Exhibit B-186
LIMITED PARTNERSHIP AGREEMENT
OF
MID-XXXXXXX XXXXX L.P.
A DELAWARE LIMITED PARTNERSHIP
Dated as of April 15, 1996
TABLE OF CONTENTS
RECITALS 1
ARTICLE I
DEFINITIONS 2
Section 1.1 2
ARTICLE II
FORMATION OF PARTNERSHIP 4
Section 2.1 Continuation 4
Section 2.2 Name 4
Section 2.3 Principal Office 4
ARTICLE III
FILING OF CERTIFICATES AND OTHER DOCUMENTS 4
Section 3.1 Additional Filings of Certificates 4
Section 3.2 Filing of Other Documents 5
ARTICLE IV
PURPOSES 5
Section 4.1 Purposes of Partnership 5
ARTICLE V
TERM, FISCAL YEAR AND ACCOUNTING METHOD 5
Section 5.1 Term 5
Section 5.2 Fiscal Year; Accounting Method 5
ARTICLE VI
CONTRIBUTIONS AND CAPITAL 6
Section 6.1 Capital Contributions 6
Section 6.2 Capital Account 6
Section 6.3 Withdrawal of Capital 7
Section 6.4 Interest 7
Section 6.5 No Liability for Return of Capital 7
Section 6.6 No Third Party Rights 7
ARTICLE VII
DISTRIBUTIONS; ALLOCATION OF PROFITS AND LOSSES 8
Section 7.1 Distributions 8
Section 7.2 Form of Distribution 8
Section 7.3 Allocation of Profits and Losses 8
ARTICLE VIII
TAX MATTERS 8
Section 8.1 Considered a Partnership 8
Section 8.2 General Partner as Tax Matters Partner 9
Section 8.3 Preparation of Tax Returns 9
Section 8.4 Elections by Tax Matters Partner 10
Section 8.5 Special Basis Adjustment 10
Section 8.6 Withholding 10
Section 8.7 Survival of Tax Provisions 10
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ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS 10
Section 9.1 Books and Records 10
Section 9.2 Reports; Fiscal Year 11
Section 9.3 Tax Returns 11
Section 9.4 Bank Accounts 11
ARTICLE X
COMPENSATION AND REIMBURSEMENT OF GENERAL PARTNER 11
Section 10.1 Compensation 11
ARTICLE XI
AUTHORIZED PAYMENTS 12
Section 11.1 Contractual Obligations 12
ARTICLE XII
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER 12
Section 12.1 Management of the Partnership 12
Section 12.2 Authority of the General Partner 12
Section 12.3 Right of Public to Rely on Authority
of General Partner 15
Section 12.4 Duties and Obligations of General
Partner 16
Section 12.5 Liability of the General Partner;
Indemnification 16
Section 12.6 Restrictions 17
Section 12.7 Withdrawal of General Partner 18
ARTICLE XIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS 19
Section 13.1 No Right to Participate in Management 19
Section 13.2 Limited Liability 19
Section 13.3 Matters Subject to Vote 19
Section 13.4 Call of Meetings and Written Consents 19
Section 13.5 Manner of Voting 20
Section 13.6 Limitations 20
Section 13.7 Compensation and Reimbursement 20
ARTICLE XIV
ASSIGNMENT OF PARTNERSHIP INTERESTS 20
Section 14.1 Restrictions on Transfers 20
Section 14.2 Rights of Assignee of Limited
Partnership 21
Section 14.3 Substitution of Assignee of Limited
Partner 21
Section 14.4 Consent to Assignment 22
Section 14.5 Indemnification 23
Section 14.6 Bankruptcy of a Limited Partner 23
Section 14.7 Further Assignments 23
Section 14.8 Additional Limited Partner 23
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ARTICLE XV
REMOVAL, WITHDRAWAL AND REPLACEMENT OF THE GENERAL PARTNER 23
Section 15.1 Voluntary Withdrawal 23
Section 15.2 Selection of a Substitute General
Partner 24
Section 15.3 Substitution 24
Section 15.4 Conversion or Purchase of the General
Partner's Interest 24
ARTICLE XVI
DISSOLUTION, LIQUIDATION AND
TERMINATION OF THE PARTNERSHIP 24
Section 16.1 Events of Dissolution 24
Section 16.2 Right to Continue the Partnership
Business 25
Section 16.3 Liquidation 25
Section 16.4 Termination 26
Section 16.5 Compliance With Timing Requirements of
Regulations 27
ARTICLE XVII
MISCELLANEOUS PROVISIONS 27
Section 17.1 Amendments 27
Section 17.2 Notices 28
Section 17.3 Power of Attorney 28
Section 17.4 Severability 28
Section 17.5 Application of Delaware Law 29
Section 17.6 Sole and Absolute Discretion 29
Section 17.7 Confidential Information 29
Section 17.8 Headings 29
Section 17.9 Entire Agreement 29
Section 17.10 Gender and Number 29
Section 17.11 Successors 29
Section 17.12 Variation of Pronouns 29
Section 17.13 Attorneys' Fees 29
Section 17.14 Further Action 30
Section 17.15 Counterparts 30
Section 17.16 Covenant to Sign Documents 30
Section 17.17 No Partition 30
Section 17.18 Not for Benefit of Creditors 30
Section 17.19 Representations of Limited Partner 30
Section 17.20 Waiver 31
Section 17.21 Incorporation by Reference 31
EXHIBIT A 1
CONTRIBUTIONS BY PARTNERS 1
EXHIBIT B 1
ALLOCATION OF PROFITS AND LOSSES 1
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THE PARTNERSHIP INTERESTS REFERRED TO HEREIN ("INTERESTS") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR UNDER THE SECURITIES LAWS OF DELAWARE
OR ANY OTHER STATE. SUCH INTERESTS ARE BEING OFFERED AND SOLD
UNDER THE EXEMPTION PROVIDED BY SECTION 4(2) OF THE SECURITIES
ACT AND SIMILAR EXEMPTIONS UNDER APPLICABLE STATE LAW.
A PURCHASER OF ANY INTEREST MUST BE PREPARED TO BEAR THE ECONOMIC
RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE
THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OR UNDER APPLICABLE STATE SECURITIES LAWS AND, THEREFORE, CANNOT
BE SOLD UNLESS THEY ARE SUBSEQUENTLY SO REGISTERED OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THERE IS NO
OBLIGATION OF THE ISSUER TO REGISTER THE INTERESTS UNDER THE
SECURITIES ACT OR APPLICABLE STATE LAW.
ARTICLE XIII OF THE PARTNERSHIP AGREEMENT PROVIDES FOR FURTHER
RESTRICTIONS ON TRANSFER OF THE INTERESTS.
LIMITED PARTNERSHIP AGREEMENT
OF
MID-XXXXXXX XXXXX L.P.,
A DELAWARE LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT (the "Agreement") of
Mid-Xxxxxxx Xxxxx L.P., a Delaware limited partnership (the
"Partnership"), is made and entered into as of the 15th day of
April, 1996, between NCP Houston Power Incorporated, a Delaware
corporation, as the general partner ("NCP Houston" or, in its
capacity as the general partner, the "General Partner") and NCP
Perry Incorporated, a Delaware corporation, as a limited partner
("NCP Perry") and NCP Houston, as a limited partner (together,
NCP Perry and NCP Houston, in its capacity as a limited partner,
are hereinafter referred to as the "Initial Limited Partners")
and any other limited partner (the "Additional Limited Partner")
admitted to the Partnership in accordance with the terms of this
Agreement (together with the Initial Limited Partners, the
"Limited Partners").
RECITALS
A. The Partnership was formed by NCP Houston, as a general
partner, and NCP Perry, as a limited partner, for the purpose of
developing, financing, constructing, owning (or leasing) and
operating a natural gas and distillate oil-fired electric
generating facility (the "Facility") to be located in Kathleen,
Georgia. No written partnership agreement was entered into at
the time of its formation, but a Certificate of Limited
Partnership was filed in the Office of the Secretary of State of
the State of Delaware on December 3, 1993 (the "Certificate").
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B. The General Partner and the Initial Limited Partners
desire to continue the Partnership on the terms and conditions
set forth herein and to enter into this Agreement to govern the
relationships of the parties hereto.
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants set forth herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings set
forth below:
"Act" shall mean the Delaware Revised Uniform Limited
Partnership Act.
"Affiliate" shall mean, with respect to any Person, a Person
(including a subsidiary) which directly or indirectly controls,
or is controlled by, or is under common control with, such
Person.
"Capital Account" shall mean, with respect to any Partner,
the Capital Account maintained for such Partner in accordance
with the provisions of Article VI.
"Capital Contribution" shall mean, with respect to any
Partner, the amount of money and the initial gross asset value of
any property (other than money) contributed to the Partnership
with respect to the interest in the Partnership held by such
Partner.
"Cash Available for Distribution" shall mean, at any time,
such cash on hand and in financial institutions as in the General
Partner's sole and absolute discretion is then available for
distribution to the Partners after (i) all costs and expenses
incurred by or on behalf of the Partnership have been paid or
reimbursed and all current debts and obligations of the
Partnership have been paid or provisions therefor have been made,
(ii) reserves have been set aside by the General Partner (which
reserves shall be determined by the General Partner in its sole
and absolute discretion) and (iii) adequate provision has been
made for the satisfaction of debt service requirements (if any).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"EI Fuels" shall mean EI Fuels Corporation, a Delaware
corporation.
"EI Services" shall mean EI Services, Inc., a Delaware
corporation.
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"Equity Contribution Agreement" shall mean that certain
Equity Contribution Agreement, dated as of April 15, 1996, among
NCP Houston, NCP Perry, the Partnership and The Bank of Nova
Scotia.
"Fuel Management Agreement" shall mean that certain Fuel
Management Agreement, dated as of February 19, 1996, between EI
Fuels and the Partnership, as amended by the letter amendment
thereto dated as of April 15, 1996.
"GDPIPD" shall mean the Gross Domestic Product Implicit
Price Deflator which shall have the value specified by the United
States Government Department of Commerce, Bureau of Economic
Analysis, in the Survey of Current Business as published in
January of each year and revised thereafter.
"Limited Partnership Interest" shall mean, as to any Limited
Partner, the proportion that the Partnership Interest of such
Limited Partner (as such) bears to the sum of the Partnership
Interests of all Partners.
"Loan Documents" shall have the same meaning as set forth in
the Project Loan Agreement.
"Majority in Interest of the Limited Partners" shall mean
the Limited Partners owning more than fifty (50%) percent of the
Partnership Interests then owned by all of the Limited Partners.
"Operations Management Agreement" shall mean that certain
Construction and Operations Management Agreement dated as of
April 15, 1996 between EI Services and the Partnership.
"Partnership Interest" shall mean the percentage interest in
the profits, losses and capital of the Partnership of each
Partner which is set forth opposite such Partner's name on
Exhibit A annexed hereto, as such percentage interest may be
amended from time to time.
"Partnership Property" shall mean the Partnership's right,
title and interest in all property of the Partnership, whether
real, personal or mixed, whether tangible or intangible.
"Partner" shall mean NCP Houston, NCP Perry and any other
Person admitted as a general or limited partner to the
Partnership.
"Person" shall mean the individual, partnership (whether
general or limited), business trust, joint venture, trust,
unincorporated association, corporation, limited liability
company, joint stock company, government authority or any other
legal entity of whatever nature.
"Project Documents" shall have the same meaning as set forth
in the Project Loan Agreement.
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"Project Loan Agreement" shall mean that certain Loan and
Reimbursement Agreement dated as of April 15, 1996, among
Partnership, The Bank of Nova Scotia and other parties thereto,
as it may be amended from time to time.
"Regulations" shall mean the Treasury Regulations
promulgated under the Code.
"Transaction Documents" shall have the same meaning as set
forth in the Project Loan Agreement.
ARTICLE II
FORMATION OF PARTNERSHIP
Section 2.1 Continuation. On December 3, 1993, NCP Houston
and NCP Perry caused the Certificate to be prepared and to be
filed in the Office of the Secretary of State of the State of
Delaware. The General Partner and the Initial Limited Partners
hereby ratify and approve the Certificate of Limited Partnership
of the Partnership effective as of the date of this Agreement.
The parties hereto acknowledge that the Partnership has been
formed under the Act, and that the Act shall govern the rights
and liabilities of the parties hereto, except as otherwise herein
expressly stated. As of the date hereof, NCP Houston is the sole
General Partner of the Partnership. As of the date hereof, NCP
Perry and NCP Houston are the sole limited partners of the
Partnership. The Partners expressly ratify and approve all prior
actions of the Partnership.
Section 2.2 Name. The name of the Partnership is "MID-XXXXXXX
XXXXX L.P." The business of the Partnership may be conducted
under any name chosen by the General Partner, in accordance with
the Act, and the General Partner may, in its sole discretion,
change the name of the Partnership from time to time. The
General Partner shall promptly notify the Limited Partners of any
such name change.
Section 2.3 Principal Office. The principal office of the
Partnership shall be located at Xxx Xxxxx Xxxx Xxxx, Xxxxxxxxxx,
XX 00000. From time to time, the General Partner may change the
location of such principal office and may establish such
additional offices as the General Partner may deem advisable, in
the General Partner's sole discretion. Notification of any such
change or additional offices shall be given to the Limited
Partners as soon as practicable.
ARTICLE III
FILING OF CERTIFICATES AND OTHER DOCUMENTS
Section 3.1 Additional Filings of Certificates. In addition
to the filing of the Certificate with the Delaware Secretary of
State, the General Partner shall cause the Certificate to be
filed in such other places as are or shall be required by
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applicable law. The General Partner shall also cause the
Certificate to be amended as and when required by applicable law,
and shall cause to be prepared and filed in the office of the
Delaware Secretary of State and in such other places as are or
shall be required by applicable law any certificate of
cancellation required to be filed by applicable law.
Section 3.2 Filing of Other Documents. From time to time, the
General Partner shall sign, acknowledge, swear, file and publish
any additional certificates, notices, statements or other
instruments, including without limitation, any appropriate
fictitious business name statements, as, when and where required
by any provisions of law governing the formation of the
Partnership or the conduct of its business or to enable the
Partnership to have a right, title and interest in real, personal
or mixed property in the Partnership's name.
ARTICLE IV
PURPOSES
Section 4.1 Purposes of Partnership. The purposes of the
Partnership are to: construct, finance, own and/or lease,
operate and manage the Facility; and carry on any activities
whatsoever that it may deem proper, convenient, incidental or
appropriate in connection with any of the foregoing purposes, or
that it may deem calculated, directly or indirectly, to improve
the interests of the Partnership in connection therewith.
Without limiting the generality of the foregoing, the Partnership
may (A) develop, own, invest, sell, transfer, convey, license,
mortgage, pledge, exchange, use, exhaust or otherwise dispose of
or deal with all of the property of every nature whatsoever of
the Partnership, (B) incur indebtedness, secured or unsecured,
for any of the purposes of the Partnership, (C) engage in any
activities in the opinion of the General Partner that are in
furtherance of said purposes and are not prohibited by law and
(D) execute, deliver and perform all such documents, writings,
agreements, certificates, acknowledgments, applications and
instruments incidental thereto, in each case as the same may be
amended, modified, supplemented or replaced from time to time.
ARTICLE V
TERM, FISCAL YEAR AND ACCOUNTING METHOD
Section 5.1 Term. The term of the Partnership commenced on
December 3, 1993, the date the Certificate was filed in the
office of the Delaware Secretary of State. Unless earlier
dissolved pursuant to Section 16.1 hereof or the provisions of
the Act, the Partnership shall be dissolved on April 14, 2046.
Section 5.2 Fiscal Year; Accounting Method. The Partnership's
fiscal year shall be the calendar year. The Partnership's books
and records shall be maintained on an accrual basis in accordance
with generally accepted accounting principles and tax accounting
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methods applicable to the Partnership.
ARTICLE VI
CONTRIBUTIONS AND CAPITAL
Section 6.1 Capital Contributions. (a) As of the date of this
Agreement, each Partner has contributed to the capital of the
Partnership the net amount set forth opposite such Partner's name
on Exhibit A attached hereto, and such amount has been credited
to such Partner's Capital Account.
(b) NCP Houston and NCP Perry each agree to make the
capital contributions to the Partnership in the amounts and at
the times as required under the Equity Contribution Agreement.
In the event that General Public Utilities Corporation ("GPU") is
required to meet the obligations of NCP Houston or NCP Perry, as
the case may be, under its Guarantee of the Equity Contribution
Agreement, dated as of April 15, 1996, such payments by GPU shall
be treated as satisfying the obligations of NCP Houston or NCP
Perry, as the case may be, under the Equity Contribution
Agreement and shall also be treated as capital contributions to
the Partnership by the respective guaranteed party.
(c) Except as set forth in this Section 6.1 or as
expressly required elsewhere in this Agreement, no Partner shall
have any further obligation to make capital contributions to the
Partnership.
Section 6.2 Capital Account. The Partnership shall maintain a
Capital Account for each Partner in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall
be debited (x) the amount of cash and the gross asset value of
any Partnership Property distributed to such Partner pursuant to
any provision of this Agreement, (y) such Partner's distributive
share of Loss and any items in the nature of expenses or losses
which are specially allocated pursuant to Exhibit B hereof, and
(z) the amount of any liabilities of such Partner assumed by the
Partnership or which are secured by any property contributed by
such Partner to the Partnership.
(ii) To each Partner's Capital Account there shall
be credited (x) such Partner's Capital Contributions, (y) such
Partner's distributive share of Profits and any items in the
nature of income or gain which are specially allocated pursuant
to Exhibit B hereof, and (z) the amount of any Partnership
liabilities assumed by such Partner or which are secured by any
Property distributed to such Partner.
(iii) In the event all or a portion of a Partner's
Partnership Interest is transferred in accordance with the terms
of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
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transferred Partnership Interest.
(iv) In determining the amount of any liability
for purposes of clauses (i) and (ii) hereof, there shall be taken
into account Section 752(c) of the Code and any other applicable
provisions of the Code and Regulations.
The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such
Regulations. In the event the General Partner shall determine
that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including without
limitation, debits or credits relating to liabilities which are
secured by contributed or distributed property or which are
assumed by the Partnership or Partners), are computed in order to
comply with such Regulations, the General Partner may make such
modification, provided that it is not reasonably expected to have
a material effect on the amounts distributable to any Partner
pursuant to Article XVI hereof upon the dissolution of the
Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain
equality between the Capital Accounts of the Partners and the
amount of Partnership capital reflected on the Partnership's
balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(g) and (ii) make any
appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b).
Section 6.3 Withdrawal of Capital. No Partner shall have the
right to withdraw its Capital Contribution or to receive any
return of all or any portion of its Capital Contribution.
Section 6.4 Interest. Interest earned on funds of the
Partnership shall constitute Partnership Property and no Partner
shall be entitled to interest on any Capital Contribution, on any
Capital Account balance or on any undistributed or reinvested
Partnership Property.
Section 6.5 No Liability for Return of Capital. The General
Partner shall not be personally liable for the return of all or
any portion of the Capital Contribution of any Limited Partner;
the return of such Capital Contribution shall be made solely from
Partnership assets. Under the circumstances requiring a return
of any Capital Contribution pursuant to the terms of this
Agreement, no Partner shall have the right to demand or receive
property other than cash except as may be specifically provided
for herein.
Section 6.6 No Third Party Rights. Except as each Partner may
otherwise consent with respect to such Partner's own obligations
or rights, the obligations or rights of the Partnership or of
Partners to make or require any Capital Contribution under this
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Agreement shall not grant any rights to, or confer any benefits
upon, any Person who is not a Partner unless otherwise required
by applicable law.
ARTICLE VII
DISTRIBUTIONS; ALLOCATION OF PROFITS AND LOSSES
Section 7.1 Distributions. The Partnership intends to make
distributions of Cash Available for Distribution from time to
time (each such distribution, a "Distribution") as determined by
the General Partner, subject to the following: (i)
Distributions may be restricted or suspended when the General
Partner determines in its sole and absolute discretion that it is
in the best interest of the Partnership to do so; and (ii)
Distributions shall be limited by, or otherwise subject to, the
terms on which the Partnership has incurred any indebtedness
outstanding. Subject to the foregoing and to Article XVI hereof,
Cash Available for Distribution, if any, shall be distributed to
the Partners in proportion to the Partnership Interest of each
Partner.
Section 7.2 Form of Distribution. No Partner shall have any
right to receive any Partnership Property other than cash upon a
Distribution, except as specifically provided in this Agreement.
A Partner shall not be compelled to accept a distribution of
Partnership Property other than cash.
Section 7.3 Allocation of Profits and Losses. The profits and
losses and other items of the Partnership shall be allocated
among the Partners as set forth in Exhibit B attached hereto.
For purposes of this Agreement, profits and losses shall mean the
profits or losses, as the case may be, of the Partnership for
each fiscal year, or part thereof, as determined by the
Partnership's independent certified public accountants and
reported to the Partners on the Partnership's financial
statements; provided, however, that if, pursuant to Exhibit B,
certain items of income, gain, loss or expense are required to be
reported and allocated differently for tax purposes than for
financial reporting purposes, the Partnership shall allocate such
items among the Partners in accordance with Exhibit B in
preparing and filing its tax returns.
ARTICLE VIII
TAX MATTERS
Section 8.1 Considered a Partnership. The Partners intend
that, as defined in Section 7701(a)(2) of the Code, the
Partnership will be treated as a partnership for United States,
state and local income tax purposes. Specifically, each Partner
agrees not to make the election described in Section 761(a) of
the Code to be excluded from the application of the provisions of
Subchapter K. Moreover, each Partner further agrees not to make
an election to be excluded from the application of the
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partnership provisions of any applicable state taxation code or
statute.
Section 8.2 General Partner as Tax Matters Partner. The
General Partner is designated the tax matters partner ("Tax
Matters Partner") as provided in Section 6231(a)(7)(A) of the
Code and any comparable provision of state or local law. Except
as otherwise provided herein, this designation is effective only
for the purpose of activities performed under the Agreement
pursuant to the provisions of the Code and any comparable
provision of state or local law and shall be subject to the
following terms and conditions:
(a) The Tax Matters Partner shall keep the Partners
informed of all administrative and judicial proceedings for the
adjustment of Partnership items (as defined in Section 6231(a)(3)
of the Code and any comparable provision of state or local law)
at the Partnership level.
(b) If notice of an administrative proceeding under
Section 6223 of the Code (or any comparable provision of state or
local law) is received by a Partner (other than the Tax Matters
Partner), such Partner shall notify the Tax Matters Partner of
the treatment of any Partnership item on the Partner's income tax
return which is or may be inconsistent with the treatment of that
item on the Partnership return.
(c) No Partner (other than the Tax Matters Partner)
shall enter into any settlement agreement with any taxing
authority with respect to any Partnership item unless and until
such Partner shall have first notified the Tax Matters Partner in
writing of the proposed agreement and its terms at least thirty
(30) days prior to entering into such settlement.
(d) The Tax Matters Partner or any Partner shall
notify all Partners of any intention to file a petition with the
Tax Court for a redetermination of any Partnership item within
five (5) business days from the date of the Notice of Final
Partnership Administrative Adjustments (as defined in Section
6223 of the Code).
(e) The Tax Matters Partner may enter into one or more
agreements with the Internal Revenue Service with respect to the
tax treatment of any items of Partnership income, loss,
deductions or credits and, to the extent permitted under the
Code, may expressly argue that such agreement or agreements shall
bind all of the Partners.
Section 8.3 Preparation of Tax Returns. The Tax Matters
Partner shall cause the preparation and timely filing of United
States, state and local income tax returns on behalf of the
Partnership. Each Partner agrees to furnish the Tax Matters
Partner such information as each Partner may have which is
required for the proper and timely preparation of such returns.
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Section 8.4 Elections by Tax Matters Partner. The Tax Matters
Partner shall make the following elections under the Code and the
Regulations and any similar state and local statutes and
regulations:
(a) To adopt the calendar year as the annual
accounting period, unless otherwise required by law;
(b) To adopt the accrual method of accounting;
(c) To make such other elections as the Tax Matters
Partner may deem advisable to reduce Partnership taxable income
to the maximum extent possible and to take deductions in the
earliest taxable year possible in accordance with the Code and
the Regulations.
Section 8.5 Special Basis Adjustment. In connection with
Distributions or any assignment or transfer of a Partnership
Interest permitted by the terms of this Agreement, the General
Partner in its discretion may cause the Partnership, at the
written request of the transferor or the transferee with respect
to a transfer of a Partnership Interest, on behalf of the
Partnership and at the time and in the manner provided in the
Regulations, to make an election to adjust the basis of
Partnership Property in the manner provided in Sections 734(b),
743(b) and 754 of the Code. If such election is made with
respect to a transfer of a Partnership Interest, the transferee
shall pay all costs incurred by the Partnership in connection
therewith, including without limitation, reasonable attorneys'
and accountants' fees.
Section 8.6 Withholding. The General Partner shall comply
with any income tax withholding obligations that may be imposed
from time to time by the Code or any similar state and local
statutes with respect to distributions or income allocations to
Partners.
Section 8.7 Survival of Tax Provisions. The provisions of
this Agreement relating to tax matters shall survive the
termination of the Partnership and this Agreement and the
termination of any Partner's Partnership Interest in the
Partnership and shall remain binding on that Partner for the
period of time necessary to resolve with any Federal, state or
local tax authority any tax matters regarding the Partnership.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Books and Records. The Partnership's books and
records, together with copies of all of the documents and papers
pertaining to the business of the Partnership, shall be kept at
the principal place of business of the Partnership and at all
reasonable times upon reasonable notice shall be open to the
inspection of and may be copied and excerpts taken therefrom by
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any Partner, or such Partner's duly authorized representative,
provided that such inspection is made in good faith, at such
Partner's expense, and without any intent to damage the
Partnership or any of the Partners.
Section 9.2 Reports; Fiscal Year.
(a) Annual Reports. Within one hundred twenty (120)
days after the close of each fiscal year, the Partnership shall
provide its Partners with a balance sheet (including a statement
of such Partner's capital account), determined as of the close of
such year, and an income statement and a statement of changes in
financial position for such year, which balance sheet and
statements shall be accompanied by the report prepared by the
independent accountants engaged by the General Partner on behalf
of the Partnership.
(b) Quarterly Reports. The General Partner shall
prepare and forward to the Limited Partners quarterly unaudited
financial information summarizing the results of operations of
the Partnership's business for the three months then ended within
sixty (60) days after the end of each such period (excluding the
last fiscal quarter), the form and extent of which shall be in
the sole discretion of the General Partner.
Section 9.3 Tax Returns. The General Partner shall send to
each Partner, within one hundred twenty (120) days after the end
of each tax year, the information necessary for such Partner to
complete its Federal and state income tax or information returns.
Section 9.4 Bank Accounts. All funds of the Partnership shall
be deposited in the name of the Partnership in such bank accounts
or other accounts, including, in the sole discretion of the
General Partner, money market funds or other short term
investments, as shall be determined by the General Partner, or as
may be otherwise required under the Project Loan Agreement. All
withdrawals therefrom shall be made upon checks signed on behalf
of the Partnership by any officer of the General Partner or by
any Person or Persons authorized by the General Partner to sign
checks on behalf of the Partnership, except as otherwise may be
required under the Project Loan Agreement.
ARTICLE X
COMPENSATION AND REIMBURSEMENT OF GENERAL PARTNER
Section 10.1 Compensation. In addition to other amounts
payable to the General Partner hereunder, the General Partner
shall have the authority to cause the Partnership to pay or cause
to be paid:
(i) On the Closing Date (as defined in
the Project Loan Agreement), the amounts payable on the Closing
Date as set forth in the budget delivered pursuant to Section
8.1(w) of the Project Loan Agreement, including a development fee
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to the General Partner of not less than Three Million Five
Hundred Thousand ($3,500,000) Dollars.
(ii) Commencing on the Closing Date (as
defined in the Project Loan Agreement), an annual administrative
fee ("Administrative Fee") to the General Partner equal, in each
twelve month period, to the product of $50,000 and a fraction,
the numerator of which is the GDPIPD as of January 1st of such
year and the denominator of which the GDPIPD as of January 1st of
the year in which the Closing Date occurs. The Administrative
Fee shall be payable in advance in equal installments, beginning
on the Closing Date and thereafter on each March 31, June 30,
September 30 and December 31, during the term of this Agreement,
and shall be apportioned for periods of less than twelve months.
(iii) reimbursements from time to time
for all expenses incurred by the General Partner in performing
its duties hereunder including, but not limited to, travel costs,
costs incurred in the preparation of draw requests under, and
compliance with, the Project Loan Agreement and other Transaction
Documents, amounts payable to Persons employed pursuant to
Section 12.2(b)(iii) hereof (including allocable overhead) and
attorneys' fees, consultants' fees, accountants' fees and similar
fees related thereto.
ARTICLE XI
AUTHORIZED PAYMENTS
Section 11.1 Contractual Obligations. The General Partner
shall have the authority to cause the Partnership to pay, subject
to any restrictions contained in the Project Loan Agreement, all
amounts payable by the Partnership to (i) EI Services under the
Operations Management Agreement, (ii) EI Fuels under the Fuel
Management Agreement and (iii) Energy Initiatives Inc. under that
certain Front Load Letter of Credit Maintenance Agreement dated
as of April 15, 1996.
ARTICLE XII
RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
Section 12.1 Management of the Partnership. The management and
control of the business and affairs of the Partnership shall be
vested solely in the General Partner, except as otherwise
expressly provided in this Agreement.
Section 12.2 Authority of the General Partner.
(a) The General Partner shall have all the
rights and powers herein conferred upon the General Partner and
all rights and powers of general partners as provided in the Act
and as otherwise provided by law, except to the extent such
powers may be expressly limited by this Agreement.
Notwithstanding anything to the contrary set forth herein, the
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General Partner shall have the right and power to cause the
Partnership to perform all of its obligations and to take all
action required by the Transaction Documents. Any action taken
by the General Partner on behalf of the Partnership shall
constitute the act of and serve to bind the Partnership.
(b) Except as otherwise expressly provided
in this Agreement, including, without limitation, the
restrictions set forth in Section 12.6 below, the General Partner
is hereby granted the right, power and authority to do on behalf
of the Partnership, and in its name, to the extent the General
Partner determines it to be appropriate, all things which, in its
good faith judgment, are necessary, proper or desirable to carry
out its duties and responsibilities in managing the business of
the Partnership, including, but not limited to, the right, power
and authority from time to time to do the following:
(i) to make borrowings under the
Transaction Documents, and, as contemplated and permitted thereby
as security for the Partnership's obligation thereunder, to
mortgage, pledge or otherwise encumber the assets of the
Partnership, all on such terms and conditions as the General
Partner in its discretion deems appropriate;
(ii) to cause to be paid all
amounts due and payable by the Partnership to any Person and to
collect all amounts due to the Partnership;
(iii) to employ such agents,
employees, managers, accountants, attorneys, consultants and
other Persons, including itself and its Affiliates (including,
without limitation, EI Services pursuant to the Operations
Management Agreement and EI Fuels pursuant to the Fuel Management
Agreement), as it deems necessary or appropriate to carry out the
business and affairs of the Partnership, whether or not any such
Persons so employed are Affiliates of any Partner, and to pay the
fees, expenses, salaries, wages and other compensation to such
Persons provided for in the agreement under which they are
employed;
(iv) to pay, extend, renew, modify,
adjust, submit to arbitration, prosecute, defend or compromise,
upon such terms as it may determine and upon such evidence as it
may deem sufficient, any obligation, suit, liability, cause of
action or claim, including taxes, either in favor of or against
the Partnership;
(v) subject only to such
limitations, if any, as are specifically set forth in this
Agreement, to pay any and all fees and to make any and all
expenditures which it, in its good faith judgment, deems
necessary or appropriate in connection with the organization of
the Partnership, the management of the affairs of the
Partnership, and the carrying out of its obligations and
responsibilities under this Agreement, and to enforce all rights
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of the Partnership;
(vi) to admit an assignee of a
Limited Partner's Interest to be a Limited Partner in the
Partnership, pursuant to and subject to the terms of Section
14.2;
(vii) to prosecute, protect and
defend or cause to be prosecuted, protected and defended all
patents, patent rights, tradenames, trademarks and servicemarks,
and all applications with respect thereto, which may be held by
the Partnership and to take all reasonable and necessary actions
to protect the secrecy of and the proprietary rights with respect
to any trade secret, know-how, secret processes or other
proprietary information and to prosecute and defend all rights of
the Partnership in connection therewith;
(viii) to enter into, execute,
acknowledge, deliver and perform any and all contracts,
agreements or other instruments necessary or appropriate to carry
on the business of the Partnership, including, without
limitation, the Transaction Documents (and all such contracts,
agreements and instruments as have been executed are hereby
ratified and approved) subject to the restrictions set forth in
Section 12.6(c);
(ix) to file any and all tax
returns that may be required by applicable law, to cause to be
paid any and all taxes, charges and assessments that may be
levied or assessed against or imposed upon the Partnership or any
of the assets of the Partnership.
(x) subject to Section 8.4 to
make, from time to time, such tax elections, as the General
Partner may deem necessary or desirable and to file any and all
tax returns that may be required by applicable law;
(xi) to enter into agreements and
engage in the transactions described in Section 10.1 with itself,
as provided in such Section, and to execute and deliver the
Operations Management Agreement and the Fuel Management
Agreement;
(xii) to establish and maintain one
or more accounts for the Partnership in such banks, and with such
brokers and other financial institutions as the General Partner
may from time to time designate;
(xiii) to make Distributions
periodically to the Partners in accordance with the provisions of
this Agreement;
(xiv) to sell, transfer, assign,
convey, lease or otherwise dispose of or deal with all or any
part of the Partnership Property or any interest or estate
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therein, subject to the restrictions set forth in Section
12.6(b);
(xv) to execute and deliver (either
singly or jointly) on behalf of the Partnership any documents
required to be executed and delivered by the Partnership pursuant
to the closing of the financing relating to the construction and
development of the Facility, including, but not limited to the
Transaction Documents and all documents and certificates required
or otherwise necessary or convenient to be executed in connection
with the transactions contemplated thereby;
(xvi) to acquire and enter into any
contract of insurance which the General Partner in its good faith
judgment deems to be necessary and proper for the protection of
the Partnership, for the conservation of Partnership Property or
for any purpose beneficial to the Partnership;
(xvii) to make any alterations,
improvements and repairs which are necessary to maintain the
Partnership Property in good operating condition;
(xviii) to invest, subject to any
restrictions contained in the Project Loan Agreement, any
Partnership funds not immediately needed in the conduct of the
Partnership's business in such investments as the General Partner
deems appropriate; and
(xix) to engage in any kind of
activity and to perform and carry out contracts of any kind
necessary to, or in connection with or convenient or incidental
to, the accomplishment of the purposes of the Partnership, so
long as such activities and contracts may be lawfully carried on
or performed by a partnership under the laws of the State of
Delaware.
(c) With respect to all of its obligations,
powers and responsibilities under this Agreement, the General
Partner is authorized to execute and deliver, for and on behalf
of the Partnership, such notes and other evidences of
indebtedness, contracts, agreements, assignments, deeds, leases,
loan agreements, mortgages and other security instruments and
agreements as it deems proper, all on such terms and conditions
as it deems proper, but subject to the limitations on the powers
of the General Partner contained below in Section 12.6(b) and
(c).
Section 12.3 Right of Public to Rely on Authority of General
Partner. At any time during the term of the Partnership, any
General Partner, individually, if there is more than one General
Partner, shall have the authority to act for and on behalf of the
General Partners collectively and the Partnership consistent with
the terms and conditions of this Agreement. No person shall be
required to determine a General Partner's authority to undertake
any act or execute any contract on behalf of the General Partners
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collectively (if more than one) and on behalf of the Partnership,
or to see to the application or distribution of revenues or
proceeds paid to a General Partner as a representative of the
Partnership. Any Limited Partner who acts in contravention of
this Agreement and thereby causes itself to be deemed a general
partner for liability purposes shall under no circumstances be
construed as receiving a grant of power to act or authority to
act in such capacity under this or any other provision of this
Partnership Agreement.
Section 12.4 Duties and Obligations of General Partner.
(a) The General Partner shall be responsible for the
general management, supervision, and administration of the
Partnership's business and affairs. The General Partner shall
also manage and supervise the construction and operation of the
Facility. The General Partner shall devote such time and effort
to the Partnership's business as shall be reasonably necessary or
appropriate to perform its duties as specified in the preceding
sentence, and the General Partner shall not engage in any
business other than the business of the Partnership.
(b) Neither being a party to this Agreement nor
participating in the implementation and development of the
Facility shall in any way restrain any Partner or its officers,
directors, shareholders, employees or Affiliates from engaging in
any other present or future business activities, whether or not
any such activity is competitive with the business of the
Partnership or the Facility, or shall in any way preclude or
restrict any of them from entering into a joint venture,
partnership or other business arrangement with one or more
Partners, whether or not such venture, partnership or arrangement
is competitive with the business of the Partnership or the
Facility.
No Partner or its officers, directors,
shareholders, employees or Affiliates shall be obligated or bound
to offer or present to any other Partner or the Partnership any
business opportunity offered to such Partner, officers,
directors, shareholders, employees or Affiliates, whether or not
such business opportunity is competitive with the business of the
Partnership or the Facility.
Section 12.5 Liability of the General Partner; Indemnification.
The General Partner shall not be liable, responsible or
accountable in damages or otherwise to the Partnership, to any of
the Limited Partners or to any other Person for any act or
omission performed or omitted in good faith by it as General
Partner on behalf of the Partnership or the Limited Partners, as
the case may be, and in a manner reasonably believed by the
General Partner to be within the scope of the authority granted
to it by this Agreement and in the best interests of the
Partnership, except when such action or failure to act
constitutes gross negligence or willful misconduct. The General
Partner shall be indemnified by the Partnership against any
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liability, loss or expense, including, without limitation,
reasonable attorney's fees, litigation costs, settlement amounts
and judgments, as and when incurred, it may incur for any act
performed by it in good faith and reasonably believed by it to be
within the scope of the authority granted to it by this Agreement
and in the best interests of the Partnership; provided, however,
that no indemnification may be made in respect of any claim,
issue or matter as to which the General Partner shall have been
adjudged by a court having jurisdiction to be liable for gross
negligence or willful misconduct in the performance of its duties
hereunder unless, and only to the extent that, the court in which
such action or suit has been brought determines that in view of
all the circumstances of the case, despite such adjudication, the
General Partner is fairly and reasonably entitled to
indemnification for those expenses which the court deems proper.
Any indemnity under this Section 12.5 shall be paid from, and
only to the extent of, the Partnership Property, and no Limited
Partner shall have any personal liability on account thereof.
The obligations of the Partnership to the General
Partner under this Section 12.5 are subordinate, subject and made
junior in right of payment to the rights under the Project Loan
Agreement of the Lenders, as defined therein; provided, however,
that so long as no Event of Default shall have occurred and be
continuing under the Project Loan Agreement, the Partnership may
make such payments to the General Partner as may be required
under this Section 11.5.
Section 12.6 Restrictions.
(a) Notwithstanding anything herein to the contrary,
the General Partner shall not borrow money on behalf of the
Partnership for other than a Partnership purpose, it being
understood without limitation that any borrowings made under the
Transaction Documents shall be deemed to be made for Partnership
purposes.
(b) The General Partner shall not cause the
Partnership to sell all or substantially all of the Partnership
Property, except upon obtaining the consent of a Majority in
Interest of the Limited Partners or in accordance with the
procedures described in Article XVI with respect to the
dissolution of the Partnership, if applicable.
(c) Except as otherwise provided herein, without the
consent of a Majority in Interest of the Limited Partners, the
General Partner shall have no authority to:
(i) do any act in contravention of this
Agreement or the Partnership's Certificate of Limited
Partnership, as such document may be amended from time to time;
(ii) do any act which would make it
impossible to carry on the ordinary business of the Partnership;
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(iii) possess any Partnership Property,
or assign rights in specific Partnership Property for other than
a Partnership purpose;
(iv) borrow from the Partnership;
(v) affirmatively represent to any
Person that any Limited Partner is a general partner of the
Partnership other than NCP Houston in its capacity as General
Partner;
(vi) except as provided in Article XIV,
admit a Person as a Limited Partner or as a General Partner;
(vii) change the nature of the
Partnership's business;
(viii) transfer the Facility;
(ix) cause or permit the Partnership to
waive any provisions of its material agreements, including but
not limited to the Project Loan Agreement, the Power Purchase
Agreement (as defined in the Project Loan Agreement), the
Operations Management Agreement or the Fuel Management Agreement
if such waiver would have the effect of (1) decreasing by a
material amount the amount of payments to be made by Georgia
Power Company thereunder to the Partnership under the Power
Purchase Agreement, (2) relieving Georgia Power Company by a
material amount of its obligations to accept and pay for all
electric energy and capacity delivered to it under the Power
Purchase Agreement or (3) diminishing the term of the Power
Purchase Agreement; or
(x) cause or permit the Partnership to
modify, amend or waive any provisions of its material agreements,
including but not limited to the Project Loan Agreement, the
Power Purchase Agreement (as defined in the Project Loan
Agreement), the Operations Management Agreement, the Fuel
Management Agreement, any other Loan Documents or any Project
Document or enter into any new Project Documents, if such
modification, amendment or waiver is expected to have a material
adverse effect on the Facility.
Section 12.7 Withdrawal of General Partner. The General
Partner shall not voluntarily withdraw from the Partnership as a
General Partner, and no purported withdrawal shall be effective,
unless (i) a substitute General Partner shall have been selected
as provided in Article XV, and (ii) the General Partner shall
have delivered to the Partnership an opinion of the Partnership's
counsel that such withdrawal and appointment of such successor
General Partner or Partners would not (x) subject the Partnership
to Federal income taxation as an association taxable as a
corporation and not as a partnership or (y) result in the loss of
the Project's status as a "qualifying cogeneration facility"
under Public Utility Regulatory Policies Act ("PURPA") or any
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applicable successor provision (if the Facility then is not
required to be a qualifying cogeneration facility under the
Project Loan Agreement), unless otherwise permitted under the
Loan Documents. The General Partner may not dispose of its
Partnership Interest held by it as a General Partner except to
its successor general partner or partners.
ARTICLE XIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
Section 13.1 No Right to Participate in Management. The
Limited Partners shall not, and shall have no right to,
participate in the control, conduct or operation of the
Partnership or the Partnership's business, and shall have no
right or authority to act for or bind the Partnership; provided,
however, that a Limited Partner may be selected as the person to
act for and bind the Partnership during the winding up period
following dissolution of the Partnership pursuant to, and subject
to the conditions of, Section 16.3(a) hereof in the event that
the General Partner is no longer a general partner of the
Partnership and no Substitute General Partner exists. A Limited
Partner shall not be deemed to participate in the management or
control of the Partnership solely by virtue of consulting with
and advising the General Partner with respect to the business of
the Partnership or exercising any rights or powers which the
Limited Partners are permitted to exercise pursuant to this
Agreement and Section 17-303 of the Act.
Section 13.2 Limited Liability. No Limited Partner or
assignee of a Limited Partner shall have any liability whatsoever
for any debts, liabilities or other obligations of the
Partnership to the fullest extent provided by the Act, beyond the
amount of such Limited Partner's Capital Contribution pursuant to
Section 6.1 hereof; provided, however, that each Limited Partner
may be required to return any Distributions made to such Limited
Partner (with interest thereon) in violation of Section 17-607 of
the Act. A Limited Partner, as such, shall not be personally
liable for any obligations of the Partnership, and shall not be
obligated to make loans to the Partnership.
Section 13.3 Matters Subject to Vote. The Limited Partners
shall not be entitled to vote on, or consent to, any matters
except as expressly provided for in this Agreement or as
otherwise required by law.
Section 13.4 Call of Meetings and Written Consents. The
General Partner may call a meeting of the Limited Partners for a
vote, or may call for a vote or consent without a meeting. The
General Partner shall call a meeting of the Limited Partners for
a vote, or shall call for a vote or consent without a meeting,
within twenty (20) days after receiving a written request from
Limited Partners holding a majority or more of the aggregate
Limited Partnership Interests for a vote or consent with respect
to any matter as to which any or all of the Limited Partners may
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vote or consent pursuant to Section 13.3 hereof. The General
Partner's notice of a meeting shall state the time and place of
the meeting, and the general nature of the business to be
transacted; if no meeting is called, the General Partner's notice
shall state the matter or matters as to which a vote or consent
is being sought and the date on which such votes or consents
shall be counted. The date of the meeting, or the date on which
votes or consents shall be counted, shall be no less than ten
(10) nor more than sixty (60) days after the mailing of the
General Partner's notice. The meeting, if any, shall be held at
the Partnership's principal place of business or at such other at
location as the General Partner shall state in the notice. The
Partnership shall bear all expenses of the notification and
meeting or vote or consent.
Section 13.5 Manner of Voting. Each Limited Partner shall be
entitled to cast votes (a) at a meeting, in person, by written
proxy or by a signed writing directing the manner in which the
vote is to be cast, which writing must be received by the General
Partner before the meeting or (b) without a meeting, by a signed
writing indicating the matter as to which the vote or consent is
effective and, if a vote, whether it is in support of or
opposition to such matter, which writing must be received by the
General Partner at or before the time and date on which the votes
or consents are to be counted. Only the votes or consents of
Limited Partners of record on the date on which the General
Partner sends its notice, whether at a meeting or otherwise,
shall be counted. The General Partner shall be entitled to vote
its Limited Partnership Interest, if any, for all matters in the
same fashion as other Limited Partners. If a proposal is
approved by an action of the Limited Partners taken without a
meeting, the written vote or consent shall set forth the action
to be taken and shall be signed by Limited Partners owning, in
the aggregate, not less than the minimum percentage of the
aggregate Limited Partnership Interest that would be necessary to
authorize or take such action at a meeting at which all the
Limited Partners were present and voted.
Section 13.6 Limitations. No Limited Partner shall have the
power to: (a) withdraw from the Partnership or reduce its
contribution to the capital of the Partnership; (b) except as may
be otherwise required by law, cause the dissolution and
termination of the Partnership by court decree or otherwise; or
(c) receive property other than cash in return for such Limited
Partner's Capital Contribution.
Section 13.7 Compensation and Reimbursement. No salary or
other compensation shall be paid to any Limited Partner.
ARTICLE XIV
ASSIGNMENT OF PARTNERSHIP INTERESTS
Section 14.1 Restrictions on Transfers. No Partner shall
voluntarily, involuntarily or by operation of law, convey,
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exchange, assign, mortgage, encumber, hypothecate, pledge, sell
or otherwise transfer (each a "Transfer") all or any portion of
its interest in the Partnership or enter into any agreement to do
so, except in accordance with the provisions of this Article XIV.
Any attempted Transfer in violation of the terms of this Article
XIV shall be deemed to be null and void and of no effect.
No Partner may Transfer any portion of its interest in the
Partnership unless (a) the Partnership shall have received an
instrument, duly executed by the transferring Limited Partner, in
a form satisfactory to the General Partner, which sets forth the
transferee of the Limited Partnership Interest which is the
subject of the Transfer, (b) the Partnership shall have received
an opinion from counsel reasonably acceptable to the Partnership
that (i) such Transfer shall not result in the Partnership being
treated as an association taxable as a corporation under the
Code, (ii) such Transfer would not result in the Facility ceasing
to be a "qualifying cogeneration facility" under PURPA (if the
Facility then is a qualifying cogeneration facility) or an exempt
wholesale generator ("EWG") (if the Partnership then is an EWG),
unless otherwise permitted under the Project Loan Agreement,
(iii) such Transfer, when added to any previous Transfer by any
other Partner within a twelve (12) month period, would not cause
the Partnership to be considered to be terminated under Section
708(b) of the Code, unless such Transfer has received the
unanimous consent of the Partners, and (iv) such Transfer would
not cause a Default (as defined in the Project Loan Agreement),
and (c) the transferee of the Limited Partnership Interest agrees
to be bound by the provisions of this Article XIV and (d) the
transferee of the Limited Partnership Interest shall have paid
all of the fees and expenses (including reasonable attorneys'
fees) incurred by the Partnership and the General Partner in
effecting the Transfer and, if requested, the substitution
described in Section 14.3.
Section 14.2 Rights of Assignee of Limited Partnership. An
assignee of a Partner's Limited Partnership Interest or a portion
thereof (an "Assignee") who does not become a Substitute Limited
Partner in accordance with the provisions of Section 14.3 hereof
shall not have any other rights of a Partner other than the right
to the transferring Limited Partner's share of Profits and Losses
and Distributions. If the General Partner receives a notice of
Transfer, as defined in Section 14.1, the Assignee shall become
entitled to receive the transferring Limited Partner's share of
Profits and Losses and Distributions with respect to the Limited
Partnership Interest so transferred and shall succeed to the
transferring Limited Partner's Capital Account with respect to
the Limited Partnership Interest so transferred as of the close
of the month all the conditions set forth in Section 14.1 are
satisfied; provided, however, that an Assignee shall become a
Substitute Limited Partner only upon the satisfaction of the
conditions for substitution set forth in Section 14.3 hereof.
Section 14.3 Substitution of Assignee of Limited Partner. An
Assignee of all or any part of a Partner's Limited Partnership
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Interest shall become a substitute limited partner ("Substitute
Limited Partner") only if each of the following conditions are
met:
(a) The General Partner consents thereto, which
consent shall be in the sole and absolute discretion of the
General Partner;
(b) The Assignee shall consent in writing, in a
form prepared by or satisfactory to the General Partner, to be
bound by all of the terms and conditions of this Agreement, and
to assume all of the obligations of the transferring Limited
Partner hereunder;
(c) The Assignee shall have certified in writing
to the General Partner that the transferring Limited Partner
intends that the Assignee become a Substitute Limited Partner;
and
(e) All requirements of the Act, including any
amendment of the Certificate required by the Act, shall have been
completed by the Assignee, the transferring Limited Partner and
the Partnership, as the case may be.
The admission of a Substitute Limited Partner shall be
effective as of the close of the month in which all of the
conditions specified in this Section 14.3 have been satisfied.
A Substitute General Partner may be admitted only
pursuant to the provisions of Article XV or Section 12.8 hereof.
Section 14.4 Consent to Assignment. Notwithstanding anything
to the contrary set forth herein, each Partner hereby consents to
(1) the pledge by the General Partner of all of its Partnership
Interest to The Bank of Nova Scotia, as Security Agent, pursuant
to the General and Limited Partner Interest Pledge Agreement (as
defined in the Project Loan Agreement), (2) the pledge by each
Initial Limited Partner of all of its Partnership Interest to The
Bank of Nova Scotia, as Security Agent, pursuant to the Limited
Partner Interest Pledge Agreement (as defined in the Project Loan
Agreement) (the General Partner Interest Pledge Agreement and the
Limited Partner Interest Pledge Agreement being collectively
referred to as the "Pledge Agreements"), (3) the exercise by the
Security Agent, upon the occurrence of an event of default under
the Pledge Agreements, of the rights and remedies set forth under
the Pledge Agreements, including, without limitation, (A) the
right to exercise the voting and consensual rights and other
powers of the assigning Partner as set forth in this Agreement to
the extent provided in the Pledge Agreements, and (B) the right
to foreclose upon the collateral subject to the security
interests granted under the Pledge Agreements and to cause the
Security Agent or any third party purchaser of such collateral to
become a substitute General Partner or a substitute Limited
Partner, as the case may be, to the extent provided in the Pledge
Agreements without complying with the requirements of Section
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14.1, 14.3 or 15.3 of this Agreement, (4) any transfer by any
nominee, affiliate or designee of the Security Agent or any
successor thereto that has become a Substituted Limited Partner
or substitute General Partner, and (5) the requirement set forth
in Section 5(j) of the Pledge Agreements that all transfers of
existing Partnership Interests, and all issuances of new or
substitute Partnership Interests, be subject to the pledge in
favor of the Security Agent.
Section 14.5 Indemnification. Each Limited Partner hereby
agrees that it shall indemnify and hold harmless the Partnership,
and in the case of an attempted Transfer by such Partner, the
General Partner, from and against any and all losses, costs,
liabilities or economic disadvantages which result, directly or
indirectly, from any attempt by such Partner to make a Transfer
which does not comply with the requirements of this Article XIV.
Section 14.6 Bankruptcy of a Limited Partner. In the event of
the bankruptcy of a Limited Partner, the trustee, conservator,
administrator, receiver or other successor in interest of such
Limited Partner shall have all the rights of such Limited Partner
for the purpose of settling or managing its affairs and such
power as such Limited Partner possessed to assign all or a part
of its Limited Partnership Interest and to join with the assignee
in satisfying the conditions precedent to such assignee becoming
a Substitute Limited Partner. The bankruptcy of a Limited
Partner shall not dissolve the Partnership. A Limited Partner's
successor in interest shall be liable for all obligations of the
Limited Partner hereunder. In no event, however, shall such
successor in interest become a Substitute Limited Partner, except
in accordance with Section 14.3 hereof.
Section 14.7 Further Assignments. An Assignee of all or any
portion of a Partner's Partnership Interest pursuant to the terms
hereof, who desires to make a further Transfer of such interest,
shall be subject to all of the relevant provisions of this
Article XIV to the same extent and in the same manner as the
Partner making the initial Transfer of a Partnership Interest.
Section 14.8 Additional Limited Partner. No additional limited
partner shall be admitted to the Partnership pursuant to the
creation of additional Limited Partnership Interests in the
Partnership without the approval of the General Partner.
ARTICLE XV
REMOVAL, WITHDRAWAL AND REPLACEMENT OF THE GENERAL PARTNER
Section 15.1 Voluntary Withdrawal. So long as the General
Partner has given written notice to the other Partners and a
Person has been selected and has agreed to become a Substitute
General Partner in accordance with Sections 15.2 and 15.3 hereof,
the General Partner may voluntarily withdraw from the Partnership
as the general partner effective ninety (90) days after written
notice (the "Withdrawal Notice") to the Limited Partners (the
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"Withdrawal Date"); provided, however, that (i) such Withdrawal
Date may not be prior to the date upon which a Person has agreed
to become a Substitute General Partner in accordance with the
terms hereof and (ii) so long as the Loan Documents remain in
effect, the General Partner may not withdraw from the
Partnership.
Section 15.2 Selection of a Substitute General Partner. The
vote of a Majority in Interest of the Limited Partners is
necessary to select a Substitute General Partner; provided,
however, that so long as the Loan Documents remain in effect, the
selection of a Substitute General Partner shall be subject to the
approval requirements therein.
Section 15.3 Substitution. A Person shall become a Substitute
General Partner and assume the rights, powers and
responsibilities of the General Partner as provided in this
Agreement when such Person delivers to the Partners a written
agreement (the "Substitute General Partner Agreement") executed
by such Person within ten (10) days after such Person's selection
as a proposed Substitute General Partner, which Substitute
General Partner Agreement shall set forth the following
agreements by such Person: (a) to be bound by this Agreement;
(b) to assume the rights, powers and responsibilities of the
General Partner pursuant to the terms of this Agreement accruing
after such selection; (c) to amend this Agreement to reflect the
withdrawal of the withdrawn General Partner and the appointment
of such Substitute General Partner; (d) to perform the duties
and the responsibilities of the General Partner; and (e) to
record, file and publish any certificates or documents as may be
appropriate to evidence or effect such withdrawal, substitution
and release.
Section 15.4 Conversion or Purchase of the General Partner's
Interest. The Partnership shall not make any payment to a
withdrawing General Partner in respect of its interest in the
Partnership. Instead, within thirty (30) days after the
Withdrawal Date, if the withdrawing General Partner does not
assign its General Partner Partnership Interest to a Substitute
General Partner, the General Partner Partnership Interest of the
withdrawing General Partner in the Partnership as of the
Withdrawal Date shall be converted into an interest as a
transferee of a Limited Partner that does not become a Substitute
Limited Partner.
ARTICLE XVI
DISSOLUTION, LIQUIDATION AND
TERMINATION OF THE PARTNERSHIP
Section 16.1 Events of Dissolution. The Partnership shall
dissolve and commence winding up and liquidating upon the first
to occur of any of the following:
(a) The date specified in Section 5.1 hereof;
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(b) When all of the Partners have given their
written consent to dissolve the Partnership;
(c) The removal or withdrawal of the General
Partner, unless either (i) there is at least one other general
partner and that general partner elects to continue the business
of the Partnership or (ii) if there is no other general partner
or there is a general partner but such general partner does not
elect to continue the business of the Partnership, then, within
ninety (90) days after the withdrawal, all Limited Partners agree
in writing to continue the business of the Partnership and a
Substitute General Partner is elected and admitted pursuant to
the provisions of Article XV hereof;
(d) The sale or other disposition of all or
substantially all of the Facility;
(e) The continued conduct of the business of the
Partnership becomes illegal;
(f) The General Partner files a voluntary
petition in bankruptcy or is adjudged a bankrupt (each a "GP
Bankruptcy Event") unless a Substitute General Partner is
selected and admitted pursuant to the provisions of Article XV
and all the other Partners agree to continue the Partnership
within ninety (90) days after the GP Bankruptcy Event;
(g) The entry of a judicial decree of dissolution
of the General Partner or the Partnership; provided, however,
that the involuntary dissolution of the General Partner shall not
cause a dissolution of the Partnership if the General Partner is
reinstated within ninety (90) days after such involuntary
dissolution; or
(h) Any event requiring dissolution of the
Partnership pursuant to Section 17-801(4) of the Act.
Section 16.2 Right to Continue the Partnership Business. Upon
the occurrence of any event which causes there to be no General
Partner, Limited Partners holding all of the Limited Partner
Interests shall have the right, but not the obligation,
exercisable within ninety (90) days from such event, to elect to
continue the Partnership's business provided that such election
shall not be effective unless within such ninety (90) day period,
a Majority in Interest of the Limited Partners appoints a
Substitute General Partner in accordance with the terms of this
Agreement.
Section 16.3 Liquidation.
(a) Except as otherwise set forth in Section 16.2
hereof, upon dissolution of the Partnership, the General Partner
shall take (or cause to be taken) a full accounting of the
Partnership's assets and liabilities as of the date of such
dissolution and, subject to the right of the General Partner or
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its successor to continue the business of the Partnership for the
purpose of winding up its affairs, the General Partner shall
proceed with reasonable promptness to liquidate the Partnership's
assets (including, without limitation, by way of the sale,
assignment, exchange, lease, sublease or other disposition of any
or all of the assets of the Partnership) and to terminate its
business; provided, however, that the assets of the Partnership
which are, in the opinion of the General Partner, suitable for
distribution in kind, may, in the sole and absolute discretion of
the General Partner, be distributed in kind to the extent that
the liquidation thereof is not necessary to satisfy the
requirements of clauses (i), (ii) and (iii) below. In the event
of the withdrawal, dissolution or bankruptcy of the General
Partner which causes the dissolution of the Partnership under
Section 16.1, the winding up of the affairs of the Partnership
and the liquidation of its assets shall be conducted by such
Person as may be selected by a Majority in Interest of the
Limited Partners, which Person is hereby authorized to do any and
all acts and things authorized by law for these purposes and is
entitled to the compensation approved by a court of competent
jurisdiction.
The cash proceeds from such liquidation shall be
applied in the following order:
(i) First, to the payment of all taxes,
debts and other obligations and liabilities of the Partnership,
including amounts owing to Partners, and all necessary expenses
of liquidation thereof;
(ii) Second, to the establishing of
reserves deemed reasonably necessary to satisfy contingent
liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership; and
(iii) Third, to the Partners, in
accordance with the relative amounts of the positive balances (if
any) in their respective Capital Accounts, after giving effect to
all contributions, distributions and allocations for all periods.
(b) Except as provided above, the General Partner
shall administer the liquidation of the Partnership and the
termination of its business but shall receive no compensation.
The General Partner shall be allowed a reasonable time for the
orderly liquidation of the Partnership's assets and the discharge
of liabilities to creditors so as to minimize losses resulting
from the liquidation of the Partnership's assets.
Section 16.4 Termination. Upon compliance with the foregoing,
the General Partner or other Person winding up the affairs of the
Partnership as permitted hereunder, as the case may be, shall
file or cause to be filed a certificate of cancellation of the
Partnership, as provided in Section 17-203 of the Act, and the
Partnership thereupon shall be terminated.
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Section 16.5 Compliance With Timing Requirements of
Regulations. In the event the Partnership is "liquidated" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) of the
Code, distributions shall be made pursuant to this Article XVI to
the Partners who have positive Capital Accounts in compliance
with Regulations Section 1.704-1(b)(2)(ii)(b)(2) of the Code. If
any Partner has a deficit balance in his Capital Account (after
giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to
make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered
a debt owed to the Partnership or to any other Person for any
purpose whatsoever. In the discretion of the General Partner, a
pro rata portion of the distributions that would otherwise be
made to the Partners pursuant to this Article XVI may be:
(a) distributed to a trust established for the
benefit of the Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership
and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the Partners from time to
time, in the reasonable discretion of the General Partner, in the
same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the Partners
pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be
distributed to the Partners as soon as practicable.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1 Amendments.
(a) Except for amendments made in accordance with
Sections 17.1(b) hereof, this Agreement may be amended only with
the written consent of the General Partner and a Majority in
Interest of the Limited Partners.
(b) In addition to any amendments otherwise
authorized herein, amendments may be made to this Agreement by
the General Partner, acting without the consent of any Limited
Partner: (i) to elect that the Partnership be governed by any
successor statute of the State of Delaware governing limited
partnerships; (ii) to substitute or admit any additional Limited
Partners to the extent allowed by this Agreement; (iii) to effect
changes of a ministerial nature that do not materially and
adversely affect the rights of the Partners; (iv) to cure any
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ambiguity, to correct or supplement any provision herein that may
be inconsistent with any other provision herein, or to make any
other provision with respect to matters or questions arising
under this Agreement that will not be inconsistent with the
provisions of this Agreement; and (v) to preserve the
Partnership's status as a Partnership and not as an association
taxable as a corporation for federal income tax purposes.
Section 17.2 Notices. Any notice, payment, demand or
communication required or permitted to be given by the
Partnership to a Partner pursuant any provision of this Agreement
shall be deemed to have been sufficiently given or served for all
purposes if delivered personally to the party to whom the same is
directed by a recognized national or local courier service (in
which case notice shall be effective upon receipt) or five
business days after deposit in the United States mail, registered
or certified, postage and charges prepaid, addressed to the other
Partner, as applicable at the address set forth opposite such
Partner's name on the signature page hereto. A Partner may
change his or her address for purposes of notice by a writing
sent in accordance with this Section 17.2 to the General Partner.
Section 17.3 Power of Attorney. Each Limited Partner hereby
makes, constitutes and appoints the General Partner (and each
such Person appointed by the General Partner), with full power of
substitution, such Limited Partner's true and lawful attorney,
for it and in its name, place, stead and benefit, to sign,
execute, swear, file and record the Certificate, and, subject to
any applicable consent requirements contained in this Agreement,
to sign, execute, certify, swear, acknowledge, file and record
any other documents, instruments and conveyances as may be
necessary or appropriate to carry out the provisions or purposes
of this Agreement or which may be required of the Partnership in
Delaware or any other applicable jurisdiction, or by the Act, or
by Federal or state securities laws or other applicable laws,
including, without limitation, amendments to or cancellation and
termination of the Certificate and fictitious business name
statements. The foregoing grant of authority is hereby declared
to be irrevocable and a power coupled with an interest and shall
survive the bankruptcy or dissolution of any Person hereby giving
such power and the transfer or assignment of the whole or any
portion of the Limited Partnership Interest of such Person;
provided, however, that in the event of a transfer by such
Limited Partner of all of such Limited Partner's Limited
Partnership Interest, the foregoing power of attorney of the
transferor Limited Partner shall survive such transfer until such
time, if any, as the transferee shall have been duly admitted to
the Partnership as a Substitute Limited Partner.
Section 17.4 Severability. If any provision of this Agreement
shall be invalid, illegal or unenforceable in any applicable
jurisdiction, the validity, legality and enforceability of the
remaining provisions, or of such provision in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
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Section 17.5 Application of Delaware Law. This Agreement, and
the application or interpretation hereof, shall be governed,
construed and enforced in accordance with the laws of the State
of Delaware.
Section 17.6 Sole and Absolute Discretion. Except as
otherwise provided in this Agreement, all actions which the
General Partner may take and all determinations which the General
Partner may make pursuant to this Agreement may be taken and made
at the sole and absolute discretion of such General Partner.
Section 17.7 Confidential Information. Each of the Partners
shall treat and maintain as confidential any and all confidential
and/or proprietary information, including without limitation
financial information, technical information and know-how and
development plans and strategies, received from or pertaining to
any other Partner or any Affiliate thereof, the Partnership or
the Facility; provided, however, that the foregoing obligation
shall not apply to information which (a) was or becomes known by
such Partner or was or is generally available to the public
through no breach of this Agreement by any Partner, (b) was or is
disclosed to the public by a third party having the right to do
so, or (c) where such disclosure was required by law, regulatory
authority or judicial order.
Section 17.8 Headings. Headings at the beginning of each
Article and Section of this Agreement are solely for convenience
and are not a part of this Agreement.
Section 17.9 Entire Agreement. This Agreement contains the
entire agreement of the parties relating to the subject matter
hereof.
Section 17.10 Gender and Number. With respect to words used in
this Agreement, the singular form shall include the plural form,
the masculine gender shall include the feminine or neuter gender,
and vice versa, as the context requires.
Section 17.11 Successors. This Agreement shall be binding on
and inure to the benefit of the respective successors, permitted
assigns and personal representatives of the parties hereto,
except to the extent of any contrary provision of this Agreement.
Section 17.12 Variation of Pronouns. All pronouns and any
variations thereof shall be deemed to refer to masculine,
feminine or neuter, singular or plural, as the identity of the
Person or Persons may require.
Section 17.13 Attorneys' Fees. If any legal action or
arbitration or other proceeding is brought by any party hereto
for the enforcement of this Agreement or as a result of a breach,
default or misrepresentation in connection with any of the
provisions of this Agreement, any successful or prevailing party
shall be entitled to recover from the party that does not prevail
reasonable attorneys' fees and other costs incurred by the
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prevailing party in such action or proceeding, in addition to any
other relief to which that party may be entitled.
Section 17.14 Further Action. Each Partner, upon the request of
the General Partner, agrees to perform all further acts and
execute, acknowledge and deliver any documents which may be
reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement.
Section 17.15 Counterparts. This Agreement may be executed in
counterparts by each of the Partners, all of which taken together
shall be deemed one original.
Section 17.16 Covenant to Sign Documents. Each Partner shall
execute, with acknowledgment or affidavit if required, all
documents and writings reasonably necessary or expedient in the
creation of the Partnership and the achievement of its purpose
and the implementation of the provisions of this Agreement. Each
Partner hereby represents and warrants that the individual
signing this Agreement on its behalf is duly authorized to
execute and deliver this Agreement on behalf of such Partner.
Section 17.17 No Partition. No Partner nor any legal
representative, successor, heir or assignee of any Partner shall
have the right to partition the Partnership Property or any part
thereof or interest therein, or to file a complaint or institute
any proceeding at law or in equity to partition the Partnership
Property or any part thereof or interest therein. Each Partner,
for itself and its legal representatives, heirs, successors and
assigns, hereby waives any such rights. The Partners intend
that during the term of this Agreement, the rights of the
Partners and their successors in interest, as among themselves,
shall he governed solely by the terms of this Agreement and, to
the extent consistent with this Agreement, by the Act.
Section 17.18 Not for Benefit of Creditors. The provisions of
this Agreement are intended only for the regulation of relations
among Partners and the Partnership. Except as expressly provided
herein, this Agreement is not intended for the benefit of non-
Partner creditors and does not grant any rights to any non-
Partner.
Section 17.19 Representations of Limited Partner. Each Limited
Partner represents to the Partnership and the General Partner
that: (a) it is acquiring its Limited Partnership Interest for
its own account for investment and not with a view to or for sale
in connection with any distribution of such Limited Partnership
Interest (but subject, nevertheless, to any requirement of law
that the disposition of its property remain within its control at
all times); (b) it understands that the interests in the
Partnership have not been registered under the Securities Act of
1933, as amended, or the applicable securities laws of Delaware
or any other state, and must be held indefinitely unless the
interests are so registered or an exemption from such
registration is available; (c) it has such knowledge and
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experience in business matters that it is capable of evaluating
the risks and merits of its investment in the Partnership; and
(d) it has received and reviewed the material agreements and
other documents relating to the Partnership and/or its business
and such other information, oral or written, as it has requested,
having been afforded the opportunity to ask questions of the
General Partner and to obtain any additional information that it
has deemed appropriate.
Section 17.20 Waiver. No waiver of any provision of this
Agreement shall be deemed effective unless contained in a writing
signed by the party against whom the waiver is sought to be
enforced. No failure or delay by any party in exercising any
right, power or remedy under this Agreement shall operate as a
waiver of any such right, power or remedy, and no waiver of any
breach or failure to perform shall be deemed a waiver of any
subsequent breach or failure to perform or of any other right
arising under this Agreement.
Section 17.21 Incorporation by Reference. Every exhibit,
schedule and other appendix attached to this Agreement and
referred to herein is hereby incorporated in this Agreement by
reference.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
"GENERAL PARTNER"
NCP HOUSTON POWER INCORPORATED,
a Delaware corporation
By:__________________________
Address: Xxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopier: 000-000-0000
Attention: Vice President - Finance
"LIMITED PARTNER"
NCP PERRY INCORPORATED
a Delaware corporation
By:__________________________
Address: Xxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopier: 000-000-0000
Attention: Vice President - Finance
NCP HOUSTON POWER INCORPORATED,
a Delaware corporation
By:___________________________
Address: Xxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopier: 000-000-0000
Attention: Vice President - Finance
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EXHIBIT A
LIMITED PARTNERSHIP AGREEMENT
OF
MID-XXXXXXX XXXXX L.P.
PERCENTAGE INTEREST AND
CONTRIBUTIONS BY PARTNERS
Percentage
Interest Contributions
"General Partner"
NCP Houston Power Incorporated 1% $1
"Limited Partner"
NCP Houston Power Incorporated 19% $19
NCP Perry Incorporated 80% $80
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EXHIBIT B
LIMITED PARTNERSHIP AGREEMENT
OF
MID-XXXXXXX XXXXX L.P.
ALLOCATION OF PROFITS AND LOSSES
1. Profits. After giving effect to the special
allocations set forth in Sections 3 and 4 hereof, Profits for any
fiscal year shall be allocated to the Partners in proportion to
the Partnership Interest of each Partner.
2. Losses. After giving effect to the special
allocations set forth in Sections 3 and 4 hereof, Losses for any
fiscal year shall be allocated as follows:
(a) Except as provided in Section 2(b) hereof,
Losses shall be allocated to the Partners in proportion to the
Partnership Interest of each Partner.
(b) The Losses allocated pursuant to Section 2(a)
hereof shall not exceed the maximum amount of Losses that can be
so allocated without causing any Limited Partner to have an
Adjusted Capital Account Deficit at the end of any fiscal year.
All Losses in excess of the limitation set forth in this Section
2(b) shall be allocated to the General Partner. For purposes of
this Exhibit B, Adjusted Capital Account Deficit shall mean the
amount by which zero exceeds the Capital Account balance credited
to such Partner as of the end of such fiscal year.
3. Special Allocations. The following special
allocations shall be made in the following order:
(a) Partnership Minimum Gain Chargeback. Except
as provided in Section 1.704-2(f) of the Regulations,
notwithstanding any other provision of this Exhibit B, if there
is a net decrease in Partnership Minimum Gain during any
Partnership fiscal year, each Partner shall be specially
allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to
each Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(f)(6) and
1.704-2(j)(2) of the Regulations. This Section 3(a) is intended
to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently
therewith.
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(b) Partner Nonrecourse Debt Minimum Gain
Chargeback. Except as otherwise provided in Section 1.704-
2(i)(4) of the Regulations, notwithstanding any other provision
of this Exhibit B except Section 3(a) hereof, if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain attributable to
a Partner Nonrecourse Debt during any Partnership fiscal year,
each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the
Regulations, shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent
years) in an amount equal to the portion of such Partner's share
of the net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be
determined in accordance with Sections 1.704-2(i) (4) and 1.704-
2(j)(2) of the Regulations. This Section 3(b) is intended to
comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently
herewith.
(c) Qualified Income Offset. In the event any
Limited Partner unexpectedly receives any adjustments,
allocations or distributions described in Section 1.704-
l(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of
Partnership income and gain shall be specially allocated to each
such Limited Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Limited Partner as
quickly as possible, provided that an allocation pursuant to this
Section 3(c) shall be made only if and to the extent that such
Limited Partner would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Exhibit B have
been tentatively made as if this Section 3(c) were not in the
Agreement.
(d) Gross Income Allocation. In the event any
Limited Partner has a deficit Capital Account at the end of any
Partnership fiscal year which is in excess of the sum of (i) the
amount such Limited Partner is obligated to restore pursuant to
any provision of this Agreement and (ii) the amount such Limited
Partner is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g) and
1.704-2(i)(5), each such Limited Partner shall be specially
allocated items of Partnership income and gain in the amount of
such excess as quickly as possible, provided that an allocation
pursuant to this Section 3(d) shall be made only if and to the
extent that such Limited Partner would have a deficit Capital
Account in excess of such sum after all other allocations
provided for in this Exhibit B have been tentatively made as if
this Section 3(d) and Section 3(c) hereof were not in the
Agreement.
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(e) Nonrecourse Deductions. Nonrecourse
Deductions for any fiscal year or other period shall be specially
allocated to Partners in proportion to the Partnership Interest
of each Partner.
(f) Partner Nonrecourse Deduction. Any
Nonrecourse Deductions for any fiscal year or other period shall
be allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance
with Regulations Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an
the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) of the Code or Section 743(b) of the Code is
required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis)
and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
4. Curative Allocations.
(a) The "Regulatory Allocations" consist of the
"Basic Regulatory Allocations," as defined in Section 4(b)
hereof, the "Nonrecourse Regulatory Allocations," as defined in
Section 4(c) hereof, and the "Partner Nonrecourse Regulatory
Allocations," as defined in Section 4(d) hereof.
(b) The "Basic Regulatory Allocations" consist of
(i) allocations pursuant to the last sentence of Section 2(b)
hereof, and (ii) allocations pursuant to Sections 3(c), 3(d) and
3(g) hereof. Notwithstanding any other provision of this
Agreement, other than the Regulatory Allocations, the Basic
Regulatory Allocations shall be taken into account in allocating
items of income, gain, loss and deduction among the Partners so
that, to the extent possible, the net amount of such allocations
of other items and the Basic Regulatory Allocations to each
Partner shall be equal to the net amount that would have been
allocated to each such Partner if the Basic Regulatory
Allocations had not occurred. For purposes of applying the
foregoing sentence, allocations pursuant to this Section 4(b)
shall only be made with respect to allocations pursuant to
Section 3(g) hereof to the extent the General Partner reasonably
determines that such allocations will otherwise be consistent
with the economic agreement among the parties to this Agreement.
(c) The "Nonrecourse Regulatory Allocations"
consist of all allocations pursuant to Sections 3(a) and 3(e)
hereof. Notwithstanding any other provision of this Agreement,
other than the Regulatory Allocations, the Nonrecourse Regulatory
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Allocations shall be taken into account in allocating items of
income, gain, loss and deduction among the Partners so that, to
the extent possible, the net amount of such allocations of other
items and the Nonrecourse Regulatory Allocations to each Partner
shall be equal to the net amount that would have been allocated
to each such Partner if the Nonrecourse Regulatory Allocations
had not occurred. For purposes of applying the foregoing
sentence, (i) no allocations pursuant to this Section 4(c) shall
be made prior to the Partnership fiscal year during which there
is a net decrease in Partnership Minimum Gain, and then only to
the extent necessary to avoid any potential economic distortions
caused by such net decrease, and (ii) allocations pursuant to
this Section 4(c) shall be deferred with respect to allocations
pursuant to Section 3(e) hereof to the extent the General Partner
reasonably determines that such allocations are likely to be
offset by subsequent allocations pursuant to Section 3(a) hereof.
(d) The "Partner Nonrecourse Regulatory
Allocations" consist of all allocations pursuant to Sections 3(b)
and 3(f) hereof. Notwithstanding any other provision of this
Agreement, other than the Regulatory Allocations, the Partner
Nonrecourse Regulatory Allocations shall be taken into account in
allocating items of income, gain, loss and deduction among the
Partners so that, to the extent possible, the net amount of such
allocations of other items and the Partner Nonrecourse Regulatory
Allocations to each Partner shall be equal to the net amount that
would have been allocated to each such Partner if the Partner
Nonrecourse Regulatory Allocations had not occurred. For purposes
of applying the foregoing sentence, (i) no allocations pursuant
this Section 4(d) shall be made with respect to allocations
pursuant to Section 3(f) relating to a particular Partner
Nonrecourse Debt prior to the Partnership fiscal year during
which there is a net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, and then only to
the extent necessary to avoid any potential economic distortions
caused by such net decrease, and (ii) allocations pursuant to
this Section 4(d) shall be deferred with respect to allocations
pursuant to Section 3(f) hereof relating to a particular Partner
Nonrecourse Debt to the extent the General Partner reasonably
determines that such allocations are likely to be offset by
subsequent allocations pursuant to Section 3(b) hereof.
(e) The General Partner shall have reasonable
discretion, with respect to each Partnership fiscal year, to (i)
apply the provisions of Sections 4(b), 4(c) and 4(d) hereof in
whatever order is likely to minimize the economic distortions
that might otherwise result from the Regulatory Allocations, and
(ii) divide all allocations pursuant to Sections 4(b), 4(c) and
4(d) hereof among the Partners in a manner that is likely to
minimize such economic distortions.
5. Other Allocation Rules.
(a) For purposes of determining the Profits,
Losses, or any other items allocable to any period, Profits,
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Losses, and any such other items shall be determined on a daily,
monthly, or other basis, as determined by the General Partner
using any permissible method under Section 706 of the Code and
the Regulations thereunder.
(b) Except as otherwise provided in this
Agreement, all items of Partnership income, gain, loss,
deduction, and any other allocations not otherwise provided for
shall be divided among the Partners in the same proportions as
they share Profits or Losses, as the case may be, for the year.
(c) The Partners are aware of the income tax
consequences of the allocations made by this Exhibit B and hereby
agree to be bound by the provisions of this Exhibit B in
reporting
their shares of Partnership income and loss for income tax
purposes.
(d) Solely for the purpose of determining a
Partner's proportionate share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations
Section 1.752-3(a)(3), the Partners' interests in Partnership
profits shall be in proportion to each Partner's Partnership
Interest.
(e) To the extent Permitted by Section 1.704-
2(h)(3) of the Regulations, the General Partner shall endeavor to
treat Distributions as having been made from Proceeds of
Nonrecourse Liabilities or Partner Nonrecourse Debt only to the
extent that such Distributions would cause or increase an
Adjusted Capital Account Deficit for any Limited Partner.
6. Tax Allocations: Section 704(c) of the Code. In
accordance with Section 704(c) of the Code and the Regulations
thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to
take account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes and
its initial Gross Asset Value (computed in accordance with clause
(i) of the definition thereof).
In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to clause (ii) of the
definition thereof, subsequent allocations of income, gain, loss
and deduction with respect to such asset shall take account of
any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the Regulations
thereunder.
Any elections or other decisions relating to such
allocations shall be made by the General Partner in any manner
that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 6 are solely for
-B-5-
purposes of federal, state and local taxes and shall not affect,
or in any way be taken into account in computing, any Partner's
Capital Account or share of Profits, Losses, other items or
distributions pursuant to any provision of this Agreement.
-B-6-
