MANAGEMENT AGREEMENT
AGREEMENT made as of the 9th day of February, 1998 by and between THE
RIDGEWOOD POWER GROWTH FUND, a Delaware business trust (the "Trust"), and
Ridgewood Power Corporation, a Delaware corporation (hereinafter referred to as
the "Management Company").
W I T N E S S E T H:
WHEREAS, the Trust is a business trust organized under The Delaware
Business Trust Act, as amended, and is engaged in business to invest in and
operate independent electric power projects and other projects as provided in
its Declaration of Trust, as amended (the "Declaration"); and
WHEREAS, the Management Company is the managing shareholder of the Trust
and will engage principally in rendering management, administrative and
investment advisory services to the Trust; and
WHEREAS, the Trust desires to retain the Management Company to render
management, administrative and certain investment advisory services to the Trust
in the manner and on the terms hereinafter set forth; and
WHEREAS, the Management Company is willing to provide management,
administrative and investment advisory services to the Trust on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Management Company hereby agree as
follows:
ARTICLE I
Duties of the Management Company
The Trust hereby employs the Management Company to furnish, or arrange for
affiliates of the Management Company to furnish, the management, administrative
and investment advisory services described below. The Management Company hereby
accepts such employment and agrees during such period, at its own expense, to
render, or arrange for the rendering of, such services and to assume the
obligations herein set forth for the compensation provided for herein.
(a) Management Services. The Management Company shall perform (or arrange
for the performance of) the management and administrative services necessary for
the operation of the Trust, including providing managerial assistance to
portfolio companies of the Trust and such other services related to investments
in non-utility generating facilities which sell electric and/or thermal power
and in other non-utility facilities, as shall be necessary for the operation of
the Trust. The Management Company shall also perform services related to
administering the accounts and handling relations with all holders of beneficial
interests in the Trust. The Management Company shall provide the Trust with
office space, equipment and facilities and such other services as the Management
Company shall from time to time determine to be necessary or useful to perform
its obligations under this Agreement. The Management Company shall also, on
behalf of the Trust, conduct relations with custodians, depositories, transfer
agents, other shareholder service agents, accountants, attorneys, underwriters,
brokers and dealers, corporate fiduciaries, insurers, banks and such other
persons in any such other capacity deemed to be necessary or desirable. The
Management Company shall furnish advice and recommendations with respect to such
other aspects of the business and affairs of the Trust as the Management Company
shall determine to be desirable.
(b) Investment Advisory Services. Pursuant to the Declaration, the
Management Company in its capacity as the managing shareholder of the Trust is
responsible for providing investment advisory services in connection with the
Trust's power and other project investments and in connection with the money
market securities or other non-power liquid investments held by the Trust (such
investments being referred to herein as the "Investments"). The Management
Company shall also provide the Trust with such investment research, advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Investments and shall determine from time to time
which Investments shall be purchased, sold or exchanged and what portion of the
Trust's assets shall be held in the various money market securities or cash,
subject always to any restrictions of the Declaration, as amended from time to
time, and the Trust's investment objectives, investment policies and investment
restrictions as the same are set forth in the reports filed by the Trust under
the Securities Exchange Act of 1934, as amended. The Management Company shall
also make determinations with respect to the manner in which voting rights,
rights to consent to corporate action and any other rights pertaining to the
Trust's Investments shall be exercised. The Management Company shall take, on
behalf of the Trust, all actions which it deems necessary to implement its
investment policies. Subject to applicable provisions of law, the Management
Company may select brokers or dealers with which it or the Trust is affiliated
to effect the purchase or sale of Investments. The Management Company, in its
sole discretion, may engage professionals, consultants and other persons whose
expertise or qualifications may assist the Management Company or the Trust in
connection with the Trust's business and, if such persons are not affiliated
with the Management Company, may treat the costs and expenses so incurred as a
Trust expense.
ARTICLE II
Allocation of Charges and Expenses
(a) The Management Company. The Management Company assumes and shall pay
the expense for maintaining the staff and personnel necessary to perform its
obligations under this Agreement and shall at its own expense, provide the Trust
with office space, facilities, equipment and personnel necessary to carry out
its obligations hereunder. The Management Company will bear the administrative
and service expenses associated with the management services it is to provide
for the Investments of the Trust pursuant to the terms of this Agreement.
(b) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not expressly assumed by the Management Company,
including, without limitation: expenses of portfolio transactions, valuation
costs (including the quarterly calculation of net asset value), expenses of
printing reports and other documents distributed to the Securities and Exchange
Commission and holders of beneficial interests, Securities and Exchange
Commission and other regulatory fees, interest, taxes, fees and actual
out-of-pocket expenses of the Independent Panel Members of the Trust, fees for
legal, auditing and consulting services, litigation expenses, costs of printing
proxies and other expenses related to meetings of holders of beneficial
interest, postage and other expenses properly payable by the Trust.
ARTICLE III
Compensation of the Management Company
(a) Management Fee. For the services rendered, the facilities furnished and
the expenses assumed by the Management Company, the Trust shall pay to the
Management Company compensation which shall be at the annual rate of 2.5% of the
Capital Contributions of the Trust determined in the manner set forth in the
Confidential Memorandum ("Memorandum") of the Trust dated February 9, 1998. Such
fee is payable monthly in advance. To the extent that the Trust does not have
cash or readily marketable securities in an amount sufficient to pay the
management fee, the Trust will accrue such fee as a liability and pay the
accrued fee at such time as it has sufficient cash available to it. Interest on
the amount of the accrued fee will be assessed at the annual rate of ten percent
(10%).
(b) Other Fees. In connection with the offering of shares of beneficial
interest in the Trust ("Shares"), the Management Company is entitled to receive
an organizational, distribution and offering fee of 6% of each capital
contribution to the Trust to defray expenses incurred in the offer and sale of
the shares. In connection with the initial management of the capital
contributions, the Management Company is also entitled to receive an investment
fee of 2% of each capital contribution to the Trust for services in
investigating and evaluating investment opportunities. If the Management Company
or an affiliate performs brokerage services in connection with the acquisition
or disposition of Trust investments in the independent power industry (other
than the Trust's participation in or investments made through any entity
organized to develop multiple independent power projects), the entity providing
those services will be entitled to a brokerage fee of up to 2% of the gross
proceeds of the acquisition or disposition. Ridgewood Securities Corporation, an
affiliate of the Management Company, is acting as placement agent for the
offering of Shares and is entitled to a 1% placement fee from each capital
contribution and, to the extent it effects the sales of Shares as a
broker-dealer, to an 8% selling commission on each such Share. The Trust will
reimburse Ridgewood Energy Holding Corporation, the corporate trustee of the
Trust, for all actual and necessary expenses paid or incurred in connection with
the operation of the Trust, including the Trust's allocable share of the
corporate trustee's overhead. All these fees and expenses are to be paid
pursuant to the provisions of the Declaration.
(c) Expense Limitations. In the event the operating expenses of the Trust,
including amounts payable to the Management Company pursuant to subsection (a)
hereof, for any fiscal year ending on a date on which this Agreement is in
effect exceed any expense limitations applicable to the Trust imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Management Company shall reduce
its management fee hereunder by the extent of such excess and, if required
pursuant to any such laws or regulations, will reimburse the Trust in the amount
of such excess; provided, however, to the extent permitted by law, there shall
be excluded from such expenses the amount of any interest, taxes, portfolio
transaction costs and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Trust. Whenever the expenses of the Trust exceed
a pro rata portion of the applicable annual expense limitations, the estimated
amount of reimbursement under such limitations shall be applicable as an offset
against the monthly payment of the fee due to the Management Company. Should two
or more such expense limitations be applicable as at the end of the last
business day of the month, that expense limitation which results in the largest
reduction in the Management Company's management fee shall be applicable.
ARTICLE IV
Limitation of Liability of the Management Company
(a) As more fully described in Article 3 of the Declaration, the Management
Company shall not be liable for any loss suffered by the Trust that arises out
of any action or inaction of the Trust, any Trust officers, agents or
affiliates, the Independent Panel Members, the Management Company, the Corporate
Trustee, or any affiliate of the Management Company or a Trustee, or any
director, officer or agent of those entities (collectively, "Managing Persons")
or out of any error of judgment or mistake of law, if the Managing Person
responsible, in good faith, determined that such course of action was in the
Trust's best interest and such course of conduct was within the scope of this
Management Agreement or the Declaration of Trust and did not constitute
negligence or misconduct of the Managing Persons involved.
(b) Indemnification. The provisions of Section 3.7 of the Declaration are
hereby incorporated by reference into this Management Agreement. The Management
Company shall be entitled to indemnification hereunder in each instance where
the "Managing Shareholder" is entitled to indemnification under said Section
3.7.
ARTICLE V
Activities of the Management Company
The services of the Management Company of the Trust to be performed under
this Management Agreement are not deemed to be exclusive, the Management Company
being free to render services to others. It is understood that affiliates of the
Trust (other than the Independent Panel Members) and holders of beneficial
interest of the Trust are or may become interested in the Management Company as
directors, officers, employees or shareholders of the Management Company or
otherwise and that the Management Company or its directors, officers, employees
or shareholders are or may become interested in the Trust as controlling persons
or officers (other than as an Independent Panel Member), holders of beneficial
interests or otherwise.
ARTICLE VI
Duration and Termination of this Contract
This Agreement shall become effective as of the date first above written
and shall remain in force indefinitely. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of the
outstanding voting securities of the Trust, or by the Management Company, on
sixty days' written notice to the other party.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by the Independent Panel Members of the Trust by a vote
cast in person at a meeting called for the purpose of voting on such approval or
by the vote of a majority of the holders of outstanding voting securities of the
Trust.
ARTICLE VIII
Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THE RIDGEWOOD POWER GROWTH FUND
By:
Xxxxxx X. Xxxxxxx
President
RIDGEWOOD POWER CORPORATION
By:
Xxxxxx X. Xxxxxxx
President
