawal or
removal of NCP Syracuse as a General Partner pursuant to Section 7.4) and its
respective Presidents, Vice-Presidents, Secretaries and Treasurers (and, in the
event of a withdrawal of NCP Syracuse as a General Partner, the general partner
of the Developer General Partner, and such officers of the general partner of
the Developer General Partner), and each of them acting alone, in each case with
full power of substitution, his or its true and lawful agent and attorney-in-
fact, with full power and authority in his or its name, place and stead, to
make, execute, sign, acknowledge, swear to, deliver, file and record at the
appropriate public offices (i) such amendments to this Agreement and the
Partnership's certificates of limited partnership, as amended from time to time,
as are necessary to admit to the Partnership a substituted or additional Limited
Partner pursuant to Section 7.1, (ii) such documents and instruments as are
necessary to cancel the Partnership's certificate of limited partnership
pursuant to Section 8.1. (iii) all certificates and other instruments deemed
advisable by the Managing General Partner to permit the Partnership to become or
to continue as a limited partnership or partnership wherein the Limited Partners
have limited liability in the jurisdictions where the Partnership may be doing
business, and (iv) all fictitious or assumed name certificates required or
permitted to be filed on behalf of the Partnership. Each Limited Partner agrees
to execute and deliver, when requested by the Managing General Partner, such
documents and instruments as may be reasonably necessary or appropriate to carry
out the provisions of this Agreement or which are required by law to be filed on
behalf of the Partnership.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and coupled with an interest, and it shall survive the Bankruptcy or legal
disability of any of the Partners to the fullest extent permitted by law and
extend to its successors and assigns, and shall survive the Transfer or
assignment of all or any part of the Interest of such Partner; provided,
however, that if any General Partner or any Limited Partner Transfers all or any
part of its respective Interest, the foregoing power of attorney of the
Transferor shall survive such Transfer as to the Interest or portion so
Transferred only until such time as the Transferee thereof shall have been
admitted to the Partnership as a Substitute Partner and all required documents
and instruments shall have been duly executed, filed and recorded to effect such
substitution.
10.3. Amendment. (a) Except for the amendments made in accordance with
---------
paragraph (b) of this Section 10.3, this Agreement may be amended only upon the
Consent of all General Partners (including Orange Partners, whether or not it
continues to serve as a General Partner) and a Majority in Interest of Limited
Partners.
-56-
(b) In addition to any amendments otherwise authorized herein, amendments
may be made to this Agreement from time to time by the Managing General Partner,
with the Consent of the Developer General Partner, (i) to elect that the
Partnership be governed by any successor statute. of the State of Delaware
governing limited partnerships, or (ii) to substitute or admit any additional
limited partners to the extent allowed by this Agreement.
(c) Notwithstanding the foregoing Sections 10.3(a) and 10.3(b), no
amendment shall be adopted pursuant to this Section unless the adoption thereof
(A) is not adverse to the interests of the Limited Partners, (B) is consistent
with Article IV, (C) does not affect the method of distributions set forth in
Article VI, and (D) does not affect the limited liability of the Limited
Partners contemplated by Section 4.7 or the status of the Partnership as a
partnership for Federal income tax purposes. The power of attorney granted
pursuant to Section 10.2 may be used by the Managing General Partner to execute
on behalf of a Limited Partner any document evidencing or effecting an amendment
adopted in accordance with the terms of this Section 10.3.
10.4. Partition. The Partners hereby agree that no Partner nor any
---------
successor-in-interest to any Partner shall have the right while this Agreement
remains in effect to have the property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have the
property of the Partnership partitioned, and each Partner, on behalf of it, its
successors, representatives and assigns, hereby waives and forfeits any such
right arising out of statute or by operation of law to seek, bring or maintain
in any court an action for partition pertaining to the Partnership or any assets
of the Partnership. It is the intention of the Partners that during the term of
this Agreement, the rights of the Partners and their successors-in-interest, as
among themselves, shall be governed by the terms of this Agreement, and that the
right of any Partner or successor-in-interest to Transfer its interest in the
Partnership's properties shall be subject to the limitations and restrictions of
this Agreement. No Partner shall have the right to seek or have dissolution or
winding up of the Partnership by decree of court, if such dissolution or winding
up would constitute a violation or default under the Financing Agreement.
10.5. No Waiver. The failure of any Partner to insist upon strict
---------
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such Partner's right to demand strict compliance in the future. No consent or
waiver, express or implied, to or of any breach or default in the performance of
any obligation hereunder; shall constitute a consent or waiver to or of any
other breach or default in the performance of the same or any other obligation
hereunder.
10.6. Entire Agreement. This Agreement Constitutes the full and
---------------
complete agreement of the parties hereto with respect to the subject matter
hereof.
10.7. Creditors. None of the provisions of this Agreement
---------
shall be forthe benefit of or enforceable by any creditor of any
Partner or of the Partnership.
10.8. Agreement in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts, and all counterparts so executed shall together
constitute one agreement binding on all parties hereto, notwithstanding that all
parties hereto are not signatories to the same counterpart.
-57-
10.9. Captions. Captions contained in this Agreement are inserted as a
--------
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any provision hereof.
10.10. Successors and Assigns. Subject to the restrictions on transfers
----------------------
set forth herein, all provisions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by or against, the respective successors,
successors-in-title, heirs and assigns of the Partners, and each and every
successor-in-interest to any Partner, whether such successor acquires such
interest by way of Transfer, foreclosure, or by any other method, shall hold
such interest subject to all terms and provisions of this Agreement.
10.11. Governing Law. This Agreement and the rights and obligations of
-------------
the Partners hereunder shall be governed by the substantive laws of the State of
Delaware governing limited partnerships, and shall be interpreted and construed
in accordance with the laws of the State of New York.
10.12. Equitable Remedies. Each Partner agrees that in the event that any-
------------------
Partner breaches or threatens to breach any provision of this Agreement, each
General Partner and (in the case of obligations owed to Syracuse Partners or the
partnership) Syracuse Partners shall, in addition to any other remedies
available to it at law or in equity, have the right to obtain specific
performance or injunctive relief against such Partner (provided, that no Limited
Partner shall be entitled to obtain such specific performance or injunctive
relief against the Developer General Partner) without the necessity of proving
irreparable injury or the inadequacy of remedies at law or posting bond or other
security.
10.13. Partial Invalidity. If any term, provision, condition or
------------------
covenant of this Agreement that is not material or the application thereof to
any Person or circumstance shall, to any extent, be held invalid or
unenforceable, the remainder of this Agreement, or the application of such term,
provision, condition or covenant to any Person or circumstance other than those
as to whom or to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law. Notwithstanding the
foregoing, the parties agree that should any material portion or provision of
this Agreement be found to violate any law, order, rule or regulation, they will
fully cooperate to try to resolve any such matter and to preserve to the fullest
extent possible each of the rights and obligations of the respective parties
created by this Agreement.
10.14. Consent to Jurisdiction. Venue and Service of Process. Each
-----------------------------------------------------
Partner agrees that any action, suit or proceeding in respect of or arising out
of this Agreement may be initiated and prosecuted in the state or Federal
courts, as :the case may be, located in New York County, New York. Each Partner
consents to and submits to the exercise of jurisdiction over its person by any
such court in New York County, New York which has jurisdiction over the subject
matter, waives any objections to venue with respect to such court and any claim
of forum non conveniens, waives personal service and agrees that service
----- --- ----------
of process may be made by registered mail directed to such Partner at
its address set forth in this Agreement, as the same may be changed by notice in
accordance with Section 10.1. except as provided in paragraph (h)
-58-
of Section 4.1, the Federal and state courts situated in the State of New York
shall have exclusive jurisdiction over all disputes arising under or with
respect to this Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
duly executed by their respective officers duly authorized, as of the date first
above written.
GENERAL PARTNERS:
G.A.S. ORANGE PARTNERS, L.P.
By: G.A.S. Orange Development, Inc.,
its General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
NCP SYRACUSE, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
LIMITED PARTNERS: G.A.S. ORANGE PARTNERS, L.P.,
By: G.A.S. Orange Development, Inc.
its General Partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
SYRACUSE ORANGE PARTNERS, L.P.
By: NCP Syracuse, Inc., its General Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
-59-
Schedule I
Names and Addresses of
General Partners end Limited Partners
Names and Addresses
-------------------
General Partners
----------------
G.A.S. Orange Partners, L.P.
c/o Gas Orange Deve1opment, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇-▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ or if not working,
(▇▇▇) ▇▇▇-▇▇▇▇
NCP Syracuse, Inc.
c/o North Canadian Power Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Limited Partners
----------------
Syracuse Orange Partners, L.P.
c/o North Canadian Power Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
G.A.S. Orange Partners, L.P.
c/o Gas Orange Development, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇-▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ or if not working,
(▇▇▇) ▇▇▇-▇▇▇▇
-60-
Schedule II
Capital Contributions
---------------------
The Developer General Partner has contributed the following assets and
rights to the capital of the Partnership:
The agreement; and permits listed on Schedule III and on Part I of Exhibit
M to the Financing Agreement, together with all other subsisting development and
operating rights and property, tangible or intangible, which it or any of its
partners or ▇▇▇▇ ▇. ▇▇▇▇▇▇ or Gas Alternative Systems, Inc. has at any time held
with respect to the Project.
The Net Agreed Value of the assets and rights contributed by the Developer
General Partner is set forth in section 3.1(a) of the Agreement.
-61-
Schedule III
Material Project Documents
--------------------------
a. Amended and Restated Cogeneration Facility Turnkey
construction Contract, dated as of April 5, 1991, between the Partnership and
Century Contractors West Inc., a; amended.
b. Agreement, dated as of September 19, 1986, between Gas
Alternative Systems, Inc. and Niagara Mohawk Power Corporation, as amended by an
amendment dated April 7, 1989, as assigned by Gas Alternative Systems, Inc. to
G.A.S. Orange Development, Inc. by an assignment dated April 6, 1988, and as
further assigned by G.A.S. Orange Development, Inc. to the Partnership by an
assignment dated November 30, 1990.
c. Steam Contract, dated as of February 27, 1990, between the
Partnership and Syracuse University, as amended by amendatory letters dated May
1, 1990, June 22, 1990 and August 29, 1990, and an amendment dated as of
December 31, 1990.
d. Operating Agreement, dated as of February 27, 1990, between
the Partnership and Syracuse University, as amended by an amendatory letter
dated May 1, 1990 and an amendment dated as of December 31, 1990.
e. 80 MW Facility Operation and Maintenance Agreement, dated as
of April 5, 1991, between Project Orange Associates, L.P. and ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ Operations, Inc.
f. Financing Documents.
g. Restated Gas Sales and Purchase Agreement, dated as of March
18, 1991, between the Partnership and Noranda, Inc.
h. Lease Agreement, dated as of February 27, 1990, between the
Partnership and Syracuse University, as amended by amendatory letters dated May
1, 1990, June 22, 1990, and August 29, 1990 and an amendment dated as of
December 31, 1990.
i. Payment in Lieu of Tax Agreement, dated as of April 5, 1991,
among the Partnership, the City of Syracuse, and the City of Syracuse Industrial
Development Agency.
j. Firm Natural Gas Transportation Agreement, dated March 29,
1991, between Tennessee Gas Pipeline Company and the Partnership.
k. Drawing Agreement, dated March 29, 1991, between Tennessee Gas
Pipeline Company and the Partnership.
l. Gas Pipeline Turnkey Construction Agreement, dated as of April
5, 1991, between the Partnership and OBG Technical Services, Inc.
-62-
Exhibit A
[Deleted]
-63-
Exhibit B
Calculation of Flip Point
-------------------------
A "Flip Point" shall occur when, after the Term Loan Date, (a) the present
value, discounted on a quarterly basis to the Equity Funding Date at the
Applicable Quarterly Discount Rate (as defined below) of the aggregate of (i)
the quarterly Federal income tax and New York State franchise tax benefits
allocated to the Investor Group, and (ii) cash distributions to the Investor
Group (including all distributions pursuant to Article VI and/or Article VIII),
is equal to (b) the present value discounted to the Equity Funding Date as
provided above of (i) the Net Agreed Value of the Investor group's investment in
the capital of the Partnership pursuant to Section 3.1(a) of the Partnership
Agreement and (ii) the quarterly Federal income tax and New York State franchise
tax expenses allocated to or borne by the Investor Group attributable to its
Interests.
The Federal income tax benefit or expense will be calculated by applying an
assumed 34% corporate Federal income tax rate (regardless of what the actual
maximum corporate Federal income tax rate is for that year) to the share of
Partnership taxable income or loss allocable to the Investor Group for that
year, adjusted for New York State franchise taxes as applicable. All tax
allocations will be deemed to occur on the last day of each calendar quarter,
and each quarterly allocation will be equal to the Investor Group's allocable
share of one quarter of the annual amount.
For purposes of the First Flip Point, the "Applicable Quarterly Discount
Rate" shall mean the quarterly discount rate which, when compounded quarterly
for four quarters, equals the Investor Group's target annual after-tax return of
19%. For purposes of the Second Flip Point, the "Applicable Quarterly Discount
Rate" shall mean the quarterly discount rate which, when compounded quarterly
for four quarters, equals the Investor Group's target annual after-tax return of
20%.
Tax liabilities with respect to income recognized by the Investor Group in
the year in which a Flip-Point occurs as the result in the change in the
Investor Group's percentage interests in Partnership profits and losses, will be
included in the tax expense that is borne by the Investor Group per clause (b)
(ii) of the first paragraph of this Exhibit.
The receipt of fees paid pursuant to Sections 2.11 through 2.13 shall not
be taken into account in calculating the Flip Point.
The receipt of amounts paid pursuant to Section 6.2(a) shall not be taken
into account in calculating the Flip Point.
The payment to North Canadian Power Incorporated of $300,000 as specified
in Exhibit A to reimburse it for certain of its costs relating to the Project
shall not be taken into account in calculating the Flip Point.
-64-
The receipt by any Partner of payment by the partnership of interest on.and
principal of any loans made by such Partner shall not be taken into account in
calculating the Flip Point.
The funding of Additional Reserves, as well as other reserves required
under the Financing Agreement, shall have no impact on the calculation of the
Flip Point, since the funds deposited to reserve accounts will be treated as if
distributed to the Partners and recontributed by them to the Partnership at the
same time.
-65-
Exhibit C
Boiler Expenses and Reserves
----------------------------
Aggregate Amount of Expenses
Relevant 12- and Reserves for Boilers for
Month Period * that 12-Month Period
-------------- ----------------------------
Any period ending $ -0-
prior to the Term 110,000
Loan Date 116,000
First 122,000
Second 128,000
Third 134,000
Fourth 141,000
Fifth 148,000
Sixth 155,000
Seventh 163,000
Eighth 171,000
Ninth 135,000
Tenth 141,000
Eleventh 148,000
Twelfth 156,000
Thirteenth 164 000
Fourteenth 172,000
Fifteenth 180,000
Sixteenth 190,000
Seventeenth 199,000
Eighteenth 209,000
Nineteenth
Twentieth
Twenty-First and
thereafter As agreed to by the
General Partners at that
time or as it shall
continue to escalate at
the same rate
* Refers to 12-month periods measured relative to the Term Loan Date
(commencing as of the first day of the first full calendar month after the Term
Loan Date). For example, "First" means the first 12-month period after the Term
Loan Date, "Second" means the second 12-month period following the Term Loan
Date, etc.
-66-
Exhibit D
Tranche Thresholds
------------------
Year Tranche 1 Threshold Tranche 2 Amount
1992 $ * $ *
1993 2,916,000 224,000
1994 782,000 60,000
1995 248,000 19,000
1996 1,593,000 123,000
1997 4,450,000 342,000
1998 4,839,000 372,000
1999 5,480,000 422,000
2000 8,683,000 668,000
2001 11,030,000 848,000
2002 13,661,000 1,051,000
2003 12,937,000 995,000
2004 12,472,000 959,000
2005 15,755,000 1,212,000
2006 17,375,000 1,337,000
2007 18,931,000 1,456,000
2008 11,764,000 905,000
2009 14,089,000 1,084,000
2010 5,458,000 420,000
2011 3,746,000 288,000
2012 1,569,000 121,000
* The figures set forth in this Exhibit D are based on a 20-year Pro forma
Statement of Operations and Cash Flow for the Partnership (the "Projection")
which assumes the occurrence of the Term Loan Date on January 1, 1993 and the
consequent computation and distribution of Available Cash commencing from and
after that date. The Partners have agreed that the Term Loan Date is likely to
occur before January 1, 1993 and, accordingly, that the Projection and the
resulting Tranche 1 Threshold and Tranche 2 Amount (collectively, the
"Tranches") will be revised solely to reflect the actual Term Loan Date. Thus,
the period of the revised Projection (the "Revised Projection") and the
corresponding Tranches (the "Revised Tranches") will extend over 21 calendar
years, including a period commencing on the Term Loan Date and ending on
December 31, 1992.
The revision will establish Tranches for 1992 based on the computation of a
daily net cash flow figure derived from the annual Before Tax Cash Flow shown in
the Projection for 1993. For this purpose, the projected 1993 Before Tax Cash
Flow will be adjusted (the "1993 Adjusted Cash Flow") by increasing Before Tax
Cash Flow by (x) 5% of those items of expense that are subject to annual
inflation increases in the Projection and (y) all projected debt service
payments on the Term Loan. "Estimated 1992 Cash Flow" will be the amount
determined by dividing Adjusted 1993 Cash Flow by 365, multiplying the quotient
by the number of days from the Term Loan Date to and including December 31,
1992, and subtracting from the product an amount equal to the aggregate of the
scheduled debt service payments on the Term Loan during 1992 (based on the
interest rate assumed in the Projection for 1993). The Tranche 1 Threshold
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for 1992 `will be the Estimated 1992 Cash Flow, and the Tranche 2 Amount for
1992 will be 7.69% of the Tranche 1 Threshold for 1992.
With respect to 1993 and subsequent years, the Revised Projection will be
determined by revising the Projection solely to substitute the actual schedule
of debt service payment dates under the Term Loan for the schedule assumed in
the Projection; thus, if the Term Loan Date is earlier or later than January 1,
1993, the entire schedule of debt service in the Projection will be shifted
backward or forward in the Revised Projection to coincide with the scheduled
dates of principal repayment. The Revised Tranches for 1993 and each subsequent
year will be calculated based on the projected Before Tax Cash Flow for each
year in the Revised Projection, in the manner provided in the last sentence of
the preceding paragraph.
The Managing General Partner has provided the Developer General Partner
with a copy of the Projection, initialled by its Vice President for
identification. Promptly following the Term Loan Date, the Managing General
Partner shall prepare a proposed Revised Projection and corresponding Revised
Tranches, utilizing the assumptions underlying the Projection and modified only
as indicated above, and shall deliver copies thereof to the Developer General
Partner. The Revised Trenches as so prepared shall be binding and conclusive
unless the Developer General Partner shall object thereto by notice given to the
Managing General Partner within 30 days after such delivery. If the General
Partners are unable to resolve such objection within 30 days after such notice,
the matter shall be resolved by arbitration in the manner provided in Section
4.1(h). Upon determination of the Revised Tranches in accordance with the
foregoing, the Revised Tranches shall be substituted for this Exhibit D,
effective as of the Term Loan Date.
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Exhibit E
[Deleted]
Exhibit F
List of Agreements and Permits
------------------------------
1. Assignment and Assumption Agreement, dated November 30, 1990, between
Orange Development and the Partnership, relating to that certain
Agreement for power sales (the "NIMO Power Purchase Agreement"), dated
September 19, 1986, between Gas Alternative Systems, Inc. ("GAS") and
Niagara Mohawk Power Corporation ("NIMO").
2. Assignment and Assumption Agreement, dated April 6, 1988, between Gas and
Orange Development, relating to the NIMO Power Purchase Agreement.
3. Amendment, dated April 7, 1989, to NIMO Power Purchase Agreement.
4. Steam Contract, dated February 27, 1990, between the Partnership and
Syracuse University (the "University") (the "Steam Contract").
5. Amendment, dated as of December 31, 1990, to the Steam Contract.
6. Operating Agreement, dated February 27, 1990, between the University and
the Partnership (the "Operating Agreement").
7. Amendment, dated as of December 31, 1990, to the operating Agreement.
8. Lease Agreement, dated February 27, 1990, between the University and the
Partnership (the "Lease Agreement").
9. Amendment, dated as of December 31, 1990, to the Lease Agreement.
10. Amendatory Letter, dated May 1, 1990, amending the Steam Contract, the
Operating Agreement and the Lease Agreement.
11. Amendatory Letter, dated June 22, 1990, amending the Steam Contract and
Lease Agreement.
12. Amendatory Letter, dated August 29, 1990, amending the Steam Contract and
Lease Agreement.
13. Letter Agreement, dated January 18, 1991, between Becon Construction
Company ("Becon") and the Partnership regarding the conditions upon which
that certain (i) Cogeneration Facility Turnkey Construction Contract,
dated as of August 17, 1988, between Orange Development and Becon, as
assigned by Orange Development to the Partnership, and as amended by
Amendment No. 1, dated May 17, 1990, and Amendment No. 2, dated May 31,
1990, and (ii) Operation and Maintenance Agreement, dated as of August
17, 1989, between Orange Development and Becon,
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as assigned by Orange Development to the Partnership, and as amended by
Amendment No. 1, dated May 31, 1990, would be terminated.
14. Assignment and Assumption Agreement, dated November 16, 1988, between GAS
and the Partnership, relating to that certain Agreement for Engineering
Services;, dated January 15, 1985, between GAS and O'Brien & ▇▇▇▇
Engineers, Inc.
15. Restated Gas Sales and Purchase Agreement restating the Gas Purchase
Agreement, dated March 18, 1991, between the partnership and Noranda (the
"Restated Gas Purchase Agreement").
16. Two Side Letter Agreements, dated as of January 3, 1991, between the
Partnership and Century, clarifying and amending the Century Construction
Contract.
17. Amended and Restated Cogeneration Facility Turnkey Construction Contract,
dated as of April 5, 1991, between the Partnership and Century (the
"Restated Facility Construction Contract").
18. Firm Natural Gas Transportation Agreement, dated March 29, 1991, between
Tennessee Co. and the Partnership (the "Tennessee Firm Natural Gas
Transportation Agreement").
19. Letter of Credit Drawing Agreement, dated March 29, 1991, between
Tennessee Co. and the Partnership.
20. Agreement of Limited Partnership of the Partnership, dated May 23, 1988
(the "Partnership Agreement").**
21. Certificate of Limited Partnership of Orange Partners dated May 12, 1988.
22. Assignment and Assumption Agreement, dated January 15, 1990, between
Orange Development and the Partnership, relating to the Certificate of
Environmental Compatibility and Public Need granted to Orange Development
pursuant to the New York State Public Service Commission ("PSC") Opinion
No. 89-17, dated June 5, 1989.
23. Right of Way Agreement, dated as of November 1, 1990, between Tennessee
Co. and the Partnership.
24. Consent to Cross Easement, dated December 10, 1990, between the Dormitory
Authority of the State of New York and the Partnership.
25. Indicative proposal, dated July 24, 1990, for Project financing of up to
$220,500,000 by ABN (the "Term Sheet").
26. Letter, dated July 31, 1990, from AEN to the Partnership converting the
Term Sheet into a commitment.
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27. Settlement Agreement dated March 21, 1991, among the Partnership, Orange
Development, Asea ▇▇▇▇▇ Boveri Inc., and ABB Power Generation Inc.
28. Consulting Agreement, dated as of April 4, 1991, between Entek Research,
Inc. and the Partnership.
29. Letter Agreements with those claimants listed on Exhibit H to this
Agreement (excluding ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
and Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇, ▇▇▇▇")), regarding of
amounts owed to each claimant and terms of delivering that claimant's
release from escrow.
30. Agreement, dated April 5, 1991, between Kronish, Lieb, on its own behalf
and on behalf of Kronish ▇▇▇▇ Orange Partners, L.P., and ▇▇▇▇ ▇. ▇▇▇▇▇▇,
on his own behalf and on behalf of GAS, Orange Partners, and Orange
Development regarding selection of a dispute resolution process and
providing for an interim sharing arrangement.
31. Partial Release and Subordination Agreement, dated as of April 5, 1991,
by and among Kronish, Lieb, Agent, the Partnership and Kronish, ▇▇▇▇
Orange Partners, L.P.
32. Agreement, dated April 5, 1991, between the Partnership, the City of
Syracuse and the Syracuse Housing Authority, relating to a community
center near the Project.
Permits
-------
1. PSD permit issued December 18, 1989 to the Partnership by the New York
State Department of Environmental Conservation ("DEC") (the "PSD
Permit").
2. Extension of the PSD Permit issued to the Partnership, dated November 27,
1990.
3. FERC Order, issued June 29, 1988, granting certification as a qualifying
cogeneration facility to Orange Development.
4. Notice, dated September 25, 1989, submitted by Orange Development to FERC
regarding self-recertification of qualifying status for a cogeneration
facility.
5. Supplementary letter to FERC dated October 3, 1989 regarding correction
to Notice of self recertification.
6. State Environmental Quality Review Findings Statement, dated January 21,
1990, certifying that the City of Syracuse, as lead agency, has met the
requirements of Article 8, New York State Environmental Conservation Law
and 6 N.Y.C.R.R. Part 617 in its review of the Syracuse Cogeneration
Project.
7. United States of America Department of Energy ("DOE") Order No. 274,
dated October 17, 1988, granting Orange Development conditional authority
to import natural gas from Canada.
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8. Amendment to DOE Order No. 274, dated December 19, 1988, approving
transfer to the Partnership of conditional authority under Order No. 274.
9. DOE Order No. 274-A, dated January 16, 1990 granting authorization to
import natural gas from Canada using existing facilities.
10. DOE Order No. 425, dated September 29, 1990, granting authorization to
import natural gas from Canada.
11. New York State Public Service Commission ("PSC") Opinion No. 89-17, dated
June 5, 1989, granting Certificate of Environmental Compatibility and
Public Need (the "Certificate") to Orange Development.
12. PSC Order, issued and effective as of November 13, 1989, approving
transfer of Certificate to the Partnership and exempting the Partnership
from regulation as a "gas corporation."
13. Letter, dated January 17, 1990, from ▇▇▇▇ ▇▇▇ to the PSC advising them of
transfer of Certificate to the Partnership.
14. PSC Order, issued November 30, 1990, setting a new date for the filing of
the Environmental Management and Construction Plan for the pipeline.
15. Self-Certification by Orange Development, dated May 3, 1988, filed with
the DOE pursuant to the Power Plant Industrial Fuel Use Act ("PPIFUA").
16. Revised Self-Certification by Orange Development under PPIFUA, dated May
24, 1988.
17. PSC Order, issued July 7, 1987 (Case 29292), approving the Power Purchase
Contract.
18. PSC Order, issued January 26, 1988 (Case 29292), conditioning revised
approval of the Power Purchase Contract (which requires submission to PSC
of all final environmental permits and a description of the environmental
impacts of the facility).
19. Notice by GAS to the PSC, dated February 12, 1988, relating to acceptance
of the terms and conditions of the PSC Order issued January 26, 1988
(Case 29292).
20. Notice by GAS to the PSC, by letter, dated April 22, 1988, relating to
(i) plans to construct a facility of 80 MW net electric power generation
capacity, (ii) the assignment of GAS' interest under the Power Purchase
Contract to Orange Development, and (iii) plans that Orange Development
will assign its interest under the Power Purchase Contract to a limited
partnership.
21. Notice by the PSC, dated July 10, 1989, approving amendment of April 7,
1989 to Power Purchase Contract.
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22. Letter, dated November 5, 1990, from PSC to the Partnership's counsel
stating that all conditions capable of being satisfied prior to operation
of the facility have been satisfied.
23. Permits from Onondaga County Department of Transportation to install
pipeline within the public right of way of Sentinel Heights Road,
Lafayette Road and Rock Cut Road.
24. Permit or License, dated April 4, 1991, issued by the City of Syracuse to
the Partnership (and currently being held in escrow by Kronish, ▇▇▇▇
until the Initial Funding Date) regarding street crossings.
__________________
** Superseded by this Agreement.
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Exhibit G
Legal Proceedings
-----------------
1. Proceeding presently before the New York State Public Service Commission
(the "PSC") regarding Guarantor's Application (filed March 15, 1991) to
amend the Certificate of Environmental Compatibility and Public Need
issued by the PSC pursuant to Opinion No. 89-17.
2. Proceeding presently before the PSC regarding approval of the
Environmental Management and Construction Plan ("EM&CP") which was
submitted by the Guarantor on March 15, 1991.
3. Phase II EM&CP proceedings to be instituted upon Phase II filings with
the PSC.
4. Proceeding presently before the United States Department of Energy
("DOE") regarding Guarantor's Application (filed March 22, 1991) to Amend
DOE Order No. 425.
5. Possible action by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
against the Guarantor for a claim estimated to be $2,870,000.
6. Possible arbitration involving Orange Partners, Orange Development and
Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇ regarding legal fees (if not settled
pursuant to the agreement between them).
7. Other right of way and permit applications or proceedings contemplated by
Exhibits to the Financing Agreement.
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Exhibit H
List of Claims
--------------
1. Claim, as of the Initial Funding Date, by Brown, Williams, ▇▇▇▇▇ & ▇▇▇▇▇,
Inc., in the amount of $50,000.*
2. Claim, as Of the Initial Funding Date, by ▇▇▇▇▇ & Gardener, in the amount
of $89,950.*
3. Claim, as of the Initial Funding Date, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, in
the amount of $9,890.*
4. Claim, as of the Initial Funding Date, by ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Goodyear in the amount of $8,436.25.*
5. Claim, as of the Initial Funding Date, by Holden Day ▇▇▇▇▇▇, in the
amount of $25,847.29.*
6. Claim, as of the Initial Funding Date, by Barclays Bank PLC, in the
amount of $339,662.*
7. Claim, as of the Initial Funding Date, by the Estate of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
in the amount of $70,000.*
8. Claim, as of the Initial Funding Date, by the Estate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
in the amount of $50,000.*
9. Claim, as of the Initial Funding Date, by AEB Power Generation, Inc., in
the amount of $700,000.*
10. Claim, as of the Initial Funding Date, by Syracuse University, in the
amount of $12,500.*
11. Claim, as of the Initial Funding Date, by Perelson, ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
P.C., in the amount of $160,000.
12. Claim, as of February 28, 1991, by ▇▇▇▇▇ and Dax, in the amount of
$243,361.34.+
13. Claim, as of February 28, 1991, by Nixon, Hargrave, Devans & ▇▇▇▇▇, in
the amount of $140,301.60.+
14. Claim, as of the Initial Funding Date, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., in
the amount of $52,750.16.*
15. Claim, as of the Initial Funding Date, by Entek Research, Inc., in the
amount of $750,000.++
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16. Claim, as of the Initial Funding Date, by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in the amount
of $22,000.*
17. Claim, as of the Initial Funding Date, by KPMG Peat Marwick, in the
amount of $9,900.*
18. Claim, as of the Initial Funding Date, by Bizar ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, in the amount of $120,000.*
19. Claim, as of the Initial Funding Date, by the New York State Energy
Research Development Authority, in the amount of $480,000.*
20. Claim, as of the Initial Funding Date, by LFC Energy Resources in right
of Cogeneration Capital Associates, in the amount of $50,000.*
21. Claim, as of the Initial Funding Date, by ▇▇▇▇▇▇▇▇▇ Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation estimated to be $2,870,000.
22. Claim, as of the Initial Funding Date, by O'Brien & ▇▇▇▇ Engineers, Inc.,
in the amount of $l,000,000.*
23. Claim, as of the Initial Funding Date, by Tenneco Gas, in the amount of
$2,120.*
24. Claim, as of the Initial Funding Date, by Kronish, Lieb, Weiner &
▇▇▇▇▇▇▇, in the amount of $67,500 for loans.
25. Claim, as of the Initial Funding Date, by ▇▇▇ ▇▇▇▇▇▇▇▇, in the amount of
$25,000.
26. Claim, as of the Initial Funding Date, by the Estate of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
in the amount of $15,000.
27. Claim, as of the Initial Funding Date, by Becon Construction Company, in
the amount of $1,000,000.
28. Claim, as of April 30, 1991, by Century Contractors West, Inc.
("Century"), in the amount of $90,000 for advances made pursuant to the
that certain letter agreement, dated as of January 3, 1991, between
Century and the Partnership.
29. Claim, as of April 5, 1991, by McKenzie, Smith, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
in an amount at least equal to $9,800.+
30. Claim, as of the Initial Funding Date, by Kronish, Lieb, Weiner &
▇▇▇▇▇▇▇, in an indeterminate amount, for legal fees. +
31. Claim, by Syracuse University for fees of Bond, ▇▇▇▇▇▇▇▇▇ & King in the
amount of $ ** for certain legal services rendered pursuant to
--
Article IV and Article VI of the Steam Contract.
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32. Claim, as of the Initial Funding Date, by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ for legal
fees in an amount estimated at $80,000.
33. Claim by Consolidated Rail Corporation, as of April 5, 1991, for an
estimated $2,500.
_____________________
+ Claim will continue to increase until the Initial Funding Date because
services are still being rendered. There is however a $300,000 cap on
claim by ▇▇▇▇▇ and Dax.
++ $500,000 will be paid on the Initial Funding Date. The balance will be
paid and/or extinguished at Term Loan Date in accordance with the terms
of the Financing Agreement.
* Amount of Claim is based on a release (the "Releases") received and
currently being held in escrow by Kronish, Lieb, Weiner & ▇▇▇▇▇▇▇. The
claimant may demand return of its Release at any time prior to the
Initial Funding Date.
** To be provided prior to the Initial Funding Date.
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