AMENDED DECLARATION OF TRUST FOR
RIDGEWOOD ELECTRIC POWER TRUST V
This AMENDED DECLARATION OF TRUST (the "Declaration"),
is made as of April 12, 1996 and has been amended as of July
19, 1996, by Ridgewood Energy Holding Corporation, a
Delaware corporation ("Ridgewood Holding"), who, with its
successors as trustees under this Declaration, is referred
to as the "Corporate Trustee," for the benefit of those
persons who are accepted as holders of shares of beneficial
interest under this Declaration.
WHEREAS, the Corporate Trustee has organized RIDGEWOOD
ELECTRIC POWER TRUST V (the "Trust") as a business trust
under the Delaware Business Trust Act, to provide for the
management of the Trust by Ridgewood Power Corporation, a
Delaware corporation ("Ridgewood Power," or "Managing
Shareholder" when acting hereunder in such capacity), and to
provide for the sale of beneficial interests in the Trust,
the operation of the Trust and the rights of the Corporate
Trustee and owners of beneficial interests; and
WHEREAS, a Certificate of Trust (the Certificate") was
filed by the Corporate Trustee on March 14, 1996 with the
Secretary of State of Delaware to evidence the existence of
the Trust;
WHEREAS, the Corporate Trustee is executing this
Declaration for the benefit of those persons accepted as
holders of shares of beneficial interest.
NOW, THEREFORE, the Corporate Trustee declares that it
constitutes and appoints itself trustee of the sum of $10.00
owned by it, together with all other property that it
acquires under this Declaration as trustee, together with
the proceeds thereof, to hold, IN TRUST, to manage and
dispose of for the benefit of the holders, from time to
time, of beneficial interests in the Trust, subject to the
provisions of this Declaration as follows:
ARTICLE 1
ORGANIZATION AND POWERS
1.1 Trust Estate; Name. The Trust, comprised of the
trust estate created under this Declaration and the business
conducted hereunder, shall be designated as "Ridgewood
Electric Power Trust V," which name shall refer to the trust
estate and to the Corporate Trustee in its capacity as
trustee of the trust estate but not in any other capacity
and which shall not refer to the officers, agents, other
trustees or beneficial owners of the Trust. To the extent
possible, the Corporate Trustee shall conduct all business
and execute all documents relating to the Trust in the name
of the Trust and not as trustees. The Corporate Trustee may
conduct the business of the Trust or hold its property under
other names as necessary to comply with law or to further
the affairs of the Trust as it deems advisable in their sole
discretion. This Declaration, the Certificate and any other
documents, and any amendments of any of the foregoing,
required by law or appropriate, shall be recorded in all
offices or jurisdictions where the Trust shall determine
such recording to be necessary or advisable for the conduct
of the business of the Trust.
1.2 Purpose. (a) The Trust's purposes are to invest
in and to operate where appropriate projects in the
independent electric power, energy, environmental compliance
and capital facilities development industries. However, the
Trust will not invest in, develop or operate nuclear
facilities that produce electricity. The Trust may
participate in pre-development or preparatory activities for
any of these types of projects, including without limitation
evaluation, planning, permitting or development.
Illustrations of some of the types of projects in which the
Trust may invest, without limitation, include cogeneration
facilities producing electricity and useful heat energy;
other independent electric generation facilities using non-
nuclear sources of energy; facilities related to the
production, transmission, distribution or disposal of energy
or environmentally sensitive substances; motive power
facilities, processing facilities; or infrastructure
facilities.
(b) In carrying out its purposes, the Trust has the
power to perform any act that is necessary, advisable,
customary or incidental thereto. It may invest in a passive
or active manner in, develop, plan, construct, manage,
operate, advise, transfer or dispose of any facility or
interest and produce or market products or services. The
Trust may act independently, through subsidiary
organizations, in cooperation with others or through
business entities in which others have interests whether as
principal, agent, partner, owner, member, associate, joint
venturer or otherwise. When related to its trust purposes,
the Trust may also guarantee obligations of other persons,
supply collateral for those obligations or for the issuance
of letters of credit or surety bonds benefiting other
persons, enter into leases as lessor or lessee or acquire
goods or services for the use or benefit of other persons.
(c) The Trust may make interim investments of funds in
any vehicle permitted by this Declaration and may take all
action necessary, advisable or appropriate to maintain its
existence, enforce this Declaration and its rights or the
rights of the Shareholders and comply with legal
requirements.
1.3 Relationship among Shareholders; No Partnership.
As among the Trust, the Corporate Trustee, the Shareholders
and the officers and agents of the Trust, a trust and not a
partnership is created by this Declaration irrespective of
whether any different status may be held to exist as far as
others are concerned or for tax purposes or in any other
respect. The Shareholders hold only the relationship of
trust beneficiaries to the Corporate Trustee with only such
rights as are conferred on them by this Declaration.
1.4 Organization Certificates. The parties hereto
shall cause to be executed and filed (a) the Certificate,
(b) such certificates as may be required by so-called
"assumed name" laws in each jurisdiction in which the Trust
has a place of business, (c) all such other certificates,
notices, statements or other instruments required by law or
appropriate for the formation and operation of a Delaware
business trust in all jurisdictions where the Trust may
elect to do business, and (d) any amendments of any of the
foregoing required by law or appropriate.
1.5 Principal Place of Business. The principal place
of business of the Trust shall be The Ridgewood Commons, 947
Linwood Avenue, Ridgewood, New Jersey 07450 or such other
place as the Trust may from time to time designate by notice
to all Investors. The Trust's office in the State of
Delaware and the principal place of business of Ridgewood
Holding are 1105 North Market Street, Suite 1300,
Wilmington, Delaware 19899, or such other place as the Trust
may designate from time to time by notice to all Investors.
The Trust may maintain such other offices at such other
places as the Trust may determine to be in the best
interests of the Trust.
1.6 Admission of Investors. (a) The Trust shall have
the unrestricted right at all times prior to the Termination
Date (as defined in Article 2) to admit to the Trust such
Investors as it may deem advisable, provided the aggregate
subscriptions received for Capital Contributions (as defined
in Article 2) of the Investors and accepted by the Trust do
not exceed $50,000,000 immediately following the admission
of such Investors. The Trust in its sole discretion may
increase the $50,000,000 amount to not more than $75,000,000
at any time prior to the Termination Date. One Investor
Share will be issued for each $100,000 of Capital
Contributions and fractional Shares may be issued in the
Managing Shareholder's sole discretion for proportional
amounts of Capital Contributions. After the Termination
Date, the sale of Shares or different series of Shares is
governed by Section 9.5.
(b) Each Investor shall execute a Subscription
Agreement (as defined in Article 2) and make such Capital
Contributions to the Trust as subscribed by the Investor.
Subject to the acceptance thereof by the Trust, each
Investor who executes a Subscription Agreement shall be
admitted to the Trust as an Investor. All funds received
from such subscriptions will be deposited in the Trust's
name in an interest-bearing escrow account at a commercial
bank until the Escrow Date (as defined in Article 2).
(c) If, by the close of business on July 31, 1996,
Investor Shares representing Capital Contributions in the
aggregate amount of at least $1,500,000 have not been sold
or if the Trust withdraws the offering of Investor Shares in
accordance with the terms of this Declaration, the Trust
shall be immediately dissolved at the expense of the
Managing Shareholder and all subscription funds shall be
forthwith returned to the respective subscribers together
with any interest earned thereon. As soon after the
Termination Date as practicable, the Trust shall advise each
Investor of the Termination Date and the aggregate amount of
Capital Contributions made by all Investors.
(d) The full cash price for Shares must be paid to the
Trust at the time of subscription, unless, after
subscriptions for at least an aggregate of 15 Investor
Shares have been accepted by the Trust, a subsequent
subscriber obtains the consent of the Trust (which may be
refused in its sole discretion) to delay full payment
until not later than the Termination Date in anticipation of
obtaining financing from other sources.
1.7 Term of the Trust. For all purposes, this
Declaration shall be effective on and after the date hereof
and the Trust shall continue in existence until the fortieth
anniversary of that date, at which time the Trust shall
terminate unless sooner terminated under any other provision
of this Declaration.
1.8 Powers of the Trust. Without limiting any powers
granted to the Trust under this Declaration or applicable
law, in carrying out its purposes the Trust has all powers
granted to a corporation incorporated under the Delaware
General Corporation Law, including, without limitation:
(a) To borrow money or to loan money and to pledge or
mortgage any and all Trust Property and to execute
conveyances, mortgages, security agreements, assignments and
any other contract or agreement deemed proper and in
furtherance of the Trust's purposes and affecting it or any
Trust Property (including without limitation the Management
Agreement (as defined in Article 2)); provided, however,
that the Trust shall not loan money to the Managing
Shareholder, any Trustee or any other Managing Person;
(b) To pay all indebtedness, taxes and assessments due
or to be due with regard to Trust Property and to give or
receive notices, reports or other communications arising out
of or in connection with the Trust's business or Trust
Property;
(c) To collect all monies due the Trust;
(d) To establish, maintain and supervise the deposit
of funds or Trust Property into, and the withdrawals of the
same from, Trust bank accounts or securities accounts;
(e) To employ accountants to prepare required tax
returns and provide other professional services and to pay
their fees as a Trust expense;
(f) To make any election relating to adjustments in
basis on behalf of the Trust or the Shareholders which is or
may be permitted under the Code, particularly with respect
to Sections 743 and 754 of the Code;
(g) To employ legal counsel for Trust purposes and to
pay their fees and expenses as a Trust expense; and
(h) To conduct the affairs of the Trust with the
general objective of achieving capital appreciation and
distributable income from the Trust Property.
1.9. Preferred Participation Rights. (a) Investors
whose subscriptions are accepted by the Trust and who have
made full payment for those Shares not later than October
31, 1996 (or at an earlier or later date chosen by the
Managing Shareholder in its sole discretion if by that date
the Trust has accepted Share subscriptions for at least $20
million) will be issued Preferred Participation Rights for
those Shares. Each qualifying Investor will receive
Preferred Participation Rights at the rate of one right for
each qualifying Share, multiplied by the number of whole
months (a fractional month being considered to be a whole
month) from the date the subscription is accepted by the
Trust through December 31, 1996. Fractional Preferred
Participation Rights will be issued. If for any reason a
subscription or full payment for Shares is not received by
the deadline, Preferred Participation Rights for those
Shares will not be issued.
(b) The holders of Preferred Participation Rights
shall be entitled to distributions as provided under Section
8.1(d) but shall have no voting, liquidation or other rights
in respect of the Preferred Participation Rights, except for
the class voting provision of this Section 1.9(b) and the
right to receive, if available, any unpaid balance in
respect of the Preferred Participation Rights. Preferred
Participation Rights are not transferable apart from and
must be transferred with the Shares with which they are
associated. Each Preferred Participation Right may be
repurchased at any time by the Trust, subject to applicable
law, at a price per Preferred Participation Right equal to
$1,000 minus any distributions made in respect of that
Preferred Participation Right. The rights of holders of
Preferred Participation Rights may not be modified except by
an amendment to this Declaration that is also consented to
by the affirmative vote of the holders of at least a
majority of the outstanding Preferred Participation Rights,
voting as a class.
ARTICLE 2
DEFINITIONS
The following terms, whenever used herein, shall have
the meanings assigned to them in this Article 2 unless the
context indicates otherwise. References to sections and
articles without further qualification denote sections and
articles of this Declaration. The singular shall include
the plural and the masculine gender shall include the
feminine, and vice versa, as the context requires, and the
terms "person" and "he" and their derivations whenever used
herein shall include natural persons and entities,
including, without limitation, corporations, partnerships
and trusts, unless the context indicates otherwise.
"Act" - The federal Securities Act of 1933, as amended,
and any rules and regulations promulgated thereunder.
"Adjusted Capital Account" - A Shareholder's Capital
Account at any time (determined before any allocations for
the current fiscal period) (a) increased by (i) the amount
of the Shareholder's share of partnership minimum gain (as
defined in Regulation Section 1.704-2(d)) at such time, (ii)
the amount of the Shareholder's share of the minimum gain
attributable to a partner nonrecourse debt (as defined in
Regulation Section 1.704-2(b)(4)) and (iii) the amount of
the deficit balance in the Shareholder's Capital Account
which the Shareholder is obligated to restore under
Regulation Section 1.704-1(b)(2)(ii)(c), if any, and (b)
decreased by reasonably expected adjustments, allocations
and distributions described in Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6) (taking into account the
adjustments required by Regulation Sections 1.704-2(g)(ii)
and 1.704-2(i)(5)).
"Affiliate" - An "Affiliate" of, or person
"Affiliated" with, a specified person is a person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control
with, the person specified.
"Average Annual Capital Contributions" - For any
calendar year or shorter period, the Trust will compute as
of each day an amount equal to the total Capital
Contributions of the Investors (excluding Capital
Contributions made in respect of additional classes or
series of Shares under Section 9.5) minus all prior
distributions made under Section 8.1(c) to Investors. The
"Average Annual Capital Contributions" will equal the sum of
the amounts computed under the preceding sentence on each
day in the year or period, divided by the actual number of
days in the year or period.
"Capital Account" - The amount representing a
Shareholder's capital interest in the Trust, as determined
under Article 6 hereof.
"Capital Contributions" - The aggregate capital
contributions of the Investors accepted by the Trust in
payment of the purchase price of one or more whole or
fractional Investor Shares (inclusive of the amount of any
fee or other compensation waived by the Trust, the Managing
Shareholder or the Placement Agent) plus any amounts
contributed by the Managing Shareholder pursuant to Section
14.7 and minus any return of capital by the Trust.
"Certificate" - The Certificate of Trust of the Trust,
as amended from time to time.
"Code" - The Internal Revenue Code of 1986, as amended
from time to time, and any rules and regulations promulgated
thereunder.
"Corporate Trustee" - Ridgewood Holding or its
successors as Corporate Trustee. The Corporate Trustee acts
as legal title holder of the Trust Property, subject to the
terms of this Declaration.
"Declaration" - This Declaration of Trust, as amended
from time to time.
"Delaware Act" - The Delaware Business Trust Act, as
amended from time to time (currently codified as title 12,
chapter 38 of the Delaware Code).
"Escrow Date" - The later of the dates on which the
Trust (i) accepts the subscription that causes Capital
Contributions in the initial offering to Investors to be at
least $1,500,000, (ii) deposits at least $1,500,000 in
collected funds in escrow under Section 1.6(b), provided,
however, the Escrow Date shall not be later than July 31,
1996.
"Investor" - A purchaser of Investor Shares (which
will include the Managing Shareholder to the extent it
acquires Investor Shares) whose subscription is accepted by
the Trust.
"Investor Share" - Beneficial interests in the Trust
representing an initial Capital Contribution of $100,000.
"Losses" - Defined at "Profits or Losses."
"Majority" - A majority in interest of the Investors
(including the Managing Shareholder to the extent it owns
Investor Shares), or of a subgroup of Investors in
appropriate cases.
"Management Agreement" - The management agreement
between the Trust and the Managing Shareholder as described
in the Memorandum, and as may be amended.
"Management Share" - Interest in the Trust that
represents the beneficial interests and management rights of
the Managing Shareholder in its capacity as Managing
Shareholder, but excluding the Managing Shareholder's
interest, if any, attributable to Investor Shares acquired
by it.
"Managing Person" - Any of the following: (a) Trust
officers, agents, or Affiliates, the Managing Shareholder,
the Corporate Trustee, Panel Members, RPMC or other
Affiliates of the Managing Shareholder or the Corporate
Trustee and (b) any directors, officers or agents of any
organizations named in (a) above when acting for the
Corporate Trustee, the Managing Shareholder or any
of their Affiliates on behalf of the Trust.
"Managing Shareholder" - Ridgewood Power and any
substitute or different Managing Shareholder as may
subsequently be created under the terms of this Declaration.
"Memorandum" - The Confidential Memorandum dated April
12, 1996 of the Trust, as the same may be amended or
supplemented from time to time, to which this Declaration is
an Exhibit.
"Net Cash Flow" - The total gross receipts of the
Trust, less cash operating expenses, all other cash
expenditures of the Trust and reasonable reserves as
determined by the Trust to cover anticipated Trust expenses.
For purposes of determining Net Cash Flow, gross receipts
shall mean proceeds from any source whatsoever, including,
but not limited to, income from operations and the temporary
investment of Trust funds under Section 10.5 and any
proceeds from the sale, exchange, financing or refinancing
of Trust Property, but excluding any Capital Contributions
of the Shareholders.
"1940 Act" - The federal Investment Company Act of
1940, as amended, and any rules and regulations promulgated
thereunder.
"Operation Agreement" - Any Operation Agreement, by and
among the Trust or its Project Entities, the Managing
Shareholder and RPMC, under which RPMC will operate
specified Projects for the Trust.
"Panel" - The Independent Review Panel created by
Section 12.14 of this Declaration, comprised of the Panel
Members, for the purpose of reviewing Ridgewood Program
Transactions.
"Panel Member" - An individual serving under Section
12.14 as a member of the Panel. Panel Members are not
trustees of the Trust.
"Payout" - The point at which total cumulative
distributions to Investors from the Trust (exclusive of
distributions in respect of Preferred Participation Rights
and distributions under Section 9.5) equal their total
Capital Contributions (exclusive of Capital Contributions
made on the sale of a new series of Shares under Section
9.5).
"Placement Agent" - Ridgewood Securities Corporation,
a Delaware corporation, with its principal place of business
at The Ridgewood Commons, 947 Linwood Avenue, Ridgewood, New
Jersey 07450.
"Preferred Participation Right" - A right issued by the
Trust under Section 1.9 to an Investor. A Preferred
Participation Right entitles the holder to special
distributions under Section 8.1(d) in recognition of the
extra benefits the Trust receives from early subscriptions
for Shares.
"Profits or Losses" - For a given fiscal period, an
amount equal to the Trust's taxable income or loss for such
period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, expense, loss,
deduction or credit required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(a) Any income of the Trust that is exempt from federal
income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition and any income
and gain described in Regulation Section 1.704-
1(b)(2)(iv)(i)(1) shall be added to such taxable income or
loss;
(b) Any expenditures of the Trust described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulation Section 1.704-
1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss;
(c) In the event of a distribution in kind under
Section 8.2, the amount of any unrealized gain or loss
deemed to have been realized on the property distributed
shall be added or subtracted from such taxable income or
loss; and
(d) Notwithstanding any other provision of this
definition, any items which are specially allocated pursuant
to Sections 4.5, 4.6, 4.7 and 7.4 shall not be taken into
account in computing Profits or Losses.
"Project" - A facility that generates, transmits or
distributes electric power or heat energy (including a
cogeneration facility), or that supplies products or
services for the environmental remediation, energy or public
service or capital facilities development industries, except
for nuclear facilities that produce electricity. Projects
include the preparatory, engineering, legal, siting,
financial and permitting work undertaken in anticipation of
construction or acquisition of any such facility.
"Project Entity" - The partnership or other legal
entity that develops or will own a Project and holds title
to its assets.
"Purchase Right" - A right to purchase additional
Shares granted to an Investor pursuant to Section 9.5(c).
"Regulation" - A final or temporary Treasury regulation
promulgated under the Code.
"Ridgewood Holding" - Ridgewood Energy Holding
Corporation, a Delaware corporation having its principal
office at 1105 North Market Street, Suite 1300, Wilmington,
Delaware 19899, which is the initial Corporate Trustee.
"RPMC" - Ridgewood Power Management Corporation, a
Delaware corporation which is an Affiliate of Ridgewood
Power.
"Ridgewood Power" - Ridgewood Power Corporation, a
Delaware corporation that is the initial Managing
Shareholder.
"Ridgewood Program" - Another investment program
sponsored by the Managing Shareholder or an Affiliate of the
Managing Shareholder.
"Ridgewood Program Transaction" - A "Ridgewood Program
Transaction" is any transaction material to the Trust in
which both the Trust (or an entity in which the Trust has
invested) and either (a) a Ridgewood Program or (b) an
entity controlled by a Ridgewood Program or Programs or (c)
an entity in which a Ridgewood Program has invested is a
party. Ridgewood Program Transactions do not include any
transaction authorized by Section 12.5 of this Declaration.
"Share" - An Investor Share or a Management Share.
"Shareholder" - An owner of a beneficial interest in
the Trust.
"Subscription Agreement" - The form of subscription
agreement (contained in Exhibit F to the Memorandum, which
is separately bound) which each prospective Investor must
execute in order to subscribe for an interest in the Trust.
"Termination Date" - The date on which the initial
offering of Investor Shares is ended, as set or extended
from time to time by the Trust in its sole discretion,
provided that the Termination Date may not occur before the
Escrow Date, and that if the offering is withdrawn, the
Termination Date is the date the Trust elects to do so.
"Trust" - Ridgewood Electric Power Trust V, a Delaware
business trust.
"Trust Property" - All property owned or acquired by
the Corporate Trustee as part of the trust estate under this
Declaration.
ARTICLE 3
LIABILITIES
3.1 Liability and Obligations of Corporate Trustee.
(a) To the fullest extent permitted by the Delaware Act,
the Corporate Trustee in its capacity as a trustee of the
Trust shall not be personally liable to any person other
than the Trust and its Shareholders for any act or omission
of the Trust, or any obligation of the Trust. The trust
estate shall be directly liable for the payment or
satisfaction of all obligations and liabilities of the Trust
incurred by the Corporate Trustee, the Managing Shareholder
and the officers and agents of the Trust within their
authority or in a manner that would entitle them to
indemnification under Section 3.6.
(b) The Corporate Trustee shall not exercise any
management or administrative powers in respect of the Trust
except on the direction of the Managing Shareholder.
(c) The Corporate Trustee, as trustee, may be made
party to any action, suit or proceeding to enforce an
obligation, liability or right of the Trust, but it shall
not solely on account thereof be liable separate from the
Trust and it shall be a party in that case only insofar as
may be necessary to enable such obligation or liability to
be enforced against the trust estate.
3.2 Liability of Managing Shareholder to Third
Parties. (a) The Managing Shareholder shall be liable for
any wrongful act or omission of the Corporate Trustee or the
Trust taken in the ordinary course of the Trust's business
or with the authority of the Managing Shareholder, that
causes loss or injury to any person who is not a Shareholder
or that incurs any penalty.
(b) The Managing Shareholder shall be liable for
losses resulting from (i) the misapplication by the Managing
Shareholder of money or property received from a person who
is not a Shareholder by the Managing Shareholder within the
scope of the Managing Shareholder's apparent authority or
(ii) the misapplication of money or property received by the
Trust in the course of its business from a person who is not
a Shareholder while the money or property is in the custody
of the Trust.
(c) Subject to the remaining provisions of this
Article 3, the Managing Shareholder shall be liable for all
other debts and obligations of the Trust, but it may enter
into a separate obligation to perform a Trust contract.
3.3 Liability of Investors in General. No Investor in
his capacity as an Investor shall have any liability for the
debts and obligations of the Trust in any amount beyond the
unpaid amount, if any, of the Capital Contributions
subscribed for by him. Each Investor shall have the same
limitation on his liability for the Trust's debts and
obligations as a stockholder of a Delaware corporation has
for debts and obligations of the corporation.
3.4 Liability of Investors to Trustee, Trust and
Shareholders. No Investor in his capacity as an Investor
shall be liable, responsible or accountable in damages or
otherwise to any other Shareholder, the Corporate Trustee or
the Trust for any claim, demand, liability, cost, damage and
cause of action of any nature whatsoever that arises out of
or that is incidental to the management of the Trust's
affairs.
3.5 Liability of Managing Persons to Trust and
Shareholders. (a) No Managing Person shall have liability
to the Trust or to any other Shareholder for any loss
suffered by the Trust that arises out of any action or
inaction of the Managing Person if the Managing Person, in
good faith, determined that such course of conduct was in
the Trust's best interest and such course of conduct
did not constitute recklessness or willful misconduct of the
Managing Person.
(b) No act of the Trust shall be affected or
invalidated by the fact that a Managing Person may be a
party to or has an interest in any contract or transaction
of the Trust if the interest of the Managing Person has been
disclosed or is known to the Shareholders or such contract
or transaction is at prevailing rates or is on terms at
least as favorable to the Trust as those available from
persons who are not Managing Persons or is a Ridgewood
Program Transaction authorized under Section 12.14(d).
3.6 Indemnification of Managing Persons. (a) Each
Managing Person may be indemnified from the Trust Property
against any losses, liabilities, judgments, expenses and
amounts paid in settlement of any claims sustained by him in
connection with the Trust or claims by the Trust, in right
of the Trust or by or in right of any Shareholders, if the
Managing Person would not be liable under the standards of
Section 3.5 and, in the case of Managing Persons other than
the Corporate Trustee and the Managing Shareholder, they
were acting within the scope of authority validly delegated
to them by the Corporate Trustee or the Managing Shareholder
or the Declaration. The termination of any action, suit or
proceeding by judgment, order or settlement shall not, of
itself, create a presumption that the Managing Person
charged did not act in good faith and in a manner that he
reasonably believed was in the Trust's best interests. To
the extent that any Managing Person is successful on the
merits or otherwise in defense of any action, suit or
proceeding or in defense of any claim, issue or matter
therein, the Trust shall indemnify that Managing Person
against the expenses, including attorneys' fees, actually
and reasonably incurred by him in connection therewith. The
Managing Shareholder shall have full and complete discretion
to authorize indemnification of any Managing Person
consistent with the requirements of this Declaration at any
time, regardless of whether a claim is pending or threatened
and regardless of any conflict of interest between the
Managing Shareholder and the Trust that may arise in regard
to the decision to indemnify a Managing Person.
(b) Notwithstanding the foregoing, no Managing Person
nor any broker-dealer shall be indemnified, nor shall
expenses be advanced on its behalf, for any losses,
liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws, unless (i)
there has been a successful adjudication on the merits
of each count involving alleged securities law violations as
to the particular indemnity, or (ii) those claims have been
dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnity or
(iii) a court of competent jurisdiction approves a
settlement of the claims against the particular indemnity.
In any claim for federal or state securities law violations,
the party seeking indemnification shall place before
the court the positions of the Securities and Exchange
Commission, the Massachusetts Securities Division and other
state securities administrators to the extent required by
them with respect to the issue of indemnification for
securities law violations.
(c) Notwithstanding any other provision of this
Declaration, Panel Members shall be indemnified by the Trust
against any loss, liability, judgment, expense or amount
paid in settlement of any claim sustained by them in
connection with the Trust or claims by the Trust, in right
of the Trust or by or in right of any Shareholders, if the
Panel Member would not be liable under the standards of
Section 3.5. The last three sentences of Section 3.6(a),
the last sentence of Section 3.6(b) and Section 3.7(a) shall
apply to Panel Members' rights to indemnification,
regardless of whether any condition under Section 3.7(a)(i)-
(iii) is fulfilled.
3.7 General Provisions. The following provisions
shall apply to all rights of indemnification and advances of
expenses under this Declaration and all liabilities
described in this Article 3:
(a) Expenses, including attorneys' fees, incurred by a
Managing Person in defending any action, suit or proceeding
may be paid by the Trust in advance of the final disposition
of the action, suit or proceeding upon receipt of an
undertaking by the recipient to repay such amount if it
shall ultimately be determined that the Managing Person is
not entitled to be indemnified by the Trust under this
Declaration or otherwise and if at least one of the
following conditions is satisfied:
(i) The Managing Person provides appropriate
security for the undertaking;
(ii) The Managing Person is insured against losses
or expenses of defense or settlement so that the advances
may be recovered or
(iii) Independent legal counsel in a written
opinion determines, based upon a review of the then readily-
available facts, that there is reason to believe that the
Managing Person will be found to be entitled to
indemnification under Section 3.6. In so doing, it shall
not be necessary to employ hearing or trial-like procedures.
Counsel may rely as to matters of business judgment or as to
other matters not involving determinations of law upon the
advice of a committee of persons not affiliated with the
Trust that may be appointed by the Managing Shareholder for
that purpose.
(b) Rights to indemnification and advances of expenses
under this Declaration are not exclusive of any other rights
to indemnification or advances to which a Managing Person or
Investor may be entitled, both as to action in a
representative capacity or as to action in another capacity
taken while representing another.
(c) Each Managing Person shall be entitled to rely
upon the opinion or advice of or any statement or
computation by any counsel, engineer, accountant, investment
banker or other person retained by such Managing Person or
the Trust which he believes to be within such person's
professional or expert competence. In so doing, he will be
deemed to be acting in good faith and with the
requisite degree of care unless he has actual knowledge
concerning the matter in question that would cause such
reliance to be unwarranted.
3.8 Dealings with Trust. With regard to all rights of
the Trust and all actions to be taken on its behalf, the
Trust and not the Corporate Trustee, nor the Managing
Shareholder, nor the Panel Members, nor the Trust's officers
and agents, nor the Investors shall be the principal and the
Trust shall be entitled as such to the extent permitted by
law to enforce the same, collect damages and take all other
action. All agreements, obligations and actions of the
Trust shall be executed or taken in the name of the Trust,
by an appropriate nominee, or by the Corporate Trustee as
trustee but not in its individual capacity. Money may be
paid and property delivered to any duly authorized officer
or agent of the Trust who may receipt therefor in the name
of the Trust and no person dealing in good faith thereby
shall be bound to see to the application of any moneys so
paid or property so delivered. No entity whose securities
are held by the Trust shall be affected by notice of such
fact or be bound to see to the execution of the Trust or to
ascertain whether any transfer of its securities by or to
the Trust or the Corporate Trustee is authorized.
ARTICLE 4
ALLOCATION OF PROFIT AND LOSS
4.1. Profits. Profits for any fiscal period shall be
allocated among the Shareholders as follows:
(a) First, 100% to the Managing Shareholder until the
Profits so allocated to the Managing Shareholder plus the
cumulative Profits allocated to the Managing Shareholder for
prior fiscal periods during which a Profit was earned by the
Trust equal the cumulative amounts distributable to the
Managing Shareholder under Article 8 hereof for the current
and prior periods; and
(b) The balance, if any, to the Investors.
4.2. Losses. Losses for any fiscal period shall be
allocated 99% to the Investors and 1% to the Managing
Shareholder; provided that Losses shall not be allocated
pursuant to this Section 4.2 to the extent that such
allocation would cause any Investor to have a negative
amount in the Investor's Adjusted Capital Account at the
end of this fiscal period.
4.3 General Allocation Provisions. (a) Except as
otherwise provided in this Declaration, all items of Trust
income, gain, expense, loss, deduction and credit for a
particular fiscal period and any other allocations not
otherwise provided for shall be divided among the
Shareholders in the same proportions as they share Profits
or Losses, as the case may be, for the fiscal period.
(b) The Shareholders shall be bound by the provisions
of this Declaration in reporting their shares of Trust
income and loss for income tax purposes.
(c) The Trust may use any permissible method under
Code Section 706(d) and the Regulation thereunder to
determine Profits, Losses and other items on a daily,
monthly or other basis for any fiscal period in which there
is a change in a Shareholder's interest in the Trust.
(d) The definition of "Capital Account" and certain
other provisions of this Declaration are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2 and shall
be interpreted and applied in a manner consistent with such
Regulations. These Regulations contain additional rules
governing maintenance of Capital Accounts that may not have
been provided for in this Declaration because, in part,
these rules may relate to transactions that are not expected
to occur and in some instances are prohibited by this
Declaration. If the Trust after consultation with its
regular accountants or tax counsel determines that it is
prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in
order to comply with such Regulations, or to avoid the
effects of unanticipated events that might otherwise cause
this Declaration not to comply with such Regulations, the
Trust shall make such modification without the need of prior
notice to or consent of any Shareholder; so long as no such
modification is likely to have a material effect on the
amounts distributable to any Shareholder.
4.4 Among Investors. Each Investor shall be allocated
that percentage part of the aggregate amounts allocated to
all Investors or to a subgroup of Investors, as the case may
be, as the number of Shares owned by the Investor bears to
the aggregate number of Shares owned by all Investors or
Investors in the subgroup. Allocations under Section 4.1(b)
of Profits shall be made among Investors as follows: first,
all Profits so allocated shall be allocated to the holders
of Preferred Participation Rights in proportion to their
holdings until the amounts so allocated, together with prior
allocations under this sentence, equal the cumulative
distributions made in respect of Preferred Participation
Rights. All remaining Profits allocated under Section
4.1(b) shall be allocated among the Investors as prescribed
by the first sentence of this Section 4.4.
4.5 Minimum Allocation. Notwithstanding anything to
the contrary in this Declaration, in no event shall the
Managing Shareholder's allocable share of each material item
of Trust income, gain, expense, loss, deduction or credit be
less than 1% of such item.
4.6 Tax Allocation. Notwithstanding anything to the
contrary in this Declaration, to the extent that the
Managing Shareholder is treated for federal income tax
purposes as having received an interest in the Trust as
compensation for services which constitutes income to the
Managing Shareholder under Code Section 61, any amount
allowed as a deduction for federal income tax purposes to
the Trust (whether as an ordinary and necessary business
expense or as a depreciation or amortization deduction) as
a result of such characterization shall be allocated solely
for federal income tax purposes to the Managing Shareholder.
4.7 Allocation of Gains from Dispositions. Prior to
the allocation of Profits under Section 4.1, all gains
derived by the Trust during any fiscal period from any sale,
transfer, injury, destruction or other disposition of Trust
Property or an interest therein, other than in the ordinary
course of operation of Trust Property (including, without
limitation, proceeds from insurance, refinancing or
condemnation) shall be allocated to the Managing
Shareholder to the extent that the Capital Account of the
Managing Shareholder would have otherwise been negative as
of the end of such fiscal period. Gain or loss allocable to
each Shareholder will be adjusted accordingly.
ARTICLE 5
CAPITAL CONTRIBUTIONS OF SHAREHOLDERS
5.1 Additional Capital Contributions. There shall be
no additional Capital Contributions by the Investors except
as provided in Section 9.5.
5.2 Managing Shareholder's Capital Contributions. The
Managing Shareholder in its capacity as Managing Shareholder
shall make Capital Contributions in accordance with Section
14.7.
5.3. Returns of Capital. If the Trust for any reason
at any time does not find it necessary or appropriate to
retain or expend all Capital Contributions, the Managing
Shareholder in its sole discretion may cause the Trust to
return any or all such excess Capital Contributions ratably
to Investors. The Investors will be notified of the source
of the payment and as to the amounts of fees charged against
the original Capital Contribution that are being returned
therewith.
ARTICLE 6
CAPITAL ACCOUNTS
6.1 Capital Accounts. A Capital Account shall be
established and maintained for each Shareholder and shall be
adjusted as follows:
(a) The Capital Account of each Shareholder shall be
increased by:
(1) The amount of such Shareholder's Capital
Contributions to the Trust;
(2) The amount of Profits allocated to such
Shareholder pursuant to Articles 4 and 7 and Section 9.5;
(3) The fair market value of property contributed
by the Shareholder to the Trust (net of liabilities secured
by the contributed property that the Trust under Code
Section 752 is considered to have assumed or taken subject
to); and
(4) Any items in the nature of revenues, income or
gain that are specially allocated to such Shareholder or
adjusted pursuant to Sections 4.5, 4.6, 4.7 and 7.4.
(b) The Capital Account of each Shareholder shall be
decreased by:
(1) The amount of Losses allocated to such
Shareholder pursuant to Articles 4 and 7 and Section 9.5;
(2) All amounts of money and the fair market value
of property paid or distributed to such Shareholder pursuant
to the terms hereof (other than payments made with respect
to loans made by such Shareholder to the Trust), net of
liabilities secured by that property that the Shareholder
under Code Section 752 is considered to have assumed or
taken subject to, as well as returns of capital under
Section 5.3; and
(3) Any items in the nature of expenses or losses
that are specially allocated to such Shareholder pursuant to
Sections 4.5, 4.6, 4.7 and 7.4.
6.2 Calculation of Capital Account. Whenever it is
necessary to determine the Capital Account of any
Shareholder, the Capital Account of such Shareholder shall
be determined in accordance with the rules of Regulation
Sections 1.704-1 (b) (2) (iv) and 1.704-2 (as amended from
time to time). If necessary to comply with the Code, an
Adjusted Capital Account may be employed.
6.3 Effect of Loans. Loans by any Shareholder to the
Trust shall not be considered contributions to the capital
of the Trust.
6.4 Withdrawal of Capital. No Shareholder shall be
entitled to withdraw any part of his Capital Account or to
receive any distribution from the Trust, except as
specifically provided herein.
6.5 Capital Accounts of New Shareholders. Any person
who shall acquire Shares in accordance with the terms and
conditions of Article 13 of this Declaration shall have the
Capital Account of his transferor after adjustments
reflecting the transfer, if any, except as specifically
provided herein.
6.6 Limitation. Neither the Corporate Trustee, the
Managing Shareholder nor any other Managing Person shall be
required or shall have any personal liability to fund any or
all of any negative Capital Account of any Investor,
including without limitation Capital Contributions.
ARTICLE 7
ADDITIONAL PROVISIONS APPLICABLE TO ALLOCATIONS
7.1 Determination of Income and Loss. At the end of
each Trust fiscal year, and at such other times as the Trust
shall deem necessary or appropriate, each item of Trust
income, gain, expense, loss, deduction and credit shall be
determined for the period then ending and shall be allocated
to the Capital Account of each Shareholder in accordance
with this Declaration. With respect to the admission of
Shareholders, the Trust will use the "interim closing date"
method of accounting as permitted by the Regulations.
7.2 Determination of Income and Loss in the Event of
Transfer. In the event that a Shareholder transfers his
interest in the Trust in accordance with the terms of this
Declaration, the determination and allocation described in
Section 7.1 shall be made as of the date of such transfer
and thereafter all such allocations shall be made to the
account of the transferee of such interest; provided,
however, that the Trust may agree that such determination
and allocation shall be pro rata to the Shareholders based
upon the actual number of days in such fiscal year that each
such Shareholder held an interest in the Trust. In the
event of a pro rata determination and allocation, the
foregoing provisions of this Section relating to a pro rata
determination and allocation will not be applicable to the
distributive shares, with respect to the Shares transferred,
of items of Trust income, gain, expense, loss, deduction and
credit arising out of (a) the sale or other disposition of
all or substantially all Trust Property, or (b) other
extraordinary nonrecurring items, all of which will be
allocated to the holder of such Trust interest on the date
such items of Trust income, gain, expense, loss, deduction
and credit are earned or incurred.
7.3 Allocation of Net Income and Net Losses. All
items of income, gain, expense, loss, deduction and credit
of the Trust from operations and in the ordinary course of
operation of Trust Property shall be allocated among the
Shareholders in accordance with Article 4.
7.4 Qualified Income Offset and Other Allocation
Provisions. (a) If there is a net decrease in "partnership
minimum gain" (within the meaning of Regulation Section
1.704-2(d)) during a fiscal period, then there shall be
allocated to each Shareholder items of income and gain for
such fiscal period (and, if necessary, subsequent fiscal
periods) in proportion to, and to the extent of, an amount
equal to the portion of such Shareholder's share of the
net decrease in partnership minimum gain during such fiscal
period that is allocable to the disposition of Trust
Property subject to one or more nonrecourse liabilities of
the Trust. However, such allocation shall be reduced to the
extent (i) the Shareholder contributes capital to the Trust
that is used to repay the nonrecourse liability and (ii) the
Shareholder's share of the net decrease in partnership
minimum gain is caused by the repayment. The foregoing is
intended to be a "minimum gain chargeback" provision as
described in Regulation Section 1.704-2(f), and shall be
interpreted and applied in all respects in accordance with
such Regulation. If there is a net decrease in the minimum
gain attributable to a "partner nonrecourse debt" (as
defined in Regulation Section 1.704-2(b) (4)) for a fiscal
period, then, in addition to the amounts, if any, allocated
pursuant to the first sentence of this Subsection 7.4(a),
there shall be allocated to each Shareholder with a share of
such minimum gain attributable to a "partner nonrecourse
debt" items of income and gain for such fiscal period (and,
if necessary, subsequent fiscal periods) in proportion to,
and to the extent of, an amount equal to the portion of such
Shareholder's share of the net decrease in the minimum gain
attributable to a partner nonrecourse debt during such
fiscal period that is allocable to the disposition of Trust
Property subject to one or more nonrecourse liabilities of
the Trust. However, such amount shall be reduced to the
extent (i) the Shareholder contributes capital to the Trust
that is used to repay the nonrecourse liability and (ii) the
Shareholder's share of the net decrease in the minimum gain
attributable to a partner nonrecourse debt is caused by the
repayment.
(b) If during any fiscal period of the Trust a
Shareholder unexpectedly receives an adjustment, allocation
or distribution described in Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), which causes or increases a
deficit balance in the Shareholder's Adjusted Capital
Account, there shall be allocated to the Shareholder items
of income and gain (consisting of a pro rata portion of each
item of Trust income, including gross income, and gain for
such period) in an amount and manner sufficient to eliminate
such deficit balance as quickly as possible. The foregoing
is intended to be a "qualified income offset" provision as
described in Regulation Section 1.704-1(b)(2)(ii)(d), and
shall be interpreted and applied in all respects in
accordance with such Regulation.
(c) Notwithstanding anything to the contrary in
Article 4 or this Article 7, any item of deduction, loss or
Code Section 705(a)(2)(B) expenditure that is attributable
to "partner nonrecourse debt" shall be allocated in
accordance with the manner in which the Shareholders bear
the economic risk of loss for such debt (determined in
accordance with Regulation Section 1.704-2(i)).
(d) To the extent that any item of income, gain, loss
or deduction has been specially allocated pursuant to
paragraph (a), (b) or (c) of this Section 7.4 ("Required
Allocations") and such allocation is inconsistent with how
the same amount otherwise would have been allocated under
Sections 4.1 and 4.2, subsequent allocations under Sections
4.1 and 4.2 shall be made, to the extent possible, in a
manner consistent with paragraphs (a), (b) and (c) of this
Section 7.4 which negates as rapidly as possible the effect
of all previous Required Allocations.
(e) Solely for federal, state and local income and
franchise tax purposes and not for book or Capital Account
purposes, income, gain, loss and deduction with respect to
property carried on the Trust's books at a value other than
its tax basis shall be allocated (i) in the case of property
contributed in kind, in accordance with the requirements of
Code Section 704(c) and such Regulations as may be
promulgated thereunder from time to time, and (ii) in the
case of other property, in accordance with the principles of
Code Section 704(c) and the Regulations thereunder, in each
case, as incorporated among the requirements of the relevant
provisions of the Regulations under Code Section 704(b).
(f) All or a portion of the remaining items of Trust
income or gain for the fiscal period, if any, shall be
specially allocated to the Investors in proportion to the
cumulative distributions each has received pursuant to
Section 8.1(e) from the commencement of the Trust, until the
aggregate amounts allocated to each Investor pursuant to
this Section 7.4(f) for such period and all prior periods
equal the cumulative amount of such distributions to such
Investor.
ARTICLE 8
INTEREST OF SHAREHOLDERS IN CASH DISTRIBUTIONS
8.1 Distribution of Net Cash Flow. Subject to the
terms of this Declaration, the Trust shall make
distributions of Net Cash Flow out of the Trust's funds, to
the extent and at such times as it deems advisable, in the
following manner:
(a) Indebtedness to Shareholders. First, Net Cash
Flow shall be applied pro rata (in accordance with the
percentage of total loans that are owing to each
Shareholder) to the payment to the Shareholders of interest
and principal, in that order, on loans, if any, made by the
Shareholders to the Trust.
(b) Special Provisions. Distributions of Net Cash
Flow in respect of an additional series of Shares under
Section 9.5 are governed by the Managing Shareholder's
designation under that Section and distributions made in
connection with the dissolution and termination of the Trust
under Section 14.1 are governed by Section 8.1(g). Net Cash
Flow distributed under those provisions shall be excluded
from consideration under Sections 8.1(c) - (f).
(c) Proceeds from Dispositions of Property. All Net
Cash Flow remaining after the application of Sections 8.1(a)
and (b) from the sale, transfer, injury, destruction or
other disposition of Trust Property or an interest therein,
other than in the ordinary course of operation of Trust
Property (and including, without limitation, proceeds from
insurance, refinancing or condemnation, but excluding sales
or resales of interim investments under Section 10.5) which
the Trust determines to distribute, shall be distributed as
follows:
(1) Prior to Payout, 99% to the Investors and 1%
to the Managing Shareholder; and
(2) After Payout, 80% to the Investors and 20% to
the Managing Shareholder.
(d) Satisfaction of Preferred Participation Rights.
All Net Cash Flow remaining after the application of
Sections 8.1(a) - (c) that the Trust determines to
distribute during a calendar year or shorter period shall
first be applied to the redemption of any outstanding
Preferred Participation Rights in the following order:
(1) Ninety-nine percent of Net Cash Flow subject
to this Section 8.1(d) and distributed during 1997 shall be
distributed pro rata among the holders of Preferred
Participation Rights and the remaining 1% shall be
distributed to the Managing Shareholder until total
cumulative distributions to those holders under this Section
8.1(d) equal $500 per outstanding Preferred Participation
Right, and the remaining Net Cash Flow distributed during
1997, if any, shall be distributed under Sections 8.1(e) -
(f);
(2) Ninety-nine percent of Net Cash Flow subject
to this Section 8.1(d) and distributed during 1998 shall be
distributed pro rata among the holders of Preferred
Participation Rights and the remaining 1% shall be
distributed to the Managing Shareholder until total
cumulative distributions to those holders under this Section
8.1(d) equal $1,000 per outstanding Preferred Participation
Right, and the remaining Net Cash Flow distributed during
1998, if any, shall be distributed under Sections 8.1(e) -
(f); and
(3) If after 1998 cumulative distributions under
this Section 8.1(d) to holders of Preferred Participation
Rights are less than $1,000 per outstanding Preferred
Participation Right, 99% of all Net Cash Flow subject to
this Section 8.1(d) that is distributed thereafter shall be
distributed pro rata to the holders of outstanding Preferred
Participation Rights and the remaining 1% shall be
distributed to the Managing Shareholder until total
cumulative distributions to the holders under this Section
8.1(d) equal $1,000 per Preferred Participation Right, and
all remaining Net Cash Flow shall be distributed under the
remaining provisions of this Article 8.
(e) Investor Priority for Distributions - - Pre-
Payout. Until Payout is achieved, all Net Cash Flow that
remains after the application of Sections 8.1(a) - (d) and
that the Trust determines to distribute shall be distributed
as follows:
(1) Until total distributions of Net Cash Flow
subject to this Section 8.1(e) during a calendar year to
Investors equal the greater of (A) 12% of the Investors'
Average Annual Capital Contributions or (B) 80% of Net Cash
Flow distributed in that year after deducting amounts
governed by Sections 8.1(a) - (d), 99% of all distributions
made under this Section 8.1(e) in that year (or shorter
period ending on Payout) shall be made to the Investors and
the remaining 1% shall be made to the Managing Shareholder;
and
(2) Thereafter, 100% of distributions made during
the remainder of the calendar year (or shorter period ending
on Payout) shall be made to the Managing Shareholder.
(f) Distributions - - Post-Payout. After Payout is
achieved, 80% of all distributions made in any calendar year
or portion thereof after the application of Sections 8.1(a)
- - (e) shall be made to the Investors and the remaining 20%
shall be made to the Managing Shareholder.
(g) Proceeds Available Upon Dissolution. Upon
dissolution and termination of the Trust under Section 14.1,
the proceeds of the sale or other disposition of the Trust
Property shall be paid or distributed in the following order
of priority:
(1) First, there shall be paid to the Trust's
creditors, other than Shareholders, funds, to the extent
available, sufficient to extinguish current Trust
liabilities and obligations, including costs and expenses of
liquidation (or provision for payment shall be made, which
provision may include a distribution of assets subject to
the obligations in question); provided, however, that all
loans made to fund expenditures under Section 9.5 shall be
paid only from assets allocable to the Shareholders who
benefited from such expenditures and only in proportion to
such benefit;
(2) Second, any loans owed by the Trust to the
Shareholders shall be paid in proportion thereto; provided,
however, that all loans made to fund expenditures under
Section 9.5 shall be paid only from assets allocable to the
Shareholders who benefited from such expenditures and only
in proportion to such benefit;
(3) Third, to the Shareholders in proportion to,
and to the extent of the excess, if any, of (i) the
cumulative distributions to which a Shareholder is entitled
under Sections 8.1(d) and (e) from the inception of the
Trust until the date on which the liquidating distribution
is made over (ii) the sum of all prior distributions made to
the Shareholders under Sections 8.1(d),(e) and (g)(3);
provided, however, that no distribution shall be made under
this Section 8.1(g)(3) that creates or increases a negative
amount in the Investor's Adjusted Capital Account at the end
of this fiscal period. This proviso shall be determined as
follows: distributions shall be first determined
tentatively pursuant to this Section 8.1(g)(3) without
regard to the Shareholders' Capital Accounts and then the
allocation provisions of Article 4 shall be applied
tentatively as if such tentative distributions had been
made. If any Investor shall thereby have a negative amount
in the Investor's Adjusted Capital Account, the actual
distribution to the Investor under this Section 8.1(g)(3)
shall be equal to the tentative distribution to the Investor
less the negative amount in the Adjusted Capital Account
after application of the tentative allocation; and
(4) Fourth, the balance, if any, to the
Shareholders, in accordance with their Capital Accounts,
after giving effect to all adjustments to Capital Accounts
for all fiscal periods through and including the fiscal
period in which dissolution occurs.
(h) Limitation. Notwithstanding any other provision
of this Declaration, no distribution may be made selectively
to one Shareholder or group of Shareholders but must be made
ratably to all Shareholders entitled to that type of
distribution at that time, subject to the provisions of
Section 12.11(b).
8.2 Distribution in Kind. If the Trust elects to make
distribution in kind of any of the assets of the Trust, it
shall give notice of its election to each Shareholder,
specifying the nature and value of all such assets to be
distributed in kind, the deadline for giving notice of
refusal to accept a distribution in kind and to the extent
advisable, the estimated time necessary for the Trust to
liquidate assets if those assets are not distributed and
other information as required. In making such election, the
Trust shall not arbitrarily value assets to be distributed
in kind nor shall it specify assets to be distributed in
kind in such a manner as to unreasonably advantage or
disadvantage any Shareholder. A Shareholder may refuse to
accept a distribution in kind by giving written notice to
the Trust not later than 30 days after the effective date of
the Trust's notice of distribution. If a Shareholder
refuses distribution in kind, the Trust shall retain in the
Trust's name the portion of the assets which were to be
distributed in kind and which were to be allocated to the
refusing Shareholder (the "Retained Assets") and shall
liquidate the Retained Assets in accordance with this
Declaration. Upon liquidation of the Retained Assets, the
sum realized shall be distributed to the Shareholder
refusing distribution in kind in full discharge of the
Trust's obligation to distribute the Retained Assets. In
determining the Capital Accounts of the Shareholders, a
distribution of assets in kind shall be considered a sale of
the property distributed so that any unrealized gain or loss
with respect to such property shall be deemed to have been
realized and allocated among the Shareholders in accordance
with Article 4.
8.3 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 Trust or
the Shareholders shall be treated as amounts distributed to
the Shareholders pursuant to this Article 8 for all purposes
under this Declaration. The Trust may allocate any such
amounts among the Shareholders in any manner that is in
accordance with applicable law.
8.4 Limitation. Distributions to Shareholders shall
not be made to the extent they are prohibited by
restrictions contained in the Delaware Act or other
provisions of this Declaration.
ARTICLE 9
OPERATION OF TRUST
9.1 Investment Fee. The Trust shall pay the Managing
Shareholder out of Trust Property an investment fee in an
amount equal to 2% of each Capital Contribution from the
initial offering or any future offering of Investor Shares.
The investment fee payable in respect of Investors whose
subscriptions for Shares are accepted by the Managing
Shareholder in 1996 is for its services in investigating and
evaluating investment opportunities and effecting
transactions for investing the capital contributed through
1996, and the fee payable by Investors whose subscriptions
for Shares are accepted by the Managing Shareholder in a
later year is for those services for capital contributed in
that year. The fee shall be payable on the Escrow Date as
to Shares purchased through that date and on each date
thereafter on which the Trust receives and collects full
payment for additional accepted subscriptions for Shares.
In addition, an investment fee shall be paid to the Managing
Shareholder in an amount equal to 2% of additional Capital
Contributions received under Section 9.5, for similar
services rendered by the Managing Shareholder during the
year in which such funds are received by the Trust. The fee
in respect of services performed by the Managing Shareholder
during any year in which such additional funds are received
by the Trust under Section 9.5 shall be payable upon the
later of each date on which payment is accepted by the Trust
or the fulfillment of any applicable escrow conditions.
9.2 Selling Commissions and Placement Agent Fee. The
Trust shall pay out of Trust Property to Ridgewood
Securities Corporation or to any broker-dealer who effects
the sale of one or more whole or fractional Shares, cash
selling commissions in an aggregate amount equal to 8% of
each Capital Contribution. For serving as Placement Agent,
Ridgewood Securities Corporation shall also be entitled to
receive out of Trust Property a fee in an amount equal to 1%
of each Capital Contribution. Such commissions and fees
payable in respect of sales of Shares under the initial
offering of Shares shall be due and payable promptly after
the latest to occur of (i) acceptance by the Trust of an
Investor's subscription, (ii) the Escrow Date or (iii) the
receipt by the Trust of the gross purchase price for the
Shares. Such commissions and fees in respect of additional
Capital Contributions shall be due and payable upon the
later of such date on which funds are accepted by the Trust
or the fulfillment of any applicable escrow conditions.
9.3 Other Expenses. (a) The Trust shall pay the
Managing Shareholder out of Trust Property an
organizational, distribution and offering fee in an amount
equal to 6% of each Capital Contribution to cover all
expenses incurred in the offer and sale of Shares, including
legal, accounting, and consulting fees, printing, filing,
postage and other expenses of organizing the Trust,
distribution and selling costs and closing costs for the
offering. The fee shall be payable on the Escrow Date as to
Shares purchased through that date and on each date
thereafter on which the Trust receives and collects full
payment for additional accepted subscriptions for Shares.
If these expenses exceed 6% of the aggregate Capital
Contributions, the Managing Shareholder shall pay such
excess.
(b) The Trust shall reimburse the Managing Shareholder
for all other actual and necessary direct expenses paid or
incurred in connection with the operation of the Trust,
including but not limited to accounting, legal and
consulting fees, to the extent that those expenses were
incurred by the Managing Shareholder in carrying out
responsibilities assigned to it by this Declaration,
were consistent with this Declaration and do not constitute
Organizational, Distribution and Offering Fees. The Trust
shall reimburse the Corporate Trustee for all actual and
necessary expenses paid or incurred in connection with the
operation of the Trust, including the Trust's allocable
share of the Corporate Trustee's overhead.
(c) In respect of the disposition of all or a portion
of the investments that the Trust may make in Projects or
Project Entities on its own behalf (rather than through its
participation in any entity organized to develop multiple
Projects), the Trust may be required to or may find it most
advantageous to engage a broker or similar adviser and to
pay a brokerage fee to the broker or other persons
responsible for bringing the disposition opportunity to the
Trust's attention or for investigating, evaluating or
negotiating the acquisition or disposition of the Trust's
interest therein. However, if the Managing Shareholder or
an Affiliate performs those services in respect of an
investment acquisition or disposition opportunity for the
Trust relating to a particular Project or Project Entity,
the Managing Shareholder or Affiliate so providing those
services shall be entitled to receive a brokerage fee from
the Trust for such services in an amount not in excess of 2%
of the gross proceeds of that disposition.
(d) If the Trust engages RPMC or another Affiliate of
the Managing Shareholder to manage Projects under Section
12.5 of this Declaration, it shall reimburse that person for
its actual costs incurred (which may include a reasonable
allocation of overhead items and of expenses incurred
commonly with the Managing Shareholder or its Affiliates) as
an expense of the Trust.
9.4. Management Fee. For each 12-month period
beginning on the Termination Date and ending upon the
winding up of the Trust's business, the Trust shall pay the
Managing Shareholder from Trust Property a Management Fee,
payable in advance in equal monthly installments, at the
annual rate of 2.5% of the aggregate Capital Contributions.
The Management Fee shall be in lieu of any reimbursement to
the Managing Shareholder for administrative and overhead
expenses, including without limitation postage,
communication, computer service, accounting, regulatory
reporting and compensation costs of the Managing Shareholder
allocable to the Trust. Those administrative and overhead
expenses do not include fees, expenses and payments made by
the Trust to persons other than the Managing Shareholder
(such as legal, outside accounting and consulting expenses)
or extraordinary expenses incurred by the Managing
Shareholder. The Trust may enter into a management
agreement with the Managing Shareholder regarding the
services to be provided and compensated from the Management
Fee.
9.5 Additional Offers of Shares. (a) Beginning six
months and one day after the Termination Date, the Trust
from time to time may create and sell additional Investor
Shares or additional classes or series of Shares if the
Managing Shareholder determines that the best interests of
the Trust so require. Additional classes or series may but
are not required to be limited to the results of Projects or
Project Entities that are not coextensive with the entire
Trust Property. The Managing Shareholder is authorized to
determine or alter any or all of the powers, preferences and
rights, and the qualifications, limitations or restrictions
granted to or imposed upon any unissued class or series of
additional Shares, and to fix, alter or reduce the number
of Shares comprising any such class or series and the
designation thereof, or any of them, and to provide for the
rights and terms of redemption or conversion of the Shares
of any such class or series. The Managing Shareholder's
designation of the Shares and the terms and conditions of
any new class or series of Shares shall be deemed an
amendment of this Declaration and shall be effective without
any notice to, action by or approval of the Investors. Any
Shares so designated may be offered to such persons and on
such terms and conditions as the Trust may determine.
(b) Any additional Shares or classes or series of
Shares shall have voting rights as designated by the
Managing Shareholder; however, no such Share shall have more
than one vote per $100,000 of Capital Contributions for that
Share on matters in which the holders of those Shares vote
with the holders of Investor Shares, without the consent of
the holders of a Majority of the Investor Shares.
(c) The Trust may but is not required to offer all
Investors the right (a "Purchase Right") to acquire
additional Shares of any type to be offered by the Trust;
however, no Investor who declined to subscribe to a previous
series of Shares whose net proceeds were invested in a
Project or Project Entity in which any net proceeds
of the proposed series are to be invested shall be entitled
to a Purchase Right for the proposed series. A Purchase
Right may be exercisable prior to or concurrent with the
offering of the series to other persons. If the Trust offers
a Purchase Right, the Trust shall give each Investor
entitled thereto a notice specifying the total Shares of the
additional series that it is offering and the terms and
conditions of the offering, together with any other required
information. The Trust will require the Investors to notify
the Trust of their decision to exercise the Purchase Right
and to deliver the subscription documents and the price for
the Shares offered within a reasonable period set by the
Trust and specified in the notice, which shall not be less
than 10 days after the effective date of the notice.
(d) If a Purchase Right is offered and the Investors
do not purchase all the offered Shares within the period
specified in the Trust's notice, the Trust may dispose of
the remaining offered Shares in its sole discretion or may
modify its plan of activity accordingly.
(e) All Profits, Losses and other items attributable
to additional Shares shall be allocated as specified in the
determination of the Managing Shareholder creating those
Shares, except that any such allocation shall not
unreasonably reduce allocations to existing Investors of
Profits, Losses, Net Cash Flow and other items to the extent
attributable to their Capital Contributions. The Managing
Shareholder's election in good faith of allocation methods
(which may include subjective elements) shall be conclusive
in the absence of willful misconduct or gross negligence.
9.6 Payment and Recoupment of Fees. As soon as funds
have been released to the Trust from the escrow account
referred to in Section 1.6, they may be used to pay the fees
referred to in Sections 9.1, 9.2 and 9.3 then due. If the
Managing Shareholder withdraws the offering of Shares, any
person that has received payments from the proceeds of the
offering shall return such payments to the Trust upon demand
by the Managing Shareholder.
ARTICLE 10
ACCOUNTING
10.1 Elections. The Trust shall elect the calendar
year as its fiscal year. The Trust shall adopt the accrual
method of accounting or such other method of accounting as
the Trust shall determine. The Trust shall elect to be
taxed only as a partnership. The Trust shall not be
required to make an election under Section 754 of the Code
or corresponding state taxation laws.
10.2 Books and Records. The Trust's books and records
shall be kept at the principal place of business of the
Trust and shall be maintained on the basis utilized in
preparing the Trust's federal income tax return with such
adjustments in accounting as are required by this
Declaration or as the Trust determines would be in the best
interests of the Trust.
10.3 Reports. (a) The Trust will keep each Investor
and assignees complying with Article 13 currently advised as
to activities of the Trust by reports furnished at least
quarterly. Each quarterly report will contain a condensed
statement of "cash flow from operations" for the year to
date as determined by the Trust in conformity with generally
accepted accounting principles on a basis consistent with
that of the annual and quarterly financial statements and
showing its derivation from net income. An independent
certified public accounting firm selected by the Trust will
prepare the Trust's federal income tax return as soon as
practicable after the conclusion of each year and each
Shareholder will be furnished, at that time, with the
necessary accounting information for each Shareholder to
take into account and report separately such Shareholder's
distributive share of the income and deductions of the
Trust. The Trust will use its reasonable best efforts to
obtain the information necessary for the accounting firm
as soon as practicable and to transmit the resulting
accounting and tax information to the Shareholders as soon
as possible after receipt from the accounting firm. The
Trust shall furnish each Shareholder as soon as practicable
after the conclusion of each year annual financial
statements of the Trust which have been audited by the
Trust's independent certified public accounting firm. The
annual financial statements will include in the notes
thereto a reconciliation of net income as reported therein
to the annual reported cash flow from operations and to net
income for tax purposes.
(b) Within 180 days after the end of each year
following the fourth anniversary of the Termination Date,
the Trust shall provide the Investors with an estimated
valuation per Share based, if possible, upon a generally
accepted method or methods of valuation of the Trust
Property.
10.4 Bank Accounts. The Trust shall maintain separate
segregated accounts in its name at one or more commercial
banks, and the cash funds of the Trust shall be kept in any
of those accounts as determined by the Trust.
10.5 Interim Assets. The Trust may purchase, to the
extent the Trust's funds are not otherwise committed to
transactions or required for other purposes, either or both
of the following:
(a) Obligations of banks or savings and loan
associations that either (i) have assets in excess of $5
billion or (ii) are insured in their entirety by agencies of
the United States government; and
(b) Obligations of or guaranteed by the United States
government or its agencies.
ARTICLE 11
RIGHTS AND OBLIGATIONS OF INVESTORS
11.1 Participation in Management. No Investor (other
than the Managing Shareholder acting in its capacity as
such) shall have the right, power, authority or
responsibility to participate in the ordinary and routine
management of the Trust's affairs or to bind the Trust in
any manner.
11.2 Rights to Engage in Other Ventures. No Investor
or any officer, director, shareholder or other person
holding a legal or beneficial interest in any Investor
shall, by virtue of his ownership of a direct or indirect
interest in the Trust, be in any way prohibited from or
restricted in engaging in, or possessing an interest in, any
other business venture of a like or similar nature
including any venture involving the independent power
industry.
11.3 Limitations on Transferability. The interest of
an Investor shall not be transferable except under the
conditions set forth in Article 13 hereof.
11.4 Information. (a) Each Investor's rights to
obtain information from the Trust from time to time are set
forth in this Section. In addition to information provided
under Section 10.3, each Investor shall be provided on
request with the following:
(1) True and full information regarding the status
of the Trust's business and financial condition;
(2) Promptly after becoming available, a copy of
the Trust's federal, state and local income tax returns or
information returns for the preceding year and prior years
to the extent reasonably available;
(3) A current list of the name and last known
business, residence or mailing address of each Shareholder
and of any confidential representative of each Shareholder,
if specifically designated as such in writing (unless such
Shareholder has specified that the Trust is not to disclose
such information, in which case the Trust, at the requesting
Investor's cost, shall forward communications, sealed or
unsealed, from the requesting Investor to such Shareholder
or representative upon assertion by the Investor in writing
to the Trust of a proper purpose for the communication);
(4) A copy of the Certificate and this Declaration
and all amendments thereto;
(5) True and full information regarding the amount
of cash and a description and statement of the agreed value
of any other property or services contributed by each
Shareholder and which any Shareholder has agreed to
contribute in the future, and the date on which each current
Shareholder acquired his Shares; and
(6) Such other information regarding the Trust's
affairs as is just and reasonable.
(b) The Trust shall establish reasonable standards
governing without limitation the information and documents
to be furnished and the time and the location, if
appropriate, of furnishing that information and documents.
Costs of providing information and documents shall be borne
by the requesting Investor except for de minimis amounts
consistent with the Trust's ordinary practices. The Trust
shall be entitled to reimbursement for its direct,
out-of-pocket expenses incurred in declining unreasonable
requests (in whole or in part) for information.
(c) The Trust may keep confidential from Investors for
such period of time as it deems reasonable any information
that it reasonably believes to be in the nature of trade
secrets or other information that the Trust in good faith
believes would not be in the best interests of the Trust to
disclose or that could damage the Trust or its business or
that the Trust is required by law or by agreement with a
third party to keep confidential.
(d) The Trust may keep its records in other than
written form if capable of conversion into written form
within a reasonable time.
(e) All demands or requests for information under this
Section shall be solely for a purpose reasonably related to
the Investor's interest in the Trust. All requests or
demands for information under this Section shall be in
writing and shall state the purpose of the demand; the
Trust's acceptance of oral requests shall not waive or limit
the scope of this provision. Any action to enforce rights
under this Section may be brought in the Delaware Court of
Chancery, subject to Section 15.4.
ARTICLE 12
POWERS, DUTIES AND LIMITATIONS OF MANAGING SHAREHOLDER AND
CORPORATE TRUSTEE
12.1 Management of the Trust. The Managing
Shareholder shall have full, exclusive and complete
discretion in the management and control of the Trust,
except as otherwise provided herein. The Managing
Shareholder agrees to manage and control the affairs of
the Trust to the best of its ability and to conduct the
operations contemplated under this Declaration in a careful
and prudent manner and in accordance with good industry
practice. The Managing Shareholder may bind the Trust.
12.2 Acceptance of Subscriptions. The Managing
Shareholder shall not cause the Trust to accept any
subscription for Shares except as provided in Article 1 or
in Section 9.5, as the case may be.
12.3 Specific Limitations. (a) The Managing
Shareholder shall not take any of the following actions
without the approval of all Investors:
(1) Any act in contravention of this Declaration
or the Certificate;
(2) Any act that would make it impossible to carry
on the Trust's ordinary business;
(3) Effecting a confession of judgment against the
Trust in an amount exceeding 10% of the aggregate Capital
Contributions;
(4) Causing the dissolution or termination of the
Trust prior to the expiration of its term, except as
provided under Article 14;
(5) Possessing Trust Property or assigning rights
in specific Trust Property for other than a Trust purpose;
or
(6) Constituting any other person as a Managing
Shareholder, except as provided in Article 14.
(b) The Managing Shareholder shall not sell, exchange,
lease, mortgage, pledge or transfer all or substantially all
of the Trust's assets if not in the ordinary course of
operation of Trust Property or amend this Declaration
without the approval of a Majority of the Investors except
as specified in this Declaration or except pursuant to
Section 15.8(a).
(c) The Corporate Trustee, the Trust or the Trust's
agents shall not take any action that is prohibited to the
Managing Shareholder by this or any other provision of this
Declaration and shall take all actions necessary or
advisable to carry out actions specified in this Section
that are approved as specified herein.
12.4 Specific Powers. In addition to the powers and
duties otherwise provided for in this Declaration, the
Managing Shareholder has the following powers and duties:
(a) To direct or supervise the Corporate Trustee, the
Trust and the Trust's agents in the exercise of any action
relating to the Trust's affairs, including without
limitation the powers described in Section 1.8;
(b) To take the actions specified in Section 12.3 if
the approvals specified therein are obtained;
(c) To amend this Declaration as specified in Section
15.8(a) or other provisions of this Declaration;
(d) To lend money to the Trust (without being obligated
to do so) if such loan bears interest at a reasonable rate
not exceeding the Managing Shareholder's interest cost or
the amount that would be charged to the Trust by an
unrelated lender on a comparable loan for the same purpose
(without reference to the financial abilities or guarantees
of the Managing Shareholder). The Managing Shareholder may
not receive points or other financing charges or fees
regardless of the amount loaned to the Trust. Before making
any loans to the Trust, a Managing Shareholder will attempt
to obtain a loan from an unrelated lender secured, if at
all, only by Trust Property;
(e) To approve in its sole discretion any transfer of
Investor Shares;
(f) To terminate the offering of Shares at any time
prior to the Termination Date, provided that the Escrow Date
has occurred;
(g) To withdraw the offering of Shares at any time as
provided in Section 1.6;
(h) If the Trust elects to become a business
development company, to take any action in its discretion
that may be necessary, advisable or appropriate to maintain
the Trust's status as a business development company under
the 1940 Act, without any requirement to give notice to or
to obtain the prior or subsequent consent of any Investor;
(i) To acquire such assets or properties, real or
personal, as the Managing Shareholder in its sole discretion
deems necessary or appropriate for the conduct of the
Trust's business and to sell, exchange, distribute to
Shareholders in kind or otherwise dispose of any part of the
Trust Property in the ordinary course of the operation of
the Trust Property;
(j) To waive any fees or compensation payable to it
and to credit such waived amount in its discretion against
any obligations it may have to contribute capital under
Section 14.7;
(k) To provide, or arrange for the provision of,
managerial assistance to those persons in which the Trust
invests; and
(l) To establish valuation principles and to
periodically apply such principles to the Trust's investment
portfolio.
12.5. Operation by Affiliate. The Trust, by action of
the Managing Shareholder, may engage RPMC or another
Affiliate of the Managing Shareholder to provide management,
purchasing, planning and administrative services for any or
all Projects operated by the Trust. A manager under this
Section 12.5 shall act under the supervision and direction
of the Managing Shareholder and does not have the authority
to bind the Trust or act directly in its name except as
authorized by the Managing Shareholder or an officer of the
Trust. A manager under this Section 12.5 shall be
reimbursed for all costs incurred by it as provided in
Section 9.3(d) but shall not receive any compensation in
excess of its costs. A manager under this Section 12.5 may
provide services to the Managing Shareholder, its Affiliates
or other entities sponsored by the Managing Shareholder or
its Affiliates and costs and expenses shall be reasonably
allocated among those entities. The Trust may enter into an
Operation Agreement or other agreements to implement this
Section 12.5. A manager under this Section 12.5 shall not
be compensated or reimbursed for any services related to the
administration of the Trust as a whole, to relations with
Investors or the offering of Shares or to the
identification, acquisition or disposition of Projects.
12.6 Officers of Trust. (a) The Managing Shareholder
shall appoint a President, one or more Vice Presidents as
designated by the Managing Shareholder, a Secretary and such
other officers and agents as the Managing Shareholder may
from time to time consider appropriate, none of whom need be
a Shareholder. Except as otherwise prescribed by the
Managing Shareholder or in this Declaration, each officer
shall have the powers and duties usually appertaining to a
similar officer of a Delaware corporation under the
direction of the Managing Shareholder and shall hold office
during the pleasure of the Managing Shareholder. Any two or
more offices may be held by the same person. Any officer
may resign by delivering a written resignation to the
Managing Shareholder and such resignation shall take effect
upon delivery or as specified therein.
(b) All conveyances of real property or any interest
therein by the Trust may be made by the Corporate Trustee,
which shall execute on behalf of the Trust any instruments
necessary to effect the conveyance. A certificate of the
Secretary of the Trust stating compliance with this Section
12.6(b) shall be conclusive in favor of any person relying
thereon.
(c) All other documents, agreements, instruments and
certificates that are to be made, executed or endorsed on
behalf of the Trust shall be made, executed or endorsed by
such officers or persons as the Managing Shareholder shall
from time to time authorize and such authority may be
general or confined to specific instances. In the absence
of other provisions, the President is authorized to execute
any document, to take any action on behalf of the Trust
within this Section 12.6(c), and to authorize other
officers to execute confirmatory documents or certificates.
12.7 Presumption of Power. The execution by the
Corporate Trustee, the Managing Shareholder or the officers
on behalf of the Trust of leases, assignments, conveyances,
contracts or agreements of any kind whatsoever shall be
sufficient to bind the Trust. No person dealing with the
Managing Shareholder or the Trust's officers shall be
required to determine their authority to make or execute any
undertaking on behalf of the Trust, nor to determine any
fact or circumstances bearing upon the existence of their
authority nor to see the application or distribution of
revenues or proceeds derived therefrom, unless and until
such person has received written notice to the contrary.
12.8 Obligations Not Exclusive. The Managing
Shareholder, the Panel Members and the Corporate Trustee
shall be required to devote only such part of their time as
is reasonably needed to manage the business of the Trust or
discharge their duties, it being understood that the
Managing Shareholder, the Panel Members and the Corporate
Trustee have and shall have other business interests and
therefore shall not be required to devote their time
exclusively to the Trust. The Managing Shareholder, the
Panel Members and the Corporate Trustee shall in no way be
prohibited from or restricted in engaging in, or possessing
an interest in, any other business venture of a like or
similar nature including any venture involving the
independent power industry. Nothing in this Section 12.8
shall relieve the Managing Shareholder of other fiduciary
obligations to the Investors, except as limited in Article
3. Notwithstanding anything to the contrary contained in
this Article or elsewhere in this Declaration, the Managing
Shareholder shall have no duty to take any affirmative
action with respect to management of the Trust business or
the Trust Property which might require the expenditure of
monies by the Trust or the Managing Shareholder unless the
Trust is then possessed of such monies available for the
proposed expenditure. Under no circumstances shall the
Managing Shareholder be required to expend its own funds in
connection with the day to day operation of Trust business.
12.9 Right to Deal with Affiliates. No act of the
Trust shall be affected or invalidated by the fact that a
Managing Person may be a party to or have an interest in any
contract or transaction of the Trust, provided that the fact
of the Managing Person's interest shall be disclosed or
shall have been known to the Shareholders or the contract or
transaction is at prevailing rates or on terms at least as
favorable to the Trust as those available from persons who
are not Managing Persons or has been approved by the vote of
an Independent Panel or of a Majority of the Investors.
12.10 Management Share. The Managing Shareholder
shall be credited with a Management Share which shall have
no voting rights and shall be deemed to have attached to it
the rights appertaining to the Managing Shareholder under
this Declaration. No Management Share shall be held by or
transferred to a person who is not a Managing Shareholder
except as provided by Section 13.1.
12.11 Removal of Managing Shareholder. (a) The
holders of at least 10% of the Investor Shares may propose
the removal of a Managing Shareholder, either by calling a
meeting or soliciting consents in accordance with the terms
of this Declaration. On the affirmative vote of a Majority
of the Investors (excluding Investor Shares held by the
Managing Shareholder that is the subject of the vote or by
its Affiliates), such Managing Shareholder shall be removed.
(b) In the event of any such removal or other
incapacity (other than voluntary resignation without cause)
of a Managing Shareholder as enumerated in Section 14.1(c),
the former Managing Shareholder may elect in its sole
discretion to take and to cause the Trust to take one of the
following courses of action:
(1) The former Managing Shareholder may elect to
exchange its Management Share for a series of cash payments
from the Trust to the former Managing Shareholder in amounts
equal to the amounts of distributions to which the former
Managing Shareholder would otherwise have been entitled
under this Declaration in respect of investments made by the
Trust prior to the date of the removal or other incapacity.
Such payments shall be payable out of the Trust's available
cash before any distributions are made to the Investors
pursuant to this Declaration. For purposes of this Section
12.11(b)(1), from and after the date of any such removal or
other incapacity: (i) the former Managing Shareholder's
interest in the Trust attributable to its Management Share
shall be terminated and its Capital Account shall be reduced
by the amount which is attributable to its Management Share
and (ii) the former Managing Shareholder shall continue to
receive its pro rata share of all allocations to Investors
provided in this Declaration that are attributable to
Investor Shares acquired by the Managing Shareholder.
(2) In the alternative, the former Managing
Shareholder may elect to engage a qualified independent
appraiser and cause the Trust to engage a separate qualified
independent appraiser (at the Trust's expense in each case),
who shall value the Trust Property as of the date of such
removal or other incapacity as if the Trust Property had
been sold at its fair market value so as to include all
unrecognized gains or losses. If the two appraisers cannot
agree on a value, they shall appoint a third independent
appraiser (whose cost shall be borne by the Trust) whose
determination, made on the same basis, shall be final and
binding. Based on the appraisal, the Trust shall make
allocations to the former Managing Shareholder's Capital
Account of Profits, Losses and other items resulting from
the appraisal as of the date of such removal or other
incapacity as if the Trust's fiscal year had ended solely
for the purpose of determining the former Managing
Shareholder's Capital Account. If the former Managing
Shareholder has a positive Capital Account after such
allocation, the Trust shall deliver a promissory note of the
Trust to the former Managing Shareholder, with a principal
amount equal to the former Managing Shareholder's Capital
Account and which shall bear interest at a rate per annum
equal to the prime rate in effect at Chase Manhattan Bank,
N.A. on the date of removal or other incapacity, with
interest payable annually and principal payable only from
20% of any available cash before any distributions thereof
are made to the Investors under this Declaration. If the
Capital Account of the former Managing Shareholder has a
negative balance after such allocation, the former Managing
Shareholder shall contribute to the capital of the
Trust in its discretion either cash in an amount equal to
the negative balance in its Capital Account or a promissory
note to the Trust in such principal amount maturing five
years after the date of such removal or other incapacity,
bearing interest at the rate specified above. For purposes
of this Section 12.11(b)(2), from and after the date of any
such removal or other incapacity, the former Managing
Shareholder's interest in the Trust shall be terminated and
the former Managing Shareholder shall no longer have any
interest in the Trust other than the right to receive the
promissory note and payments thereunder as provided above.
(c) In the event that a Managing Shareholder is
removed or no longer serves as a Managing Shareholder due to
an incapacity enumerated in Section 14.1(c), the former
Managing Shareholder shall not be entitled to any
uncollected fees specified in Article 9 to the extent not
accrued before the date of such removal or other incapacity.
12.12 Indemnification of Placement Agent. (a) The
Placement Agent shall not have any duty, responsibility or
obligation to the Trust, the Panel Members, the Corporate
Trustee or any Shareholder as a consequence of its right to
receive any selling commissions or placement agent fees from
the Trust in connection with any offering of Shares, except
to the extent provided under the Act. The Placement Agent
has not assumed, and will not assume, any responsibility
with respect to the Trust nor will it be permitted by the
Trust to assume any duties, responsibilities or obligations
regarding the management, operations or any of the business
affairs of the Trust, subsequent to any offering of Shares.
(b) The Placement Agent shall be indemnified and held
harmless by the Trust against any losses, damages,
liabilities or costs (including attorneys' fees) arising
from any threatened, pending or completed action, suit,
claim or proceeding by any Shareholder against the Placement
Agent (except as may be limited by the Act or applicable
state statutes, including, but not limited to, the
Massachusetts Securities Act and the Tennessee Securities
Act), based upon the assertion that the Placement Agent has
any continuing duty or obligation, subsequent to any
offering of Shares, to the Trust, the Panel Members, the
Corporate Trustee or any Shareholder or otherwise to monitor
Trust operations or report to Investors concerning Trust
operations.
12.13 Contribution. Each of the initial Managing
Shareholder and subsequent Managing Shareholders agrees that
it shall remain jointly or jointly and severally liable as
required by law for any obligation or recourse liability of
the Trust incurred during the period in which it is a
Managing Shareholder. However, the existing and subsequent
Managing Shareholders hereby agree among themselves to
contribute to each other the amount of funds necessary to
effectuate a sharing of Trust obligations and recourse
liabilities in proportion to each Managing Shareholder's
share of such obligations and liabilities as they accrue.
12.14. Independent Review Panel. (a) There shall be a
standing Independent Review Panel comprised of at least two
Panel Members. The number of Panel Members may be increased
(but to not more than eight) or decreased (but to not fewer
than two) from time to time by action of a majority of the
Managing Shareholder and the incumbent Panel Members, acting
together. No Panel Member shall be
(i) an Affiliate of the Trust (although by serving
as such he or she shall not be deemed to be an Affiliate);
(ii) an investment advisor or underwriter of the
Trust;
(iii) a person beneficially owning five percent or
more of the Investor Shares, or an entity, five percent or
more of whose outstanding equity securities are beneficially
owned by the Trust;
(iv) any officer, director, general partner or
employee of the Trust or its subsidiaries;
(v) any member of the immediate family of any
individual named in (i)-(iv); or
(vi) any person who has acted as legal counsel
for the Trust or the Managing Shareholder at any time since
the beginning of the second-to-last completed fiscal year of
the Trust, or a principal, officer, partner, counsel or
employee of that counsel.
(b) If at any time a Panel Member fails to meet the
foregoing requirements, either he or she or the Trust will
take action under Section 12.14(c) within 180 days to
correct that condition. The Panel Members shall have terms
of indefinite duration, subject only to removal, incapacity
or resignation under this Section 12.14.
(c) Vacancies, however caused, in the authorized
number of Panel Members shall be filled by a majority of the
remaining Panel Members and the Managing Shareholder. If no
Panel Member remains and if the Managing Shareholder does
not elect to suspend the Panel under Section 12.14(i), the
Managing Shareholder shall nominate Panel Members and not
later than 120 days after the last vacancy results it shall
either request written consents from Investors or call a
special meeting of Investors for the purpose of electing
Panel Members.
(d) The Trust shall not consummate any Ridgewood
Program Transaction without the approval of a majority of
the incumbent Panel Members (if there are two Panel Members,
both shall be required to approve) or approval by a Majority
of the Investors. The Managing Shareholder, in its sole
discretion, may elect to refer to the Panel other
transactions in which the Managing Shareholder or Affiliates
of the Managing Shareholder may have an interest. In that
event, the Panel in its sole discretion may elect not to
review the transaction, or to review the transaction
and report to the Managing Shareholder. The Panel Members
shall incur no liability to the Trust or any Shareholder by
their decision to review or not to review and the
concurrence of the Panel shall not be required for the
consummation of any transaction other than a Ridgewood
Program Transaction referred to the Panel.
(e) The Panel Members are not trustees of the Trust
and have no responsibility for any action or failure to take
action by the Trust other than to review Ridgewood Program
Transactions referred to them. They have no general
responsibility for oversight of the Trust and are not
charged with fiduciary responsibility for the investments of
the Trust.
(f) The Panel shall meet on the call of the Managing
Shareholder. Except to the extent conflicting with the
Delaware Act or this Declaration, the law of Delaware
governing meetings of directors of corporations shall govern
meetings, voting and consents by the Panel Members.
(g) As compensation for services rendered to the
Trust, each Panel Member shall be paid by the Trust the sum
of $5,000 annually in quarterly installments and shall be
reimbursed for all reasonable out-of-pocket expenses
relating to attendance at meetings or otherwise performing
his duties hereunder. The Managing Shareholder and the
Panel may review the compensation payable to the Panel
Members no more often than annually and may increase or
decrease it as they find to be reasonable, upon approval by
both the Managing Shareholder and a majority of the
incumbent Panel Members. No compensation for consulting
services shall be paid to a Panel Member without prior
approval of both the Managing Shareholder and a majority of
the remaining Panel Members.
(h) Any Panel Member may resign if he or she gives
notice to the Trust of the intent to resign and cooperates
fully with any successor Panel Member appointed under
Section 12.5(b), effective on the designation of the
successor Panel Member.
(i) Any Panel Member may be removed (x) for cause by
the action of at least two-thirds of the remaining Panel
Members or (y) by action of the holders of at least two-
thirds of the Investor Shares. The Panel may be suspended
by the Managing Shareholder, upon its certification recorded
in the minutes of the Trust that there is no reasonable
probability that the Trust will engage in future Ridgewood
Program Transactions. In that case the annual stipend for
Panel Members shall cease during the period of suspension.
The Managing Shareholder may reinstate the Panel at any time
after a suspension. Removal of a Panel Member shall not
affect the validity of any actions taken prior to the
date of removal.
ARTICLE 13
TRANSFERS OF SHARES
13.1 Transfer or Resignation by Managing Shareholder.
The Managing Shareholder shall not sell, assign or otherwise
transfer its Management Share or resign without cause (which
cause shall not include the fact or the determination that
continued service would be unprofitable to the Managing
Shareholder) without first obtaining the consent of a
Majority of the Investors, except that (i) the Managing
Shareholder may pledge its Management Share for a
loan to the Managing Shareholder provided that such pledge
does not reduce the cash flow of the Trust distributable to
other Shareholders and (ii) the Managing Shareholder may
waive or assign compensation or fees payable to it.
13.2 Transfers by Investors. An Investor may sell,
exchange or transfer his Shares except as restricted by and
upon compliance with all applicable laws and all of the
following provisions of this Section 13.2:
(a) Shares may not be transferred to any person or
entity if, as determined by the Trust, such assignment would
have adverse regulatory consequences to the Trust or any
Trust Property.
(b) Within 30 days after written notice of a proposed
sale or assignment is received by the Trust from an
Investor, the Trust may request in its sole discretion an
opinion of counsel acceptable to the Trust that the proposed
transfer (i) would not invalidate the exemption afforded by
Section 4(2) of the Act or by Regulation D promulgated under
the Act and the exemption afforded by any applicable state
securities laws as to any offering of interests in the Trust
and (ii) complies with the exemption afforded by Section
4(1) of the Act and qualifies for an exemption from
registration under any applicable state securities laws
(including any investor suitability standard applicable to
the transferee or the Trust).
(c) The written approval of the Managing Shareholder
must be obtained, the granting or denial of which shall be
within its sole and absolute discretion.
(d) The transferor and transferee must deliver a dated
notice in writing signed by each, confirming that (i) the
transferee accepts and agrees to comply with all the terms
of this Declaration and (ii) the transfer was made in
compliance with this Declaration and all applicable laws and
regulations.
(e) The transferor, transferee and the Trust must
execute all other certificates, instruments and documents
and take all such additional action as the Trust may deem
appropriate.
(f) The Trust may require as a condition to any
transfer that may create a future interest that an opinion
of counsel acceptable to the Trust be delivered to the Trust
confirming that the proposed transfer does not have adverse
effects on the Trust under the rule against perpetuities or
similar provisions of law. Transfers shall be effective and
recognized upon fulfillment of the requirements of clauses
(a) through (f) above and the transferee shall be an
Investor owning Investor Shares with the same rights as
appertained to the transferor. Any purported sale or
transfer consummated without first complying with this
Section 13.2 shall be void.
13.3 Assignments by Operation of Law. If any Investor
shall die, with or without leaving a will, or become non
compos mentis, bankrupt or insolvent, or if a corporate,
partnership or trust Investor dissolves during the Trust
term or if any other involuntary transfer of an Investor's
Shares is made, the legal representatives, heirs and
legatees (and spouse, if the Shares have been community
property of such Investor and his or her spouse),
bankruptcy assignees, successors, assigns and corporate,
partnership or trust distributees or such other involuntary
transferees shall not become transferees but shall have
(subject to the other terms and provisions hereof) such
rights as are provided with respect to such persons under
the law; provided, however, that such legal representatives,
heirs and legatees, spouse, bankruptcy assignees,
successors, assigns and corporate, partnership or trust
distributees or involuntary transferees may become
transferees in accordance with the provisions of Section
13.2.
13.4 Expenses of Transfer. In the sole discretion of
the Trust, the person acquiring Shares pursuant to any of
the provisions of this Article 13 may be required to bear
all costs and expenses necessary to effect a transfer of
such Shares including, without limitation, reasonable
attorney's fees incurred in preparing any required
amendments to this Declaration and the Certificate to
reflect such transfer or acquisition and the cost of
filing such amendments with the appropriate governmental
officials.
13.5 Survival of Liabilities. No sale or assignment
of Shares shall release the transferor from those
liabilities to the Trust which survive such assignment or
sale as a matter of law or that are imposed under Section
3.4.
13.6 No Accounting. No transfer of Shares, whether
voluntary, involuntary or by operation of law, shall entitle
the transferor or transferee to demand or obtain immediate
valuation, accounting or payment of the transferred Shares.
ARTICLE 14
DISSOLUTION, TERMINATION AND LIQUIDATION
14.1 Dissolution. Unless the provisions of Section
14.2 are elected, the Trust shall be dissolved and its
business shall be wound up upon the decision of the Managing
Shareholder to withdraw the offering of Shares described in
the Memorandum in accordance with Section 12.4(g) or on the
earliest to occur of:
(a) Forty years from the effective date of this
Declaration;
(b) The sale of all or substantially all of the Trust
Property;
(c) The death, removal, dissolution, resignation,
insolvency, bankruptcy or other legal incapacity of the
Managing Shareholder or any other event which would legally
disqualify the Managing Shareholder from acting hereunder;
(d) The decision of all Investors or the Managing
Shareholder and a Majority of Investors; or
(e) The occurrence of any other event which, by law,
would require the Trust to be dissolved.
14.2 Continuation of the Trust. Upon the occurrence
of any event of dissolution described in Sections 14.1 (a)
through (e), inclusive, the Trust shall be dissolved and
wound up unless (i) the Managing Shareholder and a Majority
of the Investors (calculated without regard to Investor
Shares owned by the Managing Shareholder or its Affiliates)
within 90 days after the occurrence of any such event of
dissolution elect to continue the Trust or, (ii) if there
is no remaining Managing Shareholder, within 90 days after
the occurrence of any such event of dissolution, a Majority
of the Investors shall elect, in writing, that the Trust
shall be continued on the terms and conditions herein
contained and shall designate one or more persons willing to
be substituted as a Managing Shareholder or Managing
Shareholders. In the event there is no remaining Managing
Shareholder and a Majority of the Investors elect to
continue the Trust, it shall be continued with the new
Managing Shareholder or Managing Shareholders who shall
succeed to and assume all of the powers, privileges and
obligations of the previous Managing Shareholder or Managing
Shareholders hereunder except as specified in Section 12.11.
In the event of a dissolution under this Section 14.2, the
former Managing Shareholder or Managing Shareholders shall
have the rights specified in Section 12.11.
14.3 Obligations on Dissolution. The dissolution of
the Trust shall not release any of the parties hereto from
their contractual obligations under this Declaration.
14.4 Liquidation Procedure. Upon dissolution of the
Trust for any reason:
(a) A reasonable time shall be allowed for the orderly
liquidation of the assets of the Trust and the discharge of
liabilities to creditors so as to enable the Trust to
minimize the losses normally attendant to a liquidation;
(b) The Shareholders shall continue to receive Net
Cash Flow, subject to the other provisions of this
Declaration and to the provisions of subsection (c) hereof,
and shall share Profits and Losses for all tax and other
purposes during the period of liquidation; and
(c) Ridgewood Power shall act as liquidating Managing
Shareholder (or, in its absence, any other Managing
Shareholder shall act) and shall proceed to liquidate the
Trust Properties to the extent that they have not already
been reduced to cash unless the liquidating Managing
Shareholder elects to make distributions in kind to the
extent and in the manner herein provided and such cash, if
any, and property in kind, shall be applied and distributed
in accordance with Article 8 and Section 9.5 (if
applicable).
14.5 Liquidating Trustee. (a) If the dissolution of
the Trust is caused by circumstances under which no Managing
Shareholder shall be acting as a Managing Shareholder or if
all liquidating Managing Shareholders are unable or refuse
to act, a Majority of the Investors shall appoint a
liquidating trustee who shall proceed to wind up the
business affairs of the Trust. The liquidating trustee
shall have no liability to the Trust or to any Shareholder
for any loss suffered by the Trust which arises out of
any action or inaction of the liquidating trustee if the
liquidating trustee, in good faith, determined that such
course of conduct was in the best interests of the
Shareholders and such course of conduct did not constitute
negligence or misconduct of the liquidating trustee. The
liquidating trustee shall be indemnified by the Trust
against any losses, judgments, liabilities, expenses and
amounts paid in settlement of any claims sustained by it in
connection with the Trust, provided that the same were not
the result of negligence or misconduct of the liquidating
trustee.
(b) Notwithstanding the above, the liquidating trustee
shall not be indemnified and no expenses shall be advanced
on its behalf for any losses, liabilities or expenses
arising from or out of an alleged violation of federal or
state securities laws, unless (1) there has been a
successful adjudication on the merits of each count
involving alleged securities law violations as to the
particular indemnitee, or (2) such claims have been
dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee, or
(3) a court of competent jurisdiction approves a settlement
of the claims against a particular indemnitee.
(c) In any claim for indemnification for federal or
state securities law violations, the party seeking
indemnification shall place before the court the position of
the Securities and Exchange Commission and the Massachusetts
Securities Division (if applicable) and the Tennessee
Securities Division (if applicable), or other applicable
securities administrators if required, with respect to the
issue of indemnification for securities law violations.
(d) The Trust shall not incur the cost of that portion
of any insurance, other than public liability insurance,
which insures any party against any liability the
indemnification of which is herein prohibited.
14.6 Death, Insanity, Dissolution or Insolvency of an
Investor or Trustee. The death, insanity, dissolution,
winding up, insolvency, bankruptcy, receivership or other
legal termination of a Trustee or an Investor who is not a
Managing Shareholder shall have no effect on the life of the
Trust and the Trust shall not be dissolved thereby.
14.7 Managing Shareholder's Capital Contributions.
Upon or prior to the first distribution in liquidation, the
Managing Shareholder shall contribute to the capital of the
Trust an amount equal to any deficit in the Capital Account
of such Managing Shareholder calculated just prior to the
date of such distribution, to the extent not previously
contributed.
14.8 Withdrawal of Offering. Dissolution of the Trust
resulting from withdrawal of the offering of Shares is
governed by Section 1.6(c) and Section 12.4(g).
ARTICLE 15
MISCELLANEOUS
15.1 Notices. Notices or instruments of any kind
which may be or are required to be given hereunder by any
person to another shall be in writing and deposited in the
United States Mail, certified or registered, postage
prepaid, addressed to the respective person at the address
appearing in the records of the Trust. Any Investor may
change his address by giving notice in writing, stating his
new address, to the Trust. Any notice shall be deemed to
have been given effective as of 72 hours, excluding
Saturdays, Sundays and holidays, after the depositing of
such notice in an official United States Mail receptacle.
Notice to the Trust may be addressed to its principal
office.
15.2 Meetings of Shareholders. (a) Meetings. The
Managing Shareholder may call meetings of the Shareholders,
the Investors or any subgroup thereof concerning any matter
on which they may vote as provided by this Declaration or by
law or to receive and act upon a report of the Managing
Shareholder on matters pertaining to the Trust's business
and activities. Investors holding 10% or more of the
outstanding securities or Shares entitled to vote on the
matter may also call meetings by giving notice to the Trust
demanding a meeting and stating the purposes therefor.
After calling a meeting or within 20 days after receipt of a
written request or requests meeting the requirements of the
preceding sentence, the Trust shall mail to all Shareholders
entitled to vote on the matter written notice of the place
and purposes of the meeting, which shall be held on a date
not less than 15 days nor more than 45 days after the Trust
mails the notice of meeting to the Shareholders. Any
Shareholder or Investor entitled to vote on the matter may
appear and vote or consent at a meeting by proxy, provided
that such authority is granted by a writing signed by the
Shareholder or Investor and delivered to the Trust at or
prior to the meeting.
(b) Consents. Any consent required by this
Declaration or any vote or action by the Shareholders, the
Investors or any subgroup thereof may be effected without a
meeting by a consent or consents in writing signed by the
persons required to give such consent, to vote or to take
action. The Managing Shareholder may solicit consents or
Investors holding 10% or more of the outstanding securities
or Shares entitled to vote on the matter may demand a
solicitation of consents by giving notice to the Trust
stating the purpose of the consent and including a form of
consent. The Trust shall effect a solicitation of consents
by giving those Shareholders or the Investors, as the case
may be, a notice of solicitation stating the purpose of the
consent, a form of consent and the date on which the
consents are to be tabulated, which shall be not less than
15 days nor more than 45 days after the Trust transmits the
notice of solicitation for consents. If Investors holding
10% or more of the outstanding securities or Shares entitled
to vote on the matter demand a solicitation, the Trust
shall transmit the notice of solicitation not later than 20
days after receipt of the demand.
(c) General. To the extent not inconsistent with this
Declaration, Delaware law governing stockholders' meetings,
proxies and consents for corporations shall apply as to the
procedure, validity and use of meetings, proxies and
consents. Any Shareholder may waive notice of or attendance
at any meeting or notice of any consent, whether before or
after any action is taken. The date on which the Trust
transmits the notice of meeting or notice soliciting
consents shall be the record date for determining
the right to vote or consent. A list of the names,
addresses and shareholdings of all Shareholders shall be
maintained as part of the Trust's books and records.
15.3 Loan to Trust by Shareholder. If any Shareholder
shall, in addition to his Capital Contribution to the Trust,
lend any monies to the Trust, the amount of any such loan
shall not increase his Capital Account nor shall it entitle
him to any increase in his share of the distributions of the
Trust, but the amount of any such loan shall be an
obligation on the part of the Trust to such Shareholder and
shall be repaid to him on the terms and at the interest rate
negotiated at the time of the loan, and the loan shall be
evidenced by a promissory note executed by the Trust
except that no Shareholder shall be personally obligated to
repay the loan, which shall be payable and collectible only
out of the assets of the Trust.
15.4 Delaware Laws Govern. This Declaration shall be
governed and construed in accordance with the laws of the
State of Delaware, and venue for any litigation between or
against any of the parties hereto may be maintained in New
Castle County, Delaware; however, residents of Massachusetts
may, at their option, choose to maintain any such litigation
in the Commonwealth of Massachusetts.
15.5 Power of Attorney. Each Investor irrevocably
constitutes and appoints the Managing Shareholder as his
true and lawful attorney-in-fact and agent to effectuate and
to act in his name, place and stead, in effectuating the
purposes of the Trust including the execution, verification,
acknowledgment, delivery, filing and recording of this
Declaration as well as all authorized amendments thereto and
hereto, all assumed name and doing business certificates,
documents, bills of sale, assignments and other instruments
of conveyances, leases, contracts, loan documents and
counterparts thereof, and all other documents which may be
required to effect a continuation of the Trust and which the
Trust deems necessary or reasonably appropriate, including
documents required to be executed in order to correct
typographical errors in documents previously executed by
such Investor and all conveyances and other instruments or
other certificates necessary or appropriate to effect an
authorized dissolution and liquidation of the Trust. The
power of attorney granted herein shall be deemed to be
coupled with an interest, shall be irrevocable and shall
survive the death, incompetency or legal disability of an
Investor.
15.6 Disclaimer. In forming this Trust, all Investors
recognize that the independent power business is highly
speculative and that neither the Trust nor the Managing
Shareholder nor any Trustee nor any other Managing Person
makes any guaranty or representation to any Investor as to
the probability or amount of gain or loss from the conduct
of Trust business.
15.7 Corporate Trustee Resignation and Replacement.
The Managing Shareholder may increase or decrease the number
of Corporate Trustees so long as there is at least one
Corporate Trustee which meets the requirements of Section
3807 of the Delaware Act. A Corporate Trustee may resign by
delivering a written resignation to the Managing Shareholder
not less than 60 days prior to the effective date of the
resignation. The Managing Shareholder may remove a
Corporate Trustee at any time, provided that if there is no
incumbent, at least one new Corporate Trustee is oncurrently
appointed. In the event of the absence, death, resignation,
removal, dissolution, insolvency, bankruptcy or legal
incapacity of a Corporate Trustee or if an additional
Corporate Trustee is to be appointed, the Managing
Shareholder shall appoint the Corporate Trustee in writing
and shall subsequently give notice to the Investors,
although such notice is not necessary to the validity of the
appointment. A Corporate Trustee so appointed shall qualify
by filing his written acceptance at the Trust's principal
place of business. If there are multiple Corporate Trustees,
each is vested with an undivided interest in the trust
estate and may exercise all powers vested in the Corporate
Trustee as directed by the Managing Shareholder.
15.8 Amendment and Construction of Declaration. (a)
This Declaration may be amended by the Managing Shareholder,
without notice to or the approval of the Investors, from
time to time for the following purposes: (1) to cure any
ambiguity, formal defect or omission or to correct or
supplement any provision herein that may be inconsistent
with any other provision contained herein or in the
Memorandum or to effect any amendment without notice to or
approval by Investors as specified in other provisions of
this Declaration; (2) to make such other changes or
provisions in regard to matters or questions arising under
this Declaration that will not materially and adversely
affect the interest of any Investor; (3) to otherwise
equitably resolve issues arising under the Memorandum or
this Declaration so long as similarly situated Investors are
not treated materially differently; (4) to maintain the
federal tax status of the Trust and any of its Shareholders
(so long as no Investor's liability is materially increased
without his consent) or as provided in Section 4.3(d); (5)
to authorize additional Shares or new classes or series of
Shares under Section 9.5, (6) as otherwise provided in this
Declaration or (7) to comply with law.
(b) Other amendments to this Declaration may be
proposed by either the Managing Shareholder or Investors
owning 10% or more of the outstanding Shares, in each case
by calling a meeting of Investors or requesting consents
under Section 15.2 and specifying the text of the amendment
and the reasons therefor. No amendment under this Section
15.8(b) that increases any Shareholder's liability, changes
the Capital Contributions required of him or his rights in
interest in the Profits, Losses, deductions, credits,
revenues or distributions of the Trust in more than a de
minimis manner, his rights on dissolution, or any voting or
management rights set forth in this Declaration shall become
effective as to that Shareholder without his written
approval thereof. Unless otherwise provided herein, all
other amendments must be approved by the holders of a
Majority of the outstanding Shares (calculated without
regard to Shares owned by the Managing Shareholder and its
Affiliates), and, if the terms of a series of Shares or
securities so require, by the vote of the holders of such
class, series or group specified therein.
(c) The Managing Shareholder has power to construe
this Declaration and to act upon any such construction. Its
construction of the same and any action taken pursuant
thereto by the Trust or a Managing Person in good faith
shall be final and conclusive.
15.9 Bonds and Accounting. The Corporate Trustee and
other Managing Persons shall not be required to give bond or
otherwise post security for the performance of their duties
and the Trust waives all provisions of law requiring or
permitting the same. No person shall be entitled at any
time to require the Corporate Trustee, the Panel Members,
the Trust or any Shareholder to submit to a judicial or
other accounting or otherwise elect any judicial,
administrative or executive supervisory proceeding
applicable to non-business trusts.
15.10 Binding Effect. This Declaration shall be
binding upon and shall inure to the benefit of the
Shareholders (and their spouses if the Shares of such
Shareholders shall be community property) as well as their
respective heirs, legal representatives, successors and
assigns. This Declaration constitutes the entire
agreement among the Trust, the Corporate Trustee, the Panel
Members, and the Shareholders with respect to the formation
and operation of the Trust, other than the Subscription
Agreement entered into between the Trust and each Investor
and the Management Agreement.
15.11 Headings. Headings of Articles and Sections
used herein are for descriptive purposes only and shall not
control or alter the meaning of this Declaration as set
forth in the text.
15.12 Tax Matters Partner. The Managing Shareholder
or its designee shall be designated the tax matters partner
of the Trust pursuant to Code Section 6221.
IN WITNESS WHEREOF, the undersigned have signed this
Declaration as of the date first above written.
RIDGEWOOD ENERGY HOLDING CORPORATION,
Grantor and Corporate Trustee
By:/s/ Robert E. Swanson
Robert E. Swanson, President
RIDGEWOOD POWER CORPORATION,
Managing Shareholder
By:/s/ Robert E. Swanson
Robert E. Swanson, Presiden
Exhibit A
Investors
Number of
Investor Shares
Name Address and Class