Exhibit 3.42(c)
(BENTLEY COAL COMPANY)
PARTNERSHIP AGREEMENT
dated
as of January 1, 1998
between
ROARING CREEK COAL COMPANY
and
GRASSY COVE COAL MINING COMPANY
PARTNERSHIP AGREEMENT
THIS AGREEMENT, dated as of January 1, 1998, by and between Roaring Creek
Coal Company, a Delaware corporation and a wholly-owned subsidiary of AMAX Inc.
("Roaring Creek"), and Grassy Cove Coal Mining Company, a Delaware corporation
and an indirect wholly-owned subsidiary of Petrolina S.A. ("Grassy Cove").
WITNESSETH:
WHEREAS, Roaring Creek and Grassy Cove and their respective Affiliates are
the joint owners of certain properties, equipment and operations for the
production of coal in the State of West Virginia (the "Bentley Operations"); and
WHEREAS, the parties hereto have entered into this Agreement to form a
partnership to conduct certain business related to the Bentley Operations.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:
ARTICLE I
Definitions
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Section 1.1 Definitions. As used in this Agreement terms defined above
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have the meanings set forth above and the following terms have the following
meanings:
"Accounting Procedure" means the Accounting Procedure attached as Exhibit
A.
"Act" means the Uniform Partnership Act of the State of New York, as
amended from time to time, and any successor statutes.
"Act of the Partners" means an act taken by the Executive Committee of the
Partnership in accordance with Section 5.2.
"Affiliate" of any Partner means any person, partnership, joint venture,
corporation or other form of enterprise which directly or indirectly
controls, is controlled by, or is in common control with, a Partner and for
purposes of Section 11.2 specifically includes any joint venture or
partnership in which such Partner has an interest of at least 50 percent.
For purposes of the preceding sentence, "control" means possession,
directly or indirectly, of the power to elect a majority of the Board of
Directors or other governing body or to direct or cause direction of
management and policies through ownership of voting securities, contract,
voting trust or otherwise.
"Agreement" means this Partnership Agreement, as amended from time to time,
together with the Exhibits hereto.
"Appalachia" means the area encompassed by and including Pennsylvania,
West Virginia, Eastern Kentucky (as generally understood in the coal
industry, Tennessee, Maryland, Ohio, Virginia and Alabama, U.S.A.
Budget" for any Year means a plan in reasonable detail, including dates and
places, of Operations carrying out the purposes of the Partnership, to be
conducted during such Year, together with such forecasts or projections as
to Operations for subsequent periods as may be appropriate and a detailed
estimate of all costs to be incurred by the Partnership during or with
respect to such Year and other cash items with respect to the plan of
Operation for such period, and shall include items setting forth
anticipated revenue, any reserve for contingencies and itemized
expenditures for capital items, and a schedule of the estimated time of
expenditures and receipt of revenue.
"Business Day" means any day other than a day on which banks in new York
City are closed.
Coal Property" means any fee, surface or mineral estate in Appalachia
purchased, leased or then held, by a Partner or any Affiliate with the
primary intention of exploring for or developing or recovering coal, ro any
property or interest in Appalachia with respect to which any Partner or an
Affiliate is then actually exploring or developing or recovering coal.
"Code" means the internal Revenue Code of 1986, as amended.
"Executive Committee" means the Executive Committee of the Partnership
established under Article V.
"Major Partner" means a Partner having (together with its Affiliates, a
Partnership interest at least equal to 25 percent.
"Management Services Agreement" means the Management Services Agreement
dated as of the date hereof between the Partnership and FINAMAX, as amended
from time to time, or any replacement management services agreement with
any Manager.
"Net Losses" means the excess of partnership expenses over partnership
revenues as periodically determined on an accrual basis in accordance with
generally accepted accounting principles.
"Net Profits" means the excess of partnership revenues over partnership
expenses as periodically determined on an accrual basis in accordance with
generally accepted accounting principles.
"Operations" means the activities of the Partnership implementing he
purposes set forth in Section 2.4.
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"Partner" means Roaring Creek or Grassy Cove and "Partners" means both
Roaring Creek and Grassy Cove and in each case includes any successor of
either or both.
"Partnership Item" has the meaning set forth in Section 6231(a)(3) of the
Code or any successor provision.
"Partnership" means the Partnership between he Partners established by this
Agreement.
'Partnership Interest" has the meaning set forth in Section 2.6.
"Prime Rate" means the rate of interest publicly announced from time to
time in New York City by Bank of America as its prime rate.
"Tax Maters Partner" has the meaning set forth in Section 6231(a)(7) of the
Code of any successor provisions.
All references to money in this Agreement are references to amounts in
United States dollars.
ARTICLE II
The Partnership
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Section 2.1. Establishment of Partnership. Roaring Creek and Grassy Cove
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hereby enter into and form a general partnership under the Act for the purposes
set forth in this Article II. The rights and obligations of the Partners and
the administration of the partnership will be governed by the terms of this
Agreement. The existence and business of the Partnership shall not be affected
by the withdrawal of any Partner and the parties shall continue as partners of a
partnership under this Agreement until the Partnership terminates pursuant to
Article X hereof.
Section 2.2. Name. The name of the Partnership shall be Bentley Coal
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Company. The name may be changed by agreement of all the Partners. The
Partners shall execute and cause to be filed any assumed or fictitious name
certificates required to be filed in connection with the formation and
activities of the partnership.
Section 2.3. Offices. The principal place of business of the Partnership
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shall be at such location as the Executive Committee shall select. The
Partnership shall also maintain offices at such other locations as the Executive
Committee may from time to time select.
Section 2.4. Purposes and Certain Powers. The purposes of the
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Partnership shall be:
a) purchasing and selling coal, whether for its own account or for the
account of others;
b) conducting exploration and mining activities on its behalf or for
other coal producers and purchasers;
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c) identifying and evaluating new properties for the West Virginia
Operations and new business opportunities for the Partnership;
d) purchasing equipment and facilities for its own use or for lease or
sublease to contractors who are themselves to contracts with the
Partnership;
e) contracting with contractors or contract miners for performance of
mining work;
f) acquiring coal properties for development and mining; and
g) engaging in activities necessary, appropriate or incidental to any of
the foregoing purposes.
The Partnership shall have the power to do any act and thing and to enter into
any contract incidental to, or necessary, proper, desirable or advisable for,
the accomplishment or attainment of any purpose of the Partnership set forth in
this Agreement.
Section 2.5. Scope of Partners' Authority. Except as otherwise
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specifically provided in this Agreement or agreed to in writing by all of the
Partners, no Partner shall have any authority to act for, or to assume any
obligation or responsibility on behalf of, or to bind, any other Partner or the
Partnership. Each Partner shall indemnify and hold harmless each other Partner
and its directors, officers, employees and representatives, from and against any
and all losses, claims, damages and liabilities arising out of any act of or any
assumption of any obligation or responsibility by any such Partner or any of its
directors, officers, employees or representatives, done or undertaken or
apparently done or undertaken on behalf of such other Partner, other than
pursuant to and in accordance with the authorization granted herein or by
further express agreement of the Partners.
Section 2.6. Partnership Interests. Each Partner's initial percentage
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interest in the Partnership and the Net Profits and Net Losses of the
Partnership (the "Partnership Interest") shall be 50 percent, and thereafter
shall be subject to adjustments by agreement of the Partners or by assignment,
sale or transfer as therein provided.
Section 2.7. Competition. Nothing in this Agreement shall prevent a
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Partner at any time and without notice to or agreement by the other Partner or
the Partnership from engaging in any business activities of any character which
are neither conducted in, nor conducted with respect to property located in,
Appalachia, whether or not the Partnership is then doing business outside
Appalachia, or from engaging in any business activities conducted in, or with
respect to property located in, Appalachia, which are not related to the coal
business in Appalachia.
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ARTICLE III
Representations and Warranties
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Section 3.1. Representations and Warranties of Roaring Creek. Roaring
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Creek represents and warrants to Grassy Cove that:
(a) Roaring Creek is a corporation duly incorporated and in good
standing in Delaware;
(b) Roaring Creek has full power and authority to enter into and
perform this Agreement and, as a Partner of the Partnership, to
execute and deliver the Management Services Agreement and the
execution, delivery and performance of this Agreement and all
transactions contemplated hereby and, as a Partner of the
Partnership, the execution and delivery of the Management
Services Agreement have been duly authorized and approved by all
necessary action of its Board of Directors and this Agreement is
the valid and binding agreement of Roaring Creek and the
Management Services Agreement are each valid and binding
agreements of it as a Partner in the Partnership; and
(c) the execution, delivery and performance by Roaring Creek of this
Agreement and, as a Partnership of the Partnership, the
Management Services Agreement do not and will not conflict with
or constitute a violation of any judgment, order, decree, other
agreement or arrangement to which Roaring Creek or any Affiliate
thereof is a party or by which any of them is bound or require
the approval, consent or authorization of any Federal, State or
local authority.
Section 3.2 Representations and Warranties of Grassy Cove. Grassy
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Cove represents and warrants to Roaring Creek that:
(a) Grassy Cove is a corporation duly incorporated and in good
stranding in Delaware;
(b) Grassy Cove has full power and authority to enter into and
perform this Agreement and, as a Partner of the Partnership, to
execute and deliver the Management Services Agreement and the
execution, delivery and performance of this Agreement and all
transactions contemplated hereby and, as a Partner of the
Partnership, the execution and delivery of the Management
Services Agreement have been duly authorized and approved by all
necessary action of its Board of Directors and this Agreement is
the valid and binding agreement of Grassy Cove and the
Management Services Agreement are each valid and binding
agreements of it as a Partners in the Partnership; and
(c) the execution, delivery and performance by Grassy Cove of this
Agreement and, as a Partner of the Partnership, the Management
Services Agreement do not and will not conflict with or
constitute a violation of any judgment, order, decree, other
agreement
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or arrangement to which Grassy Cove or any Affiliate thereof is a part
or by which any of them is bound or require the approval, consent or
authorization of any Federal, State or Local authority.
ARTICLE IV
Contributions
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Section 4.1. Initial Contributions. Roaring Creek and Grassy Cove hereby
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each contribute to the capital of the Partnership their respective interests in
certain mining equipment, real estate, other assets, and liabilities as are
conveyed by bills of sale and assignments to the Partnership dated this same
date, and the benefits of all coal sales and brokerage efforts with respect to
Appalachian area, and any resulting goodwill, directly or indirectly, developed
by Roaring Creek and Grassy Cove or their Affiliates.
Section 4.2. Cash Contributions For Capital, Expenditures and Operating
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Expenses. The Partners shall from time to time contribute in proportion to
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their respective Partnership interests such amounts of cash to he capital of the
Partnership as shall be necessary in order pay amounts contemplated by the
Budget.
Section 4.3. Cash Calls. The Partnership shall determine the cash
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requirements of the Partnership for the expenditures, business and programs
contemplated by the Budget in effect at that time pursuant to Section 5.6 and
issue calls to the Partners, from time to time upon at least ten Business Days'
notice, and contributions of amounts for the following month from the Partners
in proportion to their Partnership interests. In order to assist the Partners
in planning for cash calls, the Partnership shall provide the Partners on or
prior to the first day of each calendar month with its estimate of the amount
and the timing of cash calls for the next three succeeding calendar months, but
if necessary the Partnership may make cash calls in excess of those estimated
for any month. Each Partner agrees to provide the amounts required by any cash
calls issued by the Partnership in accordance with the provisions of this
Section 4.3 by the third Business Day prior to the first day of the calendar
month for which such amounts are requested. The Partner shall be required to
contribute cash or pay expenses in excess of amounts set forth in an approved
Budget or later ratified by the Partnership, except for expenditures in excess
of the Budget in amounts which do not exceed ten percent of the amount budgeted
for any one item; provided, that aggregate excess expenditures do not exceed
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five percent of the entire Budget; and provided, further, no such excess
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expenditure shall be made for any item as to which a contingency amount is
included in the Budget or in excess in the aggregate of any general contingency
amount included in the Budget.
Section 4.4. Interest on Capital Contributions. No interest shall be
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paid in the Partnership on any capital contributed by the Partners to the
Partnership.
Section 4.5 Investment of Contributions. As and when requested by the
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Executive Committee, the Partnership shall invest its surplus funds in
_____________ obligations constituting full faith and credit obligations of the
United States, __________ deposits in any branch of any
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commercial bank organized under the laws of the United States or any state
thereof having capital and surplus of at least $50 Million, or (iii) prime
commercial paper of any corporation organized under the laws of the United
States or any state thereof or any combination thereof, provided in each case
the period of material on the case of acquisition of any such obligation,
deposit or commercial paper shall not exceed 90 days. The Partnership may also
invest in such other investments as shall be approved by the Partners. Any
income earned on such investments shall belong to the Partnership.
Section 4.6. Failure to Make Contributions. If either Partner fails in
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its obligation to make any payment or contribution of any amount required
hereunder to the Partnership, such obligation shall constitute indebtedness from
such Partner to the Partnership and shall bear interest payable to the
Partnership from the date such amount was due until the earlier of the date on
which such Partner pays such indebtedness in full or the other Partner elects to
make payment as described in the fourth sentence of this Section, at a rate
equal to the sum of the Prime Rate plus four percent (or at such other rate as
shall be established by an Act of the Partners), provided, that the rate of
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interest shall in no event exceed the maximum amount permitted by applicable
law. Such interest shall not be treated as a capital contribution by either
Partner. In addition, the Partnership may recover reasonable attorneys' fees
incurred in recovering the amount of such debt and interest from the defaulting
partner and any other damages suffered as a result of such failure to make such
payment or contribution. In addition to the right of the Partnership to recover
such indebtedness and interest, the other Partner may, _____ shall not be
required to, make such payment or contribution (without any interest thereon) to
the Partnership on behalf of the default Partner. Any such payment or
contribution shall constitute a loan to the defaulting Partner from the other
equal to the sum of the Prime Rate plus four percent (or at such other rate as
shall be established by an Act of the Partners, provided that the rate of
interest shall ____ be payable on demand, together with accrued interest, and
may be prepaid, in time without penalty and the Partner making such loan may at
any time recover from the defaulting Partner, reasonable attorneys' fees and any
other damages suffered as a result of the defaulting Partner's failure to make
any payment or contribution.
ARTICLE V
Management and Operations
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Section 5.1 Executive Committee. The Partners hereby establish an
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Executive Committee to approve Budgets and Operations and to determine other
policies, objectives, procedures, methods and actions under this Agreement. The
Executive Committee shall consist of three members. Each initial Partner shall
have the right to appoint one such member until and unless one of such Partners
transfers all or part of its Partnership interest and one such member shall be
the General Manager of FINAMAX. If all or part of a Partnership interest is
transferred, the transferor and transferee shall agree on method of selection of
the members previously appointed by such transferor, except that each major
partner shall have the right to appoint at least one such member. Each Partner
may appoint one or more alternates to act in the absence of a regular member
appointed by it. Any alternate so acting shall be deemed a member.
Appointments shall be made or changed by notice to the other Partner.
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Section 5.2 Design. Each Partner represented on the Executive
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Committee, acting through its appointed member, shall have one vote per one
percent of Partnership Interest on the Executive Committee. As long as each
initial Partner (together with its Affiliates) has a partnership Interest equal
to 40 percent or more, all decisions of the Executive Committee shall be by
unanimous decision of the initial Partners. At such time as any initial Partner
(together with its Affiliates) has a Partnership having an aggregate of more
than 50 percent of the total partnership Interests then outstanding; provided
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that the consent of each initial Partner who is also a Major Partner shall be
required in connection with the following matters:
(i) any decision to take or refrain from taking any action which would
cause a material breach or the termination of any material contract
by which the Partnership or such Partners are bound;
(ii) settlement by the Partnership of any legal proceeding or claim
against the Partnership involving the payment by the Partnership of
any amount in excess of $50,000;
(iii) approval of any Budget of the Partnership or any material changes
thereto or any material agreement to be entered into by the
Partnership or any material changes thereto;
(iv) the appointment of any president, determination of tasks to be done
by a president, execution of any agreement with any president or any
material amendment to this Agreement or any contract with a
president; and
(v) any other matter which such Partners agree in writing shall require
the consent of each such Partner.
Section 5.3 Meetings. The Executive Committee shall hold regular
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meetings as frequently as it determines to be necessary, which shall be called
by the Partner designated at the last preceding meeting. Either Partner may
call a special meeting upon five Business Days' notice to the other Partner.
All meetings shall be held at such location in the United States as may be
specified in any notice of a meeting. In case of emergency, reasonable notice
of a special meeting shall suffice. There shall be a quorum if one member
representing each Partner represented on the Executive Committee is present.
Each notice of a special meeting shall specify the matters to be considered at
such meeting but any matter may be considered with the consent of all members of
the Executive Committee. The minutes of such meeting, which shall be prepared
by a partner designated at such meeting, shall be, when signed by each Major
Partner, the official record of the decisions made by the Executive Committee
and shall be binding on the Partners. All costs of attending such meetings
shall be paid for by the Partners individually.
Section 5.4 Action Without Meeting. In lieu of meetings, the Executive
----------------------
Committee may hold telephone conferences, so long as all decisions are
immediately confirmed in writing by the Partners whose consent was required to
make the decision.
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Section 5.5 Matters Requiring Approval. Subject to the proviso in
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Section 5.2, the Executive Committee shall have exclusive authority to accept
Budgets and to determine all management matters related to the Partnership.
Section 5.6 Budgets. (a) On or prior to September __ of each calendar
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year commencing on or after January 1, 1984, the Partnership shall prepare a
proposed Budget for the following calendar year. The proposed Budget shall be
considered at a meeting of the Executive Committee held during the last three
months of the calendar year. If no Budget is approved at such meeting, the
Partners shall cause a special meeting of the Executive Committee to be held to
consider further and approve a Budget.
(b) For any period during which no Budget has been duly adopted by the
Executive Committee, the Executive Committee shall be deemed to have
approved, and, without any further act of any Partner being required,
the Partners shall be bound by, a Budget consisting of the following
items:
(i) for the first calendar year during which no Budget is so
approved, expenditures for items other than capital expenditures
in amounts equal to the amounts approved in the last Budget duly
approved by the Executive Committee without regard to this
subsection;
(ii) such additional operating or capital expenditure items as the
Executive Committee shall unanimously approve; and
(iii) such additional expenditures in such amounts and at such times as
may be necessary in the reasonable good faith judgment of any
Major Partner in order to avoid any default by the Partnership
under any contract or agreement by which the Partnership, whether
directly or as agent, is bound.
(c) Any Budget may be amended at any time by vote of the Executive
Committee in accordance with Section 5.2.
Section 5.7 Interim Budgets. For any period during which no Budget has
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been duly adopted by the Executive Committee, the Executive Committee shall be
deemed to have approved, and, without any further act of any Partner being
required, the Partners shall be bound by a Budget consisting of the following
items:
(a) for the calendar year during which no Budget has been adopted,
Operations and expenditures for items other than capital expenditures of a type,
to the extent and in amounts equal to the amounts approved ___ the last Budget
duly approved by the Executive Committee without regard to this Section:
(b) such Operations and operating or capital expenditure items as the
Executive Committee shall unanimously approve; and
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(c) such Operations and additional operating or capital expenditures in
such amounts and at such times as may be necessary in the reasonable good faith
judgment of any Major Partner in order to maintain the Operations or to avoid
any default by the Partnership or any Partner under any contract or agreement by
which they are bound.
Section 5.8 Officers. The Executive Committee shall have the right to
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appoint officers for such Partnership offices as it deems necessary, including,
but not limited to, the offices of president, vice-president, secretary, and
treasurer. Except with respect to the approval of the Budget, the Executive
Committee shall have the right to delegate to the Partnership officers such
authority and responsibility concerning the management and operation of the
Partnership as the Executive Committee deems appropriate. Such delegation of
authority to Partnership officers shall be by unanimous resolution adopted by
the Executive Committee and set forth in the regular minutes of business. Any
third party dealing or contracting with the Partnership through its officers
pursuant to a resolution of the Executive Committee shall have the right to rely
on the expressed provisions of such resolution without regard to the
appropriateness of the act of delegation.
ARTICLE VI
Allocation of Profits and Losses
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Section 6.1 Profits and Losses. Net Profits and Net Losses of the
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Partnership shall be allocated to the Partners in proportion to their
Partnership Interests.
Section 6.2 Allocation of Distributors Subsequent to Assignment. The
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Net Profits and Net Losses of the Partnership attributable to any interest in
the Partnership acquired by reason of the assignment of the interest or
substitution of a Partner with respect to that interest and any distributions
made with respect thereto shall be allocated between the assignor and the
assignee and set forth in a document delivered to the other Partner and the
Manager. If no such agreement between the assignor and the assignee is
delivered to the other Partner and the Manager all Net Profits and Net Losses
accruing prior to the effective date of such assignment or substitution and all
distributions with respect thereto shall be allocated or distributed to the
assignor and all other profits, losses and distributions shall be allocated or
distributed to the assignee. Such partner and the Manager shall not be liable
to the assignor or the assignee as long as allocations and distributions are
made in good faith on such basis.
Section 6.3 Capital Accounts. A capital account shall be maintained for
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each Partner. A Partner capital account shall be credited with (i) the amount
of cash paid and the fair market value of property contributed to the
Partnership as capital contributions and (ii) the share of partnership income or
gains allocable to such account, and shall be debited with (x) the share of
Partnership deductions or losses allocable to such account and (y) the amounts
of any distributions made to such Partner with respect to such account. The
initial capital accounts of the Partners shall be equal. Additionally, a
separate capital account shall be maintained for each Partner on the same basis
as previously set forth in this Section 6.3 but substituting the tax basis for
the fair market value of
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properly contributed to or distributions from the Partnership and basing
depreciation calculations on such tax basis.
ARTICLE VII
Accounting
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Section 7.1 Books and Records: Accounting Policies. The books and
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records of the Partnership shall be maintained on an accrual basis in accordance
with United States generally accepted accounting principles and with the
Accounting Procedure. Such books and records shall be adequate to permit the
preparation of complete financial statements and the filing of tax returns by
the Partners and the Partnership.
Section 7.2 Audit. Unless waived by the Executive Committee, the
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accounts of the Partnership shall be audited as of the end of each calendar year
by Coopers & Lybrand or any other nationally recognized firm of certified public
accountants unanimously selected by the Partners. Any Partner shall be entitled
(either directly or through any designated representative) at any time during
normal business hours and without any need for prior notice to examine and make
copies of the books and records of the Partnership.
ARTICLE VIII
Tax Considerations
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Section 8.1 Taxable Year. The Partnership's taxable year shall be the
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calendar year.
Section 8.2 Elections. Neither the Partnership nor any Partner shall
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elect at any time to be excluded from any of the provisions of Subchapter K of
the Code. Any other election required or allowed to be made by the Partnership
shall be made by an Act of the Partners, except that the Partners hereby agree
for Federal income tax purposes:
(a) to keep the books of the Partnership on ac accrual basis; and
(b) that all tax election shall be made with the intent of maximizing
deductions in the current year to the extent permissible under law,
unless all Partners agree otherwise.
Section 8.3 Allocations. For Federal income tax purposes the
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distributive share of each Partner in each item of Partnership income, gain,
loss, deduction or credit shall be allocated to and among the Partners according
to the same percentages and provisions herein governing the Partners sharing of
profits and losses.
Section 8.4 Tax Returns. The Tax Matters Partner (or, in designated
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instances, the Partnership, if all Partners agree) shall prepare, or cause to be
prepared, Federal, state and local income, and other tax returns of the
Partnership and shall file such returns, which shall be satisfactory
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in form and substance to each Partner and other entity that was a Partner during
the tax year for which such return is filed, with the Internal Revenue Service
and with the appropriate sate and local taxing authorities.
Section 8.5 Tax Matters Partner. A Tax Matters Partner of the
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Partnership shall take no action as Tax Matters Partner unless all major
Partners and other entities that were Major Partners during the tax year with
respect to which such action is to be taken shall have unanimously agreed that
that action shall be taken, and a Tax Matters Partner shall give to the other
Partners prompt notification (without regard to any time period allowed by the
Code for any such notification) of any communication from or action by the
Internal Revenue Service with respect to the Partnership or any Partnership Item
of the Partnership. The Tax Matters Partner for the Partnership is hereby
designated to be Roaring Creek.
ARTICLE IX
Distributions
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Section 9.1 Capital. Except as otherwise provided herein, capital,
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whether cash or property, may not be distributed by or withdrawn from the
Partnership without the consent of each Major Partner.
Section 9.2 Excess Cash. To the extent that the cash available in the
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bank accounts of the Partnership at the close of business on the twentieth
calendar day of each month exceeds the anticipated cash requirements of the
Partnership for such month and the next month, such cash shall be distributed on
such day first, to repay any loan made by any Partner or the Partnership
pursuant to Section 4.6 and second to the Partners in proportion to their
respective Partnership Interests as of the last day of the preceding month.
ARTICLE X
Dissolution and Purchase Rights
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Section 10.1 Dissolution. The Partnership may be dissolved only as
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follows:
(a) By written agreement of all Major Partners;
(b) Upon delivery of notice to the other Partners by any Partner, if a
Major Partner has transferred all or any portion of its Partnership
Interest in violation of Article X: and such violation has remained
_______ for at least 60 days after notice of such violation by such
Partner to the transferring Partner; or
(c) Upon delivery of notice by any Partner, if the Partner to whom such
notice is directed (the "defaulting Partner") (x) has failed to make a
contribution of, or contributions aggregating $30,000 or more in
accordance with the provisions of Article IV hereof
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and such failure to pay has not been cured by the nondefaulting Partner and
has continued for a period of 30 days after notice thereof to the
defaulting Partner from the nondefaulting Partner or (y) has failed to
repay within two Business Days after demand any loan made by the
nondefaulting Partner to the defaulting Partner pursuant to Section 6.6.
Section 10.2 Distributions Upon Liquidation. (a) Except as set forth in
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paragraph (b) below, upon any dissolution of the Partnership, the assets of the
Partnership shall thereupon be liquidated and the proceeds from such liquidation
shall be applied and distributed in the following order of priority:
(i) to the payments of debts and liabilities of the Partnership and
the expenses of such liquidation and of any loans made by the
Partnership or any Partner pursuant to Section 4.6;
(ii) to the setting up of any reserves which are reasonably
necessary (in the reasonable judgment of any Major Partner or,
in the case of any dissolution pursuant to Section 10.1(c), in
the reasonable judgment of the nondefaulting Partner) for any
contingent or unforeseen liabilities of the Partnership; and
(iii) if the balances of the capital account of the Partners at the
time of the initial distribution are not in proportion to their
respective Partnership Interests, to the Partner whose capital
account is proportionately excessive to the extent of such
excess and until such balances are in such proportion and
thereafter and in any other event to the Partners in proportion
to their respective Partnership Interests;
provided, however, that any Partner whose balance in the
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capital account is a negative amount shall contribute to the
Partnership in cash the amount of that negative balance.
In connection with any liquidation of the assets of the Partnership, each
Partner shall have the right to bid on any asset on an equal basis as third
parties, it being the intent hereof that upon liquidation the activities of the
Partnership shall be wound down, the assets of the Partnership shall be reduced
to cash and such cash shall be distributed as set forth in this Section 10.2.
(b) If Roaring Creek would otherwise be entitled to give notice of the
dissolution of the Partnership under Section 10.1(b) or 10.1(c),
Roaring Creek may elect, in lieu of giving such notice, to notify
Grassy Cove that it will acquire the Partnership Interest of Grassy
Cove and its Affiliates pursuant to Section 10.3 hereof. If Grassy Cove
would otherwise be entitled to give notice of the dissolution of the
Partnership in accordance with Section 10.1(b) or 10.1(c), Grassy Cove
may elect, in lieu of giving such notice, to notify Roaring Creek that
it will acquire the Partnership Interest of Roaring Creek and its
Affiliates pursuant to Section 10.3 hereof. In any such case, the
Partners shall execute such instruments of amendment, assignment and
consent as may be required or advisable.
13
Section 10.3 Buy-Out. Any Partner that elects pursuant to Section ___
-------
(the Purchasing Partner") to purchase the Partnership Interests of any other
Partner and its Affiliates (collectively, the "Selling Partner") shall exercise
its election to acquire such Partnership Interests by notice to the Selling
Partner setting forth such election and the grounds upon which such Partner is
entitled to make such election, and the date (which shall not be earlier than 90
nor later than 120 days after the date such notice is given) upon which such
Partnership Interest shall be transferred from the Selling Partner to the
Purchasing Partner. The Selling Partner shall be bound by the provisions of the
notice relating to such date. The purchase price for such transfer shall be the
book value of the Partnership Interests to be purchased, without giving effect
to good will, but including the present value (discounted at a rate equal to the
average of the Prime Rate for _____of the two preceding years plus five percent)
of the then existing ongoing sales, brokerage or other contracts of the
Partnership. Such present value shall be determined by either John T. Boyd
Company or Pittsburgh, Pennsylvania, _____Engineering Company of Beckley, West
Virginia, or Paul Weir Company of Chicago, Illinois. The Selling Partner and the
Purchasing Partner shall each eliminate one of such firms and the remaining firm
shall be requested to make a determination of such present value. The expenses
of such determination shall be paid by the Partnership. The purchase price
shall be payable, at the option of the Purchasing Partner, in cash on the date
of transfer of the Partnership Interest, or within five years thereafter in
equal annual installments payable on the date of such _______ and thereafter on
each succeeding anniversary of such date, together with interest from the date
of such transfer on any unpaid portion of the purchase price at a rate equal to
the Prime Rate plus one percent, provided that the rate of interest shall in no
event exceed the maximum amount permitted by applicable law and that the
Purchasing Partner shall be entitled to offset against such purchase price any
amounts owed to it by the Selling Partner pursuant to Section 6.5. The
Partnership Interest to be acquired by the Purchasing Partner shall include all
of the _______ Partner's rights and interest under this Agreement. The transfer
of Partnership Interests to the Purchasing Partner pursuant to this Section 10.3
shall relieve the Selling Partner of all obligations to the Partnership or to
the Purchasing Partner other than for those resulting from events occurring
prior to the effective date of such transfer. The Selling Partner agrees, from
time to time at the request of the Purchasing Partner, at or after the date of
such transfer, to execute and _____ such instruments of conveyance, assignment,
transfer and consent as may be required or advisable for the effective
conveyance and transfer of any of the business, properties, name, good will,
assets and rights included in such Partnership Interest.
Section 10.4 Continuing Responsibilities. Notwithstanding any amendment
---------------------------
or termination of this Agreement or dissolution of the Partnership and subject
to the provisions of this Agreement, each Partner shall remain _____ for, and
_______ the extent that they have not theretofore been paid and discharged and
to the extent that any reserves created upon the dissolution of the Partnership
shall be insufficient therefore, pay, when due, its proportionate interest
(based on the percentage amount equivalent to its Partnership Interest at the
time of such dissolution) of, all liabilities of the Partnership, including
without limitation, the liabilities (i) assumed or incurred by the Partnership
prior to the time of the dissolution or (ii) arising thereafter as a result of
the conduct of the business of the Partnership prior to the dissolution of the
Partnership and the completion of any liquidation or sale of all of the assets
of the Partnership.
14
Section 10.5 Right to Redress. The provisions of this Article X are not
----------------
intended to set forth the exclusive remedies available if any Partners shall be
in default under this Agreement and shall be in addition to each and every other
remedy now or hereafter existing. A Partner may institute legal action against
the other Partner in its own name or that of the Partnership if such other
Partner is in default under this Agreement with no consent required on the part
of such defaulting Partner.
ARTICLE XI
Transfer of Interest
--------------------
Section 11.1 General. Prior to the fifth anniversary of the date of this
-------
Agreement, no Partner shall have the right to assign, transfer, convey, pledge
or otherwise dispose of any or all of its Partnership Interest. Thereafter no
such assignment, transfer, conveyance, pledge or disposition shall be made
except with the prior consent of the other Partner (which shall not be
unreasonably withheld. the transferring Partner shall remain liable hereunder
for the good and ______ performance of its pre-transfer Partnership Interest of
________ and liabilities (no matter when arising) arising out of operations of
the Partnership prior to such transfer and, in case of any transfer to an
Affiliate of the transferring Partner, shall remain liable hereunder to the
extent such Partner would have been, or such Affiliate is, liable hereunder as
though no such transfer had been made. The transferring Partner and the
transferee shall bear all tax consequences and shall reimburse all other
reasonable out-of-pocket expenses of any Major Partner in connection with the
transfer and the transferee, as of the effective date of the transfer, shall
have agreed in writing in a form satisfactory to the other Partners to be bound
by this Agreement (including this Article XI) t the same extent as the
transferring Partner. Any transfer not made in compliance with this Article XI
shall be null and void.
Section 11.2 Assignment to an Affiliate. Section 11.3 and the first
--------------------------
sentence of Section 11.1 shall not apply to, and no consent of any Partner shall
be required for, as assignment of all or any portion of a Partner's Partnership
Interests to an Affiliate of the assignor.
Section 11.3 Preemotive Right. (a) Except as otherwise provided in
----------------
Section 11.4, if a Partner desires to convey, assign or transfer all or any part
of its Partnership Interest, the other Partner shall have a preemptive right to
acquire such Partnership Interest as provided in this Section 11.3.
(b) A Partner intending to transfer all or any part of its Partnership
Interest shall promptly notify the other Partner of such intent. This
notice shall identify the proposed transferee and shall state the ____
(which shall be payable in cash only ) and all other material terms and
conditions of the intended transfer. The other Partner shall have ___
days from the date such notice is delivered to notify the transferring
partner whether it elects to acquire the offered interest at the same
price and on the same terms and conditions as set forth in the notice.
If it does so elect, the transfer shall be consummated promptly after
notice of such election is received to the transferring Partner.
15
(c) If the Partner entitled to purchase hereunder fails to so elect within
the period provided for in Section 11.3(a), the transferring Partner
shall have 90 days following the expiration of such period to
consummate the transfer to the proposed transferee at a price and on
terms no less favorable to the transferring Partner than those set
forth in the notice required in Section 11.3(b).
(d) If the transferring Partner fails to consummate the transfer to the
proposed transferee within the period set forth in Section 11.3(c), the
preemptive right of the other Partner with respect to any disposition
of such Partnership Interest shall be ______. any subsequent proposal
to transfer such interest shall be conducted in accordance with all of
the procedures set forth in this Section 11.3.
Section 11.4 Exceptions to Preemptive Right. Section 11.3 shall not
------------------------------
apply to any transfer occurring by operation of law in a corporate merger,
consolidation, amalgamation or reorganization of a Partner in which the
surviving entity possesses all of the stock or all of the property rights and
interests, and is subject to all of the liabilities and obligations of that
partner or to the grant by a Partner of a security interest in any portion of
its Partnership Interest pursuant to the second paragraph of Section ____.
Section 11.5 Instruments of Assignment. Whenever any Partnership
-------------------------
Interest is transferred to any entity which thereby becomes a Partner, the other
Partner agrees to execute an appropriate instrument admitting such entity.
Section 11.6 More Than two Partners. Without limiting the rights of any
----------------------
Partner under Section 11.1, if, after giving effect to any transfer of
Partnership Interests in accordance with this Article XI there would be more
than two Partners, Section 4.6, Section 10.2(b), Section 10.3 and Section 11.3
shall be amended, effective the date of such transfer, as appropriate to reflect
the increased number of Partners and all references to Partner or Partners shall
be deemed to refer to or include such additional Partner where the context
requires.
ARTICLE XII
Insurance
---------
Section 12.1 Insurance. The Partnership shall maintain:
---------
(i) Coverage which shall comply with all applicable state and federal
workers' compensation and occupational disease laws and which shall
encompass all employees of the Partnership. These policies shall also
provide for employers' liability in the amount of not less than
$1,500,000 (see section on comprehensive general liability).
(ii) Comprehensive general liability insurance against claims arising out
of the operations of the Partnership with limits of not less than $2
million per occurrence, $4 million in
16
the aggregate. Policy shall include _____ gap employers' liability
endorsement, should coverage for same be omitted from workers'
compensation policies.
(iii) Automobile bodily injury and property damage liability covering
automobiles owned, non-owned, or leased by the Partnership or the
Manager in connection with the Operations of the Partnership. Limits
of liability shall be not less then $2 million per occurrence, $4
million in the aggregate.
(iv) Umbrella liability coverage in the amount of not less than $50
million, in the name of the Partner or in the name of each Partner,
(providing excess coverage for employer's liability, comprehensive
general liability, automobile liability, and limited named perils
pollution).
(v) Insurance against physical loss or damage to real and personal
property owned by the Partnership by fire, explosion and other
hazards or casualties. Such coverage shall have limits not less than
the fair market value of the insured assets, subject to a deductible
not exceeding $1 million.
(vi) Insurance to compensate for business interruption losses, if such
coverage is economically attainable.
(vii) And other such insurances as are customarily maintained in the
business (including but not limited to fidelity, environmental
impairment, directors and officers, etc.).
ARTICLE XIII
ACQUISITIONS WITHIN APPALACHIA
------------------------------
Section 13.1 General. Any interest or option to acquire any interest in
-------
Coal Properties in Appalachia acquired or held during the term of this Agreement
by or on behalf of a Partner or any Affiliate shall, except as otherwise
provided in this Article or agreed to by the Partners, be included in the
Partnership and shall be subject to the terms and provisions of this Agreement.
Section 13.2 Intention of Parties. It is the intention of the Partners
--------------------
that, except if it is necessary to act quickly in acquiring Coal Properties and
consultation among the Partners is not practicable or if a Partner does not
elect to accept the interest pursuant to Section 13.4, Coal Properties be
acquired by the Partners in the Partnership name and not through the procedures
described in Section 13.3, 13.4, and 13.5.
Section 13.3 Notice to Nonacquiring Partner. If it is not practicable to
------------------------------
acquire Coal Properties in the Partnership name as contemplated by Section 13.2,
within 14 days after the acquisition by any Partner or its affiliates of any
interest or the option to acquire any interest in Coal Properties, the acquiring
Partner shall notify the other Partner of such acquisition. Such notice shall
17
describe in detail the acquisition, the real property and minerals covered
thereby, the cost thereof, and the reasons why the acquiring Partner believes
that the acquisition of the interest is in the best interests of the Partners
under this Agreement. The acquiring partner shall also make any and all other
information concerning the acquired interest available to the other Partner.
Section 13.4 Option Exercised. If, within 90 days after receiving the
----------------
acquiring Partner's notice pursuant to Section 13.3, the other Partner notifies
the acquiring Partner of its election to accept the acquisition in the
Partnership name, the acquiring Partner or Affiliate shall convey to the
Partnership, be deed or by assignment of lease in form acceptable to the other
Partner, such acquired interest. The acquired interest shall become a part of
the Partnership for all purposes of this Agreement immediately upon notice of
such other Partners election to accept such. Such other Partner shall promptly
pay to the acquiring Partner its proportionate share of the latter's accrual
out-of-pocket acquisition costs and shall assume its proportionate share of any
indebtedness incurred in making such acquisition.
Section 13.5 Option Not Exercised. If the other Partner does not give
--------------------
such notice within the 90-day period set forth in Section 13.4, neither it nor
the Partnership shall have any interest in the acquired interest, and the
acquired interest shall not be a part of the Partnership, shall not be
considered Coal Property and shall not be subject to this Agreement.
Section 13.6 Stock Acquisitions. If any Partner acquires, or proposes to
------------------
acquire, any interest in Coal Property through the acquisition of stock in a
company in which such interest and related assets represent less than 50 percent
of the fair market value of all assets of such company, such acquisition or
proposed acquisition shall be subject to this Article XIII only if reasonably
practicable and if such interest and related assets can reasonably be offered to
a Partner and held in partnership subject of this Agreement.
ARTICLE XIV
General Provisions
------------------
Section 14.1 Information. The Partnership shall from time to time
-----------
provide each Partner with such information and records as such Partner may
reasonably request.
Section 14.2 Confidentiality. Each Partner and the Partnership shall use
---------------
their best efforts to assure that all information disclosed to them in
connection with the business of the Partnership and not otherwise generally
available shall be kept confidential and shall not be revealed without the
consent of the Partners to anyone other than to directors, employees,
accountants and representatives of the Partnership, the Partners and their
Affiliates or in connection with filings required by law with government
agencies or courts. If such information is revealed to such persons, each
Partner and the Partnership agree to use their best efforts to have such persons
keep such information confidential.
Section 14.3 Notices. Notices, payments and other required
-------
communications to the Partners or the Partnership shall be in writing or by
telex with acknowledgment of receipt and shall be effective
18
(i) when delivered during normal business hours to the party to be given such
notice, election or consent at the address designated by it for such delivery,
(ii) five Business Days after such notice, election or consent shall have been
deposited in the United States mails, certified or registered with return
receipt requested and postage thereon fully prepaid, addressed to such address
or (iii) on the calendar day following the day such notice, election or consent
shall have been transmitted by telecopy, telex or telegram, fully prepaid, to
such address or telephone number, whichever shall first occur. Until otherwise
specified by notice to the other Partner, the addresses and telephone numbers
for any such notice, election or consent shall be:
If to Roaring Creek:
Roaring Creek Coal Company
251 N. Illinois Street
Post Office Box 967
Indianapolis, Indiana 46206-0967
Attention: Vice President, Law & Governmental Affairs
Telex: 276163
Telecopier: 317-266-3429
If to Grassy Cove:
Grassy Cove Coal Mining Company
c/o American Petrofina, Incorporated
Fina Plaza
8350 North Central Expressway
Post Office Box 2159
Dallas, Texas 75206
Attention: Vice President
Telex: 0730138
Rapifax: 214-750-2798
With a copy to:
Petrofina S.A.
52 Rue de Industrie
1040 Brussels, Belgium
Attention: Manager, Coal Operations
Telex: PFINAS 846 21556
Rapifax: 322-2339191
If to the Partnership:
Bentley Coal Company
Hyer Building
19
1500 Harrison Avenue
Elkins, West Virginia 26241
Attention: President
Telecopier:
Any notice delivered to any Partner or to the Partnership shall be given to
all other Partners and the Partnership as nearly simultaneously as is
practicable.
Section 14.4 Waiver. The failure of a Partner to insist on the strict
------
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Partner's right thereafter to enforce any provision
or exercise any right.
Section 14.5 Modification. No waiver under, modification of or amendment
------------
to this Agreement shall be valid unless made in writing and duly executed by the
requisite number of Partners.
Section 14.6 Further Assurances. Each of the Partners agrees that it
------------------
shall from time to time take such actions and execute such additional
instruments as may be reasonably necessary to carry out the purposes of this
Agreement.
Section 14.7 Governing Law. This Agreement shall be governed by the Laws
-------------
of the State of New York and shall be construed in accordance with the Act.
Section 14.8 Consent to Jurisdiction: Service of Process. Subject to
--------------------------------------------
Section 14.9, each of the Partners: (a) irrevocably submits to the jurisdiction
of any New York State or Federal court sitting in The City of New York over any
suit, action or proceeding arising out of or relating to this Agreement or the
operations of the Partnership; (b) irrevocably waives, to the fullest extent
permitted by law, any objection which it may have or hereafter have to the
laying of the venue of any suck suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum; (c) hereby appoints CT
Corporation System its automated agent to accept and acknowledge service of any
and processes which may be served if any suit, action or proceeding of the
nature referred to in this Section 14.8 and consents to process being served in
any such suit, action or proceeding upon CT Corporation System in any manner or
by the mailing of a copy thereof by registered or certified air mail, postage
prepaid, return receipt requested, to such Partner's address specified in
Section 14.3; and (c) agrees that such service (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law, be taken and
held to be valid personal service upon and personal delivery to it. Nothing in
this Section 14.8 shall affect the right of any Partner to serve process in any
manner permitted by law or limit the right of any partner to bring proceedings
against any other Partner in the courts of any jurisdiction or jurisdictions.
Each Partner will, no later than 30 days after the date of this Agreement, take
any action necessary to make the preceding appointment effective and will
deliver to the other Partner a copy of acceptance of appointment of CT
Corporation System.
20
Section 14.9 Settlement of Disputes and Arbitration. The Partners
--------------------------------------
recognize that disagreements between them could result in an impasse. the
Partners further recognize that such an impasse resulting from disagreement with
respect to Budgets and certain other major decisions would have an adverse
effect upon Operations. Accordingly, the Partners have agreed upon the _______
____ form in this Section 14.9 pending resolution of such disagreements.
If the Partners are unable to resolve disputes, Roaring Creek and Grassy
Cove will, prior to referring any matter to arbitration pursuant to this Section
14.9 or Section 2.4 of the Accounting Procedure, in the first instance refer the
dispute to top level executives of AMAX Inc. a New York corporation, and
Petrofina S.A., a Belgian corporation, respectively, who are not members of the
Executive Committee or the FINAMAX Management Committee, and if such executive
officers do not resolve the dispute within 30 days of referral, either Partner
may refer such matter to arbitration as provided herein or in Section 2.4, as
the case may be. Any dispute or difference which may arise between the Partners
solely with respect to the meaning or interpretation of any provision of this
Agreement, other than disputes or differences with respect to accounting matters
described in and subject to Section 2.4 of the Accounting Procedure, shall be
finally settled by arbitration in accordance with the regulations of the
American Arbitration Association. Either Partner may serve written demand on
the other Partner that any such dispute be settled by arbitration within 30 days
of the date of such written demand, the Partner serving such demand shall
deliver to the other Partner a written designation of an arbitrator. The other
Partner shall, within 30 days after receipt of such designation, deliver to the
first Partner a written designation of an arbitrator selected by such other
Partner. The two arbitrators so designated shall designate a third arbitrator
mutually acceptable to them, but if the two arbitrators are unable within 15
days to agree upon a third arbitrator, or if the other Partner or the two
arbitrators shall fail to designate an arbitrator within 30 days after the
designation of an arbitrator by the first Partner, the first Partner may apply
to the American Arbitration Association for the appointment by such Association
of such second or third arbitrator in accordance with its rules and regulations.
If such experience is, in the judgment of the Major Partners, relevant to the
question to be arbitrated, the arbitrators appointed by each Partner and
________ American Arbitration Association shall be persons experienced in the
coal business.
The Partners agreed to be conclusively bound by the decision or report of
arbitrators designated in accordance with the preceding paragraph and Section
2.4 of the Accounting Procedure.
Section 14.10. Counterparts. This Agreement may be signed in any number
------------
of counterparts, each of which shall be an original, and which together shall
constitute but one agreement.
Section 14.11. Severability. If any provision of this Agreement or the
------------
application of any provision hereof to any party or set of circumstances is held
invalid, the remainder of this Agreement and the application of such provision
to any other party or set of circumstances shall not be affected unless the
invalidity of such provision substantially impairs the benefits of the remaining
provisions or the realization of the agreements of the parties expressed herein.
21
Section 14.12. Miscellaneous. This Agreement supersedes any other
-------------
agreement dated prior to the date hereof, including the _______ of Agreement,
between the Partners or their Affiliates with respect to the subject matter of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Partnership
Agreement to be executed by their duly authorized representatives as of the date
first above written.
Roaring Creek Coal Company
By: /s/ Illegible
--------------------------------
Its:_______________________________
Grassy Cove Coal Mining Company
By: /s/ Illegible
--------------------------------
Its: Vice President
-------------------------------
22
EXHIBIT A
---------
ACCOUNTING PROCEDURES
ARTICLE I
---------
Definitions
-----------
Terms used herein and defined in the Partnership Agreement have the meaning
set forth therein and the following terms have the following meanings:
"Agreement" means Partnership Agreement;
"Section" means a section of this Accounting Procedure, unless otherwise
specified.
ARTICLE II
----------
General Provisions
------------------
Section 2.1. Books, Records and Accounts; Audits
-----------------------------------
The Partnership shall maintain, or cause to be maintained, true and correct
books, records and accounts for the Partnership in accordance with the terms of
the Partnership Agreement and with United States generally accepted accounting
principles. All revenues and costs shall be recognized on an accrual basis.
Such books, records and accounts shall include but not be limited to a complete
set of double-entry books, consisting of appropriate asset accounts, liability
accounts, capital accounts (i.e., Partners' equity accounts), and income and
expense accounts. They shall be used to record all revenues, income, costs,
expenses, receipts, disbursements, and other transactions of the Partnership,
including the brokering and purchase and disposition of coal. Appropriate
records, such as weigh tickets and engineering surveys, shall be maintained to
verify the amount of production, coal purchases and shipments. The books,
records and accounts shall be retained for three years, or such additional
periods as may be required by the Internal Revenue Code.
The Partnership books, records and accounts shall be audited annually as
provided in Section 7.2 of the Partnership Agreement. The results thereof shall
be delivered to each Partner within 120 days of the end of the calendar year.
All written exceptions to and claims upon the partnership for discrepancies
disclosed by any audit shall be made within sixty (60) days following completion
of such audit and delivery of the results thereto to the Partners.
23
At any time during normal business hours and without any need for prior
notice, any Partner shall be entitled (through either internal auditors or
another designated representative) to examine and make copies of the books and
records maintained by the Partnership.
Section 2.2. Internal Accounting Control
---------------------------
The Partnership shall maintain or cause to be maintained systems of
internal accounting control, including organization, supervision, procedures and
records which are sufficient to provide reasonable assurance that:
(a) All transactions are properly authorized;
(b) All transactions are properly recorded on a timely basis to permit (1)
preparation of financial statements and related footnotes in accordance
with United States generally accepted accounting principles, (2)
preparation of tax returns in accordance with the IRS Code and other
applicable statutes, and (3) to maintain accountability for assets;
(c) All assets are adequately safeguarded and all liabilities are
recognized and discharged on a timely basis;
(d) Recorded balances are periodically substantiated.
Section 2.3. Reports and Information
-----------------------
Within twenty (20) calendar days after the end of each calendar month the
Partnership Executive Committee shall be furnished a report as to the operating
and financial results of FINAMAX Coal Company for the month and year-to-date,
with comparisons to the adopted budget.
Such financial information as is required for each partner to record their
pro rata portion of the Partnership's financial results shall be furnished
monthly to each Partner on a timely basis. This financial information will
normally consist of a statement of financial position, an income statement, and
a schedule of capital expenditures, as well as other financial data reasonably
requested by each Partner.
Each Partner shall be furnished such forecast, budget and other information
as may be reasonably required to allow the preparation of financial
projections, tax returns and other required reports.
Section 2.4. Arbitration
-----------
Any dispute or difference which may arise between the Partners with respect
to the meaning, interpretation or application of the Accounting Procedure or
with respect to any other accounting matter shall be finally settled by Coopers
& Lybrand, or any other firm of certified public accountants selected by the
Partnership Executive Committee. If Coopers & Lybrand or such firm has been
24
consulted by either Partner regarding the matter in dispute, such firm shall
select any other firm of certified public accountants to act in its stead.
Section 2.5. Cash Accounts
-------------
The Partnership shall maintain or cause to be maintained such bank accounts
as are approved by the Partnership Executive Committee.
25