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EXHIBIT 10.1
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
AMERICAN REF-FUEL COMPANY
Dated as of December 5, 1997
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AMENDED AND RESTATED PARTNERSHIP AGREEMENT
AMERICAN REF-FUEL COMPANY
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT (this "Agreement") is
entered into as of December 5, 1997 by and between Duke/UAE Ref-Fuel Management
LLC, a limited liability company organized and operating under the laws of the
State of Delaware ("Duke/UAE Sub"), BFI Ref-Fuel, Inc., a corporation organized
and operating under the laws of the State of Delaware ("BFI Sub") and Air
Products Ref-Fuel, Inc., a corporation organized and operating under the laws
of the State of Delaware ("AP Sub"). Duke/UAE Sub, BFI Sub and AP Sub are at
times referred to collectively as the "Partners" and individually as a
"Partner," and AP Sub is sometimes referred to as the "Special Partner."
WHEREAS, AP Sub and BFI Sub are parties to an Amended and Restated
Partnership Agreement, dated as of January 25, 1991 (the "Original Agreement");
WHEREAS, Duke/UAE Sub has purchased a 49.9% general partnership interest
in the Partnership from AP Sub, and AP Sub has retained the Base Interest (as
hereinafter defined);
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WHEREAS, Duke/UAE Sub has been granted an option by AP Sub to purchase AP
Sub's 0.1% general partnership interest in the partnership; and
WHEREAS, the Partners now desire to amend and restate the Original
Agreement in its entirety as of the date hereof.
NOW, THEREFORE, the Partners hereby agree as follows, which agreement
shall constitute the entire Amended and Restated Partnership Agreement (the
"Agreement").
ARTICLE 1
THE PARTNERSHIP
Section 1.1 Certain Definitions. In addition to terms otherwise
defined herein, the terms set forth below shall have the following meanings:
"Act" shall mean the Uniform Partnership Act of the State of Delaware.
"Affiliate" shall mean, (i) with respect to BFI-Sub, BFI and any Person
controlling, controlled by or under common control with BFI-Sub or BFI, (ii)
with respect to Duke/UAE Sub, Duke/UAE, Duke Capital and UAE and any Person
controlling, controlled by or under common control with Duke/UAE, Duke Capital,
UAE or Duke/UAE Sub, (iii)
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with respect to AP Sub, APCI and any Person controlling, controlled by or under
common control with AP Sub or APCI, and (iv) with respect to any other Person,
any Person controlling, controlled by or under common control with such Person.
For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by," and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or partnership,
membership or other ownership interests or by contract or otherwise. For the
avoidance of doubt, it is acknowledged and agreed that ownership of 50% of the
outstanding voting securities or other equity interests of an entity in which
an unrelated third party owns an equal interest shall be deemed not to
constitute control of that entity and that therefore such entity shall not be
considered an Affiliate of either party owning such securities or other equity
interests.
"AP Sub" shall mean Air Products Ref-Fuel, Inc., a Delaware
corporation.
"APCI" shall mean Air Products and Chemicals, Inc., a Delaware
corporation, the ultimate parent company of AP Sub.
"Appropriate Committee" shall mean the Management Committee, or, if
acting within the scope of its authority pursuant to Section 3.1, the Executive
Committee or any committee appointed by the Management Committee pursuant to
Section 3.1(h).
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"Base Interest" shall mean the interest of AP Sub as a partner in the
Partnership entitling the owner of such interest to 0.1% of the profit, loss
and capital of the Partnership.
"Base Interest Option Agreement" shall mean the option agreement with
respect to the Base Interest, dated as of the date hereof between Duke/UAE Sub
and AP Sub.
"BFI" shall mean Xxxxxxxx-Xxxxxx Industries, Inc., a Delaware
corporation, the ultimate parent company of BFI Sub.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Compensation Committee" shall have the meaning and functions
established in Section 3.1.
"Competing Technology" shall mean a system for burning refuse,
consisting of a refuse burning device and an integral heat recovery device for
the recovery of energy, other than such a system employing Proprietary
Equipment.
"DBA" shall mean Deutsche Xxxxxxx Anlagen GmbH, a corporation of the
Federal Republic of Germany, and its successors and assigns.
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"DBA License" shall mean the World Wide Cooperation and Limited License
Agreement, dated effective as of January 1, 1996. The term "DBA License" shall
also include any amendment, renewal, successor or replacement thereof between
DBA and the Partnership.
"Development Project" shall mean any Project that, at the time in
question, is not in the Operations stage and is designated as a "Development
Project" by the Management Committee.
"Duke Capital" shall mean Duke Capital Corporation, a Delaware
corporation.
"Duke/UAE" shall mean Duke/UAE Ref-Fuel LLC, a limited liability
company organized under the laws of the State of Delaware.
"Executive Committee" shall have the meaning and functions established
in Section 3.1.
"Implement" or "Implementation" shall mean the process by which and the
time period during which a Project is either (a) designed, constructed and
passes an acceptance test established for the Project or (b) is identified as
an acquisition opportunity, evaluated and acquired, all in accord with the
obligations of and as further defined in the contracts for the Project.
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"Intellectual Property" shall mean all rights, property and
information of DBA to which the Partnership has access under the DBA License,
and all patents, trademarks and copyrights, and applications therefor and
registrations thereof, trade names, trade secrets and proprietary technology or
information owned or used by the Partnership.
"Interest Rate" shall have the meaning given to that term in Section
7.4(a).
"Licensed Plant" shall mean a waste incineration plant employing the
Proprietary Equipment.
"Liquidating Trustee" shall have the meaning given to that term in
Section 11.2(a).
"Management Committee" shall have the meaning and functions established
in Section 3.1.
"Municipal Solid Waste" shall mean solid waste of the type generally
collected as refuse from residential and commercial properties by
municipalities, including durable goods, containers, packaging, food waste,
yard waste and miscellaneous inorganic waste, but excluding industrial waste,
agricultural waste, sewage sludge, tires and all categories of hazardous waste,
including batteries and medical waste.
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"Operate" or "Operations" shall refer to the period commencing after a
Project is Implemented during which the Project is operated and maintained in
accordance with the applicable contractual obligations, if any.
"Other Waste Incineration Plants" shall mean facilities that employ
Competing Technology.
"Parent", as to BFI Sub, shall mean BFI, and, as to Duke/UAE Sub, shall
mean Duke/UAE.
"Parent Agreement" shall mean the Parent Agreement with respect to the
Partnership by and among Duke Capital, UAE, Duke/UAE and BFI dated as of the
same date as this Agreement, as that agreement may be amended from time to
time.
"Partnership" shall mean the partnership confirmed by this Agreement.
"Person" shall mean an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or any other legal entity.
"Project" is a term used generically in this Agreement and shall mean a
plant, located within the Territory, that xxxxx Municipal Solid Waste and
generates energy and includes the entire process by which a Licensed Plant or
Other Waste Incineration Plant is
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Implemented and Operated, and includes all phases of a particular Project
commencing with the identification of the opportunity for the Project and
continuing through the stage of Operation.
"Project Agreements" shall mean the agreements that are entered into to
Implement and Operate a Project or for the undertaking or pursuit of an
opportunity for a Project.
"Project Company" shall have the meaning given to that term in Section
1.6(b).
"Project Subsidiary" shall mean a corporation organized by an Affiliate
of a Partner formed for the sole purpose of being a partner, stockholder or
other equity participant in a Project Company.
"Proposal" shall mean the process of developing and submitting either a
definitive or general special written technical and/or pricing proposal
relative to a particular Project. A Proposal may either be a technical
proposal or a definitive pricing proposal (or both) submitted without
invitation from a client or in response to a request for proposals or bid from
a client and may, if necessary, be submitted with a Proposal bond.
"Proprietary Equipment" shall mean the Incineration System and Boiler
System as more fully described in Item 2 of Appendix I to the DBA License.
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"Reasonable business efforts" shall mean those efforts that would be
expended by a reasonably prudent businessman in the exercise of his business
judgment under the same or similar circumstances, provided that he, or the
enterprise by which he is employed, would not incur a financial loss (other
than time expended and incidental out-of- pocket expenditures which are
reimbursable pursuant to this Agreement) by reason of having expended or
expending such efforts.
"Special Partner" shall mean AP Sub, so long as it remains the owner of
the Base Interest.
"Territory" shall mean the United States of America, its territories
and possessions, and the Dominion of Canada, its territories and possessions.
"UAE" shall mean United American Energy Corp., a New York corporation.
Section 1.2 Continuation of Partnership. The Partners hereby
confirm the continuation of the Partnership as a general partnership under and
pursuant to the provisions of the Act, notwithstanding any addition or
withdrawal of a Partner on the date hereof or in accordance with the Base
Option Agreement. The amendment of this Section 1.2 shall be deemed for all
purposes to have been effected prior to the addition of Duke/UAE Sub as a
Partner on the date hereof.
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Section 1.3 Rights and Liabilities. The rights and liabilities
of the Partners shall be as provided in the Act except as otherwise expressly
provided herein.
Section 1.4 Partnership Name. The name of the Partnership shall
be American Ref-Fuel Company. All business of the Partnership shall be
conducted under such name and under such variations thereof as the Management
Committee deems necessary or appropriate to comply with the requirements of law
in any jurisdiction in which the Partnership may elect to do business.
Section 1.5 Principal Place of Business. The principal place of
business of the Partnership initially shall initially be located at 000 Xxxxx
Xxxxxxxx at Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000, but the Management Committee
may substitute or establish such other places of business for the Partnership
as it may, from time to time, deem necessary or appropriate.
Section 1.6 Business and Purposes of the Partnership.
(1) The Partnership is intended to have access to sufficient
professional staff and financial resources that will enable the Partnership to
prepare and submit definitive Proposals, and investigate opportunities, for
power generating plants fueled by Municipal Solid Waste.
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(2) The Partnership is also intended to evaluate various Proposals
that may be submitted for power generating plants fueled by Municipal Solid
Waste that would constitute Projects that Affiliates of the Partners, together
(through separate business organizations formed for the particular Projects,
herein a "Project Company") or in combination with other parties, can Implement
and that may be owned and/or Operated through other entities owned by
Affiliates of the Partners (and possibly others). The Partnership is intended
to develop Proposals (i) in response to requests from governmental entities or
other clients where sufficient profit opportunity exits, and (ii) in markets
that offer unique opportunity for private investment (particularly those areas
where Affiliates of BFI collect large quantities of refuse). Developmental
expenses for Projects shall be incurred by the Partnership on behalf of the
Project Companies to be formed for those Projects and shall be reimbursed by
those Project Companies after they have been formed.
(3) The Partners recognize, and are committed in principle to the
proposition, that preliminary planning, design and construction funds for
Projects initially selected for development by an Appropriate Committee, as
well as additional commitments of capital resources for the Projects to be
Implemented, if not otherwise available from the resources of the Partnership
or from third parties, will have to be provided by the Partners, It is
further contemplated that contractual relationships necessary for the Projects
to be Implemented will have to be negotiated with municipalities, energy users
and others. A current, definitive economic analysis of projected financial
results of each Project shall be reviewed by an Appropriate Committee during
the Proposal stage of that Project. The
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substance of all contemplated Proposals that cannot be withdrawn without a
material risk of liability shall be approved by an Appropriate Committee prior
to submission.
(4) The Partners also intend that Projects will be Implemented
(possibly with other participants or limited partners included) through the
formation of Project Companies. Agreements for the undertaking or pursuit of
particular Projects or opportunities for Projects may be entered into by
Affiliates of the Partners. The Partnership will have its own employees, and
will have access to the management and staff support personnel of Affiliates of
the Partners, in accordance with Section 3.3(a). The Partnership will furnish
professional staff and other personnel to Project Companies pursuant to General
Services Contracts. Forms of such Contracts have been approved by the
Partners, and will be used for each Project. Such forms may be modified only
with the approval of each Partner and an Appropriate Committee.
Section 1.7 Term. The Partnership shall continue in full force
and effect until December 31, 2087 unless earlier terminated or dissolved in
accordance with the provisions of this Agreement.
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Section 1.8 DBA License.
(1) Each Partner covenants and agrees with the other Partners and the
Partnership and for the benefit of DBA and the Partnership that such Partner
and its Affiliates having access to the Intellectual Property of DBA protected
by the DBA License shall be bound to the same obligations of confidentiality to
the Partnership and DBA as and to the same legal effect as the Partnership is
bound to such obligations pursuant to the DBA License. Each Partner shall
cause any of its Affiliates having access to the Intellectual Property of DBA
protected by the DBA License to similarly be bound to such obligations of
confidentiality. Each Partner agrees that any of the other Partners, the
Partnership or DBA may enforce directly against such Partner and its Affiliates
(subject to compliance with Section 12.3 and 12.4 of this Agreement), and
benefit from those remedies available for the breach of, those obligations of
confidentiality set forth in the DBA License with the same legal force and
effect as if such Partner and its Affiliates were an actual party to the DBA
License. The obligations under this Section 1.7 shall survive the dissolution
and termination of the Partnership, or the disposition by a Partner or its
Affiliates of any or all of its or their direct or indirect interests in the
Partnership or in a Partner. With respect to confidential information of the
Partners or their Affiliates, the Partners shall be bound by the provisions of
Section 1.8.
(2) Each Partner covenants to each other Partner and the Partnership
that such Partner and its Affiliates will not independently and intentionally
take any action that would obligate the Partnership to commit or omit to take
any act, or otherwise place the Partnership in a position, that would causes
the Partnership to be deemed to be in breach of the DBA License.
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Section 1.9 Confidentiality.
(1) The Partners expect that it will be necessary to receive and use
under this Agreement information considered proprietary and confidential by one
or more Partners or one or more of their Affiliates and further that such
information may, in fulfillment of the business purpose of the Partnership, be
disclosed to and used by the Partners or their Affiliates. The Partners agree
to comply with the provisions of Article VIII of the Parent Agreement with
respect to such information as if each Partner were an Affiliate of a Parent
thereunder.
(2) Dissolution of the Partnership shall not relieve a Partner of any
continuing obligations under Section 8.2 of the Parent Agreement, except as
provided in Section 8.3 of the Parent Agreement and Section 11.2(j) of this
Agreement.
(3) The obligations of each Partner and its Affiliates with respect to
Intellectual Property of DBA are as set forth in Sections 1.7(a) and 11.2(i),
(j) and (k) of this Agreement, which obligations may be enforced by either DBA,
the Partnership or any other Partner or its Affiliates.
(4) Each Partner represents and warrants that it and its Affiliates
have the right to make or to permit the disclosures contemplated by this
Agreement.
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ARTICLE 2
THE PARTNERS
Section 2.1 Partners. Duke/UAE Sub, BFI Sub and AP Sub shall be
the Partners of the Partnership. AP Sub shall be a Special Partner of the
Partnership. The Partners shall devote such time and attention to the business
of the Partnership as may be reasonably necessary to the conduct of such
business for the greatest advantage of the Partnership.
Section 2.2 Rights and Powers of the Partners.
(1) Subject to the Act and the further provisions of this Agreement,
the consent of the Partners other than the Special Partner shall be required to
exercise control, management and discretion and take all action in connection
with the business of the Partnership, except to the extent that powers and
authority have been delegated to Appropriate Committees, officers and agents in
accordance with this Agreement. The Special Partner shall have no power or
authority to bind the Partnership unless specific power and authority is
delegated by an Appropriate Committee pursuant to this Agreement.
(1) The Partnership shall take all actions necessary to ensure that
it complies with all laws and regulations applicable to the operation of its
business, and to ensure that it fulfills all of its contractual obligations
material to the continued operation of its business, it
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being agreed, however, that the Partners shall have no obligation to supply
funds or resources to the Partnership for such purposes, except as provided in
this Agreement.
(2) Notwithstanding Section 2.2(a), no person, firm or corporation
dealing with the Partnership shall be required to inquire into the authority of
a Partner (other than the Special Partner) or Partnership officer to take any
action or make any decision hereunder. As between the Partnership and any
person, firm or corporation lending money or extending credit to the
Partnership, it shall be conclusively presumed that the proceeds of such
indebtedness are to be and will be used exclusively for purposes authorized
under this Agreement.
(3) None of the Partners nor the Partnership shall be entitled to
recover from any other Partner or its Affiliates special or consequential
damages, or damages for anticipated future profits, loss of business
opportunities or other similar speculative damages for breach of any covenant
or undertaking of such parties set forth in this Agreement, and shall only be
entitled to seek reimbursement for the actual out-of-pocket costs and expenses
incurred by the non-breaching party as a direct result of the conduct of the
breaching party.
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(4) Except as provided in Section 2.2(f), each Partner shall
indemnify the other Partners and their Affiliates and the officers, directors
and employees of the such other Partners and their Affiliates to the extent of
the percentage interest of the indemnifying Partner set forth on Appendix A
hereto, for any costs, judgments, claims, liabilities, damages, losses,
penalties or expenses suffered by an indemnitee that (x) pertain to the
activities conducted pursuant to, or incidental to a Partner's obligations
under, this Agreement, or in connection with the defense of any action based on
such activities, including reasonable attorneys' fees and expenses of
investigation (which fees and expenses shall be paid as incurred), and (y) do
not result from claims or actions by the Partnership or any Partner against
another Partner or its Affiliates under Section 2.2(g) or (i); provided,
however, that where the indemnifiable amounts arise out of the actions of an
employee of a Partner or its Affiliate, such indemnity shall apply for the
benefit of that Partner, its Affiliates and the officers, directors or
employees of that Partner or its Affiliates only if such employee (x) at the
time of such actions, was being furnished to the Partnership pursuant to a
General Services Contract approved by an Appropriate Committee pursuant to
Section 3.3(a) and acting within the scope of his duties thereunder, or (y) was
acting on behalf of the Partnership with the prior knowledge and authorization
of an officer of the Partnership pursuant to Section 3.3(a); provided further
that such indemnity shall not apply for the benefit of an indemnitee unless
such indemnitee shall, in respect of the matter that gave rise to the indemnity
claim, have acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the Partnership and with respect to any
criminal action or proceeding had no reasonable cause to believe such
indemnitee's conduct was unlawful. Employees of a Partner or its
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Affiliate who are not also employees of the Partnership shall act for or on
behalf of the Partnership only with the prior knowledge and authorization of an
officer of the Partnership.
(5) Paragraph (e) above shall not apply to matters that are the
subject of the indemnity provisions of Section 2.3. Paragraph (e) above also
shall not apply to activities that may be performed by Affiliates of BFI Sub in
connection with (i) the providing through contractual arrangements of solid
waste to a Project, (ii) the operating of, to the extent consistent with a
Project, any solid waste transfer station that may be established as part of or
for the benefit of the Project, and (iii) to the extent consistent with a
Project, the transportation and/or disposal through contractual arrangements of
ash, by-pass waste and other solid waste residue from the Project; and also
shall not apply to any other activities that may be performed by Affiliates of
any Partner through contractual arrangements with the Partnership except in
those instances where such activities are performed at cost, or otherwise at
substantially below the price that would be available from a third party in an
arm's length transaction on comparable terms and conditions, pursuant to
contracts that have been approved in advance by an Appropriate Committee.
(6) If the Partnership enters into an agreement, waiver, or
modification or amendment thereto with an Affiliate of a Partner, then the
terms and provisions of such agreement, waiver, modification or amendment shall
govern exclusively (except the predicate acts necessary for the Partnership to
assert any claim against an Affiliate of a Partner shall be governed
exclusively as provided in paragraph (h) below) all rights and
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obligations of the parties thereto and their respective Affiliates, including
any remedies at law or in equity which may be available to either party thereto
or its Affiliate pursuant to any statute, regulation or order of any court, or
in contract, in tort (including negligence) or otherwise, in connection with
the performance or failure of performance of the terms and provisions of such
agreement, waiver, modification or amendment.
(7) If a Partner (other than the Special Partner) (the "Claimant")
believes that the Partnership has a reasonable basis for a claim, whether or
not provided for in paragraph (g) above (the "Claim"), against any other
Partner (other than the Special Partner) or an Affiliate of such Partner, the
Claimant may, in the name and on behalf of the Partnership, assert and enforce
the Claim (subject to the provisions of Section 2.2(d)) including, without
limitation, the retention of attorneys and other consultants and advisors and
the institution and prosecution of litigation, without the approval of such
other Partner, provided the following conditions precedent are satisfied:
(1) The Claimant shall give such other Partner a written
notice (the "Notice") stating that the Claimant believes the Partnership has a
reasonable basis for the Claim, describing the Claim and relevant supporting
facts in reasonable detail and accompanied by an opinion of a law firm of
nationally recognized standing which does not provide general representation to
any Partner or any of its Affiliates on any regular basis, to the effect that
the Partnership has a reasonable legal and factual basis for the Claim. As to
the
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alleged factual basis for the Claim, such counsel may rely on affidavits of
persons having knowledge of facts relevant to the Claim.
(2) Thereafter, the Claimant shall, if requested by such
other Partner, negotiate in good faith with such other Partner or its
Affiliates in an effort to resolve their differences regarding the Claim. If
good faith negotiation does not resolve the Claim, then each such Partner
agrees to attempt to resolve the dispute giving rise to the Claim through a
mutually agreeable alternative dispute resolution technique before initiating
litigation. If such Partners are unable to agree on an alternative dispute
resolution technique within 45 days after either such Partner has requested the
use of alternative dispute resolution, or if, after completing an alternative
dispute resolution proceeding, either such Partner is unwilling to be bound by
the determination of such proceeding, then the Claimant may, within 60 days
after the expiration of such 45-day period or the completion of the alternative
dispute resolution proceeding, whichever is applicable, xxx on the Claim on
behalf of the Partnership; provided, however, that at any time after any such
Partner has requested the use of alternative dispute resolution and before the
initiation of litigation, such Partner that is not the Claimant may require
that the Claim be submitted to binding arbitration pursuant to Section 9.2 of
the Parent Agreement. Subject to the foregoing, all decisions on behalf of the
Partnership regarding the Claim shall be made by the unanimous vote of the
Management Committee representatives of the Claimant and no approval of the
Management Committee representatives of such other Partner shall be required;
provided, however, that all such decisions shall be made in good faith on the
basis of the expected benefit to the Partnership.
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(8) If an Affiliate of a Partner (other than the Special Partner)
proposes to assert any claim against the Partnership, such claim shall be
subject to the provisions of Section 9.1 of the Parent Agreement, if and to the
extent that to do so would then be permitted by applicable agreements and legal
requirements. All decisions on behalf of the Partnership regarding such claim
shall be made by the unanimous vote of the Management Committee representatives
of the unaffiliated Partner other than the Special Partner and no approval of
the Management Committee representatives of the affiliated Partner shall be
required; provided however, that all such decisions shall be made in good faith
on the basis of the expected benefit to the Partnership.
(9) The provisions of Sections 2.2(d), (e), (f), (g) and (i) shall
survive the dissolution and termination of the Partnership and shall apply to
all judgments, claims or penalties that arise at any time from acts or
omissions that occurred prior to the termination of the Partnership. The
provisions of Section 2.2(h) shall not apply to any Claim (as defined in that
Section) initiated after the termination of the Partnership or after all
Partners have become Affiliates of the same Parent pursuant to the "Buy-Sell"
procedure of the Parent Agreement; provided, however, that the party against
which the Claim is asserted may require that the Claim be submitted to binding
arbitration pursuant to Section 9.2 of the Parent Agreement.
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Section 2.3 Indemnification of Committee Members, Officers and
Employees. Each person who is or was a member of a committee established
pursuant to Section 3.1, an officer or employee of the Partnership, or a
director, officer or employee of a Partner, shall, in accordance with this
Section 2.3 but not if prohibited by law, be indemnified and held harmless by
the Partnership from and against any and all costs, judgments, liabilities,
damages, losses, penalties or expenses arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or
investigative, in which he may be involved, as a party or otherwise, by reason
of his participation in the affairs of the Partnership or by his having been a
director, officer or employee of a Partner while such Partner was acting with
respect to the Partnership's affairs, whether or not he continues to be such at
the time any such liabilities or expenses are paid or incurred. No person
shall be entitled to indemnification hereunder if the claim or liability in
question arises from (i) such person not acting in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Partnership, (ii) the gross negligence or willful malfeasance of such person,
(iii) with respect to any criminal action or proceeding, acts or omissions by
such person when he had reasonable cause to believe his conduct was unlawful,
(iv) the breach of this Agreement by a Partner, or (v) a matter unrelated to a
Partner's or such person's management of or participation in the Partnership's
affairs. The rights of indemnification provided in this Section 2.3 shall be
in addition to any rights to which any person may otherwise be entitled by
contract or as a matter of law and shall extend to his heirs, assigns and legal
representatives. Notwithstanding the foregoing, payments shall be made
pursuant to this Section 2.3 only to the extent that the indemnified person has
not been made whole by the proceeds of insurance maintained by the
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Partnership or a Project Company, or pursuant to an indemnity from a Project
Company. If after such payments have been made, the indemnified person
receives or becomes entitled to receive amounts in respect of the same matter
from an insurer or an indemnity from a Project Company, such person shall
promptly pay such amounts, or assign such entitlement, to the Partnership to
the extent necessary to reimburse the Partnership.
Section 2.4 Other Liabilities; Non-Competition.
(1) No Partner shall engage in any business or assume any liability
other than those provided for in or incidental to its obligations under this
Agreement, the Project Agreements or through the Partnership.
(2) The Partners recognize and agree that until the dissolution of
the Partnership, the Partners (other than the Special Partner) intend that the
Partnership and the Project Companies shall constitute the exclusive means for
each such Partner to Implement a Project. For this reason, the Partners hereby
agree that: (i) until after the dissolution of the Partnership, except as
provided in this Section 2.4(b) or in Section 2.4(c), no Affiliate of a Partner
(other than the Special Partner) shall have any Competing Interest in any
Project; (ii) should the appropriate committee representatives of a Partner
(other than the Special Partner) vote not to have the Partnership or a Project
Company Implement any Project (a "Declined Project"), the Affiliates of such
Partner may not pursue the Implementation of such Project independent of the
Partnership prior to the dissolution of the Partnership; provided that
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the Affiliates of the Partner voting to pursue the Implementation of such
Project may do so, so long as such Implementation does not materially and
adversely affect the Partnership, and in such event the Partnership will make
its personnel and other resources available, on commercially reasonable terms,
to assist the other Partner's Affiliates in such Implementation; and (iii) if
the Appropriate Committee representatives of all the Partners (other than the
Special Partner) vote not to pursue the Implementation of a particular Project,
the Affiliates of any Partner may become involved in such Project in another
capacity, e.g., BFI as a waste hauler and disposer to a site or Duke Capital as
a marketer of power or UAE as an operator. For the purposes of this Agreement,
"Competing Interest" shall mean providing any equity investment in, providing
financing to, or entering into a service contract having a term of more than
one year with, a Project that is not owned, in whole or in part, by a Project
Company.
(3) Notwithstanding any other provisions of this Agreement, (i) any
Affiliate of Duke/UAE may enter a contract having a term of more than one year
to provide (A) power marketing services (including the arranging for the
purchase, sale, transmission, marketing and trading of electrical energy and
capacity, whether by, on behalf of or for itself, its Affiliates or others),
(B) engineering services, or (C) other services, in each case to any operating
Project that is not owned, in whole or in part, by a Project Company
("Unaffiliated Project"), and (ii) any Affiliate of BFI may enter into a
contract having a term of more than one year to provide ash disposal, Municipal
Solid Waste or other services to any Unaffiliated Project; provided that
Duke/UAE or BFI, as the case may be, shall give written notice to the
Partnership within a reasonable time after any such Affiliate has determined to
negotiate or
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initiate negotiations for such a contract setting forth the name of such
Unaffiliated Project and the probable terms of such contract; and (iii)
Duke/UAE or BFI, as the case may be, and such Affiliate shall discuss such
contract in good faith with the Partnership, taking into account whether the
Unaffiliated Project is a reasonable acquisition opportunity for the
Partnership, the probability of similar terms from other service providers, and
such other factors as Duke/UAE or BFI and the Affiliate consider relevant. If
at any time after commencing such discussion Duke/UAE or BFI, as the case may
be, and its Affiliate determine that it is in the best interest of such
Affiliate to enter into such a contract, such Affiliate may do so. If the
Unaffiliated Project, in the reasonable judgment of the Chief Executive Officer
of the Partnership, is a competitor of the Partnership, the Affiliate of
Duke/UAE or BFI shall offer to the Partnership the same services, on the same
terms and conditions, proposed for the Unaffiliated Project, and the
Partnership shall have 90 days after delivery of notice of the proposed
services to the Partnership to accept such offer. If the proposed terms and
conditions of the services offered the Unaffiliated Projected are amended in
any material respect, Duke/UAE or BFI shall give notice to the Partnership
which shall have an additional ten days to consider whether to accept the
services, as amended.
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ARTICLE 3
MANAGEMENT
Section 3.1 Committees.
(1) The Partners will manage and coordinate the business and affairs
of the Partnership through a management committee (the "Management Committee")
and other committees described or provided for in this Article III.
(2) The Management Committee will consist of seven persons, three
appointed by each of Duke/UAE Sub and BFI Sub, each such person to have one
vote; the remaining member shall be the Chairman and Chief Executive Officer of
the Partnership but shall not have a vote. The voting members shall be persons
who are not officers or employees of the Partnership. Each voting member shall
serve until the Partner appointing him shall change its appointment, which it
may do at any time by written notice to the other Partner. The Management
Committee shall have control over the management of the business of the
Partnership, and shall be authorized to procure management services and engage
persons to provide other services in connection with the activities of the
Partnership. A unanimous vote of those votes cast at a meeting of the
Management Committee (a quorum, as defined in Section 3.1(c), being present)
will be required for Management Committee action, except as provided in Section
2.2(h), 2.2(i), 7.4(b) or 12.8.
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(3) The quorum for each meeting of the Management Committee shall be
two members including at least one member appointed by each of Duke/UAE Sub and
BFI Sub except that the presence of a person appointed by a Partner shall not
be required to authorize the taking of action against that Partner or its
Affiliates as provided in Section 2.2(h), 2.2(i), 7.4(b) or 12.8.
(4) The Management Committee shall annually elect officers of the
Partnership, consisting initially of a Chairman and Chief Executive Officer, a
President, one or more Vice Presidents, a Chief Financial Officer, a Chief
Legal Officer, a Secretary and such other officers as the Management Committee
shall from time to time deem appropriate. Any Partnership officer may be
removed by the Management Committee at any time with or without cause upon
delivery to such officer of a written notice of such removal. Any replacement
shall be elected by the Management Committee.
(5) The Partnership shall also have an Executive Committee consisting
of the Chairman and Chief Executive Officer and three other members of the
Management Committee appointed by the Management Committee, including an equal
number of representatives of each of Duke/UAE Sub and BFI Sub. The Chairman of
the Executive Committee shall be designated by the Management Committee and
may, but need not, be the Chairman and Chief Executive Officer. All members of
the Executive Committee shall have one vote, and a unanimous vote of all
members will be required for Executive Committee action. The Executive
Committee shall have and may exercise all of the powers and authority
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of the Management Committee in the management of the business and affairs of
the Partnership, but neither the Executive Committee nor any other committee
appointed by the Management Committee shall have such powers or authority in
reference to the following matters: (i) election or removal of Partnership
officers; (ii) determination of the compensation of officers of the
Partnership; (iii) approval or modification of the annual budget to be prepared
pursuant to Section 8.2(d); (iv) any assignment, amendment or termination of
the DBA License or the grant, amendment or termination of any sublicenses under
the DBA License; (v) pursuit or settlement of Claims against a Partner or its
Affiliates; (vi) the requirement of additional contributions pursuant to
Section 4.2, the return of contributions pursuant to Section 4.3, the making of
distributions pursuant to Article VII, or the matters that Article VIII states
are to be determined or approved by the Management Committee; or (vii) the
waiver of any conditions precedent required for a notice to proceed or similar
notice to be issued with respect to any Project. Matters on which the members
of the Executive Committee do not concur will be referred to the Management
Committee.
(6) The Partnership shall also have a Compensation Committee
consisting of three members of the Management Committee appointed by the
Management Committee, including at least one representative of each of Duke/UAE
Sub and BFI Sub, and none of whom shall be officers or employees of the
Partnership. The Compensation Committee shall have the exclusive power and
authority on behalf of the Partnership to determine the compensation of
officers of the Partnership and shall review at least annually (i) compensation
policies for all employees of the Partnership and Project Companies, (ii)
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reports prepared by or for the Partnership regarding the fringe benefit plans
provided by the Partnership and (iii) the funding levels of funded plans
maintained by the Partnership, and shall have such other powers and authority
as the Management Committee shall determine (subject to the limitations of
Section 3.1(e)). The quorum for each meeting of the Compensation Committee
shall be two members, including at least one representative of each Partner. A
majority of the votes cast at a meeting of the Compensation Committee, a quorum
being present, will be required for action by the Compensation Committee.
(7) The Partnership may also have such other committees as the
Management Committee may from time to time appoint, and which shall have such
powers and authority of the Management Committee as the Management Committee
shall determine (subject to the limitations of Section 3.1(e)). Each such
committee need not have an equal number of representatives of each of Duke/UAE
Sub and BFI Sub, and the members need not be members of the Management
Committee.
(8) It shall be policy of each committee to make decisions on the
basis of the benefit to the business of the Partnership rather than the
partisan interest of the respective Partners or their Affiliates. Any action
taken by a committee in accordance with this Agreement shall be binding on the
Partnership and the Partners and no further consent of the Partners shall be
required to authorize any such action.
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(9) Any committee shall meet in person or by telephone conference,
provided, in the case of a telephone conference, all participating members can
hear all other participating members and any action taken at a telephone
conference is promptly confirmed in writing. Such participation by telephone
shall constitute presence in person at the meeting. Minutes of the meetings of
each committee shall be taken, recorded and circulated to the members of the
committee and to the Legal Departments of Duke/UAE and BFI.
(10) Any action required or permitted to be taken at any meeting of a
committee may be taken without a meeting if all members of the committee
consent thereto in writing and the writing or writings are filed with the
minutes of the proceedings and meetings of the committee.
(11) Regular meetings of any committee shall be held at such times and
places as may be fixed by the committee, and may be held without further
notice. Special meetings may be called by any member. Notice of the time and
place of a special meeting shall be effective (i) if delivered to each member
by hand, telecopy, or telephone at least 24 hours prior to the time of the
special meeting, or (ii) if placed in the United States mail addressed to each
member with proper first-class postage prepaid, at least seven days prior to
the date of the special meeting. Actual receipt of notice by members shall not
be required and notice shall be deemed received if sent to a member at the
address or the telecopy number designated by the member for such notices or
communicated to the member or to a responsible
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person at the telephone number designated by the member for such notices.
Notices of special meetings shall identify the purpose of the meetings.
(12) Whenever notice is required to be given of a committee meeting, a
written waiver of notice, signed by the member entitled to notice, whether
before or after the meeting, shall be deemed equivalent to notice. A member's
attendance at a meeting shall constitute a waiver of notice of that meeting,
except when the member attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
(13) At least monthly, the Chairman of the Management Committee shall
report to members of the Management Committee any significant contracts or
arrangements that have been entered into between the Partnership or any Project
Company and a Parent or its Affiliate and have not been previously reviewed by
the Management Committee.
(14) At least quarterly, the Management Committee shall determine
which Projects are then deemed to be Development Projects.
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Section 3.2 Officers.
(1) The Chairman shall be the Chief Executive Officer of the
Partnership. Subject to this Agreement and the direction of the Management
Committee, he shall have primary responsibility for the overall business and
affairs of the Partnership including, without limitation, strategic planning,
general management and control of the activities contemplated by this Agreement
and the Project Agreements and for the communication of information to the
Appropriate Committees. In addition, he shall have such other duties as are
incidental to his office. He shall perform such other duties as may from time
to time be assigned to him, and shall have such other powers as may be
prescribed from time to time, by the Management Committee.
(2) The President shall perform such duties as may from time to time
be assigned to him by the Chairman or an Appropriate Committee and shall have
such other powers as may be prescribed from time to time by an Appropriate
Committee.
(1) The Secretary shall record all the proceedings of the meetings of
the committees in a book or books kept for that purpose; be custodian of the
records of the Partnership; and, in general, perform all duties incident to the
office of Secretary and have such other duties as may from time to time be
assigned to him by the Chairman or an Appropriate Committee and have such other
powers as may be prescribed from time to time by an Appropriate Committee.
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(2) Vice Presidents and any other officers of the Partnership
designated by the Management Committee shall perform such duties as from time
to time shall be assigned by the Chairman or an Appropriate Committee and have
such powers as may be prescribed from time to time by an Appropriate Committee.
(3) No officer or employee of the Partnership shall be authorized to
enter into or incur any material obligation or commitment on behalf of the
Partnership except pursuant to the limits of authority policy adopted by an
Appropriate Committee, as such policy may be amended from time to time.
(4) Officers of the Partnership shall report to such other officers
as determined from time to time by the Chairman.
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Section 3.3 Employees. Except for the officers elected by the
Management Committee, the Partnership shall have such employees as the Chairman
or his delegates shall from time to time deem appropriate, and the Chairman or
his delegates shall have authority to recruit, hire and discharge such
employees consistent with approved budgets. The Partners intend that the
Partnership will eventually be staffed wholly or primarily by its own
employees, but they recognize that during the early stages of the Partnership
it will be appropriate for the Partnership, to the extent practical, to avail
itself of the experience and incremental services available from the management
and staff support personnel of the Affiliates of the Partners. These persons
will be made available to the Partnership pursuant to a General Services
Contract. A form of this Contract has been approved by the Partners, and may
be modified only with the approval of each Partner (other than the Special
Partner) and an Appropriate Committee.
Section 3.4 Project Implementation.
(1) Recognizing that the Special Partner will not have any obligation
to contribute further capital to the Partnership, the Special Partner shall not
participate in any Project selected or Project Company formed after the date of
this Agreement. If a particular opportunity for such a Project shall be
selected for development by the Partnership, the Partners (other than the
Special Partner) shall, and shall cause their Affiliates to, negotiate in good
faith to develop such plans and agreements as are necessary to organize a
mutually acceptable form of Project Company for the ownership, Implementation
and Operation of that
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Project. Such agreement shall provide, among other things, for the Affiliate
of each Partner forming the Project Company to be represented ratably according
to its respective interests in the Project on the governing body of the Project
Company. The governing body or a committee thereof shall vote on all
substantial commitments. The normal day- to-day business of the Project
Company shall be managed by the officers elected by such governing body.
Affiliates of Duke/UAE Sub and BFI Sub will provide services to the Project
Company in accordance with Section 3.3 of this Agreement and Article VI of the
Parent Agreement.
(2) The Partners (other than the Special Partner) intend that the
Affiliates of a Partner other than the Special Partner shall have access to the
Intellectual Property, basic engineering services, and the required Proprietary
Equipment if an Affiliate of that Partner elects to pursue independently a
Project that the appropriate committee representatives of the other Partner
have caused the Partnership not to pursue. To effectuate such intent, if such
Partner's Affiliate desires to Implement such a Project the Partnership will
either provide what that Affiliate requires for such Project under the DBA
License, or will consent to DBA providing what that Affiliate requires for such
Project under the DBA License, and, if necessary, a Project specific license
directly to that Affiliate or the Project for purposes of Implementation of the
Project. The Partnership will also use its reasonable business efforts, if
requested by that Affiliate, to cause DBA to enter into the contractual
arrangements required for that particular Project to provide such items. As
used in the context of this Section 3.4(b), reasonable business efforts of the
Partnership shall mean efforts no less substantial than the Partnership would
have expended in the context of a Project in which both
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Duke/UAE Sub and BFI Sub or their Affiliates would participate. That Affiliate
shall reimburse the Partnership for its costs (including allocable salary and
overhead, plus expenses) incurred pursuant to this Section 3.4(b). If the
Partnership is not successful in such efforts, that Affiliate will be free to
negotiate an engineering, licensing and other arrangements directly with DBA on
terms acceptable to DBA. To the extent DBA agrees to indemnify the Project
Company under the DBA License for a particular Project or a subsequent
agreement relating to a particular Project, the Project Company shall indemnify
the Partnership in the Implementation of the Project and the Partners and their
Affiliates.
ARTICLE I
CAPITAL CONTRIBUTIONS
Section 3.5 Mandatory Contributions. The Partners shall be
required to contribute additional capital in proportion to their respective
ownership interests to the Partnership to enable the Partnership to meet its
obligations under any commitments properly authorized by an Appropriate
Committee which shall be entered into or undertaken in connection with
qualifying for a Proposal, preparing Proposals, evaluating and selecting the
Proposals to be negotiated and during such negotiations; provided, however,
that in no event shall the Special Partner be obligated to make contributions
of capital unless it consents to do so expressly and in writing. If both
Duke/UAE Sub and BFI Sub so agree, capital may be furnished in equal shares by
Duke/UAE Sub and BFI Sub (or their Parents or other Affiliates) in the form of
debt.
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Section 3.6 Additional Contributions. If the Management
Committee determines that the Partnership requires funds in excess of those
otherwise available to it, the Partners shall contribute additional capital in
proportion to their respective ownership interests; provided, however, that in
no event shall the Special Partner be obligated to make contributions of
capital unless it consents to do so expressly and in writing. If both Duke/UAE
Sub and BFI Sub so agree, capital may be furnished in equal shares by Duke/UAE
Sub and BFI Sub (or their Parents or other Affiliates) in the form of debt.
Section 3.7 Return of Capital Contributions. No Partner shall be
entitled to the return of its capital contribution except by way of
distribution of assets upon dissolution and liquidation of the Partnership
pursuant to the provisions of this Agreement or except as determined by the
Management Committee.
Section 3.8 Interest on Capital Contributions. No interest shall
be paid by the Partnership on or with respect to the capital contributions of
the Partners, except in respect of debt contemplated by Section 4.1 or as
expressly provided in Section 7.4 with respect to Partnership loans.
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ARTICLE II
COMPENSATION OF PARTNERS AND AFFILIATES
Section 3.9 Management Fee. No Partner shall receive any
management or other fee or salary for services rendered to the Partnership, or
reimbursement of any costs and expenses incurred in connection therewith except
as provided in Section 5.2.
Section 3.10 Reimbursement of Expenses; Service Contracts. Each
Partner (other than the Special Partner) shall be entitled to current
reimbursement out of Partnership assets for all reasonable costs and expenses
incurred by it when acting for or on behalf of the Partnership and in
accordance with the terms of this Agreement or the Project Agreements
specifically including, but not limited to, all salaries and related expenses
of employees of a Partner in performing authorized services for the Partnership
and all fees of third parties engaged as provided in this Agreement in
activities for or on behalf of the Partnership. Compensation and reimbursement
of expenses for services of employees of Affiliates shall be governed by the
applicable General Services Contract and must be authorized or approved by an
Appropriate Committee or by standing authorizations to appropriate officers.
The Special Partner and its Affiliates shall be entitled to reimbursement of
costs and expenses if and to the extent provided in any other agreement between
the Special Partner or its Affiliates and the Partnership.
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ARTICLE III
PROFITS AND LOSSES
Section 3.11 Allocations. Except to the extent the Partners agree
otherwise, all items of income, gain, loss, deduction and credit of the
Partnership shall be allocated among the Partners in accordance with the
percentages set forth on Appendix A hereto; provided, however, that the Special
Partner shall not receive any allocation of items of income, gain, loss,
deduction, or credit that are solely attributable to the Implementation of a
Project under Section 3.4(a) that is selected after the date of this Agreement,
and any such items shall be allocated equally between the BFI Sub and the
Duke/UAE Sub.
Section 3.12 Capital Accounts. A separate capital account shall
be maintained for each Partner. Each Partner's capital account shall consist
of the initial capital contribution, increased by additional capital
contributions and each Partner's share of Partnership profits, and decreased by
distributions and withdrawals and each Partner's share of Partnership losses.
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ARTICLE IV
DISTRIBUTIONS AND LOANS
Section 3.13 Distribution Ratio. To the extent that special
allocations are made to the BFI Sub and the Duke/UAE Sub pursuant to Section
6.1, distributions of cash and other Partnership assets attributable to such
items shall be made equally to BFI Sub and Duke/UAE Sub in priority to any
other distributions to the Partners. Following any such distributions, unless
otherwise provided herein, all cash and other Partnership assets to be
distributed under this Article VII or under Article XI shall be distributed to
the Partners in accordance with the percentages set forth on Schedule A
attached hereto.
Section 3.14 Time of Distributions. Subject to the provisions of
Section 7.4, the Partnership may make distributions from time to time as
approved by the Management Committee, and such distributions shall be made in
accordance with Section 7.1.
Section 3.15 Undistributed Assets. Except for interest on loans
pursuant to Sections 4.1, 4.2 or 7.4, no Partner shall be entitled to receive
any interest on undistributed cash or other property, nor shall any such cash
or property not withdrawn be deemed an increase in such Partner's share of the
capital of the Partnership, without the express written consent of both
Duke/UAE Sub and BFI Sub.
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Section 3.16 Partnership Loans.
(1) If any Partner, with the prior written consent of the other
Partners (other than the Special Partner), advances any funds or makes any
other payment to or on behalf of the Partnership not required pursuant to the
provisions hereof, such advance shall be deemed a loan to the Partnership by
such Partner, bearing interest from the date of such advance or payment was
made until such loan is repaid. The rate of interest payable on such loan
shall be equal to the lesser of (i) the greater of (x) the published base
lending rate from time to time in effect at Citibank N.A. for prime borrowers,
adjustable quarterly or (y) the applicable federal rate (within the meaning of
Section 1274(d) or successor provision) of the Code, or (ii) the maximum rate
of interest allowed by applicable law (the "Interest Rate"). All distributions
shall first be made to the Partner or Partners making such loans until all such
loans have been repaid to such Partners, together with interest accrued thereon
as above provided (with payments allocated first to accrued interest and then
to principal). If more than one Partner shall have made such loans,
distributions shall be made to such Partners pro rata in proportion to the
respective amounts owed them by the Partnership.
(1) For purposes of this Section 7.4, a Partner (the
"Noncontributing Partner") shall be deemed to have given its prior written
consent to an advance or payment by any other Partner (the "Contributing
Partner") if (i) the Contributing Partner reasonably determines that an advance
or payment of funds to the Partnership would be necessary or beneficial to the
Partnership business; (ii) the Contributing Partner notifies the
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Noncontributing Partner to such effect citing this Section 7.4; and (iii) the
Noncontributing Partner does not, within five business days after receipt of
such notice, notify the Contributing Partner of its objection to the making of
an advance and the reason therefor.
(2) Each Partner other than the Special Partner may, from time to
time, on a demand basis, borrow up to one-half of the Partnership's cash
balance at the close of business on any day, subject to other agreements of the
Partner or the Partnership restricting such right, provided that (i) the
borrowing shall be repayable on demand and shall bear interest, payable
quarterly, at the Interest Rate, (ii) the Parent of the borrowing Partner
shall, pursuant to Article V of the Parent Agreement, unconditionally guarantee
the full and timely repayment of such borrowing, and (iii) at all times when
there shall be any such outstanding borrowing, the borrowing Partner or its
Parent shall have either (a) outstanding commercial paper or short-term
promissory notes that have been given the following short-term ratings (or
their equivalent if such ratings are no longer applicable) by at least two of
the following three rating agencies: rating F1 of Fitch Investors Service,
Inc., rating A1 of Xxxxx'x Investors Service and rating P1 of Standard & Poor's
Corporation, or (b) outstanding long-term debt rated at least A- or the
equivalent by at least two of such rating agencies, or, (c) if such paper,
notes or debt is not outstanding, the borrowing Partner shall furnish
collateral reasonably satisfactory to the other Partner. Such borrowings shall
be evidenced by appropriate entries on the books of the Partnership, and, if
requested by the other Partner, by promissory notes. Except to the extent the
Partners agree otherwise, the Partnership shall not make any distributions to
the borrowing Partner until all borrowings have been repaid by such Partner,
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together with interest accrued thereon as above provided (with payments
allocated first to accrued interest and then to principal).
ARTICLE V
ACCOUNTING AND REPORTS
Section 3.17 Books and Records. The Partnership shall maintain
complete and accurate books and records reflecting the nature and extent of the
assets, liabilities and contractual commitments of the Partnership and all
receipts and disbursements of the Partnership. In addition, the Partnership
shall maintain all other records necessary for documenting and recording the
operations and affairs of the Partnership. The Partnership shall keep its
books of account on an accrual basis, and its fiscal year shall end on
September 30. The books of the Partnership shall be kept at the principal
place of business of the Partnership or at such other place as the Management
Committee shall determine. Each Partner or its duly authorized representative
may, at its own expense, inspect the books of the Partnership at any time
during ordinary business hours.
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Section 3.18 Financial Statements and Reports.
(1) Not later than 45 days after the end of each fiscal year, the
Partnership shall prepare, or cause to be prepared, and shall furnish to each
Partner, (i) financial statements for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles consistently applied
throughout the period indicated, except for such changes in such principles
with which the independent public accountants referred to below have concurred,
and (ii) sufficient and timely tax information. If either Partner so requests,
such financial statements shall be audited by a firm of independent certified
public accountants selected by the Partners. All costs of preparation and
distribution of such reports and the costs of the audit shall be borne by the
Partnership.
(1) Promptly after becoming available and in any event within 20
days after the end of each fiscal quarterly period, the Partnership shall
prepare, or cause to be prepared, and shall furnish to each Partner, (i)
financial statements of the Partnership for the quarterly period then ended and
for the period from the beginning of the fiscal year to the end of such
quarterly period, prepared in accordance with generally accepted accounting
principles consistently applied throughout the period indicated except to the
extent stated therein, subject to normal changes resulting from year-end
adjustments, and (ii) tax information sufficient to enable the Partners to
prepare their quarterly estimated income tax statements.
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(2) Promptly after becoming available and in any event within 15
days after the end of each calendar month, the Partnership shall prepare, or
cause to be prepared, and shall furnish to each Partner, financial statements
of the Partnership for the month then ended and for the period from the
beginning of the fiscal year to the end of such month, prepared in accordance
with generally accepted accounting principles consistently applied throughout
the period indicated except to the extent stated therein, subject to normal
changes resulting from year-end adjustments.
(3) Not later than July 1 of each year, the Chief Financial
Officer of the Partnership shall cause to be prepared and shall submit to the
Management Committee a preliminary budget of the Partnership and preliminary
Project budgets for the next fiscal year, setting forth in reasonable detail
the proposed activities, expenditures, sources of funds and other relevant
supporting information for that year, as well as the amount of the
distributions made and proposed to be made for the current fiscal year. The
Management Committee shall consider the preliminary budgets. If the Management
Committee objects to any preliminary budget, it shall request the submission of
an alternate proposed budget. If the Management Committee is unable to adopt a
budget, the Partnership shall continue to make expenditures, other than capital
expenditures, in order to continue, in the ordinary and usual course of
business, the operations otherwise to be covered by that budget.
(4) The Chief Financial Officer of the Partnership shall cause to
be prepared and shall submit to the Management Committee three financial
updates for anticipated
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needs and results during each fiscal year. Such financial updates shall
compare the then current forecast with the budgets and previous forecasts for
such fiscal year. The Partnership will obtain authorization from the
Management Committee to commit funds through the approval of the budgets, and
such approval shall be amended through the authorization of each forecast.
(5) The Partnership shall also furnish all such other financial
and tax information as a Partner shall from time to time reasonably request.
(6) For financial reporting (to the extent not inconsistent with
GAAP) and federal income tax reporting purposes, the Partnership and the
Partners will treat the Base Interest as part of a partnership interest
retained by AP Sub and not purchased by Duke/UAE Sub or any other person,
unless the Base Interest is in fact purchased by Duke/UAE Sub or by a third
party, in which case this provision shall no longer apply. In the event that
the Partnership's accountants determine in good faith that GAAP does not permit
reporting consistent with the foregoing provision, the Partnership's
accountants shall notify AP Sub at least thirty (30) days before the
Partnership issues a financial statement reflecting an inconsistent position,
and during such 30-day period, shall consult with AP Sub's accountants to
determine if consistent reporting can be achieved. If, after such
consultation, the Partnership's accountants conclude in good faith that GAAP
will not permit reporting consistent with the foregoing, the Partnership shall
not be required to report consistently for financial reporting purposes.
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Section 3.19 Tax Returns and Elections. The Partners designate
BFI Sub as the Tax Matters Partner, as that term is defined in Section
6231(a)(7) of the Code, and such Partner shall supervise the preparation and
filing of all tax and information returns which the Partnership may be required
to file and shall, on behalf of the Partnership, make such tax elections and
determinations as are necessary, appropriate or desirable, subject to the
written approval of Duke/UAE Sub. The Tax Matters Partner shall use its
reasonable efforts to deliver copies of all tax and information returns to
Duke/UAE Sub and the Management Committee not less than 60 days prior to the
filing of all such returns. If Duke/UAE Sub gives notice that it objects to a
return (or portion or item thereof), such Partners shall reach a mutually
satisfactory return position prior to filing. If they cannot agree, the matter
shall be resolved by the Management Committee.
Section 3.20 Committee Approval. All financial statements,
budgets, forecasts and other Partnership documents contemplated by this Article
VIII shall require the approval of the Management Committee.
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ARTICLE 4
PARTNERSHIP PROPERTY
Section 4.1 Partnership Property. The capital contributions of
the Partners shall become Partnership property, and all assets acquired with
Partnership funds, including without limitation the Project Agreements and the
Projects, the proceeds of sale of such assets, or the proceeds of Partnership
indebtedness shall be so reported in the accounts of the Partnership.
Section 4.2 Method of Holding Property. Property of the
Partnership may be acquired, held and conveyed in the name of the Partnership
or in the name of a Partner as nominee for the Partnership or in the name of
any other entity as agent or nominee for the Partnership or as security for any
loan made to the Partnership by such entity, but shall be recorded as
Partnership property in the accounts of the Partnership.
Section 4.3 Bank Accounts. The Partnership shall establish and
maintain such accounts in such financial institutions (including federal or
state banks, trust companies, or savings and loan institutions) and in such
amounts as an Appropriate Committee may deem necessary from time to time.
Checks may be drawn on, and withdrawals of funds shall be made from, any such
accounts for Partnership purposes and shall be signed or requested by the
Partners or by any of their or the Partnership's duly authorized personnel.
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Section 4.4 Commingling Partnership Property. Notwithstanding
anything to the contrary contained herein, property of the Partnership shall
not be commingled with the property of the Partners, and property of Project
Companies shall not be commingled with the property of the Partnership.
ARTICLE 5
DISPOSITION OF PARTNERSHIP INTEREST
Section 5.1 Restrictions. No interest in the Partnership or in
shares of capital stock or equity interest of a Partner may, directly or
indirectly, be sold, assigned, pledged, hypothecated, encumbered, transferred
or disposed of, except to the extent, if any, expressly permitted by the Parent
Agreement or the Base Interest Option Agreement.
ARTICLE 6
DISSOLUTION AND LIQUIDATION
Section 6.1 Causes of Dissolution. The Partnership shall be
dissolved upon the first of the following to occur (provided, the Partnership
shall not terminate until the winding up of affairs is complete):
(1) the expiration of the term provided in Section 1.6 hereof,
unless the Partners agree in writing to extend the term of the Partnership
beyond such term;
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(2) the agreement of all of the Partners to dissolve and terminate
the Partnership;
(3) the sale, abandonment or other disposition of all or
substantially all of the assets of the Partnership;
(4) the commission of a Terminating Act (as defined in Section
2.2(b) of the Parent Agreement) by a Partner, or by one of its Affiliates that
is a Project Subsidiary, and the giving by another Partner of written notice of
dissolution on or before the ninetieth day after such Terminating Act has been
committed; or
(5) except as otherwise provided herein, the occurrence of any
other event which under the Act mandates dissolution of the Partnership and is
not waivable by agreement of the Partners.
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Section 6.2 Termination of the Partnership.
(1) Upon the occurrence of any event which causes the dissolution
of the Partnership as set forth in Section 11.1, the Partners other than the
Special Partner shall unanimously elect a liquidating trustee (the "Liquidating
Trustee") and shall proceed to wind up and terminate the Partnership affairs
with full power and authority to do all acts necessary and in accordance with
the terms hereof. If such Partners are unable to elect a Liquidating Trustee,
each such Partner shall elect one liquidating trustee, who shall together
appoint one additional liquidating trustee. The three liquidating trustees
shall together act as Liquidating Trustee for the purposes of this Section
11.2.
(1) Upon dissolution of the Partnership, a proper accounting shall
be made of the Partnership's assets and liabilities and obligations from the
date of the last previous accounting to the date of such dissolution, and the
Partnership's business and affairs shall be liquidated in an orderly manner and
such sales of properties of the Partnership as may be required for such
purposes shall be made by the Liquidating Trustee including, without
limitation, the sale of any property which may not be susceptible to division
upon distribution to the Partners. Notwithstanding the foregoing, if the
Liquidating Trustee shall determine that an immediate sale of part or all of
the Partnership's assets could cause undue loss to the Partners, the
Liquidating Trustee may, upon notice to the Partners, either defer liquidation
(to the extent permitted by law) or withhold from distribution for a reasonable
time, any assets of the Partnership or distribute assets in kind to the
Partners. Pursuant to the liquidation of the
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Partnership, payments shall be made of all expenses of liquidation (including,
without limitation, any legal and accounting expenses incurred in connection
therewith) and all debts of the Partnership first to third party creditors and
then to Partners, or adequate provision shall be made for the payment thereof.
The remaining assets and properties of the Partnership shall be distributed to
the Partners, in cash or in kind, to the Partners in proportion to and to the
extent of their respective capital accounts.
(2) For this purpose, if any Partnership asset is to be
distributed in kind to a Partner, the Partnership books and the capital
accounts of the Partners shall be adjusted prior to the time of distribution to
reflect the fair market value of such asset and the gain or loss that would
result from the sale of such asset by the Partnership at such value, and upon
such distribution in kind the capital account of each Partner shall be reduced
by the fair market value of any asset distributed to it. Whenever a valuation
of the assets and properties of the Partnership shall be required to be made
for this purpose, such valuation shall be made by the Liquidating Trustee
utilizing such reasonable methods of valuation as the Liquidating Trustee shall
select, which determination shall be binding on all parties.
(3) Any Partner who, at the time of any distribution, has any
borrowings from the Partnership outstanding pursuant to the provisions of
Section 7.4(c) hereof, shall be obligated to repay such borrowings to the
Partnership, together with interest thereon, prior to any distributions to it.
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(4) Until terminated by final distribution of all assets, the
Partnership, the Partners and the assets of the Partnership shall remain
subject to this Agreement.
(5) All distributions of Partnership property pursuant to the
terms of this Agreement shall be subject to such liens, encumbrances,
obligations, commitments, undertakings and/or restrictions as affect such
property at the date of such distribution.
(6) The Liquidating Trustee (or any officer, director,
shareholder, partner or employee thereof) shall be indemnified and held
harmless by the Partnership from and against all claims, demands, liabilities,
causes of action, costs and damages of any nature whatsoever arising out of or
incidental to the Liquidating Trustee (or any officer, director, shareholder,
partner or employee thereof) taking any action authorized under this Section
11.2; provided, however, that the Liquidating Trustee (or any officer,
director, shareholder, partner or employee thereof) shall not be entitled to
indemnification hereunder where the claim or issue arose out of (a) a matter
entirely unrelated to the Liquidating Trustee acting under the provisions
hereof; or (b) the negligence or willful misconduct of the Liquidating Trustee
(or any officer, director, shareholder, partner or employee thereof); or (c)
the breach by the Liquidating Trustee of its obligations under this Section
11.2.
(2) To the extent that any Proposal has been submitted prior to
the date of dissolution of the Partnership, the Partners and their Affiliates
shall in good faith endeavor to
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negotiate a definitive Project Agreement pursuant to which their Affiliates
will Implement and Operate the Project.
(7) Any dissolution of the Partnership pursuant to Section 11.1(d)
shall result in the Partners that are not the Partner who committed (or whose
Affiliate committed) the Terminating Act having the right to all Intellectual
Property (excluding Intellectual Property of DBA protected under the DBA
License) and the right to use the same, to the extent the right is not
restricted as a result of a prior agreement with a third party (including DBA)
or by the provisions of Section 1.8.
(8) The provisions of Section 11.2(i) relating to the continued
obligation of confidentiality of information provided for in Section 1.8 shall
not be construed to limit the Partner that is not the Terminating Party from
using such information for purposes that would have been consistent with the
business purpose of the Partnership, provided that adequate steps are taken to
avoid it being introduced into the public domain.
(9) The dissolution of the Partnership shall not terminate the
confidentiality obligations of the Partners set forth in Section 1.7(a) or
Section 1.8 of this Agreement.
Section 6.3 Rights Not Affected. Upon termination of the
Partnership pursuant to this Article XI, all of the rights and obligations of
the Partners under this
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Agreement shall terminate except as otherwise specifically provided herein;
provided, however, that subject to the limitations contained in Section 2.2(d),
nothing contained in this Article XI shall be construed as a limitation upon,
and no action or transaction in pursuance of this Article XI, shall be deemed a
satisfaction, waiver or discharge of, any rights, claims or causes of action of
either Partner against the other, whether for damages or other relief, arising
out of or by virtue of (i) breach of this Agreement, theretofore or thereafter
committed, by the other Partner or (ii) any event of default, theretofore or
thereafter arising, on the part of the other Partner, and except, in each case,
as and to the extent that such default or breach is taken into account in any
computation or adjustment made pursuant to this Article XI. It shall be a
condition of any disposition of the books and records of the Partnership under
this Article that, notwithstanding the termination of the Partnership, each
Partner shall have access thereto at any time upon reasonable notice for the
purpose of inspection and obtaining copies at its own expense.
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ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.1 Covenant as to Liens. Each Partner agrees that,
except (i) as provided in the Parent Agreement or the Base Interest Option
Agreement or (ii) with the prior written consent of each other Partner, other
than the Special Partner, it will not create, assume, incur, or suffer to be
created, assumed or incurred or to exist, any charge (which for the purposes of
this Section shall mean any mortgage, pledge, encumbrance, lien or charge of
any kind, including the charge upon property purchased under conditional sales
or other title retention agreements) upon its interest in the Partnership or
any portion of such interest, or acquire or hold or agree to acquire or hold
any such interest or portion thereof subject to any conditional sale agreement
or other title retention agreement.
Section 7.2 Liability. Nothing in this Agreement shall be deemed
to create any right in any third party and this Agreement shall not be
construed in any respect to be a contract in whole or in part for the benefit
of any third party, except as expressly provided herein.
Section 7.3 Claims and Litigation. The Partners and the
Partnership shall each notify the others of any claim, demand or right of
action asserted or any action, suit or proceeding threatened or instituted
against it which arises out of the conduct of business of the Partnership or
involves in whole or in material part the interpretation or performance of this
Agreement, the properties, rights or assets of the Partnership, or any material
portion thereof. Any negotiations or litigation with respect to any such
claim, demand, right of action, suit or proceeding shall be conducted by
whichever of the Partners or the Partnership
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the same may be asserted or brought against. Whichever of the Partners or the
Partnership may be conducting such negotiations or litigation shall keep the
others currently advised of the status thereof and any one or both of such
others shall be entitled to participate in such negotiations or litigation.
Section 7.4 Dispute Resolution. Any controversies or claims
among the Partners, or between a Partner and the Partnership, arising out of or
relating to this Agreement shall be resolved in the same manner as is set forth
in Article IX of the Parent Agreement.
Section 7.5 Waiver of Partition. Each Partner hereby irrevocably
waives during the term of the Partnership any right that such Partner may have
to maintain any action for partition with respect to any Partnership property.
Section 7.6 No Right of Withdrawal. No Partner shall have the
right to withdraw from the Partnership.
Section 7.7 Specific Performance. The Partners acknowledge that
the failure of any Partner to substantially perform its material obligations
and covenants under this Agreement may result in a significant frustration of
the respective business objectives of the Partners under this Agreement and
that the remedies at law may be inadequate to protect the rights and interests
of the other Partner. Accordingly, the Partners, in addition to the remedies
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provided in this Agreement and otherwise available under the law for the
enforcement of this Agreement and in view of Section 2.2(d), expressly consent
to an order for specific performance of such obligations and covenants of a
Partner or an order granting other substantially equivalent equitable remedies
calculated to require performance of any such obligations or covenants.
Section 7.8 Default in Payments. If a Partner shall default in
making any payment due from it to the Partnership pursuant to Section 4.1 or
4.2, (a) the Partnership may satisfy the defaulting Partner's indebtedness out
of its share of the net revenues of the Partnership; and (b) the Partnership
may exercise any other remedies available at law or in equity for the payment
of the sums owed. The Partnership may elect to charge the defaulting Partner
interest on any overdue payment at the Interest Rate, and may also elect to
charge such Partner for reasonable attorneys' fees, costs of investigation and
all other costs of collection. Actions to be taken by the Partnership pursuant
to this Section 12.8 may be authorized by the unanimous vote of the
representatives of the non-defaulting Partner on the Management Committee, and
no approval of the representatives of the defaulting Partner shall be required.
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Section 7.9 Notices.
(1) Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and shall be sufficient if personally delivered
or sent by air courier, or by certified or registered mail (return receipt
requested) properly stamped and addressed, or by telecopy, as follows:
(1) If to Duke/UAE Sub, addressed to Duke/UAE Ref-Fuel Management
LLC, 00 Xxxx Xxxxxxxxx, Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000, marked for the
attention of the Secretary with a copy sent to the same address marked for the
attention of the President (telecopy no. (000) 000-0000).
(2) If to BFI Sub, addressed to it, in the case of mail delivery,
c/o Xxxxxxxx-Xxxxxx Industries, Inc., X.X. Xxx 0000, Xxxxxxx, Xxxxx 00000, or
in the case of other delivery, c/o Xxxxxxxx-Xxxxxx Industries, Inc., 000 X.
Xxxxxxxx, Xxxxxxx, Xxxxx 00000, in either case marked for the attention of the
Secretary (telecopy no. (000) 000-0000).
(3) If to AP Sub, addressed to it c/o Air Products and Chemicals,
Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000-0000, marked for
the attention of the Corporate Secretary with a copy sent to the same address
marked for the attention of the President (telecopy no. (000) 000-0000).
(2) A Partner may change its address by giving written notice of
its new address to the other Partners.
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SECTION 7.10 CHOICE OF LAW. THIS AGREEMENT AND ALL RIGHTS AND
LIABILITIES OF THE PARTIES HERETO WITH REFERENCE TO THE PARTNERSHIP SHALL BE
SUBJECT TO AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
Section 7.11 Certificates. Each Partner agrees to execute,
acknowledge, record and file or deliver all such certificate, amendments,
instruments, questionnaires, documents or counterparts thereof as may be
required to comply with the laws of the State of Delaware or of any other
jurisdiction in which the Partnership does business.
Section 7.12 Binding Effect; Amendments. This Agreement shall be
binding upon and shall inure to the benefit of the Partners and their
respective legal representatives, successors and assigns, subject, however, to
the provisions and exceptions herein contained and provided. The written
agreement of the Partners (other than the Special Partner) is required for any
amendment to this Agreement; provided, however, that no such amendment shall
limit any right of the Special Partner nor increase any obligation or liability
of the Special Partner unless the Special Partner shall have consented in
writing thereto.
Section 7.13 Gender and Numbers. Whenever the context requires,
the gender of all words used herein shall include the masculine, feminine or
neuter, and the number of all words shall include the singular and plural.
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Section 7.14 Severability. If any provision of this Agreement, or
the application thereof, shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the maximum extent permissible under applicable
law. The Partners shall negotiate in good faith regarding amendments to this
Agreement that would, to the maximum extent permissible under applicable law,
effectuate the intent of any provision determined to be invalid or
unenforceable.
Section 7.15 Multiple Counterparts. This Agreement contains the
entire agreement between the Partners. This Agreement may be executed in
multiple counterparts, each of which shall be an original hereof for all
purposes, and shall be binding upon the Partner so signing, irrespective of
whether or not each Partner executed each such counterpart, but all of which
shall be and constitute one instrument.
Section 7.16 Headings, etc. Captions and headings contained in
this Agreement are for ease of reference only and do not constitute a part of
this Agreement.
Section 7.17 Representations and Warranties. Each Partner
represents and warrants, as of the date hereof (the "Execution Date"), as
follows:
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(1) It is an entity formed and validly existing in good standing
under the laws of the state of its formation, and is duly authorized,
qualified, permitted and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted (except where failure to be so
authorized, qualified, permitted and licensed would not have a material adverse
effect on the business, operations, properties, assets or financial condition
of such entity).
(2) It is not a party to any contract, agreement or other
commitment or instrument or subject to any charter or other corporate
restriction or subject to any restriction or condition contained in any permit,
license (including the DBA License), judgment, order, writ, injunction, decree
or award which would prevent or restrict its ability to enter into and perform
its obligations under this Agreement or which materially and adversely affects
or in the future is expected as far (as such Partner can, as of the Execution
Date, reasonably foresee) to materially and adversely affect its business
operations, properties, assets or conditions (financial or otherwise)
considered as a consolidated enterprise.
(3) Its execution and delivery of this Agreement and the
performance of the transactions contemplated herein have been duly and validly
authorized by its Board of Directors or members (or a duly authorized committee
thereof), and this Agreement has been duly and validly authorized by any other
necessary corporate action and will be, when executed and delivered, its legal,
valid and binding obligation.
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Section 7.18 Obligations of Affiliates. Whenever this Agreement
provides for obligations of an Affiliate of a Partner, the failure of the
Affiliate to perform those obligations shall be deemed a breach of this
Agreement by that Partner, but shall not give rise to any cause of action
against the Affiliate pursuant to this Agreement (although a cause of action
regarding such failure may arise pursuant to the Parent Agreement or other
agreements to which the Affiliate is a party). For the avoidance of doubt, the
Partnership shall not be considered on Affiliate of either Parent.
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IN WITNESS WHEREOF, the Partners hereto have caused their respective
officers to execute this Agreement as of the day and year first above written.
DUKE/UAE REF-FUEL MANAGEMENT LLC
By:
----------------------------
ATTEST: Name:
Title:
SEAL
BFI REF-FUEL, INC.
By:
----------------------------
ATTEST: Name:
Title:
SEAL
AIR PRODUCTS REF-FUEL, INC.
By:
----------------------------
ATTEST: Name:
Title:
64
