-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RM44tmECLXT6JyzBUAJyniRjGOFxWGN9iUxjeftvU6oYlF23BlVsoTcXxBUOuxzN 8ZnAGwWXe4gVnF8/7n0Siw== 0000925655-96-000004.txt : 19960517 0000925655-96-000004.hdr.sgml : 19960517 ACCESSION NUMBER: 0000925655-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIGEN ENERGY CORP CENTRAL INDEX KEY: 0000925655 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 133378939 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13264 FILM NUMBER: 96567040 BUSINESS ADDRESS: STREET 1: ONE WATER ST CITY: WHITE PLAINS STATE: NY ZIP: 10601 BUSINESS PHONE: 9142866600 MAIL ADDRESS: STREET 1: ONE WATER ST CITY: WHITE PLAINS STATE: NY ZIP: 10601 10-Q 1 FORM 10-Q FOR QUARTER ENDING 3/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-13264 TRIGEN ENERGY CORPORATION (Exact name of Registrant as specified in its charter) Delaware 13-3378939 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) One Water Street White Plains, New York 10601 (Address of principal executive offices) (Zip Code) (914) 286-6600 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No There were 11,508,223 shares of the Registrant's Common Stock outstanding as of May 15, 1996. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES INDEX TO FORM 10-Q Quarter Ended March 31, 1996 Part I - Financial Information: Page Item 1. Financial Statements Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1996 and 1995 (Unaudited) 2 Condensed Consolidated Balance Sheets as of March 31, 1996 (Unaudited)and December 31, 1995 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 (Unaudited) 4 Notes to Condensed Consolidated Financial Statements (Unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-8 Part II - Other Information: Item 6. Exhibits and Reports on Form 8-K 9 Signature 10
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1996 and 1995 Unaudited (All amounts in thousands, except per share data) 1996 1995 Revenues Energy revenues $82,359 $ 63,623 Fees earned and other operating revenues 3,860 1,553 ------- -------- Total revenues 86,219 65,176 Operating expenses Fuel and consumables 47,808 32,504 Production and operating costs 13,161 12,100 Depreciation 4,193 4,043 General and administrative 8,914 6,527 ------- ------- Total operating expenses 74,076 55,174 Operating income 12,143 10,002 Other income (expense): Interest expense (4,669) (4,989) Other income, net 419 537 ------- ------ Income before minority interests and income tax expense 7,893 5,550 Minority interests in earnings of consolidated entities (801) (37) ------ ------ Income before income tax expense 7,092 5,513 Income tax expense 2,911 2,255 ------- ------ Net income $ 4,181 $3,258 ======= ====== Net income per share $ .36 $ .29 ======= ====== Average shares outstanding 11,470 11,373 ======= ====== Dividends per share $ .035 $ .035 ======= ======= See accompanying notes to condensed consolidated financial statements.
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except share data) March 31, December 31, 1996 1995 (Unaudited) Assets Current assets: Cash and cash equivalents $ 14,091 $ 9,984 Accounts receivable: Trade (less allowance for doubtful accounts of $783 in 1996 and $697 in 1995) 36,809 36,275 Other 3,254 1,922 Inventories 5,743 6,239 Prepaid costs and other current assets 4,639 6,890 ------- ------- Total current assets 64,536 61,310 Non-current cash and cash equivalents 10,016 10,191 Property, plant and equipment, net 343,436 341,188 Investment in non-consolidated partnerships 8,701 6,548 Intangible assets, net 15,464 15,088 Deferred costs and other assets, net 19,669 20,581 ------- ------- Total assets $ 461,822 $ 454,906 ======= ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 3,929 $ 5,924 Accrued fuel 16,085 16,806 Accrued expenses and other current liabilities 22,923 16,718 Short-term debt 4,100 14,165 Current portion of long-term debt 14,070 7,415 ------- ------ Total current liabilities 61,107 61,028 Long-term debt 222,111 223,371 Other liabilities 9,236 9,229 Deferred income tax liabilities 28,054 25,222 ------- ------- Total liabilities 320,508 318,850 Minority interests in consolidated entities 16,940 17,226 Stockholders' equity: Preferred stock-$.01 par value (authorized and unissued 15,000,000 shares) ---- ---- Common stock-$.01 par value (authorized 60,000,000 shares; issued 11,518,815 shares in 1996, 11,416,418 shares in 1995) 115 114 Additional paid-in capital 102,683 100,788 Retained earnings 21,848 18,070 Treasury stock, at cost (13,556 shares in 1996, 7,268 shares in 1995) (272) (142) Total stockholders' equity 124,374 118,830 -------- -------- Total liabilities and stockholders' equity $461,822 $454,906 ======== ======== See accompanying notes to condensed consolidated financial statements.
TRIGEN ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 Unaudited (All amounts in thousands) 1996 1995 Increase (decrease) in cash and cash equivalents: Net cash provided by operating activities $16,695 $12,422 -------- -------- Cash flows from investing activities: Sale of marketable securities ---- 7,786 Capital expenditures (6,385) (2,781) Investment in non-consolidated partnerships, net (2,153) (737) ------- ------- Net cash (used in) provided by investing activities (8,538) 4,268 ------- ------- Cash flows from financing activities: Short-term debt, net (10,065) (7,600) Proceeds of long-term borrowings 7,000 ---- Payments of long-term borrowings (1,605) (615) Dividends (403) (399) Issuance of common stock 859 ---- Repurchase of common stock (130) ---- Sale of interest rate caps 1,003 ---- Distribution to minority interests (884) ---- ------ ------ Net cash (used in) financing activities (4,225) (8,614) ------- ------- Net increase in cash and cash equivalents 3,932 8,076 Cash and cash equivalents at beginning of period 20,175 19,837 ------ ------ Cash and cash equivalents at end of period $24,107 $27,913 ======= ======= Cash and cash equivalents at end of period: Current cash and cash equivalents $14,091 $17,083 Non-current cash and cash equivalents 10,016 10,830 ------- ------- Cash and cash equivalents at end of period $24,107 $27,913 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest (net of amounts capitalized) $4,325 $4,378 ====== ====== Income taxes $1,054 $2,273 ====== ====== Non-cash investing activity: Acquisition of subsidiary $1,037 $ ---- ====== ====== Non-cash financing activity: Issuance of common stock for acquisition of subsidiary $1,037 $ ---- ====== ======
See accompanying notes to condensed consolidated financial statements. TRIGEN ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation Trigen Energy Corporation (the "Company") develops, owns and operates community energy systems and cogeneration facilities at 13 locations in the United States and Canada. The Company believes that it is the leading commercial owner and operator of community energy systems in North America. A community energy system consists of a central production plant that distributes steam, hot water and/or chilled water to customer buildings through underground distribution pipelines. Steam, hot water and/or chilled water are sold by the Company to over 1,500 customers, including colleges and universities, office buildings, hotels, civic and cultural landmarks, housing complexes, industrial plants and hospitals. Cogenerated electricity produced by the Company is used by the Company in eight of its systems and is sold to one steam customer and to local utilities in three communities. The consolidated financial statements of Trigen Energy Corporation and its subsidiaries presented herein are unaudited. However, such information reflects all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to present fairly the financial position as of March 31, 1996, and the results of operations and the cash flows for the three months ended March 31, 1996 and 1995. The results of operations and cash flows for the three month period ended March 31, 1996 are not indicative of those to be expected for the year ending December 31, 1996. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 1995 included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview The Company's operations are primarily the production and distribution of steam, hot water, electricity and chilled water. Approximately 60% of total revenue is derived from long-term contracts. The Company's heating and cooling revenues and consequently its operating profits are subject to seasonal fluctuation due to peak heating demand in the winter and peak cooling demand in the summer. For the quarter ended March 31, 1996, the Company reported net income of $4.2 million or $0.36 per share compared to $3.3 million or $0.29 per share for the comparable 1995 period. Results of Operations Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995 Revenues Revenues were $86.2 million for the three months ended March 31, 1996, an increase of $21.0 million, from $65.2 million in the corresponding period in 1995, due principally to two acquisitions consummated in September 1995, which contributed approximately half of the increase, a colder winter in 1996 compared to 1995 and the increased price of fuel. Operating Expenses The Company's cost of sales includes fuel and consumables, production and operating costs and depreciation expense and is affected primarily by its costs for fuel, chemicals, water and other commodities. Because the Company's rates typically enable it to pass through fuel and most commodity prices, changes in such prices have little impact on operating income. The Company's cost of sales and its operating income are also affected by its efficiency in converting fuel to steam, hot water, electricity and chilled water and its ability to minimize costs through automation and enhanced process control efforts. Cost of sales as a percentage of revenues increased from 74.6% of revenues in 1995 to 75.6% of revenues in 1996. Fuel and consumable costs were $47.8 million, or 55.4% of revenues in 1996, compared to $32.5 million, or 49.9 % of revenues in 1995, an increase of $15.3 million. This increase is due to the impact of the two acquisitions, the increased price of fuel and the use of less efficient backup production equipment to meet demand during the periods of extreme cold. Production and operating costs are those costs of operating the Company's facilities other than fuel and consumables, and include labor and supervisory personnel, repair and maintenance costs and plant operating costs. The increase resulting from the two acquisitions was offset by cost savings and labor productivity improvements. Production and operating costs increased to $13.2 million in 1996 from $12.1 million in 1995, and as a percentage of revenues decreased to 15.3% in 1996 compared to 18.6% in 1995. Depreciation expense was $4.2 million in 1996 compared to $4.0 million in 1995, an increase of $0.2 million due predominately to the two acquisitions. General and administrative expenses represent on-site management and other overhead costs incurred for existing operations, as well as the Company's marketing and corporate management costs, and development expenses. General and administrative costs increased to $8.9 million, or 10.3% of revenues in 1996 from $6.5 million or 10.0% of revenues, in 1995. This is primarily due to additional staff and development and marketing costs and the impact of the two acquisitions. Operating Income Operating income was $12.1 million, or 14.1% of revenues, in 1996 compared to $10.0 million, or 15.3% of revenues, in 1995. Increased general and administrative expenses offset by cost savings, primarily from efficiency and labor productivity, higher revenues, and the impact of the two acquisitions, resulted in improved operating income of $2.1 million. Interest Expense; Other Income Interest expense decreased to $4.7 million in 1996 from $5.0 million in 1995, primarily due to lower average interest rates on indebtedness. Income Tax Expense The Company's effective tax rate is determined primarily by the federal statutory rate of 35%, and state and local income taxes. The effective income tax rate of 41.0% is consistent with the rate in 1995. Liquidity and Capital Resources Liquidity The Company had cash and cash equivalents of $24.1 million at March 31, 1996 and $20.2 million at December 31, 1995, an increase of $3.9 million. The Company had short-term indebtedness outstanding of $4.1 million at March 31, 1996 compared to $14.2 million at December 31, 1995, a reduction of $10.1 million. These changes were primarily due to the use of cash on hand at December 31, 1995 and cash generated from operations during the quarter. Certain of the Company's debt agreements restrict payments by its subsidiaries, which are the primary obligors, to the Company unless the payments are for specified purposes or the subsidiary meets certain financial covenants. Restricted cash and cash equivalents of $16.0 million at March 31, 1996 included $6.4 million for debt service and reserve funds, $2.6 million for operations and maintenance reserves, $3.7 million available for subsidiary operating purposes and $3.3 million for certain construction projects. Restricted funds may be invested only in certain securities. At March 31, 1996, the Company had unused lines of credit available consisting of $10.1 million under a United Thermal Corporation ("UTC") revolving credit facility and $39.5 million under a corporate revolving credit facility. On February 20, 1996, the Company declared a dividend of $.035 per share of common stock to holders of record as of March 29, 1995, payable April 15, 1996. Cash Flow During the three months ended March 31, 1996, cash provided by operating activities was $16.7 million compared to $12.4 million for the comparable period in 1995. Net cash used in investing activities was $8.5 million for the three months ended March 31, 1996 primarily due to capital expenditures of $6.4 million and the initial equity investment of $2.0 million in the Grays Ferry Cogeneration Facility. Net cash used in financing activities was $4.2 million in 1996 principally reflecting debt repayments. Debt At March 31, 1996, the Company's long-term debt (including the current portion) was $236.2 million or 61.9% of total capital, at a weighted average annual interest rate of approximately 7.07% (based on 3 month LIBOR of 5.47% per year) and an average remaining maturity of 6.9 years. Certain of the Company's debt is variable rate or rate capped. Based upon the debt balances at March 31, 1996, a change in the LIBOR rate of .25% would have a corresponding change in interest expense of approximately $300,000 per year when three month LIBOR is under 6.25% ranging to approximately $100,000 per year when three month LIBOR is over 7.25%. Future Capital Expenditures The Company's planned capital expenditures for upgrades, expansions, environmental matters and other improvements are material. The Company believes that cash provided by operations net of debt service, cash balances at March 31, 1996 and available credit facilities will be sufficient to finance its capital program and several new development projects. On January 18, 1996 the Company acquired Ewing Power Systems, Inc. for $1.0 million of common stock. On March 11, 1996, a wholly-owned subsidiary of the Company became a one-third partner in the Grays Ferry Cogeneration Facility. Under the terms of the Partnership Agreement, in addition to its initial equity investment, the Company is required to contribute $10 million when construction is completed, which is expected in the last quarter of 1997. Part II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of this report: 10.1 - Acquisition Agreement dated March 1, 1996 among Adwin (Schuylkill) Cogeneration, Inc., O'Brien (Schuylkill) Cogeneration, Inc., and Trigen-Schuylkill Cogeneration, Inc. 10.2 - Amended and Restated Partnership Agreement of Grays Ferry Cogeneration Project dated March 1, 1996 among Adwin Schuylkill) Cogeneration, Inc., O'Brien (Schuylkill) Cogeneration, Inc., and Trigen-Schuylkill Cogeneration, Inc. 11 - Computation of Earnings Per Share (b) No reports on Form 8-K were filed for the three months ended March 31, 1996. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRIGEN ENERGY CORPORATION /s/ Thomas R. Casten Thomas R. Casten President and Chief Executive Officer /s/ David H. Kelly David H. Kelly Chief Financial Officer /s/ Daniel J. Samela Daniel J. Samela Controller Date: May 15,1996 /TEXT EX-10.1 2 ACQUISITION AGREEMENT ACQUISITION AGREEMENT THIS ACQUISITION AGREEMENT is entered into this 1st day of March, 1996, by and among ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania corporation ("Adwin"), O'BRIEN (SCHUYLKILL) COGENERATION, INC., a Delaware corporation ("O'Brien"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a Pennsylvania corporation (the "Purchaser"). (Adwin and O'Brien are sometimes hereinafter referred to collectively as the "Partners.") BACKGROUND WHEREAS, on October 29, 1991, the Partners entered into a Partnership Agreement to form Grays Ferry Cogeneration Partnership, a Pennsylvania general partnership (hereinafter the "Partnership"), which Partnership Agreement was amended by the First Amendment to Partnership Agreement, dated September 17, 1993, the Second Amendment to Partnership Agreement dated September 27, 1994, and the Third Amendment to Partnership Agreement dated January 23, 1996; and WHEREAS, the Partnership was formed to develop a cogeneration facility to be located at 2600 Christian Street, Philadelphia, Pennsylvania, such facility to be known as the "Grays Ferry Cogeneration Project" (the "Project"); and WHEREAS, on September 17, 1993, the Partnership and Philadelphia United Power Corporation ("PUPCO") entered into an Amended and Restated Project Services and Development Agreement (the "Project Services Agreement"); and WHEREAS, on September 17, 1993, PUPCO, Trigen-Philadelphia Energy Corporation (then known as Philadelphia Thermal Energy Corporation) ("Trigen- Philadelphia"), Adwin Equipment Company ("AEC"), and O'Brien Environmental Energy, Inc. entered into an Amended and Restated Steam Venture Agreement (the "Steam Venture Agreement"); and WHEREAS, Purchaser desires to purchase a one-third interest in the Partnership, pursuant to the terms of this Agreement; and WHEREAS, in consideration of the Purchaser's purchase of a one-third interest in the Partnership, PUPCO has agreed to terminate its option to purchase an interest directly from the Partnership; and WHEREAS, contemporaneously with the closing under this Acquisition Agreement, the Purchaser desires to be admitted to the Partnership as an equal partner, and Adwin and O'Brien desire that the Purchaser be so admitted, with each of Adwin, O'Brien and the Purchaser having a one-third interest in the Partnership following the consummation of the transactions contemplated by this Agreement; and WHEREAS, as a condition to the closing hereunder, the parties contemplate that the Partnership Agreement shall be amended by an Amended and Restated Partnership Agreement that will be executed by all of the parties hereto, which Amended and Restated Partnership Agreement is attached as Exhibit A to this Agreement (the "Restated Partnership Agreement"); and WHEREAS, in connection with the execution of this Agreement, the Partnership, the Partners, PUPCO and Trigen-Philadelphia desire to clarify certain matters contained in the Project Services Agreement and the Steam Venture Agreement; and WHEREAS, the parties have agreed that the Purchaser's participation in the Partnership shall be on the terms set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. The Transaction. 1.1 Purchase Price; Purchaser Partnership Interest. On the Closing Date (as hereinafter defined), the Purchaser shall pay an aggregate amount of $2,000,000 (the "Purchase Price") for a one-third interest in the Partnership, one-half of which shall be paid to O'Brien and one-half to Adwin. Upon paying the Purchase Price hereunder, the Purchaser shall receive a one-third interest in the Partnership as provided in the Restated Partnership Agreement (the "Partnership Interest"). 1.2 Certain Understandings with Regard to the Project Services Agreement. PUPCO and the Partnership agree that the Project Services Agreement is clarified as follows: (a) Sections 19.1, 19.4, 19.5, 19.6 and 19.7 are no longer effective. (b) Section 19.2 shall be interpreted as if the Equity Purchase Option (as defined in the Project Services Agreement) has been exercised. (c) Section 19.3 remains in full force and effect. 1.3 Certain Payments to PUPCO Under the Steam Venture Agreement. The Partnership shall continue to pay PUPCO the quarterly development fees of $150,000 per month described in Section 7D(i) of the Steam Venture Agreement through the date of commercial operation of the Project. 1.4 Fees Due PUPCO at Financial Closing. The Partnership agrees that the following fees due PUPCO shall be paid on the Financial Closing Date (as defined in the Restated Partnership Agreement): (a) the $600,000 fee identified in Section 7F of the Steam Venture Agreement, (b) the reimbursement of $55,176 in legal costs and $300,000 in past due development fees due PUPCO under the Steam Venture Agreement and, (c) development costs associated with the alternative natural gas pipeline in the amount of $259,200. 1.5 Restated Partnership Agreement. In connection with the consummation of the transactions contemplated hereby and as a condition precedent thereto, the Restated Partnership Agreement shall be executed by all of the parties hereto at Closing. 1.6 Construction Manager. The Purchaser acknowledges that the Partnership will retain NRG Energy, Inc. ("NRG") as the Construction Manager of the Project, pursuant to the terms of a Construction Management Agreement dated February 20, 1996, entered into by and between the Partnership and NRG with respect thereto. 2. Closing. The closing of the transactions contemplated by this Agreement shall be held at the offices of Ballard Spahr Andrews & Ingersoll, counsel for Adwin, on or before the Financial Closing Date, but in no event later than March 9,1996 (the "Expiration Date"), or at such other place as the parties may agree (the "Closing"). (The date of the Closing shall be referred to herein as the "Closing Date.") Ballard Spahr Andrews & Ingersoll shall serve as Escrow Agent for the parties pursuant to a letter agreement among Ballard Spahr Andrews & Ingersoll, the Partners and the Purchaser dated the same date as this Agreement (the "Escrow Agreement"). All Deliverables received from the parties by the Escrow Agent, pursuant to Section 9 of this Agreement on the Closing Date, shall be held in escrow until delivered or disposed of by the Escrow Agent in accordance with the terms of the Escrow Agreement. 3. Joint Representations and Warranties of the Partners. For purposes of the following representations and warranties which are based on the Partners' knowledge, the knowledge of the Partners shall be deemed to include, but is not necessarily limited to, that of Reed Wills, who was formerly employed by O'Brien Environmental Energy, Inc. The Partners, jointly and severally, represent and warrant to the Purchaser as follows: 3.1 Organization and Standing; Qualification. The Partnership is a general partnership duly constituted, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. The Partnership has all requisite partnership power and authority under its Partnership Agreement to: (a) own or lease its properties and assets; (b) conduct its business as currently conducted; (c) develop, construct, own, operate and manage the Project, as contemplated by the Restated Partnership Agreement; and (d) enter into and perform this Agreement and all other agreements entered into in connection with the transactions contemplated hereby. Copies of the Partnership's Partnership Agreement, as amended or restated to date, have been delivered by the Partnership to the Purchaser and are complete and correct. The Partnership has not qualified to do business in any other jurisdiction and neither the ownership of its properties nor the conduct of its business requires such qualification. 3.2 Conflict with Partnership Documents. None of the execution, delivery and performance of, and compliance with, this Agreement nor the consummation of the transactions contemplated hereby will (with or without the giving of notice or lapse of time, or both) contravene or violate the Partnership Agreement, or, to the best knowledge of the Partners, conflict with, result in a breach or violation of, be in conflict with, entitle any party to terminate, or constitute a default with respect to, any contract, bond, note, indenture or other agreement or any restriction on the Project, the Partnership, or its properties or assets, or any judgment, decree, order, statute, rule or regulation to which the Project, the Partnership, or its properties or assets, are subject or by which they may be bound, or result in the creation of any liens, mortgages, pledges, prior assignments, encumbrances, claims, charges, restrictions or security interests of any kind or character (collectively, "Encumbrances") upon the Project, the Partnership or any of its properties or assets. The Partnership is not a party to, nor subject to, nor bound by any judgment, injunction or decree of any court or governmental authority and no judgment, action or proceeding in law is pending or, to the knowledge of the Partners, threatened against or involving the Partnership, which may restrict or interfere with the performance of this Agreement by the Partnership. 3.3 Investments. The Partnership does not own any material amount of stock in and has made no material equity investment in or material acquisition of any other interest in, nor has it made any material advances or loans to, any corporation, association, partnership, joint venture or other entity. 3.4 Financial Statements. Attached hereto as Exhibit B are copies of the Partnership's unaudited financial statements as of and for each of the calendar years ended December 31, 1995, and 1994 (December 31, 1995 being hereinafter referred to as the "Balance Sheet Date"), with each of the financial statements consisting of a balance sheet as of December 31 of each such year, an Income Statement as of December 31 of each such year, and a General Ledger for the years then ended. Attached hereto as Exhibit C is a copy of an unaudited financial statement of the Partnership for the two-month period ended February 29, 1996, and a General Ledger for the period then ended. (Exhibits B and C are hereinafter referred to as the "Financial Statements.") To the best knowledge of the Partners, the Financial Statements are true, correct and complete in all material respects and, to the best knowledge of the Partners, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis for the period covered by such statements, and, to the best knowledge of the Partners, fairly and accurately present the financial condition and operating results of the Partnership as of the dates and for the period thereof. To the best knowledge of the Partners, all transactions between the Balance Sheet Date and the Closing Date shall be or have been accounted for on the Partnership's books and records of original entry in accordance with generally accepted accounting principles, consistently applied. 3.5 Business Condition: Absence of Certain Changes. Since February 29, 1996, there has not been: (a) Any material adverse change in the financial condition, properties, assets, liabilities, business operations or, to the knowledge of the Partners, prospects of the Partnership taken as a whole (hereinafter referred to as the Partnership's "Business or Condition"); (b) Any damage, destruction or loss, whether covered by insurance or not, materially and adversely affecting the Partnership's Business or Condition; (c) Any declaration, setting aside, or payment of any distribution (whether in cash, securities, property or otherwise) by the Partnership; (d) Any discharge or satisfaction of any Encumbrance, or any payment or satisfaction of any liability, absolute or contingent, other than those performed in the ordinary course of business; (e) Any secured or unsecured borrowing or any guaranty of the borrowing of any money by the Partnership or the issuance or creation of (or any commitment with respect thereto) any bonds, debentures, notes or other obligations for the payment of money by the Partnership, other than those performed in the ordinary course of business; (f) Any loans or advances made by the Partnership to any person or entity; (g) Any cancellation, modification or waiver of any evidence of indebtedness for borrowed money held by the Partnership; (h) Any change in any method of accounting or accounting practice of the Partnership; (i) Any sale, assignment, transfer, mortgage, pledge or other Encumbrance by the Partnership of any assets (real, personal or mixed, tangible or intangible), or waiver by the Partnership of any rights of the Partnership; or (j) Any agreement or commitment by the Partnership to take any of the actions described in clauses (c) through (i) above, except those actions required in connection with the Financial Closing. 3.6 Permits. Except as set forth in Schedule 3.6, and specifically excluding building permits, the Partnership has, to the best of the Partners' knowledge, all governmental permits, licenses and authorizations issued by any federal, state or local governmental authority (hereinafter referred to, collectively, as the "Permits") that are required to commence construction of the Project. To the best of the Partners' knowledge, all such Permits were validly issued and are in full force and in effect, have not been suspended or revoked, nor are there proceedings pending or threatened to suspend or revoke any of such Permits. 3.7 Contracts. (a) Schedule 3.7 sets out a list of the material contracts to which the Partnership is currently a party. (b) The Partners have delivered to the Purchaser a true, correct and complete copy of (or, if oral, a true, correct and complete description of) each material agreement, contract, plan, instrument, arrangement and commitment listed on Schedule 3.7, including all amendments thereto, whether written or oral. To the best of Partners' knowledge, all of such agreements were duly authorized and approved by appropriate action of the Partnership and, to the best of the Partners' knowledge, each such agreement is valid and in full force and effect. To the best of the Partners' knowledge, neither the Partnership nor the Partners is in default under any such agreement in a manner which could have a material adverse effect on the Project, the Partnership or the Partnership's future activities, and, to the best of Partners' knowledge, there exists no condition or event which, with the lapse of time or notice, would constitute any such default by the Partnership. To the best of the Partners' knowledge, there is no outstanding notice of cancellation or termination in connection with any such agreement. 3.8 Environmental Reports. To the best of the Partners' knowledge, the Partners have delivered to the Purchaser all environmental reports commissioned by the Partners regarding the Project. 3.9 Liabilities. Except as and to the extent reflected or reserved against in the Financial Statements, and except those incurred subsequent to the Balance Sheet Date that are fully recorded and reflected on the books of original entry of the Partnership, to the best of the Partners' knowledge, the Partnership does not have any liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise. 3.10 Books and Records. The books and accounts and other records of the Partnership relating to the Project and the Partnership's properties and assets are complete and correct in all material respects and have been maintained in accordance with good business practices. All transactions of the Partnership relating to the Project and the properties and assets of the Partnership have been recorded in all material respects in such books and records. The Partnership's principal place of business is 300 Stevens Drive, Lester, Pennsylvania. 3.11 Compliance with Laws. To the best of the Partners' knowledge, the Partnership is in compliance with all existing requirements of all laws, statutes, rules, regulations and orders, federal, state and local, and all existing requirements of all governmental bodies or agencies having jurisdiction over the Project, the Partnership, its properties or assets, except where such failure to be in compliance will not have a material adverse effect on the Partnership's Business or Condition or on its ability to perform its obligations under this Agreement or any other agreement to which it is a party. To the best of the Partners' knowledge, neither the Partnership nor the Project are in violation of, nor have they received any notice of any violation or alleged violation of, or claim under any federal, state or local law, statute, rule, regulation or order, nor do the Partners have any knowledge of any pending or threatened governmental proceeding or investigation. 3.12 Employees. The Partnership does not now have nor has it ever had any employees or any commitment to hire or engage any employees. 3.13 Litigation. The Partnership is not a party to, nor, to the knowledge of the Partners, threatened with any suit, action, arbitration or other legal or governmental proceeding relating to or affecting the Project, the Partnership or its properties or assets. There is no material judgment, decree, award or order outstanding or unsatisfied against the Partnership relating to or affecting the Project, the Partnership or its properties or assets, nor, to the knowledge of the Partners, is there any basis for any such suit, action, arbitration or other legal or governmental proceeding. To the best of the Partners' knowledge, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed, and no investigation, review or proceeding is pending or, to the best of the Partners' knowledge, threatened, of any kind, by any person, firm or entity, with respect to the Project, the Partnership or its properties or assets. 3.15 Exhibits and Schedules. To the best of the Partners' knowledge, all exhibits, schedules and other documents relating to the Partnership which are attached to this Agreement are accurate and shall constitute an integral part of this Agreement with the same force and effect as if such exhibits, schedules and documents were set forth in their entirety herein. 4. Individual Representations and Warranties of the Partners. For purposes of the following individual representations and warranties made by O'Brien which are based on the knowledge of O'Brien, such knowledge shall be deemed to include, but is not necessarily limited to, the knowledge of Reed Wills, who was formerly employed by O'Brien Environmental Energy, Inc. Each Partner individually (but not jointly and severally) represents and warrants to the Purchaser as follows: 4.1 Organization and Standing; Qualification. Such Partner is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation. Such Partner has all requisite corporate power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to enter into and perform this Agreement and all other agreements entered into by it in connection with the transactions contemplated hereby. Copies of the Articles or Certificate of Incorporation, as amended to date, and By-Laws, as amended to date, of such Partner have been delivered to the Purchaser and are complete and correct. Such Partner, if such Partner is Adwin, is not qualified to do business as a foreign corporation in any jurisdiction and neither the ownership of its properties nor the conduct of its business requires such qualification. If such Partner is O'Brien, it is qualified to do business in Pennsylvania. 4.2 Authority, Binding Effect. Such Partner has the full corporate power and authority to make, execute, deliver and perform this Agreement, and the other instruments and documents required or contemplated hereunder to which it is a party, to perform its obligations hereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement, and all documents and instruments required to be executed, delivered and performed hereunder or thereunder by such Partner, have been duly and validly authorized and approved by all necessary action by it, and have been duly and validly executed and delivered by such Partner. This Agreement constitutes, and all other documents and instruments to be executed, delivered, and performed hereunder by such Partner will constitute, the valid and binding obligation of such Partner, enforceable against it in accordance with their respective terms. 4.3 Performance of this Agreement. Such Partner is not a party to, nor subject to, nor bound by any judgment, injunction or decree of any court or governmental authority and no judgment, action or proceeding in law is pending or, to the knowledge of such Partner, threatened against or involving such Partner, which may restrict or interfere with the performance of this Agreement by such Partner. 4.4 Compliance with Laws. To the best of such Partner's knowledge, it is in compliance with all existing requirements of all laws, statutes, rules, regulations and orders, federal, state and local, and all existing requirements of all governmental bodies or agencies having jurisdiction over it or its properties or assets, except where such failure to be in compliance will not have a material adverse affect on such Partner's business or financial condition or on its ability to perform its obligations under this Agreement or any other agreement to which it is a party. To the best knowledge of such Partner, it has received no notice of any violation of, or claim under any federal, state or local law, statute, rule, regulation or order, nor does it have any knowledge of any pending or threatened governmental proceeding or investigation. 4.5 No Consents. Except as set forth on Schedule 4.5, no consent of any governmental or judicial authority or agency, or of any bank, other financial institution or other third party, is required in connection with the execution and delivery by such Partner of this Agreement and the other documents and instruments required or contemplated herein or the consummation of the transactions contemplated hereunder by such Partner. 4.6 Ownership of Partnership Interests. The only ownership interests in the Partnership in existence on the date hereof are those owned by the Partners, each of which owns a one-half interest in the Partnership. Upon the consummation of the transactions contemplated hereby, each of Adwin, O'Brien and the Purchaser shall own a one-third interest in the Partnership. The partnership interests outstanding on the date hereof have been, and such Partner's portion of the Partnership Interest, when delivered in accordance with the terms of this Agreement and based upon the representations of Purchaser set forth in Sections 5.7 and 5.8, will be issued in compliance with applicable federal and state securities laws. No action has been taken by the Partnership, the Partners or, to the best of the Partners' knowledge, any third party that would cause the Partnership to be deemed to be a publicly-traded partnership within the meaning of Section 7704(b) of the Internal Revenue Code of 1986, as amended. Neither the Partnership nor such Partner has issued, nor is the Partnership or such Partner bound by, any outstanding subscriptions, options, warrants, contracts, calls, rights or commitments of any character relating to the issuance of or granting of a right in or to acquire any interest of or in the Partnership, whether equitable or otherwise, nor, to the knowledge of such Partner, is there any basis for any third party making a claim to or against its interest in the Partnership. 4.7 Partnership Contributions and Loans. Except as set forth on Schedule 4.7 hereto, such Partner has not made any capital contributions to the Partnership, loaned any money to the Partnership, borrowed any money from the Partnership, guaranteed any obligation of the Partnership or been the beneficiary of any guarantee made by the Partnership. 4.8 Partnership Interest. Following the consummation of the transactions contemplated hereby, such Partner shall have transferred to the Purchaser title to one-half (1/2) of the Partnership Interest conveyed hereunder, free and clear of any liens, claims or encumbrances, excepting only those created or granted by or arising through the Purchaser. 4.9 Litigation. Such Partner is not a party to, nor to its knowledge, threatened with any suit, action, arbitration or other legal or governmental proceeding relating to or affecting the Project, the Partnership or its properties or assets. There is no material judgment, decree, award or order outstanding or unsatisfied against such Partner relating to, or affecting, the Project, the Partnership, or its properties or assets, nor to the knowledge of such Partner, is there any basis for any such suit, action, arbitration or other legal or governmental proceeding. To the best knowledge of such Partner, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed, and no investigation, review or proceeding is pending, or to the best of such Partner's knowledge, threatened, of any kind, by any person, firm or entity, with respect to the Project, the Partnership or its properties or assets. 5. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Partners as follows: 5.1 Organization; Existence and Authority. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. The Purchaser has all requisite corporate power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to enter into and perform this Agreement and all other agreements entered into in connection with the transactions contemplated hereby. Copies of the Purchaser's Articles of Incorporation, as amended to date, and By-Laws, as amended to date, have been delivered by the Purchaser to the Partners, and are complete and correct. 5.2 Authority; Binding Effect. The Purchaser has the full corporate power and authority to make, execute, deliver and perform this Agreement, and the other instruments and documents required or contemplated hereunder, to perform its obligations hereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement, and all documents and instruments required to be executed, delivered and performed hereunder or thereunder by the Purchaser, have been duly and validly authorized and approved by all necessary action by it, and have been duly and validly executed and delivered by the Purchaser. This Agreement constitutes, and all other documents and instruments to be executed, delivered and performed hereunder or thereunder by the Purchaser shall constitute, the valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms. 5.3 Conflict with Documents. Neither the execution, delivery and performance of, and compliance with, this Agreement nor the consummation of the transactions contemplated hereby will (with or without the giving of notice of lapse of time, or both) contravene or violate the Articles of Incorporation or By-Laws of the Purchaser, or, to the best knowledge of Purchaser, conflict with, result in a breach or violation of, entitle any party to terminate, or constitute a default with respect to any contract, bond, notice, indenture or other agreement or any restriction on the Purchaser or its properties or assets, or any judgment, decree, order, statute, rule or regulation to which the Purchaser or its properties or assets are subject or by which they may be bound or result in the creation of any Encumbrance upon the Purchaser or any of its properties or assets. The Purchaser is not a party to, nor subject to, nor bound by any judgment, injunction or decree of any court or governmental authority and no judgment, action or proceeding in law is pending or, to the knowledge of the Purchaser, threatened against or involving the Purchaser, which may restrict or interfere with the performance of this Agreement by the Purchaser. 5.4 Litigation. The Purchaser is not a party to nor, to its knowledge, threatened with any suit, action, arbitration or other legal or governmental proceeding relating to or affecting it or its properties or assets. There is no material judgment, decree, award or order outstanding or unsatisfied against the Purchaser relating to or affecting it or its properties or assets, nor, to the knowledge of the Purchaser, is there any basis for any such suit, action, arbitration or other legal or governmental proceeding. To the best of Purchaser's knowledge, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed, and no investigation, review or proceeding is pending or, to the best of the Purchaser's knowledge, threatened, of any kind, by any person, firm or entity, with respect to the Purchaser, its properties or assets. 5.5 Compliance with Laws. To the best knowledge of Purchaser's knowledge, Purchaser is in compliance with all existing requirements of all laws, statutes, rules, regulations and orders, federal, state and local, and all existing requirements of all governmental bodies or agencies having jurisdiction over it or its properties or assets, except where such failure to be in compliance will not have a material adverse affect on the Purchaser's business or financial condition or on its ability to perform its obligations under this Agreement or any other agreement to which it is a party. To the best knowledge of Purchaser, the Purchaser has received no notice of any violation or alleged violation of, or claim under any federal, state or local law, statute, rule, regulation or order, nor does the Purchaser have knowledge of any pending or threatened governmental proceeding or investigation. 5.6 No Consents. Except as set forth on Schedule 5.6, no consent of any governmental or judicial authority or agency, or of any bank, other financial institution or other third party, is required in connection with the execution and delivery by the Purchaser of this Agreement and the other documents and instruments required or contemplated herein or the consummation of the transactions contemplated hereunder by the Purchaser. 5.7 No Distribution. The Partnership Interest being acquired by the Purchaser hereunder is being acquired for its own account for investment and not with a view to distribution or resale of such Partnership Interest to others, and Purchaser recognizes that it may not transfer such Partnership Interest in violation of securities laws. 5.8 Requisite Knowledge, Undertaking of Risks. The Purchaser possesses the requisite knowledge and experience in business and financial matters to be capable of evaluating the merits and risks of investment in the Partnership, and is not relying on any representations and warranties of the Partners except those explicitly set out herein. The Purchaser recognizes that participation in the Partnership involves a substantial degree of risk, and that it may lose some or all of its investment in the Partnership. 6. Covenants of the Partners. The Partners covenant to and with the Purchaser as follows: 6.1 Conduct of Business. From the date hereof through the Financial Closing Date, the Partnership and each of the Partners will conduct their operations according to their normal course of business, including without limitation their reasonable efforts to preserve intact their respective business organizations, and to maintain satisfactory relationships with third parties having business relationships with them. The Partners shall confer on a regular and frequent basis with the Purchaser to report operational matters of a material nature and to report the general status of the ongoing operations of the business of the Partnership. The Partners shall promptly notify the Purchaser of: (a) any fact or event, the existence or occurrence of which would render any of the Partners' representations or warranties untrue or inaccurate; (b) any fact or event, the existence or occurrence of which would have a material adverse impact on the Project, the Partnership or the Partnership's future activities; (c) any unexpected emergency or other material change in the normal course of business or in the operations of the business of the Partnership or the Partners; and (d) any investigation or review, pending or threatened, by any governmental entity involving any material business, asset or property of the Partnership or the Partners. The Partners shall keep the Purchaser fully informed of all developments with respect to any such facts and events and shall permit the Purchaser's representatives access to all materials prepared in connection therewith or relevant thereto. 6.2 Forbearance by the Partnership. Prior to the Financial Closing Date, the Partners shall be required to obtain the Purchaser's approval of major decisions affecting the Partnership. These "Major Decisions" shall include, but are not necessarily limited to, a decision to do any of the following: (a) Issue additional partnership interests or any options, warrants or other rights to acquire an interest in the Partnership; (b) Declare or pay any distribution; (c) Sell any of its properties or assets; (d) Extend credit, or issue, incur or prepay any indebtedness for borrowed money; (e) Mortgage, pledge or otherwise encumber any of its properties or assets; (f) Make any investment in third parties of a capital nature either by purchasing stock or securities, contributing to capital, transferring property or otherwise; (g) Enter into any employment agreement or any incentive compensation, profit sharing, partnership interest purchase, option, savings, consulting, deferred compensation, retirement, pension or other employee benefit plan or arrangement with or for the benefit of any Partner, officer, employee or other person; (h) Terminate or voluntarily allow to lapse any insurance policy naming the Partnership as a beneficiary or a loss payee unless, simultaneously with such termination or lapse, replacement policies providing substantially the same coverage are in full force and effect; (i) Amend the Partnership Agreement; or (j) Enter into any agreement to do any of the things described in clauses (a) through (i) above. 6.3 Investigations and Purchaser Due Diligence. Purchaser acknowledges that it has had the opportunity to conduct due diligence regarding the proposed acquisition of the Partnership Interest, and to investigate the business and properties of the Partnership, as well as its financial and legal condition. Purchaser has satisfied itself with respect to such investigations. Notwithstanding completion of Purchaser's due diligence, no investigation by or on behalf of the Purchaser heretofore or hereafter made shall affect the representations and warranties of the Partners contained herein, and such representations and warranties shall survive any such investigation as and to the extent provided in this Agreement. 6.4 Negotiations with Others. From the date hereof through the Financial Closing Date, the Partners shall not, directly or indirectly, without the prior written consent of the Purchaser, initiate or engage in discussions or negotiations with any corporation, partnership, person or other entity (other than the Purchaser) concerning any sale of an interest in the Partnership or any merger, sale of assets, or similar transaction involving the Partnership. 7. Conditions of the Purchaser to the Breaking of Escrow. The obligations of the Purchaser under this Agreement, and the authority of the Escrow Agent to break escrow, are subject to the satisfaction and fulfillment, or waiver by the Purchaser, at or before the Expiration Date, of each of the following conditions: 7.1 Bankruptcy Court Approval Opinion. The Purchaser shall have received from counsel to O'Brien reasonably satisfactory to the Purchaser an opinion to the effect that the approval of the bankruptcy court is not necessary or required for the execution, delivery and/or performance by O'Brien of this Agreement or the other instruments and documents required or contemplated hereunder to perform O'Brien's obligations hereunder or to consummate the transactions contemplated hereby, or, if required, any necessary approval has been obtained. 7.2 Financial Closing. The Financial Closing shall have been consummated on terms satisfactory to Purchaser. 7.3 Deliverables. Escrow Agent shall have received, on behalf of Purchaser, the documents required to be delivered to Purchaser under Section 9.1 below. 7.4 Payments Due PUPCO. PUPCO shall have received at Financial Closing those payments due PUPCO under Section 1.4 hereof. 7.5 Letter of Credit or Corporate Guaranty. The Escrow Agent shall have received a letter of credit or a corporate guaranty securing the Project Equity Contribution under the Restated Partnership Agreement of each of the Partners in a form satisfactory to the Lenders under the Credit Agreement. 7.6 Certain Consents. The Lender shall have received Consents executed by the Partners and other necessary parties with respect to the Steam Purchase Agreement, the Steam Venture Agreement, the Project Services Agreement, and the Dock Facility Services Agreement in form satisfactory to Lender. 7.7 Opinion. Insofar as counsel to O'Brien delivers an opinion to the Lenders on the Financial Closing Date (as each such term is defined in the Restated Partnership Agreement) which addresses matters of law which are also addressed directly or by implication in the opinion delivered at the Closing by O'Brien's general counsel, Purchaser shall receive the permission of counsel delivering such opinion to the Lenders to rely on the portions of such opinion addressing such matters of law. 7.8 Lien Searches. To the extent lien searches are received prior to the Financial Closing, they shall not reveal anything inconsistent with the representations and warranties made by the Partners herein. 8. Conditions of the Partners to the Breaking of Escrow. The obligations of the Partners under this Agreement, and the authority of the Escrow Agent to break escrow, are subject to the satisfaction and fulfillment, or waiver by the Partners, at or before the Expiration Date, of each of the following conditions: 8.1 Financial Closing. The Financial Closing shall have been consummated on terms satisfactory to each of the Partners. 8.2 Deliverables. The Escrow Agent shall have received, on behalf of the Partners, documents required to be delivered to the Partners under Section 9.2 below. 8.3 Letter of Credit. The Escrow Agent shall have received a letter of credit from Purchaser in a form satisfactory to the Lenders under the Credit Agreement guaranteeing the Project Equity Contribution of Purchaser under the Restated Partnership Agreement. 8.4 Certain Consents. The Lender shall have received Consents executed by the Purchaser and other necessary parties with respect to the Steam Purchase Agreement, the Steam Venture Agreement, the Project Services Agreement, and the Dock Facility Services Agreement in form satisfactory to Lender. 8.5 Opinion. Insofar as counsel to O'Brien delivers an opinion to the Lenders on the Financial Closing Date (as each such term is defined in the Restated Partnership Agreement) which addresses matters of law which are also addressed directly or by implication in the opinion delivered at the Closing by O'Brien's general counsel, Adwin shall receive the permission of counsel delivering such opinion to the Lenders to rely on the portions of such opinion addressing such matters of law. 9. Closing; Deliverables at Closing. All Deliverables required of the Purchaser and the Partners set out below shall be delivered on or before the Closing to Escrow Agent and Escrow Agent shall hold the Deliverables in escrow until such time as the conditions to the breaking of escrow set out in Paragraphs 7 and 8 herein have been fulfilled. If the conditions to the breaking of escrow set out in Paragraphs 7 and 8 have not been satisfied by the Expiration Date, or if this Agreement is terminated by mutual consent of the Purchaser and the Partners under Section 10 hereof, Escrow Agent shall return all Deliverables to the parties, pursuant to the terms of the Escrow Agreement, and the rights and obligations of the parties shall be determined in accordance with Paragraph 11 herein. Upon satisfaction of all of the conditions to the breaking of escrow set out in Paragraphs 7 and 8 or upon such termination, Escrow Agent shall deliver or dispose of the Deliverables in accordance with the terms of the Escrow Agreement. 9.1 Deliverables from the Partners. At or prior to the Closing, the Partners shall execute and/or deliver to the Escrow Agent: (a) Restated Partnership Agreement. The Restated Partnership Agreement, in the form of Exhibit A hereto, duly executed by the Partners. (b) PUPCO Side Letter. A side letter agreement dated date the hereof, duly executed by the Partnership, the Partners, the Purchaser and PUPCO (the "PUPCO Side Letter"). (c) Acknowledgment. An acknowledgment letter dated the date hereof duly executed by Trigen-Philadelphia, PUPCO, AEC, O'Brien and the Partnership. (d) Updated Balance Sheet. An updated, unaudited balance sheet of the Partnership, effective as of February 29, 1996. (e) Opinion Letter. An opinion of counsel to each of the Partners, dated the Closing Date, in the form set forth in Exhibit D hereto. (f) Certificate Regarding Continuous Validity of Representations and Warranties. A certificate executed by the respective President or Chief Executive Officer of each of the Partners certifying that all representations and warranties of such Partner made in or pursuant to this Agreement are true and correct at and as of the Closing Date. (g) Certificate Regarding Fulfillment of Obligations and Conditions. A certificate from each of the Partners signed by its respective President or Chief Executive Officer certifying that such Partner has performed, observed, and complied with all the obligations and conditions required of it by this Agreement to be performed, observed or completed at or prior to the Closing Date. (h) Other Documents. (i) A Certificate of Good Standing with respect to each of the Partners from the Secretary of State of its incorporation; (ii) certified copies of resolutions duly adopted by the Board of Directors of each of the Partners respectively authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated herein by such Partner; (iii) certified copies of the Articles of Incorporation and by-laws, as amended, of each of the Partners; and (iv) the Escrow Agreement in a form satisfactory to the Escrow Agent, Purchaser, and the Partners. (i) Consents of Third Parties. The consents or approvals of any third parties whose consent is required for each of the Partners to consummate the transactions contemplated by this Agreement. (j) Governmental Approvals. All necessary consents, authorizations and approvals of all governmental agencies, commissions and similar bodies, the consent, authorization or approval of which is required under any applicable law, rule, order or regulation for the consummation by each of the Partners of the transactions contemplated by this Agreement. 9.2 Deliverables from the Purchaser. At or prior to the Closing, the Purchaser shall execute and/or deliver to the Escrow Agent: (a) Restated Partnership Agreement. The Restated Partnership Agreement, in the form of Exhibit A hereto, duly executed by the Purchaser. (b) Purchase Price. The sum of $2,000,000, $1,000,000 of which shall be represented by a cashier's check, payable to O'Brien, drawn on a bank reasonably acceptable to O'Brien, and $1,000,000 of which shall be represented by a cashier's check payable to Adwin, drawn on a bank reasonably acceptable to Adwin, representing the amount of the Purchase Price to be paid by the Purchaser under Section 1. 1. (c) PUPCO Side Letter. The PUPCO Side Letter, duly executed by the Partnership, the Partners, the Purchaser and PUPCO. (d) Opinion Letter. An opinion of counsel to the Purchaser, dated the Closing Date, in the form set forth in Exhibit I hereto. (e) Certificate Regarding Continuing Validity of Purchaser's Representations and Warranties. A Certificate executed by the President of Purchaser certifying that all representations and warranties of the Purchaser made in or pursuant to this Agreement are true and correct at and as of the Closing Date. (f) Certificate Regarding Fulfillment of Obligations and Conditions. A Certificate signed by the President of Purchaser certifying that Purchaser has performed, observed and complied with all the obligations and conditions required by this Agreement to be performed, observed, or complied with prior to the Closing Date. (g) Other Documents. Purchaser shall have delivered to the Escrow Agent: (i) A certificate of Good Standing with respect to the Purchaser from the Secretary of the Commonwealth of Pennsylvania; (ii) Certified copies of resolutions duly adopted by the Board of Directors of the Purchaser, authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated herein; (iii) Certified copies of the Articles of Incorporation and by-laws, as amended, of the Purchaser; and (iv) The Escrow Agreement in a form satisfactory to the Escrow Agent, Purchaser and the Partners. (h) Consents of Third Parties. The consents or approvals of any third parties whose consent is required for the Purchaser to consummate the transactions contemplated by this Agreement. (i) Governmental Approvals. All necessary consents, authorizations and approvals of all governmental agencies, commissions and similar bodies, the consent, authorization or approval of which is required under any applicable law, rule, order or regulation for the consummation by the Purchaser of the transactions contemplated by this Agreement. 10. Termination. This Agreement and the transactions contemplated hereby may be terminated as follows: 10.1 Mutual Termination. By written mutual consent of the Purchaser and the Partners on or prior to the Expiration Date. 10.2 Expiration Date. By the Purchaser, on the one hand, or by the Partners, on the other hand, if the conditions to the breaking of escrow set out in Sections 7 and 8 hereby have not been satisfied by the Expiration Date. 11. Effect of Termination. If this Agreement and the transactions contemplated hereby are terminated on or before the Expiration Date, then, except as set forth in this Section 11, no party hereto shall be liable to any other party hereto under this Agreement or otherwise and this Agreement shall become void and be without any force of effect. Notwithstanding the foregoing, upon any such termination, the rights and obligations of the parties shall be governed by the other agreements in effect between and among them, including, without limitation, the Project Services Agreement, the Steam Venture Agreement, and the Escrow Agreement. 12. Survival. The right to make a claim for breach of the representations and warranties made as of the Closing Date shall survive the Closing Date for a period of three years from and after the Closing Date, with the exception of those representations and warranties set out in Sections 3.1, 3.2, 4.1, 4.2, 4.8, 5. 1, and 5.2, as to which the right to make a claim shall survive for a period as is provided under applicable Pennsylvania law. Any claim by the Purchaser for indemnification under Section 13 for a breach of any representation or warranty made as of the Closing Date, or by the Partners under Section 14 for a breach of any representation or warranty made as of the Closing Date, must be made on or prior to the date on which the survival period for such representation or warranty expires, it being understood that the indemnity obligations of the Purchaser and the Partners, as the case may be, with respect to claims that are asserted on or prior to such expiration date shall survive such expiration date. 13. Indemnification of the Purchaser. 13.1 Indemnification of the Purchaser. The Partners shall, up to an aggregate maximum of $3,000,000 per Partner, indemnify, defend and hold harmless Purchaser (and its directors, officers, employees and affiliates) from and against any and all "Purchaser Losses" as hereafter defined. "Purchaser Losses" means any and all claims, liabilities, losses, damages, reasonable costs and expenses, including reasonable attorneys' fees and court costs incurred (i) by the Partnership where the result is a diminution of the Fair Value (as defined in the Restated Partnership Agreement) of the Purchaser's interest in the Partnership including, without limitation, a diminution in cash distributions, or (ii) by the Purchaser, that results in either case, from the breach of a representation or warranty of a Partner under this Agreement. The $3,000,000 limit per Partner shall apply even if the aggregate indemnity obligation of such Partner for joint representations and warranties made under Section 3 herein, plus its liability for individual representations and warranties made under Section 4, exceeds $3,000,000. Notwithstanding the foregoing, no indemnification obligation of any Partner for Purchaser Losses shall arise under this Section 13.1 until such time as the Purchaser Losses, in the aggregate, exceed $300,000. 13.2 Notice of Claims by the Purchaser. Within ten business days after the Purchaser receives notice of any claim, in respect of which the Partners may be liable under this Section 13, the Purchaser shall give written notice thereof to the Partners. The Purchaser may at its option give notice and claim indemnity under this Section 13 as soon as a claim has been threatened by a third party, regardless of whether a loss has been suffered, so long as the Purchaser shall in good faith determine that such claim is not frivolous and that the Purchaser may be liable or otherwise incur a loss as a result thereof and shall give notice of such determination to the Partners. The Purchaser shall permit the Partners, at the sole option and expense of the Partners, to assume the defense of any such claim by counsel satisfactory to the Purchaser and to settle or otherwise dispose of the same. In any such event, the Purchaser will cooperate with the Partners and may at all times participate in such defense, at its own expense; provided, however, that the Partners shall not, in defense of any such claim, except with the prior written consent of the Purchaser, consent to the entry of any judgment or enter into any settlement that does not include the giving by the claimant or plaintiff in question to the Purchaser a release of all liabilities in respect of such claims, or that does not result solely in the payment of money damages by the Partners. 13.3 Purchaser's Remedy Upon Dissolution. As Purchaser's exclusive remedy for Purchaser Losses under Section 13.1, Purchaser shall have the right, upon liquidation of the assets of the Partnership pursuant to Section 24 of the Restated Partnership Agreement, to receive priority payment of any Net Indemnity Obligations, as defined below, which are owed to it by either Adwin and/or O'Brien pursuant to the provisions of Section 13.1. For purposes of this Section, "Net Indemnity Obligations" shall mean all Purchaser Losses under Section 13.1, the amount of which shall have been established by mutual agreement or a final, nonappealable judgment of a court of competent jurisdiction, and which shall represent the excess of the indemnity obligations of Adwin and/or O'Brien owed Purchaser under Section 13.1, over any indemnity obligations owed by Purchaser to Adwin and/or O'Brien pursuant to Section 14.1. Such "Net Indemnity Obligations" shall be deducted from the Unreimbursed Development Costs otherwise due Adwin and/or O'Brien under Section 24 of the Restated Partnership Agreement, and shall be paid prior to the reimbursement of such Unreimbursed Development Costs due Adwin and/or O'Brien, pursuant to the provisions of Section 24 of the Restated Partnership Agreement. The indemnity cap, calculation of Net Indemnity Obligation, and calculation of Net Indemnity Amount shall be applied and made on a per Partner basis, and neither Partner shall be liable for the other Partners' indemnity obligation. In the event of a dispute over any indemnity claims of Purchaser, the parties agree to mediate the dispute initially pursuant to the Commercial Mediation Rules of the American Arbitration Association, but if such mediation efforts have not produced a settlement within ninety (90) days, any party may refer the matter to a court of competent jurisdiction for resolution. 14. Indemnification of the Partners. 14.1 Indemnification of the Partners. The Purchaser shall, up to an aggregate maximum of $3,000,000, indemnify, defend and hold harmless the Partners (and their respective directors, officers, employees and affiliates) from and against any and all "Partner Losses" as hereafter defined. "Partner Losses" means any and all claims, liabilities, losses, damages, reasonable costs and expenses, including reasonable attorneys' fees and court costs and expenses incurred (i) by the Partnership where the result is a diminution of the Fair Value (as defined in the Restated Partnership Agreement) of the Partners' interest in the Partnership including, without limitation, a diminution in cash distributions, or (ii) by the Partners, that results in either case, from the breach of a representation or warranty of the Purchaser under this Agreement. Notwithstanding the foregoing, no indemnification obligation of the Purchaser for Partner Losses shall arise under this Section 14.1 until such time as the Partner Losses, in the aggregate, exceed $300,000. 14.2 Notice of Claims by the Partners. Within ten business days after the Partners receive notice of any claim, in respect of which the Purchaser may be liable under this Section 14, the Partners shall give written notice thereof to the Purchaser. The Partners and the Partnership may at their option give notice and claim indemnity under this Section 14 as soon as a claim has been threatened by a third party, regardless of whether an actual loss has been suffered, so long as the Partners shall in good faith determine that such claim is not frivolous and that the Partners may be liable or otherwise incur a loss as a result thereof and shall give notice of such determination to the Purchaser. The Partners shall permit the Purchaser, at its sole option and expense, to assume the defense of any such claim by counsel satisfactory to the Partners and to settle or otherwise dispose of the same. In any such event, the Partners will cooperate with the Purchaser and may at all times participate in such defense, at its own expense; provided, however, that the Purchaser shall not, in defense of any such claim, except with the prior written consent of the Partners, consent to the entry of any judgment or enter into any settlement that does not include the giving by the claimant or plaintiff in question to the Partners a release of all liabilities in respect of such claims, or that does not result solely in the payment of money damages by the Purchaser. 14.3 The Partners' Remedy Upon Dissolution. As the Partners' exclusive remedy for Partner Losses under Section 14.1, the Partners shall have the right, upon liquidation of the assets of the Partnership pursuant to Section 24 of the Restated Partnership Agreement, to collect from Purchaser's share of distributions under Section 24.01(e) of the Restated Partnership Agreement any "Net Indemnity Amounts Owed by Purchaser," as defined below, owed to the Partners by Purchaser pursuant to the provisions of Section 14.1. For the purposes of this Section, "Net Indemnity Amounts Owed by Purchaser" shall mean the excess of all Partner Losses under Section 14.1 owed to the Partners by Purchaser over any indemnity amounts owed by the Partners to Purchaser pursuant to the provisions of Section 13.1. Such "Net Indemnity Amounts Owed by Purchaser" shall be established through either mutual consent of the parties, or by a final, nonappealable order of a court of competent jurisdiction, and once established, shall be deducted from the Capital Account of Purchaser, pursuant to the provisions of Section 24.01(e) of the Restated Partnership Agreement. In the event of a dispute over any indemnity claims of the Partners, the parties agree to mediate the dispute initially pursuant to the Commercial Mediation Rules of the American Arbitration Association, but if such mediation efforts have not produced a settlement within ninety (90) days, any party may refer the matter to a court of competent jurisdiction for resolution. 15. Agreement to Consummate, Further Assurances. Subject to the terms and conditions herein provided, including the termination rights under Section 10 hereof, each of the parties hereto agrees to use commercially reasonable efforts to do all things necessary, proper or advisable under this Agreement (including satisfaction of the conditions set forth in Sections 7 and 8 hereof), applicable laws and regulations to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement, including without limitation the acquisition of all consents, authorizations, orders and approvals of any governmental commission, board of other regulatory body required in connection therewith. The parties hereto shall execute and deliver all such other instruments and take all such other actions as any party may reasonably request from time-to-time, before or after the date hereof and without any further consideration, in order to effectuate the transactions provided for herein. The parties shall cooperation fully with each other and with their respective counsel in connection with any steps required to be taken as part of their respective obligations under this Agreement. 16. Miscellaneous. 16.1 Amendments. No change, amendment, waiver or modification of any provisions of this Agreement will be effective unless it is in writing and signed by the party against whom enforcement of the waiver, change or amendment is sought. 16.2 Waiver. No waiver of any right under this Agreement will be deemed effective unless contained in writing signed by the party charged with such waiver, and no waiver of any right arising from any breach or failure to perform will be deemed to be a waiver of any future such right or of any right arising under this Agreement. 16.3 Successors and Assigns. None of the parties hereto may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of all of the other parties hereto. Except as otherwise expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives, successors and permitted assigns. 16.4 Titles. The titles of the Sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing the terms and provisions hereof. 16.5 Notices. All notices, requests, demands and other communications required or permitted to be made hereunder shall be in writing and shall be deemed duly given if hand delivered against a signed receipt therefor, sent by registered or certified mail, return receipt requested, first class postage prepaid, or sent by nationally recognized overnight delivery service, in each case addressed to the party entitled to receive the same at the address specified below: (a) If to Adwin, then to: William J. Brady, Vice President Adwin (Schuylkill) Cogeneration, Inc. 300 Stevens Drive Suite 155 Lester, PA 19113 With a copy, sent in the manner prescribed above, to: John Halderman, Esquire PECO Energy Company 2301 Market Street Philadelphia, PA 19101 (b) If to O'Brien, then to: Peter Ford O'Brien (Schuylkill) Cogeneration, Inc. 225 South Eighth Street Philadelphia, PA 19106 With a copy, sent in the manner prescribed above, to: Robert J. Rauch, Esquire 17 Glen Andrew Road White Sulphur Springs, WV 24986 (c) If to the Purchaser, then to: Steve Smith, President Trigen-Schuylkill Cogeneration, Inc. 2600 Christian Street Schuylkill Station Philadelphia, PA 19146 With a copy, sent in the manner prescribed above, to: Barnett Satinsky, Esquire Fox, Rothschild, O'Brien & Frankel 2000 Market Street 10th Floor Philadelphia, PA 19103 And, with an additional copy, sent in the manner prescribed above, to: Eugene E. Murphy, Esquire Trigen Energy Corporation 1 Water Street White Plains, NY 10601 Any party may alter the address to which communications are to be sent by giving notice of such change of address in conformity with the provisions of this Section providing for the giving of notice. Notice shall be deemed to be effective, if personally delivered, when delivered; if mailed, at midnight on the third business day after being sent by registered or certified mail; and if sent by nationally recognized overnight delivery service, on the next business day following delivery to such delivery service. 16.6 Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. 16.7 Exhibits; Schedules. All exhibits and schedules to this Agreement are hereby incorporated by reference into, and made a part of, this Agreement. 16.8 Execution; Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories hereto. 16.9 Expenses. Whether or not the transactions contemplated by this Agreement shall be consummated and except as otherwise provided herein, each party shall pay its own expenses incident to the negotiation, execution and performance of this Agreement and the transactions contemplated hereby. The Partnership shall each be solely responsible for, and shall timely pay in accordance with applicable law, all transfer taxes and other similar taxes, in either case, imposed by any taxing authority, federal, state or local, with respect to the Partnership Interest issued to the Purchaser under this Agreement (if any). 16.10 Entire Agreement. This Agreement and the other documents delivered pursuant hereto shall constitute the full and entire understanding and agreement among the parties with regard to the subject matter hereof and thereof, and supersede all prior agreements, understandings, inducements or conditions, express or implied, oral or written, except as herein contained. The express terms hereof shall control and supersede any course of performance and/or usage of trade inconsistent with any of the terms hereof. 16.11 Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 16.12 Conflict Among Documents. In the event of any conflict between or among the terms of this Agreement and the terms of the Project Services Agreement or the Steam Venture Agreement, such conflict shall be controlled and governed by the terms of this Agreement. In the event of any conflict between any other documents, the later dated document shall control and govern. All terms and provisions of the Project Services Agreement and the Steam Venture Agreement that are not expressly amended or modified by this Agreement or any other document entered into by the parties after the date thereof shall remain in full force and effect. IN WITNESS WHEREOF, the authorized representatives of each party hereby executes this Agreement as of the date first set forth above. ADWIN (SCHUYLKILL) O'BRIEN (SCHUYLKILL) COGENERATION, INC. COGENERATION, INC. By:______________________ By:________________________________ Date:____________________ Date: ______________________________ TRIGEN-SCHUYLKILL COGENERATION, INC. By:_______________________ Date:_____________________ Agreeing and intending to be legally bound only with respect to Sections 1.2 through 1.4 of this Agreement as of the date of this Agreement: PHILADELPHIA UNITED POWER GRAYS FERRY COGENERATION CORPORATION PARTNERSHIP By: ________________________ By: Adwin (Schuylkill) Cogeneration, Inc. By:____________________ EX-10.2 3 AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF GRAYS FERRY COGEN PROJECT AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF GRAYS FERRY COGENERATION PARTNERSHIP This Amended and Restated Partnership Agreement ("Agreement") is executed this _____ day of March, 1996, by and among O'BRIEN (SCHUYLKILL) COGENERATION, INC., a Delaware corporation, with its principal offices located at 225 South Eighth Street, Philadelphia, Pennsylvania (hereinafter "O'Brien"), ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania corporation, with its principal offices located at 300 Stevens Drive, Airport Business Center, Lester, Pennsylvania (hereinafter "Adwin"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a Pennsylvania corporation, with its principal offices located at 2600 Christian Street, Philadelphia, Pennsylvania (hereinafter "Trigen"). All three parties are sometimes collectively referred to as "the Partners." BACKGROUND A. As of October 29, 1991, O'Brien and Adwin Equipment Company ("AEC"), the parent company of Adwin, formed a general partnership known as the Grays Ferry Cogeneration Partnership (the "Partnership") pursuant to a Partnership Agreement of Grays Ferry Cogeneration Partnership dated as of such date, which agreement was amended by the First Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership dated as of September 17, 1993, and the Second Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership, dated September 27, 1994 (collectively the "Partnership Agreement"). B. AEC has assigned all of its right, title and interest in and to the Partnership to Adwin pursuant to the Third Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership, dated January 23, 1996, and, simultaneously therewith, Adwin has been admitted to the Partnership as a Partner, has assumed the Managing Partner position, and AEC has withdrawn from the Partnership as a Partner. C. O'Brien is a wholly owned subsidiary of O'Brien Environmental Energy, Inc., which is a corporation involved in the development, ownership, operation, and management of cogeneration facilities which produce steam and electric power for sale to industrial and commercial users and public utilities. D. Adwin is a wholly owned subsidiary of AEC, which, in turn, is a wholly owned subsidiary of Eastern Pennsylvania Development Company, which, in turn, is a wholly-owned subsidiary of PECO Energy Company ("PECO"). E. Philadelphia United Power Corporation ("PUPCO") has agreed to terminate its option to purchase a one-third interest in the Partnership in consideration of Trigen's purchase of such interest directly from the Partnership. F. The terms of the acquisition of the Partnership interest by Trigen are set out in the Acquisition Agreement among Adwin, O'Brien, and Trigen dated March 1996 (the "Acquisition Agreement"). G. Adwin, O'Brien and Trigen wish to amend and restate the Partnership Agreement in its entirety for the purpose of continuing development of a qualifying cogeneration facility to be located at the Schuylkill Station of the Trigen-Philadelphia Energy Corporation ("TPEC") in Philadelphia, Pennsylvania, and to provide for the ownership, operation and maintenance of said cogeneration facility by the Partnership once completed. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of which is acknowledged by all parties, Adwin, O'Brien and Trigen, intending to be legally bound, hereby agree as follows: SECTION 1. DEFINITIONS Except as otherwise expressly stated, the singular includes the plural and the plural includes the singular; a reference to any law or rule includes any amendment or modification to such law or rule and all regulations, rulings and other governmental interpretations promulgated thereunder; a reference to any person includes such person's permitted successors and permitted assigns; the words "include," "includes" and "including" are not limiting, and references to any document includes all amendments, modifications and supplements thereto. The capitalized terms used in this Agreement shall have the meanings set forth below: "Affiliate" means, with respect to any Partner, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with (including, but not limited to, any Person that, directly or indirectly, is a beneficial owner of fifty percent (50%) or more of any class of equity securities of) such Partner. "Affiliated Party Decision" is defined in Section 7.03. "As Adjusted" means with respect to any dollar amount specified as such in the Agreement, such dollar amount as adjusted for inflation on an annual basis measured by the change in the Consumer Price Index (Philadelphia, for all Urban Consumers) (1982 - 1984 equals 100) since the execution and delivery of this Agreement. "Agreement Date" means the date of this Agreement. "Capital Account" means the account maintained for each Partner pursuant to Section 12. "Carrying Value" of any asset means its adjusted basis for federal income tax purposes, except that the initial carrying Value of any property contributed to the Partnership by a Partner shall be its Fair Value at the time of contribution. Carrying Value of assets shall be adjusted to Fair Value at the following times: (i) acquisition of an additional interest in the Partnership by a new or existing Partner in exchange for more than a de minimis capital contribution, (ii) disposition by the Partnership of assets to a Partner in exchange for more than a de minimis amount of money or Partnership property as consideration for an interest in the Partnership, and (iii) upon liquidation of the Partnership. Carrying Value of an asset shall be reduced for depreciation, amortization, and other cost recovery deductions allowable for federal income tax purposes, but to the extent that the Carrying Value of an asset differs from its adjusted tax basis, such Carrying Value shall be reduced by the same ratio used to compute depreciation of the asset's adjusted basis for tax purposes. "Code" means the Internal Revenue Code of 1986, as amended. "Credit Agreement" means the Construction and Term Loan Agreement between the Lenders and the Partnership dated March ,1996. "Disbursable Assets" means the sum of (a) all Gross Receipts of the Partnership less Operating Expenses plus (b) any other assets of the Partnership that the Partnership determines to be in excess of the current needs of the Partnership. "Disinterested Partner" is defined in Section 7.02. "Electric Contract" means collectively (1) the Agreements for Purchase of Electric Output (Phase 1) and (Phase 2) dated as of July 8, 1992, between the Partnership and PECO, and (2) the Phase 1 and Phase 2 Contingent Capacity Purchase Addendums, dated as of September 17, 1993, between the Partnership and PECO, as well as the Letter Agreement, dated March 30, 1995, pursuant to which PECO tendered its Activation Notice under Section 3.3 of the Phase 1 and Phase 2 Electric Capacity Contracts, as the foregoing Agreements may be amended, modified, or supplemented from time-to-time. "Event of Default" is defined in Section 20. "Fair Value" of any property, other than of interests in the Partnership, means the fair market value of such property as determined by the Partners through the same procedure provided for in Section 22.04. "FERC" means the Federal Energy Regulatory Commission. "Financial Closing Date" means the date on which the Partnership closes on construction financing for the Project. "GAAP" means generally accepted accounting principles, consistently applied. "Gross Receipts" means, collectively, all receipts from operations of the Partnership, receipts from the sale, exchange, transfer, assignment or other disposition of property of the Partnership, proceeds of insurance and receipts from any other source by the Partnership. "Lenders" means Chase Manhattan Bank, N.A., and such other participating lenders as are signatories to the Credit Agreement, or participate in any additional financing or re-financing of the Project. "Major Decision" has the meaning set forth in Section 7.04. "Management Committee" means the committee established pursuant to Section 7.01(b). "Managing Partner" means the Partner responsible for day-to-day administration of the Partnership's business, as more fully described in Section 6.01. "Operating Expenses" means all expenses necessary for the construction, repair, operation and maintenance of the Project including, without limitation, payments, if any, required to be made to any Affiliate of the Partnership pursuant to the Project Documents, debt service, capital expenditures, amounts used for the creation or restoration of reserves, and taxes. "Overdue Rate" means the prime rate of The Chase Manhattan Bank, N.A., as announced from time-to-time, plus three percent. "Partner" means each of Adwin, O'Brien and Trigen, as long as it remains a Partner of the Partnership and each other Person or entity who becomes a partner of the Partnership pursuant to the terms of this Partnership Agreement. "Partnership" means the Grays Ferry Cogeneration Partnership, the partnership formed by the Partners pursuant to this Agreement. "Partner Percentage" means the respective percentage interest of each Partner in the Partnership, initially as set forth in Section 3.01, as such percentage may be adjusted in connection with the assignment, from time-to-time, by a Partner of its interest in the Partnership pursuant to the terms hereof. "PECO" means the PECO Energy Company, a Pennsylvania corporation, its successors and permitted assigns. "Person" means any individual, corporation, partnership, association, joint stock company, limited liability company, unincorporated organization, or other entity. "Project" means the cogeneration facility to be developed, constructed, owned and operated by the Partnership, located at 2600 Christian Street, Philadelphia, Pennsylvania, of at least 150 megawatts of nominal capacity. "Project Documents" means the Credit Agreement, all agreements, permit applications, final permits, surety bonds, and other documents material to the development, financing, construction and operation of the Project, including, without limitation, those set out in Exhibit B. "Project Equity Contribution" means the amount required by the Lenders for the construction of the Project to be contributed as equity by the Partners to the Partnership. "Project Services and Development Agreement" means the Amended and Restated Project Services and Development Agreement, dated as of September 17, 1993, by and between the Partnership and PUPCO, as clarified by the Acquisition Agreement and as further amended, modified or supplemented from time-to-time pursuant to the terms thereof. "PUPCO" means Philadelphia United Power Corporation, a Delaware Corporation, its successors and permitted assigns. "PURPA" means the Public Utility Regulatory Policies Act of 1978, as amended. "Steam Venture Agreement" means the Amended and Restated Steam Venture Agreement, dated September 17, 1993, by and among AEC, O'Brien Environmental Energy, Inc., TPEC and PUPCO (which Agreement has been assigned by AEC and O'Brien Environmental Energy, Inc. to the Partnership), as clarified by the Acquisition Agreement and as the same may be further amended, supplemented, and modified from time-to-time pursuant to the terms thereof. "TPEC" means Trigen-Philadelphia Energy Corporation, formerly known as Philadelphia Thermal Energy Corporation, its successors and permitted assigns. "Turnkey Contractor" means Westinghouse, or such substitute contractor as may be engaged by the Partnership to complete construction of the Project. "Unreimbursed Development Costs" means those costs to develop the Project incurred by O'Brien and AEC and/or Adwin, as set out in Exhibit A. "Westinghouse" means Westinghouse Electric Corporation, its successors and assigns. "Work Product" means all work products produced by, or on behalf of, a Partner prior to the Agreement Date that relate to the development, construction and operation of the Project, including without limitation, engineering drawings and feasibility studies, plans and specifications, construction cost estimates, financial studies, surveys, and governmental approvals and permits. SECTION 2. FORMATION OF PARTNERSHIP 2.01 Adwin and O'Brien hereby continue the Partnership for the purposes set forth in this Agreement, and Trigen hereby joins the Partnership for said purposes. The Partnership will be governed by the Uniform Partnership Act of the Commonwealth of Pennsylvania ("the Act) as from time-to-time amended. 2.02 A duly executed application for registration of fictitious name will be filed with the offices of the Secretary of State of Pennsylvania. The Managing Partner shall execute and cause to be filed amended applications for registration of fictitious name and shall take any and all other actions as may be necessary or advisable to perfect and maintain the Partnership as qualified to do business in accordance with this Agreement in any state which may be required from time-to-time. 2.03 The name of the Partnership is Grays Ferry Cogeneration Partnership. 2.04 The principal office of the Partnership shall be located at the offices of the Managing Partner. 2.05 Title to any assets acquired to effectuate or implement the purposes of the Partnership shall be held in the name of the Partnership or at any time, from time-to-time, in the name of a nominee of the Partnership selected by the Managing Partner and approved by the other Partners. The Managing Partner shall obtain such documents as may be necessary to reflect the Partnership's ownership of such assets. SECTION 3. PARTNER PERCENTAGES; CAPITAL CONTRIBUTIONS 3.01 The Partner Percentage of each Partner is set forth below: Partner Partner Percentage Adwin 33 1/3% O'Brien 33 1/3% Trigen 33 1/3% 3.02 Simultaneously with the execution of this Agreement, Adwin and O'Brien shall be deemed to have contributed to the capital of the Partnership the Unreimbursed Development Costs set out in Exhibit A. 3.03 Trigen will have no obligation to contribute to development expenses paid prior to the Financial Closing Date. Certain development costs listed in Schedule 3.03 have been incurred, but not paid prior to Financial Closing Date. These will be paid by the Partnership at or after the Financial Closing Date. 3.04 Each Partner shall contribute Ten Million Dollars ($10,000,000) as its share of the Project Equity Contribution, for a total of Thirty Million Dollars ($30,000,000). Such Project Equity Contributions shall be made after all construction loan proceeds under the Credit Agreement have been utilized, or at such time as is required by the Lenders under the Credit Agreement, and prior to any drawdowns under the subordinated debt to be provided by Westinghouse. On, or prior to, the Financial Closing Date, each Partner shall post one or more letters of credit, corporate guarantees or other security, in each case acceptable to the Lenders, to secure its obligation under this paragraph. 3.05 (a) Following completion of the Project and except as provided in subparagraph (b), any subsequent equity contributions shall be subject to the unanimous approval of the Partners, and unless otherwise agreed, shall be in accordance with the Partner Percentage of each Partner. (b) In the event that one or more Partners fail to make part or all of any subsequent equity contributions approved pursuant to subparagraph (a) or approved by the Management Committee in order to avoid default under the Project Documents, or which, in the reasonable judgment of the Management Committee, may be necessary to avoid default under such Project Documents, the interest of each such non-contributing Partner shall be subject to the following restrictions until such time as the default is cured: (i) loss of all voting rights under this Agreement, and (ii) suspension of all distributions to which such Partner would otherwise be entitled, with the stipulation that such distributions shall be placed in escrow by the Management Committee until such time as the default is either cured or the interest of the non-contributing Partner is purchased pursuant to the procedures set out below. (c) A non-contributing Partner under this Section 3.05 shall have six (6) months from the date the Management Committee sets for payment of the subsequent equity contribution to cure any default. Cure shall consist of payment in full of the subsequent equity contribution required of the Partner plus interest on the unpaid amount at the Default Rate applicable to late payments under the Credit Agreement. If any such Partner has failed to cure the default within said six (6) month period, the remaining Partners shall have the opportunity, pro rata to their respective Partner Percentages, to purchase the Partnership interest of the non-contributing Partner, pursuant to the provisions of Section 22, except that the purchase price shall equal the amount of the subsequent equity contribution which the non-contributing Partner failed to make. (d) As a condition to participating in any such buyout, a Partner shall have paid to the Partnership, pro rata to its Partner Percentage, that part of the capital shortfall created by the non-contributing Partner either through an additional equity contribution to the Partnership (which shall be added to the Partner's Capital Account) or, if approved by the Management Committee, and permitted by the Credit Agreement, through a loan to the Partnership. To the extent that a Partner fails to pay its pro rata share of the subsequent equity contribution required of the non-contributing Partner, the remaining Partners shall have the opportunity, pro rata to their respective Partner Percentages, to make up the shortfall, and thereby be eligible to participate in the purchase of the noncontributing Partner's interest should a cure not be effected by such non-contributing Partner within the six (6) months set out herein. If none of the Partners make up the shortfall created by the non-contributing Partner, the contributing Partners shall take such action as they deem appropriate. (e) In addition to its other obligations under subparagraphs (a) and (b) of this Section, each Partner agrees to contribute additional capital to the Partnership pursuant to the provisions of this Section 3.05 to satisfy obligations owed third parties if, as a result of such obligations, the Partnership's liabilities exceed its assets. SECTION 4. PURPOSE AND POWERS 4.01 The purpose of the Partnership is to develop, construct, own, maintain, and operate the Project. Unless all of the Partners otherwise agree, the Project shall at all times be a qualifying cogeneration facility" within the meaning of section 3(18)(B) of the Federal Power Act, as amended by Section 201 of PURPA and the applicable rules and regulations of FERC. 4.02 The Partnership shall have the following powers: (a) To buy, lease, own or sell any personal or real property useful or necessary for the development, construction and operation of the Project; (b) To borrow money and issue evidences of indebtedness in furtherance of any or all of the objects of the Partnership's business or for the refinancing of any indebtedness, and to secure the same by mortgage, pledge or other liens on any or all of the Partnership's property; (c) To enter into, perform and carry out contracts of any kind necessary to, or in connection with, or incidental to, the accomplishment of the foregoing purposes; (d) Negotiate for and conclude agreements for the sale, exchange or other disposition of all, or substantially all, of the property of the Partnership; (e) Make Permitted Investments of Partnership funds, as such Permitted Investments are defined in the Credit Agreement; (f) Bring or defend actions at law or in equity; (g) Sell, purchase, cancel, or otherwise dispose of, the interest of any Partner in the Partnership in accordance with the terms of this Agreement; and (h) Undertake any other action or thing reasonably necessary to carry out the purposes set forth in this Agreement. 4.03 Partners may not engage in or possess interests in business ventures of any kind other than in accordance with this Agreement. Affiliates of a Partner may engage in or possess interests in other business ventures of any kind for their own account including, without limitation, owning or participating in or serving as a partner or other owner of other entities that own, either directly or through interests in other Persons, projects similar to, or that compete with, the Project. Neither the Partnership nor any of the Partners shall have any rights by virtue of this Agreement in, or to, such other business ventures or to the income or profits derived from Affiliate activities. SECTION 5. DESCRIPTION OF THE PROJECT; RELEASE OF CERTAIN PRIOR FINANCIAL COMMITMENTS 5.01 Initially, the Project will consist of a Westinghouse 501D5A Econopac combustion turbine, a heat recovery steam generator, a condensing- extraction steam turbine which, in combination with the combustion turbine, is expected to be capable of generating 170 MW at 90 degrees Fahrenheit, and an auxiliary boiler whose capacity shall be approximately 730,000 pounds of steam per hour, and shall be capable of burning both No. 2 oil and natural gas. SECTION 6. MANAGEMENT OF PARTNERSHIP BUSINESS; ROLE OF THE MANAGING PARTNER 6.01 (a) The day-to-day responsibility to administer the business of the Partnership shall be vested in the Managing Partner, pursuant to guidelines and policies issued by the Management Committee established by Section 7.01(b) herein. The Managing Partner shall report on a regular basis to the Management Committee. The intent of the Partners is that policy decisions be referred to the Management Committee by the Managing Partner, but that the Managing Partner perform all administrative or ministerial duties of the Partnership within the guidelines and policies approved by the Management Committee and the annual budget approved by the Partnership. Subject to any requirement under Section 7.02 that a Disinterested Partner handle such activities, the Managing Partner shall have the authority and responsibility to undertake the following actions without the need to seek approval from the Management Committee: (i) prepare for the Partnership an annual budget for approval by the Partners (to be presented to the Partnership no later than ninety (90) days prior to the beginning of each year), which budget shall include a narrative description of construction, repair, operating and maintenance activities proposed to be undertaken by the Partnership during such year and a description of such other information, plans, agreements and other matters as are necessary to inform the Partners of matters materially relevant to the operation and management of the Partnership and the Project during such year; (ii) recommend staffing and compensation to the Management Committee for consultants, attorneys, accountants and other professionals utilized by the Partnership; (iii) pursue all permits required for the development, financing, construction and operation of the Project; (iv) except as specifically provided herein with respect to transactions with Affiliates, negotiate and administer the Partnership's obligations under the Project Documents; (v) provide the other Partners with copies of new Project Documents promptly after each has been executed by the Partnership; (vi) promptly notify the other Partners of any material impediments to the expected completion of construction of the Project within the proposed capital budget which is attached hereto as Schedule 6.01; (vii) monthly notify the Partnership of any anticipated deviations of five percent (5%) or more from any line item of the annual approved budget; (viii) invest and re-invest the funds of the Partnership in accordance with Section 4.02(e); (ix) execute and deliver in accordance with the terms of this Agreement, on behalf of the Partnership, construction contracts, instruments for the transfer of real property, loan agreements, any and all instruments and documents which shall be required by the Lenders, or any other document or instrument in any way related thereto or necessary or appropriate in connection therewith; (x) provide all required risk management services, including development of an indemnity program and maintenance of adequate insurance to insure compliance by the Partnership with the Project Documents; (xi) provide administration of the Partnership including, without limitation, its accounting requirements, and administration for the Project while under construction and, after completion, for its operation; (xii) handle all public relations matters; and (xiii) handle all environmental, regulatory and contractual reporting requirements. (b) Any Person dealing with the Partnership may rely (without duty of further inquiry) upon a certificate signed by the Managing Partner as to the identity of any Partner; the existence or nonexistence of any fact or facts which constitute a condition precedent to acts by the Partnership or which are in any other manner germane to the affairs of the Partnership; the Persons who are authorized to execute and deliver any instrument or document of the Partnership; and any act or failure to act by the Partnership or any other matter whatsoever involving the Partnership; subject in each case to any requirements under Section 7.02 that a Disinterested Partner handle such activity. (c) Subject to the Managing Partner's compliance with Sections 7 and 17 herein, the signature of the Managing Partner shall be sufficient to convey title to any assets or property owned by the Partnership, or to lease, mortgage, lien or encumber the same, and all of the Partners agree that a copy of this Agreement may be shown to the appropriate parties in order to confirm the same, and further agree that the signature of the Managing Partner shall be sufficient to execute any "statement of partnership" or other documents necessary to effectuate this or any other provision of this Agreement or to satisfy any requirement of the Act or of other applicable law. (d) The Managing Partner may not, except with approval of the Partnership under Section 7.04: (i) Knowingly take any action in contravention of this Agreement; (ii) Deal with or assign rights in any Partnership property for other than Partnership purposes; (iii) Confess judgment against the Partnership or make an assignment for the benefit of creditors; (iv) Take any action which would make it impossible to carry on the business of the Partnership; or (v) Cause the Partnership to cease to be a partnership for any reason, including federal income tax purposes. 6.02 Adwin shall serve as the Managing Partner until the Financial Closing Date, at which time, it shall automatically be replaced by O'Brien. O'Brien shall serve as the Managing Partner until care, custody and control of the Project is turned over to the Partnership by the Turnkey Contractor, (or at such earlier time as the Management Committee determines is necessary to avoid ownership problems under PURPA), at which point O'Brien will automatically be replaced by Trigen as the Managing Partner. Trigen shall continue to serve as the Managing Partner until it resigns or is replaced pursuant to Section 6.03, or until it ceases to be a Partner. 6.03 If an Event of Default by the Managing Partner occurs, the non-Managing Partners may elect to remove the Managing Partner by serving notice of the election on the Managing Partner. If, at the time of removal, there is only one other Partner, such Partner will become the Managing Partner. If there is more than one non-Managing Partner, the non-Managing Partners shall jointly agree on a substitute Managing Partner. The substituted Managing Partner shall be formally designated by an amendment to this Agreement signed by all the non-Managing Partners. 6.04 Notwithstanding any other provision of this Agreement, no Partner shall become Managing Partner or remain in such position if fulfillment of such responsibilities will jeopardize the Project's qualifying facility status under PURPA. 6.05 Any Partner (including the Managing Partner) may appoint, employ, or contract with any Person to assist it in fulfilling its duties hereunder, but may not delegate its powers, rights or obligations hereunder to such Person, and only so long as any such appointment, employment, contract, or other dealing is at no cost to the other Partners or to the Partnership. 6.06 Each Partner hereby makes, constitutes, and appoints the Managing Partner its true and lawful attorney-in-fact for the express purposes contained in this Section 6.06 (and no others) and authorizes it to act in its name, place, and stead and for its use and benefit, to sign, execute, certify, acknowledge, swear to, file, publish and record (i) all amended name certificates to be filed by the Partnership under the laws of any jurisdiction in which the Partnership is doing business;(ii) any amendments and the instruments described in clause (i), as now or hereafter amended, which are required to admit any substituted Partner in accordance with the terms of this Agreement; and (iii) all certificates of cancellation and other instruments which shall be required by applicable law to effect the dissolution and termination of the Partnership; provided that any such actions are taken in accordance with the terms and provisions of this Agreement. The power of attorney granted herein may be exercised by any such attorney-in-fact by listing the Partners executing any agreement, certificate, instrument, or other document with the single signature of any such attorney-in-fact acting as attorney-in- fact for such Partners. 6.07 To reimburse the Managing Partner for all of its incurred in performing its responsibilities Partnership shall provide the Managing Partner fee of One Hundred Fifty Thousand Dollars Adjusted, which fee shall be pro-rated on a monthly basis for any periods less than a year during which a Partner serves as Managing Partner. Third party expenses, including legal and accounting costs, shall be payable by the Partnership, consistent with the annual budget approved by the Partners. SECTION 7. PARTNERSHIP DECISION MAKING; MAJOR DECISIONS 7.01 (a) For those decisions requiring a vote of the Partners (i.e., those decisions for which the Managing Partner does not have sole authority under paragraph 6.01), the Partners shall have a vote equal to their respective Partner Percentage. The Partnership shall execute its decision making through a Management Committee, established pursuant to sub-paragraph (b)below. (b) The Management Committee shall consist of one non-voting General Manager appointed by the Managing Partner, and one voting member from each of Adwin, O'Brien and Trigen. The Management Committee shall be chaired by the General Manager, and shall meet quarterly at the offices of the Managing Partner, or at such other location as may be mutually agreeable. The agenda for each meeting of the Management Committee will consist of an Operations Report (which shall address Project availability, efficiency, net production, equipment runtime, PURPA calculations, equipment condition, permit compliance, and explanation of any downtime), a Financial Report (which shall address net income, balance sheet, available cash, deviations from approved budgets, loan balances, and recommendations for distributions), a Third Party Relationships Report (which shall address relations with lenders, customers, contractors/vendors, permitting and regulatory bodies, neighbors and the press), and a Major Decision Report, with recommendations on Major Decisions to be made. Minutes of the meetings of the Management Committee shall be maintained by the General Manager and a copy served on each Partner within five (5) business days after any meeting of the Committee. The General Manager shall ensure that (1) unaudited annual financial statements are ready for review and approval by the end of February of each year and that audited financial statements are ready for approval by the end of March of each year, (2) annual tax returns are ready for review and approval by April 1 of each year, and (3) annual staffing plans and proposed annual budgets are ready for review by October 1 of each year. To the extent possible, the Management Committee will seek to make "Major Decisions" (as defined in Section 7.04) by consensus. In the absence of a consensus, the provisions of Section 7 shall control. (c) Special meetings of the Management Committee may be called by Partners holding at least thirty-three and one-third percent (33 1/3%) of the voting interests in the Partnership upon reasonable written or telephonic notice to the other Partners. Meetings of the Management Committee shall be authorized if a quorum representing fifty-one percent (51%) or more of the voting interests in the Partnership is represented either in person or by proxy. Any meeting of the Management Committee may be held by conference telephone or similar telecommunications arrangement whereby all Partners in attendance may hear one another. Any action that may be taken at a meeting of the Partners may be taken, without a meeting, by the unanimous written consent of those Partners holding voting interests sufficient to approve such action pursuant to the terms of this Agreement. 7.02 To avoid the appearance of any conflict of interest, the Management Committee shall assign primary responsibility for the negotiation and monitoring of any agreements, or amendments thereto, between the Partnership and a Partner (or an Affiliate thereof) to a Disinterested Partner unless there is no Disinterested Partner. For purposes of this Agreement, a "Disinterested Partner" as to a particular decision is one which neither (1) is a contracting party or an Affiliate of such contracting party with respect to said decision, nor (2) has a financial interest in the agreement that is the subject of the decision which is materially different from the financial interest of the remaining Partners or the Partnership, due to a separate agreement with the contracting party or its Affiliate. The Disinterested Partner shall have no authority to make final decisions with respect to said agreements, but shall have the primary responsibility for negotiating or monitoring the terms of such agreements or amendments, subject to approval by the Partnership, as set out in Sections 7.03 and 7.04. If the Managing Partner is not a Disinterested Partner and is, therefore, not assigned to any such negotiation or monitoring responsibility, it shall nevertheless assist and consult with the assigned Disinterested Partner, including attendance at negotiation sessions, if requested. 7.03 With the exception of those decisions set out in Sections 7.04, any decision which is supported by fifty-one percent (51%) or more of the voting interests of the Partners shall be deemed to be a decision or act of the Partnership. Unless there is no Disinterested Partner, and notwithstanding any provisions herein to the contrary, the vote of a majority of the voting interests held by the Disinterested Partners (or the unanimous consent of the voting interests held by the Disinterested Partners for decisions covered by Section 7.04) shall be required for those actions of the Partnership which specially affect the interests of one Partner, either because such Partner or an Affiliate thereof has a separate contract with the Partnership involving such decision or has a financial interest in the decision which is materially different from the financial interests of the remaining Partners or the Partnership, due to a separate agreement with the contracting party or its Affiliate (such a decision is hereinafter referred to as "Affiliated Party Decision"). Without limiting the foregoing, an Affiliated Party Decision shall include waivers, elections, default notices and the initiation of enforcement actions under, and the execution, modification, or termination of, contracts between the Partnership and a Partner or Affiliate of such Partner. 7.04 Any of the actions specified below (each, a "Major Decision") may be taken only if agreed upon by a unanimous vote of the Disinterested Partners with respect to any such decision if such decision involves an "Affiliated Party Decision"; otherwise, the unanimous vote of all Partners shall be required. The following actions shall be covered by this paragraph: (a) Any action which would change or materially or adversely affect the purpose or business of the Partnership as specified in Section 4; (b) Any issuance of additional interests in the Partnership or the admission of any Person as a Partner; (c) Any material modification to the Project Documents, including any modification which involves an expenditure or incurrence of liability, or a potential liability, on the part of the Partnership in excess of an annual aggregate total of Two Hundred Thousand Dollars ($200,000), As Adjusted; (d) Any execution by the Partnership of any unbudgeted agreement with a term greater than one year or involving the expenditure or incurrence of liability, or a potential liability, in excess of one Hundred Thousand Dollars ($100,000), As Adjusted, in the aggregate; (e) Any sale, assignment, or grant of mortgage or other encumbrance involving all or substantially all of the assets of the Partnership; provided, however, that this clause shall not apply to the leasing or installment purchase of office and related equipment and vehicles; (f) The incurring of unbudgeted indebtedness, or a potential indebtedness, by the Partnership in excess of One Hundred Thousand Dollars ($100,000), As Adjusted, per occurrence or Five Hundred Thousand ($500,000), As Adjusted, in the aggregate on an annual basis; (g) The determination of compensation for professionals and consultants retained by the Partnership; (h) Any material modifications to an insurance and indemnity program for the Partnership, including any modification which involves an expenditure or the incurrence of liability, or a potential liability, in excess of Two Hundred Thousand Dollars ($200,000), As Adjusted, in the aggregate; (i) Approval of the annual operating budget for any calendar year and approval of any action or actions, which in the aggregate result is an increase of greater than five percent (5%) in the expenditures or a decrease of greater than five percent (5%) in the revenues of or to the Partnership as set forth in the approved annual operating budget; (j) The dissolution of the Partnership, except under Section 21.01(iv); (k) Disposition of assets of the Partnership upon dissolution or termination of the Partnership; (1) The distribution of cash or other assets to the Partners, the establishment of any reserves not required by the Lenders or the determination of Disbursable Assets; (m) The merger or consolidation of the Partnership with or into any Person; and (n) The decisions identified in Section 6.01(d). 7.05 Whenever any Partner is requested to evidence its approval of or agreement to any decision or action of any nature whatsoever that requires consent of the Partners, the Partner to whom such request has been made shall respond to such request with reasonable promptness. Commensurate with the nature of the approval, action or agreement being sought, the Partner to whom the request is made shall advise the requesting Partner(s) of its approval or its reasons for withholding the same. If the request for approval, agreement or other action is in writing, the response must also be in writing. SECTION 8. TERM; TERMINATION 8.01 The Partnership shall continue in existence until the first to occur of the following events: (a) the date determined by unanimous decision of the Partners to dissolve the Partnership; (b) the sale of all or substantially all of the assets of the Partnership; (c) the withdrawal by any Partner resulting in less than two remaining Partners, unless, if there is a sole remaining Partner, a second Partner is admitted within the time required by applicable law; (d) the occurrence of an event specified under applicable law resulting in a dissolution of the Partnership unless, pursuant to applicable law, the Partners elect to continue the business of the Partnership; (e) December 31, 2035; or (f) the dissolution of the Partnership due to an Event of Default or otherwise in accordance with this Agreement. 8.02 Upon termination of this Agreement, none of the Partners shall have any further liability to each other, except any liability which expressly survives pursuant to Section 30.02 of this Agreement. SECTION 9. SCOPE OF AUTHORITY 9.01 Except as otherwise expressly provided in this Agreement, no Partner shall have any authority to bind or act for, or in the name of, or assume any obligations or responsibilities on behalf of, the other Partners or the Partnership. Neither the Partnership nor any Partner shall be responsible or liable for any indebtedness of a Partner, whether incurred or arising before or after the execution of this Agreement, except those responsibilities, liabilities, indebtedness or obligations expressly assumed by such Partner or the Partnership in writing. This Agreement shall not be deemed to create a general partnership among the Partners with respect to any activities whatsoever, other than activities within the scope and purpose of the Partnership. SECTION 10. INDEMNIFICATION 10.01 Each Partner hereby indemnities and holds harmless the Partnership as well as the other Partner(s) and their or its Affiliates, officers, directors, employees and agents from and against any and all claims, demands, losses, damages, liabilities, lawsuits and other proceedings, judgments and awards, and costs and expenses (including but not limited to reasonable attorneys' fees) arising directly or indirectly, in whole or in part, out of any breach of the provisions of this Agreement by such Partner or its Affiliate, director, officer, employee or agent. 10.02 Except as provided in non-waivable provisions of applicable law: (a) The Partnership hereby indemnities each Partner (and its officers, directors, employees and agents) from and against any liability resulting from any act omitted or performed by such Partner (or its officer, director, employee or agent) in good faith on behalf of the Partnership and in a manner reasonably believed by such Partner (or its officer, director, employee, or agent) to be within the scope of the authority conferred upon such Partner by this Agreement and in the best interests of the Partnership. (b) No Partner (and no officer, director, employee or agent of a Partner) shall be liable, responsible or accountable, in damages or otherwise, to the Partnership or the Partners for or as a result of any act, omission or error in judgment which was taken, omitted or made by it in good faith on behalf of the Partnership and in a manner reasonably believed by it to be within the scope of the authority granted to it by this Agreement and in the best interests of the Partnership. A Partner may consult with such legal or other professional counsel as it may select. Any action taken or omitted by it in good faith reliance on, and in accordance with, the opinion or advice of such counsel shall afford full protection and justification to it with respect to the action taken or omitted. (c) The Partnership may reimburse a Partner for all expenses, including reasonable legal fees, and losses in connection with any suit or action involving Partnership business (but not in connection with any action brought by one Partner against another). Any such indemnification and advancement of expenses agreed to by the Partnership shall not be exclusive of any other right available to the Partners, unless otherwise provided in extending the offer thereof. The Partnership shall purchase and maintain insurance on behalf of the Partners against liability. SECTION-11. LIMITATION OF LIABILITIES 11.01 No Partner, except as provided in Section 3.05, shall be liable to any third Person for losses, liabilities or obligations of the Partnership (except as otherwise expressly agreed to in writing by such Partner) unless the assets of the Partnership shall first have been exhausted. 11.02 Unless otherwise decided by the Partnership, the Partnership shall not enter into any contract, lease, sublease, note, deed of trust, or other agreement unless there is contained in such instrument an appropriate provision which (a) limits the claims of all parties to, and beneficiaries under, such instrument to the assets of the Partnership and (b) expressly waives any rights of such parties and other beneficiaries to proceed against the Partners individually. To the extent the Partnership has entered into any contract, lease, sublease, note or other agreement in violation of this requirement prior to the date of this Agreement, the Partners hereby waive any violation of the provisions of this section. 11.03 Unless due to a Partner's willful misconduct, gross negligence, actions taken in bad faith, or actions taken by a Partner for which there was no basis for the Partner to form a reasonable belief that such actions were in compliance with the Affiliated Party Decision requirements of Section 7.03, in no event shall any Partner be liable to any other Partner for indirect, incidental, special or consequential damages including, but not limited to loss of revenue, loss of profit, cost of capital, or loss of opportunity, regardless of whether such liability arises out of contract, tort (including negligence), strict liability, or otherwise. SECTION 12. CAPITAL ACCOUNTS 12.01 A separate "Capital Account" shall be maintained for each Partner in accordance with applicable United States Treasury regulations. Upon execution of this Agreement, the Capital Accounts of Adwin and O'Brien shall consist of the Unreimbursed Development Costs set out in Exhibit A plus their respective shares of the Project Equity Contribution set out in Section 3.03. The Capital Account of Trigen shall consist of its share of the Project Equity Contribution. The resulting initial Capital Accounts of the Partners are set out in Exhibit A. Following execution of this Agreement, the Capital Account of each Partner shall be: (a) increased by (i) the amount of cash and Fair Value of any property (net of liabilities assumed by the Partnership and liabilities to which the property is subject) contributed by such Partner to the Partnership pursuant to this Agreement; (ii) the items of income and gain allocated to such Partner in accordance with Section 13.01; and (iii) any positive adjustment to such Capital Account by reason of an adjustment to the Carrying Value of Partnership Assets; (b) decreased by (i) the amount of cash and Fair Value of any property (net of liabilities assumed by the Partner and liabilities to which the property is subject) distributed to such Partner by the Partnership pursuant to this Agreement; (ii) the items of loss and deduction allocated to such Partner in accordance with Section 13.01; and (iii) any negative adjustment to such Capital Account by reason of an adjustment to the Carrying Value of Partnership Assets. 12.02 Immediately prior to the distribution of any property (other than cash) to a Partner, the Capital Account of each Partner shall be increased or decreased, as the case may be, to reflect the manner in which the unrealized income, gain, loss and deduction inherent in such property (that has not previously been reflected in the Capital Accounts of the Partners) would be allocated among the Partners in accordance with GAAP as if there had been a taxable disposition of such property for its Fair Value. SECTION 13. ALLOCATION 13.01 For purposes of making allocations to Capital Accounts, all items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners in accordance with their respective Partner Percentages. 13.02 Any allocation pursuant to Section 13.01 will, however, be subject to any adjustment required to comply with Sections 704(b) and 704(c) of the Code and the Treasury Regulations thereunder including, without limitation, adjustments with respect to any nonrecourse deduction or minimum gain chargeback within the meaning of Treasury Regulation Section 1.704-2. Any special allocations of items pursuant to this Section 13.02 shall be taken into account, to the extent permitted by the Treasury Regulations, in computing subsequent allocations of income, gain, loss or deductions pursuant to Section 13.01 or 13.03 so that the net amount of any items so allocated and all other items allocated to each Partner over the life of the Partnership shall, to the extent possible, be equal to the amount that would have been allocated to each Partner pursuant to Section 13.09-had such special allocation not occurred. 13.03 For purposes of making allocations for federal, state, and local income tax purposes, all items of income, gain, loss, deduction and credit realized by the Partnership shall, for each fiscal period, be allocated, among the Partners in the same manner as the correlative items of income, gain, loss, deduction and credit were allocated pursuant to Section 13.01. SECTION 14. DISTRIBUTIONS TO PARTNERS 14.01 Subject to Section 24, and as permitted by the Partnership's Lenders, the Partnership shall distribute its Disbursable Assets. if any, for each fiscal quarter to the Partners simultaneously in accordance with the Partner Percentage of each Partner. SECTION 15. BOOKS, RECORDS AND ACCOUNTS 15.01 The Partnership shall maintain, at its principal office, full and accurate accounts and financial records which all Partners shall have the right to inspect and examine during reasonable business hours. In addition, each Partner may designate a Person or Persons to inspect, examine and audit such accounts and financial records and to make copies of documents deemed appropriate during regular business hours at such Partner's sole cost and expense. The Managing Partner shall keep or cause such books to be kept and shall fully and accurately enter all transactions of the Partnership in the books. Such books and records of account shall be maintained on the accrual basis and shall be adequate to provide each Partner with all financial information that may be needed by such Partner or any of its Affiliates for purposes of satisfying the financial and tax reporting obligations of such Partner or Affiliate. Such books shall be closed and balanced at the end of each fiscal year. The Managing Partner will furnish financial statements, prepared in accordance with GAAP, to each Partner within thirty (30) days following the end of each quarter. On or before March 1 of each year, the Partnership will furnish each Partner, for the prior calendar year, audited financial statements of the Partnership. At the request of any Partner, the Partnership shall give specific answers to questions upon which information is desired from time-to-time relative to the income, assets, liabilities, contracts, operations, condition of the property, status of any loans and any other data with respect to the Partnership or its property. 15.02 The Partnership shall engage as independent auditors for the Partnership the firm recommended by the Managing Partner, and approved by the Management Committee. The independent auditors shall at the end of each fiscal year (i) audit the records and accounts of the Partnership and (ii) render their opinion on the statements of financial condition of the Partnership as of the end of each fiscal year and related statements of income and changes in financial condition for each fiscal year. SECTION 16. TAX RETURNS; TAX ACCOUNTING; TAX ELECTIONS 16.01 It is the intention of the parties that the relationship created by this Agreement will, for federal, state, local and foreign tax purposes, be treated as a partnership. The Partners agree to take all action, including the amendment of this Agreement and the execution of other documents, as may be required to qualify for and receive such tax treatment. Subject to the provisions of Section 16.04, all of the Partnership's elections for federal and state tax purposes, except those specifically reserved by the Code to be made by the individual Partners, shall be determined by the "Tax Matters Partner" (as defined in Section 16.05) and approved by the other Partners. Subject to the provisions of this Section 16.01, the Partnership's federal and state tax returns of the Partnership shall be reviewed and approved by each Partner. Any Partner who objects to the presentation of any Partnership item on any such return shall so notify the Managing Partner in writing within fifteen (15) days after the date on which the income tax return in question was furnished to such Partner by the Partnership's independent auditors. Such notice shall set forth in reasonable detail the nature of, and basis for, each such objection. copies of such notice shall be provided to the other Partners and to the independent auditors. If the Partners cannot agree upon a mutually satisfactory resolution of any disputed item, any Partner who objects to the majority decision of the Partners shall be entitled to take an inconsistent position with respect to any unresolved items on its own income tax return. In all other respects each Partner shall report the results of the operation of the Partnership on its own returns in a manner consistent with the manner in which such results were reported by the Partnership. 16.02 Income tax returns of the Partnership shall be prepared by the independent auditors. Copies of all income tax returns of the Partnership shall be furnished to each of the Partners for review and approval by April 1 of each year for filing such returns, including extensions, if any. If any Partner shall fail to approve any such return, an application for an extension of time to file shall be timely filed. If all Partners fail to approve the return prior to the expiration of the extension period, the Managing Partner shall file the return as approved by a majority-in-interest of the Partners, subject to the provisions of Section 16.01. 16.03 The fiscal year and the tax year of the Partnership shall end on December 31 of each year. 16.04 The Partnership shall, if requested by any Partner, make the election provided under Section 754 of the Code. 16.05 The Managing Partner is hereby designated as the "Tax Matters Partner," pursuant to Section 6231 of the Code and the applicable regulations thereunder. 16.06 Prompt notice shall be given to the Partners upon receipt of notice that the Internal Revenue Service or any other taxing authority intends to examine Partnership tax returns for any period. The Tax Matters Partner shall promptly supply to the other Partners copies of any communications with any taxing authority relating to any audit of any tax returns filed by or on behalf of the Partnership which involve any material issue and shall take such other steps as may be appropriate to keep the other Partners fully informed about the course of the audit and any other administrative or judicial proceeding relating thereto. The Tax Matters Partner shall not settle any material claim for additional taxes, interest or penalties, or other adjustments to the Partnership's tax returns without first obtaining the approval of the Management Committee. SECTION 17. BANK ACCOUNTS 17.01 Except as otherwise required by the Lenders, all funds shall be deposited in the name of Partnership in such account or accounts as shall be designated by the Managing Partner. Except as provided below or as otherwise required by the Partnership's Lenders, all withdrawals therefrom shall be made upon checks signed (i) by the chief executive officer, the chief operations officer, or the chief financial officer of the Managing Partner and (ii) by such additional person or persons as shall be designated by the Managing Partner from time-to-time. Any withdrawal in excess of Twenty Thousand Dollars ($20,000) which is out of the ordinary course of business of the Partnership or outside the scope of the approved annual budget, shall be approved in writing by the Managing Partner and at least one other Partner. The Managing Partner shall have no authority to approve withdrawals to itself or its Affiliates that are outside the scope of the approved annual budget, without the approval of the Partnership, which decision shall not be unreasonably delayed. SECTION 18. TRANSFER OF A PARTNER'S INTEREST 18.01 No Partner may sell, assign or encumber all or any part of its interest in the Partnership unless each of the conditions set forth herein are satisfied or waived by consent of the Partners; provided, however, that each Partner may transfer all or a portion of its interest in the Partnership to an Affiliate without the consent of, but with notice to the other Partner(s); provided, however, that such transfer does not cause the Project to lose its status as a "qualifying cogeneration facility" under PURPA. Notwithstanding any other provision of this Agreement, no Partner may sell or assign all or any part of its interest in the Partnership if such sale or assignment would result in a total of more than three (3) Partners in the Partnership, unless to remedy a failed capital call under Section 3.05, or to remedy a potential violation of the ownership requirements under PURPA, pursuant to Section 18.02 below. 18.02 If it is determined that the ownership of interests in the Partnership by any Partner would cause the Project to cease being a "qualifying cogeneration facility" under PURPA or would cause the Partnership to be regulated pursuant to the Public Utility Holding Company Act, each Partner agrees, consistent with the provisions of the Agreement, to reduce its Partnership Interest, pro rata to its Partner Percentage, to a level which avoids loss of "qualifying facility" status. Each Partner agrees that it will not transfer any interest in the Partnership, the result of which transfer would cause a loss of "qualifying facility" status. No transfer shall be allowed or be effective unless an opinion of counsel satisfactory to the Partners and the Partnership or other evidence satisfactory to the Management Committee is obtained stating that such transfer would not (i) cause the Partnership to be classified as an entity other than a partnership for purposes of the Code or to be treated as a publicly traded partnership within the meaning of Section 7704 of the Code, (ii) require registration under the Securities Act of 1933 and would not violate or cause the Partnership to violate any applicable law, and (iii) adversely affect the status of the Project as a qualifying facility under PURPA. 18.03 As a condition to the transfer of any interest, the transferee shall execute and deliver to each remaining Partner an instrument pursuant to which it agrees to be bound by the terms of this Agreement and such additional instruments and documents as may be reasonably required by the remaining Partners. SECTION 19. FIRST RIGHT OF PURCHASE 19.01 If, at any time, any Partner desires to sell all or any portion of its interest (other than a sale by a Partner to any Affiliate), such Partner shall give the other Partners notice of its intention to seek a purchaser for such interest promptly after making the determination to do so. Such Partner, upon securing a bona fide offer to purchase such interest intended to be sold shall give the other Partners notice of (a) the price (which shall be a dollar sum), (b) the identity of the proposed purchaser (if then known to the seller) and (c) all other terms of sale. The Remaining Partners shall have the right pro rata to their Partner Percentage, during the forty-five (45) day period after the giving of the notice of the proposed sale and its terms to enter into an agreement to purchase all of the interest specified in the notice (which price shall be prorated if the Remaining Partners want to purchase only a portion of the interest being offered for sale) and upon the terms set forth in the notice. In the event less than all of the Remaining Partners determine to purchase the interest to be sold within the said forty-five (45) day period, those Remaining Partners who elect to purchase shall have the right within the ten (10) day period to purchase the interest to be sold in the same proportion as the Partner Percentage of each purchasing Remaining Partner bears to the total Partner Percentage of all such purchasing Remaining Partners. If none of the Remaining Partners elect to purchase the seller Partner's interest to be sold within the said time periods, the selling Partner shall be free for a period of thirty (30) days thereafter to sell the interest to be sold to the proposed purchaser on the same terms and conditions contained in the notice to the Remaining Partners of the proposed sale. if the said sale is not effected within the said thirty (30) day period, any subsequent sale must again comply with the requirements of this Section. Settlement under any purchase agreement entered into by one or more of the Remaining Partners pursuant to this Section shall occur within ninety (90) days of the execution of a written purchase agreement. SECTION 20. EVENTS OF DEFAULT 20.01 Each of the following shall be considered to be an "Event of Default" by a Partner: (a) such Partner shall be named a debtor in any petition, whether voluntary or involuntary, in any bankruptcy or insolvency proceeding, whether state or federal, and such petition is not stayed or dismissed within sixty days; (b) such Partner shall enter into an assignment for the benefit of creditors; (c) such Partner shall have a receiver appointed to administer its interest in the Partnership; (d) such Partner shall have its Partnership interest seized by a general creditor; (e) it shall become unlawful for such Partner to carry on the business of owning an interest in the Partnership; (f) Except for a failure to make a capital call pursuant to Section 3.05, such Partner defaults in the performance of, or fails to comply with, any material obligation or agreement set out in this Agreement, and has not cured such default within thirty (30) days after notice from any of the remaining Partners of such default; (g) such Partner commits fraud, is convicted of a crime, or violates the Affiliated Party provisions of Section 7.02; or (h) such Partner is either dissolved or liquidated. 20.02 Upon the occurrence of an Event of Default, the nondefaulting Partner(s) may, in addition to all other remedies at law or in equity to which such Partner(s) may be entitled, elect to purchase the defaulting Partner's interest in the Partnership pursuant to the provisions of Section 22. SECTION 21. DISSOLUTION 21.01 The Partnership shall dissolve upon the first to occur of (i) termination of the Partnership pursuant to Section 8.01, (ii) such time as the last Project Document expires by its terms and no longer requires, or prospectively could require, administration by the Partnership, (iii) upon the withdrawal of a Partner or upon the occurrence of an Event of Default as to a Partner under Sections 20.01(a), (b), (c), (d), or (e), unless all of the remaining, non-defaulting Partners agree, in writing, to continue the business of the Partnership, or (iv) upon an Event of Default as to a Partner under Section 20.01(f) if the non-defaulting Partners elect to dissolve the Partnership. SECTION 22. PURCHASE OF DEFAULTING PARTNER'S INTEREST 22.01 Upon the occurrence of any Event of Default by any Partner (the "Defaulting Partner"), the other Partner(s) (the "Remaining Partner(s)") shall have the right to acquire the Partnership interest of the Defaulting Partner for cash, in proportion to the respective Partner Percentage of the Remaining Partners, or if only one Partner remains, all of the Defaulting Partner's interest, at a price determined pursuant to the procedure set forth in Section 22.04. If any Remaining Partner should elect not to purchase its pro rata share of the Defaulting Partner's interest, the Remaining Partner(s) may purchase the pro rata share of the Defaulting Partner's interest to which the Partner who chooses not to participate in the buy out of the Defaulting Partner's interest would otherwise be entitled. The Remaining Partner(s) may notify the Defaulting Partner at any time within thirty (30) days of their knowledge of an Event of Default of its or their election to institute the procedures set forth in Section 22.04. Upon receipt of notice of the determination of the Net Fair Market Value of the Defaulting Partner's Partnership interest, the Remaining Partner(s) may notify the Defaulting Partner of its or their election to purchase the interest of the Defaulting Partner. 22.02 The closing of any purchase pursuant to this Section 22 shall take place at the principal office of the Partnership, unless otherwise mutually agreed by the Remaining Partner(s), on a date specified by the Remaining Partner(s) that is not less than ten (10) days following receipt of notice of determination of the Net Fair Market Value of the Defaulting Partner's Partnership interest pursuant to Sections 22.04 or 22.05. Upon closing of such purchase, the Remaining Partner or Partners may elect to offset against the purchase price the amount of any loss, damage or injury, the amount of which has been established by a final nonappealable judgment, suffered by it or incurred as a result of the default of the Defaulting Partner. 22.03 The right of a single Remaining Partner to elect to acquire the entire interest of the Defaulting Partner as set forth in this Section 22, is independent of the Remaining Partner's right to elect to dissolve and terminate the Partnership pursuant to Section 21 of this Agreement by sixty (60) days written notice to the Defaulting Partner. 22.04 The "Net Fair Market Value" of an interest in the Partnership for purposes of a purchase pursuant to this Section 22 shall be determined as follows: (a) The Partners shall first attempt to agree upon the "Net Fair Market Value" of the Partnership as a whole. The "Net Fair Market Value" of the Partnership shall mean the cash price at which a sophisticated purchaser would purchase, and a sophisticated seller would sell, one hundred percent (100%) of the interests in the Partnership, with neither party being under any compulsion to effect such transaction and with both parties being reasonably informed as to all material facts. (b) In the event the Partners are unable to mutually agree upon the Net Fair Market Value of the Partnership for purposes of Section 22.04 within thirty (30) days of the date the remaining Partners notify the Defaulting Partner to institute the procedures set forth in Section 22.04, the Partners shall then attempt to agree upon the appointment of two disinterested appraisers who shall be members of the American Institute of Appraisers. If the Partners are unable to agree upon the selection of two appraisers within seventy five days, then each Partner shall, within ten (10) days thereafter, select a single appraiser so qualified and such two appraisers shall select a third appraiser so qualified. Each appraiser so selected shall furnish the Partners with a written appraisal within ninety (90) days of the selection, setting forth such appraiser's determination of the Net Fair Market Value of the Partnership. The average of the two closest valuations of such appraisers shall be treated as the Net Fair Market Value of the Partnership, and such amount shall be final and binding on the Partners. The cost of such appraisal shall be an expense of the Defaulting Partner. (c) The Net Fair Market Value of the Defaulting Partner's Interest to be purchased pursuant to this Section 22 shall equal the greater of the positive balance, if any, in the defaulting Partners "Adjusted Capital Account" or $100. For this purpose, the Defaulting Partner's Adjusted Capital Account shall equal such Partner's Capital Account on the date of the valuation of the Net Fair Market Value plus or minus the net gain or loss which would have been credited or debited to such account if: (i) the Partnership's assets had been sold on such date at a price equal to the Net Fair Market Value of the Partnership and (ii) the net gain or net loss so determined were allocated among the Partners in accordance with the provisions of Section 13. SECTION 23. WINDING UP 23.01 Upon dissolution of the Partnership pursuant to Section 21 the Partnership shall immediately commence to wind up its affairs and the Managing Partner shall proceed with reasonable promptness to liquidate the business of the Partnership and take account of the assets and liabilities of the Partnership as promptly as is consistent with obtaining the Fair Value of such assets. During the period of the winding up of the affairs of the Partnership, the rights and obligations of the Partners set forth herein with respect to the management of the Partnership shall continue. For purposes of winding up, the Managing Partner shall continue to act as such subject to Section 7.02, unless Section 6.04 applies. SECTION 24. DISTRIBUTIONS ON TERMINATION 24.01 The proceeds from a liquidation, together with assets distributed in kind, shall be applied and distributed in the following order: (a) First, to the payment of debts and liabilities of the third- party creditors of the Partnership, in the order of priority provided by law and to the expenses of liquidation; (b) Second, to the establishment of any reserve that the Partnership may deem reasonably necessary for any contingent or unforeseen liabilities of the Partnership or of the Partners arising out of or in connection with the Partnership. Such reserves shall be paid to a trust to be held for the purpose of disbursing such reserves in payment of any contingencies, and, at the expiration of such period as the Partnership shall deem advisable, to distribute the balance thereafter remaining in the manner provided by this Section 25; (c) Third, to the payment of any net indemnity obligations owed Trigen by either Adwin and/or O'Brien under Section 13 of the Acquisition Agreement, subject to the requirement that any such indemnity payments be deducted from the Unreimbursed Development Costs otherwise payable to Adwin and/or O'Brien under subparagraph (d) below; (d) Fourth, to the payment of any Unreimbursed Development Costs as set out in Exhibit A (as adjusted pursuant to subparagraph (c)), pro rata to the amounts owed to individual Partners; (e) Fifth, to the payment of any indebtedness owed to the Partners by the Partnership, pro rata to the amounts owed to individual Partners; (f) Any balance then remaining shall be distributed to the Partners (i) to the extent of the positive balances of their Capital Accounts (after adjustments, if any, for payments under (c) and (d) and any net indemnity payments owed Adwin and O'Brien by Trigen pursuant to Section 14 of the Acquisition Agreement, which amounts, if any, shall be deducted from Trigen's Capital Account and credited to Adwin's and O'Brien's Capital Accounts, as the case may be), as determined after taking into account all adjustments to Capital Accounts for the Partnership taxable year during which the liquidation occurs, in the proportion of such positive balances and (ii) any excess over Capital Account balances being distributed according to the Partner Percentage of each Partner, by the end of such taxable year or, if later, within ninety (90) days after the date of such liquidation. For purposes of determining Capital Accounts on liquidation, all unrealized gains, losses and accrued income and deductions are treated as realized and recognized immediately before the date of distribution; and (g) Every reasonable effort shall be made to dispose of the assets of the Partnership so that all distributions may be made to the Partners in cash. To the extent such assets are not disposed of for cash, they will be offered to each Partner and the Partner offering the highest cash price for such assets shall have the right to purchase them, and the proceeds from such sale(s) distributed to the Partners as otherwise provided herein. SECTION 25. DOCUMENTS AND RECORDS 25.01 All documents and records of the Partnership including, without limitation, all financial records, vouchers, canceled checks and bank statements shall be delivered to the Managing Partner upon termination of the Partnership. Unless otherwise approved by the Partnership, the Managing Partner shall retain such documents and records for a period of not less than seven (7) years and shall make such documents and records available during normal business hours to the other Partners for inspection and copying at the other Partners' cost and expense; provided, however, that if there is an audit or threat of audit, such documents and records shall be retained until the audit is completed and any tax liability finally determined. SECTION 26. COMPLIANCE WITH LEGAL REQUIREMENTS 26.01 This Agreement, and the obligations and rights of the Partners under this Agreement, shall be construed and applied, so as to be in conformity with all environmental, regulatory and other laws and rules and regulations of governmental bodies applicable to the Partnership, or any Partner, or any Affiliate of a Partner. In the event that this Agreement, or the performance by any party of its obligations hereunder, shall conflict-with, or be contrary to, any such law, rule or regulation, the parties agree to negotiate in good faith to amend or modify this Agreement so as to comply with such law, rule or regulation. In furtherance thereof, the Partners acknowledge their intent to have the Project be and remain a "qualifying cogeneration facility" under PURPA. Accordingly and except for the provisions of Section 18.02 as to the transfer of interests in the Partnership to maintain "qualifying cogeneration facility" status, if the operation of any provision in this Agreement results or, with the passage of time, will result in the loss of such "qualifying cogeneration facility" status, the Partners agree to negotiate in good faith to amend or modify this Agreement so as to retain and continue such "qualifying cogeneration facility" status. SECTION 27. RESOLUTION OF DISPUTES 27.01 In the event of a dispute under this Agreement involving (1) the legal interpretation of the terms of this Agreement, or (2) an amount of money owed a Partner under this Agreement: (a) Each Partner involved in the dispute and/or the Partnership shall appoint a senior manager from its management, or in the case of the Partnership, the Chief Executive officer of the Managing Partner, or of a Disinterested Partner if required under Section 7.02, who shall meet within ten (10) days of notice of such a dispute in an effort to resolve the matter. (b) If the matter has not been resolved within ten (10) days of the first meeting of the managers, or if the managers fail to meet within ten (10) days, the parties will attempt in good faith to resolve the dispute or claim by mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Rules, before resorting to arbitration. Either party may initiate mediation by filing a submission to mediation with the AAA. The mediation shall be conducted in Philadelphia, Pennsylvania. (c)(i) If the matter has not been resolved pursuant to mediation within sixty (60) days of the initiation of mediation, or if either party fails to participate in the mediation, the controversy shall be resolved by binding arbitration under the commercial Arbitration Rules of the American Arbitration Association. Where no disclosed claim or counterclaim exceeds One Million Dollars ($1,000,000), exclusive of interest and arbitration costs, the arbitration shall be heard and determined by one neutral arbitrator. Where any disclosed claim or counterclaim exceeds One Million Dollars ($1,000,000), exclusive of interest and arbitration costs, the arbitration shall be heard and determined by three neutral arbitrators and shall be conducted under the Supplementary Procedures of Large, Complex Disputes then in effect. (ii) Either party may initiate arbitration under this Section 27.01 by filing a demand for arbitration with the AAA or the parties may jointly initiate arbitration by filing a submission to arbitration. The arbitration shall be conducted as a common law arbitration under Pennsylvania law, 42 Pa. Cons. Stat Ann. Section 7341, and judgment upon the award rendered by the arbitrators) may be entered by any court having Jurisdiction thereof. The arbitrator(s) shall have no authority to award punitive or treble damages. The arbitration process shall be concluded not later than three (3) months after the date that it is initiated and the award of the arbitrator(s) shall be accompanied by a reasoned opinion if requested by either party. The arbitration shall be conducted in Philadelphia, Pennsylvania. (d)(i) All deadlines specified in this Section 27 may be extended by mutual agreement of the parties. (ii) The procedures specified in this Section 27 shall be the sole and exclusive procedures for the resolution of disputes covered by this Section 27; provided, however, that a party may seek a preliminary injunction or other preliminary judicial relief if, in its judgment, such action is necessary to avoid irreparable damage or to preserve the status quo. Despite such action, the parties will continue to participate in good faith in the procedures specified in this Section 27. All applicable statutes of limitations and defenses based upon the passage of time shall be tolled while the procedures specified in this section 27 are pending. The parties will take such actions, if any, required to effectuate such tolling. All negotiations pursuant to this Section 27 shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence. (e) (i) Pending final resolution of any dispute, the parties shall continue to fulfill their respective obligations under this Agreement. (ii) During any dispute concerning the payment of money due under the Agreement, the amount in controversy shall not be paid unless and until the dispute is resolved in favor of the party claiming entitlement to the disputed payment. SECTION 28. NOTICES 28.01 All notices, requests and other communications to any Partner shall be in writing (including bank wire, telecopier or similar writing) and shall be given to such party at its address or telecopier number set forth at the heading of this Agreement or such other address or telecopier number as such Partner may specify for the purpose by notice to such Partner. Each such notice, request or other communication shall be effective (a) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and the appropriate answer back is received, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mail with first class postage prepaid, addressed as required, or (c) if given by any other means, when delivered at the address specified in this section. SECTION 29. CONFIDENTIALITY 29.01 (a) Confidential Information consists of: (i) information identified at the time of disclosure as confidential, proprietary or secret by the provider or its partners, employees, agents, attorneys or consultants; (ii) information involving the economic plans, development, construction, permitting, financing, equipment procurement, fuel procurement, power sales, feasibility assessments of, or parties involved with, the Project; (iii) the terms or proposed terms of any existing or proposed agreement between or among the Partners; and (iv) analyses, computations, studies, documents and records, prepared by either party or its employees, agents or representatives which contain or otherwise reflect or are generated from information furnished by the other party, its partners, employees, agents, attorneys or consultants with respect to the Partnership or the Project. (b) Confidential Information shall not include: (i) information which is in the public domain at the time of disclosure; (ii) information which becomes publicly known through no wrongful act of the receiver, its Affiliates, attorneys, consultants or other third party; (iii) information which is or becomes known to the receiver from a third party without a similar confidentiality obligation to the provider, and without breach of this Agreement; (iv) information which is approved for release in writing by the provider; or (v) information which the Partners unanimously agree should be made public as part of the financing or development or operation of the Project. 29.02 Confidential Information may be disclosed as required to carry out the purpose of the Partnership; provided, however, that any Confidential Information disclosed, to or obtained by, any Partner with respect to the Project and all other Confidential Information obtained by any Partner shall be held in the strictest confidence by the receiver. The receiver shall not disclose, make public, or disseminate in any way any Confidential Information except as expressly permitted by this Agreement. The receiver shall take the strictest precautions to protect against unauthorized and inadvertent disclosure of Confidential Information and shall not disclose Confidential Information to any party without the prior written consent of the provider. SECTION 30. GENERAL CONTRACT TERMS 30.01 Further Assurances. Each of the Partners will execute and deliver such further instruments, and do such further acts and things as may be reasonably requested to carry out the intent and purposes of this Agreement. 30.02 Survival. All payment obligations which shall have arisen under this Agreement shall survive termination of this Agreement. The indemnification obligations of the Partners under this Agreement shall survive termination of this Agreement. 30.03 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania. Subject to the provisions of Section 27, for the purposes of any suit, action or proceeding arising out of the Project, this Agreement, or any of the Project Documents, each Partner hereby consents and submits to the exclusive jurisdiction and venue of any of the courts of the Commonwealth of Pennsylvania and the United States District Court for the Eastern District of Pennsylvania and irrevocably agrees that service of process by certified mail, return receipt requested addressed as provided in Section 28 shall be deemed in every respect effective and valid personal service of process. Each Partner irrevocably waives any objection which it may now or hereafter have to the laying of venue in such courts and any claim that such suit, action or proceeding has been brought in an inconvenient forum. 30.04 Complete Agreement; Amendments. This Agreement represents the complete agreement and understanding of the parties with respect to the Project and there are no other agreements, oral or written, with respect to the subject matter hereof. With the exception of an amendment pursuant to Section 6.03, this Agreement may not be modified or amended except by written consent of all Partners. 30.05 Successors in Interest. All provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the successors and permitted assigns of any of the parties to this Agreement. 30.06 Severability. Each provision of this Agreement shall be considered severable, and if for any reason any provision which is not essential to the effectuation of the basic purposes of the Agreement is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement that are valid. IN WITNESS WHEREOF, the Partners have executed this Amended and Restated Partnership Agreement as of the date written above. O'BRIEN (SCHUYLKILL) COGENERATION, TRIGEN-SCHUYLKILL INC. COGENERATION, INC. By:_____________________________ By:____________________ _______________________ _______________________ Date Date ADWIN (SCHUYLKILL) COGENERATION, INC. _____________________________________ By: _____________________________________ Date EX-11 4 COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11 TRIGEN ENERGY CORPORATION AND SUBSIDIARIES Computation of Earnings Per Share (All amounts in thousands, except share and per share data) Three Months Ended March 31, 1996 1995 Earnings Per Share - Primary Net income $4,181 $3,258 ======== ======== Weighted average number of common and common equivalent shares applicable to primary earnings per share calculation 11,469,658 11,372,725 Dilutive effect of stock options 77,516 95,293 ---------- ---------- Weighted average number of shares outstanding 11,547,174 11,468,018 ========== ========== Net income per share - primary $0.36 $0.28 ===== ===== Earnings Per Share - Assuming Full Dilution Net income $4,181 $3,258 Plus: Interest on convertible subordinated debt (net of taxes) 157 109 ------- ------- Net income for fully diluted earnings per share calculation $4,338 $3,367 ====== ====== Weighted average number of common and common equivalent shares applicable to fully diluted earnings per share calculation Weighted average number of shares outstanding 11,469,658 11,372,725 Shares issuable upon conversion of subordinated debt 334,012 250,000 Dilutive effect of stock options 100,490 95,293 ---------- ---------- 11,904,160 11,718,018 ========== ========== Net income per share assuming full dilution $0.36 $0.29 ===== =====
EX-27 5 FINANCIAL DATA SCHEDULE FILED WITH FORM 10-Q
5 This schedule contains summary financial information extracted from SEC Form 10-Q for quarter ending March 31, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1996 JAN-1-1996 MAR-31-1996 $24,107 0 $37,592 $783 $5,743 $64,536 $394,831 $51,395 $461,822 $61,107 $222,111 0 0 $115 $124,259 $461,822 0 $86,219 0 $74,076 $296 $86 $4,669 $7,092 $2,911 $4,181 0 0 0 $4,181 $.36 $.36
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