Resolution No. 9511 (2) EXHIBIT 7
CITY OF VERNON
DESIGNATION BY CITY ADMINISTRA'T'OR UNDER RESOLUTION NO.9S11
1, Eric T. -Fresch, hereby certify in connection with that certain Purchase and 'Sale
Agreement (as amended, supplemented, or otherwise modified, the "_purchase Agreement"),
dated as of December 13,2007, by and between:the City of Vernon, a municipal corporation and
a chartered city duly organized and existing under and by virtue of the Constitution and laws of
the State of C:alitbrnia(the "C'zty'), and Starwood Energy Infrastructure Fund, L.P., a Delaware
limited partnership as follows. Capitalized terms used herein and not otherwise defined herein
shall have the respective means ascribed to them in the Purchase Agreement.
I. I am the City Administrator of the City;
2. City of Vernon resolution No. 9511 by the Council of the City(the"Resolution l)
authorized the transaction contemplated by the Purchase Agreement (the
"`1'rransaetion") and allows me and my designee to take all actions necessary to
consummate the Transaction;
3. In connection with the 'Transaction, Jeff Harrison, the kits, Attorney, is and was
acting as my designee, as that term is defined in the Resolution;
IN WITNESS WI-MREOF, I have hereunto signed my name this day of April,2008.
Eric T.Fresch
City Administrator
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EXHIBIT 8
K&L I GATES Kirkpatricx o&Lockhart.Preston Gates Ellls uP
10100 Santa Monica Boulevard
Seventh Floor
Los Angeles,CA 90067
1310.552.5000 www.klgates,com
February 1, 2008 Dennis M.P.Ehling
D 310.552.5090
F 310.552.5001
dennis.ehling @klgates.com
VIA OVERNIGHT MAIL
tdr. John W. Schumann
Chairman
Mead-Adelanto Project Coordinating Committee
Los Angeles Department of Water and Power
Room 1255,JFB
P.O.Box 51111
Los Angeles, California 90051-0100
ly1r. Gary Harper
Chairman
Mead-Phoenix Project Management Committee
Salt River Project
P.O.Box 52025-POB009
Phoenix,Arizona 85072-2025
Re: Transfer of City of Vernon's Interests in the Mead Adelanto Project and the Mead
Phoenix Project
Dear Sirs:
We represent the City of Vernon("Vernon") in connection with various matters
related to the sale of its interests as an Owner in the Mead-Adelanto Project(the"Project"as
defined in the Mead-Adelanto Project Joint Ownership Agreement)and the Mead-Phoenix
Project(the"Project" as defined in the Mead-Phoenix Project Joint Ownership Agreement)
(collectively the"Mead Transmission Interests"), including its proportionate share of the
rights,title and interests under the Project Agreements(as defined,respectively,in the Mead-
Adelanto Project Joint Ownership Agreement and the Mead-Phoenix Project Joint Ownership
Agreement). All capitalized terms not otherwise defined herein shall have the meaning .
attributed to them in the, as applicable, Mead-Adelanto Project Joint Ownership Agreement
and the Mead-Phoenix Project Joint Ownership Agreement(collectively the"Ownership
Agreements").
By letter dated January 14,2008,pursuant to Section 16.3 of each of the Ownership
Agreements,Vernon notified the Mead=Adelanto Project Coordinating Committee and the
Mead-Phoenix Project Management Committee of its intent to transfer its Mead.
L.A-223149 Q
K&LIGTES
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1,2008
Page 2
Transmission Interests to Starwood Energy Infrastructure Fund,L.P. or one of its subsidiaries
or affiliates ("Starwood"), effective upon the Closing Date, as defined in the Purchase and
Sale Agreement between Vernon and Starwood(the"PSA"). For your information,the
specific Starwood affiliate that will be acquiring Vernon's Mead Transmission Interests is
StarTrans 10, L.L.C.
We understand that the Los Angeles Department of Water&Power("LADWP")has
raised certain "concerns"about this transfer,including: (1) "a lack of timely notice to the
other Project Participants"; (2)"no request for Participants' consent"; and(3)"the potential
`private use' issues with project bonds." We write to address and clarify these issues.
The rights of any Owner to transfer its Interest or any portion of its Interest, including
rights under the Project Agreements,to a third party are governed by the provisions of
Section 16 of the Ownership Agreements. Specifically, Section 16.3 of each of the
Ownership Agreements provides as follows:
16.3 Limitation on Transfer. No Owner shall.transfer its Interest
or any portion of its Interest, including rights,title and interests
of such Owner under the Project Agreements, except as
provided in Section 13 hereof or this Section 16. Without the
prior consent of any other Owner, an Owner shall have the
right,upon written notice to the Project[Coordinating/
Management] Committee,to transfer or assign all or part of its
Interest, including a proportionate share of the rights, title and
interests of such Owner under the Project Agreements, to any
person,partnership, corporation or governmental corporation
or agency engaged in the generation, transmission or
distribution of electric energy, subject to the provisions of
Section 16.12 hereof. The provisions of this Section 16.3 shall
not apply to the Transmission Service Contracts or any transfer
thereunder of rights,title and interests." (Emphasis added).
Section 13 of the Ownership Agreements relates to a default by a party on its obligations
under the Ownership Agreements and has no application here. Further, Section 16.4 of each
of the Ownership Agreements provides as follows:
"16.4 Owner's Relief From Obligations. Except as provided in
Section 16.10 hereof, an Owner shall not be relieved of any of
its obligations under this Agreement and the other Project
Agreements by succession or transfer under this Section 16
K&L I GAaTES
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1,2008
Page 3
without the prior written consent of the Project [Coordinating/
Management] Committee and all other'Owners,which consent
will not be unreasonably withheld." (Emphasis added).
Section 16.10 of the Ownership Agreements relates to the transfer of leasehold interests in an
Owner's Interest and has no application here. Finally, Section 16.12 of each.of the
Ownership Agreements provides as follows:
"16.12 Supplement to Describe Rights Transferred. If any Interest,
including rights,title or interest under the Project Agreements,
is transferred.or assigned pursuant to Section 16 hereof, any
transferee or assignee shall execute and deliver in recordable
form all necessary documents relating to the Project
Agreements,including a supplement to this Agreement and any
other Project Agreement,prepared by the Construction
Manager or the Operation Manager, as the case may be, in
consultation with Designated Counsel unless determined
otherwise by the Project [Coordinating/Management]
Committee,to reflect in detail such Interest,rights, title and
interests under the Project Agreements of such transferee or
assignee following such transfer or assignment. No such
documents or supplement or other documents shall constitute
an amendment to any Project Agreement. Upon compliance
with the terms and conditions set forth in Section 16 hereof,
such transferee or assignee shall thereupon be considered an
Owner under this Agreement and the other Project
Agreements.". (Emphasis added).
As outlined under Section 16.3 of the Ownership Agreements,Vernon has an
unfettered right to transfer its Interests, including its rights, title or interests under the Project
Agreements,to Starwood without the prior consent of any other Owner. This is precisely the
'right Vernon is exercising in the PSA. Neither 16.3 nor any other provision of Section 16 of
the Ownership Agreements provides for any additional"notice,"timely or otherwise,to the
other Project Participants beyond the Notice of Assignment contained in Vernon's January
14, 2008 letter to the Project Coordinating Committee and the Project Management
Committee.
Nor is the consent of any of the other Project Participants required for the transfer to
be effective. Effective on the Closing Date, and upon compliance with the terms of Section
K&L I GAT E S
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1,2008
Page 4
16.3 and 16.12, Starwood"shall thereupon be considered an Owner"under the Ownership
Agreements and the other Project Agreements.
Nor are any"potential `private use' issues"relevant to a transfer under Section 16.3.
To the extent that Section 16.4 would require Vernon to seek consent in order to be
relieved of any of its own ongoing obligations under the Ownership Agreements or the
Project Agreements after Starwood becomes the owner of the Mead Transmission Interests,
Vernon will address that issue, as appropriate, after the Closing Date. We note,however,
that under Section 16.4 of the Ownership Agreements, such consent"will not be
unreasonably withheld."
We hereby request that each of the Project Coordinating Committee and the Project
Management Committee instruct the Operation Manager of each respective Project to
prepare all necessary documents as specified under Section 16.12 of each of the Ownership
Agreements for the execution and delivery by StarTrans 10,L.L.C.upon the closing of the
transaction.
Vernon and Starwood both look forward to working with each of you to complete this
transaction in a timely fashion. Should you have any questions regarding the issues
addressed in this letter or any other questions related to the transaction,please do not hesitate .
to contact the undersigned or the individuals listed in the Notice of Assignment.
Sincerely,
7 vim- ,
Dennis M.P. Ehling
DME:
cc: Adison Grose
Starwood Energy Infrastructure Fund, L.P.
591 West Putnam Avenue
Greenwich, CT 06830
Facsimile: 203-422-7814
K&L I GATES
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1., 2008
Page 5
✓City of Vernon
Attention: Director of Light and Power Department
4305 Santa Fe Avenue
Vernon, CA 90058
r. Son Hoang
Chairman
Mead-Adelanto Project Engineering and Operations Committee
Los Angeles Department of Water and Power
Room 1141, GOB
P.O. Box 51111
Los Angeles,California 90051-0100
r:Roberts Kondziolka
Chairman
Mead-Phoenix Project Engineering and Operations Committee
Salt River Project
P.O. Box 52025-POB100
Phoenix, Arizona 85072-2025
\ingincering al fiver Project
cad-Phoenix Project .
and Operations Committee
ATTN: Mr. Gary Frere, SEP007
E&O Committee Secretary
P.O. Box 52025
Phoenix,AZ 85072-2025
Western Area Power Administration
Desert Southwest Region
TT : Brenda McKissack, G6211
M. Box 6457
Phoenix,AZ 85005-6457
City of aheim
City rk
20 South Anaheim Boulevard
naheim, California 92805
Fax: (714) 991-4261
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K&L I GATES
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1,2008
Page 6
Y lities General Manager
Public Utilities Department
222
, California 92803
City f Azusa
Di ctor of Utilities
3 East Foothill Boulevard
Azusa, California 91702
Fax: (626)334-3163
City f Banning
Ci Manager
6 East Lincoln
Banning, California 92220
Fax: (951)922-3128
u Service Department
ager
164 West Magnolia Avenue
Burbank, California 91503
Fax: (818) 845-5806
City of olton
Elect Utility Director
0 orth La Cadena Drive
Colton, Calif
is 92324
Fax: (909) 0-0813
Dep ent of Water and Power of the
City of Los Angeles
At : Assistant General Manager-Power
111 North Hope Street,Room 1155 .
Los Angeles,California 90051-0100
Fax: (213) 487-8701
K&L I GATES
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1,2008
Page 7
Glendale Public Service Department
Direct Public Service
119 orth Glendale Avenue
endale, California 92106-4496
Fax: (818)240-4754
M-S-R Public Power Agency
Genera anager
23 leventh Street
Modesto, California 95353
Fax: (209) 526-7575
Pasadena Water and Power Department
General Manager
200 Spt6 Los Robles Avenue,Suite 150
ena, California 91101
Fax: (626) 792-5658
Riverside Public Utilities Department
Dire of Public_Utilities
3 0 Main Street
Riverside, California 92522
Resource ivision
Aiver ' e Public Utilities Department
.3 Main Street
Riverside, California 92522
Southern C lifornia Public Power Authority
Executi Director
200 uth Los Robles Avenue, Suite 155
dena, California 91101
Fax: (626)793-9461
K&LIGATES
Mead-Adelanto Project Coordinating Committee
Mead-Phoenix Project Management Committee
February 1,2008
Page 8
DepartmentAf Energy
Weste ea Power Administration
Area anager,Phoenix Area Office
6 South Z d Avenue
Phoenix,Arizona 85009
Fax: (602) 352-2630
Arizona lic Service Company
c/o Se etary
Voenix,rth Fifth Street
Arizona 85004
r.
Salt River Project Agricultural Improvement
an Power District
Atli: cretary
152 roject Drive ,
T pe, Arizona 85281
ax: (602) 236-2505
Associate General Manager,
FVanz I Information and Planning
S
Salt iv Project Agricultural Improvement
and Power District
P.O. Box 52025
Tempe, Arizona 85072-2025
r
EXHIBIT 9
L I GATES Kirkpatrick&Lockhart Preston Gates Ellis UP
10100 Santa Monica Boulevard
Seventh Floor
Los Angeles, CA 90067
T 310.552,5000 www.kloatBs.com
Dennis M.P.Ehling
December 31,2007 D 310.552.5090
F 310.552.5001
dennis.chling@kl-,ates.com
VIA E-Mail and U.S. Mail
Daniel Shonkwiler
California Independent System Operator
Corporation
151 Blue Ravine Road
Folsom, California 95630
Dear Daniel:
As we have discussed,the City of Vernon("Vernon")has been in the process of
exploring a sale of its interests in certain transmission assets and associated facilities that
Vernon has previously placed under the operational control of the California Independent
System Operator("CAISO"), including Vernon's interests in the Mead-Adelanto
Transmission Project("MAP") and the Mead-Phoenix Transmission Project("MPP"and
collectively with MAP,the"Mead Projects"). On November 14, 2007,we wrote to inform
you that Vernon had entered into an agreement to transfer its interests in the Mead Projects to
Beowulf(Vernon)Power, LLC("Beowulf"). Subsequently,with the consent of Beowulf,
Vernon has entered into a separate agreement to, instead,transfer its interests in the Mead
Projects to Starwood Energy Infrastructure Fund, L.P.or one of its subsidiaries or affiliates
("Starwood").
Pursuant to Section 4.4.1 of the Transmission Control Agreement("TCA"),Vernon
hereby requests CAISO's consent to this transfer. It is our understanding that Starwood
intends to apply to become a Participating TO and assume the obligations of a Participating
TO under the TCA related to the Mead Projects. In addition, it is our understanding that,
pursuant to Section 4.4.1.2 of the TCA, Starwood will assume in writing all of Vernon's
obligations under the TCA with respect to the Mead Projects,pursuant to the attached form
of Assumption Agreement. Vernon would appreciate the CAISO's assistance in facilitating
both Vernon's transfer of its interests in the Mead Projects to Starwood and Starwood's
becoming a Participating TO as expeditiously as possible.
LA-216224 v1
.DATE
Daniel Shonkwiler
December 31,2007
Page 2
We appreciate and look forward to your prompt response to this request and look
forward to working with the CAISO and Starwood on this transition, Should you have any
questions or wish to discuss this matter further,please do not hesitate to contact me.
Sincerely,
Dennis M.P. Ehlmg
DME:
Enclosure
cc: Douglas O. Waikart, Esq.
Counsel for Starwood Energy Infrastructure Fund, L,P.
AGREEMENT ON ASSUMPTION OF LIABILITIES
UNDER THE TRANSMISSION CONTROL AGREEMENT
This AGREEMENT ON ASSUMPTION OF LIABILITIES UNDER THE
TRANSMISSION CONTROL AGREEMENT("Assumption Agreement")is made by and
between the City of Vernon, a municipal corporation and a chartered city duly organized under
and by virtue of the Constitution and laws of the State of California("City or"Seller"),
Startrans IO,L.L.C., a Delaware limited liability company("Starwood or"Purchaser"), and the
California Independent System Operator Corporation,a California non-profit public benefit
corporation("CAISO"). Seller,Purchaser and CAISO are referred to herein sometimes
individually as a"Party" and collectively as the"Parties." Starwood is an indirect subsidiary and
affiliate of Starwood Energy Infrastructure Fund,-L.-P., a Delaware limited partnership("SEIF").
RECITALS
WHEREAS;on or about December 13,2007,the City and SEIF entered into a Purchase
and Sale Agreement(the"PSA")pursuant to which the City agreed to sell and SEIF or its
affiliate agreed to purchase the City's interests in certain transmission assets,known as the Mead
Transmission Interests (as that term is defined in the PSA); and
WHEREAS,the City is a party to a certain Transmission Control Agreement(the
"TCA")by and among certain participating transmission owners and the CAISO,pursuant to
which the City has turned over operational control of its Mead Transmission Interests to the
CAISO; and
WHEREAS,pursuant to the TCA,the CAISO's written consent is required for the
transfer of the Mead Transmission Interests as contemplated by the PSA; and
WHEREAS, as a condition to receiving the CAISO's consent, as required by the TCA,to
the.transfer of the Mead Transmission Interests as contemplated by the PSA, the CAISO has
required the City to cause Starwood to assume, in writing, all of the City's obligations under the
TCA with respect to the Mead Transmission Interests, including those obligations excluded by
Section 2.3(c)(10) of the PSA, and the City's entire obligation to repay monies collected pursuant
to the TRR ("Transmission Revenue Requirement") and/or liability relating to the TRR Case,
without regard to the specific transmission assets that might have given rise to any particular
portion of such obligation and/or liability. For purposes of the Agreement,the term"TRR Case"
means, collectively, Case No.EL00-105 before the Federal Energy Regulatory Commission, and
Case Nos. 05-1402 and 06-1246 before the United States Court of Appeals for the District of
Columbia Circuit, or any subsequent proceeding before Governmental Authority relating to the
same subject matter. Also for purposes of the Agreement, the term "Governmental Authority"
means any federal, state, local, tribal or other governmental, quasi-governmental, regulatory or
administrative agency, authority, commission, department, board, subdivision, court, tribunal,
official, arbitrator,arbitral body or other body;
Whereas Starwood does not intend to assume, and the CAISO is not requiring Vernon to
cause Starwood to assume, any obligation of Vernon that arises because of charges issued by the
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CAISO or transactions entered by CAISO market participants after Closing with respect to assets
other than the Mead Transmission Interests;and
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WHEREAS,the Patties enterthis agreement in order to provide the CAISO the right to
invoice Statwood for the Seller's obligations excluded by Section 2 3(c)(10)of the PSA and the !
City's entire obligation to repay monies collected pursuant to the TRR and/or liability relating io
the TRR Case,without regard to the specific transmission assets that might have given rise to
any particular portion of such obligation and/or liability,without prejudicing Starwood's right to
recover such invoiced amounts from the City under Section 93(b)of the PSA,or the City's
ability to pay such invoiced amounts directly to the CAISO.
AGREEMENT,
NOW,THEREFORE,in consideration of the respective covenants and promises `
contained herein and for good and valuable consideration,the receipt and adequacy of which is
hereby acknowledged,the Parties agree as follows;
1'. Effective as of the Closing as defined in Section 2..5 of the PSA,Stanwood hereby
assumes all of the City's pre-and post-Closing obligations under the TCA with respect to the
Mead Transmission Interests,including without limitation,any and all obligations of the Seller
excluded by Section 2.3(c)(10)of the PSA..For purposes of this assumption,and notwithstanding
the limitation of the scope of obligation in the first sentence of this section to the Mead
Transmission Interests,such obligations shall include City's entire obligation to repay monies
collected pursuant to the TRR and/or liability relating to the TRR Case that arises or has arisen
because of charges issued by the CAISO or transactions entered by CAISO market participants
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prior to or as of the date of such Closing,without regard to the specific ttansrnission assets that
might have given rise to any particular portion of such obligation and/or liability.. Stanwood will
have no obligations.under this Assumption Agreement if such Closing does not occur.
2. The Parties agree that,consistent with Section 9:3(a)of the PSA,they are entering
into this agreement in order to facilitate the CAISO's consent to the transactions described in the
PSA because the CAISO has required; as a necessary but not sufficient condition of such
consent, that the City cause Statwood to assume the liabilities described in Section I of this
agreement..
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1 Notwithstanding the foregoing,Stanwood and the City agree that nothing in this
Assumption Agreement is intended to affect,modify,waive or novate nor-should anything in this
Assumption Agreement be interpreted as having affected,modified,waived or novated any of
the respective rights and obligations of Stanwood, SELF,and the City as among each other
pursuant to the terms of the PSA,including,but without limitation,the City's responsibility for E
all of the obligations of the Seller set forth in Section 23(c)(10)of the PSA as between the City,
on the one hand,and Statwood and its affiliates,on the other..
4.. The CAISO hereby accepts this Assumption Agreement as full and complete I
satisfaction of the City's obligations under Section 4..4..1.2 of the TCA with respect to the transfer j
of the Mead Transmission Interests as contemplated by the PSA
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5. The validity,interpretation and effect of this Assumption Agreement are governed I I
by and shall be construed in accordance with the laws of the State of California applicable to
contracts made and performed in such State and without regard to conflicts of law doctrines f }
except to the extent that certain matters are preempted by Federal law or are governed by the law I
of the jurisdiction of organization of the respective Parties,
6. This Assumption Agreement may be executed in one or more counterparts,each
of which is an original,but all of which together constitute one and the same instrument.
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7. Except as maybe specifically set forth in this Assumption Agreement,nothing in
this Assumption Agreement,whether express or implied,is intended to confer any rights or-
remedies under or by reason of this Assumption Agreement on any persons other than the Patties
and their-respective permitted successors and assigns,nor is anything in this Assumption
Agreement intended to relieve or discharge the obligation or liability of any third persons to any 1
Party,nor give any third persons any right of subrogation or action against any Party
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8.. Ambiguities or uncertainties in the wording of this Assumption Agreement shall
not be construed for-or against any Party either on account of such Party having drafted or ?
provided any language in this Assumption Agreement or otherwise,and shall be construed in
accordance with the fair meaning of this Assumption Agreement,
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9. Nothing contained in this Agreement creates or is intended to create an
association,trust,partnership,or joint venture or impose a trust or partnership duty,obligation,
or liability on or with tegard to any Party.
10., Any dispute relating to this Assumption Agreement will be resolved in .
accordance with the dispute resolution procedures set forth in Section 13 of the CAISO tariff. -
IN WITNESS WHEREOF,the Patties have executed this Agreement as of the date first f
above written.
SELLER:
CITY OF J N
By: earrison
rtle: rney
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Date ?f ax
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--- — PURCHASER: ----- ----- --- - —
STARTRANS 10,LL C
By STARTRANS IH,L..L.C.,
Its Sole Managei
By STARTRANS I,INC..
Its Sole Manager
By'
Madison Grose,Senior Managing Director'
Date: 20 o
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CALIFORNIA INDEPENDENT SYSTEM OPERATION CORPORATION:
By:
Name:
Title: i
Date:
f
The execution of this Assumption Agreement by the City of Vernon is hereby affirmed and
attested to by:
CITY OF VERNON t
By: �.
Name: Manuela Gir n
Title: City Clerk
Date: March 25, 2008
K:ISIARWOODIREVISED ASSUMPTION OF LIABILIIY AGREENMNI (FINAL).DOC
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PURCHASER:
STARTRANS IO, L.L.C.
By STARTRANS II-I,L.L.C.
Its Sole Manager
By STARTRANS I, INC.
Its Sole Manager
By:
Madison Grose, Senior Managing Director
Date:
CALIFORNIA INDEPENDENT SYSTEM OPERATION CORPORATION:
By: •`�•''�
Nam�S
T e: 1� �r'rTla i S
Date: z
The execution of this Assumption Agreement by the City of Vernon is hereby affirmed and
attested to by:
CITY OF VERNON
By:
Name:
Title: City Clerk r
Date:
K:\STARWOOD\REVISED ASSUMPTION OF LIABILITY AGREEMENT(FINAL).DOC
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EXHIBIT 10
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val_
LIGHT &POWER DEPARTMENT
Donal O'Callaghan, Director of Light& Power
April 24, 2008
Mr. Gary Harper; Chairman
Mead-Phoenix Project Management Committee
Salt River Project
P.O. Box 52025-POB009
Phoenix, AZ 85072-2025
Re: Notice of Designation of Additional Persons and Addresses
Ladies and Gentlemen:
Pursuant to Section 22.3 of that certain Joint Ownership Agreement,dated as of
August 4, 1992, among Southern California Public Power Authority, City of Vernon
("Vernon"), M-S-R Public Power Agency, Salt River Project Agricultural Improvement and
Power district, Arizona Public Service.Company and Tucson Electric Power Company (as
may be amended, amended and restated, supplemented or otherwise modified from time to
time, the"Agreement"). Vernon requests that the entities listed below be added to both
Exhibit A and Exhibit B of the Agreement.
StarTrans IO, L.L.C.
StarTrans IO, L.L.C.
c/o Starwood Energy Group Global, L.L.C.
591 West Putnam Avenue
Greenwich, CT 06830
Attn: Madison Grose, General Counsel
Telephone: 203-422-770
Facsimile: 203-422-7814
With a copy to:
StarTrans IO, L.L.C.
Atlantic Path 15, LLC
720 S Tyler, Suite 232
Amarillo,TX 79101
Attn: Bob Dickerson
Telephone: 806-322-3278
Facsimile: 806-322-3279
4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323)583-8811 Fax (323) 826-1425
E,,(c(usivefy Industrial
Mr. Gary Harper
April 24, 2008
Page 2
WestLB AG, New York Branch
WestLB AG, New York Branch
1211 Avenue of the Americas
26'h Floor
New York,NY 10036
Attn: Torn Brensic, Associate Director, Agency &Documentation Group
Tel: (212) 597-1153
Fax: (212) 597-1490
With a copy to:
WestLB AG, New York Branch
1211 Avenue of the Americas
26rth Floor
New York, NY 10036
Attn: Andrea Bailey, Agency Services
Tel: (212) 597-1158
Fax: (212) 597-7946
Please do not hesitate to contact me if you have any questions regarding the foregoing.
Sincerely,
Donal O'Callaghan
Director of Light and Power
DO:rmt
c: Steven Park, Esq. (West LB)
Ari Bessendorf, Esq. (Starwood)
Neeraj Arora, Esq. (City of Vernon)
Abraham Alemu (City of Vernon)
Document Control (City of Vernon)
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LIGHT & POWER DEPARTMENT
Donal O'Callaghan, Director of Light& Power
April 24, 2008
Mr, Mohammed J. Beshir
Manager of Transmission Planning, Engineering and Contracts
Los Angeles Department of Water and Power
Room 1250,JFB
P.O. Box 51111
Los Angeles, CA 90051-0100
Re: Notice of Designation of Additional Persons and Addresses
Ladies and Gentlemen:
Pursuant to Section 22.3 of that certain Joint Ownership Agreement, dated as of
August 4, 1992, among Southern California Public Power Authority,City of Version
("Vernon") and M-S-R Public Power Agency(as may be amended, amended and restated,
supplemented or otherwise modified from time to time, the "Agreement"). Vernon requests
that the entities listed below be added to both Exhibit A and Exhibit B of the Agreement.
StarTrans I0. L.L.C.
StarTrans 10, L.L.C.
c/o Starwood Energy Group Global, L.L.C.
591 West Putnam Avenue
Greenwich, CT 06830
Attn: Madison Grose, General Counsel
Telephone: 203-422-770
Facsimile: 203-422-7814
With a copy to:
StarTrans I0, L.L.C. }
Atlantic Path 15, LLC
720 S Tyler, Suite 232
Amarillo, TX 79101
Attn: Bob Dickerson
Telephone: 806-322-3278
Facsimile: 806-322-3279
4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 Fax (323)826-1425
E:kcfusively Industrial
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Mr. Mohammed J. Beshir
April 24, 2008
Page 2
WestLB AG,New York Branch
WestLB AG, New York Branch
1211 Avenue of the Americas
26°i Floor
New York, NY 10036
Attn: Tom Brensic, Associate Director, Agency &Documentation Group
Tel: (212) 597-1153
Fax: (212) 597-1490
With a copy to:
WestLB AG, New York Branch
1211 Avenue of the Americas
26rth Floor
New York, NY 10036
Attn: Andrea Bailey, Agency Services
Tel: (212) 597-1158
Pax: (212) 597-7946
Please do not hesitate to contact me if you have any questions regarding the foregoing.
Sincerely,
Donal O'Callaghan
Director of Light and Power
DO:rmt
c: Steven Park, Esq. (West LB)
Ari Bessendorf, Esq. (Starwood)
Neeraj Arora, Esq. (City of Vernon)
Abraham Alemu (City of Vernon)
Document Control (City of Vernon)
EXHIBIT 11
CITY OF VERNON
OFFICER'S CERTIFICATE
This Certificate is delivered pursuant to Section 2.6(a)(2) of that certain Purchase
and Sale Agreement(as amended,supplemented,or otherwise modified, the"Purchase
Agreement"), dated as of December 13,2007, by and among City of Vernon, a municipal
corporation and a chartered city duly organized and existing under and by virtue of the
Constitution and laws of the State of California and its Charter(the"Seller"), and Starwood
Energy Infrastructure Fund, L.P., a Delaware limited partnership (the"Purchaser").. Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings ascribed
to them in the Purchase Agreement.
The undersigned, Jeff A. Harrison, in his capacity as the City Attorney of the
Seller and not in his individual capacity, does hereby certify to Purchaser, in the-name of and on
behalf of the Seller, as follows:
1. All representations and warranties of the Seller contained in Section 5 are
true and correct in all material respects without regard to any qualification by"materiality",
"Material Adverse Effect or words of similar import as of the date hereof and as of the Closing
Date, with the same effect as though those representations and warranties had been made again at
and as of that time (except to the extent that any such representation or warranty is made as of a
specified date, in which case as of such specified date), except insofar as any failures to be true
and correct that, individually or in the aggregate, do not constitute,and could not reasonably be
expected to have, a Material Adverse Effect; and
2. All of the terms, covenants and conditions to be complied with and
performed by the Seller on or prior to the Closing Date have been complied with or performed in
all material respects.
[Signature Page Follows]
LA\1847799.1
IN WITNESS WHEREOF, the Seller has caused this Certificate to be executed, in its
name and on its behalf,by the undersigned on and as of this o day of April, 2008.
CITY OF VERNON
By:
N Jef Harrison
Ti City ttorney
[Signature Page to Officer's Certificate—Starwood]
EXHIBIT 12
Charter
of the
City of Vernon
Article I
1
Succession
Section 1. Name.
The municipal corporation now existing and known as the
City of Vernon shall remain and continue to exist as a municipal
. corporation under its present name.
Section 2. Boundaries.
The boundaries and territory of the City of Vernon
shall continue as now established until changed in a manner
sufficient to legally alter the boundaries and territory.
Section 3. Rights and Liabilities of the City.
The City shall continue to own, possess, control, and
remain vested with all rights and property of every kind and
nature owned, possessed, controlled, or vested at the time that
this Charter takes effect. All legally enforceable debts,
obligations, liabilities, and contracts with respect to the City
and in force at the time this Charter takes effect shall be
unaffected by the adoption of this Charter.
Section 4. Ordinances.
Each ordinance, code, resolution and other regulation,
or portion thereof, in force on the date that this Charter takes
effect, and not inconsistent with this Charter, shall be in force
after this Charter takes effect and shall remain in force until
amended, repealed or superseded by proper authority. If any
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1
section, subsection or provision of such existing ordinance,
code, resolution or other regulation is inconsistent with this
Charter and the remainder thereof is not inconsistent with this
Charter, such inconsistent portion shall be deemed to be.severed
and repealed and the remainder of such ordinance, code, resolu-
tion or other regulation shall remain in force until amended,
repealed or superseded.
Section 5. Officers and Employees.
The tenure, duties and responsibilities of the officers
and employees of the City shall not be affected by the adoption
of this Charter, except as specifically provided in this
Charter, but shall be subject to such ordinances or actions as
may be duly adopted or taken by the City Council of the City
subsequent to the adoption of this Charter. No provision of this
Charter shall be construed to grant a right to employment to City
employees.
Section 6. Pending Actions and Proceedings
Neither this Charter, nor its adoption, shall affect or
abate any civil action or proceeding or criminal action or
proceeding, brought by or against the City or any officer,
office, department or agency of the City, which is pending on the
date that this Charter takes effect.
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I
Article II
Powers of the City
Section 1. General Powers.
The City shall have full power and authority to adopt,
make, exercise and enforce all legislation, laws, and regulations
and to take all actions in respect to municipal affairs, without
limitation, which may lawfully be adopted, made, exercised, taken
or enforced under the Constitution of the State of California
subject only to such limitations as may be provided by this
Charter. The City shall also have the power and authority to
adopt, make, exercise and enforce all legislation, laws and
regulations and to take all actions and to exercise any and all
rights, powers and privileges heretofore or hereafter
established, granted or prescribed by any law of the State of
California, or by this Charter, or by other lawful authority.
The specification in this Charter of any particular
power shall not be held to be exclusive of any other specific
power that may be exercised under the general power, or of the
general powers, provided for in this section.
Section 2. Emergency Powers.
Notwithstanding any general or special provisions of
this Charter, in order to ensure continuity of governmental
operations in periods of extreme emergency resulting from damage
or destruction from acts of war, subversion, terrorism, natural
disaster or other causes of whatever nature, the City Council, by
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majority vote of its members in office, shall have the power and
immediate duty to declare an emergency by resolution and:
(a) To provide for prompt and temporary succession to the
powers and duties of all City offices, whether filled by election
or appointment, when the incumbent may become unavailable for
carrying on the powers and duties of such office, "and
(b) To adopt such other measures as may be necessary and
proper for ensuring the continuity of City operations, including,
but not limited to the financing thereof.
Section 3. Intergovernmental Relations.
The city may exercise any of its powers, perform any of
its functions, or participate in the financing thereof, jointly
or in cooperation, by contract or otherwise, with any one or more
governmental entities or civil divisions or agencies thereof.
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Article III
City Council
Section 1. Composition. .
There shall be a City Council composed of five members
elected at large by the qualified voters of the City.
Section 2. Powers
Subject to the provisions of this Charter, and the
valid delegation by this Charter of any power to any person,
officer, board or committee, the City Council shall have the
power and authority, in the name of the City, to exercise all of
the governmental, legislative, administrative or other power,
authority or function of the City which a city council could
exercise under the Constitution of the State of California and
which now or hereafter would be competent for this Charter
specifically to enumerate.
Section 3. Eligibility.
No person shall be eligible to hold the office of
councilmember unless he or she is a voter and resident of the
City of Vernon at the time of filing nomination papers or
declaring candidacy and remains a voter and resident until the
election and throughout his or her term as councilmember.
Section 4. Election and Terms.
The regular election of councilmembers shall be held on
the second Tuesday of April in each even numbered year. The term
of each office shall be four years. Three four-year terms shall
be filled at the first general municipal election held after the
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adoption of this Chapter and two four-year terms at the next
general municipal election.
The City Council shall be the final judge of election
results and the qualifications of its members. The City Council
shall canvass the returns of an election on the first Tuesday
following a City Council election or such other date within
fifteen (15) days of the election as may be provided by
ordinance. The term of each elected councilmember shall begin
at the hour of the completion of the canvass of the election'
returns. In the absence of death, removal from office or
disqualification, each councilmember shall serve until expiration
of his or her term and until a successor qualifies.
Section 5. Mayor. '
At the council meeting at which any councilmember is
installed following a regular municipal election, and at any time
when there is a vacancy in the office of Mayor, the City Council
shall meet and shall elect one of its members as Mayor. The
Mayor shall be the presiding officer of the City Council. The
Mayor shall be a member of the City Council for all purposes and
shall have all the rights, powers and duties of a member of the
City council in addition to those powers and duties conferred
upon the Mayor by virtue of his or her office.
The Mayor shall be the official head of the City for
all ceremonial purposes. The Mayor shall perform such other
duties consistent with the office of Mayor as may be prescribed
by this Charter or as may be provided by the City Council. The
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Mayor shall serve in his or her capacity at the pleasure of the
City Council and may be removed by a majority vote of the members
of the City Council.
Section 6. Mayor Pro Tempore.
At the time that a Mayor is selected, the City Council
shall also designate one of its members as Mayor Pro Tempore.
The Mayor Pro Tempore shall serve in such capacity at the
pleasure of the City Council and may be removed by a majority
vote of the members of the Council. The Mayor Pro Tempore shall
perform the duties of the Mayor during the Mayor's absence or
disability.
Section 7. Vacancy.
Any vacancy occurring in the City Council for whatever
reason may be filled by appointment by the City Council. If the
City council fails to fill the vacancy within thirty days., then
the City Council shall immediately call a special election to
fill the vacancy.
Any person appointed or elected to fill A vacancy on
the City Council shall hold office for the remainder of the term
in the absence of death, removal from office or disqualification.
If an election occurs at which one or more full terms
and one or more unexpired terms are to be filled, no distinction
between the full terms and the unexpired terms shall be made in
nominating or voting. The person or persons elected by the
highest number of votes shall be elected for the full term or
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terms and the person or persons elected with the fewest votes
shall be elected for the unexpired term or terms.
Section 8. Forfeiture.
The following shall be grounds for forfeiture of' a
councilmember's office:
(a) Absence from three consecutive regular meetings of
the Council without permission of, or excuse by, the Council, for
absence from at least one of those meetings expressed in its
official minutes,
(b) Conviction of"a 'crime involving moral turpitude,
(c) Failure at any time during the councilmember's
term of office to meet any qualification for office prescribed by
this Charter or by the Constitution of the State of California.
A vacancy caused by the forfeiture of a council-
member's office shall be filled as prescribed by Section 7 of
Article III of this Charter.
Section 9. Forfeiture Procedure.
The Council shall be the final judge of the grounds for
forfeiture of a councilmembers' office and for that purpose shall
have the power to subpoena witnesses, administer oaths and
require the production of evidence. A member charged with
forfeiture of office shall be entitled to a public hearing on
demand. Notice of such hearing shall be given in the manner
provided by ordinance.
An order of the City Council of forfeiture shall be
effective immediately. A petition for judicial review of such
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i
order may be filed in a court of competent jurisdiction within
two weeks after notice to the councilmember of such order.
Sending a copy of the order of forfeiture by United States mail,
certified and postage_prepaid, addressed to the councilmember at
his or her address on file with the City Clerk, shall constitute
notice for purposes of this section. During the pendency of any
such judicial action or proceeding, anyone appointed by the
Council or elected to fill the vacancy resulting from such
forfeiture shall have all the rights, duties, and powers of a
councilmember and shall continue in such office for the remainder
of the term (in the absence of death, removal from office or
disqualification) unless and until a final judgment is rendered
holding the declaration of forfeiture to be invalid or ordering
the Council to reinstate the councilmember.
Section 10. Council Meetings and Rules of Order.
The City Council shall hold regular meetings at least
once each month. The frequency, time and place of meetings,
provisions for adjournment of meetings and calling of special
meetings and the rules of order for the conduct of Council
proceedings shall be established by ordinance adopted by the
Council.
section 11. Compensation.
The Council may determine the base compensation of
councilmembers by resolution adopted by a majority vote of the
members of the Council. Any change in the base compensation of
councilmembers shall be effective on the first day of the
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following fiscal year or such other date as may be specified in
the resolution.
In addition to such base compensation, individual
councilmembers may be compensated for serving on City boards,
commissions, committees or other City governmental bodies. Such
additional compensation shall be set by resolution adopted by a
majority vote of the members of the Council. Any change in
additional compensation of councilmembers shall be effective on
the first day of the following fiscal year or such other date as
may be specified in the resolution.
Councilmembers shall also receive compensation for
actual or anticipated expenses that may be incurred in the
performance of their duties of office.
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Article IV
Ordinances and Resolutions
Section 1. Ordinances, When Required.
The following actions by the City Council shall be
taken by ordinance:
(1) Any action which this Charter requires to be taken
by ordinance;
(2) Provision of a fine or other penalty or
establishment of a rule or regulation for violation of which a
fine or other penalty may be imposed;
(3) Grant of a franchise;
(4) Creation of, alteration of, or abolishment of a
commission, board or agency;
(5) Restriction on the use of property;
(6) Adoption or amendment of a code;
(7) Adoption of ordinances proposed under the
initiative power; and
(8) Amendment or repeal of any ordinance or code
previously adopted.
Actions other than those referred to above in this
section may be taken by ordinance, by resolution or order duly
entered in the minutes of a council meeting as may be
appropriate.
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Section 2. Procedure.
Every proposed ordinance shall be introduced in writing
and substantially in the form required for adoption. The
enacting clause shall be, substantially: "The City Council of
the City of Vernon hereby ordains:".
Except as provided by this Charter, no ordinance shall
be adopted by the City Council on the day of its introduction,
nor within five days thereafter. Upon introduction and upon
second presentation, unless at least one Councilmember requests
that an ordinance be read in full, an ordinance may be read by
title only. Unless a higher vote is required by other provi-
sions of this Charter, the affirmative votes of a majority of the
members of the City council shall be required for the enactment
of any ordinance. Adopted ordinances shall be signed by the
Mayor and attested by the City .Clerk.
In the event that any ordinance is substantially
altered after its introduction, it shall not be adopted within
five days after the date of such alteration. The correction of
typographical or clerical errors or other minor changes shall not
constitute the making of an alteration within the meaning of this
paragraph.
The City Council may provide by ordinance for any
publication or posting of ordinances as it deems appropriate.
Section 3. Effective Date.
An ordinance shall be effective after the thirtieth day
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following its adoption with the exception of the following
ordinances which shall take effect upon adoption:
(a) An ordinance calling or otherwise relating to any
election;
(b) An ordinance relating to public improvements, the
cost of which is to be borne wholly or in part by special
assessments;
(c) An ordinance declaring the amount of money neces-
sary to be raised by taxation, or fixing the rate of property
taxation, or levying tax upon property;
(d) An ordinance fixing utility rates or charges;
(e) An emergency ordinance adopted as provided in
Section four of this Article of this Charter.
Ordinances referred to in (a) through (d) of this
section may be introduced and adopted at one and the same regular
or special meeting.
An ordinance may specify a date on which all or a
portion of its provisions shall be operative.
Section 4. Emergency ordinances.
Any ordinance declared by the City Council to be
necessary as an emergency measure for the immediate preservation
of the public peace, health, or safety, and containing a state-
ment of the reasons for its urgency, may be adopted in the
manner provided by this Charter except that such emergency
ordinance may be introduced and adopted at one and the same
regular or special meeting, and shall take effect immediately.
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Section 5. Adoption By Reference.
Detailed regulations pertaining to any subject, model
codes, and codifications of ordinances of other public agencies
may be adopted by reference, in their original form or with
amendments thereto, with the same effect as an ordinance, in the
manner set forth for adopting ordinances. Not less than three
copies of the regulations, codes or ordinances so adopted shall
be filed and kept on file for use and examination by the public
in the office of the City Clerk.
Section 6. Codification.
The City Council may by ordinance codify the ordinances
of the city. Ordinances so codified shall be repealed as of the
_ effective date of the codification unless the City Council shall
otherwise provide. Amendments to a code shall be enacted by
ordinance.
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Article V
Elections
Section 1. General Municipal Elections.
General municipal elections shall be held in the City
on the second Tuesday of April in each even numbered year.
Section 2.. special Municipal Elections.
All other municipal elections shall be special
municipal elections.
Section 3. Procedure.
The City Council is authorized to adopt by ordinance
procedures governing municipal elections. Until the City Council
adopts by ordinance provisions governing municipal elections, all
elections shall be held in accordance with the general laws of
the state of California. If an ordinance respecting municipal
elections is adopted by the City Council thereby superseding
certain provisions of the general laws governing municipal
elections, the general laws not so superseded as they may exist
from time to time shall be applicable unless and until the City
Council shall take action otherwise.
Section 4. Initiative, Referendum and Recall.
The power of the initiative and referendum and of the
recall of municipal elective officers is reserved to the voters
of the City. The procedures for initiative, referendum and
recall shall be governed by ordinance or ordinances of the City.
Until the City Council adopts by ordinance provisions governing
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initiative, referendum, and recall, these procedures shall be in
accordance with the general laws of the State of California. If
an ordinance respecting initiative, referendum or recall of
municipal elective officers is adopted by the City Council,
thereby superseding certain provisions of the general laws
governing initiative, referendum and recall, the general laws not
so superseded as they may exist from time to time shall be
applicable unless and until the City Council shall take action
otherwise.
No initiative ordinance providing for the expenditure
of public money or for a change in salaries of any city officer
or employee shall take effect until the beginning of the fiscal
year next following the date of its adoption.
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Article VI
City Administrator
Section 1. Appointment.
The City Council shall appoint, by majority vote, a
City Administrator who shall be the chief administrative officer
of the City of Vernon. The City Administrator shall serve at the
pleasure of the Council except as may otherwise be provided by
written contract; provided, however, that the City Administrator
shall not be removed from office except as provided by this
Charter.
The City Administrator shall engage in no other
business or occupation except as may be permitted by the Council.
Section 2. Removal.
(a) Except as otherwise provided by this section, the
City Administrator may be removed from office by a majority vote
of the members of the City Council.
(b) At least thirty (30) days before the effective
date of removal, the City Administrator shall be furnished with a
written notice stating the Council's intention to remove and, if
requested by the City Administrator, the reasons therefor.
Sending a copy of such notice by United States mail, certified
and postage prepaid, addressed to the City Administrator at his
or her last known address, shall constitute notice for purposes
of this section. Within seven days after receipt of such notice,
the City Administrator may, by written notification to the City
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Council, request a public hearing before the City Council. Upon
such request, the Council shall fix a time and place for public
hearing which shall be held before the date of the City
Administrator's removal. The City Administrator may appear and
be heard at such hearing. The purpose of the hearing is to allow
the City Council and the City Administrator to present publicly
all pertinent facts prior to final action of removal. In
removing the City Administrator, the City Council shall use its
uncontrolled discretion and its action shall not `depend`upon any
showing or degree of 'proof at the hearing. The City Council
action shall be final.
(c) After furnishing the City Administrator with
written notice of intended removal, the City Council may suspend
the City Administrator from duty with regular compensation to
continue until removal as provided by this Section 2.
(d) The City Administrator shall not be removed within
ninety (90) days after the election of a councilmember unless
(i) The City Administrator has been convicted of
commission of a felony; or
(ii) The City Administrator has been convicted of
a crime prescribed by statute applicable to municipal
officials.
In either case the City Administrator may be removed by
majority vote of the members of the City Council.
Section 3. Compensation.
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Compensation for the City Administrator shall be set by
the City Council. However, compensation for the City Admin-
istrator shall not be reduced within ninety (90) days after the
election of a councilmember.
Section 4. Duties.
The City Administrator shall be responsible to the City
Council for the proper and efficient management of all the
affairs of the City and those specific duties assigned to the
City Administrator by this Charter or by the City Council. The
specific duties of the City Administrator may be specified by
ordinance, resolution or order of the city Council.
Section 5. Noninterference.
The power to direct the City Administrator rests with
the Council as a governing body, not with its individual members.
No individual member of the Council, without authorization of the
Council, shall in any manner direct or request the City
Administrator to appoint any person to and/or remove any person
from any office or position of employment with the City.
No individual member of the City Council, without
authorization of the Council, shall give orders or instructions
publicly or privately to any person under the jurisdiction of the
City Administrator or otherwise interfere with the administrative
staff of the City.
No individual member of the City Council, without
authorization of the Council, shall undertake to coerce or direct
the City Administrator with respect to any of the City
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Administrator's duties, and/or any municipal contract, and/or in
connection with the purchase of any municipal supplies.
Section 6. Eligibility.
No person shall be eligible to be appointed City
Administrator while serving as a •member of the City Council or
within two years following the termination of membership on the
City Council.
Section 7. Other Positions.
The City Council may appoint the City Administrator to
any other office in the City and direct the City Administrator to
carry out the duties of that office or any other position of
employment with the City in addition to his or her duties as City
Administrator.
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Article VII
Other Officers, Boards, Commissions, and Employees
Section 1. City Clerk.
There shall be a City Clerk who shall be the custodian of
the City seal and shall maintain a book or books of the ordinances
and resolutions adopted by the City Council and the minutes of all
meetings and actions of the Council. The City Council shall
provide by ordinance for the method of selection of the City Clerk,
by appointment or election, and the duties and tenure of the City
Clerk. The City Clerk's compensation shall be fixed by the City
Council.
Section 2. City Treasurer.
There shall be a City Treasurer who shall receive and
safely keep the funds of the City and shall disburse the same for
public purposes pursuant to appropriations and directions by the
City Council. The City Council shall provide by ordinance for the
method of selection of the City Treasurer, by appointment or
election, and the duties and tenure of the City Treasurer. The
City Treasurer's compensation shall be fixed by the City Council.
The City Treasurer shall be bonded in an amount determined by the
City Council.
Section 3. City Attorney.
There shall be a City Attorney who shall be the legal
officer of the City. The City Attorney shall serve at the pleasure
of the City Council unless otherwise provided by written contract,
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and shall perform such duties and provide such professional
services as may be assigned by the City Council unless otherwise
provided by written contract. The compensation of the City
Attorney shall be determined by the City Council subject to any
provisions of a written contract of employment.
Section 4. ' Other Officers.
The City Council shall provide for such 'other officers as
it deems appropriate, and shall fix the duties, tenure and
compensation of such officers by ordinance.
Section 5. Boards and commissions.
The City Council may, by ordinance, establish such boards
and commissions as the Council deems to be necessary, and shall
provide for the method of selection, tenure, duties and any
compensation of the boards and commissions so established.
Section 6. Employees.
All City employees shall serve at the will and pleasure
of the City Council. No City employee shall have any right to
employment with the City unless that employee and the City have
entered into a written contract which gives the employee a property
right to employment with the City.
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Article VIII
Fiscal Administration
Section 1. Fiscal Year.
The fiscal year of the City shall begin on the first
day of July and end on the last day of June of the following
year. The Council may, by ordinance, change the fiscal year.
Section 2. Submission of Budget.
on or before the thirtieth (30th) day preceding the
last day of the fiscal year, the City Administrator shall submit
to the City Council a proposed budget for the ensuing fiscal
year.
Section 3. Budget Contents.
The proposed budget shall contain the following:
(a) An estimate of the revenues and expenditures for
each City Department for the ensuing fiscal year;
(b) A statement of comparison of expenditures for the
current fiscal year with proposed expenditures for the ensuing
fiscal year, and reasons for the proposed increase or decrease;
(c) An estimate of money needed for contingent or
emergency purposes;
(d) An estimate of all anticipated revenues;
(e) An estimate of the tax rate necessary to meet the
expenditures proposed;
(f) A recommendation for the amount of funds to be
allocated to capital outlays;
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(g) A recommendation for amounts to be appropriated,
with reasons therefor, in such detail as the Council may direct;
(h) Such other or further information as the City
Administrator may deem advisable to submit, subject to approval
by the City Council.
Section 4. Adoption of the budget and Appropriations.
After receiving the budget, the City Council shall hold
a public hearing regarding the adoption of the budget. Notice of
the hearing shall be given in such manner as the City Council may
provide by ordinance. Copies of the proposed budget shall be
made available in the City Clerk's office in City Hall for public
inspection.
At or after the public hearing, the Council shall make
any changes to the budget that it deems advisable and shall adopt
the final budget by resolution passed by the affirmative vote of
a majority of the members of the Council on or before the last
day of the fiscal year preceding the fiscal year for which the
budget is adopted (the "budget year") .
The resolution adopting the budget shall also operate
as an appropriation of funds in the amounts and for the purposes
set forth in the budget so adopted.
If the Council fails to adopt the budget by the last
day of such preceding fiscal year, the amounts appropriated for
the preceding fiscal year shall be deemed adopted for the budget
year on a month-to-month basis, with all items prorated
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accordingly, until such time as the City Council adapts a budget
for the budget year.
Section 5. Amendment of the Budget.
At any meeting of the City Council after the adoption
of the budget, the City Council may amend or supplement the
budget by the affirmative vote of a majority of the members of
the Council.
Section 6. Lapse of Appropriations.
Every appropriation, except an appropriation for a
capital expenditure, shall lapse at the end of the last day of
the fiscal year if that appropriation has not been expended or
lawfully encumbered. An appropriation for a capital expenditure
shall continue in force until the purpose for which it was made
has been accomplished or abandoned. The purpose of any such
appropriation shall be deemed abandoned if three years pass
without any disbursement from or encumbrance of the appropriation
for such purpose.
Section 7. Taxation.
The city council may adopt all or part of a system of
taxation for the assessment, levy and collection of city taxes.
The City Council may, by ordinance, authorize the transfer to,
assumption of, and discharge by officers of the County of. Los
Angeles, of any function of the City relating to assessment of
property for taxation, the equalization of such assessment, and
collection of taxes.
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880111 pf A016A 5W (3)
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Section 8. Bonded Debt Limit.
The total bonded general obligation debt of the City
shall not exceed fifteen percent (15%) of the assessed valuation
of all property taxable for municipal purposes.
Section 9. Franchises.
Franchises may be granted to persons, firms, corpor-
ations, or other entities for such consideration and upon such
terms, conditions, restrictions, or limitations as may be
prescribed by the City Council by ordinance.
Section 10. Contracts.
The City Council shall have the power, by majority
vote, to enter into any contract on behalf of the City. All
contracts must be in writing, signed by the mayor or other
officer authorized by resolution, and attested by the City Clerk.
There shall be no bidding requirements for any contract unless
the City Council otherwise provides by ordinance.
Section 11. Audit.
The City Council shall appoint a California certified
public accountant or firm of certified public accountants to
provide an independent, annual audit of all City accounts,
including the accounts of all departments, officers, and
employees who receive, handle or disburse public funds. The City
Council may require more frequent audits as it deems advisable.
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860111 pf A016ASY (3)
Within one hundred twenty (120) days after the end of
the ,fiscal year, unless the City Council extends such time, a
final audit and report shall be submitted to each member of the
City Council and to other officers designated by the Council.
Also, copies of the final audit and report shall be provided to
such other persons or agencies as the City Council may direct,
and copies shall be made available in City Hall for public
inspection.
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880111 pi AOMA SY (3)
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Article IX
Miscellaneous Provisions
Section 1. Construction.
The general grant of power to the City under Article II
of this Charter shall be construed broadly in favor of the City.
The specific provisions enumerated in this Charter are intended
to be and shall be interpreted as limitations upon the general
grant of power and shall be construed narrowly.
Section 2. Violations.
The City Council may establish fines and penalties for
violations of ordinances.
Section 3. Definitions.
Unless the provision or the context otherwise
requires, as used in this Charter:
(a) "Shall" is mandatory, and "may" is permissive,
(b) "City" is the City of Vernon;
(c) "Council" or "City Council" is the City Council of
Vernon;
(d) "City Administrator" or "Administrator" is the
City Administrator of Vernon
(e) "Majority" of the City Council means a majority
of a quorum of the City Council.
(f) "Majority of the members" of the Council means a
majority of the entire membership of the City Council.
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880111 pf A016ASM (3)
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(g) The masculine includes the feminine and the
feminine includes the masculine.
(h) The singular includes the plural and the plural
includes the singular.
Section 4. Official Bonds.
The City Council shall, by ordinance, determine which
officers or other persons in the service of the City, in addition
to the City Treasurer, shall give bonds for the faithful
performance of their duties. The Council shall fix by ordinance
or resolution the amounts and terms of the official bonds of, all
officials or employees who are required to give such bonds. All
bonds shall be executed by a responsible corporate surety, and
shall be approved as to form by the City Attorney, and shall be
filed with the City. Premiums on official bonds shall be paid by
the City.
Section 5. Residence.
The City Council may, to the maximum extent permitted
by the Constitution of the State of California, provide by
ordinance for protection against fraud in municipal elections in
the City involving claims of residence in areas of the City in
which personal residence is not permitted by law.
Section 6. Severability.
If any provision of this Charter is held invalid, the
other provisions of the Charter shall not be affected thereby.
If the application of this Charter or any of its provisions to
any person or circumstance is held invalid, the application of
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the Charter and its provisions to other persons or circumstances
shall not be affected thereby.
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880111 pf A016ASY (3)
EXHIBIT 13
1 RESOLUTION NO. 9511
2
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
3- VERNON APPROVING AND RATIFYING THE EXECUTION OF A
4 PURCHASE AND SALE AGREEMENT AND RELATED DOCUMENTS
BY AND BETWEEN THE CITY--OF VERNON AND STARWOOD
5 ENERGY INFRASTRUCTURE FUND; LP REGARDING
TRANSMISSION ASSETS
6
7 WHEREAS, the City of ~
Y Vernon (the City") is a municipal
8 corporation and a chartered city of the State of California organized
9 and existing under its Charter and the Constitution of the State of
10 California; and
11 WHEREAS, the City owns and operates a system for the
12 generation, purchase, transmission, distribution and sale of electric
.13 capacity and energy; and
14 WHEREAS, the City•has a participation interest in the Mead-
15 Phoenix and Mead-Adelanto transmission projects (collectivel
Meads" Y, the
1 "Meads") ;) ; and
1.7 WHEREAS, the City desires to sell its entitlement, right,
18 , title and interest in the Mead's to Starwood Energy' Infrastructure
19 Fund; LP ("Starwood") under the terms and conditions of a Purchase and
20 Sale Agreement,- and other related documents; and
21 WHEREAS, . in order to meet the urgent need to facilitate the
22 purchase and sale, the City Administrator signed the Purchase and Sale
23 Agreement and related documents on December 13, 2007, subject to
24 ratification by the City Council; and-
25 WHEREAS, the City Council of the City of Vernon has
26 determined that, pursuant to the provisions of. subsection
(a) of
27 Section 2 .27 of the Vernon City Code, it was in the
public interest
28 and necessity to enter into the Purchase and Sale Agreement and other
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2 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
3 CITY OF VERNON AS FOLLOWS:
4 SECTION 1: The City Council of the City of Vernon hereby
5 finds and determines that the recitals contained •hereinabove are true
6 and- correct.
7 SECTION 2: The City Council of the City of Vernon hereby
8 approves and ratifies the execution of the Purchase and Sale Agreement
9 and other related documents (collectively, the "Purchase Documents")
10 with Starwood Energy Infrastructure Fund, LP at a sale price of not
11 less than $39, 500, 000, a copy of which are being presented to the City
12 Council concurrently with this Resolution, and the City Council hereby
13 orders said Purchase Documents to be received and filed by the City-
14 Clerk.
15 SECTION 3 : The City Council of the City of Vernon hereby
16 approves and authorizes the City Administrator, or his designee, to
17 perform such acts and deeds as may be necessary or convenient to
18 effect the purposes of this Resolution and the transactions herein
19 approved, ratified or authorized and to execute any and all documents
20 as shall be required to complete the sale of the Meads and to
21 accomplish the close of escrow consistent with the terms of the
22 Purchase Documents herein.
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1 .SECTION 4: The City Clerk-of the City of Vernon shall
2 certify to the passage of this resolution, and thereupon and
3 thereafter the same shall be in full force and effect.
4 APPROVED AND ADOPTED this 17th day of December, 2007.
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7 1 Name: Leonis C. Malburg
8 Title: Mayor /
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12 ELA GIRON, it lerk
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1 STATE OF CALIFORNIA )
2 ) ss
COUNTY OF LOS ANGELES )
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4 I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby
5 certify that the foregoing Resolution; being Resolution No. 9511, was
6 duly adopted by the City Council. of the City of Vernon at a. regular
7 meeting of the City Council duly held on Monday, - December 17, 2007,
8 and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the
9 City of Vernon.
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UELA GIR ity Clerk
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EXHIBIT 14
CITY OF VERNON
SECRETARY'S CERTIFICATE
This Certificate is delivered pursuant to _Section 2.6(a)(5) of that certain Purchase
and Sale Agreement (as amended, supplemented, or otherwise modified, the "Purchase
Agreement"), dated as of December 13, 2007, by and between the City of Vernon , a municipal
corporation and a chartered city duly organized and existing under and by virtue of the
Constitution and laws of the State of California (the "Seller"), and Starwood Energy
Infrastructure Fund, L.P., a Delaware limited partnership (the "Purchaser"). Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings ascribed to them
in the Purchase Agreement.
The undersigned, Manuela Giron, hereby certifies in her capacity as the City
Clerk of the Seller and on behalf of the Seller and not in her individual capacity as follows:
1, the Seller's charter, delivered to the Purchaser pursuant to Section 2.6(a)(3) of
the Purchase Agreement and attached hereto as Exhibit A,is true and
complete and in full force and effect as of the date.thereof,
2. the resolutions of the City Council of the Seller, delivered to the Purchaser
pursuant to Section 2.6(a)(4) and attached hereto as Exhibit B, are true and
complete and in full force and effect; and
3. the officer(s) or representative(s) of the Seller executing and delivering the
Purchase Agreement, the Related Agreements and any other documents
delivered by the Seller in connection with the Closing have been duly
authorized to execute and deliver such document on behalf of the Seller.
[Signature Page Follows]
LA\1847807.1
IN WITNESS WHEREOF,the Seller has caused this Certificate to be executed,in its
name and on its behalf,by the undersigned on and as of this a A day of April, 2008.
CITY OF VERNON
By: fit"
anuela Giron
City Clerk
[Signature Page to Secretary's Certificate—Starwood]
EXHIBIT A
Charter
[See Tab 12]
EXHIBIT B
Authorizing Resolutions
[See Tab 13]
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EXHIBIT 15
STARWOOD ENERGY INFRASTRUCTURE FUND,L.T.
OFFICER'S CERTIFICATE
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This Certificate is delivered pursuant to Section 2.6(b)(5)ofthat certain Purchase
and Sale Agreement(as amended, supplemented,or otherwise modified,the"Purchase
Agreement"), dated as of December 13,2007, by and among City of Vernon,a municipal
corporation and a chartered city duly organized and existing under and by virtue ofthe
Constitution and laws ofthe State of California and its Charter(the"Seller"), and Stanwood
Energy Infrastructure Fund, L.P., a Delaware limited partnership(the"Purchaser").. Capitalized
terms used.herein and not otherwise defined herein shall have the respective meanings ascribed
to them in the Purchase Agreement..
The undersigned,Madison Grose,in his capacity as an authorized officer ofthe
Purchaser-and not in his individual capacity, does hereby certify. to Seller, in the name of and on
behalf of the Purchaser, as follows:
I. Attached hereto as Exhibit A are true, correct and complete Governing f
Documents of'Pur-chaser, and certificates of good standing of'Purchaser-issued by the state in
which Purchaser is organized dated within three(3)Business Days ofthe Closing Date.
2.. Attached hereto as Exhibit B ar-e true, correct and complete copies of the
resolutions adopted by the general partner of Purchaser necessary to authorize the transactions
contemplated and to execute and deliver-the Purchase Agreement and the Related Agreements.
3.. The persons named on Exhibit C attached hereto are each authorized to
execute the Purchase Agreement and Related Agreements and each other-document to be _
delivered by the Purchaser from time to time in connection therewith.. The signature appearing
opposite the name of each person named on Exhibit C is a copy of'his or her true and genuine
signature..
4.. All representations and warranties of'Pur,chaser contained in Article 6 of
the Purchase Agreement were true and correct in all material respects without regard to any
qualification by"materiality","Material Adverse Effect"or-words of similar import as ofthe
date hereof and as ofthe Closing Date, with the same effect as though those representations and i
warranties had been made again at and as of that time(except to the extent that any such
representation or warranty is made as of a specified date,in which case as of'such specified
date), except insofar as any failures to be true and correct,individually or in the aggregate, do not
constitute, and could not reasonably be expected to have,a Material Adverse Effect and(ii) all of
the terms, covenants and conditions to be complied with and per by Purchaser-on or prior-
to the Closing Date have been complied with or performed in all material respects.
5. The Governing Documents of Purchaser delivered to Seller pursuant to
Section 2.6( )f( )ofthe Purchase Agreement are true and complete and in full force and effect,
(ii)the resolutions ofthe general partner of Purchaser delivered to Seller pursuant to.Section
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2.6(_)(7)of the Purchase Agreement are true and complete and in full force and effect, and (iii)
the authorized officer of Purchaser or any Affiliate thereof,' as applicable,executing and
delivering the Purchase Agreement,the Related Agreements and the other documents delivered
by Purchaser in connection with the Closing have been duly authotized to execute and deliver
such documents on behalf'of'Pur-chaser..
6. All of the terms,covenants and"conditions to be complied with and
performed by the Purchaser on of prior to the Closing Date have been complied with or
performed in all matezial respects
[Signature Page Follows]
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IN WITNESS WHEREOF, the Purchaser has caused this Certificate to be executed,in its
name and on its behalf;by the undersigned on and as of this 21"day of April,2008
STARWOOD ENERGY INFRASTRUCTURE
FUND,L.P.
By:
Name:Madison Grose
Title: Authorized Officer '
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EXHIBIT A
Governing Documents and Good Standings
[See Tab 16 - 18]
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EXHIBIT B
Authorizing Resolutions
[See Tab 19]
EXHIBIT C
Incumbency
[See Tab 20]
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EXHIBIT 16
Delaware PAGE 1
qhe First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF LIMITED PARTNERSHIP OF "STARWOOD
ENERGY INFRASTRUCTURE FUND, L.P. ", FILED IN THIS OFFICE ON THE
TWENTY—FOURTH DAY OF JANUARY, A.D. 2007, AT 9:12 O'CLOCK P.M_
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE
NOT BEEN ASSESSED TO DATE.
4GPET ARY's- _ p
u Harriet Smith Windsor,Secretary of State
4290514 8100 o � AUTHENTICATION: 6526393
080433311 °f� q P DATE: 04-15-08
You may verify this certificate online
at corp.delaware.gov/authver.shtml
CERTIFICATE=OF LIMITED PARTNERSHIP
OF
STARWOOD ENERGY INFRASTRUCTURE FUND, L.P.
The undersigned,for the purpose of forming a limited partners*pursuant to the
Delaware Revised Uniform Limited Partnership Act,6 Delaware Code,Chapter 17,does
hereby certify as follows:
1. The name of,the limited partnership is Starwood Energy Infrastruture
Fund,L.P.
IL The address of the partnership's registered office in the Staff of Delawfare
is Corporation Trust Center, 1209 Orange. Street, in the City of WImington,County of
New Castle. The name of its registered agent at such address is The Corporation Trust
Company.
III. The name and mailing address of the sole general partner Is as follows:
SEI Management.LP.
591 West Putnam-Avenue
Greenwich, Connecticut 06830
IN WITNESS WHEREOF, the undersigned has executed this Cartirkato of
Limited Partnership as of the 2e day of January,2007.
General Partn2r:
SEI Management,LP.
a Delaware limited partnership
By. SEI MANAGEMENT HOLDINGS,L.L.C.,
a Delaware limited liability company
its General Partner
By: STARWOOD ENERGY GROUP GLOBAL,L.L.C.,
a Delaware limited Iiabifity company
its Managing Member
By:
KJIaclison Grose
Senior Managing Director
State of Delaware
SeczEtary of State
Division of Corporations
Delivered 09:07 PM 0112412007
FILED 09:12 PM 0112412007
SRV 070083029- 4290514 FILE
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EXHIBIT 17
EXECUTION COPY
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
STARWOOD ENERGY INFRASTRUCTURE FUND, L.P.
NEW YORK 5772537 04(2K)
Table of Contents
Pale
ARTICLEI DEFINITIONS...................................................................................................1
Section1.1. Definitions................................:.........................................................................1
ARTICLEII ORGANIZATION..............................................:..........................:...................1
Section 2.1. Formation of Limited Partnership......................................................................I
Section 2.2. Firm Name;Registered and Principal Place of Business...................................2
Section2.3. Purpose...............................................................................................................2
ARTICLE III CAPITAL CONTRIBUTIONS .........................................................................3
Section 3.1. Capital Commitments........................................................................................3
Section 3.2. Capital Contributions of Partners.......................................................................3
Section 3.3. Default in Making Additional Capital Contributions........................................4
Section 3.4. Redemption by the General Partner...................................................................7
Section 3.5. No Interest or Withdrawals................................................................................9
Section 3.6. Minimum Capital Contribution of General Partner and Related Parties...........9
Section3.7. Capital Accounts................................................................................................9
Section3.8. Opt-Out............................................................................................................ 9
Section 3.9. Credit Enhancement.........................................................................................1 l
ARTICLE IV ALLOCATION OF INCOME-AND LOSSES................................................12
Section 4.1. Allocation of Net Income and Net Losses.......................................................12
Section 4.2. Other Allocation Provisions.............................................................................13 .
Section 4.3. Allocations for Income Tax Purposes..............................................................15
Section4.4. Withholding.....................................................................................................15
Section4.5. Recapture.........................................................................................................15
ARTICLEV DISTRIBUTIONS...........................................................................................16
Section5.1. General.............................................................................................................16
Section 5.2. Tax Distributions.............................................................................................18
Section5.3. Reinvestment...................................................................... .............................19
Section 5.4. Distributions of Net Cash Flow
19
Section5.5. Giveback Obligation...............................................................:........................20
ARTICLE VI ACCOUNTING, REPORTING AND RECORDS .........................................21
Section 6.l. Books and Records..........................................................................................21
Section 6.2. Access to Books and Records..........................................................................21
Section 6.3. Quarterly Reports.............................................................................................21
Section 6.4. Annual Reports and Opinions..........................................................................22
Section6.5. Event of Default...............................................................................................23
Section6.6. Other Reports:..................................................................................................23
Section6.7. Indemnification................................................................................................23
NEWYORK 5772517 A4(2K) -�-
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23 Section 68. l�euu Year---'-----.---'---_--^—^.'.--__.._—__^,
Section 6.9. Valuation Plan Appraisals..............................................................................24
Section610. Bank Accounts..................................................................................................24
Section 6.11. Fidelity Bond --.-_---------____,—_---._----...—.25
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Section 6.12' lnƒbnnudonu) Meetings....................................................................................
ARTICLE VII LIMITED PARTNERS.....................................................................................26
Section 7. Names,Addresses and Capital CommiUnents------------...--.26
3*udou 7.2. Co-Investment..................................................................................................26
Section 7.3. Certain Approval Rights -------_----'—'---,_-----.-.:.....27
Section7.4. Limited Liability..............................................................................................38
Section 7.5. Incapacity--------------.--_-------.—.--._----3A
Section 7.6. No Control of Other Limitations..................................................}O '
Section 7.7. Priority--------.--.-----.-----.-----.-----.—.—.3O
Section 7.8. /\ddkioouJ roSubstitute I.im�ed Partners....................................................... .
ARTICLE VIII GENERAL PARTNER....................................................................................32
Section 8. Names,Addresses and Capital Commitments------------.—^.—..l2
Section 8.2. Management and Control o[the Partnership...................................................33
Section 8.3. Powers and Duties of General Partner.............................................................33
Section 8.4. Single Asset Test-----------.._.—.--__---------.36
Section 8.5. Partnership Funds -------'------.—_--------..._--..36
Section 8.6. Transactions with Affiliates --------.----.-----------.]6
Section 8.7. Organizational and Operating Expenses..........................................................39
3undnu 8.8. Key Man Provisions.........................................................................................40
Section 8.9. Other Activities and Competition------.----'..---_------.4l
Soudou 8.10. Investment Opportunities..................................................................................4l
Scoboo 8]]. LiahiUtv---------------------.—.--.--.-----.—.46 '
3ocdoo 8.12. Limits on General Partner's Power --_----'------.-------46
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Section 8.13. Auuo ��uuugooxn�Fee---.---'--.---------.'---.--.
Section 8.14. Tax Matters Purtncr-----^—.----------------.--.--...47
Section 8.15. General Partner................................................................................................48
Section8.16. Advisory Board................................................................................................49
Section 8'17. ClD8A and Regulatory Matters.......................................................................49
^ Sou6ou 8.18. Advisory Committee........................................................................................5l
8cohou 8.19. ...--------------------._--^--52
Section 820. Certificate of Limited Partnership...................................................................53
Section8.21. Other Entities.................................................................... ............... ..............53
ARTICLE IX TRANSFERS OF INTERESTS B`y PARTNERS...........................................53
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Section 9.L General............................................................. ---_--__----_--�j3
.Section 91 Transfer o[Interest ofGeneral Partner............................................................
Section 9.3. Transfer o[Interest oyLirnkedPurtncr ................................ ...........................55
8outou 9.4. Further Requirements.-------------------_--..-----..57
Section 9.5. Consequences o[Transfers Generally ............ ................................................58
Section 9.6. Removal of General Partner for Cause............................................................59
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Section 9.7. Removal of General Partner Without Cause....................................................61
Section9.8. Additional Filings............................................................................................63
Section 9.9. Withdrawal of Partners....................................................................................63
ARTICLE X DURATION OF PARTNERSHI P...................................................................63
Section 10.1. Term of Partnership ................63
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Section 10.2. Dissolution of Partnership................................................................................63
Section 10.3. Extension of Term.........................................................:..................................64
ARTICLE X1 LIQUIDATION AND DISTRIBUTION OF ASSETS..................................65
Section 11.1. Appointment of Liquidator..............................................................................65
Section 11.2. Distribution in Liquidation ............................ .................................................65
Section11.3. Final Reports....................................................................................................66
Section 11.4. Rights of Limited Partners...............................................................................66
Section 11.5. Deficit Restoration...........................................................................................67
Section11.6. Termination......................................................................................................67
ARTICLE XII NOTICES AND VOTING...............................................................................67
Section12.1. Notices.............................................................................................................67
Section 12.2. Voting;Consents..............................................................................................67
ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT AND POWER
OFATTORNEY..............................................................................................68
Section 13.1. Approval of Amendments................................................................................68
Section 13.2. Amendment of Certificate.......................................:........................................69
Section 13.3. Power of Attorney............................................................................................69
ARTICLEXIV MISCELLANEOUS........................................................................................70
Section 14.1. Entire Agreement..........................................................................................
Section14.2. Governing Law................................................................................................70
Section14.3. Effect................................................................................................................70
Section 14.4. Pronouns and Number......................................................................................70
Section14.5. Captions...........................................................................................................70
Section 14.6. Partial Enforceability.......................................................................................71
Section 14.7. Counterparts.................................................................................................
....71
Section 14.8. Representations, Warranties and Covenants....................................................71
Section 14.9. Representations and Warranties of General Partner........................................74
Section 14.10. Covenants of General Partner..........................................................................75
Section 14.11. Waiver of Partition...........................................................................................76
Section 14.12.Litigation without Termination........................................................................76
Section14.13. Designee..........................................................................................................76
Section 14.14. Treatment of Participating Plans and the Group Trust....................................76
Section 14.15. Parallel Partnerships.....................................................................................:...77
Section 14.16. Confidentiality.................................................................................................79
Section 14.17. Side-by-Side Partnerships................................................................................80
NEWVORK 5772537 Od(2K)
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Section |4]O. Treatment of Other Entities.............................................................................8l
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NE°'vRKvno 14(2K) '�-
STARWOOD ENERGY INFRASTRUCTURE FUND,L.P.
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT `
WHEREAS,THIS AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP of Starwood Energy Infrastructure Fund, L.P. (the"Partnership")is made as of
3uw Jmfe 1, 2007, by and among SEI Management, L.P., a Delaware limited partnership (the
"General Partner', as general partner,Barry S. Stemlicht(the "Initial Limited Partner"), as the
initial limited partner, and the Persons who became limited partners of the Partnership in
accordance with this Partnership Agreement(as defined herein)and whose names are set forth as
Limited Partners on Appendix A attached hereto.
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WHEREAS, the General Partner and the Initial Limited Partner entered into a
Limited Partnership Agreement regarding the initial formation of the Partnership dated as of
2007(the"Partnership Agreement");and
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WHEREAS, the parties hereto desire to amend and restate the Partnership j
Agreement to admit the Limited Partners and provide for certain changes to the terms and
conditions set forth.in the Partnership Agreement.
NOW, THEREFORE, the General Partner and the parties hereto hereby agree to
amend and restate in its entirety the Partnership Agreement of the Partnership to read as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Capitalized terms used herein without definition have
the meanings ascribed to them in Appendix B annexed hereto.
ARTICLE II !
ORGANIZATION
Section 2.1. Formation of Limited Partnership. (a) The Partnership was
formed as a limited partnership on(Z� Ja,�r , 2007 pursuant to and in accordance with the i
Delaware Revised Uniform Limited Partnership Act, as amended (the"Revised Uniform Act").
The parties hereto agree to continue the Partnership subject to the teens of this Agreement. The
General Partner, for itself and as agent for the Limited Partners, shall make every reasonable
effort to ensure that all certificates and documents are properly executed, and shall accomplish
all filing, recording, publishing and other acts necessary or appropriate for compliance with all
the requirements for the formation of the Partnership as a limited partnership under the Revised
Uniform Act and under all other laws of the State of Delaware or such other jurisdictions in
which the General Partner determines that the Partnership may conduct business. Each Limited
Partner admitted to the Partnership by the General Partner shall promptly execute all relevant
certificates and other documents as the General Partner shall reasonably request. The rights and
NEWYORK 5971537 v t a(2K)
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duties of the Partners shall be as provided in the Revised Uniform Act except as modified by this
Agreement.
(b) Immediately following the admission of Persons as limited partners of the
Partnership in accordance with this Agreement, the Initial Limited Partner shall be deemed to
have withdrawn from the Partnership as a limited partner of the Partnership, and upon such
withdrawal, the Initial Limited Partner shall have his capital contribution to the Partnership, if
any,returned to him and his capital commitment to the Partnership, if any, shall be released, and
the Initial Limited Partner shall have no interest in the Partnership, as a Limited Partner thereof.
A Person shall be admitted at the Initial Closing as a limited partner of the Partnership at the time
that this Agreement or a counterpart hereof is executed by or on behalf of such Person and a
Subscription Agreement or a counterpart thereof is executed by or on behalf of such Person and
by the General Partner. After the Initial Closing,Persons shall be admitted as limited partners of
the Partnership only as provided in Section 7.8, 9.3 or 9.4.
Section 2.2. Firm Name; Registered and Principal Place of Business. The
name of the Partnership is "Starwood Energy Infrastructure Fund, L.P.". The initial address of
the Partnership's registered office in Delaware is 1209 Orange Street, Wilmington, Delaware
19801, and its initial registered agent at such address for service of process is The Corporation
Trust Company. The principal place of business of the Partnership initially shall be located at
591 W. Putnam Avenue, Greenwich, Connecticut 06830. The General Partner may change the
location of the registered office and principal place of business of the Partnership to such other
location within the United States as the General Partner may determine at any time, upon written
notice to all the Partners indicating the new location of such principal place of business or
registered office. The General Partner may cause the Partnership to open such additional offices
at such other locations as the General Partner in its sole discretion may determine.
Section 2.3. Purpose. The purpose of the Partnership is to generate significant
returns for its Partners by (i)locating, analyzing, investing in, acquiring, holding, originating,
maintaining, operating, leasing, managing, developing, improving, mortgaging, encumbering,
and selling for profit equity and debt interests in primarily energy infrastructure related projects,
assets and entities, including without limitation, electric transmission and distribution, natural
gas storage and pipeline, and power-generation assets,primarily located in the United States and
Canada, and (ii)participating as a partner, owner or investor in or lender to other general or
limited partnerships, limited liability companies, corporations or other vehicles or Persons, the
business of which is related to energy infrastructure related projects including, without
limitation,the ownership,sale, leasing financing,development and/or management thereof or the
provision of services thereto; and (iii) engaging in all other activities related or incidental thereto
or intended to enhance the value thereof(collectively, such assets into which such investments
are invested, commitments and options to acquire or sell such investments,"Project Interests"),
in each case, in accordance with this Agreement over such period as the General Partner
determines to be in the best interest of the Partners. For avoidance of doubt,the Partnership shall
not invest in any"Fund of Funds."
NEW YORK 5772517 v14(2K) -�- -
ARTICLE IIII
CAPITAL CONTRIBUTIONS
Section 3.1. Capital Commitments. Each Partner has committed to contribute
to the capital of the Partnership an amount equal to its Capital Commitment. Subject to certain
specific limitations contained in-other provisions of this Agreement,such obligation to contribute
capital to the Partnership shall be irrevocable, unconditional and not subject to any defense,
counterclaim or offset of any kind.
Section 3.2. Capital Contributions of Partners. (a) Subject to certain
limitations contained in this Agreement, as and when at any time in the opinion of the General
Partner capital is required to acquire or pursue Project Interests, provide working capital,
establish reasonable reserves or pay expenses oncosts, losses or liabilities of the Partnership,
including, without limitation, repayment of the Working Capital Line, the Partners shall
contribute cash to the capital of the Partnership. The amount of capital required to be
contributed by each Partner shall be equal to the total amount of Capital Contributions called for
by the General Partner, multiplied by a fraction, the numerator of which shall be the amount of
such Partner's Capital Commitment and the denominator of which shall be the aggregate amount
of all Partners' Capital Commitments. Except for reinvestments in accordance with Section 5.3,
the sum of a Partner's Capital Contributions shall not exceed such Partner's Capital
Commitment. Notwithstanding anything to the contrary contained in this Agreement, until such
time as a Partner has contributed pursuant to this Section 3.2 an amount equal to the total Capital
Commitment of such Partner, any amounts contributed to the capital of the Partnership by the
Partner upon the request of the General Partner shall be deemed to be a Capital Contribution
pursuant to this Section 3.2 rather than a reinvestment of.proceeds pursuant to Section 5.3.
References in this Agreement to requests or calls for Capital Contributions by the General
Partner shall include such requests or calls by the Working Capital Line Lender in the event of a
default under the Working Capital Line.
(b) Subject, to Section 8.17, the Capital Contributions specified in
Section 3.2(al shall be made from time to time within ten (10) Business Days after notice from
the General Partner of the amounts to be contributed by each Partner and of the general purposes
to which such contributions will be applied, and shall be invested by the General Partner in
Permitted Temporary Investments until applied to Project Interests, liabilities(including, without
limitation, repayment of the Working Capital Line) or expenditures. All Capital Contributions
shall be made in cash only. Any amounts contributed by the Partners to the Partnership as
Capital Contributions and not invested in Project Interests or otherwise employed for Partnership
purposes,in any case, within twenty-five (25) Business Days of the date of such notice from the
General Partner, and any investment income earned thereon, shall be promptly returned by the
Partnership to the Partners who have contributed such amounts, pro rata, in proportion to the
amounts so contributed by the Partners. Any amount of Capital Contributions so returned to a
Partner shall not constitute Capital Contributions for the purposes of this Agreement, shall not be
deemed to have reduced the amount of such Partner's uncalled Capital Commitment, shall be
treated for all other purposes of this Agreement as though such amounts were never contributed
as Capital Contributions or called for by the General Partner in the first instance, and the
investment income earned thereon shall not be considered Net Cash Flow of the Partnership.
r
NPWYORK 577253104 _3
Without limitation upon the terms and provisions of the preceding sentence, nothing in this
Agreement shall operate to increase any Partner's Capital Commitment and no Partner shall have
any obligation to contribute any amounts in excess of such Partner's aggregate Capital
Commitment to the Partnership(except with respect to reinvestments in accordance with Section
5_3),
(c) Any portion of a Partner's Capital Commitment which has not been called
for by the General Partner by the end of the Commitment Period or is not required for
investments Identified by the Partnership by the end of the Commitment Period shall be released
from further commitment to the Partnership, except for the purposes enumerated in clauses (i)
through (iii) of the next succeeding sentence. The General Partner may at any time (whether
before or after the end of the Commitment Period) request Capital Contributions from the
Partners to (i) pay expenses or costs, losses or liabilities of the Partnership (including, without
.limitation, expenses allocated to the Partnership by any entity through which the Partnership
holds a Project Interest and the payment of the Working Capital Line), subject to the prior
unanimous approval of the members of the Advisory Committee for any request for Capital
Contributions pursuant to this clause (i) occurring after the expiration of the Commitment Period
(except for payments of the Working Capital Line which shall not require approval), (ii) fund or
complete,within six (6) months after the end of the Commitment Period, or with the approval of
the Advisory Committee within one (1) year after the end of the Commitment Period, any
additional investments by the Partnership in Project Interests held by the Partnership (including
reserves established therefor and including the funding of additional capital requirements of
entities in which the Partnership has invested, directly or indirectly, to enable such entities to
acquire additional assets or make ongoing investments in ,existing assets) and (iii) complete,
within six (6) months after the end of the Commitment Period, or with the approval of the
Advisory Committee within one(1)year after the end of the Commitment Period, investments in
Project Interests Identified as of the end of the Commitment Period. Subject to the immediately
preceding sentence of this Section 3.2(c), any Capital Contributions which have not, by the end
of the Commitment Period, either (i) been invested in Project Interests or committed for
Identified Project Interests or (ii)been expended or reserved by the Partnership in connection
with the acquisition or disposition of Project Interests or as working capital or to fund expenses,
costs, losses or liabilities of or attributable or allocated to the Partnership(or reasonable reserves
against same), shall be promptly returned to the Partners contributing such amounts.
Section 3.3. Default in Making Additional Capital Contributions. (a) Each
Partner hereby pledges and assigns its Interest in the Partnership to the Partnership as security for
the performance of its obligations to make Capital Contributions that it has committed to invest
in the Partnership when called for by the General Partner in accordance with Sections 3.2 or 5.3
(and for any other amounts required to be paid by such Partner pursuant to this Section 3.3) and
to make reimbursements to the Partnership pursuant to Section 4.4, and hereby grants to the
Partnership all rights available to a secured party under the Uniform Commercial Code of the
State of Delaware and the comparable laws of its state of residence (if different) (hereinafter
referred to individually and collectively as the "Uniform Commercial Code") and agrees, upon
request, to deliver to the General Partner a duly' executed financing statement and any other
documents which the General Partner may reasonably request with respect thereto from time to
time. Each Partner hereby irrevocably constitutes and appoints the General Partner as its
attorney-in-fact to execute any documents necessary to carry out the terms of this subpara rg aph.
NEWYORK 5772537 v 14)2K) -V
i
if such Partner fails to execute such documents upon request. Each Partner hereby
Lai
acknowledges that such power of attorney is coupled with an interest, is irrevocable and is
transferable to any successor of the General Partner. The pledges and assignments of each
Partner created pursuant to this subparagraph (a): (i)shall be prior and superior to any other
pledges or assignments of Interests in the Partnership created from time to time(except in
connection with any Working Capital Line); (ii) shall constitute a continuing lien on such
Interests following any transfers of all or a portion of such Interests or any foreclosure or other
exercise of remedies pursuant to subparagraph (b)below; and (iii)provided such Partner is not a
Defaulting Partner, shall terminate upon such date as such Partner shall have no further
obligation to make any additional Capital Contributions to the Partnership or to fund or
reimburse withholding obligations pursuant to Section 4.4 below.
(b) (i) Upon the failure of a Partner to make a Capital Contribution when
called for by the General Partner in accordance with Sections 3.2 or 553, or to pay any other
amounts required to be paid by such Partner pursuant to this Section 3.3 or Section 4.4, which.
failure is not cured within five (5) Business Days following written notice from the General
Partner to the Defaulting Partner of such failure (the"Default Notice"),the General Partner shall
be entitled to exercise and enforce, on behalf of the Partnership, all rights and remedies available
at law and in equity against the Defaulting Partner. Without limiting the foregoing, the General
Partner may give notice of such failure to all other Partners. Subject to Section 8.17, within ten
(10) days of receipt of such notice (the "Election Period"), any Non-Defaulting Partner may, by
delivery of written notice to the.Defaulting Partner and the General Partner and subject to any
regulatory approval requirements, elect to purchase all, but not less than all, of the Defaulting
Partner's Interest in the Partnership at a price (the "Purchase Price") equal to the Adjusted
Capital Contributions of the Defaulting Partner as of the date of the Default Notice. If more than
one Partner desires to purchase the Defaulting Partner's Interest, each such Partner (a
"purchaser') shall have the right to purchase its rho rata portion of such Interest, based upon the
purchasers' relative Participation Percentages immediately prior to such purchase. The closing
of the purchase and sale of the Defaulting Partner's Interest shall take place on a date designated
by the purchasers not later than thirty (30) days following the date of the Default Notice. At the
closing, the Defaulting Partner shall execute and deliver to the purchasers assignments of
interest, bills of sale, instruments of conveyance, and such other instruments as such purchasers
may reasonably require to convey all of the Defaulting Partner's right,title and interest in and to
the Defaulting Partner's Interest in the Partnership, free and clear of liens, claims and
encumbrances (other than any liens in favor of the Partnership and the Working Capital Line
Lender). In the event the Defaulting Partner refuses or fails to execute and deliver any of the
foregoing; the purchasers (or their respective designees) are hereby irrevocably appointed
attorneys-in-fact to execute and deliver on behalf of the Defaulting Partner any such documents
or instruments. At any closing under this paragraph, the Purchase Price for the Defaulting
Partner's Interest shall be paid entirely in cash at the closing, by delivery of a cashier's or
certified check or by wire transfer. In addition, but subject to the rights of the Working Capital
Line Lender,to the extent that any monies are owed from a Defaulting Partner to the Partnership, (,
such amounts may be offset against the Purchase Price payable to the Defaulting Partner
hereunder,provided that the purchasers of the Defaulting Partner's Interest shall agree to assume
the obligations of the Defaulting Partner to contribute to the Partnership any portion of the
Defaulting Partner's required Capital Contribution together with Default Interest (as defined in
Section 33(c)) thereon and Collection Costs (as defined in Section 3.3(b)(ii)) in respect thereof
i
NEWYORK 5772537�Id 12K) —5—
f
i
then due and to pay to the Partnership any Capital Contributions when called for by the General
Partner in accordance with Sections 3.2 or 5.3. Notwithstanding the foregoing, if the Defaulting
Partner pays its unpaid required Capital Contribution, together with all Default Interest thereon
and Collection Costs (as defined in Section 3.3(b)(ii)) incurred by the Partnership by the end of
the Election.Period, it shall not be required to close the sale under this subparagraph(b)(i).
(ii) In the event that the Defaulting Partner's Interest is not purchased by the
Non-Defaulting Partners and the default is not cured, as aforesaid, by the end of the Election
Period, the General Partner may institute proceedings and take any other action available at law
and/or in equity against the Defaulting Partner for the payment of the Defaulting Partner's
Capital Contribution or other amount owed to the Partnership, Collection Costs and Default
Interest. In addition to, or as part of the foregoing proceedings, the General Partner shall be
entitled to exercise on behalf of the Partnership all of the rights afforded to a secured party under
the Uniform Commercial Code, and may, upon such notice as may be required by the Uniform
Commercial Code (but in no event less than 15 Business Days' notice), cause the Defaulting
Partner's Interest to be sold at private or public sale in accordance with the Uniform Commercial
Code or any other applicable law; provided, however, that the Defaulting Partner's Interest shall
not be sold pursuant to this subparagraph (b)(ii) unless the purchaser of such Interest agrees to
assume the obligations of the Defaulting Partner to contribute to the Partnership any portion of
the Defaulting Partner's required Capital Contribution together with Default Interest thereon and
Collection Costs in respect thereof then due '(after taking into account the application of the
proceeds of the sale in accordance with the next sentence) and to pay to the Partnership any
Capital Contributions when called for by the.General Partner in accordance with Sections 3.2 or
5_3, and provided, further, that such transfer of the Defaulting Partner's Interest shall comply
with each of the limitations set forth in Sections 9.4(b) and (c). Subject to the rights of the
Working Capital Line Lender, any proceeds of the sale received in addition to the assumption
described above shall be applied first, to the reasonable expenses, including attorneys' fees,
incurred by the Partnership and the General Partner in connection with the sale or other exercise
of remedies pursuant to this subparagraph (b) (collectively, "Collection Costs"), second, against
any accrued and unpaid Default Interest in respect of such Defaulting Partner's required Capital
Contributions or said Collection Costs, and then against the Defaulting Partner's required Capital
Contributions or other payments owing to the Partnership. Any remaining proceeds shall be paid
to the Defaulting Partner.
(c) Any Capital Contribution or other payment to the Partnership (including,
without limitation, any reimbursement pursuant to Section 4.4) not made when due and
Collection Costs incurred shall bear interest ("Default Interest") from the date five (5) Business
Days after the dates due or incurred, as appropriate, until contributed or reimbursed to the
Partnership at a rate (the"Default Rate")equal to the lesser of(x)four(4)percentage points over
the prime rate of interest announced from time to time by Citibank N.A. or its successor (the
"Prime Rate") during such period and (y)the maximum interest that may be charged by the
Partnership on such amounts under applicable usury or other law. Any distributions which a
Defaulting Partner would otherwise be entitled to receive during any period in which such
Partner is a Defaulting Partner shall be applied by the Partnership against such Defaulting
Partner's required Capital Contributions, Default Interest and Collection Costs in such order as
the General Partner may determine. During any period in which there is a Defaulting Partner,
but subject to the rights of the Partners to purchase the Defaulting Partner's Interest as set forth
NEWYORK 5772537 v14(2K) -6-
above, the General Partner or its Affiliates may, in the General,Partner's sole discretion, lend
funds to the Partnership in an amount up to the sum of such Defaulting Partner's defaulted
Capital Contributions, Default Interest thereon and Collection Costs in respect thereof. All
payment obligations with respect to such loans made by the General Partner or its Affiliates
(herein, the "Default Loans"), together with interest thereon at the rate prescribed above with
respect to Default Interest, or all payment obligations with respect to amounts advanced to the
Partnership under a credit facility for such purpose and .interest on such amounts, shall be
specially allocated to or borne by the Defaulting Partner; it being understood that no payment
obligation with respect to Default Interest;principal,Collection Costs or funds advanced under a
credit facility for such purpose and interest thereon shall be allocated to or borne by any Partner
who funds its Capital Contribution prior to such borrowing date and on whose behalf no Default
Loan or advance under a credit facility is required. Default Loans and interest thereon, or
advances under a credit facility in lieu of Default.Loans and interest on such advances, shall be
repaid by the Partnership to the General Partner or its Affiliates prior to any distributions to the
Defaulting Partner under Article V out of distributions otherwise payable to the Defaulting
Partner. Default Interest shall compound monthly (i.e.,Default Interest shall accrue with respect
to previously accrued and unpaid Default Interest).
(d) Appendix A hereto shall be amended to reflect any transfer of a Defaulting
Partner's Interest pursuant to Section 3.3(b). The amended Appendix A shall be attached hereto
and the General Partner shall furnish a copy of it to each Partner.
Section 3.4. Redemption by the General Partner. (a) If at any time the
General Partner determines,in its sole discretion that the continued ownership by any Limited
Partner(the"Redeemed Partner") of its Interest has or will have an adverse effect on any Project
Interest or on the Partnership, including, without limitation, any such adverse effect arising out
of, resulting from, relating to or evidenced by (i) any violation by the Redeemed Partner of its
covenants or agreements contained in this Agreement or its Subscription Agreement,including,
without limitation, the covenants specified in Section 14.8M or 14.8(e) hereof, (ii) any
inaccuracy or breach (whether existing as of the date hereof or arising at any time in the future)
of any of the representations and warranties of the Redeemed Partner contained in this
Agreement or its Subscription Agreement, including, without limitation, the representations and
warranties specified in Section 14.8(a), 14.8(b) or 14.8(c) hereof,or any other certificate or
document delivered to the General Partner or its Affiliates, (iii) any adverse effect on the
regulatory status; authorizations or exemptions of any Project Company including, without
limitation,a Project Company's loss or threatened loss,of market-based rate authority granted by
FERC or authorization to transmit or distribute electricity or store, transport or distribute natural
gas, as applicable, (iv) a Project Company's being required to provide access to its books and
records under 18 C.F.R. Part 366 of FERC's regulations implementing PUHCA 2005 as a result
of the Redeemed Partner's indirect interest in an Additional Investment Vehicle, (v) any other
notice,judgment or determination of or by FERC or any other governmental authority that the
ownership by the Redeemed Partner of its Interest may have an effect on the legal or regulatory
status, authorizations or exemptions of any Project Company, including, without limitation, the
loss by any Project Company of its market-based rate authority or authority to transmit or
distribute electricity or store, transport or distribute natural gas, as applicable, (vi) any objection
by FERC or any other governmental authority to the Redeemed Partner's ownership of its
Interest or any request by FERC or any other governmental authority that the Redeemed Partner
NFWYOKK 5772537 04)2K) -�-
cease to own an Interest, or (vii) any Plan Asset Event as described in Section 8.17(e) or any
Regulatory Issue as described in Section 8.17(g), then the General Partner shall have the right,
exercisable by written notice (the"Redemption Notice") to the Redeemed Partner, to cause the
Redeemed Partner to sell and transfer its Interest to the General Partner or any Person designated
by the General Partner specified in the Redemption Notice,at the purchase price determined in
accordance with Section 3.4(b)(the"Redemption Price").
(b) (i) if the Redemption Notice is delivered prior to the date on which the
Partnership acquires its first Project Interest, then the Redemption Price shall be equal to the
Adjusted Capital Contributions of the Redeemed Partner as of the date of the Redemption
Notice, without interest and without the payment of any Preferred Return thereon. (ii) If the
Redemption Notice is delivered on or after the date on which the Partnership has acquired its
first Project Interest,and (A)neither Section 3.4(a)(i)'nor Section 3.4(a)(ii) applies with respect
to the Redeemed Partner, then the Redemption Price shall be equal to the Fair Market Value of
the Redeemed Partner's Interest; or(B) either Section 3.4(a)(i) or Section 3.4(a)(ii) applies with
respect to the Redeemed Partner,then the Redemption Price shall be equal to the lesser of(x)an
amount equal to the Adjusted Capital Contribution of the Redeemed`Partner as of the date of the
Redemption Notice, and (y) ninety percent (90%) of the Fair Market Value of the Redeemed
Partner's Interest. The Fair Market Value of the Redeemed Partner's Interest shall
be determined by a reputable appraiser with expertise in the power industry selected by the
General Partner in its sole discretion and not otherwise then performing any services on behalf of
the General Partner or the Partnership(the "Appraiser"). The determination of the Appraiser
shall be final and binding. on the General Partner and the Redeemed Partner. The General
Partner and the Redeemed Partner shall use commercially reasonable efforts to cooperate with
the Appraiser to facilitate its prompt determination of the Fair Market Value of the Redeemed
Partner's Interest. All costs incurred by the General Partner, the Partnership or the Redeemed
Partner in connection with the redemption shall be borne by the Redeemed Partner.
(c) Immediately upon receipt of the Redemption Notice, the Redeemed
Partner shall execute and deliver to the General Partner,or its designee a transfer instrument
substantially in the form attached hereto as Appendix C. Such transfer shall have an effective
time as of the close of business on the date immediately prior to the date on which the adverse
effect on any Project Interest occurred as specified in the Redemption Notice, or such later date
as is the earliest date permitted by applicable law. The Redemption Price,less costs borne by the
General Partner and the Partnership, shall be payable by the General Partner or its designee to
the Redeemed Partner in eight equal quarterly installments (or according to a shorter time period
that may be set by the General Partner in its sole discretion with respect to each such
redemption),commencing on the first day of the first calendar quarter commencing after the
determination of the Redemption Price pursuant to Section 3.4(b). The unpaid portion of any
Redemption Price payable to a Redeemed Partner with respect to which neither Section 3.4(a)(i)
nor Section 3.4(a)(ii) applies shall bear interest at a rate equal to eight percent (8%) per annum,
non-compounded. In the event that the Redeemed Partner refuses or fails to execute a transfer
instrument as aforesaid, the General Partner is hereby irrevocably appointed attorney-in-fact to
execute and deliver on behalf of the Redeemed Partner such transfer instrument. To the extent
that any monies are owed by the Redeemed Partner to the Partnership or any Working Capital
Line Lender, such amounts may be offset against the Redemption Price; provided that the
purchasers of the Redeemed Partner's Interest shall agree to assume the obligations of the
NEWYORK 5772517 v14(2K) -8- -
Redeemed Partner to contribute to the Partnership any portion of the Redeemed Partner's.
outstanding Capital Commitment when called for by the General Partner in accordance.with
Section 3.2 or 5.3.
(d) The parties hereto expressly acknowledge and agree that the remedies of
the General Partner and the Partnership specified in this Section 3.4 shall be in addition to, and
not in lieu of, any other remedies available to the Partnership and/or the General Partner under
applicable law or under this Agreement or any other document, instrument or arrangement
between or among the General Partner, the Partnership and/or any of the Limited Partners. The
General Partner and the Partnership hereby reserve, and the delivery of the Redemption Notice
shall in no event constitute a waiver of, any and all other rights that the General Partner and/or
the Partnership may have in equity or at law, including without limitation any right the General
Partner and/or the Partnership may have to seek damages for a breach of any of the
representations,warranties or covenants specified in Section 14.8.
Section 3.5. No Interest or Withdrawals. No interest shall accrue on any
Capital Contribution made by a Partner, and no Partner shall have the right to withdraw or to be
repaid any of its Capital Contributions so made, except as specifically provided in this
Agreement.
Section 3.6. Minimum Capital Contribution of General Partner and Related
Parties. Notwithstanding any other provision of this Agreement. the General Partner shall
contribute, or cause certain of its related parties to contribute, capital to the Partnership at such
times and in such amounts as are necessary to ensure that the aggregate Capital Contributions of
the.General Partner and such related parties to the Partnership and the Other SEI-1 Partnerships
(taken as a whole,and not proportionately with respect to each of the Partnership and each Other
SEL-I Partnership) shall be no less than an amount equal to the lesser of(i) five percent (5%) of
the aggregate Capital Contributions of all Partners in the Partnership and the Other SEW
Partnerships at such time, or(ii)Twenty Million Dollars ($20,000,000); provided, however,that,
in addition to the foregoing contribution obligation, in the event that, as of the Final Closing,the
aggregate Capital Commitments to the Partnership and to the Other SEI-I Partnerships
(determined prior to taking into account this proviso) shall be less than $400,000,000, then the
General Partner shall itself provide an additional Capital Commitment, and/or shall cause its
related parties to provide an additional Capital Commitment, equal to, in the aggregate, five
percent (5%) of the difference between $400,000,000 and such aggregate Capital Commitments
to the Partnership and to the Other SEI-I Partnerships (determined prior to taking into account
this proviso).
Section 3.7. Capital Accounts. A capital account ("Capital Account') shall be
established and maintained for each Partner in accordance with Regulation § 1.704-1(b)(2)(iv).
Section 3.8. Opt-Out. (a) On or before the fifth (5th) Business Day after any
i
notice of request for Capital Contribution delivered by the General Partner to the Partners
pursuant to Section 3.2(b), any Limited Partner may deliver to the General Partner a certificate
(an "Opt-Out Certificate") of an authorized officer(to which shall be attached a written opinion
of counsel reasonably acceptable to the General Partner confirming the matters set forth in such
Opt-Out Certificate) of such Limited Partner to the effect that such Limited Partner's
NEWYORK 5772537 V14(2K) -9- -
participation in such Capital Contribution and the investment related thereto would result in a
violation of law applicable to such Limited Partner. Each Opt-Out Certificate shall describe in
reasonable detail the nature of the alleged violation of law and such Limited Partner's analysis
that led to the conclusion that such violation would occur. If either(l) counsel to the General
Partner confirms the correctness of the statements and analysis set forth in an Opt-Out Certificate
or (2) the General Partner determines in its sole discretion to accept an Opt-Out Certificate
notwithstanding the lack of such confirmation by counsel, then the provisions of_Section 3.8(b)
shall apply to the Limited Partner that delivered such Opt-Out Certificate (the "Opt-Out
Partner").
(b) An Opt-Out Partner shall not be obligated to make the Capital
Contribution (or portion thereof) which would result in the violation of law described in the
applicable Opt-Out Certificate. In the event that there are one or more Opt-Out Partners with
respect to a Capital Contribution,the General Partner may, in its sole discretion, either(i) cancel
such Capital Contribution in its entirety, and cause the Partnership to refrain from making the
investment in respect of which such Capital Contribution was requested or(ii) cause all Partners
other than the Opt-Out Partner to make such Capital Contribution and request.an additional
Capital Contribution from all Partners other than the Opt-Out Partner to replace the amount that
would otherwise have been contributed by the Opt-Out Partner.
(c) In the event that the General Partner determines to proceed without the
Opt-Out Partner in accordance with Section 3.8(b)(ii), the General Partner may, in its sole
discretion and without the consent of any Limited Partner, either (i) amend this Agreement to
create one or more new classes of Interest in the Partnership designed to permit the Partnership
to make the relevant investment while avoiding the issuance of an interest in such investment to
the Opt-Out Partners or (ii) cause the Partners (other than the Opt-Out Partners) to make the
Capital Contributions described in Section 3.8(b)(ii) to a new partnership (a "Backstop
Partnership") that will make the investment to which the Opt-Out Partner objected in the
applicable Opt-Out Certificate. The terms of the partnership agreement with respect to any
Backstop Partnership shall be substantially similar to this Agreement, including the distribution
provisions of Article V hereof and the payment of any annual asset management fees described
hereunder, and each Backstop Partnership shall be deemed to be a Co-Investment Partnership for
all purposes under the Partnership Agreement, except that the Partnership shall not co-invest
with any Backstop Partnership, and all references in Section 7.2(a) of this Agreement to Excess
Interest shall, for this purpose, be deemed to be references to the investment or portion of an
investment which would have been made by the Opt-Out Partner but for the application of
Section 3.8(b). Nothing contained in this Agreement shall limit or restrict the General Partner
(other than on behalf of the Partnership so tong as any Partner is an Opt-Out Partner) or any
Other SEI-I Partnership from-making an investment in any investment described in an Opt-Out
Certificate. Additionally, none of the provisions of the Partnership Agreement, including
without limitation Section 8.6, shall prohibit the General Partner (or any Affiliate thereof) from
receiving (or require any consent or approval before any such party receives) the fees,
compensation and/or interests in distributions, capital, profits, income, gain, loss, deduction or
credit provided for in the partnership agreement of any Backstop Partnership. For the purposes
of calculating, pursuant to the third sentence of Section 3.2(a) of this Agreement, whether any
Partner has made Capital Contributions equal to such Partner's Capital Commitment, all loans
NTWYORK 5772537,14(2K)
and/or contributions made by such Partner to the capital of any Backstop Partnership shall be
aggregated with and treated as part of such Partner's Capital Contributions hereunder.
Section 3.9. Credit Enhancement. 'None of the General Partner nor any of its
Affiliates shall be obligated to issue any guaranties or indemnities (other than arising as a matter'
of law) in connection with any financing or other transaction relating to any of the Partnership's
r'
assets or the acquisition thereof. Notwithstanding the foregoing, the General Partner or any
Affiliate of the General Partner(each such Person, as applicable,a "Credit Provider") may, on a
case by case basis and in its sole judgment, elect to provide credit enhancement for any loan
obtained by, or other obligation of, the Partnership or any Additional Investment Vehicle in the
form of guaranties, indemnifications, pledges of collateral or letters of credit to the provider of
such loan or financing or the Person (which may include, without limitation,a seller to whom a
purchase or other payment obligation is owed)to whom such obligation is owed (a"Lender"), in
each case to secure certain obligations'of the Partnership or any Additional Investment Vehicle
(any such credit enhancement shall be collectively referred to as "Credit Enhancement"). If at
any time, a Credit Provider has provided such Credit Enhancement and (a) in the case of a
guaranty or indemnification, funds are paid to the Lender thereunder or costs are incurred in
connection with the enforcement thereof, (b) in the case of a pledge of collateral, such collateral
is applied'by the Lender or costs are incurred in connection with the enforcement thereof, or (c)
in the case of a letter of credit,-such letter of credit is drawn upon or costs are incurred in
connection with the enforcement thereof, such Credit Provider shall be deemed to have made a
loan to the Partnership in the amount of such payment, application or draw (any such loan, a
"Credit Enhancement Loan"), which Credit Enhancement Loan shall be evidenced by a
promissory note in form reasonably satisfactory to the Credit Provider, and which Credit
Enhancement Loan shall bear interest at the same rate as the underlying loan or obligation to the
Lender, unless a higher rate is permitted or approved pursuant to Section 8.6, and be payable on
a first priority basis by the Partnership prior to any distributions to the Partners under Article V
or Section 11.2. Interest on a Credit Enhancement Loan, to the extent unpaid, shall accrue and
compound on the same basis as the underlying loan or obligation, unless a different basis is
permitted or approved pursuant to Section 8.6. All payments made in respect of any Credit
Enhancement Loan shall be applied first to payment of any interest due under such Credit
Enhancement Loan and then to principal until all amounts due thereunder are paid in full. If any
Credit Enhancement Loan is made under this Section 3.9, the General Partner shall have the
unilateral right, subject to Section 3.2, to issue a funding notice to the Partners to repay such
Credit Enhancement Loan and, within ten (10) Business Days after receipt of such notice, each
Partner shall make a Capital Contribution, equal to the Credit Enhancement Loan (plus interest
accrued thereon) multiplied by its Participation Percentage, the proceeds of which shall be
utilized to immediately re-pay the Credit Enhancement Loan, together with all accrued and
unpaid interest thereon. In addition, if a Credit Provider has provided Credit Enhancement and
the Partnership and/or the applicable Additional Investment Vehicle defaults on any obligation
secured by such Credit Enhancement and it is likely that such Credit Provider will have to make
or incur a Credit Enhancement Loan, the General Partner shall have the unilateral right, subject
to Section 3.2, to issue a funding notice to raise such funds as it deems reasonably necessary to
cure such default, up to the maximum contingent liability of the Credit Provider who provided
such Credit Enhancement and, within ten (10) Business Days after receipt of such notice; each
Partner shall make a Capital Contribution equal to the aggregate amount due under the funding
notice multiplied by its Participation Percentage, the proceeds of which shall be utilized to
NEW YOKK 5792537 04(2K) -1 1
immediately cure such default and avoid the incurrence of such Credit Enhancement Loan. If
more than one Person has Credit Enhancement Loans outstanding to the Partnership, such Credit
Enhancement Loans shall be payable to each such Person in proportion to the outstanding
balances of such Credit Enhancement Loans to each such Person at the time of payment. The
Partners' respective obligations pursuant to this Section shall be secured in the same manner as
their respective obligations under Section 3.2 and each Partner hereby confirms that the remedies
specified in Section 3.3 shall secure such Member's obligations pursuant to this Section 3.9.
ARTICLE IV
ALLOCATION OF INCOME AND LOSSES
Section 4.1. Allocation of Net Income and Net Losses. (a) Net Income or Net
Losses as well as all other items of Partnership income, gain, loss, deduction and credit, shall be
allocated among the Partners in a manner such that if the Partnership were dissolved, its assets
sold, its affairs wound up and the proceeds thereof distributed to the Partners in accordance with
their respective Capital Account balances immediately after making such allocation (including
the allocation of all minimum gain), such liquidating distributions would, as nearly as possible,
be equal to the distributions that would be made pursuant to Section 5.4 hereof, after taking into
account the provisions of Section 5.2(c). For purposes of making allocations pursuant to this
Section 4.1(a) prior to the dissolution of the Partnership, the assets held by the Partnership on
any Valuation Date (as to which a disposition has not occurred as of such Valuation Date) shall
be deemed to have a value equal to their basis for Capital Account purposes (or as previously
adjusted for allocations pursuant to this Section 4.1(a) for any other Valuation Date); rop vided,
however, that in the event of a distribution of property permitted under Section 5.1 (other than a
distribution of cash) the Capital Accounts shall be adjusted to reflect the manner in which
unrealized income, gain, loss, and deduction inherent in such property (that has not been
reflected in the Capital Accounts previously) would be allocated among the Partners if there
were a taxable disposition of such property for the fair market value of such property
(determined in accordance with the provisions of Section 5.1) on the distribution date; provided
further however, that any Nonrecourse Deductions must be allocated among the Partners in
accordance with their Participation Percentages and any Partner Nonrecourse Deductions
attributable to Partner Nonrecourse Debt most be allocated among the Partners bearing the
economic risk of loss for such debt under Regulation §1.704-2(b)(4).
(b) All elections, decisions and other matters concerning the allocation of
profits, gains and losses among the Partners, and accounting procedures, not specifically and
expressly provided for by the terms of this Agreement, shall be determined by the General
Partner. Such determination shall be final and conclusive to all Partners.
(c) The provisions of Section 3.7 and this Section 4.1 and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are intended to comply with
Regulation § 1.704-1(b) and shall be interpreted and applied in a manner consistent with such
Regulations. The General Partner shall be authorized to make appropriate adjustments to the
allocations of items pursuant to this Section 4.1 if necessary in order to comply with Section 704
of the Code or applicable Regulations thereunder.
NEW YORK 5772537v 14(2K) -12-
(d) Notwithstanding anything in Section 3.3(c) hereof, all deductions
attributable to Collection Costs, Default Interest and other items attributable to the default by a
Defaulting Partner shall be specially allocated to the Defaulting Partner under Section 4.1 hereof.
Section 4.2. Other Allocation Provisions. (a) (i) if there is a net decrease in
"partnership minimum gain" (within the meaning of Regulation § 1.704--2(d)) for a Fiscal Year,
then there shall be allocated to each Partner items of income and gain for that year equal to that
Partner's share of the net decrease in partnership minimum gain (within the meaning of
Regulation § 1.704-2(g)(2)), subject to the exceptions set forth in Regulation § 1.704-2(f)(2) and
(3), and to any exceptions provided by the Commissioner pursuant to Regulation § 1.704-2(f)(5),
provided, that if a Partnership has any discretion as to an exception provided pursuant to
Regulation § 1.704-2(f)(5), the General Partner may exercise such discretion on behalf of the
Partnership. In the event that the application of the minimum gain chargeback requirement
would cause a distortion in the economic arrangement among the Partners, the General Partner
shall request that the Commissioner waive the minimum gain chargeback requirement pursuant
to Regulation § 1.704-2(f)(4). The foregoing is intended to be a "minimum gain chargeback"
provision as described in Regulation § 1.704-2(f) and shall be interpreted and applied in all
respects in accordance with that Regulation.
(ii) If during a Fiscal Year there is'a net decrease in partner nonrecourse debt
minimum gain (as determined in accordance with Regulation§ 1.704-2(i)(3)), then, in addition
to the amounts, if any, allocated pursuant to the preceding paragraph, any Partner with a share of
that partner nonrecourse debt minimum gain (determined in accordance with Regulation § 1.704-
2(i)(5)) as of the beginning of the Fiscal Year shall, subject to the exceptions set forth in
Regulation § 1.704-2(i)(4), including the exceptions analogous to those in Regulation § 1.704
2(f)(2), (3), and (5) (provided,that if a partnership has any discretion as to an exception set forth
pursuant to Regulation § 1.704-2(f)(5) as made applicable by Regulation § 1.704-2(i)(4), the
General Partner may exercise such discretion on behalf of the Partnership), be allocated items of
income and gain for the year (and, if necessary, for succeeding years) equal to that Partner's
share of the net decrease in the partner nonrecourse debt minimum gain. In the event that the
application of the partner nonrecourse debt minimum gain chargeback requirement would cause
a distortion in the economic arrangement among the Partners, the General Partner shall request
that the Commissioner of the Internal Revenue Service waive the minimum gain chargeback
requirement pursuant to Regulation §§ 1.704-2(f)(4) and 1.704-2(i)(4). The foregoing is
intended to be the "chargeback of partner nonrecourse debt minimum gain" required by
Regulation § 1.704-2(i)(4) and shall be interpreted and applied in all respects in accordance with
that Regulation.
(b) Notwithstanding any other provision herein to the contrary,no Net Losses
(or item of loss or deduction) of the Partnership shall be allocated to a Partner if such allocation
would result in a deficit balance in such Partner's Capital Account, Such Net Losses (or item of
loss or deduction) shall be allocated among the Partners whose Capital Account balances are
positive in proportion to such positive balances to the extent necessary to reduce the balances of
such other Partners' positive Capital Accounts to zero, it being the intention of the Partners that
no Partner's Capital Account shall fall below zero while any other Partner's Capital Account has
a positive balance. For this purpose, a Partner's Capital Account shall be increased by the
amount, if any, that such Partner is obligated (or is deemed to be obligated) to contribute
NEWYORK 5772537 via(2K) —13—
i
subsequently to the capital of the Partnership as determined under Regulation §§ 1.704-
I(b)(2)(ii)(c)and 1.704-2(g)
(c) Notwithstanding any other provision herein to the contrary, if a Partner
unexpectedly receives an adjustment, allocation, or distribution described in Regulation
§§ 1.704-(b)(2)(ii)(d)(4), (5), or (6), such Partner shall be allocated items of income (including
gross income) and gain (after the allocations required by Section 4.2(a) hereof but before any
other allocation required by this Article IV in an amount and in a manner sufficient to eliminate
any deficit balance in its Capital Account as quickly as possible. For this purpose, a Partner's
Capital Account shall be increased by the amount, if any, that such Partner is obligated (or is
deemed to be obligated) to contribute subsequently to.the capital of the Partnership as
determined under Regulations §§ 1.704-1(b)(2)(ii)(c) and 1.704-2(g). This Section 4.2(c) is
intended to satisfy the provisions of Regulations § 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) To the extent an adjustment to the adjusted basis of any Partnership asset
pursuant to Section 734(b) or Section 743(b) of the Code is required to be taken into account in
determining Capital Accounts pursuant to Regulations § 1.704-1(b)(2)(iv)(m), the amount of
such adjustment 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 allocated to
the Partners in a manner consistent with the manner in which their Capital Accounts are required
to be adjusted pursuant to Regulations § 1.704-1(b)(2)(iv)(m).
(e) To the extent that any item of income, gain, loss or deduction has been
specially allocated pursuant to paragraphs (a), (, (c) or (d) of this Section 4.2 and such
allocation is inconsistent with the way yin which the same amount otherwise would have been
allocated under Section 4.1, subsequent allocations under Section 4.1 shall be made,to the extent
possible and without duplication, in a manner which negates as rapidly as possible the effect of
all such inconsistent allocations under said paragraph(a),(b),(c)or(d).
(f) Except to the extent otherwise required by the Code and Regulations, if an
Interest in the Partnership or part thereof is transferred in any Fiscal Year,the items of income,
gain, loss, deduction and credit allocable to the Interest in the Partnership for such Fiscal Year
shall be allocated to the Person who held the Interest in the Partnership on the date such items
were. realized or incurred by the Partnership, based upon the closing of the books method of
allocation. At the request of the transferor, the General Partner shall make the election provided
for in Section 754 of the Code,provided that the costs incurred by the Partnership in connection
with making such election, and expenditures incurred with additional record-keeping and
accounting incurred in connection with the transfer of an interest (including expenditures
incurred in computing basis adjustments under Section 743(b)), shall be borne by the transferee
Partner. The record date for admission of new Partners to the Partnership for income tax
purposes may be selected by the General Partner under any reasonable convention consistently
applied, and items of taxable income and loss allocated to them based upon the closing of the
books method of allocation for the period subsequent to the date of admission.
NEWYORK 5772537v14(2K) -14- -
These provisions shall be applied as if all distributions and allocations were made
at the end of the Fiscal Year, including distributions of any Fiscal Year's Net Cash Flow made in
a subsequent Fiscal Year.
Section 4.3. Allocations for Income Tax Purposes. The income, gains, losses,
deductions and credits of the Partnership for Federal,state and local income tax purposes shall be
allocated in the same manner as Gross Income and/or the corresponding items entering into the
computation of Net Income and Net Losses were allocated pursuant to Sections 4.1 and 442;
provided that solely for Federal, state and local income and franchise tax purposes and not for
book purposes, income, gain, loss and deduction with respect to property properly carried on the
Partnership's books at a value other than its tax basis shall be allocated (i) in the case of property
contributed in kind, in accordance with the requirements of Code section 704(c) and such
Regulations as may be promulgated thereunder from time to time, and (ii) in the case of other
property, in accordance with the principles of Code section 704(c) and the Regulations
thereunder as incorporated among the requirements of the relevant provisions of the Regulations
under Code section 704(b):
Section 4.4. Withholding. (a) The Partnership,shall comply with withholding
requirements under Federal, state and local law and shall remit amounts withheld to, and file
required forms with, the applicable jurisdictions. To the extent the Partnership is required to
withhold and pay over any amounts to any authority with respect to distributions or allocations to
any Partner, the amount withheld shall be treated as a distribution in the amount of the
withholding to that Partner. If the amount withheld was not withheld from actual distributions,
the Partnership may, at its option, (i)require the Partner to reimburse the Partnership for such
withholding or(ii)reduce any subsequent distributions by the amount of such withholding. Each
Partner agrees to furnish the Partnership with any representations and forms as shall reasonably
be requested by the Partnership to assist it in determining the extent of, and in fulfilling, its
withholding obligations. Without limiting the foregoing, any amounts reimbursed by any Partner
for taxes withheld pursuant to this Section 4.4 shall in no event constitute a Capital Contribution
for purposes of this Agreement and the requirement of a Partner to make such reimbursements
shall not reduce or be limited by such Partner's Capital Commitment.
(b) To the extent the Partnership has remitted any amounts with respect to any
Partner in payment of a withholding obligation, if distributions to the Partner are not reduced by
the amounts withheld in the year of withholding or the first 90 days of the next succeeding year
and if the Partner has not reimbursed the Partnership for such withholding no later than 90 days
following the year of withholding, the Partnership shall make distributions to all Partners
pursuant to, at the election of the General Partner, Sections 5.2 or 554 in an amount sufficient to
enable the Partnership to reduce distributions to the Partner with respect to which the Partnership
has withheld any amounts by the amount withheld. For purpose of the preceding sentence, any
amounts withheld within the first 90 days of a taxable year shall be deemed withheld in the
preceding year.
Section 4.5. Recapture. For purposes of determining the nature (as ordinary or
capital) of any Partnership profit allocated among the Partners for federal income tax purposes
pursuant to this Article IV, the portion of such profit required to he recognized as ordinary
NEW YORK 5772537 04(2K) -15-
income pursuant to Sections 1245 and/or 1250 of the Code shall be deemed to be allocated
among the Partners in accordance with Regulations §§ 1.1245-1(e)(2) and 1.1250-1(f).
ARTICLE V
DISTRIBUTIONS
Section 5.1. General Except as set forth in Section 5.3, beginning with the first
complete calendar quarter after the Initial Closing, Net Cash Flow of the Partnership for a
calendar quarter shall be distributed within 20 Business Days after the end of such quarter;
provided, however, that in the event of a Capital Transaction resulting in Net Cash Flow in
excess of$10,000,000, such Net Cash Flow shall be distributed within 30 Business Days after
the closing of such transaction. The General Partner shall not distribute assets of the Partnership
other than cash, Marketable Securities, or interests in Limited Liability Entities that are readily
exchangeable for or convertible into Marketable Securities;provided, however, that the General
Partner shall deliver at least ten (10) days prior written notice to the Limited Partners of its
intention to make in-kind distributions with a reasonable description thereof. In the event that
the General Partner distributes Marketable Securities or interests in Limited Liability Entities
readily exchangeable for or convertible into Marketable Securities, the General Partner shall
determine the value of such securities, net of all reasonable costs or expenses anticipated to be
incurred in connection with such conversion or exchange, and based upon such valuation,
distribute Marketable Securities or interests in Limited Liability Entities to the Partners in
accordance with Section 5.4 below. For this purpose, the value of such securities shall be equal
to the average of the closing prices of such securities (as reported by the stock exchange or over-
the-counter market in which such securities are primarily traded) on each trading day during the
ten (10) Business Day period immediately prior to and during the ten (10) Business Day period
including and immediately after the Date of Distribution. As Used herein, the "Date'of
Distribution"shall mean the date on which Marketable Securities or interests in Limited Liability
Entities that are readily exchangeable for or convertible into Marketable Securities are available
for distribution' to such Partner. Any interests in Limited Liability Entities that are readily
exchangeable for or convertible into Marketable Securities shall be valued on the same basis as
the Marketable Securities for which such interests are exchangeable'or convertible. In such case,
the General Partner shall have the right to prohibit sales and/or further distributions by the
Partners of such securities or interests during the ten (10) trading day period commencing with
the Date of Distribution. Unless otherwise consented to by the Advisory Committee, the General
Partner, on behalf of the Partnership, will ensure that any sale to third parties or distribution to
Limited Partners of Marketable Securities received from any Controlled Affiliate with Other
SEI-I Partnerships or from any Non-Controlled Entity with Other SEI-I Partnerships'shall, in
each case,be made in an amount which is pro rata (based on the percentage interest of each of
the Partnership's and the Other SEI-I Partnership's interest in such Controlled Affiliate or Non
Controlled Entity) with any such sale or distributions made by the Other SEH Partnership of
- such Marketable Securities.
Notwithstanding the foregoing,at all times, including, without limitation, upon
liquidation pursuant to Section 11.2 below, the General Partner shall not distribute assets of the
Partnership comprising Marketable Securities or interests in Limited Liability Entities that are
readily exchangeable for or convertible into Marketable Securities unless:
NEWVQRK 5772537 v14(2K) -16-
(i) such distribution has been approved either by a majority of the members
of the Advisory Committee or by the Non-Defaulting Limited Partners holding seventy-
five percent (75%) of the Participation Percentages, excluding for this purpose, any
Limited Partners who are Affiliates, managers, members or employees of the General
Partner or otherwise hold a direct or indirect interest in the General Partner; or
(ii) all of the following criteria are met: (1)the value of such Marketable
Securities (or of the Marketable Securities for or into which such interests,are readily
exchangeable or convertible) and of all similar distributions pursuant to this clause (ii)
that have occurred within the 365-day period preceding such distribution pursuant to this
clause(ii) shall, in the aggregate, be less than 25%of all Partners' Capital Commitments
and (2)the number of Marketable Securities included in such in-kind distribution (or the
number of Marketable Securities for or into which such interests are readily exchangeable
or convertible)shall not exceed the product of(x) the average daily trading volume of the
Marketable Securities on the exchange or market on which such Marketable Securities
trade, determined over the 30-day period preceding such distribution, times (y)ten (10);
or
(iii) one or more Partners consent to the receipt of such Marketable Securities
or interests in Limited Liability Entities that are readily exchangeable for or convertible
into Marketable Securities and all Partners who do not so consent receive cash rather than
such Marketable Securities or such interests.
In the event that a distribution shall occur pursuant to the operation of paragraph
(iii) above, then, with respect to all Partners who desire to receive cash rather than such
Marketable Securities or such interests(herein,"Cash Distributees"),the Partnership shall follow
the following procedure. The General Partner shall establish a single-purpose limited liability
company (the "Disposition Entity") for such distribution (and only such distribution) of which
the General Partner (or an Affiliate of the General Partner) shall be a member or nonmember
manager (the "Disposition Entity Manager") and the Cash Distributees with respect to. such
particular distribution shall be the non-managing members (and the General Partner (or its
Affiliates) shall have the right, and is hereby irrevocably granted a power of attorney to act on
behalf of each Cash Distributee as its attorney-in-fact,to sign the constituent agreements for such
Disposition Entity and to take all other action necessary to effect the intent and purposes of this
paragraph). Marketable Securities or such interests distributed to the Cash Distributees shall be
immediately contributed by such Cash Distributees to the Disposition Entity (or, in lieu thereof,
such Marketable Securities or Interests shall be transferred by or at the direction of the
Partnership to the Distribution Entity), and such Distribution Entity shall sell (or exchange or
convert and sell) all such Marketable Securities (a)in the open market over, or through the
facilities or market makers of,any exchange and/or underwriters in one or more transactions,and
(b) in an orderly manner at best available market prices from time to time. Each Cash
Distributee shall have a pro rata interest in the Disposition Entity equal to the total Marketable
Securities and interests contributed by such Cash Distributee (or by or at the direction of the
Partnership for the account of such Cash Distributee) to the Disposition Entity, divided by the
total Marketable Securities and interests contributed by all Cash Distributees (or the Partnership,
as applicable) to the Disposition Entity. All proceeds to the Disposition Entity from such sales,
net of reasonable and customary fees, brokerage commissions, underwriters' fees and/or
NEW'YORK 5772537 vl4(7K) -17-
discounts, shall be promptly distributed by the Disposition Entity to the Cash Distributees in
accordance with their >]rO rata interests. The Disposition Entity shall promptly liquidate and
dissolve following the sale of all such Marketable Securities and interests and the distribution of
all such net proceeds to the Cash Distributees. Notwithstanding the foregoing provisions of this
Section 5.1, the value of the Marketable Securities and other interests for purposes of the
distribution to the Cash Distributees pursuant to paragraph (iii) shall be equal to the net proceeds
distributed to the Cash Distributees from the Disposition Entity. The form and content of all
organizational documents for the Disposition Entity and the identity of the Disposition Entity
Manager shall be consistent with the requirements of paragraph (iii). Any Partner who declines
to execute and deliver such documents shall not be considered a Cash Distributed with respect to
the particular distribution, but shall reserve all rights to elect to become a Cash Distributee with
respect to any and.all subsequent distributions for which such Partner is willing to execute and
deliver such documents.
Section 5.2. Tax Distributions. (a) The General Partner may, in its sole
discretion, cause the Partnership to make distributions to the General Partner with respect to each
Fiscal Year in an amount not to exceed the product of(i)the taxable income of the General
Partner for such Fiscal Year with respect to which taxes will be payable for Federal income tax
purposes in the form of either estimated taxes or final taxes (said taxable income to be
determined by netting all items of profit, loss, gain and income which are allocated to the
General Partner by the Partnership for such Fiscal Year) and (ii)the Imputed Tax Rate (a "Tax
Distribution");provided,that the aggregate amount of the General Partner's Tax Distribution for
all Fiscal Years shall not exceed an amount which is equal to the excess of(a)the total tax that
would be due at the Imputed Tax Rate on all taxable income (net of all tax losses) that the
General Partner has then and theretofore been allocated by the Partnership for all Fiscal Years
over(b)the aggregate of distributions, including any Tax Distributions,that the General Partner
has theretofore received from the Partnership. Tax Distributions shall be made prior to
distributions pursuant to Section 5.4 and shall be treated as advance distributions of amounts
otherwise distributable to the General Partner pursuant to Section 5.4.
(b) For purposes of coordinating Tax Distributions with distributions of Net
Cash Flow, subsequent distributions to the General Partner pursuant to Section 5.4 shall take into
account and be reduced by Tax Distributions previously made to the General Partner, and not
previously deducted pursuant to this paragraph from distributions to be made under Section 5.4,
with all such distributions under Section 5.4 applied against'Tax Distributions not previously so
deducted. No Tax Distributions shall be made with respect to the taxable year in which the
Partnership dissolves. If, at the time of liquidation of the Partnership, as a result of this Section
552.the General Partner has received distributions over the life of the Partnership in excess of the
amount that the General Partner would have otherwise received under Section 5.4 or Article XI,
then the General Partner shall promptly contribute such excess amount to the Partnership to be
distributed in accordance with Section 11.2.
(c) In the event the Partnership receives a distribution or other income or gain
from or in respect of which tax has been withheld, paid or incurred, the General Partner, in its
sole discretion and on a case-by-case basis, may elect for the Partnership to be deemed to have
received cash in an amount equal to the amount of such tax withheld, paid or incurred, as
applicable, and if so elected by the General Partner, each Partner shall be deemed to have
- NEWYORK 5772537 V14(2K) -18-
received as a distribution of Net Cash Flow, pursuant to the relevant clause of Section 5.4,the
portion of such amount that is attributable to such Partner's Interest as determined by the General
Partner in its reasonable discretion.
Section 5.3. Reinvestment. (a) During the Commitment Period, the General
Partner may, in its sole discretion, (i) retain in the Partnership, or distribute to the Partners and
recall, any deposits returned to the Partnership in connection with unsuccessful bids for Project
Interests,and (ii)recall for the purpose of reinvestment amounts that were previously contributed
or borrowed for investment and then returned or repaid to the Partners;provided,that in no event
shall the General Partner recall, in the aggregate, proceeds in excess of an amount equal to the
total Capital Commitments of the Partners. Net proceeds from Capital Transactions shall be
considered a return of Capital Contributions to the extent of the Capital Contributions that were
applied to the acquisition of the Project Interest from which such proceeds are derived, and shall
be considered to be distributed to Partners prior to the distribution of profits from such
transaction (notwithstanding the fact that distributions of such net proceeds may occur under
Section 5.4(a) prior to any distributions of such proceeds pursuant to Section 5.4(b)).
Additionally, to the extent the Partners have made Capital Contributions to fund the Asset
Management Fee and such Capital Contributions are returned to the Partners pursuant to a
distribution of Net Cash Flow from any source under Section 5.4(b) hereof, the General Partner
may, in its sole discretion, recall such proceeds distributed to the Partners for the purpose of
reinvestment in accordance with the provisions of Section 3.2. Net Cash Flow distributed under
Section 5.4(b) out of operations shall first be deemed to be a return of Capital Contributions (if
any)for payment of the Asset Management Fee. Net Cash Flow distributed under Section 5.4(b)
out of a Capital Transaction with respect to a Project Interest shall first be deemed to be a return
of unreturned Capital Contributions on account of the acquisition of such Project Interest and
then a return of unreturned Capital Contributions (if any) to pay the Asset Management Fee.
Notwithstanding anything herein to the contrary, in no event shall the aggregate amount of
unreturned Capital Contributions made by the Partners pursuant to Section 3.2 and capital
recontributed under this Section 5.3 exceed the total Capital Commitments of the Partners.
(b) After the Commitment Period, any net proceeds received by the
Partnership from a Capital Transaction will be distributed to the Partners in accordance with the
provisions of Section 5.4, subject to Section 3.2(c) and any reasonable reserves which the
General Partner may establish pursuant to Section 8.3, and the General Partner shall have no
right to recall any such distributed proceeds for the purpose of reinvestment, other than for the
purposes for which Capital Contributions may be called pursuant to Section 12(c).-
Section 5.4. Distributions of Net Cash Flow. Subject to Section 5.21 all
distributions of Net Cash Flow for any period shall be made to those Persons who are Partners at
the time of such distribution in the following order of priority:
(a) First, 100%to the Partners in proportion to the excess for each Partner of
(x)such Partner's Preferred Return as of the end of such period over (y) all amounts
previously distributed to such Partner pursuant to this Section 5.4(a), until the Partners
have received aggregate distributions pursuant to this Section 5.4(a)equal to the Partners'
Preferred Return as of the end of such period;
I
NEW YOP K 5772537 vi d(2K) -19-
(b) Second, 100% to the Partners in accordance with each Partner's
Participation Percentage until each such Partner's Adjusted Capital Contribution has been
reduced to zero;
(c) Third, (i) 80% to the General Partner and (ii) 20% to the Partners in
proportion to each such Partner's Participation Percentage until the aggregate amount
distributed to the General Partner under clause (i) of this Section 5.4(c) equals twenty
percent(20%) of the sum of the amounts distributed to the Partners under Section 5.4(a)
and Section 5.4(c)(ii) and to the General Partner under Section 5.4(c)(i); provided,
however,that no distributions shall be made to the General Partner pursuant to clause(i)
of this Section 5.4(c) during any period in which there shall be any outstanding
indebtedness of the Partnership that is secured by a pledge of the Limited Partners'
unfunded Capital Commitments and all amounts that would otherwise be distributed to
the General Partner but for this proviso shall be placed into Partnership reserves and shall
be distributed from such reserves to the General Partner only at or after such time as such
indebtedness shall no longer be outstanding; and
(d) Thereafter, (i) 80% to the Partners in accordance with each Partner's
Participation Percentage and (ii) 20%to the General Partner;.provided, however, that no
distributions shall be made to the General Partner pursuant to clause (ii) of this Section
5.4(d) during any period in which there shall be any outstanding indebtedness of the
Partnership that is secured by a pledge of the Limited Partners' unfunded Capital
Commitments and all amounts that would otherwise be distributed to the General Partner
but for this proviso shall be placed into Partnership reserves and shall be distributed from .
such reserves to the General Partner only at or after such time as such indebtedness shall
no longer be outstanding.
Section 5.5. Giveback Obligation. (a) If, at liquidation, (i) the aggregate
distributions received by the Partners during the term of the Partnership pursuant to Section 5.4
and Section 11.2 (excluding, for this purpose, amounts actually received by the General Partner
under Section 5.4(c)(i)or Section 5.4(d)(iiD are less than the aggregate Capital Contributions of
the Partners plus the Preferred Return thereon (the "Capital Deficiency") and (ii) the General
Partner has actually received any distributions under Section 5.4(c)(i) or Section 5.40)(ii)
(collectively, the "Carried Interest Distributions"), then the General Partner shall pay or
contribute to the Partnership an amount equal to the lesser of(x) one hundred percent(100%) of
the total amount of the Carried Interest Distributions less the aggregate U.S. federal, state and
local income tax liability thereon (calculated using the same assumptions used to calculate Tax
Distributions) less the amount, if any, and without duplication of any amount,paid or contributed
by the General Partner pursuant to the last, sentence of Section 5.2(b) or (y) the Capital
Deficiency.
(b) Upon liquidation, the General Partner shall pay or contribute to the
Partnership the amount (if positive) by which the aggregate Carried Interest Distributions (less
the amount, if any, and without duplication of any amount, paid or contributed by the General
Partner pursuant to Section 5.5(a) and less the aggregate U.S.federal, state and local income tax
liability thereon (calculated using the same assumptions used to calculate Tax Distributions) and
less the amount, if any, and without duplication of any amount, paid or contributed by the
NEW YORK 5772537Y]4(M) -20-
1
General Partner pursuant to the last sentence of Section 5.2(b)) exceed twenty percent (20%) of
the amount by which (i) the aggregate distributions made pursuant to Section 5.4 and Section
11.2 exceed(ii)the aggregate Capital Contributions of the Partners.
(c) Notwithstanding the foregoing, in no event shall a member of the General
Partner be obligated to pay or contribute to the Partnership (on behalf of the General Partner or
as a result of being a member of the General Partner) pursuant to this Section 5.5 or to pay or
contribute to the General Partner (to provide amounts to fund the General Partner's obligation
pursuant to this Section 5.5) an amount in excess of such member's proportionate share, based
upon such member's interest in the General Partner, of the amount required to be contributed by
the General Partner pursuant to this Section 5.5.
r
ARTICLE VI
ACCOUNTING,REPORTING AND RECORDS
Section 6.1. Books and Records. Proper and complete records and books of
account shall-be kept by the General Partner in which shall be entered fully and accurately all
transactions and other matters relative to the Partnership's business as are usually entered into
records and books of account maintained by Persons engaged in businesses of a like character.
The Partnership books and records shall be kept on the cash or accrual method of accounting, as
determined by the General Partner in its sole discretion, or such other method as is required by
the Code;all methods of accounting, elections and the treatment of particular transactions shall
-be as consistent as possible with the methods of accounting,elections and treatments employed
for Federal income tax purposes.
Section 6.2. Access to Books and Records. The books and records shall at all
times be maintained at the principal office of the Partnership and shall be open to the inspection
and examination of the Partners or their duly authorized representatives for any purpose
reasonably related to a Limited Partner's Interest in the Partnership during reasonable business
hours, upon reasonable advance notice and at the sole cost and expense of the inspecting or
examining Partner. Each Partner shall have the right to audit such records and books of account
by an accountant of its choice at its expense. The General Partner shall cooperate fully with any
Partner or its agents in connection with any review or audit of the Partnership or its records and
books. The General Partner shall retain all records and books relating to the Partnership for a
period of at least six (6)years after the termination of the Partnership and shall thereafter destroy
such records and books only after giving at least thirty (30) days advance written notice to the
Partners.
Section 6.3. Quarterly Reports. No later than sixty (60) days after the last day
of each fiscal quarter, the General Partner shall prepare and furnish to each Partner, at the
Partnership's expense. an unaudited report which includes for the quarter and year to date a
balance sheet. an income statement, and a statement of cash flows with respect to the Partnership
prepared in accordance with generally accepted accounting principles("GAAP"), and:
(a) a statement of the cost of each Project Interest held by or for the
Partnership, and to the knowledge of the General Partner, all material liabilities
NEW YORK 5772537 v 14(2K) '2 I
(contingent or non-contingent) accrued with respect to such property or otherwise
payable by the Partnership;
(b) a statement showing the computation of fees and distributions to the
General Partner and its Affiliates, which statement shall separately reflect each
transaction with or service provided by the General Partner and its Affiliates, the amount
paid with respect thereto, and the method or formula used for calculating such payment;
(c) a cash flow transactions report which shows the details of all significant
Partnership transactions which have occurred since the end of the preceding quarter and
preceding calendar year, including, but not necessarily limited to, the date, nature, and
amount of all capital calls, changes in reserves, and cash flows and/or capital
distributions; and
(d) a statement for each Partner showing, as of the last day of such quarter,
such Partner's total Capital Commitment, Capital Contributions to date and Adjusted
Capital Contributions, as well as prior quarter market value adjusted for itemized
contributions, income distributions, net income, realized and unrealized gains and/or
losses and returns of capital resulting in the current quarter ending market value.
Section 6.4. Annual Reports and Opinions. (a) As soon as reasonably
practical,but in no event later than ninety (90)days after the end of each Fiscal Year(in the case
of the information described in clause (i) and (ii).below), or one hundred twenty(120)days after
the end of each Fiscal Year (in the case of all other items described in this Section 6.4), the
General Partner shall cause to be prepared and furnished to each Partner, at the Partnership's
expense,the following with respect to the Partnership:
(i) the information necessary for the preparation by such Partner of its
Federal, state and other income tax returns as set forth on a Schedule K-1;
(ii) an audited'balance sheet, income statement, and statement of cash flows
prepared in accordance with GAAP, together with a management letter;
(iii) a statement setting forth the projected distributions that would be made to
the Partners as of the end of such Fiscal Year if the Partnership were dissolved and the
assets of the Partnership liquidated at fair market value (as reasonably estimated by the
General Partner), less payment or reserves for all liabilities of the Partnership (as
reasonably estimated by the General Partner);and
(iv) a schedule and description of the Project Interests owned by the
Partnership as of the end of such Fiscal Year and a schedule of the Project Interests
acquired or disposed of by the Partnership during such Fiscal Year;
provided,however, that to the extent information is from partners in,or tenants or counterparties
of, Project Interests and such information is required in order to produce any of the foregoing
reports and the same is unavailable at such time and the General Partner has reasonably
,attempted to obtain such information, the General Partner may furnish such information to the
Partners as soon as it becomes available, but in no event later than 120 days after the end of such
NEWYORK 5772537 r14 UK) -22-
Fiscal Year, unless the General Partner is in the process of pursuing its remedies against such
party or has determined,based upon advice of legal counsel,that it would be imprudent to pursue
such remedies because of potential liabilities to the Partnership, would result in an adverse
impact to the Partnership's other rights and remedies against such party, would be fruitless, or
such party has otherwise satisfied the General Partner that such information shall be provided as
soon as is reasonably practicable.
(b) No later than seventy-five(75) days after the end of each Fiscal Year, the
General Partner shall provide each Limited Partner with, at the Partnership's expense, the
following:
(i). a statement reflecting any transactions with or, in conjunction with any
such transactions, any benefits received by the General Partner or any Affiliate of the
General Partner or Non-Controlled Entity with respect to the Partnership (including a
description of any property management agreements entered into between the Partnership
or any Controlled Affiliate and the General Partner or any of its Affiliates);and
(ii) a summary of any regulatory or legal proceedings against the General
Partner, any criminal proceeding against any Key Executive, any regulatory or legal
proceedings against any Key Executive,the subject matter of which relates to the General
Partner or the Partnership and which has, or if successful may have, a material adverse
effect on the business or operations of the General Partner or the Partnership, and any
legal proceedings involving any Key Executive, which has, or if successful could have, a
material adverse effect on the ability of the General Partner to manage the Partnership.
(c) Copies of all annual statements prepared for any partnerships, limited
liability companies or other entities in which the Partnership has invested promptly after the
same is delivered to the General Partner.
Section 6.5. Event of Default. The General Partner shall cause to be prepared
and furnished to each Partner a statement describing any material event of default under any
loans to which the Partnership or any property thereof is subject within thirty (30) days after the
General Partner knows of such an event.
Section 6.6. Other Reports. The General Partner shall provide such, other
reports as any Partner may reasonably request, including without limitation such reasonable
projections of Net Income and Net Losses as may be appropriate to enable any Partner to file
quarterly estimates of taxable income and make estimated tax payments.
Section 6.7. Indemnification. The General Partner shall indemnify the Partners
for any out-of-pocket costs and expenses or liabilities reasonably and necessarily incurred by
reason of the General Partner's failure to use commercially reasonable efforts to provide any
Material reports required by this Article VI in a timely manner.
Section 6.8. Fiscal Year. The fiscal year of the Partnership shall be the calendar
year, or such other year as is required by the Code (the "Fiscal Year"); provided that the first,
Fiscal Year of the Partnership shall commence on the date of the Initial Closing and continue
through the next succeeding December 31.
{
NEWVOR}:5772537 04(2K) -23-
Section 6.9. Valuation Plan; Appraisals. (a) At the annual meeting referenced
in Section 6.12, the General Partner shall present to the Limited Partners and the Advisory
Committee a valuation plan for the Project Interests. Such plan shall provide for the valuation of
each of the Partnership's Project Interests and shall include the General Partner's
recommendation as to the appropriate method of valuation for each such Project Interest, which
may include:independent appraisals, General Partner estimates or other reasonable methods of
valuation. The General Partner shall implement the valuation plan which shall be deemed
approved by the Advisory Committee unless disapproved by the Advisory Committee within 10
days of receipt, provided that any such valuation plan may be amended at any by vote or
consent of, or as otherwise required by, either two-thirds of the members of the Advisory
Committee or Non-Defaulting Limited Partners holding seventy-five percent (75%) of the
Participation Percentages(excluding any Participation Percentages held by Limited Partners who
are Affiliates, members, managers or employees of the General Partner or who otherwise hold
direct or indirect interests in the General Partner), in which event the General Partner shall obtain
such new or additional valuation as provided in such revised plan., Within 90 days after the end
of each Fiscal Year (or such other date as may be set forth in the valuation plan), the General
Partner shall provide to each Limited Partner a report setting forth the valuation of the
Partnership's Project Interests in accordance with the valuation plan approved by the Advisory
Committee or Limited Partners, as applicable.
(b) The Majority-in-Interest of the Non-Defaulting Limited Partners shall
have the right, at any time (but in no event more often than once in any two (2) year period
during the Commitment Period, and in no event more often than once in any twelve-month
period thereafter), to cause the Project Interests to be appraised, at the sole cost and expense of
the Partnership, and the General Partner shall cooperate fully with the appraisal firm selected by
the Majority-in-Interest of the Non-Defaulting Limited Partners for such purpose. The General
Partner shall deliver a copy of such appraisal to all of the Limited Partners..
Section 6.10. Bank Accounts. The General Partner shall be responsible for
` causing one or more accounts to be maintained in a bank (or banks)that, unless otherwise
approved by the Advisory Committee: (i)when the bank is located in the United States, both
maintains deposits insured by the Federal Deposit Insurance Corporation and meets the
definition of"well capitalized"under the capital regulations issued by the appropriate federal
banking agency for that bank,,and(ii)when the bank is located in a country other than the United
States, maintains deposits covered by that other country's deposit insurance program, if any, and
` meets capital standards comparable to "well capitalized" for banks located in the United States.
The accounts shall be used for the payment of the expenditures incurred by the General Partner
or the Partnership in connection with or related to the business of the Partnership, and in which
shall be deposited any and all cash receipts. All deposits-and funds not needed for the operations
of the Partnership may be invested in the following investments (collectively, "Permitt ed
Temporary Investments"): (i)cash and obligations issued or guaranteed by the United States of
America (so long as such obligations are scheduled to mature within nine months from the date
of acquisition thereof), (ii)obligations issued or guaranteed by any Person controlled or
supervised by and acting as an agency or instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States (so long as such obligations
are scheduled to mature within nine months from the date of acquisition thereof),
(iii)commercial paper maturing within nine months irom the date of acquisition thereof and
-24-
NEWYORK 5772577 04(2K)
having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's
Ratings Services or from Moody's Investors Service,Inc., (iv)investments in commercial paper
maturing within nine months from the date of acquisition thereof and issued by the holding
company of any commercial bank organized under the laws of the United States of America or
any State thereof that has (x)a combined capital and surplus in excess of$1,000,000,000 and a
rating of at least AA or the equivalent thereof by Standard &Poor's Ratings Services or at least
Aa or the equivalent thereof by Moody's Investors Service,Inc., and (y)commercial paper rated
at least A-1 or the equivalent thereof by Standard & Poor's Ratings Services and at least P-1 or
the equivalent.thereof by Moody's Investors Service, Inc., (v)certificates of deposit, banker's
acceptances and time deposits maturing within nine months from the date of acquisition thereof
issued or guaranteed or placed with, and money market deposit accounts issued or offered by,
commercial banks which are members of the Federal Deposit Insurance Corporation and which
have a combined capital, surplus and undistributed profits of at least two hundred fifty million
dollars ($250,000,000), (vi)repurchase agreements that are secured by obligations issued or
guaranteed by the United States of America or an agency or instrumentality thereof entered into
with any office of any commercial bank meeting the qualifications specified in clause (v) above
(so long as such repurchase agreements have a term of not more than seven (7) days), (vii)other
money market instruments, and (viii)mutual funds 'substantially all of the assets of which are
invested in any or all of the investments described in clauses(i) through (vii) above. All such
amounts shall be and remain property of the Partnership and held in the name of the Partnership
or the General Partner on behalf of the Partnership, and shall be received, held and disbursed by
the General Partner for the purposes specified in this Agreement.
There shall not be deposited in any of said accounts any funds other than funds
belonging to the Partnership, and no other funds shall in any way be commingled with such
funds. Withdrawals from such account(s) shall be made only for disbursement to other accounts
maintained in the name of the Partnership or the General Partner on behalf of the Partnership or
for the purpose of paying fees and expenses and other obligations of the'-Partnership permitted
hereunder and/or to acquire assets contemplated hereunder,and shall be made on such signatures
as the General Partner may determine from time to time, provided that such signatures always
include either (a).signatures of at least two officers or managers of the General Partner's general
partner, or (b) the signature of either the Chief Financial Officer of the manager of the General
Partner's general partner or of another designee of the General Partner.
Section 6.11. Fidelity Bond. The General Partner shall maintain a fidelity bond
(or insurance policies providing equivalent coverage) of not less than $5,000,000 covering all
employees or agents of the General Partner handling assets of the Partnership.
`Section 6.12. Informational Meetings. The General Partner shall hold annual
meetings (which may be telephonic) with the Limited Partners to review and discuss the
Partnership's activities and portfolio of Project Interests.
NEWYORK 5772537 vld(2K) —25—
f
ARTICLE VII
LIMITED PARTNERS
Section 7.1. Names, Addresses and Capital Commitments. The names and
addresses of the Limited Partners and their respective Capital Commitments are set forth in
Appendix A. Appendix A shall be amended from time to time to reflect any change in the
identity or Capital Commitments of the Limited Partners.
Section 7.2. Co-Investment. (a) If, and to the extent that; any proposed
investment by the Partnership in'a Project Interest would cause a violation of the Single Asset
Test and the Advisory Committee does not allow the Partnership to violate the Single Asset Test,
the Partnership will invest only in that portion of the Project Interest which does not cause the
Partnership to violate the Single Asset Test. If, and to the extent that, the General Partner
determines in its sole discretion that any. proposed investment by the Partnership in a Project
Interest is not suitable for investment by the Partnership acting alone, the Partnership will invest
only in that portion of the Project Interest which the General Partner determines to be suitable for
investment by the Partnership acting alone. In each case, the balance of the interest in the
Project Interest, net of any portion thereof allocated to Persons other than Partners, Affiliates of
the General Partner, Other SEI-I Partnerships or any Targeted Fund (as so netted, the "Excess
Interest") shall be subject to the following:
(b) The General Partner shall,prior to itself(in its personal capacity and not
as General Partner) or any of its Affiliates (other than the Other SEI-I Partnerships or any
Targeted Fund) investing in such Excess Interest, offer the Limited Partners, pro rata in
accordance with their Participation Percentages, the opportunity to invest in such Excess Interest
through a new partnership (the "Co-Investment Partnership") with the General Partner. The
terms and provisions of the Co-Investment Partnership's partnership _agreement shall be
substantially similar to this Agreement, including the distribution provisions of Article V* and
the payment of the annual asset management fees described hereunder. The Co-Investment
Partnership shall invest in such Project Interest on a pAri passu basis and on terms substantially
similar (to the extent practicable) to the terms of the Partnership's investment in such Project
Interest, and the Co-Investment Partnership shall bear its pro-rata portion of all costs and
expenses associated with the investment in the Excess Interest including, without]imitation, all
acquisition or other transaction expenses and all indemnification payments; if any. For example,
in the event that such partnerships co-invest in securities, each partnership shall invest in the
same class, series or tranche of "securities at the same price per unit. Additionally, the
Partnership and the Co-Investment Partnership shall, on a pari passu basis and on substantially
similar.(to the extent practicable) terms, concurrently sell, finance or otherwise dispose of the
Project Interest and the Excess Interest relating thereto. Notwithstanding the foregoing, such
right to co-invest shall not apply to an interest proposed to be acquired by the General Partner(or
any of its Affiliates) equal to five percent (5%) or less of the aggregate capital committed by all
parties to a particular transaction, where the primary purpose of such investment by the General
Partner(or any of its Affiliates) in acquiring such an interest is to facilitate the structuring of the
transaction in which the Partnership is acquiring the Project Interest. The foregoing right to co-
invest with the General Partner shall apply only with respect to the Excess Interest.
MWYORK 5772537 v14(2K) -26- -
1
(c) If, and to the extent that, the Limited Partners and General Partner do not
contribute all of the additional capital necessary for the proposed investment by the Co-
Investment Partnership in such Excess Interest, the Limited Partners theretofore contributing to
the Co-Investment Partnership shall have the further right to invest(on a pro-rata basis with their
then-investment in the Co-Investment Partnership) the balance of the required capital. If, and to
the extent that, the Limited Partners do not contribute all of the additional capital necessary for
the proposed investment in such Co-Investment Partnership pursuant to the preceding sentence,
those Limited Partners investing additional capital pursuant to the preceding sentence shall again
have the right to contribute the balance of the required capital. If more than one such Limited
Partner desires to contribute, the Limited Partners desiring to so contribute shall determine,
among themselves,the additional amount each will contribute, and if they are unable to so agree,
such contribution shall be made pro-rata among such Limited Partners based upon the ratios of
their Participation Percentages in the Partnership. To the extent capital is further required, the
General Partner (or its Affiliates) next shall have the right to invest through the Co-Investment
Partnership in its personal capacity (and not as General Partner). If, and to the extent that,
additional capital is still necessary for the proposed investment, any other Person may invest in
such Co-Investment Partnership.
(d) Any notice by a Partner of an election to co-invest pursuant to this
Section 7.2 shall be given within fifteen (15) Business Days of receipt from the General Partner
of a written offer to so co-invest, together with such information as is reasonably necessary for
such Partner to make an investment decision, or the right to co-invest shall be deemed waived by
such Partner. Notwithstanding the foregoing provisions of this Section 7.2, if, as to any
particular proposed investment, the General Partner concludes that adherence to such foregoing
provisions could jeopardize the ability of the Partnership to consummate the proposed
investment,then the General Partner shall be relieved from the foregoing requirements in respect
of the allocation of the Excess Interest and/or the investment terms.in respect thereof and, in such
event, and, without limitation, the General Partner may allocate the Excess Interest in whatever
manner it believes will maximize the Partnership's ability to consummate the proposed
investment; provided, however, that the General Partner shall, in such event, nevertheless use
reasonable efforts to make available to the Limited Partners in accordance with the foregoing
provisions of this Section 7.2 that portion of the Excess Interest as is equal to the Partnership's
proposed investment but with, however, such reduction in the aforesaid fifteen (15) Business
Day period for notice by a Partner of an election to co-invest as the General Partner deems
necessary or appropriate under the circumstances.
i
Section 7.3. Certain Approval Rights.
(a) Restricted Partnerships. The General Partner shall not, without the prior
written consent of the Majority-in-Interest of the Non-Defaulting Limited Partners, invest
Partnership funds in excess of an aggregate of$10,000,000 in any "Restricted Partnership(s)".
As used herein,_a "Restricted Partnership" means a partnership meeting all of the following
requirements:
(1) The General Partner lacks the authority to cause the partnership to dispose
of its assets or redeem the Partnership's interests therein prior to the end-date of the
Partnership;
P,`EWYORK 5772537 14(2K) -27-
(2) The same shall have a scheduled term of existence or end-date that is
longer than the scheduled end-date of the Partnership;
(3) At the time the Partnership acquires its interest in such partnership, the
Partnership shall not have a disposition strategy with respect to its interest in such
partnership or such partnership's assets which provides for such disposition prior to the
scheduled end-date of the Partnership(such as a sale,public offering,or securitization);
(4) The interests acquired by the Partnership in such partnership shall not be
transferable in the discretion of the Partnership at any time prior to the scheduled end-
date of the Partnership (however, for purposes of this clause (4), the fact that reasonable
consent or opinion requirements or undertakings related to compliance with law may be
imposed on such transfer or that such transfer may be subject to rights of first opportunity
or refusal shall not be deemed to render the interests acquired by the Partnership non-
transferable in the discretion of the Partnership); and
(5) The interest acquired by the Partnership in such partnership shall not itself
be or be convertible to publicly traded securities at any time prior to the scheduled end-
date of the Partnership (however, for purposes of this clause (5), the fact that such
conversion may require registration in accordance with applicable securities laws shall
not be construed as rendering such interests non-convertible, unless the costs of
registration of such securities are prohibitive or not economically justifiable given the
aggregate value of the applicable securities, as reasonably determined by the General
Partner).
(b) Accountants. The certified public accountants to be engaged by the
Partnership (the "Accountants")for the audit of the Partnership shall be PricewaterhouseCoopers
LLP, unless the General Partner elects to engage:other Accountants with the approval of the
Advisory Committee. The General Partner shall use reasonable efforts to obtain an engagement,
with the Accountants whose terms extend to the Limited Partners, provided, that such inclusion
of the Limited Partners does not result in material additional charges or fees associated with such
engagement.
(c) Investments in Other General Partner Investments. Except as permitted or
described in Sections 7.2, 8_6 and 8.10, and except as otherwise approved by the Advisory
Committee, the General Partner shall not cause or permit the Partnership to invest in, or enter
into any transaction with, any partnership or other entity in which the General Partner or any of
its Affiliates has an economic interest, other than investments in or transactions with partnerships
or other entities (i) in which the General Partner and its Affiliates have less than a 1/3rd
economic interest or (ii) provided that such investment in or with such entity, if made by the
Partnership concurrently with the investment in such entity by the General Partner or its
Affiliates, is made on a pari passu basis and on terms substantially similar (to the extent
practicable) to the terms of the investment by the General Partner or its Affiliates, and, if made
subsequently, is made on market terms as set by the public market or as set by a third party
participant (which is not an Affiliate of the General Partner) making a concurrent investment or
commitment in such investment or entity. For avoidance of doubt, investments by the
NE W YO"577253704 14(2K) -28-
Partnership in, or transactions by the Partnership with, any Non-Controlled Entity, shall be
subject to the provisions of this Section 7.3(c).
(d) No Duplication of Fees. Notwithstanding anything to the contrary
contained herein, unless otherwise approved by the Advisory Committee, neither the General
Partner nor any Key Executive or other Affiliate of the General Partner shall receive consulting,
acquisition fees, disposition fees, annual director's or trustee's retainers, performance or other
fees or compensation which would be duplicative of the fees or compensation provided for
herein, break-up fees or investment banking fees from any entity in which the Partnership may
invest; provided, however, that the General Partner (or any Key Executive or other Affiliate of
the General Partner) may be reimbursed for out-of-pocket costs or expenses incurred by any such
party with respect to such other entity and may receive market based compensation or fees for
any other services not listed above (including, without limitation, development and asset
management services) performed by the General Partner (or any such party) for such entity
which could otherwise be provided by an unaffiliated third party (but in no event for services
covered by the Asset Management Fee described in Section 8.13); and provided further, that the
approval of the Advisory Committee shall not be required with respect to that portion of any
such fees or other compensation which would otherwise not be allowed hereunder but which
portion is not or will not be borne, directly or indirectly,by the Partnership.
(e) No-Fault Freeze. In the event that (i) Non-Defaulting Limited Partners
holding seventy-five percent(75%)(or fifty-one percent(51%) in the event that both Bradford T.
Nordholm and Stephen P. Zaminski shall have ceased to be Key Executives, regardless of who
their replacements may be) of the Participation Percentages so elect at any time prior to the fifth
anniversary of the Final Closing or (ii) Two-Thirds-in-Interest of the Non-Defaulting Limited
Partners so elect at any time after the fifth anniversary of the Final Closing, the General Partner
shall not invest in any Project Interests not acquired or Identified prior to the date on which the
General Partner receives written notice of such election, nor shall the General Partner call for
additional Capital Contributions for such purpose; provided, however in each case,such election
shall not be effective or be deemed given hereunder for any purpose unless either concurrently or
as a condition precedent thereto, Non-Defaulting Limited Partners holding seventy-five percent
(75%) (or fifty-one percent (51%), as applicable) of the Participation Percentages or Two-
Thirds-in-Interest of the Non-Defaulting Limited Partners, as applicable, in the Partnership and
the Other SEI-I Partnerships (as defined thereunder, but for purposes of this proviso calculated
on an aggregate basis and not on an individual partnership basis)also shall have so elected in
writing to exercise the right described in this Section. For purposes of this provision, the
determination as to whether the required percentage has voted for the decision set forth herein
shall exclude any votes cast by any Limited Partners who are Affiliates, managers, members or
employees of the General Partner or otherwise hold a direct or indirect interest in the General
Partner. The General Partner shall furnish each Limited Partner with a summary of all votes
received, setting forth the votes cast by each Limited Partner with respect to such election.
r
(f) Passive Public Investments. The General Partner shall not, without the
prior written consent of the Advisory Committee, make an investment that is a Passive Public
Investment if, after giving effect thereto, (i) the aggregate amount of all Passive Public
Investments then held by the Partnership would exceed 15% of the aggregate Capital
Commitments of all Partners, or(ii) the aggregate amount of all Passive Public Investments then
;2EWYORK 5772537 v14 UK) -29-
i
held by the Partnership in any single issuer of securities would exceed 5% of the aggregate
Capital Commitments of all Partners. In addition,the General Partner shall not, without the prior
written consent of the Advisory Committee, make a Passive Public Investment where there is
neither the intention nor the expectation that such Passive Public Investment may lead to the
Partnership's acquisition of additional Project Interests related to the issuer of such Passive
Public Investment or to one or more of such issuer's assets.
(g) Jurisdictional Limitations. The General Partner shall not,without the prior
written consent of the Advisory Committee,cause the Partnership to make any investment that is
primarily located outside of the United States and Canada.
Section 7.4. Limited Liability. No Limited Partner shall have. any liability
whatsoever with respect to the debts and obligations of the Partnership in excess of such Limited
Partner's Capital Commitment, and no Limited Partner shall be obligated to make contributions
to the Partnership other than as provided in Sections 3.2, 3_3 and 5_3, except as required by the
Revised Uniform Act or other applicable law.
Section 7.5. Incapacity. The Incapacity of a Limited Partner shall not cause a
dissolution of the Partnership, but the rights of such Limited Partner to share in the profits and
losses of the Partnership, to give any consents required of such Limited Partner under the terms
of this Agreement, to receive distributions of Partnership funds, and to assign its Partnership
Interest pursuant to Article IX shall, on the happening of such an event, devolve on such
Partner's trustee or receiver, subject to the terms and conditions of this Agreement, and the
Partnership shall continue as a limited partnership. The trustee or receiver, as the case may be,
shall be liable for all the obligations of the Incapacitated Limited Partner. However, in no event
shall such trustee or receiver become a Substituted Limited Partner, except in accordance with
Article IX.
Section 7.6. No Control of Partnership, Other Limitations. The Limited
Partners shall not participate in the control of the Partnership's business nor shall they transact
any business for the Partnership, nor shall they have the power to act for or bind the Partnership,
said powers being vested solely and exclusively in the General Partner. The Limited Partners
shall, however, have the rights set forth in this Agreement. The Limited Partners shall have no
interest in the properties or assets of the General Partner, or any equity in such properties or
assets, or in any proceeds of any sales thereof(which sales shall not be restricted in any respect),
solely by virtue of acquiring or owning an Interest in the Partnership.
Section 7.7. Priori . Except as set forth in Section 3.3 and Article IV, no
Limited Partner shall have priority over any other Limited Partner as to Partnership allocations or
distributions.
Section 7.8. Additional or Substitute Limited Partners.
(a) Subscription Period. During the period (the "Subscription Period")
commencing on the date of the Initial Closing and ending on December 31, 2007 except as
hereinafter provided (the "Final Closing"), the General Partner is authorized, but not obligated,
to offer additional Interests and admit other Persons to the Partnership as additional Limited
NEWYORK 57729704(2K) -30-
Partners. The General Partner shall cease ail marketing efforts with respect to attracting
investors in the Partnership on or before December 31, 2007; provided, however, that the
General Partner may continue discussions and negotiations with prospective investors with
whom the General Partner had commenced discussions prior to such date and, with the approval
of the Advisory Committee, there may be one additional closing to admit other Persons to the
Partnership as additional Limited Partners subsequent to December 31, 2007 to accommodate
Persons finalizing their approval process and/or Persons with respect to whom any applicable
governmental consents or approvals shall have not yet been obtained. In the event that an
additional Limited Partner is admitted to the Partnership during the Subscription Period unless,
priorto the date of such admission of other Partners, there shall have been a material change or
other significant event relating to any Project Interest held by the Partnership which, in the sole
discretion of the General Partner, would justify a different valuation of the Interests offered by
the Partnership, such additional Limited Partner shall contribute to the Partnership an amount
equal to its Rro rata portion (based upon the ratio of its Capital Commitment to all Capital
Commitments, including its own) of an amount equal to the excess, if any, of (1)all Capital
Contributions made by the Partners prior to the admission of such additional Limited Partner
over (2)the sum of all distributions made to the Partners under Section 5.4(b) hereof prior to
sucb admission (such excess being herein called the "Contribution Amount"). In addition, such
additional Limited Partner shall pay to the previously admitted Partners an amount(the "Capital
Return Amount") equal to the excess, if any, of(a) a hypothetical amount equal to the interest
that would have accrued at the rate of eight percent(8%) per annum on such additional Limited
Partner's Capital Contributions required to be made from and after the Initial Closing through the
day immediately preceding the actual date of such Limited Partner's admission (herein, the
"Reference Period"), determined as if such additional Limited Partner had been admitted, at the
Initial Closing and had timely made its pro rata share of all Capital Contributions required to be
made during such Reference Period pursuant to its Capital Commitment, over(b) a hypothetical
amount equal to what would have been such Limited Partner's pro rata share of the aggregate of
all distributions made to the Partners under Section 5.4(a) and under Sections 5.4(c)(ii) and
5.4 d i during the Reference Period, determined as if such additional Limited Partner had been
admitted at the Initial Closing and had timely made its pro rata share of all Capital Contributions
required to be made during such Reference Period pursuant to its Capital Commitment. The
Contribution Amount contributed by such additional Limited Partner will be distributed among
the previously admitted Partners, pro rata, based upon their unreturned Capital Contributions
determined immediately prior to such additional Limited Partner's admission and such
distribution shall be deemed a return of capital under Section 5.4(h). Each Partner's portion of
the distribution of the Contribution Amount shall be deemed to increase the available Capital
Commitment of each such Partner. The Capital Return Amount shall not be deemed to be a
Capital Contribution by the additional Limited Partner and shall be paid directly to the Partners
receiving the aforesaid deemed distribution under Section 5.4(b)and such payment shall be made
in proportion to such deemed distribution, after which there shall be no Preferred Return due on
the portion of the Capital. Contributions so returned to such previously admitted°Partners
pursuant to such deemed distribution. The Contribution Amount shall be deemed contributed to
the Partnership as of the Initial Closing.
(b) Asset Management Fee. In addition to the Contribution Amount payable
to the Partnership, an additional Limited Partner shall pay to the Manager (or its designated
Affiliate) an amount (the "Fee Amount'') equal to the sum of (i) 0.375% of such additional
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NEWYORK 5772577v14(2K) -
Limited Partner's Capital Commitment for each consecutive three (3) month period or portion
thereof occurring during such additional Limited Partner's Reference Period plus (ii) interest on
the amount determined pursuant to clause (i) at the rate of eight percent (8%) per annum and
determined as if the Fee Amount were a loan from the Manager to such additional Limited
Partner disbursed in increments equal to 0.375% of such additional Limited Partner's Capital
Commitment, commencing with a disbursement at the Initial Closing and including an additional
disbursement at the commencement of each consecutive three (3) month period (or portion
thereof) occurring after the Initial Closing and during the Reference Period. The Fee Amount
shall not be deemed to be a Capital Contribution by such additional Limited Partner.
(c) Accession to Agreement. Each Person who is to be admitted as an
additional or substitute Limited Partner pursuant to this Agreement shalt accede to this
Agreement by executing, together with the General Partner, a counterpart signature page to this
Agreement providing for such admission, which shall be deemed for all purposes to constitute an
amendment to this Agreement providing for such admission but shall not require the consent of
any other Partner. In addition, the General Partner shall make any necessary filings with the
appropriate governmental authorities and take such actions as are necessary under applicable law
to effectuate such admission. The admission of additional or substitute Limited Partners to the
Partnership shall be effective upon the execution of the necessary amendment to this Agreement
or such later effective date as is set forth in such amendment. The General Partner shall cause
Appendix A to be amended from time to time, without the consent of any other Partner,to reflect
any changes in the Capital Commitments or identity of any Partner occurring pursuant to this
Agreement.
(d) Limit on Further Subscriptions. Notwithstanding anything to the contrary
set forth in this Section 7.8, the General Partner shall not, except as may be approved by the
Advisory Committee, accept any subscription that would cause the aggregate Capital
Commitments of the Limited Partners (excluding, for the avoidance of doubt; any Capital
Commitments that are included in fulfilling the General Partner's Capital Commitment pursuant
to Section 3.6)to the SEI-I Partnerships to exceed Five Hundred Million Dollars($500,000,000);
provided that the General Partner may at any permit any existing Limited Partner of the
Partnership or any Other SEI-I Partnership to increase such Limited Partner's Capital
Commitment to an amount not exceeding the largest Capital Commitment of any single Limited
Partner (or group of affiliated Limited Partners) in the SEI-I Partnerships, to the extent that the
General Partner or the Partnership is required to accept such increase by the provisions of any
side letter or other arrangement with such increasing Limited Partner.
ARTICLE VIII
GENERAL PARTNER
Section 8.1. Names,Addresses and Capital Commitments. The name, address
and Capital Commitment of the General Partner are set forth in Appendix A. Appendix A shall
be amended from time to time to reflect any change in the Capital Commitments of the General
Partner.
NEW YORK 5772577 v 14(2K) -32-
i
Section 8.2. Management and Control of the Partnership. The management,
policies and control of the Partnership shall be vested exclusively in the General Partner. The,
General Partner shall invest the Partnership's assets and exercise all of its powers and duties in
accordance with the terms of this Agreement and, subject to the terms of this Agreement, with a
degree of diligence, prudence and care and in a manner in which other general partners familiar
with such investments would use in the conduct of an enterprise of similar character and with
similar aims, but determined without regard to the actual standard of care set forth in any
partnership agreement governing any such other general partner. Each Limited Partner expressly
acknowledges that the Partnership has been formed to invest in Project Interests that are high-
risk, and are highly speculative in nature and are being undertaken in order to generate above-
market returns for the Partners and that the risks of the Partnership's actual results differing
materially from the General Partner's expectations are significantly greater than would be the
case were the investment objectives of the Partnership of a more conservative nature. The
provisions of this Agreement, to the extent they expand or restrict the duties and liabilities of the
General Partner existing at law or in equity (including fiduciary duties), are agreed by the
Partners to modify such duties and liabilities of the General Partner existing at law or in equity.
Limited Partners may,to the extent expressly provided in this Agreement,possess
or exercise any of the powers, or have or act in any of the capacities permitted under Section
17303(b) of the Revised Uniform Act for limited partners who are deemed thereby not to
participate in the control of the affairs of a limited partnership. The General Partner shall not
employ or permit another to employ Partnership assets in any manner other than for the benefit
of the Partnership, but the foregoing does not prohibit the General Partner from pledging assets
as security for financing as described in Section 8.19 or from engaging in or entering into any
transaction permitted or contemplated hereunder.
Section 8.3. Powers and Duties of General Partner. Except as otherwise
specifically provided herein, the General Partner shall have all rights and powers of a general
partner under the Revised Uniform Act, and shall have all authority, rights and powers in the
management of the Partnership business to do any and all other acts and things necessary,
proper, convenient or advisable to effectuate the purposes of this Agreement, including, by way
of illustration but not by way of limitation, to enter into, and take all actions to effect, the
following:.
(a) To secure the necessary goods and services required in performing the
General Partner's duties for the Partnership or the Partnership's duties or obligations in
respect of any Controlled Affiliate, any Additional Investment Vehicle or any other asset
in which the Partnership has a direct or indirect interest from time to time.
(b) To set aside funds for reserves from any and all income and/or assets of
the Partnership (including, without limitation, from or in calculating Net Cash Flow,
and/or from the proceeds of Capital Transactions), including, without limitation, for
ongoing operating expenses and other obligations of the Partnership, for potential future
investments to protect or enhance the value of existing Project Interests, and for
anticipated contracting and re-contracting, development and capital expenditures,
contingencies and working capital, in such amounts as the General Partner determines to
be reasonable for the requirements and obligations of the Partnership.
r'
NEWYORK 5792577 v14(2K) -33-
(c) To cause the Partnership, any Controlled Affiliate or any Additional
Investment Vehicle to carry such indemnification insurance in an amount and at a cost as
the General Partner deems necessary and reasonable under the circumstances to protect it
and any other Person entitled to indemnification by the Partnership under Section 8.15.
The General Partner shall provide the Advisory Committee with written notice of the
amount and cost of such indemnification insurance.
(d) Subject to Section 8.12, to purchase or sell direct or indirect equity
interests in Project Interests or related-businesses or assets, in any Controlled Affiliate or
in any Additional Investment Vehicle in the name or for the account of the Partnership or
enter into any contract in the name or for the account of the Partnership with respect to
any Project Interests, interests in any Controlled Affiliate or in any Additional Investment
Vehicle or in any other manner bind the Partnership to purchase or sell any Project
Interests, interests in any Controlled Affiliate or in any Additional Investment Vehicle on
such terms as the General Partner shall determine and to otherwise deal in any manner
with the assets of the Partnership. Without limitation,the General Partner shall exercise
all powers of the Partnership, on behalf of the Partnership,in connection with the sale,
transfer or disposition of any assets owned by the Partnership, in any Controlled Affiliate
or in any Additional Investment Vehicle.
(e) Subject to Sections 8.12 and 8.19, to borrow money on behalf of the
Partnership, of any Controlled Affiliate or of any Additional Investment Vehicle from
any source, including one or more of the Partners, upon such terms and conditions as the
General Partner may deem advisable and proper,to execute promissory notes, guarantees,
drafts, bills of exchange and other instruments and evidences of indebtedness and to
secure the payment thereof by mortgage, pledge or assignment of or security interest in
all or any part of property then owned or thereafter acquired by the Partnership, by any
Controlled Affiliate or by any Additional Investment Vehicle or in all or any part of the
Capital Commitments of the Partners to the Partnership, and to refinance,recast,modify,
extend or memorialize any of the obligations of the.Partnership, of any Controlled
Affiliate. or of any Additional Investment Vehicle and to execute instruments and
agreements evidencing and securing those obligations. Without limitation, the General
Partner shall exercise all powers of the Partnership, on behalf of the Partnership, in
connection with the financing or refinancing of any assets owned by the Partnership, by
any Controlled Affiliate or by any Additional Investment Vehicle or the other incurrence
of debt by the Partnership, by any Controlled Affiliate or any Additional Investment
Vehicle.
(f) Subject to Sections 6.10, 8.6(a) and 812, to retain, or otherwise secure or
enter into contracts, agreements and other undertakings with persons or firms. in
connection with the management and operation of the Partnership's business, including,
without limitation, attorneys, accountants, consultants, investment bankers and other
agents and to enter into contracts, agreements or other undertakings and transactions with
the General Partner, any Limited Partner or any Affiliate of the General Partner or any
Limited Partner, and to make arrangements with insurance companies through brokers,
all on such terms and for such consideration as the General Partner deems advisable, and
NLXVYORK 577251704(2K) -34-
i
provided that such persons or firms (or principals of such firms) have experience or
expertise in the matters for which they have been engaged.
(g) To enter into partnership or similar agreements on behalf of the
Partnership and to take any and all actions incident to the Partnership's serving as general
partner, or investing as a limited partner, member or shareholder in other general or
limited partnerships or other entities the principal business of which is related to any of
the Project Interests and to enter into organizational agreements (for organizations other
than partnerships) on behalf of the Partnership and to take any and all actions incident to
the Partnership's investment or participation in such organizations, the principal business
of which is related to any of the Project Interests,
(h) To open, maintain and close bank accounts and to draw checks and other
orders for the payment of money,subject to Section 6.10.
(i) To take any and all action which is permitted under the Revised Uniform
Act and this Agreement, and which is customary or reasonably related to the business of
the Partnership or expressly provided for herein, including the purchase for its own
account of Interests.
0) Subject to Section 4.2(f), to make all elections for the Partnership that are
permitted under tax or other applicable laws, including an election under Section 754 of
the Code.
(k) To bring or defend, pay, collect, compromise, arbitrate, resort to legal
action, or otherwise adjust claims or demands of or against the Partnership, any
Controlled Affiliate or any Additional Investment Vehicle.
(1) To deposit, withdraw, invest, pay, retain and distribute the Partnership's
funds in a manner consistent with the provisions of this Agreement.
(m) To take all action which may be necessary or appropriate for the
continuation of the Partnership's valid existence as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Limited Partners or to enable the
Partnership to conduct the business in which it is engaged.
(n) Subject to Section 8.12, to cause the Partnership, any Controlled Affiliate
or any Additional Investment Vehicle to make capital commitments upon such terms and
conditions as the General Partner may deem advisable and proper.
(o) Subject to Section 9.7 d , to exercise, on behalf of the Partnership, all
powers and rights of the Partnership in respect of any Controlled Affiliate or any
Additional Investment Vehicle.
(p) To execute and deliver any and all instruments as are necessary to carry
out the intentions and purposes of the above duties and powers.
NE WYOKK 5777577 vl4(2K) -35-
(q) To take any action the General Partner determines is necessary or
desirable to ensure that the assets of the Partnership are not deemed to be Plan Assets.
Section 8.4. Single Asset Test. (a) The General Partner shall not undertake or
consummate,without having obtained the prior written consent of the Advisory Committee, any
proposed transaction by the Partnership, if after giving effect to such transaction, more than the
greater of$80,000,000 or twenty percent(20%)of the total Capital Commitments of the Partners
would be invested or would be Identified by the Partnership for investment in any Project
Interest or Project Interests in a single property (the "Single Asset Test"). Each individual
property(or interest therein) acquired or held in or as part of a portfolio of properties (including,"
without limitation, through an Additional Investment Vehicle) shall be treated as a single
property for purposes of the foregoing test.`
(b) Notwithstanding the foregoing provisions of this Section 8.4, the Single
Asset Test shall not apply to any transaction in which Partnership assets are contributed to any
publicly traded or to be publicly traded entity or to any affiliate of such publicly traded or to be
publicly traded entity in exchange for partnership interests,stock, options or other equity in such
publicly traded or to be publicly traded entity or its affiliates.
Section 8.5. Partnership Funds. All funds of the Partnership not invested in
Project Interests as permitted hereunder and all reserves of the Partnership shall be temporarily
invested in accordance with Section 6.10. Partnership funds shall be held in the name of the
Partnership or the General Partner on behalf of the Partnership and shall not be commingled with
those of any other Person. Partnership funds shall be used by the General Partner only for the
business of the Partnership.
Section 8.6. Transactions with Affiliates.
(a) Requirements. Subject to Sections 8.6(e) and 8.8._12, the General Partner
shall be permitted to cause the Partnership or any Controlled Affiliate to (i)enter into any
transaction for the provision of Services to or by the Partnership or any Controlled Affiliate with
respect to which the General Partner or any of its Affiliates may have an interest or receive a
benefit, or (ii)engage in any other transaction or enter in any agreement with respect to which
the General Partner or any of its Affiliates may receive additional compensation (including,
without limitation,fees,rental income,promote or other incentive compensation)or other benefit
including, without limitation, entering into loan transactions or lease, franchise or management
agreements (each of the transactions and agreements referred to in clauses(i) or(ii)hereof being
referred to as, an "Affiliate Transaction'), provided that either (A) the Advisory Committee
consents to such Affiliate Transaction or(B)all of the following criteria are complied with:
(i) The terms and conditions of the Affiliate Transaction are documented in
writing and are (1) at least as favorable to the Partnership or the Controlled Affiliate as
the terms available in an arm's length transaction with an independent third party or (2)
the result.of arm's length negotiations;
NEWYORK 5772537 v14(2K) -36-
(ii) The terms of any such Affiliate. Transaction shall not provide for
indemnification of the General Partner.or its Affiliates by the Partnership on terms more
favorable to the General Partner or its Affiliates than are provided under this Agreement;
(iii) Such Affiliate Transaction is entered into for the benefit of the Partnership
or the Controlled Affiliate and in the ordinary course of business; and
(iv) With respect to an Affiliate Transaction for the origination of Project
Interests, neither the Partnership nor a Controlled Affiliate shall pay more to an Affiliate
of the General Partner for the Project Interest than its cost for the investment and
reasonable out-of-pocket expenses for origination, such Affiliate shall have not held the
Project Interest for a period.in excess of one hundred eighty (180) days, and there shall
have been no material adverse change in the value of the Project Interest since its date of
acquisition by such Affiliate;
provided, further,that no fees, other than the Asset Management Fee and fees in respect of other
development and asset management services on terms complying with clauses (i)through (iii) of
this Section, shall be payable to the General Partner or any Affiliate of the General Partner
without the prior written consent of the Advisory Committee. As used herein;the term"Affiliate
Transaction" shall not include transactions and activities with any Person permitted or
contemplated hereunder (e.g., Co-investment Partnerships, Parallel Partnerships, Side-by-Side
Partnerships, Targeted Funds, Other SEI-I Partnerships, or Affiliates permitted under
Section 7.3fc )•
(b) Additional Provisions. Nothing herein contained shall be construed as a
guarantee by the General Partner of the performance by any Affiliate, designee or nominee of its
obligations under any contract between any such Affiliate and the Partnership. Reasonable and
customary brokerage commissions may be paid to unrelated third parties or, subject to Section
related parties in connection with the acquisition of Project Interests by the Partnership.
(c) Other Fees. Except as provided in this Section 8.6 or as permitted
pursuant to Sections 7.2, 7_3,8_3, 8_7, 8.10, 8.12, 8.13 or 8.15 or as otherwise approved by the
Advisory Committee, and except for the General Partner's interests in distributions, capital,
profits, income, gain, loss, deduction and credit of the Partnership and the Asset Management
Fee, none of the General Partner nor any Affiliate of the General Partner shall receive anything
of economic value from the Partnership, nor shall any of them receive from the Partnership any
fees or other compensation on account of any Project Interest in which the Partnership may
invest,including, without limitation, any acquisition, disposition, financing, break-up, leasing or
similar transaction-related fee or any directors' fees.
(d) Joint Investment with Affiliates. Notwithstanding anything to the contrary
in this Agreement,the Partners acknowledge that it is possible that the Partnership and/or any
Controlled Affiliate may invest jointly with the General Partner or any of its Affiliates. Such
joint investments may be made in entities that are or are not Controlled Affiliates and such joint
investments may or may not be concurrent. Except for such investments permitted under Section
71 c or 8.10, all such joint investments by the Partnership shall be approved in writing by the
Advisory Committee, and in considering whether to approve or disapprove any request by the
NEWYORK 5772577 04(2K) -37-
i
General Partner for such a joint investment, the Advisory Committee shall address, without
limitation, any relative valuation issues that may arise as a result of such joint investments. In
connection therewith,the Partners acknowledge that the terms of any such joint investment may
not have been determined through arms'-length negotiations and that, in connection with any -
such joint investments, neither the.General Partner nor the Advisory Committee shall be required
to obtain fairness opinions, appraisals, independent consultant reports or the. consent of the
Limited Partners in recommending (in the case of the General Partner) or in approving (in the _
case.of the Advisory Committee)any such joint investment_ However, any request for approval
of any such joint investment by the.Advisory Committee shall be submitted by the General
Partner in a writing which shall set forth in reasonable detail(i)the Genera!Partner's reasons for
desiring that the Partnership make such joint investment, (ii)the General Partner's relative
valuation analysis with.respect to such joint investment and (iii)the likely benefits which the
General Partner or any of its Affiliates are likely to receive as a result of such joint investment
other than by virtue of their Interests in the Partnership. Nothing contained herein shall restrict
or prohibit the Advisory Committee from obtaining, in its sole discretion, any fairness opinion,
appraisal or independent consultant report in connection with approving any joint investment.
The Partnership and the Affiliate(s)shall share ratably in any costs and expenses associated with
such joint investment.
(e) Midway Investment. Notwithstanding anything to the contrary set forth in
this Agreement(including without limitation Section 8.6(a)),the Partnership may acquire From
the General Partner or its applicable Affiliate(i)the investment in the Midway project described
in the POM and/or (ii) such other investments as may be acquired from or Identified by the
General Partner or an Affiliate of the General Partner and described in the POM as investments
which the General Partner intends that the Partnership acquire from the General Partner or its
applicable Affiliate. The purchase prices with respect to all such acquisitions shall be equal to
the aggregate costs of the General Partner and its Affiliates for such investments and reasonable
out-of-pocket expenses for origination., plus interest on all such costs and expenses at a rate of ,
eight percent (8%) per annum, without compounding, from the dates on which such costs and
expenses were paid. Such amounts shall be paid without revaluation, interest (other than the
interest described above), penalty or premium of any kind regardless of the amount of time
lapsed between the date upon which such investment was acquired by the General Partner or its
applicable Affiliate and the date upon which such investment is acquired by the Partnership. The
terms and conditions (other than purchase price) of the Partnership's investment in the Midway
project and of the Partnership's investment in such other investments shall be determined by the
General Partner in its sole but good faith discretion consistently with the information regarding
such investment contained in the POM. As used herein,"POM"means the private placement
memorandum for the Partnership dated October 24,2006, M modi fed and supplemented by the
first supplement thereto dated June 2. 2007 and by any subsequent written supplement issued
after June L2,.2007 and prior to the Initial Closing, and which subsequent written supplement is
expressly referenced in the Subscription Agreement. For the avoidance of doubt and
notwithstanding anything to the contrary in this Agreement: (i) none of the Partnership nor any
Other SEI-I Partnerships shall acquire any interest from an Affiliate of the General Partner in
either(1) the existing five"peaker"generation plant portfolio known as CalPeak and located in
California, and including, without limitation, the pending acquisition of land underlying and
adjacent to the "Border" plant in such portfolio and the pending (as of the date of this
Agreement) submitted bids to San Diego Gas & Electric ("SDG&E'D for the re-contracting or
NEWYORK5772537 040K) -38- -
relocation of one or more of the plants in such portfolio, or (2) the so-called Neptune project, a
transmission cable connecting New Jersey and Long Island that is scheduled to commence ,
delivery on or about July, 2007; (ii)the total Project Interest available to SEG and its Affiliates
in the so-called Hudson project, a proposed transmission cable that would connect New Jersey
and Manhattan, shall be allocated 50% to the Partnership (and to any Other SEI-I Partnerships,
collectively) and 50% to principals and executives of SEG and its Affiliates and as otherwise
heretofore or hereafter allocated by SEG in its sole and absolute discretion; and (iii) the total
Project Interests that may result from the pending (as of the date of this Agreement) submitted
bids for the construction of new power plants for San Diego Gas & Electric (such bids not
including those for any re-contracting or relocation of existing CalPeak generation plants) shall
be allocated 33% to General Electric Corporation or its Affiliates,33%to the existing Affiliate
of the General Partner that is an owner.in CalPeak and 34% to the Partnership (and to any Other
SEI-I Partnerships, collectively).
Section 8.7. Organizational and Operating Expenses.
(a) Organizational Expenses. The Partnership shall pay (or reimburse the
General Partner or its Affiliates for) its pro rata share, based on the Capital Commitments to the
Partnership, on the one hand, and the aggregate capital commitments of all. Other SEI-I
Partnerships and this Partnership, on the other, of the.total of all out-of-pocket costs or expenses
(including, without limitation, Organizational Expenses) incurred by or on behalf of the
Partnership in connection with the offering of Interests in the Partnership and the Other SEI-I
Partnerships and the initial organization of the Partnership and the Other SEI-I Partnerships
which are paid to unaffiliated third parties, including, but not limited to, legal and accounting
costs;provided, however,that such payments and reimbursements shall not exceed $1,500,000 in
the aggregate. The Partnership shall not-pay any costs or expenses (including, but without
limitation, legal fees) incurred by any Limited Partner in connection with its acquisition of an
Interest in the Partnership. Notwithstanding the foregoing, the Partnership shall pay no
placement fees in connection with the sale of Interests in the Partnership and shall not reimburse
the General Partner or any of its Affiliates for any such placement fees paid by the General
Partner or such Affiliates.
(b) Operating Expenses. The Partnership shall pay for the reasonable
expenses (including, but not limited to, costs of accounting, and legal fees and disbursements,
transfer agent fees and disbursements, duplicating, travel, telephone, appraisal, engineering and
environmental expenses, property management fees and real estate commissions) relating to the
acquisition, development, financing, management, operation and disposition of Partnership
assets or the Partnership's investment in or sponsorship of any Controlled Affiliate or Additional
Investment Vehicles (or negotiations related thereto), including, without limitation, Pursuit
Costs,as well as all other expenses incurred by or on behalf of the Partnership in connection with
Partnership business;provided,however,that in no event shall the Partnership pay any Overhead
_Expenses, all of which are intended,to be paid by the Asset'Management Fee. The Partnership
also will reimburse the General Partner to the extent that the General Partner or its Affiliates
provide any of the services described in this Section 8.7 to or for the benefit of the Partnership or
any other services which could be provided by an unrelated third party outside the scope,of the
General Partner's responsibilities under this Agreement, in each case, subject to the limitations
set forth in the first sentence of Section 8.6(a). The Partnership shall also reimburse the General
{
NEWYORK 5772537 04(2K) -39-
Partner or its Affiliates for any costs and expenses advanced by the General Partner or its
Affiliates on behalf of the Partnership that are proper Partnership related expenses. Nothing
herein shall be deemed to restrict, limit or modify any contractual obligation of the Partnership
arising from time to time to make capital contributions or loans to a Controlled Affiliate or to
any Additional Investment Vehicle.
Section 8.8. Key Man Provisions. (a) During the existence of the Partnership,
and provided that SEI Management, L.P. ("SEI Management") or an Affiliate of SEI
Management is the General Partner,the General Partner and its officers,directors and employees
shall devote such time and effort to the activities of the Partnership as may be necessary to
promote the objectives of the Partnership. Without limitation of the foregoing, during the
Commitment Period, and provided that SEI Management or an Affiliate of SEI Management is
the General Partner, at least three (3) Key Executives shall continue to be actively involved in
the business and activities of the Partnership and shall devote such business time as is reasonably
necessary to promote the objectives of the Partnership and one of such three Key Executives
shall be Bradford T. Nordholm or a Person replacing him who has comparable experience and
education. If the General Partner believes that the provisions of this clause (a) are not being
complied with (any such condition being herein called a "Change in Management"), it shall so
notify the Limited Partners and the Advisory Committee in writing.
(b) In the event of a Change in Management, as determined by the Advisory
Committee, the sole remedies of the Limited Partners on account of such event shall be as
follows (but without negating other rights of the Limited Partners hereunder, such as
Section 10.2(b), which are not based on the default of the General Partner): The Advisory
Committee may elect to terminate the Commitment Period as of a date which is sixty (60) days
from the date of such election, unless within such sixty (60) day period activities have resumed
such that the condition has been corrected. As of the end of such sixty (60) day period, unless
such condition has been corrected, the Partnership shall not invest in any new Project Interests
not theretofore acquired or Identified, nor shall the General Partner call for Capital Contributions
for such purpose but the foregoing shall not prevent the General Partner from calling capital for
other purposes permitted hereunder, including, without limitation, repayment of the Working
Capital Line. If, within one hundred twenty (120) days of the occurrence of a Change in
Management (unless such condition is corrected), the Non-Defaulting Limited Partners holding
sixty percent (60%) of the Participation Percentages (excluding for this purpose, any Limited
Partners who are Affiliates, managers, members or employees of the General Partner or
otherwise hold a direct or indirect interest in the General Partner) so elect, the General Partner
shall commence and diligently prosecute an orderly liquidation of the assets of the Partnership;
provided, however, such election shall not be effective or be deemed given hereunder for any
purpose unless simultaneously and as a condition precedent thereto, Non-Defaulting Limited
Partners holding sixty percent (60%) of the Participation Percentages in the Partnership and the
Other SEI-I Partnerships(as defined thereunder,but for purposes of this proviso calculated on an
aggregate basis and not on an individual partnership basis) also shall have so elected in writing to
the liquidation of the assets of their applicable partnership. The General Partner shall furnish
each Partner with a summary of all votes cast by each of the Limited Partners regarding
liquidation upon a Change in Management.
NEWYORK 5772537 v14(2K) -40- -
Section 8.9. Other Activities and Competition. (a) During the existence of the
Partnership, the General Partner and its officers, directors and employees shall devote such time
and effort to the activities of the Partnership as may be necessary to promote adequately the
interests of the Partnership and the mutual interests of the Partners.
(b) It is specifically understood and agreed that, notwithstanding any duty
otherwise existing at law or in equity, the General Partner shall not be required to manage the
Partnership as its sole and exclusive function and that, except as set forth in Sections 8.9(a) and
8.10 and subject to Section 7.2, the General Partner, its Affiliates and agents, officers, directors
and employees of the General Partner and its Affiliates may engage in or possess any interests in
business ventures and may engage in other activities of every kind and description independently
or with others in addition to those relating to the Partnership, including the rendering of advice or
services of any kind to other investors and the making or management of other investments or
other investment partnerships. Without in any way limiting the foregoing, the General Partner,
its Affiliates and any agent, officer, director or employee of the General Partner or its Affiliates
may act as a director of any corporation, trustee of any trust, partner of any partnership or
administrative officer of any business entity, and,-subject to Section 7.3(d), may receive
compensation for service as a director,employee, advisor,consultant,general partner or manager
with respect to, or participate in profits derived from, investments in or of any such corporation,
trust,partnership or other business entity. Subject to the limitations contained in this Agreement,
including without limitation Section 8.10 below, each Limited Partner authorizes, consents to
and approves of such present and future activities by such Persons, whether or not any such
activities may conflict with any interest of the Partnership or any of the Partners or be
competitive with the business of the Partnership. Notwithstanding any duty otherwise existing at
law or in equity, without in any way limiting the foregoing but subject to the provisions of
Section 8.10 below,the General Partner shall not have any obligation or responsibility to refer
any such investments or other activities to the Partnership or any Partner and, subject to the
provisions of Section 8.10 below, neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or the partnership relationship created hereby in or to other ventures or
activities of the General Partner or its Affiliates or of their respective agents, officers, directors
or employees or to the income or proceeds derived therefrom.
Section 8.10. Investment Opportunities.
(a) Pooled Investment Vehicles. Without the prior written consent of Two-
Thirds in Interest of the Non-Defaulting Limited Partners (excluding, for this purpose, any
Affiliates of the General Partner), none of the General Partner, any Person controlled.by or under
common control with the General Partner or any of the Key Executives, shall form or cause to be
formed during the Exclusivity Period any Pooled Investment Vehicle or serve in a general
partner capacity with respect to any new Pooled Investment Vehicle (other than this Partnership
and the Separate Funds), which has as its primary investment objective, the investment, directly
or indirectly, in Project Interests which are Exclusive Investments.
(b) Allocation of Investment Opportunities. (i) Without the prior written
consent of the Advisory Committee, none of the General Partner, Barry Sternlicht or any Key
Executive shall allocate an Exclusive Investment at any time during the Exclusivity Period to one
or more "Designated Affiliates' of the General Partner rather than to the Partnership. As used
NEWYORK 5772537v]4(2K) -41-
i
herein, a "Designated Affiliate" means an investment partnership or fund sponsored by the
General Partner or by parties controlling, controlled by, or under common control with the
General Partner, that is an Affiliate of the General Partner and that is other than the Partnership;
provided, however, that the term "Designated Affiliate" shall not be deemed to include (1)
partnerships or joint ventures between the Partnership(and/or any Other SEI-I Partnership or any
Targeted Fund) and unrelated parties in which the Partnership (or any Other SEI-I Partnership
and/or any Targeted Fund, in the aggregate) has at least a 10% interest,or (2) partnerships or
joint ventures where an entity controlled by or under common control with the General Partner;
and that is other than the Partnership, has an economic interest, but such entity has acquired its
interest in order to facilitate the structuring of the transaction for the benefit of the Partnership
and such entity is obligated to contribute less than five percent (5%) of the required capital of
such partnership or joint venture.
(ii) In the event that the General Partner, Barry Sternlicht or any other Key
Executive has Identified an Exclusive Investment which the Partnership can purchase in whole
with the remaining Capital Commitments of the Partners (excluding, for this purpose, Reserved
Capital Commitments) during the Commitment Period (even if after the end of the Exclusivity
Period), the Partnership shall, subject to this Section 8.10 or unless otherwise approved by the
Advisory Committee, have priority with respect to the purchase of such investment over any
other Pooled Investment Vehicle or Designated Affiliate. If an investment would be an
Exclusive Investment except that the portion of such investment allocated hereunder to the
Partnership cannot be so purchased in whole (but can be purchased in part) with the remaining
Capital Commitments of the Partners (excluding, for this purpose, Reserved Capital
Commitments) during the Commitment Period,then the Partnership shall have the right to invest
the entire remaining Capital Commitments, subject to Section 8.10(d), in such investment and
the balance of such investment shall be made by such Pooled Investment Vehicle (which may
include one or more of the entities constituting a Successor Fund) or Designated Affiliate on and
subject to the terms herein provided. The decision as to whether to invest with such Pooled'
Investment Vehicle shall be made by the General Partner in its sole discretion. If (x)'the
Partnership has uncalled Capital Commitments (excluding, for this purpose, Reserved Capital
Commitments), and (y) none of the SEI-I Partnerships have uncalled Capital Commitments
(excluding, for this purpose, Reserved Capital Commitments), then the Partnership, subject to
this Section 8.10 or unless otherwise approved by the Advisory Committee,shall jointly invest in
such investment with one or more of the entities constituting a Successor Fund or such other
Pooled Investment Vehicle or Designated Affiliate designated by the General Partner, with the
percentage of capital required from each such co-investing entity to be determined by the
General Partner in its sole discretion, and otherwise on and subject to the terms herein provided;
provided, however, to the extent the Partnership shall not have sufficient uncalled capital to
invest 50% of the capital required for an investment, the Partnership shall invest its entire
remaining available uncalled capital and such other entities, Pooled'Investment Vehicle or
Designated Affiliate shall make the balance of such investment. Any joint investments made
pursuant to this Section 8.10(b)(ii) shall be made in substantially the same' manner and on
substantially similar terms and conditions as the joint investments made by the Partnership with
Other SEI-I Partnerships pursuant to Sections 8.10(d) and 8.1 0 e hereof.
(iii) The General Partner, in its sole discretion,may or may not allocate a Non-
Exclusive Investment in whole or in part to the Partnership; provided, 'however, that,
NEWYORK 5772537 v14(2K) -42-
notwithstanding anything to the contrary in this subsection 8.10(bb)(iii), in no event shall a Non-
Exclusive Investment be allocated in whole or in part to the Partnership if the Partnership's
making of such investment would violate any of the other provisions of this Agreement, with
such other provisions being construe_d, for such purpose, without regard to the definition of Non-
Exclusive Investment. The General Partner, in its sole discretion,may allocate all or any portion
of such Non-Exclusive Investment to(a) a Designated Affiliate or any other Affiliate(including,
without limitation,an investment partnership or fund sponsored or formed by the General Partner
(or any of its Affiliates) at any time for such purpose or otherwise), (b) one or more Pooled
Investment Vehicles.formed by the General Partner (or any Affiliate of the General Partner
controlled, directly or indirectly, by Barry S. Sternlicht or any other Key Executive, individually
or in the aggregate), (c) the Partnership (including on a co-investment basis with any of the
foregoing,as such co-investment is so permitted under this Agreement but with the percentage of
capital required from each co-investing entity, including the Partnership and/or the Other SEI-I
Partnerships and/or Targeted Fund, to be determined by the General Partner in its sole
discretion), or(d)any other Person designated by the General Partner.
(c) Targeted Funds. Notwithstanding anything to the contrary in this
Agreement (but without limiting the rights of the General Partner (and its Affiliates) under
Section 8.10(b)(ii) or (iii) above), the General Partner, any Person controlled by or under
common control with the General Partner or any of the Key Executive may form, sponsor,
create, market or manage investment funds other than the SET-I Partnerships (each, a "Targeted
Fund") that intend to acquire Project Interests that may otherwise constitute Exclusive
Investments but principally involve the generation of energy, or distribution of energy generated
from, renewable or reduced-emission sources and/or processes, including, without limitation,
solar,wind,hydro-electric,waste,geo-thermal,biomass and/or combinations of any two or more
of the foregoing. With respect to any such Targeted Fund as is closed during the Exclusivity
Period, each of the Limited Partners shall have the right, exercisable at the first closing of such
Targeted Fund, to commit capital to such Targeted Fund up to an amount which represents the
same percentage of the total capital commitments to such Targeted Fund at such first closing as
such Limited Partner's Capital Commitment to the Partnership represents of the total Capital
Commitments to the .Partnership. The Partnership, together with the applicable Other SEI-I
Partnerships, subject to available Capital Commitments, and the agreements governing such
Targeted Funds, and provided that the General Partner determines that the Partnership shall co-
invest with such Targeted Fund, shall invest 50%0 of the aggregate capital to be invested by the
SEI-I Partnerships and such Targeted Fund in each investment opportunity which constitutes an
Exclusive Investment and is of the type intended by the General Partner to be pursued by or on
behalf of the Partnership. Any such joint investment between the Partnership(and the applicable
Other SEI-I Partnerships)and a Targeted Fund shall be on a substantially pni passu basis and on
substantially similar terms (to the extent practicable); provided, however, such joint investment
may or may not be concurrent and the governance of such joint investment (including, without
limitation, the day-to-day control thereof) shall be determined by the General Partner on a case-
by-case basis and may be based upon the relative interests held by each entity in such co-
investment or subject to co-control (through a management board or otherwise), subject to
certain conditions and exceptions (in each case as provided in the governing instrument for such
joint investment). With respect to any non-concurrent joint investments, the terms set forth in
Section 8.10(e) shall be applicable. Such agreements may contain.provisions which permit one
or more of the investors, partners or members, as applicable, to cause a sale or other transfer of
t
NEWYORK 5772537 v14(2K) -43-
such investment or the assets of such joint investment after a certain specified time period.
Subject to the provisions of this Section 8.10(c), the General Partner shall have the right to
structure such ownership interests in such manner that it deems appropriate under the
circumstances including the terms of all agreements relating thereto. Such investments by the
Partnership shall not require the approval of the Advisory Committee. In connection therewith,
the Partners acknowledge that the terms of any such investment with the Targeted Fund may not
have been determined through arms'-length negotiations (provided, however, the terms of such
investment between the Partnership and the Targeted Fund, on the one hand, and the third party
to such transaction,on the other,shall be determined through arms'-length negotiations)and that,
in connection with any such investments, the General Partner shall not be required to obtain
fairness opinions, appraisals, independent consultant reports or the consent of the Limited
Partners in recommending or entering into any such investment. The Partnership,the applicable
Other SEI-1 Partnerships and the Targeted Fund, as applicable, shall share ratably in any costs
and expenses associated with such investment. None of the provisions of this Agreement,
including, without limitation, Sections 7.3(d), 8.6(a) or 8.6(c), shall prohibit the General Partner
(or any Affiliate thereof) or the Manager (or any Affiliate thereof) from receiving the fees,
compensation and/or interests in distributions, capital, profits, income, gain; loss, deduction or
credit provided for in the partnership agreements or other organizational documents of the
Targeted Fund.
(d) Co-Investments with Other SEI-I Partnerships. Notwithstanding anything
to the contrary in this Agreement, the Partners acknowledge that the Partnership (or its
Controlled Affiliates) may(and is permitted to) invest, or indirectly,with one or more of
the Other SE1-1 Partnerships (in the case of each Other SET-1 Partnership, subject to and in
accordance with the governing instruments for such entity) or one or more Co-Investment
Partnerships, Parallel Partnerships, Side-by-Side Partnerships or Backstop Partnerships (as
defined hereunder and/or under the governing instruments for any applicable Other SEI-1
Partnership) pursuant to the operation of this Section 8.10(d) or otherwise. Such joint
investments may or may not be concurrent and may be structured through the creation of a
partnership, limited liability company or other investment vehicle (which may not be Controlled
Affiliates), including parallel ownership interests, the operation, management and control of
which shall be governed by co-tenancy or similar agreements. 'With respect to any non-
concurrent joint investments, the terms set forth in Section 8.10(e) shall be applicable. " Such
agreements may contain provisions which permit one or more. of the investors, partners or
members, as applicable, to cause a sale or other transfer of such investment or the assets of such
joint investment after a certain specified time period. Subject to the provisions of this Section
8.10(d), the General Partner shall have the right to structure such ownership interests in such
manner that it deems appropriate under the circumstances including the terms of all agreements
relating thereto. Such investments by the Partnership shall not require the approval of the
Advisory Committee. The capital invested in such investment by the Partnership and the Other
SEI-I Partnerships (and, as applicable, any Co-lnvestment Partnerships, Parallel Partnerships,
Side-by-Side Partnerships or Backstop Partnerships, as defined hereunder and/or under the
governing instruments for any applicable Other SEI-1 Partnerships)shall be drawn in accordance
with the terms hereof and the governing instruments for such entities, respectively, and the
governing instruments for the joint investment entity, subject to the then available Capital
Commitments hereunder and thereunder, and shall be based upon the Partnership's Co-Invest
Percentage unless otherwise approved by the Advisory Committee. To the extent the capital
NEWYOR c 577253704(ix) —44-
required from the Partnership for such (or any subsequent) investment exceeds the then available
Capital Commitments hereunder, the terms and conditions as described in Section 8.10(a)(ii)
shall apply. In connection therewith, the Partners acknowledge that the terms of any such
investment with the Other SEI-I Partnerships may not have been determined through arms'-
length negotiations,such investment may not be made simultaneously with the investment by the
Other SEI-I Partnerships and that,in connection with any such investments, the General Partner
shall not be required to obtain fairness opinions,appraisals, independent consultant reports or the
consent of the Limited Partners in recommending or entering into any such investment. The
Partnership and the applicable Other SEI-I Partnerships shall share ratably in any costs and
expenses associated with such investment. None of the provisions of this Agreement, including,
without limitation, Sections 73(d), B.6 a and 8,6 c , shall prohibit the General.Partner (or any
Affiliate thereof) or the Manager(or any Affiliate thereof)from receiving the fees,compensation
and/or interests in distributions, capital, profits, income, gain, loss, deduction or credit provided
for hereunder or in the partnership agreements or other organizational documents of the Other
SEI-I Partnerships. To facilitate any such joint investment between the Partnership and the
Other SEI-L Partnerships, the General Partner may create one or more Additional Investment
Vehicles into which the Partnership and such Other SEI-I Partnerships shall co-invest, on such.
terms as the General Partner may determine consistently with the foregoing provisions of this
Section 8.10(d).
(e) Non-Concurrent Investment. With respect to any non-concurrent joint
investments between the Partnership and a Targeted Fund as provided under Section 8.10(c), an
Other SEI-I Partnership as provided under Section 8.10(d) or a Successor Fund as provided
under Section 8.10(b)(ii), the following terms shall apply. If any one or more of the Partnership,
one or more of the Other SEI-I Partnerships, a Targeted Fund or one or.more:of the entities
constituting a Successor Fund (the "First Fund") initially makes such investment (the "Asset
Acquisition Date"), the General Partner thereafter shall have the,right, but not the obligation, to
allocate the applicable portion thereof(on the terms and determined in accordance with Sections
8.10(c), 8.1 0 d and 8.1 0 b ii , as applicable)to one or more Other SEI-I Partnerships, Targeted
Funds,one or more of the entities constituting a Successor Fund or the Partnership, as applicable
(the "Subsequent Fund") within a reasonable period of time after the Asset Acquisition Date
(provided that any such allocation made prior to the later of the end of the Subscription Period or
six months after the Asset Acquisition Date shall be deemed to have been made within a
reasonable period of time) (the "Asset Co-Invest Date"). The consideration to be paid by the
Subsequent Fund to the First Fund at the Asset Co-Invest Date in respect of such investment
shall be equal to (i) the percentage of such investment that is allocated to such Subsequent Fund
multiplied by the aggregate investment made by the First Fund and, without duplication, other
costs and expenses incurred by the First Fund in connection with such investment, plus (ii) a
return to the First Fund thereon equal to eight percent(8%) on an annualized basis for the period
from the date on which such investment was made by the First Fund until the date on which such
Subsequent Fund is allocated such investment and pays such consideration. All of the terms set
forth in Section 8.10(c) shall be applicable to such joint investments with a Targeted Fund and
all of the terms set forth in Section 8.10(d) shall be applicable to such joint investments with an
Other SEI-I Partnership and all of the terms set forth in Section 8.10(b)(ii)shall be applicable to
such joint investments with a Successor Fund.
NrEWYORH 5172537 l UK) -45-
Section 8.11. Liabili . The General Partner shall not be personally liable for
the return of any portion of the Capital Contributions (or any return thereon) of the Limited
Partners. The return of such Capital Contributions (or any return thereon) shall be made solely
from assets of the Partnership. The General Partner shall not be required to pay to the
Partnership or any Limited Partner any deficit in any Limited Partner's return of capital upon
dissolution or otherwise. No Limited Partner shall have the right to demand or receive property
other than cash for its Interest. Neither the General Partner nor any of its Affiliates nor any
officer or employee of the General Partner or any of its Affiliates, shall be liable, responsible or
accountable in damages or otherwise to the Partnership, or any Limited Partner, for any action
taken or failure to act on behalf of the Partnership,unless such act or omission(i)was performed
or omitted fraudulently or otherwise in bad faith or(ii)was a result of the willful misconduct or
gross negligence of the General Partner or such officer, employee or Affiliate, as applicable,and
resulted in a material adverse impact upon the Partnership and the other Partners. Furthermore,
neither the General Partner nor any of its Affiliates nor any officer or employee of the General
Partner or any of its Affiliates shall be liable, responsible or accountable in damages or otherwise
to the Partnership, or any Limited Partner, for any actions or omissions (including any
negligence or willful misconduct)on the part of any broker or other agent of the Partnership.
Section 8.12. Limits on General Partner's Powers. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not,without the written
consent or ratification of the specific act by all the Limited Partners given in this Agreement or
by other written instrument executed and delivered by all the Limited Partners subsequent to the
date of this Agreement, cause or permit the Partnership to:
(a) do any act which would make it impossible to carry on the ordinary
business of the Partnership;
(b) possess Partnership property, or assign Partnership property,for other than
a Partnership purpose;
(c) admit a Person as a Partner, except as provided,in Sections 3.3, 7_8, 9_3,
9_6 or as otherwise specifically provided in this Agreement;
(d) make any loans to the General Partners or their Affiliates, except in
connection with a transaction permitted under, and subject to the terms of, Section 8.6(a).
provided, however, that this subparagraph (d) shall not apply to loans made by the
Partnership to a Controlled Affiliate;
(e) perform any act that would subject any Limited Partner or member of the
Advisory Committee to liability as a general partner in any jurisdiction;
(f) violate the provisions of this Agreement, including but without limitation,
Section 2.3, 7_3 or 8_4 hereof;
(g) do business in any jurisdiction which does not recognize the limited
liability status of limited partners of a limited partnership; or
NEWYORK 5772537 114(2K) -46-
(h) perform any act that would cause the Partnership to be taxable as a
corporation for federal income tax purposes.
Section 8.13. Asset Management Fee. The Partnership will pay to Starwood
Energy Management,L.L.C. (the"Manager") (or such other Person from time to time designated
by the Manager), as compensation for its Partnership level management services, an annual asset
management fee(the"Asset Management Fee")as follows:
(a) during the period commencing on the date of the Initial Closing through
the earlier to occur of(i) the end of the Commitment Period, and (ii) the first call for capital
contributions from the limited partners of a Successor Fund, one and one-half percent(1.5%) of
the total amount of Capital Commitments made by the Limited Partners to the Partnership from
time to time; and
(b) Thereafter, until the earlier of (i) the Dissolution Date or (ii) the actual
dissolution of the Partnership,one and one-half percent (1.5%) of the weighted average amount
of Capital Contributions made by Limited Partners and invested in Project Interests. For the
avoidance of doubt, no Asset Management Fee shall be assessed pursuant to the preceding
sentence on Capital Contributions as are from time to time being held in Permitted Temporary
Investments and which either (1)are not being held for investment in Project Interests or(2) are
not intended to be distributed within the applicable time,period set forthin Section 5.1 above.
For this purpose, Capital Contributions shall be considered invested in Project
Interests until Project Interests are sold or disposed of in a Capital Transaction without
conversion, exchange or reinvestment of the proceeds thereof into other Project Interests (for
example, the Asset Management.Fee shall not be reduced or adjusted by returns of capital from
operations or refinancings). The Asset Management Fee will be estimated and paid each quarter
in advance and appropriate adjustments shall be made promptly at the end of each calendar year
to reflect the actual Asset Management Fee payable for the year. The Asset Management Fee is
not intended to cover Project-level operations and maintenance ("O&M") nor Project-level asset
management, for which services the Partnership and the Other SEI-I Partnerships may incur
additional expense.
Section 8.14. Tax Matters Partner. (a) For purposes of Code section
6231(a)(7), the "Tax Matters Partner" shall be the General Partner as long as it remains the
general partner of the Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.
(b) The Partnership will, at the request and expense of any Limited Partner,
and so long as such request is not unreasonably time consuming, use reasonable efforts to (i)
assist such Limited Partner in securing on its behalf any available tax refunds and exemptions
from withholding or similar relief, including, without limitation, payment of tax credits
associated with dividends from non-United States companies arising in connection with an
investment in the Partnership and (ii) make any filings, applications or elections to reduce the
amount of tax withheld, and to receive refunds of tax withheld or paid, to the extent the
Partnership may lawfully do so.
NEWYOPK 5777537,14(2K) -47-
Section 8.15. General Partner. The Partnership shall indemnify and hold
harmless the General Partner (including the General Partner in its capacity as the Tax Matters
Partner), its partners and members, all parties holding direct or indirect interests in the General
Partner and all Affiliates of the General Partner, as well as all of the foregoing entities'
respective officers, directors, employees, partners, members and stockholders (each herein an
"Indemnified Party"),from and against any loss, expense,damage or injury suffered or sustained
by them, by reason of any acts, omissions or alleged acts or omissions arising out of their
activities on behalf of the Partnership or in furtherance of the interests of the Partnership,
including, without limitation, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in. connection with the defense of any actual or threatened
action, proceeding or claim and including any payments made by the General Partner to any
Affiliate, the members of the General Partner, any officer or director of the members of the
General Partner, or any of their respective officers, directors or employees pursuant to an
indemnification agreement no broader than this Section 8.15; provided that the acts,omissions or
alleged acts or omissions upon which such actual or threatened action, proceeding or claims are
based (i)were not performed or omitted fraudulently or otherwise in bad faith and (ii)were not
the result of such Indemnified Party's willful misconduct or gross negligence. Furthermore, the
Partnership shall indemnify and hold harmless each Indemnified Party from and against any loss,
expense, damage or injury suffered or sustained by them by reason of any actions or omissions
(including any negligence or willful misconduct) on the part of any broker or other agent of the
Partnership. In no'event shall the Partnership indemnify any Indemnified Party with respect to
any loss sustained by such Indemnified Party by reason of any claims by another Indemnified
Party against such Indemnified Party. The Partnership will indemnify and hold harmless any
agents of the General Partner, of its members; of the officers and directors of the members in the
General Partner and of the Affiliates of the General Partner to the extent provided in any
applicable agreement with such agent or other party, provided that such agreement was entered
into in accordance with the provisions of Section 8.6 a).
The General Partner shall provide each of the Limited Partners with at least ten
(10)days' prior written notice of any payment by the Partnership to.an Indemnified Party,which
notice shall summarize the facts and circumstances entitling the Indemnified Party to such
payment. Without in any way limiting the other obligations of the Partnership under this Section
8.15, without the consent of the Advisory Committee, in no event shall the Partnership be
required to reimburse or pay the Indemnified Parties, in the aggregate, an amount in excess of
$5,000,000 for attorneys' fees, court costs or other costs, such as fees of expert witnesses,
incurred in the defense of any claim to which an Indemnified Party is entitled to indemnification
hereunder. The Partnership shall only advance to any Indemnified Party the fees, costs and
expenses incurred in connection with such defense upon obtaining an agreement from such
Indemnified Party that in the event such Indemnified Party receives any such advance, such
Indemnified Party shalt reimburse the Partnership therefor to the extent that it shall be
determined that such party was not entitled to indemnification hereunder. In addition, in. no
event shall the Partnership advance any fees, costs or expenses to any Indemnified Party in
connection with the defense of any claim asserted against such Indemnified Party by a Majority
in Interest of the Non-Defaulting Limited Partners; provided, however, such Indemnified Party
shall be reimbursed therefor to the extent that such Indemnified Party is thereafter determined to
be the prevailing party with respect to such claim. Without limitation of the liability of the
Partnership to the General Partner hereunder, it is expressly agreed that (i)no Partner shall be
NEW YORK 5772537 04 UK) -48-
personally liable to contribute funds to the Partnership to cover claims for indemnity in excess of
the amount of capital required to be contributed by such Partner under the terms of this
Agreement (and in no event shall a Partner be obligated to contribute amounts in excess of its
respective Capital Commitment) and (ii) the General Partner shall not call for Capital
Contributions in order to pay indemnification obligations of an Additional Investment Vehicle or
a,Controlled Affiliate to an Indemnified Party if such Indemnified Party would not be entitled to
receive indemnification from the Partnership directly pursuant to this Section 8.15.
Section 8.16. Advisory Board. The General Partner may establish an advisory
board (the "Advisory Board') of the Partnership, which shall consist of recognized energy
professionals (none of whom shall be a Key Executive or an Affiliate of the General Partner)
with backgrounds in industry,government and/or academia to advise the General Partner on such
matters relating to the Partnership's activities as the General Partner shall determine. The
Advisory Board shall have no control over, or responsibility for, any decision taken by the
General Partner in its management and operation of the Partnership, and accordingly no member
of the Advisory Board shall have any fiduciary responsibility to the Partnership or any Partner.
The General Partner may, at its sole cost and expense, pay such fees, stipends or other
compensation(including equity or incentive compensation issued by the General Partner or any
of its Affiliates; provided that no such compensation so issued shall result in any member of the
Advisory Board becoming an Affiliate of the General Partner) to the members of the Advisory
Board, and reimburse members of the Advisory Board for such expenses, as the General Partner
may determine. Each member of the Advisory Board, as a condition to such membership, shall
execute a confidentiality agreement_pursuant to which such member shall agree to use any
confidential information received in connection with his or her participation in the Advisory
Board solely for the purposes of providing the advice requested by the General Partner. Except
as provided in such confidentiality agreement, no member of the Advisory Board shall be in any
way subject to any noncompetition, confidentiality or other restrictions applicable to the General
Partner hereunder (including, without limitation, as set forth in Sections 8.6, 8_9 and 8.10 . No
Person. shall be deemed to be an Affiliate of the General Partner or of any Key Executive by
virtue of such Person's serving on the Advisory Board.
Section 8.17. ERISA and Regulatory Matters.
.(a) The General Partner will use commercially reasonable efforts to conduct the
affairs and operations of the Partnership in such a manner that the Partnership will qualify as an
Operating Company or for another exception from being deemed to hold Plan Assets of any
Benefit Plan Investor.
(b) Notwithstanding Section 3.2, until such time as the General Partner delivers to
each Benefit Plan Investor (and the escrow agent, if any) a certificate which identifies the
exception from holding Plan Assets on which the Partnership will rely, all Capital Contributions
required to be made to the Partnership by a Benefit Plan Investor shall, at the request of the
General Partner, instead be deposited directly by such Benefit Plan Investor into an escrow
account that is intended to comply with Department of Labor Advisory Opinion 95-04A.
(c)' Each Limited Partner that is or will be a Benefit Plan Investor on the date when it
is admitted to the Partnership shall so notify the General Partner in writing prior to such date.
NEWYORK 5772577 M(2K) - -49-
j
Any Limited Partner which has not indicated in its Subscription Agreement that it is a Benefit
Plan Investor hereby represents, warrants and covenants that it is not, it is not acting on behalf of
and, so long as it holds an interest in the Partnership, it will not be and will not be acting on
behalf of a Benefit Plan Investor.
(d) It is intended that none of the Partnership, the General Partner or any of their
Affiliates will act as or be deemed to be a fiduciary under ERISA with respect to any Benefit
Plan Investor or the assets of the Partnership. Notwithstanding any other provision of this
Agreement,the General Partner is authorized to take any action or refrain from taking'any action
which in its judgment is necessary or desirable in order to prevent any Partnership assets from
being deemed to constitute Plan Assets of any Benefit Plan Investor.
(e) Should the General Partner reasonably determine that the continued participation
of a Benefit Plan Investor would result in the assets of the Partnership being deemed Plan Assets
of such Benefit Plan Investor(a"Plan Asset Event"), the General Partner shall so notify each of
the Benefit Plan Investors in writing within 30 days of such determination. Thereafter, the
General Partner shall take reasonable steps to correct or cure the Plan Asset Event and, if the
General Partner determines that it is not reasonably likely that the Partnership's Plan Asset Event
can be reasonably corrected or cured (including by exercise of the General Partner's powers
enumerated in clauses (i) through (v) below), taking into account the overall interest of the
Partnership, shall terminate the Partnership and wind up its affairs in accordance with Article XI.
In connection with the foregoing obligation, in addition to any other powers the General Partner'
may have, the General Partner shall have the authority to take any of the following actions, in its
sole discretion: (i) any action necessary or desirable, in the General Partner's reasonable
judgment,to cure the Partnership's failure to qualify as an Operating Company, if applicable; (ii)
in accordance with the provisions of Section 13.1. amend this Agreement to cure any illegality or
other adverse consequences to the Partnership; (iii) amend, terminate or restructure any then
existing or contemplated arrangements to cure any illegality or other adverse consequences to the
Partnership; (iv) redeem any Limited Partner's interest in the Partnership,in whole or in part, in
a manner consistent with the procedures in clause h below; or(v)terminate the Partnership and
wind up its affairs in accordance with Article XI.
(f) Each Limited Partner acknowledges that the assets of the Partnership do not
constitute plan assets of such Limited Partner for purposes of any applicable non-U.S., state or
local law governing the investment and management of the assets of that Limited Partner, and
that none of the Partnership, the General Partner or any of their Affiliates will be acting as a
fiduciary within the meaning of any applicable non-U.S., state or local law relating to
governmental plans or foreign plans with respect to such Limited Partner or the Partnership
assets.
(g) In the event that the General Partner believes that (i) the investment in the
Partnership by a Limited Partner which is a governmental plan, foreign plan or other regulated ,
entity (each, a "Regulated Investor") might result in (A) any violation of any provision of law
applicable to such Regulated Investor, (B) the treatment of the assets of the Partnership as assets
of such Regulated Investor or (C) the treatment of the Partnership or the General Partner as a
fiduciary under such provisions of law applicable to such Regulated Investor and (ii) if, in the
reasonable judgment of the General Partner, any of the foregoing conditions result in or may
NEWYORK 577253704(2K) -50-
result in any adverse consequences to the Partnership or the General Partner(any of(i) or (ii), a
"Regulatory Issue"), then the General Partner, in its sole discretion, may require that such
Regulated Investor provide (at such Regulated Investor's expense) an opinion of counsel,
reasonably acceptable to the General Partner in form and substance, that no Regulatory Issue
exists or may cause the Partnership to redeem such Regulated Investor's interest in the
Partnership,in whole or in part.
(h) In the case of a complete or partial redemption of a Limited Partner's
Interest pursuant to clause e or(g) above,such redemption shall be deemed effective, and the
redemption price shall be calculated and paid in accordance with the terms and conditions set
forth in Section 3.4.
f
Section 8.18. Advisory Committee. The General Partner shall cause an
advisory committee (the"Advisory Committee") of the Partnership to be formed for the purpose
of reviewing and approving those certain matters and determinations with respect to the
management of the Partnership specified in this Section 8.18 and elsewhere in this Agreement.
The Advisory Committee shall consist of such.number of members as the General Partner shall
determine, each of whom shall be a Limited Partner or a representative of a Limited Partner and
none of whom shall be in the employ of or an Affiliate of the General Partner. If one or more of
the Partners is a Benefit Plan Investor, at least one member of the Advisory Committee shall be a
Benefit Plan Investor. After the initial appointment of the Advisory Committee by the General
Partner, members of the Advisory Committee shall serve on the Advisory Committee for such
periods as may be determined by the General Partner. Any vacancy on the Advisory Committee
occurring subsequent to the Final Closing shall be filled by an individual nominated by the
General Partner and approved_by a Majority-in-Interest of the Non-Defaulting Limited Partners.
Unless otherwise expressly provided herein,all decisions and actions of the Advisory Committee
shall require the affirmative written vote of a majority of the members, with each member
entitled to one vote in all matters. In lieu of holding a meeting, the members of the Advisory
Committee may vote or otherwise take action by a written instrument indicating the consent of
the number of members required to approve or take such action.
(a) To the extent pennitted under Section 17-303 of the Revised Uniform Act
for Persons that do not thereby become liable to any party as general partners of the Partnership,
the Advisory Committee shall have authority or discretion to review and approve only those
matters and determinations concerning the management of the Partnership which are.specifically
set forth in this Agreement as requiring approval of the Advisory Committee. Nothing contained
in this Section 8.18 or elsewhere in this Agreement shall empower or authorize the Advisory
Committee to act as a general partner of the Partnership or otherwise be construed to deem the
Advisory Committee as acting as a general partner of the Partnership. Other than as specifically
set forth in this Section 8.18 or elsewhere as specifically set forth in this Agreement, the
Advisory Committee shall not participate in the management or control of the Partnership's
business nor shall they transact any business for the Partnership,nor shall they have the power to
act for or bind the Partnership, said powers being vested solely and exclusively in the General
Partner.
(b) The General Partner shall provide the Advisory Committee sufficient
information and factual analysis to enable the Advisory Committee to make a reasoned and
1.
NEWYORK 5772537 v14(2K) -51-
(
1
informed decision with respect to any matter submitted to the Advisory Committee under this
Section 8.18 or submitted pursuant to provisions set forth elsewhere in this Agreement. Except
as otherwise expressly set forth herein, the members of the Advisory Committee shall use
reasonable efforts to approve or disapprove of any proposal or other matter to be decided by the
Advisory Committee within ten (10) Business Days after such matter has been submitted to the
Advisory Committee.
(c) No member of the Advisory Committee shall be entitled to receive any
fees or other compensation for serving as a member of the Advisory Committee. The
Partnership shall reimburse each member of the Advisory Committee,for such member's out-of-
pocket expenses incurred in connection with such member's service on the Advisory Committee,
including, without limitation, all reasonable expenses for airfare, lodging, meals and other travel
expenses.incurred in attending meetings of the Advisory Committee.
(d) The Partnership shall defend, indemnify and hold harmless each member
of the Advisory Committee, the Limited Partner which appointed such member,the employer of
such member, and all Affiliates of such member, Limited Partner or employer (each, an
"Indemnitee") from and against any and all liabilities, demands, claims, actions or causes of
action, losses or expenses (including reasonable attorneys' fees, expenses and costs of
investigation) sustained or incurred by any such Indemnitee by reason of the fact that such
Indemnitee.is or was a member of the Advisory Committee, or by reason of action taken or
omitted to be taken by such Indemnitee in any such capacity,provided that the acts,omissions or
alleged acts or omissions giving rise to such liabilities, demands, claims, actions or causes of
action, losses or expenses (i) were not performed or bmitted fraudulently or otherwise in bad
faith and(ii)were not the result of such Indemnitee's willful misconduct or gross negligence.
Section 8.19. Leverag-e. (a) 'The General Partner shall have the right to obtain,
on behalf of the Partnership, the Other SEI-I Partnerships and one or more Additional Investment
Vehicles, a financing commitment for a credit line or lines on such tenns and conditions as the
General Partner deems appropriate(the"Working.Capital Line"),the use of which proceeds shall
be subject to the same restrictions as those applicable to calls for Capital Contributions under this
Agreement. Borrowings by the Partnership or any Additional Investment Vehicle under the
Working Capital Line may be secured by pledges of the obligations of the Partners to make
Capital Contributions to the Partnership with respect to borrowings for the benefit of the
Partnership or,to the extent capital contributions could be drawn by such Additional Investment
,. Vehicle, any such Additional Investment Vehicle, and in connection therewith, each Partner
agrees to cooperate with the General Partner and execute such documents and instruments as
may be reasonably required to effectuate a security interest in its obligation to make such Capital
Contributions, which security interest may be granted by the Partnership and/or the General
Partner to the Working Capital Line Lender to secure the borrowing by the Partnership or any
such Additional Investment Vehicle under the Working Capital Line for the benefit of the
Partnership or any such Additional Investment Vehicle. Such cooperation may include, without
limitation, furnishing the Working Capital Line Lender with acknowledgments, estoppel
certificates and financial statements with respect to such Partner. To the extent such Working
Capital Line is so secured by a pledge of the Capital Commitments, such Working Capital Line
will be.retired no later than eighteen (18) months after the Final Closing. Notwithstanding
anything to the contrary contained elsewhere in this Agreement, and without regard to the
NEWYORK 5772577 v14(2K) -52-
termination of the Commitment Period or the limitations contained in this Agreement, including,
without limitation,Sections 3.4, 8_4, 9_6 and 10? b ,the Partners acknowledge and agree that to
the extent that the Partnership or any Additional Investment Vehicle has any outstanding
obligations under the Working Capital Line, the. General Partner may request Capital
Contributions (in the case of an obligation of any Additional Investment Vehicle, to the extent
capital contributions could be drawn by the Additional Investment Vehicle) to pay such
obligations without defense,counterclaim or offset of any kind. Any payment made by a Partner
to the Working Capital Line Lender in satisfaction of its obligation to contribute capital to the
Partnership shall be deemed a Capital Contribution by such Partner to the Partnership. Nothing
contained in this Section 8.19 shall be construed to require any Partner to make any Capital
Contribution in excess of such Partner's Capital Commitment.
(b) The General Partner also shall have the right to obtain, on behalf of the
Partnership,the Other SEI-I Partnerships and one or more Additional Investment;Vehicles, if and
at such times as the General Partner deems it advisable, one or more financings secured by the
Project Interests of the Partnership or by assets of any Project Company. Financings obtained
pursuant to this Section 8.19(b) may be in such amounts as the General Partner determines to be
appropriate in order to facilitate investments and/or enhance returns.
Section 8.20. Certificate of Limited Partnership. The General Partner shall
file for public record with the appropriate public authorities, and, if required, publish the
Certificate of Limited Partnership of the Partnership (the "Certificate") and any amendments
thereto and take all such other action as may be required to preserve the limited liability of the
Limited Partners in any jurisdiction in which the Partnership shall conduct operations.
Section 8.21. Other Entities. Although it is expressly acknowledged:and agreed
by all Partners that the Partnership may make investments in Project Interests indirectly through
one or more partnerships, corporations, limited liability companies or other entities, the General
Partner agrees that, unless the Advisory Committee otherwise approves, the rights and
obligations of the Limited Partners and the restrictions on the General Partner provided for in
this Agreement shall not be vitiated or altered in any material respect by reason of the investment.
in any such entity.
ARTICLE IX
TRANSFERS OF INTERESTS BY PARTNERS
Section 9.1. General. No Partner may sell, assign, pledge, or in any manner
dispose of, or create, or suffer the creation of, a security interest in or any encumbrance on, or
any participation, beneficial, profits, economic or other interest in (collectively, a "transfer") all
or a portion of its Interest in the Partnership except in accordance with the terms and conditions
set forth in this Article IX or as otherwise contemplated in this Agreement. No transfer of an
Interest shall be effective until such date as all requirements of this Article IX in respect thereof
have been satisfied and, if consents, approvals or waivers are required by the General Partner,all
of same shall have been confirmed in writing by the General Partner. Any transfer or purported
transfer of an Interest in the Partnership not made in accordance with this Agreement shall be
NEWYO"5772337 v14(2K) -53-
null and void and of no force or effect whatsoever to the fullest extent permitted by applicable
law.
Section 9.2. Transfer of Interest of General Partner. (a) Except as provided
in Section 3.3(a) and subject to any regulatory approval requirements, the General Partner may
not transfer all or any portion of its Interest in the Partnership as the General Partner without the
prior written consent of the Advisory Committee,which consent may be given or withheld in the
sole discretion of the Advisory Committee provided, however, that nothing contained herein
shall prevent (or require the Advisory Committee to consent to) (i) the transfer in one or more
transactions of up to fifty percent (50%) of the interests, directly or indirectly, in the General
Partner`to a third party so long as the Key Executives referenced in Section 8.8 during the
periods described therein continue to control the day-to-day activities of the General Partner and
all material matters relating to the Partnership, (ii)the General Partner pledging, hypothecating
or otherwise encumbering up to fifty percent (50%).of its rights to distributions from the
Partnership so long as no such secured party is admitted to the Partnership except in accordance
with the provisions of this Article IX,or(iii)the transfer,directly or indirectly, of interests in the
General Partner so long as the General Partner remains controlled by or under common control
with Starwood Energy.Group Global,L.L.C. ("SEG"); and provided further, that the General
Partner may assign all or any portion of its Interest as a general partner to an Affiliate which is
controlled by or under common control with SEG without obtaining such consent.
(b) Except for transfers expressly permitted hereunder and subject to any
regulatory approval requirements, no transferee of the General Partner's Interest in the
Partnership shall be admitted to the Partnership as the General Partner without the prior written
consent of the Advisory Committee, which consent may be given or withheld by each member of
the Advisory Committee in the exercise of its sole discretion. Unless a transferee of the General
Partner's Interest in the Partnership is admitted as a General Partner under this Section 9.2(b), it
shall have none of the powers of a General Partner hereunder and shall have only the rights of an
assignee to distributions under the Revised Uniform Act. The General Partner,together with any
additional and successor General Partners admitted to the Partnership, shall at all times retain, in
aggregate,at least a 1%Interest in the Partnership.
(c) Upon the transfer of the entire Interest in the Partnership of the General
Partner and effective after the admission of its transferee as a General Partner, the transferring
General Partner shall be deemed to have withdrawn from the Partnership as a General Partner.
(d) Notwithstanding the foregoing to the contrary, any Person holding an
interest described in clause (i) or (iii) of Section 9.2(a) above may pledge, hypothecate or
otherwise encumber his direct or indirect rights to distributions from the General Partner so long
as the secured party shall not become a substituted limited partner or member of such entity upon
default unless such secured party is an Internal Permitted Transferee as defined under clause (i)
of the definition of Internal Permitted Transferee. In the event that any Key Executive transfers
or otherwise relinquishes his rights to distributions from the General Partner or any constituent
member of the General Partner to a Person other than an Internal Permitted Transferee, in an
amount which exceeds five percent (5%) of his total rights in distributions from such entity, the
General Partner shall notify each of the Partners in writing within ten(10)calendar days after the
end of the Fiscal Year in which such transferor other relinquishment occurred.
NEWYORK 577251704(2K) -54-
I,
Section 9.3. Transfer of Interest of Limited Partners. (a) Except as otherwise
provided in Sections 331 , 9.3
AbJ and 9.3 e , a Limited Partner may not transfer, directly or
indirectly, all or any portion of its interest in the Partnership without the prior written consent of
the General Partner, which consent may be given or withheld in the General Partner's sole but
good faith discretion and may include such terms and conditions as the General Partner shall
deem appropriate in its sole discretion (including,without limitation, those specified below).
Without limiting the foregoing (but subject to the other provisions hereof, including, without
limitation, Sections 9.3(f) and 9.3 , circumstances in which the General Partner will withhold
its consent include, without limitation, transfers (i) which could adversely affect the tax status,
treatment and/or calculation of taxable income of the Partnership, (or any partner thereof), or
thereafter result in, or cause, the imposition of a tax on the payment or receipt of any
distributions from the Partnership, (ii) to Persons who are (or who are Affiliates of any other
Person who is) under legal investigation for a securities law violation, a felony or matters
involving moral turpitude, (iii) to Persons who are (or who are Affiliates of any other Person
who is) subject to bankruptcy proceedings, (iv)to Persons who compete (or who are Affiliates of
any other Person who competes) with the Partnership or the General Partner for investments
similar to the Project Interests or which owns (or which is an Affiliate of any other Person which
owns) similar assets to that of the Partnership or the General Partner or an Affiliate of either of
them,or(v)to Persons currently subject to United States sanctions administered by the Office of
Foreign Assets Control of the United States Treasury Department, or Persons subject to similar
money laundering or counterterrorism laws of any jurisdiction, (vi)which would cause the assets
of the Partnership to be deemed Plan Assets or(vii) which would adversely affect the regulatory
status,authorizations or exemptions of an Additional Investment Vehicle.
(b) Notwithstanding the provisions of Section 93(a), but subject to the
limitations set forth in Sections9.3(a)(i)through LyW, 9.3 JqA and 9,4, each Limited Partner shall
be entitled, without the consent of the General Partner or any other Partner, to transfer, directly
or indirectly,all or any portion of his or its Interest to any Permitted Affiliate,Family Member or
Family Trust of such Partner; provided, however, that no such transfer shall be construed as
relieving the transferor (or any of its predecessors-in-interest) from its obligation to fund its
Capital Commitment and any other economic obligations set forth in this Agreement and such
transferor (and all of its predecessors-in-interest) shall, following all such transfers, remain
(jointly and severally) liable for the obligation to fund the entire Capital Commitment and any
other economic obligations set forth in this Agreement relating to the greatest portion of the
Limited Partner's Interest at any time held by such party.
(c) Notwithstanding anything contained herein to the contrary, the transferee
of a Limited Partner's Interest in the Partnership may be admitted to the Partnership as a
Substituted Limited Partner only upon the receipt of the prior written consent of the General
Partner, which consent may be given or withheld in the sole but good faith discretion of the
General Partner. Unless a transferee of a Limited Partner's Interest is admitted as a Substituted
Limited Partner under this Section 93(c), it shall have none of the powers of a Limited Partner
hereunder and shall only have such rights of an assignee under the Revised Uniform Act as are
consistent with the other terms and provisions of this Agreement. No transferee of a Limited
Partner's Interest shall become a Substituted Limited Partner unless such transfer shall be made
in compliance with Sections 9.3(a)and 21(b). If a transferee of a Limited Partner's Interest does
not become a Substituted Limited Partner under this Section 93(c), the transferor shall retain all
14EWYORK 5772517 04(2K) -��-
.non-economic rights of a Limited Partner, including, without limitation, the power to vote such
Limited Partner Interest on all matters coming before the Limited Partners for a vote.
(d) Upon the transfer,direct or indirect, of its entire Interest in the Partnership
and the admission of such Limited Partner's transferee(s) pursuant to Section 9.3(c) above, a
Limited Partner shall be deemed to have.withdrawn from the Partnership as a Limited Partner,.
but shall remain liable for its Capital Commitment and any other economic obligations set forth
in this Agreement,as set forth in Section 9.3(b)above unless the General Partner has determined,
in its sole discretion,that such Substituted Limited Partner has the requisite financial capacity so
that such continuing liability of the transferor Limited Partner is not necessary.
(e) Upon the death, disability, winding-up and termination (in the case of a
Limited Partner that is a partnership), dissolution and termination (in the case of a Limited
Partner that is a corporation), withdrawal in contravention of Section 9.9 or occurrence of an
Event of Bankruptcy of a Limited Partner (the "Withdrawing Limited Partner"), the
Withdrawing Limited Partner shall cease to be a Limited Partner of the Partnership and the
General Partner shall, subject to Section 9.3(b), have the right to treat such
suecessor(s)-in-interest as assignees of the Interest in the Partnership of the Withdrawing Limited
Partner, with only such rights of an assignee of a partnership interest under the Revised Uniform
Act as are consistent with the other terms and provisions of this Agreement and with no other
rights under this Agreement. Without limiting the generality of the foregoing, the
successor(s)-in-interest of the Withdrawing Limited Partner shall only have the rights to
distributions provided in Articles V and XI,unless otherwise waived by the General Partner in its
sole discretion. For purposes of this Section 93(e), if the Withdrawing Limited Partner's
Interest in the Partnership is held by more than one person (for purposes of this subparagraph,
the"Assignees"),the Assignees shall appoint one person with full authority to accept notices and
distributions with respect to such Interest in the Partnership on behalf of the Assignees and to
bind them with respect to all matters in connection with the Partnership or this Agreement.
(f) Notwithstanding any other provision of this Agreement, no transfer
(whether direct or indirect) by a Limited Partner of all or any portion of its Interest in the
Partnership will be effective (i.e., the purported 'transferor will continue to be treated as the
holder of such Interests and the purported transferee will not be treated as the holder of such
Interests) if the General Partner determines in its sole but good faith discretion that the proposed
transfer requires the approval of FERC and/or the approval of any state agency under the
applicable laws and regulations of such state, unless and until, as applicable, (i) FERC'and/or the
relevant state agency issues an order approving such transfer or(ii) the Limited Partner seeking
to transfer all or any portion of its Interests provides the General Partner an opinion of counsel
addressed to the Partnership (subject only to customary qualifications and assumptions) from a
law firm that both (A) is satisfactory to the General Partner in its sole but good faith discretion
and (B) maintains a nationally recognized energy regulatory practice concluding that no
regulatory approval is required for such transfer_ Notwithstanding the foregoing, if FERC or any
state agency subsequently determines that such approval is required, such transfer will not be
effective from the date of such determination by FERC or the state agency until such approval is
obtained.
NEWYOM 577253704(2K) - -56-
f
(g) Notwithstanding any other provision of this Agreement, no transfer
(whether direct or indirect) by a Limited Partner of all or any portion of its Interest in the
Partnership will be effective (i.e., the purported transferor will continue to be treated as the
holder of such Interests and the purported transferee will not be treated as the holder of such
Interests) if the General Partner determines in its sole but good faith discretion that, immediately
following such transfer, the Partnership would become a "holding, company", a "subsidiary
" ;
(iii) the transfer will not cause the Partnership to be treated as a
"publicly traded partnership" within the meaning of Section 7704 of the Code;
and
(iv) the transfer will not violate the registration requirements of the
Securities Act or of any applicable state securities laws,rules or regulations.
(c) the satisfaction of the General Partner that:
(i) the transfer will not violate any applicable Federal or state law or
the rules and regulations of any other governmental or other authority or agency
which is applicable to the business of the Partnership or such transfer;
(ii) -the transfer will not cause the Partnership to be an investment
.company required to be registered under the Investment Company Act of 1940,as
amended;and
(iii) if the transferor is a Defaulting Partner, then, as .a condition
concurrent to any such transfer, all such defaults in the making of Capital
Contributions or payment of other items required of such Defaulting Partner
under Article III hereof shall be cured.
Any consents or waivers from the General Partner permitted under this Section 9.4 shall be given
or denied in the sole but good faith discretion of the General Partner. The General,Partner shall
reflect transfers and admissions authorized under this Article IX (including the terms and
conditions imposed thereon by the General Partner) by preparing an amendment to this
Agreement, dated as of the date of such transfer. The form and content of all documentation
delivered to the General Partner pursuant to this Section 9.4 shall be subject to the approval of
the General Partner,which approval may be granted or withheld in the General Partner's sole but
good faith discretion.
Section 9.5. Consequences of Transfers Generally. (a)In the event of any
transfer or transfers permitted under this Article IX, the transferor (other than in the event the
transferee becomes a Substituted Limited Partner and the transferor is released pursuant to
Section 9.3(d)) and the Interest in the Partnership that is the subject of such transfer shall remain
subject to all terms and provisions of this Agreement and the transferee shall hold such Interest
subject to all unperformed obligations of the transferor Partner and shall agree in writing to the
foregoing if requested by the General Partner. Any successor or transferee of a Limited Partner
hereunder or any successor general partner shall be subject to and bound by all the provisions of
this Agreement as if originally a party to this Agreement.
(b) Any Partner making or offering to make an assignment,or transfer of all or.
any part of his or its Interest in the Partnership shall indemnify, defend and hold harmless the
Partnership and all other Partners from and against any losses, expenses, judgment, fines,
settlements or damages, suffered or incurred by the Partnership or any such other Partner arising
out of or resulting from (i)such transfer, assignment or offer, including, without limitation, any
actual or alleged misrepresentation, misstatement of fact's or omission to state facts made (or
omitted to be made) by such Partner in connection therewith, or(ii) any claims by the transferee
NEWYORK 5772537 v14(2K) -58-
i
of such Interest in the Partnership or any offerees of such Interest, in any case, in connection
with such transfer, assignment or offer, including, without limitation, costs, expenses and
attorneys' fees expended in the settlement or defense of any such claim, and shall advance such
expenses and attorneys' and accountants' fees incurred in defending such proceeding as incurred.
Notwithstanding the foregoing, no Limited Partner shall have any liability hereunder for actual
or alleged misrepresentations, misstatements of fact or omissions to state facts made (or omitted
to be made)by such Limited Partner in reliance on written information provided to such Limited
Partner by the General Partner. Nothing contained in this Section 9.5(b) shall be construed as
limiting the rights of the Limited Partners or eliminating the obligations of the General Partner,
in each case, as set forth elsewhere in this Agreement; provided, however, that the foregoing
indemnification shall not be valid as to any Partner who supplied the information which gave rise
to any alleged or actual misrepresentation, misstatement of facts or omission to state facts.
(c) Unless a transferee of a Limited Partner's Interest becomes a Substituted
Limited Partner, such transferee shall have no right to obtain or require any information or
account of Partnership transactions, or to inspect the Partnership's books, or to vote on
Partnership matters. Such a transfer shall merely entitle the transferee to receive the share of
distributions, income and losses to which the transferring Limited Partner otherwise would be
entitled. Each Limited Partner agrees that such Limited Partner will,upon request of the General
Partner, execute such certificates or other documents and perform such acts. as the General
Partner deems appropriate after a transfer of that Limited Partner's Interest (whether or not the
transferee becomes a Substituted Limited Partner)to preserve the limited liability of the Limited
Partners under the laws of the jurisdictions.in which the Partnership is doing business. Each
Limited Partner further agrees that such Limited Partner will, prior to the time the General
Partner consents to a transfer of an Interest by that Limited Partner,pay all reasonable expenses,
including, without limitation, attorneys' fees and the cost of the preparation, filing and
publishing of any amendment to the Certificate, incurred by the Partnership in connection with
such transfer.
(d) The transfer of a Limited Partner's Interest and the admission of a
Substituted Limited Partner shall not, in and of itself,be cause for dissolution of the Partnership.
Section 9.6. Removal of General Partner for Cause. (a) In the event that
Cause shall exist with respect to the General Partner,either the General Partner or the Advisory
Committee shall promptly provide the Partners with written notice of such event (with any
member of the Advisory Committee having the right to call for a meeting of the Advisory
Committee to consider the issuance by the Advisory Committee of such notice). Upon receipt of
such notice, Two-Thirds in Interest of the Non-Defaulting Limited Partners (excluding for this
purpose, any Limited Partners who are Affiliates , managers, members or employees of the
General Partner or otherwise hold a direct or indirect interest in the General Partner) may by
written notice either (i) remove the General Partner and appoint a new General Partner or (ii)
dissolve the Partnership in accordance with the provisions of Section 10.2; provided, however,
such election shall not be effective for any purpose unless concurrently or as a condition
precedent thereto, Two-Thirds-in-Interest of the Non-Defaulting Limited Partners of the
Partnership and the Other SEI-1 Partnerships (as defined thereunder, but for purposes of this
proviso calculated on an aggregate basis and not on an individual partnership basis) also shall
have elected in writing to so remove their applicable general partner or dissolve their applicable
NEWYORK 5772377 v14(2h) -59-
partnership. Such removal for Cause of the General Partner shall be effective upon delivery of
written notice of such action to the Partners and the admission of the new General Partner.
Except as set forth in this Section 9.6, the removal of the General Partner shall in no way impair
any rights of such General Partner attributable to the period prior to the effective date of such
removal.
(b) Upon removal for Cause, the interest of the General Partner in the
Partnership shall be converted, without any further action being necessary to effect such
conversion, into a Limited Partner Interest having the same rights to distributions and.the same
allocations of Net Income and Net Losses that it had as General Partner; rop vided that the
removed General Partner's right to receive distributions, if any,pursuant to Section 5.4(c)(i) and
Section 5.4(d)(ii)hereof shall be thereafter reduced by fifty percent(50%); and rop vided, further,
that in the event that the losses, costs, damages or expenses incurred by the other Partners as a
result of such breach or gross negligence exceed the value of the portion of the distributions
forfeited hereunder by the General Partner(which shall first offset such losses,costs,..damages or
expenses), such converted Interest shall be subject to any obligations which the removed General
Partner may have by reason of any such excess losses, costs, damages or expenses. In the event
of the removal of the General Partner pursuant to this Section 9.6,the removed General Partner,
and any Affiliate of the General Partner, shall not receive an Asset Management Fee for any
period accruing subsequent to such removal, and such Asset Management Fee for such
subsequent period shall be payable to the new General Partner.
(c) The new General Partner shall have such rights to distributions and
allocations of Net Income and Net Losses as may be conveyed to it voluntarily by any Partner,
provided there is no reduction (other than as a result of the Asset Management Fee)or dilution to
the removed General Partner's rights to distributions, Net Income or Net Losses. The new
General Partner shall operate the Partnership solely for the purpose of conserving and disposing
of its portfolio of Project Interests existing as of the date of admission of such successor General
Partner and no additional Project Interests unrelated to its existing portfolio shall thereafter be
made or acquired through the Partnership unless as to a particular Project Interest, the
Partnership is then subject to a binding acquisition agreement and would lose an earnest money
deposit in excess of$1,000,000. Notwithstanding anything to the contrary contained herein, any
additional compensation payable to the new General Partner and the services provided by the
new General Partner to the Partnership shall, in each case, comply with the criteria set forth in
Section 8.6(a).
(d) The removed General Partner shall (whether removed for Cause or
without Cause) be free of any obligations and liabilities in respect of any events and
circumstances arising after such removal. The removed General Partner, even though removed
pursuant to this Section 9.6: or Section 9.7, shall remain entitled to exculpation and
indemnification, in its capacity as a General Partner, from the Partnership pursuant to Sections
8.11 and 8,15 (subject to the limitations set forth in each such section)with respect to any matter
arising prior to its removal and shall have no liability to the Partnership as a general partner in
respect of any matter arising after its removal as General Partner. The removed General Partner
(whether removed for Cause or without Cause) shall have the right to require the Partnership and
any Controlled Affiliate to conduct its business under a name not using the term "Starwood" or
any variation thereof. Upon its appointment, the new General Partner shall promptly amend the
NEWYORK 5772537 04(2K) -60-
Partnership's Certificate and other state filings to reflect the change of the General Partner and, if
required, to reflect the change of the Partnership's name. The removed General Partner shall
have all of the rights(including all voting rights)of a Limited Partner tinder this Agreement.
(e) From and after the date of the removal of the General Partner and the
appointment of a new General Partner pursuant to the provisions of Section 9.6(a) or Section
9.7 a , the new General Partner shall, by written notice to the Limited Partners in accordance
with Section 12.1, request each such Limited Partner to propose an individual to serve as the
representative of the Partnership on any governing board or committee of any joint investment
entity described in Section 8.10(d) in which the Partnership is invested. The new General
Partner shall appoint the individual or individuals proposed by the Limited Partners to serve on
such governing board or committee; provided that if more than one individual is proposed by the
Limited Partners to serve on any one governing board or committee, each individual so
appointed by the new General Partner shall exercise the portion of the vote of the Partnership on
such committee that corresponds to the ratio of the Participation Percentage of the Limited
Partner or Limited Partners that proposed such individual to the aggregate Participation
Percentages of all Limited Partners. A Limited Partner may, by notice to the new General
Partner at any time; request that an individual proposed by such Limited Partner to serve on a
governing board or committee of a joint investment entity be removed and a different individual
be appointed in his or her stead. The new General Partner shall promptly, upon receipt by notice
of such request, implement such request.
(f) The new General Partner shall operate the Partnership solely for the
purpose of conserving and disposing of its portfolio of Project Interests existing as of the date of
admission of such successor General Partner and no additional investments in Project Interests
unrelated to its existing portfolio shall thereafter be made or acquired through the Partnership
..unless as to a particular Project Interest, the Partnership is then subject to a binding acquisition
agreement and would forfeit an earnest money deposit in excess of$1,000,000 if the Partnership
were to fail to perform under such agreement. Notwithstanding anything to the contrary
contained herein, any additional compensation payable to the new General Partner and the
services provided by the new General Partner to the Partnership shall, in each case, comply with
the criteria set forth in Section 8.6(a).
Section 9.7. Removal of General Partner Without Cause. (a) At any time
prior to the fifth anniversary of the Final Closing, the Non-Defaulting Limited Partners holding
seventy-five percent (75%) of the Participation Percentages(excluding, for this purpose, any
Limited Partners who are Affiliates, managers, members or employees of the General Partner or
otherwise hold a direct or indirect interest in the General Partner) may, by written notice to the
General Partner, elect to remove the General Partner without Cause; provided, however, such
notice and election shall not be effective or deemed given hereunder for any purpose unless
simultaneously and as a condition precedent thereto, Non-Defaulting Limited Partners holding
seventy-five percent(75%) of the Participation Percentages in the Partnership and the other SEl-
I Partnerships (as defined thereunder, but for purposes of this proviso calculated on an aggregate
basis and not on an individual partnership basis) also shall have so elected in writing to remove
their applicable general partner without Cause. At any time after the fifth anniversary of the
Final Closing, Two-Thirds in Interest of the Non-Defaulting Limited Partners may so elect to
remove the General Partner; provided,however, such notice and election shall not be effective or
NEW YORK 5772537 M UK) -61-
be deemed given hereunder for any purpose unless simultaneously and as a condition precedent
thereto,Two-Thirds in Interest of the Non-Defaulting Limited Partners in the Partnership and the
other SEI-I Partnerships(as defined thereunder, but for purposes of this proviso calculated on an
aggregate basis and not on an individual partnership basis)also shall have so elected in writing to
remove their applicable general partner. Such removal of the General Partner shall be effective
upon delivery of written notice of such action to the Partners and the appointment of the new
General Partner.
(b) Upon removal without Cause, the Interest of the General Partner in the
Partnership shall be converted, without any further action being necessary to effect such
conversion, into a Limited Partner Interest having the same rights to distributions and the same
allocations of Net Income and Net Losses that it had as General Partner. In addition to the
compensation described herein, the removed General Partner shall be entitled to receive a
payment upon such removal equal to the Asset Management Fee which the removed General
Partner would have received for.the one (1) year period subsequent to the effective date of such
removal. Furthermore, upon removal without Cause, each of the removed General Partner and
the Advisory Committee shall select an independent, qualified, nationally recognized appraiser
to determine the fair market value of the General Partner's Interest in the Partnership, including
all of its rights to distributions. Such appraisers shall jointly select a third independent,qualified
nationally recognized appraiser(the "Third Appraiser") and submit their respective appraisals of
the fair market value of the General Partner's Interest to the Third Appraiser. The Third
Appraiser shall determine the fair market value of the General Partner's Interest by selecting one
of the two appraisals. In determining the fair market value of the General Partner's Interest as of
the effective date of removal, the appraisers shall take into account all rights to distributions and
allocations of Net Income and Net Losses to which the General Partner would be entitled under
this Agreement if all Project Interests of the Partnership were sold as of the effective date of
removal for fair market value and the proceeds were distributed pursuant to this Agreement. The
fees and expenses of all of the appraisers retained pursuant to this Section 9.7 shall be borne by
the Partnership.
(c) Within thirty (30) days of receipt of the Third Appraiser's determination
of the fair market value of the removed General Partner's Interest, the removed General Partner
shall elect to either(i) require the Partnership to redeem for cash the removed General Partner's
Interest for such fair market value'as determined by the Third Appraiser or(ii) retain its Interest
as a.Limited Partner in accordance with the first two sentences of clause (b) of this Section. In
the event that the removed General Partner elects to receive a cash payment,the Partnership shall
have the right to elect, in lieu of a lump sum payment, to defer the payment required to be made
to the General Partner under this Section 9.7 for up to twelve(12)months from the date such fair
market value is determined, in which case such payment shall accrue interest at a rate equal to
the higher of(i) the interest rate used to calculate the Preferred Return and (ii) the Prime Rate
plus two percent (2%), but provided, however, that in no event shall such interest.exceed the
maximum interest that may be charged on such amounts under applicable usury or other law. No
distributions shall be made to the Limited Partners until such payment has been made in full to
the General Partner.
(d) The new General Partner shall have such rights to distributions and
allocations of Net Income and Net Losses as may be conveyed to it voluntarily by any Partner,
NEWYOAK 5772537 04(2K) -62-
I,
provided there is no reduction or dilution to the removed General Partner's distributions, Net
Income or Net Losses. The new General Partner shall operate the Partnership solely for the
purpose of conserving and disposing of its portfolio of Project Interests existing as of the date of
admission of such successor General Partner and no additional investments in Project Interests
unrelated to its existing portfolio shall thereafter be made or acquired through the Partnership
unless as to a particular Project Interest, the Partnership is then subject to a binding acquisition
agreement and would forfeit an earnest money deposit in excess of$1,000,000 if the Partnership
were to fail to perform under such agreement. Notwithstanding anything to the contrary
contained herein, any, additional compensation payable to the new General Partner and the
services provided by the new General Partner to the Partnership shall,in each case, comply with
the criteria set forth in Section 8.6(a).
Section 9.8. Additional Filings. Upon the admission of a Substituted Limited
Partner under Section 9.3,the General Partner shall cause to be executed, filed and recorded with
the appropriate governmental agencies such documents (including amendments to this
Agreement)as are required to accomplish such substitution.
Section 9.9.°Withdrawal of.Partners. Without limitation upon, and subject to
the provisions of,Article IX,no Partner shall at any time retire or withdraw from the Partnership.
Any Partner retiring or withdrawing in contravention of this Section 9.9 shall indemnify, defend
and hold harmless the Partnership and all other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership or any other
Partner arising out of or resulting from such retirement or withdrawal. No transfer of all or a
portion of a Partner's Interest in accordance with Article IX shall constitute a retirement or
withdrawal within the meaning of this Section 9.9.
ARTICLE X
DURATION OF PARTNERSHIP
Section 10.1. Term of Partnership. The Partnership shall continue until the.
date that is ten (10) years after the Final Closing unless its term is extended as provided in
Section 10.3, or unless it is sooner dissolved as provided in Section 10.2 or by operation of law.
Section 10.2.. Dissolution of Partnership. The Partnership shall be dissolved
upon the first to occur of the following:
(a) the Dissolution Date;
(b) provided no amounts are then outstanding under the Working Capital
Line, the election to dissolve the Partnership by(i)Limited Partners, holding seventy-five
percent (75%) of the Participation Percentages, at any time prior to the fifth anniversary
of the Final Closing or (ii) Two-Thirds-in-Interest of the Non-Defaulting Limited
Partners at any time after the fifth anniversary of the Final Closing (in either case,
excluding for such purpose,any Limited Partners who are Affiliates,managers, members
or employees of the General Partner or otherwise hold a direct or indirect interest in the
General Partner); provided, however; in each case, such election shall not be effective or
NEWYORK m2537 04(2K) -63-
l
be deemed given hereunder for any purpose unless simultaneously and as a condition
precedent thereto, Non-Defaulting Limited Partners holding seventy-five percent (75%)
of the Participation Percentages or Two-Thirds-in-Interest of the Non-Defaulting Limited
Partners, as applicable, in the Partnership and the Other SEI-I Partnerships (as defined
thereunder, but for purposes of this proviso calculated on an aggregate basis and not on
an individual partnership basis) also shall have so elected in writing to dissolve their
applicable partnership;
(c) at any time there are no Limited Partners of the Partnership, unless the
business of the Partnership is continued in accordance with this Agreement or the
Revised Uniform Act;
(d) any event that results in the General Partner ceasing.to be a general partner
of the Partnership under the Revised Uniform Act,provided that the Partnership shall not
be dissolved and required to be wound up in connection with any such event if(A)at the
time of the occurrence of such event there is at least one remaining general partner of the
Partnership who is hereby authorized to and does carry on the business of the Partnership,
or (B) within 90 days after the occurrence of such event, Non-Defaulting Limited
Partners holding seventy-five percent (75%) of the Participation Percentages agree in
writing or vote to continue the business of the Partnership and to the appointment,
effective as of the date of such event, if required, of one or more additional general
partners of the Partnership;
(e) the entry of a decree of judicial dissolution under Section 17-802 of the
Revised Uniform Act;
(f) a good faith determination by the General Partner that dissolution of the
Partnership is necessary or desirable (i) as a result of a Plan Asset Event or (ii)to avoid
any material adverse consequences to the Partnership or the General Partner as a result of
any law applicable to a Regulated Investor;
(g) provided no amounts are then outstanding under the Working Capital
Line, an election to dissolve the Partnership by the Limited Partners (and the other
applicable Limited Partners of the Other SEI-I Partnerships)pursuant to Section 8.8(b)or
9.6a ii ;or
(h) the occurrence of any event that would make it unlawful for the business
of the Partnership to be continued.
Section 10.3. Extension of Term. It is contemplated by the Partners that the
term of the Partnership shall terminate on the date that is ten (10) years after the Final Closing
and that the Partnership shall be considered to be dissolved on such date without any further
action being required by any of the Partners, unless sooner dissolved.pursuant to Section 10.2 or
by operation of law. Notwithstanding the foregoing, the term of the Partnership may be
extended, at the discretion of the General Partner, for one additional one(1)year period. At the
end of this one year period, the General Partner, subject to the approval of the Advisory
Committee,may extend the term of the Partnership for one additional one(1)year period.
NEWY0[U<5772537 v14(2K) -64- -
ARTICLE XI
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1. Appointment of Liquidator. (a) In the event of the dissolution of
the Partnership for any reason, the General Partner, or, if there is no General Partner, then a
liquidating trustee appointed by a Majority in Interest of the Non-Defaulting Limited Partners
(the General Partner or such person so designated hereinafter referred to as the "Liquidator"),
shall commence to wind up the affairs of the Partnership-and to liquidate the Partnership's assets.
The Partners shall continue to share all income, losses and distributions during the period of
liquidation in accordance with Articles IV and V. The Liquidator shall, subject to the Revised
Uniform Act, have full right and unlimited discretion to determine the time,manner and terms of
any sale or sales of Partnership property pursuant to such liquidation, giving due regard to the
activity and condition of the relevant market and general financial and economic conditions.
Subject to the Revised Uniform Act,the Partnership's Project Interests shall be disposed as soon
as practicable, but in no event later than eighteen(18)months from the date of dissolution,unless
a Majority in Interest of the Non-Defaulting Limited Partners consent to an extension of such
liquidation period, and the Partnership's activities shall be limited to those reasonably necessary
to and consistent with that purpose, so that the liquidation period is not unreasonably prolonged
or devoted to the operation of the Partnership's business on a permanent continuing basis.
(b) The Liquidator shall have all of the rights and powers with respect to the
assets and liabilities of the Partnership in connection with the liquidation and termination of the
Partnership that the General Partner would have with respect to the assets and liabilities of the
Partnership during the term of the Partnership, and the Liquidator is hereby expressly authorized
and empowered to execute any and all documents necessary or desirable to effectuate the
liquidation and termination of the Partnership and the transfer of any assets. The Liquidator shall
at all times wind up the affairs of the Partnership and liquidate the Partnership's assets in a
manner in which the Partnership and its assets will not be deemed to be "plan assets" for
purposes of ERISA and the Plan Asset Regulations, except that in the event of a dissolution
pursuant to Section 10.2(fl, the Liquidator need only make reasonable efforts to avoid the
Partnership's assets being"plan assets under the Plan Asset Regulations.
(c) Notwithstanding the foregoing, a Liquidator which is not the General
Partner or a Limited Partner shall not be deemed a Partner in this Partnership and shall not have
any of the economic interests in the Partnership of a Partner; and such Liquidator shall be
compensated for its services to the Partnership by the Partnership.
Section 11.2. Distribution in Liquidation. The Liquidator shall use all
reasonable efforts to wind up the affairs of the Partnership and sell the assets of the Partnership
and distribute cash to the Partners as soon as practicable after the date of dissolution of the
Partnership. The Liquidator may distribute cash, Marketable Securities or interests (other than
interests having unlimited liability) that are readily exchangeable for or convertible into
Marketable Securities; provided, however, that in no event shall any Benefit Plan Investor (or
plan sponsor of a Benefit Plan Investor) receive in-kind distributions to the extent that such
distributions or the possession of such securities or interests would violate ERI.SA, as applicable
(and, in order to give effect to this proviso, the Liquidator shall, to the extent necessary or
WA'YORK 5772537 v14(2K) -65-
reasonably appropriate, be relieved from any obligation that would otherwise exist to cause in-
kind distributions to be made in a strictly proportionate manner among the Partners), and
provided further,that the Liquidator shall deliver at least ten(10)days prior written notice to the
Limited Partners of its intention to make in-kind distributions with a reasonable description
thereof. The assets of the Partnership shall be applied in the following order of priority (to the
fullest extent permitted by applicable law):
(a) first, to creditors of the Partnership, including Partners who are creditors,
to the extent otherwise permitted by law, in satisfaction of the liabilities of the
Partnership (whether by payment or the making of reasonable provision for payment
thereof);
(b) second, to the Partners for loans', if any, made by them to the Partnership
and to the General Partner for any expenses of the Partnership paid by it;to the extent it
is entitled to reimbursement; and
(c) third, after all items of Partnership income, gain, credit, loss, or deduction
are credited or debited to the Capital Accounts of the Partners in accordance with Article
IV hereof,all remaining Partnership assets shall then be distributed among the Partners in
accordance with Section 5.4 by the end of the taxable year of the liquidation (or,if later,
within 90 days after the date of such liquidation).
Section 11.3. Final Reports. Within a reasonable time following the completion
of the liquidation of the Partnership's properties, but in any event within one (1) year from such
date, the Liquidator shall supply to each of the Partners a statement audited by the Accountants
which shall set forth the assets and liabilities of the Partnership as of the date of complete
liquidation and each Partner's.portion of distributions pursuant to Section 11.2. The Liquidator
shall provide a final statement to each of the Partners confirming that the distributions to the
Limited Partners, on the one hand,and to the General Partner,on the other hand, during the term
of the Partnership were made in accordance with Article V hereof, or, if not, the reconciliation
which would be required so that such confirmation could be made. If so required, the Partners
acknowledge and understand that the Partnership may make adjustments to the distributions in
accordance with such reconciliation, and the Partners agree to contribute capital to the
Partnership to the extent necessary to enable the Partnership to make such distribution
adjustments; provided, that in no event shall any Partner be required to contribute capital under
this Section 11.3 in excess of the total distributions received by such Partner during the term of
the Partnership.
Section 11.4: Rigbts of Limited Partners. Each Limited Partner shall look
solely to the assets of the Partnership for all distributions with respect to the Partnership and such
Partner's Capital Contribution (including return thereof), and such Partner's share of profits or
losses thereof, and shall have no recourse therefor (upon dissolution or otherwise) against the
General Partner or any other Partner. No Partner shall have any right to demand or receive
property other than cash upon dissolution and termination of the Partnership: Notwithstanding
anything to the contrary contained in this Agreement,the Partnership,and the General Partner on
behalf of the Partnership, shall not be required to make a distribution to any Partner on account
-66-
NEWYORK 577253704(2K) -
of its interest in the Partnership if such distribution would violate the Revised Uniform Act or
other applicable law.
Section 11.5. Deficit Restoration. Notwithstanding any other provision of this
Agreement to the contrary,upon liquidation of a Partner's Interest(whether or not in connection
with a liquidation of the Partnership),no Partner shall have any liability to restore any deficit in
any deemed or hypothetical capital account. In addition,no allocation to any Partner of any loss,
whether. attributable to depreciation or otherwise, shall create any asset of or obligation to the
Partnership, even if such allocation reduces, or creates or increases a deficit in such Partner's
deemed or hypothetical capital account; it is also the intent of the Partners that no Partner shall
be obligated to pay any such amount to or for the account of the Partnership or any creditor of
the Partnership. Except for the Working Capital Line Lender, the obligations of the Partners to
make contributions pursuant to any of Article III or Sections 5.3,5.5 or 11.3 are for the exclusive
benefit of the Partnership and not of any creditor of the Partnership, and no such creditor is
intended as a third-party beneficiary of this Agreement, nor shall any such creditor have any
rights hereunder, including, but without limitation, the right to enforce any capital contribution
obligation of the Partners.
Section 11.6. Termination. The Partnership shall terminate when (i) all
property owned by the Partnership shall have been disposed of and the assets shall have been
distributed as provided in Section 11.2, and (ii)the Liquidator shall have executed and cause to
be filed a Certificate of Cancellation of the Certificate of Limited Partnership of the Partnership.
ARTICLE XII
NOTIC> S AND VOTING
Section 12.1. Notices. All notices and demands required or permitted under this
Agreement shall be in writing and,in order to be legally effective, shall be deemed to have been
duly given when delivered by overnight courier or personally, or five days after being sent by
registered or certified mail, postage and certification fees prepaid, to the Partners at their
addresses as shown from time to time on the records of the Partnership. Any Partner may
specify a different address by notifying the General Partner in writing of such different address.
Section 12.2. Voting; Consents. Any action requiring the affirmative vote,
consent or approval of Limited Partners under this Agreement,unless otherwise specified herein,
may be taken by vote at a meeting or, in lieu thereof, by written consent of Non-Defaulting
Limited Partners holding, in the aggregate, in excess of fifty percent (50%) of the Participation
Percentages of all Limited Partners, which vote by such Limited Partners shall be binding on all
Limited Partners. Except as otherwise expressly set forth herein, in the event that the Limited
Partners are required to consent in writing to any action or matter under this Agreement and a
Limited Partner shall fail to deliver such written consent or notice of refusal to consent to the
Partnership or the General Partner within twenty (20) Business Days of receipt of a notice
requesting such consent, then such Limited Partner shall be deemed to have consented to such
action or matter. Such notice requesting consent of the Limited Partners shall refer to this
Section 12.2 and state that the failure by a Limited Partner to respond to such request shall be
deemed to be a consent to the action or matter set forth in the notice. For purposes of this
NEWYORK 5772537x14 aKi -67-
Agreement, in the event and to the extent that the General Partner or an Affiliate of the General
Partner holds any Interest as a Limited Partner, such Interest shall be excluded from and not be
permitted to vote on or consent to any action or matter coming before the Limited Partners for
their approval or consent.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT AND POWER OF ATTORNEY
Section 13.1. Approval of Amendments. (a) Except as otherwise provided
herein; no amendments may be made to this Agreement (including, without limitation, Section
8.10)without the approval or written consent of the General Partner and Non-Defaulting Limited
Partners holding, in the aggregate, in excess of fifty percent (50%) of the Participation
Percentages of all Non-Defaulting Limited Partners; provided, however, no such amendment
shall increase the liability or-the Capital Commitment of any Limited Partner or change the rights
and interests of a Limited Partner to receive'distributions under Section 5.4 without the approval
of such Limited Partner. The General Partner shall give written notice to all Partners promptly
after any such amendment has become effective.
(b) Notwithstanding the foregoing, the General Partner shall have the right to
unilaterally (i)amend this Agreement to make changes of a ministerial nature which do not
materially or adversely affect the rights of the Limited Partners, (ii)delete or add any provision
of this Agreement required to be so deleted or added by a state securities commission or similar
agency, which addition or deletion is deemed by such commission or agency to be for the benefit
or protection of the Limited Partners, (iii)amend Appendix A as required in connection with the
Capital Contributions by Limited Partners or admission of new Limited Partners in accordance
with this Agreement, (iv)amend the provisions of this Agreement relating to the allocations of
profits. or losses or items thereof. (including, without limitation, nontaxable receipts or
nondeductible expenditures) or credits among the Partners if the Partnership is advised at any
time by the Partnership's independent certified public accountants or legal counsel that in their
opinion it is likely that such allocations would not be respected for Federal income tax purposes,
due, among other things, to promulgation of Treasury Regulations or other developments in the
law (including, without limitation,clarification of Treasury Regulations under Code Section
704), provided that such amendment does not materially and adversely affect the rights of the
Limited Partners, (v) amend this Agreement to accommodate an Opt-Out Partner in accordance
with Section 3.8(c), (vi) amend this Agreement to take such actions contemplated in Section
8.17 e or avoid any material adverse consequences to the Partnership or the General Partner as a
result. of any ,change in law or interpretation of law applicable to a Regulated Investor,
(vii)amend this Agreement to accommodate the regulatory requirements of Limited Partners,
provided that the ownership interests of the other Limited Partners are not affected, (viii)amend
this Agreement to impose additional limitations on financings that would otherwise be permitted
i pursuant to Section 8.19, provided that no such amendment pursuant to this clause (viii) shall
operate to increase the obligations of any Partner, and (ix) amend this Agreement to provide for
additional approval rights for the Advisory Committee. The General Partner shall give written
notice to all Partners promptly after any amendment made pursuant to this Section 13.1(b)'has
become effective.
NEWYORK 577?57704(2K) - -68-
i
(c) Notwithstanding the provisions of this Agreement, including (without
limitation) Section 13.1, or of any Subscription Agreement, it is hereby acknowledged and
agreed that the General Partner on its own behalf or on behalf of the Partnership without the
approval of any Limited Partner or any other Person may enter into a side letter or similar
agreement to or with a Limited Partner which has the effect of establishing rights under, or
altering or supplementing the terms hereof or of any Subscription Agreement, provided such
letter or similar agreement does not impose additional obligations or liabilities on any other
Limited Partner not party to such side letter or similar agreement. Except as set forth in the
preceding sentence, the parties hereto agree that any terms contained in a side letter or similar
agreement to or with a Limited Partner shall govern with respect to such Limited Partner
notwithstanding the provisions of this Agreement or of any Subscription Agreement. .
(d) Without limitation of the foregoing and notwithstanding anything to the
contrary set forth in this Agreement, the General Partner may admit to the Partnership or any
Other SEI-I Partnership one or more business associates or other "friends and family" of
Starwood Energy Group Global, L.L.C. or any of its Affiliates ("F&F Investors"), on economic
terms different from those applicable to the other Limited Partners (including,without limitation,
changes to any F&F Investor's pro rata portion of distributions otherwise payable to the General
Partner pursuant to Section 5.4(c)(oor Section 5.4(d)(ii) and fees otherwise payable to the
Manager pursuant to Section-8.13); provided, that the aggregate,Capital Commitments of the
F&F Investors shall not exceed five percent (5%) of the aggregate Capital Commitments of the
Limited Partners to the SEI-I Partnerships.
Section 13.2. Amendment of Certificate. In the event this Agreement shall be
amended pursuant to Section 13.1,the General Partner shall amend the Certificate to reflect such
change if it deems such amendment of the Certificate to be necessary or appropriate.
Section 13.3. Power of Attorney. Each Limited Partner hereby irrevocably
constitutes and appoints the General Partner(and the Liquidator) as its true and lawful attorney-
in-fact, with full power of substitution, in its name, place and stead to make, execute, sign,
acknowledge (including swearing to), record and file, on behalf of it and on behalf of the
Partnership,the following:
(a) a Certificate of Limited Partnership, a Certificate of Doing Business
Under an Assumed Name, and any other certificates or instruments which may be
required to be filed by the Partnership or any of the Partners under the laws of the State of
Delaware and any other jurisdiction whose laws may be applicable;
(b) a certificate of cancellation of the Partnership and, subject to the last'
sentence of this Section 13.3, such other instruments as may be deemed necessary under
applicable law by the holder of such power upon the termination of the Partnership;
(c) any and all amendments of the instruments described in subparagraphs (a)
and (b) hereof, provided such amendments are either required by law to be filed or have
been authorized by the particular Limited Partner or Partners; and
NEWYORK 5772537 vJ4(7K) -69-
f. .
(d) any and all documents described in Sections 3.3(a), 1.3 Lb) and 551;
provided that such documents are entered into in accordance with such provisions.
The foregoing grant of authority:
(1) shall survive the delivery of an assignment by a Limited Partner of
the whole or any portion of its Interest and any assignee of a Limited Partner does
hereby constitute and appoint the aforesaid holders his attorney in the same
manner and force and for the same purposes as does the assignor;
(ii) is a special power of attorney coupled with an interest, is
irrevocable and shall survive the death or incapacity of the Limited Partner
granting the power;and
(iii) may be exercised by the holder on behalf of each Limited Partner
by a facsimile signature or by listing all of the Limited Partners executing any
instrument with a single signature as attorney-in-fact for all of them.
The powers conferred on the General Partner pursuant to this Section 13.3' shall be exercised
only to the extent that such action would be required to be taken by the Limited Partner, as a
Limited Partner of the Partnership,under applicable law.
ARTICLE XIV
MISCELLANEOUS
Section 14.1. Entire Agreement. This Agreement (including the Appendices
hereto) supersedes any prior agreement or understandings among the Partners with respect to the
subject matter hereof and shall not amend, modify, succeed or in any way affect any other
agreement or understanding among the parties hereto that are not related to the subject matter
hereof, and it may not be modified or amended in any manner other than as set forth herein.
Section 14.2. Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the law of the State of
Delaware without giving effect to principles of conflicts of laws.
Section 14.3. Effect. Except as herein otherwise specifically provided, this
Agreement shall be binding upon and inure to the benefit of the parties and their legal
representatives,successors and assigns.
Section 14.4. Pronouns and Number. Wherever from the context.it appears
appropriate, each term stated in either the singular or the plural shall include the singular and the
plural, and pronouns stated in either the masculine, feminine or neuter shall include the
masculine,feminine and neuter.
Section 14.5. Captions. Captions contained in this Agreement are inserted only
as a matter of convenience and in no way. define, limit or extend the scope or intent of this
Agreement or any provision hereof.
NEWYORK 5772537v14(2K) -70-
Section 14.6. Partial Enforceability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held invalid, the remainder
of this Agreement,or the application of such provision to persons or circumstances other than
those to which it is held invalid, shall not be affected thereby.
Section 14.7. Counterparts. This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the affixing of the
signatures of each of the Partners to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.
Section 14.8. Representations, Warranties and Covenants. (a) Securities
Representations and Warranties. Each of the Limited Partners represents and warrants for the
benefit of the other Partners and the Partnership that, as of the date of the execution and delivery
of this Agreement and as of the date of admission of such Limited Partner to the Partnership:
(i)such Limited Partner, either alone or together with a purchaser representative(if any),has the
requisite knowledge and experience in investment and business matters to be capable of
evaluating the merits and risks of an investment in Interests, and such Limited Partner and its
counsel have reviewed all documents and inquired into all matters concerning an investment in
Interests and the investment by the Partnership,directly or indirectly, in the Project Interests, and
had all questions answered, which they desired to review and question for the purpose of making
a decision to invest; (ii) such Limited Partner(a) is an employee benefit plan within the meaning
of ERISA, for which the investment decision is made by a plan fiduciary, as defined in section
3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or
registered investment adviser, or the employee benefit plan has total assets in excess of
$5,000,000 or, such plan is a self-directed plan, with investment decisions made solely by
persons that are accredited investors, (b) is a corporation or partnership not formed for the
specific purpose of acquiring the Limited Partner Interests with total assets in excess of
$5,000;000, (c)is an individual whose net worth (or-joint net worth with such individual's
spouse) exceeds $1 million, (d) is an entity in which all of the equity owners are "accredited
investors" as such term is defined in Regulation D under the Securities Act, (e)is a director,
executive officer or partner of the Partnership or of the General Partner, or a director, executive
officer, or partner of the general partner of the General Partner, or(f)is a"qualified purchaser"
within the meaning of the Investment Company Act, by virtue of the fact that it is (A)a natural
person who owns not less than $5,000,000 in investments (as such term is defined under
Rule 2a51-1 promulgated under the Investment Company Act); (B)either(x)a person, acting for
its own account or the accounts of other.qualified purchasers, who in the aggregate owns and
invests on a discretionary basis not less than $25,000,000 in investments or (y)a qualified
institutional buyer (as defined in paragraph(a)of Rule 144A promulgated under the Securities
Act) meeting the requirements of Rule 2a51-1(g) promulgated under the Investment Company
Act; (C)a company that owns not less than $5,000,000 in investments that is owned directly or
indirectly by or for two (2)' or more natural persons who are related as siblings or spouse
(including former spouses), or direct lineal descendants by birth, adoption, spouses of such
persons,the estates of such persons, or foundations, charitable organizations or trusts established
by or for the benefit of such persons; (D)a trust not covered by clause(C) above that was not
formed for the purpose of acquiring the securities offered,as to which the trustee or other person
authorized to make decisions with respect to the trust, and each settlor or other person who has
NEWYORK 5772577 v14(2K) -71-
contributed assets to the trust is a person described in clauses(A), (B) or (C) above; or (E)is a
company all of the securities of which are beneficially owned by "qualified purchasers';
(iii)such Limited Partner(including,for this purpose,in the case of a Benefit Plan Investor,each
trust which is an Affiliate of such a Benefit Plan Investor) is acquiring its Interest for its own
account for investment purposes and not with a view to the distribution thereof; (iv)such
Limited Partner understands that the Limited Partner Interests are not being registered under the
Securities Act of 1933,as amended,or the securities or similar laws of any,state,and are offered
in reliance on the exemptions therefrom and in reliance on the representations and warranties
contained herein; (v)such Limited Partner recognizes that the Partnership is a speculative
venture involving a high degree of financial risk and can bear the economic risk of losing its
entire investment in Interests; (vi) such Limited Partner understands that the transferability of its
Interest in the Partnership is restricted pursuant to the provisions of this Agreement and that such
Limited Partner cannot expect to be able to liquidate all or any portion of its Interest readily in
the case of emergency and can afford to hold the Interests indefinitely; (vii)such Limited Partner
(including,for this purpose, in the case of a Benefit Plan Investor,each trust which is an Affiliate
of such a Benefit Plan Investor) is the sole party in interest in its interest and, as such, is vested
with all legal and equitable rights in such Interest; and (viii)such Limited Partner has not relied
on any advice of the General Partner or any of its Affiliates or advisors in connection with any
state, Federal or local income or other tax matter related to the formation of the Partnership
(other than an opinion of counsel delivered to the Partnership and the Partners with respect to the
characterization of the Partnership as a partnership for tax purposes) or the preparation of this
Agreement and that such Limited Partner has looked solely to its own counsel
(b) ERISA Governmental .Plan and Other Employee Benefit Plan
Representations and Warranties. Each Plan Investor represents and warrants for the benefit of
the other Partners and the Partnership that, as of the date of the execution and delivery of this
Agreement and as of the date of admission of such Limited Partner to the Partnership: (i) the
decision to commit assets of the Plan Investor for investment in the Partnership was made by
fiduciaries independent of the Partnership, the General Partner, and any of their respective
agents, representatives or affiliates, which fiduciaries (a) are duly authorized to make such
investment decision and have not relied.on any advice or recommendations of the Partnership,
the General Partner, or any of their respective agents, representatives or affiliates and (b) in
consultation with their advisers, have carefully considered the impact of ERISA, the Code and
the regulations,rules, procedures and judicial decisions thereunder, to the extent applicable, or
any applicable state or local law similar to ERISA or Section 4975 of the Code,on an investment
in the Partnership; (ii) none of the Partnership, the General Partner, or any of their respective
agents, representatives or affiliates has exercised any discretionary authority or control with
respect to the Plan Investor's investment in the Partnership, nor has the Partnership,the General
Partner, or any of their respective agents, representatives or affiliates rendered individualized
investment advice to the Plan Investor based upon the Plan Investor's investment.policies or
strategies, overall portfolio composition or diversification with respect to its commitment to
invest in the Partnership and the investment program thereunder; (iii) the Plan Investor
acknowledges and agrees that it is intended that the Partnership will not hold Plan Assets of the
Plan Investor and that none of the Partnership, the General Partner, or any of their respective
agents, representatives or affiliates will be acting as a fiduciary to the Plan Investor under
ERISA, the Code or any applicable federal, state or local law governing the Plan Investor, with
respect to either(a)the Plan Investor's purchase or retention of its investment in the Partnership
NEWYORK 5772537 1114(2K) -72-
or (b) the management or operation of the business or assets of the Partnership and the Plan
Investor confirms that there is no rule,regulation,or requirement applicable to such Investor that
is inconsistent with the foregoing description of the Partnership,and the General Partner; (iv) if
pursuant to Section 8.17(b), the General Partner elects to direct the Capital, Contributions of
Benefit Plan Investors into an escrow account that is intended to comply with Department of
Labor Advisory Opinion 95-04A, each Benefit Plan Investor acknowledges and agrees that the
escrow agent, as the agent of the Benefit Plan Investor trustee, may invest the funds in such
escrow account in money-market funds, bank deposit accounts and other similar investments
intended to provide for the preservation of capital;(v)the Plan Investor acknowledges and agrees
that the General Partner concludes in its sole discretion that it is probable that the continuation of
any Benefit Plan Investor as a Limited Partner in the Partnership could either in itself or as a
contributing factor result in all or any portion of the assets of the Partnership being deemed to
constitute Plan Assets of the Benefit Plan Investor for purposes of ERISA, Section 4975 of the
Code or any applicable state or local law similar to ERISA or Section 4975 of the Code, the
General Partner may take such actions as it deems necessary or appropriate to mitigate,prevent
or cure such adverse consequences, taking into account the interests of the Partnership and all
Investors in the Partnership as a whole, including without limitation, in the General Partner's
sole discretion, causing an immediate redemption of some or all of any Benefit Plan Investor's
Interests in the Partnership;(vi)the execution and delivery by the Plan Investor, and compliance
by the Plan Investor with the Subscription Agreement and this Agreement (including all
appendices, attachments or exhibits hereto or thereto) and each other document required to be
executed and delivered by the Plan Investor in connection with its acquisition of Interests in the
Partnership, and the contemplated investment program and operations of the Partnership, do.not
conflict with, or constitute a default under, any instruments or applicable guidelines governing
the Plan Investor, any applicable law, regulation or order, or any agreement to which the Plan
Investor is a party or by which the Plan Investor is bound and the Plan Investor shall promptly
advise the Partnership in writing of any changes of which it becomes aware in any governing law
or any regulations thereunder or interpretations thereof affecting the duties, responsibilities,
liabilities or obligations of the Partnership,the General Partner,or any of their respective agents,
representatives or affiliates with respect to the Plan Investor; (vii) the Subscription Agreement
and the Partnership Agreement have been duly executed by the Plan Investor and constitute,and.
when the Plan Investor is admitted as a Limited Partner, will constitute, a valid and legally
binding agreement of the Plan Investor; and (viii) the Plan Investor agrees that it will provide
additional information reasonably requested by the Partnership, and the General Partner for
purposes of compliance with applicable law.
(c) Regulato!y Representations and Warranties. Each Partner represents and
warrants for the benefit of the other Partners and the Partnership that, as of the date of the
execution and delivery of this Agreement and as of the date of admission of such Partner to the
Partnership: (i) its ownership of its Interests does not impair or otherwise adversely affect any
Project Company's regulatory status,authorizations or exemptions, including,without limitation,
a Project Company's market-based rate authority. or authorization to transport or distribute
electricity or transport or distribute natural gas, as applicable;(ii) it is not a"public utility"and it .
does not hold its Interest on behalf of a"public utility", as such term is defined under the Federal
Power Act; and (iii) it is neither a "holding company", a "subsidiary company" of a "holding
company an "affiliate" of a "holding company", an "electric utility company", a "gas utility.
NEWYORK 5773531 v14(2K) -73- -
company", a "public-utility company", a "public utility" nor a "natural gas company" as such
terms are defined under PUHCA 2005.
(d) Re ug latory Covenants. Each Partner covenants for the benefit of the other
Partners and the Partnership that, as of the date of the execution and delivery of this Agreement,
as of the date of admission of such Partner to the Partnership and so long as it is a Partner: (i)
neither such Partner nor,to the maximum extent of its control, any of its FERC Affiliates,shall
take any action that would result in, or refrain from taking any action relating to such Partner or
its FERC Affiliates necessary to prevent, any Project Company suffering a loss of, impairment
to, or other adverse change in respect of its regulatory status, authorizations or exemptions,
including, without limitation, a Project Company's market-based rate authority or authorization
to transport or distribute electricity or transport or distribute natural gas, as applicable; and (ii)
neither such Partner nor its FERC Affiliates shall take any action that would result in, or refrain
from taking any action relating to such Partner necessary to prevent, such Partner and/or the
Partnership becoming a"holding company", a"subsidiary company"of a"holding company",an
"affiliate" of a "holding company", an "electric utility company", a "gas utility company", a
"public-utility company", a "public utility" or%a "natural gas company", as such terms are
defined under PUHCA 2005.
(e) Regulatory Certificate. If the General Partner in its sole discretion
determines that (i) any acquisition or transfer of a Limited Partner's Interest would require
approval by FERC or a state regulatory authority, or(ii)certain energy regulatory information is
required from the Limited Partners in order to maintain compliance with regulatory notice or
filing requirements in effect from time to time, then the General Partner may request that any
Limited Partner provide a regulatory certificate in such form as is reasonably determined by the
General Partner, and the Limited Partner shall promptly comply with such request within the
lesser of thirty (30) days from the date of such request or the time period necessary to permit
compliance with such approval,notice or filing requirement.
(f) Each Limited Partner hereby covenants and agrees that it shall
immediately notify the General Partner if the Limited Partner becomes a Benefit Plan Investor.
`Section 14.9. Representations and Warranties of General Partner. The
General Partner represents and warrants for the benefit of the Partnership and the Limited
Partners as follows:
(a) The Partnership is duly organized and validly existing as a limited
partnership under the laws of the State of Delaware, and has all requisite partnership
power and authority to carry on its business as now conducted and as proposed to be
conducted, as described herein and in the POM. The General Partner is duly organized
and validly existing as a limited partnership under the laws of the State of Delaware and
has all requisite partnership power and authority to act as a general partner of the
Partnership. This Agreement, the Subscription Agreements with respect to the
Partnership and any other documents executed and delivered by the Partnership or the
General Partner in connection herewith or therewith have been duly authorized, executed
and delivered by such Persons, and are the legal, valid and binding obligations of such
Persons enforceable against such Persons in accordance with their respective terms.
NEWYORK 5772537 vla(2K) —74—
(b) All actions required to be taken by the General Partner and the Partnership
as a condition to the issuance and sale of the Limited Partner Interests have been taken;
and each Limited Partner shall be entitled to all the benefits of a Limited Partner under
this Agreement and the Revised Uniform Act.
(c) Neither the General Partner nor the Partnership is in default(and no event
has occurred which with notice, lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition contained in any indenture,
mortgage,deed of trust,credit agreement, note or other evidence of indebtedness or any
lease or other agreement or understanding, or any license,permit, franchise or certificate,
to which any such person is a party or by which any thereof is bound or to which the
properties of any thereof are subject, and no such person is in violation of any statute,
regulation, law, order, writ,injunction,judgment or decree to which it is subject, which
default or violation would materially adversely affect the business or financial condition
of the General Partner or the Partnership or impair the General Partner's ability to carry
out its obligations under this Agreement. Except for the Working Capital Line or as
disclosed in the POM, as of the date hereof, the Partnership is not a party to any
indenture, mortgage, deed of trust, credit agreement, note or other evidence of
indebtedness or, except in respect of Project Interests identified in the POM, any lease or
other agreement or understanding.
(d) There is no litigation, investigation or other proceeding pending or,to the
knowledge of the General Partner, overtly threatened against the General Partner or any
of its Affiliates which is reasonably expected to materially adversely affect the business
or financial condition of the General Partner or the ability of the General Partner to
perform its obligations under this Agreement.
(e) Neither the Partnership nor any Person authorized to act on its behalf has
taken or will take any actions that would subject the issuance and sale of Interests to the
registration and prospectus delivery provisions of the.Securities Act.
(f) To the knowledge of the General Partner based upon the truthfulness and
accuracy of certain representations made by the Limited Partners to the General Partner
and the Partnership, the Partnership is not an "investment company" within the meaning
of the Investment Company Act of 1940,as amended.
Section 14.10. Covenants of General Partner. The General Partner hereby
covenants and agrees as follows::
(a) The General Partner will not, without the prior written consent of the
Advisory Committee, amend;alter or otherwise modify in any material respect any provisions of
the Operating Agreement of the General Partner relating to the dissolution or termination of the
General Partner or take any action to voluntarily dissolve itself.
(b) The General Partner will use all reasonable efforts to act in a manner that
will not cause the Partnership to be an investment company required to be registered under the
Investment Company Act of 1940,as amended.
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NEW YORK 5772537 v14(2k)
r.'
i
Section 14.11. Waiver of Partition. The Partners hereby agree that the assets of
the Partnership and.of any Controlled Affiliate or Additional Investment Vehicle are not and will
not be suitable for partition. Accordingly, each of the Partners hereby irrevocably waives any
and all rights (if any) that such Partner may have to maintain any action for partition of any of
such assets.
Section 14.12. Litigation without Termination. Any Partner shall be entitled to
maintain, on its own behalf or on behalf of the Partnership,any action or proceeding against
another Partner, an Affiliate of another Partner or the Partnership for or by reason of any matter,
including, without limitations breach by such other party or its Affiliate of this Agreement,
notwithstanding the fact that any or all of the parties to such proceeding may then be Partners in
the Partnership or Affiliates of Partners, and without dissolving the Partnership as a partnership.
Section 14.13. Designee. Each Limited Partner which is not an individual shall
at all times have designated in writing to the General Partner one or more individuals(herein.,the
"Designees" or "Designee'), and the General Partner and the Partnership shall have the right to
rely conclusively upon any action, decision or approval by such Designee on behalf of such
Limited Partner. A Designee may be replaced only by written notice to the General Partner and
the Partnership, signed by a duly authorized representative of such Limited Partner.
Section 14.14. Treatment of Participating Plans and the Group Trust.
Notwithstanding anything in this Agreement to the contrary, in the event that,and for so long as,
any Limited Partner is a Group Trust,then:
(a) in connection with any vote of the Limited Partners required or permitted
under this Agreement, the Group Trust shall divide its vote as required to reflect the
proportionate interests of each Participating Plan in the Partnership;
(b) in the event that the Group Trust shall commit any default as a result of a
failure by any Participating Plan to make any required contribution to the Group Trust,
(i)the Group Trust shall be a Defaulting Partner only with respect to such portion of its
Interest as shall represent the interest contributed by such Participating Plan to the Group
Trust, (ii)the provisions of Section 3.3 applicable to a Defaulting Partner's Interest shall
apply only with respect to such portion of the Group Trust's Interest, and (iii)the General
Partner shall make appropriate adjustments in enforcing any remedy against the Group
Trust pursuant to Section 3.3 as may be necessary to give effect to this Section 14.14;
(c) the distributions to which the Group Trust shall be entitled pursuant to
Article V shall be calculated separately for the Interest contributed by each Participating
Plan," determined taking into account the Preferred Return with respect to each
Participating Plan and the application, if any, of Section 8.17 to each such Interest as if
such Interest were held directly by such Participating Plan;
(d) a redemption by a Participating Plan of all or a portion of its beneficial
interest in the Group Trust or the issuance of beneficial interest to a new Participating
Plan shall be subject to the terms and conditions set forth in Sections 9.1, 9.3, 9.4 and 9_5
NEWYORK 5772577 04(2K) -76- .
as if the Group Trust were transferring the Interest contributed by one or more of the
existing Participating Plans to the Group Trust,and
(e) for the purposes of Section 8.18, the General Partner may offer the
opportunity to designate a member of the Advisory Committee to any Participating Plan.
Section 1415. Parallel Partnerships. The General Partner may at any time and
from time to time form one or more entities for the benefit of one or more Partners (including,
for this purpose, partners in a Side-by-Side Partnership) through which one or more Partners
would invest in lieu of investing through the Partnership in some or all Project Interests (each, a
"Parallel Partnership'). A Parallel Partnership may be structured as a limited partnership,
limited liability company, corporation or other entity as determined by the General Partner. The
General Partner and Limited Partners agree that if any Parallel Partnership is formed, the
following terms and conditions will be applicable to investments by such Parallel Partnership
with the Partnership:
(a) The Parallel Partnership may invest in one or more Project Interests in lieu
of the Partnership or may co-invest with the Partnership in the same Project Interests. In
the event of a co-investment, the Parallel Partnership investing in such Project Interest
shall invest in Project Interests >l ro rata with the Partnership based on the respective
aggregate capital commitments to the Parallel Partnerships, on the one hand, and the
Capital Commitments to the Partnership,on the other.
(b) Investments with the Parallel Partnership may be structured through the
creation of a partnership, limited liability company or other investment vehicle. Other
investments may be structured through parallel ownership interests, the operation,
management and control of which is governed by co-tenancy agreements and the like.
Subject to the provisions of Section 8.21, the General Partner shall have the right to
structure such ownership interests in such manner as it deems appropriate under the
circumstances, including, the terms of all agreements relating thereto. The Parallel
Partnership shall invest in Project Interests on a pari passu basis and on terms
substantially the same (to the extent practicable) as the terms of the Partnership's
investment in such Project Interests and in any event on terms no more favorable to the
Parallel Partnership than the terms available to the Partnership.
(c) The capital contributions of the General Partner and certain of its related
parties to the Partnership and any Parallel Partnership, in the aggregate, shall at all times
meet the minimum requirements set forth in Section 3.6, applying the same to the
aggregate capital contributions of the partners to the Partnership and each Parallel
Partnership. For purposes of this Agreement, contributions by the General Partner to
each of the Parallel Partnerships shall be credited towards the obligation of the General
Partner under Section 3.6 of this Agreement, and contributions by each Limited Partner
to each of the Parallel Partnerships shall be credited towards the obligations of such
Limited Partner under Section 3.2 and Section 5.3 of this Agreement.
(d) For purposes of this Agreement, the Parallel Partnership shall not be
considered an Affiliate of the General Partner, a Cc-Investment Partnership,a Controlled
NEWYORK 5772577 04(2K) -77- -
Affiliate, a Designated Affiliate, a Pooled Investment Vehicle or an entity subject to the
provisions of Section 8.6 hereof.
(e) Additionally, none of the provisions of this Agreement,including,without
limitation, Sections 7.3(d), 16(a) or 8.6(cl shall 'prohibit the General Partner (or any
Affiliate thereof) or Starwood Asset Management, L.L.C. (or any Affiliate thereof) from
receiving the fees, compensation and/or interests in distributions, capital,profits,income,
gain, loss, deduction or credit provided for in the Parallel Partnership's partnership
agreements.
(f) Except as otherwise expressly provided below, if any Parallel Partnership
is formed, whenever this Agreement requires a vote of a Majority-In-Interest of the Non-
Defaulting Limited Partners, Two-.Thirds-In-Interest of the Non-Defaulting Limited
Partners, or the. Non-Defaulting Limited Partners holding a certain percentage of the
Participation Percentages, the vote of the Limited Partners shall include the vote of
partners of the Parallel Partnership and the applicable definitions shall be deemed to read
as follows:
(1) "Majority-In-Interest of the Non-Defaulting Limited Partners"
means "Non-Defaulting Limited Partners" in the Partnership and the Parallel
Partnerships whose aggregate participation.percentages as hereinafter described
exceed fifty percent (50%) of all such Non-Defaulting Limited Partners'
participation percentages. For purposes of this definition, the participation
percentages of all such partners shall mean the ratio of (i)the sum of the
aggregate Capital Contributions of each such partner in the Partnership and the
Parallel Partnerships,the aggregate amount of any capital contribution obligations
of such partner to the applicable partnership which are delinquent and the
aggregate amount of all potential capital contributions (other than then delinquent
contributions) which such partner may be required to make to the applicable
partnership to (ii)the sum of the aggregate capital contributions of all partners to
such partnerships, the aggregate amount of all capital contribution obligations of
the partners to the applicable partnerships which are delinquent and the aggregate
amount of all potential capital contributions (other than then delinquent
contributions) which such partners may be required to make to the applicable
partnerships.
(2) "Two-Thirds-in-Interest of the Non-Defaulting Limited Partners"
means "Non-Defaulting Limited Partners" in this Partnership and the Parallel
Partnership whose aggregate participation percentages (determined as provided in
the definition of"Majority-in-Interest of the Non-Defaulting Limited Partners")
equal or exceed sixty-six and two-thirds percent (66-2/3%) of all such Non-
Defaulting Limited Partners' Participation Percentages.
(3) "Participation Percentage" means, with respect to any Partner in
this Partnership and the Parallel Partnerships, the participation percentages of all
such partners as determined pursuant to the definition of Majority-in-Interest of
the Non-Defaulting Limited Partners.
NEWYORK 5772577 04(2K) -78-
(g) The capital commitments of partners of each Parallel Partnership shall be
included in determining the maximum amount of the Working Capital Line under
Section 8.19. The partnership interests of the partners in each of the Parallel Partnerships
have been pledged to each Parallel Partnership, respectively, as security for such
partners' respective capital commitment to each Parallel Partnership. The Parallel
Partnerships will pledge the capital commitments of its partners as security for the
Working Capital Line, and in connection therewith, each partner in a Parallel Partnership
agrees to cooperate with the General Partner and execute such documents and
instruments as may be reasonably required to effectuate a security interest in its
obligation to make such capital contributions. Such cooperation may include, without
limitation, the requirement that'the obligation of each partner to contribute capital to the
Parallel Partnership be evidenced by a promissory note and may further include
furnishing the Working Capital Line Lender with acknowledgments, estoppel certificates
and financial statements with respect to such partner.
(h) The terms and provisions of each Parallel Partnership's partnership
agreement shall be substantially similar to this Agreement, including without limitation,
the distribution provisions of Article V and the asset management fee payable to the
General Partner pursuant to Section 8.13 of this Agreement, and in no event shall the
terms of any Parallel Partnership grant economic,voting or other rights to any partner of
a Parallel Partnership which are more favorable than those granted to the Limited
Partners herein.
(i) Notwithstanding the foregoing provisions of this Section 14.15, in no
event shall a Limited'.Partner be required to participate in any Parallel Partnership to the extent
such participation would result in the applicability of Section 3.8 to such Limited Partner.
Section 14.16. Confidentiality. Each Limited Partner agrees that, except as
otherwise consented to by the General Partner, such Limited Partner shall keep confidential and
shall not disclose to any Person any information or matter relating to the Partnership and its
operations, business or affairs and any information or matter related to any Project Interest.
(including, without limitation, any information contained in any report distributed hereunder or
pursuant hereto) or any information received from, or on behalf of,the Partnership, the General
Partner or any of their respective Affiliates (including,without limitation, from conference calls
or other discussions with the General Partner or its Affiliates); provided that a Limited Partner
may disclose any such information to the extent that(i) such information is or becomes generally
available to the public through no act or omission of such Limited Partner, (ii) such information
otherwise is or becomes known to such Limited Partner other than by disclosure by the
Partnership or the General Partner, provided that the source of such information is not bound by
a confidentiality'agreement or other contractual, legal or fiduciary obligation of-confidentiality,
or (iii) such disclosure is to (A) such Limited Partner's and its Affiliates' trustees, directors,
officers, employees, auditors, agents, attorneys, financial advisors and other professional
advisors responsible for matters relating to the Partnership or who otherwise have a need to
know such information in connection with their responsibilities with such Limited Partner and
who have been notified of the confidential nature of and who are under an obligation to keep
such information confidential on the terms set forth herein, (B) any investor approved of by the
General Partner to which a Limited Partner sells or offers to sell an.Interest pursuant to the terms
c .
NE W YORY 5772537 v14 12K) -79-
hereof if such investor agrees to keep such information confidential on the terms set forth herein,
(C)any federal or state regulatory authority or self-regulatory body having jurisdiction over such
Limited Partner (including the National Association of Insurance Commissioners) or any
nationally recognized rating agency that requires access to information about a Limited Partner's
investment portfolio,or(D)with reasonable prior notice to the General Partner, any other Person
to which such delivery or disclosure is necessary or appropriate(I)to effect compliance with any
law, rule, regulation or order applicable to such Limited Partner or (II) in response to any
subpoena or other legal process;provided that in connection with any disclosure pursuant to this
clause (D) such Limited Partner shall upon request of the General Partner cooperate with the
General Partner in seeking an order to protect the confidentiality of such information.
Section 14.17. Side-by-Side Partnerships. The General Partner may form at
any time and from time to time one or more entities for the benefit of one or more investors
through which such investor(s) would invest in lieu of investing through the Partnership(each, a
"Side-by-Side Partnership"). A Side-by-Side Partnership may be structured as a limited
partnership, limited liability company or other entity as determined by the General Partner. The
following terms and conditions will be applicable to investments by such Side-by-Side
Partnership with the Partnership:
(a) The Side-by-Side Partnership shall invest in Project Interests Loo rata with
the Partnership based on the respective aggregate capital commitments to the Side-by-Side
Partnerships, on the one hand, and the Capital Commitments to the Partnership, on the other. In
no event shall the Side-by-Side Partnership have the right to invest in Project Interests which are
Exclusive Investments unless such investment is made jointly with the Partnership.
(b) Investments with the Side-by-Side Partnership may be structured through
the creation of a partnership, limited liability company or other investment vehicle. Other
investments may be structured through parallel ownership interests, the operation, management
and control of which is governed by co-tenancy agreements and the like. Subject to the
provisions of Section 8.21, the General Partner shall have the right to structure such ownership
interests in such manner as it deems appropriate under the circumstances, including, the terms of
all agreements relating thereto. The Side-by-Side Partnership shall invest in Project Interests on
a pari passu basis and on terms substantially the same (to the extent practicable) as the terms of
the Partnership's investment in such Project Interests and in any event on terms no more
favorable to the Side-by-Side Partnership than the terms available to the Partnership.
(c) For purposes of this Agreement, the Side-by-Side Partnership shall not be
considered an Affiliate of the General Partner, a Co-Investment Partnership, a Parallel
Partnership, a Controlled Affiliate, a Designated Affiliate, a Pooled Investment Vehicle or an
entity subject to the provisions of Section 8.6 hereof.
(d) Additionally, none of the provisions of this Agreement, including, without
limitation, Section 8.6 shall prohibit the General Partner (or any Affiliate thereof) or Starwood
Asset Management, L.L.C. (or any Affiliate thereof) from receiving the fees, compensation
and/or interests in distributions, capital, profits, income, gain, loss, deduction or credit provided
for in the Side-by-Side Partnership's partnership agreements.
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Section 14.18. Treatment of Other Entities. The General Partner may, in its
discretion, allocate fees and expenses associated with pursuing and developing any particular
investment, Project Interest or Additional Investment Vehicle among the Partnership,the Parallel
Partnerships and the Side-by-Side Partnerships that participate in such investment, Project
Interest or Additional Investment Vehicle, or among the Partners and the investors in each such
Parallel Partnership and Side-by-Side Partnership. Each Backstop Partnership, each Parallel
Partnership and each Side-by-Side Partnership may be-jointly and severally liable with the
Partnership for all credit support obligations in respect of Additional Investment Vehicles or
under any indebtedness and other obligations to which the Partnership may commit in
accordance with this Agreement.
SIGNATURES ON NEXT PAGE .
1
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' I
IN WITNESS WHEREOF,the undersigned have executed this Agreement of
Limited Partnership as of the date first above written.
GENERAL PARTNER:
SEI MANAGEMENT,L.P.,a Delaware limited partnership
By: SEC MANAGEMENT HOLDINGS,L.L.C.,
its General Partner
By: STARWOOD ENERGY GROUP GLOBAL,L.L.C.,
its General Manager
B
Name: Barry .Stemlicht
Title: Gen ral Manager
INITIAL LIMITED PARTNER
Barry S.Sterrnli ht
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APPENDIX A
TO PARTNERSHIP
AGREEMENT
Names,Addresses and
Capital Commitments of Partners
Name and Address
of Partners: Total Capital Commitment
General Partner:
SEI Management, L.P. To be determined pursuant
591 W. Putnam Avenue to Section 3.6
Greenwich,Connecticut 06830
t
NEWYORK 577:537x14(7K)
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APPENDIX B
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Definitions
For purposes of this Agreement, the following terms shall have the meanings set forth below
(such meanings to be equally applicable to both singular and plural forms of the terms so
defined). Additional defined terms are set forth in the Sections of this Agreement to which they
relate.
"Accountants"has the meaning set forth for such term in Section 7.3(b).
"Additional Investment Vehicle" means any Person in which the Partnership
holds a direct or indirect interest.
"Adiusted Capital Contribution" means, with respect to each Partner, such
Partner's aggregate Capital Contribution reduced by any distributions previously made to that
Partner pursuant to Section 5.4(b).
"Advisory Board"has the meaning set forth for such term in Section 8.16.
"Advisory Committee"has the meaning set forth for such term in Section 8.18.
"Affiliate" means, with respect to a specified Person, (i)any Person directly or
indirectly owning, controlling or holding with power to vote 25% or more of the outstanding
voting securities or other ownership interests of the specified Person, (ii)any Person 25% or
more of whose outstanding voting securities or other ownership interests are directly or
indirectly owned, controlled or held with power to vote by the specified Person, (iii)any Person
directly or indirectly controlling, controlled by, or under common control with the specified
Person; (iv)a partnership in which the specified Person is a general partner, (v)any officer,
director or member of the specified Person or any other Person directly or indirectly controlled
by such officer; director or member, (vi) if the specified Person is an officer, director, member,
general partner or employee, any other entity for which the specified Person acts in any such
capacity, (vii) if the specified Person is the General Partner, any entity.in which Barry S.
Sternlicht directly or indirectly owns, controls or holds the power to vote 10% or more of the
ownership interests, and (viii) if the specified Person is a Limited Partner, any other Person that
is an "affiliate (as such term is defined by FERC) of such Person. Notwithstanding the
foregoing, Affiliate shall not include (x) any Additional Investment Vehicle or any other partner,
member or shareholder therein not otherwise affiliated with the General Partner,or(y) any Non-
Controlled Entity. Further; for purposes of any provision contained in this Agreement which
imposes an obligation on the General Partner and/or its Affiliates to take any action or to refrain
from taking any action (including, without limitation,Sections 7.2 and 8.10). Affiliate shall not
include any Person not controlled, directly or indirectly,by Barry S. Sternlicht or any other Key
Executive, individually or in the aggregate. Notwithstanding anything to the contrary, no
member of the Advisory Board shall be deemed an Affiliate of the General Partner by virtue of
such membership or by virtue of any compensation (including equity or incentive compensation)
received in connection with such membership.
"Affiliate Transaction"has the meaning specified in Section 8.6(a).
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Page 2
"Agreement" means this Amended and Restated Limited Partnership Agreement,
as amended, modified or supplemented from time to time. References to the words."hereof',
"herein"or"hereunder" or any derivation thereof shall mean this, in or under this Agreement as
the context requires.
"Appraiser"has the meaning set forth in Section 3.4(b).
"Asset Acquisition Date"has the meaning specified in Section 8.10(d).
"Asset Co-Invest Date"has the meaning specified in Section 8.10(e).
"Asset Management Fee" means the fee payable to the Manager pursuant to
Section 8.13.
"Assignees"has the meaning set forth in Section 93(e).
"Backstop Partnership"has the meaning set forth in Section 3.8(c).
"Benefit Plan Investor" means any Partner that is a "benefit plan investor" as
defined in Section 3(42)of ERISA and any regulations promulgated thereunder.
"Business Day' means any day other than a Saturday, Sunday or a day on which
commercial banks are authorized or required to close in New York City.
"Capital Account"has the meaning set forth in Section 3.7.
"Capital Commitment" means (i)with respect to a Limited Partner, the total
amount of capital which such Limited Partner has agreed to contribute to the Partnership, as set.
forth opposite such Limited Partner's name in the column entitled "Total Capital Commitment"
on Appendix A to the Agreement, and (ii)with respect to the General Partner, an aggregate
amount calculated in accordance with Section 3.6.
"Capital Contribution"means amounts contributed to the Partnership in cash by a
Partner pursuant to Article III or Section 5.3.
"Capital Deficiency"has the meaning set forth in Section 5.5(a).
"Capital Return Amount"has the meaning set forth in Section 7.8(a).
"Capital Transaction" means 0)any sale, exchange, transfer, assignment or other
disposition of all or a portion of the Partnership's assets or of Project Interests in which the
Partnership holds a direct or indirect interest, (ii)any financing or refinancing of any
indebtedness of the Partnership or any financing or refinancing in respect of assets in which the
Partnership holds a direct or indirect interest, (iii)the taking of all or a portion of the assets of the
Partnership (or of assets in which the Partnership holds a direct or indirect interest) by any
governmental authority through the exercise of the power of eminent domain or condemnation or
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Page 3
the delivery of a deed or transfer in lieu of such taking, (iv)the receipt of the proceeds of hazard
or casualty insurance (other than rental or business interruption insurance), (v)the repayment of
principal on any loans made by the Partnership, or (vi)releases of Partnership reserves funded
from previous transactions of a nature described herein.
"Carried Interest Distributions"has the meaning set forth in Section 5.5(a).
"Cash Distributees"has the meaning set forth in Section 5.1:
"Cause"shall mean:
(i) the General Partner engages in any action resulting in a final, non-
appealable finding of either civil or criminal fraud against the Partnership by a judicial or
administrative body of competent jurisdiction;
(ii) the conviction of any Key Executive of a felony or of any crime involving
financial dishonesty unless, within thirty (30) days of such conviction, such Key Executive
ceases to be an employee of the General Partner or of any Affiliate of the General Partner which
is involved in the Partnership's activities;
(iii) the General Partner's gross negligence,recklessness or willful misconduct
in the performance of its obligations hereunder and which gross negligence, recklessness or
willful misconduct(x)has had or is reasonably expected to have a material adverse impact on the
Partnership, and (y) is not cured within sixty (60) days following written notice to the General
Partner from Two Thirds in Interest of the Non-Defaulting Limited Partners (excluding for this
purpose, any Limited Partners who are Affiliates, managers, members or employees of the
General Partner or otherwise hold a direct or indirect interest in the General Partner) specifying
in reasonable detail the nature of such gross negligence or willful misconduct;or
(iv) the General Partner's breach of this Agreement(a breach being deemed to
include, without limitation, a failure by the General Partner timely to fund its Capital
Contribution obligations to the Partnership or a breach of fiduciary duties owed to the
Partnership) in a material manner, which material breach results in.a material adverse impact
upon the Partnership and the other Partners and which breach is not cured within 120 days (or
such longer period of time as is reasonably necessary under the circumstances as approved by a
Majority in Interest of the Non-Defaulting Limited Partners or the Advisory Committee)
following written notice to the General Partner from Two-Thirds In Interest of the Non-
Defaulting Limited Partners(excluding for this purpose, any Limited Partners who are Affiliates,
managers, members or employees of the General Partner or otherwise hold a direct or indirect
interest in the General Partner) specifying in reasonable detail the nature of the breach.
"Certificate" means the Certificate of Limited Partnership of the Partnership, as
amended,modified or supplemented from time to time.
"Change in Management"has the meaning specified in Section 8.8(a).
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"Code"means the United States Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder,as amended from time to time(or any succeeding law).
"Co-Investment Opportunity" means an investment opportunity pursued by the
Partnership,any Other SEI-I Partnership or a Targeted Fund where the Partnership,together with
the applicable SEW Partnerships, on the one hand, and such Targeted Fund, on the other hand,
each are given the opportunity to invest on the terms herein provided or as may be agreed upon
between the Partnership,the Other SEI-i Partnerships and the Targeted Fund,as applicable
"Co-Investment Partnership"has the meaning specified in Section 7.2(b).
"Collection Costs"has the meaning specified in Section 3.3(b)(ii).
"Commissioner"has the meaning set forth in Section 7701(a)(]3)of the Code.
"Commitment Period" means the period commencing on the date of the Initial
Closing and ending on the fifth(5`h)anniversary of the Final Closing.
"Contribution Amount"has the meaning set forth in Section 7.8(a).
"Controlled Affiliate" means any Affiliate of the Partnership which is controlled,
directly or indirectly, by the Partnership or which is under common control with the Partnership
and which has been organized to carry out business principally of and for the benefit of the
Partnership or any Other SEI-I Partnership or any other Affiliate of the Partnership with which
the Partnership intends to invest.
"Credit Enhancement"has the meaning set forth in Section 3.9.
"Credit Enhancement Loan" has the meaning set forth in Section 3.9.
"Credit Provider" has the meaning set forth in Section 3.9.
"Date of Distribution"has the meaning set forth in Section 5.1.
"Default Interest"has the meaning specified in Section 33(c).
"Default Loans"has the meaning specified in Section 3.3(c).
"Default Notice has the meaning set forth in Section 3.3(b)(i).
"Default Rate"has the meaning specified in Section 3.3(c).
"Defaulting Partner" means any Partner who has failed to contribute any amount
called for in accordance with this Agreement (including, without limitation, Section 3.2) and
who has failed to cure such default (and to pay any other amounts then required to be paid
hereunder by such Partner)within any applicable cure period.
i
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Page 5
"Designated Affiliate has the meaning set forth for such term in Section
8.10(b)().
"Designee"or"Designees"has the meaning specified in Section 14.13.
"Disposition Entity"has the meaning set forth in Section 5.1.
"Disposition Entity Manager"has the meaning set forth in Section 5.1.
"Dissolution Date" means the date which is the last day of the term described in
Section I0.1,subject to extension as set forth in Section 10.3.
"Election Period"has the meaning set forth in Section 3.3(b)(i).
"ERISA means the Employee Retirement Income Security Act of 1974 of the
United States of America, together with the rules and regulations promulgated thereunder, as
amended from time to time(or any corresponding provisions of succeeding law).
"Event of Bankruptcy" means, with respect to a Limited Partner, the occurrence
of a similar event with respect to a general partner described in Section 17-402(a)(4)a.through f.
of the Revised Uniform Act.
"Excess Interest" has the meaning specified in Sectibn 7.2(a).
"Exclusive Investment" means an investment which, if made by the Partnership,
(1)would be within the scope of the purposes of the Partnership, as set forth in Section 2.3, (2)
would comply with the other terms and provisions of this Agreement, and (3) has not been
determined by the General Partner(acting in accordance with the requirements of the definition
of "Non-Exclusive Investment" set forth in this Appendix B below) to be a non-suitable
investment for the Partnership.
"Exclusivity Period means the period commencing with the Initial Closing and
ending on the earlier of(i) the date on which an amount equal to at least seventy-five percent
(75%) of the aggregate Capital Commitments have been invested or Identified for investment in
Project Interests, (ii)the end of the Commitment Period, (iii) the removal of the General Partner
pursuant to Section 9.6 or Section 9.7, or (iv) the election by the requisite Limited Partners to
dissolve the Partnership pursuant.to Section 10.2(b).
"F&F Investors"has the meaning set forth in Section 13.1(d).
"Fair Market Value" shall mean with respect to any Redeemed Partner's Interest
the price at which a willing seller under no compulsion to sell would sell, and a willing buyer
under no compulsion to purchase would purchase, such Interest, and shall otherwise be
calculated as determined by the General Partner in its discretion.
NEWYORK 5772537v14(2K)
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TO PARTNERSHIP
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Page 6
"Family Members" means with respect to any natural person, such person's
spouse,lineal descendants,siblings and parents.
"Family Trusts"means with respect to any natural person,a trust benefiting solely
such natural person or the Family Members of such natural person.
"Federal Power Act"means the Federal Power Act of 1920, as amended.
"Fee.Amount"has the meaning set forth in Section 7.8(b).
"FERC"means the Federal Energy Regulatory Commission or its successor.
"FERC Affiliate" means,with respect to a specific Person, any other Person that
is an"affiliate", as such term is defined by FERC within the context of the Federal Power Act,
PUHCA 2005,the Natural Gas Act or the Natural Gas Policy Act, as applicable.
"Final Closing" shall have the meaning ascribed to that term in Section 7.8
hereof.
"First Fund"has the meaning specified in Section.8.10(e).
"Fiscal Year"has the meaning specified in Section 6.8.
"GAAP" has the meaning set forth in Section 6.3.
"General Partner" means SEI Management, L.P., a Delaware limited partnership,
and its respective successors and assigns, and any successor general partners of the Partnership,
either by operation of law or as permitted by the terms of this Agreement.
i
"Gross Income" means the gross income of the Partnership (each and every such
item included in Gross Income to be allocated proportionately among all the Partners receiving
an allocation of Gross Income) as determined in accordance with the method of accounting,
followed by the Partnership for Federal income tax purposes, including, for all purposes, any
gross income exempt from tax.
"Group Trust" means the group trust, if any, formed as a vehicle through which
the Participating Plans invest in the Partnership.
"Identified" means an investment in a Project Interest for which a letter of intent,
term sheet, memorandum of understanding, purchase agreement or other similar document has
been agreed to in writing by or on behalf of the Partnership and a counterparty.
"Imputed Tax Rate" means, for any Fiscal Year, the highest effective combined
Federal, state and local income tax rate applicable during such year to a natural person residing
in New York City, New York, taxable at the highest marginal Federal income tax rate and the
REWYORK 5772537 v14(2K)
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APPENDIX B
TO PARTNERSHIP
AGREEMENT
Page 7
highest marginal New.York State and New York City income tax rates (after giving effect to the
Federal income tax deduction for state and local income taxes).
"Incapacity' or "Incapacitated", as it relates to a Person, means the death,
adjudication of incompetence, insanity, dissolution or termination (other than by merger or
consolidation in which the Person is the surviving entity),as the case may be,of that Person.
"Indemnified Party"has the meaning specified in Section 8.15.
"Indemniee" has the meaning set forth in Section 8.18(d).
"Initial Closing" shall mean the first date on which any Limited Partner delivers,
and the General Partner accepts in writing, a Subscription Agreement.
"Initial Limited Partner"has the meaning set forth in the recitals hereto.
"Instrument of Transfer" means an instrument, in the form of Appendix C,
evidencing a transfer by a Limited Partner of all or a portion of that Limited Partner's Interest.
"Interest" means the entire ownership interest of a Partner in the Partnership at
any particular time, including, without limitation, its interest in the capital, profits, losses and
distributions of the Partnership.
"Internal Permitted Transferee" means, with respect to any Person making a
transfer pursuant to Section 9.2(d), any of (i) any Key Executive, or any officer, director or
employee of the General Partner (or any of its Affiliates) who is or who has already been
admitted as a member of the entity by which the applicable interest proposed to be transferred is
issued; (ii) any Family Member of, or Family Trust for, such transferor; or (iii) any entity in
which at least 75%of the equity interests are owned and controlled by the transferor or by one or
more Family Members of,or Family Trusts for, any such transferor.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time.
"Key Executive"means Barry S. Sternlicht, and so long as each is an employee of
the General Partner or an Affiliate of the General Partner which is controlled by Barry S. -
Sternlicht or any other.Key Executive (individually or in the aggregate), Bradford T. Nordholm,
Stephen P. Zaminski, Madison F. Grose and Jerome C. Silvey and any Person replacing any of
the foregoing and who has comparable experience and education to the person being replaced.
"Lender" has the meaning set forth in Section 3.9.
"Limited Liability Entity" means an entity in which the liability of the holders of
interests in such entity.to third parties is limited by operation of law (such as corporations,
business trusts, limited partnerships and limited liability companies).
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"Limited Partner" means each Person named as a Limited Partner in Appendix A
to the Agreement, each Person admitted as a limited partner of the Partnership pursuant to
Article IX and, with respect to those provisions of this Agreement concerning a Limited
Partner's rights to receive a share of profits or other distributions or the return of a Limited
Partner's contribution, any transferee of a Limited Partner's Interest(except that a transferee who
is not admitted as a Limited Partner shall have only those rights of an assignee specified by the
Revised Uniform Act and which are consistent with the terms of this Agreement).
"Liquidator"'has the meaning set forth in Section 11_1(a).
"Majority-in-Interest of the Non-Defaulting Limited Partners" means Non-
Defaulting Limited Partners whose aggregate Participation Percentages exceed 50% of all Non-
Defaulting Limited Partners' Participation Percentages.
"Manager"has the meaning specified in Section 8.13.
"Marketable Securities" means stocks, bonds or other interests (but excluding
equity interests in entities that are not Limited Liability Entities)issued by any Person that can be
readily sold without volume limitations on a stock exchange or in an over-the-counter market.
"Natural Gas Act" means the Natural Gas Act of 1938,as amended.
"Natural Gas Policy Act"means the Natural Gas Policy Act of 1978, as amended.
"Net Cash Flow"means, with respect to any applicable period, the gross receipts
of the Partnership from all sources during such period, including cash proceeds received by the
Partnership from any Capital Transaction, less, without duplication, (i)Partnership expenses
actually paid during such period including, without limitation, ad valorem taxes, insurance.
premiums, repair and maintenance costs and management, servicing and trustees' fees and
Pursuit Costs, (ii)interest and principal paid during such period on indebtedness of the
Partnership, (iii) additions to reserves made during such period in accordance with
Section 8.3(b), (iv)expenditures for capital improvements and other capital items paid during
such period, (v)all expenditures to be made out of such proceeds in connection with restoration,
repair or improvement of the property affected by such Capital Transaction, (vi)payment of or
provision for all debts and obligations to be satisfied as the result of or in connection with such
Capital Transaction, and (vii)payment of all costs and expenses incurred in connection with the
receipt or collection of such proceeds and the setting aside of any reserves from such proceeds,
in each case including the Partnership's share of such costs and expenses paid by the Partnership
or by contribution to any entity in which the Partnership holds a direct or indirect interest. Net
Cash Flow shall not include any capital contributed to the Partnership by its Partners. Any
reserves taken into account for purposes of determining Net Cash Flow shall be as reasonably
established and determined by the General Partner, and any reductions to reserves during any
applicable period shall increase the amount of Net Cash Flow.
z
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Page 9
"Net Income" and "Net Losses", respectively, means the income or losses of the
Partnership as determined in accordance with the method of accounting followed by the
Partnership for Federal income tax purposes, including, for all purposes, any income exempt
from tax and any expenditures of the Partnership which are described in section 705(a)(2)(B) of
the Code but after taking into account any allocation of Gross Income; provided;however,that if
any property is carried on the books of the Partnership at a value that differs from that property's
adjusted basis for tax purposes, gain, loss, depreciation and amortization with respect to such
property shall be computed with reference to the book basis of such property, consistently with
the requirement of Treas. Reg. §1.704-1(b)(2)(iv)(g); and provided further, that any item
allocated under Section 4.2 shall be excluded from the computation of Net Income and Net
Losses.
"Non-Controlled Entity" means (i) any Person which would otherwise hereunder
be deemed an Affiliate of the General Partner or of any Key Executive were it not for the
exclusions from the definition of"Affiliate 'set forth above in this Appendix B and (ii) where
one or more of the following circumstances exists: (1) if such Person is a company whose
securities are listed and traded on a national securities exchange or in an over-the-counter market
which (A) has (or its general partner or managing member has) a board of directors, trustees or
similar body the majority of which is comprised of Persons who are not Key Executives or
otherwise Affiliates of the General Partner, and (B) neither the General Partner nor any Key
Executive, directly or indirectly,owns, controls or holds the power to replace a majority of the
members of such board.of directors, trustees or similar body, or (2) if such Person is of a type
other than as described in the foregoing subelause (1), (A) such Person is controlled or co-
controlled by one or more non-Affiliates of the General Partner or of any Key Executive, and(B)
the Key Executives or Affiliate of the General Partner serving on the board of directors,trustees
or similar body of such Person (or of its general partner or managing member)recuse themselves
from any formal vote or decision on behalf of such Person with respect to any transaction
between such Person,on the one hand,and the Partnership or any Other SEI-I Partnership,on the
other hand.
"Non-Defaulting Partner" and "Non-Defaulting Limited Partner" means any
Partner or Limited Partner,as the case may be,who is not a Defaulting Partner.
"Non-Exclusive Investment" means an investment which, in the sole but good
faith discretion of the General Partner or its Affiliates, is determined not to be a suitable.
investment for the Partnership at the time such determination is being made, including, without
limitation,due to the existence of one or more of the following circumstances:
(i) the projected holding period for the investment would likely need to
extend beyond the remaining term of the Partnership (as described in Section 10.1) in
order to achieve the minimally acceptable risk-adjusted whole dollar profits and internal
rate of return for the investment;
(ii) the entirety of the investment is not likely to be liquidated without
substantial discount or penalty if liquidated during the remaining term of the Partnership;
NEWYORK'77253704(2K) -
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(iii) the investment is likely to require that one or more Limited Partners
directly submit to licensing applications or other regulatory approvals;
(iv) such investment, alone or together with other investments made or
anticipated to be made by the General Partner for the Partnership, could cause the
Partnership or one or more Additional Investment Vehicles to not qualify as a REOC or
VCOC, as applicable, or such investment would likely cause the assets of the Partnership
to be treated as"plan assets"under the Plan Asset Regulations;
(v) the projected pre-tax project level internal rate of return on equity invested
in such investment is not consistent with the Partnership's targeted return objectives, or
such investment otherwise does not meet the investment objectives of the Partnership;
(vi) such investment is a passive investment in a professionally managed or
other third-party hedge ;fund, private equity fund, fund of funds or other private
investment entity or vehicle;
(vii) such investment represents an investment primarily in publicly traded
equity or debt securities;
(viii) such investment or an applicable portion thereof has been or will be
allocated to an entity other than the Partnership in accordance with the terms and
conditions of this Agreement (e.g., to a Targeted Fund, an Other SEI-T Partnership, a
Designated Affiliate to which the Advisory Committee has consented pursuant to Section
8.10 0 b , any Person described in Section 8.6(e),or an entity in which any of the foregoing
has an interest);
(ix) such investment, if made by the Partnership,would result in applicability
of Section 3.8 to any Limited Partner;
(x) such investment requires an initial equity capital investment of
$10,000,000 or less;
(xi) such investment is an opportunity relating to existing investments made by
any Designated Affiliate prior to the date of this Agreement or to investments which are
the subject of a contract or letter of intent that is in existence as of the date of this
Agreement;
(xii) such investment is an opportunity (1) presented to companies (other than
the General Partner) or other entities of which one or more Key Executives may be
trustees,officers or directors or(2) originated for the account of an entity with respect to
which an Affiliate of the General Partner or one or more Key Executives shall be serving
as a managing member or general partner or in a similar capacity prionto the date of this
Agreement;
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(xiii) such investment is in an asset which, though energy-related, is ancillary to
an investment in another industry or to an investment not otherwise required to be offered
to the Partnership (such as a generation facility that is located on a real estate
development);
(xiv) such investment constitutes the portion of an investment opportunity that
was offered to the Partners in accordance with Section 7.2(a); or
(xv) such investment constitutes the portion of an investment opportunity that
is made by the General Partner in accordance with .the penultimate sentence of Section
7.2(b).
For the avoidance of doubt,nothing herein shall be construed as requiring the General Partner or
its Affiliates to conclude that an investment opportunity is a"Non-Exclusive Investment"solely
by reason of the existence of one or more of the circumstances set forth above with respect to
such investment opportunity.
"Nonrecourse Deductions"shall have the meaning set forth in Regulation §1.704-
1(b)(1).
"Operating Company" means an "operating company" within the meaning of the
Plan Asset Regulation, including a "venture capital operating company" and "real estate
operating company".
"Opt-Out Certificate" shall have the meaning set forth in Section 3.8(a).
"Opt-Out Partner"shall have the meaning set forth in Section 3.W"
"Orvanizational Expenses" means any fees, costs or expenses incurred by or on
behalf of the Partnership to the extent attributable to the initial organization of the Partnership or
the offer or sale of Interests to the Limited Partners.
"Other SEI-I Partnership" means each SEI-I Partnership, excluding the
Partnership.
"Overhead Expenses" means rent for the Partnership's (or any Controlled
Affiliate's) place of business, salaries and benefits of personnel of the General Partner who are
also engaged in work for the benefit of the Partnership, office costs, such as office supplies,
computer equipment and utilities, and general and administrative expenses. In no event shall
Overhead Expenses be deemed to include asset management fees or expenses payable to the
Manager to the extent such fees or expenses are at market rates charged by unrelated third parties
for such services.
"Parallel Partnership" has the meaning set forth in Section 14.15.
NEWYOKK 5772577 A4(2K) -
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"Participating Plan" means any employee benefit plan, governmental plan or
governmental unit having a beneficial interest in the Group Trust.
"Participation Percentage"with respect to any Partner at any time means the ratio
of(i)the sum of the aggregate Capital Contributions of such Partner, the aggregate amount of
any capital contribution obligations of such Partner to the Partnership which are delinquent and
the aggregate amount of all potential capital contributions (other than then delinquent
contributions) which such Partner may be required to make to the Partnership pursuant to Article
III or Section 5.3 to (ii)the sum of the aggregate Capital Contributions of all Partners, the
aggregate amount of all capital contribution obligations of the Partners to the Partnership which
are delinquent and the aggregate amount of all potential capital contributions (other than then
delinquent contributions)which the Partners may be required to make to the Partnership pursuant
to Article III or Section 5.3.
"Partner Nonrecourse Debt" shall have the meaning set forth in Regulations
§§1.704-2(b)(4)and 1.704-2(i).
"Partner Nonrecourse Deductions'shall have the meaning set forth in Regulations
§1.704-2(b).
"Partners means the General Partner and all Limited Partners,collectively,where
no distinction is required by the context in which the term is used.
"Partnership" means the limited partnership formed pursuant to this Agreement
under the name"Starwood Energy Infrastructure Fund,L.P."
"Partnership Agreement"has the meaning set forth in the recitals hereto.
"Partnership's Co-Invest Percentage" shall mean, with respect to any proposed
investment, the ratio of (a) the aggregate Capital Commitments to the Partnership to (b) the
aggregate capital commitments to all SEW Partnerships that are participating in such proposed
investment.
"Passive Public Investment" means an investment in securities listed and traded
on a national securities exchange or in an over-the-counter market registered under the Securities
Exchange Act of 1934, as amended, or in puts, calls or other options on any such equity
securities, unless the Partnership's investment in such securities is made in connection with a
transaction or series of transactions in which the Partnership (i) intends, or is attempting to
position itself, to (a) become actively involved in the management or activities of the issuer of
such securities or (b) obtain control of such issuer (in either event, regardless of the success of
such intention, attempt or strategy), and/or (ii) receives such securities in consideration for a
disposition or other transfer of a Project Interest.
"Permitted Affiliate" means, with respect to another 'Person, (i) any Person
directly or indirectly owning, controlling or holding with power to vote 80% or more of the
ti
NEWYORK 5772537x•14(2K)
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outstanding voting securities of or equity or beneficial interests in such other Person, (ii)any
Person 80% or more of whose outstanding voting securities or equity or beneficial interests are
directly or indirectly owned,controlled or held with power to vote by such other Person, (iii)any
Person 80%or more of whose outstanding voting securities or equity or other beneficial interests
are directly or indirectly owned, controlled or held with power to vote by a Person or Persons
directly or indirectly owning, controlling or holding with power to vote 80% or more of the
outstanding voting securities or equity or other beneficial interests of such other Person with.
whom affiliate status is being tested, (iv)any general partner of a Partner or any Family Member
or Family Trust of any such general partner, or(v)any other qualified benefit plan(s)maintained
on behalf of the same employer or group of employers and any trust(s) or trustee(s) that is a
successor thereto.
"Permitted Temporary Investment"has the meaning set forth in Section 6.10.
"Person" means any individual, general partnership, limited partnership, limited
liability company, corporation,joint venture, trust, business trust, cooperative or association and
the heirs, executors, administrators, legal representatives, successors and assigns of such Person
where the context so admits.
"Plan Asset Event" has the meaning set forth in Section 8.17(e).
"Plan Asset Regulation" means the U.S. Department of Labor regulation located
at 29 C.F.R. Section 2510.3-101, or any successor regulation thereto, as in effect at the time of
reference,as modified by Section 3(42)of ERISA.
"Plan Assets means"plan assets"as defined in the Plan Asset Regulation.
"Plan Investor" means any Benefit Plan Investor or Limited Partner that is a
governmental plan, a foreign plan or other employee benefit plan, account or arrangement that is
not subject to the fiduciary provisions of ERISA or Section 4975 of the Code.
"POW has the meaning set forth in Section 8.6(e).
"Pooled Investment Vehicle" means an investment partnership or fund which is
organized for the purpose of investing in one or more than one Project Interest (and any
successor to, or replacement or follow-on of such partnership or fund, as the case may be);
provided, however, a Pooled Investment Vehicle shall not be deemed to include any C
corporation, partnership or other entity to which energy related assets may hereafter be
contributed by other investment partnerships or entities in which the General Partner or any of its
Affiliates has direct or indirect interests, or any such entity to which Project Interests are
hereafter contributed by the Partnership and which are Affiliates of the Partnership during the
Exclusivity Period (subject, however, to such entity becoming unaffiliated with the Partnership
due to initial public offerings, admission of new Partners through contribution of assets and
similar events)or which are Non-Controlled Entities.
KEWYORK 5772537 v14(2K)
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"Preferred Return" means, with respect to each Partner, as of any date, an eight
percent(8%)cumulative, compounded annually, annual return on the weighted average of such
Partner's Adjusted Capital Contribution (calculated by taking into account the amount of such
Partner's Adjusted Capital Contribution from time to time) from the dates such Partner's Capital
Contribution was contributed to the Partnership to the date as of which such calculation is being
made.
"Prime Rate"has the meaning specified in Section 33(c).
"Project Company means each Person that is either an Additional Investment
Vehicle or an Affiliate of the General Partner. .
"Project Interests"has the meaning set forth in Section 2.3.
"PUBCA 2005 means the Public Utility Holding Company Act of 2005, as
amended from time to time..
"Purchase Price"has the meaning set forth in Section 3.3(b)(i).
"purchaser has the meaning set forth in Section 3.3(b)(i).
"Pursuit Costs" means all costs and expenses incurred by or on behalf of the
Partnership associated with a potential or actual acquisition or disposition of a Project Interest.
"Redeemed Partner"has the meaning set forth in Section 3.4(a).
"Redemption Notice"has the meaning set forth in Section 3.4(a).
"Redemption Price"has the meaning set forth in Section 3.4(a).
"Reference Period"has the meaning set forth in Section 7.8(a).
"Regulated Investor" has the meaning set forth in Section 8.17(8).
"Regulation"means a Treasury Regulation promulgated under the Code.
"Re ug latory Issue" has the meaning set forth in Section 8.170).
"Reserved Capital Commitments" means the portion of the aggregate Capital
Commitments which, from time to time (whether before or after the end of the Commitment
Period), has been reserved or allocated by the General Partner for investments, expenditures or
other uses of the type described in Section 3.2(c).
"Restricted Partnership"has the meaning specified in Section 7.3(a).
NEWYORK 5772537 v14(2K) -
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"Revised Uniform Act" means the Delaware Revised Uniform Limited
Partnership Act,as amended,as that law applies to the Partnership.
"Securities Act means the United States Securities Act of 1933, as amended
from time to time.
"SEG"has the meaning specified in Section 9.2(a).
"SEI-I Partnership" means the Partnership and each Backstop Partnership,
Parallel Partnership, Side-by-Side Partnership and Co-Investment Partnership.
"Separate Funds" means one or more of the Other SEI-I Partnerships, Targeted
Funds, and one or more Pooled Investment Vehicles or managed separate accounts formed by
the General Partner (or any Affiliate of the General Partner controlled, directly or indirectly, by
Barry S. Sternlicht or any other Key Executive, individually or in the aggregate) for the
investment in,or origination of,any transaction or entity(including any Project Interest)which is
not an Exclusive Investment or is not required to be offered to the Partnership hereunder
(including,.without limitation, under Section 8.10(12)) and, in each case, one or more successors
to,or replacements or follow-ons of, any of the foregoing entities formed by the General Partner
(or any Affiliate of the General Partner). For the avoidance of doubt and without limiting the
generality of the foregoing, each entity comprising part of either Starwood Capital Hospitality
Fund I and its successor funds and/or Starwood Global Opportunity Fund VII and its predecessor
and successor funds,shall constitute a Separate Fund.
"Services' means any services which may be performed or provided including,
without limitation, project development and/or construction services, leasing, advisory and/or
consulting services, asset and/or property management, due diligence and/or research services,
legal services, structured finance and/or brokerage services.
"Side-by-Side Partnership" has the meaning specified in Section 14.17.
"Single Asset Test" has the meaning specified in Section 8.4(a).
"Subscription Agreement" means the subscription agreement executed, delivered
and accepted by each Partner and the General Partner pursuant to which each Partner subscribed
for its Interest.
"Subscription Period"has the meaning set forth in Section 7.8(a).
"Subsequent Fund"has the meaning specified in Section 8.10(e).
"Substituted Limited Partner" means any Person admitted to the Partnership as a
substituted Limited Partner pursuant to the provisions of Article IX.
"Successor Fund" means any investment fund (whether or not named "Starwood
Energy Infrastructure Fund 11" or anything similar) formed by the General Partner or its
NEW YORK 5772537 M(IK)
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Affiliates after the expiration of the Exclusivity Period with investment objectives substantially
similar to the Partnership, excluding, for the avoidance of doubt, any and all Targeted Funds,
Separate Funds and Non-Controlled Entities.
"Targeted Fund"has the meaning set forth in Section 8.10(c).
"Tax Distribution"has the meaning set forth in Section 5.2(a).
"Tax Matters Partner'shall have the meaning set forth in Section 8.14.
"transfer" has the meaning set forth in Section 9.1.
"Treasury Regulations" mean the Procedure and Administration Regulations
promulgated by the United States Department of the Treasury under the Code,as amended.
"Two-Thirds in Interest of the Non-Defaulting Limited Partners" means Non-
Defaulting Limited Partners whose aggregate Participation Percentages are equal to or exceed
66%%of all Non-Defaulting Limited Partners' Participation Percentages.
"Uniform Commercial Code"has the meaning specified in Section 3.3(a).
"United States and Canada" means,collectively,(a)the United States of America,
including each State of the United States and the District of Columbia, (b) Canada, including
each Province of Canada and the National Capital Region and (c) each territory, dependency,
protectorate or possession of any of the foregoing.
"Valuation Date" shall mean any date"that the Partnership assets are valued for
any reason.
"Withdrawing Limited Partner"has the meaning set forth in Section 9.3(e).
"Working Capital Line" has the.meaning set forth in Section 8.19(a).
"Working Capital Line Lender" means, collectively, any lender or lenders
advancing the Working Capital Line and any agents or other representatives acting on behalf of
such lender or lenders.
t
NEWYORK 5772577 M 12K)
APPENDIX C
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AGREEMENT
Form of Instrument of Transfer
The undersigned, (the "Assignor"), hereby assigns to (the
"Assignee") all [OR DESCRIBE APPROPRIATE PORTION] of its right, title and interest in
and to Starwood Energy Infrastructure Fund, L.P., a Delaware limited partnership (the
"Partnership"), and directs that all future distributions of cash and allocations of income, gain,
loss, deduction and credit on account of said Interest be paid or allocated to the Assignee [OR
DESCRIBE APPROPRIATE PORTION]. Except for transfers pursuant to Section 9.3(b) of the
Amended and Restated Limited Partnership Agreement of the Partnership (the "Partnership
Agreement"), THIS ASSIGNMENT SHALL BECOME EFFECTIVE(and the Assignee entitled
to distributions) ONLY UPON ACTUAL ACCEPTANCE OF THIS ASSIGNMENT BY THE
GENERAL PARTNER OF THE PARTNERSHIP(the"General Partner").
The Assignee represents and warrants to the Assignor and the Partnership that the
following statements are true: (i)the Assignee has thoroughly read and understands the
Partnership Agreement; (ii)the Assignee is experienced in investment and business matters and
such Limited Partner and its counsel have reviewed all documents and inquired into all matters
concerning an investment in Partnership interests, and had all questions answered, which they
desired to review and question for the purpose of making a decision to invest; (iii)the Assignee
is [DESCRIBE APPLICABLE CATEGORY OF "QUALIFIED PURCHASER"DEFINITION];
(iv)such Assignee is acquiring its Interest for its own account for investment purposes and not
with a view to the distribution thereof; (v)such Assignee understands that the Limited Partner
Interests are not registered under the Securities Act of 1933, as amended, in reliance on the
representations and warranties contained herein; (vi)the Assignee recognizes that an investment
in the Partnership involves risk; (vii)the Assignee understands that the transferability of the
assigned Interest in the Partnership is restricted pursuant to the provisions of the Partnership
Agreement and that the Assignee cannot expect to be able to liquidate the assigned Interest
readily in case of emergency; (viii)unless otherwise indicated in this Instrument of Transfer,that
the Assignee is the sole party in interest in the assigned Interest and, as such, is vested with all
legal and equitable rights in such Interest; and (ix)except for legal opinions delivered to the
Partnership upon which the Partners shall be entitled to rely, such Assignee has not relied on the
General Partner or any of its Affiliates or advisors in connection with any state, federal or local
income or other tax matter related to the Partnership or the Partnership Agreement and that such
Assignee has looked solely to its own counsel and other advisors in connection with all such
matters, including,but without limitation,the characterization of the Partnership as a partnership
for tax purposes and the allocations of income, gain, profits and losses pursuant to the
Partnership Agreement.
, as Assignee, hereby accepts said Interest subject to all terms,
covenants and conditions of the Partnership Agreement, as amended from time to time, and
agrees to be bound by the terms thereof as if named as a Limited Partner therein.
NEWYORK$772537 v14(2K)
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Dated:
Assignor
Dated:
Assignee
Assignee's Address
Assignee's Taxpayer I.D.Number
ASSIGNMENT ACCEPTED (check one,
if transfer is made other than pursuant to
Section 9.3(b)):
Substituted Limited Partner
Assignee of Interest
STARWOOD ENERGY INFRASTRUCTURE FUND,L.P.,
By: SEI MANAGEMENT,L.P.,
By: SEI MANAGEMENT HOLDINGS,L.L.C.,
its General Partner
By: STARWOOD ENERGY GROUP GLOBAL,L.L.C.,
its General Manager
By:
Name: Barry S. Sternlicht
Title: General Manager.
Date:
NEW YORK 5772537 A 4(2K)
EXHIBIT 18
Defaware
PAGE 1
"Ihe First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY "STARWOOD ENERGY INFRASTRUCTURE
FUND, L-P. " IS DULY FORMED UNDER THE LAWS OF THE STATE OF
DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL EXISTENCE SO
FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE FIFTEENTH DAY
OF APRIL, A.D. 2008.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE
NOT BEEN ASSESSED TO DATE-
'k
rd a Harriet Smith Windsor,Secretary of State
4290514 8300 AUTHENTICATION: 6526392
080433311 \�°�? DATE: 04-15-08
You may verify this certificate online
at corp.delaware.gov/authver.shtml
EXHIBIT 19
RESOLUTIONS ADOPTED BY
THE PARTNERS OF
STARWOOD ENERGY INFRASTRUCTURE FUND L.P.
WHEREAS, it is deemed to be in the best interest of Starwood Energy
Infrastructure Fund, L.P. (the"Partnership")to acquire from the City of Vernon a minority, non-
controlling participation interest in each of the Mead-Phoenix Transmission Project and the
Mead Adelanto Transmission Project (collectively, the "Mead Projects").
NOW, THEREFORE, BE IT RESOLVED, that the execution, delivery and
performance by the Partnership of that certain Purchase and Sale Agreement(as amended,
supplemented, or otherwise modified, the "Purchase Agreement"), dated as of December 13,
2007, by and among City of Vernon and the Partnership, is authorized and the authorized officer
is directed to execute and deliver to the City of Vernon, on behalf of and in the name of this
Partnership, the Purchase Agreement and the Related Agrements (as defined in the Purchase
Agreement) in such form as may be approved by the authorized officer executing the same, his
or her execution thereof to be conclusive evidence of such approval; and
FURTHER RESOLVED,that the officers and representatives of the Partnership
be, and each of them hereby is, authorized and directed in the name and on behalf of the
Partnership to do all acts and things, to make such disbursements and to sign, seal, execute,
acknowledge, file, record and deliver all papers, instruments, documents and certificates, from
time to time necessary, desirable or appropriate to be done,performed or recorded in order to
carry out the purpose and intent of the foregoing resolutions, provided that no such individual
shall be authorized with respect to any agreement, certificate, application, undertaking or paper,
instrument or document that he signs or will sign in his or her individual capacity; and
FURTHER RESOLVED, that all acts and deeds heretofore done by any
authorized officer in the name and on behalf of the Partnership to effect the transactions
contemplated by the foregoing resolutions, including the negotiation, execution,
acknowledgement or delivery of any agreements, instruments or documents, be, and they hereby
are, ratified, confirmed and approved in all respects-.
LA I:H6378224v]
EXHIBIT 20
EXHIBIT C
Madison Grose,Authorized Officer
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EXHIBIT 21
f
—+' r
OFFICE OF THE CITY ATTORNEY
Jeff A. Harrison, City Attorney
4305 Santa Fe Avenue,Vernon, California 90058
Telephone (323)583-8811 Fax (323)826-1438
Apri]A, 2008
Starwood Energy Infrastructure Fund,L.P.
Re: Transaction for certain power assets
Ladies and Gentlemen:
Pursuant to Section 2;6(x)(6) of that certain Purchase and Sale Agreement dated
December 13, 2007, as amended by that certain Notice of Extension and Agreement, dated as of
March 31, 2008, and that certain Second Extension and Agreement, dated as of April 18, 2008
(collectively, the"PSA")by and between the City of Vernon, California, a municipal corporation
and chartered city duly organized and existing under and by virtue of the Constitution and laws
of the state of California (the "City") and Starwood Energy Infrastructure fund, L.P., a Delaware
limited partnership. ("Starwood"), I hereby advise you as of the date hereof that I am of the
opinion that:
A. The City is duly organized and validly existing as a chartered city under the
Constitution and laws of the State of California and its Charter.
B. The members of the Council of the City (the "City Council") are duly invested in
office with full power and authority under the City's Charter to act on behalf of
the City.
C. The City has the full legal right, power and authority to enter into and perform its
obligations under the PSA and the Related Agreements.
D. The PSA and the Related Agreements constitute valid and binding obligations of
the City, enforceable against the City in accordance with their respective terms.
Each of the PSA and the Related Agreements has been duly executed and
delivered by the City.
-, crusivei5Indusrriaf
Starwood Energy Infrastructure Fund,L.P.
ApriIA 2008
Page 2
E. The City Council has duly and validly adopted Resolution 9511 authorizing the
transaction contemplated by the PSA and the Related Agreements at meetings of
the City Council that were called and held pursuant to law and the City's Charter
and with all public notice required and at which a quorum was present and acting
throughout, and Resolution 9511 is now in full force and effect, and has not been
amended.
F. All action necessary for the authorization, execution, delivery of the PSA and the
Related Agreements by the City and the performance of by the City of the
obligations to be performed by the City as of the date hereof under the PSA and
the Related Agreements has been taken on the part of the City.
Respectfully/submitted,
JfE A. 14 son
City Attorney