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Exhibit 3.2
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AES Eastern Energy, L.P.
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AGREEMENT OF LIMITED PARTNERSHIP
May 4, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CONSTRUCTION....................................... 1
Section 1.01 Definitions........................................... 1
Section 1.02 Construction.......................................... 4
ARTICLE II ORGANIZATION OF THE PARTNERSHIP................................ 5
Section 2.01 Formation, Name and Place of Business................. 5
Section 2.02 Purpose............................................... 5
Section 2.03 Conduct of Business................................... 6
Section 2.03 Term.................................................. 8
ARTICLE III PARTNERS AND CAPITAL.......................................... 8
Section 3.01 General Partner....................................... 8
Section 3.02 Limited Partners...................................... 8
Section 3.03 Capital Contributions................................. 8
Section 3.04 Admission of Additional Partners...................... 8
Section 3.05 Partner Loans......................................... 9
Section 3.06 Capital Accounts...................................... 9
ARTICLE IV DISTRIBUTIONS AND ALLOCATIONS.................................. 10
Section 4.01 Distributions......................................... 10
Section 4.02 Allocations........................................... 10
Section 4.03 Section 704(c) Adjustments............................ 11
Section 4.04 Other Operating Principles............................ 12
Section 4.05 Distributions and Allocations After Transfers of
Partnership Interests............................. 12
ARTICLE V MANAGEMENT OF THE PARTNERSHIP................................... 12
Section 5.01 Authority of General Partner.......................... 12
Section 5.02 Responsibilities of General Partner................... 13
Section 5.03 Contracts with Affiliates............................. 14
Section 5.04 Outside Business Interests............................ 14
Section 5.05 Indemnities........................................... 14
ARTICLE VI RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS..................... 15
Section 6.01 Rights of Limited Partners............................ 15
Section 6.02 Limitations........................................... 15
Section 6.03 Liability............................................. 16
ARTICLE VII TRANSFERS AND ISSUANCE OF PARTNER INTERESTS................... 16
Section 7.01 Transfers of General Partner Interests................ 16
Section 7.02 Transfers of Limited Partner Interests................ 16
ARTICLE VIII DISSOLUTION AND TERMINATION.................................. 16
Section 8.01 Events of Dissolution................................. 16
Section 8.02 Distributions and Allocations Upon
Dissolution....................................... 17
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Section 8.03 Election to Carry on Business......................... 19
Section 8.04 No Restoration of Negative Capital
Accounts.......................................... 19
ARTICLE IX MISCELLANEOUS.................................................. 19
Section 9.01 Notices............................................... 19
Section 9.02 Partition............................................. 19
Section 9.03 Power of Attorney..................................... 19
Section 9.04 Fiscal Year........................................... 21
Section 9.05 Section 754 Elections................................. 21
Section 9.06 Tax Matter............................................ 21
Section 9.07 Books and Records..................................... 21
Section 9.08 Parties in Interest................................... 21
Section 9.09 No Waiver............................................. 21
Section 9.10 Entire Agreement...................................... 21
Section 9.11 Headings.............................................. 22
Section 9.12 Counterparts.......................................... 22
Section 9.13 Severability.......................................... 22
Section 9.14 Applicable Law........................................ 22
Schedule 1 -- Percentage Interests
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AES EASTERN ENERGY
AGREEMENT OF LIMITED PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP, dated as of May 4, 1999, by and
among AES NY, L.L.C. a limited liability company ("AES NY"), and AES NY2,
L.L.C., a limited liability company ("AES NY2").
W I T N E S S E T H :
WHEREAS, AES NY and AES NY2 desire to form a limited partnership in
accordance with the laws of the State of Delaware;
NOW THEREFORE, in consideration of the mutual promises of the
parties and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
SECTION 1.01 DEFINITIONS. Capitalized terms used in this Agreement
have the following meanings:
"Act" means the Delaware Revised Limited Partnership Act, as
modified, restated, amended or supplemented from time to time.
"Adjusted Capital Account Deficit" means with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to (a) increase to such
Capital Account of any amounts which such Partner is obligated to restore
pursuant to any provisions of this Agreement or is deemed to be obligated to
restore pursuant to Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), and (b) decrease to such Capital Account of the items described
in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"AEE2" means AEE2, L.L.C., a Delaware limited liability company and
direct wholly-owned subsidiary of the Partnership.
"Affiliate", with respect to any particular Person, means any
Person, directly or indirectly controlling, controlled by or under common
control with such particular Person including, without limitation (i) any
subsidiary of such particular Person and (ii) any Person who is a spouse,
parent, sibling or child of such particular Person. For purposes of this
definition,
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"control", when used with respect to any particular Person, means the power to
direct the actions and policies of such Person, directly or indirectly, whether
by contract or otherwise.
"Agreement" means this Agreement of Limited Partnership, including
the exhibits and schedules.
"APA" means the Asset Purchase Agreement, dated as of August 3,
1998, by and among the Company, NYSEG and NGE.
"Capital Account" means the capital account of each member's capital
contributions to the Partnership maintained for a Partner pursuant to Section
3.06 hereof.
"Capital Event" means a sale, exchange, financing, refinancing or
other disposition of Partnership assets (other than in the ordinary course of
the Partnership's business), excluding financings pursuant to the Financing
Documents, but including a casualty loss or a condemnation or partial
condemnation.
"Certificate" means the certificate of limited partnership filed by
the Partnership with the State of Delaware, as amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Credit Facility Documents" means (i) the $50,000,000 Secured
Revolving O&M Costs Facility Agreement by and among the Partnership, the banks
named on the schedule thereto and Credit Suisse First Boston, as Agent (the "O&M
Facility"), to be entered into by the Partnership in connection with the
transactions contemplated by the APA, the related Pledge Agreement, Security
Agreement and the other Loan Documents (as those terms are used and defined in
the O&M Facility), and any additional documents related thereto, and any
documents related to any refinancing of such credit facility, including any and
all modifications, extensions, renewals and replacements of any such credit
facility, and (ii) the $26,000,000 Secured Credit Agreement by and among
Somerset Railroad Corporation, the banks named on the signature pages thereof
and CIBC, Inc., as Agent (the "Credit Agreement"), the related Notes, Security
Agreement, Mortgage, Railcar Mortgage, Pledge Agreement, Coal Hauling Agreement
and the Consent to Assignment and the other Loan Documents (as those terms are
used and defined in the Credit Agreement), and all other agreements, documents
and instruments relating to, arising out of, or in any way connected with any
agreement, document or instrument referred to in this clause (ii).
"Financing Documents" means any and all notes, indentures, security
agreements, mortgages, lease agreements, sublease agreements, subordination
agreements, partnership agreements, subscription agreements, participation
agreements, deeds, bills
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of sale, support documents, easement agreements and other documents relating to
the interim or long-term financing (both debt and equity) of the acquisition of
the assets of NYSEG and NGE pursuant to the APA (including by way of leveraged
lease), and any refinancing of such assets, including any and all modifications,
extensions, renewals and replacements of any such financing or refinancing.
"General Partner" means (i) while the Financing Documents are in
effect, AES NY, a bankruptcy remote entity with an independent director and (ii)
if the Financing Documents are no longer in effect, AES NY or any successor in
interest.
"Limited Partner" means AES NY2 and any Person admitted as Limited
Partner under section 3.04 of this Agreement, and any successors in interest.
"Minimum Gain" has the meaning set forth in Treas. Reg. Section
1.704-2(d). Minimum Gain shall be computed separately for each Partner in a
manner consistent with the Treasury Regulations under Code Section 704(b).
"Net Cash Flow" has the meaning set forth in Section 4.01(b) of
this Agreement.
"Net Profits" or "Net Losses" means, for each fiscal year or part
thereof, the Company's taxable income or loss for such year 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) any income of the Company that is exempt from U.S.
federal income tax shall be added to such taxable income or loss; and (ii) any
expenditures of the Company described in Code Section 705(a)(2)(B) or treated as
such pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i) shall be
subtracted from such taxable income or loss.
"Nonrecourse Deductions" has the meaning set forth in Treas. Reg.
Section 1.704-2(b)(1).
"NGE" means NGE Generation, Inc., a New York corporation.
"NYSEG" means New York State Electric & Gas Corporation, a New
York corporation.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning
set forth in Treas. Reg. Section 1.704-2(i).
"Partner Nonrecourse Deductions" shall have the meaning set forth
in Treas. Reg. Sections 1.704-2(i)(1) and 1.704-2(i)(2).
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"Partnership" means the limited partnership created by this
Agreement.
"Partnership Interest" means the entire ownership interest of a
Partner in the Company (including a Partner's rights and obligations set forth
in this Agreement), which, for each Partner, shall be expressed as the
applicable percentage set forth on Schedule 1 hereto.
"Percentage Interest" means, with respect to any Partner, the
ownership percentage of such Partner in the Partnership shown on Schedule 1, as
this schedule is amended from time to time to reflect adjustments in the
ownership percentages of the Partners.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Proceeds from a Capital Event" means cash receipts from a Capital
Event, net of any receipts applied to reduce indebtedness, acquire capital
assets or pay the costs and expenses incurred or otherwise payable in good faith
in connection with the Capital Event.
"Projects" shall mean four coal-fired electric generation facilities
consisting of (a) the ▇▇▇▇▇▇▇ Station, a 675 MW facility located near Somerset,
New York, (b) the ▇▇▇▇▇▇▇▇ Station, a 306 MW facility located on the east shore
of Cayuga Lake near Lansing, New York, (c) the ▇▇▇▇▇▇ Station, a 126 MW facility
located near Johnson City, New York and (d) the ▇▇▇▇▇▇▇▇▇ Station, a 161 MW
facility located on the west side of Seneca Lake near Dresden, New York.
"Project LLCs" means those certain Delaware Limited Liability
Companies directly or indirectly wholly-owned by the Partnership, which will
operate the Projects.
"Tax Matters Partner" has the meaning set forth in Section 9.06.
"Treasury Regulations" or "Treas. Reg." means the regulations
promulgated by the United States Department of the Treasury with respect to the
Code, or corresponding provisions of future regulations as such regulations may
be amended from time to time.
SECTION 1.02 CONSTRUCTION. (a) As used herein, the singular
shall include the plural and all references herein to one gender shall
include the others, as the context requires.
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(b) Unless otherwise expressly provided, all references to
"Articles", "Sections", or "Schedules" are to Articles, Sections or Schedules of
this Agreement.
(c) The headings and captions are used in this Agreement for
convenience only and shall not be considered when determining the meaning of any
provisions of this Agreement.
ARTICLE II
ORGANIZATION OF THE PARTNERSHIP
SECTION 2.01 FORMATION, NAME AND PLACE OF BUSINESS. The Partners
hereby form the Partnership pursuant to the provisions of the Act. The name of
the Partnership is AES Eastern Energy, L.P. The principal office and mailing
address of the Partnership is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The address of the Partnership's registered office in the State
of Delaware is The Corporation Service Company, and the name of the
Partnership's registered agent for service of process at such address is The
Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The
Partnership may do business under such other name or at such other place of
business as the General Partners choose from time to time.
SECTION 2.02 PURPOSE. The sole purposes of the Partnership are (i)
to invest in and hold interests in the Project LLCs directly, or indirectly
through AEE2, (ii) to engage in all aspects of the business of owning and
operating the Projects through the Project LLCs and all activities associated
therewith, (iii) to make distributions in cash, out of funds legally available
therefor, to partners of the Partnership and (iv) to engage in any other
activities related or incidental to any of the foregoing, including without
limitation any other activities contemplated by the APA and any other related
transaction. In order to carry out its purpose, the Partnership will have and
may exercise all powers now or hereafter conferred on limited partnerships by
the Act and other laws of the State of Delaware, and will have the authority to
do any and all things necessary, appropriate, proper, advisable, incidental to
or convenient for the furtherance and accomplishment of its purpose, and for the
protection and benefit of the Partnership. Except as stated above, the
Partnership will not engage in any business or activity whatsoever.
SECTION 2.03 CONDUCT OF BUSINESS. Notwithstanding any provision
hereof or any other document governing the formation, management or operation of
the Partnership to the contrary, for so long as the Financing Documents remain
outstanding, the following shall govern in order to preserve and maintain the
Partnership's separate and distinct identity, and the Partnership shall conduct
its affairs in accordance with the following provisions:
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(a) The Partnership shall hold itself out to the public as a legal
entity separate and distinct from any other Person, including any Affiliate of
the Partnership or any Partner, and shall conduct its business solely in its own
name in order not (i) to mislead others as to the identity with which such other
party is transacting business, or (ii) to suggest that the Partnership is
responsible for the debts of any third party (including any Partner or any
Affiliate of the Partnership or any Partner);
(b) The Partnership shall not incur any indebtedness except for
liabilities and trade indebtedness incurred in the normal course of business,
including acting as the sole member of AEE2, in the amount necessary in the
furtherance of the Partnership's purpose;
(c) Other than as provided in the Credit Facility Documents, the
Partnership shall not enter into (or hold itself out as having entered into) any
agreement or arrangement to guaranty or, in any way or under any condition,
become obligated or liable (or hold itself out as being obligated or liable) for
all or any part of the financial or other obligation of another person or
entity;
(d) Other than as provided in the Credit Facility Documents, the
Partnership shall not create, incur, assume or suffer to exist any lien,
security interest, or other charge or encumbrance, nor any other type of
preferential arrangement upon or with respect to the Partnership's assets nor
assign any right to receive income to secure or provide for the payment of any
debt of any person or entity;
(e) The Partnership shall not dissolve, liquidate (in whole or in
part), sell any material part of its assets or consolidate or merge with or into
any other entity;
(f) The Partnership shall maintain records, books of account and
bank accounts and file tax returns separate from those of any Partner, any
Affiliate of the Partnership or any Partner, or any other Person;
(g) The Partnership shall allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate of the Partnership;
(h) The Partnership shall not commingle assets with those of any
Partner, any Affiliate of the Partnership or any Partner, or any other Person,
and shall hold its assets in its own name;
(i) The Partnership shall conduct its own business in its own name;
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(j) The Partnership shall maintain financial statements showing its
own assets as being separate from those of any Partner, any Affiliate of the
Partnership or any other Person; in the event that consolidated financial
statements are created such statements shall include a footnote disclosing AES
NY, the Partnership and AES Creative Resources, L.P., a Delaware limited
partnership, as separate entities;
(k) The Partnership shall pay its liabilities out of its own funds,
including salaries of any employees of the Partnership, and not out of the funds
of any Partner or any Affiliate of the Partnership or any Partner;
(l) Other than as provided in the Credit Facility Documents, the
Partnership shall not enter into any transaction with any Partner or any
Affiliate of the Partnership or any Partner, except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arm's-length basis with third parties;
(m) The Partnership shall use separate stationery, invoices and
checks bearing its own name;
(n) Other than as provided in the Credit Facility Documents, the
Partnership shall not pledge its assets for the benefit of any other Person,
including any Partner, or any Affiliate of the Partnership or any Partner;
(o) The Partnership shall not make any loans or advances to any
third party, including any Partner or Affiliate of the Partnership or any
Partner, or buy or hold evidence of indebtedness issued by any Partner or
Affiliate;
(p) The Partnership shall take commercially reasonable steps to
correct any known misunderstandings regarding the separate identity of the
Partnership;
(q) The Partnership shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;
(r) The Partnership shall not share any common logo with or identify
itself as a department or division of any Affiliate or Partner of the
Partnership or any other Person; and
(s) The Partnership shall continue to serve as the managing member
of the Project LLCs, except for the Project LLCs directly owned by AEE2, which
the Partnership shall cause to continue to serve as the managing member of the
Project LLCs.
SECTION 2.04 TERM. The Partnership will be formed and its business
will commence upon the filing for record of an initial Certificate. The
Partnership will remain in existence
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until terminated under Article VIII.
ARTICLE III
PARTNERS AND CAPITAL
SECTION 3.01 GENERAL PARTNER. AES NY will have a 1% interest in
the Partnership as a general partner.
SECTION 3.02 LIMITED PARTNER. AES NY2 will have a 99% interest in
the Partnership as a limited partner.
SECTION 3.03 CAPITAL CONTRIBUTIONS. (a) Concurrent with the
execution of this Agreement and in consideration for their respective
Partnership Interests, each Partner shall make an initial capital contribution
to the Partnership in the amount set forth in Schedule 1.
(b) In addition to the capital contributions provided for in
3.03(a), the Partners shall from time to time make such additional contributions
determined by the General Partner. All such additional capital contributions
shall be made in proportion to the Partnership Interests. If any Limited Partner
(a "Non-Contributing Partner") fails to fulfill a contribution obligation under
this Section 3.03(b) and such failure continues for twenty (20) days after such
Partner receives notice from the Partnership of such failure, then the
contributing Partner may, in addition to any other remedies available under this
Agreement or at law or in equity, elect to contribute some or all of the
non-contributed amount to the Partnership, and in such event the Partnership
Interests of the non-contributing Partner shall be proportionately reduced and
the Partnership Interest of the contributing Partner shall be proportionately
increased.
SECTION 3.04 ADMISSION OF ADDITIONAL PARTNERS. Subject to Sections
7.01 and 7.02, additional Persons may be admitted as Partners of the
Partnership, without the sale, assignment, transfer or exchange by an existing
Partner of all or any part of its Partnership Interest, only with the consent
of, and on terms and conditions approved by the General Partner. In such event,
the Partnership Interests of each of the Partners shall be adjusted to reflect
the issuance of the new additional Partnership Interest and the admission of the
new Partner on a pro rata basis in accordance with the respective Partnership
Interest of each such Partner, and Schedule 1 shall be amended accordingly.
SECTION 3.05 PARTNER LOANS. If at any time the General Partner
determines that additional funds are required by the Partnership, the General
Partner may request that each Partner make a loan (a "Partner Loan") to the
Partnership or all or any portion of such funds, in which event each Partner
will have the right, but not the obligation, to make a Partner Loan. Any Partner
Loan made pursuant to the preceding sentence shall bear interest at an annual
rate equal and shall have a maturity
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date and be on such other terms as shall be determined by the General Partner.
All principal and interest due with respect to Partner Loans shall be fully
repaid prior to making any distributions to any Partner hereunder. If more than
one of the Partners agree to provide funds pursuant to this Section 3.05, such
funds shall be provided pro rata in accordance with their Partnership Interests.
Any Partner Loan will be treated as Partnership debt and not as a contribution
to the capital of the Partnership.
SECTION 3.06 CAPITAL ACCOUNTS. The Partnership will maintain a
separate capital account for each Partner. Capital accounts will be
maintained in the manner required by Treas. Regs. Section 1.704-1(b). The
Partnership will add to the capital account of each Partner
(a) the amount of any cash and the fair market value (as reasonably
determined by the General Partner) of any property that the Partner contributes
to the Partnership (net of liabilities securing the property that the
Partnership is considered to assume or take subject to under section 752 of the
Code), and
(b) the Net Profits allocated to the Partner under Article IV.
The Partnership will subtract from the capital account of each Partner
(c) the amount of any cash and the fair market value (as reasonably
determined by the General Partner) of any property distributed to the Partner
(net of liabilities securing the property that the Partner is considered to
assume or take subject to under section 752 of the Code, and
(d) the Net Losses allocated to the Partner under Article IV.
The capital accounts of the Partners will be revalued under Treas. Regs. Section
1.704-1(b)(2)(iv)(f) when any new Partners are admitted to the Partnership.
ARTICLE IV
DISTRIBUTIONS AND ALLOCATIONS
SECTION 4.01 DISTRIBUTIONS. (a) Except as provided in section 8.02
and subject to any restrictions in the Financing Documents or under applicable
law, Net Cash Flow arising during any fiscal quarter will be distributed
promptly after the end of the fiscal quarter to Partners in the same ratio as
their Percentage Interests.
(b) For purposes of this Agreement, "Net Cash Flow" means, with
respect to any period, cash receipts (other than
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Proceeds from a Capital Event) reduced by the following items, which will be
paid by the Partnership in the following order of priority:
(i) First, payments of any expenses incurred in operations and for
such capital expenditures as the General Partner believes is in the
Partnership's interest;
(ii) Second, payments to outside creditors of the Partnership or for
such prepayments as the General Partner believes in good faith is in the
Partnership's interest; and
(iii) Third, repayment in full of principal and interest on Partner
Loans.
(c) Except as provided in section 8.02 and subject to any
restrictions in the Financing Documents or under applicable law, Proceeds from a
Capital Event arising during any fiscal quarter will be distributed to the
Partners promptly upon receipt of such Proceeds from a Capital Event or, in the
sole discretion of the General Partner, following the end of such fiscal
quarter, pro rata according to their respective Percentage Interests.
SECTION 4.02 ALLOCATIONS. (a) Net Profits or Net Losses for any
fiscal year will be allocated among the Partners in the same ratio as their
Percentage Interests.
(b) Every item of income, gain, loss, deduction, credit or tax
preference entering into the computation of Net Profits and Net Losses, or
applicable to the period during which such Net Profits or Net Losses were
recognized, shall be considered allocated to each Partner in the same proportion
as Net Profits or Net Losses are allocated to such Partners.
(c) No Partner will be allocated Net Losses to the extent the
allocation would cause the Partner to have a deficit in its Specially-Adjusted
Capital Account.
(d) If there is a net decrease in "partnership minimum gain" (within
the meaning of Treas. Regs. Section 1.704-2(b)(2)) in a year, then each Partner
will be allocated items of gross income and gain that year, before any other
allocation of Net Profits or Net Losses, equal to that Partner's share of the
net decrease in partnership minimum gain. This provision is intended to comply
with Treas. Regs. Section 1.704-2(f).
(e) If a Partner suffers a net decrease in "partner nonrecourse
debt minimum gain" (within the meaning of Treas. Regs. Section 1.704-2(i)(4)) in
any year, then that Partner will be allocated items of gross income and gain
to comply with Treas. Regs. Section 1.704-2(i)(4).
(f) If there are any "partner nonrecourse deductions" (within
the meaning of Treas. Regs. Section 1.704-2(i)(1)) in a year,
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then these will be allocated to the Partner who bears the economic risk of loss
for the "partner nonrecourse liability" (within the meaning of Treas. Regs.
Section 1.704-2(b)(4)) to which the deductions are attributable.
(g) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
items of Partnership gross income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, the Adjusted Capital Account Deficit of such
Partner as quickly as possible, provided that an allocation pursuant to this
Section 4.02(g) shall be made only if and to the extent that such Partner would
have an Adjusted Capital Account Deficit after making all other allocations
provided for hereunder on the basis that the allocation provisions of this
Section 4.02(g) are of no force or effect and such allocation does not create or
increase an Adjusted Capital Account Deficit of any other Partner. This Section
4.02(g) is intended to be a "qualified income offset" as provided in Treas.
Regs. Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in a
manner consistent with such regulation.
(h) The allocation of Net Profits and Net Losses, pursuant to this
Section 4.02, shall not result in any Partner having an Adjusted Capital Account
Deficit at the end of any fiscal year.
SECTION 4.03 SECTION 704(C) ADJUSTMENTS. If any Partner contributes
appreciated property to the Partnership, allocations to Partners will be
adjusted as required by section 704(c) of the Code to take in account the
built-in gain at the time of the contribution.
SECTION 4.04 OTHER OPERATING PRINCIPLES. The Partnership will use
the accrual method of accounting for federal income tax purposes. Every item of
income, gain, loss, deduction, credit or tax preference entering in the
computation of Net Profits or Net Losses will be considered allocated to each
Partner in the same proportion as Net Profits or Net Losses are allocated to the
Partner. Any increase or decrease in the amount of any item of income, gain,
loss or deduction caused by adjusting the basis of Partnership assets under
sections 743(b) and 754 of the Code, and pursuant to the corresponding
provisions of applicable state and local income tax laws, will be charged or
credited, and any increase or decrease in the amount of any item of credit or
tax preference attributable to any such adjustment will be allocated, to the
capital accounts of Partners entitled to the adjustments under such laws.
SECTION 4.05 DISTRIBUTIONS AND ALLOCATIONS AFTER TRANSFERS OF
PARTNERSHIP INTERESTS. If any interest in the Partnership is transferred during
a fiscal year, distributions
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and allocations for that year will be made between the transferor and transferee
as follows:
(a) Net Cash Flow allocable to the interest will be shared in
proportion to the number of days during the fiscal year that each Person held
the interest;
(b) Proceeds from a Capital Event distributable with respect to the
interest will be distributed to the Person who held the interest on the day the
Capital Event occurred;
(c) Net Profits or Net Losses allocable to the interest will be
shared in proportion to the number of days during the fiscal year that each
Person held the interest; and
(d) Net Profits or Net Losses from a Capital Event allocable to the
interest will be allocated to the Person that held the interest on the day the
Capital Event occurred.
For purposes of this section, an interest will be treated as held by the
transferor on the day of transfer.
ARTICLE V
MANAGEMENT OF THE PARTNERSHIP
SECTION 5.01 AUTHORITY OF GENERAL PARTNER. (a) The General Partner
will have all the rights and powers of a general partner as provided in the Act,
under applicable law and by this Agreement, except to the extent such powers may
be expressly limited by the Act, such laws or this Agreement. Except as so
limited, the General Partner will have the exclusive right and power to manage
the business of the Partnership and is authorized to do on behalf of the
Partnership all things that, in its sole judgment, are necessary, proper or
desirable to carry out the Partnership's purpose.
(b) The General Partner is authorized to execute and deliver, for
and on behalf of the Partnership, such notes and other evidences of
indebtedness, contracts, agreements, assignments, deeds, leases, loan
agreements, mortgages, deeds of trust and other security instruments and
agreements as it deems proper, all on such terms and conditions as it deems
proper.
(c) The Partnership will not, without the consent of the General
Partner:
(i) institute or cause to be instituted any proceeding seeking to
adjudicate the Partnership bankrupt or insolvent, or seek a liquidation,
winding up, reorganization, dissolution, arrangement, adjustment,
protection, relief or composition of the Partnership or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seek or consent to the entry of an order for relief or the
appointment of a
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receiver, trustee, liquidator, assignee, sequestrator, custodian or other
similar official for it or for any substantial part of its property,
consent to the filing of any bankruptcy or other similar proceeding or
admit in writing the Partnership's inability to pay its debts generally as
they become due, or seek assignment of property for the benefit of
creditors, or take any action that might reasonably cause the Partnership
to become insolvent, or take any action in furtherance of any of the
foregoing;
(ii) dissolve, liquidate, consolidate or merge the Partnership into
any other corporation, business trust or association, real estate
investment trust, limited liability company, partnership, common law
trust, unincorporated business or entity;
(iii) amend Section 2.02, 5.01 or 8.01 of this Agreement; or
(iv) engage in any business or activity other than as set forth in
Section 2.02.
SECTION 5.02 RESPONSIBILITIES OF GENERAL PARTNER. The General
Partner will be responsible for day-to-day management of Partnership operations
and affairs.
SECTION 5.03 CONTRACTS WITH AFFILIATES. The General Partner is
authorized to use any Partner or any affiliate of a Partner for services as an
independent contractor, provided that, other than as provided in the Credit
Facility Documents, the terms are not materially less favorable to the
Partnership than those available from unrelated parties.
SECTION 5.04 OUTSIDE BUSINESS INTERESTS. (a) The General Partner,
its affiliates and its respective managers, officers and employees may engage or
participate independently or with others at any time in other business ventures
of every nature and description, including business ventures relating to the
Partnership's business. Nothing in this Agreement prohibits the General Partner,
its affiliates or its respective directors, officers and employees from dealing,
or otherwise engaging in business, with Persons transacting business with the
Partnership or from providing services for compensation in the same field as the
Partnership's business.
SECTION 5.05 INDEMNITIES. (a) The General Partner will not be
liable, responsible or accountable for damages to the Partnership or to any
Limited Partner or any successor, assignee or transferee thereof for any act or
omission performed or omitted by it in good faith pursuant to authority granted
to it by this Agreement (or reasonably believed by it to be within the scope of
authority granted to it by this Agreement and in the best interests of the
Partnership), provided the General Partner
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was not guilty of bad faith, fraud, gross negligence or intentional misconduct.
(b) The General Partner does not guarantee, and will not be
personally liable for, the return of all or any portion of the capital
contribution of any Partner or the payment of any distributions to any Partner
(or any assignee, successor or transferee thereof), it being expressly agreed
that any such return of capital or payment of distributions will be made solely
from the assets of the Partnership (which will not include any right of
contribution from the General Partner) in accordance with this Agreement. Each
Partner acknowledges that the General Partner has not guaranteed that the
development and operation of the Projects will be economically successful, that
any Partner's participation in the Partnership will be economically beneficial
or that any Partner will be entitled to any particular deduction or credit for
federal, state or local income tax purposes.
(c) The Partnership (i) will indemnify, defend and hold harmless the
General Partner and its affiliates and any director, officer, employee or
controlling Person of any of them, and (ii), in the sole discretion of the
General Partner, may indemnify, defend and hold harmless any of the
Partnership's agents, employees, advisors and consultants, from and against any
loss, liability, damage, cost or expense (including reasonable attorneys' fees
and expenses) arising out of or in defense of any demands, claims or lawsuits
against the General Partner or such other Person, in or as a result of or
relating to its capacity, actions or omissions as a general partner or an
affiliate thereof or as an officer, director, employee or controlling Person of
any of them, or as an agent, employee, advisor or consultant of the Partnership,
concerning the business or activities undertaken on behalf of the Partnership;
provided that no indemnity will be paid to the extent that the acts or omissions
of the General Partner or such other Person (x) violate the standard for conduct
in section 5.05(a) or (y) violate the standard for conduct under applicable law
so that an indemnity may not be paid under applicable law.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 6.01 RIGHTS OF LIMITED PARTNERS. In addition to any other
rights specified in this Agreement, the Limited Partner will have the right to
do the following:
(a) have the Partnership books and records kept at the principal
place of business of the Partnership and, upon reasonable notice to the General
Partner, inspect and copy any of them at its sole expense and at reasonable
times;
(b) obtain from the General Partner, at the Limited Partner's sole
expense and on reasonable written demand for any purpose reasonably related to
the Limited Partner's interest in
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the Partnership, the information described in Section 17-305(a) of the Act;
(c) cause a dissolution and winding up of the Partnership by decree
of court as provided for in the Act but only with the consent of the General
Partner; and
(d) exercise all rights of a limited partner under the Act, except
to the extent this Agreement restricts any such rights.
SECTION 6.02 LIMITATIONS. The Limited Partner will not be
permitted to do the following:
(a) participate in management, conduct or control of the business,
operations or affairs of the Partnership or of any Partnership property; or
(b) act as an agent for the Partnership or any Partner, do any act
that would be binding on the Partnership or any other Partner, or incur any
expenses in the Partnership's name.
The Limited Partner consents to the exercise by the General Partner of the
rights and powers conferred upon it by the Act, this Agreement and other
applicable law.
SECTION 6.03 LIABILITY. The Limited Partner will not be liable for
any debts, liabilities, contracts or obligations of the Partnership. The Limited
Partner will be liable only to make capital contributions as and when due under
this Agreement, except as otherwise provided in the Act.
ARTICLE VII
TRANSFERS AND ISSUANCE OF PARTNER INTERESTS
SECTION 7.01 TRANSFERS OF GENERAL PARTNER INTERESTS. The General
Partner will remain the sole General Partner and will not sell, assign, transfer
or otherwise dispose of any of its partnership interest in the Partnership and
may not resign or withdraw from the Partnership as general partner under any
circumstances as long as the Partnership or any of its affiliates remain subject
to financial obligations related to the APA or the Financing Documents remain
outstanding (whether such obligations are in respect of equity or debt).
SECTION 7.02 TRANSFERS OF LIMITED PARTNER INTERESTS. The Limited
Partner will remain the sole Limited Partner and will not sell, assign, transfer
or otherwise dispose of any of its partnership interest in the Partnership and
may not resign or withdraw from the Partnership as limited partner under any
circumstances as long as the Partnership or any of its affiliates remain subject
to financial obligations related to the APA or the
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Financing Documents remain outstanding (whether such obligations are in respect
of equity or debt).
ARTICLE VIII
DISSOLUTION AND TERMINATION
SECTION 8.01 EVENTS OF DISSOLUTION. (a) The Partnership will not be
dissolved under any circumstances as long as any financial obligations of the
Partnership or any of its Affiliates under the Financing Documents remain
outstanding (whether such obligations are in respect of equity or debt). If the
Partnership or any of its affiliates are no longer subject to terms of any of
the Financing Documents, the Partnership will be dissolved and its affairs will
be wound up upon the first to occur of any of the following:
(i) On a date designated by the General Partner and the Limited
Partner (or, if there is more than one Limited Partner, by the General
Partner and a majority in interest of the Limited Partners);
(ii) Upon the sale of all or substantially all the assets of the
Partnership;
(iii) Upon withdrawal of the General Partner, except that the
Partnership will not be dissolved if, within 90 days after the withdrawal,
the limited partners elect under section 8.03 to continue the Partnership;
or
(iv) In any event, at 12:01 a.m. on the date which is 60 years from
the date hereof.
(b) Any dissolution of the Partnership will be effective on the day
the event giving rise to the dissolution occurs. However, the Partnership will
not terminate until the Certificate has been canceled and the assets of the
Partnership have been distributed. Between the time the Partnership dissolves
and the time it terminates, the business and affairs of the Partnership and the
rights and obligations of the Partners will continue to be governed by this
Agreement.
Upon dissolution, the General Partner or, if there is none, a
liquidator appointed by the Limited Partner, will liquidate the assets of the
Partnership, apply and distribute the proceeds as contemplated by this
Agreement, and cause the cancellation of the Certificate. Notwithstanding this,
if the General Partner or the liquidator decides that an immediate sale of part
or all of the Partnership's assets would cause a significant loss to the
Partners, the General Partner or the liquidator may do either of the following
to avoid or minimize the loss:
(i) defer liquidation of, and withhold from such distribution for a
reasonable time, any assets of the
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Partnership except those necessary to satisfy Partnership debts and
obligations, or
(ii) distribute the assets in kind to the Partners or their assigns
in the manner described in section 8.02(b).
SECTION 8.02 DISTRIBUTIONS AND ALLOCATIONS UPON DISSOLUTION. (a)
Upon dissolution of the Partnership and liquidation of its assets, the General
Partner or the liquidator will cause the remaining assets, including any sales
proceeds from assets that have already been liquidated, to be distributed
according to the following priorities:
(i) First, payments of, or adequate provision for, the debts and
obligations of the Partnership to outside creditors, including sales
commissions and other expenses incident to any sale of the assets of the
Partnership;
(ii) Second, establishment of such reserves as the General Partner
or the liquidator believes reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership;
(iii) Third, payments in full of loans to the Partnership by a
Partner, first to the payment of loans described in section 4.01(b)(iii)
in the priority assigned to such loans by such section, and then pro rata
among all Partners according to the relative amounts of unpaid principal
and interest on other loans;
(iv) Fourth, the balance, if any, to Partners with positive capital
accounts balances pro rata in the same ratio as the balances in their
capital accounts until all such positive capital account balances are
reduced to zero; and
(v) Fifth, the balance, if any, to the Partners pro rata in the same
ratio as their Percentage Interests in the Partnership.
Any reserves established pursuant to section 8.02(a)(ii) will be paid over by
the General Partner or liquidator to a bank or other financial institution, to
be held in escrow for the purpose of paying contingent or unforeseen liabilities
or obligations and, at expiration of such period as the General Partner or
liquidator sets for holding the reserves, the reserves will be distributed to
the Partners or their assigns according to the remaining priorities in sections
8.02(a)(iii), 8.02(a)(iv) and 8.02(a)(v).
(b) If any assets of the Partnership are distributed in kind, the
assets will be distributed on the basis of their fair market values and any
Partner entitled to an interest in the assets will receive the interest as a
tenant-in-common with all other Partners so entitled. The fair market values of
assets
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will be determined by an appraiser to be selected by the General Partner. In the
event of a liquidation in kind, a distributee Partner will not thereafter sell
or otherwise transfer or dispose of any interest in any assets so distributed
that it holds as a tenant-in-common without first offering the interest in
writing to the other tenants-in-common upon the same terms and conditions and
for the same price as such proposed sale or transfer. The other
tenants-in-common will have 30 days after receiving the offer within which to
accept it. If more than one accepts, the Partners acquiring the interest will do
so in the ratio of their Percentage Interests to each other. If no other
tenant-in-common accepts, then the distributes Partner will be free to sell the
interest in the assets upon the terms and conditions described in the offer.
SECTION 8.03 ELECTION TO CARRY ON BUSINESS. Upon an event of
withdrawal of the General Partner causing dissolution of the Partnership
pursuant to section 8.01(a)(iii), the Limited Partner may, within 90 days of the
withdrawal, elect to continue the business of the Partnership in reconstituted
form with one or more successor General Partners.
SECTION 8.04 NO RESTORATION OF NEGATIVE CAPITAL ACCOUNTS. Except as
required under applicable state law, or in respect of any negative balance
resulting from a distribution in contravention of this Agreement, at no time
will a Partner with a negative balance in its capital account have any
obligation to the Partnership or to any other Partner to restore the negative
balance.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 NOTICES. Any notice, election or demand under this
Agreement must be in writing and signed by the Partner giving the notice. The
notice will be effective when delivered by hand or sent by telecopy, telegram or
cable or by first class mail, postage prepaid, and addressed to the a Partner or
Partners at the addresses shown in Schedule 1 or at such other address as the
recipient may inform the sender in writing from time to time.
SECTION 9.02 PARTITION. Each Partner hereby irrevocably waives for
the term of the Partnership any right that the Partner may have to maintain any
action for partition with respect to the Partnership property.
SECTION 9.03 POWER OF ATTORNEY. (a) By the execution of this
Agreement, the Limited Partner irrevocably appoints the General Partner its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead, 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,
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(i) the original Certificate and all amendments thereto required or
permitted by law and required or permitted by the provisions of this
Agreement,
(ii) all certificates and other instruments the General Partner
believes advisable to file so that the Partnership becomes or remains a
limited partnership or partnership wherein the Limited Partner has limited
liability in the jurisdictions where the Partnership may be doing
business,
(iii) all instruments that effect a change or modification of the
Partnership in accordance with this Agreement,
(iv) all conveyances and other instruments the General Partner
believes advisable to effect the dissolution and termination of the
Partnership, subject to any rights the Limited Partner has to avoid a
dissolution and termination under Article VIII,
(v) all fictitious or assumed name certificates required or
permitted to be filed on behalf of the Partnership,
(vi) all certificates and instruments required for the Partnership
to elect to be governed by any amendment to the Act or by any successor
statute, and
(vii) all other instruments that may be required or permitted by law
to be filed on behalf of the Partnership, and that the General Partner
believes in good faith are in the interests of the entire Partnership.
(b) The foregoing power of attorney
(i) is coupled with an interest and shall be irrevocable and
survive the termination of the Limited Partner;
(ii) may be exercised by the General Partner by signing separately
as attorney-in-fact for the Limited Partner;
(iii) will survive the delivery of an assignment by the Limited
Partner of all or any portion of its interest in the Partnership; provided
where the assignee of the entire Limited Partner 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 will
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.
SECTION 9.04 FISCAL YEAR. The Partnership will use the calendar
year as its fiscal year.
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SECTION 9.05 SECTION 754 ELECTIONS. The Partnership will make the
election under Section 754 of the Code in the sole discretion of the General
Partner.
SECTION 9.06 TAX MATTERS. The General Partner will be the tax
matters partner for the Partnership and may make any other elections available
to the Partnership for tax purposes, which in its judgment are in the best
interest of the Partnership.
SECTION 9.07 BOOKS AND RECORDS. The books and records of the
Partnership will be maintained at the principal office of the Partnership. Each
Partner will have the right to inspect and audit such books and records upon
reasonable notice and at reasonable times.
SECTION 9.08 PARTIES IN INTEREST. Subject to the restrictions on
transfer in Article VII, each provision in this Agreement will be binding on and
inure to the benefit of the Partners, their respective successors,,
successors-in-title, heirs and assigns, and each and every successor-in-interest
to any Partner, whether such successor acquires its interest in the Partnership
by way of gift, purchase, foreclosure, inheritance or any other method. Nothing
in this Agreement shall confer on any other Person any rights or remedies under
this Agreement.
SECTION 9.09 NO WAIVER. Delay or failure to exercise a right under
this Agreement will not be construed as a waiver of the right. Partial exercise
of a right will not be construed as a waiver of the right to exercise the right
in full. Any performance, term or condition of this Agreement may be waived in
whole or in part only by a writing signed by the party against whom enforcement
of the waiver is sought.
SECTION 9.10 ENTIRE AGREEMENT. This Agreement contains the full and
complete understanding of the parties with respect to their relationship, rights
and obligations in connection with the Project. It supersedes all prior or
contemporaneous agreements and understandings.
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SECTION 9.11 HEADINGS. The section headings in this Agreement are
for convenience of reference only and will not modify the text of the Agreement
or affect its meaning.
SECTION 9.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered will be
treated as an original, and all the counterparts together will constitute one
and the same instrument.
SECTION 9.13 SEVERABILITY. The unenforceability or invalidity of any
provision in this Agreement will not invalidate or make the rest of the
Agreement unenforceable. However, the Partners will negotiate an equitable
adjustment in the provisions with a view toward effecting the purpose and intent
of the original Agreement.
SECTION 9.14 APPLICABLE LAW. The validity of this Agreement and all
rights, duties and obligations arising herefrom shall be governed by, and
interpreted, construed and enforced in accordance with, the law of the State of
Delaware.
IN WITNESS WHEREOF, the Partners have executed this Agreement on May
4, 1999 effective as of that date.
General Partner
AES NY, L.L.C.
By:_______________________________________
Name:
Title:
Limited Partner
AES NY2, L.L.C.
By:_______________________________________
Name:
Title:
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Schedule 1
General Partner Initial Capital Percentage
Contribution Interest
--------------- ------------- --------
AES NY, L.L.C. $10 1%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Limited Partner
AES NY2, L.L.C. $990 99%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇