Exhibit 3.2
-----------
L. I.c.(5)(b)
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ZOND WINDSYSTEM PARTNERS, LTD-. SERIES 85-C
A CALIFORNIA LIMITED PARTNERSHIP
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TABLE OF CONTENTS
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Page
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Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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Section 1.01 Act . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Affiliate . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Agreement . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.04 Available Cash . . . . . . . . . . . . . . . . . . . . 1
Section 1.05 Capital Account . . . . . . . . . . . . . . . . . . . . 2
Section 1.06 Capital Contribution . . . . . . . . . . . . . . . . . . 2
Section 1.07 Code . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.08 Costs . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.09 Distributable Cash . . . . . . . . . . . . . . . . . . . 2
Section 1.10 Distribution Date . . . . . . . . . . . . . . . . . . . 3
Section 1.11 DWFSI . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.12 General Partner . . . . . . . . . . . . . . . . . . . . . 3
Section 1.13 Infrastructural Facilities . . . . . . . . . . . . . . . 3
Section 1.14 Investor Notes . . . . . . . . . . . . . . . . . . . . . 3
Section 1.15 Lease Agreement . . . . . . . . . . . . . . . . . . . . . 4
Section 1.16 Lessor . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.17 Limited Partners . . . . . . . . . . . . . . . . . . . . 4
Section 1.18 Majority-in-Interest of the Limited
Partners. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.19 Memorandum . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.20 Operating Site . . . . . . . . . . . . . . . . . . . . . 4
Section 1.21 Original Limited Partner . . . . . . . . . . . . . . . . 4
Section 1.22 Partners . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.23 Partnership . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.24 Person . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.25 Power Agreement . . . . . . . . . . . . . . . . . . . . 5
Section 1.26 Profits and Losses . . . . . . . . . . . . . . . . . . . 5
Section 1.27 Property . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.28 Regular Limited Partner . . . . . . . . . . . . . . . . 6
Section 1.29 Regular Unit . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.30 Reserves . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.31 Special Limited Partner . . . . . . . . . . . . . . . . . 6
Section 1.32 Special Unit. . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.33 Subscription Agreement . . . . . . . . . . . . . . . . . 6
Section 1.34 Substituted Limited Partner . . . . . . . . . . . . . . 7
Section 1.35 Treasury Regulations . . . . . . . . . . . . . . . . . . 7
Section 1.36 Turbines . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.37 Unit . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.38 Unit Holder . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.39 Wind Park Easement Agreement . . . . . . . . . . . . . . 7
Section 1.40 Windsystem. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.41 Windsystem Construction Agreement . . . . . . . . . . . 7
Section 1.42 Windsystem Management Agreement . . . . . . . . . . . . 8
Section 1.43 ZCC IV . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1.44 Zond. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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TABLE OF CONTENTS
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Page
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Formation of the-Partnership . . . . . . . . . . . . . . . . . . . . . . 8
----------------------------
Section 2.01 Formation . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.02 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.03 Recording of the Certificate . . . . . . . . . . . . . . 8
Section 2.04 Principal Place of Business . . . . . . . . . . . . . . . 8
Section 2.05 Name and Place of Residence. . . . . . . . . .. . . . . . 8
of Each Partner . . . . . . . . . . . . . . . . . . . . . 8
Section 2.06 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.07 Tax Shelter Registration Number . . . . . . . . . . . . 9
Business Purpose and Authority of the Partnership . . . . . . . . . . . 10
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Section 3.01 Business and Purpose of the Partnership . . . . . . . . . 10
Section 3.02 Authority of the Partnership . . . . . . . . . . . . . . 10
Capital Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 10
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Section 4.01 Capital Contribution of General Partner . . . . . . . . . 10
Section 4.02 Capital Contributions of Limited Partners . . . . . . . . 11
Section 4.03 Use of Capital Contributions . . . . . . . . . . . . . . 11
Section 4.04 Interest on Capital Contributions . . . . . . . . . . . 11
General Partners' and Affiliates' Compensation
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and Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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Section 5.01 Compensation. . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.02 Reimbursement . . . . . . . . . . . . . . . . . . . . . 11
Distributions to Partners . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------
Section 6.01 Distributable Cash . . . . . . . . . . . . . . . . . . . 13
Section 6.02 Amounts Withheld . . . . . . . . . . . . . . . . . . . . 13
Allocations to Partners . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------
Section 7.01 Capital Accounts . . . . . . . . . . . . . . . . . . . . 13
Section 7.02 Allocations of Profits and Losses . . . . . . . . . . . 13
Section 7.03 Special Allocations . . . . . . . . . . . . . . . . . . 13
Section 7.04 Allocations of Tax Credits . . . . . . . . . . . . . . . 14
Section 7.O5 Other Allocations . . . . . . . . . . . . . . . . . . . . 15
Section 7.06 Distributions and Allocations
in Respect to Transferred Units . . . . . . . . . . . . . 15
Section 7.07 No Repayment Obligation . . . . . . . . . . . . . . . . . 15
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TABLE OF CONTENTS
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Page
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Management and Operation of Business . . . . . . . . . . . . . . . . . . 16
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Section 8.01 Management Authority of the General
Partner . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.02 Obligations of the General Partners . . . . . . . . . . 18
Section 8.03 Restrictions on Authority of the
General Partner . . . . . . . . . . . . . . . . . . . . 18
Section 8.04 Purchase and Sale of Interests. . . . . . . . . . . . . . 19
Section 8.05 Execution of Certificates . . . . . . . . . . . . . . . . 19
Rights and Obligations of Partners . . . . . . . . . . . . . . . . . . . 19
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Section 9.01 No Loans or Additional Contributions. . . . . . . . . . . 19
Section 9.02 No Liability for Partnership obligations . . . . . . . . 20
Section 9.03 No Participation in Management . . . . . . . . . . . . . 20
Section 9.04 No Right to Withdraw Capital Contributions. . . . . . . . 20
Section 9.05 No Priorities Among Partners . . . . . . . . . . . . . . 20
Section 9.06 Voting Rights . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.07 Matters Subject to Vote. . . . . . . . . . . . . . . . . 20
Section 9.08 Meetings of Partners. . . . . . . . . . . . . . . . . . . 21
Section 9.09 Other Activities. . . . . . . . . . . . . . . . . . . . 22
Section 9.10 Special Power of Attorney . . . . . . . . . . . . . . . 22
Change in a General Partner and Transfer of a General
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Partner's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 10.01 Withdrawal of a General Partner. . . . . . . . . . . . . 23
Section 10-02 Removal of a General Partner; Right
to Remove and Method of Removal . . . . . . . . . . . . 24
Section 10.03 Effect of Removal or Withdrawal . . . . . . . . . . . . 24
Section 10.04 Transfer of Interest . . . . . . . . . . . . . . . . . . 25
Section 10.05 Continuing Liability . . . . . . . . . . . . . . . . . . 26
Transfers of, and Restrictions on Transfers of, Interests. . . . . . . . 26
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Section 11.01 Purchase for Investment. . . . . . . . . . . . . . . . . 26
Section 11.02 Restrictions on Transfer of Interests. . . . . . . . . . 26
Section 11.03 Admission of Substituted Limited Partners. . . . . . . . 27
Section 11.04 Rights of Assignee of an Interest. . . . . . . . . . . . 28
Section 11.05 Joint Ownership of Interests . . . . . . . . . . . . . . 29
Section 11.06 Defaulting Regular Limited Partners. . . . . . . . . . . 29
Section 11.07 No Interest; No Return . . . . . . . . . . . . . . . . . 30
Books, Records, Accounting, Tax Elections and Banking. . . . . . . . . . 30
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TABLE OF CONTENTS
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Page
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Section 12.01 Books, Records and Reports . . . . . . . . . . . . . . . 30
Section 12.02 Custody of Partnership Funds; Bank
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.03 Accountants. . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.04 Filing of Returns. . . . . . . . . . . . . . . . . . . . 31
Section 12.05 Tax Elections. . . . . . . . . . . . . . . . . . . . . . 31
Section 12.06 Taxable Year, Method Accounting. . . . . . . . . . . . . 32
Section 12.07 Annual Audit . . . . . . . . . . . . . . . . . . . . . . 32
Duration and Termination . . . . . . . . . . . . . . . . . . . . . . . . 32
------------------------
Section 13.01 Death, Insanity or Disability of a Unit
Holder . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 13.02 Events Causing Dissolution . . . . . . . . . . . . . . . 33
Section 13.03 Liquidation. . . . . . . . . . . . . . . . . . . . . . . 33
Section 13.04 Negative Capital Account . . . . . . . . . . . . . . . . 35
Section 13.05 Purchase by General Partner. . . . . . . . . . . . . . . 35
Section 13.06 General Partner's Discretion . . . . . . . . . . . . . . 35
Section 13.07 Liquidation Report . . . . . . . . . . . . . . . . . . . 35
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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Section 14.01 Proposal and Adoption of Amendments
Generally. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 14.02 Limitations on Amendments. . . . . . . . . . . . . . . . 36
Section 14.03 Amendments on Admission or Withdrawal
of Partners. . . . . . . . . . . . . . . . . . . . . . . 37
Section 14.04 Amendments Without Consent of Limited
Partners . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 14.05 Filing of Amendments . . . . . . . . . . . . . . . . . . 38
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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Section 15.01 Indemnification of General Partner . . . . . . . . . . . 38
Section 15.02 Burden and Benefit . . . . . . . . . . . . . . . . . . . 38
Section 15.03 Applicable Law . . . . . . . . . . . . . . . . . . . . . 39
Section 15.04 Method of Giving Consent . . . . . . . . . . . . . . . . 39
Section 15.05 Descriptive Headings . . . . . . . . . . . . . . . . . . 39
Section 15.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.07 Severability of Provisions . . . . . . . . . . . . . . . 39
Section 15.08 Partition. . . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.09 Notices . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.10 Time . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.11 Force Majeure. . . . . . . . . . . . . . . . . . . . . . 40
Section 15.12 Unit Certificates. . . . . . . . . . . . . . . . . . . . 40
Section 15.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . 41
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TABLE OF CONTENTS
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Exhibit A - Form of Certificate of Ownership of Regular Limited
Partnership Interest
Exhibit B - Form of Certificate of Ownership of Special Limited
Partnership Interest
Exhibit C - Form of Certificate of Ownership of General Partnership
Interest
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FIRST AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
ZOND WINDSYSTEM PARTNERS, LTD. SERIES 85-C,
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is
entered into among Zond Windsystems Management Corporation V, a California
corporation, (the "General Partner"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a Professional
Corporation (the "Original Limited Partner"), and such other Persons who are
admitted to the Partnership (as defined below) pursuant to Section 14.03 hereof.
1. Definitions
-----------
Section 1.01 Act
------------ ---
"Act" means the California Revised Limited Partnership Act of the
State of California as set forth in Chapter 3 of Title 2 of the California
Corporations Code, Sections 15611-15723. The term "Act" shall also include all
revisions, amendments and regulatory interpretations of those provisions.
Section 1.02 Affiliate
------------ ---------
"Affiliate" means (a) any Person directly or indirectly controlling,
controlled by or under common control with another Person, (b) any Person owning
or controlling 10% or more of the outstanding voting securities of such other
Person, (c) any officer, director or partner of such Person and (d) if such
other Person is an officer, director or partner, any entity for which such
Person acts in any such capacity.
Section 1.03 Agreement
------------ ---------
"Agreement" means this First Amended and Restated Agreement of Limited
Partnership as originally executed and as amended from time to time. Words
such as "herein," "hereinafter," "hereof," "hereto" and "hereunder," when used
in this Agreement, refer to this Agreement as a whole, unless the context
otherwise requires.
Section 1.04 Available Cash
------------ --------------
"Available Cash" means the sum arrived at by deducting from the total
annual gross cash receipts of the Partnership derived from all sources the
annual "Costs" of the Partnership. Such Costs, for the purposes herein, shall
mean all operating cash disbursements attributable to the Partnership including,
without limitation, operating and maintenance expenses, easement payments,
personal property taxes, management fees, Infrastructural Facilities operating
costs, salaries, utilities, ordinary repair and maintenance, accounting,
computer time-sharing, statistical or bookkeeping service and computing or
accounting equipment use, travel by Partnership employees, accounting, tax
preparation, legal, telephone expenses and payments
-1-
of principal and interest on loans to the Partnership. There shall be included
in Costs with respect to the Partnership the direct out-of-pocket expenses
(including without limitation general overhead and administrative charges
reasonably allocated to Partnership affairs by the General Partner or its
Affiliates) which are incurred by the General Partner or Affiliates (including
payments to salaried employees and payment for services and supplies) in
performing bookkeeping, accounting, tax preparation and legal services for the
Partnership necessary for the operation of the Partnership and its business,
which services, but for their performance by the General Partner or any such
Affiliate, would be required to be performed for the Partnership by another
Person, provided that the expenses so included in Costs shall not exceed the
amount the Partnership would be required to pay to non-Affiliated Persons for
comparable services which could reasonably be made available to the Partnership.
"Costs" do not include depreciation, cost recovery, amortization and depletion
deductions.
Section 1.05 Capital Account
------------ ---------------
"Capital Account" has the meaning set forth in Section 7.01 hereof.
Section 1.06 Capital Contribution
------------ --------------------
"Capital Contribution" means the amount of money contributed to the
capital of the Partnership by a Partner from time to time pursuant to Article 4
hereof and does not include any payments to any Person other than the
Partnership pursuant to an Investor Note or in connection with obtaining a loan
represented by an Investor Note (such as, for example, fees, costs, and bonding
premiums).
Section 1.07 Code
------------ ----
"Code" means the Internal Revenue Code of 1954, as amended (or any
corresponding provision or provisions of succeeding law).
Section 1.08 Costs
------------ -----
"Costs" mean those items designated as such in the definition of
Available Cash.
Section 1.09 Distributable Cash
------------ ------------------
"Distributable Cash" means, with respect to any taxable year or other
period, Available Cash less amounts set aside from Available Cash for the
restoration or creation of Reserves.
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Section 1.10 Distribution Date
------------ -----------------
"Distribution Date" means the date of the distribution of
Distributable Cash which first causes the aggregate amount of distributions to
the Regular Limited Partners pursuant to Section 6.01(a) hereof to equal the
product of the number of outstanding Regular Units and $8,333.
Section 1.11 "DWFSI"
------------ -------
"DWFSI" means ▇▇▇▇ ▇▇▇▇▇▇ Financial Services Inc. or another affiliate
of the Placement Agent, which has arranged a credit facility for those investors
wishing to finance a portion of the purchase price of their Regular Unit(s).
Section 1.12 General Partner
------------ ---------------
"General Partner" means the Person designated as such in the initial
paragraph of this Agreement and any successor or successors in interest, and any
Person admitted as an additional or successor General Partner, in their capacity
as General Partner.
Section 1.13 Infrastructural Facilities
------------ --------------------------
"Infrastructural Facilities" means the infrastructural improvements to
be constructed at the Operating Site by ZCC IV and utilized by the Partnership
in connection with its operation of the Windsystem. Such Infrastructural
Facilities shall include (i) items directly owned by the Partnership, such as
the concrete pads to which each Turbine owned by the Partnership is affixed, the
insulated wire cables connecting each such Turbine to the intermediate step-up
transformer, the intermediate step-up transformers and the insulated wire cables
connecting the intermediate step-up transformers to the 20MW power substation
and a 20MW power substation and (ii) certain items, such as roads on the
Operating Site, which shall be owned by Zond and made available to the
Partnership pursuant to the terms of the Wind Park Easement Agreement.
Section 1.14 Investor Notes
------------ --------------
"Investor Notes" shall mean the recourse investor notes representing
loans by DWFSI made to investors who wish to finance their purchase of Units and
secured by, among other things, the financed Units.
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Section 1.15 Lease Agreement
------------ ---------------
"Lease Agreement" means the Amended Ground Lease for Wind Park
Development on the Rooney Ranch, Alameda County between the City of Santa ▇▇▇▇▇
and Zond.
Section 1.16 Lessor
------------ ------
"Lessor" means the City of Santa ▇▇▇▇▇, a California municipal
corporation, and its successors and assigns.
Section 1.17 Limited Partners
------------ ----------------
"Limited Partners" means the Original Limited Partner and such other
Persons who are admitted to the Partnership as additional Limited Partners
(whether as Regular Limited Partners or as Special Limited Partners) or
Substituted Limited Partners pursuant to Article 11 or Article 14 hereof,
respectively. Reference to a "Limited Partner means any one of the Limited
Partners.
Section 1.18 Majority-in-Interest of the Limited Partners
------------ --------------------------------------------
"Majority-in-Interest of the Limited Partners" means the holders of a
majority of the Units.
Section 1.19 Memorandum
------------ ----------
"Memorandum" means the Confidential Private Placement Memorandum dated
November 4, 1985 relating to the Partnership.
Section 1.20 Operating Site
------------ --------------
"Operating Site" means the real property to which the Partnership
holds easement rights under the Wind Park Easement Agreement.
Section 1.21 Original Limited Partner
------------ ------------------------
"Original Limited Partner means the Person designated as such in the
initial paragraph of this Agreement.
Section 1.22 Partners
------------ --------
"Partners" means the General Partners and the Limited Partners.
Reference to a "Partner" means any one of the Partners.
Section 1.23 Partnership
------------ -----------
"Partnership" means the partnership formed pursuant to this Agreement.
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Section 1.24 Person
------------ ------
"Person" means any individual, partnership, corporation, trust or
other entity.
Section 1.25 Power Agreement
------------ ---------------
"Power Agreement" means the Standard Offer No. 4 Power Purchase
Agreement for Long Term Energy and Capacity executed on December 31, 1984 by
Wind Developers, Inc. and on January 17, 1985 by Pacific Gas and Electric
Company, which was assigned to Zond on October 5, 1985, and which was assigned
by Zond to the Partnership.
Section 1.26 Profits and Losses
------------ ------------------
"Profits" and "Losses," as the case may be, for any taxable year or
other period shall be an &mount equal to the Partnership's taxable income or
loss for such year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) All gains specially allocated pursuant to Section 7.03(c)
hereof shall not be taken into account;
(ii) Any income of the Partnership that is exempt from Federal
income tax and is not otherwise taken into account in computing Profits or
Losses pursuant to this Section shall be added to such taxable income or loss;
(iii) Any expenditures or other items of the Partnership not
deductible in computing taxable income or loss, not properly chargeable to
capital account for Federal income tax purposes and not described in any other
subsection of this Section shall be subtracted from such taxable income or loss;
and
(iv) Any gain or loss which would have been realized by the
Partnership on the sale of assets distributed in kind to Partners pursuant to
Section 13.03 hereof, determined with reference to the fair market value and the
adjusted tax basis of such property for Federal income tax purposes immediately
prior to such distribution, shall be added to or subtracted from, respectively,
such taxable income or loss.
Section 1.27 Property
---------------------
"Property" means any and all property, assets or rights acquired by
the Partnership in the conduct of its business in accordance with the terms of
the Agreement.
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Section 1.28 Regular Limited Partner
------------ -----------------------
"Regular Limited Partner" means a Person who purchases a Regular Unit
and is admitted to the Partnership as a Limited Partner pursuant to Article 14
hereof.
Section 1.29 Regular Unit
------------ ------------
"Regular Unit" means an interest in the Partnership representing
Capital Contributions totaling $25,000, paid by a Regular Limited Partner
pursuant to Article 4 hereof, which is entitled to the distributions and
allocations provided for with respect to Regular Limited Partners as set forth
in Article 6 and Article 7, respectively, hereof.
Section 1.30 Reserves
------------ --------
"Reserves" means payments made or amounts allocated during any period
to reserves which shall be maintained in amounts deemed sufficient by the
General Partner, in its sole discretion, for working capital, to pay taxes,
insurance, debt service, repairs, for replacements, capital improvements or
renewals or other costs --and expenses incident to the business of the
Partnership, or as may otherwise be required to be maintained as reserves
pursuant to any agreement to which the Partnership is a party. Upon the
completion of the offering of Units as provided for in the Memorandum, the
General Partner shall allocate from the initial Capital Contribution of the
General Partner and from proceeds of the sale of Units sufficient cash to create
a cash reserve account with an initial deposit equal to the product of (i) the
number of Turbines purchased by the Partnership under the Windsystem
Construction Agreement and (ii) $7,500.
Section 1.31 Special Limited Partner
------------ -----------------------
"Special Limited Partner" means a Person who purchases a Special Unit
and is admitted to the Partnership as a Limited Partner pursuant to Article 14
hereof.
Section 1.32 Special Unit
------------ ------------
"Special Unit" means an interest in the Partnership representing
Capital Contributions totaling $25,000 paid by a Special Limited Partner
pursuant to Article 4 hereof, which is entitled to the distributions and
allocations provided for with respect to Special Limited Partners as set forth
in Article 6 and. Article 7, respective, hereof.
Section 1.33 Subscription Agreement
------------ ----------------------
"Subscription Agreement" means the subscription agreement
substantially in the form included in the Subscription Booklet for Limited
Partners, executed by each Person in connection with his purchase of Units.
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Section 1.34 Substituted Limited Partner
------------ ---------------------------
"Substituted Limited Partner" means any Person admitted to the
Partnership either as a Regular Limited Partner or as a Special Limited Partner
pursuant to the provisions of Article 11 hereof.
Section 1.35 Treasury Regulations
------------ --------------------
"Treasury Regulations" means the Income Tax Regulations promulgated
under the Code (or any successor provisions thereof).
Section 1.36 Turbines
------------ --------
"Turbines" means the minimum number of 25 and the maximum number of
200 Vistas Model V17 wind turbine generator, each having a rated capacity of
100KW, and each being equipped with two generators, a controller and a
supporting steel lattice tower, which are being purchased by the Partnership
from ZCC IV pursuant to the Windsystem Construction Agreement.
Section 1.37 Unit
------------ ----
"Unit" means an interest in the Partnership representing Capital
Contributions totaling $2S,000 paid by a Limited Partner pursuant to Article 4
hereof.
Section 1.38 Unit Holder
------------ -----------
"Unit Holder" means the original Limited Partner, every Limited
Partner who holds Units and any Person who holds Units as the assignee or
successor in interest, directly or indirectly, of a Limited Partner.
Section 1.39 Wind Park Easement Agreement
------------ ----------------------------
"Wind Park Easement Agreement" means the agreement between the
Partnership and Zond granting the Partnership an undivided, nonexclusive
easement to the Operating Site for the purpose of owning, operating and
maintaining Turbines and for the purpose of utilizing, operating and maintaining
the Infrastructural Facilities.
Section 1.40 Windsystem
------------ ----------
"Windsystem" means Turbines and their supporting Infrastructural
Facilities.
Section 1.41 Windsystem Construction Agreement
------------ ---------------------------------
"Windsystem Construction Agreement" means the Windsystem Construction
Agreement between ZCC IV and the Partnership.
-7-
Section 1.42 Windsystem Management Agreement
------------ -------------------------------
"Windsystem Management Agreement" means the Windsystem Management
Agreement between the Partnership and Zond.
Section 1.43 ZCC IV
------------ ------
"ZCC IV" means Zond Construction Corporation IV, a California
corporation and a wholly owned subsidiary of Zond.
Section 1.44 Zond
------------ ----
"Zond" means Zond Systems, Inc., a California corporation.
2. Formation of the Partnership
----------------------------
Section 2.01 Formation
------------ ---------
The Partnership was formed at the time of the filing of the
Certificate of Limited Partnership in the office of the California Secretary
of State, which Certificate was filed on October 25, 1985.
Section 2.02 Name
------------ ----
The name of the Partnership is Zond Windsystem Partners, Ltd. Series
85-C, a California Limited Partnership.
Section 2.03 Recording of the Certificate
------------ ----------------------------
Upon the execution of this Agreement, the General Partner shall file
an Amended Certificate of Limited Partnership pursuant to Section 15621 of the
Act, and shall record such Certificate as permitted by the Act. The General
Partner shall thereafter take all other necessary actions (if any) required by
law to perfect and maintain the Partnership as a limited partnership under the
laws of the State of California.
Section 2.04 Principal Place of Business
------------ ---------------------------
The principal place of business of the Partnership shall be at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as
may be determined by the General Partner, upon written notice to the Limited
Partners.
Section 2.05 Name and Place of Residence of Each Partner
------------ -------------------------------------------
The names and addresses of the General Partner and the Original
Limited Partner is as set forth on the signature page hereof.
-8-
Section 2.06 Term
------------ ----
The Partnership will commence at the time of the filing of the
Certificate of Limited Partnership with the California Secretary of State. The
term of the Partnership shall continue until the close of Partnership business
on December 31, 2005 unless earlier terminated in accordance with the provisions
of this Agreement.
Section 2.07 Tax Shelter Registration Number
------------ -------------------------------
On behalf of the Partnership, the General Partner will apply to the
Internal Revenue Service for a tax shelter registration number. The number will
be furnished to each of the Limited Partners when it is received. Each Limited
Partner must report this registration number to the Internal Revenue Service if
any deduction, loss, credit or other tax benefit is claimed, or any income is
reported, by reason of such Limited Partner's investment in the Partnership.
3. Business Purpose and Authority of-the Partnership
-------------------------------------------------
Section 3.01 Business and Purpose of the Partnership
------------ ---------------------------------------
The business and purposes of the Partnership are to engage (i) in the
purchase, operation and management of the Turbines, and the sale of electricity
produced by the Turbines; (ii) in the purchase of certain of, and the operation
and utilization of all of, certain Infrastructural Facilities; and (iii) in any
and all general business activities related or incidental to any of the
foregoing. The Partnership shall not engage in any other business without the
prior consent of all Partners.
Section 3.02 Authority of the Partnership
------------ ----------------------------
In order to carry out its purposes and not in limitation thereof, the
Partnership is empowered and authorized to do any and all acts and things
necessary, appropriate, proper, advisable, incidental or convenient to the
furtherance and accomplishment of its purposes, and for the protection and
benefit of the Partnership, including, but not limited to, the following:
(a) To acquire and operate the Turbines and the Infrastructural
Facilities purchased by it and to utilize the Infrastructural Facilities owned
by others;
(b) To improve the Turbines and the Infrastructural Facilities;
(c) To enter into, perform and carry out contracts of any kind
necessary to, or in connection with or incidental to, the ownership, management
and operation of the Windsystem, including the employment of others to operate
and maintain the Windsystem; and
-9-
(d) To mortgage, sell, transfer, exchange or otherwise convey or
encumber the Partnership's interest in the Turbines and the Infrastructural
Facilities owned by it (either alone or jointly with others), in furtherance of
any and all of the objectives of the Partnership.
4. Capital Contributions
---------------------
Section 4.01 Capital Contribution of General Partner
------------ ---------------------------------------
The General Partner shall make a Capital Contribution, in its capacity
as General Partner, ranging from $69,925 if the Partnership admits 95 Regular
Limited Partners to $443,400 if the Partnership admits 727 Regular Limited
Partners.
Section 4.02 Capital Contributions of Limited Partners
------------ -----------------------------------------
(a) The General Partner shall have the sole and absolute right to
admit to the Partnership, as Limited Partners, such qualified Persons as it
deems advisable in accordance with Section 14.03(a). Each Person purchasing
Regular Units in the Partnership as a Regular Limited Partner shall deliver to
the Partnership a duly executed Subscription Agreement, together with payment
to the Partnership of $25,000 cash per Regular Unit purchased, provided that
$17,000 in cash per Regular Unit may be provided from the proceeds of an
Investor Note of a Person acceptable to DWFSI in the form provided with the
Subscription Agreement with the balance of $8,000 in cash. A Regular Limited
Partner in default under his Investor Note shall be subject to Section 11.06.
Each person purchasing Special Units in the Partnership as a Special Limited
Partner shall deliver to the Partnership a duly executed Subscription Agreement,
together with payment to the Partnership of $25,000 cash per Unit purchased.
(b) The Original Limited Partner shall purchase 0.01 Unit on the
same basis as other Limited Partners and shall reduce the portion initially paid
in cash upon purchase by the amount of cash he previously contributed to the
Partnership.
(c) No Limited Partner shall be liable for any of the debts and
obligations of the Partnership or to make any contributions or payments to the
Partnership in excess of the amount required pursuant to this Section 4.02
except as otherwise required by the Act.
Section 4.03 Use of Capital Contributions
------------ ----------------------------
The aggregate of the Capital Contributions shall be used to carry
out the purposes of the Partnership.
Section 4.04 Interest on Capital Contributions
------------ ---------------------------------
No Partner shall receive any interest on any Capital Contribution.
-10-
5. General Partner's and Affiliates' Compensation and Reimbursements
-----------------------------------------------------------------
Section 5.01 Compensation
------------ ------------
Except as otherwise set forth herein or in the Memorandum, the General
Partner and Affiliates thereof shall not receive fees or other compensation,
directly or, indirectly, from the Partnership.
Section 5.02 Reimbursement
------------ -------------
The Partnership shall reimburse the General Partner and its Affiliates
for all Costs properly incurred by them on behalf of the Partnership; provided,
however, that the General Partner shall not be reimbursed for more than $125,000
of legal, accounting and organizational expenses, which $125,000 includes up to
$75,000 payable to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. as reimbursement for its expenses
incurred, in connection with the offer and sale of Units.
6. Distributions to Partners
-------------------------
Section 6.01 Distributable Cash
------------ ------------------
The General Partner shall determine when and to what extent
Distributable Cash is available. In making such determination, the General
Partner shall estimate the Partnership's revenue to be received during the
current year (or such other relevant period) and the ensuing year (or such other
relevant period) and the Partnership's cash requirements for such periods. In
estimating cash requirements, the General Partner shall take into account all
prospective Costs, as well as indebtedness of the Partnership during the period,
and shall establish adequate Reserves for indebtedness maturing thereafter and
for any of the aforementioned Costs expected to be incurred in subsequent
periods. The General Partner's determination of Distributable Cash shall be
conclusive and binding upon all Partners. Except as provided in Section 13.03
hereof, Distributable Cash, if any, for each taxable year or other period shall
be distributed as follows:
(a) Each distribution made before April 1, - 1.06 with respect to
Distributable Cash for a taxable year or other period ending before January 1,
1996, and each distribution made on or after April 1, 1996 to the extent the sum
of (i) 98% of the amount of such distribution and (ii) the aggregate amount of
all prior distributions the Regular Limited Partners pursuant to this Section
6.01(a) does not exceed the product of the number of outstanding Regular Units
and $8,333, shall be made 98% to the Regular Limited Partners in proportion to
their Regular Units on the date of the distribution, 1% to the Special Limited
Partners in proportion to their Special Units on the date of the distribution
and 1% to the General Partner; and
(b) Each distribution which is made on or after April 1, 1996 and
after at least an amount equal to the product of the number of outstanding
Regular Units and $8,333 has been distributed to the
-11-
Regular Limited Partners on a cumulative basis pursuant to Section 6.01(a)
hereof shall be made 75% to the Regular Limited Partners in proportion to their
Regular Units on the date of the distribution, 5% to the Special Limited
Partners in proportion to their Special Units on the date of the distribution
and 20% to the General Partner.
Section 6.02 Amounts Withheld
------------ ----------------
All amounts withheld pursuant to the Code or any provision of any
state or local tax law with respect to any payment or distribution to the
Partnership or the Partners shall be treated as amounts distributed to the
Partners pursuant to this Article 6 for all purposes under this Agreement. The
General Partner shall have sole and absolute discretion to allocate any such
amounts among the Partners, provided that any allocation shall be in accordance
with applicable law.
7. Allocations to Partners
-----------------------
Section 7.01 Capital Accounts
------------ ----------------
A Capital Account shall be maintained for each Partner. To each
Capital Account there shall be credited (i) the Partner's aggregate Capital
Contribution and (ii) the Partner's distributive share of Profits and gains
allocated pursuant to Section 7.03(c) hereof, and from each Capital Account
there shall be debited (i) the cash and the net fair market value of property
distributed to the Partner pursuant to Section 13.03(e) hereof, (ii) the cash
distributed to the Partner pursuant to Article 6 hereof, and (iii) the Partner's
distributive share of Losses. In the event all or any portion of an interest in
the Partnership is transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred interest, provided, however, that if the
transfer of a Partnership interest causes a termination of the Partnership
pursuant to Code Section 708(b)(1)(B), the Capital Accounts of all Partners,
including the transferee, shall be redetermined as of the date of such
termination. In such event, each Partner's Capital Account shall be equal to the
net fair market value of his Partnership interest as of such date. Subsequent to
such redetermination, allocations of income, gain, loss and deduction with
respect to assets held by the Partnership on the date of such determination
shall be governed by the principles set forth in Code Section 704(c).
Section 7.02 Allocations of Profits and Losses
------------ ---------------------------------
Subject to Section 7.03(a) hereof, Profits and Losses for any taxable
year or other period shall be allocated as follows: for any taxable year or
other period beginning before the later of the Distribution Date or January 1,
1996, 98% to the Regular Limited Partners in proportion to their Regular Units,
1% to the Special Limited Partners in proportion to their Special Units and 1%
to the General Partner; and for any taxable year or other period beginning on or
after the later of the Distribution Date or January 1, 1996,
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75% to the Regular Limited Partners in proportion to their Regular Units, 5% to
the Special Limited Partners in proportion to their Special Units and 20% to
the General Partner.
Section 7.03 Special Allocations
------------ -------------------
(a) Notwithstanding Section 7.02 hereof, in the event the
Distribution Date occurs after January 1 and on or before October 1 in any
taxable year, the allocations of Profits or Losses for the taxable year during
which the Distribution Date occurs shall be determined separately for the period
beginning on January I and ending on the last day of the calendar quarter during
which the Distribution Date occurs and the period beginning on the first day of
the succeeding calendar quarter and ending on December 31, as though each such
period were a separate taxable period for purposes of this Agreement.
(b) All determinations of Profits or Losses for any period or
periods within a taxable year pursuant to Section 7.03(a) hereof shall be made
by the General Partner, in its sole and absolute discretion, on the basis of any
method selected by the General Partner and permitted by the Code.
(c) Gains for any taxable year or other period arising from the
liquidation of the assets of the Partnership shall be allocated in the following
order and priority:
(i) First, to the extent such gains do not exceed the sum
of the negative Capital Account balances, if any, of all Partners, if any, whose
balances are negative (after taking into account all other allocations under
this Agreement for, and all contributions and all distributions pursuant to
Section 6.01 during, such taxable year or period), such gains shall be allocated
to such Partners in proportion to such negative balances, until all such
balances have been restored to zero; and
(ii) The balance, if any, shall be allocated in such manner
as shall, as nearly as possible, cause the total allocations of gains pursuant
to section 7.03(c)(i) and this Section 7.03(c)(ii) for all taxable years or
other periods to be in the proportions provided in Section 7.02 for the taxable
year or other period for which the allocation is being made; provided, however,
that if the liquidation of the assets of the Partnership results from the Lessor
or its successor purchasing Property from the Partnership pursuant to the
purchase option contained in the Lease Agreement, the balance, if any, of such
gains shall instead be allocated entirely to the Regular Limited Partners in
proportion to their Regular Units.
For purposes of this Section 7.03(c), gains shall include any gains which would
have been realized by the Partnership on the sale of assets distributed in kind
to Partners pursuant to Section 13.03 hereof, determined with reference to the
fair market value and the adjusted tax basis of such property for Federal income
tax purposes immediately prior to such distribution.
-13-
(d) The Partners are aware of the economic and income tax
consequences of the allocations made by this Agreement and hereby agree to be
bound by the provisions of this Agreement in reporting their shares of
Partnership income and loss for income tax purposes.
Section 7.04 Allocations of Tax Credits
------------ --------------------------
All California solar energy tax credits shall be allocated 99% to the
Special Limited Partners in proportion to their Special Units on the last day of
the taxable year or other period to which such credits relate and 1% to the
General Partner. All Federal tax credits and all other California tax credits
shall be allocated among the Partners in the proportions provided in Section
7.02 for the taxable year or other period to which such credits relate. Any
recapture of any tax credit other than by reason of a reduction in any Partner's
proportionate interest in Partnership Profits shall be allocated among the
Partners in the same proportions as the tax credit being recaptured was
allocated.
Section 7.05 Other Allocations
------------ -----------------
Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction and any other allocations not
otherwise provided for in this Agreement shall be allocated among the Partners
in the same proportions as they share Profits or Losses, as the case may be, for
the period to which the allocation relates.
Section 7.06 Distributions and Allocations in Respect
----------------------------------------
to Transferred Units
--------------------
If any Unit is transferred during any accounting period, Profits and
Losses and all other items attributable to such Unit for such period shall be
divided and allocated between the transferor and transferee by taking into
account their varying interests during such period in accordance with Code
Section 706(d), utilizing any conventions permitted by law and selected by the
General Partner in its sole and absolute discretion. All distributions on or
before the date of the transfer of such Unit in compliance with Article 11
hereof shall be made to the transferor, and all distributions thereafter shall
be made to the transferee. Solely for purposes of making such allocations and
distributions, the Partnership shall recognize the transfer of such Unit not
later than the end of the calendar month during which it receives written notice
of such transfer, provided that if the Partnership does not receive written
notice stating the date such Unit was transferred and such other information as
the General Partner may reasonably require within 30 days after the end of the
accounting period during which the transfer occurs, then all of such items shall
be allocated, and all distributions shall be made, to the Person who, according
to the books and records of the Partnership, on the last day of the accounting
period during which the transfer occurs, was the owner of the transferred Unit.
The General Partner and the Partnership shall incur no liability for
-14-
making allocations and distributions in accordance with the provisions of this
Section, whether or not the General Partner or the Partnership has knowledge of
any transfer of ownership of any Unit.
Section 7.07 No Repayment Obligation
------------ -----------------------
Except as provided herein, no Partner shall have a duty to repay to
the Partnership or to any Partner any portion or all of any negative Capital
Account balance, and each Partner waives any right he may have, if any, against
any other Partner in connection therewith.
-15-
8. Management and Operation of Business
------------------------------------
Section 8.01 Management Authority of the General
-----------------------------------
Partner
--------
(a) Management of Business. Subject to the consent of the Limited
----------------------
Partners where required by this Agreement, the General Partners, within the
authority granted to them under this Agreement, shall have the exclusive right
to manage the business of the Partnership and are hereby authorized to take any
action of any kind and to do anything and everything they deem necessary in
accordance with the provisions of this Agreement.
(b) Operative Agreements. The Partnership has entered into (i) the
--------------------
Wind Park Easement Agreement with Zond pursuant to which the Partnership will
secure a nonexclusive easement to the Operating Site sufficient for the purposes
which are necessary to accommodate the installation and operation of its
Windsystem ; (ii) the Windsystem Construction Agreement with ZCC IV pursuant to
which the Turbines and certain Infrastructural Facilities will be constructed
for the benefit of, and be sold to, the Partnership; and (iii) the Windsystem
Management Agreement with Zond pursuant to which the Turbines and all
Infrastructural Facilities other than the roads on the Operating Site will be
operated and managed by Zond for the benefit of the Partnership. Each Limited
Partner, through the execution of this Agreement, ratifies and approves each of
these agreements, any promissory note issued by the Partnership pursuant to the
Windsystem Construction Agreement in partial payment for Turbines purchased by
the Partnership, and any security agreements and other documents or instruments
relating thereto.
(c) Authority of the General Partner. The General Partner shall
--------------------------------
control, conduct and manage the day-to-day operations of the Partnership
business and shall devote such time to the Partnership as may be necessary for
the proper performance of the General Partner's duties hereunder, but the
General Partner shall not be expected to devote full time to the performance of
such duties. Persons dealing with the Partnership are entitled to rely
exclusively on the power and authority of the General Partner as set forth in
this Agreement. The General Partner shall have and may exercise on behalf of the
Partnership all powers and rights necessary, proper, convenient or advisable to
effectuate and carry out the business and objectives of the Partnership. These
powers shall include, without limitation, the following:
(i) To acquire Property for the Partnership and to execute such
notes, mortgages, deeds of trust and other security instruments and other
agreements or instruments that may be required to acquire title to Property;
(ii) To spend the capital and income of the Partnership in the
exercise of any rights or powers possessed by the General Partner hereunder;
-16-
(iii) To purchase, hold, operate and manage Property and to
enter into and perform agreements with others with respect to any such
activities, which agreements may contain such terms, provisions and conditions
as the General Partner in its reasonable judgment shall approve;
(iv) To purchase, at the expense of the Partnership, contracts
of liability, casualty-and other insurance, including liability insurance
similar to that offered to officers and directors of corporations, which the
General Partner deem advisable, appropriate or convenient for the protection of
Property or affairs of the Partnership or for any other purpose convenient or
beneficial to the Partnership;
(v) To borrow money and, if security is required therefor,
mortgage or subject to any other security device any portion of the Property,
and to prepay, in whole or in part, refinance, increase, modify, consolidate or
extend any mortgage or other security device, all of the foregoing and any
expenses incurred to obtain same shall be expenses of the Partnership and at
such terms and in such amounts as the General Partner deems, in its absolute
discretion, to be in the best interests of the Partnership;
(vi) To enter into contracts for Partnership purposes;
(vii) To sell or exchange Property, and to execute and deliver
all deeds, bills of sale, or other documents conveying title subject to the
restrictions set forth in Section 8.03;
(viii) To retain independent public accountants for the benefit
of the Partnership;
(ix) To employ attorneys (who may also serve as counsel to the
General Partner or any Partner) to represent the Partnership;
(x) To cause the Partnership to make or revoke the elections
referred to in Section 12.05 hereof;
(xi) To enter into agreements and engage in*the transactions
described in the Memorandum, including, but not limited to, the Wind Park
Easement Agreement, the Windsystem Construction Agreement, the Windsystem
Management Agreement and the Purchase Note and Security Agreement and similar
agreements relating to the ownership, management and operation of the
Windsystem, all of which each Limited Partner hereby ratifies, confirms and
approves;
(xii) To appoint an additional or successor agent to Zond with
respect to the operation, maintenance or repair of the Turbines or the
Infrastructural Facilities, subject to the Windsystem Management Agreement and
the prior approval of PG&E given in accordance with the provisions of the Power
Agreement, if required;
-17-
(xiii) To enter into agreements with Affiliates;
(xiv) To admit Limited Partners into the Partnership in the
manner provided by Section 14.03(a) of this Agreement and in the Memorandum,
such action to require the execution by the General Partner of the signature
page of the Subscription Agreement.
Section 8.02 Obligations of the General Partner
----------------------------------
(a) The General Partner shall have a fiduciary responsibility for
the safekeeping and use of all the funds and assets of the Partnership, whether
or not in their immediate possession or control.
(b) The General Partner shall devote such time to the performance
of services for the benefit of the Partnership and the Partners as may be
necessary;
(c) The General Partner shall file and publish all certificates,
statements or other instruments required by law for formation, qualification and
operation of the Partnership and for the conduct of its business in all
appropriate jurisdictions; and
(d) The General Partner shall cause the Partnership to be
protected by adequate public liability, property damage, business interruption
and other insurance appropriate to the business of the Partnership.
Section 8.03 Restrictions on Authority of the General
----------------------------------------
Partner
--------
Notwithstanding any other provision of this Agreement, the General
Partner shall have all the rights and powers and be subject to all the
restrictions and liabilities of partners in a partnership without limited
partners, except that, without the written consent or ratification of the
specific act by all Limited Partners, the General Partner shall have no
authority to:
(i) Do any act in contravention of this Agreement;
(ii) Do any act which would make it impossible to carry on the
ordinary business of the Partnership;
(iii) Confess a judgment against the Partnership;
(iv) Possess Property or assign rights in specific Property for
other than a Partnership purpose;
(v) Admit a Person as an additional or substitute General Partner
except as otherwise provided in this Agreement;
(vi) Commingle funds of the Partnership with funds of any other
Person or entity;
-18-
(vii) Amend the Agreement, except as provided in Article 14
hereof; or
(viii) Do any act which would jeopardize the Windsystem's status
as a "qualifying small power production facility" as-defined in the Public
Utility Regulatory Policies Act of 1978.
Section 8.04 Purchase and Sale of Interests
------------ ------------------------------
The General Partner and its Affiliates may, at any time, acquire and
resell Units from time to time on their own behalf.
Section 8.05 Execution of Certificates
------------ -------------------------
The General Partner shall execute, acknowledge and file the
Certificate of Limited Partnership referred to in Section 15621 of the Act in
accordance with the provisions of such Section 15621, and shall execute,
acknowledge and file any certificates required by Sections 15622 and 15623 of
the Act, in accordance with the provisions of such Sections and of Section 15624
of the Act.
9. Rights and Obligations of Partnership
-------------------------------------
Section 9.01 No Loans or Additional Contributions
------------ ------------------------------------
A Partner shall be liable to make only the Capital Contributions
required under Article 4 hereof. No Partner shall be required to contribute to
the Partnership any other funds or to- lend to the Partnership any funds
whatsoever, provided that the Partnership and/or certain creditors of the
Partnership to the extent required by law may recover from a Partner cash
distributions deemed to be a return of capital to the Partner (together with
interest thereon) if (i) such cash distributions were made after such creditor
advanced credit or funds to the Partnership, or (ii) such creditor advanced
credit or funds to the Partnership prior to the date an amendment to the
Certificate of Limited Partnership is recorded reflecting such cash distribution
as a reduction of capital of the Partner. Notwithstanding the foregoing,
however, if necessary to pay expenses or obligations of the Partnership, the
General Partner, one or more of its Affiliates, or one or more of the Limited
Partners may lend or advance money to or for the benefit of the Partnership with
the approval of and on such terms and conditions as may be established by the
General Partner. Any such loans shall be segregated in a loans payable account
and interest shall be payable on such loans at the prevailing rate then being
charged for loans currently Outstanding to the Partnership, or if there are no
such loans, then for comparable loans by a New York clearing house bank selected
by the General Partner, but in no event more than the maximum rate then
permitted by applicable law. No such loan shall constitute additional capital or
entitle the lending Partner to any rights other than as a creditor of the
Partnership.
-19-
Section 9.02 No Liability for Partnership Obligations
------------ ----------------------------------------
No Unit Holder shall be liable for any of the debts, liabilities,
contracts or any other obligations of the Partnership in excess of the sum of
the amount required to be contributed or otherwise contributed to the capital of
the Partnership by such Unit Holder pursuant t6 Article 4 hereof and his share
of undistributed profits.
Section 9.03 No Participation in Management
------------ ------------------------------
No Limited Partner shall take any part in or interfere in any manner
with the conduct or control of the business of the Partnership. No Limited
Partner shall have any right or authority to act for or bind the Partnership.
Section 9.04 No Right to Withdraw Capital Contributions
------------ ------------------------------------------
No Partner shall have a right to withdraw any part of his Capital
Contributions except upon dissolution or liquidation of the Partnership. If the
occasion for the return of Capital Contributions should arise, no Partner shall
have the right to receive property other than cash.
Section 9.05 No Priorities Among Partners
------------ ----------------------------
Except as otherwise set forth in this Agreement, no Partner shall have
priority over any other Partner either as to the return of Capital Contributions
or as to distributions.
Section 9.06 Voting Rights
------------ -------------
Each Partner shall be entitled to vote with respect to all matters set
forth in Section 9.07 hereof. No Limited Partner shall have the right to vote on
any matter not set forth in Section 9.07 hereof, except as provided in Section
8.03(b) hereof. The voting rights of the Partners shall be in proportion to the
number of Units owned by each of them.
Section 9.07 Matters Subject to Vote
------------ -----------------------
(1) The approval of the holders of a majority of the Regular Units is
required to:
(a) Amend this Agreement, subject to the provisions of Section
14.02 hereof;
(b) Dissolve the Partnership;
(c) Remove a General Partner, subject to the provisions of
Article 10 hereof, provided that removal of a sole General Partner shall not
become effective until the election of a new General Partner;
-20-
(d) Admit a new General Partner upon the removal, withdrawal,
retirement, death, insanity, bankruptcy, insolvency or dissolution of a General
Partner;
(e) Approve the assignment, transfer, mortgage or sale of any
portion of a General Partner's interest in the Partnership (other than with
respect to an Affiliate);
(f) Sell or transfer all or substantially all of the assets of
the Partnership other than a sale or transfer of Partnership assets in the
ordinary course of business.
(2) Except as provided in subsection (3) below, Special Limited
Partners shall not be entitled to vote.
(3) Notwithstanding the provisions of subparagraphs (1) and (2) above,
(i) the affirmative vote of all of the Limited Partners shall be required to
admit a General Partner or elect to continue the business of the Partnership
after a General Partner ceases to be a General Partner other than by removal
where there is no remaining or surviving General Partner; and (ii) the
affirmative vote of a Majority-in-Interest of the Limited Partners shall be
required to admit a General Partner in all circumstances other than (A) where a
General Partner is removed and there is no remaining or surviving General
Partner, or (B) under circumstances described in clause (i) of this subparagraph
(3), consistent with Section 15636 of the California Revised Limited Partnership
Act.
Section 9.08 Meetings of Partners
------------ --------------------
(a) Meetings of the Partners may be called by the General Partner or,
upon written request to the General Partner, by Regular Limited Partners holding
more than ten percent of Regular Units, provided that the purpose(s) of the
meeting relates to matters upon which this Agreement permits the Regular Limited
Partners to vote.
(b) Written notice of a meeting called by the General Partner shall be
given to all Partners (either in person or by registered mail) not less than 10
nor more than 60 days before the date of the meeting. The notice shall state the
place, date, and hour of the meeting and the general nature of the business to
be transacted. The General Partner shall select the place, date, and hour of the
meeting with regard to convenience to the participants.
(c) After written request to the-General Partner stating the purpose
of the meeting from Persons authorized to call such a meeting, the General
Partner shall provide all Partners written notice (either in person or by
registered mail) of the meeting to be held at a time requested by the Person
calling the meeting, not less than 10 nor more than 60 days after the receipt of
the request. The notice shall state the place, date, and hour of the meeting and
the general nature of the business to be transacted.
-21-
(d) Any Partners' meeting, whether or not a quorum is present, may be
adjourned from time to time by a vote of the General Partner or General Partners
and the Regular Limited Partners which in the aggregate hold a majority in
interest in the Partnership and which are present either in person or
represented by proxy. If the meeting is adjourned to another time or place and
if the announcement of the adjournment of time or place is made at the meeting
to be adjourned, no notice of the adjourned meeting need be given.
(e) The General Partner or the Regular Limited Partners requesting a
meeting may fix in advance a date as the record date for determining the Regular
Limited Partners entitled to vote at a meeting. The date shall be not more than
50 days nor less than 10 days before any such meeting.
(f) Each Partner entitled to vote under this Agreement may authorize
another Person or Persons to act for it in all matters regarding his Units
including the waiver of notice, voting and participation in meetings. Each proxy
must be in writing and signed by the Partner or his attorney-in-fact. No proxy
shall be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy is revocable, but a proxy is not
revoked by the death or incapacity of the maker unless, before a vote is
counted, written notice of such death or incapacity is received by the
Partnership.
(g) Regular Limited Partners holding a majority of Units represented
in person or by proxy shall constitute a quorum for the transaction of business
at any meeting of the Partners.
Section 9.09 Other Activities
------------ ----------------
Nothing contained herein shall prevent any Limited Partner or any
officer, director or affiliate of the General Partner from engaging in any other
business activities, including those which are competitive with those of the
Partnership. No Limited Partner who participates in another venture will be
obligated to offer an interest in that venture to any other Partner. The General
Partner shall have no business other than as General Partner of the Partnership.
Section 9.10 Special-Power of Attorney
------------ -------------------------
(a) Each Limited Partner, including any Substituted Limited
Partner, by the execution of this Agreement or any counterpart, does hereby
irrevocably constitute and appoint the General Partner, his true and lawful
agent and attorney-in-fact with full power and authority in his name, place and
▇▇▇▇▇, to make, execute, acknowledge, swear to, deliver, file and record such
documents and instruments as may be necessary or appropriate to carry out the
provisions of this Agreement, including but not limited to (a) the Certificate
of Limited Partnership and all amendments thereto required or permitted by law
or the provisions of this Agreement, (b) all certificates and other instruments
deemed advisable by the General Partner to permit the Partnership to become or
to continue as a
-22-
Limited Partnership or Partnership wherein the Limited Partners have limited
liability in the jurisdictions where the Partnership may be doing business, (c)
all instruments that effect a change or modification of the Partnership in
accordance with this Agreement, (d) all conveyances and other instruments deemed
advisable by the General Partner to effect the dissolution and termination of
the Partnership, (e) all fictitious or assumed name certificates required or
permitted to be filed on behalf of the Partnership, and (f) all other
instruments which may be required or permitted by law to be filed on behalf of
the Partnership.
(b) The foregoing Power of Attorney:
(i) Is coupled with an interest and shall be irrevocable and
survive the death or incapacity of each Limited Partner;
(ii) May be exercised by the attorney-in-fact either by
signing separately as attorney-in-fact for each Limited Partner or, after
listing all of the Limited Partners executing an instrument, by a single
signature of an attorney-in-fact for all of them;
(iii) Shall survive the delivery of an assignment by a
Limited Partner of the whole or any portion of his interest in the Partnership;
except that, where the assignee of the whole of such Limited Partner's Interest
has been approved by the General Partner for admission to the Partnership as a
Substituted Limited Partner, the power of attorney of the assignor shall survive
the delivery of such assignment for the sole purpose of enabling the General
Partner to execute, acknowledge and file any instrument necessary to effect such
substitution.
(c) Each Limited Partner agrees to execute and deliver to the
General Partner within five (5) days after receipt of the General Partner's
request therefor such further designations, power of attorney and other
instruments as the General Partner in its sole discretion shall deem necessary
or appropriate.
10. Change in a General Partner and Transfer of a General
-----------------------------------------------------
Partner's Interest
------------------
Section 10.01 Withdrawal of a General Partner
------------- -------------------------------
A General Partner may withdraw from the Partnership at any time upon
obtaining the opinion of counsel for the Partnership that such withdrawal will
not jeopardize the Partnership's Federal tax status as a partnership. Upon the
withdrawal of a General Partner, or upon the removal, death, insanity,
dissolution, bankruptcy or other legal incapacity of a General Partner, its
interest in the Partnership shall be purchased by the Partnership in accordance
with the terms of Section 10.03 hereof. The addition or deletion of part-
-23-
ners or shareholders, the reformation or reorganization Of a General Partner
shall not be deemed a withdrawal of the General Partner for purposes of this
Section.
Section 10.02 Removal of a General Partner; Right to
------------- --------------------------------------
Remove and Method of Removal
----------------------------
(a) The Regular Limited Partners may remove a General Partner in the
manner provided in Article 9 hereof. Following the removal of a General Partner,
the Regular Limited Partners shall have the right to elect a new General Partner
in the manner provided in Article 9 hereof.
(b) Any General Partner may be removed at any time by the delivery to
it of (i) a notice signed by a majority in Interest of the Regular Limited
Partners to that effect, (ii) written evidence reasonably satisfactory to such
General Partner and its counsel that the Partnership has mailed to all its known
creditors a notice to the effect that such General Partner is no longer a
General Partner of the Partnership, (iii) written evidence reasonably
satisfactory to such General Partner and its counsel that it has been relieved
from liability (if any) as an obligor (whether as principal or guarantor) of any
obligation of the Partnership other than trade credit and other than with regard
to any loan secured by Property which has an original term in excess of four
years, and (iv) a document reasonably satisfactory in form and substance to such
General Partner and its counsel to the effect that the Partnership (and the
remaining General Partner(s), if any) indemnifies and agrees to defend and hold
harmless such General Partner from and against any and all Partnership
obligations incurred after the effective date of its removal. The removal shall
be effective solely upon complete compliance with these four conditions.
(c) An accounting shall be prepared by the Partnership's accountants
at Partnership expense within 90 days following the removal of any General
Partner. The accounting shall cover the transactions of the Partnership since
the end of its prior taxable year.
Section 10.03 Effect of Removal or Withdrawal
------------- -------------------------------
(a) A withdrawal by a General Partner prior to the expiration of the
term of the Partnership shall not constitute a breach of the Agreement.
(b) Upon the withdrawal, removal, death, dissolution, insanity,
bankruptcy or other legal incapacity of a General Partner, such General Partner
or its estate or successor in interest ("RGP") shall automatically become a
Substituted Limited Partner-of the Partnership. As such, it shall enjoy after
removal all rights of the Substituted Limited Partner.
-24-
(c) The Partnership shall have the right, exercisable by written
notice to the RGP at any time within 210 days after the effective date of its
removal, to cause the fair market value of its entire interest in the
Partnership (including any interest held as a Limited Partner) ("RGP Interest")
to be determined in the manner set forth in paragraph (d) below. In addition, at
any time within 30 days after such determination is finally made (whether
through negotiation or by appraisal), the Partnership may elect by written
notice to the RGP to cause the Partnership to purchase all or any of the RGP
Interest at such value. If it so elects, the Partnership shall purchase the RGP
Interest for cash within 30 days after the election, against receipt from such
RGP of appropriate and necessary documents of transfer covering the RGP Interest
being conveyed.
(d) If the Partnership elects to cause the fair market value of the
RGP Interest to be determined, the Partnership and the RGP shall first attempt
to negotiate the value. If they agree, the agreed value shall be the fair market
value for purposes of this paragraph (d). If they are unable to agree within 30
days after such election, either party may cause the fair market value to be
determined by appraisal by giving the other party written notice of such intent
within 210 days after the effective date of removal. In such event, within 30
days after the sending of the notice each party shall choose an M.A.I. appraiser
who is unrelated to and unaffiliated with the party choosing, and shall notify
the other party of his choice. The two appraisers so chosen shall, within 15
days after the selection of the latter of them to be selected choose a third
M.A.I. appraiser who is unrelated to and unaffiliated with either of the parties
or the first two appraisers. If the two M.A.I. appraisers initially selected
cannot agree on a third M.A.I. appraiser within 15 days, the third M.A.I.
appraiser shall be appointed by the American Arbitration Association (Los
Angeles, California, office) upon application of either M.A.I. appraiser. If a
party does not within the time permitted choose an appraiser and notify the
other party of his choice, the appraiser, if any, who was timely chosen shall
alone determine the value of the RGP Interest. Once chosen, the appraisers shall
promptly determine the fair market value of the RGF Interest as of the effective
date of removal of the RGP and shall communicate their decision to the parties.
The decision of two of the three appraisers shall be binding on the parties.
Each party shall pay the fee of the appraiser selected by him and
one-half the fee of the third appraiser.
Section 10.04 Transfer of Interest
------------- --------------------
No General Partner may assign, transfer, mortgage or sell any portion
of its interest in the Partnership (other than to an Affiliate) without the
consent of Unit Holders holding a Majority of the Units in the Partnership.
-25-
Section 10.05 Continuing Liability
------------- --------------------
In the event that a General Partner withdraws from the Partnership or
sells, transfers, or assigns its entire interest, is removed or otherwise ceases
to be a General Partner, the General Partner shall remain liable for all
obligations and liabilities incurred by the Partnership prior to the effective
date of such occurrence and shall be free of any obligation or liability on
account of the activities of the Partnership from and after such time.
11. Transfers of, and Restrictions on Transfers of, Interests
---------------------------------------------------------
Section 11.01 Purchase for Investment
------------- -----------------------
(a) Each Limited Partner hereby represents and warrants to the General
Partner and to the Partnership that his acquisition of an interest in the
Partnership is made as principal for his account for investment purposes only
and not with a view to the resale or distribution of such interest, except
insofar as the Securities Act of 1933, as amended, and any applicable securities
law of any state or other jurisdiction permit such acquisition to be made for
the account of others or with a view to the resale or distribution of such
interest without requiring that such interest, or the acquisition, resale or
distribution thereof, be registered under the Securities Act of 1933, as
amended, or any applicable securities law of the United States, any state or
other jurisdiction.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his interest in the Partnership, or any portion thereof, to
any Person who does not similarly represent and warrant and similarly agree not
to sell, assign or transfer such interest, or portion thereof, to any Person who
does not similarly represent and warrant and agree.
Section 11.02 Restrictions on Transfer of Interests
------------- -------------------------------------
(a) No Limited Partner may sell, transfer or assign his interest in
the Partnership, in whole or in part, unless the General Partner shall consent
to such sale, transfer or assignment, which consent may be withheld in their
sole discretion. Further, the General Partner need not consent to a transfer
(other than a transfer on death of a Limited Partner) unless the Limited Partner
provides an opinion of counsel satisfactory to the General Partner that such
sale, transfer or assignment would not cause (i) the termination of
the Partnership for Federal income tax purposes; (ii)-the application of Section
168(j) of the Code to the Partnership, Property or Partners; or (iii) the
failure of the Windsystem to meet, after such transfer, the definition of a
qualifying small power production facility as defined in the Public Utility
Regulatory Policies Act of 1978. Any such attempted sale, assignment or other
transfer shall be void ab initio. The General Partner hereby consents to the
-- ------
security interests created by Limited Partners in connection with the issuance
of their Investor Notes.
-26-
(b) Except for transfers by bequest, gift or under the laws of
intestacy, no Limited Partner may sell, assign or otherwise transfer his
interest in the Partnership or any portion thereof, unless the General Partner
shall have consented thereto and the interests are registered under the
Securities Act of 1933, as amended, and any applicable state securities laws or
such Limited Partner obtains an opinion of counsel satisfactory to the General
Partner that the interests may be sold in reliance on an exemption from such
registration requirements, it being the understanding of each Limited Partner
that the Partnership has no obligation or intention to register the interests
for resale under any Federal or state securities laws or to take any action
which would make available any exemption from the registration requirements of
such laws.
(c) In no event shall the interest of a Limited Partner be sold,
assigned or transferred to an incompetent, unless by will or interstate
succession, and then only if a legal representative of such incompetent has been
duly appointed according to law.
(d) In no event shall the interest of a Limited Partner be sold,
assigned or transferred to an organization exempt from Federal income tax
(including an Individual Retirement Account), nor to any individual who is not a
United States taxpayer.
Section 11.03 Admission of Substituted Limited Partners
------------- -----------------------------------------
(a) Subject to the other provisions of this Article 11, an assignee of
an interest in the Partnership (which shall be understood to include any
purchaser, transferee, donee or other recipient on any disposition of such
interest) shall be admitted as a Limited Partner of the Partnership only upon
the satisfactory completion of the following:
(i) The General Partner shall have given its consent;
(ii) The assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement, and such other documents or
instruments as the General Partner may require;
(iii) A counterpart of this Agreement shall have been executed to
evidence the consents and agreements above, and a certificate evidencing the
admission of such Person as a Substituted Limited Partner shall have been
executed and filed for record;
(iv) If the assignee is a corporation, the assignee shall have
provided the General Partner with evidence satisfactory to counsel for the
Partnership of its authority to become a Limited Partner under the terms and
provisions of this Agreement;
(v) Counsel for the Partnership, or a counsel for the assignee
which counsel shall not have been disapproved of by the General Partner, shall
have rendered an opinion satisfactory to the General Partner that the admission
of the assignee as a Substituted Limited Partner is in conformity with the Act
and that none of the
-27-
actions taken in connection with the admission will cause (A) the termination or
dissolution of the Partnership for Federal income tax purposes or (B) the
application of Section 168(j) of the Code to the Partnership, Property or
Partners; and
(vi) The assignee, if required, shall have paid all reasonable
legal fees of the Partnership and the General Partner and filing and publication
costs in connection with his admission as a substituted Limited Partner.
By executing this Agreement or a subscription agreement, each Limited
Partner shall be deemed to have consented to any substitution consented to by
the General Partner.
(b) The General Partner and the Partnership shall cooperate with the
Person seeking to become a Substituted Limited Partner by preparing the
documentation required by this Section and making all official filings and
publications as promptly as practicable after the satisfaction by the assignee
of the conditions contained in this Article 11 to the admission of such Person
as a Limited Partner of the Partnership.
Section 11.04 Rights-of Assignee of an Interest
------------- ---------------------------------
(a) Except as provided in this Article 11 and as required by operation
of law, the Partnership shall not be obligated for any purpose whatsoever to
recognize the assignment by any Limited Partner of his interest in the
Partnership or any portion thereof until the Partnership has received actual
notice thereof.
(b) In connection with any proposed assignment of Units consented to
by the General Partner, the assigning Unit Holder must assign not less than one
Unit and; if he shall retain any Units, must retain at least one Unit, provided
that if the assigning Unit Holder owns a fractional Unit he may assign his
entire fractional Unit. Any assignment must be in writing, may not contravene
any of the provisions of this Agreement, must be executed by the assigning Unit
Holder (the "Assignor"), received by the Partnership and recorded on the books
of the Partnership. Any assignment which does contravene any of the provisions
of this Agreement shall be of no force and effect and shall not be recognized by
the Partnership. Any party to whom an Assignor has assigned his interest or to
whom an assignee's interest passes is referred to herein as an "Assignee".
(c) An Assignee shall have no right to require any information or
account of the Partnership's transactions or to inspect the Partnership books or
to vote, but shall only be entitled to receive a share of the profits or the
return of the Capital Contributions to which Assignor would otherwise be
entitled hereunder. An Assignee shall, however, have the right to assign those
interests which he has to a successor Assignee and to join with such successor
Assignee in making application to substitute such successor Assignee as a
Limited Partner, so long as such assignment does not contravene the terms of
this Agreement.
-28-
(d) any Person who is the Assignee of all or any portion of an
Assignor's interest but does not become a Limited Partner, and desires to make a
further assignment of such interest, shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Assignor
desiring to make an assignment of his interest.
Section 11.05 Joint Ownership of Interests
------------- ----------------------------
With the consent of the General Partner, an interest in the
Partnership may be acquired by two Persons as joint tenants with right of
survivorship, provided that ownership in such manner is in conformity with
applicable securities laws. Any consent of the Limited Partner shall require the
action or vote of both owners of any such jointly held interest, unless a
consent has been executed by one to allow the other to act for both. Upon the
death of one owner of a jointly held interest, such interest shall become owned
solely by the survivor as a Limited Partner and not as an assignee. The
Partnership need not recognize the death of one of the owners of a jointly held
interest until it shall have received notice of such death. Upon notice to the
General Partner from either owner, the General Partner shall cause the interest
to be divided into two equal portions, which shall thereafter be owned
separately by each of the former owners, provided that division of the interest
in such manner is permitted by applicable securities laws.
Section 11.06 Defaulting Regular Limited Partners
------------- -----------------------------------
In the event a Regular Limited Partner shall be in default of his
Investor Note or the Pledge and Security Agreement entered into in connection
therewith and, as a result of such default, the holder of such Investor Note
shall foreclose upon the Regular Limited Partner's Limited Partnership interest
in the Partnership or if such interest is sold pursuant to the power of sale
contained in the Pledge and Security Agreement, the holder of such Investor Note
may itself (or its agent or designee) (the "Purchaser"), at its election, become
a Substituted Regular Limited Partner upon such foreclosure.
In the event of a foreclosure or sale pursuant to the Pledge and
Security Agreement of the defaulting Regular Limited Partner's Partnership
Interest, as provided above, the Purchaser shall become a Substituted Regular
Limited Partner with all of the rights and obligations thereof. Each Substituted
Limited Partner hereby constitutes and appoints the General Partner, and each
officer of the General Partner, with full power of substitution, such
Substituted Limited Partner's agent and attorney- in- fact for the purpose of
executing and delivering any and all such documents necessary to convey the
Interest of such Substituted Limited Partner, if such Substituted Limited
Partner shall become a Defaulting Limited Partner, to the Purchaser pursuant to
this paragraph, which power of attorney, being coupled with an interest, is
irrevocable and shall survive the death, dissolution or incapacity of such
Substituted Limited Partner.
-29-
Section 11.07 No Interest: No Return
------------- ----------------------
No Partner shall have any right to demand or receive the return of his
Capital Contributions. No Partner shall be entitled to interest on any Capital
Contributions or on such Partner's capital account.
12. Books, Records, Accounting, Tax Elections and Banking
-----------------------------------------------------
Section 12.01 Books, Records and Reports
------------- --------------------------
(a) The Partnership shall keep at its principal place of
business, for inspection by any Partner during normal business hours, all the
following:
(i) A current list of the full name and last known business
or residence address of each Partner set forth in alphabetical order together
with the contribution and the share in profits and losses of each Partner.
(ii) A copy of the Certificate of Limited Partnership and
all certificates of amendment thereto, together with executed copies of any
powers of attorney pursuant to which any certificate has been executed.
(iii) Copies of the Partnership's Federal, state, and local
income tax or information returns and reports, if any, for the six most recent
taxable years.
(iv) Copies of the original Agreement and all amendments
thereto.
(v) Financial statements of the Partnership for the six most
recent fiscal years.
(vi) The Partnership's books and records for at least the
current and past three fiscal years.
(b) The General Partner shall cause an annual report to be sent to
each of the Partners not later than 120 days after the close of the fiscal year.
That report shall contain a balance sheet as of the end of the fiscal year and
an. income statement and statement of changes in financial position for the
fiscal year, and a report on the activities of the Partnership during the period
covered by the report.
(c) Limited Partners representing at least 5 percent of the interests
of Limited Partners may make a written request to the General Partner for an
income statement of the Partnership for the initial three-month, six-month, or
nine-month period of the current fiscal year ended more than 30 days prior to
the date of the request and a balance sheet of the Partnership as of the end of
that period. The statement shall be delivered or mailed to the Limited Partners
within 30 days thereafter.
-30-
(d) The financial statements referred to in this Section 12.01 shall
be accompanied by the report thereon, if any, of the independent accountants
engaged by the Partnership or, if there is no such report, the certificate of a
General Partner that such financial statements were prepared without audit from
the books and records of the Partnership.
(e) The General Partner shall promptly furnish to a Limited Partner a
copy of any amendment to the Agreement executed by a General Partner pursuant to
a power of attorney from the Limited Partner.
(f) The General Partner shall send to each of the Partners within 90
days after the end of each taxable year such information as is necessary to
complete Federal and state income tax or information returns.
Section 12.02 Custody of Partnership Funds; Bank Accounts
------------- -------------------------------------------
(a) The General Partner shall have fiduciary responsibility for the
safekeeping and use of all Property, whether or not in their immediate
possession or control. Property shall not be commingled with the funds of any
other Person, and the General Partner shall not employ Property in any manner
except for the benefit of the Partnership.
(b) All Property in the form of cash not otherwise invested shall be
deposited in one or more accounts maintained in such financial institutions as
the General Partner shall determine or shall be invested in short-term liquid
securities or shall be left in escrow, and withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures as the
General Partner may, from time to time, determine.
Section 12.03 Accountants
------------- -----------
The accountants for the Partnership shall be such accountants as shall
be selected by and approved by the General Partner.
Section 12.04 Filing of Returns
------------- -----------------
The General Partner shall be responsible for the timely filing of all
Partnership income tax returns to be filed in jurisdictions in which the
Partnership conducts business or derives income.
Section 12.05 Tax Elections
------------- -------------
(a) No election shall be made by the Partnership or any Partner to be
excluded from the application of the provisions of Subchapter K of the Code or
from any similar provisions of state or local income tax laws.
-31-
(b) Upon the transfer of all or part of a Partner's interest in the
Partnership or upon the death of an individual Partner, or upon the distribution
of any Property to any Partner, the Partnership, at the General Partner's option
and in their sole discretion, may file an election, in accordance with
applicable regulations, to cause the basis of Property to be adjusted for
Federal income tax purposes, as provided by Sections 734, 743 and 754,
respectively, of the Code; similar elections under provisions of state and local
income tax laws may, at the General Partner's option, be made.
(c) The General Partner may, in their sole and absolute discretion,
make any or all elections which they are entitled to make on behalf of the
Partnership and the Partners for Federal, state, and local tax purposes,
including, without limitation, any election, if permitted by applicable law (i)
to extend the statute of limitations for assessment of tax deficiencies against
Partners with respect to adjustments to the Partnership's Federal, state or
local tax returns; and (ii) to represent the Partnership and the Partners before
taxing authorities or courts of competent jurisdiction in tax matters affecting
the Partnership and the Partners in their capacity as Partners, and to execute
any agreements or other documents relating to or settling such tax matters,
including agreements or other documents that bind the Partners with respect to
such tax matters or otherwise affect the rights of the Partnership or the
Partners. Zond Windsystems Management Corporation V is specifically authorized
to act as the "Tax Matters Partner" for the Partnership and the Partners under
the Code or in any similar capacity under state or local law.
Section 12.06 Taxable Year, Method of Accounting
------------- ----------------------------------
The taxable year of the Partnership shall be the calendar year. The
books and records of the Partnership shall be kept on the method of accounting
selected by the General Partner.
Section 12.07 Annual Audit
------------- ------------
At the request and at the sole expense of the Partners requesting
same, annual audits of the Partnership's affairs may be conducted by such
independent accounting firm as is selected by one or more of the Partners.
13. Duration and Termination
------------------------
Section 13.01 Death, Insanity or Disability of a Unit
------------- ---------------------------------------
Holder
------
The death, insanity, bankruptcy, dissolution or disability, either
temporary or permanent, of any Limited Partner shall not cause a dissolution of
the Partnership, and the business shall continue without interruption and
without breaking continuity. However, in the event of the withdrawal, removal,
death, insanity, dissolution, bankruptcy or legal incapacity, for any reason, of
a General Partner, the Partnership shall dissolve, unless the other General
Partner, if any, elects to continue the business of the Partnership, which
right
-32-
is hereby granted by filing for record an appropriate amendment to the
Partnership's Certificate of Limited Partnership, or if there is no other
General Partner, unless the requirements of Section 9.07(3) are met.
Section 3.02 Events Causing Dissolution
------------ --------------------------
The Partnership shall dissolve only upon the happening of any of the
following events:
(a) the withdrawal, removal, death, insanity, dissolution, bankruptcy
or legal incapacity of a General Partner, except as continued pursuant to
Section 13.01 hereof;
(b) the sale or other disposition of all or substantially all of the
Property;
(c) the affirmative vote of Partners holding a majority of the
interests in the Partnership to dissolve and wind up the affairs of the
Partnership;
(d) the delivery of written notice by Lessor or its successor pursuant
to the Lease Agreement of its intent to exercise the option contained in the
Lease Agreement to purchase certain Property from the Partnership; or
(e) the expiration of the term of the Partnership.
Only those events listed in paragraphs (a) - (e) above shall operate
to dissolve the Partnership.
Dissolution of the Partnership shall be effective on the day on which
the event occurs giving rise to the dissolution, but the Partnership shall not
terminate until the Partnership's Certificate of Limited Partnership shall have
been canceled and the assets of the Partnership shall have been distributed as
provided in Section 13.03 hereof. Notwithstanding the dissolution of the
Partnership, prior to the termination of the Partnership, as aforesaid, the
business of the Partnership and the affairs of the Partners, as such, shall
continue to be governed by this Agreement.
To the extent permitted by applicable law, for purposes of Sections
13.01 and 13.02 hereof, the term "dissolved" shall not include mere additions or
deletions of partners by a General Partner which is itself a partnership, or the
mere reformation or reorganization of a General Partner.
Section 13.03 Liquidation
------------- -----------
(a) Upon dissolution of the Partnership, the General Partner shall
liquidate the assets of the Partnership, apply and distribute the proceeds
thereof as contemplated by this Agreement and cause the cancellation of the
Partnership's Certificate of Limited Partnership.
-33-
(b) Notwithstanding the foregoing, in the event the General Partner
shall determine that an immediate sale of part or all of the Partnership assets
would cause undue loss to the Partners, the General Partner, in order to avoid
such loss, may, after having given written notification to all Partners, to the
extent not then prohibited by the Act or any other statutes of any jurisdiction
in which the Partnership is then formed or qualified and applicable in the
circumstances, either defer liquidation of and withhold from distribution for a
reasonable time any Partnership assets except those necessary to satisfy the
Partnership's debts and obligations, or distribute the assets to the Partners in
kind.
(c) If any assets of the Partnership are to be distributed in kind,
such assets shall be distributed on the basis of the fair market value thereof,
and any Partner entitled to any interest in such assets shall receive such
interest therein as a tenant- in- common with all other Partners so entitled.
The fair market value of such assets shall be determined by an independent
appraiser to be selected by the General Partner (or a trustee, if one is
appointed).
(d) The General Partner (or a trustee, if one is appointed) may set up
any reserve it deems reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership to Persons other than the Partners
arising out of or in connection with the Partnership. Such reserve shall be paid
over by the General Partner or such trustee to a bank or trust company to act as
escrow agent or to a reputable Person selected by the General Partner or such
trustee. Any such escrow agent shall hold such reserves for payment of any of
the aforementioned contingencies, and, at the expiration of such period as the
General Partner or such trustee designates, distribute the balance thereafter
remaining in the manner hereinafter provided.
(e) The proceeds from the liquidation of the assets of the Partnership
shall be distributed in the following order:
(i) First, the expenses of liquidation and the debts of the
Partnership, other than the debts owing to the Partners, shall be paid;
(ii) Second, all of the Partnership's indebtedness to the
Partners, including any expenses or advances made to or for the benefit of the '
Partnership by the General Partner, shall be paid and discharged; and
(iii) The balance, if any, shall be distributed to the Partners
in proportion to their Capital Accounts after giving effect to all
contributions, distributions and allocations for all taxable years, including
the taxable year during which the final liquidating distribution occurs.
-34-
Section 13.04 Negative Capital Account
------------- ------------------------
In the event the Capital Account of the General Partner is less than
zero upon dissolution of the Partnership and after giving effect to all
contributions, distributions and allocations for all taxable years, including
the taxable year during which the final liquidating distribution occurs, the
General Partner shall contribute to the Partnership the amount necessary to
restore its Capital Account to zero, and the amount so contributed shall be
treated as proceeds from the liquidation of Partnership assets for purposes of
Section 13.03 hereof.
Section 13.05 Purchase by General Partner
------------- ---------------------------
A General Partner or Affiliate thereof may purchase Property upon
liquidation at the greater of the highest bona fide independent offer received
or the fair market value thereof, as determined by an independent appraiser
selected by the General Partner, provided at least 15 days' advance public
notice of the proposed sale has been given.
Section 13.06 General Partner's Discretion
------------- ----------------------------
The winding up of the Partnership*s affairs and the liquidation and
distribution of its assets shall be conducted exclusively by the General Partner
(or a trustee, if one is appointed), which is authorized to do any and all acts
and things authorized by law for these purposes. Distributions in accordance
with the provisions of this Article 13 upon termination and dissolution of the
Partnership shall constitute a complete return to the Partners of their
interests in the profits of the Partnership and their Capital Contributions, a
final and complete distribution to the Partners of all their interests in the
Partnership assets and a final termination and settlement of any and all of the
Partners' other interests in the Partnership.
Section 13.07 Liquidation Report
------------- ------------------
Upon the dissolution of the Partnership, accountants for the
Partnership chosen by the General Partner shall promptly prepare, and the
liquidator shall furnish to each Partner, a statement setting forth the assets
and liabilities of the Partnership upon its dissolution. Promptly following the
complete liquidation and distribution of the Partnership assets, there shall be
prepared, and the liquidator shall furnish to each Partner, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
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14. Amendments
----------
Section 14.01 Proposal and Adoption of Amendments
------------- -----------------------------------
Generally
---------
(a) Amendments to this Agreement to reflect the addition or
substitution of a Limited Partner, the designation of an additional or a
successor General Partner, or the withdrawal or removal of a General Partner
shall be made at the time and in the manner referred to in Section 14.03 hereof.
Any other amendments to this Agreement, except for those within the General
Partner's Special Power of Attorney under Section 9.10 hereof, may be proposed
by a General Partner, who shall give notice to the Limited Partners of:
(i) The content of such amendment; and (ii) A statement of the
purpose of such amendment.
(b) For the purpose of obtaining a written vote to approve or
disapprove a proposed amendment (if a written vote is required), or for any
other matter, the General Partner may require written responses within a
specified time period (not less than 15 nor more than 60 days from the date of
any notice of a proposed amendment) and provide that the failure to respond
shall constitute a favorable or unfavorable vote (as designated) for the
proposed amendment or other manner.
(c) The General Partner shall within a reasonable time after the
adoption of any amendment to this Agreement, make any official filings or
publications required or desirable to reflect such amendment, including any
required filing for recordation of any certificate. The date of adoption of an
amendment shall be the date on which the General Partner shall have received
the requisite consents.
Section 14.02 Limitations on Amendments
------------- -------------------------
Notwithstanding the provisions of Section 14.01 hereof, no amendment
to this Agreement may:
(a) Enlarge the obligations of any Limited Partner under this
Agreement or convert the interest of any Limited Partner into the interest of a
general partner or modify the limited liability of any Limited Partner without
the consent of such Limited Partner;
(b) Modify the order or method for the allocation of Profits and
Losses and other items and distributions of cash and other property under this
Agreement without the consent of each Partner adversely affected by such
modification;
(c) Amend this Section 14.02 or Section 8.03 hereof without the
consent of all Partners; or
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(d) Expand the duties or reduce the rights of the General Partner
without the approval of the General Partner affected.
Section 14.03 Amendments on Admission or Withdrawal of
------------- ----------------------------------------
Partners
--------
(a) Upon the acceptance of the related Subscription Agreement by the
General Partner, each such Person whose Subscription Agreement was thus accepted
shall thereby be admitted as a Limited Partner to the Partnership without
requiring the consent or any other action of such Person or of any other Limited
Partner.
(b) Amendments to admit a Substituted Limited Partner shall be adopted
if the conditions specified in Section 11.03 and/or 11.06 hereof shall have been
satisfactorily complied with and the amendment shall have been signed by the
General Partner and by the Person to be substituted or added, and if a Partner
is to be substituted, by the assigning Unit Holder or his attorney-in-fact.
(c) Amendments to reflect the designation of an additional or
successor General Partner shall be adopted if the conditions specified in
Article 10 hereof shall have been satisfactorily completed and the amendment
shall have been signed by such additional or successor General Partner.
(d) Amendments to withdraw or remove any General Partner, if the
business of the Partnership is continued, shall be adopted if the conditions
specified in Article 10 hereof shall have been satisfactorily completed and the
amendment shall have been signed by the successor or remaining General
Partner(s).
Section 14.04 Amendments Without Consent of Limited
------------- -------------------------------------
Partners
--------
The General Partner may amend this Agreement from time to time without
the consent of any of the Limited Partners:
(a) To add-to the representations, duties or obligations of the
General Partner or surrender any right or power granted to the General Partner
for the benefit of the Unit Holders who is not a General Partner;
(b) To cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or to deal with
respect to matters or questions arising under this Agreement in a manner which
will not be inconsistent with the provisions of this Agreement;
(c) To delete or add any provision of this Agreement required to be so
deleted or added by any state "Blue Sky" Commissioner or similar such official
which such official deems to be for the benefit of protection of the Unit
Holders who is not a General Partner; and
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(d) To admit additional Limited Partners and Substituted Limited
Partners in accordance with the terms of this Agreement.
However, the General Partner shall adopt no amendment. pursuant hereto
unless the adoption thereof (i) is for the benefit of or not adverse to the
interests of the Limited Partners; (ii) is consistent with Article 6 hereof;
(iii) does not affect the distribution of cash or other property of the
Partnership, or the allocation of Profits and Losses and other items among the
Limited Partners; and (iv) does not affect the limited liability of the Limited
Partners or the status of the Partnership as a partnership for Federal income
tax purposes.
Section 14.05 Filing of Amendments
------------- --------------------
The General Partner shall prepare, file and, if deemed necessary by
the General Partner, record such documents and certificates as shall be required
to be prepared and filed pursuant to the Act and under the laws of the other
jurisdictions under the laws of which the Partnership owns Property or is
required to file.
15. General Provisions
------------------
Section 15.01 Indemnification of General Partner
------------- ----------------------------------
The Partnership agrees to indemnify the General Partner and its
officers and directors for any act performed by them within the scope of
authority conferred upon the General Partner by this Agreement provided that
they acted in good faith and in a manner reasonably believed to be in, or not
opposed to, the best interests of the Partnership and its Limited Partners, and
had no reasonable grounds to believe that their conduct was negligent or
unlawful. However,. no indemnification may be made with respect to any claim,
issue or matter-as to which the General Partner or its officers and directors
are adjudged to be liable for negligence or willful misconduct in the
performance of their duties to the Partnership unless, and only to the extent
that, the court in which such action or suit is brought shall determine that
despite the adjudication of liability for negligence or willful misconduct, and
in view of all the circumstances of the case, the General Partner and its
officers and directors are fairly and reasonably entitled to indemnity for such
expenses. Any indemnity shall be paid from, and only to the extent of,
Partnership assets, and the Limited Partners shall not have any personal
liability on account thereof.
Section 15.02 Burden and Benefit
------------- ------------------
The covenants and agreements contained herein shall be binding upon
and inure to the benefit of the heirs, executors, devisees, personal
representatives, administrators, successors and (subject to the other provisions
hereof) assigns of the respective parties hereto.
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Section 15.03 Applicable Law
------------- --------------
This Agreement shall be construed and enforced in accordance with the
laws, including the laws relating to conflict of laws of the State of
California.
Section 15.04 Method of Giving Consent
------------- ------------------------
Any consent or vote required by this Agreement may be given by a
written consent given by the consenting Partner and received by the General
Partner at or prior to the doing of the act or thing for which the consent is
solicited, provided that such consent shall not have been nullified by notice to
the General Partner of such nullification by the consenting Partner prior to the
doing of the act or thing for which the consent was solicited.
Section 15.05 Descriptive Headings
------------- --------------------
The headings of the Articles and Sections of this Agreement are
inserted for convenience only, shall not be deemed to be a part of this
Agreement, and in no way define, limit, extend or describe the scope or intent
of any provision hereof.
Section 15.06 Counterparts
------------- ------------
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original copy and all of which together shall
constitute one Agreement, binding on all parties hereto, notwithstanding that
all the parties shall not have signed the same counterparts.
Section 15.07 Severability of Provisions
------------- --------------------------
Each provision of this Agreement shall be considered severable and if
for any reason any provision which is not essential to the effectuation of the
basic purposes of this Agreement is determined to be invalid and contrary to any
existing or future law, such invalidity shall not impair the operation of or
affect those provisions of this Agreement which are valid.
Section 15.08 Partition
------------- ---------
Each of the parties hereto irrevocably waives during the term of the
Partnership any right that he may have to maintain any action for partition with
respect to Property, except as herein otherwise expressly provided.
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Section 15.09 Notices
------------- -------
Any notice, request or demand required or permitted under this
Agreement shall be deemed to have been duly given or made if delivered or if
sent postage prepaid by registered, certified or first-class mail to the address
of the Unit Holder contained herein, or to such other address as the Unit Holder
may designate to the other for this purpose.
Section 15.10 Time
------------- ----
Time is of the essence of each part of this Agreement.
Section 15.11 Force Majeure
------------- -------------
The General Partner shall not be liable for any loss or damage to
Property caused by strikes, labor troubles, riots, fires, tornadoes, floods,
acts of a public enemy, insurrections, acts of Cod, failure to carry out the
provisions hereof due to provisions of law or rules or regulations promulgated
by any governmental agency or any demand or requisition of any government, or
from any other cause beyond the control of the General Partner.
Section 15.12 Unit Certificates
------------- -----------------
Every Regular Limited Partner, Special Limited Partner and General
Partner, and any purchaser, transferee, assignee or other recipient of all or
any portion of a Regular Limited Partner's, Special Limited Partner's or a
General Partner's interest in the Partnership, as the case may be, shall be
issued a "Certificate of Ownership," substantially in the forms attached hereto
as Exhibits A, B and C, respectively, which shall evidence the number of Units
or other Partnership Interest owned by such Limited Partner or General Partner,
as the case may be, and whose surrender to the General Partner with appropriate
endorsement shall be necessary to transfer, assign or sell such Regular Limited
Partner's, Special Limited Partner's or General Partner's interest, as the case
may be. Such transfer, assignment or sale shall be registered by the General
Partner on books maintained by it on behalf of the Partnership for that purpose,
which fact the Certificate of Ownership shall so state. In case of alleged loss,
destruction or mutilation of a Certificate of Ownership, the General Partner may
issue a new Certificate of Ownership in lieu thereof upon the terms hereof and
such other terms and conditions as are required by applicable law. The General
Partner may in its discretion require a bond, in such form and amount and from
such surety as it may approve, before issuing a new Certificate of Ownership.
Presentation of a Certificate of Ownership registered in the name of or duly
endorsed by the registered owner or his duly appointed attorney-in-fact in favor
of the person presenting the Certificate of Ownership shall establish
conclusively such person's ownership of the interest in the Partnership
evidenced by the Certificate of Ownership.
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Section 15.13 Entire Agreement
------------- ----------------
This Agreement, including information incorporated herein by
reference, sets forth all (and in intended by all parties to be an integration
of all) of the representations, promises, agreements and understandings among
the parties hereto with respect to the Partnership, the Partnership business and
the Property of the Partnership, and there are no representations, promises,
agreements or understandings, oral or written, express or implied, among them
other than as set forth or incorporated herein.
IN WITNESS WHEREOF, this Agreement of Limited Partnership has been
executed by each of the signatories hereto as of the day and year set forth
opposite its name below.
GENERAL PARTNER:
Dated: 12/23/85
-----------------
ZOND WINDSYSTEMS MANAGEMENT
CORPORATION V a California
corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
ORIGINAL LIMITED PARTNER:
Dated: 12-23-85
-----------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, A
PROFESSIONAL CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-41-
OTHER LIMITED PARTNERS:
Dated: 12-23-85
-----------------
By Zond Windsystems Management
Corporation V, as attorney-in-fact
for the Persons admitted to the
Partnership as Limited Partners
pursuant to Section 14.03 hereof.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-42-
(APPLICABLE RESTRICTIVE LEGENDS]
------------------ ---------------------------
| CERTIFICATE | | |
| NUMBER | |REGULAR UNITS OF LIMITED |
------------------ | PARTNERSHIP INTEREST |
| |
---------------------------
FORM OF
CERTIFICATE OF OWNERSHIP OF
REGULAR LIMITED PARTNERSHIP INTEREST
IN
ZOND WINDSYSTEM PARTNERS, LTD. SERIES 85-C,
a California limited partnership
(the "Partnership")
THIS CERTIFIES THAT ---------------------------- is the registered
holder of the number of Regular Units of Limited Partnership interest in the
Partnership as indicated above transferable only on the register of the
Partnership maintained by the General Partner at the office of the Partnership
by the holder hereof in person -or by Attorney upon surrender of this
Certificate properly endorsed. Any such transfer is subject to the terms and
conditions set forth in the First Amended and Restated Agreement of Limited
Partnership, a copy of which has been supplied to the registered holder
evidenced hereby.
IN WITNESS WHEREOF, the Partnership has caused this Certificate to be
executed by its General Partner this ------------ day of 19 -----
ZOND WINDSYSTEMS MANAGEMENT
CORPORATION V
By -----------------------------------
EXHIBIT A
---------