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EXHIBIT 10.13
PARTNERSHIP AGREEMENT
OF
MT. ▇▇▇▇▇▇ PHENOL PLANT PARTNERSHIP
An Indiana Partnership
(Specific Purpose)
Effective As Of
November 1, 1987
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PARTNERSHIP AGREEMENT
OF
MT. ▇▇▇▇▇▇ PHENOL PLANT PARTNERSHIP
TABLE OF CONTENTS
PAGE
SECTION I. GENERAL; FORMATION OF PARTNERSHIP 1
1.01. Defined Terms....................................... 1
1.02. Formation........................................... 1
1.03. Statement of Partnership............................ 2
SECTION II. NAME, TERM AND OFFICES 2
2.01. Name................................................ 2
2.02. Term................................................ 2
2.03. Offices............................................. 2
SECTION III. BUSINESS PURPOSE AND LIMITATIONS 3
3.01. Business Purpose.................................... 3
3.02. No Other Business Without Mutual
Consent........................................... 4
SECTION IV. MANAGEMENT OF PARTNERSHIP........................... 4
4.01. General Management.................................. 4
4.02. Operating Agreements..... .......................... 5
4.03. Purchase and Supply Agreements...................... 6
4.04. Ground Lease ....................................... 6
4.05. Partner Representatives............................. 6
4.06. Execution of Documents.............................. 7
4.07. Meetings of Partners ............................... 7
4.08. Action Without Meeting..... ........................ 8
4.09. Other Activities of Partners........................ 8
4.10. Partnership Property................................ 8
4.11. Restriction on Authority of Partners................ 8
4.12. Waiver of Right of Partition
and Dissolution .................................. 9
4.13. Partnership Reserve Account......................... 10
4.14. Partnership Expense..... ........................... 10
4.15. Partner Indemnification............................. 11
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SECTION V. INTERESTS, CONTRIBUTIONS AND ACCOUNTS 13
5.01. Partnership Interests............................... 13
5.02. Initial Contribution of General Electric............ 13
5.03. Initial Contribution of TPP......................... 13
5.04. Initial Contribution of JLM......................... 14
5.05. Additional Contributions............................ 14
5.06. Capital Account..................................... 17
5.07. Negative Capital Account............................ 18
5.08. Interest on Capital................................. 18
5.09. Determination of Capital Accounts and
Transfers of Partners............................. 18
5.10. Return of Capital................................... 19
5.11. Distributions in Kind............................... 19
SECTION VI. ALLOCATION OF PROFITS AND LOSSES 20
6.01. Net Income and Losses From Operations
and Net Gains and Losses From
Capital Transactions.............................. 20
6.02. Section 704(b) Limitation........................... 20
6.03. Qualified Income Offset ............................ 21
6.04. Section 704(c) Compliance........................... 21
SECTION VII. DISTRIBUTIONS 21
7.01. Optional Distributions.............................. 21
7.02. Mandatory Distributions............................. 22
SECTION VIII. OPTIONAL LOANS 23
8.01. Optional Loans...................................... 23
8.02. Subordination....................................... 23
8.03. Personal Liability.................................. 24
SECTION IX. TAX AND ACCOUNTING REPORTS AND STATEMENTS 24
9.01. Tax Returns......................................... 24
9.02. Tax Decisions and Elections......................... 24
9.03. Tax Information..................................... 24
9.04. Fiscal Year......................................... 24
9.05. Books and Records................................... 24
9.06. Access to Books and Records......................... 25
9.07. Reports............................................. 25
9.08. Accounting Decisions................................ 25
9.09. Bank Accounts and Investments....................... 26
9.10. Appointment of Tax Matters Partner.................. 26
9.11. Continuation of Tax Partnership Status.............. 28
9.12. Tax Profits and Losses.............................. 28
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SECTION X. TRANSFER OF PARTNERSHIP INTEREST 28
10.01. Transfers Restricted; No Relief
Of Liability...................................... 28
10.02. Permitted Transfers................................. 28
10.03. Requirements of Permitted Transfers................. 29
10.04. Basis Adjustment.................................... 29
10.05. Allocations Between Transferor and
Transferee........................................ 29
10.06. Continued Liability of General Electric.............. 29
SECTION XI. BUY - SELL 30
11.01. Transfer to Non-Affiliate........................... 30
11.02. Transfer to General Electric........................ 31
11.03. TPP and JLM Options................................. 33
11.04. Nonproduction of Phenol............................. 36
11.05. Indemnifications.................................... 39
SECTION XII. DISSOLUTION AND LIQUIDATION 42
12.01. Events of Dissolution .............................. 42
12.02. Liquidation and Distributions....................... 42
12.03. Continuation of the Business........................ 42
12.04. Effect of New Partners;
Reconstituted Partnership......................... 42
SECTION XIII. NOTICES 43
13.01. Notices............................................. 43
13.02. Effective Date...................................... 44
SECTION XIV. INSURANCE 44
14.01. Insurance........................................... 44
14.02. Named Insureds...................................... 45
SECTION XV. DEFINITIONS 45
SECTION XVI. GENERAL PROVISIONS 49
16.01. Interpretation...................................... 49
16.02. Counterparts........................................ 50
16.03. Additional Acts..................................... 50
16.04. This Agreement...................................... 50
16.05. No Third-Party Beneficiary Rights................... 50
16.06. Third-Party Beneficiaries........................... 50
16.07. Retroactive Amendments.............................. 50
16.08. Exhibits............................................ 51
16.09. Captions............................................ 51
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16.10. Construction........................................ 51
16.11. Waiver.............................................. 51
16.12. Severability........................................ 51
16.13. Binding Agreement................................... 51
16.14. Language............................................ 51
EXHIBIT A - Legal Description of the Land
EXHIBIT B - Description of Plant
EXHIBIT C - Partner Representatives
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PARTNERSHIP AGREEMENT
OF
MT. ▇▇▇▇▇▇ PHENOL PLANT PARTNERSHIP
This PARTNERSHIP AGREEMENT (this "Agreement") is made and entered into on
the 18th day of November, 1987, to be effective as of the 1st day of November,
1987, by and between GENERAL ELECTRIC COMPANY, a New York corporation having an
office and mailing address at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter sometimes referred to as "General Electric"), TEXAS PHENOL
PLANT LIMITED PARTNERSHIP, a Texas limited partnership having an office and
mailing address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
sometimes referred to as "TPP"), and JLM (IND.), INC., a Indiana corporation
having an office and mailing address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter sometimes referred to as "JLM"). General Electric, TPP and JLM are
hereinafter sometimes referred to collectively as the "Partners" and
individually as a "Partner".
WITNESSETH:
The Partners desire and intend to form a general partnership under the laws
of the State of Indiana for a specific business purpose.
Therefore, in consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners, intending to be
legally bound, hereby agree as follows:
SECTION I
GENERAL
FORMATION OF PARTNERSHIP
1.01. Defined Terms. Reference is herein made to Section XV of this
Agreement for the meaning assigned to certain defined terms used throughout this
Agreement.
1.02. Formation. The Partners hereby enter into and form a general
partnership (hereinafter the "Partnership") pursuant to the provisions of the
Uniform Partnership Act of the State
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of Indiana, as amended from time to time, and this Agreement, as amended from
time to time in accordance with this Agreement; provided, however, that the
Partnership shall be solely for the business purposes set forth in Section 3.01
hereof.
1.03. Statement of Partnership. Promptly after the execution and delivery of
this Agreement, the Partners shall execute, acknowledge and/or swear to, as
appropriate, and the Partnership shall file or record with the proper offices in
the State of Indiana and each other jurisdiction and political subdivision in
which the Partnership does business, such certificates or other documents as are
required or permitted by any applicable partnership, assumed or fictitious name
statutes, or similar statutes or laws in effect in such jurisdiction or
political subdivision. The Partners shall further execute, acknowledge and/or
swear to, as appropriate, and the Partnership shall promptly file or record as
aforesaid, such amended certificates or additional certificates or other from
time to time be required by such statutes or laws to permit the continued
existence and operation of the Partnership.
SECTION II
NAME, TERM AND OFFICES
2.01. Name. The name of the Partnership shall be the MT. ▇▇▇▇▇▇ PHENOL PLANT
PARTNERSHIP; provided, however, the Partners may from time to time change the
name of the Partnership or adopt such trade or fictitious names as agreed to by
the Partners. The Partners shall cause the name of the Partnership and such
other trade, fictitious or other name or names as deemed appropriate by the
Partners to be registered or filed where required in the applicable local or
state records. In the event any trade, fictitious or other name is required to
comply with any such laws, the Partners shall promptly agree on such name and
shall promptly cause such name to be filed or recorded as provided above.
2.02. Term. The term of the Partnership shall commence on the date of
signing and delivering this Agreement and shall continue for a period of
approximately fifty-five (55) years and end on December 31, 2042, unless
extended or earlier terminated, as provided in Section XII hereof.
2.03. Offices. The principal office and place of business of the Partnership
shall be at ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
may from time to time be
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approved by the Partners. As agreed to by the Partners, the Partnership may from
time to time change its principal office and place of business or may change or
establish such additional offices or places of business of the Partnership as
necessary or appropriate for the operation of the Partnership's business. The
Partnership shall promptly make any and all necessary filings with governmental
authorities and agencies in connection with the establishment, relocation or
discontinuance of any place of business of the Partnership.
SECTION III
BUSINESS PURPOSE AND LIMITATIONS
3.01. Business Purpose. The purpose of the Partnership shall be as follows:
(a) to lease certain land located in Mt. ▇▇▇▇▇▇, Indiana, as more
particularly described in Exhibit "A" attached hereto and by this reference made
a part hereof, together with certain related easements, rights of way, and other
rights and privileges (hereinafter sometimes referred to as the "Land"), all as
more fully set forth in the Ground Lease; and to purchase a certain phenol
manufacturing plant which is located upon the Land and currently in operation,
as more particularly described in Exhibit "B" attached hereto and by this
reference made a part hereof (hereinafter sometimes referred to as the "Plant"),
as more fully set forth in the Plant Purchase Agreement (the Land and the Plant
being hereinafter sometimes referred to collectively as the "Phenol Facility");
(b) to construct, invest in, expand, manage, operate, maintain,
improve, repair, alter, redevelop and in any manner deal with the Phenol
Facility;
(c) to manufacture products at the Phenol Facility and sell such
products;
(d) to purchase, lease, or otherwise acquire software, licenses,
patents, technology, intellectual property, machinery, equipment, facilities,
and other intangibles, personal property, and real property of every type
necessary or desirable to operate or expand the Phenol Facility;
(e) to borrow money or incur indebtedness from time to time as approved
by the Partners;
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(f) to mortgage, pledge, encumber, and grant security interests in the
Phenol Facility or any part thereof or interest therein or in any other assets
of the Partnership as approved by the Partners from time to time to secure
borrowings and other indebtedness of the Partnership; and
(g) to enter into all contracts and do all things necessary or
desirable in connection with the foregoing or otherwise as contemplated in this
Agreement and to pursue such other purposes as may be specifically agreed to by
the Partners from time to time.
3.02. No Other Business Without Mutual Consent. It is the intent of the
Partners to create hereby a joint venture, and the scope of the Partnership
shall strictly adhere to the purposes set forth in Section 3.01 of this
Agreement. No other business shall be conducted by the Partnership without the
prior agreement of the Partners, and no Partner shall have the power to bind, to
act for, or to assume any obligation or responsibility on behalf of the other
Partners or the Partnership except as specifically provided in this Agreement.
SECTION IV
MANAGEMENT OF PARTNERSHIP
4.01. General Management. Except to the extent delegated by the written
agreement of the Partners or as otherwise herein specifically provided to the
contrary, the control and management of the business and affairs of the
Partnership shall be vested jointly in the Partners owning in the aggregate
between them at least 66% of the Partnership Interests in the Partnership. All
decisions with respect to the control, management, business and affairs of the
Partnership, including without limitation, all decisions required or permitted
to be made by the Partners pursuant to this Agreement, which are approved or
agreed to by Partners owning in the aggregate between them at least 66% of the
Partnership Interests in the Partnership (but not otherwise), shall be binding
upon the Partnership and all the Partners. As used in this Agreement, the phrase
"agreed to by the Partners", "approved by the Partners" or "agreement of the
Partners" shall mean a written agreement, consent or approval signed by Partners
owning in the aggregate between them at least 66% of the Partnership Interests
in the Partnership, provided, however, that in determining any Partnership
action on or approval of any contract that has the Partnership as one
contracting party and
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a Partner or an Affiliate of a Partner as the other contracting party
("Interested Partner"), the Interested Partner and the Partnership Interest held
by the Interested Partner shall not be considered in the determination of the
66% Partnership Interest and any decision with regard to any amendment,
modification, waiver or enforcement of any right of the Partnership pursuant to
such contract, shall be taken by Partners owning in the aggregate at least 66%
of the Partnership Interests in the Partnership owned by the Partners other than
the Interested Partner. In the event of any default by any Partner pursuant to
Section 5.05(b) hereof, and such default is not cured within the applicable
grace and cure period, if any, the Defaulting Partner (as defined in Section
5.05(b) hereof) and the Partnership Interest held by the Defaulting Partner
shall not be considered in the determination of the 66% Partnership Interest and
all decisions with respect to the control, management, business, and affairs of
the Partnership shall be made or taken by Partners owning in the aggregate at
least 66% of the Partnership Interests in the Partnership owned by the
Non-Defaulting Partners (as defined in Section 5.05(b) hereof). Partner
Representatives designated as provided in Section 4.05 hereof may grant such
written approval or consent or execute such agreement on behalf of the Partner
they represent. Thus, except as otherwise expressly provided in this Agreement
or delegated by written agreement of the Partners, all decisions with respect to
the control, management, business and affairs of the Partnership shall be made
by agreement of the Partners owning in the aggregate between them at least 66%
of the Partnership Interests in the Partnership.
4.02. Operatinq Agreements. By their signatures hereto each of the
Partners has approved, and the Partnership shall concurrently herewith (or as
soon as reasonably practical following the execution and delivery of this
Agreement) enter into, that certain Operation and Maintenance Agreement with
General Electric, pursuant to which General Electric will manage, operate and
maintain the Phenol Facility for the Partnership. By their signatures hereto
each of the Partners has approved, and the Partnership shall concurrently
herewith (or as soon as reasonably practical following the execution and
delivery of this Agreement) enter into, that certain Utilities, Waste and Site
Services Agreement with General Electric, pursuant to which General Electric
will provide or arrange for the provisions of all utilities, waste and site
services required for operation of the Phenol Facility.
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4.03. Purchase and Supply Agreements. By their signatures hereto each of
the Partners has approved, and the Partnership shall concurrently herewith (or
as soon as reasonably practical following the execution and delivery of this
Agreement) enter into, the Phenol and Acetone Supply Agreement as seller, with
General Electric as buyer, pursuant to which the Partnership will provide
General Electric with phenol and acetone. By their signatures hereto each of the
Partners has approved, and the Partnership shall concurrently herewith (or as
soon as reasonably practical following the execution and delivery of this
Agreement) enter into, that certain Phenol Plant Cumene Purchase/Sale Agreement
as purchaser, with ▇▇▇▇▇▇▇▇ Refining Company as seller, pursuant to which
▇▇▇▇▇▇▇▇ Refining Company will supply the Partnership with Cumene. By their
signatures hereto each of the Partners has approved, and the Partnership shall
concurrently herewith enter into, that certain License Agreement as licensee,
with General Electric as licensor, pursuant to which General Electric will
furnish technical information and grant patent licenses to the Partnership
related to phenol and acetone manufacturing.
4.04. Ground Lease. By their signature hereto each of the Partners has
approved, and the Partnership shall concurrently herewith (or as soon as
reasonably practical following the execution and delivery of this Agreement)
enter into the Ground Lease as lessee, with General Electric as lessor, pursuant
to which the Partnership shall lease the Land from General Electric.
4.05. Partner Representatives. Each Partner hereby designates the
respective two (2) individuals specified in Exhibit "C" attached hereto as the
Partner Representatives of such Partner. Each such Partner Representative of a
Partner shall be and hereby is singly authorized and empowered as agent for such
Partner to speak, act, direct, consent and sign on behalf of and to bind such
Partner in all matters pertaining to the control and management of the
Partnership and its business and affairs. Each Partner Representative of a
Partner is specifically and expressly authorized to exercise any and all rights,
powers and duties expressly granted in this Agreement or by law to the Partner
such Partner Representative represents, and any action by a Partner
Representative pursuant to this Agreement shall, except as provided in this
Section 4.05, be binding upon the Partner represented by such Partner
Representative. All consents, agreements, directions, approvals, signatures or
other actions by or of a Partner required or permitted under this Agreement or
by law shall be deemed to mean and refer to the consent, agreement, direction,
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approval, signature or other action of any one of such Partner's Partner
Representatives. Each of the persons referred to in this Section 4.05 as a
Partner Representative shall be authorized to act on behalf of the Partner such
Partner Representative represents, unless and until such Partner Representative
shall have been removed, as set forth below. A Partner may remove one or more of
its Partner Representatives at any time by giving prior written notice thereof
to the Partnership and the other Partners; provided, however, that each Partner
shall at all times have at least one (1) Partner Representative appointed for it
as provided in this Section 4.05. A Partner may appoint substitute or additional
Partner Representatives at any time by giving prior written notice thereof to
the Partnership and the other Partners; such notice to provide the names and
addresses of such substitute or additional Partner Representatives and the
effective date of such appointment. No Partner Representative of a Partner
appointed under this Section 4.05 shall be personally liable for any obligations
of such Partner and each such Partner Representative shall be deemed for all
purposes merely to be an agent of the Partner such Partner Representative
represents.
4.06 Execution of Documents. Except to the extent delegated by the
written agreement of the Partners or as otherwise specifically provided herein
to the contrary, all leases, contracts, agreements, deeds, mortgages, notes,
encumbrances and other documents or instruments purporting to bind the
Partnership shall be executed by Partners owning in the aggregate between them
at least 66% of the Percentage Interests in the Partnership, computed in
accordance with Section 4.01 hereof.
4.07. Meetings of Partners. The Partners shall hold regular meetings at
times and places approved by the Partners from time to time. In addition, any
Partner may call a special meeting of the Partners to be held in Mt. ▇▇▇▇▇▇,
Indiana at any reasonable time after the giving of not less than five (5)
business days' written notice to the Partnership and the other Partners of such
meeting and setting forth in reasonable detail in such notice an outline of the
items to be taken up at such meeting. Any Partner may waive notice of or
attendance at any meeting of the Partners, and may attend by telephone or any
other electronic communication device, or may execute a signed written consent
to action taken at such meeting. At such meeting, the Partners shall transact
such business as may properly be brought before the meeting; provided, however,
all such business transacted and all decisions with respect to the control and
management of the business and affairs of the
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Partnership shall be made by agreement of the Partners. A secretary of such
Partnership meetings shall keep regular minutes of the proceedings. When
approved by the Partners, the minutes of such proceedings shall be placed in the
minute book of the Partnership.
4.08. Action Without Meeting. Any action required by statute or by this
Agreement to be taken at a meeting of the Partners, or any action which may be
taken at a meeting of the Partners, may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be agreed to by the
Partners, and such consent shall have the same force and effect as an approval
by the Partners. Any such signed consent, or a signed copy thereof, shall be
placed in the minute book of the Partnership.
4.09. Other Activities of Partners. The Partners may engage in, acquire or
possess other business ventures or property of any nature or description for
their own respective individual accounts or jointly with other parties or in
other capacities, whether or not competitive with the business of the
Partnership, and may enter into joint ventures, partnerships or other business
organizations with other parties organized to pursue businesses similar or
dissimilar to the purposes of the Partnership, and neither the Partnership nor
any Partner shall have any rights to or in such independent ventures or the
income or profits derived therefrom. No Partner shall be obligated to present
any particular investment opportunity to the Partnership or to the other
Partners, even if such opportunity is of a character which, if presented to the
Partnership or the other Partners, could or would be taken by the Partnership or
the other Partners.
4.10. Partnership Property. Unless otherwise approved by the Partners, all
property and assets of the Partnership shall be held in the name of the
Partnership and not in the name or names of any Partner or Partners. All
property acquired by or standing in the name of any Partner, other than the
Phenol Facility, shall be conclusively presumed not to be Partnership property,
unless an instrument in writing, signed by such Partner, shall specify to the
contrary.
4.11. Restriction on Authority of Partners. Unless approved in writing by
all of the Partners, one or more of the Partners shall not have any authority
with respect to the Partnership and this Agreement to:
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(a) possess Partnership property or assign the right of the
Partnership or the Partners in specific Partnership property for other than a
Partnership purpose;
(b) make, execute or deliver any general assignment for the benefit of
creditors, or any bond, guaranty, indemnity bond, surety bond, accommodation
paper or accommodation endorsement;
(c) assign, transfer, pledge, compromise or release any claim of the
Partnership except for full payment, or arbitrate, or consent to the arbitration
of, any of its disputes or controversies;
(d) amend or otherwise change this Agreement so as to modify the
rights or obligations of the Partners as set forth herein;
(e) do any act in contravention of this Agreement;
(f) except as otherwise permitted herein, admit a person as a Partner
or the Partnership;
(g) change or reorganize the Partnership into any other legal form;
or
(h) require any Partner to make any contribution to the capital of the
Partnership not provided for herein.
4.12. Waiver of Right of Partition and Dissolution. Having previously
been advised that it may have a right to bring an action for partition, each of
the Partners does hereby agree to waive and does irrevocable waive for the
duration of this Agreement any right or power any such Partner might have to
cause the Partnership or any of its assets to the partitioned, to cause the
appointment of a receiver for the assets of the Partnership, to compel any sale
of all or any portion of the assets of the Partnership pursuant to any portion
of the assets of the Partnership pursuant to any applicable law or laws or to
file a complaint or institute any proceeding at law or in equity or to
voluntarily do any act (other than any bankruptcy act, or acts permitted by this
Agreement) to cause the termination or dissolution of this Partnership. Each of
the Partners hereby acknowledges and agrees that such Partner has been induced
to enter into this Agreement in reliance upon the mutual waivers set forth in
this Section 4.12 and that without such waivers, no Partner would have entered
into this Agreement. The interest of all the Partners in the Partnership are,
for all purposes, personal property.
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4.13. Partnership Reserve Account. The Partnership, as agreed to by the
Partners, may establish a separate operating and replacement reserve account
(the "Reserve Account") and may deposit therein from time to time amounts deemed
reasonably necessary by the Partners for the purposes set forth below in this
Section 4.13. The Reserve Account may be charged with any expenditure for the
operation of the Phenol Facility or the Partnership and for the maintenance or
repair of any item and any expenditure for the acquisition, repair or
construction of items in the Phenol Facility, whether such items are treated as
current expense deductions or as capital expenditures under generally accepted
accounting practices. Nothing contained in this Section 4.13 shall in any way
limit or restrict the right of the Partnership to use other assets of the
Partnership (other than deposits to the Reserve Account) for the acquisition,
repair or construction of items which are treated as capital expenditures under
generally accepted accounting principles.
4.14. Partnership Expense. Except as herein otherwise provided or as
otherwise provided in the Ground Lease, the Operation and Maintenance Agreement,
the Utilities, Waste and Site Services Agreement or the License Agreement, the
Partnership shall be responsible for paying all direct costs and expenses of
holding, owning, developing, constructing and operating the Phenol Facility,
including, without limitation, costs of construction and materials therefor,
engineering, planning and financing fees, compensation of supervisory personnel,
debt service, compensation of managers, costs of maintenance and repair of
buildings, qrounds and facilities costs of utilities, costs of supplies,
insurance premiums, taxes, advertising expenses, costs for bookkeeping and
accounting directly related to the Phenol Facility or the Partnership, legal
expenses, office supplies, reimbursements of expenses of the Partners and all
other fees, costs and expenses directly attributable to the operation of the
Phenol Facility and the Partnership, and all such expenses shall be expenses of
the Partnership. In the event any such costs and expenses are or have been paid
by a Partner on behalf of the Partnership, then, except as expressly provided
herein to the contrary, such Partner shall be entitled to be reimbursed for such
payment so long as such payment is reasonably necessary for Partnership
business, is reasonable in amount and has been approved by the Partners. The
fees and expenses of any counsel retained by a Partner on behalf of itself or
the Partnership in connection with the formation and organization of the
Partnership and the closing of the transactions contemplated by the Operative
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Documents shall be at the sole cost and expense of and for the account of such
Partner (without any right of reimbursement from the Partnership).
4.15. Partner Indemnification. (a) Notwithstanding any other provision
of this Agreement or any other agreement to the contrary, the Partnership shall
(but not any Partner in its capacity as a Partner of the Partnership) defend the
Indemnified Parties (as defined below) and absolutely and irrevocably indemnify
and hold the Indemnified Parties harmless from and against any and all (i) (A)
claims, liabilities or obligations arising from, asserted against or related to
the Partnership, the Phenol Facility or any of the transactions undertaken in
connection with or contemplated by the Operative Documents or any other
agreement to which the Partnership may be a party (other than claims of the
Partnership against an Indemnified Party pursuant to contracts between the
Partnership and such Indemnified Party or resulting from an actual breach by an
Indemnified Party of an Operative Document), including, without limitation, any
and all claims, liabilities or obligations relating to environment, health,
safety, personal injury, property damage, employment claims, product liability,
merchantability or fitness for any particular purpose of goods, conformity of
goods to contractual requirements or any other alleged or actual breach or
violation of any obligation of or requirement binding on the Partnership; or (B)
claims, liabilities or obligations arising from, related to or based upon
allegations of any of the foregoing (other hen costs and expenses of defending
and investigating such claim or action, which are indemnified, if at all, as
provided below in subparagraph (b) of this Section 4.15); and (ii) claims,
liabilities or obligations (including costs, expenses, fines, assessments,
charges, penalties, damages (whether actual, punitive or consequential) or
judgments of any kind or nature whatsoever assessed in litigation or similar
proceedings) arising from, asserted against or associated with any claim,
liability or obligation described above in clause (i) of this Section 4.15
(clauses (i) and (ii) of this Section 4.15 being referred to herein collectively
as the "Indemnified Liabilities") regardless of how or when they arose or arise
and regardless of by whom or when asserted and whether the facts on which any
Indemnified Liability is based occurred prior to, on or subsequent to the date
hereof and regardless of whether known or unknown, fixed or contingent or
asserted or unassorted, or arising out of strict liability, malfeasance,
misfeasance, or nonfeasance, provided, however, that this Section 4.15 shall not
apply to and shall not indemnify any Indemnified Party with respect to any claim
or liability
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arising out of such Indemnified Party's gross negligence, willful misconduct,
intentional wrong doing or any breach of any agreement by such Indemnified Party
which is based on such Indemnified Party's actions (but not actions of the
Partnership or any Partner which are imputed to such Indemnified Party), or any
federal, state or local income tax liability of such Indemnified Party (other
than the tax liability arising from any indemnification payment made to such
Indemnified Party pursuant to this Section 4.15), provided further that
Indemnified Liabilities shall not include any claim, liability or obligation (i)
of or asserted against a Partner or an Indemnified Party, the basis of which
does not relate to the status of the Partner as a partner in the Partnership or
in the case of an Indemnified Party, the basis of which does not relate to the
status of the Indemnified Party's relationship to a partner in the Partnership
and such partner as a Partner in the Partnership or (ii) of an Indemnified
Party, the sole basis of which is the actual active negligence of such
Indemnified Party as finally determined by a court of competent jurisdiction.
"Indemnified Parties" shall mean the Partners, any shareholder or partner of any
Partner, any Person which directly or indirectly controls, is controlled by or
is under common control with any Partner or any shareholder or partner of any
Partner, any shareholder, partner, officer, employee, agent, successor or assign
of any of the foregoing and any officer of a partner of a Partner, provided,
however, that any Person that is an Indemnified Party on the date of this
Agreement shall always be an Indemnified Party.
(b) Promptly after notice of any action or claim against any
Indemnified Party indemnified pursuant to this Section 4.15, such Indemnified
Party shall notify the Partnership in writing of such action or claim, in which
case The Partnership shall assume the defense thereof pursuant to this Section
4.15, including the appointment of counsel as necessary and the payment of all
expenses in connection with such defense. The failure of any Indemnified Party
to so notify the Partnership shall not relieve the Partnership of any liability
which it may have hereunder, provided the Partnership has otherwise received
notice or actual knowledge of such action or claim. In the event the Partnership
fails to assume, in accordance with the first sentence of this paragraph, the
defense of any action or claim indemnified pursuant to this Section 4.15 within
thirty (30) days of notice by an Indemnified Party or fails to acknowledge in
writing that such claim or action relates to an alleged liability that if proven
would constitute an Indemnified Liability pursuant to this Section 4.15, such
Indemnified Party shall be entitled to
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defend and investigate such claim or action (including by employment of counsel)
and the cost and expenses (including fees and disbursements of counsel) shall be
indemnified by the Partnership pursuant to this Section 4.15 for such period
until after the Partnership acknowledges such claim or action is an Indemnified
Liability and effectively assumes such claim and liability and the defense
thereof, in which event the Partnership shall only be liable for costs and
expenses incurred pursuant to this Section 4.15(b) prior to such acknowledgement
and assumption; provided that within said thirty (30) day period and prior to
the assumption by the Partnership of the defense of a claim, the Indemnified
Party may take reasonable action required to prevent the entry of any
injunction, judgment or determination by a court or other authority which would
constitute an adjudication of such claim or have an adverse impact on the
defense against such claim without adversely affecting the right of said
Indemnifed Party to indemnification for the expense of such actions under this
Agreement.
SECTION V
INTERESTS, CONTRIBUTIONS AND ACCOUNTS
5.01. Partnership Interests. Each Partner shall have an interest in the
Partnership expressed as a percentage of the whole ("Percentage Interest").
Except as otherwise provided herein to the contrary (and in particular, except
as provided in Sections 5.05(b), 10.02 and XI hereof), throughout the term of
this Agreement, the Partners shall have the following respective Percentage
Interests in the Partnership:
PARTNER PERCENTAGE INTEREST
------- -------------------
General Electric Company 49%
Texas Phenol Plant Limited 49%
Partnership
JLM (IND.), Inc. 2%
5.02. Initial Contribution of General Electric. As its initial
contribution to the capital of the Partnership, General Electric shall
concurrently with the execution and delivery of this Agreement contribute to the
Partnership in cash the sum of Seven Million Fifty-One Thousand One Hundred and
no/100 Dollars ($7,051,100.00), which amount shall be credited to the capital
account of General Electric as provided in Section 5.06 hereof.
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5.03. Initial Contribution of TPP. As its initial contribution to the
capital of the Partnership, TPP shall concurrently with the execution and
delivery of this Agreement contribute to the Partnership in cash the sum of
Seven Million Fifty One Thousand One Hundred and no/100 Dollars ($7,051,100.00),
which amount shall be credited to the capital account of TPP as provided in
Section 5.06 hereof.
5.04. Initial Contribution of JLM. As its initial contribution to the
capital of the Partnership, JLM shall concurrently with the execution and
delivery of this Agreement contribute to the Partnership in cash the sum of Two
Hundred Eighty Seven Thousand Eight Hundred and no/100 Dollars ($287,800.00),
which amount shall be credited to the capital account of JLM as provided in
Section 5.06 hereof.
5.05. Additional Contributions. (a) It is anticipated that at some
future time or times the Partnership may purchase certain additional phenol
manufacturing related facilities (such as a boiler house and a barge unloading
facility) from General Electric and may expand the existing Phenol Facility. In
the event such purchase and/or expansion is (i) undertaken and completed within
forty-eight (48) months from the date of this Agreement or (ii) approved by the
Partners if (A) undertaken after forty-eight (48) months from the date of this
Agreement or (B) undertaken within forty-eight (48) months from the date of this
Agreement but at a time when it may not be reasonably anticipated that such
expansion may be completed within sixty (60) months from the date of this
Agreement, the Partners agree to make additional cash contributions to the
capital of the Partnership, as is required for such purchases and expansion up
to a maximum aggregate contribution, pursuant to this Section 5.05, by all the
Partners of an amount equal to ten percent (10%) of the aggregate cost (not
however in excess of fair market value) of such purchases and expansion, but in
no event shall the Partners be obligated to make additional contributions
pursuant to this Section 5.05 which total in the aggregate in excess of Twelve
Million and no/100 Dollars ($12,000,000,00); provided however that no additional
contributions in excess of an aggregate of $5,000,000 in total will be required
unless the Phenol Facility's capacity is increased contribute proportion
Partnership and contribution by at least ten (10) percent. Partners shall such
additional capital to the Partnership in to their respective Percentage
Interests in the and in accordance with a schedule of contributions dates as
agreed to by the Partners.
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(b) If any Partner fails to pay when due all or any part of any
additional capital contribution required pursuant to Section 5.05(a) (and such
failure continues for a period of 30 days after receipt of written notice of
such failure), such Partner ("Defaulting Partner") shall be in default as of the
date such contribution was due pursuant to Section 5.05(a) hereof (and such date
of default shall sometimes be referred to herein as the "Date of Default"). Upon
the occurrence of such default, the other Partners ("Non-Defaulting Partners")
(without prejudice to any other rights they or the Partnership may have at law
or in equity, including a suit for damages) may, in the sole and absolute
discretion of such Non-Defaulting Partners owning at least 66% of the Percentage
Interests in the Partnership owned by such Non-Defaulting Partners, proceed in
any one or more of the following manners:
(i) Require such Defaulting Partner to sell its interest in the
Partnership to the Non-Defaulting Partners or their designee or assignee for
a sum equal to fifty percent (50%) of the capital contributions previously
made by such Defaulting Partner pursuant to Section V hereof, and the
purchaser of such Defaulting Partner's interest in the Partnership shall
contribute to the capital of the Partnership the installments in default,
and agree to assume the remaining liabilities of the Defaulting Partner
pursuant to this Agreement and shall be admitted to the Partnership as a
substitute Partner, succeeding to the rights and obligations of such
Defaulting Partner.
(ii) Deem a proportionate portion of the additional contribution of the
Non-Defaulting Partners made pursuant to Section 5.05(a) to be a lean
("Capital Loan") by such Non-Defaulting Partners to the Partnership at a
rate of interest equal to the lesser of 12% or the highest rate permitted by
law. Notwithstanding any provision of Section VII hereof to the contrary,
such Capital Loans shall be repaid as soon as possible from Partnership
funds, and in any event, prior to repayment of any Optional Loans and prior
to any other distributions to the Partners.
(iii) Loan or arrange for a loan ("Contribution Loan") to the Partner-
ship from any party, including any Partner ("Contribution Lender"), in an
amount equal to all or part of the defaulted capital contribution
installment at a rate of interest equal to the lesser of 12% or the highest
rate permitted by law (such loans to be repaid out of such Defaulting
Partner's share of the Partnership distributions and such Defaulting Partner
shall be entitled to receive no
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distributions from the Partnership until such Contribution Loan and accrued
interest have been paid in full). During the period in which Contribution
Loans are outstanding, all distributions to such Defaulting Partner shall
be deemed distributed to such Defaulting Partner for purposes of determining
the capital account balance of such Defaulting Partner and for purposes of
Section VII hereof, but sha11 be paid to the Contribution Lender in
satisfaction of the Contribution Loans. Such payments shall first be applied
to interest and then in reduction of principal of such Contribution Loans.
(c) Each Partner acknowledges and agrees that the other Partners would
not be entering into this Agreement were it not for (i) all the Partners
agreeing to make the capital contributions required by this Section 5.05 and
(ii) the remedy provisions set forth in this Agreement, and in particular
Section 5.05(b) hereof. Each Partner acknowledges and agrees that (i) in the
event that it rails to satisfy its obligations pursuant to this Agreement, the
other Partners will suffer substantial damages and (ii) the purchase price for
their interest in the Partnership and the other remedies set forth above in
Section 5.05(b) are fair, just and equitable in all respects and the
determination of the purchase price in Section 5.05(b)(i) is administratively
superior to any other method for determining such purchase price and each
Partner hereby waives any rights it may have or be said to have to use any other
method or procedure to determine the purchase price of its interest in the
Partnership. If the Non-Defaulting Partners (or their assignee or designee)
elect to purchase the interest or a Defaulting Partner, as set forth above,
price, determined in the manner provided above, shall be paid in full in cash on
the date set by the Non-Defaulting Partners within sixty (60) days following the
date the Non-Defaulting Partners shall have notified the Defaulting Partner of
their election to purchase the interest of the Defaulting Partner in the
Partnership, and the interest of the Defaulting Partner in the Partnership shall
be assigned to the Non-Defaulting Partners or their assignee or designee and the
Defaulting Partner shall cease to have any interest in the Partnership as of the
date of such assignment. No distributions of cash or assets of the Partnership
shall be made by the Partnership to a Defaulting Partner from the Date of
Default to the date of assignment. Each Partner hereby agrees that in the event
its interest in the Partnership is purchased or reduced, as provided above in
Section 5.05(b)(i), it shall execute and deliver such conveyances, agreements,
notes, instruments other documents which may be necessary, in the sole or and
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absolute discretion of the Non-Defaulting Partners, to confirm and render fully
effective the remedies set forth in this Agreement, including, but not limited
to, an assignment of interest in the Partnership and any amendments to this
Agreement.
5.06. Capital Account. An individual Capital account shall be
established and maintained for each Partner. The capital accounts of the
Partners shall be determined and maintained throughout the full term of the
Partnership in accordance with the capital accounting rules of Section
1.704-l(b)(2)(iv) of the Section 704(b) Regulations (relating to maintenance of
capital accounts). Each Partner's capital account shall be credited (increased)
by:
(a) the amount of its cash capital contributions to the Partnership and
the agreed net fair market value of property other than cash contributed to the
Partnership by such Partner (net of liabilities secured by such contributed
property that the Partnership is considered to assume or take subject to for
purposes of Section 752 of the Code);
(b) the amount of gain, net income and items of income and gain
allocated to it pursuant to Section VI hereof;
(c) the amount of any "deemed" gain allocated to such Partner pursuant
to Section 5.11 hereof; and
(d) any other increase required to be made to the capital account of
the Partner by the Section 704(b) Regulations, to the extent not otherwise
provided for herein; and shall be debited (decreased) by:
(e) the amount of net losses Partner pursuant to Section VI hereof;
allocated to such Partner pursuant to Section VI hereof
(f) all amounts paid or distributed to it pursuant to Section VI hereof
(other than any amount paid or distributed on account of Partner Loans), and the
fair market value (as determined for purposes of Section 5.11) of property
distributed to it other than in payment of Partner Loans (in each case, net of
liabilities securing such distributed property that such Partner is considered
to have assumed or taken subject to under Section 752 of the Code);
(g) such Partner's distributive share of expenditures of the
Partnership described in Section 705(a)(2)(B) of the
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Code (relating to expenditures which are neither deductible nor properly
chargeable to capital), and expenditures which are treated as expenditures
described in Section 705(a)(2)(B) of the Code under the Section 704(b)
Regulations for purposes of capital account maintenance;
(h) the amount of the Partner's allocable share of any decrease
(relating to investment tax credits) in the aggregate basis of Partnership
property under Sections 48(q)(1) or 48(q)(3) of the Code, such decrease to be
allocated among the Partners in the same proportion as the adjusted tax basis or
cost of the property giving rise to such decrease is allocated among the
Partners under Treasury regulation Section 1.46-3(f);
(i) the amount of any loss "deemed" allocated to the Partner pursuant
to Section 5.11 hereof; and
(j) any other reductions in the capital account of the Partner required
by the Section 704(b) Regulations, to the extent not otherwise provided for
herein.
5.07. Negative Capital Account. No Partner with a negative balance in its
capital account shall have any obligation to the Partnership or the other
Partners to restore said negative balance
5.08. Interest on Capital. No interest shall be paid on any capital
contribution to the Partnership or capital account of a Partner.
5.09. Determination of Capital Accounts and Transfers of Partners.
Except as otherwise provided in this Agreement, whenever it is necessary to
determine the balance in the capital account of any Partner for purposes of this
Agreement, such balance shall be determined after giving effect to all
allocations of net income, net losses, gains and losses, and deemed gain and
deemed losses of the Partnership for the current year and all distributions or
deemed distributions for such year (other than payments with respect to Partner
Loans) in respect of transactions effected prior to the date as of which such
determination is to be made. A Partner shall not be entitled to withdraw any
part of its capital account or to receive any distribution from the Partnership,
except as specifically provided in this Agreement, and no Partner shall be
entitled to make any additional capital contributions to the Partnership other
than as provided herein. Any Partner, including any additional or substitute
Partner, who shall
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receive an interest in the Partnership or whose interest in the Partnership
shall be increased by means of a transfer to him or it of all or part of the
interest of another Partner, shall have a capital account which reflects such
transfer. Loans by any Partner to the Partnership shall not be considered
contributions to the capital of the Partnership and shall not increase the
capital account of the lending Partner.
5.l0. Return of Capital. No Partner shall be liable for the return of
the capital contributions, or any portion thereof, of any other Partner, it
being expressly understood and agreed that such return shall be made solely from
the assets of the Partnership. No Partner shall be entitled to demand and
receive property other than cash in return for its capital contributions to the
Partnership.
5.11. Distributions in Kind. In the event that the Partnership
distributes to a Partner property other than cash, solely for purposes of
computing the capital accounts of the respective Partners, such distribution
shall be treated as a sale by the Partnership of the property so distributed for
an amount equal to the fair market value of such property (with appropriate
adjustments for any liability which is assumed by the distributes Partner or to
which such distributed property is taken subject by the distributes Partner),
and the resulting "deemed" gain or "deemed" loss, as the case may be, shall be
allocated in accordance with Section VI hereof. To the extent that the aggregate
fair market value of such assets exceeds the aggregate basis thereof, such
excess shall be deemed allocated to the Partners' respective capital accounts in
the same manner as gain is allocated pursuant to Section VI hereof. To the
extent that the aggregate fair market value of such assets is less than the
aggregate basis thereof, such difference shall be deemed allocated to the
Partners' respective capital accounts in the same manner as losses are allocated
pursuant to Section VI hereof. The fair market values used for purposes of this
Section 5.ll in determining the amount of deemed gain or deemed loss shall be
determinative of the values of such assets for purposes of determining the
amounts of distributions to Partners under Section VII hereof. Such fair market
value shall be determined in the following manner, should the Partners fail to
agree on the determination of fair market value within thirty (30) days after
such property is proposed to be distributed. Each Partner shall select an
appraiser who is a member of the Appraisal Institute, or its successors. If any
Partner fails to name an appraiser within thirty (30) days after written notice
by the first Partner to appoint an appraiser that such Partner has selected an
appraiser (such
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notice to contain the name of such appraiser), the Partner or Partners who have
named an appraiser in written notice to the other Partners within such 30-day
period may select the appraiser for the Partner or Partners who have failed to
name an appraiser. The appraisers so selected shall proceed promptly to
determine the fair market value of the property in question, taking into
consideration any outstanding indebtedness, liabilities, liens and obligations
relating to such property. The determination of such fair market value by the
appraisers so selected shall be final and binding upon all parties; and if the
appraisers so selected are unable to agree upon a fair market value within
thirty (30) days after the appointment of the last appraiser, the fair market
value of such property shall be the average of the two appraisals closest in
value to each other, and the determination of the appraisers as to fair market
value shall be conclusive as to such fair market value and shall be final and
binding upon all parties. The Partnership shall pay the fees and expenses of the
appraisers selected pursuant to the provisions of this Section 5.ll.
SECTION Vl
ALLOCATION OF PROFITS AND LOSSES
6.01. Net Income and Losses From Operations and Net Gains and Losses
From Capital Transactions. All net income and net losses of the Partnership from
operations (and each item of income, loss, deduction or tax preference
attributable thereto), all gains and losses of the Partnership in connection
with an Interim Capital Transaction (including each item of gain, loss, credit
or tax preference attributable thereto), for each fiscal year of the Partnership
(or part thereof), and all gains and losses of the Partnership in connection
with a dissolution and winding up of the Partnership, as determined for federal
income tax purposes, shall be allocated as of the last day of each taxable year
to the Partners in the following manner and order of priority:
(a) To each Partner in proportion to their respective Percentage
Interests in the Partnership.
(b) If for any reason, losses (and hence deductions) are allocated
other than in accordance with the Partners' relative Percentage Interests in the
Partnership (pursuant to Section 6.01(a) above), so that one Partner has losses
allocated to it in excess of those that would have been
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allocated to such Partner pursuant to Section 6.01(a), then notwithstanding
Section 6.01(a), income and gain shall thereafter be allocated to the
Partner to whom such excess losses were allocated, until the aggregate net
amount of all aggregate losses and income or gain allocated to each Partner
in relation to the aggregate net amount of all losses and income or gain
allocated to all Partners, stand in the same ratio as their relative
Percentage Interests in the Partnership, at which point, the allocations of
income and gain shall revert to that of Section 6.01(a) above. Thereafter,
should there again be losses allocated other than in accordance with the
Partners' relative Percentage Interests in the Partnership (as provided in
Section 6.01(a) above), then the above procedure shall be repeated so that
income or gain is again allocated to the Partner to whom such excess losses
were allocated, until the aggregate net amount of all aggregate losses and
income or gain allocated to each Partner, in relation to the aggregate net
amount of all aggregate losses and income or gain allocated to all Partners,
stance in the same ratio as their relative Percentage Interests in the
Partnership.
6.02. Section 704(b) Limitation. Notwithstanding any other provision of this
Agreement to the contrary, no allocation of income, gain or loss shall be made
to a Partner if such allocation would not have "economic effect" pursuant to
Treasury regulation Section 1.704-l(b)(2)(ii) or otherwise be in accordance with
its interest in the Partnership within the meaning of Treasury regulation
sections 1.704-l(b)(3) and 1.704-l(b)(4)(iv) and this Agreement shall be deemed
to incorporate the minimum gain chargeback provisions of Treasury regulation
Section 1.704-l(b)(4)(iv)(e). To the extent an allocation cannot be made to a
Partner due to the application of this Section 6.02, such allocations shall be
made to the other Partner or Partners entitled to receive such allocation
hereunder.
6.03. Qualified Income Offset. If a Partner unexpectedly receives an
adjustment, allocation or distribution described in paragraph (4), (5), or (6)
of Section 1.704-l(b)(2)(ii)(d) of the Section 704(b) Regulations, gross income
of the Partnership or gain from a sale of assets shall be allocated to such
Partner or Partners in an amount sufficient to eliminate any deficit balance in
such Partner's capital account caused by such adjustment, allocation or
distribution as quickly as possible to the extent such deficit balance exceeds
the amount such Partner is deemed obligated to restore to the Partnership
pursuant to the Section 704(b) Regulations. It is the intent
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of the parties hereto that any allocation pursuant to this subsection
constitutes a "qualified income offset" under Treasury regulation section
1.704-l(b)(2)(ii)(d).
6.04. Section 704(c) Compliance. In accordance with Section 704(c) of the
Code and the applicable Treasury regulations thereunder, income, gain, loss,
deduction and tax depreciation with respect to any property contributed to the
capital of the Partnership, or with respect to any property which has a book
basis different than its adjusted tax basis, shall, solely for federal income
tax purposes, be allocated among the Partners so as to take into account any
variation between the adjusted tax basis of such property to the Partnership and
the book basis of such property.
SECTION VII
DISTRIBUTIONS
7.01. Optional Distributions. After providing for the satisfaction of all
the debts and obligations of the Partnership and after any required payments on
any loan or other financing, the Partnership may, by agreement of the Partners
(except as otherwise required in this Agreement), make distributions of all or
any portion of the Net Cash Flow of the Partnership or net proceeds from any
Interim Capital Transaction, to the extent available (after establishment of
appropriate and reasonable reserves), to the Partners in the following manner
and order of priority:
(a) first, an amount up to the aggregate balance of the Optional Loan
Accounts of the Partners shall be distributed to the Partners first to make
the Optional Loan Accounts of the Partners stand in the same ratio as their
respective Percentage Interests in the Partnership, and then, in proportion
to their respective shares of such aggregate additional balance, if any, of
the Optional Loan Accounts of the Partners; and
(b) any remaining Net Cash Flow of the Partnership which is approved by
the Partners for distribution shall be distributed to the Partners in
accordance with their respective Percentage Interests in the Partnership.
7.02. Mandatory Distributions. Notwithstanding the foregoing provisions of
Section 7.01 to the contrary, the Partners agree, except as set forth below,
that after providing
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for the satisfaction of all the current portion of debts and obligations of the
Partnership, including without limitation, Optional Loans, and after any
required current payments on any loan or other financing, the Partnership shall
as soon as reasonably practical (but in any event within forty-five (45) days
after the end of the fiscal year) make annual distributions of Net Cash Flow of
the Partnership and net proceeds from any Interim Capital Transaction, to the
extent available (after establishment of appropriate and read reserves in
accordance with generally accepted accounting principles), to the Partners in an
amount up to the aggregate balance of the Preferred Distribution Accounts of the
Partners in proportion to the relative balance in each such Partner's Preferred
Distribution Account. Notwithstanding the foregoing provisions of this Section
7.02 to the contrary, the Partners agree that a distribution to a Partner,
pursuant to this Section 7.02, of net proceeds from an insurance award
("Casualty") shall not exceed an amount equal to the product of (i) the amount
of income or gain of the Partnership properly allocated to such Partner pursuant
to Section VI of this Agreement as a result of such Casualty (without regard to
any other income, gain or loss of the Partnership) times (ii) the sum of the
highest marginal federal and applicable state and local income tax rates
applicable to domestic corporations at the time of such distribution (adjusted
to take into account the deduction of state and local taxes for federal income
tax purposes).
SECTION VIII
OPTIONAL LOANS
8.01. Optional Loans. To the extent required by Partnership business, any
Partner may, but shall not be obligated or required to, advance or lend moneys
to the Partnership ("Optional Loans"), and the amount of any such advance or
loan shall not, unless otherwise agreed to by the Partners, be deemed an
increase in or contribution to the capital account of such Partner or entitle
such Partner to any increased share in distributions or allocations of the
Partnership; rather the amount of any such advance or loan shall be deemed to be
an Optional Loan to and an obligation of the Partnership to such Partner and
shall bear interest at a rate per annum equal to one per cent (1%) over the
prime rate from time to time quoted by The Chase Manhattan Bank, N.A. in New
York, New York, or at such other rate as may be agreed to by the Partners.
Notwithstanding any provision of Section VII hereof to the contrary, but subject
to Section 8.02 hereof, all
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interest on Optional Loans to the Partnership by any Partner shall be payable
quarterly out of the Net Cash Flow of the Partnership and the net proceeds from
any Interim Capital Transaction and principal shall be paid in accordance with
the terms of such Optional Loan; provided, however, that all such advances or
loans, together with accrued and unpaid interest thereon, shall become
immediately due and payable upon termination and dissolution of the Partnership.
Each Partner shall have an account ("Optional Loan Account") which shall be
increased by Optional Loans made by such Partner, plus interest on such Optional
Loans, and decreased by payments on Optional Loans made as provided in Section
VII hereof. Distributions specified in Section VII hereof which decrease the
Optional Loan Account of any Partner shall be treated first as in payment of
accumulated interest on such Optional Loans and next as in payment of principal
of such Optional Loans. Subject to Section 8.02 and this Section 8.01, Optional
Loan repayment terms shall be specified by the lending Partners at the time the
Optional Loan is made.
8.02. Subordination. If at any time the Partnership is indebted to a third
person and if the debt instrument(s) evidencing such indebtedness require that
loans or advances from any Partner to the Partnership be subordinated to such
indebtedness, then the Partners and the Partnership shall take such action with
respect to the subordination of such loans as may be required to comply with the
provisions of such debt instrument(s).
8.03. Personal Liability. No Partner shall be personally liable for the
repayment of any Optional Loan, or any portion thereof, of any other Partner, it
being expressly understood and agreed that such repayment of principal and
interest of such Optional Loans shall be made solely from the assets of the
Partnership.
SECTION IX
TAX AND ACCOUNTING REPORTS AND STATEMENTS
9.01. Tax Returns. General Electric shall prepare and file or cause to be
prepared and filed a federal partnership information return in compliance with
Section 6031 of the Code and all other federal, state and local income tax
returns and statements of the Partnership, if any, which must be filed on behalf
of the Partnership with any taxing authority. Copies of all such tax returns of
the Partnership shall be promptly
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furnished to each Partner. Each return shall be prepared on the basis of an
allocation of income, gains and losses of the Partnership to the Partners in
accordance with Section 6.01 hereof, unless General Electric elects to file on a
different basis after it shall have received an opinion of tax counsel selected
by the Partners to the effect that there is not a reasonable basis under the
relevant provisions of the Code on which such a return could be filed.
9.02. Tax Decisions and Elections. Except as otherwise expressly provided in
this Agreement, all tax decisions and elections for the Partnership shall be
made and approved by the Partners.
9.03. Tax Information. By the first day of March of each fiscal year of the
Partnership, General Electric shall furnish or shall cause to be furnished to
each Partner such tax information as shall be necessary (including a statement
for the previous year of each Partner's share of any net income, net gains, net
losses and other items of the Partnership) for the preparation and filing of
federal income tax returns, state income tax returns and any other applicable
tax returns, reports or filings of the Partners.
9.04. Fiscal Year. The Fiscal year of the Partnership shall be the calendar
year.
9.05. Books and Records. The Partnership shall keep or cause to be kept
current and complete accounts, books and records of all transactions and
dealings of the Partnership. The Partnership's accounts, books and records shall
be maintained on an accrual basis and in accordance with generally accepted
accounting principles applied on a consistent basis from year to year. The books
and records of the Partnership shall at all times be maintained at the principal
office of the Partnership or at such other place or location as shall be agreed
to by the Partners.
9.06. Access to Books and Records. Each Partner shall have the right, at all
reasonable times during usual business hours and at the expense of such Partner,
to audit, examine and make copies of or extracts from the accounts, books and
records of the Partnership. Such right may be exercised through any agent or
employee of such Partner or by an independent accountant or attorney designated
by such Partner.
9.07. Reports. The Partnership shall retain General Electric to prepare and
furnish or cause to be prepared and
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furnished to the Partners monthly, quarterly and annual statements showing the
revenue and expenses of the Partnership for each period, a cash flow report of
the Partnership containing a statement of receipts and disbursements of the
Partnership, the balances in the capital accounts of each Partner, a balance
sheet of the Partnership as of the end of each such period and such other
information as shall be reasonably requested by a Partner in order for such
Partner to be reasonably advised of the financial status and results of
operations of the Partnership. The Partnership shall have an annual audit of its
financial books, records and reports, including its balance sheet and statement
of revenue and expenses, by Deloitte ▇▇▇▇▇▇▇ & Sells or another firm of
certified public accounts of nationally recognized standing approved by the
Partners, and shall furnish to each Partner copies of such balance sheet,
statement of revenue and expenses, and a statement of such Partner's share of
the Partnership's profit or loss and the balance of its capital account as at
year end, together with the opinion of said accountants covering such balance
sheet and statements, within ninety (90) days after the end of each fiscal year.
The Partnership shall also promptly furnish to the Partners copies of all
written reports, documents or notices which are material to the Partnership or
its business or which are requested from time to time by any Partner.
9.08. Accounting Decisions. All accounting decisions for the Partnership,
other than those accounting decisions specifically provided for in this
Agreement, shall be made and approved by the Partners.
9.09. Bank Accounts and Investments. The funds of the Partnership shall be
maintained in such bank or depository account or accounts, or invested in such
interest-bearing investments, as shall from time to time be approved by the
Partners. One or more accounts shall be maintained for and in the name of the
Partnership in such bank or depository as shall from Lime to time be approved by
the Partners. Temporary excess cash of the Partnership may be deposited in a
central interest-bearing account in the name of General Electric or an entity
affiliated with General Electric (the "Depository"), so long as separate entries
are made on the books and records of the Partnership and on the books and
records of the Depository reflecting that deposits in the bank account of such
Depository with respect to amounts received from the Partnership are payable on
demand, have been deposited therein for the account of the Partnership and that
withdrawals from such bank account have been made for the purpose of disbursing
funds to the
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Partnership or for the purpose of paying costs, expenses or liabilities of the
Partnership. Such funds shall be disbursed only for Partnership purposes. All
withdrawals from any such account or accounts shall require the signature of
duly authorized signatories from time to time approved by the Partners.
9.10. Appointment of Tax Matters Partner. General Electric is hereby
designated Tax Matters Partner (hereinafter "TMP") as defined in Section
6231(a)(7) of the Internal Revenue Code (as amended) (the "Code"). The TMP and
the other Partners shall use their best efforts to comply with the
responsibilities outlined in this Section 9.10 and in Sections 6221 through 6232
of the Code (including any Treasury regulations promulgated thereunder) and in
doing so shall incur no liability to any other Partner. The following provisions
shall be applicable to the TMP and the other Partners:
(a) The Partners shall furnish the TMP with such information (including
information specified in Section 6230(e) of the Code) as it may reasonably
request to permit it to provide the Internal Revenue Service with sufficient
information to allow proper notice to the Partners in accordance with Section
6223 of the Code. The TMP shall keep the Partners informed of all audits or
investigations of the Partnership and of all administrative and judicial
proceedings, as required by Section 6223 of the Code, and shall furnish each
Partner with a copy of each notice or other communication received by the TMP
from the Internal Revenue Service (except such notices as are sent directly to
the Partners by the Internal Revenue Service).
(b) If any Partner intends to file a notice of inconsistent treatment
under Section 6222(b) of the Code, such Partner shall, at least thirty (30) days
prior to the filing of such notice, notify the other Partners of such intent and
the manner in which the Partner's intended treatment of a partnership item is
(or may be) inconsistent with the treatment of that item by the Partnership.
(c) The TMP shall not enter into any extension of the period of
limitations for making assessments on behalf of the other Partners without first
securing the written consent of the other Partners.
(d) No Partner shall file, pursuant to Section 6227 of the Code, a
request for an administrative adjustment of partnership items for any
Partnership taxable year without
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first notifying the other Partners. If the other Partners agree with the
requested adjustment, the TMP shall file the request for administrative
adjustment on behalf of the Partnership. If unanimous consent is not obtained
within thirty (30) days, or within the period required to file timely the
request for administrative adjustment, if shorter, any Partner, including the
TMP, may file a request for administrative adjustment on its own behalf.
(e) Any Partner intending to file a petition under Sections 6226, 6228,
or other sections of the Code with respect to any partnership item, or other tax
matters involving the Partnership, shall notify the other Partners of such
intention and the nature of the contemplated proceeding. In the case where the
TMP is the Partner intending to file such petition, such notice shall be given
within a reasonable time to allow the other Partners to participate in the
choosing of the forum in which such petition will be filed.
(f) The TMP shall not bind any other Partner to a settlement agreement
without obtaining the written concurrence of any such Partner who would be bound
by such agreement. Any other Partner who enters into a settlement agreement with
the Secretary of the Treasury with respect to any partnership items, as defined
by Section 6231(a)(3) of the Code, shall notify the other Partners of such
settlement agreement and its terms within ninety (90) days from the date of
settlement.
(g) The TMP shall be entitled to reimbursement by the Partnership for
all expenses, including without limitation expenses of tax counsel and
accountants, reasonably incurred by the TMP in representing the Partnership in
any audit or investigation of the Partnership by the Internal Revenue Service
and in any administrative or judicial proceeding relating to the tax treatment
by the Partnership of Partnership items.
(h) The provisions of this Section 9.10 shall survive the termination
of the Partnership or the termination of any Partner's interest in the
Partnership and shall remain binding on the Partners for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the
Partnership.
9.11. Continuation of Tax Partnership Status. The Partners agree not to
elect to be, or to have the Partnership, excluded from the application of all or
any part of
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Subchapter K of Chapter One of Subtitle A of the Code, as amended, from any
successor provisions thereto under the Code, or from any provisions of state
income tax laws of substantially the same effect.
9.12. Tax Profits and Losses. For federal income tax purposes, the
profits and losses of the Partnership shall be determined each year in
accordance with the accounting methods followed for federal income tax purposes
and shall be allocated among the Partners and credited or debited to their
respective capital accounts, as set forth in Section VI hereof.
SECTION X
TRANSFER OF PARTNERSHIP INTERESTS
10.01. Transfers Restricted; No Relief of Liability. Except as otherwise
provided in this Section X or Section XI hereof, no Partner shall have any right
to directly or indirectly Transfer any part or all of its interest in the
Partnership or otherwise withdraw or resign from the Partnership. Any attempt to
Transfer its interest in the Partnership, without the prior written consent of
the other Partners, shall be void and without force and effect.
10.02. Permitted Transfers. Notwithstanding the foregoing provisions of
Section 10.01 hereof, TPP may Transfer all of its interest in the Partnership
(provided the requirements of Section 10.03 hereof are otherwise complied with)
to a person or entity which is 90% (directly or indirectly) owned and controlled
by TPP, ▇▇▇▇▇▇▇▇ Refining Company, Properchamp, Inc., Union Pacific Refining
Inc. or their Affiliates (for purposes of this Section 10.02, the term "control"
as used in the definition of "Affiliate" shall mean the ownership of 90% or more
of the beneficial interest in the firm or entity referred to).
10.03. Requirements of Permitted Transfers. Notwithstanding the foregoing
provisions of Section 10.02, no permitted Transfer by a Partner (whether direct
or indirect) of its interest in the Partnership shall be effective, unless and
until the provisions of this Section 10.03(a)-(b) below are satisfied.
(a) A counterpart of the instrument of Transfer, executed and
acknowledged by the parties thereto, has been delivered to the Partnership
and to the other Partners.
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(b) The Transfer will not result in the transferring Partner (but only
if such transferring Partner continues to hold an interest in the
Partnership) or the transferee holding an interest in the Partnership of
less than one percent (1%).
10.04. Basis Adjustment. In the event of a Transfer of all or part of
the interest of a Partner in the Partnership pursuant to Section 10.02
hereof, at the request of the transferee, the Partnership shall elect,
pursuant to Section 754 of the Code, or the corresponding provision of
subsequent law, to adjust the basis of Partnership property as provided by
Sections 734 and 743 of the Code.
10.05. Allocations Between Transferor and Transferee. Upon the Transfer
of all or any part of the interest of a Partner as hereinabove provided, the
net income, net losses, net gains and credits attributable to the interest
so transferred shall be allocated between the transferor and the transferee
in accordance with the daily proration allocation method as authorized by
the Code and applicable Treasury Regulations and Internal Revenue Service
policies. Distributions shall be made to the holder of record of the
interest on the date of distribution.
10.06. Continued Liability of General Electric. Notwithstanding any
other provision of this Agreement to the contrary, neither the Transfer of
all or any part of General Electric's interest in the Partnership, nor
General Electric's ceasing, for any other reason, to be a Partner of the
Partnership or the sale of all or any portion of the assets of the
Partnership shall be effective to relieve General Electric of any of its
obligations under this Agreement, regardless of whether such obligations may
have been assumed by any other party.
SECTION XI
BUY - SELL
11.01. Transfer to Non-Affiliate. At any time after the execution and
delivery of this Agreement, General Electric may require the sale, transfer and
assignment of all of (but not less than all of) TPP's interests in the
Partnership to a third party entity nominated by General Electric and which is
not an Affiliate of General Electric (the "Purchasing Entity"), as set forth in
this Section 11.01. At any time after the execution and delivery of this
Agreement, General Electric may require
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the sale, transfer and assignment of all of (but not less than all of) JLM's
interests in the Partnership to a Purchasing Entity, as set forth in this
Section 11.01.
(a) The right of General Electric to require the sale and transfer of TPP's
and/or JLM's interests in the Partnership to a Purchasing Entity as set forth
above may be exercised at any time by General Electric by written notice given
by General Electric to TPP or JLM, as the case may be. The purchase and sale of
TPP's or JLM's interests in the Partnership, as the case may be, by such
Purchasing Entity shall be consummated at a closing (the "11.01 Closing") which
shall be held at the principal office of the Partnership at 10:00 a.m. central
time, on a date to be mutually agreed upon, but in no event later than sixty
(60) days after the date that General Electric shall have exercised its right
pursuant to this Section 11.01 by serving written notice on TPP or JLM, as the
case may be. At the 11.01 Closing, the Purchasing Entity and General Electric
(as set forth below) shall pay to TPP or JLM, as the case may be, the amount of
the 11.01 Purchase Price for such Partner's respective interest in the
Partnership (as defined below in subparagraph (b) of this Section 11.01) by
delivery of a certified or official bank check or the effecting of a bank wire
transfer to an account designated therefor by TPP or JLM, as the case may be,
(in either case, in immediately available funds) in such amount, and General
Electric shall duly execute and deliver to TPP or JLM, as the case may be,
releases from and indemnity against all obligations (actual or contingent) as
provided in Section 11.05, provided, however, that in any event, TPP's or JLM's
rights to indemnity pursuant to this Section ll.Ol(a) and Section 11.05 hereof
shall survive such transactions and the Closings and the termination and
dissolution of the Partnership. At the respective 11.01 Closings, the Purchasing
Entity, General Electric and TPP or JLM, as the case may be, shall execute and
deliver, such other deeds, assignments, bills of sale, releases and other
instruments as may be reasonably necessary to effect the sale and transfer of
TPP's or JLM's entire interest in the Partnership being purchased and sold
hereunder free and clear of all liens or encumbrances.
(b) For purposes of this Section 11.01, the purchase price of each of TPP's
and/or JLM's respective interest in the Partnership ("11.01 Purchase Price")
shall be the sum of (i) one hundred ten percent (110%) of the aggregate of all
actual cash contributions of such Partner to the Partnership (regardless of such
Partner's capital account balance), (ii) all of such Partner's Percentage
Interest in the
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undistributed profits of the Partnership as determined (as of the date of
transfer) in accordance with generally accepted accounting principles and (iii)
any payment and the fair market value of any benefit furnished directly or
indirectly to General Electric or any of its Affiliates from or by the
Purchasing Entity in consideration for General Electric exercising its rights
under Section 11.01(a). The portions of the 11.01 Purchase Price referred to in
clause (i) and clause (ii) of the preceding sentence shall be paid by the
Purchasing Entity and the portion of the 11.01 Purchase Price referred to in
clause (iii) of the preceding sentence shall be paid by General Electric. In the
event that either or both of TPP's and/or JLM's interests in the Partnership are
purchased pursuant to this Section 11.01, the balance in such Partner's Optional
Loan Account, together with any amount owed to such Partner on account of any
Capital Loan or Contribution Loan, shall become immediately due and payable. THE
payment of such loan amounts by the Partnership to TPP and/or JLM shall be a
condition precedent to the closing of the sale and transfer of such Partner's
interest in the Partnership pursuant to this Section 11.01.
11.02. Transfer to General Electric. Upon any date ("Purchase Date") on or
after December 31, 2008 or as provided in Section XII hereof, General Electric,
or its Affiliate, designee or assign ("Purchaser"), may purchase all of (but not
less than all of) TPP's interest in the Partnership, as set forth in this
Section 11.02. Upon any Purchase Date or as provided in Section XII hereof, the
Purchaser may purchase all of (but not less than all of) JLM's interest in the
Partnership, as set forth in this Section 11.02. The right of General Electric
to substitute its Affiliate, designee or assign shall not relieve it of any of
its obligations pursuant to this Section 11.02.
(a) The right of Purchaser to purchase TPP's or JLM's interest in the
Partnership as set forth above may be exercised by Purchaser by written notice
given by General Electric to TPP or JLM, as the case may be, not less than one
hundred eighty (180) calendar days prior to such Purchase Date (such notice to
specify the Purchase Date). The purchase and sale of TPP's and/or JLM's
interests in the Partnership, as the case may be, by Purchaser shall be
consummated at a closing (the "11.02 Closing") which shall be held at the
principal office of the Partnership at 10:00 a.m. central time, on a date to be
mutually agreed upon, but in no event later than 30 days after the Purchase
Date, to be effective as of the Purchase Date. At the 11.02 Closing, the
Partnership shall distribute to TPP
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and/or JLM, as the case may be, all of such Partner's Percentage Interest in the
undistributed profits of the Partnership as determined (as of the date of
transfer) in accordance with generally accepted accounting principles and the
Purchaser shall pay to TPP and/or JLM, as the case may be, in cash the amount of
the 11.02 Purchase Price for each such Partner's respective interest in the
Partnership (as defined below in subparagraph (b) of this Section 11.02) by
delivery of a certified or official bank check or the effecting of a bank wire
transfer to an account designated therefor by TPP and/or JLM, as the case may
be, (in either case, in immediately available funds) in such amount, and General
Electric shall duly execute and deliver to TPP and/or JLM, as the case may be,
releases from and indemnity against all obligations (actual or contingent)
incurred or to be incurred, as provided in Section 11.05 hereof, provided,
however, that in any event, TPP's and JLM's rights to indemnity pursuant to this
Section 11.02(a) and Section 11.5 shall survive such transactions and their
closings and the termination and dissolution of the Partnership. At the 11.02
Closings, Purchaser and TPP or JLM, as the case may be, shall execute and
deliver such other deeds, assignments, bills of sale, releases and other
instruments as may be reasonably necessary to effect the sale and transfer of
TPP's and/or JLM's entire interests in the Partnership to Purchaser free and
clear of all liens and encumbrances.
(b) For purposes of this Section 11.02, the purchase price of each of TPP's
and JLM's respective interest in the Partnership ("11.02 Purchase Price") shall
be as follows:
(i) In the event the Partnership purchases any additional Phenol
manufacturing related facilities or expands to any degree the existing
Phenol Facility, as contemplated by Section 5.05 hereof, $13,000,000 for
TPP's interest in the Partnership and $528,000 for JLM's interest in the
Partnership; and
(ii) In the event the Partnership does not purchase any additional
Phenol manufacturing related facilities or expand to any degree the existing
Phenol Facility as contemplated by Section 5.05 hereof, $7,100,000 for TPP's
interest in the Partnership and $288,000 for JLM's interest in the
Partnership.
In the event that either or both of TPP's and/or JLM's interests in the
Partnership are purchased pursuant to this Section 11.02, the balance in such
Partner's Optional Loan Account, together with any amount owed to such Partner
on
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account of any Capital Loan or Contribution Loan, shall become immediately due
and payable. The payment of such loan amounts by the Partnership to TPP and/or
JLM shall be a condition precedent to the Closing of the sale and transfer of
such Partner's interest in the Partnership pursuant to this Section 11.02.
11.03. TPP and JLM Options. TPP may, upon the happening of any Separation
Event (as defined below), require General Electric to purchase all of (but not
less than all of) its interest in the Partnership, as set forth in this Section
11.03. JLM may, upon the happening of any one or more of the Separation Events
set forth in Sections 11.03(c)(i)-(v), inclusive, require General Electric to
purchase all of (but not less than all of) its interest in the Partnership, as
set forth in this Section 11.03. General Electric may substitute a third party
designated by General Electric as the party purchasing JLM's and/or TPP's
interest in the Partnership pursuant to this Section 11.03. The right of General
Electric to substitute a third party shall not relieve it of any of its
obligations pursuant to this Section 11.03.
(a) The right of TPP or JLM to require the purchase and transfer of its
respective interest in the Partnership to General Electric (or a third party
designated by General Electric), as set forth above, may be exercised by TPP or
JLM, as the case may be, giving General Electric written notice ("Put Notice")
of the happening of a Separation Event (without regard to any cure periods). If,
after such Put Notice is given by TPP or JLM, as the case may be, such
Separation Event is not cured within the applicable cure period, if any, as
specified below for such a Separation Event, then General Electric will be
required to purchase TPP's and/or JLM's entire interest in the Partnership, as
the case may be. In the event such Separation Event is cured within the
applicable cure period, if any, specified in Section 11.03(c), General Electric
will not be required to purchase TPP's or JLM's interest in the Partnership
pursuant to such Put Notice. The purchase and sale of TPP's or JLM's interest in
the Partnership by General Electric or its designee shall be consummated in a
closing (the "11.03 Closing") which shall be held at the principal office of the
Partnership at 10:00 a.m. central time, on a date to be mutually agreed upon,
but in no event later than one hundred and fifty (150) days after the applicable
Put Notice. At the 11.03 Closing, General Electric, or its designee, shall pay
in cash to TPP and/or JLM, as the case may be, the amount of the 11.03 Purchase
Price for such Partner's interest in the Partnership (as defined below in
subparagraph (b) of this
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Section 11.03) by delivery of a certified or official bank check or the
effecting of a bank wire transfer to an account designated therefor by TPP
and/or JLM, as the case may be, (in immediately available funds) in such amount,
and General Electric shall duly execute and deliver to TPP and/or JLM, as the
case may be, releases from and indemnity against all obligations (actual or
contingent) incurred or to be incurred, as provided in Section 11.05, provided,
however, that in any event, TPP's and JLM's rights to indemnity pursuant to this
Section 11.03(a) and Section 11.05 hereof shall survive such transaction and its
closing and the termination and dissolution of the Partnership. At the 11.03
Closing, General Electric, TPP and/or JLM, as the case may be, and, if
applicable, General Electric's designee shall execute and deliver such other
deeds, assignments, bills of sale, releases and other instruments as may be
reasonably necessary to effect the sale and transfer of TPP's and/or JLM's
entire interest in the Partnership to General Electric or its designee free and
clear of all liens and encumbrances.
(b) For purposes of this Section 11.03, the purchase price of TPP's or JLM's
interest in the Partnership (the "11.03 Purchase Price") shall be an amount
equal to the sum of (i) one hundred percent (100%) of the aggregate of all
actual cash contributions of TPP and/or JLM, as the case may be, to the
Partnership (regardless or such Partner's capital account balance), plus (ii)
all of TPP's and/or JLM's Percentage Interest in the undistributed profits of
the Partnership as determined (as of the date of transfer) in accordance with
generally accepted accounting principles; provided, however, that, if TPP
requires General Electric (or a third warty designated by General Electric) to
purchase its interest in the Partnership pursuant to this Section 11.03 solely
because of the happening of a Separation Event described in Section 11.03(c)
(vii) (resulting from the termination Refining Company of the Phenol Plant
Cumene Purchase/Sale Agreement), the 11.03 Purchase Price for TPP's interest in
the Partnership shall not exceed to the then fair market value of TPP's interest
in the Partnership.
(c) As used herein, the term "Separation Event" shall mean and refer to any
one or more of the following:
(i) The failure of General Electric to cure any material breach by
General Electric of any of its material obligations set forth in the
Operation and Maintenance Agreement, the Phenol and Acetone Purchase and
Supply Agreement, the Utilities, Waste and Site Services Agreement
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or the License Agreement within sixty (60) days after notice of such breach from
TPP or JLM;
(ii) The failure of General Electric, within the applicable grace and
cure period of Section 5.05, to make additional capital contributions to the
capital of the Partnership as required pursuant to Section 5.05 hereof;
(iii) The failure of General Electric to satisfy any of its material
obligations pursuant to Section IX hereof, if such failure is not cured
within thirty (30) days after notice of such breach from TPP or JLM; .
(iv) Any attempt by General Electric to Transfer its interest in the
Partnership, other than as permitted in this Agreement;
(v) General Electric making a general assignment for the benefit of
creditors, filing a voluntary bankruptcy petition, becoming a subject of an
order for relief or is declared insolvent in any federal or state bankruptcy
or insolvency proceeding, filing a petition or answer seeking for such party
a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law, filing an answer or other
pleading admitting or failing to contest the material allegations of a
petition filed against such party in a proceeding of the type described
above, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator of such party or of all or any substantial
part of such party's properties; or one hundred twenty (120) days expire
after the date of commencement of a proceeding against such party seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law if the proceeding has not been
previously dismissed, or ninety (90) days expire after the date of the
appointment, without such party's consent or acquiescence, of a trustee,
receiver or liquidator of such party or of all or any substantial part of
such party's properties if the appointment has not been previously vacated
or stayed, or ninety (90) days expire after the date of expiration of a
stay, if the appointment has not previously been vacated; or solely as a
Separation Event for JLM, JLM or a party owning 80% or more of JLM does any
of the foregoing bankruptcy or insolvency events or actions set forth in
this Section 11.03(c)(v);
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(vi) The failure of the Partnership to cure any material default by the
Partnership pursuant to the Phenol Plant Cumene Purchase/Sale Agreement
within sixty (60) days after notice of such breach from TPP; and
(vii) Termination of the Phenol Plant Cumene Purchase/Sale Agreement.
11.04. Nonproduction of Phenol. (a) In the event that the Phenol Facility
does not produce any phenol acceptable to General Electric under the Phenol and
Acetone Supply Agreement (such nonproduction of acceptable phenol being referred
to as the "Phenol Failure", without regard to the duration of such nonproduction
or failure) and such Phenol Failure continues for two consecutive quarters,
General Electric shall have the right to purchase JLM's and/or TPP's interests
in the Partnership, as the case may be, at the then fair market value of each
such Partner's interest in the Partnership (as to each such Partner, the
purchase price as provided in this Section 11.04(a) shall be sometimes referred
to as the "11.04(a) Purchase Price"). The procedure and notice requirements for
such purchase shall be as set forth in Section ll.Ol(a).
(b) TPP may, upon the happening of any 11.04(b) Event (as defined below),
require General Electric to purchase all of (but not less than all of) its
interest in the Partnership, as set forth in this Section 11.04(b). JLM may,
upon the happening of any 11.04(b) Event, require General Electric to purchase
all of (but not less than all of) its interest in the Partnership, as provided
in this Section 11.04(b). In each case, General Electric may substitute a third
party designated by General Electric as the party purchasing TPP's or JLM's
interest in the Partnership pursuant to this Section 11.04(b). The right of
General Electric to substitute a third party shall not relieve it of any of its
obligations pursuant to this Section 11.04(b).
(i) The right of TPP and/or JLM, as the case may be, to require the
purchase and transfer of their respective interest in the Partnership to
General Electric (or a third party designated by General Electric), as set
forth above, may be exercised by TPP and/or JLM, as the case may be, giving
General Electric written notice ("11.04(b) Notice") of the happening of an
11.04(b) Event. After such 11.04(b) Notice is given by TPP and/or JLM, as
the case may be, General Electric will be required to purchase TPP's and/or
JLM's interest in the Partnership, as the case may be. The purchase and sale
of such interest in the Partnership by
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General Electric or its designee shall be consummated in a closing (the
"11.04(b) Closing") which shall be held at the principal office of the
Partnership at 10 a.m. central time, on a date to be mutually agreed upon,
but in no event later than thirty (30) days after the 11.04(b) Notice is
given by TPP or JLM, as the case may be, to General Electric. At the
11.04(b) Closing, General Electric, or its designee, shall pay in cash to
TPP and/or JLM, as the case may be, the amount of the 11.04(b) Purchase
Price for such Partner's interest in the Partnership [as defined below in
subparagraph (ii) of this Section 11.04(b)] by delivery of a certified or
official bank check or the effecting of a bank wire transfer to an account
designated therefor by TPP and/or JLM, as the ease may be (in immediately
available funds), in such amount, and General electric shall duly execute
and deliver to TPP and/or JLM, as the case may be, releases from and
indemnity against all obligations (actual or contingent) incurred or to be
incurred, as provided in Section 11.05 hereof, provided, however, that in
any event, TPP's and/or JLM's right to indemnity pursuant to this Section
11.04(b)(i) and Section 11.05 hereof shall survive such transaction and its
closing and the termination and dissolution of the Partnership. At the
11.04(b) Closings, General Electric, TPP, JLM and if applicable, General
Electric's designee shall execute and deliver such other deeds, assignments,
bills of sale, releases and other instruments as may be reasonably necessary
to effect the sale and transfer of TPP's and/or JLM's entire interest in the
Partnership, as the case may be, to General Electric or its designee free
and clear of all liens and encumbrances.
(ii) For purposes of this Section 11.04(b), the purchase price of each
of TPP's and/or JLM's respective interest in the Partnership shall be equal
to the then fair market value of such Partner's interest in the Partnership
(as to each of TPP and JLM, such purchase price of such Partner's interest
in the Partnership being referred to as the "11.04(b) Purchase Price"). In
the event that either or both of TPP's and/or JLM's interest in the
Partnership are purchased pursuant to this Section 11.04(b), the balance in
such Partner's Optional Loan Account, together with any amount owed to such
Partner on account or any Capital Loan or Contribution Loan, shall become
immediately due and payable.
(iii) As used herein, the term "11.04(b) Event" shall mean and refer to
any one or more of the following:
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(A) Two consecutive quarters of Phenol Failure, if no commitments
have been made during such two consecutive quarters to initiate, begin
and pursue with all reasonable diligence the necessary steps (within
twelve (12) months of the initial Gate of such Phenol Failure) to
produce phenol acceptable to General Electric (in this regard, TPP and
JLM shall not interfere with or object to the making of such
commitments, provided that neither JLM nor TPP shall have any
obligations to make capital contributions, or other commitments,
liabilities or obligations, not indemnified for by General Electric,
pursuant thereto);
(B) Genera1 Electric notifies TPP or JLM, after any Phenol Failure
of General Electric's intention not to correct or rectify such Phenol
Failure;
(C) Five (5) consecutive fiscal quarters of Phenol Failure; unless
(1) throughout such five consecutive fiscal quarters and continuing
until phenol acceptable to General Electric is produced by the Phenol
Plant, all of the current debts, obligations and liabilities of the
Partnership are being paid and satisfied when due, (2) funds have been
made fully available to the Partnership in amounts reasonably
sufficient to fully and completely take the necessary steps to correct
or rectify such Phenol Failure and such corrective or rectifying steps
shall have been initiated within such five consecutive fiscal quarters
and pursued with reasonable diligence to completion and (3) phenol
acceptable to General Electric has been produced within thirty (30)
months of the initial date of such Phenol Failure; and
(D) The Partnership makes a general assignment for the benefit of
creditors, files a voluntary bankruptcy petition, becomes a subject of
an order for relief or is declared insolvent in any federal or state
bankruptcy or insolvency proceedings, files a petition or answer
seeking for itself a reorganization, rearrangement, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any law, files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed Partnership in
a proceeding of the type described above, or seeks, consents or
acquiesces in the
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appointment of a trustee, receiver or liquidator of the
Partnership or of all or any substantial part of the
Partnership's property; or one hundred twenty (120) days expire
after the date of such commencement of a proceeding against the
Partnership seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
an: law, if the proceeding has not been previously dismissed; or
ninety (90) days days expire after the date of the appointment,
without the Partnership's consent or acquiescence, of a trustee,
receiver or liquidator of the Partnership or of all or any
substantial part of the Partnership's properties, if the
appointment has not been previously vacated or stayed; or ninety
(90) days expire after the date of expiration of a stay, if the
appointment has not been previously vacated.
11.05. Indemnifications.
(a) In the event that the partnership interest of TPP or JLM shall be
purchased (herein the "Purchased Party") as set forth in Sections 11.01,
11.02, 11.03 or 11.04 hereof or TPP ceases to be a partner by dissolution
or operation of law, General Electric shall (without any responsibility or
liability of or recourse to TPP, the Purchased Party, the Partnership or
any of TPP's or the Purchased Party's partners, directors, direct or
indirect stockholders, officers, employees, agents, or successors or
assigns) defend the Indemnified Parties (as defined below) against and
absolutely and irrevocably indemnify and hold the Indemnified Parties
harmless from and against any and all (i) (A) claims, liabilities or
obligations arising from, asserted against or related to the Partnership,
the Phenol Facility, any of the transactions undertaken in connection with
or contemplated by the Operative Documents, any other agreement to which
the Partnership may be a party (other than claims of the Partnership
against an Indemnified Party pursuant to contracts between the Partnership
and such Indemnified Party or resulting from an actual breach by an
Indemnified Party of an Operative Document), this Agreement or the purchase
of the Indemnified Party's interest in the Partnership, including, without
limitation, any and all claims, liabilities or obligations relating to
environment, health, safety, personal injury, property damage, employment
claims, product liability, merchantability or fitness for any particular
purpose of goods, conformity of goods to contractual requirements or any
other alleged or actual breach or violation of any obligation of or
requirement binding on the Partnership,
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46
the Indemnified Party or the purchaser of an Indemnified Party's interest
in the Partnership; or (B) claims, liabilities or obligations arising from,
related to or based upon allegations of any of the foregoing (other than
costs and expenses of defending and investigating such claim or action,
which are indemnified, if at all, as provided below in subparagraph (b) of
this Section 11.05); and (ii) claims, liabilities or obligations (including
costs, expenses, fines, assessments, charges, penalties, damages (whether
actual, punitive or consequential) or judgments of any kind or nature
whatsoever assessed in litigation or other similar proceedings) arising
from, asserted against or associated with any claim, liability or
obligation described above in clause (i) of this Section 11.05(a) (clauses
(i) and (ii) of this Section 11.05(a) being referred to herein collectively
as the "Indemnified Liabilities") regardless of how or when they arose or
arise and regardless of by whom or when asserted and whether the facts on
which any Indemnified Liability is based occurred prior to, on or
subsequent to the date hereof or the date of purchase of the Indemnified
Party's interest in the Partnership and regardless of whether known or
unknown, fixed or contingent, asserted or unassorted, or arising out of
strict liability, malfeasance, misfeasance, or nonfeasance, provided,
however, that this Section 11.05(a) shall not apply to and shall not
indemnify any Indemnified Party with respect to any claim or liability
arising out of such Indemnified Party's gross negligence, willful
misconduct, intentional wrong doing or any breach of any agreement by such
Indemnified Party which is based on such Indemnified Party's actions (but
not actions of the Partnership or any Partner which are imputed to such
Indemnified Party), or any federal, state or local income tax liability of
such Indemnified Party (other than the tax liability arising from any
indemnification payment made to such Indemnified Party pursuant to this
Section 1l.05), provided further that Indemnified Liabilities shall not
include any claim, liability or obligation (i) of or asserted against a
Partner or an Indemnified Party, the basis of which does not relate to the
status of the Partner as a partner or former partner in the Partnership or
in the case of an Indemnified Party, the basis of which does not relate to
the status of the Indemnified Party's relationship to a partner in the
Partnership and such partner as a Partner in the Partnership or (ii) of an
Indemnified Party, the sole basis of which is the actual active negligence
of such Indemnified Party as finally determined by a court of competent
jurisdiction. "Indemnified Parties" shall mean TPP, any Purchased Party,
any shareholder, officer, director or partner of TPP or any purchased
Party, any Person which directly or indirectly controls, is controlled by
or is under common control with TPP or any Purchased Party or any
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shareholder, officer, director or partner of TPP or any Purchased Party, or
any shareholder, partner, officer, employee, agent, successor or assign of
any of the foregoing and any officer of a partner of TPP or a Purchased
Party.
(b) Promptly after the notice of any action or claim against an
Indemnified Party indemnified pursuant to this Section 11.05, such
Indemnified Party shall notify General Electric in writing of such action
or claim, in which case General Electric shall assume the defense thereof
pursuant to this Section 11.05, including the employment of counsel as
necessary and the payment of all expenses in connection with such defense.
The failure of any Indemnified Party so to notify General Electric shall
not relieve General Electric of any liability which it may have hereunder,
provided General Electric has otherwise received notice or actual knowledge
of such action or claim. In the event General Electric fails to assume, in
accordance with the first sentence of this paragraph, the defense of any
action or claim indemnified pursuant to this Section 11.05 within 30 days
of notice by an Indemnified Party, or fails to acknowledge in writing that
such claim or action relates to an alleged liability that if proven would
constitute an Indemnifiable Liability pursuant to this Section 11.05, such
Indemnified Party shall be entitled to defend and investigate such claim or
action (including by employment of counsel) and the costs and expenses
(including fees and disbursements of counsel) shall be indemnified by
General Electric pursuant to this Section 11.05 for such period until after
General Electric acknowledges such claim or action is an Indemnifiable
Liability and effectively assumes such claim and liability and the defense
thereof, in which event General Electric shall only be liable for costs and
expenses incurred pursuant to this Section 11.05(b) prior to such
acknowledgment and assumption; provided that within said 30 day period and
prior to the assumption by General Electric of the defense of a claim, the
Indemnified Party may take reasonable action required to prevent the entry
of any injunction, judgment or determination by a court or other authority
which would constitute an adjudication of such claim or have an adverse
impact on the defense against such claim without adversely affecting the
right or said Indemnified Party to indemnification for the expense of such
actions under the Agreement.
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SECTION XII
DISSOLUTION AND LIQUIDATION
12.01. Events of Dissolution. The Partnership shall be dissolved upon
the earliest to occur of the following ("Event of Dissolution"):
(a) December 31, 2042, unless such date is extended by mutual
agreement of the Partners; and
(b) The Partners unanimously agree that the Partnership should be
dissolved.
12.02. Liquidation and Distributions. Except as provided hereinbelow
in Section 12.03, upon the occurrence of any Event of Dissolution under
Section 12.03 hereof or if for any other reason the Partnership is
dissolved and not reconstituted pursuant to Section 12.03 below, General
Electric shall be deemed to have given proper and timely notice to TPP and
JLM under Section 11.02, and General Electric, TPP and JLM shall promptly
proceed with the buy-out/sale of TPP's and JLM's entire interest in the
Partnership pursuant to Section 11.02 hereof.
12.03. Continuation of the Business. In the event that TPP or JLM
becomes insolvent or bankrupt, General Electric or its affiliate, designee
or assign shall be entitled to purchase such Partner's interests in the
Partnership pursuant to Section 11.02 hereof, and the remaining Partners,
if they unanimously agree, may reconstitute the Partnership and continue
the business of the Partnership. In the event that the Partnership is
dissolved for any reason other than an Event of Dissolution, the Partners
(or the remaining Partners, as the case may be) agree that to the fullest
extent permitted by law, the business of the Partnership shall be continued
on the terms and conditions of this Agreement by the Partners (or any
reconstituted successors thereto).
12.04. Effect of New Partners; Reconstituted Partnership. It is
understood that pursuant to the provisions of this Agreement, additional
partners may be admitted to the Partnership from time to time or existing
partners may be replaced by new partners, as provided in this Agreement.
Any such additional or new partners shall (i) assume and agree to be bound
by all of the terms, covenants and conditions of this Partnership
Agreement, (ii) assume and agree to be bound by all of the obligations
(whether pre-existing or incurred
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subsequently) of the Partnership, and (iii) become signatories to this
Agreement, such signature to constitute an acceptance of all of the
provisions hereof. In the event of a reconstitution of the Partnership and
a continuation of the business of the Partnership pursuant to Section 12.03
of this Agreement or in the event that an existing Partner increases their
interest in the Partnership by purchasing the interest of another Partner,
all obligations of the Partnership hereunder are under any other agreements
of the Partnership shall continue unaffected or unimpaired by such change
in the interest or numbers of Partners.
SECTION XIII
NOTICES
13.01. Notices. All notices and other communications required under
this Agreement shall be in writing and shall be sufficient for all purposes
if personally delivered or if sent by certified or registered U.S. mail,
return receipt requested, postage prepaid, or if sent prepaid overnight
delivery via Federal Express or another nationally recognized air courier,
and in any case addressed to the Partnership or the respective Partner at
the address set forth below or at such other address as the Partnership or
such Partner may hereafter designate by notice to the Partnership and each
of the Partners as herein provided.
(a) If to General Electric, to:
General Electric Company
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President and
Group Executive
Plastics Business Group
(b) If to TPP, to:
c/▇ ▇▇▇▇▇▇▇▇ Refining Company
InterFirst Building
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
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with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
2300 LTV Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇, ▇▇.,
(c) If to JLM, to:
JLM (IND.), INC.
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
(d) If to the Partnership, to:
MT. ▇▇▇▇▇▇ PHENOL PLANT PARTNERSHIP
c/o General Electric Company
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Manager
Mt. ▇▇▇▇▇▇ Manufacturing
Department
13.02. Effective Date. If personally delivered, notices and other
communications under this Agreement shall be deemed to have been given and
received and shall be effective when personally delivered. If sent by mail
in the form specified in Section 13.01 hereof, notices and other
communications hereunder shall be deemed to have been given and received
and shall be effective three (3) business days after deposited in the U.S.
mail or upon actual receipt, whichever first occurs. If sent via Federal
Express or another nationally recognized air courier in the form specified
herein, notices and other communications under this Agreement shall be
deemed to have been given and received and shall be effective one (1)
business day after deposited with such air courier or upon actual receipt,
whichever first occurs.
SECTION XVI
INSURANCE
14.01. Insurance. The Partnership shall carry and maintain in full
force and effect such insurance as may be approved from time to time by the
Partners, including without limitation the following insurance:
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(a) Worker's compensation insurance covering all employees of
the Partnership (if any), in the amount and form required by the laws of
the State of Indiana and any other applicable jurisdiction.
(b) Comprehensive general public liability insurance and
environmental impairment liability insurance covering the Phenol Facility
and the business and operations of the Partnership with limits of liability
from time to time approved by the Partners for injury or death of persons
or damage to property. If the coverage is provided through blanket policies
of General Electric, the Partnership will be included by endorsement, as
its interest may appear.
(c) Fire and extended coverage insurance coverage at full
replacement value including "all risk" differences in conditions insuring
all real and personal property, including boiler and machinery and business
interruption coverage, in amounts and limits of liability approved from
time to time by the Partners. If this coverage is provided through blanket
policies of General Electric, the Partnership shall be included by
endorsement, as its interest may appear.
14.02. Named Insureds. All of the above policies shall be issued by
insurance carriers approved by the Partners, and the policies required
under Section 14.01(a) and (b) above shall name the Partnership and each
Partner as insureds and each policy shall contain a provision that such
policy may not be canceled or materially modified or materially changed
without 30 days notice to each Partner.
SECTION XV
DEFINITIONS
Except as otherwise required by the context and except as otherwise
provided in this Agreement, the following terms shall have the following
respective meanings when used in this Agreement:
"Affiliate" shall mean as to any person or entity, any person, firm or
entity which controls, is controlled by, or is under common control with
such person or entity. In this definition, the term "control" shall include
the ownership of 51% or more of the beneficial interest in the firm or
entity referred to.
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"Agreement" means this Partnership Agreement, as it may from time to
time be amended.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Excess Income Account" shall mean as to each Partner, as of any given
time, an amount equal to the excess, if any, of (a) the aggregate amount of
net income or gains properly allocated to such Partner pursuant to Section
VI hereof, over (b) the aggregate amount of the net losses of the
Partnership properly allocated to such Partner under clause (a) and the
amount of losses which decrease the Excess Income Account of any Partner
under clause (b) shall be adjusted to reflect any determinations or
adjustments made by, or a a result of any examination or audit by, the
Internal Revenue Service.
"General Electric" means General Electric Company, a New York
corporation.
"Ground Lease" means that certain Lease Agreement entered into on the
18th day of November, 1987, to be effective as of the 1st day of November,
1987, by and between General Electric as the lessor and the Partnership as
the lessee of the Land.
"Interim Capital Transaction" means an insurance award (other than for
substantially complete destruction of all of the Phenol Facility), partial
condemnation, or sales of easements, rights-of-way or similar interests in
the Phenol Facility, or sales of portions of the Phenol Facility or
interests therein, and any similar items, including a financing or
refinancing, which, in accordance with generally accepted accounting
practices, are attributable to capital but which do not result in the
dissolution of the Partnership.
"JLM " means JLM (IND.), Inc., an Indiana corporation.
"Land" means the land upon which the Plant is located and certain
related easements, ways, rights and privileges as provided in Section
3.01(a) hereof.
"License Agreement" means that certain Phenol Technical Assistance and
License Agreement entered into on the 18th of November, 1987, to be
effective as of the 1st day of November, 1987, by and between General
Electric and the Partnership.
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"Net Cash Flow" means the total gross revenues of the Partnership from
operations less total gross expenditures of the Partnership. As used
herein, total gross revenues shall include all operating receipts of the
Partnership (excluding, without limitation funds received as capital
contributions to the Partnership or proceeds of any loan to the
Partnership). As used herein, total gross expenditures shall include all
gross expenditures of the Partnership (including, but not limited to, (i)
all cash operating expenses, including all management fees, (ii) all debt
service of the Partnership, (iii) all expenditures by the Partnership which
are treated as capital expenditures (as opposed to expense deductions)
under generally accepted accounting practices, and (iv) deposits to the
Reserve Account, but gross expenditures shall not include any payments for
capital expenditures to the extent the sources or funds used therefore are
not included in gross receipts.
"Operation and Maintenance Agreement" means that certain Phenol Plant
Operation and Maintenance Agreement entered into on the 18th of November,
1987, to be effective as of the 1st day of November, 1987, by and between
General Electric, as manager, and the Partnership, as owner, pursuant to
which General Electric will operate and maintain the Phenol Facility for
the Partnership.
"Operative Documents" shall mean the Ground Lease; Operation and
Maintenance Agreement, the Phenol and Acetone Supply Agreement between the
Partnership and General Electric, the Plant Purchase Agreement and the
Utilities, Waste and Site Services Agreement.
"Optional Loan" shall mean as defined in Section 8.01 hereof.
"Optional Loan Account" shall mean as defined in Section 8.01 hereof.
"Partner" or "partners" means any one or more, as the case may be, of
General Electric, TPP and/or JLM or their successors or assigns (as
permitted in this Agreement).
"Partner Representatives" means the representatives of each Partner
appointed as provided as Section 4.05 hereof.
"Partnership" means the special purpose general partnership created by
the Partners pursuant to this Agreement.
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"Partnership Interest" in the Partnership and Partnership means the
interest of each Partner the property and assets of the
"Percentage Interest" means the respective percentage interest of each
Partner in the Partnership as set forth in Section 5.01 hereof.
"Person" means and includes any individual, firm, corporation,
partnership (general or limited), trust, or other entity or association or
combination thereof.
"Phenol Facility" means collectively the Plant and the Land.
"Plant" means the phenol manufacturing plant referred to in Section
3.01(a) hereof and more particularly described in Exhibit "B" attached
hereto, as it may from time to time be expanded, constructed, improved,
repaired, altered, redeveloped, or modified.
"Plant Purchase Agreement" means that certain Phenol Plant Purchase
and Sale Agreement entered into on the 18th day of November, 1987, to be
effective as of the 1st day of November, 1987, by and between General
Electric as seller and the Partnership as purchaser for the purchase of the
Plant.
"Preferred Distribution Account" shall mean, as to each of the
Partners, us of any given time, an amount equal to the excess, if any, of
(a) the Excess Income Account of such Partner over (b) the sum of all
amounts theretofore distributed to such Partner pursuant to Sections
7.01(b) and 7.02 hereof.
"Reserve Account" shall mean as defined in Section 4.13 hereof.
"Section 704(b) Requlations" shall mean the final income tax
regulations under Section 704(b) of the Code :elating to the determination
of a partner's distributive share of partnership income, gain, loss,
deduction or credit (or item thereof), and any outstanding proposed income
tax regulations under Section 704(b) of the Code.
"Separation Event" means as defined in Section 11.03(c) hereof
"TMP" means the Tax Management Partner appointed as provided in
Section 9.10 hereof.
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"TPP" means the Texas Phenol Plant Limited Partnership, a Texas
limited partnership.
"Transfer" means the mortgage, pledge, hypothecation, transfer, sale,
assignment or other disposition of any part or 11 of an interest in the
Partnership (as the context requires), whether voluntarily, by operation of
law or otherwise.
"Utilities, Waste and Site Services Agreement" means that certain
Phenol Plant Utilities, Waste and Site Services Agreement entered into on
the 18th day of November, 1987, to be effective as of the 1st day of
November, 1987, by and between General Electric as the provider of such
services and the Partnership as the user or such services, pursuant to
which General Electric will provide or arrange for the provision of all
utilities, waste and site services required for operation of the Phenol
Facility by the Partnership.
SECTION XVI
GENERAL PROVISIONS
16.01. Interpretation. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana. Whenever the
context requires, the singular shall include the plural, the plural shall
include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. This Agreement contains the entire
agreement between the parties hereto relative to the formation of a
Partnership for the business purpose herein specified. No variations,
modifications, amendment or changes herein shall be binding upon any party
hereto unless set forth in a document duly executed by each of the
Partners.
16.02. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original and all of which together shall constitute one and the same
instrument.
16.03. Additional Acts. In connection with this Agreement, as well as
all transactions contemplated by this Agreement, each Partner agrees to
execute and deliver such additional documents, instruments and take all
such necessary action and to perform such additional acts as may be
necessary or appropriate to effectuate, carry out and perform all the
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terms, provisions and conditions of this Agreement and all such
transactions.
16.04. This Agreement. The words "herein," "hereof," "hereunder,"
"hereby," "this Agreement" and other similar reference shall be construed
to mean and include this Agreement and all the amendments thereof and
supplements thereto unless the context shall clearly indicate or require
otherwise.
16.05. No Third-Party Beneficiary Rights. Except as set forth below in
Section 16.06, this Agreement is made solely and specifically between and
for the benefit of the parties hereto, and their respective successors and
assigns, subject to the express provisions hereof relating to successors
and assigns, and no other person, individual, corporation or entity,
whatsoever shall have any rights, interests or claims hereunder or be
entitled to any benefits under or on account of this Agreement as a
third-party beneficiary or otherwise.
16.06. Third-Party Beneficiaries. Notwithstanding any other provision
of this Agreement to the contrary, each Indemnified Party is specifically
intended to be a beneficiary of Sections 4.15 and 11.05 hereof and shall
have the right to enforce its rights under such Sections against the
Partnership and General Electric, respectively. No provision of Section
4.15 or Section 11.05 may be amended so as to adversely affect the rights
of any Indemnified Party.
16.07. Retroactive Amendments. In the event any Partner of the
Partnership should, for any reason, cease to be a partner of the
Partnership ("X-Partner"), then, no provision of this Agreement may be
amended after such X-Partner ceases to be a partner of the Partnership
without the written consent of such X-Partner, if such amendment (a) is
retroactive to a time when such X-Partner was a partner of the Partnership
or (b) would be adverse to any right, claim or benefit of such X-Partner
pursuant to the terms of this Agreement without regard to such amendment.
16.08. Exhibits. All exhibits, attachments, annexed instruments and
addenda referred to herein shall be considered a part of this Agreement as
fully as if and with the same force and affect as if such exhibit,
attachment, annex or addendum had been included herein in full.
16.09. Captions. The captions and headings in this agreement are for
purposes or reference only and shall not limit, expand, or otherwise affect
the interpretation of this Agreement or any provision hereof.
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16.10. Construction. None of the provisions of this agreement shall be
for the benefit of or enforceable by any creditor of the Partnership.
16.11. Waiver. No consent or waiver, express or implied, by any
Partner to or of any breach or default by any other Partner in the
performance by such other Partner of 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 of any
other obligations of such Partner hereunder. Failure on the part of any
Partner to complain of the actions or inactions of any other Partner or to
declare any other Partner in default, irrespective of how long such failure
continues, constitute a waiver by the former Partner of its rights
hereunder.
16.12. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not
be affected thereby and shall be enforceable to the greatest extent
permitted by law. Furthermore, for purposes of application of such invalid
or unenforceable provision to such person or circumstances, there shall be
added automatically as part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable' against such person or in such circumstances.
16.13. Binding Agreement. Subject to the restrictions on transfers and
encumbrances set forth herein, this Agreement shall bind and insure to the
benefit of the Partners and their respective successors and assigns.
16.14. Language. The language used in this Agreement shall be deemed
to be the language chosen by the Partners to express their mutual intent,
and no rule of strict construction shall be applied against any Partner.
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IN WITNESS WHEREOF, the Partners have executed this Agreement on the
18th day of November,1987 to be affective as of the 1st day of November,
1987.
GENERAL ELECTRIC COMPANY, a New York
corporation
By:/s/ L ▇▇▇▇▇▇
----------------------------------
/s/ L ▇▇▇▇▇▇ (Name)
--------------------------
VP (Title)
--------------------------
TEXAS PHENOL PLANT LIMITED PARTNERSHIP,
a Texas limited partnership
By: Cumene Associates, Inc.,
a Delaware corporation,
General Partner
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Name)
----------------------
President (Title)
----------------------
JLM (IND.), INC., and Indiana
corporation
By:/s/ ▇▇ ▇▇▇▇▇▇▇▇
------------------------------
/s/ ▇▇ ▇▇▇▇▇▇▇▇ (Name)
-----------------------
President (Title)
-----------------------