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EXHIBIT 10(A)
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PARTNERSHIP AGREEMENT
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THIS AGREEMENT (the "Agreement") is entered into and effective as of this 23rd
day of August, 1996, by and between 1997 CHLORALKALI VENTURE INC. (hereinafter
"1997 CVI"), an Alabama corporation, wholly-owned by The Geon Company
(hereinafter "GEON"), and OLIN SUNBELT, INC. (hereinafter "OSI"), a Delaware
corporation, wholly-owned by Olin Corporation (hereinafter "Olin") for the
purpose of forming a general partnership.
W I T N E S S E T H:
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WHEREAS, Geon has a requirement for chlorine for use in its production of Vinyl
Chloride Monomer ("VCM") at LaPorte, Texas; and
WHEREAS, Olin has a chlorine production facility ("Olin Plant") located on land
owned by Olin in McIntosh, Alabama ("Olin Plant Site") and OSI and 1997 CVI wish
to construct additional chlorine production facilities at the Olin Plant Site
for the purpose of supplying a portion of Geon's requirements for chlorine; and
WHEREAS, OSI and 1997 CVI desire to form a general partnership for the above
purpose; and
WHEREAS, these and other objectives will be accomplished through this Agreement
and other agreements between OSI, Olin, 1997 CVI, Geon and/or the Partnership
signed concurrent with this Agreement ("Ancillary Agreements") including, but
expressly not limited to, the following:
Engineering, Procurement, and Construction Agreement
Operating Agreement
Chlorine Sales Agreement
Real Estate Lease Agreement
NOW, THEREFORE, in consideration of the mutual rights and obligations set forth
herein, the parties agree as follows:
ARTICLE I
THE PARTNERSHIP
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1.01 FORMATION OF THE PARTNERSHIP
(a) 1997 CVI and OSI (hereinafter "Partners") hereby form a general
partnership (hereinafter "Partnership") pursuant to the provisions
of the Delaware Uniform Partnership Act (the "Act") solely for the
purpose of carrying on the business of operating and maintaining
facilities to be constructed by or on behalf of the Partnership at
the Olin Plant Site ("Facilities") for the initial production of
approximately Two Hundred and Fifty Thousand (250,000) ECUs (1.0
tons chlorine plus approximately 1.1 ton caustic soda equal 1.0
ECUs) of chlorine and caustic soda per annum; and for the sale and
distribution of chlorine and caustic soda; and for the licensing of
all patents or technology owned now or in the future by the
Partnership.
(b) The Partners have executed contemporaneously with the execution of
this Agreement the assumed name certificate required under Delaware
law, which shall be filed with the Delaware Secretary of State and
as necessary in those states and counties in which the Partnership
conducts business. The Partners also agree to execute and deliver
such additional documents and perform such additional acts
consistent with the terms of this Agreement as may be necessary to
comply with the requirements of law for the formation,
qualification, and operation of the general partnership in each
jurisdiction in which the Partnership shall conduct business.
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1.02 NAME
The Partnership shall be operated under the name of Sunbelt Chlor Alkali
Partnership.
1.03 PRINCIPAL PLACE OF BUSINESS OF THE PARTNERSHIP
The principal place of business of the Partnership shall be located at
the Facilities.
1.04 PARTNERSHIP INTERESTS
(a) Each Partner shall own a fifty percent (50%) interest in the
Partnership.
(b) Each Partner shall have the right of access at all reasonable times
to all facilities and property owned or leased by the Partnership,
subject to reasonable health, safety, or security restrictions as
designated by the Operator and/or the Partnership.
1.05 DURATION OF PARTNERSHIP
The Partnership shall commence as of the effective date of this Agreement
and shall continue in full force and effect until terminated or dissolved
as set forth in Article 7 herein.
1.06 LEASE OF PROPERTY
For the purpose of constructing and operating the Facilities, the
Partnership shall lease from Olin a parcel of real estate at the Olin
Plant Site pursuant to the terms and conditions of the Real Estate Lease
Agreement, in the form attached hereto.
1.07 CONSTRUCTION OF FACILITIES
The Partnership shall enter into an Engineering, Procurement, and
Construction Agreement with Olin for construction of the Facilities, in
the form attached hereto.
1.08 RECONSTRUCTION OF FACILITIES
In the event of substantial damage to or total destruction of the
Facilities, the Partnership will determine whether or not to rebuild. In
the event the Partnership elects to rebuild, the Partnership will
reconstruct the Facilities as promptly as possible on the basis agreed to
by the Management Committee. In the event the Partnership elects not to
rebuild, then the Real Estate Lease Agreement will terminate and the
Partnership will comply with its obligations arising thereunder.
1.09 OPERATING AGREEMENT
The Partnership shall enter into an Operating Agreement with Olin for the
operation of the Facility, in the form attached hereto.
1.10 CHLORINE SALES AGREEMENT
The Partnership shall enter into a Chlorine Sales Agreement with Geon, in
the form attached hereto.
1.11 EXPANSION
(a)In the event that either Partner desires for the Facility to be
expanded, the Partner shall propose such expansion to the Management
Committee. If the Management Committee and the boards of each of the
Partners (to the extent required or deemed by a party necessary or
desirable) approves such expansion, it shall be undertaken by the
Partnership, with all capital requirements of the Partnership
contributed by the Partners in accordance with Section 2.02(a) hereof.
(b)If the Management Committee determines not to have the Partnership
fund the expansion, then the Partner proposing such expansion may
advance the funds on the Partnership's behalf for the capital costs
associated with the expansion, which advances shall be credited to the
Partner's capital account. Distributions of Operating Income/Loss (as
defined below) to be made under Section 2.05(a) hereof shall be
adjusted based on the ratio (the "Adjustment Ratio") of (i) the
Partner's funded share of the Nominal Capacity of the Facilities
(determined as provided under the Operating Agreement) after
expansion, to
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(ii) the total Nominal Capacity of the Facilities after expansion. The
Adjustment Ratio shall be applicable only for distributions from
Operating Income/Loss and capital account allocations, as provided in
Sections 2.05 and 2.09 respectively; all other rights, liabilities,
costs, expenses, obligations, distributions and allocations of the
Partnership and the Partners under this Partnership Agreement shall
remain unchanged from the ownership interests set forth in Section
1.04(a) hereof. "Operating Income/Loss" means Gross Margin (as defined
below) derived from manufacturing operations reduced by operating
expenses, such as but not limited to, selling expenses, administrative
expenses, research expenses, interest expense and any applicable
taxes. "Gross Margin" means net sales minus cost of goods sold. All
other items of income/loss or expenses are classified as non-operating
items.
(c)The Management Committee will be responsible for advising the Tax
Matters Partner of the application of Section 1.11(b) and the
Adjustment Ratio which will apply to each Partner. Advice will be
supplied by the last working day in January for the immediately
preceding year.
(d)In the event of an expansion pursuant to subsection (b) above, the
non-funding Partner's purchase or marketing obligations with respect
to chlorine and caustic under the Ancillary Agreements shall not be
applicable to the additional chlorine and caustic generated; provided
however, such non-funding Partner's other obligations, if any, under
the Ancillary Agreements shall remain unchanged. In addition, no
expansion beyond 400,000 ECU's annually shall be permitted unless the
Management Committee approves such expansion to be undertaken by the
Partnership pursuant to subsection (a) above.
ARTICLE 2
FINANCES, ACCOUNTING AND DISTRIBUTIONS
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2.01 CAPITAL ACCOUNTS
A Partnership capital account shall be established and maintained for
each Partner in accordance with Treasury Regulations ss.
1.704-1(b)(2)(iv). The capital account of each Partner shall be credited
with the amount of cash and the asset value of any property, whether
solely or jointly owned, contributed to the Partnership by such Partner
and with any income and gain allocated to such Partner pursuant to this
Agreement, and be debited with the amount of cash and the asset value of
any property, whether solely or jointly owned, distributed to such
Partner by the Partnership and with any deductions and losses allocated
to such Partner pursuant to this Agreement.
2.02 CAPITAL CONTRIBUTIONS
(a)Each Partner shall be responsible for furnishing all capital required
by the Partnership to meet its obligations under the Ancillary
Agreements, as well as any additional Partnership capital requirements
approved by the Management Committee in proportion to its ownership
interest as set forth in Section 1.04(a) hereof.
(b)The initial total capitalization of the Partnership shall be One
Thousand Dollars ($1,000), which amount shall be fully paid in at the
time of formation.
(c)The Management Committee (as defined in Article 3) may determine from
time to time that additional capital is required in the interests of
the Partnership and that the capital of the Partnership should be
increased. If so, such Committee shall determine the amounts and
timing of additional Partnership capital contributions.
(d)No interest shall be paid by the Partnership on any capital
contribution to the Partnership. Neither Partner shall have the right
to receive or request the return of its capital contributions during
the term of the Partnership.
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2.03 BORROWINGS
The amount, form, and cost of Partnership borrowings, if any, and the
sharing of such costs between the Partners shall be agreed to by the
Management Committee before such borrowings are undertaken.
2.04 PATENTS
(a)As agreed by the Management Committee, each Partner and their
affiliates, I.E. any entity controlled by, in control of, or common
control with, a Partner (a "Partner Affiliate") shall grant to the
Partnership for as long as the Facilities continue to operate, without
charge, the nonexclusive and nonassignable license to use any patent
or technology owned by such Partner or Partner Affiliate reasonably
necessary for operation of the Facilities for use in making chlorine
and caustic soda by or on behalf of the Partnership. The value of any
licenses granted by a Partner (or a related Partner Affiliate) to the
Partnership shall not be credited to the capital account of the
contributing Partner.
(b)As agreed by the Management Committee, any patent or technology
license reasonably necessary for the operation of the Facilities for
use in making chlorine and caustic soda by or on behalf of the
Partnership, a license for which is held by, or is freely acquirable
by, either Partner (or a related Partner Affiliate) from a third party
shall be sublicensed to the Partnership on a nonexclusive and
nonassignable basis for as long as the Facilities continue to operate;
provided the license with the third party permits such a sublicense.
The Partnership shall reimburse the contributing Partner for any
license fees paid or payable by such Partner (or the related Partner
Affiliate) and attributable to sublicensing and the exercise of
sublicensed rights by the Partnership. The value of any sublicenses by
the Partners (or a related Partner Affiliate) to the Partnership shall
not be credited to the capital account of the contributing Partner.
(c)Technology and patents owned by the Partnership may, if practical, be
marketed or licensed by the Partnership under the terms agreed to by
the Management Committee. All revenue or proceeds earned by the
Partnership in marketing or licensing such technology or patents shall
be revenue to the Partnership divided between the then current
Partners in proportion to their ownership interests as set forth in
Section 1.04(a) herein.
(d)The Partnership shall also grant each Partner, without charge, a
nonexclusive and nonassignable license to use solely for their
internal use any patent or technology owned by the Partnership. This
right to use can be extended by either Partner to any corporation,
partnership or venture forty percent (40%) or more of whose equity
interest is owned, or directly or indirectly controlled by such
Partner. Should a Partner cease to be a partner in the Partnership,
all rights under this subparagraph (d) shall be subject to a
commercially reasonable royalty determined by good faith negotiation
and failing agreement, all such rights will cease.
(e)The Partnership shall cause inventors to assign to the Partnership
their interest in inventions created on behalf of the Partnership, and
the Partnership shall have the right to file applications for patents
in all countries on all inventions owned by the Partnership.
"Inventions created on behalf of the Partnership" shall mean
inventions created (i) during the course of their employment, by
employees of the Partnership, or by employees of either Partner who
have been assigned by such Partner to work on Partnership matters on a
full-time basis, or (ii) by employees of either Partner, or other
persons, who create such invention in the course of performing
research services for the Partnership pursuant to a written agreement.
If the Partnership does not file an application on a certain
invention, a Partner who timely expressed a desire to file may do so
at its own expense and the Partnership will assist the Partner in
filing the application and shall assign the application to that
Partner. Any patent(s) issuing from such an application shall belong
to said Partner, with the Partnership having a nonexclusive,
royalty-free license thereunder to practice under the patent in its
own operations.
(f)Except as provided in paragraphs (c) and (d) of this Section, no
license or sublicense granted pursuant to this Article shall operate
to provide the licensee or sublicensee with any right to grant any
sublicense.
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2.05 DISTRIBUTIONS
(a)Distributions of Operating Income/Loss of the Partnership shall be
made to the Partners in proportion to their ownership interests in the
Partnership set forth in Section 1.04(a), adjusted as set forth in
Section 1.11(b), if applicable. Distributions of non-operating income,
losses and gains shall be made in accordance with the ownership
interests set forth in Section 1.04(a) herein, and shall not be
subject to adjustment as set forth in Section 1.11(b).
(b)The Management Committee shall determine generally on a quarterly
basis (i) the estimated cash flow of the Partnership, and (ii) the
amount required for reasonably foreseeable cash needs of the
Partnership. The Partnership shall thereafter distribute, subject to
any restrictions in agreements for borrowed money, the difference
between Cash Flow and the amount determined in clause (ii), to each
Partner in the manner set forth in Section 2.05(a) above. "Cash Flow"
shall be calculated as set forth in Exhibit A. Upon determining the
distribution amount, the Partnership will make distributions within
five (5) business days by ACH, or such other method as the Partners
may agree.
(c)Any proceeds arising from the sale of Partnership capital assets,
other than upon dissolution, which the Management Committee determines
the Partnership should distribute to the Partners, shall be
distributed to the Partners in proportion to their ownership interests
set forth in Section 1.04(a) hereof. A Partner's interest in the
Partnership shall not be considered a Partnership asset for purposes
of this provision.
(d)Any modification to the Olin Plant or Olin Plant Site, the title to
which is to vest with Olin as provided in the Engineering, Procurement
and Construction Agreement, shall be distributed in kind at completion
of construction to OSI at the full cost incurred by the Partnership to
construct the modification. OSI's capital account for the Partnership
shall be adjusted accordingly (typically by reduction). Such costs
shall not be included in any service fee or asset base computation
charged by Olin to the Partnership.
2.06 BANKING
The Partnership shall maintain such Partnership bank account or accounts
as shall be deemed necessary by the Management Committee.
2.07 TAXES
It is intended and agreed that this Partnership shall constitute a
"partnership" as defined in Section 761 of the Internal Revenue Code for
Federal income tax purposes, and shall be subject to all the provisions
of Subchapter K of Chapter 1 of Subtitle A of the Code. The Management
Committee shall make timely elections with respect to tax matters
including, but not limited to, the following elections unless otherwise
agreed by the Management Committee: (1) to compute the Partnership's
taxable income under the accrual method of accounting; (2) to expense
research and development currently; and (3) to use the most accelerated
method of depreciation available.
2.08 TAX RETURNS
The Partnership shall prepare, or cause to be prepared, all necessary
Federal, State, and Local income and other tax or information returns of
the Partnership, together with Schedule K-1 to Internal Revenue Service
Form 1065 (or similar successor schedule or form), showing any amount and
items of Partnership income, gain, loss, deduction, or credit allocated
to such Partner, copies of all of which shall be provided to each
Partner. Such returns shall be prepared and filed by the due date
required by the respective taxing authority. The returns shall be
approved by the Management Committee prior to the filing thereof with the
Internal Revenue Service and with the appropriate State and local taxing
authorities. OSI will be designated the Tax Matters Partner for the
purpose of the Partnership and shall be responsible for preparing and
filing the necessary tax returns for the Partnership.
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2.09 ALLOCATIONS
Not less than annually, each Partner's share of Partnership income, gain,
loss, deduction, or credit shall be allocated to the Partners in
proportion to their ownership interest as set forth in Section 1.04(a),
provided that allocations of Operating Income/Loss, and related items of
credit, deduction or expense shall be adjusted as provided in Section
1.11(b), if applicable.
2.10 ACCOUNTING
The Partnership shall cause to be maintained full and accurate
Partnership books of account on the accrual basis of accounting in
accordance with generally accepted accounting principles applied on a
basis consistent with prior periods and, except as approved by the
Management Committee, the Partnership shall use Olin's standard plant
accounting procedures, as such standard plant accounting procedures are
modified by Olin from time to time. Olin shall notify the Partners of any
material changes in such standard plant accounting procedures at least
sixty (60) days prior to implementing such change, and in the event that
such change will have a material effect on a Partner's consolidated
financial statements, then such Partner may notify Olin within thirty
(30) days of Olin's notice of the change, that such change is not
acceptable to the Partner, in which case the change will not be
implemented. Each Partner and its respective independent public
accountant shall have access to, and the right to inspect, audit and
copy, such books and all other Partnership records. Unless otherwise
agreed by the Management Committee, Ernst & Young shall serve as the
Partnership's certified public accountant and shall certify the annual
financial statements of the Partnership.
2.11 ANNUAL ACCOUNTING
The period commencing January 1 through December 31 of each calendar year
shall be deemed the fiscal year of the Partnership for all purposes.
Promptly after the end of each fiscal year, a full, true, and accurate
account shall be made in writing of all of the assets and liabilities of
the Partnership, and of all its receipts, disbursements, costs, losses,
expenses, and gross and net income. The Management Committee shall
establish closing dates for accounting, billing, and related purposes
that closely correspond to the Partnership fiscal year.
2.12 PRODUCT SALES
The output of the Facilities shall be inventoried, sold and/or disposed
of as provided in the Ancillary Agreements.
ARTICLE 3
MANAGEMENT COMMITTEE
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3.01 MANAGEMENT COMMITTEE
The Partnership shall be managed through a Management Committee, the
members of which shall be appointed by the Partners in the manner
hereinafter set forth. When proceeding in the manner hereinafter set
forth, the acts or decisions of the Management Committee shall be
considered fully authorized joint acts or decisions of the Partners.
3.02 MEMBERSHIP OF COMMITTEE
The number of members of the Management Committee shall be set by the
Partners provided that the number of voting members shall be even and
shall not be less than two (2) nor more than four (4). Each Partner shall
have the right to appoint one-half (1/2) of the voting members of the
Management Committee. Initially, there shall only be two (2) voting
members of the Committee, with each Partner having the right to appoint
one (1) voting member. Each Partner may appoint up to two (2) non-voting
members of the Management Committee. The non-voting members shall be
appointed as appropriate to support the Committee through technical and
management skills. Promptly after formation of the Partnership, each
Partner shall designate its appointments to the Management Committee and
notify the other Partner thereof in writing.
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3.03 DECISIONS OF MANAGEMENT COMMITTEE
Decisions of the Management Committee shall be made by unanimous vote at
a meeting or by unanimous written approval of a proposed resolution. In
the event the Management Committee is unable to reach agreement regarding
any Decision of Importance set forth in Section 4.05 hereof, then any
voting member of the Management Committee may elect to have such dispute
referred upward within the respective business organizations of Olin and
Geon in a logical step-by-step manner so that, if not earlier resolved,
such dispute reaches the level of corporate President within 120 days
after initiation of such dispute resolution process.
3.04 APPOINTMENT AND REMOVAL OF MEMBERS
(a)Any member of the Management Committee may be removed at any time but
only by the Partner that appointed such member.
(b)In the case of any vacancy created by death, resignation or removal of
any member, the Partner that appointed such member shall endeavor to
appoint a new member within ten (10) days of the occurrence of such
vacancy. During the period that such vacancy exists, no action shall
be taken by the Management Committee; provided however, that if no
appointment is made within such ten (10) day period, the Chairman or
the Venture Manager shall give notice to the appointing Partner, and
if the vacancy is not filled within five (5) days after such notice,
the Management Committee is authorized thereafter to act, regardless
of whether the vacancy continues.
(c)Appointments and removals made pursuant to this Section and Section
3.02 shall be evidenced by an instrument in writing signed by the
appointing Partner and delivered to the other Partner.
(d)The Venture Manager shall not serve as a Management Committee voting
member during his tenure as Venture Manager.
3.05 CHAIRMAN
A Chairman, and in his absence a substitute voting member appointed by
such Chairman, shall preside over meetings of the Management Committee.
The Chairman shall be one of the voting members of the Committee. From
the effective date of this Agreement through the end of the calendar year
following twelve (12) months after Full Start-Up of the Facilities (as
defined in the Operating Agreement), the Chairman shall be appointed by
1997 CVI. Thereafter, the Partners shall alternate appointing the
Chairman every two (2) years.
3.06 SUBSTITUTE VOTING MEMBER
A voting member may appoint another member to act as a substitute voting
member for the Partner at any meeting of the Management Committee
provided there is tendered at or before such meeting a written proxy with
such authority signed by the voting member.
3.07 SECRETARY
The Chairman shall appoint a secretary who shall keep and transmit to the
Venture Manager and all members of the Management Committee minutes of
every Management Committee meeting and all resolutions adopted by the
Management Committee.
3.08 MINUTES
The decisions and resolutions of each meeting shall be reported in
minutes, which shall state the date and place of the meeting, the members
present and the Partners they represent, the resolutions put to a vote,
and the result of the voting. The minutes shall be submitted to the
members for approval promptly after the meeting. Once approved, they
shall be signed by each of the voting members and entered in a minute
book kept at the location of the current Venture Manager, who shall
provide copies to each of the voting members of the Management Committee.
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3.09 PLACE AND TIME OF MEETINGS
Meetings of the Management Committee shall be held at the Facilities or
at such other place as may, from time to time, be fixed by resolution of
the Management Committee. Regular meetings of the Management Committee
may be held at such times as shall be determined by resolution of the
Management Committee and no notice of such meetings need be given. Any
business that properly may be transacted by the Management Committee may
be transacted at any regular meeting thereof.
3.10 SPECIAL MEETINGS
Special meetings of the Management Committee may be called at any time by
any voting member of the Committee or by the Venture Manager. Notice of a
special meeting stating the time, place, and purpose or proposed purpose
thereof shall be telegraphed or telecopied to each member at his usual
place of business, or be received by mail or personally or by telephone,
not later than three (3) days before the day of such meeting. Any
Management Committee member waives notice of a special meeting by his
presence at such meeting, and if all voting members are present, such
meeting shall be valid despite inadequate notice. Unless otherwise agreed
by all of the voting members present at a special meeting, the business
to be transacted at any special meeting shall be limited to that stated
in the notice.
3.11 QUORUM; MANNER OF MEETING
At every meeting of the Management Committee, the presence of each
Partner's voting member(s) or a duly designated substitute shall be
necessary to constitute a quorum and to transact Partnership business.
Absent exigent circumstances, the Management Committee members shall
attend regular or special meetings in person, however, participation by
telephone or video conferencing shall also be permitted.
3.12 RESOLUTIONS
In lieu of convening a meeting, a voting member may request in writing
that the other voting member(s) approve in writing a proposed resolution.
In such event, the voting member requesting approval of the resolution
shall mail to the other voting member(s) two (2) signed copies of the
resolution and an explanation of the reasons for adoption thereof. If the
other voting member(s) agree with the resolution, they shall sign and
forward executed copies to the other voting member(s) for signature. Once
fully executed (which may be by counterparts), the executed resolutions
shall be furnished to the Secretary of the Management Committee for
filing in the minute book, with a photocopy to the Venture Manager. If
such execution is not made within thirty (30) days of the mailing of the
proposed resolution, then it shall be deemed to have been rejected.
3.13 COMPENSATION
Members of the Management Committee shall not be entitled to compensation
from the Partnership for their services or reimbursement for their
expenses. Notwithstanding the above, the Venture Manager's compensation
and expenses related to the Partnership shall be a Partnership expense.
ARTICLE 4
OPERATOR AND VENTURE MANAGER
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4.01 OPERATOR
Olin is designated the Operator of the Facilities and shall have the
rights and obligations set forth in the Operating Agreement.
4.02 VENTURE MANAGER
(a)The Management Committee shall appoint a Venture Manager who, unless
otherwise agreed, will be an employee of one of the Partners. The
Partner which employs the Venture Manager shall have authority over
the transfer, retention, and career development of the Venture
Manager; provided, however, that said Partner shall use reasonable
efforts to retain any such employee appointed as Venture Manager for a
minimum of two (2) years. The Partnership shall reimburse the Partner
providing the Venture Manager for the salary, benefits, incentive
compensation and other expenses incurred in making the Venture
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Manager available, all of which shall be agreed upon by the Management
Committee prior to the Venture Manager's appointment. The initial
Venture Manager will be an employee of OSI or Olin.
(b)The Venture Manager shall be appointed for a term co-terminus with the
term of the Chairman of the Management Committee provided in Section
3.05 (I.E. the initial term shall run through the end of the calendar
year following twelve months after Full Start-Up of the Facilities (as
defined in the Operating Agreement), and thereafter for two-year
terms). At the expiration of each term, the Management Committee shall
either re-appoint the then Venture Manager for another term or appoint
a new Venture Manager. In the event that the Management Committee
cannot agree as to the appointment of the Venture Manager, the Partner
which is not appointing the Chairman of the Management Committee
pursuant to Section 3.05 hereof for the next term shall be entitled to
select one of its employees as the new Venture Manager for the next
term, such appointment to be reasonably acceptable to the
non-selecting Partner.
4.03 RESPONSIBILITY OF THE VENTURE MANAGER
The Venture Manager shall keep the Management Committee informed of the
business of the Partnership on a regular basis.
4.04 AUTHORITY OF VENTURE MANAGER
The day-to-day operating management authority for the Partnership and
the Facilities, including the following, are hereby delegated to the
Venture Manager:
(a) Managing the Partnership's relationship with Olin under the
Engineering, Procurement and Construction Agreement.
(b) Managing the Partnership's relationship with the Operator and
coordinating with the Operator with respect to supervision of all
of the manufacturing operations of the Facilities.
(c) Utilizing and coordinating with personnel of the Operator to handle
all environmental, safety and health, tax, labor, legal, financial,
and general administrative matters pertaining to the Partnership.
(d) Maintaining books and records for the Partnership.
(e) Preparing and proposing to the Management Committee annual
operating and capital budgets.
(f) Commencing the defense of any claims or lawsuits to avoid defaults
or penalties for the Partnership provided the Management Committee
is notified of the action taken promptly after the commencement of
such defense. Thereafter, the Management Committee shall have
authority thereover.
(g) Coordinating the marketing, sale and distribution of products of
the Facilities.
(h) Managing the provision of services to the Partnership pursuant to
the Ancillary Agreements.
4.05 LIMITATIONS ON AUTHORITY OF VENTURE MANAGER
Unless otherwise agreed to by the Management Committee, the Venture
Manager is not delegated the following decisions ("Decisions of
Importance"), which must be submitted to the Management Committee for
approval prior to proceeding:
(a) Approving annual operating and capital expenditure budgets,
provided, however, that the existing budgets shall be extended if
the new budgets have not yet been approved.
(b) Authorizing expenditures in excess of the approved total annual
operating and capital expenditure budgets.
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(c) Authorizing any expenditures on individual capital expenditure
projects exceeding $250,000.
(d) Entering into the following contracts:
(1) purchase contracts for materials or equipment where the total
commitment is estimated to be in excess of $250,000 in each
case;
(2) service contracts (including consultant contracts) if the total
commitment is estimated to be in excess of $250,000 in each
case;
(3) employment contracts and/or employee benefits, if the total
commitment is estimated to be in excess of $250,000 in each
case; and
(4) leases of real property or equipment where the commitment
exceeds $250,000 over the term of the lease in each case, or
the lease extends beyond three (3) years.
Provided that the Venture Manager may take such actions and
make expenditures of an emergency nature, or while the
Management Committee is unable to take action pursuant to
Section 3.04, if required in the Venture Manager's judgment to
protect life or property or maintain plant operation provided
that he notifies the Management Committee promptly of the
actions taken and such expenditures made.
(e) Authorizing expenditures for licensing or purchasing and/or sale of
technology and patents.
(f) Revising specifications for various kinds, types, grades, and
qualities of products to be produced by the Partnership.
(g) Investing undistributed funds not immediately required for
operations.
(h) Determining the scope of research and development projects and
approval of expenditures related thereto.
(i) Settling any claim or lawsuit having a settlement value estimated
to be in excess of $25,000. The Management Committee shall be
promptly notified of all settlements reached and any settlement not
approved in advance by the Management Committee shall have been
approved by responsible legal counsel as to form and substance.
(j) Handling, dealing with, or establishing any matter within the
authority of the Management Committee.
(k) Selling, transferring, leasing, or otherwise disposing of
Partnership assets in any amount to either Partner or an affiliate
of either Partner or in any amount exceeding $50,000 per
transaction to any other person.
(l) Abandoning the manufacture of any Product produced by the
Partnership or manufacturing or selling new products or product
lines.
(m) Opening and closing bank accounts and designating the persons who
have authority to make withdrawals.
(n) Issuing any press releases on behalf of the Partnership, unless
required by an emergency event and with prompt notice thereof to
the Management Committee.
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(o) Filing Partnership tax returns.
(p) Any other Decisions of Importance that the Management Committee
may, from time to time, define at any general or special meeting or
by resolution.
(q) Waiving or changing any quality specifications for products
produced by the Partnership or the operating rate of the
Facilities, contained in this Agreement or other agreements between
OSI and/or Olin, 1997 CVI and/or Geon signed contemporaneously
herewith or otherwise adopted by the Management Committee.
(r) Commencing any litigation or administrative proceedings.
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4.06 INDEMNITY
Notwithstanding anything to the contrary herein or in the Operating
Agreement, the indemnity provisions of the Operating Agreement shall
apply to Article 4 hereof.
ARTICLE 5
ASSIGNMENT OF PARTNERSHIP INTEREST
----------------------------------
5.01 ASSIGNMENT
No Partner shall sell, assign, pledge, hypothecate, or in any manner
transfer or encumber all or any part of its interest in the
Partnership, and any attempted disposition in contravention of this
Article 5 shall be null and void AB INITIO, except:
(a) at any time upon written notice to the other Partner a Partner's
interest can be assigned, sold, or otherwise transferred to a
Partner Affiliate, provided that such assignee is not, in the case
of an assignment by 1997 CVI, in competition with Olin's Chlor
Alkali business and, in the case of assignment by OSI, in
competition with Geon's PVC, VCM or EDC business, and so long as
such assignee assumes in writing all of the rights and obligations
of such Partner and so long as the assignor guarantees performance
by the assignee; and
(b) if a Partner is compelled to divest its interest by order of a
governmental body, or at any time after the date of Full Start-Up
of the Facilities and subject to the right of first refusal set
forth in Section 5.02, either Partner may sell, assign or otherwise
transfer all or part of its interest in the Partnership to any
third party, provided that such assignee is not, in the case of an
assignment by 1997 CVI, in competition with Olin's Chlor Alkali
business and, in the case of assignment by OSI, in competition with
Geon's PVC, VCM or EDC business, and provided that at the time of
such assignment the assignee (i) has a net worth which is not less
than that of the Assignor Entity (as defined below) on the date
hereof, (ii) has a Moody's Bond Rating of not less than that of the
Assignor Entity on the date hereof, and (iii) working capital and
debt/equity ratio at least equal to that of the Assignor Entity on
the date hereof; and provided further that the assignee assumes all
of the rights and obligations of the assigning Partner under this
Agreement. For purposes of the preceding sentence, "Assignor
Entity" shall mean Geon in the case of an assignment by 1997 CVI,
and shall mean Olin in the case of an assignment by OSI.
(c) OSI shall be entitled to transfer its interest in the Partnership
to any entity which purchases the Olin Plant provided that (if such
purchase is not in connection with the acquisition of a materially
larger portion of Olin assets) 1997 CVI shall have a right of first
refusal to purchase the Olin Plant and the Olin interest in the
Partnership, following the right of first refusal procedure set
forth in Section 5.02 below.
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5.02 RIGHT OF FIRST REFUSAL
(a) If one Partner (hereinafter the "Assigning Partner") receives a
bona fide offer from a third party to purchase the Assigning
Partner's interest in the Partnership at a specified price and
under specified terms and conditions that the Assigning Partner is
willing to accept, then the Assigning Partner shall promptly give
notice to the other Partner of the offer. Such notice shall be sent
by the Assigning Partner for each and every BONA FIDE offer
received, including any changes in the price or terms and
conditions of previously received bona fide offers. The other
Partner shall have the right of first refusal and privilege of
purchasing the Assigning Partner's interest in the Partnership at
the price offered by notifying the Assigning Partner in writing as
soon as possible but in all events within sixty (60) days of the
Assigning Partner's notice of the offer that it will purchase the
Assigning Partner's interest for the amount specified in such offer
and upon all the other terms and conditions contained in such offer
provided that to the extent that the third party offer contains a
term(s) which is reasonably incapable of performance by the other
Partner, then the Partners will thereafter negotiate in good faith
to substitute a payment obligation therefore reasonably reflecting
the value to the Assigning Partner of said term(s). If the Partners
are unable to arrive at such valuation within thirty (30) days
after notice of the other Partner's exercise of its right of first
refusal, then the Assigning Partner may proceed to sell to the
third party without further obligation to the other partner under
this Section.
(b) This procedure shall also apply with respect to a proposed sale of
the Olin Plant and the OSI interest in the Partnership, as provided
in Section 5.01(c) above. If such proposed sale is for not just the
Olin Plant but also Olin's interest in all or a larger portion of
the Olin Plant Site, then the right of first refusal (and
obligation, if the right of first refusal is exercised) shall apply
to the total Olin Plant Site and OSI interest being sold, without
exclusion.
5.03 RIGHT OF ASSIGNMENT WITH SHOT-GUN SALE
Sections 5.01 and 5.02 shall not apply to an assignment by OSI or 1997
CVI (the "Selling Partner") of its interest in the Partnership as part
of a sale involving (i) in the case of OSI, more than the Olin Plant
Site, or (ii) in the case of 1997 CVI, more than Geon's LaPorte Texas
facility; provided however, that in the event of such an assignment,
the Selling Partner shall notify the other partner (the "Remaining
Partner") of such assignment and the Remaining Partner shall have a
period of ninety (90) days after such notice to elect, in its
discretion, to notify the assignee of the Selling Partner's interest
that the Remaining Partner is triggering a Shot-Gun Sale, as set forth
in Article 6 below.
5.04 ANCILLARY AGREEMENTS; SUPPORT SERVICES
(a) In the event a Partner's interest is assigned or is transferred in
a Shot-Gun Sale, in accordance herewith, OSI will cause Olin and
1997 CVI will cause Geon to continue to honor any contractual
commitments previously entered into by it with the Partnership to
the extent required hereunder, or as provided in any of the
Ancillary Agreements. If support services and/or raw materials are
reasonably necessary from the Olin Plant to continue operation of
the Facilities after assignment or Shot-Gun Sale, and provided such
services and/or raw materials were previously supplied to the
Partnership, the Partners shall negotiate in good faith a contract
to supply such support services to the Partnership or the
purchasing Partner, as the case may be, after such assignment or
Shot-Gun Sale to the extent previously supplied and as allowed by
law.
(b) If Olin shuts down its production facilities at its Olin Plant,
Olin shall not be required thereafter to supply support services to
the Partnership but will offer the Partnership the opportunity to
purchase, upon terms to be mutually agreed, the fixed assets and
salt required by the Partnership to continue to operate the
Facilities at its then current capacity.
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5.05 SUBSEQUENT ASSIGNMENTS, SALES OR TRANSFERS
In the event of any assignment, sale, or transfer under this Article 5,
the assignee shall not subsequently sell, assign, transfer, or encumber
its interest in the Partnership, other than as permitted in this
Article 5.
ARTICLE 6
SHOT GUN SALE PROCEDURE
-----------------------
(a) A Partner triggering a Shot Gun Sale (the "Triggering Partner"),
under Section 5.03, shall give a written notice to the other
Partner (the "Receiving Partner") which notice states that it is
triggering the Shot Gun Sale, and specifying the price, timing, and
terms and conditions on which the Triggering Partner is offering to
purchase the Receiving Partner's interest in the Partnership (the
"Shot-Gun Terms"). Such offer cannot contain terms and conditions
which are unique to and impossible of performance by anyone other
than the Triggering Partner.
(b) Within sixty (60) days thereafter, the Receiving Partner shall
notify the Triggering Partner that it elects either to (i) purchase
the Triggering Partner's interest or (ii) sell the Receiving
Partner's interest, such purchase or sale to be on the Shot-Gun
Terms. In the event the Receiving Partner does not notify the
Triggering Partner within such time period, or its notice specifies
a price, timing or terms and conditions different from the Shot-Gun
Terms, the Triggering Partner shall have the option to (i) purchase
the Receiving Partner's interest on the Shot-Gun Terms, (ii) sell
its interest on the different terms set forth by the Receiving
Partner, if any, or (iii) terminate the Shot-Gun Sale procedure.
(c) Such purchase and sale shall close no later than thirty (30) days
after the notice electing to purchase is given.
DISSOLUTION AND WINDING UP
--------------------------
7.01 DISSOLUTION OF THE PARTNERSHIP
The Partnership shall be dissolved on December 31, 2094, or prior
thereto upon the occurrence of any of the events specified in Section
1531 of the Act, including without limitation:
(i) There being only one remaining Partner.
(ii)The written consent of all of the Partners.
(iii) The dissolution, liquidation, Bankruptcy (as defined below)
or withdrawal of a Partner, unless there are two or more
remaining Partners and the Partners elect to continue the
Partnership within ninety (90) days following the occurrence of
such event.
(iv)The Bankruptcy of the Partnership.
(v) Any event which shall make it unlawful for the existence or the
business of the Partnership to be continued.
"Bankruptcy" shall mean a voluntary or involuntary proceeding or
petition commenced or filed by or against a party under any bankruptcy,
insolvency or similar law or seeking the dissolution or reorganization
of such party, or the appointment of a receiver, trustee, custodian, or
liquidation for such party, or a substantial part of its property,
assets or business, or any writ, order, judgment, warrant of
attachment, execution or similar process is issued or levied against a
substantial part of the property, assets or business of such party and
such involuntary proceeding or petition shall not be dismissed, or such
writ, order, judgment, warrant of attachment, execution or similar
process shall not be released, vacated, or fully bonded, within sixty
(60) days after commencement, filing or levy as the case may be, or if
all or any part of the Partnership interest of a Partner shall be the
subject of any levy or attachment, and if such levy or attachment shall
not be discharged within sixty (60) days thereafter.
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7.02 NEGATIVE CAPITAL ACCOUNTS
Upon dissolution and liquidation of the Partnership, each Partner
having a negative capital account shall restore the balance of such
capital account to zero by making a capital contribution in cash in an
amount equal to the deficit of such capital account.
7.03 DISTRIBUTION UPON LIQUIDATION
Upon dissolution of the Partnership, the assets of the Partnership
shall be liquidated in an orderly fashion and in accordance with the
Act or applicable successor legislation. All assets to which the
Partnership holds title shall be Partnership property and the Partners
waive any rights of partition with respect thereto. The proceeds from
such liquidation shall be distributed to the Partners in accordance
with the positive capital account balances of the Partners, after
taking into account all capital account adjustments required to be made
by the Partnership immediately prior to the liquidating distribution.
ARTICLE 8
LIMITATION ON PARTNERS' POWERS
------------------------------
8.01 LIMITATION ON PARTNER'S POWERS
No Partner shall, without the consent of the other Partner, take any
action that purports to be the action of, or to be binding upon, the
Partnership or the other Partner, it being the intent of this Agreement
that all such action be taken by the Management Committee or by joint
action of the Partners. Without limiting the generality of the
foregoing, subject to the express rights and obligations as set forth
in the Operating Agreement and the authority of the Venture Manager as
specified herein, no Partner shall:
(a) Borrow money in the Partnership name for any purpose or utilize
collateral owned by the Partnership as security for loans;
(b) Borrow from the Partnership or lend Partnership funds to any third
party;
(c) Assign, transfer, pledge, compromise or release any of the claims
of or debts due the Partnership except upon payment in full, or
arbitrate, or consent to the arbitration of, any of the disputes or
controversies of the Partnership;
(d) Make, execute, or deliver on behalf of the Partnership any
assignment, bond, confession of judgment, chattel mortgage,
security interest, deed, guarantee, indemnity bond, or surety bond
to any third party;
(e) Sell, exchange, transfer, lease, or mortgage any Partnership
property or any interest therein or enter into any contract for any
such purpose; or
(f) Obligate the Partnership as a surety, guarantor, or accommodation
party to any obligation.
ARTICLE 9
GENERAL
-------
9.01 SECRECY AGREEMENT
(a) 1997 CVI and OSI will make available to each other, to the extent
each is able to do so, information and data necessary to operate
and maintain the Facilities. All information considered proprietary
will be disclosed or confirmed in writing and identified as
confidential.
(b) The recipient will not disclose to third parties nor use for any
purpose other than to operate or maintain the Facilities the
information and data disclosed in writing and identified as
confidential pursuant to paragraph (a), at any time that the
recipient is a Partner of the Partnership and for a period of ten
(10) years thereafter.
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(c) The obligations of paragraph (b) do not apply to any information or
data that
(1)is, at the time of disclosure, available to the public,
(2)becomes known to the public through no act or failure of the
recipient,
(3)the recipient can demonstrate, by written record, was within
its possession before receipt from the other party,
(4)becomes available to the recipient on a non-confidential basis
from a source other than the other party, without any breach
of any obligation of confidentiality,
(5)is independently developed by the recipient without reference
to the information disclosed by the other party, or
(6)the information is the subject of a subpoena or demand for
production of documents in connection with any suit,
arbitration proceeding, administrative procedure or before any
governmental agency. In such event, the recipient shall
promptly notify the disclosing party and shall cooperate with
the disclosing party in its attempts to protect the
confidentiality of its information such as by seeking a
protective order from a court of competent jurisdiction.
(d) The information and data subject to the obligations of paragraph
(a) can be disclosed to Geon, Olin and/or a third party selected
by the Partnership, provided that the receiving party agrees to
assume the same obligations in a writing containing terms no less
onerous than those set forth in this Section 9.01.
(e) As to information and data disclosed under paragraph (a) which
was obtained by either 1997 CVI, OSI, or the Partnership from
third parties under secrecy, OSI and 1997 CVI agree, when it is a
recipient, to maintain such information confidential in the same
manner and to the same extent required in agreements between the
disclosing party and the third party. If necessary, 1997 CVI and
OSI will sign secrecy agreements with the third parties
equivalent in scope with the agreement already executed by the
disclosing party.
9.02 RELATIONSHIP
(a) Without the prior written consent of the other Partner, neither
Partner shall, for and on behalf of the other, or for the account
of the Partnership directly or indirectly do any act inconsistent
with the provisions of this Agreement. In the event any Partner is
held liable either prior to or after termination of this Agreement,
for a claim of a third person by reason of acts of the Partnership,
then any payment to such third person shall be treated as an
expenditure of the Partnership and any Partner making such payment
shall be entitled to be indemnified by the Partnership to the
extent of the Partnership's insurance coverage. To the extent that
the Partnership's insurance coverage fails to indemnify fully the
paying Partner, such Partner shall be entitled to contribution from
the other Partner accordingly.
(b) Each Partner shall look solely to the assets of the Partnership for
the return of its respective capital, and if the assets remaining
after payment or discharge, or provision for payment or discharge,
of its debts or liabilities are insufficient to return the capital
to the Partners, no Partner shall have any recourse against the
separate assets of the other Partner for that purpose.
9.03 MODIFICATION; ENTIRE AGREEMENT
(a) This Agreement and the other agreements between OSI and/or Olin,
the Partnership, 1997 CVI and/or Geon signed contemporaneously
herewith, represent the entire agreement of the Partners with
respect
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to the matters discussed herein. There shall be no modification,
amendment, change or alteration of this or such other agreements
unless reflected in a written instrument executed by both Partners.
(b) The Partners anticipate pursuing third party financing and agree
that as a part of such process, each will consider in good faith
any amendments or modifications to this Agreement or the Ancillary
Agreements required by the financing party in order to proceed with
the financing, and will implement any mutually acceptable
amendments or modifications, provided that neither Partner shall be
obligated to agree to any such amendment or modification.
9.04 WAIVER
No Partner shall be construed to have waived any of its respective
rights or interests in this Agreement by a failure, in any one
instance, to have asserted, or made claim with respect to such right at
the time such Partner was entitled to assert same.
9.05 BREACH
(a) If one Partner claims that its rights or interest under this
Agreement or any of the Ancillary Agreements, have been materially
adversely affected due to the breach of the other Partner, the
Partner claiming such breach shall give the other Partner notice
thereof in writing.
(b) If the alleged breaching Partner disputes in good faith the
existence of such breach, it will notify the other Partner of the
basis for its disputing the existence of the breach and thereafter
the Partners will cause the dispute to be referred upward in the
respective business organizations of Olin and Geon in a logical
step-by-step manner, so that if not earlier resolved, such dispute
reaches the level of corporate President within 120 days of
initiation of the dispute resolution process.
(c) If the alleged breaching Partner does not dispute the existence of
the breach, it shall have ten (10) days within which to cure such
breach, or if such breach is not readily curable within ten days,
to commence to cure such breach as promptly as possible and to set
forth in writing to the other Partner the basis and timing on which
such breach shall be cured, in all events to be cured within sixty
(60) days.
(d) In the event that the breach is not fully resolved or cured within
the applicable period provided in (b) and (c) above, then the other
Partner shall be entitled, in its sole discretion, to take
unilateral action to cure such breach on behalf of the other
Partner, with any funds advanced by the non-breaching Partner in
order to cure the breach, or damages suffered by the non-breaching
Partner by the breach to be secured by a lien on such breaching
Partner's interest in the Partnership, including the rights to
distributions hereunder, until such time as the non-breaching
Partner is fully compensated for such advances or damages. The
breaching Partner shall take all actions and execute all agreements
and instruments necessary at the time to cause such lien to be
fully perfected and a first priority lien.
(e) Without limiting the foregoing, upon expiration of the applicable
period provided in (b) and (c) above, either Partner may thereafter
submit the matter to binding arbitration as to whether a breach
occurred, and the matter of damages (if any). The arbitration shall
be conducted in accordance with the rules of the American
Arbitration Association (the "AAA"), including the appointment of a
single arbitrator from a list provided by the AAA to each party.
The loser shall pay the costs and expenses of arbitration, but not
the winner's attorney fees, costs and expenses. The arbitrator's
decision shall be final and binding upon the parties, enforceable
in accordance with its terms by any court of competent
jurisdiction.
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9.06 NOTICES
Unless otherwise provided for herein, all notices or other
communications authorized or required between the Partners hereto by
any provision of this Agreement shall be in writing and delivered by
hand or transmitted by registered or certified mail, return receipt
requested, postage or other charges prepaid, and in all cases addressed
to the voting members on the Management Committee, at the address set
forth below or such other address as may be designated by the parties
hereto.
IF TO OSI, C/O OLIN CORPORATION, AT:
Chlor Alkali Products Division
650 25th Street, N.W.
Suite 300
Cleveland, Tennessee 37311
WITH A COPY TO: 501 Merritt 7
P.O. Box 4500
Norwalk, CT 06856-4500
Attn: Corporate Secretary
IF TO 1997 CVI, C/O THE GEON COMPANY, AT:
Two Kingwood Place
700 Rockmead Drive, Suite 250
Houston, Texas 77339-2111
WITH A COPY TO: One Geon Center
Avon Lake, Ohio 44012
Attn: Corporate Secretary
The date of delivery shall be deemed to be the date the notice is
given.
In the event either Partner is served with notice of a lawsuit or a
subpoena concerning the Partnership, such Partner shall promptly notify
the other Partner thereof.
9.07 CAPTIONS
Titles or captions of articles and sections contained in this Agreement
are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend, or describe the scope of this Agreement
or the intent of any provision hereof.
9.08 GOVERNING LAW
This Agreement shall be governed by and construed according to the laws
of the State of Delaware.
9.09 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute
one and the same instrument.
9.10 SEVERABILITY
If any of the terms and conditions of this Agreement are held to be
invalid or unenforceable by any court or agency of competent
jurisdiction, such holding shall not invalidate other terms and
conditions of the Agreement. Instead, this Agreement shall be construed
as if it did not contain the terms or conditions held to be invalid,
and the remainder of the Agreement shall remain in full force and
effect.
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IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed by their duly authorized representatives on the day and
year first above written.
1997 CHLORALKALI VENTURE INC.
By:\S\EDWARD C. MARTINELLI
-----------------------
Edward C. Martinelli
President
OLIN SUNBELT, INC.
By:\S\LEON B. ANZIANO
------------------
Leon B. Anziano
President
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