Exhibit 10.1

THIRD AMENDED AND RESTATED

AGREEMENT OF

LIMITED PARTNERSHIP

OF

PATTERN ENERGY GROUP HOLDINGS 2 LP

Dated effective as of

November 1, 2019

 

 

 

THE UNITS IN PATTERN ENERGY GROUP HOLDINGS 2 LP HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
JURISDICTION. NO UNIT MAY BE SOLD OR OFFERED FOR SALE (WITHIN THE MEANING OF ANY
SECURITIES LAW) UNLESS A REGISTRATION STATEMENT UNDER ALL APPLICABLE SECURITIES
LAWS WITH RESPECT TO THE UNIT IS THEN IN EFFECT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS IS THEN APPLICABLE TO THE UNIT. A UNIT
ALSO MAY NOT BE TRANSFERRED OR ENCUMBERED UNLESS THE PROVISIONS OF THIS
AGREEMENT ARE SATISFIED.

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TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

ARTICLE II

 

ORGANIZATIONAL AND OTHER MATTERS

 

Section 2.01

  Organization; Ratification      18  

Section 2.02

  Name      18  

Section 2.03

  Registered Office; Registered Agent; Principal Office in the United States;
Other Offices      18  

Section 2.04

  Purpose      19  

Section 2.05

  Foreign Qualification      19  

Section 2.06

  Term      19  

Section 2.07

  Alternative Investment Vehicles      19   ARTICLE III

 

PARTNERS; REPRESENTATIONS

 

Section 3.01

  Redesignation of Units      20  

Section 3.02

  Units (Capital) Limited Partners      20  

Section 3.03

  Units (Profits Interest) Limited Partners      21  

Section 3.04

  Units; Certificates      22  

Section 3.05

  Conflicts of Interest      22  

Section 3.06

  Representations, Warranties and Covenants      25   ARTICLE IV

 

BOOKS AND RECORDS

 

Section 4.01

  Books, Records, Access and Tax Information      27  

Section 4.02

  Tax Elections      28  

Section 4.03

  Partnership Representative      28  

Section 4.04

  Section 83(b) Election      30   ARTICLE V

 

CAPITAL CONTRIBUTIONS

 

Section 5.01

  Initial Capital Contributions of Units (Capital) Limited Partners      31  

Section 5.02

  Further Capital Contributions      32  

Section 5.03

  PEG 1 Option      33  

Section 5.04

  Withdrawal of Capital      34  

Section 5.05

  Alternative Sources of Capital      34  

Section 5.06

  Capital Accounts      34  

 

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ARTICLE VI

 

ALLOCATIONS

 

Section 6.01

  Allocations of Profits and Losses      35  

Section 6.02

  Regulatory Allocations      36  

Section 6.03

  Income Tax Allocations      37  

Section 6.04

  Other Allocation Rules      38   ARTICLE VII

 

DISTRIBUTIONS

 

Section 7.01

  Distributions      39  

Section 7.02

  Distributions in Kind      40  

Section 7.03

  Tax Distributions      40  

Section 7.04

  Redemption/Repurchase of Units      40  

Section 7.05

  Proceeds from Projects      41  

Section 7.06

  Withholding      41   ARTICLE VIII

 

MEETINGS OF PARTNERS

 

Section 8.01

  Meetings      42  

Section 8.02

  Place of Meetings      42  

Section 8.03

  Notice of Meetings      42  

Section 8.04

  Record Date      43  

Section 8.05

  Quorum      43  

Section 8.06

  Proxies      43  

Section 8.07

  Action by Partners Without a Meeting      43  

Section 8.08

  Waiver of Notice      44  

Section 8.09

  Conduct of Meetings      44  

Section 8.10

  Limited Units (Profits Interest) Voting Rights      44   ARTICLE IX

 

MANAGEMENT OF THE PARTNERSHIP

 

Section 9.01

  Management      44  

Section 9.02

  Board of Directors      47  

Section 9.03

  Officers      49  

Section 9.04

  Actions Requiring Board Approval      49  

Section 9.05

  Actions Requiring Board Approval and Approval of the Units (Capital) Limited
Partners      50  

Section 9.06

  Actions Requiring Board Approval and Approval of Pattern Energy      51  

Section 9.07

  Actions Requiring Board Approval and Approval of the Units (Profits Interest)
Limited Partners      52  

Section 9.08

  Certain Expenses      53  

Section 9.09

  Grant of Authority      53  

 

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ARTICLE X

 

INDEMNIFICATION

 

Section 10.01

  Power to Indemnify in Actions, Suits or Proceedings      54  

Section 10.02

  Expenses Payable in Advance      54  

Section 10.03

  Unpaid Claims      55  

Section 10.04

  Nonexclusivity of Indemnification and Advancement of Expenses      55  

Section 10.05

  Survival of Indemnification and Advancement of Expenses; Third Party
Beneficiaries      55  

Section 10.06

  Limitation on Indemnification      56  

Section 10.07

  Indemnification of Employees and Agents      56  

Section 10.08

  Severability      56  

Section 10.09

  Fiduciary Service      56  

Section 10.10

  Exculpation      56  

Section 10.11

  Indemnitor of First Resort      57  

Section 10.12

  Insurance      57   ARTICLE XI

 

TRANSFER OF UNITS

 

Section 11.01

  Request for Sale of Partnership by a Units (Capital) Majority      58  

Section 11.02

  Conversion to a Corporation; Qualified Public Offering      59  

Section 11.03

  Demand Registration Rights      62  

Section 11.04

  Piggyback Registration Rights      63  

Section 11.05

  Tag Along Rights      64  

Section 11.06

  Certain Events Not Deemed Transfers      65  

Section 11.07

  Transfer and Exchange      66  

Section 11.08

  Vesting Terms; Redemption/Forfeiture      66  

Section 11.09

  Determination of Fair Market Value      70  

Section 11.10

  Substituted Limited Partners      72  

Section 11.11

  Transfer of Rights      72  

Section 11.12

  Transfer      73  

Section 11.13

  Taxable Non-Cash Transactions      73   ARTICLE XII

 

LIMITATIONS ON TRANSFERS

 

Section 12.01

  Restrictions on Transfer      73  

Section 12.02

  Restrictive Legends      74  

Section 12.03

  Spouses      75  

Section 12.04

  Termination of Certain Restrictions      75  

 

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ARTICLE XIII

 

ISSUANCE OF ADDITIONAL UNITS

 

Section 13.01

  Issuance of Additional Units      76  

Section 13.02

  Preemptive Rights      76   ARTICLE XIV

 

DISSOLUTION AND LIQUIDATION

 

Section 14.01

  Dissolution      77  

Section 14.02

  Effect of Dissolution      78  

Section 14.03

  Liquidation Upon Dissolution      78  

Section 14.04

  Negative Capital Accounts      78  

Section 14.05

  Winding Up and Certificate of Cancellation      78   ARTICLE XV

 

MISCELLANEOUS PROVISIONS

 

Section 15.01

  Notices      79  

Section 15.02

  Governing Law      79  

Section 15.03

  Arbitration      79  

Section 15.04

  Waiver of Jury Trial      80  

Section 15.05

  Entire Agreement; Amendments      80  

Section 15.06

  Confidentiality      82  

Section 15.07

  Non-Disparagement      82  

Section 15.08

  Waiver      83  

Section 15.09

  Severability      83  

Section 15.10

  Ownership of Property and Right of Partition      83  

Section 15.11

  Successors and Assigns      83  

Section 15.12

  Further Assurances      83  

Section 15.13

  Parties in Interest; Third Party Beneficiaries      84  

Section 15.14

  Counterparts      84  

 

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THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

PATTERN ENERGY GROUP HOLDINGS 2 LP

This THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
“Agreement”) of Pattern Energy Group Holdings 2 LP, a Delaware limited
partnership (the “Partnership”), dated as of November 1, 2019, is made by and
among Pattern Energy Group Holdings 2 GP LLC, a Delaware limited liability
company (the “General Partner”), the Units (Capital) Limited Partners set forth
on Exhibit B hereto and the Units (Profits Interest) Limited Partners set forth
on Exhibit D hereto.

W I T N E S S E T H:

WHEREAS, the Partnership was formed as a limited partnership under the Delaware
Revised Uniform Limited Partnership Act, 6 Del. Code §17-101 et seq., (as it may
be amended from time to time, the “Act”) by filing a Certificate of Limited
Partnership (the “Certificate”) with the Secretary of State of the State of
Delaware on November 10, 2016;

WHEREAS, on November 14, 2016, the General Partner and Pattern Energy Group
Holdings LP, a Delaware limited partnership (the “Initial Limited Partner”),
entered into a limited partnership agreement of the Partnership (the “Initial
LPA”);

WHEREAS, on December 8, 2016 (the “Initial Closing Date”), the General Partner
and the Limited Partners of the Partnership as of the Initial Closing Date
entered into the Amended and Restated Agreement of Limited Partnership of the
Partnership (as amended on March 1, 2017) (the “First A&R LPA”), amending and
restating the Initial LPA in its entirety;

WHEREAS, on the Initial Closing Date, pursuant to the Contribution Agreement,
the Initial Limited Partner (i) contributed certain assets to the Partnership in
exchange for Class A Units, and (ii) distributed and transferred such Class A
Units to the Class A limited partners of the Initial Limited Partner;

WHEREAS, on June 16, 2017 (the “Signing Date”) a Second Amended and Restated
Agreement of Limited Partnership of the Partnership was entered into by the
parties thereto (the “Second A&R LPA”) amending and restating the First A&R LPA
in its entirety;

WHEREAS, prior to the Redesignation the Class A Units and the Class B Units of
the Partnership represented, in aggregate, the entire economic interest of the
Limited Partners in the Partnership;

WHEREAS, the Partners of the Partnership desire to amend and restate the Second
A&R LPA to provide for a redesignation (the “Redesignation”) of the Class A
Units and Class B Units as a single class of Units, with the Units formerly
designated as Class A Units being redesignated as Units (Capital) and the Units
formerly designated as Class B Units being redesignated as Units (Profits
Interest), each having the distinct attributes set forth herein, which
Redesignation shall be effective as at the date of this Agreement (the
“Redesignation Date”);

 

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WHEREAS, from and after the Redesignation Date, the Units (Capital) and the
Units (Profits Interest) represent, in aggregate, the entire economic interest
of the Limited Partners in the Partnership, with the Units (Profits Interest)
constituting “profits interests” as provided herein, and the Units (Capital)
representing the remaining economic interest of the Limited Partners in the
Partnership;

WHEREAS, (a) holders of Units (Capital), in such capacity and with respect to
such Units (Capital), shall have only the rights and obligations attached to the
Units (Capital) of the Partnership, and not those attached to the Units (Profits
Interest) of the Partnership, and (b) holders of Units (Profits Interest), in
such capacity and with respect to such Units (Profits Interest), shall have only
the rights and obligations attached to the Units (Profits Interest) of the
Partnership, and not those attached to the Units (Capital) of the Partnership;

WHEREAS, the Redesignation shall not have any effect on the number or terms of
the Partnership Interests of the Limited Partners in their respective capacities
as holders of Units and, in particular, does not result in any events identified
in section 15.05(b) or (c) of the Second A&R LPA;

WHEREAS, for all U.S. federal, state and local income tax purposes (i) the
Redesignation is intended to be treated as having no effect and (ii) consistent
with clause (i), the Units held by each Partner immediately after the
Redesignation are intended to be treated as the same Units held by such Partner
immediately prior to the Redesignation;

WHEREAS the Board of Directors (as defined below) previously approved certain
changes to the Second A&R LPA which the Partners desire to reflect herein; and

WHEREAS, the Redesignation and the amendments to the Second A&R LPA as set forth
in this Agreement have been approved as required by the Second A&R LPA and are
binding upon the Partners in accordance with section 15.05 of the Second A&R
LPA;

NOW, THEREFORE, in consideration of the premises and the covenants and
provisions hereinafter contained, the Partners hereby amend and restate the
Second A&R LPA in its entirety to effect the Redesignation and further agree as
follows:

ARTICLE I

DEFINITIONS

“Accredited Investor” has the meaning set forth in Regulation D promulgated
under the Securities Act.

“Act” has the meaning set forth in the recitals of this Agreement.

“Adjusted Capital Account” means the Capital Account maintained for each
Partner, (a) increased by any amounts that such Partner is obligated to restore
or is treated as obligated to restore under Treasury Regulation Sections
1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5)), and (b) decreased by any
amounts described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6) with respect to such Partner.

 

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“Adoption Agreement” means an agreement of a newly admitted Partner
substantially in the form of Exhibit G.

“Affected Partner” has the meaning set forth in Section 11.13 of this Agreement.

“Affiliate” means, with respect to any Person, any Person directly or indirectly
through one or more intermediaries, Controlling, Controlled by or under common
Control with such Person.

“Alternative Investment Vehicle” has the meaning set forth in Section 2.07.

“Amended Code” means the Code, as amended by the Bipartisan Budget Act.

“Annual Budget” means the first twelve months of each Budget.

“Approved Sale” has the meaning set forth in Section 11.01(a) of this Agreement.

“Assumed Non-Cash Transaction Tax Liability” means, with respect to any Partner
and any Taxable Non-Cash Transaction, the amount of federal, state and local
income taxes (including any applicable estimated taxes) that would be due from
such Partner, assuming such Partner is subject to federal, state and local
income tax at the highest marginal tax rate for an individual residing in the
State of California (or, if higher in the case of Riverstone, a U.S. corporation
doing business in the State of California) who earned solely the items of income
or gain recognized by the Partner by reason of such Taxable Non-Cash
Transaction.

“Assumed Tax Liability” of any Partner means an amount, determined in the sole
discretion of the Board of Directors, equal to (1) the cumulative amount of
federal, state and local income taxes (including any applicable estimated taxes)
that would be due from such Partner as of such Tax Distribution Date, assuming
such Partner were an individual residing in the State of California subject to
federal, state and local income tax at the highest marginal tax rate (or, if
higher in the case of Riverstone, a U.S. corporation doing business in the State
of California) who earned solely the items of income, gain, deduction, loss,
and/or credit allocated to such Partner pursuant to Section 6.03 and after
taking proper account of loss carryforwards available to such Partner resulting
from losses allocated to the Partners by the Partnership, to the extent not
taken into account in prior periods, reduced by (2) all previous distributions
made to such Partner pursuant to Section 7.03.

“Bipartisan Budget Act” means Title XI of the Bipartisan Budget Act of 2015 and
any related provisions of law, court decisions, regulations, rules, and
administrative guidance.

“Blocker Corporation” has the meaning set forth in Section 11.02(a) of this
Agreement.

“Board Approval” means the affirmative vote of a majority of the members of the
Board of Directors of the Partnership.

 

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“Board of Directors” means the board of directors of the Partnership, to whom
the General Partner irrevocably delegates, and in which is vested with, pursuant
to Section 9.01(a), the power to manage the business and affairs of the
Partnership (other than the General Partner’s duties as “partnership
representative” under hereof). The Board of Directors shall constitute a
committee within the meaning of Section 17-303(b)(7) of the Act, and its members
may include one or more individual Limited Partners. The members of the initial
Board of Directors are listed on Exhibit E attached hereto.

“Book Value” means, with respect to any property of the Partnership, such
property’s adjusted basis for federal income tax purposes, except as follows:

(a) The initial Book Value of any property contributed by a Partner to the
Partnership shall be the Fair Market Value of such property as of the date of
such contribution.

(b) The Book Values of all properties shall be adjusted to equal their
respective Fair Market Values in connection with (i) the acquisition of an
interest (or additional interest) in the Partnership by any new or existing
Partner in exchange for more than a de minimis Capital Contribution to the
Partnership or in exchange for the performance of services to or for the benefit
of the Partnership, (ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of property as consideration for an interest in
the Partnership, (iii) the liquidation of the Partnership within the meaning of
Treasury Regulation Section 1.704-1(b)(2)(ii)(g)(1) (other than pursuant to
Section 708(b)(1)(B) of the Code), or (iv) any other event to the extent
determined by the Board of Directors to be permitted and necessary to properly
reflect Book Values in accordance with the standards set forth in Treasury
Regulation Section 1.704-1(b)(2)(iv)(q); provided that adjustments pursuant to
clauses (i) and (ii) above shall be made only if the Board of Directors
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in the Partnership.

(c) The Book Value of property distributed to a Partner shall be the Fair Market
Value of such property as of the date of such distribution.

(d) The Book Value of all property shall be increased (or decreased) to reflect
any adjustments to the adjusted basis of such property pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m) and clause (g) of the
definition of Profits and Losses; provided, however, that the Book Value of
property shall not be adjusted pursuant to this clause (d) to the extent that an
adjustment pursuant to clause (b) is required in connection with a transaction
that would otherwise result in an adjustment pursuant to this clause (d).

(e) If the Book Value of property has been determined or adjusted pursuant to
clauses (b) or (d) hereof, such Book Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such property for purposes of
computing Profits and Losses and other items allocated pursuant to Article VI.

“Budget” means each two-year budget approved by the Board of Directors prior to
the first day of each Fiscal Year.

 

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“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized by law to be closed.

“Capital Account” has the meaning set forth in Section 5.06 of this Agreement.

“Capital Contribution” means, with respect to any Partner, the amount of money
and the initial Book Value of any property contributed or deemed contributed to
the Partnership by such Partner, in accordance with Article V of this Agreement.

“Cause” means the definition of “Cause” used in the applicable Units (Profits
Interest) Limited Partner’s Employment Agreement, or, if such Units (Profits
Interest) Limited Partner who is an Employee does not have such an Employment
Agreement that defines “Cause,” then Cause shall mean (A) any material breach of
this Agreement (other than a failure by a Units (Capital) Limited Partner that
is not a Units (Capital) Contingent Partner to fund such Limited Partner’s Units
(Capital) Commitment Amount, if any) or the Employment Agreement by the Units
(Profits Interest) Limited Partner, including without limitation the material
breach of any representation, warranty or covenant made under this Agreement or
his Employment Agreement, by the Units (Profits Interest) Limited Partner, which
such material breach remains uncorrected for thirty (30) days after the
applicable member of the PEG Group provides the Units (Profits Interest) Limited
Partner written notice of its belief that this clause (A) is being or has been
violated by the Units (Profits Interest) Limited Partner; provided that the
applicable member of the PEG Group must exercise its right to terminate
employment within ninety (90) days after it first becomes aware of such breach;
(B) the Units (Profits Interest) Limited Partner’s being the subject of any
order, judicial or administrative, obtained or issued by the Securities and
Exchange Commission for any securities violation involving fraud, including
without limitation any order in which findings of facts or any legal conclusions
establishing liability are neither admitted nor denied; provided that the
applicable member of the PEG Group must exercise its right to terminate
employment within ninety (90) days after it first becomes aware of such order;
(C) conviction of the Units (Profits Interest) Limited Partner, or plea of nolo
contendere by the Units (Profits Interest) Limited Partner, to any felony or
crime involving moral turpitude; provided that the applicable member of the PEG
Group must exercise its right to terminate employment within ninety (90) days
after it first becomes aware of such conviction or plea; or (D) the Units
(Profits Interest) Limited Partner’s material mismanagement in providing
material services to the Partnership or its Subsidiaries, which such
mismanagement is not cured within thirty (30) days after the applicable member
of the PEG Group provides the Units (Profits Interest) Limited Partner written
notice of its belief that this clause is being or has been violated; provided
that such termination of employment must be effected within ninety (90) days of
the date that the applicable member of the PEG Group first became aware of such
mismanagement.

“Certificate” has the meaning set forth in the recitals of this Agreement.

“Class A Unit” means, prior to the Redesignation Date, a Unit representing a
fractional part of the Partnership Interests and having the rights and
obligations specified with respect to the Class A Units in the Second A&R LPA.

 

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“Class B Unit” means, prior to the Redesignation Date, a Unit representing a
fractional part of the Partnership Interests and having the rights and
obligations specified with respect to the Class B Units in the Second A&R LPA.

“Code” means the Internal Revenue Code of 1986, as amended.

“Competitor” means any Person (other than any investment fund managed by a
member of the Riverstone Group) who is engaged in the active development or
operation of renewable energy projects in any geographic region where Pattern
Energy or any of its Subsidiaries is conducting business.

“Competitive Business” has the meaning set forth in Section 11.08(c)(iv) of this
Agreement.

“Contribution Agreement” means the Contribution Agreement, dated as of
December 8, 2016, by and between the Initial Limited Partner and the
Partnership.

“Contribution Loan” means any loan made by the Partnership to Pattern Energy, to
enable Pattern Energy to make an additional Capital Contribution to the
Partnership pursuant to Section 5.02(a).

“Control” (including the correlative terms “Controlled by” and “Controlling”)
means the possession, directly or indirectly, of the power to direct, or to
cause the direction of, the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

“Co-Seller” has the meaning set forth in Section 11.05(a) of this Agreement.

“Depreciation” means, for each Fiscal Period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable for
federal income tax purposes with respect to property for such Fiscal Period,
except that (A) with respect to any such property the Book Value of which
differs from its adjusted tax basis for federal income tax purposes and which
difference is being eliminated by use of the “remedial method” pursuant to
Treasury Regulation Section 1.704-3(d), Depreciation for such taxable year shall
be the amount of book basis recovered for such Fiscal Period under the rules
prescribed by Treasury Regulation Section 1.704-3(d)(2), and (B) with respect to
any other such property the Book Value of which differs from its adjusted tax
basis at the beginning of such Fiscal Period, Depreciation shall be an amount
which bears the same ratio to such beginning Book Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such Fiscal
Period bears to such beginning adjusted tax basis; provided that if the adjusted
tax basis of any property at the beginning of such Fiscal Period is zero,
Depreciation with respect to such property shall be determined with reference to
such beginning value using any reasonable method selected by the Partnership
Representative.

“Designated Individual” shall have the meaning set forth in Treasury Regulations
Section 301.6223-1.

 

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“Development Leadership Team” means the Persons listed under the heading
“Development Leadership Team” on Exhibit E hereto, as the same may be amended,
modified or supplemented from time to time. The current members of the
Development Leadership Team are Hunter Armistead, Daniel Elkort, Cary Kottler,
Christian Hackett, Derek Price, Eric Daly, George Hardie, Jean Wilson, John
Bodt, Joh Forrester, Sarah Webster, and Matt Langley.

“Dilution Event” has the meaning set forth in Section 5.02(c) of this Agreement.

“Director” means a member of the Board of Directors.

“Disabled” or “Disability” means, as used to describe any Units (Profits
Interest) Limited Partner who is an Employee, the definition of “Disabled” or
“Disability” used in such Units (Profits Interest) Limited Partner’s Employment
Agreement, or, if such Units (Profits Interest) Limited Partner does not have
such an Employment Agreement that defines “Disabled” or “Disability,” “Disabled”
or “Disability” shall exist if the Units (Profits Interest) Limited Partner is
unable to perform the essential functions of his position, with reasonable
accommodation, due to physical or mental illness or injury which continues for a
period in excess of four (4) consecutive months. The determination of a
Disability will be made by the Partnership or the applicable member of the PEG
Group, as the case may be; provided that if the Units (Profits Interest) Limited
Partner disputes the determination, the matter shall be submitted to a qualified
doctor mutually acceptable to the Partnership or such member of the PEG Group,
as the case may be, and the Units (Profits Interest) Limited Partner for final
determination, and the Units (Profits Interest) Limited Partner shall submit to
such examinations as the doctor shall reasonably request in order to enable the
doctor to make the determination. If requested by the Partnership or such member
of the PEG Group, as the case may be, the Units (Profits Interest) Limited
Partner shall submit to a mental or physical examination to be performed by an
independent physician selected by the Partnership or such member of the PEG
Group, as the case may be, to assist the Partnership or such member of the PEG
Group, as the case may be, in making such determination.

“Distributable Property” means the excess of cash and property on hand over the
amount that the Board of Directors determines is required to be retained as a
reasonable reserve to meet any liabilities or proposed expenditures of the
Partnership which are accrued or reasonably foreseeable or that is otherwise
reasonably necessary to be retained. In determining any reserves, the Board of
Directors shall consider, in its reasonable discretion and in good faith,
anticipated committed expenditures and prospective sources of cash.

“Economic Risk of Loss” has the meaning set forth in Treasury Regulation
Section 1.752-2(a).

“Effective Date” means the date on which the Partnership issues its first
capital call after the Signing Date.

“Effective Date Contributing Partner” means any Units (Capital) Limited Partner
that made a Capital Contribution on or about the Effective Date in accordance
with Section 5.01(b). The identity of each individual Effective Date
Contributing Partner is listed on Exhibit A under the heading “Effective Date
Contributing Partner.”

“Employee” means any Person who is employed by any member of the PEG Group.

 

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“Employment Agreement” means the then effective employment agreement, if any,
entered into between any member of the PEG Group and a Units (Profits Interest)
Limited Partner.

“Equity Securities” has the meaning set forth in Section 13.02(a) of this
Agreement.

“Facility Default Capital Call” has the meaning set forth in Section 5.02(c) of
this Agreement.

“Family Member” has the meaning set forth in Section 12.01(b) of this Agreement.

“Fair Market Value” has the meaning set forth in Section 11.09 of this
Agreement.

“Fiscal Period” means (i) any period commencing on the date hereof or the day
following the end of a prior Fiscal Period and (ii) ending on the last day of
each Fiscal Year, the day preceding any day in which an adjustment to the Book
Value of the Partnership’s properties pursuant to clause (b) of the definition
of Book Value occurs, or any other date determined by the Board of Directors.

“Fiscal Year” means the fiscal year of the Partnership which shall end on
December 31 of each calendar year unless, for United States federal income tax
purposes, another fiscal year is required. The Partnership shall have the same
fiscal year for United States federal income tax purposes and for accounting
purposes.

“General Partner” means Pattern Energy Group Holdings 2 GP LLC, a Delaware
limited liability company, and its successors and permitted assigns as general
partner of the Partnership.

“Goldman Facility” means the uncommitted revolving credit agreement among the
Partnership, various members of the Riverstone Group, and Goldman Sachs Bank USA
dated as of April 11, 2019.

“Good Reason” means the definition of “Good Reason” used in the applicable Units
(Profits Interest) Limited Partner’s Employment Agreement, or if the Units
(Profits Interest) Limited Partner does not have such an Employment Agreement
that defines “Good Reason,” then Good Reason shall mean (A) a material
diminution in the Units (Profits Interest) Limited Partner’s authority, title or
position, duties, or responsibilities; (B) a material breach by the Partnership
of its obligations to the Units (Profits Interest) Limited Partner pursuant to
this Agreement or a material breach by the Partnership or the applicable member
of the PEG Group of the Units (Profits Interest) Limited Partner’s Employment
Agreement; (C) the involuntary relocation of the geographic location of the
Units (Profits Interest) Limited Partner’s principal place of employment by more
than 40 miles from the location of the Units (Profits Interest) Limited
Partner’s principal place of employment as of the effective date of employment;
or (D) a diminution in the Units (Profits Interest) Limited Partner’s base
salary or a material diminution in the discretionary target bonus, if applicable
(as such terms are defined in his Employment Agreement), for which the Units
(Profits Interest) Limited Partner is eligible in one year, as compared to the
target bonus, if applicable, for which the Units (Profits Interest) Limited
Partner was eligible in the previous year. Notwithstanding the foregoing
provisions of this definition or any other provision of this Agreement to the
contrary, any assertion of a Units (Profits Interest) Limited Partner of a
termination for Good Reason shall not be effective unless all of the following
conditions are

 

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satisfied: (i) the Units (Profits Interest) Limited Partner must provide written
notice to the applicable member of the PEG Group of the conditions described in
(A), (B), (C) or (D) that give rise to the Units (Profits Interest) Limited
Partner’s belief that Good Reason for termination exists within sixty (60) days
after the Units (Profits Interest) Limited Partner first becomes aware of the
initial existence of the condition; (ii) the condition specified in such notice
must remain uncorrected for thirty (30) days after receipt of such notice by
such member of the PEG Group; and (iii) the date of the Units (Profits Interest)
Limited Partner’s termination of employment must occur within ninety-one
(91) days after the Units (Profits Interest) Limited Partner first becomes aware
of the initial existence of the condition specified in such notice.

“Grant Date” means, with respect to any Unit (Profits Interest), the date on
which such Unit (Profits Interest) is issued to an Employee or Management
Holdco, as applicable, whether pursuant to this Agreement or otherwise or, prior
to the Redesignation Date, the date on which Class B Units were so issued to an
Employee or Management Holdco, as applicable.

“Holder” means (i) any Person that was a Limited Partner immediately prior to a
Qualified Public Offering owning Registrable Securities that have not been sold
to the public, and (ii) any Transferee of Registrable Securities in a private
transaction after a Qualified Public Offering.

“Immediate Family” means the spouse of an individual and the grandparents,
parents, siblings and children (and children and spouses of any of the
foregoing) of the individual or his or her spouse. An adopted child will be
treated as a child of his or her adoptive parent or parents if (but only if) he
or she was adopted before he or she reached 21 years of age.

“Identified Development Properties” has the meaning set forth in
Section 11.08(c)(iv).

“Independent Advisor” has the meaning set forth in Section 11.09(c) of this
Agreement.

“Indemnitee” has the meaning set forth in Section 10.01 of this Agreement.

“Initial Closing Date” means December 8, 2016.

“Initial Contributing Partners” means any Units (Capital) Limited Partner deemed
to have made a Capital Contribution on the Initial Closing Date in accordance
with Section 5.01(a). The identity of each individual Initial Contributing
Partner is listed on Exhibit A under the heading “Initial Contributing Partner.”

“Initial Limited Partner” has the meaning set forth in the recitals of this
Agreement.

“Initial Limited Partner LPA” means the First Amended and Restated Agreement of
Limited Partnership of the Initial Limited Partner, dated effective as of
July 15, 2010, as the same may be amended from time to time.

“Initial LPA” has the meaning set forth in the recitals of this Agreement.

“Initiating Holder” has the meaning set forth in Section 11.03(a) of this
Agreement.

 

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“Investment Criteria” means investments in projects that meet the following
criteria:

 

  i.

Expected net pre-tax proceeds to equity upon sale of no less than 1.40 times the
total amount of equity invested prior to sale;

 

  ii.

Wind, solar, transmission or storage in countries that are members of the
Organization for Economic Co-operation and Development; and

 

  iii.

Fixed-price power purchase arrangements with a term of no less than 10 years,
covering no less than 60% of the project’s forecast output.

“Liquidation Event” means the occurrence of any of the following: (i) a merger,
consolidation or sale of substantially all of the assets of the Partnership,
(ii) the Transfer in a single transaction or a series of related transactions of
100% of the Units of the Partnership and (iii) the winding up, dissolution or
liquidation of the Partnership.

“Limited Partner” means any Person (i) executing this Agreement or any other
writing evidencing the interest of such Person to become a limited partner of
the Partnership, (ii) complying with the conditions for becoming a limited
partner of the Partnership as set forth in this Agreement or any other writing
and requesting (orally, in writing or by other action such as payment for a
Partnership Interest) that the records of the Partnership reflect such
admission, and (iii) hereafter admitted to the Partnership as a limited partner
as herein provided; but shall not include any Person who has ceased to be a
limited partner of the Partnership. For the avoidance of doubt, the term
“Limited Partner” includes each Units (Capital) Limited Partner and each Units
(Profits Interest) Limited Partner.

“Management Designee” has the meaning set forth in Section 9.02(a).

“Management Holdco” means Pattern Equity Holdings 2 LLC, a Delaware limited
liability company formed and controlled by the Partnership for the purpose of
owning Units.

“Management Holdco LLC Units” refers to the units representing membership
interests in Management Holdco.

“Management Services Agreement” means the Amended and Restated Management
Services Agreement, dated as of the Signing Date, by and between the Initial
Limited Partner, Pattern Energy and the Partnership, as the same may be amended
from time to time.

“Market Area” has the meaning set forth in Section 11.08(c)(iv) of this
Agreement.

“Marketable Securities” means securities that are (i) traded on an established
United States securities exchange or stock market, free of all liens, claims and
encumbrances (excluding those arising under applicable securities laws), and
(ii) either, (A) freely tradeable, or (B) transferable by Limited Partners that
are not Affiliates of the issuer thereof pursuant to Rule 144 under the
Securities Act, or any successor rule thereto without any volume limitations.

“Minimum Gain” has the meaning assigned to that term in Treasury Regulation
Section 1.704-2(d).

 

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“Non-Competition Agreement” means the Second Amended and Restated
Non-Competition Agreement, dated as of the Signing Date, by and between the
Initial Limited Partner, Pattern Energy and the Partnership, as the same may be
amended from time to time.

“Nonrecourse Deduction” has the meaning assigned to that term in Treasury
Regulation Section 1.704-2(b).

“Officers” has the meaning set forth in Section 9.03 of this Agreement.

“Other Investments” has the meaning set forth in Section 3.05(a)(i) of this
Agreement.

“Participation Offer” has the meaning set forth in Section 11.05 of this
Agreement.

“Partner” means any General Partner or Limited Partner.

“Partner Nonrecourse Debt” has the meaning assigned to that term in Treasury
Regulation Section 1.704-2(b)(4).

“Partner Nonrecourse Debt Minimum Gain” has the meaning assigned to that term in
Treasury Regulation Section 1.704-2(i)(2).

“Partner Nonrecourse Deduction” has the meaning assigned to that term in
Treasury Regulation Section 1.704-2(i)(1).

“Partnership” has the meaning set forth in the preamble of this Agreement.

“Partnership Group Member” means the Partnership and any Person in which the
Partnership owns a capital or profits interest.

“Partnership Interests” means, collectively, the interests of the Partners in
the Partnership, including, without limitation, rights to distributions
(liquidating or otherwise), allocations, information, and, if applicable, to
consent or approve, as represented by Units.

“Partnership Representative” has the meaning assigned to that term in
Section 6223 of the Amended Code and any Treasury Regulations or other
administrative or judicial pronouncements promulgated thereunder.

“Pattern Energy” means Pattern Energy Group Inc., a Delaware corporation.

“PEG 1 Distributions” means, with respect to a Units (Capital) Limited Partner,
any amounts distributed to such Units (Capital) Limited Partner directly by the
Initial Limited Partner pursuant to the Initial Limited Partner LPA on or after
the Effective Date, in connection with such Units (Capital) Limited Partner’s
Class A Units (as such term is defined in the Initial Limited Partner LPA as in
force at such time) in the Initial Limited Partner, or indirectly through
Pattern Equity Holdings LLC pursuant to the Limited Liability Company Agreement
of Pattern Equity Holdings LLC, dated effective as of August 31, 2010, in
connection with such Units (Capital) Limited Partner’s Class A Units in Pattern
Equity Holdings LLC, in each case, net of federal, state, and local taxes paid
or payable on such distributions, determined at the highest marginal rate
applicable to individuals resident in the State of California for the taxable
year during which any such distribution is made.

 

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“PEG 1 Services Failure” has the meaning given to such term in the Management
Services Agreement.

“PEG Indemnitors” has the meaning set forth in Section 10.11 of this Agreement.

“PEG Group” means, collectively, the Partnership, the Initial Limited Partner,
Pattern Energy and their respective Subsidiaries.

“PEG 1 Limited Partner” means any Person who has received a distribution of
Class A Units (prior to the Redesignation) from the Initial Limited Partner
pursuant to the Initial Limited Partner LPA.

“Person” means any individual, partnership, corporation, limited liability
company, trust or other entity.

“Pre-Effective Date Units (Capital)” means the Class A Units outstanding
immediately prior to the Effective Date.

“Profits” or “Losses” means, for each Fiscal Period, an amount equal to the
Partnership’s taxable income or loss for such period, determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments
(without duplication):

(a) Any income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Profits and Losses pursuant to this
definition of “Profits” and “Losses” shall be added to such taxable income or
loss;

(b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B)
or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of “Profits” and
“Losses,” shall be subtracted from such taxable income or loss;

(c) In the event the Book Value of any asset is adjusted pursuant to clause
(b) or clause (c) of the definition of Book Value, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the Book Value
of the asset) or an item of loss (if the adjustment decreases the Book Value of
the asset) from the disposition of such asset and shall, except to the extent
allocated pursuant to the Regulatory Allocations, be taken into account for
purposes of computing Profits or Losses;

(d) Gain or loss resulting from any disposition of property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Book Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Book Value;

 

12

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(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation;

(f) To the extent an adjustment to the adjusted tax basis of any asset pursuant
to Code Section 734(b) is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Account balances as a result of a distribution other than in liquidation of a
Partner’s interest in the Partnership, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or an item of loss (if the adjustment decreases such basis) from the disposition
of such asset and shall be taken into account for purposes of computing Profits
or Losses; and

(g) Any items that are allocated pursuant to the Regulatory Allocations shall
not be taken into account in computing Profits and Losses.

“Public Entity” has the meaning set forth in Section 11.03(a) of this Agreement.

“Purchase Rights Agreement” means the Amended and Restated Purchase Rights
Agreement, dated as of the Signing Date, by and between Pattern Energy and the
Partnership, as the same may be amended from time to time.

“Qualified Public Offering” means the sale in an underwritten public offering
registered under the Securities Act of the equity securities of the Partnership
(or any successor thereto) approved by the Board of Directors and with
anticipated net proceeds to the Partnership (or successor entity) of $100
million or more.

“Recapitalization” has the meaning set forth in Section 11.02(f)(i) of this
Agreement.

“Redesignation” has the meaning set forth in the preamble to this Agreement.

“Redesignation Date” has the meaning set forth in the preamble to this
Agreement.

“Registrable Securities” means securities of the Public Entity owned by a Holder
which are the same class as the equity securities sold in the Qualified Public
Offering.

“Regulatory Allocations” means the allocations pursuant to Section 6.02 of this
Agreement.

“Remaining Units (Capital) Commitment Amount” means, with respect to each Units
(Capital) Limited Partner as of any date, an amount equal to: 

(a) such Units (Capital) Limited Partner’s Units (Capital) Commitment Amount as
described on Exhibit B, as amended from time to time pursuant to this Agreement,
minus

(b) the aggregate amount of such Units (Capital) Limited Partner’s Capital
Contributions made (or deemed made) on or prior to such date for any purpose,
plus

 

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(c) the amount of any distributions made (or deemed made) to such Units
(Capital) Limited Partner pursuant to Section 7.01 and Section 7.03 up to the
aggregate amount of the Capital Contributions made by such Units (Capital)
Limited Partner.

“Renounced Business Opportunity” has the meaning set forth in Section 3.05(c) of
this Agreement.

“Reorganization” has the meaning set forth in Section 11.02(a) of this
Agreement.

“Restricted Securities” means securities that are subject to restrictions or
limitations on resale in order to comply with Rules 144 or 145 (and any
successor rules) as promulgated under the Securities Act or sales or
dispositions of securities that are otherwise restricted under the terms of any
agreement pursuant to which such securities were acquired or issued.

“Retained Distributions” has the meaning set forth in Section 7.01(f) of this
Agreement.

“Riverstone” means Riverstone Pattern Energy II Holdings, L.P.

“Riverstone Designee” has the meaning set forth in Section 9.02(a) of this
Agreement.

“Riverstone Group” means Riverstone or any analogous entities that are used to
form, organize or establish such funds, and their respective Affiliates and
partners, officers, directors and employees (and members of their respective
Immediate Families and trusts for the primary benefit of such family members).

“Riverstone Indemnitors” has the meaning set forth in Section 10.11 of this
Agreement.

“Second A&R LPA” has the meaning set forth in the preamble of this Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder as in effect from time to time.

“Selling Partner” has the meaning set forth in Section 11.05(a) of this
Agreement.

“Signing Date” has the meaning set forth in the preamble of this Agreement.

“Sponsor Indemnitees” has the meaning set forth in Section 10.11 of this
Agreement

“Sponsor Indemnitors” has the meaning set forth in Section 10.11 of this
Agreement.

“SteelRiver Entities” means SteelRiver Infrastructure Partners LP, SteelRiver
Infrastructure Fund North America LP, SteelRiver Management Holdings LLC,
SteelRiver Infrastructure Associates LLC, SteelRiver Offshore Infrastructure
Associates Ltd., SteelRiver Services LLC, SteelRiver AIV Management LLC, ICS AIV
LP, NGPL AIV LP, TransBay AIV LP and their respective investment vehicles and
Affiliates.

 

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“Subsidiary” means any Person of which 50% or more of the securities or other
equity interests having ordinary voting power for the election of managers,
directors or similar Persons is now, or shall hereafter be, owned or controlled,
directly or indirectly, by another Person. For the sake of clarity, a limited
partnership of which at least 50% of the general partner interests and 50% of
the limited partner interests are owned or controlled, directly or indirectly,
by any other person, is a Subsidiary of such Person.

“Substitute Limited Partner” means a Person who is admitted as a Limited Partner
to the Partnership pursuant to Section 11.10(b) in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.

“Tag Sale” has the meaning set forth in Section 11.05(a) of this Agreement.

“Tag Sale Value” means, as of the date of a Tag Sale, the aggregate amount that
would be received by holders of Units in a sale of all of the Units, based on a
valuation of all Units of the Partnership determined by reference to the
aggregate consideration to be paid by the acquiring party for the Units to be
sold in the Tag Sale, as determined by the Board of Directors in good faith.

“Tax Distribution Date” means any date that is two Business Days prior to the
date on which estimated U.S. federal income tax payments are required to be made
by calendar year individual taxpayers or, if earlier, a calendar year corporate
taxpayer and each due date for the U.S. federal income tax return of an
individual calendar year taxpayer or, if earlier, a calendar year corporate
taxpayer (without regard to extensions).

“Taxable Non-Cash Transaction” has the meaning set forth in Section 11.13 of
this Agreement.

“Termination Event” has the meaning set forth in Section 2.06 of this Agreement.

“Threshold Amount” has the meaning set forth in Section 3.03(c) of this
Agreement.

“Transfer” means the sale, assignment, pledge, hypothecation, transfer or other
voluntary disposition (by gift or otherwise, and whether as security or
otherwise) by a Partner of all or a portion of his, her or its Units. For
purposes of this definition, “Transfer” of a Unit includes (a) the sale,
assignment, pledge, hypothecation, transfer or other voluntary disposition (by
gift or otherwise, and whether as security or otherwise) of an equity interest
in any Person substantially all of the assets of which consist, directly or
indirectly, of Units, or (b) the merger or consolidation of a Partner, or of any
Person referred to in clause (a), with another Person. “Transferor,”
“Transferee,” “Transferred” and “Transferring” have meanings corresponding to
the forgoing.

“Treasury Regulations” means the Income Tax Regulations promulgated under the
Code, as they may be amended from time to time.

“Unit (Capital)” means a Unit representing a fractional part of the Partnership
Interests and having the rights and obligations specified with respect to the
Units (Capital) in this Agreement; it being understood that references to Units
(Capital) at any time before the Redesignation Date shall be deemed to refer to
Class A Units.

 

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“Units” means a Partnership Interest of a Partner representing a fractional part
of the Partnership Interests of all the Partners, being: (a) as at the
Redesignation Date, a single class of Units, comprised of Units (Capital) and
Units (Profits Interest), with the relative rights, powers and duties set forth
in this Agreement, and the Partnership Interest represented by the Units
(Capital) and Units (Profits Interest) shall be determined in accordance with
such relative rights and obligations set forth in this Agreement; and (b) prior
to the Redesignation Date, the Class A Units and the Class B Units, with the
relative rights, powers and duties set forth in the Second A&R LPA.

“Units (Capital) Commitment Amount” means, (i) with respect to each Units
(Capital) Limited Partner, an amount equal to its Units (Capital) Fixed
Commitment Amount as of the Signing Date as described in Exhibit B, plus (ii) in
the case of any Units (Capital) Contingent Partner, such Units (Capital)
Contingent Partner’s Units (Capital) Contingent Commitment Amount.

“Units (Capital) Commitment Ratio” means, with respect to each Units (Capital)
Limited Partner as of such date of determination, such Units (Capital) Limited
Partner’s (a) Units (Capital) Commitment Amount divided by (b) the sum of all
Units (Capital) Commitment Amounts.

“Units (Capital) Contingent Commitment Amount” means, with respect to each Units
(Capital) Contingent Partner, an amount equal to the percentage opposite such
Units (Capital) Contingent Partner’s name in Exhibit C (each, a “Units (Capital)
Contingent Commitment Percentage”) of any PEG 1 Distributions received by such
Units (Capital) Contingent Partner, in the aggregate as of such date, from the
Initial Limited Partner, during the period beginning on the Effective Date and
ending eighteen (18) months thereafter, to the extent such amount exceeds such
Units (Capital) Contingent Partner’s Units (Capital) Fixed Commitment Amount.

“Units (Capital) Contingent Partner” means each of the Units (Capital) Limited
Partners listed on Exhibit C.

“Units (Capital) Fixed Commitment Amount” means, with respect to each Units
(Capital) Limited Partner, its Units (Capital) Fixed Commitment Amount set forth
opposite such Units (Capital) Limited Partner’s name in Exhibit B.

“Units (Capital) Limited Partner” means any Limited Partner executing this
Agreement as a Units (Capital) Limited Partner or hereafter admitted to the
Partnership as a Units (Capital) Limited Partner as provided in this Agreement,
including any member of the Riverstone Group who is a Transferee of Units
(Capital), but does not include any Person who has ceased to be a Limited
Partner.

“Units (Capital) Majority” means the holders of a majority of the outstanding
Units (Capital).

“Units (Capital) Payout” means, with respect to each Unit (Capital) held by a
Units (Capital) Limited Partner, that point in time when both of the Unreturned
Capital Contributions and Unpaid Units (Capital) Preference Amount with respect
to such Unit (Capital) of such Units (Capital) Limited Partner shall have been
reduced to zero (0).

 

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“Units (Capital) Preference Amount” means, with respect to each Unit (Capital)
held by a Units (Capital) Limited Partner, an amount equal to an annual pre-tax
return of 8%, compounded quarterly, on all Unreturned Capital Contributions made
by such Units (Capital) Limited Partner with respect to such Unit (Capital). For
the sake of clarity, the Units (Capital) Preference Amount shall be calculated
with respect to a given Capital Contribution starting on the later to occur of
(i) the date of contribution and (ii) the Effective Date, and shall be applied
(and compounded) to the sum of (a) the portion of such Capital Contribution not,
as of the time of calculation, repaid to such Units (Capital) Limited Partner
and (b) any Units (Capital) Preference Amount accrued and not, as of the time of
calculation, distributed to such Units (Capital) Limited Partner until the
amount of such Capital Contribution has been returned to such Units (Capital)
Limited Partner in its entirety and all such accrued Units (Capital) Preference
Amount has been distributed to such Units (Capital) Limited Partner in its
entirety.

“Unit (Capital) Sharing Percentage” means, as to any Units (Capital) Limited
Partner, the percentage obtained by dividing the number of Units (Capital) owned
by such Units (Capital) Limited Partner by the total number of Units (Capital)
issued and outstanding at the time in question.

“Unit (Profits Interest)” means a Unit representing a fractional part of the
Partnership Interests and having the rights and obligations specified with
respect to the Units (Profits Interest) in this Agreement; it being understood
that references to Units (Profits Interest) at any time before the Redesignation
Date shall be deemed to refer to Class B Units.

“Units (Profits Interest) Limited Partner” means a holder of Units (Profits
Interest), whether such Units (Profits Interest) are vested or unvested, who is
executing this Agreement as a Units (Profits Interest) Limited Partner or is
hereafter admitted to the Partnership as a Units (Profits Interest) Limited
Partner as provided in this Agreement, but does not include any Person who has
ceased to be a Units (Profits Interest) Limited Partner.

“Units (Profits Interest) Majority” means the holders of a majority of the Units
(Profits Interest) (excluding Units (Profits Interest) held by Management
Holdco).

“Units (Profits Interest) Payout” means that point in time when the sum of the
aggregate amount of distributions, made by the Partnership to the Units (Profits
Interest) Limited Partners pursuant to Section 7.01(c) on account of their
ownership of Units (Profits Interest), equals 15% of the sum of (i) the amounts
distributed to the Units (Capital) Limited Partners pursuant to Section 7.01(b)
(excluding any Units (Capital) Preference Amount paid with respect to
Pre-Effective Date Units (Capital), whether as a distribution or as part of a
redemption or purchase price) and (ii) the amounts distributed to the Units
(Capital) Limited Partners and Units (Profits Interest) Limited Partners
pursuant to Section 7.01(c).

“Unit (Profits Interest) Sharing Percentage” means, as to any Units (Profits
Interest) Limited Partner, the percentage obtained by dividing the number of
Units (Profits Interest) owned by such Units (Profits Interest) Limited Partner
by the total number of Units (Profits Interest) issued and outstanding at the
time in question.

 

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“Unpaid Units (Capital) Preference Amount” means, with respect to each Unit
(Capital) held by a Units (Capital) Limited Partner, at any time, the excess, if
any, of (i) the Units (Capital) Preference Amount of such Units (Capital)
Limited Partner with respect to such Unit (Capital) at such time over (ii) the
cumulative amount of distributions to such Units (Capital) Limited Partner with
respect to such Unit (Capital) in payment thereof pursuant to Section 7.01(b).

“Unreturned Capital Contributions” means, with respect to each Unit (Capital)
held by a Units (Capital) Limited Partner, the aggregate amount of Capital
Contributions made by such Units (Capital) Limited Partner with respect to such
Unit (Capital) less the cumulative amount of distributions to such Units
(Capital) Limited Partner with respect to such Unit (Capital) in return thereof
pursuant to Section 7.01(a).

“Withheld Items” has the meaning set forth in Section 11.08(b).

ARTICLE II

ORGANIZATIONAL AND OTHER MATTERS

Section 2.01 Organization; Ratification

(a) The Partnership was formed as a Delaware limited partnership by the filing
of the Certificate in the office of the Secretary of State on November 14, 2016.

(b) The Board of Directors hereby ratify any and all acts taken or caused to be
taken by any “authorized person” (within the meaning of the Act) in the name of
or on behalf of the Partnership prior to the date hereof, including entry by the
Partnership (or, as applicable, one of its Subsidiaries) into (and performance
by such Person of its obligations under) the Contribution Agreement, the
Purchase Rights Agreement, the Management Services Agreement, and the
Non-Competition Agreement.

Section 2.02 Name

The name of the Partnership is “Pattern Energy Group Holdings 2 LP,” and all
Partnership business must be conducted in such name or such other names that
comply with applicable law as the Board of Directors may select from time to
time.

Section 2.03 Registered Office; Registered Agent; Principal Office in the United
States; Other Offices

The registered office of the Partnership in the State of Delaware shall be the
initial registered office designated in the Certificate or such other office
(which need not be a place of business of the Partnership) as the Board of
Directors may designate from time to time in the manner provided by law. The
registered agent of the Partnership in the State of Delaware shall be the
initial registered agent designated in the Certificate or such other Person or
Persons as the Board of Directors may designate from time to time in the manner
provided by law. The registered office of the Partnership in the United States
shall be at the place specified in the Certificate, or such other place(s) as
the Board of Directors may designate from time to time. The Partnership may have
such other offices as the Board of Directors may determine appropriate.

 

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Section 2.04 Purpose

The Partnership may carry on, directly or through one or more Subsidiaries, any
lawful business, purpose or activity permitted by the Act.

Section 2.05 Foreign Qualification

Prior to conducting business in any jurisdiction other than the State of
Delaware, the Board of Directors shall cause the Partnership to comply, to the
extent procedures are available, with all requirements necessary to qualify the
Partnership as a foreign limited partnership in such jurisdiction. Each Partner
shall execute, acknowledge, swear to and deliver all certificates and other
instruments conforming to this Agreement that are necessary or appropriate to
qualify, or, as appropriate, to continue or terminate such qualification of, the
Partnership as a foreign limited partnership in all such jurisdictions in which
the Partnership may conduct business.

Section 2.06 Term

The Partnership commenced on the date the Certificate was filed with the
Secretary of State of the State of Delaware, and its term shall continue until
the earliest to occur of (a) ten (10) years after the Effective Date, (b) such
date falling at least five (5) years after the Effective Date on which either
Pattern Energy or Riverstone, in either of their sole discretion, decide to
terminate the Partnership, (c) in Pattern Energy’s sole discretion, at any time
following the Board of Directors’ rejection of three (3) or more First Rights
Project Offers or First Rights PEG 2 LP Offers (each as defined in the Purchase
Rights Agreement), in the aggregate, in accordance with the terms of the
Purchase Rights Agreement, representing a cumulative net capacity of at least
600 MW, (d) in the event that the condition described in clause (c) applies, in
either Pattern Energy’s or Riverstone’s sole discretion at any time following
the termination of the exclusivity provisions in the Non-Competition Agreement
in accordance with the terms therein and in accordance with this Agreement and
the Purchase Rights Agreement, or (e) in the Board of Directors sole discretion,
at any time following a PEG 1 Services Failure (any such date specified in
clauses (a)-(e), a “Termination Event”). Upon a Termination Event, the
Partnership shall (i) cease to undertake any new project development activities
and (ii) be wound up, liquidated and dissolved in accordance with this Agreement
and applicable law.

Section 2.07 Alternative Investment Vehicles

If in the determination of Riverstone or the Board of Directors, it is in the
best interest of the Partnership or any of its Limited Partners that certain or
all of the Partners participate in an investment or a potential investment in
foreign assets, Riverstone or the Board of Directors may direct that Capital
Contributions of certain or all Limited Partners with respect to such investment
or potential investment in foreign assets be effected through one or more
alternative investment vehicles (each, an “Alternative Investment Vehicle”),
provided that Pattern Energy will not, without its prior written consent, be
required to participate in an Alternative Investment Vehicle that, at the time
of admission of Pattern Energy, would have a material adverse impact on Pattern
Energy. In determining whether it is in the best interest of the Partnership or
any of its Limited Partners for certain or all of the Partners to participate in
an Alternative Investment Vehicle, Riverstone and the Board of Directors will
take into account the costs of forming and operating

 

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any such Alternative Investment Vehicle and the impact such costs will have on
all the Partners. Each Alternative Investment Vehicle shall be governed by
documents containing economic and governance terms substantially comparable to
this Agreement or expressly subjecting itself to the terms of this Agreement,
and the investment results of any Alternative Investment Vehicle will be
aggregated with the investment results of this Partnership for purposes of
determining the amounts to be distributed to each Limited Partner pursuant to
Article VII of this Agreement and the corresponding provisions of any
Alternative Investment Vehicle. In furtherance of the foregoing, for purposes of
calculating the amounts to be contributed to and distributed from this
Partnership, all amounts contributed to an Alternative Investment Vehicle shall
be treated as contributed by the Limited Partners participating in such
investment through such Alternative Investment Vehicle to this Partnership and
all amounts distributed by such Alternative Investment Vehicle shall be treated
as distributed from this Partnership to such Limited Partners pursuant to the
applicable provisions set forth in Article VII of this Agreement. Each of the
Partners will cooperate and take such further actions as Riverstone or the Board
of Directors may deem necessary or appropriate to give effect to the purposes of
this Section 2.07, including without limitation executing and delivering
counterparts to the organizational documents of any Alternative Investment
Vehicle

ARTICLE III

PARTNERS; REPRESENTATIONS

Section 3.01 Redesignation of Units

(a) The Redesignation of the formerly designated Class A Units and Class B Units
as a single class of Units is effective as at the Redesignation Date. As at the
Redesignation Date, (i) the holders of Units (Capital), in such capacity and
with respect to such Units (Capital), shall have only the rights and obligations
attached to the Units (Capital) of the Partnership, and not those attached to
the Units (Profits Interest) of the Partnership, and (ii) the holders of Units
(Profits Interest), in such capacity and with respect to such Units (Profits
Interest), shall have only the rights and obligations attached to the Units
(Profits Interest) of the Partnership, and not those attached to the Units
(Capital) of the Partnership. It is recognized that the Redesignation did not
change the substantive rights and obligations of the holders of the formerly
designated Class A Units and Class B Units and, consistent therewith, for all
U.S. federal, state and local income tax purposes, the Partnership and each
Partner shall treat (x) the Redesignation as having no effect and (y) consistent
with clause (x), the Units held by each Partner immediately after the
Redesignation as the same Units held by such Partner immediately prior to the
Redesignation.

(b) The rights and obligations of the formerly designated Class A Units and
Class B Units prior to the Redesignation Date are set forth in the Second A&R
LPA.

Section 3.02 Units (Capital) Limited Partners

The identity of all of the Units (Capital) Limited Partners and the number of
Units held by each Units (Capital) Limited Partner are reflected on Exhibit B
attached hereto, which shall be amended as necessary by the Board of Directors
to reflect any changes in such information. The Partnership is authorized to
issue additional Units (Capital) at a price of $1.00 per Unit (unless otherwise
provided herein or as otherwise determined by the Board of Directors) and admit

 

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additional Units (Capital) Limited Partners only after (a) the Board of
Directors consents thereto, (b) so long as the Riverstone Group holds the Units
(Capital) Majority, Riverstone consents thereto, (c) each such additional Units
(Capital) Limited Partner pays any Capital Contribution required by the Board of
Directors and (d) each such additional Units (Capital) Limited Partner executes
an Adoption Agreement and any other documents in form and substance as the Board
of Directors may deem necessary or desirable to effect such admission. The
issuance of additional Units (Capital) shall dilute the Units (Capital) Limited
Partners pro rata.

Section 3.03 Units (Profits Interest) Limited Partners

(a) The Partnership shall have the authority to issue not more than 1,000,000
Units (Profits Interest) of which 835,000 Units (Profits Interest) are
outstanding on the date of this Agreement. Units (Profits Interest) shall be
issuable only to Employees or to Management Holdco. The identity of all of the
Units (Profits Interest) Limited Partners and the number of Units held by each
Units (Profits Interest) Limited Partner as of the date of this Agreement are
reflected on Exhibit D attached hereto, which shall be amended as necessary by
the Board of Directors to reflect any changes in such information. The remaining
165,000 authorized but unissued Units (Profits Interest) may be issued, and the
Persons to whom they are issued may be admitted as additional Units (Profits
Interest) Limited Partners, only by the Board of Directors, with the consent of
the Units (Profits Interest) Majority. As a condition to the issuance of the
Units (Profits Interest), each such additional Units (Profits Interest) Limited
Partner shall execute an Adoption Agreement and any other instruments in form
and substance as the Board of Directors may deem necessary or desirable to
effect such admission if such Person is not already a Units (Profits Interest)
Limited Partner. The issuance of such remaining 165,000 authorized but unissued
Units (Profits Interest) shall dilute the Units (Profits Interest) Limited
Partners pro rata subject to the Threshold Amount provisions of Section 3.03(c).
No Units (Profits Interest) shall be issued following the first to occur of
(i) a Qualified Public Offering, (ii) a Liquidation Event, (iii) a Transfer
after the Effective Date in a single transaction or a series of related
transactions of 50% or more of the Units (Capital), and (iv) a Reorganization.
For the purposes of Section 3.03(a) and Section 9.06(c), the Units (Profits
Interest) Majority shall be determined by including only those holders of a
majority of the Units (Profits Interest) who are Employees at the time of the
issuance of such additional Units (Profits Interest) pursuant to this
Section 3.03(a).

(b) The Units (Profits Interest) are intended to constitute “profits interests”
within the meaning of Revenue Procedures 93-27 and 2001-43 (or the corresponding
requirements of any subsequent guidance promulgated by the Internal Revenue
Service or other applicable law). Accordingly, the Capital Account associated
with each Units (Profits Interest) at the time of its issuance shall be equal to
zero dollars ($0.00). The Partnership and the holders of Units (Profits
Interest) shall file all federal income tax returns consistent with such
characterization.

(c) The Partnership may from time to time effect one or more additional
issuances of tranches of Units (Profits Interest), in accordance with the
provisions of Section 3.03(a), the first of which to be issued after the
Effective Date shall be designated as Units (Profits Interest)-2 and each
subsequent issuance shall be designated by a sequential number (Units (Profits
Interest)-3, Units (Profits Interest)-4, etc.). Each tranche of Units (Profits
Interest) shall have a “Threshold Amount” to the extent necessary to cause such
Units (Profits Interest) to constitute “profits interests” as provided in
Section 3.03(b) of this Agreement, but not less than zero (taking into

 

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account the adjustments to Book Value contemplated in clause (ii) of
subparagraph (b) of the definition thereof). The Threshold Amount of each Class
B Unit (and after the Redesignation, Unit (Profits Interest)) issued on the
Initial Closing Date (designated herein as a “Unit (Profits Interest)-1”) was
zero (0). The Threshold Amount for each other tranche of Units (Profits
Interest) shall equal the amount that would, in the reasonable determination of
the Board of Directors, be distributable with respect to each then outstanding
Unit (Profits Interest) of any then outstanding tranche of Units (Profits
Interest) if, immediately prior to the issuance of such additional tranche of
Units (Profits Interest), the assets of the Partnership were sold for their fair
market value and the proceeds (net of any liabilities of the Partnership) were
distributed pursuant to Section 7.01 of this Agreement.

Section 3.04 Units; Certificates

Units may be (but need not be) represented by certificates in such form as the
Board of Directors shall from time to time approve, but shall be recorded in a
register thereof maintained by the Partnership, and shall be subject to such
rules for the issuance thereof as the Board of Directors may from time to time
determine. If the Board of Directors elects to certificate the Units and a
mutilated Unit is surrendered to the Partnership or if the Partner claims and
submits an affidavit or other evidence, satisfactory to the Partnership, to the
effect that the Unit has been lost, destroyed or wrongfully taken, the
Partnership shall issue a replacement Unit if the Partnership’s requirements are
met. If required by the Partnership, such Partner must provide an indemnity
bond, or other form of indemnity, sufficient in the judgment of the Partnership
to protect the Partnership against any loss which may be suffered. The
Partnership may charge such Partner for its reasonable out-of-pocket expenses in
replacing a Unit which has been mutilated, lost, destroyed or wrongfully taken.
For the avoidance of doubt, the Partnership may issue fractional Units.

Section 3.05 Conflicts of Interest

(a) Generally. Each Partner acknowledges and affirms that the Riverstone Group
and its Affiliates:

(i) (A) have participated (directly or indirectly) and/or will continue to
participate (directly or indirectly) in private equity, venture capital and
other direct investments in corporations, joint ventures, limited liability
companies, limited partnerships and other entities, including those engaged in
various aspects of businesses that may, are or will be competitive with the
Partnership’s business or that could be suitable for the Partnership (“Other
Investments”), (B) have interests in, participate with, aid and maintain seats
on the boards of directors or similar governing bodies of, Other Investments,
and (C) may develop or become aware of business opportunities for Other
Investments; and

(ii) may or will, as a result of or arising from the matters referenced in
clause (i) above, the nature of the Riverstone Group and its Affiliates business
and other factors, have conflicts of interest or potential conflicts of
interest.

 

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(b) Waiver of Conflicts. Each of the Partners (in their own names and in the
name and on behalf of the Partnership) expressly, except as set forth in
Section 3.05(c) of this Agreement, waive any such conflicts of interest and
agree that neither the Riverstone Group nor its Affiliates shall have any
liability to any Partner, any Affiliate thereof, or the Partnership with respect
to such conflicts of interest or potential conflicts of interest and (y) except
as set forth in Section 3.05(c) of this Agreement, acknowledge and agree that
neither the Riverstone Group nor its Affiliates and their respective
representatives (excluding the Units (Profits Interest) Limited Partners) will
have any duty to disclose to the Partnership, any other Partner or the Board of
Directors any such business opportunities, whether or not competitive with the
Partnership’s business and whether or not the Partnership might be interested in
such business opportunity for itself. The Partners (and the Partners on behalf
of the Partnership) also acknowledge that the Riverstone Group, its Affiliates
and their representatives have duties not to disclose confidential information
of or related to the Other Investments. Each of the Partners (in their own names
and in the name and on behalf of the Partnership) hereby:

(i) agree that (A) the terms of this Section 3.05 to the extent that they modify
or limit a duty or other obligation, if any, that the Riverstone Group or its
Affiliates may have to the Partnership or another Partner under the Act or other
applicable law, rule or regulation, are reasonable in form, scope and content;
and (B) the terms of this Section 3.05 shall control to the fullest extent
possible if such terms conflict with a duty, if any, that the Riverstone Group
and its Affiliates may have to the Partnership or another Partner, under the Act
or any other applicable law, rule or regulation;

(ii) waive any duty or other obligation, if any, that the Riverstone Group and
its Affiliates may have to the Partnership or another Partner, pursuant to the
Act or any other applicable law, rule or regulation, to the extent necessary to
give effect to the terms of this Section 3.05; and

(iii) agree that nothing in this Section 3.05 shall negate, contravene, or
modify any existing duty, obligation or restriction owed by any Partner, any
member of the Riverstone Group, or any of their Affiliates to any other Partner
or any member of the PEG Group pursuant to any agreement in effect as of the
Signing Date.

(c) Business Opportunities. A Person who is not a Director or Officer, or a
director or officer of a Subsidiary of the Partnership shall not be obligated to
communicate or offer to the Partnership, and the Partnership shall not have any
interest or expectancy in, any business opportunities, transactions or other
matter, regardless of whether such opportunities, transactions or matters are
within the Partnership’s business. Without limiting the foregoing, each of the
Partners acknowledge and agree that the Partnership hereby renounces any
interest or expectancy in any business opportunity, transaction or other matter
in which the Riverstone Group or its Affiliates participates in or desires to
participate in and that involves any aspect related to the business or affairs
of the Partnership other than a business opportunity that is presented to an
individual that is a member of Riverstone Group in such individual’s capacity as
a Director or Officer (each such business opportunity, other than the exception
referred to immediately preceding, is referred to as a “Renounced Business
Opportunity”). Neither the Riverstone Group nor its Affiliates shall have any
obligation to communicate or offer any Renounced Business Opportunity to the
Partnership or any Partner thereof and may pursue any Renounced Business
Opportunity solely for its own account.

 

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(d) Acknowledgement. Each of the Partners (in their own names and in the name
and on behalf of the Partnership) acknowledge, affirm and agree that (i) the
execution and delivery of this Agreement by the members of the Riverstone Group
and/or its Affiliates is of material benefit to the Partnership and the
Partners, and that the Partners would not be willing to (x) execute and deliver
this Agreement, and (y) make their agreed Capital Contributions to the
Partnership, without the benefit of this Section 3.05 and the agreement of the
parties thereto; and (ii) they have reviewed and understand the provisions of §§
17-1101 of the Act.

(e) Resolution of Conflicts of Interest. Unless otherwise expressly provided in
this Agreement, whenever a potential conflict of interest exists or arises
between the General Partner or any of its Affiliates, or any Officer or member
of the Board of Directors, on the one hand, and the Partnership, any Partner or
any Transferee, on the other hand, any resolution or course of action in respect
of such conflict of interest shall be permitted and deemed approved by all
Partners, and shall not constitute a breach of this Agreement, of any agreement
contemplated herein, or of any standard of care or duty stated or implied by law
or equity, if the resolution or course of action is or, by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. Any conflict
of interest and any resolution of such conflict of interest shall be
conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is (i) on terms no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(ii) fair to the Partnership, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership). The Board of
Directors shall be authorized in connection with its determination of what is
“fair and reasonable” to the Partnership and in connection with its resolution
of any conflict of interest to consider (i) the relative interests of any party
to such conflict, agreement, transaction or situation and the benefits and
burdens relating to such interest; (ii) any customary or accepted industry
practices and any customary or historical dealings with a particular Person;
(iii) any applicable generally accepted accounting or engineering practices or
principles; and (iv) such additional factors as the Board of Directors
determines in its sole discretion to be relevant, reasonable or appropriate
under the circumstances. For the avoidance of doubt, (A) with respect to the
parties to the Non-Competition Agreement, any activity, action or transaction
allowed under the Non-Competition Agreement or the Initial Limited Partner LPA,
(B) to the extent a Limited Partner is an Employee, any employment relationship
between such Limited Partner and an entity that is a member of the PEG Group, or
(C) ownership of equity in, and service as an officer, director, authorized
signatory, manager, or other governance position for, an entity that is a member
of the PEG Group, shall not be treated as a conflict of interest for purposes of
this Agreement. Nothing contained in this Agreement, however, is intended to nor
shall it be construed to require the Board of Directors to consider the interest
of any Person other than the Partnership. So long as the Board of Directors acts
in good faith, the resolution, action or terms so made, taken or provided by the
Board of Directors with respect to such matter shall not constitute a breach of
this Agreement or any other agreement contemplated herein or a breach of any
standard of care or duty stated or implied by law or equity.

(f) No Duty to Consider Other Interests. Whenever this Agreement or any other
agreement contemplated hereby provides that the Board of Directors is permitted
or required to make a decision (i) in its “sole discretion” or “discretion,”
that it deems “necessary or appropriate” or under a grant of similar authority
or latitude, the Board of Directors shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any

 

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consideration to any interest of, or factors affecting, the Partnership, any
Partner or any Transferee, (ii) it will make such decision in good faith unless
another express standard is provided for, or (iii) in “good faith” or under
another express standard, the Board of Directors shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement or any other agreement contemplated hereby or under the Act or
any other law, rule or regulation.

(g) Requirement of Fair and Reasonable. Whenever a particular transaction,
arrangement or resolution of a conflict of interest is required under this
Agreement to be “fair and reasonable” to any Person, the fair and reasonable
nature of such transaction, arrangement or resolution shall be considered in the
context of all similar or related transactions.

(h) Garland Conflict of Interest. Notwithstanding anything else in this
Partnership Agreement or Michael Garland’s Employment Agreement to the contrary,
each of the Partners (in their own names and on behalf of the Partnership)
hereby acknowledge, agree and affirm that:

(i) Mr. Garland holds a position on the board of directors and the investment
committee of the SteelRiver Entities and may continue to hold such positions and
devote such time as is reasonably required to perform such duties;

(ii) Mr. Garland owns an economic interest in the SteelRiver Entities and any
conflict of interest resulting from such economic interest is hereby waived;
provided, however, that Mr. Garland agrees to notify the Partnership of any
substantial increases in his economic interest in the SteelRiver Entities by
virtue of amendments to the constitutive documents of the SteelRiver Entities or
additional investments;

(iii) Mr. Garland shall be under no obligation to disclose confidential
information (whether confidentiality arises by operation of law or contract and
whether or not such information represents a business opportunity) of, or
related to, the SteelRiver Entities, including, without limitation confidential
information relating to business opportunities (or to the SteelRiver Entities’
pursuit, acquisition and consummation of such opportunities);

(iv) Mr. Garland is hereby authorized to disclose the provisions of this
Section 3.05(h) to the board of directors of the SteelRiver Entities; and

(v) Any duty or other obligation, if any, that Mr. Garland may have to the
Partnership or another Partner, pursuant to the Act or any other applicable law,
rule or regulation, is waived to the extent necessary to give effect to the
terms of this Section 3.05(h).

 

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Section 3.06 Representations, Warranties and Covenants

Each Partner hereby represents, warrants and covenants to the Partnership and
each other Partner that the following statements are true and correct as of the
date hereof and shall be true and correct at all times that such Partner is a
Partner:

(a) if the Partner is a corporation, limited liability company, partnership or
other entity, such Partner is duly incorporated, organized or formed (as
applicable), validly existing, and (if applicable) in good standing under the
laws of the jurisdiction of its incorporation, organization or formation; and
such Partner has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, and all necessary actions by the board
of directors, shareholders, managers, members, partners, trustees,
beneficiaries, or other applicable Persons necessary for the due authorization,
execution, delivery, and performance of this Agreement by such Partner have been
duly taken;

(b) such Partner has duly executed and delivered this Agreement and the other
documents contemplated herein, and they constitute the legal, valid and binding
obligation of such Partner enforceable against it in accordance with their terms
(except as may be limited by bankruptcy, insolvency or similar laws of general
application and by the effect of general principles of equity, regardless of
whether considered at law or in equity);

(c) such Partner’s authorization, execution, delivery, and performance of this
Agreement does not and will not (i) conflict with, or result in a breach,
default or violation of, (A) the organizational documents of such Partner,
(B) any contract or agreement to which such Partner is a party or is otherwise
subject, or (C) any law, order, judgment, decree, writ, injunction or arbitral
award to which such Partner is subject; or (ii) require any consent, approval or
authorization from, filing or registration with, or notice to, any governmental
authority or other Person, unless such requirement has already been satisfied;

(d) the Units to be acquired by such Partner pursuant to this Agreement will be
acquired for investment for such Partner’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of applicable securities laws;

(e) such Partner is an experienced investor in securities and acknowledges that
he, she or it can bear the economic risk of its investment in the Units acquired
pursuant to this Agreement and has such knowledge and experience in financial or
business matters that he, she or it is capable of evaluating the merits and
risks of the investment in the Units;

(f) in the case of each Units (Capital) Limited Partner, such Partner is an
Accredited Investor;

(g) such Partner has had an opportunity to discuss the Partnership’s and its
Subsidiaries’ businesses, management, financial affairs and the terms and
conditions of the offering of Units with the Partnership’s management;

(h) such Partner understands that the Units issued hereunder have not been, and
will not be, registered under the Securities Act, but have been issued by reason
of a specific exemption from the registration provisions of the Securities Act
that depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of such Partner’s representations as expressed herein;
such Partner further understands that the Units acquired by it hereunder are
“restricted securities” under applicable U.S. federal and state securities laws
and that, pursuant to these laws, such Partner must hold the Units acquired by
it hereunder indefinitely unless they are registered with the United States
Securities and Exchange Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is available;
and

 

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(i) such Partner understands that no public market now exists for the Units or
any other securities issued by the Partnership, and that the Partnership has
made no assurances that a public market will ever exist for the Units or any
other securities issued by the Partnership.

ARTICLE IV

BOOKS AND RECORDS

Section 4.01 Books, Records, Access and Tax Information

(a) The Partnership shall keep and maintain proper and complete books and
records of accounts, taxes, financial information and all matters pertaining to
the Partnership. The Partnership and the Tax Matters Partner and/or Partnership
Representative, as applicable, shall cause to be prepared and filed all
necessary federal, state and local income tax returns for the Partnership,
including making the elections described herein and shall cause an Internal
Revenue Service Schedule K-1 or any successor form to be prepared and delivered
to the Partners within one hundred twenty (120) days after the end of each
Fiscal Year. Each Partner shall furnish to the Tax Matters Partner and/or
Partnership Representative, as applicable, all pertinent information in its
possession relating to Operations that is necessary to enable the Partnership’s
tax returns to be prepared and filed. It is acknowledged, understood and agreed
that none of the information contained in Exhibit B and Exhibit D, each as
amended from time to time, other than the names of the Partners has been nor
will it be furnished to the Units (Profits Interest) Limited Partners other than
the Chief Executive Officer of the Partnership for the purpose of preserving
privacy with respect to the Unit ownership of the Partners, unless the Board of
Directors agrees otherwise. The Partners agree that the preceding sentence is
reasonable and appropriate. The Units (Capital) Limited Partners shall have the
reasonable right (i) to consult from time to time with the Officers and the
supervisors or independent accountants of the Partnership (and its direct or
indirect subsidiaries) at their respective place of business regarding operating
and financial matters, and (ii) to visit and inspect any of the properties of
the Partnership (and any of its direct or indirect subsidiaries), so long as the
exercise of such rights does not interfere with the operations or business of
the Partnership.

(b) The Partnership shall (i) provide each Partner with an estimate of its share
of the Partnership’s taxable income for each Fiscal Year by December 15 of each
such Fiscal Year, including an estimate of state and local apportionment
information, (ii) cause an estimated Internal Revenue Service Schedule K-1 or
any successor form to be prepared and delivered to each Partner within sixty
(60) days after the end of each Fiscal Year, including any appropriate state and
local apportionment information, and (iii) provide to each Partner any other
information such Partner reasonably requests for purposes of complying with
applicable tax reporting requirements that arise as a result of it being a
Partner in the Partnership.

 

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(c) Unless determined otherwise by the Board of Directors, the Partnership shall
provide to each of the Partners the following reports:

(i) within one hundred twenty (120) days of the Partnership’s year-end, audited
consolidated financial statements of the Partnership and a schedule showing any
variance between actual and budgeted figures;

(ii) within forty-five (45) days of the end of any fiscal quarter, unaudited
quarterly consolidated financial statements of the Partnership for the previous
quarter and a schedule showing any variance between actual and budgeted figures;

(iii) promptly upon request, copies of any budget;

(iv) prompt notice of any event that would reasonably be expected to have a
material effect on the Partnership’s financial condition, business or
operations; and

(v) such other reports and information (in any form, electronic or otherwise) as
a Partner may reasonably request or as the Board of Directors may determine.

Section 4.02 Tax Elections

The Partnership shall make the following elections on the appropriate tax
returns:

(a) to adopt the calendar year as the Partnership’s Fiscal Year;

(b) to adopt an appropriate federal income tax method of accounting and to keep
the Partnership’s books and records on such income tax method;

(c) to elect pursuant to Code Section 6231(a)(1)(B)(ii) or take any other action
necessary to cause the provisions of Code Sections 6221 through 6231 to apply to
the Partnership; and

(d) any other election the Board of Directors may deem appropriate and in the
best interests of the Partnership.

Section 4.03 Partnership Representative

(a) For taxable years of the Partnership beginning before January 1, 2018,
Sections 4.03(a) – (f) of the Second A&R LPA shall continue to apply in lieu of
Section 4.03(b) – (g) of this Agreement.

(b) The “Partnership Representative” of the Partnership pursuant to Code
Section 6223(a)for taxable years of the Partnership beginning on or after
January 1, 2018 shall be an eligible Partner designated from time to time by the
Board of Directors subject to replacement by the Board of Directors. (Any
Partner who is designated as the partnership representative is referred to
herein as the “Partnership Representative”). The initial Partnership
Representative will be the General Partner and may be changed only upon Board
Approval and in accordance with the Code and applicable Treasury Regulations.
The Partnership shall designate the “Designated Individual” identified by the
Partnership Representative through whom it shall act in its capacity as
Partnership Representative; provided that the Designated Individual must be
subject to the control of the Partnership Representative.

 

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(c) The Partnership Representative (x) will (or will cause the Company to) give
notice to the other Partners of any audit, administrative or judicial
proceedings, meetings or conferences with the Internal Revenue Service or other
similar matters that come to its attention, and (y) will make the election
contemplated by Section 6226 of the Code, and follow the procedures required in
connection with that election to make inapplicable to the Partnership the
requirement in Section 6225 of the Code that the Partnership pay any “imputed
underpayment” as that term is used in such section, unless the Board of
Directors determines that such election is not in the best interests of the
Partnership and the Partners taken as a whole.

(d) In the event that the Partnership is issued a notice of proposed partnership
adjustment, the Partnership Representative will undertake the “pull-in”
procedure contemplated by Code Section 6225(c)(2)(B) with respect to such
adjustment in order to reduce the final partnership adjustment, and to the
extent that the “pull-in” procedure does not reduce the partnership adjustment
amount to zero, the Partnership Representative will make the “push-out” election
contemplated by Code Section 6226(a) with respect to any remaining deficiency in
a timely manner, provided that the “push-out” election is available to the
Partnership and the Board of Directors has not directed otherwise as set forth
in Section 4.03(c).

(e) The Partnership Representative is authorized to take such actions and to
execute and file all statements and forms and tax returns on behalf of the
Partnership which may be permitted or required by the applicable provisions of
the Code or Treasury Regulations issued thereunder, provided that the
Partnership Representative may file suit only with Board of Director approval.
The Partnership Representative shall act in a similar capacity under any
applicable non-U.S., state or local tax law. The Partnership Representative will
not cause the Partnership to be treated as other than a “partnership” for
federal income tax purposes. All out-of-pocket expenses incurred by the
Partnership Representative while acting in such capacity shall be paid or
reimbursed by the Partnership.

(f) The Partnership Representative shall have the exclusive right and sole
authority to act on behalf of the Partnership under Subchapter C of Section 63
of the Code (relating to Internal Revenue Service partnership audit proceedings)
and in any tax proceedings brought by other taxing authorities, and the
Partnership and all Partners shall be bound by the actions taken by the
Partnership Representative in such capacity. The Partnership Representative
shall keep the Partners informed on a timely basis of all material developments
with respect to any such proceeding and shall inform the Partners of any
material decision or actions it takes in its capacity as Partnership
Representative.

(g) In the event of any “imputed underpayment” within the meaning of
Section 6225 of the Code paid by the Partnership as a result of an adjustment
with respect to any Partnership item, including any interest or penalties with
respect to any such adjustment (collectively, an “Imputed Underpayment Amount”),
the Partnership Representative shall use commercially reasonable efforts to
allocate the burden of (or any decrease in Distributable Property resulting
from) any taxes, penalties or interest imposed on the Partnership pursuant to
Code Sections 6225 and 6232 among the Partners and former Partners in a
reasonable manner based on the status, actions, inactions or other attributes of
each Partner and taking into account whether such Partner has filed an amended
return for its taxable year that includes the end of the reviewed year of the
Partnership and paid any tax due shown thereon in order to modify or reduce the
amount of the Imputed

 

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Adjustment Amount under Section 6225(c)(2). Any amounts allocated to a Partner
pursuant to the preceding sentence will be treated as withholding tax that
arises as a result of the status or other matters that are particular to a
Partner. If the Partnership becomes liable for any taxes, interest or penalties
under Section 6225 of the Code (following a final determination of such
liability by the relevant governmental authority), each Partner that was a
Partner of the Partnership for the taxable year to which such liability relates
shall indemnify and hold harmless the Partnership for such Person’s allocable
share of the amount of such tax liability, including any interest and penalties
associated therewith, as reasonably determined by the Partnership
Representative.

(h) Each Partner acknowledges and agrees that (i) it is required to provide the
Partnership Representative with any reasonable requested documents, information,
assistance or cooperation in connection with the requirements imposed on the
Partnership pursuant to Sections 6221 through 6241 of the Code, together with
any guidance issued thereunder, including (i) information as to a Partner’s (or
any direct or indirect interest holder of a Partner’s) status as a “tax-exempt
entity” (within the meaning of Section 168(h)(2) of the Code), a real estate
investment trust, or a regulated investment company under the Code, (ii) the
extent to which a tax-exempt entity Partner (or direct or indirect interest
holder of a Partner) was subject to the “unrelated business income tax” under
Section 512 of the Code a taxable year, (iii) information regarding a Partner’s
(or any direct or indirect interest holder of a Partner’s) status as an
individual, C corporation or S corporation, and (iv) and any other information
required by guidance issued under Section 6225(c)(5) of the Code or that the
Partnership Representative otherwise reasonably deems relevant in order to
modify the Partnership’s imputed underpayment as permitted under
Section 6225(c), and (ii) if it fails to provide such documentation,
information, assistance or cooperation (including as a result of a Partner not
being eligible to provide any requested documentation), any taxes, penalties or
interest imposed on the Partnership as a result of such failure will be treated
for all purposes of this Agreement including Section 7.06) as amounts that are
determined by reference to the status of a Partner (or its beneficial owners).

(i) Each Partner agrees that, in the case of any direct disposition by such
Partner, such Partner shall remain liable for any indemnification obligations
set forth under clause (g) above which could be owed by such Partner in respect
of the time periods preceding the effective date of the disposition, unless the
transferee of its Partnership Interest expressly assumes its indemnification
liability under Section 4.03(g) with respect to such preceding periods.

Section 4.04 Section 83(b) Election

Each Partner who acquires Units (Profits Interest) and who is a United States
person within the meaning of Code Section 7701(a)(30) shall file a timely
election under Code Section 83(b) with respect to such Units and consult with
such Partner’s tax advisor to determine the tax consequences of such acquisition
and of filing an election under Code Section 83(b). Each such Partner
acknowledges that it is the sole responsibility of such Partner, and not the
Partnership, to file the election under Code Section 83(b) even if such Partner
requests the Partnership to assist in making such filing.

 

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ARTICLE V

CAPITAL CONTRIBUTIONS

Section 5.01 Initial Capital Contributions of Units (Capital) Limited Partners

(a) On the Initial Closing Date, in connection with the contributions by the
Initial Limited Partner pursuant to the Contribution Agreement, each of the
Initial Contributing Partners was deemed to have contributed to the Partnership
(a) assets with a Book Value in the amount set forth opposite such Partner’s
name on Exhibit A under the heading “Initial Contributed Assets”, and received,
following a distribution of the Units (Capital) issued to the Initial Limited
Partner pursuant to the Contribution Agreement, the number of Units (Capital)
set forth opposite such Units (Capital) Limited Partner’s name under the heading
“Contributed Assets Units (Capital)”, and (b) the amount set forth opposite such
Units (Capital) Limited Partner’s name on Exhibit A under the heading “Capital
Contributions”, and received, following the distribution of the Units (Capital)
issued to the Initial Limited Partner pursuant to the Contribution Agreement,
the number of Units (Capital) set forth opposite such Partner’s name under the
heading “Capital Contribution Units (Capital)” on Exhibit A hereto.
Notwithstanding the distribution on the Initial Closing Date by the Initial
Limited Partner of such Units (Capital) to its limited partners, the Initial
Limited Partner shall remain a Units (Capital) Limited Partner under this
Agreement.

(b) Within ten (10) Business Days after the Effective Date, each Effective Date
Contributing Partner contributed to the Partnership, in readily available funds,
the amounts set forth opposite such Effective Date Contributing Partner’s name
in Exhibit A, and received therefore the number of Class A Units (now, Units
(Capital)) set forth opposite such Effective Date Contributing Partner’s name on
Exhibit A.

(c) The Partnership used the funds contributed pursuant to Section 5.01(b)
(i) to redeem a number of Pre-Effective Date Units (Capital) from each holder of
Pre-Effective Date Units (Capital) equal to the number of Units (Capital) issued
to the Effective Date Contributing Partners pursuant to Section 5.01(b), in the
case of each holder of Pre-Effective Date Units (Capital), in the numbers and
for the amount set forth opposite the name of such holder on Exhibit B, and
(ii) for general business purposes. The total number of Pre-Effective Date Units
(Capital) redeemed from all holders of Pre-Effective Date Units (Capital)
pursuant to this Section 5.01(c) shall not exceed that number of Pre-Effective
Date Units (Capital) representing forty-nine percent (49%) of the Fair Market
Value of the Pre-Effective Date Units (Capital) owned by such holders before the
redemption.

(d) For federal income tax purposes, the Partnership and the Partners agree to
report the transactions described in Sections 5.01(b) and 5.01(c), taken
together, as a direct sale of Units (Capital) by each holder of Pre-Effective
Date Units (Capital) to the Effective Date Contributing Partners for a purchase
price equal to the dollar amount of the distribution made pursuant to
Section 5.01(c); provided that, notwithstanding the foregoing and for the
avoidance of doubt, for purposes of determining the amounts distributable to the
Effective Date Contributing Partners pursuant to Section 7.01(a) and 7.01(b)
with respect to the Units (Capital) issued pursuant to Section 5.01(b), the
Unreturned Capital Contribution with respect to each such Unit (Capital) as of
the Effective Date shall be equal to the amount per Unit (Capital) contributed
by the Effective Date Contributing Partners pursuant to Section 5.01(b).

 

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Section 5.02 Further Capital Contributions

(a) Except as otherwise provided herein, each Units (Capital) Limited Partner
shall make additional Capital Contributions from time to time in an amount not
to exceed its Remaining Units (Capital) Commitment Amount in proportion to its
Units (Capital) Commitment Ratio, in each case, in amounts and at such times as
shall be determined by the Board of Directors. Subject to Section 5.02(c), upon
receipt of such additional Capital Contributions, the Partnership shall issue to
each contributing Units (Capital) Limited Partner additional Units (Capital) at
a price of $1.00 per Unit in the amount of such Capital Contribution.

(b) The Units (Capital) Limited Partners shall have ten (10) days from the
issuance of a capital call pursuant to Section 5.02(a) and corresponding written
notice to such Units (Capital) Limited Partners to make the Capital
Contribution.

(c) In the event that (i) a Units (Capital) Limited Partner fails to make a
Capital Contribution called for by the Board of Directors pursuant to
Section 5.02(a) as required by Section 5.02(b), and the amount of such Capital
Contribution with respect to such Units (Capital) Limited Partner is equal to or
greater than $500,000, then the number of Units (Capital) issued in connection
with such capital call to each Units (Capital) Limited Partner who makes its
required Capital Contribution shall be determined by an Independent Advisor
selected by the Board of Directors, based on the Fair Market Value of a Unit
(Capital) determined as of the date of such capital call (in lieu of $1.00 per
Unit), or (ii) a Units (Capital) Limited Partner fails to make a Capital
Contribution called for by the Board of Directors pursuant to Section 5.02(a) as
required by Section 5.02(b) when such Capital Contribution has been called in
order to avoid a default under the Goldman Facility (a “Facility Default Capital
Call”), and the amount of such Capital Contribution with respect to such Units
(Capital) Limited Partner is equal to or greater than $500,000, then the number
of Units (Capital) issued in connection with such capital call to each Units
(Capital) Limited Partner who makes its required Capital Contribution shall be
determined by an Independent Advisor selected by the Board of Directors, based
on three (3) times the Fair Market Value of a Unit (Capital) determined as of
the date of such capital call (in lieu of $1.00 per Unit (Capital)) (each of
(i) and (ii) a “Dilution Event”).

(d) Following a Dilution Event, (i) in connection with any subsequent capital
call by the Board of Directors pursuant to Section 5.02(a), the number of Units
(Capital) issued to each Units (Capital) Limited Partner who makes its required
Capital Contribution shall be determined by an Independent Advisor selected by
the Board of Directors, based on the Fair Market Value of a Unit (Capital)
determined as of the date of such capital call and (ii) each such subsequent
capital call by the Board of Directors pursuant to Section 5.02(a) shall specify
the required Capital Contribution of each Units (Capital) Limited Partner and
upon funding, the Board of Directors shall issue each Units (Capital) Limited
Partner who made its required Capital Contribution Units (Capital) valued at an
amount equal to the Fair Market Value of Units (Capital) as most recently
determined prior to such capital call by an Independent Advisor, and such
issuances shall be subject to retroactive adjustment in accordance with
Section 11.09(c) based on a final determination of the current Fair Market Value
of such Units (Capital) by an Independent Advisor.

 

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(e) Notwithstanding the provisions of Section 5.02(a), (i) Units (Capital)
Limited Partners shall not be obligated to make any Capital Contributions to the
extent that such Capital Contributions and all prior Capital Contributions made
by such Units (Capital) Limited Partner would exceed their respective Units
(Capital) Commitment Amounts, (ii) the aggregate Units (Capital) Commitment
Amounts of Riverstone and Pattern Energy shall not collectively exceed $1.2
billion, and (iii) if a Units (Capital) Limited Partner who is an Employee on
the Effective Date ceases to be an Employee for any reason, such Units (Capital)
Limited Partner’s rights and obligations to make Capital Contributions shall
immediately cease, and such Partner and his or her successors and assigns shall
have no further obligation to make Capital Contributions to the Partnership.

Section 5.03 PEG 1 Option

(a) At any time following the first anniversary of the Effective Date, but
before the fifth anniversary of the Effective Date, the Partnership shall have
the option, but not the obligation, to (i) redeem any or all of the
Pre-Effective Date Units (Capital) held by each of the Initial Limited Partner
and the PEG 1 Limited Partners as of such date for the Fair Market Value of such
Units (Capital) as of such date or (ii) cause a direct sale of all of the
Pre-Effective Date Units (Capital) to the Effective Date Contributing Partners
on the same economic terms as would apply to any such redemption. In the event
of clause (ii) above, each of the Initial Limited Partner and the PEG 1 Limited
Partners agrees to use their reasonable best efforts to cooperate with the
Partnership to effect such transaction.

(b) In the event the option is exercised, the Board of Directors, in
consultation with the Company’s tax advisors, will determine at the time the
option is exercised the manner in which the exercise of the option will be
reported for U.S. federal income tax purposes; provided that, the Units
(Capital) Limited Partners and Units (Profits Interest) Limited Partners
acknowledge and agree that (i) in the event any redemption transaction described
in clause (i) of Section 5.03(a) is funded by Capital Contributions from
Effective Date Contributing Partners, for purposes of determining the amounts
distributable to the Effective Date Contributing Holders pursuant to
Section 7.01(a) and 7.01(b) with respect to Units (Capital) issued by the
Partnership in exchange for such Capital Contributions, the Unreturned Capital
Contribution with respect to each such Unit (Capital) as of the date of issuance
shall be equal to the amount contributed in respect of such Unit (Capital) and
the Units (Capital) Preference Amount with respect to each such Unit (Capital)
shall be determined based on the amount contributed in exchange for such Unit
(Capital) and shall accrue from the issuance date, regardless of whether the
Board of Directors determines that the redemption should be treated as a direct
sale by the PEG 1 Limited Partners of the redeemed Units (Capital) to such
Effective Date Contributing Partners for U.S. federal income tax purposes and
(ii) in the event of a direct sale described in clause (ii) of Section 5.03(a),
for purposes of determining the amounts distributable to the Effective Date
Contributing Holders pursuant to Section 7.01(a) and 7.01(b) with respect to the
purchased Units (Capital), the Unreturned Capital Contribution with respect to
each such Unit (Capital) shall be equal to the purchase price paid for such Unit
(Capital) and the Units (Capital) Preference Amount with respect to each such
Unit (Capital) shall be determined based on the purchase price paid for such
Unit (Capital) and shall accrue from the date of sale. The Units (Capital)
Limited Partners and Units (Profits Interest) Limited Partners agree to amend
this Agreement to the extent necessary to give effect to this Section 5.03(b) in
a manner that is tax efficient, including in a manner that minimizes the
likelihood that any Partner in the Partnership recognizes income as a result of
implementing this Section 5.03(b).

 

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Section 5.04 Withdrawal of Capital

No Partner shall have the right to withdraw any capital from the Partnership;
provided, however, that the Board of Directors may determine to distribute
capital to the Partners from time to time in accordance with the terms hereof.

Section 5.05 Alternative Sources of Capital

(a) Prior to making any capital calls pursuant to the terms of this Agreement,
the Board of Directors shall, in good-faith, consider alternative or lower-cost
sources of funding in lieu of making a capital call.

(b) In furtherance of the foregoing, following the Effective Date, in the event
Pattern Energy is unable to fund its required Capital Contribution in cash, the
Board of Directors may, in its sole discretion (but in no event is obligated
to), permit Pattern Energy to borrow from the Partnership, from time to time, a
Contribution Loan to fund a required Capital Contribution pursuant to
Section 5.02, in which case Pattern Energy will cooperate with the Partnership
in good faith to execute and deliver such documents or instruments reasonably
required to effect such Contribution Loan on market terms as reasonably
determined by Pattern Energy and the Board of Directors and otherwise on the
terms set forth in this Section 5.05(b). Each Contribution Loan shall be full
recourse to Pattern Energy. At the time any Contribution Loan is made to Pattern
Energy, (i) the original principal amount of such Contribution Loan shall not
exceed the amount of the additional Capital Contribution then required to be
made by Pattern Energy pursuant to Section 5.02(a), (ii) the aggregate principal
amount of all Contribution Loans between Pattern Energy and the Partnership
outstanding as of such date shall not exceed $60 million, (iii) Pattern Energy
shall immediately contribute the proceeds of such Contribution Loan to the
Partnership as an additional Capital Contribution pursuant to Section 5.02(a),
and (iv) Pattern Energy shall agree to repay the amount borrowed under such
Contribution Loan in full within 365 days following the date of such
Contribution Loan. All distributions payable to Pattern Energy pursuant to
Section 7.01 of this Agreement shall be withheld and applied against the
outstanding balance of any unpaid principal or interest amount attributable to
any Contribution Loan that has not been fully repaid at the time such
distribution becomes due and payable to Pattern Energy, regardless of the
repayment terms of such Contribution Loan, but shall not be deemed to be an
additional Capital Contribution by Pattern Energy.

Section 5.06 Capital Accounts

(a) A separate capital account (a “Capital Account”) will be maintained on the
Partnership’s books and records for each Partner. Each Partner’s Capital Account
will be increased by: (i) the amount of money contributed by such Partner to the
Partnership; (ii) the initial Book Value of property contributed by such Partner
to the Partnership (net of liabilities secured by such contributed property that
the Partnership is considered to assume or take subject to under Section 752 of
the Code); and (iii) allocations to such Partner of Profits and items of income
or gain pursuant to the Regulatory Allocations. Each Partner’s Capital Account
will be decreased by: (A)

 

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the amount of money distributed to such Partner by the Partnership; (B) the Fair
Market Value of property distributed to such Partner by the Partnership (net of
liabilities secured by such distributed property that such Partner is considered
to assume or take subject to under Section 752 of the Code); and (C) allocations
to the account of such Partner of Losses and items of loss or deduction pursuant
to the Regulatory Allocations.

(b) In the event of a Transfer of Units made in accordance with this Agreement,
the Capital Account of the Transferor shall become the Capital Account of the
Transferee to the extent it relates to the Transferred Units in accordance with
Treasury Regulation Section 1.704-l(b)(2)(iv).

(c) The manner in which Capital Accounts are to be maintained pursuant to this
Section 5.06 is intended to comply with the requirements of Section 704(b) of
the Code and the Treasury Regulations promulgated thereunder. If, in the opinion
of the Partnership’s legal counsel, the manner in which Capital Accounts are to
be maintained pursuant to the preceding provisions of this Section 5.06 should
be modified in order to comply with Section 704(b) of the Code and the Treasury
Regulations thereunder, then notwithstanding anything to the contrary contained
in the preceding provisions of this Section 5.06, the method in which Capital
Accounts are maintained shall be so modified; provided, however, that any change
in the manner of maintaining Capital Accounts shall not materially alter the
economic agreement and relative economic benefits between or among the Partners.

(d) Except as otherwise required in the Act, no Partner shall have any liability
to restore all or any portion of a deficit balance in such Partner’s Capital
Account.

ARTICLE VI

ALLOCATIONS

Section 6.01 Allocations of Profits and Losses

After giving effect to the Regulatory Allocations, and subject to
Section 14.03(b) of this Agreement, Profits and Losses for each Fiscal Period
shall be allocated among the Partners for such Fiscal Period, in such a manner
as shall cause the Capital Accounts of each Partner (as adjusted to reflect all
Regulatory Allocations and all distributions through the end of such Fiscal
Period) to equal, as nearly as possible, (a) the amount such Partner would
receive if all assets of the Partnership on hand at the end of such Fiscal
Period were sold for cash equal to their Book Values, all liabilities of the
Partnership were satisfied in cash in accordance with their terms (limited in
the case of non-recourse liabilities to the Book Value of the property securing
such liabilities), all unvested Units (Profits Interest) became vested, and all
remaining or resulting cash (including any Retained Distributions) were
distributed to the Partners under Section 7.01 of this Agreement minus (b) such
Partner’s share of Minimum Gain and Partner Nonrecourse Debt Minimum Gain,
computed immediately prior to the hypothetical sale of assets.

 

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Section 6.02 Regulatory Allocations

The following allocations shall be made in the following order:

(a) Nonrecourse Deductions shall be allocated 85% to the holders of Units
(Capital) pro rata in proportion to their respective Unit (Capital) Sharing
Percentages and 15% to the holders of Units (Profits Interest) pro rata in
proportion to their respective Unit (Profits Interest) Sharing Percentages.

(b) Partner Nonrecourse Deductions attributable to Partner Nonrecourse Debt
shall be allocated to the Partners bearing the Economic Risk of Loss for such
Partner Nonrecourse Debt as determined under Treasury Regulation
Section 1.704-2(b)(4). If more than one Partner bears the Economic Risk of Loss
for such Partner Nonrecourse Debt, the Partner Nonrecourse Deductions
attributable to such Partner Nonrecourse Debt shall be allocated among the
Partners according to the ratio in which they bear the Economic Risk of Loss.
This Section 6.02(b) is intended to comply with the provisions of Treasury
Regulation Section 1.704-2(i) and shall be interpreted consistently therewith.

(c) Notwithstanding any other provision hereof to the contrary, if there is a
net decrease in Minimum Gain for a taxable year (or if there was a net decrease
in Minimum Gain for a prior taxable year and the Partnership did not have
sufficient amounts of income and gain during prior years to allocate among the
Partners under this Section 6.02(c)), items of income and gain shall be
allocated to each Partner in an amount equal to such Partner’s share of the net
decrease in such Minimum Gain (as determined pursuant to Treasury Regulation
Section 1.704-2(g)(2)). This Section 6.02(c) is intended to constitute a minimum
gain chargeback under Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.

(d) Notwithstanding any provision hereof to the contrary except Section 6.02(c)
of this Agreement (dealing with Minimum Gain), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain for a taxable year (or if there was a net
decrease in Partner Nonrecourse Debt Minimum Gain for a prior taxable year and
the Partnership did not have sufficient amounts of income and gain during prior
years to allocate among the Partners under this Section 6.02(d), items of income
and gain shall be allocated to each Partner in an amount equal to such Partner’s
share of the net decrease in Partner Nonrecourse Debt Minimum Gain (as
determined pursuant to Treasury Regulation Section 1.704-2(i)(4)). This
Section 6.02(d) is intended to constitute a partner nonrecourse debt minimum
gain chargeback under Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.

(e) Notwithstanding any provision hereof to the contrary except Section 6.02(a)
and Section 6.02(b), no Losses shall be allocated to any Limited Partner to the
extent that such allocation would cause such Limited Partner to have a deficit
balance in its Adjusted Capital Account (or increase any existing deficit
balance in its Adjusted Capital Account) at the end of such Fiscal Period. All
Losses in excess of the limitation set forth in this Section 6.02(e) shall be
allocated to the Partners who do not have a deficit balance in their Adjusted
Capital Accounts in proportion to their relative positive Adjusted Capital
Accounts but only to the extent that such Losses do not cause any such Partner
to have a deficit in its Adjusted Capital Account.

(f) Notwithstanding any provision hereof to the contrary except Section 6.02(c),
Section 6.02(d) and Section 6.02(e) of this Agreement, a Partner who
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) shall be
allocated items of income and gain (consisting of a pro rata

 

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portion of each item of income, including gross income, and gain for the taxable
year) in an amount and manner sufficient to eliminate any deficit balance in
such Partner’s Adjusted Capital Account as quickly as possible; provided that,
an allocation pursuant to this Section 6.02(f) shall be made only if and to the
extent that such Partner would have deficit Adjusted Capital Account balance
after all other allocations provided for in this Article VI have been
tentatively made as if this Section 6.02(f) were not in this Agreement. This
Section 6.02(f) is intended to constitute a qualified income offset under
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

(g) In the event that any Partner has a deficit balance in its Capital Account
at the end of any taxable year in excess of the sum of (A) the amount such
Partner is required to restore pursuant to tax provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be
allocated items of Partnership gross income, and gain in the amount of such
deficit as quickly as possible; provided that an allocation pursuant to this
Section 6.02(g) shall be made only if and to the extent that such Partner would
have a deficit balance in its Capital Account after all other allocations
provided for in this Article VI have been tentatively made as if Section 6.02(f)
and this Section 6.02(g) were not in this Agreement.

(h) To the extent an adjustment to the adjusted tax basis of any Partnership
properties pursuant to Code Section 734(b) or Code Section 743(b) is required
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as the result of a distribution to any Partner in complete liquidation of such
Partner’s Units, the amount of such adjustment to Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
allocated to the Partners in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(2) if such Section applies, or to the Partner to
whom such distribution was made if Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4) applies.

(i) If any Units (Profits Interest) held by any holder of Units (Profits
Interest) are forfeited or redeemed by the Partnership, such holder shall be
allocated items of loss and deduction in the year of such forfeiture or
redemption in an amount equal to the portion of such holder’s Capital Account
attributable to such forfeited Units reduced, but not below zero, by the amount
of any redemption price paid by the Partnership for such Units.

(j) If, as a result of an exercise of a noncompensatory warrant or option to
acquire an interest in the Partnership, a Capital Account reallocation is
required under Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(3), the
Partnership shall make corrective allocations pursuant to Treasury Regulation
Section 1.704-1(b)(4)(x).

Section 6.03 Income Tax Allocations

(a) All items of income, gain, loss and deduction for federal income tax
purposes shall be allocated in the same manner as the corresponding item of
Profits and Losses is allocated, except as otherwise provided in this
Section 6.03.

 

 

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(b) In accordance with Code Section 704(c) and the applicable Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the Partnership shall, solely for tax purposes, be
allocated among the Partners so as to take account of any variation between the
adjusted basis of such property to the Partnership for Federal income tax
purposes and its initial Book Value. In the event the Book Value of any property
is adjusted pursuant to clause (b) or (d) of the definition of Book Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
property shall take account of any variation between the adjusted basis of such
property for Federal income tax purposes and its Book Value in the same manner
as under Code Section 704(c) and the applicable Regulations thereunder. For
purposes of the allocations pursuant to this Section 6.03(b), the Partnership
shall elect the remedial allocation method described in Treasury Regulation
Section 1.704-3(d) or such other allocation method as is determined by the Board
of Directors.

(c) Any (i) recapture of depreciation or any other item of deduction shall be
allocated, in accordance with Treasury Regulations Sections 1.1245-1(e) and
1.1254-5, to the Partners who received the benefit of such deductions (taking
into account the effect of remedial allocations), and (ii) recapture of any
income tax credits shall be allocated to the Partners in accordance with
Treasury Regulation Sections 1.704-1(b)(4)(ii) and 1.704-1(b)(4)(vii).

(d) Tax credits of the Partnership shall be allocated among the Partners as
provided in Treasury Regulation Sections 1.704-1(b)(4)(ii) and
1.704-1(b)(4)(viii).

(e) Allocations pursuant to this Section 6.03 are solely for purposes of
federal, state, and local taxes and shall not affect, or in any way be taken
into account in computing, any Partner’s Capital Account (except as provided in
Treasury Regulation Section 1.704-1(b)(2)(iv)(j)) or share of Profits, Losses,
other items or distributions pursuant to any provision of this Agreement.

Section 6.04 Other Allocation Rules

(a) All items of income, gain, loss, deduction and credit allocable to an
interest in the Partnership that may have been Transferred shall be allocated
between the Transferor and the Transferee based on the portion of the Fiscal
Year during which each was recognized as the owner of such interest, without
regard to the results of Partnership operations during any particular portion of
that year and without regard to whether cash distributions were made to the
Transferor or the Transferee during that year; provided, however, that this
allocation must be made in accordance with a method permissible under Code
Section 706 and the Treasury Regulations thereunder.

(b) The Partners’ proportionate shares of the “excess nonrecourse liabilities”
of the Partnership, within the meaning of Treasury Regulation
Section 1.752-3(a)(3), shall be allocated 85% to the holders of Units (Capital)
and 15% to the holders of Units (Profits Interest), and among each of the Units
(Capital) Limited Partners and the Units (Profits Interest) Limited Partners in
accordance with each such Partner’s respective Unit (Capital) Sharing Percentage
or the Unit (Profits Interest) Sharing Percentage, as applicable.

 

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ARTICLE VII

DISTRIBUTIONS

Section 7.01 Distributions

Except as set forth in Sections 5.01(c) and 5.03, and subject to Section 7.03,
Section 7.05, and Section 14.03 of this Agreement, all Distributable Property of
the Partnership shall be distributed at such time or times (if any) as the Board
of Directors determines in its sole discretion to the Partners in the following
order and priority:

(a) First: 100% to the Units (Capital) Limited Partners in proportion to their
respective Unreturned Capital Contributions until the Unreturned Capital
Contributions have been reduced to zero (0);

(b) Second: 100% to the Units (Capital) Limited Partners in proportion to their
respective Unpaid Units (Capital) Preference Amounts until the Unpaid Units
(Capital) Preference Amount of each Units (Capital) Limited Partner has been
reduced to zero (0);

(c) Third: (i) 50% to the Units (Capital) Limited Partners in proportion to
their respective Unit (Capital) Sharing Percentages and (ii) 50% to the Units
(Profits Interest) Limited Partners in proportion to their respective Unit
(Profits Interest) Sharing Percentages, until the Units (Profits Interest)
Payout occurs; and

(d) Thereafter: 85% to the Units (Capital) Limited Partners in proportion to
their respective Unit (Capital) Sharing Percentages and 15% to the Units
(Profits Interest) Limited Partners in proportion to their respective Unit
(Profits Interest) Sharing Percentages.

(e) In applying Section 7.01(c) and Section 7.01(d) of this Agreement, if any
tranche of Units (Profits Interest) have been issued with a Threshold Amount
greater than zero, a holder of such tranche of Units (Profits Interest) will not
be entitled to receive distributions under this Section 7.01 until the aggregate
distributions made following the issuance of such tranche of Units (Profits
Interest) to the holders of the Units (Profits Interest) of each previously
issued tranche of Units (Profits Interest) shall be equal to the Threshold
Amount designated for such tranche of Units (Profits Interest). For example,
prior to the holders of Units (Profits Interest)-4 receiving distributions under
this Section 7.01, the holders of all Units (Profits Interest)-1, Units (Profits
Interest)-2, and Units (Profits Interest)-3 must receive distributions that
cause the Threshold Amount to be attained for the Units (Profits Interest)-4.
Any distribution that otherwise would have been made to a tranche of Units
(Profits Interest) with a Threshold Amount but for this subsection shall be
treated as additional Distributable Property and distributed solely to the
tranche of Units (Profits Interest) then entitled to receive distributions.

(f) Any distributions (except tax distributions pursuant to Section 7.03 of this
Agreement) with respect to Units (Profits Interest) of any tranche that have not
“vested” in accordance with the provisions of Section 11.08(b) of this Agreement
shall be retained by the Partnership in a separate bank account until “vesting”
occurs (the “Retained Distributions”). Retained Distributions shall be promptly
distributed by the Partnership upon vesting of the relevant Units (Profits
Interest). Retained Distributions that are in respect of unvested Units (Profits

 

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Interest) that are forfeited to the Partnership pursuant to Section 11.08(c) of
this Agreement shall be reallocated among the remaining outstanding Units
(Profits Interest) pro rata in proportion to their respective Unit (Profits
Interest) Sharing Percentages (as adjusted to take into account any Threshold
Amount applicable to Units (Profits Interest)).

Section 7.02 Distributions in Kind

No Partner has any right to demand or receive a distribution from the
Partnership in any form other than cash, and any distribution from the
Partnership in any form other than cash or Marketable Securities must be
approved by the Units (Capital) Majority and the Units (Profits Interest)
Majority. Any non-cash distribution from the Partnership must also comply with
the provisions of Section 11.13.

Section 7.03 Tax Distributions

(a) On each Tax Distribution Date, the Partnership shall, subject to the
availability of Distributable Property, and prior to making distributions
pursuant to Section 7.01, if any, distribute to each Partner in cash an amount
equal to such Partner’s Assumed Tax Liability, if any, as of such date. If on a
Tax Distribution Date there are not sufficient funds on hand to distribute to
each Partner the full amount of such Partner’s Assumed Tax Liability,
distributions pursuant to this Section 7.03 shall be made to the Partners to the
extent of the available funds in proportion to each Partner’s Assumed Tax
Liability, and the Partnership shall make future distributions as soon as funds
become available to pay the remaining portion of such Partner’s Assumed Tax
Liability. Notwithstanding the foregoing and for the avoidance of doubt, the
Partners agree that the Partnership shall not be required to make distributions
to a Partner pursuant to this Section 7.03 to the extent that such Partner
realizes income in connection with the issuance or Transfer of Units (Profits
Interest) to such Partner, the forfeiture of Units (Profits Interest) by such
Partner or another Partner or the repurchase of Units (Profits Interest) from
such Partner or another Partner in accordance with this Agreement.

(b) Any amounts distributed to a Partner pursuant to this Section 7.03 shall be
treated as an advanced distribution of, and shall reduce by a like amount the
next amounts otherwise distributable to, such Partner pursuant to Section 7.01
or Section 14.03(b) of this Agreement, as applicable. Amounts distributed to a
Partner pursuant to this Section 7.03 that are treated as advanced distributions
against amounts otherwise distributable shall be taken into account in
determining when a Units (Capital) Payout or Units (Profits Interest) Payout
occurs.

Section 7.04 Redemption/Repurchase of Units

In the event the Partnership has repurchased Units (Capital) or Units (Profits
Interest) pursuant to Section 11.08(c) or otherwise (excluding any redemption or
repurchase pursuant to Section 5.03), any amount paid to a holder of Units
(Capital) in connection with such repurchase of Units (Capital) shall be treated
as an advance distribution to the holders of the remaining Units (Capital)
pursuant to Section 7.01 or Section 14.03, and any amount paid to a holder of
Units (Profits Interest) in connection with such a repurchase of Units (Profits
Interest) shall be treated as an advance distribution to the holders of the
remaining Units (Profits Interest) pursuant to Section 7.01 or Section 14.03.
Any amount treated as an advance distribution shall first, and solely for

 

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computational purposes, be added to the next aggregate amounts distributable to
holders of Units (Capital) and Units (Profits Interest), and then, after
application of the distribution provisions of Section 7.01, reduce the amounts
otherwise distributable to the holders of the remaining Units (Capital) or Units
(Profits Interest), as applicable, by a like amount.

Section 7.05 Proceeds from Projects

The Board of Directors will use good faith efforts to distribute proceeds
received from the sale or divestment, in whole or in part, of any development,
construction or operating project of the Partnership or any of its Subsidiaries
within thirty (30) days of receipt of such proceeds, provided, that the Board of
Directors has determined, on the basis of a cash flow forecast provided by the
Development Leadership Team to the Board of Directors on or about the date that
such sale or divestment is consummated, that the Partnership has sufficient cash
and property on hand to meet any liabilities or fund any proposed expenditures
of the Partnership which are accrued or reasonably foreseeable within twelve
(12) months following such date. In the event that a majority of the Board of
Directors disagrees with such forecast, the Board of Directors may instead use
the applicable twelve-month period of any Annual Budget.

Section 7.06 Withholding

(a) The Partnership may withhold distributions or portions thereof if it is
required to do so by any applicable rule, regulation or law, and each Partner
hereby authorizes the Partnership to withhold from and pay on behalf of or with
respect to such Partner any amount of U.S. federal, state, local or foreign
taxes that the Board of Directors determines that the Partnership is required to
withhold and pay with respect to any amount distributable or allocable to such
Partner pursuant to this Agreement and to pay any tax imposed on the Partnership
(including where the amount of such tax is determined by reference to the status
of a Partner (or its beneficial owners)).

(b) Except with respect to amounts that a Partner contributes to the Partnership
upon the request of the Board of Directors, any amounts withheld pursuant to
this Section 7.06 or paid pursuant to this Section where the amount of such tax
is determined by reference to the status of a Partner (or its beneficial owners)
shall be treated as having been distributed to such Partner for all purposes of
this Agreement at the time such withholding or payment is made. To the extent
that the cumulative amount of such withholding or payment for any period exceeds
the distributions to which such Partner is entitled for such period, the amount
of such excess shall be considered a loan from the Partnership to such Partner,
with interest accruing at an interest rate determined by the Board of Directors
or at the request of the Board of Directors, the amount of such excess shall be
promptly paid to the Partnership by the Partner on whose behalf such withholding
or payment is required to be made, provided that any such payment shall not be
treated as a Capital Contribution and shall not reduce the amount that a Partner
is otherwise obligated to contribute to the Partnership. Any income from any
deemed loan shall not be allocated to or distributed to the Partner requiring
such loan. Any such loan shall be satisfied out of distributions to which such
Partner would otherwise be subsequently entitled until such time as the Board of
Directors requests that the Partner pay such amount to the Partnership. Each
Partner hereby unconditionally and irrevocably grants to the Partnership a
security interest in such Partner’s Units to secure such Partner’s obligation to
pay to the Partnership any amounts required to be paid pursuant to this
Section 7.06. Each Partner shall take such actions as the Partnership may
request in order to perfect or enforce the security interest created hereunder.

 

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(c) Each Partner hereby agrees to indemnify and hold harmless the Partnership,
the other Partners and the Board of Directors from and against any liability
(including any liability for taxes, penalties, additions to tax or interest)
with respect to income attributable to or distributions or other payments to
such Partner (including pursuant to the Bipartisan Budget Act where amount of
such tax is determined by reference to the status of a Partner (or its
beneficial owners)). Upon the Partnership’s request, each Partner shall promptly
provide to the Partnership a duly completed and executed IRS Form W-9 or the
appropriate IRS Form W-8 and such other information as may be reasonably
requested by the Partnership in order for it to accurately determine its
withholding obligation, if any. Unless otherwise determined by the Board of
Directors, notwithstanding anything to the contrary in this Agreement, any
Partner who acquires its Units from a person who was a Partner of the
Partnership at the time of the Transfer shall succeed to and be responsible for,
and shall indemnify and hold harmless the Partnership from any amounts the
transferor Partner would have been liable for under this Section 7.06 if the
transferor had remained a Partner of the Partnership, provided, that for the
avoidance of doubt, this sentence will not apply to the transactions described
in Sections 5.01(c) or 5.01(d) of this Agreement.

ARTICLE VIII

MEETINGS OF PARTNERS

Section 8.01 Meetings

Annual meetings of Partners may, but need not, be held. The annual meeting of
Partners may be held at such place and on such date as the Board of Directors
may designate. Special meetings of the Partners, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the Board of Directors,
or any Partner or Partners who hold in the aggregate a Units (Capital) Majority.

Section 8.02 Place of Meetings

The Board of Directors may designate any place, either within or outside the
State of Delaware, as the place of meeting for any meeting of the Partners. If
no designation is made, or if a special meeting be otherwise called, the place
of meeting shall be the principal executive office of the Partnership.

Section 8.03 Notice of Meetings

Written notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the Board of Directors or
Person calling the meeting, to each Partner entitled to vote at such meeting.

 

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Section 8.04 Record Date

For the purpose of determining Partners entitled to notice of or to vote at any
meeting of Partners or any adjournment thereof, or Partners entitled to receive
payment of any distribution, or in order to make a determination of Partners for
any other purpose, the date on which notice of the meeting is mailed or the date
on which the resolution declaring such distribution is adopted, as the case may
be, shall be the record date for such determination of Partners.

Section 8.05 Quorum

Partners holding at least a Units (Capital) Majority represented in person or by
proxy shall constitute a quorum at any meeting of Partners. In the absence of a
quorum at any such meeting, a majority of the Units so represented may adjourn
the meeting from time to time for a period not to exceed sixty (60) days without
further notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The Partners present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal during such meeting of that number of Units whose absence would cause
less than a quorum.

Section 8.06 Proxies

At all meetings of Partners, a Units (Capital) Limited Partner may vote in
person or by proxy executed in writing by the Partner or by a duly authorized
attorney in fact. Such proxy shall be filed with the Board of Directors before
or at the time of the meeting. No proxy shall be valid after eleven (11) months
from the date of its execution, unless otherwise provided in the proxy. A
telegram, telex, cablegram, electronic mail or similar transmission by the Units
(Capital) Limited Partner, or a photographic, facsimile or similar reproduction
of an executed writing shall be effective for purposes of this Section 8.06. The
chairman of the meeting shall decide all questions touching upon the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless an inspector or inspectors shall have been appointed
by the chairman of the meeting, in which event such inspector or inspectors
shall decide all such questions. A proxy shall be with full power of
substitution and shall be revocable unless the proxy form conspicuously states
that the proxy is irrevocable and the proxy is coupled with an interest. Should
a proxy designate two (2) or more Persons to act as proxies, unless that
instrument shall provide to the contrary, a majority or, if only two Persons are
designated as proxies, then both, of such Persons present at any meeting at
which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one be
present, then such powers may be exercised by that one.

Section 8.07 Action by Partners Without a Meeting

Any action required or permitted to be taken at a meeting of Partners may be
taken without a meeting if the action is evidenced by one or more written
consents describing the action to be taken by the Partners that are signed by
the Partners with the requisite authority whose consent is required to take the
action under this Agreement. Action taken under this Section 8.07 is effective
when the requisite number of Partners required to approve such action have
signed the consent, unless the consent specifies a different effective date. The
record date for determining Partners

 

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entitled to take action without a meeting is the date the first Partner signs
and delivers to the Partnership a written consent. A telegram, telex, cablegram,
electronic mail or similar transmission by a Partner, or a photographic,
photostatic, facsimile or similar reproduction of a writing signed by a Partner,
shall be regarded as signed by the Partner for purposes of this Section 8.07.

Section 8.08 Waiver of Notice

When any notice is required to be given to any Partner, a waiver thereof in
writing signed by the Person entitled to such notice, whether before, at, or
after the time stated therein, shall be equivalent to the giving of such notice.

Section 8.09 Conduct of Meetings

All meetings of the Partners shall be presided over by the chairman of the
meeting, who shall be a Director or Officer designated by the Board of
Directors. The chairman of any meeting of Partners shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him in order.

Section 8.10 Limited Units (Profits Interest) Voting Rights

Units (Profits Interest) shall have no voting rights, except as set forth in
Section 9.06 and Section 15.05 of this Agreement.

ARTICLE IX

MANAGEMENT OF THE PARTNERSHIP

Section 9.01 Management

(a) In order to enable the Board of Directors to manage the business and affairs
of the Partnership, the General Partner hereby irrevocably delegates to the
Board of Directors and, solely to the extent necessary to enable the Officers
appointed by the Board of Directors pursuant to Section 9.03 of this Agreement
to fulfill their duties under this Agreement, to the Officers all management
powers over the business and affairs of the Partnership that it may now or
hereafter possess under applicable law (other than its obligations as “Tax
Matters Partner” or “Partnership Representative”, as applicable, under
Section 4.03 of this Agreement) as permitted under Section 17-403(c) of the Act.
The General Partner further agrees to take any and all action necessary and
appropriate, in the sole discretion of the Board of Directors, to effect any
duly authorized actions by the Board of Directors or any Officer, including
executing or filing any agreements, instruments or certificates, delivering all
documents, providing all information and taking or refraining from taking action
as may be necessary or appropriate to achieve all the effective delegation of
power described in this Section 9.01(a). Each of the Partners and Transferees
and each Person who may acquire an interest in a Partnership Interest hereby
approves, consents to, ratifies and confirms such delegation. The delegation by
the General Partner to the Board of Directors of management powers over the
business and affairs of the Partnership pursuant to the provisions of this
Agreement shall not cause the General Partner to cease to be a general partner
of the Partnership nor shall it cause the Board of Directors or any member
thereof to be a general partner of the

 

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Partnership or to have or be subject to the liabilities of a general partner of
the Partnership. Except as provided in Section 4.03 of this Agreement relating
to the General Partner’s duties as “Tax Matters Partner” and/or “Partnership
Representative”, as applicable, (subject to the limitations set forth therein)
and except as otherwise provided in this Agreement, the management of the
Partnership shall be vested exclusively in the Board of Directors and, subject
to the direction of the Board of Directors, the Officers. Neither the General
Partner nor any of the Limited Partners in their capacities as such shall have
any part in the management of the Partnership (except, with respect to the
General Partner, as provided in Section 4.03 of this Agreement relating to its
duties as “Tax Matters Partner” and/or “Partnership Representative” (subject to
the limitations set forth therein), as applicable, and shall have no authority
or right to act on behalf of the Partnership or deal with any third parties on
behalf of the Partnership in connection with any matter, except as requested or
authorized by the Board of Directors.

(b) To the fullest extent permitted by the Act, a person, in performing his or
her duties and obligations as a Director under this Agreement, shall be entitled
to act or omit to act at the direction of the Partners that designated such
person to serve on the Board of Directors, considering only such factors,
including the separate interests of the designating Partners, as such Director
or Partners choose to consider, and any action of a Director or failure to act,
taken or omitted in good faith reliance on the foregoing provision shall not, as
between the Partnership and the other Partners, on the one hand, and the
Director or Partners designating such Director, on the other hand, constitute a
breach of any duty (including any fiduciary or other similar duty, to the extent
that such exists under the Act or any other applicable law, rule or regulation)
on the part of such Director or Partners of the Partnership or any other
Director or Partner.

(c) Unless explicitly provided otherwise in this Agreement, the Board of
Directors shall have the power, right and authority on behalf and in the name of
the Partnership to carry out any and all of the objects and purposes of the
Partnership and to perform all acts which the Board of Directors, in its sole
discretion, may deem necessary or desirable, including, without limitation, the
power to:

(i) negotiate, execute and perform, any contract, agreement or other instrument
(including, without limitation, this Agreement) as the Board of Directors shall
determine to be necessary or desirable to further the purposes of the
Partnership;

(ii) open, maintain and close bank accounts and draw checks or other orders for
the payment of moneys;

(iii) collect all sums due the Partnership and contest and exercise the
Partnership’s right to collect all such sums;

(iv) to the extent that funds of the Partnership are available therefor, pay as
they become due all debts, obligations and operating expenses of the
Partnership;

(v) make any expenditures, lend or borrow money, assume, guarantee or contract
for, indebtedness or other liabilities, make prepayments or extensions of debt,
secure debt of the Partnership with Partnership assets;

 

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(vi) acquire, hold, manage, own, sell, Transfer, convey, assign, exchange or
otherwise dispose of any assets of the Partnership or cause any Subsidiaries of
the Partnership to acquire, hold, manage, own, sell, Transfer, convey, assign,
exchange or otherwise dispose of any assets of such Subsidiaries;

(vii) form, or acquire an interest in, any further limited or general
partnerships, joint ventures, corporations, limited liability companies or other
relationships;

(viii) issue securities of any kind of the Partnership, except as specifically
stated otherwise in this Agreement, or to cause any of the Partnership’s
Subsidiaries to issue securities;

(ix) merge or combine the Partnership with or into another Person, or sell all
or substantially all of the Partnership’s assets;

(x) employ, compensate, or dismiss from employment any and all employees,
attorneys, accountants, consultants, appraisers or custodians of the assets of
the Partnership, on such terms and for such compensation as the Board of
Directors may determine;

(xi) obtain insurance for the Partnership relating to the indemnification
referred to in Section 10.01;

(xii) admit additional Partners as provided in this Agreement;

(xiii) determine distributions of Partnership cash and other property as
provided in Section 7.01 and Section 7.03;

(xiv) dissolve and liquidate the Partnership as provided in Article XIV;

(xv) bring and defend actions and proceedings at law or equity and before any
governmental, administrative or other regulatory agency, body or commission;

(xvi) make all elections, investigations, evaluations and decisions, binding the
Partnership thereby, that may in the sole judgment of the Board of Directors be
necessary or desirable for the acquisition, management or disposition of assets
by the Partnership, including, without limitation, the exercise of rights to
elect to adjust the tax basis of Partnership assets or the decision whether or
not to make the election under Section 6226 of the Amended Code;

(xvii) make all tax, regulatory and other filings and render all reports to any
governmental or other agencies having jurisdiction over the Partnership;

(xviii) act for and on behalf of the Partnership in all matters incidental to
the foregoing, including, without limitation, the taking of all actions for
which any power of attorney is granted in Section 9.09; and

(xix) consult with and seek the advice of one or more of the Limited Partners.

 

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(d) When making any investment or funding projects, the Board of Directors shall
endeavor (but is in no event obligated to) to seek expected net pre-tax proceeds
to equity upon sale of no less than 1.70 times the total amount of equity
invested prior to sale and to enter into fixed-price power purchase arrangements
with a term of no less than 10 years, covering no less than 80% of the project’s
forecast output.

Section 9.02 Board of Directors

(a) Size and Designees. The Board of Directors shall consist of no less than
five (5) Directors: (a) three (3) of whom shall be appointed by Riverstone (the
“Riverstone Designees”), and (b) two (2) of whom shall be appointed by the Units
(Profits Interest) Majority (the “Management Designees”). The initial Riverstone
Designees and Management Designees are set forth on Exhibit E. If any Riverstone
Designee shall resign or be removed or be unable to serve for any reason as a
Director of the Partnership, Riverstone shall designate a replacement Riverstone
Designee. Riverstone may remove and replace any Riverstone Designee at any time
with or without cause. If any Management Designee shall resign or be removed or
unable to serve for any reason as a Director, the Units (Profits Interest)
Majority shall designate a replacement Management Designee. The Units (Profits
Interest) Majority may remove and replace any Management Designee at any time
with or without cause.

(b) Board Observers. Riverstone may designate up to two (2) individuals and
Pattern Energy may designate one (1) individual, to attend quarterly meetings of
the Board of Directors as observers and receive written materials distributed in
connection with such meetings; provided, however, that no such observer shall in
any circumstance have any right to participate in any vote, consent or other
action of the Board of Directors, the failure by any observer to attend a
meeting shall in no way invalidate any actions taken at such meeting, and no
observer shall count towards the quorum requirements described in
Section 9.02(c).

(c) Votes per Director; Quorum; Required Vote for Board Action. Each Director
shall have one (1) vote; provided, however, that any Riverstone Designee shall
be entitled to cast more than one vote under the following circumstances: (i) if
any of the Riverstone Designees are not present at such meeting, then the
Riverstone Designee or Riverstone Designees present at the meeting shall be
given an aggregate number of additional votes equal to the number of Riverstone
Designees absent (and such absent Riverstone Designee or Riverstone Designees
shall be deemed to have given a proxy to vote at such meeting to any other
Riverstone Designee who is present at such meeting) or (ii) if there are any
vacancies in the Riverstone Designees, then the remaining Riverstone Designee or
Riverstone Designees shall be given an aggregate number of additional votes
equal to the number of vacancies of the Riverstone Designees (for example, if
the Riverstone Group has only designated one of its three Directors, then that
one Riverstone Designee may cast a total of three votes on matters presented to
the Board of Directors). Unless otherwise required by this Agreement, Directors
having at least three votes, either present (in person or by teleconference) or
represented by proxy, including at least one Riverstone Designee, and, to the
extent required for any vote pursuant to Sections 9.05 or 9.07, at least one
Management Designee, shall constitute a quorum for the transaction of business
at a meeting of the Board of Directors. A single Riverstone Designee shall, for
quorum purposes, count as three votes. Actions by the Board of Directors shall
require Board Approval.

 

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(d) Place of Meetings; Order of Business. The Board of Directors may hold its
meetings in such place or places, within or without the State of Delaware, as
the Board of Directors may from time to time determine by resolution. At all
meetings of the Board of Directors, business shall be transacted in such order
as shall from time to time be determined by resolution of the Board of
Directors.

(e) Regular Meetings. Regular meetings of the Board of Directors shall be held
at such times and places as shall be designated from time to time by resolution
of the Board of Directors. Notice of such regular meetings shall not be required
if held at the times and places set forth in the relevant resolution and such
resolution has been provided to each Director.

(f) Special Meetings. Special meetings of the Board of Directors may be called
by any Director or Directors having at least two votes on at least 24 hours
personal, written, telegraphic, cable, wireless or electronic notice to each
Director, which notice must include appropriate dial-in information to permit
each Director to participate in such meeting by means of telephone conference.
Such notice need not state the purpose or purposes of such meeting, except as
may otherwise be required by the Act.

(g) Action Without a Meeting. Any action required or permitted to be taken at
any meeting of the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by the
Directors whose votes would be required to take action at a meeting of the Board
of Directors and such written consent shall be distributed to the entire Board
of Directors at least twenty-four (24) hours prior to its effective time.

(h) Telephonic Conference Meeting. Subject to the requirement for notice of
meetings, members of the Board of Directors may participate in a meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.

(i) Waiver of Notice Through Attendance. Attendance of a Director at any meeting
of the Board of Directors (including by telephone) shall constitute a waiver of
notice of such meeting, except where such Director attends the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened and notifies the other
Directors at such meeting of such purpose.

(j) Reliance on Books, Reports and Records. Each Director shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the books of account or reports made to the Partnership by any of its
Officers or by an independent certified public accountant or by an appraiser
selected with reasonable care by the Board of Directors, or in relying in good
faith upon other records of the Partnership.

(k) Costs and Expenses. The Partnership will pay all reasonable out-of-pocket
expenses incurred by the Directors in connection with their participation in
meetings of the Board of Directors (and committees thereof) and attending to the
business of the Partnership.

 

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(l) Board Committees. The Board of Directors may, by resolution passed by a
majority of the entire Board of Directors, designate one or more committees to
exercise such delegated power and authority as the Board of Directors may from
time to time determine, including with respect to matters otherwise apportioned
to the Board of Directors. Any such committee shall consist of one or more of
the Directors. For the avoidance of doubt, any such committee, to the extent
allowed by law, shall not act in the capacity of the Board of Directors, but
notwithstanding anything to the contrary herein shall have and may exercise all
the powers and authority in the management of the business and affairs of the
Partnership provided to such committee in the resolutions establishing such
committee, provided that no committee designation shall limit the application of
Section 9.05 (with respect to approvals by two-thirds of the Units (Capital)),
Section 9.06 (with respect to approvals by Pattern Energy) or Section 9.07 (with
respect to approvals by a Units (Profits Interest) Majority) except to the
extent, if any, that such approval rights may be prospectively waived by the
Person or Persons holding the applicable approval rights at the time of
designation.

Section 9.03 Officers

Upon the nomination of the Development Leadership Team or Riverstone, the Board
of Directors may appoint such individuals (whether or not any such individual is
also a Limited Partner) as the Board of Directors may deem necessary or
advisable as officers of the Partnership as the Board of Directors may deem
necessary or advisable to manage the day-to-day business affairs of the
Partnership (collectively, the “Officers”). Officers may be given titles or may
be designated as “authorized persons.” To the extent authorized by the Board of
Directors, any Officer may act on behalf of, bind and execute and deliver
documents in the name and on behalf of the Partnership. The current Officers of
the Partnership are set forth on Exhibit E hereto. The Chief Executive Officer
on behalf of the Development Leadership Team shall as required by the Board of
Directors update the Board of Directors on any material changes or occurrences
in the business of the Partnership and Riverstone shall promptly notify the
Development Leadership Team of any material changes relating to Riverstone’s
business objectives or financing capability with respect to the Partnership. The
Board of Directors may, in its sole discretion, remove any Officer with or
without cause at any time, subject to any applicable employment agreement.
Notwithstanding anything to the contrary in this Agreement, Board Approval and,
for so long as the Riverstone Group owns a Units (Capital) Majority, at least
two-thirds of the outstanding Units (Capital) shall be required to elect or
remove a member of the Development Leadership Team.

Section 9.04 Actions Requiring Board Approval

Notwithstanding anything in this Agreement to the contrary, but subject to
Section 9.05, Section 9.06, and Section 9.07, neither the Partnership nor any of
the Partnership’s Subsidiaries may take any action, including any of the
following actions, without prior Board Approval unless authority to take such
action has previously been delegated to an Officer or other authorized person:

(a) commencing or acquiring any new project in which the costs and committed
project expenses collectively exceed (i) the aggregate amounts approved in the
Annual Budget for such acquisition and committed project expenses, if any, plus
(ii) $3,000,000;

 

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(b) continuing an existing project if the cumulative committed project expenses
are expected to exceed (i) the aggregate amounts approved in the Annual Budget
for such committed project expenses, if any, plus (ii) $2,000,000;

(c) altering, supplementing, amending or otherwise modifying any Budget;

(d) approving, altering, supplementing, amending or otherwise modifying any
future Partnership budgets;

(e) making distributions in accordance with the provisions of Section 7.01 or
Section 7.03 of this Agreement;

(f) incurring, guaranteeing or assuming any indebtedness by the Partnership or
any of its Subsidiaries in excess of an aggregate of $5,000,000;

(g) acquiring or disposing, in any one transaction or series of related
transactions, of any assets for aggregate consideration in excess of $5,000,000;

(h) entering into any derivative transactions, including hedging, forward sales
or similar contracts, in excess of an aggregate of $5,000,000;

(i) initiating any material litigation or other material legal or administrative
proceeding or entering into any settlement agreement with respect to any
material litigation or other material legal or administrative proceeding;

(j) electing or removing any Officer pursuant to Section 9.03 of this Agreement;

(k) creating or adopting any compensation, benefits, incentive, welfare or other
plan for the benefit of any officer or employee of the Partnership or any of its
Subsidiaries;

(l) entering into any agreement, contract or other instrument not otherwise
referred to in this Section 9.04 to which the Partnership or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets be bound that would be reasonably expected to create liabilities or
obligations of the Partnership in excess of $1,000,000 in any Fiscal Year or in
excess of $5,000,000 during the term of such contract; and

(m) loaning money or providing any guarantee for a third party.

The thresholds set out in clauses (a), (b), (f), (g), (h) and (l) above will be
reconsidered by the Board of Directors on an annual basis and for larger
approvals, such as funding projects, the thresholds will not apply to contracts
and commitments made under the larger approval unless otherwise requested by the
Board of Directors.

Section 9.05 Actions Requiring Board Approval and Approval of the Units
(Capital) Limited Partners

Notwithstanding anything in this Agreement to the contrary, none of the
Partnership, the Board of Directors or any of the Partnership’s Subsidiaries may
take the following actions without prior (i) Board Approval and (ii) for so long
as Riverstone owns a Units (Capital) Majority, approval of at least two-thirds
of the Units (Capital):

(a) making capital calls to fund Capital Contributions other than as needed to
meet (i) general and administrative expenses and (ii) expenses approved under
Section 9.04, in each case over a ninety (90) day look-forward period;

 

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(b) making any distributions to any Partner other than cash distributions;

(c) repurchasing any issued and outstanding Units;

(d) electing or removing any member of the Development Leadership Team;

(e) after consultation with the Development Leadership Team, issuing additional
Units (including any Units (Profits Interest)) except as otherwise provided
herein or other interests or options convertible into or exchangeable for Units,
or any other equity interests in the Partnership or any of its Subsidiaries,
subject to Section 9.06, Section 9.07, Section 13.01 and Section 13.02 of this
Agreement;

(f) subject to Section 15.05 of this Agreement, altering, supplementing,
amending or otherwise modifying any provision of this Agreement;

(g) effecting a Liquidation Event;

(h) effecting a Qualified Public Offering in accordance with Section 11.02 of
this Agreement;

(i) changing the Partnership’s independent auditors;

(j) changing the Partnership’s business line; and

(k) distributions in kind pursuant to Section 7.02.

Section 9.06 Actions Requiring Board Approval and Approval of Pattern Energy

Notwithstanding anything in this Agreement to the contrary, none of the
Partnership, the Board of Directors or any of the Partnership’s Subsidiaries may
take the following actions without prior (i) Board Approval and (ii) the
approval of Pattern Energy (provided that the actions in clauses (c)-(g) below
shall only require Pattern Energy approval for so long as Pattern Energy owns at
least ten percent (10%) of the Units (Capital) outstanding at any point in
time):

(a) commencing a bankruptcy, winding up, insolvency or reorganization proceeding
involving the Partnership or any Subsidiary of the Partnership;

(b) changing the Partnership’s or any of its Subsidiaries’ business plans or the
purpose of the Partnership;

(c) making any material change to the Investment Criteria, or making any
investment or funding projects that are outside the scope of the Investment
Criteria;

 

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(d) making an investment, in a single transaction or series of related
transactions, in a development, construction, or operating project, in an amount
greater than twenty-five percent (25%) (not including any third-party debt) of
the cumulative Units (Capital) Fixed Commitment Amounts set forth on Exhibit B;

(e) admitting any Person as a Partner in accordance with Section 3.01 or
Section 3.03;

(f) authorizing or issuing any Units to a Competitor;

(g) initiating any litigation or other legal or administrative proceeding or
entering into any settlement agreement or series of settlement agreements with
respect to or otherwise resolving any such litigation or proceeding, in each
case, in an amount greater than $10 million;

(h) entering into related-party transactions (i) with any member of the
Riverstone Group or any investment fund managed by any member of the Riverstone
Group or (ii) that are likely to have a disproportionate economic impact on
Pattern Energy relative to the other Units (Capital) Limited Partners;

(i) repurchasing, redeeming, or otherwise cancelling (other than automatically
as a result of forfeiture) any Units (Capital), other than on a pro rata basis
amongst all Units (Capital) Limited Partners;

(j) amending Article VII;

(k) amending the governing documents of the Partnership or any of its
Subsidiaries, to the extent such amendment has a materially and
disproportionately adverse effect on Pattern Energy relative to the other Units
(Capital) Limited Partners; and

(l) initiating a borrowing or letter of credit issuance under the Goldman
Facility.

Section 9.07 Actions Requiring Board Approval and Approval of the Units (Profits
Interest) Limited Partners

Notwithstanding anything in this Agreement to the contrary and subject to
Section 15.05, which sets forth certain amendments to this Agreement which
require approval of the holders of a specified percentage of Units (Profits
Interest), none of the Partnership, the Board of Directors or any of the
Partnership’s Subsidiaries may take the following actions without prior
(i) Board Approval and (ii) approval of a Units (Profits Interest) Majority
(which approval, for the avoidance of doubt, shall not require a formal vote of
all Units (Profits Interest) Limited Partners but shall be effective upon
provision of a consent signed by such Units (Profits Interest) Limited Partners
as represent a Units (Profits Interest) Majority):

(a) entering into any agreement, contract or other instrument, or any
transaction with an Affiliate of Riverstone, other than the reimbursement of
expenses pursuant to Section 9.08(b);

(b) any amendment, modification or repeal of Article X or any provision hereof
that materially diminishes the rights of an Indemnitee;

 

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(c) issuance of Units (Profits Interest) pursuant to Section 3.03(a); and

(d) distributions in kind other than Marketable Securities pursuant to
Section 7.02.

Section 9.08 Certain Expenses

(a) Promptly following the Effective Date, upon the approval of the Board of
Directors, the Partnership shall reimburse the Partners for all reasonable out
of pocket expenses not previously reimbursed, including legal fees, incurred
directly in connection with preparing, negotiating and executing this Agreement
and any agreements related hereto. Each Partner shall provide the Partnership
with a good faith accounting of the amount of such expenditures and liabilities.

(b) Notwithstanding Section 9.07(a) and subject to approval by the Board of
Directors after consultation with any Management Designee, Riverstone and its
Affiliates shall be entitled to reimbursement from the Partnership for any
reasonable expenses directly incurred in connection with, or directly related
to, the Partnership business (including, without limitation, expenses associated
with the Partnership business development and expenses associated with any
amendment to this Agreement and any agreement related hereto).

Section 9.09 Grant of Authority

Each Partner hereby irrevocably constitutes and appoints each member of the
Board of Directors with full power of substitution, each as its true and lawful
attorney and agent, in its name, place and stead to make, execute, acknowledge
and, if necessary, to file and record:

(a) any certificates or other instruments or amendments thereof which the
Partnership may be required to file under the Act or any other laws of the State
of Delaware or pursuant to the requirements of any governmental authority having
jurisdiction over the Partnership or which the Board of Directors shall deem it
advisable to file, including, without limitation, this Agreement, any amended
Agreement or certificate of cancellation;

(b) any certificates or other instruments (including counterparts of this
Agreement with such changes as may be required by the law of other
jurisdictions) and all amendments thereto which the Board of Directors deems
appropriate or necessary to qualify, or continue the qualification of, the
Partnership as a limited partnership;

(c) any certificates or other instruments which may be required in order to
effectuate the dissolution and termination of the Partnership pursuant to
Article XIV; and

(d) any amendment to any certificate or to this Agreement necessary to reflect
any other changes made pursuant to the exercise of the powers of attorney
contained in this Section 9.09 or pursuant to this Agreement.

 

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ARTICLE X

INDEMNIFICATION

Section 10.01 Power to Indemnify in Actions, Suits or Proceedings

Subject to Section 10.02 of this Agreement, to the fullest extent permitted by
law, the Partnership shall indemnify, defend and hold harmless any Person (and
such Person’s heirs, administrators and executors) who was or is a party or is
threatened to be made a party to, or is otherwise involved in, any threatened,
pending or completed action, suit or proceeding (brought in the right of the
Partnership or otherwise), whether civil, criminal, administrative or
investigative, and whether formal or informal, including appeals, by reason of
the fact that he is or was a Partner, Officer or Director of the Partnership, or
is or was serving at the request of the Partnership for any other enterprise
(each such Person described herein, an “Indemnitee”), from and against any and
all losses, claims, expenses (including attorneys’ fees), costs, liabilities,
damages, judgments, fines and amounts paid in settlement actually and reasonably
incurred by such Indemnitee, in connection with such action, suit or proceeding,
including appeals; provided, that such Indemnitee shall not be indemnified by
the Partnership hereunder to the extent that such Indemnitee’s conduct
constituted fraud, willful or intentional misconduct or criminal wrongdoing or
gross negligence. For the avoidance of doubt, any Units (Profits Interest)
Limited Partner who shall serve as a member, officer, director, manager, agent
or employee of any Subsidiary or any other enterprise shall be deemed to serve
at the request of the Partnership. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
such Indemnitee’s actions were not in accordance with the previous standard. Any
indemnification provided hereunder will be satisfied solely out of the assets of
the Partnership, as an expense of the Partnership. No Partner will be subject to
personal liability by reason of these indemnification provisions.

Without limiting the generality of the foregoing, to the extent that an
Indemnitee has been successful on the merits or otherwise in defense of any such
action, suit or proceeding, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys’ fees) actually
and reasonably incurred by him in connection therewith. An Indemnitee shall not
be denied indemnification in whole or in part under this Article X because the
Indemnitee had an interest in the transaction with respect to which
indemnification applies if the transaction was otherwise permitted by the terms
hereof.

Section 10.02 Expenses Payable in Advance

To the fullest extent permitted by law, expenses incurred by an Indemnitee in
appearing at, participating in, defending or investigating a threatened or
pending action, suit or proceeding shall be promptly paid by the Partnership in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such Indemnitee to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Partnership as authorized by this Article X.

 

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Section 10.03 Unpaid Claims

If a claim for indemnification (following the final disposition of such action,
suit or proceeding) or advancement of expenses under this Article X is not paid
in full within thirty (30) days after a written claim therefor by an Indemnitee
has been received by the Partnership, such Indemnitee may, without the consent
of the Board of Directors, institute proceedings to recover the unpaid amount of
such claim and, if successful in whole or in part, shall be entitled to be paid
the expense of prosecuting such claim. In any such action the Partnership shall
have the burden of proving that such Indemnitee is not entitled to the requested
indemnification or advancement of expenses under this Agreement or applicable
law.

Section 10.04 Nonexclusivity of Indemnification and Advancement of Expenses

The indemnification and advancement of expenses provided by or granted pursuant
to this Article X shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any agreement, contract, vote of Partners or Board of Directors or pursuant to
the direction (howsoever embodied) of any court of competent jurisdiction,
arbitrator or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Partnership that indemnification of Indemnitees shall be made to the fullest
extent permitted by applicable law. The provisions of this Article X shall not
be deemed to preclude the indemnification of any Person who is not specified in
Section 10.01 of this Agreement, but whom the Partnership has the power or
obligation to indemnify under the provisions of the Act or otherwise.

Section 10.05 Survival of Indemnification and Advancement of Expenses; Third
Party Beneficiaries

The obligations of the Partnership under this Article X create vested rights in
the Indemnitees effective as of the date the Indemnitee first commences service
for the Partnership, its Subsidiaries, and/or any other enterprise (as defined
in Section 10.09). Indemnification and advancement of expenses provided by, or
granted pursuant to, this Article X shall continue as to an Indemnitee who has
ceased to be a Partner, Officer, Director or employee. The provisions of this
Article X shall be deemed to be a contract between the Partnership and each
Indemnitee. Except to the extent required by law, any amendment, modification or
repeal of this Article X or any provision hereof that does not expand the rights
of the Indemnitees (a) shall be prospective only and shall not in any way affect
the Partnership’s liability to any such Indemnitee under this Article X, as in
effect immediately prior to such amendment, modification, or repeal with respect
to actions, suits, proceedings or claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or repeal,
regardless of when such actions, suits, proceedings or claims may arise or be
asserted and (b) shall not be effective unless the holders of a Units (Profits
Interest) Majority approve such amendment, modification or repeal pursuant to
Section 9.07. The provisions of this Article X are intended to be for the
benefit of, and shall be enforceable by, each Indemnitee, and his or her heirs
and legal representatives, (each of whom are intended third party beneficiaries)
and shall be in addition to any other rights an Indemnitee may have under any
contract, by law, or under any other arrangement.

 

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Section 10.06 Limitation on Indemnification

Notwithstanding anything contained in this Article X to the contrary, except for
proceedings to enforce rights to indemnification and advancement of expenses,
the Partnership shall not be obligated to indemnify any Partner, Officer or
Director in connection with a proceeding (or part thereof) initiated by such
Person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors.

Section 10.07 Indemnification of Employees and Agents

The Partnership may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and the advancement of expenses to
employees and agents of the Partnership and its Subsidiaries similar to those
conferred in this Article X to the Indemnitees.

Section 10.08 Severability

The provisions of this Article X are intended to comply with the Act. To the
extent that any provision of this Article X authorizes or requires
indemnification or the advancement of expenses contrary to the Act or the
Certificate, the Partnership’s power to indemnify or advance expenses under such
provision shall be limited to that permitted by the Act and the Certificate and
any limitation required by the Act or the Certificate shall not affect the
validity of any other provision of this Article X. If any provision of this
Article X shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
in this Article X shall not be affected thereby.

Section 10.09 Fiduciary Service

For purposes of this Article X, references to “other enterprise” shall include
each Subsidiary of the Partnership, any employee benefit plan and any other
entity (including a limited liability company, limited partnership or
corporation), committee, association, joint venture, enterprise, trust or
unincorporated operation that an Indemnitee is serving at the request of the
Partnership; references to “fines” shall include any excise taxes assessed on a
Person; and the Partnership shall be deemed to have requested, and references to
“serving at the request of the Partnership” shall include, any service as a
director, officer, employee, agent, trustee, fiduciary, consultant,
administrator, representative, or delegate of or for the Partnership, any
Subsidiary and/or any other enterprise, including any capacity with respect to
an employee benefit plan, its participants, or beneficiaries.

Section 10.10 Exculpation

No Partner, Officer or Director of the Partnership will be liable to the
Partnership or to any Partner for any act or failure to act, unless such
Person’s action or failure to act constituted fraud, willful or intentional
misconduct or criminal wrongdoing or gross negligence. The Partners, Officers
and Directors of the Partnership will not be liable to the Partnership or to any
Partner for such Person’s good faith reliance on the provisions of this
Agreement. Except with respect to Section 9.05, Section 9.06 and Section 9.07,
the Board of Directors may exercise any of the powers granted to it by this
Agreement and perform its duties either directly or through its agents and it
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by it in good faith.

 

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Section 10.11 Indemnitor of First Resort

As a result of agreements or obligations arising outside of this Agreement, it
may be the case that certain of the Indemnitees (“Sponsor Indemnitees”) have
certain rights to indemnification, advancement of expenses or insurance provided
by (a) Riverstone or certain of its Affiliates (the “Riverstone Indemnitors”) or
(b) the Initial Limited Partner, Pattern Energy or certain of their respective
Affiliates (the “PEG Indemnitors”, and together with the Riverstone Indemnitors,
the “Sponsor Indemnitors”). However, regardless of whether or not there are any
such rights to indemnification, advancement of expenses or insurance provided by
any Sponsor Indemnitor, (i) the Partnership is the indemnitor of first resort
(i.e., the Partnership’s obligations to each Sponsor Indemnitee are primary and
any obligation of the Riverstone Indemnitors or the PEG Indemnitors, as
applicable, to advance expenses or to provide indemnification for the same
expenses or liabilities incurred by any Sponsor Indemnitee are secondary) to the
extent of the indemnification obligations of the Partnership hereunder, (ii) the
Partnership shall be required to advance the full amount of expenses incurred by
a Sponsor Indemnitee and shall be liable for the full amount of all expenses,
judgments, penalties, fines and amounts paid in settlement to the extent legally
permitted and as required by the terms of this Agreement (or any other agreement
between the Partnership and the Sponsor Indemnitees) and (iii) to the extent of
the indemnification obligations of the Partnership hereunder, the Partnership
hereby irrevocably waives, relinquishes and releases each of the Sponsor
Indemnitors from any and all claims against any of the Sponsor Indemnitors for
contribution, subrogation or any other recovery of any kind in respect thereof.
Regardless of any advancement or payment by the Sponsor Indemnitors on behalf of
any Sponsor Indemnitee with respect to any claim for which a Sponsor Indemnitee
has sought indemnification from the Partnership, to the extent of the
indemnification obligations of the Partnership hereunder, (x) the foregoing
shall not be affected and (y) the Riverstone Indemnitors or the PEG Indemnitors,
as applicable, shall have a right of contribution and/or be subrogated to the
extent of such advancement or payment to all of the rights of recovery of such
Sponsor Indemnitee against the Partnership.

Section 10.12 Insurance

The Partnership may purchase and maintain insurance on behalf of any one or more
Indemnitees and other Persons against any liability that may be asserted against
or expense that may be incurred by such Person in connection with the activities
of the Partnership, its Subsidiaries or other enterprises as to which the
Partnership has requested service, whether or not the Partnership would have the
power to indemnify such Person against such liability hereunder. The Partnership
shall maintain policies of directors’ and officers’ liability insurance for the
Board of Directors and all Officers with respect to claims arising from facts or
events that occurred on or after the Initial Closing Date, including in respect
of the matters contemplated by this Agreement.

 

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ARTICLE XI

TRANSFER OF UNITS

Section 11.01 Request for Sale of Partnership by a Units (Capital) Majority

(a) Subject to Section 11.13, a Units (Capital) Majority, at any time after the
date of this Agreement, may give written notice to the Partnership and the
Partners requiring a sale of the Partnership (an “Approved Sale”). An Approved
Sale may be effected pursuant to a securities disposition (by unit sale, merger,
consolidation or otherwise) or asset disposition, as determined by the Units
(Capital) Majority in its sole discretion. Subject to the other provisions of
this Section 11.01, each Partner hereby agrees to vote (to the extent any such
vote is required) all of its Units in favor of an Approved Sale upon the written
request of the Units (Capital) Majority. If the Approved Sale is structured as a
(i) merger, consolidation or sale of assets, each Partner shall waive any
dissenters’ rights, appraisal rights or similar rights in connection with such
merger, consolidation or sale of assets or (ii) sale of Units, each Partner
shall agree subject to the other provisions of this Section 11.01 to sell all of
his, her or its Units or rights to acquire Units at the price and upon the
payment terms approved by the Units (Capital) Majority. If the Units (Capital)
Majority is subject to any indemnification holdback in the consideration paid to
it for Units sold pursuant to this Section 11.01, any Units (Profits Interest)
Limited Partner who sells any of its Units (Capital) or Units (Profits Interest)
pursuant to the terms of this Section 11.01 shall be subject to the same
indemnification holdback as the Units (Capital) Majority, in accordance with
such Units (Profits Interest) Limited Partner’s proportional share of the Units
sold. Each Partner shall take all necessary actions in connection with the
consummation of the Approved Sale as reasonably requested by the Units (Capital)
Majority; provided, that no Partner shall be required to make any representation
other than as to its ownership of its Units and no Partner shall assume or incur
any liability other than its pro rata share based on the Units sold of any such
indemnification holdback.

(b) In any Approved Sale:

(i) the Units (Capital) and Units (Profits Interest) shall be converted into or
entitled to receive, as applicable, a proportionate amount of the aggregate
consideration to be paid by the acquiring party, with such proportions to be
determined by applying Section 7.01 of this Agreement to a Distributable
Property amount equal to the sum of (a) the cash included in such consideration
plus (b) the Fair Market Value of any non-cash property included in such
consideration;

(ii) each holder of Units (Capital) shall receive such holder’s proportionate
share of the aggregate consideration to be allocated to Units (Capital) pursuant
to Section 11.01(b)(i) of this Agreement based on the amount it is entitled to
receive under Section 7.01; and

(iii) each holder of a tranche of Units (Profits Interest) shall receive such
holder’s proportionate share of the aggregate consideration allocated to the
tranches of Units (Profits Interest) pursuant to Section 11.01(b)(i) of this
Agreement based on the amount it is entitled to receive under Section 7.01.

 

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(c) If the Approved Sale is a transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission may
be available with respect to such transaction (including a merger, consolidation
or other reorganization), the Partners (other than those qualifying as
Accredited Investors) shall, at the request of a Units (Capital) Majority,
appoint a purchaser representative (as such term is defined in Rule 501)
reasonably acceptable to such Units (Capital) Majority. If any Partner appoints
a purchaser representative, the Partnership will pay the fees of such purchaser
representative. If the consideration consists of securities and in order to
qualify for an exemption from the Securities Act such securities cannot be sold
to non-Accredited Investors, then the non-Accredited Investors shall be entitled
to receive, in lieu of such securities, an amount, in cash, equal to the Fair
Market Value (as determined pursuant to Section 11.09) of the portion of the
Units held by the non-Accredited Investors that would otherwise be exchanged in
consideration for such securities.

(d) Partners shall bear their pro rata share (based upon the allocation set
forth in Section 11.01(b)) of the costs of any sale of Units pursuant to an
Approved Sale to the extent such costs are incurred for the benefit of all
Partners; all such costs that are incurred for the benefit of all Partners to be
paid by the Partnership if not netted from the sales proceeds or paid by the
acquiring party. Notwithstanding anything herein to the contrary, for purposes
of this Section 11.01(d), costs incurred by the Units (Capital) Limited Partners
or Units (Profits Interest) Limited Partners in exercising reasonable efforts to
take all actions in connection with the consummation of an Approved Sale in
accordance with this Section 11.01(d) shall be deemed to be for the benefit of
all Partners for purposes of this Section 11.01. Costs incurred by Partners on
their own behalf will not be considered costs of the transaction hereunder.

Section 11.02 Conversion to a Corporation; Qualified Public Offering

(a) Subject to Section 11.13, the Board of Directors, with written Board
Approval and the approval of a Units (Capital) Majority, may cause the
conversion in connection with a Qualified Public Offering of the Partnership, or
any portion thereof, into a corporation, including by (i) the Transfer of all of
the assets of the Partnership, subject to the Partnership’s liabilities, or the
Transfer of any portion of such assets and liabilities, to one or more
corporations in exchange for shares of any such corporations and the subsequent
distribution of such shares, at such time as the Board of Directors may
determine, to the Partners, (ii) conversion of the Partnership into a
corporation pursuant to Section 17-219 of the Act (or any successor section
thereto), (iii) Transfer by each Partner of Units held by such Partner to one or
more corporations in exchange for shares of any such corporations (including by
merger of the Partnership into a corporation) (or, in the case of any single
purpose entity treated as corporation for U.S. federal income tax purposes that
holds a direct or indirect interest in Riverstone (a “Blocker Corporation”), at
the request of Riverstone, merge the Blocker Corporation into the corporation
resulting from the Qualified Public Offering of the Partnership in a tax-free
reorganization or otherwise structure the Qualified Public Offering so that the
Blocker Corporation is not subject to a corporate-level tax on the Qualified
Public Offering or subsequent dividend payments or sales of stock), or (iv) by
filing an election pursuant to Treasury Regulation Section 301.7701-3(c) (each
of (i), (ii) and (iii), a “Reorganization”). The Partners shall take all actions
reasonably requested by the Board of Directors in connection with the
consummation of such Reorganization, including without limitation consenting to,
voting for and waiving any dissenters rights, appraisal rights or similar rights
and participating in any exchange or other transaction required in connection
with such Reorganization. The Partnership

 

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shall pay any and all reasonable organizational, legal and accounting expenses
and filing fees incurred by the Partnership, the Units (Capital) Limited
Partners and the Units (Profits Interest) Limited Partners in connection with
such Reorganization; provided, that the Partnership shall only have to pay for
one counsel to represent the interests of all of the Units (Profits Interest)
Limited Partners and one counsel to represent the interests of all of the Units
(Capital) Limited Partners.

(b) In connection with any Reorganization as described in Section 11.02(a) of
this Agreement, the shares (which will be valued at their Fair Market Value
immediately prior to the Qualified Public Offering) received will be distributed
in accordance with Section 7.01 of this Agreement (as adjusted to take into
account any Threshold Amount applicable to any tranche of Units (Profits
Interest)).

(c) In connection with any Reorganization as described in Section 11.02(a) of
this Agreement:

(i) the Units (Capital) and Units (Profits Interest) shall be converted into a
proportionate amount of the common stock of the resulting corporation, with such
proportion to be determined by applying Section 7.01 of this Agreement to the
total number of shares of common stock to be distributed upon conversion (which
shares will be valued based on the valuation immediately prior to the Qualified
Public Offering, less underwriting discounts and commissions, if any, and
expenses);

(ii) each holder of Units (Capital) shall receive such holder’s proportionate
share of the aggregate number of shares to be allocated to Units (Capital)
pursuant to Section 11.02(c)(i) of this Agreement based on the amount it is
entitled to receive under Section 7.01; and

(iii) each holder of Units (Profits Interest) shall receive such holder’s
proportionate share of the aggregate number of shares to be allocated to each
tranche of the Units (Profits Interest) pursuant to Section 11.02(c)(i) of this
Agreement based on the amount it is entitled to receive under Section 7.01,
provided that all shares received with respect to unvested Units (Profits
Interest) will be subject to the same vesting conditions as applied to such
Units (Profits Interest).

If securities other than, or in addition to, common stock are issued to Unit
holders by the resulting corporation in such Reorganization, each class or
series of securities shall be allocated among the holders of Units as provided
in this Section 11.02(c).

(d) In connection with any such Reorganization as described in Section 11.02(a)
of this Agreement, the Units (Capital) and the Units (Profits Interest) shall be
converted into the right to receive the same series or class of securities of
the corporation (in the case of Reorganizations described in Section 11.02(a))
or the Partnership (in the case of Reorganizations described in
Section 11.02(a)) and such securities shall be allocated among the Units
(Capital) and Units (Profits Interest), and among the holders of Units (Capital)
and Units (Profits Interest), in the same manner as shares of common stock are
allocated in the event of a Reorganization under Section 11.02(a) of this
Agreement as provided in Section 11.02(c) of this Agreement.

 

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(e) In connection with any Reorganization as provided in Section 11.02(a) of
this Agreement, (i) each holder of Units (Capital) and Units (Profits Interest)
shall receive the same form of securities and the same amount of securities per
Unit of such Units (Capital) and Units (Profits Interest), respectively, and, if
any holders of Units (Capital) or Units (Profits Interest) are given an option
as to the form and amount of securities to be received, each holder of the Units
(Capital) or Units (Profits Interest), as applicable, shall be given the same
option and (ii) each holder of Units agrees to the Transfer of its Units in
accordance with the terms of conversion or exchange, as applicable, as provided
by the Board of Directors. Each holder of Units further agrees that as of the
effective date of such conversion or exchange any Unit outstanding thereafter
that shall not have been tendered for conversion or exchange shall represent
only the right to receive a certificate representing the number of shares of any
such corporations as provided in the terms of such conversion or exchange.

(f) If the Board of Directors approves a Qualified Public Offering, the Partners
shall take all necessary or desirable actions reasonably requested by the
Partners in connection with the consummation of such Qualified Public Offering,
including without limitation compliance with the requirements of all laws and
regulatory bodies that are applicable or that have jurisdiction over such
Qualified Public Offering. If such Qualified Public Offering is an underwritten
offering:

(i) and the managing underwriters advise the Partnership in writing that in
their opinion the Partnership’s capital structure would adversely affect the
marketability of the offering, each Partner shall consent to and vote for a
recapitalization, reorganization or exchange (each, a “Recapitalization”) of any
class of the Partnership’s equity securities into securities that the managing
underwriters and the Board of Directors find acceptable and shall take all
necessary and desirable actions in connection with the consummation of such
Recapitalization; provided that each holder of a class of Units shall receive
the same type of security with the same value per Unit (other than differences
based upon differences in the amount of yield accrued on such Units since their
respective dates of issuance) and shall be subject to the same restrictions on
lock-up and transferability unless otherwise agreed to by the Partners; and

(ii) if requested by the managing underwriters, each of the Partners shall
execute customary lock-up agreements with respect to their Units and/or any
securities received by them in any attendant Reorganization or Recapitalization.

(g) In connection with a Reorganization or Recapitalization associated with a
Qualified Public Offering, any Units (Capital) Limited Partner that is a
qualified institutional buyer (as defined in Rule 144A promulgated under the
Securities Act) may elect to receive distributions with respect to its Units
(Capital) in cash, in lieu of shares.

(h) The provisions of this Section 11.02 are not intended to and shall not in
any way diminish the power and authority of the Board of Directors as set forth
in Section 9.01 of this Agreement or any other provision of this Agreement.

 

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Section 11.03 Demand Registration Rights

(a) General. If the Partnership (or successor entity) (for purposes of this
Section 11.03 and Section 11.04, the “Public Entity”) shall receive from
holder(s) of a Units (Capital) Majority after six (6) months after the Public
Entity has closed a Qualified Public Offering, a written request that the Public
Entity file a registration statement with respect to Registrable Securities (the
sender(s) of such request or any similar request pursuant to this Section 11.03
and Section 11.04 shall be known as the “Initiating Holder(s)”), then the Public
Entity shall, within thirty (30) days of the receipt thereof, give written
notice of such request to all Holders, and subject to the limitations of this
Section 11.03, use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that the
Holders request to be registered. The Public Entity shall not be obligated to
take any action to effect any such registration:

(i) after it has effected three (3) such registrations pursuant to this
Section 11.03, and such registrations have been declared or ordered effective;

(ii) within six (6) months of a registration pursuant to this Section 11.03 that
has been declared or ordered effective;

(iii) during the period starting with the date sixty (60) days prior to its good
faith estimate of the date of filing of, and ending on a date one hundred eighty
(180) days after the effective date of, a Public Entity-initiated registration
(other than a registration relating solely to the sale of securities to
employees of the Public Entity pursuant to a stock option, stock purchase or
similar plan or to a Rule 145 transaction), provided that the Public Entity is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;

(iv) where the anticipated aggregate offering price, net of any underwriting
discounts or commissions, is equal to or less than twenty-five million dollars
($25,000,000);

(v) if the Public Entity shall furnish to such Initiating Holder(s) a
certificate signed by the President of the Public Entity stating that in the
good faith judgment of the board of directors it would be seriously detrimental
to the Public Entity and its equity holders for such registration statement to
be filed at the time filing would be required and it is therefore essential to
defer the filing of such registration statement, the Public Entity shall have
the right to defer such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holders, and provided, further,
that the Public Entity shall not defer its obligation in this manner more than
once in any twelve (12) month period;

(vi) in any particular jurisdiction in which the Public Entity would be required
to qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance; or

(vii) unless the Registrable Securities are to be distributed by means of a firm
commitment underwriting.

 

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(b) The Public Entity (together with all Holders proposing to distribute their
securities through such underwriting) shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Public Entity in its sole discretion. Notwithstanding any
other provision of this Section 11.03, if the underwriter advises the Initiating
Holders that marketing factors require a limitation of the number of shares to
be underwritten, the Registrable Securities that would otherwise be underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among the
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing of
the registration statement. If any Holder of Registrable Securities disapproves
of the terms of the underwriting, such Person may elect to withdraw therefrom by
written notice to the Public Entity, the managing underwriter and the Initiating
Holders. The Registrable Securities so excluded or withdrawn shall not be
Transferred in a public distribution prior to ninety (90) days after the
effective date of such registration. If by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Public Entity shall offer to all Holders who have
included Registrable Securities in the registration the right to include
additional Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 11.03(b). If the underwriter has not
limited the number of Registrable Securities to be underwritten, the Public
Entity may include securities for its own account if the underwriter so agrees
and if the number of Registrable Securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.

Section 11.04 Piggyback Registration Rights.

(a) If, at any time or from time to time, beginning with the Public Entity’s
Qualified Public Offering, the Public Entity shall determine to register any of
its securities for its own account in connection with an underwritten offering
of its securities to the general public for cash on a form which would permit
the registration of Registrable Securities (including but not limited to the
Public Entity’s Qualified Public Offering), the Public Entity will:

(i) promptly give to each Holder written notice thereof; and

(ii) include in such registration and in the underwriting involved therein, all
the Registrable Securities specified in a written request or requests, made
within twenty (20) days after mailing or personal delivery of such written
notice from the Public Entity, by any Holders, except as set forth in
Section 11.04(b).

(b) Underwriting. The right of any Holder to registration pursuant to this
Section 11.04 shall be conditioned upon such Holder’s participation in the
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall (together with the
Public Entity) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Public Entity.
Notwithstanding any other provision of this Section 11.04, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the Public Entity shall so advise all Holders whose
securities would otherwise be registered and underwritten pursuant hereto, and
the number

 

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of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated in the following manner: (i) first, to the
Public Entity for securities being sold for its own account; then (ii) among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities entitled to inclusion in such registration held by such
Holders at the time of filing the registration statement, or, if so determined
by the underwriter, all Registrable Securities shall be excluded from each
registration and underwriting. If any Holder disapproves of the terms of any
such underwriting, the Holder may elect to withdraw therefrom by written notice
to the Public Entity and the underwriter. Any Registrable Securities so excluded
or withdrawn shall not be Transferred in a public distribution prior to ninety
(90) days after the effective date of such registration statement.

Section 11.05 Tag Along Rights

(a) Subject to Section 11.13, if one or more Units (Capital) Limited Partners or
any of their Affiliates (collectively, a “Selling Partner”) desires to effect
(i) a Transfer of Units representing 50% or more of the outstanding Units
(Capital) in a single transaction or a series of related transactions, or (ii) a
Transfer of Units that when aggregated with all other prior Transfers of Units
(Capital) (whether or not constituting a Tag Sale) equals 50% or more of the
total Units (Capital) issued by the Partnership under this Agreement (each
Transfer of Units under clause (i) or (ii) a “Tag Sale,” and any subsequent
Transfer of Units shall also be deemed a Tag Sale) and it does not elect to
exercise its rights, if any, under Section 11.01 of this Agreement to require
each non-Selling Partner (each, a “Co-Seller”) to Transfer their Units, then at
least fifteen (15) days prior to the closing of such Tag Sale, the Selling
Partner shall make a written offer (the “Participation Offer”) to each Co-Seller
to include in the proposed Tag Sale a portion of:

(i) the number of Units (Capital) equal to the product of:

(A) the sum of (x) the total number of Units (Capital) owned by the Co-Seller
immediately prior to the Tag Sale and (y) the aggregate number of such Co-Seller
Units (Capital) previously sold in Tag Sales; and

(B) the sum of (x) the percentage of the total number of Units (Capital) being
sold by the Selling Partner in the Tag Sale and (y) the percentage of the total
number of Units (Capital) previously sold by all Selling Partners prior to the
Tag Sales;

minus the aggregate number of such Co-Seller’s Units (Capital) previously sold
in Tag Sales; and

(ii) the number of Units (Profits Interest) equal to the product of:

(A) the sum of (x) the total number of Units (Profits Interest) owned by the
Co-Seller immediately prior to the Tag Sale and (y) the aggregate number of such
Co-Seller Units (Profits Interest) previously sold in Tag Sales; and

(B) the sum of (x) the percentage of the total number of Units (Capital) being
sold by the Selling Partner in the Tag Sale and (y) the percentage of the total
number of Units (Capital) previously sold by all Selling Partners prior to the
Tag Sales;

minus the aggregate number of such Co-Seller’s Units (Profits Interest)
previously sold in Tag Sales.

 

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Notwithstanding the foregoing, if the consideration to be received by the
Selling Partner includes any securities, then, unless the Selling Partner and
the Transferee both reasonably determine that an exemption is otherwise
available under the Securities Act and all applicable state securities laws for
such transaction, only Co-Sellers who have certified to the reasonable
satisfaction of the Selling Partner that they are Accredited Investors shall be
entitled to receive securities; the non-Accredited Investors shall be entitled
to receive from the Partners selling Units in the applicable transaction, pro
rata, in lieu of such securities, an amount, in cash, equal to the Fair Market
Value (as determined pursuant to Section 11.09) of the portion of the Units held
by the non-Accredited Investors that would otherwise be exchanged in
consideration for such securities. The Units of any Co-Seller sold in any Tag
Sale shall entitle such Co-Seller to receive the amount which such Co-Seller
would receive if Section 7.01 of this Agreement were applied to the Tag Sale
Value for a particular Tag Sale, and, as a result of such application, amounts
would be distributed to the holders of Units pursuant to Section 7.01 of this
Agreement. For the avoidance of doubt, the terms of this Section 11.05 shall
continue following a Qualified Public Offering.

(b) The Participation Offer shall describe the terms and conditions of the
proposed Tag Sale (including the number of Units to be sold) which shall be no
less favorable than the terms and conditions obtained by the Selling Partner and
shall be conditioned upon (i) the consummation of the transactions contemplated
in the Participation Offer with the Transferee named therein and (ii) each
Co-Seller’s execution and delivery of all agreements and other documents as the
Selling Partner is required to execute and deliver in connection with such Tag
Sale. If any Co-Seller shall accept the Participation Offer by written notice to
the Selling Partner within ten (10) days after the date on which such Co-Seller
receives the Participation Offer, the Selling Partner shall reduce, to the
extent necessary, the number of Units (Capital) it otherwise would have sold in
the proposed Transfer so as to permit those Co-Sellers who have accepted the
Participation Offer to sell the number of their Units that they are entitled to
sell under this Section 11.05 and the Selling Partner and such Co-Sellers shall
Transfer the number of Units specified in the Participation Offer to the
proposed Transferee in accordance with the terms of such Transfer as set forth
in the Participation Offer. If any Selling Partner is subject to any
indemnification holdback in the consideration paid to it for Units sold pursuant
to this Section 11.05, any Units (Profits Interest) Limited Partner who sells
any of its Units pursuant to the terms of this Section 11.05 shall be subject to
the same indemnification holdback as the Selling Partner, in accordance with
such Units (Profits Interest) Limited Partner’s proportional share of the Units
sold.

Section 11.06 Certain Events Not Deemed Transfers

In no event shall any exchange, reclassification, or other conversion of Units
into any cash, securities, or other property pursuant to a merger or
consolidation of the Partnership with, or any sale or Transfer by the
Partnership of all or substantially all its assets to, any Person constitute a
Tag Sale for purposes of Section 11.05 of this Agreement. In addition,
Section 11.05 of this Agreement shall not apply to any Transfer, sale or
disposition of Units to an Affiliate of a Partner.

 

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Section 11.07 Transfer and Exchange

When Units are presented to the Partnership with a request to register the
Transfer of such Units or to exchange such Units for Units of other authorized
denominations, the Partnership shall register the Transfer or make the exchange
as requested if the requirements of this Agreement for such transaction are met;
provided, however, that the Units surrendered for Transfer or exchange shall be
duly endorsed or accompanied by a written instrument of Transfer in form
satisfactory to the Partnership, duly executed by the holder thereof or its
attorney and duly authorized in writing. No service charge shall be made for any
registration of Transfer or exchange, but the Partnership may require payment of
a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith.

Section 11.08 Vesting Terms; Redemption/Forfeiture

(a) General. All Transferees (including spouses and former spouses) of holders
of Units (Profits Interest) shall be subject to this Section 11.08 regardless of
the fact that any such Transferee is not an employee of the Partnership or its
Subsidiaries (i.e., if the employment of the Units (Profits Interest) Limited
Partner who Transferred the Units (Profits Interest) to such Transferee is
terminated, this Section 11.08 shall apply to such Units (Profits Interest)
regardless of their ownership).

(b) Vesting Schedule. Subject to Section 11.08(c)(iii) of this Agreement, the
Units (Profits Interest) held by a Units (Profits Interest) Limited Partner
shall vest in equal installments of 25% annually over a four year period,
beginning on the Grant Date. Unvested Units (Profits Interest) shall fully vest
upon the occurrence of (i) a Qualified Public Offering, (ii) a Liquidation
Event, (iii) a Transfer in a single transaction or a series of related
transactions of 50% or more of the outstanding Units (Capital), (iv) an Approved
Sale or (v) a Reorganization; provided that, in the case of (ii) and (iii), if
requested by the third-party buyer or merger partner, and subject to clause
(D) below:

(A) if the transaction or event does not permit or result in distributions or
payments (whether upon a sale or otherwise) with respect to the Units (Profits
Interest) that were vested immediately prior to the transaction or event, then
all Units (Profits Interest) shall be immediately vested except Units (Profits
Interest) equal to the 25% of the Units (Profits Interest) that were unvested
immediately prior to the transaction or event (the “Retained Units”) shall
continue to be unvested and held by the Units (Profits Interest) Limited Partner
holding such Units subject to clause (C) below;

(B) if the transaction or event permits or results in distributions or payments
(whether upon a sale or otherwise) with respect to the Units (Profits Interest)
that were vested immediately prior to the transaction or event, then all Units
(Profits Interest) shall be immediately vested except the cash or other items
that would have been distributed or paid with respect to Units (Profits
Interest) equal to the 25% of the Units (Profits Interest) that were unvested
immediately prior to the transaction or event net of the Assumed Tax Liability
with respect thereto (which shall be immediately distributed) (the “Withheld
Items”) shall be withheld subject to clause (C) below;

 

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(C) Retained Units under clause (A) above and all Withheld Items under clause
(B) above shall be immediately vested or released, as the case may be, to the
relevant Units (Profits Interest) Limited Partners upon the earlier of the first
anniversary of the consummation of any transaction or event described in
Section 11.08(b) and the fourth anniversary of the date of the issuance of such
Units (Profits Interest). Prior to such release, the Retained Units and Withheld
Items shall be subject to the forfeiture and redemption provisions consistent
with the terms of Section 11.08(c) as if they were unvested Units (Profits
Interest). In addition, upon a Units (Profits Interest) Limited Partner ceasing
to be an Employee for any reason other than Cause, the vesting of the terminated
Units (Profits Interest) Limited Partner’s Units (Profits Interest), in the sole
discretion of the Board of Directors, may be accelerated. As to Retained Units,
the Units (Profits Interest) Limited Partners shall be entitled to receive
distributions of the Assumed Tax Liabilities prior to the release and other
distributions with respect thereto shall be treated as Retained Distributions;

(D) such third-party buyer or merger partner must agree to establish mechanisms,
reasonably acceptable to the Holders of a majority in interest of such the
Retained Units and/or Withheld Items, to assure that such holders shall receive
any Withheld Items, Retained Distributions allocable to such holders subject to
the vesting and other provisions of clause (C) above.

(c) Redemption/Forfeiture.

(i) If a Limited Partner ceases to be an Employee as a result of termination by
a member of the PEG Group for Cause, (A) all Units (Profits Interest) (whether
vested or unvested) held by such Limited Partner shall be automatically
forfeited to the Partnership at the termination date without further action on
the part of the Partnership or such former Employee and (B) the Partnership will
have the option to repurchase any Units (Capital) owned by such former Employee
for the Fair Market Value of such Units (Capital), provided that the Partnership
must consummate such repurchase within thirty (30) days of such Limited
Partner’s termination.

(ii) If a Limited Partner ceases to be an Employee as a result of such Limited
Partner’s termination other than for Good Reason, (A) all unvested Units
(Profits Interest) held by such Limited Partner shall automatically be forfeited
to the Partnership at the termination date without further action on the part of
the Partnership or such former Employee and (B) the Partnership will have the
option to repurchase any Units (Capital) and any vested Units (Profits Interest)
owned by such former Employee for the Fair Market Value of such Units, provided
that the Partnership must consummate such repurchase within thirty (30) days of
such Units (Profits Interest) Limited Partner’s termination.

 

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(iii) If a Limited Partner ceases to be an Employee as a result of
(A) termination by a member of the PEG Group for other than Cause,
(B) non-renewal by a member of the PEG Group of such Limited Partner’s
Employment Agreement prior to the full vesting of the initial Units (Profits
Interest) issued to such Units (Profits Interest) Limited Partner, (C) Good
Reason, or (D) death or Disability, (1) vesting of any unvested Units (Profits
Interest) owned by such Limited Partner shall be accelerated by twelve
(12) months, (2) any Units (Profits Interest) owned by such Limited Partner that
remain unvested after taking into account such twelve-month acceleration shall
automatically be forfeited to the Partnership at the termination date without
further action on the part of the Partnership or such former Employee and
(3) the Partnership will have the option to repurchase any vested Units (Profits
Interest) and any Units (Capital) owned by such former Employee for the Fair
Market Value of such Units, provided that the Partnership must consummate such
repurchase within thirty (30) days of such Limited Partner’s termination.

(iv) Each Limited Partner explicitly acknowledges and agrees that, if the
Partnership elects to repurchase any Units (Profits Interest) or any Units
(Capital) pursuant to the provisions of Section 11.08(c)(i), (ii), or
(iii) above, then such Limited Partner shall be selling his goodwill in the
Partnership and otherwise disposing of his ownership interest in the
Partnership, and in consideration for such sale and disposal, except as
otherwise permitted in such Units (Profits Interest) Limited Partner’s
Employment Agreement, if applicable, or with respect to a Units (Profits
Interest) Limited Partner as of the Effective Date, the Amended and Restated
Agreement of Limited Partnership of the Initial Limited Partner, expressly
agrees that for a period of twelve (12) months after the consummation of the
repurchase contemplated by Section 11.08(c)(i), (ii), or (iii) he shall not,
directly or indirectly, without prior written approval of the Partnership, for
himself or on behalf of or in conjunction with any other person or entity of
whatever nature:

(A) engage or participate within the Market Area in a Competitive Business;

(B) solicit any Employee to terminate his or her employment with any member of
the PEG Group; or

(C) engage or participate in an auction or sale process for assets or solicit
any counterparty for the delivery of power as to which the Partnership or any of
its Subsidiaries had been, at the time of his termination, targeting or
evaluating for development, negotiating for any option or acquisition, or
preparing to act as a participant in any auction or sale process (the
“Identified Development Properties”).

The covenants in this Section 11.08(c)(iv) are severable and separate and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant in this Agreement.

Because of the difficulty in measuring economic losses to the Partnership as a
result of a breach of any of the covenants in this Section 11.08(c)(iv), and
because of the immediate and irreparable damage that could be caused to the
Partnership for which it would have no other adequate remedy, the Units (Profits
Interest) Limited Partner agrees that the covenants in this Section 11.08(c)(iv)
may be enforced by the Partnership, in the event of a breach, by injunctions and
restraining orders and that such enforcement is in addition to all other rights
and remedies that may be available to the Partnership at law and equity.

 

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As used in this Section 11.08(c)(iv), the term “Market Area” shall mean any area
within a 100 mile radius from (i) the location of a power generation or
transmission facility in which the Partnership or its Subsidiaries have an
economic or other business interest and (ii) the Identifiable Development
Properties. The term “Competitive Business” shall mean any business in which:
(i) the Partnership or any of its Subsidiaries have engaged during the term of
the Units (Profits Interest) Limited Partner’s employment; and (ii) continues to
engage during some or all of the restrictive period referenced in this
Section 11.08(c)(iv). For the avoidance of doubt, with respect to each Units
(Profits Interest) Limited Partner as of the Effective Date, nothing herein
shall limit or restrict, or be deemed a “Competitive Business” with, any
activities described in this Section 11.08(c)(iv) by such Units (Profits
Interest) Limited Partner to the extent any such activity is otherwise permitted
under such Units (Profits Interest) Limited Partner’s Employment Agreement or
the Amended and Restated Agreement of Limited Partnership of the Initial Limited
Partner.

(v) Unless the Board of Directors elects to make payment in cash, payment for
any Units purchased by the Partnership pursuant to Section 11.08(c)(i) of this
Agreement shall be in the form of a promissory note, subordinated to all
indebtedness for borrowed money of the Partnership that the Board of Directors
determines are senior to such promissory note, with principal payable at the
earlier of (i) the re-sale or other monetization of all or a portion of the
repurchased vested Units to the extent of the proceeds of the sale or (ii) five
(5) years from issuance and with interest to be paid annually on the unpaid
balance of such principal at a rate that is equal to the interest rate, on the
date of issuance, that is publicly quoted by J.P. Morgan Chase & Co. or its
successor as its prime commercial or similar reference interest rate; provided,
however, that payments of amounts due on such promissory note shall be
accelerated to the extent necessary to cover any tax liability attributed to
such Partner that is associated with such promissory note, as such amounts
become due and are required to be paid.

(vi) Unless the Board of Directors elects to make payment in cash, payment for
any Units purchased by the Partnership pursuant to Section 11.08(c)(ii) of this
Agreement shall be in the form of a promissory note, subordinated to all
indebtedness for borrowed money of the Partnership that the Board of Directors
determines are senior to such promissory note, with principal and interest
payable quarterly, amortized equally over three (3) years, at a rate that is
equal to the interest rate, on the date of issuance, that is publicly quoted by
J.P. Morgan & Co. or its successor as its prime commercial or similar reference
interest rate; provided, however, that payments of amounts due on such
promissory note shall be accelerated to the extent necessary to cover any tax
liability attributed to such Partner that is associated with such promissory
note, as such amounts become due and are required to be paid. Notwithstanding
the foregoing, if a sale or other monetization of all or a portion of the
repurchased vested units occurs prior to the maturity of the note issued
pursuant to this Section 11.08(c)(vi), the Partnership shall pay to the Units
(Profits Interest) Limited Partner the proceeds from such sale to the extent of
the remaining unpaid balance (and accrued but unpaid interest) at the time of
such sale or other monetization. Notwithstanding the foregoing, if the total
payment due to a Limited Partner for any Units purchased by the Partnership
pursuant to Section 11.08(c)(ii) is less than $1,000,000, payment shall be made
in cash.

 

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(vii) Payment for the Units purchased by the Partnership pursuant to
Section 11.08(c)(iii) of this Agreement shall be made in cash.

(viii) Notwithstanding any other provision of this Agreement, if a Units
(Profits Interest) Limited Partner ceases to be an Employee and the Board of
Directors with at least one Management Designee determines within ninety
(90) days following the termination that Cause exists or existed on such
termination (including by virtue of a material breach of an obligation to the
Partnership under this Agreement or any employment agreement after such
termination), (i) the percentage of Units (Profits Interest) held by such Units
(Profits Interest) Limited Partner which have vested shall be reduced to 0% and
all Units (Profits Interest) held by such Units (Profits Interest) Limited
Partner or his direct or indirect Transferees shall automatically be forfeited
to the Partnership without further action on the part of the Partnership or such
Employee and (ii) to the extent that the Partnership has previously repurchased
any Units (Profits Interest) held by such Units (Profits Interest) Limited
Partner, all consideration for such Units (Profits Interest) previously paid by
the Partnership must be returned by the Units (Profits Interest) Limited Partner
to the Partnership.

(d) Recapture of Units (Profits Interest) held by Management Holdco. Any
Management Holdco shall issue Management Holdco LLC Units only to Employees. The
number of Management Holdco LLC Units outstanding shall at all times equal the
number of Units (Profits Interest) held by such Management Holdco. The limited
liability company agreement of Management Holdco shall provide for the vesting,
forfeiture and repurchase of Management Holdco LLC Units on terms equivalent to
those set forth in this Section 11.08. If any Management Holdco LLC Units are
forfeited to Management Holdco, an equal number of Units (Profits Interest) held
by Management Holdco shall be forfeited to the Partnership. If Management Holdco
has the right to repurchase any Management Holdco LLC Units, Management Holdco
shall exercise such right as directed by the Partnership. If the Partnership
directs Management Holdco to repurchase any Management Holdco LLC Units, the
Partnership shall repurchase an equal number of Units (Profits Interest) from
Management Holdco for the same consideration. Any such repurchase of Units
(Profits Interest) from Management Holdco may be structured in an alternative
method, as determined by the Board of Directors, provided it is not economically
disadvantageous to the applicable Employee.

Section 11.09 Determination of Fair Market Value

(a) For purposes of this Agreement, the “Fair Market Value” of any property
means, as of any time of determination, the then fair market value of such
property as determined in good faith by the Board of Directors, which
determination shall be conclusive for all purposes; provided, however, that
(i) solely with respect to the valuation of Units (Capital) and Units (Profits
Interest) pursuant to Section 11.08(c), Section 12.03(b), or Section 12.03(d) of
this Agreement, the Fair Market Value of any such Units (Capital) or Units
(Profits Interest) shall be determined in accordance with the provisions of
Section 11.09(b) and Section 11.09(c) of this Agreement and (ii) solely with
respect to the valuation of Units (Capital) for purposes of Section 5.02(c), the
Fair Market Value of such Units (Capital) shall be determined by an Independent
Advisor selected by the Board of Directors pursuant to Section 5.02(c) in
accordance with the provisions of Section 11.09(c) of this Agreement.

 

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(b) The Fair Market Value of a Unit (Capital) or a Unit (Profits Interest) shall
be determined, as of the effective date of the end of the Limited Partner’s
active employment by a member of the PEG Group pursuant to Section 11.08(c) or
as of the date the Partnership exercises its repurchase right pursuant to
Section 12.03, by the Board of Directors in its good faith reasonable
discretion, using the Partnership’s most recent previously issued annual or
semi-annual financial statements and reserve reports available on the date on
which such determination is being made by the Board of Directors. The Board of
Directors shall provide prompt written notice to the Limited Partner (or spouse
or former spouse) of its determination. The purchase of such Units (Capital)
and/or Units (Profits Interest) interests shall close promptly thereafter, but
in no case more than twenty (20) Business Days of, the giving of such notice.

(c) In the event that a Limited Partner (or spouse or former spouse) does not
agree with any determination of the Fair Market Value of such Limited Partner’s
(or spouse’s or former spouse’s) Units (Capital) or Units (Profits Interest),
then within twenty (20) Business Days after the consummation of the purchase of
Units (Capital) and/or Units (Profits Interest) pursuant to Section 12.03 or
Section 11.08(b), the Limited Partner (or spouse or former spouse) shall notify
the Board of Directors in writing of the existence of a dispute. The Limited
Partner (or spouse or former spouse) and the Board of Directors shall seek to
resolve the dispute for twenty (20) Business Days. In the event that no
resolution is reached, the Board of Directors shall promptly select three
nationally-recognized investment banking firms that have not had a direct or
indirect substantial relationship with the Partnership within the last two years
and notify the Limited Partner (or spouse or former spouse) thereof. The Limited
Partner (or spouse or former spouse) shall promptly select one of the three
investment banking firms and notify the Partnership thereof. If the Partnership
has not received notice of selection of one of the investment banking firms
within twenty (20) days of the date it gave notice to the Limited Partner (or
spouse or former spouse) of the three investment banking firms, then the Board
of Directors shall select one of such three. The investment banking firm
selected as provided above with respect to the purchase of Units (Capital)
and/or Units (Profits Interest) pursuant to Section 12.03 or Section 11.08(b) or
selected by the Board of Directors pursuant to Section 5.02(c) (the “Independent
Advisor”) shall promptly adjust or determine the Fair Market Value (as
applicable). The Independent Advisor shall render its decision within twenty
(20) Business Days and such decision shall be final and binding upon the
parties. If the Fair Market Value as determined by the Independent Advisor is
greater than the amount paid by the Partnership to the Limited Partner pursuant
to Section 11.09(b), Section 12.03(b) or Section 12.03(d), or used as the basis
for determining the number of Units (Capital) issued pursuant to
Section 5.02(c), the Partnership will pay the Limited Partner an amount equal to
the difference between such Fair Market Value as determined by the Independent
Advisor and such amount paid by the Partnership pursuant to Section 11.09(b),
Section 12.03(b) or Section 12.03(d), or shall reduce retroactively the number
of Units (Capital) issued pursuant to Section 5.02(c), in a timely manner. If
the Fair Market Value as determined by the Independent Advisor is less than the
amount paid by the Partnership to the Limited Partner pursuant to
Section 11.09(b), Section 12.03(b) or Section 12.03(d), the Limited Partner will
pay the Partnership an amount equal to the difference between such Fair Market
Value as determined by the Independent Advisor and such

 

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amount paid by the Partnership pursuant to Section 11.09(b), Section 12.03(b) or
Section 12.03(d), or the Partnership shall issue retroactively an additional
number of Units (Capital) pursuant to Section 5.02(c), in a timely manner. With
respect to any valuation relating to Section 11.09(b), Section 12.03(b),
Section 12.03(d), in the event that (i) the Independent Advisor’s determination
of Fair Market Value is more than 5% higher than the original determination made
by the Board of Directors, the Partnership shall pay 100% of the cost of
retaining the Independent Advisor, (ii) the Independent Advisor’s determination
of Fair Market Value is more than 5% lower than the original determination made
by the Board of Directors, the Limited Partner (or spouse or former spouse)
requesting the Independent Advisor shall pay 100% of the cost of retaining the
Independent Advisor, and (iii) in all other instances the Partnership shall pay
50% of the fees and expenses of retaining the Independent Advisor and the
Limited Partner (or spouse or former spouse) the other 50%. With respect to any
valuation relating to Section 5.02(c), the Partnership shall pay 100% of the
cost of retaining the Independent Advisor.

Section 11.10 Substituted Limited Partners

(a) Unless a Transferee becomes a Substituted Limited Partner in accordance with
Section 11.10(b), such Transferee shall not be entitled to any of the rights
granted to a Limited Partner hereunder.

(b) Except with respect to allocations of forfeited Units (Capital) interests
pursuant to Section 11.09(c), a Transferee of all or part of a Units (Capital)
interest or a Units (Profits Interest) interest in accordance with Section 12.01
shall become a Substituted Limited Partner entitled to all the rights of a Units
(Capital) Limited Partner or Units (Profits Interest) Limited Partner (relating
to the Transferred portion of the Partnership Interest), respectively, if, and
only if, (i) the Transferring Limited Partner requests the Transferee be granted
such right and (ii) the Transferee executes and delivers such instruments
(including Exhibit G) in form and substance satisfactory to the Board of
Directors, as the Board of Directors may deem necessary or desirable to effect
such substitution. The Partnership shall be entitled to treat the record owner
of any Partnership Interest as the absolute owner thereof in all respects and
shall incur no liability for distributions of cash or other property made to
such owner until such time as a Transfer of such interest that complies with the
terms of this Agreement has been effected. For the sake of clarity, in the event
a Units (Capital) Limited Partner makes a Transfer of any of its Units (Capital)
interests, this Section 11.10 will apply to the admission of the Transferee as a
Substitute Limited Partner and Section 13.01 shall not apply.

Section 11.11 Transfer of Rights

Subject to Section 11.12, in connection with the Transfer of Units (Capital),
the rights of the Riverstone Group under this Article XI with respect to such
Units may be assigned or Transferred in whole or in part by the Riverstone Group
without any consent or other action on the part of any other party hereto.

 

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Section 11.12 Transfer

Notwithstanding the foregoing, without the prior consent of the Board of
Directors, no Partner shall Transfer all or any part of its Units in such a
manner that, after the Transfer, the Partnership would become taxable as a
corporation for U.S. federal income tax purposes or if the Transfer, when added
to other Transfers during the preceding twelve months, would result in a
termination of the Partnership within the meaning of Section 708 of the Code.

Section 11.13 Taxable Non-Cash Transactions

Notwithstanding Section 7.02, Section 11.01, Section 11.02, or Section 11.05,
the Partnership shall not make any distribution other than in cash or Marketable
Securities that are not Restricted Securities, and neither the Partnership nor
any Partner shall make or permit any Approved Sale, Reorganization,
Recapitalization or Tag Sale not made solely for cash consideration or
Marketable Securities that are not Restricted Securities (each, a “Taxable
Non-Cash Transaction”), in each case, if the Assumed Non-Cash Transaction Tax
Liability of any Partner arising as a result of such Taxable Non-Cash
Transaction would exceed the amount of cash or Marketable Securities that are
not Restricted Securities distributable or payable to such Partner in connection
with such Taxable Non-Cash Transaction (such Partner, an “Affected Partner”),
unless such Taxable Non-Cash Transaction is approved by either (i) all of the
Affected Partners or (ii) the Units (Capital) Majority and the Units (Profits
Interest) Majority.

ARTICLE XII

LIMITATIONS ON TRANSFERS

Section 12.01 Restrictions on Transfer

(a) Except as otherwise contemplated by this Section 12.01, Section 11.01,
Section 11.02 and Section 11.05 of this Agreement and except for the Transfer of
Units (Capital) by any member of Riverstone Group which may be made without the
approval of the Board of Directors or any other Partner, the Units shall not be
Transferred or otherwise conveyed, assigned or hypothecated before satisfaction
of (a) the conditions specified in this Section 12.01, (b) if applicable, the
provisions of Article XI hereof and (c) consent of the Board of Directors in its
sole discretion. Any purported Transfer in violation of this Article XII and/or,
if applicable, the provisions of Article XI hereof shall be void ab initio and
of no force or effect. Other than Transfers pursuant to Article XI hereof, each
Partner will cause any proposed Transferee of any Unit to agree in writing, in
an instrument in form and substance reasonably satisfactory to the Partnership,
to take and hold such securities subject to the provisions and upon conditions
specified in this Agreement. No Person shall make or suffer any Transfer of its,
his or her Units if such Transfer would (a) cause the Partnership or any Partner
to become subject to regulation under either the Investment Company Act of 1940,
as amended, or the Investment Advisers Act of 1940, as amended, or (b) violate
the registration provisions of the Securities Act or the registration or
qualification provisions of any applicable securities law. Notwithstanding
anything else to the contrary herein, Riverstone may effect Transfers at any
time without consent of the Board of Directors or any other Partner.

(b) Any Limited Partner who is an individual may Transfer by way of gift all or
any of its Units to a spouse, lineal ancestor, lineal descendant, legally
adopted child, brother or sister of such Partner, or lineal descendant or
legally adopted child of a brother or sister of such Partner (a “Family Member”)
or to a trust or other entity whose sole and exclusive beneficiaries are such
Partner and/or Family Members of such Partner, but only to the extent (i) such
Transferee executes and delivers to the Partnership an Adoption Agreement in the
form of Exhibit G hereof, and (ii) the Board of Directors consents to such
Transfer, which consent shall not be unreasonably withheld.

 

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(c) The Units (Profits Interest) Limited Partners may Transfer Units (Profits
Interest) to other Employees (including those who are already Units (Profits
Interest) Limited Partners) without approval of the Board or the restrictions in
this Agreement, provided that the Transferring Units (Profits Interest) Limited
Partner provides the Board with ten (10) days prior written notice of the
proposed Transfer and the Board has not provided written objection to such
Transfer within such period. Any such Person to whom a Transfer is made shall be
obligated to enter into this Agreement if such Person was not a Units (Profits
Interest) Limited Partner prior to the Transfer. The Board of Directors will
reasonably cooperate with the Transferring Units (Profits Interest) Limited
Partner in effecting the Transfer. The Partnership Representative shall make
such adjustments to the Capital Account maintenance and allocation provisions in
Section 5.06 and Article VI as it reasonably determines necessary to account for
such Transfer.

Section 12.02 Restrictive Legends

(a) Securities Act Legend. Each Unit held by a Partner, and each Unit issued to
any subsequent Transferee of such Unit, if certificated, shall be stamped or
otherwise imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 NOR PURSUANT TO THE SECURITIES OR “BLUE SKY” LAWS OF
ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER
HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF
THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT
SUCH OFFER, SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.

(b) Other Legends. Each Unit issued to each Partner or to a subsequent
Transferee, if certificated, shall include a legend in substantially the
following form:

THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING AND OTHER TERMS AND
CONDITIONS SET FORTH IN THE THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PATTERN ENERGY GROUP HOLDINGS 2 LP DATED EFFECTIVE AS OF NOVEMBER
3, 2019. A COPY OF WHICH MAY BE OBTAINED FROM PATTERN ENERGY GROUP HOLDINGS 2 LP
AT ITS PRINCIPAL EXECUTIVE OFFICES.

 

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Section 12.03 Spouses

(a) As a condition to becoming or remaining a Limited Partner, each Limited
Partner that is an individual and is or becomes married, shall cause his spouse
to execute an agreement in the form of Exhibit F hereof. If an existing Limited
Partner fails to have his or her spouse execute such agreement, the Limited
Partner shall thereafter lose all their rights hereunder except for the rights
of a mere assignee under the Act and the Board of Directors shall thereafter
have all voting rights with respect to his or her interest.

(b) Any Units held by an individual who has failed to cause his or her spouse to
execute an agreement in the Form of Exhibit F and any Units held by a person who
is an assignee shall be subject to the option of the Partnership or the
Riverstone Group or any of their respective Affiliates to acquire all of such
Units for the Fair Market Value of the Units (Capital) and the then vested Units
(Profits Interest).

(c) In the event of a property settlement or separation agreement between a
Limited Partner and his or her spouse, such Limited Partner shall use his or her
best efforts to assign to his or her spouse only the right to share in profits
and losses, to receive distributions, and to receive allocations of income,
gain, loss, deduction or credit or similar item to which the Limited Partner was
entitled, to the extent assigned.

(d) If a spouse or former spouse of a Limited Partner acquires a Unit in the
Partnership without prior Board Approval, such spouse or former spouse hereby
grants, as evidenced by Exhibit F, an irrevocable power of attorney (which shall
be coupled with an interest) to the original Limited Partner who held such
Units, as the case may be, to vote or to give or withhold such approval as such
original Limited Partner shall himself or herself vote or approve with respect
to such matter and without the necessity of the taking of any action by any such
spouse or former spouse. Such power of attorney shall not be affected by the
subsequent disability or incapacity of the spouse or former spouse granting such
power of attorney. Furthermore, such spouse or former spouse agrees that the
Partnership or the Riverstone Group or any of their respective Affiliates shall
have the option at any time to purchase all of such Units for the Fair Market
Value of the Units (Capital) and the then vested Units (Profits Interest).

Section 12.04 Termination of Certain Restrictions

Notwithstanding the foregoing provisions of this Article XII, the legend
requirements of Section 12.02(a) of this Agreement shall terminate as to any
Unit (a) when and so long as such Unit shall have been effectively registered
under the Securities Act and disposed of pursuant thereto or disposed of
pursuant to the provisions of Rule 144 thereof or (b) when the Partnership shall
have received an opinion of counsel (or such other evidence) reasonably
satisfactory to it that such Unit may be Transferred without registration
thereof under the Securities Act and that such legend may be removed. Whenever
the restrictions imposed by Section 12.02(a) of this Agreement shall terminate
as to any Unit, the holder thereof shall be entitled to receive from the
Partnership, at the Partnership’s expense, a new Unit not bearing the
restrictive legend set forth in Section 12.02(a) of this Agreement.

 

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ARTICLE XIII

ISSUANCE OF ADDITIONAL UNITS

Section 13.01 Issuance of Additional Units

Subject to the provisions of Section 9.05, Section 9.06, Section 9.07, and
Section 15.05 of this Agreement, the Board of Directors is hereby authorized to
cause the Partnership from time to time to issue to any Person or Persons
additional Units in one or more classes, or one or more series of any of such
classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties, all as shall be determined
by the Board of Directors in its sole and absolute discretion and without the
approval of any of the Partners, including, but not limited to, (a) the
allocations of items of Partnership income, gain, loss, deduction and credit to
each such class or series of Units, (b) the right of each such class or series
of Units to share in Partnership distributions, (c) the rights of each such
class or series of Units upon dissolution and liquidation of the Partnership,
(d) the price at and the terms and conditions on which such class or series of
Units may be redeemed by the Partnership, if such Units are redeemable by the
Partnership, (e) the rate at and the terms and conditions on which such class or
series of Units may be converted into any other class or series of Units, if any
class or series of Units are issued with the privilege of conversion, and
(f) the right of such class or series of Units to vote on matters relating to
the relative rights and preferences of such class or other matters. Upon the
issuance of any class or series of Units, the Board of Directors, without the
consent at the time of any Partner, may amend any provision of this Agreement
and may add any new provision to this Agreement (subject to Section 15.05, which
sets forth certain amendments to this Agreement which require the approval of
the holders of a specified percentage of Units (Profits Interest)), and execute,
swear to, acknowledge, deliver, file and record an amended Certificate of
Limited Partnership and whatever other documents may be required in connection
therewith, as shall be necessary or desirable to reflect the issuance of such
class or series of Units and the relative rights and preferences of such class
or series of Units as to the matters set forth in the preceding sentence. The
Board of Directors is authorized and directed to do all things it deems to be
necessary or advisable in connection with any such future issuance to reflect
the issuance of the Units and the admission of any Partner acquiring the Units,
including, without limitation, compliance with any statute, rule, regulation or
guideline of any federal, state or other governmental agency or any securities
exchange on which the Units or other such security is listed for trading.

Section 13.02 Preemptive Rights

(a) General. Each Units (Capital) Limited Partner shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as defined
below, that the Partnership may, from time to time, propose to issue and sell
after the date hereof and prior to the date of a Qualified Public Offering,
other than the Equity Securities excluded by Section 13.02(d) of this Agreement
and Equity Securities issued in connection with each Units (Capital) Limited
Partner’s respective Commitment Amounts set forth on Exhibit B. Each Units
(Capital) Limited Partner’s pro rata share is equal to its Unit (Capital)
Sharing Percentage. The term “Equity Securities” shall mean (i) any Unit,
(ii) any security convertible, with or without consideration, into any Unit
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant or right to subscribe to or purchase any Unit or
(iv) any such warrant or right.

 

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(b) Exercise of Rights. If the Partnership proposes to issue any Equity
Securities (other than Equity Securities excluded by Section 13.02(d) of this
Agreement), the Partnership shall give each Units (Capital) Limited Partner
written notice of its intention, describing the Equity Securities, the price and
terms and conditions upon which such Equity Securities are to be issued and/or
sold. Each Units (Capital) Limited Partner shall have fifteen (15) days from the
giving of such notice to agree to purchase its pro rata share of the Equity
Securities for the price and upon the terms and conditions specified in the
notice by giving written notice to the Partnership and stating therein the
quantity of Equity Securities to be purchased. Notwithstanding the foregoing,
the Partnership shall not be required to offer or sell such Equity Securities to
any Units (Capital) Limited Partner who would cause the Partnership to be in
violation of applicable federal securities laws by virtue of such offer or sale.

(c) Transfer of Preemptive Rights. The preemptive rights of each Units (Capital)
Limited Partner under this Section 13.02 may not be Transferred, except that
such rights are assignable by Riverstone to any member of the Riverstone Group.

(d) Excluded Securities. The preemptive rights established by this Section 13.02
shall have no application to any of the following Equity Securities:

(i) Units (Profits Interest);

(ii) any Equity Securities issued for consideration other than cash pursuant to
a merger, consolidation, acquisition or similar business combination;

(iii) any Equity Securities issued in connection with any split, dividend or
recapitalization by the Partnership;

(iv) any Equity Securities issued pursuant to any equipment leasing arrangement,
or debt financing from a bank or similar financial institution; and

(v) any Equity Securities that are issued by the Partnership pursuant to a
registration statement filed under the Securities Act.

ARTICLE XIV

DISSOLUTION AND LIQUIDATION

Section 14.01 Dissolution

The Partnership shall be dissolved upon the determination of the Board of
Directors in accordance with the terms of this Agreement.

 

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Section 14.02 Effect of Dissolution

Upon dissolution, the Partnership shall cease carrying on its business but shall
not terminate until the winding up of the affairs of the Partnership is
completed, the assets of the Partnership shall have been distributed as provided
below and a certificate of cancellation of the Partnership under the Act has
been filed with the Secretary of State of the State of Delaware.

Section 14.03 Liquidation Upon Dissolution

Upon the dissolution of the Partnership, sole and plenary authority to
effectuate the liquidation of the assets of the Partnership shall be vested in
the Board of Directors, who shall have full power and authority to sell, assign
and encumber any and all of the Partnership’s assets and to wind up and
liquidate the affairs of the Partnership in an orderly and business-like manner.
The proceeds of liquidation of the assets of the Partnership distributable upon
a dissolution and winding up of the Partnership shall be applied in the
following order of priority:

(a) first, to the creditors of the Partnership, including creditors who are
Partners, in the order of priority provided by law, in satisfaction of all
liabilities and obligations of the Partnership (of any nature whatsoever,
including, without limitation, fixed or contingent, matured or unmatured, legal
or equitable, secured or unsecured), whether by payment or the making of
reasonable provision for payment thereof; and

(b) thereafter, to the Partners in accordance with Article VII of this
Agreement. If the foregoing distributions to the Partners do not equal the
Partners’ respective positive Capital Account balances as determined after
giving effect to the foregoing adjustments and to all adjustments attributable
to allocations of Profits and Losses (or any items thereof) during the taxable
year in question and all adjustments attributable to contributions and
distributions of money and property effected prior to such distribution, then
the allocations of Profits and Losses (or any items thereof) provided for in
this Agreement shall be adjusted, including by the filing of amended tax returns
to the extent necessary and possible, to the least extent necessary to produce a
Capital Account balance for each Partner which corresponds to the amount of the
distribution to such Partner.

Section 14.04 Negative Capital Accounts

No Partner shall be liable to the Partnership or to any other Partner for any
negative balance outstanding in each such Partner’s Capital Account, whether
such negative Capital Account results from the allocation of losses or other
items of deduction and loss to such Partner or from distributions to such
Partner, and such Partner shall not have any obligation to make any contribution
to the capital of the Partnership with respect to such deficit and such deficit
shall not be considered a debt owed to the Partnership or, except as required by
the Act, to any other Person for any purpose whatsoever.

Section 14.05 Winding Up and Certificate of Cancellation

The winding up of the Partnership shall be completed when all of its debts,
liabilities, and obligations have been paid and discharged or reasonably
adequate provision therefor has been made, and all of the remaining property and
assets of the Partnership have been distributed to the Partners. Upon the
completion of the winding up of the Partnership, a certificate of cancellation
of the Partnership shall be filed with the Secretary of State of the State of
Delaware.

 

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ARTICLE XV

MISCELLANEOUS PROVISIONS

Section 15.01 Notices

All notices provided for or permitted to be given pursuant to this Agreement
must be in writing and shall be given or served by (a) depositing the same in
the United States mail addressed to the party to be notified, postpaid and
certified with return receipt requested, (b) depositing the same with a national
overnight delivery service company which tracks deliveries, addressed to the
party to be notified, with all charges paid and proof of receipt requested,
(c) by delivering such notice in person to such party, or (d) by facsimile. All
notices are to be sent to or made at the addresses set forth in Exhibit B or
Exhibit D attached hereto, as applicable. All notices given in accordance with
this Agreement shall be effective upon delivery at the address of the addressee.
Each Partner shall have the right from time to time to change his, her or its
address by written notice to the other Partner(s).

Section 15.02 Governing Law

This Agreement and the obligations of the Partners hereunder shall be construed
and enforced in accordance with the laws of the State of Delaware, excluding any
conflicts of law rule or principle which might refer such construction to the
laws of another state or country.

Section 15.03 Arbitration

The parties acknowledge that the expeditious and equitable settlement of
disputes arising under this Agreement is to their mutual advantage. To that end,
the parties agree to use their best efforts to resolve all differences of
opinion and to settle all disputes through joint cooperation and consultation.
Any dispute, alleged breach, interpretation, challenge or disagreement
whatsoever between or among any of the parties hereto with respect to the
interpretation of, or relating to any alleged breach of, this Agreement (or any
other agreement contemplated hereby) that the parties are unable to settle
within sixty (60) days, as set forth in the preceding sentence, shall be
resolved by final and binding arbitration before a single arbitrator selected
and serving under the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall be held in New York, New York unless another
location is mutually agreed upon by the parties to such arbitration. Such
arbitration shall be the exclusive remedy hereunder; provided that nothing
contained in this Section 15.03 shall limit any party’s right to bring (i) post
arbitration actions seeking to enforce an arbitration award or (ii) actions
seeking injunctive or other similar relief in the event of a breach or
threatened breach of any of the provisions of this Agreement (or any other
agreement contemplated hereby). The decision of the arbitrator may, but need
not, be entered as judgment in accordance with the provisions of the laws of
Delaware. If this Section 15.03 is for any reason held to be invalid or
otherwise inapplicable to any dispute, the parties hereto agree that any action
or proceeding brought with respect to any dispute arising under this Agreement,
or to interpret or clarify any rights or obligations arising hereunder, shall be
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exclusively in the United States Federal Courts, venued in New York, New York.
With respect to any action or proceeding that a successful party to the
arbitration may wish to bring to enforce any arbitral award or to seek
injunctive or other similar relief in the event of the breach or threatened
breach of this Agreement (or any other agreement contemplated hereby), each
party irrevocably and unconditionally (and without limitation): (i) submits to
and accepts, for itself and in respect of its assets, generally and
unconditionally the nonexclusive jurisdiction of the courts of the United States
and the State of New York, (ii) waives any objection it may have now or in the
future that such action or proceeding has been brought in an inconvenient forum,
(iii) agrees that in any such action or proceeding it will not raise, rely on or
claim any immunity (including, without limitation, from suit, judgment,
attachment before judgment or otherwise, execution or other enforcement),
(iv) waives any right of immunity which it has or its assets may have at any
time, and (v) consents generally to the giving of any relief or the issue of any
process in connection with any such action or proceeding including, without
limitation, the making, enforcement or execution of any order or judgment
against any of its property. The party whom the arbitrator determines is the
prevailing party in such arbitration shall receive, in addition to any other
award pursuant to such arbitration or associated judgment, reimbursement from
the other party of all reasonable legal fees.

Section 15.04 Waiver of Jury Trial

EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR
THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.

Section 15.05 Entire Agreement; Amendments

(a) This Agreement and its exhibits constitute the entire agreement among the
Partners relative to the formation of the Partnership and supersedes all prior
contracts or agreements with respect to the Partnership, whether oral or
written. Except as set forth below, no amendment of this Agreement will be valid
or binding upon the Partners, nor will any waiver of any term of this Agreement
be effective, unless in writing and signed by (i) a Units (Capital) Majority and
(ii) the Board of Directors; provided that no amendment or waiver of this
Agreement shall be effected that disproportionately and adversely affects the
holders of Units (Profits Interest), in their capacities as such, without the
consent of the Units (Profits Interest) Majority.

(b) Notwithstanding the foregoing, no amendment of this Agreement may be made
without the consent of 100% of the outstanding Units (Profits Interest) if such
amendment would:

(i) impose upon any Units (Profits Interest) Limited Partner the obligation to
make contributions to the capital of the Partnership other than in their
capacity as a Units (Capital) Limited Partner;

(ii) result in any Units (Profits Interest) Limited Partner being or having the
liability of, a general partner, convert any Units (Profits Interest) Limited
Partner’s interest in the Partnership into a general partnership interest, or
modify the limited liability of any Units (Profits Interest) Limited Partner in
any manner adverse to such Units (Profits Interest) Limited Partner; or

 

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(iii) amend any provisions provided in the foregoing clauses (i) and (ii).

(c) Notwithstanding the foregoing, no amendment of this Agreement may be made
without the consent of 80% of the outstanding Units (Profits Interest) (which
consent, for the avoidance of doubt, shall not require a formal vote of all
Units (Profits Interest) Limited Partners but shall be effective upon provision
of a consent signed by such Units (Profits Interest) Limited Partners
representing at least 80% of the outstanding Units (Profits Interest)) if such
amendment would:

(i) provide for any Units (Profits Interest) Limited Partner to receive any
distribution other than pari passu with all other Units (Profits Interest)
Limited Partners, based on their respective Unit (Profits Interest) Sharing
Percentages (as adjusted to take into account any Threshold Amount applicable to
any tranche of Units (Profits Interest)), or decrease any Units (Profits
Interest) Limited Partner’s Unit (Profits Interest) Sharing Percentage in any
manner which would not decrease all Units (Profits Interest) Limited Partners’
respective Unit (Profits Interest) Sharing Percentages on a proportionate basis;

(ii) decrease any Units (Profits Interest) Limited Partner’s rights to receive
distributions in an amount equal to such Units (Profits Interest) Limited
Partner’s Assumed Tax Liability or amend Section 11.13 of this Agreement;

(iii) decrease any Units (Profits Interest) Limited Partner’s voting rights
hereunder;

(iv) increase the number of authorized Units (Profits Interest); or

(v) amend any provisions provided in the foregoing clauses (i), (ii), (iii) and
(iv). Clauses (i)-(iv) shall not prevent the Partnership from enforcing a
redemption or forfeiture of Units (Profits Interest) contemplated by
Section 11.08, and such redemption and forfeiture shall not be deemed to be a
reduction in rights to receive distributions, decrease in voting rights, or
increase in authorized Units (Profits Interest).

(d) Notwithstanding the foregoing, the Board of Directors shall be authorized to
amend this Agreement, without the approval of any Partner, pursuant to Article
XIII and with respect to any of the following matters:

(i) entering into agreements with Persons that are Transferees or new Partners
pursuant to the terms of this Agreement, providing that such Transferees or new
Partners will be bound by this Agreement and will become Partners of the
Partnership and in accordance with Article XII of this Agreement;

(ii) amending this Agreement (A) to satisfy any requirements, conditions,
guidelines or opinions contained in any opinion, directive, order, ruling or
regulation of the Securities and Exchange Commission, the Internal Revenue
Service or any other U.S. federal or state or non-U.S. governmental agency, or
in any U.S. federal or state or non-U.S. statute, compliance with which the
Board of Directors deems to be in the best interest of the Partnership, or
(B) to change the name of the Partnership;

 

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(iii) amending this Agreement to cure any ambiguity or correct or supplement any
provision hereof that may be incomplete or inconsistent with any other provision
hereof, so long as such amendment under this Section 15.05(d)(iii) does not
adversely affect the interests of the Partners; and

(iv) amending this Agreement upon publication of final regulations in the
Federal Register (or other official pronouncement), to provide for (A) the
election of a safe harbor under U.S. Treasury Regulations Section 1.83-3(1) (or
any similar provision) under which the fair market value of a partnership (or
membership) interest that is Transferred in connection with the performance of
services is treated as being equal to the liquidation value of that interest,
(B) an agreement by the Partnership and all of its Partners to comply with all
the requirements set forth in such regulations and Revenue Procedure 2005-43
(and any other guidance provided by the Internal Revenue Service with respect to
such election) with respect to all partnership (or membership) interests
Transferred in connection with the performance of services while the election
remains effective, and (C) any other related amendments.

Section 15.06 Confidentiality

Each Partner agrees that all non-public information received from or otherwise
relating to, the Partnership, the Riverstone Group, or any third party who has
entrusted the Partnership with confidential information with the expectation
that such information will be kept confidential, is confidential and will not be
(i) disclosed or otherwise released to any other Person (other than another
party hereto for a valid business purpose) or (ii) used for anything other than
as necessary and appropriate in carrying out the business of the Partnership.
The obligations of the parties hereunder do not preclude the Riverstone Group
from disclosing information to its direct and indirect beneficial owners or
representatives or as it may reasonably deem to be appropriate in connection
with fundraising efforts. The restrictions set forth herein do not apply to any
disclosures required by applicable law or securities exchange rule or
regulation, so long as (x) the Person subject to such disclosure obligations
provides prior written notice (to the extent reasonably practicable) to the
Partnership stating the basis upon which the disclosure is asserted to be
required, and (y) upon the Partnership’s request, the Person subject to such
disclosure obligations takes all reasonable steps to oppose or mitigate any such
disclosure.

Section 15.07 Non-Disparagement

Each Partner agrees that, in communications with Persons other than the Partners
and the Partnership (and their respective Affiliates, employees, members and
partners or employees of Affiliates of Partners or the Partnership), he or she
shall not disparage in any material way, the Partnership, and each other Partner
(and their Affiliates, members and partners). Under no circumstances shall any
Partner, in communications with Persons other than the Partners and the
Partnership (and their respective Affiliates, employees, members and partners or
employees of Affiliates of Partners or the Partnership), criticize or disparage
any business practice, policy, statement, valuation or report that is made,
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Partner (and their Affiliates, members and partners) in any material way.
Notwithstanding the foregoing, this Section 15.07 shall not be construed to
prohibit or restrain any criticism or other statements made, directly or
indirectly, (i) exclusively between or among any of the Partners, the
Partnership, their Affiliates, members, partners, or their respective employees
or attorneys, to the extent such communications or statements are made in the
ordinary course of business (ii) in connection with litigation, (iii) required
under law or (iv) exclusively between a Partner and a member of such Partner’s
Immediate Family. The obligations of each Partner under this Section 15.07 shall
continue after the date such Person ceases to be a Partner, but thereafter such
Person shall not have the right to enforce the provisions of this Agreement.

Section 15.08 Waiver

No consent or waiver, express or implied, by any Partner of any breach or
default by any other Partner in the performance by the other Partner of his, her
or its obligations hereunder shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the performance by such other
Partner of the same or any other obligation hereunder. Failure on the part of
any Partner to complain of any act or to declare any other Partner in default,
regardless of how long such failure continues, shall not constitute a waiver of
rights hereunder.

Section 15.09 Severability

If any provision of this Agreement or the application thereof to any Person or
circumstances shall be invalid or unenforceable to any extent, and such
invalidity or unenforceability does not destroy the basis of the bargain between
the parties, then the remainder of this Agreement and the application of such
provisions to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.

Section 15.10 Ownership of Property and Right of Partition

A Unit in the Partnership shall be personal property for all purposes. No
Partner shall have any right to partition the property owned by the Partnership.

Section 15.11 Successors and Assigns

Except as otherwise specifically provided herein, this Agreement shall be
binding upon and inure to the benefit of the Partners and their respective
successors and permitted assigns.

Section 15.12 Further Assurances

In connection with this Agreement and the transactions contemplated hereby, each
Partner shall execute and deliver any additional documents and instruments and
perform any additional acts that may be necessary or appropriate to effectuate
and perform the provisions of this Agreement and those transactions.

 

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Section 15.13 Parties in Interest; Third Party Beneficiaries

This Agreement shall be binding solely upon, be enforceable solely by, and inure
solely to the benefit of, each Partner and his, her or its successors, assigns,
and Transferees, and except as provided in Article X nothing in this Agreement
(express or implied) is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.

Section 15.14 Counterparts

This Agreement may be executed in any number of counterparts (including a
facsimile thereof) with the same effect as if all signing parties had signed the
same document. All counterparts shall be construed together and constitute the
same instrument.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

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BOARD OF DIRECTORS OF PATTERN ENERGY GROUP HOLDINGS 2 LP

/S/ Christopher Hunt

Christopher Hunt

/S/ Alfredo Marti

Alfredo Marti

/S/ Robin Duggan

Robin Duggan

/S/ Michael M. Garland

Michael M. Garland

/S/ Hunter Armistead

Hunter Armistead

SIGNATURE PAGE

TO THIRD AMENDED AND RESTATED AGREEMENT OF

LIMITED PARTNERSHIP OF PATTERN ENERGY GROUP HOLDINGS 2 LP

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CLASS A MAJORITY RIVERSTONE PATTERN ENERGY II HOLDINGS, L.P. By:  

Riverstone Pattern Energy II Holdings GP, LLC,

its general partner

  By:  

/S/ Peter Haskopoulos

  Name:   Peter Haskopoulos   Title:   Authorized Person

SIGNATURE PAGE

TO THIRD AMENDED AND RESTATED AGREEMENT OF

LIMITED PARTNERSHIP OF PATTERN ENERGY GROUP HOLDINGS 2 LP