SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
SARANAC POWER PARTNERS, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP (the "Agreement") of SARANAC POWER PARTNERS, L.P.
(the "Partnership") is made and entered into as of the 13th day
of May, 1994, by and among SARANAC ENERGY COMPANY, INC., a
Delaware corporation ("SECI"), TPC SARANAC PARTNER ONE, INC., a
Delaware corporation ("TPC One"), TPC SARANAC PARTNER TWO, INC.,
a Delaware corporation ("TPC Two"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("GE Capital" or the "GE
Capital Limited Partner").
W I T N E S S E T H:
WHEREAS, SECI is the sole general partner and SECI, TPC
One and TPC Two are the limited partners of the Partnership, a
limited partnership continued pursuant to the Amended and
Restated Agreement of Limited Partnership dated as of
December 29, 1992 (as heretofore amended, supplemented, restated
or otherwise modified, the "Original Partnership Agreement") and
SECI, TPC One and TPC Two desire to amend and restate in its
entirety the Original Partnership Agreement in order to admit GE
Capital as a limited partner of the Partnership; and
WHEREAS, (i) SECI has received distributions pursuant
to the Original Partnership Agreement equal to its capital
contributions, if any, so that its current Capital Account
balance equals the amount of the cash contributions, if any, made
pursuant to Section 8.4 and (ii) TPC One and TPC Two currently
have Capital Account balances in a total aggregate amount of
$20,000 plus the amount of any cash contributions, if any, made
pursuant to Section 3.3 of the Original Partnership Agreement;
and
WHEREAS, pursuant to the Capital Contribution
Agreement, GE Capital shall make a capital contribution to the
Partnership on the Initial Capital Contribution Date in exchange
for the GE Capital Limited Partnership Interest, and agrees,
subject to the terms and conditions set forth therein, to make
additional capital contributions to the Partnership on or before
the Second Capital Contribution Date in respect of the GE Capital
Limited Partnership Interest; and
WHEREAS, pursuant to the Capital Contribution
Agreement, TPC One agrees to make additional capital
contributions to the Partnership on the Initial Capital
Contribution Date and on or before the Tomen Equity Contribution
Date in respect of the TPC One Limited Partnership Interest; and
WHEREAS, pursuant to the Capital Contribution
Agreement, TPC Two agrees to make additional capital
contributions to the Partnership on the Initial Capital
Contribution Date and on or before the Tomen Equity Contribution
Date in respect of the TPC Two Limited Partnership Interest;
NOW, THEREFORE, in consideration of the premises and
the mutual undertakings contained herein, the parties hereto
hereby agree that as of the Initial Capital Contribution Date,
the Partnership shall be continued among SECI, the GE Capital
Limited Partner, TPC One and TPC Two and the Original Partnership
Agreement shall be amended and restated in its entirety as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. (a) Unless otherwise defined
herein, all terms used herein which are defined in Appendix A
shall have the meanings therein assigned to such terms.
(b) All terms defined in this Agreement or in Appendix
A shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto.
(c) As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms not
defined in Appendix A and accounting terms partly defined in
Appendix A to the extent not defined, shall have the respective
meanings given to them under GAAP.
(d) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and section, appendix, schedule and exhibit
references are to this Agreement unless otherwise specified.
(e) References to agreements defined herein or in
Appendix A shall include such agreements as they may be amended,
supplemented or otherwise modified from time to time in
accordance with the provisions of the Basic Documents.
(f) Terms defined in this Agreement or in Appendix A
by reference to any other agreement, document or instrument shall
have the meanings assigned to them in such agreement, document or
instrument whether or not such agreement, document or instrument
is then in effect.
(g) Notwithstanding the manner in which "Loan
Documents" is defined in Appendix A hereto, when used herein,
Loan Documents shall not include this Agreement.
ARTICLE II
FORMATION AND CONTINUATION OF PARTNERSHIP
2.1 Formation of Partnership; Name. The Partnership
was formed on May 11, 1992 by the filing, pursuant to the
Partnership Act, of the Certificate of Limited Partnership in the
office of the Secretary of the State of Delaware. The name of
the Partnership is "Saranac Power Partners, L.P."
2.2 Purpose; Business of the Partnership. The
Partnership was formed and is hereby continued for the purpose of
developing, financing, constructing, owning, operating,
maintaining, repairing and disposing of the Project or any part
thereof; constructing, installing, leasing or otherwise
acquiring, maintaining, repairing and disposing of any additional
improvements to the Project of any kind necessary or desirable in
connection therewith and, by means thereof, producing and selling
steam and electricity; owning all of the issued and outstanding
capital stock of North Country and any other purpose necessary,
incidental or ancillary to any of the foregoing. The foregoing
purposes, as effectuated pursuant to the provisions of Section
2.3, are herein referred to as the "Partnership Business".
2.3 Authorizations. (a) The Partnership is hereby
authorized to engage in all activities and transactions and to do
all things and to hold all interests in real, personal and mixed
property, contract rights and other property, necessary,
appropriate, proper, advisable or desirable for, or incidental or
convenient to, the Partnership Business, including, but not
limited to, the power to enter into, make and perform any
agreement, contract, commitment, arrangement or undertaking
(including, without limitation, the other Basic Documents), to
acquire, hold, purchase, lease, dispose of, mortgage, pledge,
hypothecate or assign, and to exercise all rights, powers,
privileges and other incidents of ownership or possession with
respect to, any property, whether real, personal or mixed.
(b) In furtherance of the Partnership's objects and
purposes, the Partnership shall have any and all powers
necessary, convenient or incidental to or for the accomplishment
of its objects and purposes, alone or with others, including,
without limitation, the following:
(i) to design, plan, finance, construct, own, develop,
maintain, operate, lease and dispose of the Project, or any
part thereof, and to engage in any and all activities
necessary or incidental to the foregoing;
(ii) to negotiate and enter into, and make, execute,
deliver and perform, all contracts, agreements and other
undertakings, as the same may be amended, restated,
supplemented or otherwise modified from time to time, and to
grant Liens on, in and against the Partnership's properties,
all as may be necessary, convenient or incidental to carry
out its objects and purposes, including, but not limited to,
the following:
(1) construction and term loan agreements;
(2) notes, including, but not limited to,
construction notes and term notes;
(3) capital contribution agreements;
(4) indemnity agreements;
(5) collateral security documents, including, but
not limited to, mortgages, security agreements,
security deposit agreements, assignments regarding
contracts and consents to assignments regarding
contracts;
(6) power purchase contracts;
(7) steam supply agreements;
(8) construction contracts;
(9) reimbursement agreements;
(10) recognition agreements;
(11) Additional Contracts, including, but not
limited to, subordinated mortgages, gas purchase and
transportation agreements, operation and maintenance
agreements, and easement agreements;
(12) any (a) assignment, (b) consent to
assignment, (c) consent and agreement, and (d) consent
and/or recognition agreement relating to the types of
contracts, agreements, commitments, arrangements or
other undertakings set forth in this Section 2.3(b);
(13) certificates and notices, including, but not
limited to, construction loan borrowing certificates,
term loan borrowing certificates, completion
certificates, cost certificates and notices of
borrowing;
(14) collateral agency agreements;
(15) tax indemnity agreements;
(16) Project Contracts;
(17) other Basic Documents;
(18) letter agreements;
(19) success fee agreements; and
(iii) to have letters of credit issued for its account
and on its behalf.
2.4 Principal Office; Offices; Addresses. (a) The
principal office and place of business of the Partnership shall
be located at the offices of the Managing General Partner at Five
Post Oak Park, Suite 1400, Houston, Texas 77027, and the
registered office of the Partnership in the State of Delaware
shall be the Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801; subject to Section
7.2(c), either office may be changed to such other place as the
Managing General Partner may from time to time designate. The
registered agent of the Partnership for service of process on the
Partnership at such address in Delaware is The Corporation Trust
Company.
(b) The Managing General Partner may also maintain
solely for the conduct of the Partnership Business an office or
offices at another location or locations and in connection
therewith rent or acquire office space, engage personnel, whether
part-time or full-time, and do such other acts as it deems
necessary or advisable in connection with the maintenance and
administration of any such office. Any costs and expenses
expected to be incurred in connection with any such office shall
be set forth in the Partnership Operating Budget delivered and
approved by the GE Capital Limited Partner pursuant to Section
6.6(c) or by the Other Limited Partners pursuant to Section
6.6(e), as the case may be.
(c) The name and business or residence address of each
Partner are set forth in Schedule 1, as the same may be amended
from time to time.
2.5 Further Filings. If at any time necessary or
advisable, the Managing General Partner shall promptly
(a) register the Partnership under any assumed, trade or
fictitious name under the Partnership Act, or similar law, if
any, in force and effect in the State of Delaware and (b) qualify
the Partnership to do business in any jurisdiction in which the
conduct of its business or the ownership or leasing of its assets
requires it to be so qualified. The Managing General Partner
shall make all filings and do all other things reasonably
possible (including publication or periodic filings of any
certificate) that may now or hereafter be required for the
perfection and continued maintenance of the Partnership as a
limited partnership, or to protect the limited liability of the
Limited Partners as limited partners, under the laws of the State
of Delaware.
2.6 Term. The term of the Partnership commenced on
the date of filing of the Certificate of Limited Partnership in
the Office of the Secretary of State of the State of Delaware and
shall continue until dissolution of the Partnership in accordance
with Article XIII.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Partners and Contributions. Subject to the terms
and conditions of the Capital Contribution Agreement, the initial
capital contribution of the GE Capital Limited Partner specified
in Section 2(a)(i) thereof shall be made on the Initial Capital
Contribution Date. Subject to the terms and conditions of the
Capital Contribution Agreement, the GE Capital Limited Partner
shall make the additional capital contributions specified in
Section 2(a)(ii) thereof on or prior to the Second Capital
Contribution Date. Pursuant to the Capital Contribution
Agreement, TPC One and TPC Two shall make the capital
contributions specified in Section 3(a) thereof on or prior to
the Tomen Equity Contribution Date. Prior to the Second Capital
Contribution Date, SECI shall have no Capital Account balance
attributable to any contributions to the Partnership other than
in respect of cash contributions, if any, to fund Cost Overruns
pursuant to Section 3.3 of the Original Partnership Agreement and
Section 8.4. On the Second Capital Contribution Date, the
Capital Account balance of SECI General and SECI Limited will be
increased by the amount required to result in SECI General and
SECI Limited having an aggregate Capital Account balance equal to
the sum of the Capital Account balances of SECI General, SECI
Limited, TPC One and TPC Two multiplied by the sum of the Initial
Allocation Percentages of SECI General and SECI Limited. Such
increase in the aggregate Capital Account balances of SECI
General and SECI Limited shall be attributable to the agreed fair
market value as of the Second Capital Contribution Date of the
Contributed Assets and the Gross Asset Value of such Contributed
Assets shall be adjusted accordingly.
3.2 No Withdrawal of Capital. Except as specifically
provided in this Agreement, no Partner shall have the right to
withdraw from the Partnership all or any part of its Capital
Contribution, nor shall any Partner have any right to demand and
receive property or cash of the Partnership in return of its
Capital Contribution. No Partner shall have the right to receive
interest on its Capital Contribution. In connection with any
distribution, whether upon winding up of the Partnership or
otherwise and whether or not it shall constitute a return of
capital, no Partner shall have the right to demand or receive
property other than cash. Except as otherwise expressly provided
in Articles IV, V, X and XIII hereof, no Partner shall have
priority over any other Partner as to the return of its Capital
Contribution.
3.3 Separate Capital Accounts. A separate Capital
Account shall be maintained for each Partner. Capital Account
balances as of the date hereof are set forth in Schedule 1.
3.4 Determination and Adjustment of Allocation
Percentages.
(a) Allocation Percentages; Tomen Flip IRR. Using the
procedures set forth in Section 3.4(c) below, on the earlier of
the Second Capital Contribution Date and the Tomen Equity
Contribution Date, the Initial Allocation Percentages and the
Tomen Flip IRR shall be set in the manner set forth in Exhibit B
attached hereto, taking into account any adjustment for
Curtailment required pursuant to Section 3.4(b) below.
(b) Curtailment. (i) If prior to the Tomen Equity
Contribution Date the PSC has not determined in PSC Case No.
92-E-0814 that no Curtailment is permissible and dismissed PSC
Case No. 92-E-0814 with prejudice, then on and after the Tomen
Equity Contribution Date until the Second Tomen Flip Date, at the
times provided in Section 3.4(c) below, the Expected Case shall
be recalculated as provided in (ii) below, and the Allocation
Percentages (and, until the First Tomen Flip Date, the Tomen Flip
IRR) shall be adjusted as provided in (iii) below (together, the
recalculated Expected Case and the adjusted Allocation
Percentages (and, until the First Tomen Flip Date, the Tomen Flip
IRR) being a "Revised Expected Case") for Curtailment so as to
demonstrate the projected receipt by the Tomen Limited Partners
of a 20% After Tax Internal Rate of Return on the Second Tomen
Flip Date based on such Revised Expected Case.
(ii) The rules for calculating the initial Revised
Expected Case for projected Curtailment shall be as provided in
subsection (A) below, and the rules for calculating each
subsequent Revised Expected Case for actual Curtailment shall be
as provided in subsection (B) below.
(A) The initial Revised Expected Case for projected
Curtailment shall assume that Curtailment commences on the first
date Curtailment is authorized to occur, and that Curtailment
continues at the same level through the Second Tomen Flip Date,
and shall be calculated based on the Expected Case with only the
following adjustments:
(1) Reduce the output of the Facility by the number of
kilowatt hours of Curtailment authorized by the Curtailment
Order, or, if the Curtailment Order does not authorize a
specific number of kilowatt hours of Curtailment, by
agreement of the parties;
(2) No scheduled maintenance shall be assumed to occur
during hours of Curtailment, and maintenance expenses for
the Facility shall be assumed to increase by $500 for each
hour of Curtailment applicable during such year in the
Expected Case, such amounts to be increased from the Second
Capital Contribution Date or the Tomen Equity Contribution
Date, as applicable, by the inflation assumption used in the
Expected Case;
(3) Curtailment will be deemed to occur 10 percent
during Peak Hours (as defined in the Power Purchase
Agreement) and 90 percent during Off-Peak Hours (as defined
in the Power Purchase Agreement);
(4) The fuel usage of the Facility shall be adjusted
to reflect the net difference in fuel projected to be
consumed when the Auxiliary Boiler is operated and one or
both of the gas turbines in the Facility are not (assuming a
constant heat rate of 8275 Btu/KWh(HHV)), in each case
solely to the extent resulting from Curtailment; in
connection therewith, all natural gas the Partnership is
required to purchase under the Gas Purchase Agreement that
is not consumed by the Facility solely to the extent
resulting from Curtailment shall be assumed to have been
resold by the Partnership for 80% of its cost to the
Partnership; and
(5) All other assumptions used in the Expected Case
shall be continued unchanged in each Revised Expected Case.
(B) Each subsequent Revised Expected Case for actual
Curtailment shall include a true-up for Curtailment experienced
during the just ending semi-annual period and shall assume that
Curtailment continues at the same level as the actual curtailment
experienced during the just ending semi-annual period and the
immediately preceding semi-annual period through the Second Tomen
Flip Date, and shall be calculated based on the preceding Revised
Expected Case with only the following adjustments:
(1) With respect to the just ending semi-annual
period, adjust the output of the Facility for the actual
Curtailment experienced during such semi-annual period, and
assume that the number of hours of Curtailment experienced
during such semi-annual period and the immediately preceding
semi-annual period continues during each succeeding annual
period through the Second Tomen Flip Date;
(2) With respect to the just ending semi-annual
period, do not adjust for the hours during which maintenance
was actually performed or for actual maintenance expenses,
and for each succeeding annual period through the Second
Tomen Flip Date, no scheduled maintenance shall be assumed
to occur during hours of Curtailment, and maintenance
expenses associated with the Facility shall be assumed to
increase by $500 for each hour of Curtailment applicable
during such year in the Expected Case based on the actual
Curtailment experienced during the just ending semi-annual
period and the immediately preceding semi-annual period,
such amounts to be increased by the inflation assumptions
used in the Expected Case from the Second Capital
Contribution Date or the Tomen Equity Contribution Date, as
applicable;
(3) With respect to the just ending semi-annual
period, adjust for the actual Peak Hour/Off-Peak Hour split
of hours of Curtailment, and assume the same mix of Peak
Hour/Off-Peak Hour hours of Curtailment as were experienced
during the just ending semi-annual period and the
immediately preceding semi-annual period continues during
each succeeding annual period through the Second Tomen Flip
Date;
(4) With respect to the just ending semi-annual
period, adjust for the actual net difference in fuel
consumed when the Auxiliary Boiler was operated and one or
both of the gas turbines in the Facility were not (assuming
a constant heat rate of 8275 Btu/KWh(HHV)), solely to the
extent resulting from Curtailment, and for the actual gains
or losses on gas resales due to Curtailment, and assume that
the level of fuel consumption and gas resales amounts
experienced during such semi-annual period and the
immediately preceding semi-annual period continue during
each succeeding annual period through the Second Tomen Flip
Date; and
(5) With respect to the just ending semi-annual
period, adjust for actual changes to any of the other
material assumptions (other than those addressed in (1)-(4)
above) used in the Revised Expected Case effective during
such semi-annual period, which changes were caused solely by
Curtailment, and assume that such changes continue during
each succeeding annual period through the Second Tomen Flip
Date.
(iii) The hierarchy to adjust the Allocation Percentages
for Curtailment is as follows:
(A) First, if the Tomen Limited Partners' Initial
Allocation Percentage then in effect is less than 42%, the
Tomen Limited Partners' Initial Allocation Percentage shall
be increased up to a maximum Initial Allocation Percentage
equal to 42% and the SECI Limited Partners' Initial
Allocation Percentage shall be decreased by a corresponding
amount;
(B) Second, the Tomen Flip IRR shall be increased so
as to cause Notional Period One to end on a date no later
than the 10th anniversary of the Second Capital Contribution
Date;
(C) Third, the Tomen Limited Partners' Middle
Allocation Percentage shall be increased up to a maximum
Middle Allocation Percentage equal to 30% and the SECI
Limited Partners' Middle Allocation Percentage shall be
decreased by a corresponding amount;
(D) Fourth, subject to clause (F) below, the Tomen
Limited Partners' Initial Allocation Percentage and the
Tomen Limited Partners' Middle Allocation Percentage shall
be increased simultaneously by the same fraction until the
Initial Allocation Percentage of the Tomen Limited Partners
equals the Capped Tomen Allocation Percentage, and the SECI
Limited Partners' Initial Allocation Percentage and the SECI
Limited Partners' Middle Allocation Percentage shall be
decreased by a corresponding amount;
(E) Fifth, subject to clause (F) below, the Tomen
Limited Partners' Middle Allocation Percentage shall be
increased up to a maximum Middle Allocation Percentage equal
to the Capped Tomen Allocation Percentage and the SECI
Limited Partners' Middle Allocation Percentage shall be
decreased by a corresponding amount;
(F) If no adjustment for Curtailment is made under
Section 3.4(b) within four years and three months following
the Second Capital Contribution Date, then during any
Quarterly Period thereafter during which an SECI Term Loan
is outstanding, the Tomen Limited Partners' Allocation
Percentages may not be adjusted upward to exceed the greater
of (i) the Tomen Limited Partners' Initial Allocation
Percentage as determined on the Second Capital Contribution
Date, and (ii) 42%, to the extent that such adjustment would
cause SECI to receive Distributable Cash in an amount less
than the scheduled principal and interest payments on the
SECI Term Loan, and any amounts not paid to the Tomen
Limited Partners as a result of the limitations on the
Allocation Percentages set forth in this clause (F) shall
earn a 20% After Tax Internal Rate of Return on the same
basis as the Tomen Total Equity (as defined in Exhibit B
hereto) and be taken into account in subsequent Revised
Expected Cases; and
(G) If an adjustment for actual Curtailment is
downward, i.e., so that Curtailment for an upcoming period
is less than Curtailment for the current period, the last
upward adjustment made pursuant to Section 3.4(b)(iii)
(A)-(F) shall first be reversed, and each next previous
adjustment shall be reversed, until adequate reversals of
previous adjustments are achieved.
(c) Procedures.
(i) Expected Case/Initial Allocation Percentages
on Second Capital Contribution Date. (A) No later than the
earlier of 60 days prior to the anticipated (x) Second Capital
Contribution Date, and (y) the Tomen Equity Contribution Date,
SECI shall deliver to TPC One and TPC Two SECI's proposed
Expected Case ("SECI's Proposed Expected Case") and proposed
Initial Allocation Percentages ("SECI's Proposed Initial
Allocation Percentages"), which shall take into account any
required adjustment for Curtailment as contemplated in
Section 3.4(c)(ii) below.
(B) Within 30 days of receipt of SECI's Proposed
Expected Case and SECI's Proposed Initial Allocation Percentages,
TPC One and TPC Two may deliver to SECI proposed changes to
SECI's Proposed Expected Case ("TPC's Proposed Expected Case")
and/or SECI's Proposed Initial Allocation Percentages ("TPC's
Proposed Initial Allocation Percentages").
(C) If within 15 days of delivery by TPC One and TPC
Two of TPC's Proposed Expected Case and/or TPC's Proposed Initial
Allocation Percentages, SECI, on the one hand, and TPC One and
TPC Two, on the other hand, are unable to agree on the Expected
Case and/or the Initial Allocation Percentages, either shall have
the right to submit the dispute to the Arbitration Procedure,
which shall determine the Expected Case and/or the Initial
Allocation Percentages. Pending completion of the Arbitration
Procedure, TPC's Proposed Expected Case shall be the Expected
Case and TPC's Proposed Initial Allocation Percentages shall be
the Initial Allocation Percentages.
(D) Not less frequently than once each ten days
following delivery of SECI's Proposed Expected Case and SECI's
Proposed Initial Allocation Percentages, until the earlier to
occur of the Second Capital Contribution Date and the Tomen
Equity Contribution Date, SECI shall deliver to TPC One and TPC
Two updates thereof to take into account changes in the
assumptions that occur after delivery of such documents or
updates thereof.
(ii) Curtailment at Second Capital Contribution Date.
(A) SECI's Proposed Expected Case shall include
assumptions regarding Curtailment, as follows: (A) if the PSC has
issued a Curtailment Order, the Expected Case shall include the
amount of Curtailment provided in Section 3.4(b)(ii)(A)(1) above;
(B) if the PSC has determined in Case No. 92-E-0814 that no
Curtailment is currently warranted, the Expected Case shall
assume zero Curtailment; and (C) if the PSC has not yet reached
any decision in Case No. 92-E-0814, the Expected Case shall
assume zero Curtailment.
(iii) Subsequent Determination of Curtailment.
(A) If no adjustment for Curtailment is included in
the Expected Case determined pursuant to clause (i) above, and if
at any time prior to the 10th anniversary of the Second Capital
Contribution Date a Curtailment Order is issued, then the
Expected Case and Allocation Percentages shall be adjusted as
provided in Section 3.4(b) above effective on the third
Distribution Date to occur following the date the Curtailment
Order permits Curtailment to occur. Within 30 days following the
authorization of curtailment by the PSC, SECI shall deliver to
TPC One and TPC Two a proposed revised Expected Case (the "SECI
Proposed Revised Expected Case") and proposed revised Allocation
Percentages (the "SECI Proposed Revised Allocation Percentages").
(B) Within 30 days of receipt of SECI's Proposed
Revised Expected Case and SECI's Proposed Revised Allocation
Percentages, TPC One and TPC Two may deliver to SECI proposed
changes to SECI's Proposed Revised Expected Case ("TPC's Proposed
Revised Expected Case") and SECI's Proposed Revised Allocation
Percentages ("TPC's Proposed Revised Allocation Percentages").
If TPC One or TPC Two does not deliver TPC's Proposed Revised
Expected Case and TPC's Proposed Revised Allocation Percentages
to SECI within such 30 day period, SECI's Proposed Revised
Expected Case and Proposed Revised Allocation Percentages shall
be the Revised Expected Case and the Allocation Percentages,
respectively, effective as of the third Distribution Date
following the date the Curtailment Order permits Curtailment to
occur.
(C) If within 15 days of delivery by TPC One and TPC
Two of TPC's Proposed Revised Expected Case and TPC's Proposed
Revised Allocation Percentages, SECI, on the one hand, and TPC
One and TPC Two, on the other hand, are unable to agree on the
Revised Expected Case and/or the Revised Allocation Percentages,
either shall have the right to submit the dispute to the
Arbitration Procedure, which shall determine the Revised Expected
Case and/or the Revised Allocation Percentages. Pending
completion of the Arbitration Procedure, effective as of the
third Distribution Date following the date the Curtailment Order
permits Curtailment to occur, TPC's Proposed Revised Expected
Case and TPC's Proposed Allocation Percentages shall be the
Revised Expected Case and the Allocation Percentages,
respectively.
(D) If SECI fails to deliver SECI's Proposed Revised
Expected Case and SECI's Proposed Revised Allocation Percentages
within the time provided in Section 3.4(c)(iii)(A) above, TPC One
and TPC Two shall have the right to deliver TPC's Proposed
Revised Expected Case and TPC's Proposed Revised Allocation
Percentages, which shall indicate TPC's proposed revisions to the
Expected Case and Allocation Percentages based on Curtailment
authorized by the PSC, and the Revised Expected Case and Revised
Allocation Percentages shall thereafter be determined as provided
in Section 3.4(c)(iii)(B) and (C) above.
(iv) Adjustments for Actual Curtailment.
(A) Effective on the earlier of the sixth Distribution
Date following the first Distribution Date which includes any
assumption for Curtailment and the third Distribution Date in
respect of a Quarterly Period during which the Project
experiences Curtailment, and effective on each sixth Distribution
Date thereafter, the Expected Case or Revised Expected Case, as
applicable, and the Allocation Percentages shall be adjusted as
provided in Section 3.4(b) above. Not less than 60 days prior to
any Distribution Date on which an adjustment will be made for
actual Curtailment, SECI shall deliver to TPC One and TPC Two
SECI's Proposed Revised Expected Case and Proposed Revised
Allocation Percentages (the "SECI Proposed Curtailment
Adjustments").
(B) Within 30 days of receipt of SECI's Proposed
Curtailment Adjustments, TPC One and TPC Two may deliver to SECI
proposed changes to SECI's Proposed Curtailment Adjustments
("TPC's Proposed Curtailment Adjustments"). If TPC One or TPC
Two does not deliver TPC's Proposed Curtailment Adjustments
within such 30 day period, SECI's Proposed Curtailment
Adjustments shall be incorporated into the Expected Case or
Revised Expected Case, as applicable, and the Allocation
Percentages, and the resulting Expected Case and the Allocation
Percentages shall become the Revised Expected Case and Allocation
Percentages, respectively.
(C) If within 15 days of delivery by TPC One and TPC
Two of TPC's Proposed Curtailment Adjustments, SECI, on the one
hand, and TPC One and TPC Two, on the other hand, are unable to
agree on the adjustments to the Expected Case and Allocation
Percentages required pursuant to Section 3.4(c)(iv)(B) above,
either shall have the right to submit the dispute to the
Arbitration Procedure, which shall determine the Revised Expected
Case and the Revised Allocation Percentages. Pending completion
of the Arbitration Procedure, TPC's Proposed Curtailment
Adjustments shall be incorporated into the Expected Case or
Revised Expected Case, as applicable, and the Allocation
Percentages, and the resulting Expected Case and Allocation
Percentages shall become the Revised Expected Case and Allocation
Percentages, respectively.
(v) Each document delivered by SECI to TPC One and TPC
Two pursuant to this Section 3.4(c) shall be prepared in good
faith on the basis of sound financial planning practice, and the
assumptions and methods of calculation employed by SECI in
connection with any thereof shall be applied consistently.
(d) Re-set of Expected Case. In the event that the
Tomen Equity Contribution Date occurs prior to the Second Capital
Contribution Date, upon the earlier to occur of the Second
Capital Contribution Date and the date that the Construction Loan
is repaid in full, each of the Expected Case (taking into account
the Project's economics at the time and any adjustments for
Curtailment required pursuant to Section 3.4(b)), the Allocation
Percentages, and the Tomen Flip IRR shall be recalculated using
the procedures set forth in Section 3.4(c) so as to demonstrate
the projected receipt by the Tomen Limited Partners of a 20%
After Tax Internal Rate of Return on the Second Tomen Flip Date.
(e) Adjustment of Final Allocation Percentages. (i)
If, as of the Second Tomen Flip Date, the Tomen Limited Partners
shall not have received the After Tax Internal Rate of Return on
the Tomen Total Equity (as defined in Exhibit B hereto) that
would have been received had there been no Curtailment, the Final
Allocation Percentage of the Tomen Limited Partners shall be the
greater of (A) the Final Allocation Percentage applicable for the
Tomen Limited Partners in the absence of this Section 3.4(e) and
(B) the Tomen Limited Partners' Middle Allocation Percentage in
effect on the day preceding the Second Tomen Flip Date, and the
SECI Limited Partners' Final Allocation Percentage shall be 99%
minus the Tomen Limited Partners' Final Allocation Percentage
determined above, which Final Allocation Percentages shall remain
in effect until the Tomen Limit Partners shall have received the
After Tax Internal Rate of Return that would have been received
had there been no Curtailment. Thereafter, the Final Allocation
Percentages shall be as otherwise provided in this Agreement.
(ii) Any dispute regarding the subject matter of
Subsection (e)(i) above shall be submitted to the Arbitration
Procedure.
(f) Limitation on Certain Adjustments. So long as the
SECI Term Loan shall be outstanding, no adjustment pursuant to
Section 3.4(b) to the Allocation Percentages after the Second
Capital Contribution Date shall result in an increase to the
Allocation Percentages of the Tomen Limited Partners to a
percentage greater than the Capped Tomen Allocation Percentage.
ARTICLE IV
DISTRIBUTIONS
4.1 Distributable Cash. The Managing General Partner
shall distribute Distributable Cash to the Partners on each
Distribution Date in the manner provided in this Article IV.
4.2 Distributions Prior to the Second Capital
Contribution Date. (a) Except as provided in Section 4.2(b),
there shall be no distributions of Distributable Cash prior to
the Second Capital Contribution Date. On the Second Capital
Contribution Date, Distributable Cash shall be used to pay, in
part, the accrued interest on, and principal of, the Construction
Loans as provided in Section 4.3 of the Security Deposit
Agreement.
(b) If the Second Capital Contribution Date shall not
occur on or prior to the Tomen Equity Contribution Date, after
the satisfaction in full of all of the obligations of the
Partnership under the Loan Documents, Distributable Cash
thereafter shall be distributed on each Distribution Date to the
GE Capital Limited Partner in the amounts determined pursuant to
Section 4.16 and to the Other Partners in accordance with their
Allocation Percentages and otherwise pursuant to this Agreement.
4.3 Distributions After the Second Capital
Contribution Date and Prior to the First GE Capital Flip Date.
Except as provided in Sections 4.7, 4.9(c), 4.11, 4.12, 4.13,
4.14 and 13.4(c), Distributable Cash for each calendar month
after the Second Capital Contribution Date (commencing with the
first calendar month or part thereof to end after the Second
Capital Contribution Date), on and prior to the First GE Capital
Flip Date, shall (after application to the payment of the
Deducted Payments) be distributed on the Distribution Date in
respect of such calendar month as follows:
(a) First, 99% to the GE Capital Limited Partner, and
1% to the Other Partners in accordance with their Allocation
Percentages, until the Partners have received pursuant to
this Section 4.3(a) an aggregate amount of cash in respect
of such calendar month equal to the amount set forth in
Schedule 5 (the "Level 1 Distribution"); provided, however,
that the amount of Distributable Cash distributable to the
GE Capital Limited Partner pursuant to this Section 4.3(a)
shall be (i) decreased by (A) amounts transferred by the
Partnership to the Senior Debt Service Account on such
Distribution Date pursuant to the provisions of Sections
4.2(a) and (b) of the Amended and Restated Security Deposit
Agreement and (B) without duplication of amounts referred to
in the preceding clause (A) and to the extent not paid from
amounts transferred to the Senior Debt Service Account on
such Distribution Date pursuant to the provisions of
Sections 4.2(a) and (b) of the Amended and Restated Security
Deposit Agreement or from drawings under any Senior Debt
Service Letter of Credit (as such term is defined in the
Amended and Restated Security Deposit Agreement) substituted
for such transferred amounts pursuant to the provisions of
Section 4.2(a) or (b) of the Amended and Restated Security
Deposit Agreement, all amounts paid and not previously
deducted pursuant to this Section 4.3(a) in respect of the
Deducted Payments since the preceding Distribution Date and
(ii) increased by amounts paid by the Swap Counterparty
pursuant to the Swap Agreement since the preceding
Distribution Date; and
(b) Second, 1% to the GE Capital Limited Partner and
99% to the Other Partners in accordance with their
Allocation Percentages.
4.4 Distributions Subsequent to the First GE Capital
Flip Date and Prior to the Second GE Capital Flip Date. Except
as provided in Sections 4.7, 4.9(c), 4.11, 4.12, 4.13, 4.14 and
13.4(c), after the First GE Capital Flip Date to and including
the Second GE Capital Flip Date, Distributable Cash for each
calendar month shall be distributed on the Distribution Date in
respect of such calendar month as follows:
(a) 15% to the GE Capital Limited Partner (but in
respect of the Second GE Capital Flip Date, only that amount
required for the GE Capital Limited Partner to achieve the
Base Term Return plus 52 basis points); and
(b) 85% to the Other Partners in accordance with their
Allocation Percentages.
4.5 Distributions Subsequent to the Second GE Capital
Flip Date. Except as provided in Sections 4.7, 4.9(c), 4.11,
4.12, 4.13, 4.14 and 13.4(c), after the Second GE Capital Flip
Date, Distributable Cash for each calendar month shall be
distributed on the Distribution Date in respect of such calendar
month as follows:
(a) 5% to the GE Capital Limited Partner; and
(b) 95% to the Other Partners in accordance with their
Allocation Percentages.
4.6 Net Cash From Sales or Refinancing. (a) Any Net
Cash from Refinancing which results from the refinancing
described in Section 10 of the Capital Contribution Agreement
shall be distributed 100% to the GE Capital Limited Partner;
provided, however, that in determining the amount of Net Cash
from Sales or Refinancing to be distributed to the GE Capital
Limited Partner, (i) there shall be deducted from such cash
proceeds (x) the portion thereof applied by the Partnership to
the repayment of the principal of, and (without duplication of
amounts deemed deducted from Level 1 Distributions distributed to
the GE Capital Limited Partner pursuant to Section 4.3(a)) the
payment of accrued interest on and fees and other amounts in
respect of, the Term Loan and any Refinancing Loan and/or
Subordinated Refinancing Loan repaid in such refinancing, and (y)
any amounts payable to the Swap Counterparty under the Swap
Agreement in connection with such refinancing and (ii) there
shall be added to such cash proceeds all amounts paid by the Swap
Counterparty to the Partnership under the Swap Agreement in
connection with such refinancing;
(b) Except as provided in Sections 4.7, 4.9(c), 4.12,
4.13 and 4.14 and 13.4(c), any Net Cash from Sales or Refinancing
(other than pursuant to the refinancing referred to in Section
4.6(a) above) shall be distributed (i) 99% to the GE Capital
Limited Partner and 1% to the Other Partners in accordance with
their Allocation Percentages until the GE Capital Limited Partner
shall have achieved its Base Term Return; (ii) any Net Cash from
Sales or Refinancing in excess of the amount referred to above in
clause (i) shall be distributed 15% to the GE Capital Limited
Partner and 85% to the Other Partners in accordance with their
Allocation Percentages until the Second GE Capital Flip Date
shall have occurred; and (iii) any Net Cash from Sales or
Refinancing in excess of the amount referred to above in clause
(ii) shall be distributed 5% to the GE Capital Limited Partner
and 95% to the Other Partners in accordance with their Allocation
Percentages, provided, however, that in determining the amount of
Net Cash from Sales or Refinancing to be distributed to the GE
Capital Limited Partner, (x) there shall be deducted from such
cash proceeds (A) the portion thereof applied by the Partnership
to the repayment of the principal of, and (without duplication of
amounts deemed deducted from Level 1 Distributions distributed to
the GE Capital Limited Partner pursuant to Section 4.3(a)) the
payment of accrued interest on and fees and other amounts in
respect of, the Term Loan and any Refinancing Loan and/or
Subordinated Refinancing Loan repaid in connection with such Net
Cash from Sales or Refinancing, and (B) any amounts payable to
the Swap Counterparty under the Swap Agreement (other than
amounts payable pursuant to Section 6(e) of the Swap Agreement)
in connection with such Net Cash from Sales or Refinancing and
(y) there shall be added to such cash proceeds all amounts paid
by the Swap Counterparty to the Partnership under the Swap
Agreement in connection with such Net Cash from Sales or
Refinancing.
4.7 Special Event. Notwithstanding anything else
contained in this Article IV (but subject to 13.4(c)), if a
Special Event occurs and is continuing, Distributable Cash and
Net Cash from Sales or Refinancing shall be distributed in
accordance with Section 13.2(c).
4.8 Determination of First GE Capital Flip Date and
Second GE Capital Flip Date. (a) If the GE Capital Limited
Partner shall receive the full amount of its distributable share
of each of the scheduled Level 1 Distributions pursuant to
Section 4.3(a) on each of the scheduled Distribution Dates
therefor, and not receive any Distributable Cash pursuant to
Sections 4.11(b) or 13.2(c) or Net Cash From Sales or Refinancing
pursuant to Section 4.6(b), the First GE Capital Flip Date shall
occur upon the distribution to the GE Capital Limited Partner of
the full amount of the last scheduled Level 1 Distribution. If
the GE Capital Limited Partner shall not receive the full amount
of its distributable share of any Level 1 Distribution on the
scheduled Distribution Date therefor, or shall receive
distributions of Distributable Cash pursuant to Sections 4.11(b)
or 13.2(c) or shall receive Net Cash from Sales or Refinancing
pursuant to Section 4.6(b), the achievement of Base Term Return
and occurrence of the First GE Capital Flip Date shall be deemed
to have occurred when the GE Capital Limited Partner shall have
received Distributable Cash pursuant to Sections 4.3(a), 4.6(b)
and 13.2(c) which, taking into account the timing and amount of
each such distribution, but making no other adjustments to the
assumptions used to determine the Level 1 Distributions,
demonstrates the achievement of the Base Term Return.
Notwithstanding the foregoing, for purposes of determining the
First GE Capital Flip Date, payments made by the Swap
Counterparty under the Swap Agreement shall not be taken into
account.
(b) The Second GE Capital Flip Date shall occur when
the GE Capital Limited Partner shall have received Distributable
Cash pursuant to Sections 4.3(a), 4.4, 4.6(b), 4.11 and 13.2(c)
which, taking into account the timing and amount of each such
distribution, disregarding any write-off of any portion of the GE
Capital Limited Partner's investment assumed for purposes of
determining the achievement of the Base Term Return but making no
other adjustments to the assumptions used to determine the Level
1 Distributions (including, without limitation, the calculation
of such distributions on a quarterly basis), demonstrates the
achievement of the Base Term Return plus 52 basis points.
Notwithstanding the foregoing, for purposes of determining the
Second GE Capital Flip Date, payments made by the Swap
Counterparty under the Swap Agreement shall not be taken into
account.
(c) If the Managing General Partner shall assert that
the First GE Capital Flip Date or the Second GE Capital Flip Date
shall have occurred and the GE Capital Limited Partner shall
dispute such assertion, the Managing General Partner may request
(and at the direction of any Tomen Limited Partner shall request)
that the non-occurrence of the First GE Capital Flip Date or the
Second GE Capital Flip Date, as the case may be, be verified by
GE Capital's independent certified public accountants, which
verification shall be at the expense of the Partnership unless GE
Capital's independent certified public accountants shall verify
that the First GE Capital Flip Date or Second GE Capital Flip
Date, as the case may be, has occurred, in which case
verification shall be at the expense of the GE Capital Limited
Partner. Each of the GE Capital Limited Partner, SECI, TPC One
and TPC Two may confer with such accountants in connection with
the verification of the occurrence or non-occurrence of the First
GE Capital Flip Date and the Second GE Capital Flip Date.
Pending the outcome of the verification by GE Capital's
accountants, the First GE Capital Flip Date or the Second GE
Capital Flip Date, as applicable, shall be deemed not to have
occurred. If GE Capital's accountants determine that the First
GE Capital Flip Date or the Second GE Capital Flip Date, as
applicable, has occurred, amounts distributed to the GE Capital
Limited Partner in excess of the amounts necessary to cause the
First GE Capital Flip Date or the Second GE Capital Flip Date to
occur, as the case may be, shall be credited against amounts
subsequently distributable to the GE Capital Limited Partner
hereunder.
4.9 Determination of First Tomen Flip Date. (a) (i)
SECI General shall reasonably determine whether and when the
First Tomen Flip Date occurs. If SECI General determines that
the First Tomen Flip Date has occurred (such date, the
"Determination Date"), SECI General shall promptly notify the
Tomen Limited Partners thereof and within 60 days of the end of
the calendar year in which the Determination Date occurs SECI
General shall provide the Tomen Limited Partners with a written
report describing any true-up required (calculated using Final
Tax Figures and as provided in paragraph (c) below) and providing
the calculations by which the Determination Date and any true-up
were determined, which report shall separately state the
following:
(A) the amount of Capital Contributions made by the
Tomen Limited Partners and the dates of such Capital
Contributions;
(B) the amount and timing of all distributions of
Distributable Cash (with such timing being determined
pursuant to the definition of After-Tax Cash Flow);
(C) the amount and timing of the Tomen Limited
Partners' Imputed Tax Benefits;
(D) the amount and timing of the Tomen Limited
Partners' Imputed Tax Costs; and
(E) the Tomen Limited Partners' After-Tax Cash Flow
and the Tomen Limited Partners' After-Tax Internal Rate of
Return as of such date.
(ii) If the Determination Date occurs before July 1st
of a calendar year, then within 30 days after the Determination
Date, SECI General shall also provide a report, substantially
similar to the report required in Section 4.9(a)(i) above showing
any true-up required (calculated using taxes estimated pursuant
to the Tax Assumptions and as provided in paragraph (c) below).
(iii) Any such notice and report from SECI General
pursuant to this Section 4.9 shall be signed by an officer of
SECI General who shall certify that SECI General's calculations
have been made pursuant to and in compliance with this Agreement
based upon information in the possession of SECI General at such
time. Except as otherwise provided in Section 4.9(b), SECI
General's determination of the First Tomen Flip Date shall be
presumed to be correct.
(b) If, after receiving any report required by Section
4.9(a), TPC One or TPC Two, on behalf of the Tomen Limited
Partners, reasonably and in good faith disagrees with the
conclusion of SECI General with respect to the Determination Date
or any proposed true-up, and so notifies SECI General in writing
within 60 days of receipt of such report, management personnel of
each of SECI General and TPC One or TPC Two, on behalf of the
Tomen Limited Partners, shall promptly confer and attempt in good
faith to expeditiously resolve such dispute. If SECI General and
TPC One or TPC Two, are unable to resolve such dispute in a
mutually satisfactory manner within 30 days of the receipt by
SECI General of TPC One's or TPC Two's notice of disagreement,
the parties shall submit (together with their respective
calculations relating thereto) the matter to an independent
nationally recognized certified public accounting firm or such
other Person, in either case as shall be selected by SECI General
and reasonably acceptable to TPC One and TPC Two (the "Arbiter"),
and the Arbiter shall determine the amount of the true-up then
due. Each party shall promptly provide the Arbiter with all
information necessary to make such determination and each of SECI
General and the Tomen Limited Partners agree to be bound by the
determination of the Arbiter. Absent other agreement by the
parties, the arbitration shall be conducted according to the
rules of the American Arbitration Association. If a final
determination with respect to the true-up has not been made by
the Arbiter within 30 days of submission of the matter to the
Arbiter, such portion of the Distributable Cash thereafter
distributed to the SECI Limited Partners on account of the
purported occurrence of the First Tomen Flip Date shall be placed
in an escrow account upon terms and conditions mutually
acceptable to the SECI Limited Partners and TPC One and TPC Two
until such final determination shall be made. SECI General and
the Tomen Limited Partners agree to make every reasonable effort
to facilitate the final determination of the Arbiter within 30
days of submission. The costs (including reasonable legal and
accounting fees and the costs of the Arbiter) of such arbitration
shall be allocated by the Arbiter in accordance with the
respective merits of each party's position.
(c) The "true-up" referred to in this Section shall be
a distribution to the Tomen Limited Partners or to the SECI
Limited Partners of Distributable Cash that would otherwise be
distributed to one or the other of them under Section 4.3 without
giving effect to this Section 4.9(c). The amount so distributed
will be treated as a guaranteed payment pursuant to Section
707(c) of the Code and as taxable income to the recipient(s) with
a corresponding deduction in the same amount to the Partnership,
allocated to the non-recipient Other Partner(s). Such
distribution or distributions shall be made as quickly as
possible after the Arbiter determines that a true-up is required,
provided, that any true-up specified in the SECI General report
or otherwise agreed by SECI General to be owed shall be paid
pending resolution of any dispute. In the case of a true-up in
favor of the Tomen Limited Partners, the amount of such
distribution or distributions shall be the amount of cash that
would have been required to have been paid to the Tomen Limited
Partners on the Determination Date to cause the First Tomen Flip
Date actually to have occurred on such date, assuming all other
factors remain unchanged including the allocation of Operating
Profits and Operating Losses. In the case of a true-up in favor
of the SECI Limited Partners, the amount of such distribution or
distributions shall be the amount of Distributable Cash
distributed to the Tomen Limited Partners at the Initial
Allocation Percentages on or before the Determination Date in
excess of the amount that the Tomen Limited Partners would have
received if the Determination Date had actually occurred on the
First Tomen Flip Date. For purposes of calculating the true-up
and allocating Operating Profits and Operating Losses for the
calendar year in which the Determination occurs, Operating
Profits and Operating Losses shall be allocated among the Other
Partners in the same proportion as Distributable Cash was
allocated for the entire such year. For purposes of calculating
the true-up and the Tomen Flip IRR, it shall be assumed that
Imputed Tax Costs and Imputed Tax Benefits, as determined based
on Final Tax Figures, accrued ratably over the calendar year in
which the Determination Date occurred and were recognized by the
Tomen Limited Partners at the end of each fiscal quarter during
such year. The amount determined pursuant to the preceding
sentences shall be increased by (i) interest, in the case of a
true-up in favor of the Tomen Limited Partners, at a pre-tax rate
of 20 percent compounded semi-annually, and in the case of a
true-up in favor of the SECI Limited Partners, at a pre-tax rate
of 10 percent compounded semi-annually, calculated from the
Determination Date to the date actually paid and (ii) a tax
gross-up so as to provide the recipient Partner with such amount
including interest after the deemed payment of federal income
taxes in respect of such amount including interest and the tax
gross-up at the rate provided in the Tax Assumptions.
4.10 Tomen Audit Adjustments. If the IRS proposes an
audit adjustment (via a 30-day letter or other similar document)
with respect to the Partnership or the Tomen Limited Partners
that would increase the Imputed Tax Costs or decrease the Imputed
Tax Benefits of the Tomen Limited Partners, SECI General shall
seek to obtain an opinion from independent tax counsel selected
by SECI General and reasonably acceptable to the Tomen Limited
Partners that the basis in law and fact in favor of the
Partnership's position with respect to the item proposed to be
adjusted outweighs the basis in law and fact to the contrary. If
an opinion to such effect is obtained within 25 days of such
proposal, then the Allocation Percentages of the Other Partners
shall continue to be determined in accordance with the other
provisions of this Agreement until such time as the matter
proposed to be adjusted shall be finally determined. At the time
of such final determination, a calculation shall be made with
respect to the Tomen Limited Partners After-Tax Internal Rate of
Return (taking into account the Imputed Tax Benefits or Imputed
Tax Costs arising as a result of the determination) and, if such
calculation shall establish that the Tomen Limited Partners'
After-Tax Internal Rate of Return is less than that which was
necessary to have caused the First Tomen Flip Date to occur, the
Allocation Percentage of each Tomen Limited Partner shall revert
to such Partner's Initial Allocation Percentage. If SECI General
shall fail to obtain, within such 25-day period, an opinion from
independent tax counsel selected by SECI General and reasonably
acceptable to the Tomen Limited Partners that the basis in law
and fact in favor of the Partnership's position with respect to
the item proposed to be adjusted outweighs the basis in law and
fact to the contrary, then on such date a calculation shall be
made with respect to the Tomen Limited Partners' After-Tax
Internal Rate of Return (taking into account the Imputed Tax Cost
or Imputed Tax Benefits arising as a result of the proposed
adjustment, and assuming for this purpose that the item proposed
to be adjusted was so adjusted on the date of the proposal) and,
if such calculation shall establish that the Tomen Limited
Partners' After-Tax Internal Rate of Return is less than that
which was necessary to cause the First Tomen Flip Rate to occur,
the Allocation Percentage of each Tomen Limited Partner shall
revert to such Partner's Initial Allocation Percentage; provided,
however, that at such time as the matter proposed to be adjusted
is finally determined, a calculation shall be made with respect
to the Tomen Limited Partners' After-Tax Internal Rate of Return
(taking into account the Imputed Tax Benefits or Imputed Tax
Costs arising as a result of the proposed adjustment) and the
interests of the Other Partners in Distributable Cash, Operating
Profits, and Operating Losses shall revert or advance, as
applicable, depending on whether the First Tomen Flip Date has
occurred.
4.11 Retention of Certain Distributions. (a) Subject
to the provisions of Section 4.13, on each Distribution Date
occurring after the Second Capital Contribution Date, until the
Base Reserve Amount shall be on deposit in the Base Reserve
Account or unless the Reserve Letter of Credit shall be issued
and in full force and effect, there shall be deposited in the
Base Reserve Account an amount equal to 23.7% of the
Distributable Cash otherwise distributable to each Other Partner
on such Distribution Date pursuant to Section 4.3(b). In the
event of any withdrawal from the Base Reserve Account (other than
withdrawals of income or gain in excess of the Base Reserve
Amount), on each Distribution Date, until the Base Reserve
Account shall have been replenished by the amount of such
withdrawal, there shall be deposited in the Base Reserve Account
an amount equal to 98% of the Distributable Cash distributable to
each Other Partner on such Distribution Date pursuant to Section
4.3(b).
(b) Subject to the provisions of Section 4.13, in the
event that the Ratio for any Quarterly Period ending prior to the
First GE Capital Flip Date shall be less than the respective
ratios set forth below, a portion of the Distributable Cash
otherwise distributable to each Other Partner pursuant to Section
4.3(b) in respect of each of the third Distribution Date in such
Quarterly Period and the first and second Distribution Dates in
the immediately succeeding Quarterly Period, in each case
corresponding to the percentage set forth opposite each such
ratio shall not be distributed to such Other Partner on each such
Distribution Date but shall instead be transferred to and
retained in the Distribution Reserve Account and applied in the
manner set forth in the Amended and Restated Security Deposit
Agreement:
Percentage of
Distributable
Ratio Cash Retained
1.40 to 1.00 20%
1.30 to 1.00 25%
1.20 to 1.00 98%
(c) Subject to the provisions of Section 4.13, until,
as of any Distribution Date occurring on or after the date twelve
years after the Date of Commercial Operation, the amount on
deposit in the Letters of Credit Reserve Account is equal to or
greater than the Letters of Credit Required Balance as of such
Distribution Date, 98% of the amount of Distributable Cash to be
distributed to each Other Partner pursuant to Section 4.3(b) on
such Distribution Date that corresponds to each such Other
Partner's allocable share of the Letters of Credit Required
Contribution (determined by multiplying the Letters of Credit
Required Contribution by the Allocation Percentage of each Other
Partner in such Distributable Cash) shall not be distributed to
each such Other Partner on such Distribution Date but shall
instead be transferred to and retained in the Letters of Credit
Reserve Account and applied as provided in the Amended and
Restated Security Deposit Agreement.
(d) In the event that, but for the provisos to any of
Sections 13.1(b), (c), (d), (f) or (m), or, in the case of clause
(ii) of Section 13.1(t), but for the lapse of either the 180 day
or 30 day periods referred to therein, a Special Event would
occur and be continuing, 98% of the Distributable Cash otherwise
distributable to such Other Partner pursuant to Section 4.3(b) on
each Distribution Date shall not be currently distributed to such
Other Partner but shall be transferred to and retained in the
Retention Account and applied in the manner set forth in the
Amended and Restated Security Deposit Agreement.
4.12 Tax Indemnity. Notwithstanding anything else
contained herein, if a Tax Indemnity Event occurs with respect to
a taxable year that ends on or prior to, or that includes, the
First GE Capital Flip Date, then an amount of Distributable Cash
that would otherwise have been distributed to SECI General and
the SECI Limited Partners under this Article IV for any calendar
month after application of Distributable Cash in accordance with
Section 4.11 shall instead be distributed to the GE Capital
Limited Partner until the balance of the Tax Indemnity Amount
equals zero.
4.13 Distributions in Respect of Additional Capital
Contributions Made Pursuant to Section 8.3. If one or more
Limited Partners shall have made Capital Contributions pursuant
to Section 8.3, 100% of the Distributable Cash distributable to
the Other Partners pursuant to Sections 4.3, 4.4 and 4.5 shall be
(after distribution of any Distributable Cash pursuant to Section
4.14) distributed as follows:
(a) If a SECI Term Loan is outstanding, (i) first, to
the Other Limited Partners who made Capital Contributions
pursuant to Section 8.3, an amount equal to the amount of
such Capital Contributions, up to an aggregate maximum
amount of distributions under this Section 4.13(a)(i) equal
to $32,000,000, pro rata in accordance with their funding of
such Capital Contributions, (ii) second, to the Other
Partners in accordance with Section 4.3, 4.4 and 4.5 until
SECI shall have received an amount sufficient to enable SECI
to pay all amounts then currently due in connection with the
SECI Term Loan, whether such amounts are due by acceleration
or otherwise, and to deposit all amounts then currently
required to be deposited in the SECI Debt Service Account
pursuant to the Amended and Restated Security Deposit
Agreement, (iii) third, to the Other Limited Partners who
made Capital Contributions pursuant to Section 8.3, an
amount equal to the amount of such Capital Contributions in
excess of the amount distributed pursuant to Section
4.13(a)(i), together with the return on the amount of the
Capital Contributions under Section 4.13, calculated as
provided in Section 8.3, pro rata in accordance with the
total amount then due to each such Other Limited Partner,
and (iv) fourth, to the Other Partners in accordance with
Sections 4.3, 4.4 and 4.5; and
(b) if no SECI Term Loan is outstanding, (i) first, to
the Other Limited Partners who made Capital Contributions
pursuant to Section 8.3, an amount equal to the amount of
such Capital Contributions together with the return thereon
calculated as provided in Section 8.3, pro rata in
accordance with the amount then due to each such Other
Limited Partner, and (ii) second, to the Other Partners in
accordance with Sections 4.3, 4.4 and 4.5.
4.14 Distributions in Respect of Section 8.5. If any
Tomen Limited Partner shall be entitled to receive distributions
pursuant to Section 8.5, 50% of the Distributable Cash
distributable to the Other Partners pursuant to Sections 4.3, 4.4
and 4.5 shall not be distributed to the Other Partners in
accordance with Sections 4.3, 4.4 and 4.5, but instead (and prior
to the distribution of any Distributable Cash pursuant to Section
4.13) shall be distributed to such Tomen Limited Partner(s) until
such Partner(s) shall have received distributions of
Distributable Cash pursuant to this Section 4.14 in an amount
equal to the amount due pursuant to Section 8.5.
4.15 Optional Prepayments of the Term Loan or any
Refinancing Loan. In the event that the GE Capital Limited
Partner shall be entitled to receive amounts of Distributable
Cash, from time to time, pursuant to Section 4.11(b) or 13.2(c)
in excess of the scheduled Level 1 Distributions or any Net Cash
From Sales or Refinancings pursuant to Section 4.6(b) or 13.2(c)
(an "Excess Distribution"), the Excess Distribution shall be
distributed to the GE Capital Limited Partner unless the Excess
Distribution would cause any of the notional amounts set forth on
Schedule 10, as adjusted to take into account the distribution of
the Excess Distribution to the GE Capital Limited Partner, to be
less than the outstanding principal balance of the Term Loan and
any Refinancing Loan or Subordinated Refinancing Loan on any such
date, in which case the Excess Distribution shall not be
distributed to the GE Capital Limited Partner, but instead shall
be applied to the optional prepayment of the Term Loan and/or any
Refinancing Loan or Subordinated Refinancing Loan. Any amount
distributed to the GE Capital Limited Partner pursuant to Section
4.11 with respect to which Operating Profits were allocated to
the Other Partners pursuant to Section 5.1 shall be treated as a
guaranteed payment pursuant to Section 707 of the Code, and as
taxable income to the GE Capital Limited Partner with a
corresponding deduction in the same amount allocated to the Other
Partners.
4.16 Failure to Make Second Capital Contribution. If
the GE Capital Limited Partner shall not make the additional
capital contributions specified in Section 2(a)(ii) of the
Capital Contribution Agreement on or prior to the Construction
Loan Maturity Date, the Limited Partnership Interest held by the
GE Capital Limited Partner after the Construction Loan Maturity
Date shall be converted into an interest that is entitled to
9/334ths (or such greater numerator over the sum of the GE
Capital Limited Partner's cash capital contributions and the
Tomen Limited Partners' cash capital contributions if the GE
Capital Limited Partner has at such time contributed more than
$900,000 to the Partnership) and the Other Partners shall be
entitled to a fraction equal to 1 minus such fraction of the
entitlements to Distributable Cash, items of taxable income,
gain, loss and deductions under this Agreement.
4.17 Treatment of Amounts Distributed To GE Capital
Limited Partner Pursuant to Amended and Restated Security Deposit
Agreement. The parties agree that any amounts withdrawn by the
GE Capital Limited Partner pursuant to Section 4.2(a) or (b) of
the Amended and Restated Security Deposit Agreement that are
later drawn under the Senior Debt Service Letter of Credit shall
be treated for income tax purposes as an interest free loan from
the Partnership to the GE Capital Limited Partner that is repaid
to the Partnership by the GE Capital Limited Partner upon the
making of such drawing under the Senior Debt Service Letter of
Credit and then paid by the Partnership to the Lenders under the
Loan Agreement.
4.18 Treatment of Amounts Transferred to SECI Reserve
Account and SECI Debt Service Account. For all purposes of this
Agreement, amounts which are transferred into the SECI Reserve
Account or the SECI Debt Service Account shall be deemed
distributed to the General Partner.
4.19 Treatment of Amounts Transferred to Steam Reserve
Account. For purposes of Article V of this Agreement, amounts
which are transferred into the Steam Reserve Account and not
distributed in the same tax year shall be deemed distributed to
the Partners in such proportion as such amounts would have been
distributed if no such transfer to such Account occurred.
ARTICLE V
ALLOCATION OF CERTAIN PROFITS AND LOSSES
FOR BOOK AND TAX PURPOSES
5.1 Operating Profits. Except as provided in Section
13.2(c), Operating Profits of the Partnership shall be allocated
between the GE Capital Limited Partner and the Other Partners as
follows:
(a) First, to the GE Capital Limited Partner and the
Other Partners so as to match Distributable Cash received by
such Partners over the term of the Partnership pursuant to
Sections 4.3(a), 4.7 and 13.2(c) (treating (i) any amounts
treated as guaranteed payments to the GE Capital Limited
Partner under the last sentence of Section 4.15 and (ii) any
amounts transferred to the GE Capital Limited Partner
pursuant to Section 4.2(a) or (b) of the Amended and
Restated Security Deposit Agreement as other than
distributions of Distributable Cash, which are not to be
matched with allocations of Operating Profits). The ratio
in which Operating Profits are allocated pursuant to this
Section 5.1(a) for any given year shall equal the ratio of
the excesses, with respect to the GE Capital Limited Partner
and the Other Partners, of Distributable Cash received
during the term of the Partnership pursuant to such Sections
over Operating Profits previously allocated pursuant to this
Section 5.1(a) during the term of the Partnership.
(b) Second, 100% to the GE Capital Limited Partner,
out of Operating Profits that would otherwise have been
allocated to the Other Partners, until it has been allocated
on a cumulative basis an amount of Operating Profits
pursuant to this Section 5.1(b) equal to the aggregate
amount of Distributable Cash it has received over the term
of the Partnership pursuant to Section 4.12.
(c) Third, 99% to the Other Partners and 1% to the GE
Capital Limited Partner until the Partners have been
allocated on a cumulative basis an amount of Operating
Profits equal to the aggregate amount of Distributable Cash
received over the term of the Partnership pursuant to
Section 4.3(b) and to Sections 4.11, 4.13 and 4.14 (to the
extent they relate to distributions that would otherwise be
made pursuant to Section 4.3(b)), for this purpose treating
any Distributable Cash deposited (and not distributed in the
same year) in the Senior Debt Service Account, the Base
Reserve Account, the Letters of Credit Reserve Account, the
Distribution Reserve Account and the Retention Account from
amounts otherwise distributable pursuant to Section 4.3(b)
as having been distributed to the Other Partners in the
proportions such amounts would have been distributed to the
Other Partners if actually distributed.
(d) Fourth, 85% to the Other Partners and 15% to the
GE Capital Limited Partner until the Partners have been
allocated on a cumulative basis pursuant to this Section
5.1(d) an amount of Operating Profits equal to the aggregate
amount of Distributable Cash received over the term of the
Partnership pursuant to Section 4.4 and Sections 4.13 and
4.14 (to the extent they relate to distributions that would
otherwise be made pursuant to Section 4.4).
(e) Fifth, 95% to the Other Partners and 5% to the GE
Capital Limited Partner until the Partners have been
allocated on a cumulative basis an amount of Operating
Profits equal to the aggregate amount of Distributable Cash
received over the term of the Partnership pursuant to
Section 4.5 and Sections 4.13 and 4.14 (to the extent they
relate to distributions that would otherwise be made
pursuant to Section 4.5).
(f) Sixth, prior to the Second Capital Contribution
Date, 73% to the GE Capital Limited Partner and 27% to the
Other Partners, and thereafter, until the earlier of the
taxable year that includes the First GE Capital Flip Date
and the taxable year that includes the fourteenth
anniversary of the Second Capital Contribution Date, to the
extent Operating Profits in any taxable year exceed the
amounts to be allocated pursuant to paragraphs (a) through
(f) above, the excess to the GE Capital Limited Partner and
the Other Partners in accordance with the relative Capital
Contributions of the GE Capital Limited Partner and the
Tomen Limited Partners (reducing the GE Capital Limited
Partner's Capital Contribution by any amount received as a
distribution pursuant to Section 4.6(a) and ignoring any
Capital Contribution of SECI); provided, however, that,
subject to the succeeding proviso, the allocation of such
excess Operating Profits shall not be less than 73% to the
GE Capital Limited Partner or more than 27% to the Other
Partners, and provided further that notwithstanding the
73%/27% limitation the Other Partners will be allocated an
amount of such Operating Profits that would otherwise be
allocated to the GE Capital Limited Partner in an amount, on
a cumulative basis pursuant to this Section 5.1(f), equal to
the amount, if any, of Depreciation with respect to the
Noncontributed Assets that has been allocated to the Other
Partners pursuant to Section 5.3(c), in the first year or
years that the amount of Operating Profits in excess of
Distributable Cash allocated to the GE Capital Limited
Partner pursuant to this paragraph (f) would exceed the
amount necessary for the GE Capital Limited Partner to have
sufficient Capital Account to utilize the Depreciation to be
allocated to the GE Capital Limited Partner for such year or
years pursuant to Section 5.3(b)(i).
(g) Seventh, notwithstanding paragraphs (a) through
(f) hereof, beginning in the earlier of the taxable year
that includes the First GE Capital Flip Date and the taxable
year that includes the fourteenth anniversary of the Second
Capital Contribution Date, Operating Profits, to the extent
necessary after taking into account the allocation of
Depreciation pursuant to Section 5.3(d), shall be allocated
to the GE Capital Limited Partner and the Other Partners so
that, if the Partnership were to liquidate at the end of the
year with respect to which the allocations are being made,
to the extent possible, the Capital Accounts of the GE
Capital Limited Partner and the Other Partners would be in
ratios that correspond to the relative amounts to which the
GE Capital Limited Partner and the Other Partners would be
entitled if the remaining assets of the Partnership were
distributed in payment of (i) any amounts not distributed
pursuant to Section 4.3(a) and then (ii) the amounts
described in Section 4.4 and then (iii) the amounts
described in Section 4.5.
5.2 Operating Losses. Operating Losses of the
Partnership shall be allocated among the Partners in the same
manner as Depreciation with respect to the Noncontributed Assets
described in Section 5.3.
5.3 Depreciation. (a) If a taxable year of the
Partnership ends after the Initial Capital Contribution Date and
before the Second Capital Contribution Date, Depreciation with
respect to the Noncontributed Assets for such taxable year shall
be allocated 73% to the GE Capital Limited Partner and 27% to the
Other Partners; provided that any Depreciation which if allocated
pursuant to such ratio would reduce the Capital Accounts of the
Other Partners below zero while the Capital Account of the GE
Capital Limited Partner is positive will be reallocated to the GE
Capital Limited Partner until its Capital Account equals zero.
(b) Except as provided in Section 5.3(a), 5.3(c) or
5.3(d), Depreciation with respect to the Noncontributed Assets
shall be allocated as follows:
(i) First, so long as the Other Partners and the GE
Capital Limited Partner have positive Capital Account
balances, to the Other Partners and the GE Capital Limited
Partner so that, to the extent possible, cumulative
Depreciation with respect to the Noncontributed Assets
(including for this purpose Depreciation allocated pursuant
to paragraph (a), but assuming that any allocations made
pursuant to paragraph (c) were in fact not made) is
allocated in accordance with the ratios of the relative
Capital Contributions of the Tomen Limited Partners and the
GE Capital Limited Partner (reducing the GE Capital Limited
Partner's Capital Contribution by any amount received as a
distribution pursuant to Section 4.6(a) and ignoring any
Capital Contribution by SECI); provided, however, that,
subject to paragraphs (c) and (d), the allocation of such
cumulative Depreciation shall not be less than 73% to the GE
Capital Limited Partner or more than 27% to the Other
Partners.
(ii) Second, any Partner Nonrecourse Deductions for any
taxable period shall be allocated to the Partner who bears
the economic risk of loss with respect to the liability to
which such Partner Nonrecourse Deductions are attributable
in accordance with Treas. Reg. Sec. 1.704-2(j).
(iii) Third, to the extent of the Nonrecourse
Deductions, to the Other Partners and the GE Capital Limited
Partner in accordance with the ratios of their actual total
cash investments (debt and equity) in the Partnership as of
the Second Capital Contribution Date (as adjusted by any
refinancing pursuant to Section 4.6(a)).
(c) Notwithstanding Section 5.3(b)(i), any
Depreciation in any year which if allocated pursuant to Section
5.3(b)(i) would reduce the Adjusted Capital Account of the GE
Capital Limited Partner below zero without regard to any possible
allocation pursuant to Section 5.12(b) while the Capital Accounts
of the Other Partners are positive will be reallocated to the
Other Partners until their Capital Accounts equal zero.
(d) Beginning in the earlier of the taxable year that
includes the First GE Capital Flip Date and the taxable year that
includes the fourteenth anniversary of the Second Capital
Contribution Date, Depreciation with respect to the
Noncontributed Assets, and, to the extent necessary, Operating
Profits pursuant to Section 5.1(g), shall be allocated to the GE
Capital Limited Partner and the Other Partners so that, if the
Partnership were to liquidate at the end of the year with respect
to which the allocations are being made, to the extent possible,
the Capital Accounts of the GE Capital Limited Partner and the
Other Partners would be in ratios that correspond to the relative
amounts to which the GE Capital Limited Partner and the Other
Partners would be entitled if the remaining assets of the
Partnership were distributed in payment of (i) any amounts not
distributed pursuant to Section 4.3(a) and then (ii) the amounts
described in Section 4.4 and then (iii) the amounts described in
Section 4.5.
(e) Any Depreciation with respect to the Contributed
Assets shall be allocated 100% to the Other Partners unless such
Depreciation constitutes a Partner Nonrecourse Deduction, in
which case such Partner Nonrecourse Deduction shall be allocated
to the Partner who bears the economic risk of loss with respect
to the liability to which such Partner Nonrecourse Deductions are
attributable in accordance with Treas. Reg. Sec. 1.704-2(j).
5.4 Gains and Losses. Upon the sale, transfer or
other disposition of any property, any Gain or Loss realized by
the Partnership shall be allocated so that, to the extent
possible, if there were an immediate liquidation of the
Partnership, proceeds would be distributed in accordance with the
Partners' Capital Account balances, as follows:
(a) First, 99% to the GE Capital Limited Partner and
1% to the Other Partners until the GE Capital Limited
Partner would have received the amount required for the
First GE Capital Flip Date to have occurred.
(b) Second, 85% to the Other Partners and 15% to the
GE Capital Limited Partner until the GE Capital Limited
Partner would have received the amount required for the
Second GE Capital Flip Date to have occurred.
(c) Third, 95% to the Other Partners and 5% to the GE
Capital Limited Partner.
5.5 Allocation Among the Other Partners. For purposes
of this Article V, items to be allocated among the Other Partners
shall be allocated as follows:
(a) Depreciation with respect to the Noncontributed
Assets shall be initially allocated to the Tomen Limited Partners
and Depreciation with respect to the Contributed Assets shall be
initially allocated to SECI; provided, however, that if such
allocations would result in Capital Account balances that differ
from those provided for pursuant to paragraph (b), after taking
into account the allocations made pursuant to paragraph (b), then
an amount of Depreciation with respect to the Contributed Assets
shall instead be allocated to the Tomen Limited Partners, or an
amount of Depreciation with respect to the Noncontributed Assets
shall instead be allocated to SECI, so that the Capital Accounts
of the Other Partners satisfy the requirements of paragraph (b).
(b) Operating Income, Operating Loss, Gain and Loss
shall be allocated among the Other Partners so that after taking
into account the initial allocations of Depreciation pursuant to
paragraph (a) above then, to the extent possible, their Adjusted
Capital Accounts remain at all times in the ratios of relative
Initial Allocation Percentages, provided however, that if SECI
has an Adjusted Capital Account balance at least equal to the
lesser of (x) the greater of (i) the outstanding amount of the
SECI Term Loan (plus any amounts that SECI may draw on the SECI
Term Loan) and (ii) the principal amount of the SECI Term Loan
that would have been outstanding pursuant to the Expected Case or
(y) SECI's Initial Allocation Percentage times the total SECI and
Tomen Adjusted Capital Amount balances, then items will be
allocated so that, to the extent possible, and subject at all
times to the requirement that SECI's Adjusted Capital Account at
least equals the lesser of (x) and (y) above, the Tomen Limited
Partners adjusted Capital Account balance will equal the sum of
the amount necessary to provide the Tomen Limited Partners their
base return plus the product of Tomen's Final Allocation
Percentage times the Excess SECI/Tomen Adjusted Capital Account.
5.6 Qualified Income Offset. Notwithstanding anything
herein to the contrary, in the event any Partner unexpectedly
receives any adjustments, allocations or distributions described
in paragraphs (b)(2)(ii)(d)(4), (5) or (6) of Regulations Section
1.704-1, there shall be specially allocated to such Partner such
items of Partnership income and gain, at such times and in such
amounts as will eliminate as quickly as possible that portion of
any deficit in its Adjusted Capital Account caused or increased
by such adjustments, allocations or distributions.
5.7 Minimum Gain Chargeback. Notwithstanding any
other provision in this Article V, if there is a net decrease in
Partnership minimum gain or partner nonrecourse debt minimum gain
(determined in accordance with the principles of Regulation
Sections 1.704-2(d) and 1.704-2(i)) during any Partnership
taxable year, the Partners shall be specially allocated items of
Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to their respective shares
of such net decrease during such year, determined pursuant to
Regulation Sections 1.704-2(g) and 1.704-2(i)(5). The items to
be so allocated shall be determined in accordance with
Regulations Section 1.704-2(f). This Section 5.7 is intended to
comply with the minimum gain chargeback requirements in such
Regulation Sections and shall be interpreted consistently
therewith; including that no chargeback shall be required to the
extent of the exceptions provided in Regulations Sections 1.704-
2(f) and 1.704-2(i)(4).
5.8 Curative Allocations. The allocations set forth
in Sections 5.6, 5.7 and 5.12(b) are intended to comply with
certain requirements of Regulations Section 1.704-1(b).
Notwithstanding any other provisions of this Article V (other
than Sections 5.6, 5.7 and 5.12(b)), allocations that have taken
place pursuant to Sections 5.6, 5.7 and 5.12(b) shall be taken
into account in allocating other Operating Profits, Operating
Losses, Depreciation and other items, so that, to the extent
possible, the net amount of such other allocations and the
Sections 5.6, 5.7 and 5.12(b) allocations to each Partner shall
equal the net amount that would have been allocated to each
Partner if the Sections 5.6, 5.7 and 5.12(b) allocations had not
occurred.
5.9 Section 754 Adjustments. (a) To the extent an
adjustment to the adjusted tax basis of any property of the
Partnership pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Treas. Reg 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such
a basis) and such gain or loss shall be specially allocated to
the General Partner and Limited Partners in a manner consistent
with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Regulations. If an
adjustment is not required to be taken into account in
determining Capital Accounts, the effect of the adjustment on the
Partner's share of items of taxable income, gain, loss and
deduction similarly shall not be taken into account in
determining Capital Accounts.
(b) With respect to its first taxable year, and
thereafter at any time at the request of any Partner if the
initial election is revoked or rendered ineffective for any
reason, the Partnership shall make the election described in
Section 754 of the Code to adjust the basis of the partnership
property. Each Partner will furnish to the Partnership all
information necessary to give effect to such elections.
5.10 Tax Allocations. Except as provided in Section
5.11, for income tax purposes each item of income, gain, loss and
deduction shall be allocated in the same manner as the
corresponding book item is allocated for Capital Account
purposes.
5.11 Property Subject to 704(c) and 704(b). In the
case of any Partnership asset the Gross Asset Value of which
differs from its adjusted tax basis, income, gain, loss and
deduction with respect to such asset shall, solely for tax
purposes, be allocated in accordance with the principles of Code
Sections 704(b) and 704(c) to take account of such difference.
5.12 Gross Income Allocation. (a) To the extent all
or any portion of any payment by the Partnership to any payee
that is deducted or capitalized by the Partnership for tax
purposes is treated as a non-deductible distribution, such payee
will be allocated an amount of gross income in the period the
deduction would have been taken, or in the case of a capitalized
payment, in the periods in which depreciation or amortization
deductions would have been taken with respect to such capitalized
amount (or in the next succeeding periods to the extent there is
insufficient gross income in any such period) equal to the amount
of the deduction.
(b) Except as provided in Section 5.3(c), in the event
any Partner has a deficit Capital Account at the end of any
Partnership taxable year that is in excess of the sum of (i) the
amount the Partner is deemed to be obligated to restore pursuant
to the penultimate sentence of Regulations Section 1.704-
1(b)(4)(iv)(f) and (ii) the amount the Partner would be deemed to
be obligated to restore if Partner Nonrecourse Deductions were
treated as Nonrecourse Deductions, the Partner shall be specially
allocated items of Partnership income and gain in the amount of
such excess as quickly as possible, provided that an allocation
pursuant to this paragraph (b) shall be made only if and to the
extent that the Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in
this Article V have been tentatively made.
5.13 Limitations. Notwithstanding anything to the
contrary in this Article V, no allocation under this Article V
shall be made to a Partner that would cause such Partner to have,
or that would increase, a deficit in its Adjusted Capital
Account.
5.14 SECI General's Share. It is the intent of the
Partners that SECI General shall be allocated 1% of each item of
Partnership income, gain, loss, deduction and credit (other than
Depreciation with respect to the Noncontributed Assets). To the
extent that SECI General would not otherwise be allocated 1% of
such items in any year pursuant to the terms of this Article V,
an amount of such items shall be reallocated from first, the SECI
Limited Partner, and then, if necessary, the Other Limited
Partners, to SECI General in an amount sufficient to give SECI
General a 1% allocation.
5.15 Distributions and Allocations Among Partners. If
a Partnership Interest has been transferred during a taxable year
as permitted under this Agreement, allocations shall be made
among the transferor(s) and transferee(s) as follows:
(i) Operating Profits or Operating Losses for such
year allocable to such Limited Partnership Interest shall be
shared by the transferor(s) and transferee(s) in proportion
to the number of days during such year that each Person held
the Limited Partnership Interest; and
(ii) Gain or Loss, if any, during such year allocable
to such Limited Partnership Interest shall be allocated to
the Person that holds the Limited Partnership Interest on
the day that the disposition of the property occurs.
For purposes of this Section 5.15, a Partnership
Interest shall be deemed to be held by the transferor for the day
of transfer.
5.16 Special Allocation. Any Partner that is treated
as paying interest to the Partnership pursuant to the terms of
Section 7872 of the Code shall be specially allocated the
corresponding interest income.
ARTICLE VI
BOOKS OF ACCOUNT, RECORDS, REPORTS AND TAX MATTERS
6.1 Books and Records. Proper and complete records
and books of account for the Partnership shall be kept by the
Managing General Partner in which shall be appropriately entered
all transactions and other matters related to the Partnership's
business as are usually entered into records and books of account
maintained by partnerships engaged in businesses of like
character. The books and records shall at all times be made
available at the principal office of the Partnership and shall be
open to the inspection and examination of any Partner or its duly
authorized representatives at all reasonable times. The
Partnership will be on the accrual method for both tax and
accounting purposes.
6.2 Information Kept by Managing General Partner. The
Managing General Partner shall keep at the principal office of
the Partnership all the following:
(a) A current list of the full name and last known
business or residence address of each Partner together with
the Capital Contribution of each Partner;
(b) a copy of the original Certificate of Limited
Partnership and all certificates of amendment thereto and
restatements thereof, together with executed copies of any
powers of attorney pursuant to which any such certificate
has been executed;
(c) copies of the Partnership's federal, state and
local income tax or information returns and reports, if any,
for the six most recent taxable years;
(d) copies of this Agreement and all amendments hereto
and restatements hereof;
(e) financial statements of the Partnership for the
six most recent fiscal years;
(f) the Partnership's books and records as they relate
to the internal affairs of the Partnership for at least the
current and past three fiscal years including, without
limitation, true and full information regarding the amount
of cash and a description and statement of the agreed value
of any other property or services contributed by each
Partner and which each Partner has agreed to contribute in
the future, and the date on which each Partner became a
partner of the Partnership; and
(g) all other material information received by the
Managing General Partner from or with respect to the
Partnership.
6.3 Fiscal Year. The fiscal and taxable year of the
Partnership shall end on December 31st of each year.
6.4 Partnership Funds. (a) For so long as the
Security Deposit Agreement is in effect, the funds of the
Partnership shall be deposited in the relevant accounts
maintained by the Security Agent pursuant to the Security Deposit
Agreement, and be invested in such interest-bearing or non-
interest-bearing investments as are specified therein. All
withdrawals from any such accounts shall be made in accordance
with the terms of the Security Deposit Agreement. Any funds
withdrawn from the Revenue Account (as defined in the Security
Deposit Agreement) pursuant to Section 4.1(a) of the Security
Deposit Agreement shall be deposited in a separate bank account
of the Partnership, be invested from time to time only in such
Permitted Investments as may be determined by the Managing
General Partner and be used solely for the payment of expenses
set forth in the then-effective Operating Budget.
(b) Partnership funds shall not be commingled with
those of any other Person.
6.5 Tax Accounting Matters. The Partnership's Capital
Accounts and its books and records related thereto shall be
maintained in accordance with the accounting methods used in
preparing the Partnership's Federal income tax return
notwithstanding the fact that the Partnership shall also maintain
books and records in accordance with GAAP.
6.6 Financial Statements. (a) The Managing General
Partner shall furnish or cause to be furnished to each other
Partner:
(i) as soon as available, but in any event within 120
days after the end of each fiscal year of each Reporting
Participant, a copy of the balance sheet of such Reporting
Participant as of the end of such fiscal year and the
related statements of income, retained earnings (or
partners' capital) and changes in cash flows of such
Reporting Participant for such fiscal year, setting forth in
each case in comparative form the figures for the previous
fiscal year, certified without qualification or exception as
to the scope of its audit by Deloitte & Touche or other
independent public accountants of national standing selected
by the Managing General Partner reasonably acceptable to the
GE Capital Limited Partner; and
(ii) as soon as available, but in any event within 60
days after the end of each quarterly period of each fiscal
year (other than the last quarterly period of each such
fiscal year) of each Reporting Participant, the unaudited
balance sheet of such Reporting Participant as of the end of
such quarterly period and the related unaudited statements
of income and retained earnings (or partners' capital) and
changes in cash flows of such Reporting Participant for such
quarterly period and for the portion of the fiscal year then
ended, setting forth in each case in comparative form the
figures for the previous period, certified by a Responsible
Officer of such Reporting Participant (subject to normal
year-end audit adjustments).
All such financial statements shall be complete and correct in
all material respects and shall be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the
periods reflected therein (except for changes approved or
required by the independent public accountants certifying such
statements and disclosed therein).
(b) Certificates; Other Information. The Managing
General Partner shall furnish or cause to be furnished:
(i) to the GE Capital Limited Partner (with respect to
periods ending prior to the First GE Capital Flip Date) and
to the Tomen Limited Partners (with respect to periods
ending prior to the later of the First GE Capital Flip Date
and the Second Tomen Flip Date) concurrently with the
delivery of the financial statements referred to in Section
6.6(a)(i), a certificate of the independent public
accountants which certified such financial statements
stating that (i) their examination was made in accordance
with generally accepted auditing standards and, in their
opinion, such financial statements fairly present the
financial position, financial results of operations, and
changes in Partners' capital and cash flow in accordance
with GAAP consistently applied and (ii) in making the
examination and reporting on the financial statements
described above, nothing came to their attention that caused
them to believe that (A) the income and revenues were not
paid or credited in accordance with the financial and
accounting provisions of this Agreement, (B) the costs and
expenses were not charged in accordance with the financial
and accounting provisions of this Agreement, or (C) a
Special Event or of any event which, with the passage of
time or the giving of notice or both, would constitute a
Special Event had occurred, except as specified in such
certificate;
(ii) to the GE Capital Limited Partner (with respect to
periods ending prior to the First GE Capital Flip Date) and
to the Tomen Limited Partners (with respect to periods
ending prior to the later of the First GE Capital Flip Date
and the Second Tomen Flip Date) concurrently with the
delivery of the financial statements referred to in Sections
6.6(a)(i) and (ii) a certificate of a Responsible Officer of
the Managing General Partner stating that, to the best of
such officer's knowledge, the Managing General Partner,
during the period covered by such financial statements, has
observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this
Agreement to be observed, performed or satisfied by it, and
caused the Partnership to observe and perform all of its
covenants and other agreements, and satisfied every
condition in the other Basic Documents to be observed,
performed or satisfied by the Partnership and that such
officer has obtained no knowledge of any Special Event or of
any event which, with the passage of time or the giving of
notice or both, would constitute a Special Event at any time
during such period or on the date of such certificate and no
knowledge of any default or event which, with the passage of
time or the giving of notice or both, would constitute a
default under any of the other Basic Documents at any time
during such period or on the date of such certificate (or,
if any such Special Event or default or event shall have
occurred, a statement setting forth the nature thereof and
the steps being taken by the Managing General Partner or the
Partnership to remedy the same);
(iii) to the GE Capital Limited Partner (with respect to
periods ending prior to the First GE Capital Flip Date) and
to the Tomen Limited Partners (with respect to periods
ending prior to the later of the First GE Capital Flip Date
and the Second Tomen Flip Date) promptly after becoming
available, but in any event within 30 days after the end of
each calendar month (except the last month of each quarter),
a report setting forth the power production and the revenues
of the Project during such month and setting forth any
extraordinary items incurred in connection with the Project
but not included in the Partnership Operating Budget
delivered pursuant to Section 6.6(c), together with a
comparison of the projected power production and revenues of
the Project for such month;
(iv) to the GE Capital Limited Partner (with respect to
periods ending prior to the First GE Capital Flip Date) and
to the Tomen Limited Partners (with respect to periods
ending prior to the later of the First GE Capital Flip Date
and the Second Tomen Flip Date) promptly after becoming
available, but in any event within 30 days after the end of
each calendar quarter, a report setting forth the year-to-
date revenues, operating expenses, general and
administrative expenses and capital expenditures of the
Partnership, together with a comparison of the Partnership
Operating Budget for such period, and a projection of
revenues and expenses for the remainder of the Partnership's
fiscal year;
(v) within 75 days after the end of each fiscal year,
the Managing General Partner shall deliver or cause to be
delivered to each Person who was a Partner at any time
during such fiscal year all information necessary for the
preparation of such Person's Federal income tax return,
including a statement showing such Person's share of
Operating Profits, Operating Losses or credits for such year
for Federal income tax purposes and the amount of any
distribution made to or for the account of such Person
pursuant to this Agreement, and, upon the written request of
any such Person made not later than 30 days after the end of
each fiscal year, any information necessary for the
preparation of any state and local income tax returns which
must be filed by such Person;
(vi) promptly after the filing thereof, the "Annual
Returns" (Form 5500 series) and attachments filed annually
with the Internal Revenue Service with respect to each
Single Employer Plan, if any, of the Partnership;
(vii) with respect to any Single Employer Plan adopted
or amended by the Partnership or SECI or any Commonly
Controlled Entity on or after the Initial Capital
Contribution Date, any determination letters received from
the Internal Revenue Service with respect to the
qualification of such Plan, as initially adopted or amended
under Section 401(a) of the Code;
(viii) promptly after delivery or receipt thereof, a copy
of each material notice, demand or other communication
delivered by or received by the Partnership pursuant to any
Basic Document;
(ix) with respect to periods ending prior to the First
GE Capital Flip Date, copies of each Governmental Approval
or other consent or approval obtained or made by the
Partnership; and
(x) with respect to periods ending prior to the First
GE Capital Flip Date, promptly, such additional financial
and other information as any Partner may from time to time
reasonably request for a purpose which is reasonably related
to the interest of such Partner as a partner in the
Partnership.
(c) (i) No later than November 1 of each year
commencing prior to the First GE Capital Flip Date, the Managing
General Partner shall submit to the GE Capital Limited Partner,
its proposed operating budget for the next succeeding year. Such
proposed operating budget shall be substantially in the form of
Schedule 9A (with any deviations from such form indicated by the
Managing General Partner) (the "Partnership Operating Budget")
and shall include, in each case, on a cash basis a budget for
such operating year specifying on a monthly basis for such
operating year the principal items of (x) revenue anticipated to
be received in respect of the Facility, including, without
limitation, the estimated energy and steam sales, rates and
revenues pursuant to the Steam Supply Agreement and the estimated
power sales, rates and revenues pursuant to the Power Purchase
Agreement and (y) costs and expenses anticipated to be incurred
in connection with the operation, maintenance and administration
of the Facility, including, without limitation, taxes, premiums
for insurance policies required to be maintained pursuant to this
Agreement and any fees and expenses payable to the Lenders
pursuant to the Loan Documents, together with a manpower forecast
and periodic inspection, maintenance and repair schedule and any
other items necessary to calculate "operating income" in the
proposed Partnership Operating Budget and (z) a revised estimate
(and related schedule) of costs to be incurred by the Partnership
in respect of major maintenance items during the next six year
period. Such proposed Partnership Operating Budget shall be
accompanied by (i) a forecasted Partnership Operating Budget for
the next succeeding operating year specifying, in the same
format, on an annual basis the items described in clauses (x),
(y) and (z) above for each such operating year, (ii) a discussion
of any significant changes from the approved Partnership
Operating Budget for the previous year, (iii) a discussion of any
anticipated changes to the terms and conditions, coverages,
policies or carriers of the insurance described in Section 1 of
Schedule 8, (iv) a discussion of whether the funding of the Major
Maintenance Reserve Account then contemplated by the Security
Deposit Agreement will be sufficient to pay costs of all
forecasted major maintenance items and, if not, a proposed
schedule of increases in such funding, and (v) a discussion of
any contemplated changes to agreements or elections covering the
supply and transmission of fuel to the Facility and the other
Assigned Contracts.
(ii) Such Partnership Operating Budget shall be subject
to the written approval of the GE Capital Limited Partner (which
approval shall not be unreasonably withheld or delayed). In the
event the GE Capital Limited Partner disapproves the proposed
Partnership Operating Budget, the GE Capital Limited Partner
shall indicate objections thereto in writing to the Managing
General Partner. The Managing General Partner shall revise the
proposed Operating Budget to reflect the revisions proposed by
the GE Capital Limited Partner or, if the Managing General
Partner disagrees with the GE Capital Limited Partner's
objections, the item(s) in dispute shall be submitted to, and
resolved by, a mutually agreeable independent engineering firm of
national standing.
(iii) If, for any reason, the Partnership Operating
Budget shall not have been approved by the GE Capital Limited
Partner on or prior to the commencement of the applicable
operating year, the Partnership Operating Budget for the prior
operating year shall remain in effect, with such adjustments
thereto as shall be required in respect of (x) any increase in
fuel prices, (y) all contractual payment requirements then
binding on the Partnership, and (z) an increase of 5% of all
Project Expenses other than as provided under the foregoing
clauses (x) and (y). Upon any subsequent approval of the
proposed Partnership Operating Budget, such Partnership Operating
Budget shall become effective for such operating year.
(iv) During the operating year, the Managing General
Partner shall promptly advise the GE Capital Limited Partner of
any circumstance that, in the reasonable judgment of the Managing
General Partner, makes necessary or advisable any revision to the
effective Partnership Operating Budget (including, without
limitation, any allocation of savings in one item of the
Partnership Operating Budget to other items thereof) and shall
promptly furnish to the GE Capital Limited Partner all
information reasonably requested by the GE Capital Limited
Partner in connection with its review of the proposed revision.
The GE Capital Limited Partner shall approve or disapprove such
proposed revision in accordance with the procedures outlined in
paragraph (ii) above. No such revision to the Partnership
Operating Budget may be made without such required approval;
provided, however, that the Managing General Partner may allocate
savings in one such item to other items in the Operating Budget
up to ten percent (10%) of the item from which the allocation is
made; and provided, further, that no item in the Partnership
Operating Budget may be increased as a result of the allocation
of savings by an amount greater than ten percent (10%) of the
original amount of such item. During the existence of any
emergency or event of force majeure affecting the Facility, the
Managing General Partner may in good faith take such actions as
may be reasonably required by such emergency or event of force
majeure; provided, that the Managing General Partner shall
promptly notify the GE Capital Limited Partner of such actions
and any effect such actions may have had on the amounts allocated
in the Partnership Operating Budget and shall promptly consider
in good faith any further reallocations in the Partnership
Operating Budget which may be recommended in writing by the GE
Capital Limited Partner.
(d) (i) No later than November 1 of each year commencing
prior to the First GE Capital Flip Date the Managing General
Partner shall cause North Country to submit to the GE Capital
Limited Partner the proposed operating budget of North Country
for the next succeeding year. Such proposed operating budget
shall be substantially in the form of Schedule 9B (with any
deviations from such form indicated by North Country) (the "North
Country Operating Budget") and shall include, in each case, on a
cash basis a budget for such operating year specifying on a
monthly basis for such operating year the principal items of (x)
revenue anticipated to be received in respect of the North
Country Project, including, without limitation, the estimated gas
sales, rates and revenues pursuant to the North Country Gas
Agreements and (y) costs and expenses anticipated to be incurred
in connection with the operation, maintenance and administration
of the North Country Project, including, without limitation,
taxes, premiums for insurance policies required to be maintained
pursuant to this Agreement and any fees and expenses payable to
any Lender pursuant to the Loan Documents, together with a
manpower forecast and periodic inspection, maintenance and repair
schedule and any other items necessary to calculate "operating
income" in the proposed North Country Operating Budget and (z) a
revised estimate (and related schedule) of costs to be incurred
by North Country in respect of major maintenance items during the
next six year period. Such proposed North Country Operating
Budget shall be accompanied by (A) a forecasted North Country
Operating Budget for the next succeeding operating year
specifying, in the same format, on an annual basis the items
described in clauses (x), (y) and (z) above for each such
operating year, (B) a discussion of any significant changes from
the approved North Country Operating Budget for the previous
year, (C) a discussion of any anticipated changes to the terms
and conditions, coverages, policies or carriers of the insurance
described in Section 2 of Schedule 8, and (D) a discussion of the
costs of maintaining the Pipeline;
(ii) such North Country Operating Budget shall be
subject to the written approval of the GE Capital Limited Partner
(which approval shall not be unreasonably withheld or delayed).
In the event the GE Capital Limited Partner disapproves the
proposed North Country Operating Budget, the GE Capital Limited
Partner shall indicate objections thereto in writing to North
Country. North Country shall revise the proposed North Country
Operating Budget to reflect the revisions proposed by the GE
Capital Limited Partner or, if North Country disagrees with the
GE Capital Limited Partner's objections, the item(s) in dispute
shall be submitted to, and resolved by, a mutually agreeable
independent engineering firm of national standing;
(iii) if, for any reason, the North Country Operating
Budget shall not have been approved by the GE Capital Limited
Partner on or prior to the commencement of the applicable
operating year, the North Country Operating Budget for the prior
operating year shall remain in effect, with such adjustments
thereto as shall be required in respect of (x) all contractual
payment requirements then binding on the North Country, and (y)
an increase of 5% of all North Country Project Expenses other
than as provided under the foregoing clause (x). Upon any
subsequent approval of the proposed North Country Operating
Budget, such North Country Operating Budget shall become
effective for such operating year; and
(iv) during the operating year, North Country shall
promptly advise the GE Capital Limited Partner of any
circumstance that, in the reasonable judgment of North Country,
makes necessary or advisable any revision to the effective North
Country Operating Budget (including, without limitation, any
allocation of savings in one item of the North Country Operating
Budget to other items thereof) and shall promptly furnish to the
GE Capital Limited Partner all information reasonably requested
by the GE Capital Limited Partner in connection with its review
of the proposed revision. The GE Capital Limited Partner shall
approve or disapprove such proposed revision in accordance with
the procedures outlined in paragraph (ii) above. No such
revision to the North Country Operating Budget may be made
without such required approval; provided, however, that North
Country may allocate savings in one such item to other items in
the North Country Operating Budget up to ten percent (10%) of the
item from which the allocation is made; and provided, further,
that no item in the North Country Operating Budget may be
increased as a result of the allocation of savings by an amount
greater than ten percent (10%) of the original amount of such
item. During the existence of any emergency or event of force
majeure affecting the North Country Project, North Country may in
good faith take such actions as may be reasonably required by
such emergency or event of force majeure; provided, that North
Country shall promptly notify the GE Capital Limited Partner of
such actions and any effect such actions may have had on the
amounts allocated in the North Country Operating Budget and shall
promptly consider in good faith any further reallocations in the
North Country Operating Budget which may be recommended in
writing by the GE Capital Limited Partner.
(e) With respect to any year commencing on or before
the First GE Capital Flip Date, the Managing General Partner
shall provide a copy of the approved Partnership Operating Budget
and North Country Operating Budget to the Limited Partners. With
respect to any year commencing after the First GE Capital Flip
Date, the Managing General Partner shall deliver to the Limited
Partners the proposed Partnership Operating Budget and North
Country Operating Budget for the next succeeding year. Within
thirty days after receipt of a proposed Partnership Operating
Budget or any proposed amendment thereto, a Majority in Interest
of the Other Limited Partners shall either approve the proposed
Partnership Operating Budget and North Country Operating Budget
or amendment thereto, as the case may be, or make such revisions
as they reasonably deemed necessary and proper but not in
violation of any Basic Document then in effect; provided,
however, that the proposed Partnership Operating Budget and North
Country Operating Budget or amendment thereto, as the case may
be, shall be deemed approved by a Majority in Interest of the
Other Limited Partners if a Majority in Interest of the Other
Limited Partners do not respond to the Managing General Partner's
proposal within such thirty day period; and provided, further
that once either approved or revised by a Majority in Interest of
the Limited Partners, the Partnership Operating Budget and North
Country Operating Budget shall become the binding Partnership
Operating Budget and North Country Operating Budget for the
applicable fiscal year.
6.7 Tax Matters Partner. (a) The Managing General
Partner shall not make any income tax elections affecting
interest expenses or affecting the depreciation deductions with
respect to the Contributed Assets or the Noncontributed Assets
with respect to the Partnership shown on Schedule 2 or any other
item that may affect the GE Capital Limited Partner, or extend
the statute of limitations for assessment of tax deficiencies,
unless it has received the prior written consent of the GE
Capital Limited Partner (such consent not to be unreasonably
withheld or delayed). The Managing General shall make any income
tax election reasonably requested by the GE Capital Limited
Partner, subject to applicable laws.
(b) The Managing General Partner shall cause to be
prepared all tax returns and statements, if any, which must be
filed on behalf of the Partnership with any taxing governmental
authority. With respect to each fiscal year or portion thereof,
the Managing General Partner shall submit a draft of the Federal
information tax return of the Partnership (with accompanying
schedules) for such fiscal year or portion thereof no later than
90 days prior to the required filing date (including extensions),
to the GE Capital Limited Partner for its consent, and when
consented to by the GE Capital Limited Partner, shall promptly
and timely file the return. If the GE Capital Limited Partner
disagrees with the proposed treatment of any Partnership item on
a tax return of the Partnership, then the GE Capital Limited
Partner shall give written notice to the Managing General Partner
within 30 days of the receipt of the return. If, after good
faith consultation, an agreement regarding the treatment of the
item cannot be reached within 10 days after the Managing General
Partner's receipt of such notice, the Partnership shall treat
such item in the manner prescribed by the GE Capital Limited
Partner, provided, that, if the Managing General Partner so
requests in writing, the GE Capital Limited Partner shall provide
a written opinion from independent tax counsel selected by the GE
Capital Limited Partner (and reasonably acceptable to the
Managing General Partner) to the effect that there is substantial
authority for such treatment or to the effect that there is a
reasonable basis for such treatment and that there is more
support for such treatment than the treatment proposed by the
Managing General Partner. Each of the GE Capital Limited Partner
and the Managing General Partner hereby agrees to use its best
efforts to resolve any disputes with respect to the Partnership
under this Section prior to the required filing date therefor.
On or before the required filing date (including extensions) of
the Partnership information tax return, the Managing General
Partner shall furnish to each Person who was a Partner at any
time during such Fiscal Year (x) a Schedule K-1 or any similar
form as may be required by the Code or the IRS and (y) such other
information with respect to the Partnership as is reasonably
necessary to fulfill such Partner's Federal, state, local and
foreign tax obligations.
(c) The Managing General Partner is hereby designated
as the "tax matters partner" for purposes of Section 6231(a)(7)
of the Code (the "Tax Matters Partner" or "TMP") with respect to
all taxable years of the Partnership. Additionally, the Tax
Matters Partner covenants to notify the Limited Partners promptly
as to the beginning of any audit or administrative or judicial
proceedings with respect to Partnership tax matters and as to all
material developments in such matters, and to provide the Limited
Partners with copies of all reports, notices and correspondence
relating to such matters. In connection with any administrative
or judicial proceeding with respect to the Partnership, the Tax
Matters Partner shall control the contest relating to such
adjustment; provided, however, that (i) with respect to any issue
that may affect the GE Capital Limited Partner, the Tax Matters
Partner shall take no actions without the consent of the GE
Capital Limited Partner, (ii) the GE Capital Limited Partner may
at any time at its option and at the expense of the Partnership,
assume control of all or any portion of such proceedings, and
(iii) with respect to any issue that may affect TPC One or TPC
Two, the Tax Matters Partner shall take no action without the
consent of TPC One and TPC Two unless the GE Capital Limited
Partner has consented to such action. Each Partner agrees that,
notwithstanding the rights afforded the Tax Matters Partner under
the Code, it will not pursue any administrative adjustment with
the Internal Revenue Service or judicial review of any such
adjustment other than in the manner detailed in this Section.
(d) The Managing General Partner shall not take any
position for income tax reporting purposes that is inconsistent
with any of the assumptions in Section 6.7(f)(iii) or in
paragraphs (a) or (h) (disregarding the assumption in paragraph
(h) concerning the write-off of basis) of the Assumptions in Part
1 of Schedule 2, except to the extent that (i) such assumption is
inconsistent with a final determination pursuant to a contest
conducted in accordance with Section 6.7(c) or (ii) if the
General Partner requests, due to a change in law, resulting from
a change to the Code, a change to the Regulations, a court case
or a published revenue ruling, that affects such an assumption, a
written opinion that there is a reasonable basis for taking a
position for income tax reporting purposes consistent with such
assumption, independent tax counsel, selected by the GE Capital
Limited Partner, is unable to provide such opinion. In either
such event, the Managing General Partner shall use reasonable
efforts to report the matter so as to result in tax consequences
as close as possible to the assumptions. No Partner shall take a
position on its tax returns that is inconsistent with the
positions taken on the Partnership tax returns with respect to
such assumptions.
(e) The GE Capital Limited Partner's rights under this
Section 6.7(a) through (d) apply only with respect to all taxable
years that end on or before, or that include, the First GE
Capital Flip Date and shall terminate on the earlier to occur of
(i) the expiration of the statute of limitations with respect to
all such years and (ii) the date the GE Capital Limited Partner
ceases to be a Partner.
(f) (i) For years beginning after the First GE
Capital Flip Date, the Managing General Partner shall cause to be
prepared all tax returns and statements, if any, which must be
filed on behalf of the Partnership with any taxing governmental
authority. With respect to each fiscal year or portion thereof
the General Partner shall submit a draft of the Federal
information tax return of the Partnership (with accompanying
schedules) for such fiscal year or portion thereof no later than
90 days prior to the required filing date (including extensions),
to the Other Limited Partners for their consent, and, when
consented to by a Majority in Interest of the Other Limited
Partners, shall promptly and timely file the return. If a
Majority in Interest of the Other Limited Partners disagrees with
the proposed treatment of any Partnership item on a tax return of
the Partnership, then any Other Limited Partner may give written
notice to such effect to the Managing General Partner within 30
days of the receipt of the return. If, after good faith
consultation, an agreement regarding the treatment of the item
cannot be reached within 10 days after the Managing General
Partner's receipt of such notice, the Partnership shall treat
such item in the manner prescribed by a Majority in Interest of
the Other Limited Partners, provided that if the Managing General
Partner so requests in writing to the Other Limited Partners, a
written opinion from independent tax counsel selected by a
Majority in Interest of the Other Limited Partners, and
reasonably acceptable to the General Partner shall be provided to
the Managing General Partner to the effect that (A) there exists
substantial authority for such treatment and that there is a
stronger basis for the treatment proposed by a Majority in
Interest of the Other Limited Partners than that proposed by the
Managing General Partner and (B) to the extent that the treatment
proposed by the Managing General Partner is consistent with the
tax assumptions set forth in (iii) below, there is no substantial
authority for the treatment proposed by the Managing General
Partner. If such opinion cannot be obtained, then the
Partnership return shall be prepared in accordance with the
treatment of such item prescribed by the Managing General
Partner, provided that, if the Majority in Interest of the Other
Limited Partners so requests, the Managing General Partner
provides an opinion of the independent counsel selected by the
Managing General Partner and reasonably acceptable to the
Majority in Interest of the Other Limited Partners to the effect
that there exists substantial authority for such treatment. If
no such opinion can be obtained, then the item shall be reported
in accordance with the manner prescribed by the Majority in
Interest of the Other Limited Partners if the Managing General
Partner shall have been provided with a written opinion of
independent tax counsel selected by the Majority in Interest of
the Other Limited Partners and reasonably satisfactory to the
Managing General Partner to the effect that there is a reasonable
basis for treating the item in such manner and that there is a
stronger basis for the treatment proposed by the Majority in
Interest of the Other Limited Partners than that proposed by the
Managing General Partner. If no such opinion can be obtained,
then the item shall be reported in accordance with the manner
prescribed by the Managing General Partner. Each of the Limited
Partners and the Managing General Partner hereby agrees to use
its reasonable best efforts to resolve any disputes with respect
to the Partnership under this Section prior to the required
filing date therefor. On or before the required filing date
(including extensions) of the Partnership information tax return,
the Managing General Partner shall furnish to such Person who was
a Partner at any time during such Fiscal Year (x) a Schedule K-1
or any similar form as may be required by the Code or the IRS and
(y) such other information with respect to the Partnership as is
reasonably necessary to fulfill such Partner's Federal, state,
local and foreign tax obligations.
(ii) In connection with any audit of the Partnership
with respect to taxable years ending after the taxable year in
which the First GE Capital Flip Date occurs, (A) for so long as
such audit shall be conducted at the level of the Internal
Revenue Service (rather than at the judicial level) the Tax
Matters Partner shall control the contest relating to such
adjustment; provided, however, that the Tomen Limited Partners
and the GE Capital Limited Partner shall be permitted to
participate in the contest if and to the extent that either so
desires (subject to the control of such contest by the Tax
Matters Partner), and provided further, that the Tax Matters
Partner shall not (W) select counsel or other tax advisors to
represent the Partnership in connection with the contest without
the consent of a Majority in Interest of Other Limited Partners
(which consent shall not be unreasonably denied), (X) contest any
adjustment for a fiscal year, without the consent of a Majority
in Interest of Other Limited Partners (which consent may not be
unreasonably denied) where the amount of such adjustment shall be
in excess of $250,000 or where the counsel selected by the Tax
Matters Partner pursuant to (A) (W) above shall have failed to
opine that there is, at minimum, a reasonable basis for
contesting the proposed adjustment, (Y) settle any such contest
without the consent of a Majority in Interest of the Other
Limited Partners (which consent shall not be unreasonably
denied), or (Z) enter into any extension of the period of
limitations for making assessments with respect to the
Partnership or any Partner without the consent of a Majority in
Interest of the Other Limited Partners (which consent shall not
be unreasonably denied); and (B) for so long as such audit shall
be conducted at the judicial level, a Majority in Interest of the
Other Limited Partners shall control the contest relating to such
adjustment, including choice of forum and the decision as to
whether or not a judicial contest shall be undertaken (with the
Tax Matters Partner, and each other Partner of the Partnership,
following the instructions of the Majority in Interest of the
Other Limited Partners); provided, however, that the Tax Matters
Partner shall be permitted to participate in the judicial contest
if and to the extent that it so desires (subject to the control
of such contest by a Majority in Interest of the Other Limited
Partners) and, provided further, that the Majority in Interest of
the Other Limited Partners shall not (W) select counsel to
represent the Partnership in connection with the contest without
the consent of the Tax Matters Partner (which consent shall not
be unreasonably denied), (X) decline to judicially contest any
adjustment for a fiscal year without the consent of the Tax
Matters Partner (which consent may not be unreasonably denied) if
the counsel selected by the Majority in Interest of the Other
Limited Partners pursuant to (B)(W) shall have opined that the
basis in law and fact in favor of allowance of the item proposed
to be adjusted outweighs the basis in law and fact to the
contrary, (Y) settle any such contest without the consent of the
Tax Matters Partner (which consent shall not be unreasonably
denied), or (Z) appeal any matter to the Supreme Court of the
United States. Both the Tax Matters Partners shall be entitled
to rely on the advice of such legal and accounting firms as they
may employ with respect to matters set forth in this Section and
shall be reimbursed by the Partnership for any costs and expenses
incurred in connection therewith. Each Partner agrees that,
notwithstanding the rights afforded such Partner under the Code,
it will not pursue any administrative adjustment with the
Internal Revenue Service or judicial review of any such
adjustment other than in the manner detailed in this Section.
The rights of the Other Limited Partners under this Section
6.7(f)(ii) shall terminate on the earlier to occur of (A) the
Second Tomen Flip Date, and (B) the date TPC One and TPC Two
cease to be Partners.
(iii) The Managing General Partner shall not take any
position for income tax reporting purposes that is inconsistent
with any of the tax assumptions below or the assumptions in
paragraphs (a) and (h) of the Assumptions in Part 1 of Schedule 2
(disregarding the assumption in paragraph (h) concerning the
write-off of basis), except to the extent that (A) such
assumption is inconsistent with a final determination pursuant to
a contest conducted in accordance with Section 6.7(f)(ii) or (B)
if the General Partner requests, due to a change in law,
resulting from a change to the Code, a change to the Regulations,
a court case or a published revenue ruling, that affects such an
assumption, a written opinion that there is a reasonable basis
for taking a position for income tax reporting purposes
consistent with such assumption, independent tax counsel selected
by a Majority in Interest of Other Limited Partners and
reasonably satisfactory to the Managing General Partner is unable
to provide such opinion the assumptions described in this Section
6.7(f)(iii) are:
(A) Each of the Partners has made its Capital
Contribution;
(B) Each of the Partners will be recognized as a
Partner of the Partnership and treated as owning its
interest in the Partnership as of the date hereof:
(C) The Project was placed in service for Federal
income tax purposes on the date reasonably determined by the
Managing General Partner and the GE Capital Limited Partner.
(D) The Organization Expenses will be deducted ratably
over a sixty-month period as provided in Sections 195 and
709 of the Code;
(E) The allocations set forth in this Agreement will
be respected for Federal income tax purposes; and
(F) The Partnership constitutes a "partnership" under
Section 7701(a)(2) of the Code.
6.8 Inspection; Reports to Regulatory Authorities.
The Partners and their respective authorized representatives may
inspect the Project and the books and records of the Managing
General Partner relating to the Project during normal business
hours for any purpose reasonably related to the interest of the
Partners as partners of the Partnership and make copies and
extracts therefrom, and may discuss the Partnership's affairs,
finances and accounts with the employees and accountants of the
Managing General Partner and the Partnership (and by this
provision the Managing General Partner authorizes such
accountants to discuss with each of the Partners and their
respective authorized representatives the affairs, finances and
accounts of the Partnership), all at such times and as often as
may be reasonably requested. The Managing General Partner shall
furnish each of the Partners statements accurate in all material
respects regarding the condition and state of repair of the
Project, all at such times and as often as may be reasonably
requested. None of the Partners shall have any duty to make any
such inspection or inquiry or incur any liability or obligation
by reason of not making any such inspection or inquiry. To the
extent permitted by Applicable Law, the Managing General Partner
shall prepare and file in timely fashion or, where any Partner
shall be required to file, on reasonable notice, the Managing
General Partner shall prepare and deliver to such Partner within
a reasonable time prior to the date for filing, any report with
respect to the Project that shall be required to be filed with
any Governmental Authority. Each of the Partners shall notify
the Managing General Partner at least 30 days prior to any filing
deadline if any such notice, application or document is necessary
on its behalf. Notwithstanding anything in Section 17-305(b) of
the Partnership Act to the contrary, the General Partner shall
not have the right to keep confidential from the Limited Partners
any information relating to the Partnership.
ARTICLE VII
MANAGEMENT
7.1 Appointment; Powers of the Managing General
Partner. (a) SECI is hereby appointed as the initial Managing
General Partner. SECI shall serve as the Managing General
Partner until it shall cease to be a General Partner or the
Managing General Partner pursuant to Section 13.2 or as provided
in Article X or XII.
(b) The Managing General Partner, acting as such and
subject to Section 7.3 and to any other specific limitations
contained in this Agreement, shall have full and exclusive power
and discretion to manage the day-to-day business and affairs of
the Partnership, including the construction, equipping,
management, control, operation, maintenance and repair of the
Project, and to engage in all activities and transactions and all
other acts and things that in its reasonable judgment are
necessary, appropriate, proper, advisable or desirable to effect
the furtherance of the Partnership Business, including, but not
limited to, the power to:
and records of the Partnership, and have charge and
supervision over and care and custody of all moneys,
securities, and disbursements of the Partnership;
(ii) Contracts. Negotiate the terms of and make, enter
into, execute, deliver and perform any and all agreements,
contracts, commitments, arrangements and undertakings, and
amendments thereto, all as may be necessary, proper,
advisable or desirable to carry out the Partnership's
objects and purposes, including, but not limited to, the
following:
(1) construction and term loan agreements;
(2) notes, including, but not limited to,
construction notes and term notes;
(3) capital contribution agreements;
(4) indemnity agreements;
(5) collateral security documents, including, but
not limited to, mortgages, security agreements,
security deposit agreements, assignments regarding
contracts and consents to assignments regarding
contracts;
(6) power purchase contracts;
(7) steam supply agreements;
(8) construction contracts;
(9) reimbursement agreements;
(10) recognition agreements;
(11) additional contracts, including, but not
limited to, subordinated mortgages, gas purchase and
transportation agreements, operation and maintenance
agreements, and easement agreements;
(12) any (a) assignment, (b) consent to
assignment, (c) consent and agreement, and (d) consent
and/or recognition agreement relating to the types of
contracts, agreements, commitments, arrangements or
other undertakings set forth in this Section 7.1(b);
(13) certificates and notices, including, but not
limited to, construction loan borrowing certificates,
term loan borrowing certificates, completion
certificates, cost certificates and notices of
borrowing;
(14) collateral agency agreements;
(15) tax indemnity agreements;
(16) Project Contracts;
(17) Basic Documents;
(18) letter agreements; and
(19) success fee agreements; and
to have letters of credit issued for its account and on its
behalf.
(iii) Authorization. Grant special or limited authority
to employees and agents of the Partnership to make, execute,
deliver and perform the agreements generally described in
paragraph (ii) of this Section 7.1(b);
(iv) Investments. Invest and reinvest available funds
of the Partnership in Cash Equivalents in accordance with
the terms of the Security Deposit Agreement and Section 6.4;
(v) Proceedings. Pursue or defend any claim, action,
proceeding or debt due to, owned by or asserted against the
Partnership, by litigation or otherwise; provided, however,
that (1) until the First GE Capital Flip Date, the Managing
General Partner shall permit any Partner, at such Partner's
sole option, to take part with the Managing General Partner
in any arbitration proceeding under any Project Contract and
(2) until the First GE Capital Flip Date, without the
approval of the GE Capital Limited Partner, the Managing
General Partner shall not initiate any lawsuit except to
collect debts or to enforce contractual obligations in the
ordinary course of business;
(vi) Accounts. Open, maintain and close depositories
and bank accounts for the deposit and withdrawal of money
and give signatory powers to designated Persons in
accordance with the terms of the Security Deposit Agreement
and Section 6.4;
(vii) Advisors. Select, retain, direct, consult and
discharge attorneys, accountants, engineers, financial
advisors, consultants and other experts, agents and advisors
for the Partnership and determine their compensation and the
terms of their engagement on behalf of the Partnership in
accordance with the Partnership Operating Budget;
(viii) Reports. Prepare and file any reports, returns,
requests, applications or other filings relating to taxes,
legal requirements or governmental regulations pertaining to
the Partnership or the business or activities of the
Partnership, and act as TMP;
(ix) Borrowing Money and Pledging Assets. Borrow money
and, as security therefor, mortgage, pledge or otherwise
encumber any and all assets of the Partnership, including
the rights of the Partnership under any agreements
(including, without limitation, transactions pursuant to the
Loan Documents);
(x) Expenditures. Pay any and all fees and make any
and all expenditures which the Managing General Partner
deems necessary or appropriate in connection with the
organization of the Partnership, the transfer of interests
in the Partnership, the management of the affairs of the
Partnership, and the carrying out of its obligations and
responsibilities under this Agreement and the Partnership
Act, and to enforce all rights of the Partnership;
(xi) Admission of Limited Partners. Admit an assignee
of a Limited Partnership Interest as a substitute Limited
Partner, pursuant to and subject to the terms of Article 10;
(xii) Intellectual Property. Subject to paragraph (v)
above, 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
and 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 prosecute and defend all rights
of the Partnership in connection therewith;
(xiii) Payments and Collections. Cause to be paid all
amounts due and payable by the Partnership to any Person and
to collect all amounts due to the Partnership;
(xiv) Reserves. Establish and maintain reserves in
accordance with the provisions of this Agreement and the
Loan Documents;
(xv) Distributions. Make periodic distributions to the
Partners in accordance with the provisions of this
Agreement; and
(xvi) Necessary Activities. Engage in any kind of
activity necessary or incidental to the accomplishment of
the purpose of the Partnership, so long as such activities
may be lawfully carried on or performed by a partnership
under applicable law.
7.2 Certain Management Duties and Responsibilities of
the Managing General Partner. The Managing General Partner shall
do the following:
(a) Payment of Obligations. (i) Cause the
Partnership and North Country to pay, discharge or otherwise
satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations and
liabilities of whatever nature under the Basic Documents;
(ii) Cause the Partnership and North Country to pay,
discharge or otherwise satisfy at or before maturity or
before they become delinquent, all of its Indebtedness and
other obligations of whatever nature (other than under the
Basic Documents) except where any such failure could not
reasonably be expected, in the sole discretion of, until the
First GE Capital Flip Date, the GE Capital Limited Partner,
and thereafter, the Managing General Partner, to have a
Material Adverse Effect;
(b) Taxes; Charges; Laws. (i) Promptly cause the
Partnership and North Country to pay and discharge all
taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its
property prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might
become a Lien upon its property (including for this purpose,
property title to which is held by the IDA), provided, that,
if no Special Event shall have occurred and is continuing,
the Partnership and North Country shall have the right, or
if a Special Event shall have occurred and be continuing,
with the prior written consent of the GE Capital Limited
Partner, the Partnership and North Country shall have the
right, however, to contest in good faith the validity or
amount of any such tax, assessment, charge, levy or claim by
proper proceedings timely instituted, and may permit the
taxes, assessments, charges, levies or claims so contested
to remain unpaid during the period of such contest if: (A)
the Partnership or North Country, as the case may be,
diligently prosecutes such contest, (B) the Partnership or
North Country, as the case may be, sets aside on its books
adequate reserves with respect to the contested items, (C)
during the period of such contest the enforcement of any
contested item is effectively stayed, and (D) the outcome of
which, if adversely determined, could not reasonably be
expected to have a Material Adverse Effect, and promptly pay
or cause to be paid any valid, final judgment enforcing any
such tax, assessment, charge, levy or claim and cause the
same to be satisfied of record; and (ii) comply and cause
the Partnership to comply with all Applicable Laws, and from
time to time obtain and comply with and cause the
Partnership and North Country to obtain, maintain and comply
with Governmental Approvals as shall now or hereafter be
necessary under all Applicable Laws, in connection with the
construction, ownership, operation or maintenance of the
Project or the making and performance by the Partnership or
North Country, as the case may be, of any of the Basic
Documents to which it is a party except any thereof the
failure with which to comply or of which to obtain would not
reasonably be expected, in the sole discretion of, until the
First GE Capital Flip Date, the GE Capital Limited Partner,
and thereafter, the Managing General Partner, to have a
Material Adverse Effect.
(c) Principal Place of Business. So long as SECI
shall be the Managing General Partner: (i) cause each of
the Partnership and North Country to maintain its principal
place of business at Five Post Oak Park, Houston, Texas;
(ii) not permit the Partnership or North Country to keep any
place of business outside of the States of New York and
Texas; (iii) not permit the Partnership to keep any assets
outside of the States of New York and Texas; (iv) not change
its name or the name of the Partnership or North Country;
and (v) in the case of the Partnership, not do business
under any name other than Saranac Power Partners, L.P. or
Saranac Energy Company, Inc., and in the case of North
Country, not do any business under any name other than
"North Country Gas Pipeline Corporation", without, in each
case, the prior written consent of each of the Partners,
which consent shall not be unreasonably withheld.
(d) Performance of Obligations; Enforcement of Rights.
Fully and faithfully carry out all of its obligations, and
cause each of the Partnership and North Country to fully and
faithfully carry out all of its obligations, from time to
time under or in respect of the Basic Documents, and,
without limiting the generality of the foregoing, cause the
Partnership and North Country to pay all amounts payable by
the Partnership or North Country thereunder. The Managing
General Partner will take any and all such action as may be
necessary to enforce its, the Partnership's and North
Country's rights and to collect any and all sums due it, the
Partnership or North Country under the Project Contracts and
will obtain all necessary Governmental Approvals to keep
such Project Contracts in full force and effect. Without
limiting the generality of the foregoing, it will:
(i) do or cause to be done all things necessary
to preserve and keep unimpaired its, the Partnership's
and North Country's rights and those of its assignees
under the Project Contracts and to prevent any default
under any thereof or any termination, surrender,
cancellation, forfeiture or impairment in any material
respect of any thereof, including, without limitation,
all things necessary to defend any appeal of the FERC
Order; and
(ii) not receive or collect or permit North
Country to receive or collect any payments under the
Project Contracts in advance of the time when the same
become due and payable thereunder unless such money is
held by the Security Agent pursuant to the Security
Deposit Agreement until due and payable.
(e) Maintenance of Existence. (i) Engage solely in
(A) the business of being the managing general partner of
the Partnership, except that the Managing General Partner
may enter into the SECI Term Loan Agreement as in effect on
the Conformed Agreement Date and to perform its obligations
thereunder and (B) the performance of the Partnership's
obligations pursuant to the Basic Documents and preserve and
maintain its existence as a corporation under the laws of
the State of Delaware and its qualification to do business
in the States of Texas and New York and in each other
jurisdiction in which the conduct of its business requires
such qualification except where the failure to qualify would
not have a Material Adverse Effect; (ii) not permit North
Country to engage in any business other than the operation
of the North Country Project and the performance of its
obligations pursuant to the Basic Documents to which it is a
party; and (iii) cause North Country to preserve and
maintain its existence as a corporation under the laws of
the State of New York and its qualification to do business
in the States of Texas and New York and in each other
jurisdiction in which the conduct of its business requires
such qualification except where the failure to qualify would
not have a Material Adverse Effect.
(f) Maintenance of Property; Insurance. Keep all of
the Partnership's and cause North Country to keep all of its
material property useful and necessary in its business in
good working order and condition except for normal wear and
tear; maintain and cause North Country to maintain insurance
on all the property of the Partnership or North Country, as
the case may be, in accordance with the provisions of
Schedule 8, naming each Partner as an additional insured if
requested by the GE Capital Limited Partner or a Majority in
Interest of the Other Limited Partners; comply and cause the
Partnership and North Country to comply with all warranties,
covenants and agreements made, given or undertaken by the
Partnership or North Country in favor of insurers in
connection with such insurance policies; and furnish to the
Limited Partners, upon written request, full information as
to the insurance carried for any purpose reasonably related
to the interest of such Partner as a partner in the
Partnership.
(g) Further Assurances. Promptly and duly execute and
deliver and cause North Country to promptly and duly execute
and deliver to each Partner such documents and assurances
and to take such further action as any Partner may from time
to time reasonably request in order to carry out more
effectively the intent and purpose of the Basic Documents
and to establish, protect and perfect the right and remedies
created or intended to be created in favor of each Partner.
(h) Governmental Regulation. (i) Take all actions and
cause North Country to take all actions as may from time to
time be necessary so that none of the Partners, their
respective Affiliates (other than North Country) or the
Partnership will, as a result of the construction, ownership
or operation of the Facility, the supply of fuel or water
thereto or the sale of steam or electricity therefrom, the
construction, ownership or operation of the Pipeline by
North Country or the entering into or performance of any
Basic Document or any transaction contemplated hereby or
thereby, become subject to the jurisdiction of any Federal,
state or local Governmental Authority or regulatory
commission or group to whose jurisdiction the same would not
otherwise be subject (including, without limitation, the
Securities and Exchange Commission, FERC and the public
utility commission, public service commission or analogous
Governmental Authority of any state (a "PUC")) or be deemed
to be, or be subject to regulation as, a public utility, an
electric utility, an electric company, a gas utility company
or a public utility holding company under any Applicable Law
(including, without limitation, the PUHCA, the FPA and the
laws under which any PUC is empowered to act) other than, in
each case, as an owner or operator of a Qualifying Facility;
and (ii) promptly and duly, and cause North Country to
promptly and duly, prepare and, if necessary, execute and
file, and prepare for execution and filing by any Partner,
any of its Affiliates or the Partnership, such notices,
applications and other documents as shall be necessary so
that the construction, ownership or operation of the
Facility, the supply of fuel and water thereto and the sale
of steam and electricity therefrom, the construction,
ownership or operation of the Pipeline by North Country and
the entering into and performance of any Basic Document
shall not subject any such Partner, its Affiliates or the
Partnership to any such regulation.
(i) Compliance with FERC Order, etc. At all times
cause the Partnership to comply with the terms and
conditions of the FERC Order and of each other license
required for the ownership or operation of the Project; not,
and not permit North Country to, amend or modify in any
material respect, terminate, transfer, pledge or otherwise
dispose of, or forfeit, surrender, permit or consent to the
amendment or modification in any material respect,
termination, transfer, pledge, other disposition,
forfeiture, or surrender of, any such license; and not take,
and not permit North Country to take, any other action under
any such license having a material adverse effect on any
Partner;
(j) Notices. Promptly and, in any event, within five
days of obtaining knowledge of any of the following, give
notice to each Partner:
(i) of the occurrence of (x) any Special Event or
(y) any event which, with the passage of time or the
giving of notice or both, would constitute a Special
Event;
(ii) of any default or event of default under any
Indebtedness, Guarantee Obligation or other Contractual
Obligation of the Managing General Partner, the
Partnership or North Country;
(iii) of any litigation, investigation or
proceeding which may exist at any time between SECI or
the Partnership or North Country and any Governmental
Authority including, without limitation, any
litigation, investigation or proceeding to revoke or
modify the FERC Order or any other license or
Governmental Approval required for the ownership or
operation of the Project;
(iv) of any litigation or proceeding affecting the
Partnership, the Managing General Partner, North
Country or the Project in which the amount involved is
$100,000 or more or in which injunctive or similar
relief is sought;
(v) of any litigation, investigation or
proceeding affecting any Project Participant other than
the Partnership which if adversely determined could
reasonably be expected to have a Material Adverse
Effect;
(vi) of discovery of any Hazardous Materials at
the Site, or of any litigation or proceeding relating
to environmental matters concerning the Partnership,
North Country or the Project (including receipt by the
Partnership or North Country of any notice of any
proceeding involving a Relevant Environmental Law or
any discharge of Hazardous Materials);
(vii) of the following events, as soon as possible
and in any event within 30 days after the Managing
General Partner knows or has reason to know thereof:
(A) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or (B) the
institution of proceedings or the taking or expected
taking of any other action by PBGC or SECI (if it shall
be a General Partner) or the Partnership to terminate,
withdraw or partially withdraw from any Plan, or (C)
the reorganization or insolvency of any Multiemployer
Plan, and, in addition to such notice, deliver to each
Limited Partner whichever of the following may be
applicable: (1) any notice delivered by PBGC
evidencing its intent to institute such proceedings or
any notice to PBGC that such Plan is to be terminated,
or (2) any notice of the reorganization or insolvency
of a Multiemployer Plan received by the Partnership or
SECI (if it shall be a General Partner);
(viii) of any Material Adverse Effect or any event
which could reasonably be expected to result in a
Material Adverse Effect;
(ix) of any loss or damage to the Project in
excess of $100,000;
(x) of any unscheduled shutdown or material
reduction in operation of the Facility, in each case
for a period in excess of 24 hours, or of any
substantial labor dispute which could lead to such a
reduction or shutdown;
(xi) of the execution and delivery of any
Additional Contract;
(xii) of any event constituting force majeure under
any of the Basic Documents or any claim by any party to
any Basic Document alleging that a force majeure event
thereunder has occurred;
(xiii) of (A) a complete copy of any new Basic
Document or Additional Contract entered into by the
Partnership and (B) any proposed amendment or
supplement to or waiver (together with a copy thereof)
of any provision of any Basic Document, or any proposal
with respect thereto;
(xiv) of the receipt by the Managing General
Partner, the Partnership or North Country of any
material notice, demand or declaration from any other
party to any of the Project Contracts relating to any
default or event of default thereunder (including,
without limitation, Article II, Section 3 of the Steam
Supply Agreement), the termination thereof or the
renewal or nonrenewal thereof;
(xv) of any request by a party to a Project
Contract for an arbitration proceeding under and
pursuant to the provisions of such Project Contract;
and
(xvi) of the receipt by the Managing General
Partner, the Partnership or North Country of any notice
or declaration by any Governmental Authority which
relates to, or could result in, Public Utility Status
with respect to the Partnership, the Managing General
Partner, North Country, any Limited Partner or any of
their respective Affiliates.
Each notice pursuant to this paragraph (j) shall be
accompanied by a statement of the Responsible Officer of the
Managing General Partner setting forth details of the
occurrence referred to therein and stating what action the
Managing General Partner proposes to take with respect
thereto. For all purposes of clause (vii) of this Section,
the Partnership shall be deemed to have all knowledge or
knowledge of all facts attributable to the administrator of
such Plan.
(k) Operation and Maintenance. (i) Cause the
Facility to be maintained in such condition that the
Facility will have the capacity and functional ability to
perform, on a continuing basis (ordinary wear and tear
excepted), in normal commercial operation, the functions and
ratings for which it was specifically designed in accordance
with the Plans and Specifications; and operate, service,
maintain and repair all necessary or useful components
thereof so that the condition and operating efficiency
thereof will be maintained and preserved (ordinary wear and
tear excepted) in accordance with (A) Prudent Utility
Practice and good commercial practice for items of a similar
size and nature, (B) such operating standards as shall be
required to enforce any material warranty claims against
dealers, manufacturers, vendors, contractors and
subcontractors and (C) the terms and conditions of all
insurance policies maintained by the Partnership or the
Managing General Partner in effect at any time with respect
thereto; and (ii) cause North Country to cause the North
Country Project to be maintained in such condition that the
Pipeline will have the capacity and functional ability to
perform, on a continuing basis (ordinary wear and tear
excepted), in normal commercial operation, the functions and
ratings for which it was specifically designed in accordance
with the Plans and Specifications; and cause North Country
to operate, service, maintain and repair all necessary or
useful components thereof so that the condition and
operating efficiency thereof will be maintained and
preserved (ordinary wear and tear excepted) in accordance
with (A) prudent pipeline practices and good commercial
practice for items of a similar size and nature, (B) such
operating standards as shall be required to enforce any
material warranty claims against dealers, manufacturers,
vendors, contractors and subcontractors and (C) the terms
and conditions of all insurance policies maintained by North
Country in effect at any time with respect thereto.
VF Liens. Protect and defend the Partnership's, and
cause North Country to protect and defend its, interest in
the Project against any Lien for the performance of work or
the supply of materials filed against the Project, and
remove any such Lien, except to the extent that (i) the
claim giving rise to such Lien is being diligently contested
in good faith, by appropriate proceedings timely instituted,
(ii) the Partnership or North Country has posted a bond or
established a cash reserve in an amount at least equal to
such claim on the books of the Partnership or North Country,
(iii) during the period of such contest the enforcement of
any contested item is effectively stayed and (iv) such
contest does not involve any substantial danger of the sale,
forfeiture or loss of any part of the Project, title thereto
or any interest therein and does not interfere with the
operation of the Facility or the Pipeline.
(m) North Country. The Managing General Partner shall
cause North Country, and shall prepare, execute and file any
and all documents necessary to permit North Country, to
declare and distribute to the Partnership (for distribution
in accordance with the terms of this Agreement and the
Security Deposit Agreement) promptly following the end of
each fiscal quarter of North Country any and all dividends
that North Country may declare in compliance with Applicable
Law.
(n) Non-cash receipts. The Managing General Partner
shall promptly liquidate in a commercially reasonable manner
all distributable non-cash receipts that it receives on
behalf of the Partnership but which it determines are not
necessary or desirable for the business of the Partnership
and deposit the proceeds in the Revenue Account for
distribution to the Partners as cash in accordance with
Article IV.
(o) Alternative Steam Plan. If during the Base Term
the GE Capital Limited Partner shall determine, in its
reasonable judgment, that the Steam Host will cease for any
reason to purchase steam from the Facility in sufficient
quantities so as to maintain the Facility's status as a
Qualifying Facility and SECI shall not have undertaken an
alternative to the operation of the Substitute Facility,
which the GE Capital Limited Partner shall have determined,
in its reasonable judgment, to be a viable and not
economically disadvantageous means to preserve the
Facility's status as a Qualifying Facility, upon the request
of the GE Capital Limited Partner, so long as SECI shall be
the Managing General Partner, the Managing General Partner
shall provide to the GE Capital Limited Partner, as soon as
possible but in any event within 60 days after receipt by
the Managing General Partner of written notice from the GE
Capital Limited Partner to such effect, an Alternative Steam
Plan; and the Managing General Partner shall cause the
substitute facility described in such Alternative Steam Plan
to be constructed and completed and become operational in
compliance with Applicable Law and the Alternative Steam
Plan by no later than the date one year after the date of
such request or, if the FERC shall have granted an exemption
from the requirement that the Facility be a Qualifying
Facility, such longer period not later than the date of the
expiration of such exemption, so long as during such period
NYSEG shall have taken no action to terminate the Power
Purchase Agreement.
7.3 Restrictions on Powers of the Managing General
Partner. (a) Until the First GE Capital Flip Date, whereupon
all of the provisions of this Section 7.3(a) (other than Section
7.3(a)(ii) which shall remain in full force and effect) shall
cease to be effective, the Managing General Partner shall not do
any of the following unless it shall have the prior written
approval of the GE Capital Limited Partner:
(i) Certain Contracts. Enter, or permit the
Partnership to enter, into any Additional Contract requiring
payments by the Partnership in excess of $1,500,000 during
the term of such Additional Contract or if the payments by
the Partnership under such Additional Contract during the
twelve month period commencing with the effectiveness of
such Additional Contract, when aggregated with the payments
by the Partnership under all other Additional Contracts then
in effect during such twelve month period, would exceed
$250,000; or appoint, or permit, the Partnership to appoint,
any operator of the Facility other than the Falcon Power
Operating Company;
(ii) Contracts with Affiliates. Approve the terms of
any agreement, contract, instrument or other transaction
between the Partnership and any Partner, or between the
Managing General Partner or the Partnership and any
Affiliate of the Partnership or the Managing General
Partner, except as explicitly provided for herein, in the
other Basic Documents or in the SECI Term Loan Agreement,
such consent not to be unreasonably withheld if entered on
terms no less favorable to the Partnership than would be
available in a bona fide arm's length transaction with a
Person which is not an Affiliate;
(iii) Merger; Sale of Assets. Authorize or permit the
merger or consolidation of the Partnership with any other
Person, any change to the form of the organization of the
Partnership or the sale, lease, exchange, transfer or other
disposition of the Project or any other assets of the
Partnership in a single transaction or a related series of
transactions, in each case with a value in excess of
$250,000 per year;
(iv) Indebtedness. Authorize the incurrence,
assumption or guaranty by the Partnership of, or suffer the
existence by the Partnership of, any Indebtedness, except
Partnership Permitted Indebtedness;
(v) Acquisition of Assets; Capital Expenditures.
Acquire assets or otherwise make capital expenditures except
in accordance with the Partnership Operating Budget;
(vi) No Other Business. Engage, or cause the
Partnership to engage at any time, in any activity other
than the activities contemplated to be engaged in by it
under the Basic Documents or enter into, or permit the
Partnership to enter into, any contract or agreement other
than the SECI Term Loan Agreement as in effect on the
Conformed Agreement Date, and as explicitly provided for
herein, in the other Basic Documents;
(vii) Liens. Create or otherwise allow any Lien to be
on or otherwise to affect any property included in the
Project, except Partnership Permitted Liens;
(viii) No Amendments or Assignments. Amend in any
material respect, modify in any material respect, waive
compliance with any material provision of, terminate, assign
any rights the Partnership may have under, consent to or
permit the assignment by any other Person of any right such
Person may have under, give consents or exercise rights
under or agree to any such amendment, modification,
termination, consent or waiver of compliance with any
material provision of, or any such assignment or exercise of
any rights under, any Project Contract or Governmental
Approval;
(ix) Private Placement. Take, or permit any of its
Affiliates to take, any action which would subject any
interest in the Partnership to the provisions of Section 5
of the Securities Act;
(x) Settlement of Proceedings. Compromise, settle or
abandon any claim, action, proceeding or debt due to, owned
by or asserted against the Partnership, in each case, in an
amount equal to $500,000 or more;
(xi) Investments. Make any investment of Partnership
funds other than in Permitted Investments;
(xii) Prepayment of Term Notes. Make any prepayment of
the principal of the Term Notes other than mandatory
prepayments in accordance with the express terms of the Term
Notes;
(xiii) Bankruptcy Filing. Take any action of the type
referred to in Section 13.1(g); and
(xiv) Liability to Third Parties. Perform or omit to
perform any act which (1) would cause any Person reasonably
to believe that the GE Capital Limited Partner is a general
partner of the Partnership, (2) would cause Persons with
which the Partnership transacts business reasonably to
believe that the GE Capital Limited Partner participates in
the control of the business of the Partnership or (3) would
otherwise cause the GE Capital Limited Partner to be liable
for the obligations of the Partnership under any
jurisdiction in which the Partnership is deemed to transact
business.
(b) Without limiting the force or effect of Section
7.3(a), unless the Managing General Partner has given at least 30
days' prior written notice to all of the Other Limited Partners
of its intention to take any of the following actions and all of
the Other Limited Partners have approved in writing the proposed
action, the Managing General Partner shall not have the authority
to:
(i) perform any act that would subject the Limited
Partners to liability as general partners in any
jurisdiction in which the Partnership transacts business;
(ii) knowingly refrain from performing any act if such
failure would subject the Limited Partners to liability as
general partners in any jurisdiction in which the
Partnership transacts business;
(iii) cause the Partnership to make a loan to a General
Partner or an Affiliate thereof;
(iv) act in a way that would cause the loss of the
Qualifying Facility status of the Facility;
(v) cause the Partnership to merge or consolidate with
or into any Person;
(vi) take any action or cause the Partnership to take
action that could cause the Partnership not to be recognized
as a partnership for Federal income tax purposes; or
(vii) change the nature of the Partnership's business,
conduct or carry on the business of the Partnership through
any business entity other than the Partnership, or cause any
action to be taken by the Partnership to engage in any
business other than as set forth in Section 2.2 of this
Agreement.
(c) Without limiting the force or effect of Section
7.3(a) and, other than with respect to Sections 7.3(c)(iv)(D),
(E), (F), (G) or (I), so long as no Special Event shall have
occurred and be continuing, unless the Managing General Partner
has given at least 30 days' prior written notice to all of the
Other Limited Partners of its intention to take any of the
following actions and a Supermajority in Interest of the Other
Limited Partners (except in the case of (i) below) has approved
in writing the proposed action, the Managing General Partner
shall not have the authority to:
(i) transact any business (including any amendment of
any then-existing business arrangement) with any Partner or
any Affiliate thereof for goods or services in connection
with the conduct of the Partnership's business (except
pursuant to the Operation and Maintenance Agreement and
agreements for the transportation of natural gas between the
Partnership and North Country, as in effect on the date
hereof); provided, however, that so long as the transaction
is effectuated on terms no less favorable to the Partnership
than would be available in a bona fide arm's-length
transaction with an unaffiliated Person, the approval of the
Limited Partners may not be unreasonably withheld; and
provided, further, that in the case of this subsection only,
such action by the Managing General Partner must be approved
in writing by more than fifty percent (50%) of the Non-SECI
Limited Partners;
(ii) incur indebtedness for borrowed money (including
the assumption or guaranty of a third-party obligation) by
the Partnership other than in the ordinary course of
business and other than pursuant to the Loan Agreement,
Section 10 of the Capital Contribution Agreement and
Sections 7.2(o) and 13.2(e) of this Agreement, if the
aggregate amount outstanding of all Indebtedness of the
Partnership (other than pursuant to the Loan Agreement,
Section 10 of the Capital Contribution Agreement and
Sections 7.2(o) and 13.2(e) of this Agreement) would exceed
$1,000,000.00;
(iii) act in a way contrary to the provisions of this
Agreement;
(iv) from the Initial Capital Contribution Date to and
including the First Tomen Flip Date,
(A) sell, lease, abandon, mortgage or pledge, or
otherwise dispose of, in a transaction or series of
transactions, all or any substantial portion of the
assets of the Partnership (excluding, however, the
liens and encumbrances granted pursuant to the
Collateral Security Documents), other than replacement
of assets in the ordinary course of business;
(B) elect to terminate or dissolve or wind up the
Partnership;
(C) commence or permit to occur a Bankruptcy of
the Partnership;
(D) possess any assets of the Partnership, or
assign rights in specific assets of the Partnership,
for other than a Partnership purpose;
(E) confess a judgment or settle a claim or
lawsuit against the Partnership which makes it
impossible to carry on the business of the Partnership;
(F) admit a Substituted Limited Partner except in
accordance with the provisions of Section 10.2 or admit
a successor General Partner except in accordance with
Article X or Article XII or Section 13.2(b);
except in the ordinary course of business of the
Partnership or of North Country;
(H) acquire assets for or otherwise make a
capital expenditure, expansion or modification of the
Project at a cost of more than $5,000,000 for any
single acquisition, expenditure or modification or
$5,000,000 in the aggregate for any series of
acquisitions, expenditures or modifications in respect
of the same matter, unless such acquisition,
expenditure or modification constitutes a replacement
or repair in the ordinary course of business;
(I) elect to be governed by any amendment to the
Partnership Act or by a succeeding or successor statute
of the State of Delaware governing limited
partnerships;
(J) enter into, amend in any material respect,
refinance or replace the GE Capital Equity
Contribution, the Term Loan or any Refinancing Loan
except in accordance with Section 10.10 or 13.2(g)
hereof or Section 10 of the Capital Contribution
Agreement;
(K) enter into, terminate or materially amend any
Project Contract; provided, however, that the Managing
General Partner shall not be required to seek the
consent of the Other Limited Partners as to any
contract for the supply of goods and services entered
into in the ordinary course of business and (i) under
which the Partnership would pay in the aggregate not
more than $1,500,000; or (ii) which is permitted under
the Loan Documents;
(L) after a damage or loss to the Project (other
than in the case of a Partnership Event of Loss), elect
not to rebuild or repair any material portion of the
Project;
(M) remove or change Falcon Power Operating
Company as the Project operator; provided, however,
that if the Managing General Partner obtains an
acceptable replacement Project operator, the approval
of the Other Limited Partners under this provision
shall not be unreasonably withheld;
(N) make any material modification to the
electric and steam generating capacity of the Project
(other than pursuant to Section 7.2(o));
(O) prepay any indebtedness of the Partnership
unless in the ordinary course of business or pursuant
to a mandatory or, with respect to Distributable Cash
applied pursuant to Section 4.11 or 4.15 hereof or in
connection with a refinancing pursuant to Section 10 of
the Capital Contribution Agreement, optional prepayment
under the Loan Documents; or
(P) distribute any property other than cash to a
Partner;
provided, however, that if a Supermajority in Interest of the
Other Limited Partners have not responded in writing to the
written notice of proposed action given by the Managing General
Partner pursuant to this Section 7.3(c) within 30 days of receipt
of such notice, such proposed action shall be deemed to be
approved by a Supermajority in Interest of the Other Limited
Partners; and provided, further, that the failure of SECI
Limited, alone, to respond to such notice shall not result in a
deemed approval for the purposes of this Section 7.3(c).
(d) Without limiting the force or effect of Section
7.3(a) and, other than with respect to Sections 7.3(d)(iv), (v),
(vi), (vii) or (ix), so long as no Special Event shall have
occurred and be continuing, after the First Tomen Flip Date,
unless the Managing General Partner has given at least 30 days'
prior written notice to all of the Other Limited Partners of its
intention to take any of the following actions and a Majority in
Interest of the Other Limited Partners has approved in writing
the proposed action, the Managing General Partner shall not have
the authority to:
(i) sell, lease, abandon, mortgage or pledge, or
otherwise dispose of, in a transaction or series of
transactions, all or any substantial portion of the assets
of the Partnership (excluding, however, the liens and
encumbrances granted pursuant to the Loan Documents), other
than replacement of assets in the ordinary course of
business;
(ii) elect to terminate or dissolve or wind up the
Partnership;
(iii) commence or permit to occur a Bankruptcy of the
Partnership;
(iv) possess any assets of the Partnership, or assign
rights in specific assets of the Partnership, for other than
a Partnership purpose;
(v) confess a judgment or settle a claim or lawsuit
against the Partnership which makes it impossible to carry
on the business of the Partnership;
(vi) admit a Substituted Limited Partner except in
accordance with the provisions of Section 10.2 or admit a
successor General Partner except in accordance with Article
X or Article XII or Section 13.2(b);
(vii) make any loans or extensions of credit, except in
the ordinary course of business of the Partnership or of
North Country;
(viii) acquire assets for or otherwise make a capital
expenditure, expansion or modification of the Project at a
cost of more than $5,000,000 for any single acquisition,
expenditure or modification or $5,000,000 in the aggregate
for any series of acquisitions, expenditures or
modifications in respect of the same matter, unless such
acquisition, expenditure or modification constitutes a
replacement or repair in the ordinary course of business or
is made pursuant to Section 7.2(o);
(ix) elect to be governed by any amendment to the
Partnership Act or by a succeeding or successor statute of
the State of Delaware governing limited partnerships;
(x) enter into, amend in any material respect,
refinance or replace the GE Capital Equity Contribution or
the Term Loan except in accordance with Section 10.10 or
13.2(g) hereof or Section 10 of the Capital Contribution
Agreement;
(xi) after a damage or loss to the Project (other than
in the case of a Partnership Event of Loss), elect not to
rebuild or repair any material portion of the Project;
(xii) remove or change Falcon Power Operating Company as
the Project operator; provided, however, that if the
Managing General Partner obtains an acceptable replacement
Project operator, the approval of the Other Limited Partners
under this provision shall not be unreasonably withheld;
(xiii) make any material modification to the electric and
steam generating capacity of the Project other than pursuant
to Section 7.2(o);
(xiv) prepay any indebtedness of the Partnership unless
in the ordinary course of business or pursuant to a
mandatory or, with respect to Distributable Cash applied
pursuant to Section 4.11 or 4.15 hereof or in connection
with a refinancing pursuant to Section 10 of the Capital
Contribution Agreement, optional prepayment under the Loan
Documents; or
(xv) distribute any property other than cash to a
Partner;
provided, however, that if a Majority in Interest of the Other
Limited Partners have not responded in writing to the written
notice of proposed action given by the Managing General Partner
pursuant to this Section 7.3(d) within 30 days of receipt of such
notice, such proposed action shall be deemed to be approved by a
Majority in Interest of the Other Limited Partners; provided,
further, that the failure of SECI Limited alone, to respond to
such notice shall not result in a deemed approval for the
purposes of this Section 7.3(d).
(e) The Managing General Partner shall be prohibited
from taking any action in connection with the governance of the
Partnership which is inconsistent with the express provisions of
this Agreement. Neither the Managing General Partner, nor the
SECI Limited Partners or the Tomen Limited Partners, after the
Second Capital Contribution Date and prior to the First GE
Capital Flip Date, shall make any loans or capital contributions
to the Partnership without the express prior written consent of
the GE Capital Limited Partner other than capital contributions
made pursuant to Article VIII.
7.4 Limitations on Liability of General Partner. (a)
The General Partner shall not be liable, responsible or
accountable in damages or otherwise to the Partnership or any
other Partner for any loss, damage or liability sustained by the
Partnership or any such other Partner, or any successor, assignee
or transferee thereof for any act or omission performed or
omitted by it in good faith pursuant to authority granted to it
by this Agreement and in a manner reasonably believed by it to be
within the scope of authority granted to it by this Agreement and
in the best interests of the Partnership and the Limited
Partners, unless such act or omission constitutes bad faith,
fraud, gross negligence, recklessness or intentional misconduct.
The General Partner shall be under a fiduciary duty and
obligation to conduct the affairs of the Partnership in the best
interests of the Partnership.
(b) The General Partner does not guarantee, and shall
not be personally liable for, the return of all or any portion of
the Capital Contribution of any Partner or the payment of any
distributions to any Partner (or any assignee, successor or
transferee thereof), including, without limitation, distributions
pursuant to Article IV, it being expressly agreed that any such
return of capital or payment of distributions shall be made
solely from the assets of the Partnership (which shall not
include any right of contribution from the General Partner) in
accordance with this Agreement. Each Partner acknowledges that
the General Partner has not guaranteed that the development and
operation of the Project will be economically successful, that
any Partner's participation in the Partnership will be
economically beneficial or that any Partner will be entitled to
any particular deduction or credit for Federal, state or local
income tax purposes.
7.5 Partnership Information Meetings. The Managing
General Partner shall once each calendar quarter, with the first
such meeting to be held during the first calendar quarter after
the date hereof, call a meeting with the Limited Partners to
discuss and report on Facility operations.
7.6 Limitations on the Partners. No Partner other
than the Managing General Partner shall have any right or
authority to act on behalf of or in the name of the Partnership
or to bind the Partnership in any manner except with the prior
written consent of the Managing General Partner, as provided in
Article XIII, as provided in any Recognition Agreement or as
provided pursuant to a contract approved as required under
Section 7.3. No Partner shall have any right or authority to act
for or bind the Partnership except as expressly set forth herein.
No Partner shall take any action in conflict with the foregoing
provisions of this Section 7.6 or represent, directly or by
course of conduct, that it has any right, power or authority to
take any such action. Notwithstanding anything in this Agreement
to the contrary, the Limited Partners are hereby authorized to
enter into any agreement under which the Limited Partners have
rights, duties or obligations relating to contracts entered into
by the Partnership, including any such agreement denominated as a
"Recognition Agreement," all without affecting the Limited
Partners' limited liability as limited partners of the
Partnership. The Managing General Partner shall use its best
efforts to cause the Partnership to cooperate to the fullest
extent necessary to assure each Limited Partner's ability to
perform under any recognition agreement relating to contracts
entered into by the Partnership.
7.7 Cooperation Regarding Governmental Approvals and
Power Purchase Agreement. SECI General agrees to cooperate fully
with the Partnership and with the Managing General Partner (if
the Managing General Partner shall not be SECI General) so as to
keep the Governmental Approvals (including, without limitation,
the FERC Order) and the Power Purchase Agreement in full force
and effect. As promptly as practicable after it is permitted by
Applicable Law, agreement or contract, as the case may be, the
General Partner shall cause the Partnership (and shall cooperate
with the Partnership and the Managing General Partner, to the
extent necessary) to apply for a renewal of the Governmental
Approvals and a renewal or replacement of the Power Purchase
Agreement for the periods available and to actively prosecute
such application.
7.8 Time Devoted to Partnership. The Managing General
Partner shall devote whatever time and attention to the business,
affairs and operations of the Partnership as are required,
appropriate or desirable for Partnership purposes and to carry
out the provisions of this Agreement. If SECI is the Managing
General Partner, it shall devote its full time to the
Partnership; provided that SECI's directors, officers and
employees (other than full-time employees, if any) shall not be
expected to devote their full time to the performance of such
duties unless necessary from time to time for the proper
performance of the Managing General Partner's duties hereunder.
7.9 Other Business Activities. (a) Except as
expressly provided herein, nothing in this Agreement shall be
deemed to restrict in any way the right of any Partner to manage,
conduct, be employed by, operate, participate in or have an
interest in any other business, activity, venture or organization
of any nature or description independently or with others,
without accountability to the Partnership or any other
Partner(s); provided, that each Partner shall conduct its
business in a manner so as to avoid Public Utility Status as
described in Section 10.10. Each Partner shall be entitled to
receive and hold, without being accountable to the Partnership or
to any other Partner, any fees, compensation, salary, income,
dividends, share of profits or other distribution, gain or income
which it may receive from any other business, activity, venture
or organization.
(b) No General Partner shall engage in any business or
activity other than as required or permitted hereby with respect
to the Project.
(c) Notwithstanding any other provision of this
Agreement, any opportunity to expand or enhance the Project at
the Site or within a one-mile radius thereof shall be presented
to the Partnership.
7.10 Meetings. (a) Meetings of the Other Limited
Partners for the purpose of acting upon any matter upon which the
Other Limited Partners are entitled to vote may be called by the
Managing General Partner at any time and shall be called by the
Managing General Partner not more than 15 days after receipt of a
written request for such a meeting signed by one or more of the
Other Limited Partners representing in the aggregate at least ten
percent (10%) of the Percentage Interest of the Other Limited
Partners. Meetings of the Other Limited Partners shall be held
at such location as from time to time shall be reasonably
determined by the Managing General Partner. The Managing General
Partner shall give written notice of any such meetings to all
Other Limited Partners and such meeting shall be held not less
than 15 days nor more than 60 days after the Managing General
Partner sends such notice to the Other Limited Partners.
(b) The presence in person or by proxy of a Majority
in Interest of the Other Limited Partners entitled to vote shall
constitute a quorum at all meetings of the Other Limited
Partners; provided, that if there shall be no such quorum, a
Majority in Interest of the Other Limited Partners so present or
so represented may adjourn the meeting from time to time without
further notice until a quorum shall have been obtained. No
notice of the time, place or purpose of any meeting of Other
Limited Partners need be given to any Other Limited Partner
entitled to such notice who, in writing, executes and files with
the records of the meeting, either before or after the time
thereof, a waiver of such notice. Any Other Limited Partners who
attend a meeting in person or are represented by proxy, except
for Other Limited Partners attending a meeting for the express
purpose of objecting at the beginning of the meeting to the
transaction of any business on the ground that the meeting is not
lawfully called or convened, shall be deemed to have waived
notice of such meeting. Each Other Limited Partner may authorize
any Person to act for it by proxy with respect to any matter in
which such Other Limited Partner is entitled to participate,
including waiving notice of any meeting and voting or
participating in a meeting. Every proxy must be signed by such
Other Limited Partner or its attorney-in-fact. No proxy shall be
valid after the expiration of 12 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Other Limited Partner executing
it.
(c) If the Managing General Partner elects to seek the
written consent of the Other Limited Partners, the Managing
General Partner shall notify the Other Limited Partners in
writing of the nature of the proposed matter being submitted for
action and the Managing General Partner's recommendation with
respect to approval or disapproval thereof. The Managing General
Partner shall include with each such notification a current list
of the names and addresses of the Other Limited Partners. For
purposes of obtaining such consent, the Managing General Partner
may require a response within a specified time, which may be not
less than 15 days nor more than 60 days from the date of the
notice.
Special Rights of the Other Limited Partners.
Notwithstanding any provision to the contrary herein, and subject
to the provisions set forth in this Section 7.11 and in the
Partnership Act, with, until the First GE Capital Flip Date, the
prior written consent of the GE Capital Limited Partner, Other
Limited Partners holding at least 75 percent of the Percentage
Interests of all NonSECI Limited Partners may (a) remove the
Managing General Partner in the event the Managing General
Partner takes or omits or refuses to take action which amounts to
a breach of Section 7.4(a) or if there is a breach of Section
7.2(n) and (b) appoint a successor thereto. Any removal or
withdrawal of the Managing General Partner pursuant to this
Section 7.11 shall be effective immediately following the
admission to the Partnership of a successor general partner of
the Partnership. In addition, if at any time the sum of the
Percentage Interest owned by the Managing General Partner and all
Affiliates of the Managing General Partner is less than 10
percent, with, until the First GE Capital Flip Date, the prior
written consent of the GE Capital Limited Partner, a Majority in
Interest of the Other Limited Partners shall have the right to
remove the Managing General Partner at will and without cause.
Immediately upon the removal or withdrawal of the Managing
General Partner it shall deliver to the Partnership all books and
records relating to the affairs of the Partnership.
7.12 Partnership Expenses. To the extent not
otherwise expressly provided to the contrary herein, the
Partnership shall pay all fees, costs and expenses of the
Partnership and the Managing General Partner acting as such.
7.13 Liability of the General Partner After
Withdrawal. Upon the General Partner's ceasing to be a general
partner of the Partnership, whether voluntarily or involuntarily,
the General Partner shall remain liable for all liabilities and
obligations hereunder incurred on or prior to the date and time
of its withdrawal or retirement and, if its ceasing to be a
general partner violates this Agreement or the Partnership Act,
it shall be liable for any loss or damage which the Partnership
or any of its Partners may incur as a result of such ceasing to
be a general partner. The General Partner shall not have any
liability for any liabilities or obligations hereunder incurred
after the date and time of its ceasing to be a general partner.
7.14 No Compensation; Reimbursement. The Managing
General Partner shall receive no compensation for performing its
duties as the Managing General Partner under this Agreement,
provided, that this Section 7.14 shall not be interpreted so as
to affect the rights of SECI General or an Affiliate thereof (a)
to receive its share of distributions and allocations as set
forth in Articles IV and V, (b) to receive compensation for
providing goods and services in independent capacities outside
its capacity as the Managing General Partner or (c) to receive
payments and reimbursements permitted under this Agreement.
7.15 North Country. The Managing General Partner
shall be relieved of any obligation to cause North Country to
take any action, or refrain from taking any action, to the extent
that the performance of such obligation could subject the
Partnership or any Partner to regulation as a "gas corporation"
under the Public Service Law of the State of New York.
ARTICLE VIII
CALLS FOR AND PAYMENT OF FUNDS
8.1 Calls for and Payment of Funds. Except as set
forth in Articles III, VIII, X or XIII, the Capital Contribution
Agreement and the Loan Agreement, or as otherwise mutually agreed
by the Partners, no Partner shall make (or be required to make) a
capital contribution or loan of funds to the Partnership.
8.2 Partner Loans; Additional Capital Contributions.
(a) After the First GE Capital Flip Date, in the event that the
Partnership is unable to borrow money necessary to further the
Partnership's business on terms reasonably acceptable to the
Managing General Partner, prior to making any call for Additional
Capital Contributions (as hereinafter defined) the Managing
General Partner shall, subject to Section 7.3(c)(ii), seek to
borrow the necessary money from the Limited Partners and the
Limited Partners shall have the right but not the obligation to
loan money to the Partnership (a "Partner Loan"). Partner Loans
shall bear interest at the lesser of (i) the maximum rate
permitted by law, and (ii) the Prime Rate plus 2% per annum, and
shall be repayable prior to any distributions pursuant to Article
IV; provided, however, that the total amount of each repayment as
a percentage of Distributable Cash shall not exceed fifty percent
(50%). If more than one Limited Partner desires to make a
Partner Loan pursuant to this Section 8.2, each shall be entitled
to make a Partner Loan pro rata in the same proportion that its
Percentage Interest bears to the total Percentage Interests of
all Partners desiring to make such Partner Loans. Partner Loans
shall not be treated as Capital Contributions. In accordance
with this Agreement, a Limited Partner may lend money to and
transact other business with the Partnership and, subject to
applicable law, shall have the same rights and obligations with
respect thereto as a Person who is not a partner of the
Partnership. If a Limited Partner is a lender, in exercising its
rights as a lender, including in making its decision on whether
to foreclose on property of the Partnership, such lender will
have no duty to consider (i) its status as a partner of the
Partnership, (ii) the interests of the Partnership, or (iii) any
duty (including fiduciary duties, if any) it may have to any
Partner or the Partnership.
(b) After the First GE Capital Flip Date, upon notice
from the chief financial officer of the Managing General Partner
pursuant to paragraph (c) of this Section 8.2 that a
determination has been made that additional Capital Contributions
to the Partnership are required, any Partner may, but shall not
be required to, make additional Capital Contributions of cash to
the Partnership in excess of its required Capital Contributions
under Section 3.1 ("Additional Capital Contribution(s)"), which
Additional Capital Contributions may be made by each Partner in
an amount equal to the product of (x) such Partner's Percentage
Interest at the time such Additional Capital Contributions are
called for and (y) the aggregate amount of the call.
(c) After the First GE Capital Flip Date, a call for
Additional Capital Contributions to the Partnership shall be
issued by or on behalf of the chief financial officer of the
Managing General Partner by notice, which shall specify the
amount to be contributed in the aggregate and the amount the
Partner to which the call is directed may contribute, and which
shall be sent to all Partners and shall be executed by the chief
financial officer or a designated representative of the chief
financial officer. To satisfy a call for Additional Capital
Contributions, a Partner shall have paid into the Partnership
cash funds in the full amount of its proportionate share of the
aggregate amount of such call for Additional Capital
Contributions on or before a date thirty (30) days following the
date of the notice, which date shall be the "Contribution Date"
for such contributions. All Additional Capital Contributions
shall be credited to the respective Capital Accounts of the
Partners as of the Contribution Date.
(d) After the First GE Capital Flip Date, should a
Partner not have contributed by the Contribution Date the full
amount of an Additional Capital Contribution called for as
provided in this Section 8.2, the Percentage Interest and
Allocation Percentage of each Partner, effective as of the
Contribution Date, shall be the fraction (expressed as a
percentage) determined by dividing the Deemed Contribution Amount
(as defined hereinbelow) with respect to such Partner by the
aggregate amount of all Capital Contributions made to the
Partnership by the Partners, and credited to the Capital Accounts
of such Partners, on or prior to the Contribution Date (including
any Additional Capital Contributions made by the Partners in
response to the call); provided, however, that no downward
adjustment of the Percentage Interest or the Allocation
Percentage of the Tomen Limited Partners under this Section 8.2
shall be effective prior to the Second Tomen Flip Date and no
downward adjustment of the percentage interest of the GE Capital
Limited Partner under this Section 8.2 shall be effective prior
to the Second GE Capital Flip Date. For purposes of this Section
8.2(d), the "Deemed Contribution Amount" shall mean, with respect
to each Partner, an amount determined by (i) multiplying the
aggregate amount of all Capital Contributions made to the
Partnership by all Partners and credited to the Capital Accounts
of the Partners prior to the Contribution Date (but excluding any
Additional Capital Contributions made by the Partners in response
to the call in question) by such Partner's Percentage Interest or
Allocation Percentage, as the case may be (as in effect
immediately prior to the Contribution Date), and (ii) adding to
the product determined in clause (i) above any Additional Capital
Contribution made by such Partner in response to the call in
question. The Deemed Contribution Amount shall be applied solely
for purposes of making the adjustments to the Partners'
Percentage Interests or Allocation Percentage, as the case may
be, pursuant to this Section 8.2(d) and shall not affect, or be
taken into account in determining, the Partners' Capital Accounts
or other rights to the capital of the Partnership.
(e) In the event that a call for Additional Capital
Contributions shall be issued as provided herein and any Partner
shall not have made its Additional Capital Contribution in
response to such call on or before the Contribution Date, a
Partner who has made its Additional Capital Contribution in
response to such call may make all or any portion of the unmade
Additional Capital Contribution of any noncontributing Partner,
whereupon the Percentage Interests and Allocation Percentages
shall be adjusted as provided for hereinabove.
8.3 Cure Rights; Additional Capital Contributions.
(a) General. This Section 8.3 establishes the procedures for
the Other Limited Partners to cure payment defaults pursuant to
the provisions of Sections 13.1(e) and 13.1(r).
(b) Notice. Upon the earlier of the Managing General
Partner's (i) receipt of notice constituting or evidencing a
Special Event under Section 13.1(e) or 13.1(r), and (ii)
awareness of the reasonable likelihood of a Special Event under
Section 13.1(e) or 13.1(r), the Managing General Partner shall
notify each of the Limited Partners thereof, specifying the
nature of the actual or anticipated Special Event and the
aggregate amount necessary or anticipated to be necessary to cure
such Special Event (the "Cure Amount").
(c) Rights to Fund Cure. Each of the Other Limited
Partners shall have the right, but not the obligation, to make an
additional Capital Contribution to the Partnership to fund the
portion of the Cure Amount equal to the product of its then
applicable Percentage Interests times the Cure Amount. In the
event that one or more of the Other Limited Partners does not
fund all or any portion of the Cure Amount it has the right to
fund as calculated according to the preceding sentence (the "Cure
Amount Deficiency"), the Other Limited Partners desiring to fund
the Cure Amount Deficiency shall have the right to do so
according to the ratio of their then applicable Percentage
Interests to one another.
(d) Return on Section 8.3 Capital Contributions.
Capital Contributions made pursuant to this Section 8.3 shall be
repaid to the Other Limited Partners making such additional
Capital Contributions, together with a cash on cash return equal
to LIBOR plus 500 basis points per annum, as provided in Section
4.13.
(e) The Managing General Partner shall use reasonable
efforts to coordinate the process for the exercise of the rights
of the Other Limited Partners under this Section 8.3.
8.4 Cost Overruns. (a) General. On or before the
Second Capital Contribution Date, in the event that (i) Certified
Construction Costs exceed the Construction Budget, or (ii) the
actual cost of or expense associated with any item designated in
the Construction Budget exceeds the amount set forth in the
Construction Budget with respect to such item after application
of any remaining Construction Budget contingency or other amounts
available under the Loan Documents for the payment of such item
(in each case, such excess a "Cost Overrun"), SECI shall seek to
obtain the money necessary to pay for the Cost Overrun, as
follows:
(i) first, SECI shall have the right, but not the
obligation, to contribute capital to the Partnership up
to the amount of the Cost Overrun; and
(ii) second, to the extent not provided by SECI,
the Tomen Limited Partners shall have the right, but
not the obligation, to contribute capital to the
Partnership up to the amount of the Cost Overrun.
(b) Delivery of Overrun Notice. Immediately upon the
earliest of (i) the date on which a Cost Overrun has occurred,
(ii) the date SECI expects a Cost Overrun to occur, and (iii) the
date SECI receives any notice under the Loan Documents indicating
a Cost Overrun, SECI shall provide the Tomen Limited Partners
with written notice of such Cost Overrun, specifying the amount
of and reason(s) for such Cost Overrun (the "Overrun Notice").
(c) Funding by SECI. As soon as possible and in any
event within 5 days after the date of the Overrun Notice, SECI
shall (i) deliver a notice (the "SECI Notice") to the Tomen
Limited Partners setting forth the amount of capital
contributions SECI will make pursuant to Section 8.4(a)(i) above,
and (ii) fund such capital contributions, in immediately
available funds, to the Partnership. The Partnership shall
credit the amount of the capital contribution to SECI's Capital
Account.
(d) Funding by the Tomen Limited Partners. Within 5
days after receipt of the SECI Notice, the Tomen Limited Partners
shall (i) deliver a notice to SECI and the Managing General
Partner setting forth the amount of the capital contribution the
Tomen Limited Partners will make pursuant to Section 8.4(a)(ii)
above, and (ii) fund such capital contribution, in immediately
available funds, to the Partnership. The Partnership shall
credit the Tomen Limited Partners' capital contribution in the
amount of the capital contribution to the Tomen Limited Partners'
Capital Account.
(e) Distributions in Respect of Capital Contributions.
On or prior to the Second Capital Contribution Date, prior to
payment to SECI of any Success Fee and after payment to any
Affiliate of the Tomen Limited Partners of any amount due such
Affiliate under the Joint Development Agreement, SECI shall use
all amounts otherwise available to pay the Success Fee or the
proceeds of Construction Loans, if any, made for the purpose of
reimbursing the Partnership for such Cost Overruns to make
distributions in respect of capital contributions made pursuant
to this Section 8.4 in the following order of priority:
(i) first, to the Tomen Limited Partners in return of their
capital contributions, (together with a return thereon as
provided in Section 8.4(f)), and (ii) second, to SECI in return
of its capital contributions.
(f) Return on Tomen Limited Partners' Capital
Contributions. A Tomen Limited Partner shall be entitled to earn
a 20% After-Tax Internal Rate of Return on the amount of any
Capital Contribution contributed by such Tomen Limited Partner
under this Section 8.4 and shall be included in the calculation
to determine the Initial Allocation Percentage of such Tomen
Limited Partner under Section 3.4(a) and Exhibit A.
(g) Unreturned Capital Contributions. On the Second
Capital Contribution Date, the amount of any Capital Contribution
contributed by the Tomen Limited Partners pursuant to Section
8.4(d) will be added to any Capital Contribution made by the
Tomen Limited Partners on the Second Capital Contribution Date.
8.5 Unpaid Tomen Fees. On the Second Capital
Contribution Date, if there exist any unpaid Tomen Fees and Delay
Interest thereon (both as defined in the Joint Development
Agreement) the Tomen Limited Partners shall be entitled to
distributions in an amount equal to the amount of such unpaid
Tomen Fees or Delay Interest thereon, and on the amount of any
return, calculated pursuant to Section 8.4(f), on any Capital
Contribution contributed by the Tomen Limited Partners pursuant
to Section 8.4(d), to the extent such return has not been
returned pursuant to Section 8.4(e) together with a 30% pre-tax
(cash on cash) per annum return thereon. Such distributions
shall be payable from Distributable Cash as provided in Section
4.14. At any time any amount shall be distributable to either
Tomen Limited Partner under Section 4.14, SECI shall not borrow
any amount under the SECI Term Loan Agreement, unless such
borrowing is used, in whole or in part, to make capital
contributions to be used by the Partnership to make distributions
provided under Section 4.14.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 Conditions to the Contributions on the Initial
Capital Contribution Date. The obligation of GE Capital to make
a capital contribution to the Partnership on the Initial Capital
Contribution Date is subject to the satisfaction or waiver
immediately prior to or concurrently with the making of such
contribution of the conditions precedent set forth in Section
2(b) of the Capital Contribution Agreement.
9.2 Conditions to the Contributions on or Prior to the
Second Capital Contribution Date. The obligation of GE Capital
to make additional capital contributions to the Partnership in
respect of its Limited Partnership Interest on or prior to the
Second Capital Contribution Date is subject to the satisfaction
or waiver immediately prior to or concurrently with the making of
such contributions of the conditions precedent set forth in
Section 2(c) of the Capital Contribution Agreement.
ARTICLE X
TRANSFER AND ENCUMBRANCE
10.1 Limited Partner Transfer Restrictions. (a) Each
Limited Partner, subject to and after compliance with the
provisions of Sections 10.3, 10.4, 10.6, 10.12, 10.13 and 10.14
applicable to such Limited Partner, may sell, assign, transfer,
mortgage, pledge or otherwise (directly or indirectly, including
entering into or consenting to any transaction that constitutes a
transfer for tax purposes) dispose of ("Transfer") its Limited
Partnership Interest, except if:
(i) the assignee is not a Permitted LP Transferee;
(ii) the Transfer would cause the number of Persons
which acquired Limited Partnership Interests directly or
indirectly from in the case of each of SECI, the Tomen
Limited Partners and the GE Capital Limited Partner, to
exceed ten;
(iii) such Transfer would violate any Governmental
Approval;
(iv) such Transfer would cause the Facility to lose its
status as a Qualifying Facility;
(v) such Transfer would violate the terms of any
agreement binding upon the Partnership;
(vi) such Transfer would violate any Applicable Law,
including, without limitation, applicable Federal or state
securities laws or require any registration under such
securities laws;
(vii) such Transfer would cause the Partnership to be
classified otherwise than as a partnership for Federal
income tax purposes;
(viii) the transferee has not agreed in writing to be
bound by this Agreement;
(ix) such Transfer would cause a termination of the
Partnership for Federal income tax purposes;
(x) such Transfer would cause a dissolution of the
Partnership under the Partnership Act; or
(xi) the transferee is an incompetent or a minor.
(b) Any transfer made by any Partner which violates
any provision of this Agreement shall be ab initio null and void
and of no effect.
(c) An assignee pursuant to this Section 10.1 of a
Limited Partnership Interest shall be entitled to receive all
distributions and allocations otherwise distributable or
allocable to the Limited Partner with respect to the Limited
Partnership Interest assigned to such assignee but shall not have
the right to vote such Limited Partnership Interest (or part
thereof) until such time as the assignee becomes a substitute
Limited Partner as provided herein. The "effective date" of an
assignment under this Section 10.1 shall be the date specified in
a notice delivered by the assigning Limited Partner to the
Managing General Partner, which date shall be no earlier than the
date of receipt of such notice as provided in Section 11.1.
10.2 Substitute Limited Partners; Additional Limited
Partners. (a) No transferee of any Limited Partner shall become
a substitute Limited Partner without the prior written consent of
the Managing General Partner and, in the case of a transferee
from SECI, a Majority in Interest of all Partners (excluding, for
this purpose, SECI), in each case, which consent may be granted
or withheld in the Managing General Partner's or each Partner's,
as applicable, sole and absolute discretion.
(b) Except as may be permitted by Section 10.2(a) or
13.2 of this Agreement, no additional Partners may be admitted to
the Partnership, except upon the prior written consent of each
Partner, acting in its sole discretion, and after compliance with
the conditions set forth in Sections 10.1(a)(i) through (xi).
10.3 Additional SECI Limited Transfer Restrictions.
Except as security for the Obligations and the obligations of
SECI under the SECI Term Loan Agreement, SECI may not Transfer
its interest as a limited partner in the Partnership until after
the Second Capital Contribution Date. From and after the Second
Capital Contribution Date until the fifth anniversary of the
Second Capital Contribution Date, SECI may Transfer its interest
as a limited partner in the Partnership; provided that, after
giving effect to such Transfer, SECI shall continue to own a
Limited Partnership interest equal to not less than 60% of the
Limited Partnership Interest owned by it on the Second Capital
Contribution Date after giving effect to the transactions
consummated on such date. From and after the fifth anniversary
of the Second Capital Contribution Date, the provisions of this
Section 10.3 shall no longer be applicable.
10.4 Tomen Rights to Transfer. (a) Notwithstanding
the provisions of Section 10.2 (but subject to the provisions of
Section 10.13 in the case of the Transfer to a limited
partnership the general partner of which is Tomen and one or more
limited partners of which are not Affiliates of Tomen), TPC One
and TPC Two shall have the right from time to time to Transfer
all or any part of their Limited Partnership Interests to an
Affiliate (including without limitation to a limited partnership
the general partner of which is Tomen), which Affiliate shall,
upon execution of this Agreement be admitted to the Partnership
as a limited partner of the Partnership, subject to such Transfer
meeting the conditions set forth in Sections 10.1(a)(i) through
(xi); provided, however, that if the Partnership would otherwise
not satisfy the requirements of Revenue Procedure 92-33 (or any
successor thereto) solely on the basis of the transfer
restrictions applicable to SECI and the GE Capital Limited
Partner, the transferee of Limited Partnership Interests of any
of the Tomen Limited Partners shall be admitted as a substitute
Limited Partner only in accordance with Section 10.2(a).
(b) If (i) an Event of Default under the Loan
Agreement shall have occurred and be continuing, (ii) the
Substitute Term Loan shall not have been made as provided in
Section 8 of the Capital Contribution Agreement, (iii) the
Construction Loans shall not have been refinanced as provided in
Section 9 of the Capital Contribution Agreement, and (iv) the
Limited Partnership Interest of the GE Capital Limited Partner
shall have been converted as provided in Section 4.16, then (x)
notwithstanding any other provision (other than Sections
10.1(a)(iii) through (xi)), TPC One and TPC Two may transfer
their Limited Partnership Interests to a Person that does not
compete directly with Falcon in the development, ownership or
operation of non-utility generation projects, and (y) at the
request of TPC One or TPC Two, such transferee shall, subject to
Section 10.2(a), be admitted as a substitute Limited Partner.
10.5 Pledges, Security Interest. Notwithstanding
anything else in this Agreement to the contrary, upon any
Transfer which is a grant of any pledge, security interest,
hypothecation, lien or other encumbrance by a Partner against
such Partner's interest in the Partnership, such Partner shall
continue to be a partner of the Partnership.
10.6 Ownership by SECI, TPC One and TPC Two.
Notwithstanding anything to the contrary contained in this
Agreement, SECI shall retain the beneficial ownership of not less
than a nine percent (9%) Limited Partnership Interest, and TPC
One and TPC Two, collectively, shall retain the beneficial
ownership of not less than a two percent (2%) Limited Partnership
Interest, in each case for five years from the Second Capital
Contribution Date.
10.7 Revisions to this Agreement Upon Transfer or
Encumbrance. If pursuant to the provisions of Section 10.1, the
Limited Partners are permitted to Transfer any of their interests
in the Partnership, or, if additional Partners are admitted
pursuant to Section 10.2(b) or otherwise, then contemporaneously
with such Transfer or admission, the Capital Accounts, Percentage
Interests and Allocation Percentages of the Partners shall be
adjusted to accurately reflect the interests of each and every
Partner.
10.8 Transfer of the General Partner Interest. Except
as security for the Obligations and the obligations of SECI under
the SECI Term Loan Agreement, SECI may not Transfer its General
Partner Interest until after the Second Capital Contribution
Date. Thereafter, SECI may Transfer its General Partner Interest
if (i) the GE Capital Limited Partner shall have expressly
consented in writing to such Transfer (which consent may be
granted or withheld in the sole discretion of the GE Capital
Limited Partner); (ii) SECI has provided one or more successor
General Partners reasonably satisfactory to the GE Capital
Limited Partner and a Majority in Interest of the Other Limited
Partners, (iii) such transferee meets the requirements to be a
Permitted LP Transferee, and (iv) such transferee meets the
conditions set forth in Sections 10.1(a)(i) through (xi). Any
purported assignment by SECI in violation of this Section shall
be deemed a withdrawal by SECI under Section 12.1 hereof.
10.9 Amendment to Certificate of Limited Partnership.
If a Person has otherwise qualified under this Agreement to
become a substitute or new General Partner, such Person shall
become a General Partner upon the filing with the Secretary of
State of the State of Delaware of an amendment to the Certificate
of Limited Partnership in proper form, duly executed by such
Person. Any such admission shall be deemed to have occurred
immediately prior to the withdrawal of any General Partner who is
withdrawing from the Partnership in connection with the admission
of a new General Partner.
10.10 Voluntary Withdrawal by the GE Capital Limited
Partner. (a) (i) If at any time, the GE Capital Limited
Partner or any Affiliate of the GE Capital Limited Partner,
solely by reason of its interest in the Partnership or any
transaction contemplated by this Agreement or any other Basic
Document and not as a result of any other interest or activity of
the GE Capital Limited Partner or such Affiliate, shall be deemed
by any Governmental Authority having jurisdiction to be an
"electric utility" or an "electric utility holding company" as
such terms are used in PURPA and the regulations thereunder (18
C.F.R. Part 292), or any wholly or partially owned direct or
indirect subsidiary of any "electric utility", "gas utility" or
"electric utility holding company", as such terms are so used, or
any similar entity (including without limitation a "public
utility" as such term is defined in the FPA, or a "holding
company," a "subsidiary company," an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company" as such
terms are defined in the PUHCA) subject to regulation under the
FPA, the PUHCA, or any other comparable federal, state or local
law or regulation (any such classification being called "Public
Utility Status"), then, upon demand made by such Limited Partner
to the Managing General Partner, the Partnership shall forthwith
redeem the GE Capital Limited Partner's right, title and interest
in the Partnership for a redemption price equal to the Stipulated
Termination Value of its interest plus the Termination Payment.
(ii) The redemption price shall be paid in cash, or at
the option of the Partnership, with the proceeds of a loan to be
made by the GE Capital Limited Partner to the Partnership on the
proposed purchase date. Such loan will be evidenced by a note
(the "Redemption Note") which will mature on the last scheduled
Level 1 Distribution Date, bear interest at a rate equal to the
lesser of (i) the maximum rate permitted by law and (ii) the
Treasury Index Rate plus 4.40%, be payable in consecutive
quarterly installments of principal and interest for the period
commencing with the first Distribution Date after the date of
such note (each such installment to be in an amount not greater
than the maximum amount of Level 1 Distributions that, but for
the consummation of the purchase referred to in this Section
10.10, would have been payable to the GE Capital Limited Partner
on each Distribution Date) and have other terms and conditions
which are not more onerous, in any material respect, than those
contained in the Loan Agreement. If the Redemption Note is not
paid in full on or prior to the date fifteen years after the Date
of Commercial Operation, principal and interest will continue to
be payable thereon until the Redemption Note is paid in full, but
such payments will be made only in amounts and at times that, but
for the consummation of the purchase referred to in this Section
10.10, distribution would have been payable to the GE Capital
Limited Partner pursuant to Sections 4.4 and 4.5. The Redemption
Note will be secured by a first (second so long as the Loan
Agreement is in effect) pledge of (i) the interests of SECI in
the Partnership and (ii) the stock of SECI and SECI Holdings
pursuant to pledge agreements in form and substance reasonably
satisfactory to the GE Capital Limited Partner and by a first
(second so long as the Loan Agreement or any refinancing thereof
is in effect) priority lien on the assets of the Partnership
(including, without limitation, the Project) pursuant to a
security agreement and a mortgage, each in form and substance
reasonably satisfactory to the GE Capital Limited Partner.
10.11 Tomen's Rights Following Regulatory Events. (a)
Notwithstanding anything to the contrary herein, in the event
that a Tomen Event of Regulation (other than a North Country
Event of Regulation) has occurred, each Tomen Limited Partner
shall have the right to require that SECI purchase its Limited
Partnership Interests for an amount equal to the Fair Market
Sales Value thereof (the "Tomen Purchase Price"). The Tomen
Purchase Price, together with all other amounts then due Tomen
from the Partnership under this Agreement, shall be payable in
cash, or at the option of SECI by means of a non-recourse note or
notes payable out of future distributions from the Partnership
that such Tomen Limited Partner otherwise would have been
entitled to had it retained its Limited Partnership Interest and
shall contain subordination provisions in form and substance
satisfactory to the GE Capital Limited Partner. Unpaid amounts
shall accrue interest at an interest rate equal to the lesser of
(i) the maximum rate permitted by law and (ii) 30% per annum.
(b) Notwithstanding anything to the contrary herein,
in the event that a North Country Event of Regulation has
occurred, a Majority in Interest of the Other Limited Partners
shall have the right to require that the Partnership sell (in
compliance with Applicable Law) all of its right, title and
interest in the stock or assets, held directly or indirectly, of
North Country within 30 days of such North Country Event of
Regulation (or as soon as possible thereafter in compliance with
Applicable Law) to an entity, and on terms and conditions,
reasonably acceptable to the Managing General Partner; provided,
however, that if the Partnership has not sold all of its right,
title and interest in the stock or assets of North Country as set
forth hereinabove in this Section 10.11(b), then each Tomen
Limited Partner shall have the right to require that the
Partnership purchase its Limited Partnership Interests pursuant
to the terms of Section 10.11(a). The purchase price for the
stock or assets of North Country (or its immediate parent) shall
be reasonably acceptable to the Managing General Partner and may
be payable out of cash flow of North Country (or its immediate
parent).
10.12 Right of First Offer in Respect of the GE
Capital Limited Partnership Interests. Prior to offering for
sale the GE Capital Limited Partnership Interest or any portion
thereof to Persons other than Affiliates of SECI, Tomen or GE
Capital, or soliciting offers to purchase the GE Capital Limited
Partnership Interest or any portion thereof from Persons other
than Affiliates of SECI, Tomen or GE Capital, GE Capital shall
solicit an offer to purchase the GE Capital Limited Partnership
Interest or portion thereof to be sold from SECI and TPC One and
TPC Two. Upon receipt of such a solicitation from the GE Capital
Limited Partner, SECI and TPC One and TPC Two shall have 60 days
in which to make an offer to purchase the GE Capital Limited
Partnership Interest or portion thereof to be sold. If neither
SECI nor TPC One and TPC Two makes an offer to purchase the GE
Capital Limited Partnership Interest or portion thereof to be
sold prior to the end of such 60 day period, then the GE Capital
Limited Partner may thereafter offer to sell, solicit offers to
purchase and sell the GE Capital Limited Partnership Interest or
portion thereof to be sold to any Person (other than the Persons
listed on Schedule 2 to the Letter Agreement) on such terms and
conditions as the GE Capital Limited Partner deems appropriate,
in its sole discretion. If either SECI or TPC One and TPC Two
makes an offer to purchase the GE Capital Limited Partnership
Interest or portion thereof to be sold and the GE Capital Limited
Partner rejects such offer, then the GE Capital Limited Partner,
during the 270 day period following the rejection of such offer,
may offer to sell, solicit offers to purchase and sell the GE
Capital Limited Partnership Interest or portion thereof to be
sold to any Person on terms and conditions which are more
favorable to the GE Capital Limited Partner than the terms and
conditions offered by SECI and/or TPC One and TPC Two. If the GE
Capital Limited Partner shall not enter into a binding commitment
to sell the GE Capital Limited Partnership Interest or portion
thereof to be sold prior to the end of such 270 day period, then
the procedure set forth in the foregoing provisions of this
Section 10.12 shall be reinstated. Following the admission of a
Limited Partner to the Partnership in respect of the transfer of
less than all of the GE Capital Limited Partnership Interest, any
actions that may be taken by the GE Capital under this Agreement
may be taken by holders of more than 50% of the GE Capital
Limited Partnership Interest. Upon any transfer of the GE
Capital Limited Partnership Interest pursuant to the provisions
of this Section 10.12, the provisions of this Section 10.12 shall
lapse and be of no further force or effect with respect to the
portion of the GE Capital Limited Partnership Interest so
transferred.
10.13 Right of First Offer in Respect of the Tomen
Limited Partnership Interests. Prior to offering for sale the
Tomen Limited Partnership Interests or any portion thereof to
Persons other than Affiliates of SECI, Tomen or GE Capital, or
soliciting offers to purchase the Tomen Limited Partnership
Interests or any portion thereof from Persons other than
Affiliates of SECI, Tomen or GE Capital, the Tomen Limited
Partners shall solicit an offer to purchase the Tomen Limited
Partnership Interests or portion thereof to be sold from SECI and
the GE Capital Limited Partner. Upon receipt of such a
solicitation from the Tomen Limited Partners, SECI and the GE
Capital Limited Partner shall have 60 days in which to make an
offer to purchase the Tomen Limited Partnership Interests or
portion thereof to be sold. If neither SECI nor the GE Capital
Limited Partner makes an offer to purchase the Tomen Limited
Partnership Interests or portion thereof to be sold prior to the
end of such 60 day period, then the Tomen Limited Partners may
thereafter offer to sell, solicit offers to purchase and sell the
Tomen Limited Partnership Interests or portion thereof to be sold
to any Person (other than the Persons listed on Schedule 2 to the
Letter Agreement) on such terms and conditions as the Tomen
Limited Partners deem appropriate, in their sole discretion. If
either SECI or the GE Capital Limited Partner makes an offer to
purchase the Tomen Limited Partnership Interests or portion
thereof to be sold and the Tomen Limited Partners reject such
offer, then the Tomen Limited Partners, during the 270 day period
following the rejection of such offer, may offer to sell, solicit
offers to purchase and sell the Tomen Limited Partnership
Interests or portion thereof to be sold to any Person (other than
the Persons listed on Schedule 2 to the Letter Agreement) on
terms and conditions which are more favorable to the Tomen
Limited Partners than the terms and conditions offered by SECI
and/or the GE Capital Limited Partner. If the Tomen Limited
Partners shall not sell the Tomen Limited Partnership Interests
or portion thereof to be sold prior to the end of such 270 day
period, then the procedure set forth in the foregoing provisions
of this Section 10.13 shall be reinstated. Following the
admission of a Limited Partner to the Partnership in respect of
the transfer of less than all of the Tomen Limited Partnership
Interests, any actions that may be taken by TPC One or TPC Two,
as the case may be, under this Agreement may be taken by holders
of more than 50% of the Tomen Limited Partnership Interests.
Upon any transfer of the Tomen Limited Partnership Interest
pursuant to the provisions of this Section 10.13, the provisions
of this Section 10.13 shall lapse and be of no further force or
effect with respect to the portion of the Tomen Limited
Partnership Interest so transferred.
10.14 Right of First Offer in Respect of the SECI
Limited Partnership Interests. Prior to offering for sale the
SECI Limited Partnership Interest or any portion thereof to
Persons other than Affiliates of SECI, Tomen or GE Capital, or
soliciting offers to purchase the SECI Limited Partnership
Interest or any portion thereof from Persons other than
Affiliates of SECI, Tomen or GE Capital, SECI shall solicit an
offer to purchase the SECI Limited Partnership Interest or
portion thereof to be sold from GE Capital and TPC One and TPC
Two. Upon receipt of such a solicitation from SECI Limited, GE
Capital and TPC One and TPC Two shall have 60 days in which to
make an offer to purchase the SECI Limited Partnership Interest
or portion thereof to be sold. If neither GE Capital nor TPC One
and TPC Two makes an offer to purchase the SECI Limited
Partnership Interest or portion thereof to be sold prior to the
end of such 60 day period, then SECI may thereafter offer to
sell, solicit offers to purchase and sell the SECI Limited
Partnership Interest or portion thereof to be sold to any Person
on such terms and conditions as SECI deems appropriate, in its
sole discretion. If either GE Capital or TPC One and TPC Two
makes an offer to purchase the SECI Limited Partnership Interest
or portion thereof to be sold and SECI rejects such offer, then
SECI, during the 270 day period following the rejection of such
offer, may offer to sell, solicit offers to purchase and sell the
SECI Limited Partnership Interest or portion thereof to be sold
to any Person on terms and conditions which are more favorable to
SECI than the terms and conditions offered by GE Capital and/or
TPC One and TPC Two. If SECI shall not enter into a binding
commitment to sell the SECI Limited Partnership Interest or
portion thereof to be sold prior to the end of such 270 day
period, then the procedure set forth in the foregoing provisions
of this Section 10.14 shall be reinstated. Upon any transfer of
the SECI Limited Partnership Interest pursuant to the provisions
of this Section 10.14, the provisions of this Section 10.14 shall
lapse and be of no further force or effect with respect to the
portion of the SECI Limited Partnership Interest so transferred.
ARTICLE XI
NOTICES
11.1 Notices. Any notice, request, demand or other
communication which any Partner, the Managing General Partner or
the Partnership is to give under this Agreement shall be in
writing and shall be sufficient for all purposes hereof if
delivered in person or by registered or certified mail, by
courier service, or by telecopier or telex, in each case
addressed as provided in Section 11.2. Any such notice, request,
demand or other communication shall be deemed given and made
effective when delivered by hand or by courier, five days after
deposit in the mail, in the case of transmission by telecopier,
when confirmation of the receipt is received, or in the case of
telex notice, when sent, answerback received.
11.2 Addresses. For the purposes hereof, the
addresses are:
In the case of SECI or the Partnership:
c/o Saranac Energy Company, Inc.
Five Post Oak Park
Suite 1400
Houston, Texas 77027
Attention: President
Telecopy: (713) 622-0045
In the case of the GE Capital Limited Partner:
General Electric Capital Corporation
1600 Summer Street
Stamford, Connecticut 06927-1560
Attention: Vice President, Energy Project
Operations -- Transportation and
Industrial Funding Corporation
Telecopy: (203) 357-4329 or 6970
In the case of TPC One or TPC Two:
c/o Tomen Power Corporation
1455 Frazee Road
Suite 300
San Diego, California 92103
Attention: Chief Financial Officer
Telecopy: (619) 293-7046
Any party may upon written notice to the others given in
accordance with this Article XI change the address to which
notices, requests, demands or other communications are to be sent
or add such additional addresses as it may reasonably request.
ARTICLE XII
WITHDRAWAL
12.1 Withdrawal. Except as otherwise provided in this
Agreement, but in any event subject to the terms and conditions
contained in this Agreement, no Partner may withdraw from the
Partnership without the consent of a Majority in Interest of All
Partners and, prior to the First GE Capital Flip Date, the GE
Capital Limited Partner; provided, that SECI shall not withdraw
from the Partnership as a general partner except in connection
with the transfer of its General Partnership Interest under
Article X. To the fullest extent permitted by law, each Partner
hereby waives any right or remedy at law or in equity that it may
have to obtain dissolution or to dissolve the Partnership, except
as provided in this Agreement. If the General Partner shall
withdraw, be removed, or an event occurs that causes SECI General
to cease to be a general partner of the Partnership under the
Partnership Act and this Agreement, the Partnership shall be
dissolved and its affairs shall be wound up unless (i) at such
time there is at least one other general partner of the
Partnership, who is hereby authorized to and shall continue the
business of the Partnership, or (ii) if there is no remaining
general partner of the Partnership, within 90 days after the
occurrence of such event, all Partners agree in writing to
continue the business of the Partnership and to the appointment,
effective as of the date of such event, of one or more additional
general partners who is hereby authorized to and shall continue
the business of the Partnership.
ARTICLE XIII
SPECIAL EVENTS AND DISSOLUTION; LIQUIDATION; TERMINATION
13.1 Special Events. After the Second Capital
Contribution Date and prior to the First GE Capital Flip Date,
the occurrence of any of the following events shall constitute a
special event (each, a "Special Event") hereunder:
(a) Either SECI General or SECI Limited shall violate
any of the restrictions upon its rights to transfer its
Partnership Interest set forth in Article X of this
Agreement or a transfer of the Partnership Interest of SECI
General or SECI Limited in violation of the provisions of
Article X of this Agreement shall purportedly occur; or
(b) Any representation or warranty made by SECI in the
Capital Contribution Agreement or by the Partnership or any
other Partner in any other Basic Document to which it is a
party, or any representation, warranty or statement in any
certificate, financial statement or other document furnished
to the GE Capital Limited Partner by or on behalf of the
Partnership or SECI hereunder or the Partnership or any
Partner under any Basic Document, shall prove to have been
false or misleading in any material respect as of the time
made or deemed made unless the circumstances that made any
such representation or warranty false or misleading at the
time when made or deemed made shall no longer be continuing
provided, however, if such false or misleading
representation or warranty has not resulted in a Material
Adverse Effect and if the circumstances which made such
representation or warranty false or misleading are
susceptible of cure by the Managing General Partner, then a
Special Event shall not result from such false or misleading
representation or warranty for a period of 180 days after
the time when such false of misleading representation was
made or deemed made so long as during such 180 day period
the Managing General Partner shall be diligently using its
best efforts to cause the circumstances which made such
representation or warranty false or misleading to no longer
exist; or
(c) The Managing General Partner or the Partnership
shall fail to perform or observe any of its covenants
contained in this Agreement or in any other Basic Document
to which it is a party and (except in the case of Section
13.1(a) and Sections 7.2(a)(i), 7.2(b), 7.2(e) and 7.3(a) as
to which there shall be no grace or cure period) such
failure shall continue unremedied or unwaived for a period
of 30 days after written notice thereof from the GE Capital
Limited Partner to the Managing General Partner; provided,
however, if such failure to perform or observe the covenants
referred to above in this paragraph (c) (except in the case
of Section 13.1(a) and Sections 7.2(a)(i), 7.2(b), 7.2(e)
and 7.3(a) as to which there shall be no grace or cure
period) has not resulted in a Material Adverse Effect and if
such failure is susceptible of cure by the Managing General
Partner, then such failure shall not become a Special Event
unless such failure shall continue unremedied or unwaived
for a period of 180 days after written notice thereof from
the GE Capital Limited Partner to the Managing General
Partner so long as during such latter 150 day period, the
Managing General Partner shall be diligently using its best
efforts to cure such failure; or
(d) The Partnership or the Managing General Partner
shall fail to perform or observe any of its covenants or
obligations (other than the covenants and obligations
referred to in Sections 13.1(a), (b) and (c)) contained in
(1) any of the Basic Documents (other than the Installment
Sale Agreement, the Power Purchase Agreement, the Steam
Supply Agreement and the Gas Arrangements) and such failure
shall continue unremedied and unwaived until the later of
(x) the end of the applicable grace period, if any,
contained in the applicable Basic Document, and (y) 30 days
after notice thereof by the GE Capital Limited Partner to
the Managing General Partner and (2) the Installment Sale
Agreement, the Power Purchase Agreement, the Steam Supply
Agreement and any of the Gas Arrangements and such failure
shall continue unremedied or unwaived until the earlier of
(x) the end of the applicable grace period, if any,
contained in such agreement and (y) 30 days after notice
thereof by the GE Capital Limited Partner to the Managing
General Partner; provided, however, if the failure to
perform or observe the covenants referred to above in this
paragraph (d) (other than the covenants and obligations
referred to in Sections 13.1(a), (b) and (c)) with respect
to the Basic Documents referred to in clause (1) has not
resulted in the receipt of a notice of termination of such
Basic Document or otherwise resulted in a Material Adverse
Effect and if such failure is susceptible of cure by the
Managing General Partner, then such failure shall not become
a Special Event unless such failure shall continue
unremedied or unwaived for a period of 180 days after
written notice thereof from the GE Capital Limited Partner
to the Managing General Partner so long as during such
latter 150 day period, the Managing General Partner shall be
diligently using its best efforts to cure such failure; or
(e) The Partnership, SECI or North Country, with
respect to the Loan Agreement or any other Indebtedness (the
principal amount of which exceeds $250,000) other than the
SECI Term Loan Agreement, shall (x) default in any payment
of principal of or interest on any such Indebtedness for a
period in excess of the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness
was created, or (y) default in the observance or performance
of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such
Indebtedness to become due prior to its stated maturity or
to realize upon any Collateral given as security therefor,
provided, that any Other Partner and, subject to Section
13.2(e), the GE Capital Limited Partner shall have the right
to make capital contributions to the Partnership to cure a
failure to make payments on the Term Loan or any Refinancing
Loan or any Subordinated Refinancing Loan unless a cure has
been effected in respect of (i) the failure to make such
payments for each of the three Quarterly Periods immediately
preceding such failure or (ii) the failure to make such
payments for more than six Quarterly Periods; or
(f) Any Project Participant, other than the
Partnership, North Country or the Managing General Partner,
shall fail to perform or observe any of its covenants or
obligations contained in any of the Basic Documents (other
than the covenants and obligations referred to in Sections
13.1(a), (b), (c), (d) and (e)) for a period in excess of
the grace period, if any, provided for in such Basic
Document, which failure shall continue unremedied for a
period of 30 days after notice by the GE Capital Limited
Partner to the Managing General Partner or (x) any material
provision of any Basic Document shall at any time for any
reason cease to be valid and binding or in full force and
effect or any party thereto shall so assert in writing, (y)
any material provision of any Basic Document shall be
declared to be null and void or (z) any party thereto shall
deny that it has any further liability or obligation under
any Basic Document to which it is a party provided, however,
that any such failure by a Project Participant (other than
the Partnership, North Country, NYSEG or the Operator) shall
not be a Special Event if, during the 30 days immediately
following such failure, the Partnership diligently proceeds
to enter into an agreement with a substitute Project
Participant as set forth below and within 30 days of such
failure:
(1) a substitute Project Participant shall have
entered into an agreement with the Partnership in
substantially the form of such Basic Document and
containing, in the reasonable judgment of the GE
Capital Limited Partner, terms not materially less
favorable to the Project than the terms contained in
such Basic Document;
(2) in the reasonable judgment of the GE Capital
Limited Partner, such substitute Project Participant
shall be as financially sound as the replaced Project
Participant (and the guarantor, if any, of the
obligations of such Project Participant) was on the
date of execution of this Agreement;
(3) the GE Capital Limited Partner shall have
received fully executed counterparts of such agreement;
and
(4) the GE Capital Limited Partner shall have
received a recognition agreement from the Partnership
and such substitute Project Participant and an opinion
of counsel for such substitute Project Participant,
each in form and substance reasonably satisfactory to
the GE Capital Limited Partner;
whereupon such substitute Project Participant shall be
deemed to be a Project Participant hereunder; or
(g) Any Project Participant shall (i) apply for or
consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) admit
in writing its inability, or be generally unable, to pay its
debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a
voluntary case under the Bankruptcy Code (as now or
hereafter in effect), (v) file a petition seeking to take
advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding up, or composition or
readjustment of debts, (vi) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any
petition filed against such Person in an involuntary case
under the Bankruptcy Code, or (vii) take any partnership or
corporate action for the purpose of effecting any of the
foregoing provided, however, that in the case of any Project
Participant (other than SECI, the Partnership, NYSEG, North
Country or the Operator) the events specified in clauses (i)
through (vii) above shall not be a Special Event if, during
the 30 days immediately following the occurrence of any such
event, the Partnership diligently proceeds to enter into an
agreement with a substitute Project Participant as set forth
below and within 30 days of such event:
(1) a substitute Project Participant shall have
entered into an agreement with the Partnership in
substantially the form of such Basic Document and
containing, in the reasonable judgment of the GE
Capital Limited Partner, terms not materially less
favorable to the Project than the terms contained in
such Basic Document;
(2) in the reasonable judgment of the GE Capital
Limited Partner, such substitute Project Participant
shall be as financially sound as the replaced Project
Participant (and the guarantor, if any, of the
obligations of such Project Participant) was on the
date of execution of this Agreement;
(3) the GE Capital Limited Partner shall have
received fully executed counterparts of such agreement;
and
(4) the GE Capital Limited Partner shall have
received a recognition agreement from the Partnership
and such substitute Project Participant and an opinion
of counsel for such substitute Project Participant,
each in form and substance reasonably satisfactory to
the GE Capital Limited Partner;
whereupon such substitute Project Participant shall be
deemed to be a Project Participant hereunder; or
(h) A proceeding or case shall be commenced without
the application or consent of any Project Participant in any
court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution, winding-up, or the
composition or readjustment of debts, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of
such Project Participant under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts or (iii) a warrant of
attachment, execution or similar process against all or a
substantial part of the assets of such Project Participant
and such proceeding or case shall continue undismissed, or
any order, judgment or decree approving or ordering any of
the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days, or any order for
relief against such Person shall be entered in an
involuntary case under the Bankruptcy Code provided,
however, that the commencement of a proceeding referred to
above in clauses (i) through (iii) against a Project
Participant (other than SECI, the Partnership, NYSEG, North
Country or the Operator) shall not be a Special Event if,
during the 90 days immediately following the commencement of
a proceeding referred to above in clauses (i) through (iii),
the Partnership diligently proceeds to enter into an
agreement with a substitute Project Participant as set forth
below and within 30 days after the lapse of the 60 day
period referred to above:
(1) a substitute Project Participant shall have
entered into an agreement with the Partnership in
substantially the form of such Basic Document and
containing, in the reasonable judgment of the GE
Capital Limited Partner, terms not materially less
favorable to the Project than the terms contained in
such Basic Document;
(2) in the reasonable judgment of the GE Capital
Limited Partner, such substitute Project Participant
shall be as financially sound as the replaced Project
Participant (and the guarantor, if any, of the
obligations of such Project Participant) was on the
date of execution of this Agreement;
(3) the GE Capital Limited Partner shall have
received fully executed counterparts of such agreement;
and
(4) the GE Capital Limited Partner shall have
received a recognition agreement from the Partnership
and such substitute Project Participant and an opinion
of counsel for such substitute Project Participant,
each in form and substance reasonably satisfactory to
the GE Capital Limited Partner;
whereupon such substitute Project Participant shall be
deemed to be a Project Participant hereunder; or
(i) A judgment or judgments for the payment of money
in excess of $250,000 shall be rendered against the
Partnership or SECI General and such judgment (other than in
respect of the SECI Term Loan Agreement) or judgments shall
remain in effect, unsatisfied, unstayed and unbonded for a
period of 30 or more consecutive days; or
(j) Falcon and its Affiliates shall cease to directly
or indirectly own 100% of the voting securities of and
economic interests in SECI Holdings and Falcon Power
Operating Company;
(k) The Partnership shall abandon the Project or
otherwise cease to diligently pursue the development or
construction of the Project for a period longer than 30
consecutive days; or
(l) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan,
or (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate
any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the reasonable opinion of
the GE Capital Limited Partner, likely to result in the
termination of such Plan for purposes of Title IV of ERISA,
or (iv) any Single Employer Plan shall terminate under
Section 4041(c) of ERISA, or (v) the Managing General
Partner or any Commonly Controlled Entity shall, or is, in
the reasonable opinion of the GE Capital Limited Partner,
likely to incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan, or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each
case in clauses (i) through (vi) above, such event or
condition, together with all other such events or
conditions, if any, could subject the Managing General
Partner, the Partnership or North Country to any tax,
penalty or other liabilities in the aggregate material in
relation to the business, operations, property or financial
or other condition of the Managing General Partner or the
Partnership or North Country; or
(m) (i) The Partnership shall fail to pay, satisfy or
otherwise obtain a release of any bond or lien for the
performance of work or the supply of materials filed against
the Site (for an amount individually, or when aggregated
with all other similar Liens, exceeds $250,000) within 20
days of the Managing General Partner's becoming aware of the
filing thereof or (ii) any right, title or interest of the
Partnership in and to the Site shall be levied upon,
attached or seized pursuant to a court order and such order
is not vacated or stayed within 20 days of entry of such
order provided, however, if the event specified in clause
(i) has not resulted in a Material Adverse Effect and if
such event is susceptible of cure by the Managing General
Partner, then such event shall not become a Special Event
unless such event shall continue unremedied or unwaived for
a period of 180 days after the Managing General Partner's
becoming aware of the filing referred to in clause (i) so
long as during such latter 160 day period, the Managing
General Partner shall be diligently using its best efforts
to satisfy or discharge such bond or lien; or
(n) The resignation or withdrawal of SECI General
Partner from the Partnership or the resignation of SECI as
Managing General Partner, in each case without the prior
written consent of the GE Capital Limited Partner; or
(o) The IDA shall cease to have good and marketable
title to the Project and the Site and the Partnership shall
cease to have good title to the property purported to be
owned by it, in each case, free and clear of all Liens other
than Partnership Permitted Liens; or
(p) The Facility shall cease to be a Qualifying
Facility (other than as a result of a transfer of the GE
Capital Limited Partnership Interest); or
(q) An Event of Loss shall have occurred; or
(r) In respect of any Quarterly Period, the GE Capital
Limited Partner shall not have received an amount equal to
99% of the scheduled Level 1 Distributions for such
Quarterly Period (net of any Deducted Payments) within five
days after the last Distribution Date in such Quarterly
Period; provided, that any Other Partner shall have the
right to make capital contributions to the Partnership to
cure such failure unless a cure has been effected in respect
of (i) (A) Level 1 Distributions payable to the GE Capital
Limited Partner for each of the three Quarterly Periods
immediately preceding such failure, (B) Level 1
Distributions payable to the GE Capital Limited Partner for
more than six Quarterly Periods, (C) the failure to make
payments on the Term Loan or a Refinancing Loan or
Subordinated Refinancing Loan for each of the three
Quarterly Periods immediately preceding such failure or (D)
the failure to make payments on the Term Loan or a
Refinancing Loan or Subordinated Refinancing Loan for more
than six Quarterly Periods or (ii) any combination of (A)
through (D) above in respect of three consecutive Quarterly
Periods or six Quarterly Periods; or
(s) At any time, the Partnership shall fail to (i)
keep in force the insurance required by Section 7.2(f) and
Schedule 8 or (ii) comply with and conform to all provisions
and requirements of the insurance policies and the insurers
thereunder which would affect the Partnership's ability to
keep in force the insurance required by Section 7.2(f) and
Schedule 8 or to collect any proceeds therefrom; or
(t) (i) Any Governmental Approval required to be
obtained by the Partnership pursuant to Section 7.2(b) shall
be revoked, terminated, withdrawn, suspended, modified or
withheld or shall cease to be in full force and effect, and
the GE Capital Limited Partner shall have determined that
such revocation, termination, withdrawal, suspension,
modification, withholding or cessation could reasonably be
expected to have a Material Adverse Effect; or (ii) any
proceeding which could reasonably be expected to have a
Material Adverse Effect shall be commenced by or before any
Governmental Authority for the purpose of so revoking,
terminating, withdrawing, suspending, modifying or
withholding any such Governmental Approval and the GE
Capital Limited Partner shall have determined that such
proceeding could reasonably be expected to have a Material
Adverse Effect and such proceeding shall not have been
dismissed or stayed within 180 days, or notice shall be
given by such Governmental Authority for such purpose and
shall have remained uncontested for 30 days.
13.2 Certain Remedies Following Special Event. (a)
If a Special Event occurs and is continuing, the GE Capital
Limited Partner shall have the right, exercisable by, and
effective upon, written notice to the Managing General Partner
(except in the case of a Special Event with respect to the
Partnership or the Managing General Partner referred to above in
Section 13.1 (g) or (h) or in the case of a Special Event which
occurs during the pendency of such a Special Event, in either
which case no written notice shall be required), to appoint or
become substitute Managing General Partner as provided in Section
13.2(b). Any substitute Managing General Partner is authorized
to and shall continue the business of the Partnership and shall
upon meeting the conditions set forth in clauses (i) through (xi)
of Section 10.1(a), without any act or deed by the Partnership,
any Partner or any other Person, be admitted to the Partnership
as a general partner of the Partnership.
(b) If a Special Event occurs and is continuing, the
GE Capital Limited Partner may, by written notice to the
Partnership (except in the case of a Special Event with respect
to the Partnership referred to above in Section 13.1(g) or (h) or
in the case of a Special Event which occurs during the pendency
of such a Special Event, in either which case no written notice
shall be required) appoint a substitute Managing General Partner
or designate itself or its nominee as the substitute Managing
General Partner, whereupon, without any further act or deed by
the Partnership, any Partner or any other Person, the existing
Managing General Partner shall cease to serve as such but shall
continue to be a General Partner. In the event the GE Capital
Limited Partner appoints a substitute Managing General Partner
said substitute Managing General Partner shall, automatically and
without any further act or deed by the Partnership, any Partner
or any other Person, acquire a 1% interest in the Partnership,
and the interest of the GE Capital Limited Partner shall be
automatically reduced by the same amount. The interest of said
substitute Managing General Partner shall be a General
Partnership Interest in the Partnership and such substitute
Managing General Partner shall, without any further act or deed
by the Partnership, any Partner or any other Person, succeed to
all the powers, privileges and obligations of a General Partner
and of the Managing General Partner under this Agreement, except
to the extent accrued or attributable to the period prior to the
allocation of such interest and except that the transfer and
related provisions of Article X pertaining to the GE Capital
Limited Partner shall be applicable to the substitute Managing
General Partner rather than those pertaining to SECI General.
The Managing General Partner hereby consents to such a partial
conversion of the GE Capital Limited Partnership Interest and
hereby consents to the admission as a General Partner of said
substitute Managing General Partner so designated by the GE
Capital Limited Partner.
(c) If a Special Event occurs and is continuing, in
addition to the other remedies available to the GE Capital
Limited Partner pursuant to this Section 13.2, the GE Capital
Limited Partner shall receive 99% and the Other Partners shall
receive 1% in accordance with their Allocation Percentages of all
Distributable Cash (after deducting from the amount distributable
to the GE Capital Limited Partner the Deducted Payments), in each
case since the last previous distribution of Distributable Cash
until the earlier of (i) the receipt by the GE Capital Limited
Partner of the Base Term Return plus the Termination Payment and
(ii) the date on which no Special Event shall be continuing.
(d) If a Special Event occurs and is continuing, in
addition to the other remedies available to the GE Capital
Limited Partner pursuant to this Section 13.2, the GE Capital
Limited Partner may elect by written notice to the General
Partner (except in the case of a Special Event with respect to
SECI referred to above in Section 13.1(g) or (h) or in the case
of a Special Event which occurs during the pendency of such a
Special Event, in either which case no written notice shall be
required) that all powers of SECI General (including the Managing
General Partner) hereunder with respect to any matter shall
thereupon, automatically, and without any further act or deed by
the Partnership, any Partner or any other Person, vest in the GE
Capital Limited Partner.
(e) Upon the occurrence of a Special Event that may be
cured, the GE Capital Limited Partner shall be entitled to, but
shall have no obligation to, cure such Special Event, unless the
Other Limited Partners have cured such Special Event prior to the
earlier of 15 days after delivery of the notice referred to in
Section 8.3(b) and the occurrence of such Special Event, and all
costs and expenses incurred by the GE Capital Limited Partner in
connection therewith shall be in the form of a demand loan to the
Partnership which shall bear interest at the lesser of (i) the
maximum rate permitted by law and (ii) LIBOR plus 500 basis
points.
(f) If a Special Event occurs and is continuing, the
GE Capital Limited Partner may by written notice to the
Partnership (except in the case of a Special Event with respect
to the General Partner or the Partnership referred to above in
Section 13.1(g) or (h) or in the case of a Special Event which
occurs during the pendency of such a Special Event, in either
which case no written notice shall be required) appoint, in the
name and on behalf of the Managing General Partner and the
Partnership, a project manager to construct, equip, maintain,
manage, control, operate and repair the Project. The reasonable
fees of any such project manager shall be an operating expense of
the Partnership.
(g) (i) If a Special Event not reasonably within the
control of the Managing General Partner to prevent or to cure
shall have occurred and be continuing and the GE Capital Limited
Partner shall have exercised the remedy set forth above in
Section 13.2(c), the Partnership (at the election of SECI General
but with the consent of TPC One and TPC Two) shall have the right
to purchase (on the date specified in the Purchase Notice, which
date shall coincide with a Distribution Date (hereinafter, the
"Redemption Date") the GE Capital Limited Partnership Interest
for a cash purchase price equal to the greater of (A) the Fair
Market Sales Value of such interest as of such purchase date
(determined without reference to the current exercise of the
remedy set forth above in Section 13.2(c)) and (B) the Stipulated
Redemption Value as of the Distribution Date specified in the
Purchase Notice.
(ii) In order to exercise the purchase right provided
in Section 13.2(g)(i) above, SECI General shall give the GE
Capital Limited Partner a Purchase Notice to such effect
(specifying the Distribution Date on which the purchase is to
occur) (A) no earlier than the later of (x) 330 days after the
commencement of the remedy under Section 13.2(c) above and (y) 30
days prior to the sixth anniversary of the Second Capital
Contribution Date and (B) no later than the later of (x) the
second anniversary of commencement of the remedy under Section
13.2(c) above and (y) the sixth anniversary of the Second Capital
Contribution Date. The Partnership shall complete the purchase
of the GE Capital Limited Partnership Interest on the Redemption
Date (A) by paying to the GE Capital Limited Partner, in
immediately available funds, (1) cash in an amount such that, if
the GE Capital Limited Partner were to receive distributions
after such date in accordance with the provisions of Sections
4.3(a) and 4.11, and without reference to Section 13.2(c), the GE
Capital Limited Partner would, taking into account the timing and
amount of the distributions of Distributable Cash under Sections
4.3(a), 4.11 and 13.2(c) and distributions of Net Proceeds from
Sales or Refinancings under Section 4.6(b) to the GE Capital
Limited Partner on and prior to such date, but making no other
adjustments to the assumptions used to determine the Level 1
Distributions, achieve the Base Term Return on the date of the
last scheduled Level 1 Distribution, (2) the purchase price of
the GE Capital Limited Partnership Interest, (3) all Breakage
Amounts and (4) all reasonable out-of-pocket expenses incurred by
the GE Capital Limited Partner in connection with such sale, (B)
by satisfying in full, in immediately available funds, (1) all
obligations of the Partnership under the Loan Documents
(including the replacement of all issued Letters of Credit or the
cash collateralization of such Letters of Credit in the manner
set forth in the Loan Documents) and (2) all obligations of SECI
under the SECI Loan Documents and (C) by paying to the GE Capital
Limited Partner the Termination Payment.
(h) In the case of (i) the appointment of a substitute
Managing General Partner pursuant to the provisions of Section
13.2(a) or (b), (ii) the vesting in the GE Capital Limited
Partner of the powers of the Managing General Partner pursuant to
the provisions of 13.2(d) or (iii) the appointment of a project
manager pursuant to Section 13.2(f), if (A) the Special Event
giving rise to such appointment or vesting of powers shall be
cured by SECI General and (B) for a period of twenty-four
consecutive months no other Special Event shall have occurred and
be continuing then SECI General shall have the right (exercisable
after the end of such twenty-four month period and prior to the
date thirty-six months after the date no Special Event shall have
occurred and be continuing) to be reinstated as the Managing
General Partner and project manager. Such reinstatement shall be
effected by the delivery to the Partnership and the other
Partners of a written notice of reinstatement executed by the GE
Capital Limited Partner, the substitute Managing General Partner
and SECI General and such other documents and instruments as the
GE Capital Limited Partner deems appropriate under the
circumstances. Upon such reinstatement, in the case of the prior
appointment of a substitute Managing General Partner pursuant to
Section 13.2(b), the General Partnership Interest of the
substitute Managing General Partner appointed by the GE Capital
Limited Partner shall be converted into or exchanged for a
Limited Partnership Interest of the same amount. Upon
reinstatement, SECI General shall succeed to all the powers,
privileges and obligations of the substitute Managing General
Partner under this Agreement, except that the transfer and
related provisions of Article X shall continue to be applicable
to the General Partnership Interest of SECI General.
(i) The rights of the GE Capital Limited Partner
hereunder are not the exclusive remedies upon the occurrence of a
Special Event but are in addition to any other remedies which may
at the time be available hereunder, at law or in equity.
(j) For purposes of this Section 13.2, no Special
Event under Section 13.1(r) shall be deemed to be continuing as
of the date when the GE Capital Limited Partner shall have
received distributions of Distributable Cash in an amount such
that, if the GE Capital Limited Partner were to receive
distributions after such date in accordance with the provisions
of Section 4.3(a) and 4.11, and without reference to Section
13.2(c), the GE Capital Limited Partner would, taking into
account the timing and amount of the distributions of
Distributable Cash under Sections 4.3(a), 4.11 and 13.2(c) and
distributions of Net Proceeds from Sales or Refinancings under
Section 4.6(b) to the GE Capital Limited Partner on and prior to
such date, but making no other adjustments to the assumptions
used to determine the Level 1 Distributions, achieve the Base
Term Return on the date of the last scheduled Level 1
Distribution.
(k) Notwithstanding any other provision of this
Agreement, in no event shall the existence of a Default or Event
of Default under the SECI Term Loan Agreement constitute a
Special Event unless the events giving rise to such Default or
Event of Default would independently give rise to a Special Event
hereunder.
13.3 Events of Dissolution. The Partnership shall be
dissolved and its affairs shall be wound up:
(a) if the Partners agree in writing to terminate the
Partnership;
(b) upon the sale, transfer or other irrevocable
disposition of all or substantially all of the property of
the Partnership, other than in connection with any security
interest granted in all or any portion of the assets of the
Partnership pursuant to the terms of the Loan Documents or
any sale-leaseback transaction in which the Partnership
becomes the lessee of the assets of the Partnership;
(c) if the Partnership is terminated in accordance
with the terms of this Agreement;
(d) upon the bankruptcy, insolvency or other event of
withdrawal (within the meaning of 17-402 of the
Partnership Act) of the General Partner, except as otherwise
provided herein; or
(e) on December 31, 2032 unless the Partners agree in
writing to extend the term of the Partnership beyond such
date.
Upon the withdrawal of the last remaining general partner of the
Partnership, the Partnership shall not be dissolved and its
affairs wound up if all remaining Partners agree in writing to
continue the Partnership and appoint one or more general partners
in the manner set forth in Section 12.1.
13.4 Procedure in Dissolution and Liquidation. (a)
Winding Up. Upon dissolution of the Partnership pursuant to
Section 13.3, the Partnership immediately shall commence to wind
up and liquidate the affairs and business of the Partnership in
an orderly manner.
(b) Management Rights During Winding Up. During the
period of the winding up of the affairs of the Partnership, the
rights and obligations of the Partners set forth herein with
respect to the management of the Partnership shall continue. For
purposes of winding up, and subject to Section 13.2, the Managing
General Partner shall act as liquidator to wind up the Partnership
and shall make all decisions relating to the conduct of any
business or operations during the winding up period and to the sale
or other disposition of the Partnership assets with the advice of
the Limited Partners, except that if the dissolution results from
the occurrence of a Special Event, the GE Capital Limited Partner
shall act as liquidating trustee and make all such decisions.
(c) Distributions in Liquidation. The assets of the
Partnership shall be applied or distributed in liquidation in the
following order:
(i) First, to the payment and discharge of all of the
Partnership's debts and liabilities (including, without
limitation, debts and liabilities to Partners other than debts
and liabilities for distributions to Partners on account of
their respective interests in the Partnership), including the
establishment of any reasonably necessary reserves; and
(ii) Second, to the Partners in accordance with the
positive balances in their respective Capital Accounts as
determined after taking into account all adjustments to
Capital Accounts for the year during which the liquidation
occurs.
All items of income, gain, loss and deduction with respect to the
taxable year of the liquidation shall be allocated as if all such
items were Gains and Losses as provided in Sections 5.4 and 5.5.
(d) Non-Cash Assets. Every reasonable effort shall be
made to dispose of the interests of the Partnership in the assets
of the Partnership, so that the distribution may be made to the
Partnership in cash. If at the time of the liquidation of the
Partnership, the Partnership owns any assets in the form of notes,
deeds of trust or other non-cash assets, such assets, if any, shall
be distributed in kind to the Partners, in lieu of cash, in
accordance with Section 13.4(c), in proportion to their right to
receive the assets of the Partnership on an equitable basis
reflecting the net fair market value of the assets so distributed.
13.5 Disposition of Documents and Records. All
documents and records of the Partnership, including, without
limitation, all financial records, vouchers, cancelled checks and
bank statements, shall be delivered to the Managing General Partner
upon termination of the Partnership. Copies thereof shall be
prepared, by microfiche process if requested, and made available to
each Partner as requested for any purpose reasonably related to the
interest of such Partner as a partner in the Partnership and at
such Partner's cost and expense. Unless otherwise approved by the
Partners, the Managing General Partner shall retain such documents
and records for a period of not less than seven years and shall
make such documents and records available for any purpose
reasonably related to the interest of a Partner as a partner in the
Partnership during normal business hours to any other Partner for
inspection and copying at such other Partner's cost and expense;
provided, however, that if there is an audit or threat of audit,
such documents and records shall be retained until the audit is
completed and any tax liability finally determined. Said documents
and records shall be available for inspection, examination and
copying by the Managing General Partner upon reasonable notice.
13.6 Termination. Upon the completion of the
liquidation of the Partnership and the distribution of all
Partnership funds, the Partnership shall terminate. The Managing
General Partner shall execute and file a Certificate of
Cancellation of the Certificate of Limited Partnership as well as
any and all other documents required to effect the dissolution and
termination of the Partnership.
13.7 No Restoration of Negative Capital Accounts.
Except as required under applicable laws of the State of Delaware,
or in respect of any negative balance resulting from a distribution
in contravention of this Agreement, at no time shall a Partner with
a negative balance in its Capital Account have any obligation to
the Partnership or to any other Partner to restore such negative
balance.
ARTICLE XIV
RIGHTS AND OBLIGATIONS OF LIMITED PARTNER
14.1 Management of the Partnership. Except as provided
in Article XIII and the Recognition Agreements with respect to the
GE Capital Limited Partner, a Limited Partner in its capacity as
such shall not (a) take part in the management or control of the
business of the Partnership or transact any business in the name of
the Partnership, (b) have the power or authority to bind the
Partnership or to sign any agreement or document in the name of the
Partnership, or (c) have any power or authority with respect to the
Partnership except insofar as the consent of such Limited Partner
shall be expressly required; provided, however, that the Limited
Partners shall have the right to consult with and advise the
Managing General Partner with respect to the business of the
Partnership. The Limited Partners hereby consent to the exercise
by the Managing General Partner of the rights and powers conferred
upon it by the Partnership Act and under other Applicable Law,
except those rights and powers that may, pursuant to the
Partnership Act or other Applicable Law, be limited and are so
limited by this Agreement. Notwithstanding the foregoing, the
Limited Partners may vote on (i) the matters listed in Section 7.3,
(ii) the removal of SECI General pursuant to Section 7.11, (iii)
the dissolution of the Partnership pursuant to Section 13.3, and
(iv) the admission of a successor General Partner pursuant to
Section 10.2, and (v) all other matters requiring the consent of
some or all of the Limited Partners under the terms of this
Agreement. These Limited Partner rights are intended solely to
assist the Limited Partners in protecting their investment in the
Partnership and not as a means of exercising control of the
Partnership or the Partnership's business.
14.2 Limitation on Liability of Limited Partners.
Except as otherwise provided by law, the liability of a Limited
Partner shall be limited to its Capital Contribution as and when it
is payable under the provisions of the Capital Contribution
Agreement. A Limited Partner, in its capacity as such, shall have
no other liability to contribute money to, or in respect of the
liabilities or obligations of, the Partnership, nor shall any
Limited Partner be personally liable for any obligations of the
Partnership. Except as provided in Section 10.10 no Limited
Partner shall be obligated to make loans to the Partnership. It is
the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of any money or other
property in violation of the Partnership Act. The payment of any
such money or distribution of any such property to a Limited
Partner shall be deemed to be a compromise within the meaning of
Section 17-502(b) of the Partnership Act, and the Limited Partner
receiving any such money or property shall not be required to
return any such money or property to any Person, the Partnership or
any creditor of the Partnership. However, if any court of
competent jurisdiction holds that, notwithstanding the provisions
of this Agreement, any Limited Partner is obligated to return such
money or property, such obligation shall be the obligation of such
Limited Partner and not the General Partner.
ARTICLE XV
MISCELLANEOUS
15.1 Further Assurances. Each Partner shall execute and
deliver such other certificates, agreements and documents, and take
such other actions as may be reasonably requested by the Managing
General Partner or any Limited Partner in connection with the
formation of the Partnership and the achievement of its purposes
and the placement of any debt and equity relating to the Project
authorized pursuant to this Agreement (whether by or on behalf of
the Partnership).
15.2 Amendments and Waivers. Any term of this Agreement
may be amended only with the written consent of all the Partners.
The observance of any term of this Agreement may be waived only if
such waiver is in writing signed by the Partner waiving such term.
15.3 Successors and Assigns. Subject to the provisions
of Article X, the terms and provisions hereof shall be binding on
and inure to the benefit of and be enforceable by the successors
and assigns of the parties hereto, whether so expressed or not.
15.4 Indemnification. To the fullest extent permitted
by law, the Partnership agrees to pay, indemnify and hold each
Partner and its Affiliates, directors, officers, successors and
assigns harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may
at any time be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement, the
other Basic Documents or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or
thereby, or as a result of such Partner's acting as a partner of
the Partnership hereunder (all of the foregoing, collectively, the
"indemnified liabilities", provided, that, with respect to SECI
General, "indemnified liabilities" shall not include the
liabilities set forth in Section 7.4 for which SECI General is
liable), provided, that the Partnership shall have no obligation
hereunder to any such Person with respect to indemnified
liabilities arising from (i) the gross negligence, fraud or willful
misconduct of any such Person, (ii) legal proceedings commenced
against any such Person by any security holder or creditor other
than in its capacity as a security holder or creditor of the
Partnership arising out of and based upon rights afforded any such
security holder or creditor solely in its capacity as such security
holder or creditor, or (iii) legal proceedings commenced against
any such Person by any assignee of such Person's interest herein.
The agreements in this Section shall survive the making by each
Partner of its initial capital contributions to the Partnership and
the termination of the Basic Documents.
15.5 Incorporation By Reference. The provisions of the
Capital Contribution Agreement are hereby incorporated by reference
herein with the same effect as if such provisions were fully set
forth herein.
15.6 Severability. If any term or provision of this
Agreement or the application thereof to any circumstance shall be
held invalid or unenforceable, to any extent, by a court of
competent jurisdiction, the remainder of this Agreement, other than
that portion determined to be invalid or unenforceable, shall not
be affected thereby, and each valid provision hereof shall be
enforced to the fullest extent permitted by law.
15.7 Headings and Table of Contents. The headings in
and the table of contents of this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning
hereof.
15.8 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
15.9 Submission to Jurisdiction; Waivers. (a) Each
Partner hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other
Basic Document, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the States of New York and
Delaware, the courts of the United States of America for the
Southern District of New York and for the District of
Delaware, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that any such action or
proceeding was brought in any inconvenient court and agrees
not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Partner at its address
set forth in Section 11.2 or any such other address of which
the other Partners shall have been notified pursuant thereto;
and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law
or shall limit the right to sue in any other jurisdiction.
(b) Each Partner hereby irrevocably and unconditionally
waives trial by jury in any legal action or proceeding referred to
in paragraph (a) above.
15.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE.
15.11 Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto with respect to its subject
matter, and supersedes all previous understandings, written or
oral, with respect thereto.
15.12 Partition. No Partner or any successor-in-
interest to any Partner shall have the right while this Agreement
remains in effect to have the assets 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 itself, its successors,
representatives, heirs and assigns, hereby waives any such right.
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 assign, transfer, sell or otherwise dispose of its
interest in the Partnership or any of its assets shall be subject
to the limitations and restrictions of this Agreement.
15.13 Recourse Only to Partner. The sole recourse of
the Partnership or any Partner for performance of the obligations
of a particular Partner hereunder shall be against such Partner and
its assets and not against any assets or property of any present or
future shareholder, officer, employee, servant, executive,
director, agent, authorized representative or Affiliate of such
Partner.
IN WITNESS WHEREOF, this Agreement has been executed as
of the date and year first above written.
GENERAL PARTNER:
SARANAC ENERGY COMPANY, INC.
By:
Title:
LIMITED PARTNERS:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Title:
TPC SARANAC PARTNER ONE, INC.
By:
Title:
TPC SARANAC PARTNER TWO, INC.
By:
Title:
SARANAC ENERGY COMPANY, INC.
By:
Title:
EXECUTION COPY
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
FIRST AMENDMENT, dated as of September 30, 1994 (this
"Amendment"), to the Second Amended and Restated Agreement of
Limited Partnership of Saranac Power Partners, L.P., a Delaware
limited partnership (the "Partnership"), dated as of May 13, 1994
(the "Partnership Agreement"), by and among Saranac Energy
Company, Inc., a Delaware corporation ("SECI"), TPC Saranac
Partner One, Inc., a Delaware corporation ("TPC One"), TPC
Saranac Partner Two, Inc., a Delaware corporation ("TPC Two"),
and General Electric Capital Corporation, a New York corporation
("GE Capital").
W I T N E S S E T H:
WHEREAS, the parties to the Partnership Agreement
desire to make certain amendments to such Agreement and to
certain exhibits thereto, and are willing to make such amendments
subject to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein,
terms defined in Appendix A to the Partnership Agreement (without
giving effect to this Amendment) shall have their defined
meanings as set forth therein.
2. Amendment to Introductory Paragraph. The
introductory paragraph to the Partnership Agreement is hereby
amended by inserting at the beginning of the last parenthetical,
the words "together with its successors and permitted assigns
hereunder,".
3. Amendment to Section 3.1. Section 3.1 of the
Partnership Agreement is hereby amended by deleting the phrase
"Contributed Assets" each place it appears in the last sentence
thereof and inserting in lieu thereof the phrase "Power Purchase
Agreement."
4. Amendment to Section 4.3. Section 4.3(a) of the
Partnership Agreement is hereby amended by deleting the first
clause immediately before the proviso therein and substituting,
in lieu thereof, the following clause:
"First, 99% to the GE Capital Limited Partner, and 1% to the
Other Partners in accordance with their Allocation
Percentages, until the Partners have received pursuant to
this Section 4.3(a) or Section 4.9(b) of the Amended and
Restated Security Deposit Agreement an aggregate amount of
cash equal to the sum of (1) the amount set forth in
Schedule 5 in respect of such calendar month (the "Level 1
Distribution") and (2) the aggregate amount of Level 1
Distributions in respect of all prior calendar months;"
5. Amendment to Section 4.4. Section 4.4 of the
Partnership Agreement is hereby amended by inserting "and 4.22"
immediately after the reference to "13.4(c)" therein.
6. Amendment to Section 4.8(a). Section 4.8(a) of the
Partnership Agreement is hereby amended by inserting immediately
after the words "Level 1 Distributions" and immediately before
the words ", demonstrates the achievement of the Base Term
Return" at the end of the second sentence thereof, the
parenthetical "(including, without limitation, the calculation of
such distributions on a quarterly basis)".
7. Amendments to Section 4.11. (a) Section 4.11(a)
of the Partnership Agreement is hereby amended and restated in
its entirety as follows:
"(a) (i) On each Distribution Date occurring after the
Second Capital Contribution Date, until the sum of (1) the
aggregate amount on deposit in the Base Reserve Debt Account
(so long as the Loan Agreement is in effect) and the Base
Reserve Equity Account and (2) the amount available to be
drawn under the Base Reserve Letter of Credit, if any, shall
be equal to the Base Reserve Amount, there shall be
deposited in the Base Reserve Debt Account or, after the
Loan Agreement is no longer in effect, the Base Reserve
Equity Account an amount equal to 23.7% of the Distributable
Cash otherwise distributable to each Other Partner on such
Distribution Date pursuant to Section 4.3(b).
(ii) In the event of (1) any withdrawal from the Base
Reserve Debt Account (other than withdrawals of income or
gain in excess of the Base Reserve Amount or transfers from
the Base Reserve Debt Account to the Base Reserve Equity
Account) or the Base Reserve Equity Account (other than
withdrawals of income or gain in excess of the Base Reserve
Amount) or (2) any drawing under the Base Reserve Letter of
Credit, on each Distribution Date, until (A) the Base
Reserve Debt Account or, after the Loan Agreement is no
longer in effect, the Base Reserve Equity Account shall have
been replenished by the amount of such withdrawal or (B) the
stated amount of the Base Reserve Letter of Credit shall
have been reinstated by the amount of such drawing, as the
case may be, there shall be deposited in the Base Reserve
Debt Account or, after the Loan Agreement is no longer in
effect, the Base Reserve Equity Account an amount equal to
100% of the Distributable Cash otherwise distributable to
each Partner on such Distribution Date pursuant to Sections
4.3(a), 4.3(b), 4.13 and 4.14."
(b) Section 4.11(b) of the Partnership Agreement is
hereby amended by (i) changing the word "Quarterly" to
"Measurement" the first time that it appears therein and (ii)
deleting the phrase "a portion of the Distributable Cash
otherwise distributable to each Other Partner pursuant to Section
4.3(b) in respect of each of the third Distribution Date in such
Quarterly Period and the first and second Distribution Dates in
the immediately succeeding Quarterly Period" and inserting, in
lieu thereof, the phrase "a portion of the Distributable Cash
otherwise distributable to each Other Partner pursuant to Section
4.3(b) in respect of each of the three Distribution Dates
immediately after the end of such Measurement Period".
(c) Section 4.11(c) of the Partnership Agreement is
hereby amended by inserting the word "Project" immediately before
the words "Letters of Credit" each time that such words appear
therein.
(d) Section 4.11(d) of the Partnership Agreement is
hereby amended by inserting after the reference to "Section
4.3(b)" therein, the words "and Section 4.13".
(e) Section 4.11 of the Partnership Agreement is
hereby amended by inserting the following new paragraphs (e), (f)
and (g) at the end thereof:
"(e) During the period from and including the date of
occurrence of a Steam Host Event to but excluding the date
of receipt by the Security Agent of the written notice from
the Agent described in Section 4.15(a) of the Amended and
Restated Security Deposit Agreement, 100% of all
Distributable Cash otherwise distributable to each Partner
pursuant to Sections 4.3(a), 4.3(b), 4.13 and 4.14 and 100%
of all Net Cash from Sales or Refinancings otherwise
distributable to each Partner pursuant to Section 4.6(b) in
respect of each Distribution Date occurring during the
continuance of such Steam Host Event shall not be
distributed to such Partner on each such Distribution Date
but instead shall be transferred to and retained in the
Steam Reserve Account and applied as provided in Section
4.15 of the Amended and Restated Security Deposit Agreement.
(f) In the event that the Debt Service Coverage Ratio
for any Measurement Period shall be less than 1.20 to 1.00,
100% of the Distributable Cash otherwise distributable to
the Partners pursuant to Sections 4.3(a), 4.3(b), 4.13 and
4.14 in respect of each of the three Distribution Dates
immediately after the end of such Measurement Period and
100% of the Net Cash from Sales or Refinancings otherwise
distributable to the Partners pursuant to Section 4.6(b) in
respect of the period commencing with the end of such
Measurement Period and ending on the third Distribution Date
occurring immediately after the end of such Measurement
Period shall not be distributed to the Partners on each such
Distribution Date but shall instead be transferred to and
retained in the Senior Debt Service Coverage Account and
applied as provided in Section 4.11(a) of the Amended and
Restated Security Deposit Agreement."
(g) Distributable Cash that would otherwise be
distributed to the Tomen Limited Partners pursuant to
Sections 4.3, 4.4 and 4.5 on a Distribution Date which does
not occur on the last Business Day of a Quarterly Period
shall not be currently distributed to such Partners but
shall instead be transferred to and retained in the Tomen
Distribution Account. On each Distribution Date which
occurs on the last Business Day of a Quarterly Period, all
amounts on deposit in the Tomen Distribution Account shall
be distributed to the Tomen Limited Partners. Amounts held
in the Tomen Distribution Account shall be invested in
Permitted Investments maturing not later than the date such
cash is to be distributed to the Tomen Limited Partners.
Any income or gain realized as a result of any such
investment shall not be retained in the Tomen Distribution
Account but instead shall be included in Project Revenues.
Until the Amended and Restated Security Deposit Agreement
shall have been terminated in accordance with its terms, the
account referred to in this paragraph shall be the Tomen
Distribution Account established thereunder and such account
shall be subject to the provisions of the Amended and
Restated Security Deposit Agreement."
8. Amendment to Section 4.15. Section 4.15 of the
Partnership Agreement is hereby amended (i) by inserting after
the first reference to "the GE Capital Limited Partner" in the
last sentence thereof, the words "from any Account" and (ii) by
inserting after "4.11" in the last sentence thereof, the words
"or Section 13.2(c)".
9. Amendment to Section 4.18. Section 4.18 is hereby
amended and restated in its entirety as follows:
"Section 4.18 Treatment of Amounts Transferred to SECI
Reserve Account, SECI Debt Service Account and Tomen
Distribution Account. For all purposes of this Agreement,
(i) amounts which are transferred into the SECI Reserve
Account or the SECI Debt Service Account shall be deemed
distributed to the General Partner, and (ii) amounts
transferred to the Tomen Distribution Account shall be
deemed distributed to the Tomen Limited Partners."
10. Amendment to Section 4.19. Section 4.19 of the
Partnership Agreement is hereby amended and restated in its
entirety as follows:
"4.19. Treatment of Amounts Transferred to Other
Accounts. Except as provided in Section 4.18, for purposes
of Article V of this Agreement, Distributable Cash deposited
into, transferred to or retained in an Account pursuant to
Section 4.11 and not distributed under the Amended and
Restated Security Deposit Agreement to a Partner in its
capacity as a Partner in the same tax year shall not be
deemed distributed to any Partner in such year."
11. Other Amendments to Article IV. Article IV of the
Partnership Agreement is hereby amended by adding to the end
thereof the following new Sections 4.20, 4.21 and 4.22:
"4.20. Treatment of Amounts Distributed from Other
Accounts. Except as provided in Section 4.18, for all
purposes of this Agreement (other than for purposes of
Article V), cash distributed directly to a Partner in its
capacity as a Partner from an Account pursuant to the
Amended and Restated Security Deposit Agreement shall be
deemed to have been distributed to such Partner.
4.21. Success Fee. To the extent any Success Fee paid
to SECI at the Second Capital Contribution Date exceeds the
amount of cash operating profits prior to the Second Capital
Contribution Date, such excess shall be treated as a
guaranteed payment under Code Section 707(c) and shall be
considered a capitalized cost of construction. The
remainder of such Success Fee shall be treated as a
distribution of cash to SECI.
4.22. If all the Level 1 Distributions are made at the
times and in the amounts set forth on Schedule 5 hereto and
the Base Term Return is achieved as assumed on March 31,
2009, then for the period beginning from the first GE
Capital Flip Date until June 30, 2009, the distribution
percentages set forth in Section 4.4 shall be 7.5% to the GE
Capital Limited Partner and 92.5% to the Other Partners in
accordance with the Allocation Percentages. All other terms
of Section 4.4 shall apply to this period."
12. Amendments to Section 5.1. (a) Section 5.1(a) of
the Partnership Agreement is hereby amended by deleting the first
sentence thereof in its entirety and substituting, in lieu
thereof, the following sentence:
"First, to the GE Capital Limited Partner and the Other
Partners so as to match on a cumulative basis the amounts
treated as a distribution pursuant to Section 4.21 and the
greater of (i) 99% to the GE Capital Limited Partners and 1%
to the Other Partners of the aggregate amounts set forth in
Schedule 5 reduced by Deducted Payments in respect of the
present calendar year and all prior periods and
(ii) Distributable Cash received by such Partners over the
term of the Partnership pursuant to Sections 4.3(a), 4.7 and
13.2(c) (treating (x) any amounts treated as guaranteed
payments to the GE Capital Limited Partner under the last
sentence of Section 4.15 and (y) any amounts transferred to
the GE Capital Limited Partner pursuant to Section 4.2(a) or
(b) of the Amended and Restated Security Deposit Agreement
as other than distributions of Distributable Cash, which are
not to be matched with allocations of Operating Profits)."
(b) Section 5.1(c) of the Partnership Agreement is
hereby amended and restated in its entirety as follows:
"(c) Third, 99% to the Other Partners and 1% to the GE
Capital Limited Partner until the Partners have been
allocated on a cumulative basis an amount of Operating
Profits equal to the aggregate amount of Distributable Cash
received over the term of the Partnership pursuant to
Section 4.3(b) and to Sections 4.11, 4.13 and 4.14 (to the
extent they relate to distributions that would otherwise be
made pursuant to Section 4.3(b)) for this purpose treating
any Distributable Cash deposited in an Account pursuant to
the Amended and Restated Security Deposit as having been
distributed to the Partners in the proportions such amounts
would have been distributed to the Partners if actually
distributed."
(c) Section 5.1(d) of the Partnership Agreement is
hereby amended by inserting the following parenthetical at the
end thereof:
"(provided, however, that with respect to Distributable Cash
received pursuant to Section 4.22, the allocation
percentages of this Section 5.1(d) shall be 92.5% to the
Other Partners and 7.5% to the GE Capital Limited Partner)".
(d) Section 5.1(f) of the Partnership Agreement is
hereby amended by inserting the following phrase immediately
before "73%" the first time that it appears therein: "to the
extent income exceeds the amount treated as a cash distribution
under Section 4.21,".
(e) Section 5.1(g) of the Partnership Agreement is
hereby amended by (i) inserting after the reference to "(f)"
therein, the words "and (g)(i)" and (ii) inserting the following
language immediately after the word "Seventh," appearing therein:
"(i) notwithstanding paragraphs (a) through (f) of this
Section 5.1, the amount of Operating Profits otherwise
allocated to the GE Capital Limited Partner over the term of
the Partnership shall be reduced by an amount equal to 73%
of the sum of (x) the aggregate principal payments received
by the Partnership on its loan to North Country and (y) the
aggregate amounts received by the Partnership as a return of
capital with respect to its shares of North Country, and
such amount shall instead be allocated to the Other
Partners, and (ii)".
13. Amendment to Section 5.3. Section 5.3 of the
Partnership Agreement is hereby amended by (i) deleting
paragraphs (a) through (c) thereof in their entirety, (ii)
redesignating paragraph (d) thereof as paragraph (c) and deleting
therefrom the phrase "with respect to the Noncontributed Assets",
(iii) deleting paragraph (e) thereof and (iv) inserting the
following new paragraphs (a) and (b) therein:
"(a) Depreciation shall be allocated 49.22% to the GE
Capital Limited Partner, 18.20% to the Tomen Limited
Partners and 32.58% to SECI.
(b) Partner Nonrecourse Deductions for any taxable
period shall be allocated to the Partner who bears the
economic risk of loss with respect to the liability to which
such Partner Nonrecourse Deductions are attributable in
accordance with Treas. Reg. Sec. 1.704-2(j)."
14. Amendment to Section 5.5(a). Section 5.5(a) of
the Partnership Agreement is hereby amended and restated in its
entirety as follows:
"(a) Depreciation shall be initially allocated to the
Tomen Limited Partners and to SECI in the ratio of their
initial Capital Account balances as shown on Schedule 1
hereto; provided, however, that if such allocations would
result in Capital Account balances that differ from those
provided for pursuant to paragraph (b) below, after taking
into account the allocations made pursuant to paragraph (b)
below, then Depreciation shall instead be allocated to the
Tomen Limited Partners and to SECI so that the Capital
Accounts of the Other Partners satisfy the requirements of
paragraph (b) below."
15. Amendment to Section 5.11. Section 5.11 of the
Partnership Agreement is hereby amended by adding the following
sentences to the end thereof:
"In particular, tax depreciation for any period shall be
allocated 73% to the GE Capital Limited Partner and the
remaining tax depreciation first, to the Tomen Limited
Partners to match the amount of Depreciation allocated to
such Partners during such period and second, any remaining
tax depreciation shall be allocated to SECI."
16. Amendment to Section 6.6(b). Section 6.6(b) of
the Partnership Agreement is hereby amended by inserting before
the semicolon at the end of subparagraph (viii) thereof, the
following parenthetical:
"(including, without limitation, a copy of all engineer's
reports furnished by the Partnership to NYSEG pursuant to
Part 2 of Exhibit B of the Power Purchase Agreement)".
17. Amendments to Section 7. (a) Section 7.2(o) of
the Partnership Agreement is hereby amended and restated in its
entirety as follows:
"(o) Alternative Steam Plan. If during the Base Term
the GE Capital Limited Partner shall determine, in its
reasonable judgment, that the Steam Host will cease for any
reason to purchase steam from the Facility in sufficient
quantities so as to maintain the Facility's status as a
Qualifying Facility and SECI shall not have undertaken an
alternative to the sale of the thermal output of the
Facility to the Steam Host, which the GE Capital Limited
Partner shall have determined, in its reasonable judgment,
to be a viable and not economically disadvantageous means to
preserve the Facility's status as a Qualifying Facility,
upon the request of the GE Capital Limited Partner, so long
as SECI shall be the Managing General Partner, the Managing
General Partner shall provide to the GE Capital Limited
Partner, as soon as possible but in any event within 60 days
after receipt by the Managing General Partner of written
notice from the GE Capital Limited Partner to such effect,
an Alternative Steam Plan; and the Managing General Partner
shall cause the substitute facility and the permits relating
thereto described in such Alternative Steam Plan to be
developed, constructed, implemented and obtained within
fifteen (15) days of the milestones specified as 'critical
path milestones' in the timetable described in clause (x) of
the definition of Alternative Steam Plan in Appendix A, and
shall cause such substitute facility to be constructed and
completed and become operational in compliance with
Applicable Law and the Alternative Steam Plan by no later
than the date one year after the date of such request or, if
the FERC shall have granted an exemption from the
requirement that the Facility be a Qualifying Facility, such
longer period not later than the date of the expiration of
such exemption, so long as during such period NYSEG shall
have taken no action to terminate the Power Purchase
Agreement."
(b) Section 7.3(a)(i) of the Partnership Agreement is
hereby amended by adding after "$250,000" appearing therein, the
phrase ", unless such Additional Contract is contemplated by the
Partnership Operating Budget or North Country Operating Budget
most recently approved by the GE Capital Limited Partner pursuant
to Section 6.6(c) or (d), as the case may be".
(c) Section 7.3(a)(viii) of the Partnership Agreement
is hereby amended and restated in its entirety as follows:
"(viii) No Amendments or Assignments. (1) Amend in
any material respect, modify in any material respect, waive
compliance with any material provision of, or agree to any
such amendment, modification, termination, consent or waiver
of compliance with any material provision of, any Project
Contract or Governmental Approval; or (2) amend in any
respect, modify in any respect, waive compliance with any
provision of, or agree to any such amendment, modification,
termination, consent or waiver of compliance with any
provision of, any other Basic Document; or (3) terminate,
assign any rights the Partnership may have under, consent to
or permit the assignment by any other Person of any right
such Person may have under, give consents or exercise rights
under or agree to any such assignment or exercise of any
rights under, any Basic Document or Governmental Approval;".
(d) Section 7.3(a)(xi) of the Partnership Agreement is
hereby amended by inserting at the end thereof, the phrase "and
intercompany advances made by the Partnership to North Country
contemplated by clause (f) of the definition of 'Partnership
Permitted Indebtedness' in Appendix A".
(e) Section 7.3(b)(iii) of the Partnership Agreement
is hereby amended by inserting the following phrase immediately
before the semicolon at the end thereof:
", except for the loan to North Country described in clause
(f) of the definition of Partnership Permitted Indebtedness
in Appendix A."
(f) Section 7.3(c) of the Partnership Agreement is
hereby amended (i) by inserting at the end of the parenthetical
in clause (A) of subparagraph (iv) thereof, the words "and the
Cash Collateral Agreement".
(g) Section 7.3(d) of the Partnership Agreement is
hereby amended (i) by inserting at the end of the parenthetical
in clause (i) thereof, the words "and the Cash Collateral
Agreement".
18. Amendments to Article VIII. Article VIII of the
Partnership Agreement is hereby amended by inserting a new
Section 8.6 therein as follows:
"8.6. Additional SECI Capital Contribution. SECI
shall be deemed to have made an additional capital contribution
to the Partnership in an amount equal to amount specified in
Section 2.3(b)(i) or (ii) of the SECI Term Loan Agreement on the
date SECI has made or is deemed to have made, as the case may be,
a drawing of the SECI Term Loan pursuant to Section 2.3(b) of the
SECI Term Loan Agreement or, in lieu of making such a drawing,
SECI (on behalf of the Partnership) pays such amount to the
Surety Bond Arranger."
19. Amendments to Article X. (a) Sections 10.3 and
10.8 of the Partnership Agreement are hereby amended by deleting
the clause "Except as security for the Obligations and the
obligations of SECI under the SECI Term Loan Agreement," from the
first sentence of each such Section and inserting, in lieu
thereof, the phrase "Except as security for the obligations of
SECI under the SECI Term Loan Agreement,".
(b) Section 10.10(a)(ii) of the Partnership Agreement
is hereby amended by deleting the first two parentheticals in the
last sentence thereof in their entirety and substituting, in lieu
thereof, the parenthetical "(second so long as the SECI Term Loan
Agreement is in effect and such second lien is permitted by the
SECI Term Loan Agreement)" and the parenthetical "(second so long
as the Loan Agreement or any refinancing thereof is in effect and
such second lien is permitted by Section 8.2 of the Loan
Agreement and the loan documents in respect of such
refinancing)", respectively.
20. Amendments to Article XIII. Article XIII of the
Partnership Agreement is hereby amended as follows:
(a) Section 13.1(b) is hereby amended by inserting
immediately after the words "other Partner" and before the words
"in any other Basic Document" the phrase "(other than GE
Capital)".
(b) Section 13.1(e) is hereby amended by inserting
immediately before the word "unless" in the proviso clause
appearing therein, the phrase "so long as, at the time that any
such cure is made, any such Other Partner also makes capital
contributions to the Partnership to reimburse the Senior Debt
Service Reserve Letter of Credit Issuer in an aggregate amount
equal to the aggregate principal amount of all unreimbursed
drawings under the Senior Debt Service Reserve Letters of
Credit,".
(c) Section 13.1(f) is hereby amended by deleting the
word "and" at the end of subparagraph (3) thereof, by inserting
the word "and" after the semicolon at the end of subparagraph (4)
thereof and by inserting the following new subparagraph (5)
immediately after subparagraph (4) thereof:
"(5) all Governmental Approvals and other consents and
approvals required in connection with the execution,
delivery and performance of such substitute agreement shall
have been duly obtained or made, and shall be in full force
and effect (other than any such Governmental Approvals or
other consents and approvals which are obtainable in the
ordinary course of business and which are not required for
the Partnership or such substitute Project Participant to
execute or deliver such substitute agreement or to perform
its obligations under such substitute agreement which are
then required to be performed by it (including the
obligation of the Partnership to operate the Facility as
then required pursuant to such substitute agreement and the
other Project Contracts));"
(d) Sections 13.1(g) and 13.1(h) are hereby amended by
inserting the word "and" after the semicolon at the end of
subparagraph (4) thereof and by inserting the following new
subparagraph (5) immediately after subparagraph (4) thereof:
"(5) all Governmental Approvals and other consents and
approvals required in connection with the execution,
delivery and performance of such substitute agreement shall
have been duly obtained or made, and shall be in full force
and effect (other than any such Governmental Approvals or
other consents and approvals which are obtainable in the
ordinary course of business and which are not required for
the Partnership or such substitute Project Participant to
execute or deliver such substitute agreement or to perform
its obligations under such substitute agreement which are
then required to be performed by it (including the
obligation of the Partnership to operate the Facility as
then required pursuant to such substitute agreement and the
other Project Contracts));"
(e) Section 13.1(r) is hereby amended and restated in
its entirety as follows:
"(r) In respect of any Quarterly Period, the GE
Capital Limited Partner shall not have received an amount
equal to 99% of the scheduled Level 1 Distributions for such
Quarterly Period (net of any Deducted Payments) within five
days after the last Distribution Date in such Quarterly
Period; provided, that (I) any Other Partner shall have the
right to make capital contributions to the Partnership to
cure such failure so long as, at the time any such cure is
made, such Partner also makes capital contributions to the
Partnership to reimburse the Senior Debt Service Reserve
Letter of Credit Issuer in an aggregate amount equal to the
aggregate principal amount of all unreimbursed drawings
under the Senior Debt Service Reserve Letters of Credit,
unless a cure has been effected in respect of (i) (A) Level
1 Distributions payable to the GE Capital Limited Partner
for each of the three Quarterly Periods immediately
preceding such failure, (B) Level 1 Distributions payable to
the GE Capital Limited Partner for more than six Quarterly
Periods, (C) the failure to make payments on the Term Loan
or a Refinancing Loan or Subordinated Refinancing Loan for
each of the three Quarterly Periods immediately preceding
such failure or (D) the failure to make payments on the Term
Loan or a Refinancing Loan or Subordinated Refinancing Loan
for more than six Quarterly Periods or (ii) any combination
of (A) through (D) above in respect of three consecutive
Quarterly Periods or six Quarterly Periods, (II) the failure
of the GE Capital Limited Partner to receive in respect of
any Quarterly Period an amount equal to 99% of the scheduled
Level 1 Distributions for such Quarterly Period (net of any
Deducted Payments) shall not constitute a Special Event
under this paragraph (r) if such failure was caused solely
by such Level 1 Distributions being deposited during such
Quarterly Period into the Steam Reserve Account in
accordance with the provisions of Section 7.22(e) of the
Loan Agreement and Section 4.2(d) of the Amended and
Restated Security Deposit Agreement and the conditions to
the release of such Level 1 Distributions to the GE Capital
Limited Partner set forth in Section 4.15(a) of the Amended
and Restated Security Deposit Agreement not having been
satisfied, (III) if the failure of the GE Capital Limited
Partner to receive such Level 1 Distributions was caused
solely by such Level 1 Distributions being deposited during
such Quarterly Period into the Senior Debt Service Coverage
Account in accordance with the provisions of Section 7.22(c)
of the Loan Agreement and Section 4.2(d) of the Amended and
Restated Security Deposit Agreement, the Managing General
Partner, at its option, may elect to cure such failure (any
such cure being subject to the numerical limitations set
forth in subclauses (i) and (ii) of clause (I) of this
paragraph (r)) without making any capital contribution to
the Partnership (other than capital contributions to
reimburse the Senior Debt Service Reserve Letter of Credit
Issuer in an aggregate amount equal to the aggregate
principal amount of all unreimbursed drawings under the
Senior Debt Service Reserve Letters of Credit) by sending a
written notice to the GE Capital Limited Partner specifying
that the Managing General Partner is making such election
and (IV) the failure of the GE Capital Limited Partner to
receive an amount equal to 99% of the scheduled Level 1
Distribution for any Distribution Date (net of any Deducted
Payments) prior to the end of the Quarterly Period in which
such Distribution Date occurs shall not be deemed to be a
Special Event under this Section 13.1(r); or"
(f) Article XIII of the Partnership Agreement is
hereby amended by deleting the period at the end of Section
13.1(t) and inserting, in lieu thereof, "; or" and inserting the
following new paragraph (u) at the end thereof:
"(u) Any drawing shall occur under the Senior Debt
Service Reserve "A" Letter of Credit or the Senior Debt
Service Reserve "B" Letter of Credit (other than a drawing
as a result of a loss of or reduction in the rating of the
Senior Debt Service Reserve Letter of Credit Issuer) or any
withdrawal from the Senior Debt Service Reserve Account
shall occur, in each case that is not reimbursed on the
first Monthly Transfer Date that is on or after the date of
such drawing or withdrawal."
21. Amendments to Schedules and Exhibits. (a)
Schedule 1 to the Partnership Agreement is hereby deleted in its
entirety and Schedule 1 hereto is hereby added to the Partnership
Agreement as the new Schedule 1 thereto.
(b) Schedules 2, 3, 4 and 5 hereto are added to the
Partnership Agreement as Schedules 2, 5, 6 and 7, respectively.
(c) Schedule 8 to the Partnership Agreement is hereby
deleted in its entirety and Schedule 6 hereto is added to the
Partnership Agreement as the new Schedule 8 thereto.
(d) Exhibit A hereto is hereby added to the
Partnership Agreement as a new Exhibit thereto.
(e) Exhibit A to the Partnership Agreement is hereby
amended by (i) deleting in Section 1(a) the words "term is" and
inserting in lieu thereof the words "terms are" and (ii) by
inserting in Section 1(a) the following new definition:
"'Second Capital Contribution Date' shall mean
September 30, 1994."
22. Consent. The parties hereto hereby (i) agree that
the Amended and Restated Appendix A (Definitions) attached hereto
shall be substituted for the Appendix A (Definitions) which
applies to each of the Loan Documents, SECI Loan Documents and
the Partnership Agreement and (ii) consent to the execution and
delivery by the respective parties thereto of (1) the Amended and
Restated Loan Agreement, the Note Pledge Agreement (including the
note pledged pursuant thereto), the Surety Bank Arrangements Cash
Collateral Agreement and the Amended and Restated Security
Deposit Agreement (as each such document is defined in the
Amended and Restated Appendix A referred to in clause (i) above),
(2) the Letter Agreement, dated as of September 30, 1994, among
the Partnership, GE Capital and Credit Suisse, as agent, relating
to the payment of certain fees and expenses under the Amended and
Restated Loan Agreement, (3) the Successor Agency Agreement,
dated as of September 30, 1994, among Credit Suisse, GE Capital
and the Partnership, (4) the Notices of Assignment, each dated as
of October 7, 1994, delivered by the Partnership to each of the
parties to the Assigned Contracts, (5) the Amendment, dated as of
October 7, 1994, to the Consent and Agreement, dated as of
December 29, 1992, among North Country, the Partnership and GE
Capital, (6) the Term Notes, (7) the Amended and Restated
Amendment No. 1 to the Operation and Maintenance Agreement, dated
as of September 30, 1994, (8) the Amendment, dated as of
October 7, 1994, to the Partnership Stock Pledge Agreement, made
by the Partnership in favor of GE Capital, (9) the Second Swap
Agreement, (10) the Amendment No. 2, dated February 24, 1994, to
the Power Purchase Agreement, and (11) the Letter Agreement,
dated October 7, 1994, among GE Capital, the Partnership and
North Country (relating to the termination of certain Collateral
Security Documents).
23. Full Force and Effect. Except as expressly
amended and modified by this Amendment, the Partnership Agreement
shall continue to be, and shall remain, in full force and effect
in accordance with its terms.
24. No Other Amendments. This Amendment shall be
effective solely to the extent set forth herein, and is not and
shall not be construed (i) to be an amendment of any other term
or condition of the Partnership Agreement or (ii) to prejudice
any other right or rights which any party thereto may now have or
may have in the future under or in connection with the
Partnership Agreement.
25. Counterparts. This Amendment may be executed by
the parties hereto in any number of separate counterparts, all of
which counterparts, taken together, shall be deemed to constitute
one and the same instrument.
26. Condition Precedent. This Amendment shall become
effective as of the date first above written upon receipt by GE
Capital of counterparts hereof duly executed by each of the
parties hereto.
27. Governing Law. This Amendment and the rights and
obligations of the parties hereunder shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
SARANAC ENERGY COMPANY, INC.
By:
Title:
TPC SARANAC PARTNER ONE, INC.
By:
Title:
TPC SARANAC PARTNER TWO, INC.
By:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
Title: