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Fox Rothschild LLP ATTORNEYS AT LAW

2000 Market Street, 20th Floor Philadelphia, PA 19103-3222 Tel 215.299.2000 Fax 215.299.2150 www.foxrothschild.com

RECEIVED Kmail Address: [email protected] p -i n 0(110

Barnell Satinsky Direct Dial: (215)299-2088

COMMISSION

•TSSSSBK August 13,2010

VTA FEDERAL EXPRESS

Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street Harrisburg, PA 17120

Re: Request for Approval of Three Affiliated Interest Agreements Between Trigen-Philadelphia Energy Corporation and Veolia Energy Efficiency (PA), LLC

Dear Secretary Chiavetta:

Enclosed for filing are an original and four copies ofthree separate affiliated interest agreements between Trigen-Philadelphia Energy Corporation ( :Trigen' ;) and Veolia Energy Efficiency (PA), LLC ("VEEPA"). Please dale stamp and return lo me in the self-addressed envelopes I have provided a copy of each ofthe filings.

As described in Trigen's June 29, 2010 Petition docketed atP.-20l0-2]85I73J Trigen musi arrange for the construction and operation of two Rapid Eire Boilers in order to fulfill its obligations under an Amended and Restated Steam Service Agreement between Trigen and The Trustees ofthe University of Pennsylvania. The Rapid Fire Boilers aie lo be owned by VEEPA, which is an affiliated interest lo Trigen wilhin the meaning of 66 Pa. C.S. § 2102. Each ofthe three affiliated interest agreemenis pertains to some aspect ofthe siting, operation or sale of steam to Trigen from the Rapid Fire Boilers

The three agreements are as follows:

1. The LEASE between Trigen and VEEPA pertaining to a poriion of Trigen's Schuylkill Station where the VEEPA facilities will be located:

A Pennsylvania Umiled Liability Partnership

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mailto:[email protected]

FOX Rothschild LLP RECEIVED A ™ R N E V S A T L A W AUG 1 3 2010

Rosemary Chiavetta, Secretary August 13,2010 PAPUBUC UTILITY COMMISSION SECRETAHY'S BUBEAU

2. The OPERATING SERVICES AGREEMENT between Trigen and VEEPA pursuant to which Trigen will operate the Rapid Fire Boilers; and

3. The STEAM SUPPLY AGREEMENT between Trigen and VEEPA pertaining to the sale of steam from VEEPA to Trigen.

Trigen respectfully requests that the Commission consider these three related affiliated interest filings at the time of its disposition of P-2010-2185173 and a related filing at A-2010-2185172.

If there are questions about any ofthe three affiliated interest agreement filings, please let me know. Thank you for your cooperation.

yery truly yours,

Barnett Satinsky

Enclosures BS:mo

cc: Paul Diskin (w/enclosures) Michael J. Smedley (w/enclosures) Lawrence W. Plitch, Esq. (w/enclosures)


2000 Market Street, 20th Floor Philadelphia, PA 19103-3222 Tel 215.299,2000 Fax 215.299-2150 www.foxfothschild.com

Barnett Satinsky Direct Dial: (215)299-2088 Email Address: [email protected] RECEIVED

AUG 1 3 2010

August 13 2010 P A P K l f r , U T Y COMMISSION August l i , z u i u SECRETARY'S BURgAU

VIA FEDERAL EXPRESS

Rosemary Chiavetta, Secretary

Pennsylvania Public Uti l i ty Commission

Commonwea l th Keystone Building

400 Nor th Street

Harr isburg, PA 17120

Re: Request fo r Approva l as an A f f i l i a ted Interest Agreement o f LEASE Be tween

Tr igen-Phi ladelph ia Energy Corpora t ion and Veol ia Energy Eff iciency (PAI. LLC

Dear Secretary Chiavetta:

Tr igen-Phi ladelphia Energy Corporat ion ("Trigen") hereby requests approval of t he at tached

LEASE which is an aff i l iated interest agreement w i th in the mean ing of 66 Pa. C.S. § 2102. A t rue

and correct copy o f t h e LEASE is at tached as Exhibit A.

A. Background

As separately described in a June 29, 2010 Pet i t ion and Appl icat ion, docketed at P-2010'

2185173 and A-2010-2185172 respectively, Trigen is seeking approval of an Amended and

Restated Steam Service Agreement , Operat ions and Maintenance Agreement and Lease

be tween Trigen and The Trustees of the University of Pennsylvania ("Penn")1 . Approva l of

those t ransact ions {the "Penn Transact ions"), wh ich have 20-year te rms, is cr i t ical t o the

1 The Amended and Restated Steam Service Agreement pertains to the sale of steam to be purchased by Penn and quality of steam to be delivered to Penn. The Lease with Penn pertains to the nine miles of distribution system owned by Penn which will be leased to Trigen. The Operations and Maintenance Agreement pertains to operation and control ofthe leased distribution system.

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Fox Rothschild LLP ATTORNEYS ATLAW

Rosemary Chiavetta, Secretary August 13, 2010 Page 2

continued operation of Trigen's district steam system which serves Center City Philadelphia and portions of West Philadelphia pursuant to Trigen Certificate of Public Convenience at Docket Number A-130375 and related dockets.

In order to accomplish the objectives of the June 29, 2010 Petition (the "Petition") and the June 29, 2010 Application (the "Application"), Trigen must arrange for the construction and operation of two 250,000 pound per hour, saturated steam, 265 PSI, rapid start O-Type package boilers (the "Rapid Fire Boilers"). The need for the Rapid Fire Boilers is tied to both (1) the age and relative inefficiency of Trigen's existing steam-producing equipment and (2) the goal of relaxing the reliability standards by which service interruptions to the Penn Campus are measured and certain early termination rights and remedies are triggered.

Trigen and Penn currently are parties to a 1994 Penn Steam Discount Agreement, which is approaching the end of its term. As explained in the Petition, Penn has been evaluating whether to continue buying steam from Trigen, or alternatively, whether to construct its own steam producing facilities and become self-reliant. The transactions encompassed by the Petition and Application are designed to maintain and extend the Trigen-Penn relationship. However, i f t he complete package of transactions is not approved, Penn needs sufficient lead time to construct its own facilities before the end o f the 20-year term of the 1994 Agreement.

Under the 1994 Agreement, Trigen provided steam to Penn at a rate less than Tariff Rate S, which is Trigen's general rate classification, but with certain operational commitments by Trigen which exceeded the minimum standards otherwise applicable under Trigen's tariff. As a result of these operational commitments, and the method by which potential steam outages would be measured by Penn, Trigen often has had to keep in hot stand-by large, oil-fired burners due to the fact that these boilers take a full hour to bring up to the necessary steam production level. Depending on the temperature conditions and other system dynamics, these back-up boilers may be supplementing steam-producing equipment at either Grays Ferry Cogeneration Project, the principal Trigen boilers at Schuylkill Station or the smaller Trigen boilers at Edison Station.

Pursuant to the Amended Agreement with Penn, which is one of the subjects of the Petition, Trigen will be utilizing Rapid Fire Boilers to meet the new reliability criteria to which Penn has agreed. Installation of the Rapid Fire Boilers will reduce C02 emissions compared to the current method of operation. The Rapid Fire Boilers will burn natural gas, which is a cleaner burning fuel than the #6 fuel oil burned by the older units which Trigen operates on hot standby

Fox Rothschild LLP ATTORNEYS ATLAW


to ensure adequate reliability. The Rapid Fire Boilers can be brought on-line in half the time as Trigen's traditional, less efficient boilers, some of which are more than 70 years old. In addition, the design o f the Rapid Fire Boilers will result in reduction in the number of hours that the oil-fired backup steam-generating equipment will need to be operated. Consequently, Trigen will be able to shed some of its fuel and operating expenses. This will benefit not only Trigen and Penn, but also Trigen's other customers who bear their share of the costs of keeping the existing back-up boilers in hot stand-by mode. Further analysis of the efficiency savings appears in Section C l . below.

B. Structure of the Rapid Fire Boilers Ownership and Operation

The cost to develop, finance and construct the Rapid Fire Boilers is estimated to be approximately $28 million. Trigen's parent company, Veolia Energy North America Holdings, Inc., has established an ownership and operation structure which directly parallels the ownership and operation o f the Grays Ferry Cogeneration Partnership's cogeneration facilities, which already produce in excess of 75% of the steam which Trigen sells and distributes to its customers annually.

The Grays Ferry ownership and operation model was considered and approved by the Commission in a series of filings in the early 1990s. At that t ime, Grays Ferry Cogeneration Partnership was not yet an affiliate of Trigen2, but the concept of third party ownership of a significant portion of the steam producing facilities was embedded in those transactions. See Opinions and Orders entered December 18, 1992 at Docket Numbers P-00920566 and A-130375F002 and February 18, 1994 at Docket Numbers P-00930729, P-00930730 and A-130375F0003.

Once Trigen became an affiliated interest of Grays Ferry, by reason o f the ownership interest of Trigen-Schuylkill Cogeneration, Inc., further changes to the Trigen-Grays Ferry Steam Purchase Agreement were approved by the Commission August 28, 1997 at Docket Number G-00970563 (pertaining to a modified rate to be charged for steam used to provide cooling steam). On the same date, the staffing arrangement for operation of Grays Ferry was approved at Docket No. G-00970566. Finally, on September 12, 1997, the Commission approved at Docket No. M-

2 Trigen's sister company, Trigen-Schuylkill Cogeneration, Inc., did not have any ownership interest in Grays Ferry Cogeneration Partnership untif 1996, when it acquired a 33% interest in the Partnership. That interest increased to 50% in 1999, and subsequently to 100%, as it is today.



00970932 Trigen's request for approval of (1) the modification of the previously amended and approved Affiliated Interest Agreement with GFCP, the effect of which was to modify the steam purchase price formula under which Trigen purchases steam to be used for heating, hot water, process or other non-cooling purposes, from Grays Ferry Cogeneration Project and (2) the full and current rate recovery under the Steam Cost Rate ("SCR") of the costs to be paid under the Agreement.

Since the end of 1997, when the Grays Ferry facility went on-line, the cost of the steam purchased by Trigen has been included under the SCR. A copy of the SCR portion of Trigen's Tariff Heating and Cooling - PA.P.U.C. No. 4, Original Page Nos. 20 to 24, is attached as Exhibit B. As identified in the Definitions (SPp and CSPi), and included in the computation formulas, the SCR includes the cost of purchased steam. As such, those costs are continually monitored by the Commission, both through the annual 1307(e) filings and through periodic audits performed by the Commission's Bureau of Audits.

VEEPA, like Trigen, is a wholly owned subsidiary of Veolia Energy North America Holdings, Inc. As such, each of the transactional documents between Trigen and VEEPA falls within the definition of affiliated interest under 66 Pa. C.S. § 2102, and must be submitted for approval by the Commission. There are three such affiliated interest agreements which are being submitted to the Commission at this t ime:

1. The LEASE between Trigen and VEEPA pertaining to a portion of Trigen's Schuylkill Station where the VEEPA Rapid Fire Boilers will be located;

2. The OPERATING SERVICES AGREEMENT between Trigen and VEEPA pursuant to which Trigen will operate the Rapid Fire Boilers under contract to VEEPA and Trigen will ensure that VEEPA is supplied with all necessary operational inputs (fuel, water, etc.); and

3. The STEAM SUPPLY AGREEMENT between Trigen and VEEPA pertaining to the sale of

steam from VEEPA to Trigen.

This filing pertains to the LEASE, which addresses (i) where the Rapid Fire Boilers will be situated at Trigen's Schuylkill Station, (ii) what services Trigen, as the landlord, will provide and (iii) how VEEPA, as the tenant, will pay for those services. This filing also will demonstrate why the lease of this portion of the A-2 Building at Schuylkill Station will not interfere in any way with Trigen's delivery of steam to its customers.



C. Siting of the Rapid Fire Boilers

The "A-2 Building" at Schuylkill Station where the Rapid Fire Boilers will be sited is a multi-story structure with two cement floors. It contains an array of facilities, ranging from out-of-service, turn of the 20 th century coal fired boilers (which are too expensive to remove) and old oil-fired boilers, which also are no longer in service, to many active systems, including electrical switchgear, a river water system used for fire protection and cooling of boilers, pumps, and maintenance shops and parts/equipment storage.

The portion of the A-2 Building in which the Rapid Fire Boilers will be placed currently contains the old oil-fired boilers and associated steel support/perimeter walkway structure and the electrical switchgear. The boilers and steel will be dismantled and removed. The electrical switchgear will be replaced with new switchgear and relocated to another portion of Schuylkill Station. All of this work, including the upgrade in Trigen's electrical switchgear, will be paid for by VEEPA. To the extent any of the other active systems need to be relocated, that relocation will be at VEEPA's sole expense.

Except for the space taken up by the Rapid Fire Boilers, Trigen wiil maintain full use of the A-2 Building. The LEASE provides that except for those portions of the premises actually occupied by the Boilers, "all other portions of the Premises shall be subject to use by Landlord [Trigen] so long as such use does not unreasonably interfere with Tenant's [VEEPA] operation of the Boilers." The OPERATING SERVICES AGREEMENT, under which Trigen employees will be the ones operating the VEEPA Boilers, virtually eliminates any opportunity for conflict.

Although Trigen is responsible for making sure natural gas, coil steam, demineralized water, potable water and sanitary sewer and electricity are supplied to the A-2 building, all costs associated with providing interconnections from existing facilities are paid for by VEEPA under the terms of the STEAM SUPPLY AGREEMENT. VEEPA's consumption of these services is paid for exclusively by VEEPA under the LEASE.

In short, allowing VEEPA to site the Rapid Fire Boilers in the portion o f t h e A-2 Building that contains currently inoperable equipment, at VEEPA's sole cost, does not harm the ratepayers in any way. To the contrary, it helps facilitate the Penn Transactions, which are of benefit to Trigen and its entire customer base.



Trigen respectfully requests that the Commission take the following actions:

1. Consider the LEASE between Trigen and VEEPA together with the related STEAM SUPPLY AGREEMENT and OPERATING SERVICES AGREEMENT, and contemporaneous with the Commission's disposition of the filings docketed at P-2010-2185173 and A-2010-2185172;

2. Approve the LEASE; and

3. Grant such other relief as may be necessary or appropriate.

If there are questions about this affiliated interest agreement filing, please let me know. Thank you for your cooperation.

Verytruly yours,

^Barnett Satinsky

BS:mo

RECEi AUG 1 3 ZOIO

« P W B U C U T , L I 7 Y C O M

SECRETARY'S SUFiEAU

cc: Paul Diskin (w/enclosures)

Michael J. Smedley (w/enclosures)

Lawrence W. Plitch, Esq. (w/enclosures)

RECEIVED AUQ 1 3 2010

L E A S E PAPUBUC UTIUTY COMMISSION ^ SECRETARY'S BUREAU

This Lease (the "Lease") is dated August fo , 2010, and made by and between TRIGEN-PHILADELPHIA ENERGY CORPORATION, a Pennsylvania corporation (the "Landlord") and VEOLIA ENERGY EFFICIENCY (PA), LLC, a Delaware limited liability company (the "Tenant")/

BACKGROUND

Landlord is the owner of a portion of a building commonly known as Building A-2 erected on land (the "Land") owned by the Philadelphia Electric Company, now known as PECO Energy Company ("PECO") located at 26th and Christian Streets, Philadelphia, Pennsylvania, such building being a portion ofthe property known as Schuylkill Station (the "Building"). Landlord utilizes the Building to operate a steam generation and distribution system (the "Steam Loop").

Tenant is an entity formed to design, construct, start-up, test and own rapid-fire boilers, and related piping and equipment (collectively, the "Boilers") to produce additional steam. The steam will be provided to Landlord pursuant to a Steam Supply Agreement of even date herewith between Landlord and Tenant. In addition, the Boilers will be operated for Tenant by Landlord pursuant to an Operating Services Agreement of even date herewith between Landlord and Tenant. Landlord and Tenant have now agreed that Landlord will lease a portion ofthe Building to Tenant for the installation and operation ofthe Boilers pursuant to the terms and conditions set forth below.

NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows;

1. Premises.

(a) Premises Defined. Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, on the conditions set forth herein, that certain portion ofthe Building as designated on the plan attached hereto as Exhibit A (the "Premises"), together with the use in common with others entitled thereto ofthe common areas, service areas, sidewalks and other facilities on or appurtenant to the Land or the Building, subject to the terms ofthis Lease and to reasonable rules and regulations established by Landlord from time to time. Tenant and its employees and contractors shall have exclusive use of only those portions ofthe Premises actually occupied by the Boilers, all other portions ofthe Premises shall be subjeel to use by Landlord so long as such use does not unreasonably interfere with Tenant's operation ofthe Boilers.

(b) Acceptance of Premises. Tenant acknowledges that Tenant has inspected the Premises and determined that the Premises is suitable for installation and operation ofthe Boilers with respect to its dimensions, weight-carrying capacity, construction access and environmental condition, and Tenant is not relying on any representation by Landlord except as expressly set forth herein. Tenant further acknowledges that the Premises currently contains several boilers and associated systems and equipment, some of which may be inoperative, which

were neither installed nor operated by Landlord, which has no specific knowledge ofthe condition ofthe Premises or such equipment except for information received by Landlord from the prior owner ofthe Building.

2. Shared Facilities. Tenant shall have the right to utilize existing stacks, doorways, rail facilities, engines, cranes and similar facilities owned by Landlord and described in Exhibit B (collectively, "Landlord's Facilities") as necessary or appropriate for the installation, operation and maintenance ofthe Boilers, provided that (i) such use does not unreasonably interfere with Landlord's ongoing operation ofthe Steam Loop, and (ii) Tenant's use of Landlord's Facilities shall comply with reasonable rules and regulations promulgated by Landlord in writing. The operating cost of using Landlord's Facilities by Tenant shall be determined by Landlord in its reasonable discretion and may be based on (x) the actual incremental cost of such use, if such can be readily detennined, or (y) Landlord's reasonable estimate ofthe relative use made by Tenant of various Landlord's Facilities in proportion to Landlord's use thereof. Incremental utility charges and any maintenance, repair and replacement costs shall be considered in calculating the cost of Tenant's use of Landlord's Facilities.

3. Permits; Ground Lease.

(a) Emissions. To the extent available to Landlord from existing facilities owned by Landlord, and from the operation ofthe Boilers (through the displacement of steam production from other boilers), Landlord shall assign excess emission offsets and/or allowances available at Schuylkill Station to Tenant without charge, to the extent reasonably required by Tenant to permit the construction and operation ofthe Boilers, without interfering with, or imposing additional costs upon, Landlord's ability to meet the steam requirements of its customers. Tenant shall request such offsets and allowances in writing, accompanied by appropriate engineering reports supporting Tenant's requirements. Tenant shall be solely responsible for acquiring any additional offsets or allowances required by Tenant for the Boilers beyond those available from Landlord under this Section.

(b) Ground Lease. Tenant acknowledges that the Building is located on land which Landlord leases from PECO pursuant to a Schuylkill Station Lease Agreement dated January 30, 1987 ("Ground Lease""). Any conflict between the terms ofthis Lease and the terms ofthe Ground Lease shall be controlled by the terms ofthe Ground Lease.

4. Term. This Lease shall be for a term (the "Term") consisting ofthe period commencing on the Commencement Date (as defined hereinafter) and ending twenty five (25) years after the commercial operations date ofthe Boilers. The Term ofthis Lease shall commence on the date consiruction ofthe Boilers begins (the "Commencement Date").

5. Rent; Additional Rent

(a) Minimum Rent. Tenant shall pay an annual rent of One Dollar ($ 1.00) in advance, on each anniversary ofthe Commencement Date.

(b) Additional Rent. In addition, Tenant shall pay Landlord without set-off the Additional Rent as hereinafter set forth. Unless otherwise specifically provided, all sums shall be paid to Landlord at the address set forth on the signature page. As used herein, the term "Additional Rent" shall refer to any and all sums payable by Tenant to Landlord hereunder, including, without limitation, those sums specifically described as Additional Rent in this Lease. All Additional Rent shall be payable within thirty (30) days following written demand from Landlord, unless a different period is specified elsewhere in this Lease.

(c) Taxes. Tenant shall be solely responsible for, and shall pay Landlord as Additional Rent, all increases in real estate taxes, use and occupancy taxes or other taxes, impositions, levies, fees or governmental impositions and charges of any kind incurred by Landlord or imposed against the Land, the Building or the Premises as a direct result ofthe installation and operation ofthe Boilers (including, without limitation, real estate taxes resulting from any increase in the assessment ofthe Building due to Tenant's installation ofthe Boilers). Landlord shall give Tenant notice of any such increase in taxes, and Tenant shall pay all amounts due hereunder to Landlord within thirty (30) days following receipt of such notice by Landlord; provided, however, that Tenant may contest any such tax increase with the taxing authority in good faith so long as such contest prevents any lien for unpaid taxes from being levied against Landlord or the Premises.

y

6. Construction of Boilers. Tenant, at its expense, shall design, construct and install the Boilers and all equipment necessary or appropriate for the operation ofthe Boilers, including, without limitation, relocation and upgrading of Landlord's electrical switchgear currently located in the Premises. Tenant shall prepare and submit to Landlord plans and specifications for the Boilers, which shall be subject to Landlord's reasonable review and revision. Upon receipt of Landlord's written consent. Tenant shall obtain all required permits and shall install the Boilers using contractors reasonably acceptable to Landlord. Tenant shall indemnify and defend Landlord from any mechanics liens asserted by any contractor based on a contract with Tenant. During Tenant's installation ofthe Boilers, Landlord shall provide reasonable access to the Premises for Tenant's workers and equipment and make available (or request PECO to make available) additional space on the Land for staging, laydown and storage to facilitate the construction process, as may be reasonably required by Tenant's contractors without materially interfering with Landlord's operations. Tenant's workers shall not park in the parking lot unless authorized in writing by Landlord, which shal! have no obligation to provide such parking.

7. Use; Compliance with Law.

(a) Permitted Use. The Premises shall be used and occupied only for (i) the construction, hookup, testing, operation, maintenance and repair ofthe Boilers, as described in plans and specifications prepared by Tenant and approved by Landlord, and (ii) office and control room space for operation ofthe Boilers and other uses associated with operating the Boilers that do not interfere with Landlord's use ofthe Building. Except as set herein to the contrary, the Premises shall be used for no other purpose.

(b) Compliance with Laws. With regard to all or any part of the Premises or to the use or manner of use ofthe Premises, or to the fixtures and equipment in the Premises, throughout the term ofthis Lease, and at its sole cost and expense, Tenant shall: (i) comply promptly with all laws, ordinances, notices, orders, rules, regulations and requirements of ali federal, state and municipal governments and all departments, commissions, boards and officers thereof, and ofthe National Board of Fire Underwriters or any other body now or hereafter constituted exercising similar functions; and (ii) keep in force at all times all licenses, consents and permits necessary for the lawful use ofthe Premises for the purposes herein provided. Tenant shall have the right to contest the validity of any purported violation, provided that such contest operates to prevent enforcement of any remedy by any party for such purported violation. Tenant shall comply with all reasonable rules and regulations established by Landlord from time to time.

8. Maintenance, Repairs and Alterations.

(a) Tenant's Obligations. Except as specifically otherwise provided herein, Tenant, at its sole cost and expense, shall maintain, repair and replace, and keep in good order, condition and repair the Premises, including, without limitation, all plumbing and electrical systems servicing the Premises. Tenant shall also be responsible for any repairs, replacements or maintenance necessary or appropriate to render existing systems and utilities located in.the Premises available and operative for use by Tenant.

(b) Landlord's Obligations. Landlord, throughout the term ofthis Lease and at Landlord's sole cost and expense, shall make all necessary repairs to the footings, foundations, walls, roof and columns and girders forming a part ofthe Building; provided, however, that Landlord shall have no responsibility to make any repair unless and until Landlord receives written notice ofthe need for such repair, and provided ftirther that Landlord shall have no responsibility to repair any damage (other than ordinary wear and tear) which arises out of or is caused by Tenant's use, manner of use or occupancy ofthe Premises, or by Tenant's installations in or upon the Premises, or by any act or omission of Tenant or any employee, agent, contractor or invitee of Tenant. Landlord shall initiate repair of any problems described in this Section that materially affect the operation ofthe Boilers within seven (7) business days following receipt of notice, and shall diligently pursue such repairs thereafter to completion, subject to delays for circumstances beyond Landlord's reasonable control.

(c) Surrender. On the last day ofthe Term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in the same condition as on the Commencement Date, ordinary wear and tear excepted. Tenanl shall repair any structural damage to the Premises occasioned by the removal of Tenant's equipment. Ali alterations, improvements, and additions which may be made on the Premises shall become the property of Landlord and remain upon and be surrendered with the Premises at the expiration ofthe term. Notwithstanding the provisions ofthis Section, the Boilers, other than those portions which are affixed to the Premises so that they cannot be removed without material damage to the Premises, shall remain the property of Tenant and may be removed by Tenant at Tenant's option.

(d) Landlord's Cure Right. If Tenant fails to perform any of Tenant's obligations under this Section, Landlord may at its option (but shall not be required to) enter upon the Premises, after five (5) days prior written notice to Tenant, and put the same in good order, condition and repair consistent with its condition on the date that the Boilers begin operation, and the cost thereof together with interest thereon shall become due and payable as Additional Rent to Landlord immediately upon demand.

(e) Alterations. Following installation of the Boilers, Tenant shall not, without Landlord's prior written consent (not to be unreasonably withheld), make any alterations, improvements, or additions on or about the Premises, except for minor nonstructural alterations. Any alterations, improvements or additions in or about the Premises that Tenant shall desire to make and which require the consent ofthe Landlord shall be presented to Landlord in written form with proposed plans. If Landlord shall give its consent, the consent shall be deemed conditioned upon Tenant acquiring all permits required to do so from appropriate governmental agencies, the furnishing of a copy thereof to Landlord prior to the commencement ofthe work and the compliance by Tenant with all conditions ofthe pennits in a prompt and expeditious manner.

(f) Liens. Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been fumished to or for Tenant at or for use in the Premises which claims are or may be secured by any mechanics' or materialmen's lien against the Premises or any interest therein. If Tenant shall, in good faith, contest the validity of any such lien, claim or demand, then Tenant shall, at its sole expense, defend itself and Landlord against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Landlord or the Premises, upon the condition that if Landlord or its mortgagee shall require. Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an amount equal to such contested lien, claim or demand indemnifying Landlord against liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Landlord may require Tenant to pay Landlord's reasonable attorneys' fees and costs if Landlord is named as a party in such action.

9. Insurance; Indemnity.

(a) Tenant's Insurance. Tenant, at Tenant's sole cost and expense, shall maintain and keep in effect throughout the term ofthis Lease;

(i) insurance against loss or damage to the Boilers by fire and such other casualties as may be included within all-risk insurance and other insurance as may be reasonably needed.

(ii) broad form insurance against liability for bodily injury (including death) or property damage in or about the Premises, under a policy of comprehensive general public liability insurance, naming Landlord and Tenant as insured parties, with such limits as to each as may reasonably be required by Landlord from time to time but not less than $3,000,000 for each occurrence and in the aggregate. Tenant shall also maintain Workers' Compensation in

statutory amounts, and employer's liability and automobile liability coverage in such amounts as Landlord determines as reasonable and customary.

(iii) The aforesaid insurance shall be in companies and in form, substance and amount (where not stated above) reasonably satisfactory to Landlord and any mortgagee of Landlord, and shall contain standard mortgage clauses satisfactory to Landlord's mortgagee. The aforesaid insurance shall not be subject to cancellation except after at least thirty (30) days prior written notice to Landlord and any mortgagee of Landlord. At least thirty (30) days prior to the Commencement Date, and thirty (30) days prior to any subsequent date on which the insurance would expire by its term, a certificate evidencing the required coverage shaJJ be provided to Landlord, and original insurance policies shall be delivered Landlord within sixty (60) days following the date on which certificates are due hereunder. If Tenant shall fail, refuse or neglect to obtain or to maintain any insurance that it is required to provide, or to furnish Landlord with satisfactory evidence of coverage within the time required, Landlord shall have the right to purchase such insurance. All payments for such insurance made by Landlord shall be recoverable by Landlord from Tenant, together with interest thereon, as Additional Rent promptly upon being billed therefor.

(b) Landlord's Insurance. Landlord, at Landlord's sole cost and expense, shall maintain and keep in effect throughout the term ofthis Lease insurance against loss or damage to the Building by fire and such other casualties as may be included within all-risk insurance.

(c) Waiver of Subrogation. Each ofthe parties hereto releases the other, to the extent ofthe releasing party's insurance coverage, from all liability for any loss or damage covered by such insurance which may be inflicted upon the property of such party even if such loss or damage shall be brought about by the fault or negligence ofthe other party, its agents or employees; provided, however, that this release shall be effective only with respect to loss or damage occurring during such time as the appropriate policy of insurance shall contain a clause to the effect that this release shall not affect said policy or the right ofthe insured to recover thereunder.

(d) Tenant's Indemnity. Tenant shall indemnify and hold harmless Landlord from and against any and all claims arising from Tenant's use ofthe Premises or from the . conduct of Tenant's business or from any activity, work, or things done, permitted, or suffered by Tenant in or about the Premises or elsewhere and shall further indemnify and hold harmless Landlord from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms ofthis lease, or arising from any negligence ofthe Tenant or any of Tenant's agents, contractors or employees, and from and against all costs, attorney's fees, expenses and liability incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Landlord by reason of any such claim, Tenant upon notice from Landlord shall defend the same at Tenant's expense by counsel satisfactory to Landlord.

(e) Landlord's Indemnity. Landlord shall indemnify and hold harmless Tenant from and against any and all claims arising from Landlord's use ofthe Building or from

6

the conduct of Landlord's business or from any activity, work, or things done, permitted, or suffered by Landlord in or about the Building or elsewhere and shall further indemnify and hold harmless Tenant from and against any and all claims arising from any breach or default in the performance of any obligation on Landlord's part to be performed under the terms ofthis lease, or arising from any negligence of Landlord or any of Landlord's agents, contractors or employees, and from and against all costs, attorney's fees, expenses and liability incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Tenant by reason of any such claim, Landlord upon notice from Tenant shall defend the same at Landlord's expense by counsel satisfactory to Tenant.

10. Damage by Fire or Other Casualty. Ifthe Premises shall be damaged or destroyed by fire or other casualty. Tenant shall promptly notify Landlord, and Landlord shall' elect, by notice to Tenant within ten (10) business days following receipt of Tenant's notice, to (i) terminate this Lease, (ii) subject to any mortgagee's consent and to the conditions set forth in this Section, to repair, rebuild, or replace such damage and restore the Premises to substantially the same condition in which they were immediately prior to such damage or destruction, or (iii) subject to any mortgagee's consent and to the conditions set forth in this Section, to construct a replacement structure. In the event Landlord elects not to make such restoration or construct a replacement structure, as applicable, Tenant shall have the right, but not the obligation, to (i) reject the tennination ofthis Lease, whereupon the Lease shall remain in effect but the parties' maintenance obligations shall be suspended during reconstruction, and (ii) repair, rebuild or replace such damage or construct a replacement structure, and Landlord shall in either such event release to Tenant any portion of any insurance proceeds received by Landlord for the portion of the Premises damaged or destroyed.

11. Utilities.

(a) Natural Gas. All costs and expenses associated with making natural gas available to the Boilers shall be the sole responsibility of Tenant, provided that Landlord shall provide at no charge easements and/or licenses for the installation of pipes and related facilities so long as such installation does not interfere with Landlord's operations. Any easement or licenses required from PECO as owner ofthe Land, or from any party other than Landlord shall be obtained by Tenant at Tenant's expense, and Landlord shall have no liability of any kind for PECO's or such other party's failure or refusal to grant any easement. Landlord shall bill Tenant for all natural gas used by Tenant on a monthly basis, in accordance with Section 4.5 ofthe STEAM SUPPLY AGREEMENT between Landlord and Tenant, and the same shall constitute Additional Rent.

(b) Demineralized Water. Tenant shall have the right to purchase water treated at Landlord's existing demineralization plant ("Water Plant") in accordance with the terms ofthis Section. All modifications, additions or expansions to the Water Plant required to produce demineralized water for Tenant's use shall be performed byLandlord at Tenant's sole expense pursuant to plans, specifications and construction contracts obtained by Landlord at Tenant's expense and approved in advance by Tenant in Tenant's reasonable judgment. Landlord shall bill Tenant for all demineralized water used by Tenant on a monthly basis, in accordance with Subsection 4.4.2 ofthe STEAM SUPPLY AGREEMENT between Landlord and Tenant, and the same shall constitute Additional Rent.

(c) Water/Sewer. Potable water and sanitary sewer for Tenant's use shall be supplied by Landlord to the extent currently available at the Building, provided that Landlord shall not be liable for any failure to provide such utilities not within Landlord's reasonable control. All usage charges and all connection fees for all utilities shall be paid for by Tenant. Landlord shall bill Tenant for all water and sewer usage by Tenant on a monthly basis, in accordance with Subsection 4.4.1 ofthe STEAM SUPPLY AGREEMENT between Landlord and Tenant, and the same shall constitute Additional Rent.

(d) Electricity. Tenant shall bear the cost ofail electricity used by Tenant or by the Boilers based on a sub-meter, at the same rate paid by Landlord plus any additional cost incurred by Landlord for such additional use, in accordance with Subsection 4.4.3 ofthe STEAM SUPPLY AGREEMENT between Landlord and Tenant, and the same shall constitute Additional Rent.

(e) Coil Steam. Tenant shall have the right to purchase Coil Steam from Landlord to keep Tenant's Boilers in hot standby mode. Landlord shall bill Tenant for all Coil Steam used by Tenant on a monthly basis, in accordance with Section 4.2 ofthe STEAM SUPPLY AGREEMENT between Landlord and Tenant, and the same shall constitute Additional Rent.

12. Assignment and Subletting.

(a) No Assignment. Except for security assignments to any construction or permanent lender to Tenant, Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Tenant's interest in this Lease or in the Premises wiihout Landlord's prior written consent, which Landlord may unreasonably withhold. Any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a breach ofthis Lease, at Landlord's option.

(b) No Release. No subletting or assignment, regardless of Landlord's consent, shall release Tenant from Tenant's obligations hereunder or alter the primary liability of Tenant to pay the rent and to perform all other obligations to be performed by Tenant hereunder. The acceptance of Additional Rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any

assignee of Tenant or any successor of Tenant in the performance of any ofthe terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such assignee. Landlord may consent to amendments or modifications to this Lease with assignees of Tenant after notice thereof to Tenant if Tenant is still liable hereunder, and such action shall not relieve Tenant of liability under this Lease. No notice to Tenant of such amendments or modifications shall be required. Any permitted assignee shall assume the obligations of Tenant hereunder, by a writing satisfactory to Landlord, and a copy thereof shall be delivered to Landlord and to Tenant.

13. Tenant Defaults; Remedies.

(a) Event of Default. The occurrence of any one or more ofthe following events shall constitute an Event of Default by Tenant:

(i) The failure by Tenant to make any payment of Additional Rent when due or any other payment required to be made by Tenant hereunder when due.

(ii) The failure by Tenant to observe or perform any of the covenants, conditions or provisions ofthis Lease to be observed or performed by Tenant, other than as described in subsection (a) above, where such failure shall continue for a period of 30 days after written notice thereof from Landlord to Tenant; provided, however, that ifthe nature of Tenant's default is such that more than 30 days are reasonably required for its cure, then Tenanl shall not be deemed to be in default if Tenant commences such cure within said 30 day period and thereafter diligently pursues such cure to completion.

(iii) The making by Tenant of any general assignment, or general arrangement for the benefit of creditors; the filing by or against Tenant of a case or petition to have Tenant adjudged a bankrupt or a case or petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a case or petition filed against Tenant, the same is dismissed within 60 days); the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within 30 days; or the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within 30 days.

(iv) The abandonment or vacating ofthe Premises by Tenant, which shall include any cessation of operation ofthe Boilers for a period in excess often (10) consecutive days other than for repair or scheduled maintenance.

(b) Remedies. Upon the occurrence of an Event of Default, Landlord shall have the right (i) to collect from Tenant by legal action all amounts owing with interest at two percent over Prime Rate (as defined in the Amended Project Services Agreement), or (ii) to seek injunctive relief.

(c) Late Charges. If any installment of Additional Rent shall nol be received by Landlord or Landlord's designee or within thirty (30) days after any such amount shall

otherwise be due. Tenant shall pay to Landlord a late charge equal to 3% of such overdue amount, unless otherwise agreed to by the Landlord. The parties hereby agree that such late charge represents a fair and reasonable estimate ofthe costs Landlord will incur by reason of late payment of Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any ofthe other rights and remedies granted hereunder.

(d) Curing Defaults. If Tenant shall be in default in the performance of any of its obligations hereunder, Landlord, without any obligation to do so, in addition to any other rights it may have in law or equity, may elect to cure such default on behalf of Tenant after ten (10) days' written notice (except in the case of emergency) to Tenant. Tenant shall reimburse Landlord upon demand for any sums paid or costs actually incurred by Landlord in curing such default, including interest thereon from the respective dates of Landlord's making the payments and incurring such costs, which sums and costs together with interest thereon shall be deemed Additional Rent payable promptly upon being billed therefor.

(e) Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy herein or by law, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity or by statute.

14. Default by Landlord.

(a) Landlord 's Events of Default. The occurrence of any one or more ofthe following events shall constitute an Event of Default by Landlord:

(i) The failure by Landlord to observe or perform any ofthe covenants, conditions or provisions ofthis Lease to be observed or performed by Landlord, where such failure shall continue for a period of 30 days after written notice thereof from Tenant to Landlord; provided, however, that ifthe nature of Landlord's default is such that more than 30 days are reasonably required for its cure, then Landlord shall not be deemed to be in default if Landlord commences such cure within such 30 day period and thereafter diligently pursues such cure to completion.

(b) Remedies. Upon the occurrence of an Event of Default by Landlord hereunder, Tenant may exercise all of Tenant's remedies at law or in equity.

15. Condemnation.

(a) Termination. If all ofthe Premises is taken by a condemnation, or if any portion ofthe Premises is taken by a condemnation and, in Landlord's reasonable opinion, it would be impractical or the condemnation proceeds will be insufficient to restore the remainder ofthe Premises, or if any portion ofthe Premises is taken by a condemnation and, in Tenant's reasonable opinion, the taking is so extensive or constitutes the taking of a part ofthe Premises so vital to its operation that such partial taking has the same practical effect as a total taking,

10

then, in any such event, this Lease shall terminate and all obligations hereunder shall cease as of the date upon which possession is taken by the condemnor.

(b) Partial Condemnation. If there is a partial condemnation and this Lease has not been terminated pursuant to subsection (a), Landlord shall restore the Building and the improvements which are part ofthe Premises to a condition and size as nearly comparable as reasonably possible to the condition and size thereof immediately prior to the date upon which possession shall have been taken by the condemnor. Ifthe condemnation proceeds are more than adequate to cover the cost ofthe restoration and Landlord's expenses in collecting the condemnation proceeds, any excess proceeds shall be retained by Landlord or applied to repayment of any mortgage secured by the Premises.

(c) Award. In the event of a condemnation affecting Tenant, Tenant shall have the right to make a claim against the condemnor for removal expenses, business dislocation damages, moving expenses, and the value of special purpose equipment installed by Tenant; provided and to the extent, however, that such claims or payments do not reduce the sums Otherwise payable by the condemnor to Landlord.

(d) Mortgagee. Ifthe first Mortgagee (as defined below) ofthe Premises in the reasonable exercise of its judgment deems it impractical or the condemnation proceeds insufficient to restore the Premises, the decision ofthe Mortgagee shall be binding upon Landlord and Tenant.

16. General Provisions.

(a) Estoppel Certificate. Tenant shall at any time upon not less than ten (10) days' prior written notice from Landlord execute, acknowledge and deliver to Landlord a written instrument in recordable form certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that it is in full force and effect as modified and stating the modifications); certifying that Tenant has accepted possession ofthe Premises (if true); stating the date on which the term ofthe Lease commenced and the dates to which minimum rent. Additional Rent and other charges have been paid in advance, if any; stating that to the best knowledge ofthe signer of such instrument Landlord is not in default ofthis Lease (or specifying any default); stating any other fact or certifying any other condition reasonably requested by Landlord or reasonably required by any mortgagee or prospective mortgagee or purchaser ofthe Premises or any interest therein; and stating that it is understood that such instrument may be relied upon by any mortgagee or prospective mortgagee or purchaser ofthe Premises or any interest therein or by any assignee of Landlord's interest in this Lease or by any assignee of any mortgagee. The foregoing instrument shall be addressed to Landlord and to any mortgagee, prospective mortgagee, purchaser or other party specified by Landlord.

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(b) Certain Definitions.

(i) "Landlord". The word "Landlord" is used herein to include the Landlord named above as well as its successors and assigns. Neither Landlord nor any principal of Landlord shall have any personal liability with respect to any ofthe provisions ofthis Lease or the Premises, and if Landlord is in breach or default with respect to Landlord's obligations under, this Lease or otherwise, Tenant shall look solely to the equity of Landlord in the Premises for the satisfaction of Tenant's claims.

(ii) "Tenant". The word "Tenant" is used herein to include the Tenant named above as well as its successors and assigns.

(iii) "Mortgage" and "Mortgagee". The word "mortgage" is used herein to include any lien or encumbrance on the Land, the Premises or any part of or interest in or appurtenance to the Premises. The word "mortgagee" is used herein to include the holder of any mortgage. The term "first mortgagee" refers to the holder ofthe most senior lien on the Premises. Wherever any right is given to a mortgagee, that right may be exercised on behalf of such mortgagee by a representative or servicing agent of such mortgagee.

(c) Severability. If any provision ofthis Agreement or the application thereof to any person or circumstance(s) shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Person(s), entity(ies) or circumstance(s) shall not be affected thereby, and each such provision shall be enforced to the greatest extent pennitted by law.

(d) Time of Essence. Time is ofthe essence ofail provisions hereof.

(e) Captions. Article and Section headings are not a part hereof.

(f) Amendments. This Lease may be modified in writing only, signed by both ofthe parties.

(g) Notices. Any notice required or permitted to be given hereunder shall be in writing and maybe given by personal delivery or by overnight delivery. If given personally, such notice shall be deemed to be given on the date delivered; if sent by overnight delivery, such notice shall be deemed to be given as ofthe day it is delivered. Notice shall be deemed sufficiently given if addressed to Tenant or to Landlord at the address noted below the signature line ofthe respective parties, as the case may be. Eilher party may by notice lo the other specify a different address for notice purposes. Notices may be given by and to counsel.

(h) Waivers. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent or Additional Rent hereunder by Landlord shall not be a waiver of any

12

preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. The payment of any rent or Additional Rent hereunder by Tenant shall not be a waiver of any preceding breach by Landlord of any provision hereof, regardless of Tenant's knowledge of such preceding breach at the time of acceptance of such rent.

(i) Recording. Tenant or Landlord, at any time and from time to time and within five (5) days after the other party's written request, shall execute, acknowledge and deliver to the other party a short form or memorandum ofthis Lease for recording purposes.

(j) Holding Over. If Tenant remains in possession ofthe Premises or any part thereof after the expiration ofthe term hereof without the express written consent of Landlord, such occupancy shall be a tenancy from month to month under the same terms and conditions set forth in this Lease. Anything to the contrary notwithstanding, any holding over by Tenant without Landlord's prior written consent shall constitute an Event of Default hereunder without notice or cure period and shall be subject to all the remedies set forth herein.

(k) Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

(1) Choice of Law. This Lease shall be governed by the laws ofthe Commonwealth of Pennsylvania.

(m) Entire Agreement. This Lease represents the entire agreement between the parties hereto with respect to the contents hereof, and there are no collateral or oral agreements or understandings between Landlord and Tenant with respect to the Premises. Tenant agrees to make such changes to this lease as are reasonably required by any mortgagee, provided such changes do not substantially affect Tenant's rights and obligations hereunder. The masculine (or neuter) pronoun, singular number, shall include the masculine, feminine and neuter genders and the singular and plural number.

(n) Quiet Possession. Upon Tenant paying the rent reserved hereunder and observing and performing all ofthe covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession ofthe Premises for the entire term hereof subject to all ofthe provisions ofthis Lease.

(o) Brokers. Landlord and Tenant each represent and wanant to the other that it has caused or incurred no claims for brokerage commissions, finder's fees or similar claims in connection with this Lease, and each party shall indemnify, defend and hold the other harmless from any liabilities arising from any such claim caused or incurred by it.

(p) Waiver of Trial of Jury. Landlord and Tenant each waive trial by jury in any action or counterclaim brought by either party against the other under this Lease.

17. Signs. Except for signs which are located wholly wilhin the interior ofthe

Building and which are not visible from the exterior ofthe Building, no signs shall be placed,

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erected, maintained or painted at any place upon the Premises without the prior written consent of Landlord as to the size, design, color, location, content, illumination, composition, or material and mobility thereof, which consent shall not be unreasonably withheld. All signs shall be installed and maintained by Tenant, at its cost, in good condition during the term ofthis Lease, and Tenant shall remove all signs at the termination ofthis lease and shall repair and restore any damage caused by the installation or removal thereof

18. Subordination. This Lease and the estate, interest and rights hereby created are subordinate to any mortgage now or hereafter placed upon the Land, the Building or any interest therein, and to all renewals, modifications, consolidations, replacements and extensions of same as well as any substitutions therefor. Tenant agrees that in the event any person, firm, corporation or other entity acquires the right to possession ofthe Land and the Building including any mortgagee, Tenant shall, if requested, attom to and become the tenant of such person, firm, corporation or other entity, upon the same terms and conditions as are set forth herein for the balance ofthe Lease term. The foregoing shall be operative with respect to any lien hereafter created only if Landlord shall deliver to Tenant the written agreement ofthe lienholder that such lienholder shall not disturb Tenant's possession under this Lease, in the event of foreclosure, transfer in lieu thereof, or other enforcement proceedings, provided that Tenant shall not be in default hereunder. Any such agreement shall be in reasonable form, may require Tenant to confirm the subordination ofthis Lease and to agree to attom to the lienholder, and may provide that the lienholder is not bound by the acts or omissions of Landlord, and Tenant shall not unreasonably withhold or delay execution or delivery of such agreement. Tenant, if requested by Landlord, shall execute any such instruments in recordable form as may be reasonably required by Landlord in order to confirm or effect the subordination ofthis Lease and the attornment of Tenant to future landlords in accordance with the terms hereof.

19. Hazardous Waste.

(a) Acknowledgement. Tenant acknowledges that Landlord has advised Tenant that (i) Landlord acquired a portion ofthe Building from PECO, (ii) PECO had previously used a portion ofthe Building for operation ofthe Steam Loop, and (iii) PECO has used and continues to use a portion ofthe Building. Any environmental problem or liability created by any use ofthe Building or the Land, prior to Landlord's acquisition or lease thereof, shall not be imputed to either Landlord or Tenant.

(b) Tenant 's Representations and Warranties. Tenant represents and warrants to Landlord that it will;

(i) not store, use, release, produce, install or dispose of any Hazardous Material on the Premises except in full compliance with all applicable laws and regulations and with Landlord's prior written consent;

(ii) provide Landlord with written notice: (A) upon Tenant obtaining knowledge of any potential or known release, or threat or release, of any Hazardous Material al or from the Premises; (B) upon Tenant's receipt of any notice to such effect from any federal, state, or other governmental authority; and (C) upon the Tenant obtaining knowledge of any

14

incurring of any expense or loss by such governmental authority in connection with the assessment, containment, or removal of any Hazardous Material for which such expense or loss Tenant may be liable or for which such expense or loss a lien may be imposed on the Premises;

(iii) provide Landlord with written notice ofail Hazardous Material brought onto the Premises and fully cooperate with Landlord in complying with all tracking and monitoring requirements of any governmental agency.

(c) Tenant's Indemnity. Tenant shall indemnify, defend, and hold Landlord harmless ofand from any claim brought or threatened against Landlord on account ofthe introduction by Tenant of Hazardous Material onto the Premises, or the release of such Hazardous Material on or from the Premises, or the failure by Tenant to comply with the terms and provisions hereof (each of which may be defended, compromised, settled, or pursued by Landlord with counsel of Landlord's selection, but at the expense of Tenant). This indemnification shall survive any termination ofthis Lease.

(d) Inspection. Landlord shall have the right to enter the Premises at any time to inspect the Premises to ascertain whether it is clean and free of Hazardous Material.

(e) Definition. The term "Hazardous Material" is used in this Lease in its broadest sense and includes but is not limited to (i) "hazardous substances" as that term is defined in Section 101(14) ofthe Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601(14), (ii) "hazardous waste" or "solid waste" as defined in 40 CFR §261, (iii) "hazardous waste," "residual waste" and "solid waste," as defined in Section 103 ofthe Pennsylvania Solid Waste Management Act, 35 P.S. §6018.103 or 25 Pa. Code §§75.260 and 75.261; and (iv) petroleum base products, paint and solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonium compounds, asbestos, PCB's and other chemical products.

(f) Landlord's Representation and Warranties. Landlord represents and warrants to Tenant that Landlord has no actual knowledge of any Hazardous Material stored, used, released, produced, installed or disposed of in the Building excepl in compliance with all applicable laws and regulations.

(g) Landlord's Indemnity. Landlord shall indemnify, defend, and hold Tenant harmless ofand from any claim brought or threatened against Tenant on account ofthe introduction by Landlord of Hazardous Material onto the Premises or the Building, orthe release by Landlord of such Hazardous Material on or from the Premises, or the failure by Landlord to comply with the terms and provisions hereof (each of which may be defended, compromised, settled, or pursued by Tenant with counsel of Tenant's selection, but at the expense of Landlord). This indemnification shall survive any termination ofthis Lease.

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IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first above written.

Address: TENANT:

2600 Christian Street Philadelphia, PA 19146

Address:

VEOLIA ENERGY EFFICIENCY (PA), LLC, a Delaware limited liability compam

By:_ fjtfym k-Attest:

^2kA U s

LANDLORD:

2600 Christian Street Philadelphia, PA 19146

TRIGEN-PHILADELPHIA ENERGY CORPORATION, a Pennsylvania corporation

Attest:

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EXHIBITS AND SCHEDULES

EXHIBIT A Site Plan showing Premises

EXHIBIT B Landlord's Facilities and Services

EXHIBIT A

ffefcu^

EXHIBIT B

EXHIBIT B

LANDLORD'S FACILITIES AND SERVICES

Service

Shared Facilities & Tenant's Maintenance/Repair/Replacement Responsibility

1. Exhaust Gas Stacks

2. Station Air

3. Control Room

4. Fire Protection

5. Waste Water Drains

6.. P.A. System

Landlord will make available to Tenant a retired exhaust stack which Tenant will be responsible to upgrade and maintain.

Landlord will make available to Tenant Landlord's existing compressed air system.

Landlord will make available to Tenant space in Landlord's existing Control Room for installation of Boiler controls which will be operated pursuant to the Operating Services Agreement.

Landlord will make available to Tenant access to Landlord's existing fire protection system.

Landlord will make available to Tenant Landlord's existing waste water disposal system.

Landlord will make available to Tenant Landlord's existing P.A. system.

TARIFF HEATING AND C00LING-PA.P.U.C. NO. 4 CANCELLING TARIFF STEAM-PA. P.U.C. NO. 3

TRIGEN-PHILADELPHIA ENERGY CORPORATION ORIGINAI

SfflVED AUG 1 3 2010

STEAM COST RATE

PROVISION FOR STEAM COST RATE. <* ̂ ^ I S ^

The steam cost rate shall be applied to each thousand pounds of steam billed under the applicable rates and riders ofthis Tariff

COMPUTATION AND APPLICATION OF STEAM COST RATE.

The steam cost rate shall be computed monthly to the nearest one-thousandth of a dollar in accordance with the formula set forth below:

SCR = [C / (PS-PSC) - BJ - [(E/PS-.PSC)]

The steam cost rate so computed each month shall be applicable to all Customers' invoices with an ending service date in that month. There will be no proration made for steam used before and after fhe Ist calendar day of the billing month. Subject to the approval of the Pennsylvania Public Utility Commission, the rate calculated by the application of the formula contained herein may be revised on an interim basis if it is detennined that the then effective rate so calculated will result in material over or under collections. Such revision shall become effective thirty (30) days from the date ofthe revised filing unless otherwise ordered by the Commission.

DEFINITIONS.

"SCR" - steam cost rate

"Computation Year" - tlie twelve month period fiom September thnougft the following August

" C " - Projected total costs of steam and electricity production during the computation year as calculated below:

C = (SPp * CSP,) + SMp

Where:

SPp = Projected total thousand pounds of steam to be purchased during the computation year, other than cooling steam.

ISSUED: MAY 5, 2006 EFFECTIVE: JULY 6, 2006

ISSUED BY: KEVIN E. BROWN, VICE PRESIDENT 2600 Christian Street Philadelphia, PA 19146

TARIFF HEATING AND COOLING-PA.P.U.C. NO. 4 CANCELLING TARIFF STEAM-PA.P.U.C. NO. 3

TRIGEN-PHILADELPHIA ENERGY CORPORATION ORIGINAL PAGE NO. 21

STEAM COST RATE - Continued

CSPi = Actual cost per thousand pounds of steam purchased during the prior month.

SMp = Projected total costs of Trigen-produced steam and electricity and water and electric revenues and expenses incurred during the computation year, as calculated below.

PS = Total projected sales in thousand pounds of steam.

PSC = Projected sales of COOLING steam in thousand pounds of steam.

B = Base unit fuel cost per thousand pounds of steam billed to customers ($7,782 as of date of issuance of Tariff Steam-PA. P.U.C. No. 3).

E = Actual net over or under collection balance from the prior year.

SMp = [(PS + DL - SPp - PSC) * 1.195a/.8b *FP ] + (Tp * 4.5C * Fp) + Wp + Lp - (CRLp + CRWP) + HP

Where:

Note a: 1 Mlb. of saturated steam at 150 psi equals 1.195 MMBtus, per ASME Steam Tables, 6th Edition

Note : Trigen's estimated annual steam plant efficiency is 80%.

Note c: 4.5 is a coefficient derived by dividing the 3.413 MMBtus per Megawatt hour of electricity (per Mark's Standard Handbook for Mechanical Engineers) by Trigen's estimated 95% Turbine Generator efficiency; then dividing the quotient by Trigen's estimated 80% Boiler efficiency.

DL = Trigen's estimated distribution system losses (excluding those associated with cooling steam sales) expressed in thousand pounds of steam,

Fp = Actual cost per MMBtu of fuel (lower heating value) consumed during the preceding month.

• Tp - Projected megawatt-hours of Trigen electricity sales during the computation year.




TRIGEN-PHILADELPHIA ENERGY CORPORATION ORIGINAL PAGE NO. 22


Wp = Projected total water and sewer costs during the computation year.

Lp = Projected total electricity purchases at Schuylkill Station during the computation year.

CRLp - Projected total electricity revenues during the computation year.

CRWp = Projected total water revenues from the Grays Ferry Cogeneration Partnership during the computation year.

Hp = Actual prior month fuel hedge costs (revenues)

Over/Under Collection Formula:

E = [Sa * Ci/(PSi - PSd)] - [Aa + (TFa + La + Wa - CRLa - CRWa - Ha)] + {E,-[E,/(PS,-PSc,)*S,] + I}

Where;

Sa = . Actual total thousand pounds of steam, less cooling steam, billed to all customers for the most recent year ended June 30.

Ci = The annual "C" factor utilized for billing to customers for the most recent year ended June 30, such that the monthly "C" factors will be weighted by the proportion of each month's thousand pounds of steam billed to the annual total thousand pounds of steam billed.

PSi = Total projected thousand pounds of steam sales from the prior year's SCR calculation.

PScj = Projected thousand pounds of cooling steam sales from the prior year's SCR calculation.

Aa — Actual total costs of steam purchased for resale (excluding cooling steam and associated line losses) for the most recent year ended June 30.

TFa = Actual total fuel costs for Trigen manufactured steam (excluding cooling steam and associated line losses) and electricity for the most recent year ended June 30.

La = Actual total electricity purchases at Schuylkill Station for the most recent year ended June 30.




TRIGEN-PHILADELPHIA ENERGY CORPORATION . _ _ ORIGINAL PAGE NO. 23


Wfl = Actual total water and sewer costs for the most recent year ended June 30.

CRLa = Actual-total electricity revenues for the most recent year ended June 30.

CRWfl^ Actual total water revenues from the Grays Ferry Cogeneration Partnership for the most recent year ended June 30.

ended June 30. Ha = Actual fuel hedge costs (revenues) for the most recent year

Ei = The "E" factor from prior year's SCR calculation

I = Interest on gross over or under collections for the most recent year ended June 30 which is computed monthly using the appropriate rate as specified in section 1308(d) ofthe Public Utility Code from the month the over or under collection occurs to the effective month such over collection is refunded or such under collection is recouped. Customers shall not be liable for interest on net under collections.

FILING WITH PENNSYLVANIA PUBLIC UTILITY COMMISSION: AUDIT: RECTIFICATION

The filing of the Company's initial annual steam cost rate effective during the billing periods of September through August setting forth the projected values for each component of the steam cost rate, shall be submitted to the Commission by August 1 of each year and is subject to the Commission's approval prior to its implementation. Thereafter, the Company will calculate a new value for the steam cost rate monthly based on the formula contained herein and submit the calculation to the Commission for informational purposes only.

The application ofthe steam cost rate shall be subject to continuous review and to audit by the Commission at such intervals as the Commission shall determine. The Commission shall continuously review the reasonableness and lawfulness of the amounts of the charges produced by the steam cost rate and the charges included therein.

If from such audit it shall be determined, by final order entered after notice and hearing, that* this clause has been erroneously or improperly utilized, the Company will rectify such enor or impropriety, and in accordance with the terms of the order apply credits or additional charges against future steam cost rates for such revenues as shall have been enoneously or improperly collected. The Commission's order shall be subject to the Right of Appeal.

ISSUED; MAYS, 2006 EFFECTIVE: JULY 6, 2006

ISSUED BY: KEVIN E. BROWN, VICE PRESIDENT 2600 Cbnstian Street Philadelphia, PA 19146


TRIGEN-PHILADELPHIA ENERGY CORPORATION i ORIGINAL PAGE NO. 24


REPORTING REQUIREMENTS.

The Company shall file quarterly reports within thirty (30) days following the conclusion of each quarter of the computation year. These reports will be in such form as the Commission shall prescribe. The third quarterly report shall be accompanied by a tentative estimate of the steam cost rate for the next computation year.

EXCLUSION FROM OTHER CHARGES.

Amounts billed for the steam cost rate shall not be subject to the state tax adjustment surcharge set forth elsewhere in this Tariff.

ISSUED: MAYS, 2006 EFFECTIVE: JULY 6, 2006


From: Origin ID: REDA (215)299-2000 Barnett Satinsky FoxRothschild 2000 Market Street

Philadelphia, PA 19103

Fedlsse Express

-M 0201 OOiKO J J i

SHIPTO: (215)299-2088 BILLSENDER

Rosemary Chiavetta, Secretary PA Public Utility Commission 400 North St Commonwealth Keystone Building Harrisburg, PA 17120

Ship Date: 13AUG10 ActWgt; 4.0 LB CAD:5193122/WBUS0200

Delivery Address Bar Code

R e f # 004423,00020-0066 Invoice # P O # Dept#

TRK# I020T1 7938 2077 2454

KM MDTA

MON - 16 AUG Al

PRIORITY OVERNIGHT

17120 PA-DS

MDT

FOLD on this tine and place in shipping pouch with bar code and delivery address visible

1. Fold the first printed page in half and use as the shipping label. 2. Place the label in a waybill pouch and affix it to your shipment so

that the barcode portion ofthe label can be read and scanned. 3. Keep the second page as a receipt for your records. The receipt

contains the terms and conditions of shipping and information useful for tracking your package.

direct dial: (215)299-2088 kmail address: bsaiinsky ...kmail address: [email protected] p...

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