Exhibit B-73
AGREEMENT OF
LIMITED PARTNERSHIP
OF SOUTH CAROLINA COALTECH NO. 1 L.P.
This Agreement of Limited Partnership (this "Agreement") of SOUTH
CAROLINA COALTECH NO. 1 L.P., a Delaware limited partnership (the
"Partnership"), is made and entered into as of April 7, 2000, by and between
COALTECH LLC, an Illinois limited liability company, as the general partner (the
"General Partner"), and USA COAL LP, an Illinois limited partnership ("AJG"),
which is an affiliate of AJG Financial Services, Inc., a Delaware corporation
("AJGFS") and SOUTH CAROLINA ELECTRIC & GAS COMPANY, a South Carolina
corporation ("SCE&G"), on behalf of itself and as agent for South Carolina
Generating Company, Inc., a South Carolina corporation ("GENCO"), as limited
partners (the "Limited Partners").
R E C I T A L S:
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The parties desire to form the Partnership as a Delaware limited
partnership for the purposes and on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
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Act. The Delaware Revised Uniform Limited Partnership Act, as in
effect from time to time.
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Adjusted Capital Account Deficit. With respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account, as of the end of the
relevant fiscal year, after giving effect to the following adjustments: (i)
crediting thereto (A) that portion of any deficit Capital Account balance that
such Partner is required to restore under the terms of this Agreement, (B) the
amount of such Partner's share of Minimum Gain, including any "partner
nonrecourse debt minimum gain" (as defined in Treasury Regulations Section
1.704-2(i)), and (C) the amount of Partnership liabilities allocated to such
Partner under Section 752 of the Code with respect to which such Partner bears
the economic risk of loss (as defined in Treasury Regulations Section
1.752-2(a)), to the extent such liabilities do not constitute "partner
nonrecourse debt" under Treasury Regulations Section 1.752-2 and (ii) reduced by
all reasonably expected adjustments, allocations and distributions described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
Affiliate. (a) Any Person directly or indirectly owning, controlling or
holding the power to vote 10% or more of the outstanding voting securities of an
identified other Person; (b) any Person 10% or more of whose voting securities
are directly or indirectly owned, controlled or held with power to vote, by such
other Person; (c) any Person directly or indirectly controlling, controlled by,
or under common control with such other Person; (d) any officer, director or
partner of such other Person; and (e) if such other Person is an officer,
director or partner, any company for which such Person acts in any such
capacity.
Binder Purchase Agreement. Any agreement entered into by the
Partnership and a vendor or vendors, by which the Partnership shall have the
right to purchase binding materials used in the production of Synfuel.
Business Day. Any day other than a Saturday, Sunday or federal
government holiday, or other day on which banks in the State of Illinois or
South Carolina are authorized or required by law to close.
Capital Account. The capital account maintained for each Partner
pursuant to Section 6.4.
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Coal Feedstock. Any and all coal, fine coal derived particles, coal
dust and other coal products.
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Code. The Internal Revenue Code of 1986, as amended from time to time
or any replacement or successor law.
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Environmental Law. The Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, 42
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U.S.C.ss.9061 et seq., The Hazardous Materials Transportation Act, 49
X.X.X.xx. 1801 et seq., The Resource Conservation and
Recovery Act, 42 U.S.C.ss.6901 et seq., The Toxic Substance Control Act of
1976, as amended, 15 U.S.C.ss.2601 et seq., The Clean
amended, The Clean Air Act, 42 U.S.C.ss.7401 et seq., and all other present
nd future applicable state, federal, and local environmental statutes,
ordinances, rules, permit conditions and regulations which regulate, impose
liability or standards of conduct with respect to environmental, health or
safety issues, and any amendments to
any of the foregoing.
Equipment. The equipment identified in Exhibit B.
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General Partner. Coaltech LLC, an Illinois limited liability company,
or any Person who becomes a substitute or additional general partner of the
Partnership pursuant to the terms of this Agreement and applicable law, or,
where the context so requires, any successor General Partner(s) acting pursuant
to the provisions of this Agreement.
Gross Cash Receipts. With respect to any period, the amount of all
cash funds received by the Partnership from all sources.
Limited Partners. AJG, SCE&G and each Person who may become a
substituted limited partner of the Partnership pursuant to the provisions
hereof and applicable law.
Minimum Gain. As such term is defined in Treasury Regulation Section
1.704-2(d), which shall generally mean the amount by which the nonrecourse
liabilities secured by any assets of the Partnership exceed the adjusted tax
basis of such assets as of the date of determination. A Partner's share of
Minimum Gain (and any net decrease thereof) at any time shall be determined in
accordance with Treasury Regulation Section 1.704-2(g).
Net Cash Flow. With respect to any period, the amount by which the
Gross Cash Receipts in such period exceed the sum of the following: (a) all
principal and interest and other required payments on all indebtedness of the
Partnership (including any loans from Partners or their Affiliates); (b) all
cash expenditures (including expenditures for capital improvements) made in such
period incident to the operation of the Partnership business; and (c) amounts
contributed to cash reserves as authorized by the applicable annual budget, net
of amounts released from such reserves. Net Cash Flow shall not include amounts
associated with the dissolution and termination of the Partnership.
Operations and Maintenance Agreement. The Operations and Maintenance
Agreement to be entered into by the Partnership and any Person regarding the
operation of the Project, as in effect from time to time, and any additional or
subsequent agreement between the Partnership and any other Person regarding the
operation of the Project.
Participating Percentage. For each Partner, the percentage set forth
opposite such Partner's name below:
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Partner Participating Percentage
General Partner .01%
AJG 59.99%
SCE&G 40%
Partner or Partners. Unless the context in which the term is used
requires otherwise, the term shall include the General Partner and the Limited
Partners.
Partnership. The Delaware limited partnership known as South Carolina
Coaltech No. 1 L.P.
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Person. A natural person, corporation, limited liability company,
trust, partnership, estate, unincorporated
association or other entity.
Prime Rate. The rate of interest published for each business day as
the "prime rate" or "corporate base rate" in The Wall Street Journal.
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Profits or Losses. The net income or loss of the Partnership for
federal income tax purposes determined as of the close of the Partnership's
fiscal year (or as of such other time as be required by this Agreement), as well
as, where the context requires, related federal tax items such as tax
preferences, items of income and expense which are required to be separately
stated, nontaxable income less any expenses related thereto, and credits,
appropriately adjusted with respect to final determination of any of the
foregoing for federal income tax purposes. Profits or Losses shall not include
any amounts specially allocated pursuant to Sections 7.7 or 7.2 of this
Agreement.
Project. All activities, property, improvements, equipment and efforts
associated with the production and sale of Synfuel made from Coal Feedstock, as
well as any ancillary activities performed by or on behalf of the Partnership.
Purchase Agreement. The purchase agreement to be entered into by the
Partnership and SCE&G or an Affiliate thereof
regarding the purchase of Coal Feedstock by the Partnership.
Regulations. The regulations issued under the Code, as amended from
time to time.
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Section 29 Tax Credits. The income tax credits under Section 29
of the Code for the production of fuels from nonconventional sources.
Site. The land upon which the Project shall be located. If the
Project is conducted at more than one location, the
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term "Site" shall refer collectively to all such locations.
Site Lease. The Lease Agreement to be entered into by the Partnership
and SCE&G or an Affiliate of SCE&G, pursuant to which the Partnership shall
lease the Site and the improvements thereon from SCE&G or its Affiliate. If the
Site consists of more than one location that is leased to the Partnership by
SCE&G or an Affiliate thereof, then the term "Lease Agreement" shall refer
collectively to all such leases of all or any portion of the Site.
Super Majority. Partners owning more than seventy-five percent (75%) of
the aggregate Participating Percentages held by all Partners, or Partners owning
more than seventy-five percent (75%) of the aggregate Participating Percentages
of a specified group of less than all of the Partners (such as the Limited
Partners), as the context may require.
Sales Agreement. The sales agreement to be entered into by the
Partnership and SCE&G or an Affiliate thereof regarding
the purchase of Synfuel (as defined below).
Synfuel. Synthetic fuel produced from Coal Feedstock which
constitutes a "qualified fuel" as defined in Code Section
29(c).
1.2 Interpretation. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Wherever the context
may require, any pronoun used in this Agreement shall include the corresponding
masculine, feminine and neuter forms. For all purposes of this Agreement, the
term "control" and variations thereof shall mean the direct or indirect
possession of the power to direct or cause the direction of the management and
policies of the specified entity, through the ownership of equity interests
therein, by contract or otherwise. As used in this Agreement, the words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." As used in this Agreement, the terms "herein,"
"hereof," and "hereunder" shall refer to this Agreement in its entirety. Any
references in this Agreement to "Sections," "Articles" or "Exhibits" shall,
unless otherwise specified, refer to Sections, Articles or Exhibits,
respectively, in or attached to this Agreement.
ARTICLE 2
FORMATION OF THE PARTNERSHIP
2.1 Formation. The parties hereto agree to form the Partnership as a
limited partnership under and pursuant to the provisions of the Act; and the
rights and obligations of the Partners shall be as provided therein except as
otherwise expressly provided in this Agreement. The Partners agree to execute
such certificates or documents and the General Partner shall do such filings and
recordings and all other acts, including the filing or recording of a
certificate of limited partnership of the Partnership and any assumed name
certificates in the appropriate offices in the States of Delaware and South
Carolina and any other applicable jurisdictions as may be required to comply
with applicable law.
2.2 Entire Agreement. Each and every other agreement or understanding,
oral or written, relating in any way to the formation or operation of the
Partnership entered into prior to the date hereof is hereby superseded in its
entirety. From and after the execution of this Agreement, the same shall
constitute the only Agreement of Limited Partnership of the Partnership except
as the same may hereafter be amended pursuant to the provisions hereof. This
Agreement represents the entire agreement and understanding of the parties
hereto concerning the Partnership and their relationship as Partners, and all
prior or concurrent agreements, understandings, representations and warranties
in regard to the subject matter hereof are and have been merged herein.
ARTICLE 3
NAME AND PRINCIPAL OFFICE
3.1 Name. The business of the Partnership shall be conducted
under the name of "South Carolina Coaltech No. 1
L.P." or such other name as the General Partner may from time to time designate
upon notice to the Limited Partners.
3.2 Principal Office, Registered Agent and Registered Office. The
principal office of the Partnership shall be located, c/o the General Partner,
at 000 XxXxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000. The registered agent and
the registered office of the Partnership in Delaware shall be Corporation
Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000. The General Partner may
from time to time designate another registered agent or another location for the
principal office or registered office of the Partnership upon notice to the
other Partners.
ARTICLE 4
PURPOSE
4.1 Purpose.
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(a The business and purpose of the Partnership is the
production and sale of Synfuel produced using Coal Feedstock in a
manner consistent with Section 29 of the Code and other related
activities.
(b In furtherance of the foregoing purposes but subject to the
other provisions of this Agreement, the Partnership is authorized and
empowered as follows:
(i0 to sell, exchange, operate, or cause to be
operated, maintain, service, improve, lease, mortgage, pledge
and otherwise encumber its interest in the Project or any part
thereof, to renovate, alter, reconstruct, and remodel any
improvements hereafter forming a part thereof, and to
construct additional improvements thereon; to finance all or
any part of the activities pursuant thereto by secured or
unsecured indebtedness and, in connection therewith, to issue
evidences of indebtedness and to execute and deliver
mortgages, mortgage notes, and any other instruments of every
nature and kind as security therefor; to prepay, refinance,
and/or recast any mortgage, mortgage debt, or other lien; to
enter into, perform upon, and carry out contracts of every
kind necessary or incidental to the accomplishment of its
purposes, including agreements to settle disputes with other
parties; and to take or omit such further action in connection
with the Project as may be necessary or desirable to further
the Project and the interests of the Partnership;
(ii0 to incur indebtedness, secured or unsecured,
including loans and advances by any Partner to the
Partnership, for any of the purposes of the Partnership; to
invest and reinvest the assets of the Partnership in, and
purchase or otherwise acquire, hold, sell, transfer, exchange,
or otherwise dispose of or realize gain upon, securities of
all types and descriptions; and
(iii0 to engage in any other lawful business activity
which the General Partner may reasonably deem necessary or
advisable to carry out the purpose of the Partnership.
ARTICLE 5
TERM AND FISCAL YEAR
5.1 Term. The term of the Partnership shall commence as of the date
hereof and shall continue until December 31, 2029, unless sooner terminated
pursuant to the provisions of this Agreement or as otherwise provided by law.
5.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
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ARTICLE 6
CAPITAL CONTRIBUTIONS, LOANS AND CAPITAL ACCOUNTS
6.1 Initial Capital Contributions.
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(a General Partner. Concurrently with the execution
of this Agreement, the General Partner shall contribute
the amount of $875.00 to the capital of the Partnership.
(b Limited Partners.
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(i0 Concurrently with the execution of this
Agreement, AJG shall assign its entire right, title and
interest in and to the Equipment to the Partnership, free and
clear of all liens, claims, security interests and
encumbrances whatsoever, as a contribution to the capital of
the Partnership. The Partners hereby agree that the aggregate
fair market value of the Equipment as of the date hereof is
AJG's adjusted net book value of the Equipment as at the date
hereof.
(ii0 Concurrently with the execution of this
Agreement, SCE&G shall contribute immediately available funds
in the amount of Three Million Five Hundred Thousand Dollars
($3,500,000) to the capital of the Partnership.
6.2 Additional Capital Contributions.
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(a If, in the judgment of the General Partner, the revenues
and other funds of the Partnership are not sufficient to satisfy the
financial obligations of the Partnership or to otherwise fund the
expenditures of the Partnership set forth in the applicable annual
budget adopted in accordance with Section 10.4, as determined on a
monthly basis (the first year's budget shall be approved by April 30,
2000), then the General Partner shall deliver to each Partner written
notice on a monthly basis, setting forth the aggregate amount of
additional funds then required by the Partnership and each Partner's
Participating Percentage of such aggregate amount. Notwithstanding the
immediately preceding sentence, without the prior written approval of a
Super Majority of the Limited Partners, the General Partner shall not
deliver such notices during any calendar year requesting funds, in the
aggregate, in excess of 110% of the amount of expenditures set forth in
the annual budget adopted pursuant to Section 10.4 for such calendar
year. Each Partner shall contribute immediately available funds to the
capital of the Partnership in the amount of such Partner's
Participating Percentage of the aggregate amount of funds then required
by the Partnership as set forth in the monthly notice (referred to
herein as such Partner's "Additional Capital Contribution"). In
addition, each Partner shall contribute immediately available funds to
the capital of the Partnership in the amount of such Partner's
Participating Percentage of the aggregate amount of fees, costs and
expenses payable to the firm of Xxxxxx Xxxx & Priest LLP in connection
with the preparation, filing and receipt of the private letter ruling
referred to in Section 17.1 hereof. Any such contribution shall be made
within thirty (30) days following the date of delivery of such notice.
(b If any Partner fails to timely contribute to the
Partnership immediately available funds in the full amount of its
Additional Capital Contribution (a "Defaulting Partner"), the General
Partner shall, within ten (10) days after the date such contribution is
required to be made, notify each of the Partners, if any, that
contributed in full their respective Additional Capital (the
"Contributing Partners") of such fact and the Contributing Partners
shall have the right, but shall not be obligated, to contribute
immediately available funds (a "Default Contribution")as a loan to the
Defaulting Partner in the amount of the Defaulting Partner's Additional
Capital that was not contributed (the "Default Amount") in proportion
to the respective Participating Percentages of the Contributing
Partners or in such other proportion as the Contributing Partners may
agree upon. Any contribution pursuant to the immediately preceding
sentence shall be made within ten (10) days of delivery of notice from
the General Partner of the right to make such contribution. Any loan to
a Defaulting Partner pursuant to this Section 6.2(b) shall be deemed a
demand loan which shall bear interest from the date the Default
Contribution is paid until this loan is paid in full at the Prime Rate
plus five percent (5%). Such interest shall be payable
contemporaneously with the repayment of the principal balance of such
loan. To secure the repayment of the principal and interest payable
with respect to the aforesaid demand loan, the Defaulting Partner
shall, within five (5) business days after the demand loan has been
made pursuant to this Section 6.2(b), execute and deliver to each
Contributing Partner who has made such a demand loan, on a pari passu
basis, all documents which are required to pledge and assign, for
collateral purposes only, the Defaulting Partner's entire interest in
the Partnership, including all proceeds thereof. If the Defaulting
Partner shall fail or refuse to timely execute and deliver the
aforesaid pledge and assignment documents, then the General Partner is
hereby irrevocably designated as the agent of the Defaulting Partner,
with full power of attorney in the name of, and on behalf of the
Defaulting Partner, to execute and deliver such documents to the
Contributing Partners who have made the demand loan. Each Limited
Partner covenants and agrees that such Partner shall not, at any time
hereafter, except as provided for above in this Section 6.2, pledge,
grant a security interest or lien in or otherwise encumber such
Partner's interest in the Partnership.
(c All additional capital contributions and other amounts any
Partner owes the Partnership shall bear interest beginning on the date
such amounts are due until paid at the rate of the sum of the Prime
Rate plus five percent (5%). In addition, a Partner shall reimburse the
Partnership for any of the costs and expenses (including attorneys'
fees) which the Partnership incurs due to such Partner's failure to pay
amounts owed to the Partnership. Each Partner shall be required to make
every Additional Capital Contribution pursuant to this Section 6.2,
together with interest thereon and costs and expenses as provided
above, and the Partnership and each other Partner shall be entitled to
exercise any and all rights and remedies available at law or in equity
to enforce such liability.
(d Except as specifically provided in Section 6.1 or this
Section 6.2, no Partner shall be required to make any additional
contributions to the capital of the Partnership.
6.3 Return of Capital. Except as specifically provided in this
Agreement, a Partner shall not be entitled to the return of his capital account
(as determined pursuant to Section 6.4 below) or to any distribution from the
Partnership except as specifically provided herein.
6.4 Capital Account. A separate capital account ("Capital Account")
shall be established and maintained for each Partner in accordance with the Code
and the Regulations, including the rules regarding the maintenance of Partners'
Capital Accounts set forth in Regulation Section 1.704-1. Subject to the
immediately preceding sentence, there shall be credited to each Partner's
Capital Account (i) the amount of money and the fair market value at the time of
contribution (as set forth herein or as otherwise agreed upon by the
contributing Partner and a Super Majority of the other Partners) of any property
(net of related liabilities) contributed by the Partner to the Partnership, and
(ii) the Partner's share of income or gain (or items thereof) of the
Partnership, including income and gain exempt from tax. There shall be charged
against each Partner's Capital Account (iii) the amount of money and the fair
market value at the time of distribution (as agreed upon by the distributee
Partner and a Super Majority of the other Partners) of any property (net of
related liabilities) distributed to the Partner by the Partnership and (iv) the
Partner's share of loss and deduction (or items thereof) of the Partnership. If
property is contributed to the capital of the Partnership or if there is a
revaluation of any Partnership property so that the book value of such
Partnership property differs from its adjusted tax basis, the Partners' Capital
Accounts shall be appropriately adjusted for income, gain, loss and deduction as
required by Regulation Section 1.704-1(b)(2)(iv)(g). To the extent a Partner's
Capital Account is greater than zero, such excess is hereinafter referred to as
a "positive balance." To the extent that a Partner's Capital Account is less
than zero, said amount is hereinafter referred to as a "deficit balance."
6.5 Interest on Capital Contributions. Except as specifically
provided in this Agreement, the Partnership shall
not pay interest on capital contributions or undistributed profits.
ARTICLE 7
ALLOCATION OF PROFITS AND LOSSES
7.1 Allocation of Profits and Losses. After giving effect to the
allocations set forth in Section 7.7 first and then Section 7.2, all Profits and
Losses (including all items of income and expense entering into the
determination thereof), as finally determined for federal income tax purposes
for each fiscal year of the Partnership, shall be allocated among the Partners
in accordance with their Participating Percentages.
7.2 Synfuel Gross Receipts. Receipts from the sale of Synfuel
shall be allocated among the Partners in accordance
with their Participating Percentages.
7.3 Limitation on Allocation of Losses. Notwithstanding Section 7.1
above, the Losses allocated to each Partner pursuant to this Article 7 shall not
exceed the maximum amount of Losses that can be allocated to that Partner
without causing or increasing an Adjusted Capital Account Deficit for such
Partner at the end of any Fiscal Year. All Losses in excess of the amount that
may be allocated to that Partner shall be re-allocated to the Partners that
would not have an Adjusted Capital Account Deficit as a result of the
allocation, in proportion to their respective Participating Percentages, or, if
no such Partners exist, then to the Partners in accordance with their respective
Participating Percentages.
7.4 Depreciation Recapture. If any portion of Profits recognized from
the disposition of property by the Partnership represents the "recapture" of
previously allocated deductions by virtue of the application of Code Section
1245 or 1250 ("Recapture Gain"), such Recapture Gain shall be allocated solely
for federal income tax purposes as follows:
(a First, to the Partners in proportion to the lesser of each
Partner's (i) allocable share of the total Profit recognized from the
disposition of such property and (ii) share of depreciation or
amortization with respect to such property (under Regulations sections
1.1245-1(e)(2) and (3)), until each such Partner has been allocated
Recapture Gain equal to such lesser amount.
(b Second, the balance of Recapture Gain shall be allocated
among the Partners whose allocable shares of total Profits from the
disposition of such property exceed their shares of depreciation or
amortization with respect to such property (under Regulations Sections
1.1245-1(e)(2) and (3)), in proportion to their shares of total Profit
(including Recapture Gain) from the disposition of such property;
provided, however, that no Partner shall be allocated Recapture Gain
under this Section 7.3 in excess of the total Profit otherwise
allocated to such Partner from such disposition.
7.5 Allocations with Respect to Transferred Interests. Except as
otherwise provided below or unless otherwise required by the provisions of the
Code or agreed upon by a Super Majority of the Partners, any Profits or Losses
allocable to an interest in the Partnership which has been transferred during
any year shall be allocated among the Persons who were holders of such interest
during such year in proportion to the number of days during such year that each
holder was recognized as the holder of the interest, without regard to the
results of Partnership operations during the period the holder was recognized as
the owner thereof.
7.6 Tax Credits. Unless otherwise required by the Code, any tax credits
of the Partnership, including any Section 29 Tax Credits, shall be allocated
among the Partners in accordance with their Participating Percentages. Any
recapture of tax credits shall be allocated among the Partners in the same ratio
as the applicable tax credits were allocated to the Partners.
7.7 Regulatory Allocations.
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(a Minimum Gain Chargeback. Notwithstanding any other
provision of this Agreement, if there is a net decrease in Minimum Gain
for a Partnership taxable year, each Partner shall be allocated, before
any other allocation of Partnership items for such taxable year, items
of gross income and gain for such year (and, if necessary, for
subsequent years) in proportion to, and to the extent of, the amount of
such Partner's share of the net decrease in Minimum Gain during such
year. The income allocated pursuant to this Section 7.6(a) in any
taxable year shall consist first of gains recognized from the
disposition of property subject to one or more nonrecourse liabilities
of the Partnership, and any remainder shall consist of a pro rata
portion of other items of income or gain of the Partnership. The
allocation otherwise required by this Section 7.6(a) shall not apply to
a Partner to the extent provided in Regulation Section 1.704-2(f)(2)
through (5).
(b Partner Nonrecourse Debt. Notwithstanding any other
provision of this Agreement other than Section 7.7(a) above, any item
of Partnership Loss, deduction or expenditures described in Code
Section 705(a)(2)(B) that is attributable to a partner nonrecourse debt
(as defined in Regulation Section 1.704-2(b)(4)) of a Partner shall be
allocated to those Partners that bear the economic risk of loss for
such partner nonrecourse debt, and among such Partners in accordance
with the ratios in which they share such economic risk, determined in
accordance with Regulation Section 1.704-2(i). If there is a net
decrease for a Partnership taxable year in any partner nonrecourse debt
minimum gain of the Partnership, each Partner with a share of such
partner nonrecourse debt minimum gain as of the beginning of such year
shall be allocated items of gross income and gain in the manner and to
the extent provided in Regulation Section 1.704-2(i)(4).
(c Qualified Income Offset. Notwithstanding any other
provision of this Agreement, if a Partner unexpectedly receives an
adjustment, allocation or distribution described in Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes or increases an
Adjusted Capital Account Deficit with respect to such Partner, items of
Partnership gross income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate such Adjusted
Capital Account Deficit as quickly as possible.
(d Nonrecourse Deductions. Any deductions attributable to
partnership nonrecourse liabilities (as determined pursuant to
Regulation Section 1.704-2(c)) of the Partnership for any taxable year
shall be allocated among the Partners in the same proportion as Profits
or Losses (as may apply) for such year are allocated.
(e Interpretation. The foregoing provisions of this Section
7.7 are intended to comply with Regulation Sections 1.704-1(b) and
1.704-2 and shall be interpreted consistently with this intention. Any
terms used in such provisions that are not specifically defined in this
Agreement shall have the meaning, if any, given such terms in the
Regulations cited above.
7.8 Section 704(c) Allocation. Notwithstanding the foregoing
allocations of Profits and Losses, if any property contributed to the
Partnership has a fair market value at the time of contribution (as set forth
herein or as agreed by the contributing Partner and a Super Majority of the
other Partners) that differs from its adjusted basis for federal income tax
purposes at the time of such contribution, or if there is a revaluation of any
Partnership property such that the book value of such property differs from its
adjusted basis for federal income tax purposes, items of income, gain, loss, and
deduction with respect to any such property shall be allocated, solely for
federal income tax purposes, among the Partners so as to take account of such
difference, in the manner intended by Section 704(c) of the Code and the
Treasury Regulations from time to time promulgated thereunder, using such method
permitted by such Treasury Regulations as the contributing Partner and a Super
Majority of the other Partners may determine.
ARTICLE 8
DISTRIBUTIONS
8.1 Distribution of Net Cash Flow. Net Cash Flow, if any,
shall be applied and distributed to and among the
Partners in accordance with their Participating Percentages.
8.2 Timing of Distributions; No Third-Party Beneficiaries. Net Cash
Flow shall be distributed to the Partners in such amounts and at such intervals
as the General Partner, in its sole discretion, may determine, but no less
frequently than quarterly. The foregoing priorities of application of Net Cash
Flow are for the benefit of the Partners only and not for the benefit of any
third party or creditor of the Partnership or of any Partner, and neither the
Partnership nor any Partner shall be liable or responsible to any third party or
creditor of the Partnership or of any Partner for any deviation from such
priorities.
ARTICLE 9
BOOKS OF ACCOUNT, RECORDS AND REPORTS
9.1 Books of Account and Records.
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(a Proper and complete records and books of account shall be
kept by the General Partner at the registered office of the Partnership
and shall be open to the reasonable inspection and examination of the
Partners or their duly authorized representatives during reasonable
business hours. Such books and records shall be kept on the accrual
basis. The General Partner shall maintain at the registered office of
the Partnership, and shall furnish to any Partner who requests such a
list for a legitimate and proper purpose, a written list of the names,
addresses and interests of all the Partners. Subject to Section 10.3,
the Partnership shall retain one of the "Big Five" firms (or the
equivalent) of certified public accountants designated by a Super
Majority of the Limited Partners to prepare the tax returns of the
Partnership.
(b If a Partner reasonably requests the Partnership or the
General Partner to assemble or compile information, the General Partner
shall have the authority to pass on all reasonable costs of labor,
duplicating or other related charges so incurred to the Partner making
the request.
9.2 Reports to Limited Partners. The General Partner shall
furnish to each of the Partners within ninety (90) days
after the end of each calendar year the following:
(a A copy of the federal income tax return filed by the
Partnership for the calendar year, except for
Schedules K-1 applicable to other Partners;
(b All information relative to the Partnership
necessary for the preparation of the Partners' federal and
state income tax returns;
(c A balance sheet as of the close of such calendar year and
statements of Profits or Losses, and Net Cash Flow, if any, all of
which shall be prepared in accordance with generally accepted
accounting principles and audited by independent certified public
accountants; and
(d Any additional reports in existence regarding
the Partnership or the Project as a Partner may
reasonably request.
In addition, within thirty (30) days after the end of each calendar month, the
General Partner shall furnish to each Partner a statement showing the
Partnership's revenues and expenditures, itemized in reasonable detail,
including, without limitation, the calculation of the estimated Section 29 Tax
Credits, during such month and for the calendar year to date, as compared with
the amounts budgeted for each such item in the applicable annual budget.
ARTICLE 10
MANAGEMENT
10.1 Management of Partnership Affairs. Except with respect to those
matters constituting Super Majority Decisions (as defined in Section 10.3) or as
otherwise specifically provided in this Agreement, the General Partner shall
have full, exclusive and complete discretion in the management and control of
the business and affairs of the Partnership and shall make all decisions
affecting the Partnership's business and affairs. Notwithstanding the foregoing
or any other provision of this Agreement, the General Partner shall perform the
duties and comply with the obligations set forth in Exhibit A. Subject to the
foregoing, the General Partner shall have all the rights, powers and obligations
of a general partner as provided in the Act, and, except as otherwise provided,
any action taken by the General Partner (in its capacity as such) shall
constitute the act of and serve to bind the Partnership. The General Partner
shall act on behalf of the Partnership to implement all Super Majority Decisions
approved in accordance with Section 10.3. The General Partner may designate one
or more of its Affiliates to carry out its duties and responsibilities to the
Partnership. Persons dealing with the Partnership shall be entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement. The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership. The General
Partner shall not employ, or permit another Person to employ any funds or assets
of the Partnership in any manner other than for the exclusive benefit of the
Partnership.
10.2 Powers and Authorities of the General Partner. Except as otherwise
specifically provided in this Agreement, including Section 10.3, and subject to
the provisions of Exhibit A, the General Partner is hereby granted the right,
power and authority to do on behalf of the Partnership all things which, in its
best business judgment, are necessary, proper or desirable to carry out its
duties and responsibilities, including but not limited to the right, power and
authority to:
(a Cause the Partnership to acquire the Equipment in
accordance with Section 6.1(b)(i);
(b Cause the Partnership to enter into the Site Lease;
(c Cause the Partnership to enter into the Sales
Agreement and the Purchase Agreement;
(d Cause the Partnership to enter into the Binder
Purchase Agreement;
(e Cause the Partnership to enter into the Operations
and Maintenance Agreement;
(f Incur all reasonable expenditures and pay all
obligations of the Partnership, to the extent provided
for in the applicable annual budget adopted pursuant to
Section 10.4;
(g Execute any and all documents or instruments of any
kind which the General Partner may deem necessary or
appropriate for carrying out the purposes of the Partnership;
(h Purchase or lease equipment for Partnership purposes;
(i Act on behalf of the Partnership in all respects in
connection with the Project, and the Partnership's interest therein,
including, but not limited to, any sale, transfer, disposition,
financing or refinancing of all or any portion of the Project;
(j Subject to Section 10.3, cause the Partnership to borrow
money from individuals, banks and other lending institutions for any
Partnership purpose, and pledge any or all of the assets of the
Partnership and the income therefrom to secure or provide for the
repayment of such loans; and obtain replacements of any such loan in
whole or in part, refinance, recast, modify, extend or consolidate any
loan;
(k Request Additional Capital from the Partners in
accordance with and subject to the provisions of
Section 6.2;
(l Procure and maintain, at the expense of the
Partnership, with responsible companies such insurance as
may be advisable in connection with the Project;
(m Receive and disburse any Net Cash Flow in accordance
with Article 8;
(n Supervise the preparation and filing of all
Partnership tax returns;
(o Perform all accounting and record-keeping for the
Partnership, including the records and reports
described in Article 9;
(p Sell any Synfuel produced; and
(q Perform any and all other acts or activities
customary or incident to the purpose of the Partnership.
10.3 Super Majority Decisions. Notwithstanding anything in Section 10.1
or 10.2 of this Agreement to the contrary, the General Partner shall not enter
into or make the following actions or decisions by or on behalf of the
Partnership ("Super Majority Decisions") without the prior written approval of a
Super Majority of the Limited Partners (which shall not require the approval of
the General Partner):
(a Any sale, exchange, transfer, consent to the
execution of a deed in lieu of foreclosure, or other
disposition of all or any portion of the Project or of the
Partnership's interest therein;
(b Except as provided in an adopted annual budget, any
borrowing by the Partnership and any pledge of any or all of the assets
of the Partnership or the income therefrom to secure or provide for the
repayment of any such borrowing, any replacement, refinancing,
recasting, material modification, extension or consolidation of any
such borrowing;
(c Any lease or sublease of all or any portion of the Project
(including the Site Lease), any amendment, modification, extension,
renewal or termination of any such lease, and any elections, decisions,
approvals, or the exercise or waiver of any rights of the Partnership
under any such agreement;
(d The engagement of any accountant or firm of accountants;
(e The adoption of annual budgets (in the manner provided in
Section 10.4), and any deviation from any line item for expenditures
set forth in an adopted annual budget in excess of five percent (5%) of
the amount of such line item, excluding any such deviations
attributable to the payment of amounts due and owing for real property
taxes, public utilities and wages and benefits payable under agreements
with labor unions;
(f Any establishment of or addition to any reserve or fund of
the Partnership, except to the extent (i) provided for in an adopted
annual budget, or (ii) required pursuant to any agreement to which the
Partnership is a party or to which any of its assets are subject;
(g The reinvestment in the Project of any casualty
insurance or condemnation proceeds;
(h Any tax elections or decisions required in the preparation
and filing of Partnership tax returns and any decisions or agreements
in connection with any examination or controversy relating to the tax
returns or positions of the Partnership;
(i The commencement, compromise or settlement of any
lawsuit, legal proceeding, bankruptcy proceeding or
arbitration proceeding involving the Partnership or affecting the
Project;
(j Any operating agreement regarding the operation or
management of any production facilities of the Partnership (including
the Operations and Maintenance Agreement), any modification, amendment,
extension, renewal or termination of any such operating agreement, and
any elections, decisions, approvals or the exercise or waiver of any
rights by the Partnership under any such Agreement;
(k Any agreement for the sale of Synfuel or other products
produced by the Partnership (including the Sales Agreement and the
Purchase Agreement), any modification, amendment, extension, renewal or
termination of any such agreement, and any elections, decisions,
approvals or the exercise or waiver of any rights by the Partnership
under any such Agreement;
(l Any agreement for the purchase of Coal Feedstock, binding
materials or other materials by the Partnership (including the Sales
and Purchase Agreement and the Binder Purchase Agreement), any
modification, amendment, extension, renewal or termination of any such
agreement, and any elections, decisions or the exercise or waiver of
any rights of the Partnership under any such agreement;
(m The conversion of the Partnership to a corporation,
general partnership, limited liability company or
any other form of legal entity;
(n Any merger or other combination of the Partnership
with or into any other Person;
(o The incurrence of any obligation requiring the Partnership
to expend in excess of Fifty Thousand Dollars ($50,000) during any
calendar year, except as specifically authorized pursuant to an
approved annual budget;
(p Any request for Additional Capital Contributions
from the Partners pursuant to Section 6.2 in excess
of the amount permitted by Section 6.2;
(q Any engagement by the Partnership of the General Partner or
any Affiliate of the General Partner for the performance of services or
the provision of goods to the Partnership, and any modification of the
terms of any such engagement; and
(r Any other transaction or decision outside the
ordinary course of the business of the Partnership.
Notwithstanding the foregoing provisions of this Section 10.3, any Super
Majority Decision involving entering into, modifying, amending or terminating
any agreement or other arrangement with any Limited Partner or any Affiliate of
any Limited Partner, and any elections, decisions, approvals or the exercise or
waiver of any rights or remedies by the Partnership under any such agreement or
arrangement (including but not limited to the Site Lease and the Sales and
Purchase Agreement) shall be made only upon the prior written approval of a
Super Majority of the Limited Partners other than the Limited Partner that is a
party (or whose Affiliate is a party) to such agreement or arrangement with the
Partnership.
10.4 Annual Budgets. On or before November 15th of each year, the
General Partner shall prepare and distribute to each Limited Partner a proposed
annual budget for the next fiscal year of the Partnership. Such a proposed
annual budget, with such modifications thereto as a Super Majority of the
Limited Partners may agree upon, shall be adopted as the annual budget for the
Partnership only upon the written consent of a Super Majority of the Limited
Partners. Each proposed and adopted annual budget shall include reasonably
itemized estimates of all items of revenue, expenses and capital expenditures of
the Partnership and its business for such year and shall provide for the
establishment of, additions to and reductions to any reserves and the amount of
working capital of the Partnership for such year. If an annual budget for any
year is not adopted as provided above on or before December 31st of the
immediately preceding year, then, unless and until an annual budget for such
year is so adopted, the annual budget in effect for the fiscal year immediately
preceding such year shall be the adopted annual budget for such year, but (i)
with expenses adjusted to reflect the actual amounts thereof, in the case of
items outside the discretion of the Partnership (such as real property taxes),
and (ii) with any nonroutine capital expenditures excluded.
10.5 Engagements by the Partnership. Subject to Section 10.3, the
General Partner may engage, on behalf and at the expense of the Partnership,
such professional persons, firms or corporations as the General Partner in its
reasonable judgment shall deem advisable for the conduct and operation of the
business of the Partnership, including brokers, mortgage bankers, lawyers,
accountants, architects, engineers, consultants, contractors and purveyors of
other such services for the Partnership on such terms and for such compensation
or costs as the General Partner, in its reasonable judgment, shall determine;
provided, however, the General Partner shall not engage any such professional
persons, firms or corporation without obtaining prior written consent of a Super
Majority of the Limited Partners if the compensation or costs of such services
will exceed the amount allocated for such services in the applicable annual
budget. Each Partner hereby approves the payment by the Partnership of a
development fee in the amount of Two Million Dollars ($2,000,000) to AJGFS as
consideration for the services performed by AJGFS in connection with the
development of the Project, together with reimbursement to AJGFS for moving and
start up costs which shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000.00) in the aggregate). The Partnership shall pay such fee and
reimbursement in full concurrently with the execution of this Agreement, from
the funds contributed to the capital of the Partnership by SCE&G pursuant to
Section 6.1(b)(ii).
10.6 Liability of the General Partner. The General Partner and its
Affiliates, officers, directors, agents and employees shall not be liable,
responsible or accountable in damages or otherwise to the Partnership or any of
the Partners or their successors or assigns for any acts performed or omitted
within the scope of its authority as General Partner, or otherwise conferred on
the General Partner and such Affiliates, officers, directors, agents and
employees by this Agreement, provided that the General Partner or such
Affiliates, agents or employees shall act in conformance with the provisions of
Exhibit A, shall act in good faith and shall not be guilty of willful misconduct
or gross negligence; provided, however, the foregoing shall not limit the
General Partner's fiduciary duty to the Limited Partners.
10.7 Devotion of Time by General Partner. The General Partner and its
agents, Affiliates, employees and agents of Affiliates shall devote such time to
the Partnership business as is reasonably necessary to manage and supervise the
Partnership business and affairs in an efficient manner and to accomplish the
purposes of the Partnership. The General Partner and each employee, agent or
Affiliate thereof, shall be free to engage in other business ventures whether or
not directly competing with the Partnership or the Project, and to exploit
business opportunities whether or not arising from the conduct of Partnership
business.
10.8 Other Business of Partners. Each Partner and its respective
Affiliates may engage in or possess any interests in other business ventures of
any kind, independently or with others. Neither the Partnership, any Partner,
nor the holder of any interest in the Partnership shall have any right by virtue
of this Agreement or the partnership relationship created hereby in or to such
ventures or activities or to the income or profits derived therefrom, and the
pursuit of such ventures, even if competitive with the business of the
Partnership, shall not be deemed wrongful or improper.
10.9 Tax Matters Partner. The General Partner, for so long as it shall
serve as a General Partner, shall be the tax matters partner of the Partnership,
and as such, subject to Section 10.3, and shall have all powers and authorities
granted tax matters partners under the applicable provisions of the Code and any
regulations promulgated thereunder; provided, however, that in the event the
Partnership shall be dealing with an issue relating to Section 29 of the Code,
then the General Partner, on behalf of the Partnership and after consultation
with the Limited Partners, shall engage the services of special tax counsel with
expertise in Section 29 tax matters ("Special Counsel"). All costs and expenses
incurred by the tax matters partner or Special Counsel in connection with an
audit by the Internal Revenue Service or other government tax agency of a
Partnership income tax return shall be borne by the Partnership. The tax matters
partner shall notify the Limited Partners of any field or office audit by
federal or state tax authorities and shall keep the Limited Partners informed of
the progress of any such audit, proceeding or controversy.
10.10 Election to Adjust Basis. In the event of a distribution of
property made in the manner provided in Section 734 of the Code (or any
comparable provision of any succeeding law), the General Partner, subject to
Section 10.3, on behalf of the Partnership may make or revoke the election
referred to in Section 754 of the Code permitting adjustments to basis as
provided in Section 734 of the Code. In the event of a transfer of any interest
in the Partnership permitted by this Agreement made in the manner provided in
Section 743 of the Code, the General Partner shall, subject to Section 10.3, on
behalf of the Partnership, make the election referred to in Section 754 of the
Code permitting adjustments to basis as provided in Section 743 of the Code if
requested by the transferor Partner. Any additional costs or expenses incurred
by the Partnership as a result of such an election shall be borne pro rata by
the Partner or Partners benefitting from such an election.
10.11 Removal of General Partner. If at any time in the reasonable
judgment of a Super Majority of the Limited Partners, the General Partner has
acted materially outside the authority vested in the General Partner under this
Agreement, has materially failed to act in accordance with Exhibit A, or has
otherwise acted materially in violation of any provision of this Agreement, then
a Super Majority of the Limited Partners shall have the right, in their sole
discretion, to deliver written notice to the General Partner specifying the
action or failure to act described above. If the General Partner has not cured
or, to the extent necessary, acted to prevent, any adverse consequences to the
Partnership or any Limited Partner arising from the action or failure to act
specified in such notice within thirty (30) days following the delivery of such
written notice, then a Super Majority of the Limited Partners shall have the
right, in their sole discretion, to remove the General Partner from its position
as General Partner by delivering written notice of such removal to each Partner.
Upon any such removal, the General Partner shall immediately cease to be a
general partner of the Partnership, and its interest shall be converted to that
of a Limited Partner having the same interest in Profits, Losses and Net Cash
Flow as such Partner previously had as General Partner, but, such removed
General Partner shall not acquire any right or interest in any payment or
distribution to the Limited Partners, as such, pursuant to this Agreement. Such
a removed General Partner shall have no further right to participate in the
management of the affairs of the Partnership and the interest and Participating
Percentage of such Person shall be disregarded in determining whether any
approval, consent or other action has been given or taken by the Partners, the
Limited Partners or any group of Partners. Upon the removal of a General
Partner, a Super Majority of the Limited Partners shall select a new or
replacement General Partner, and the provisions of Sections 13.4 and 13.5 shall
apply. The right of the Limited Partners to remove the General Partner for any
violation of this Agreement shall not preclude or limit the right of any Limited
Partner or the Partnership to exercise any one or more other remedies available
(under this Agreement or otherwise) for such a violation, either in addition to
or in place of such removal.
10.12 Production Standards. The Partners agree that it is the intent of
the Partnership and in its best interests to produce and sell as much Synfuel as
possible. The Partners agree to work together to maximize the output of the
Project in order to optimize the utilization of the assets owned by the
Partnership. Should the throughput of the Project drop below a four-month moving
average of 100,000 tons of Synfuel per month (excluding any days in a month with
power plant outages at the host station or events of force majeure), then the
Partners agree to meet within fifteen (15) days after any Partner delivers
notice to the other Partners of such a drop to determine the types of corrective
actions the Partners and the Partnership can undertake to increase the output of
the Project. In such event, the Partners shall develop a plan to increase the
throughput of the Project and shall work diligently to increase the utilization
of the Project. The actions to be evaluated shall include:
(a) Determine ways to increase production capability of
the Project.
(b) Determine ways to increase the utilization of Synfuel
by the host power station, including capital
expenditures which would assist in the undertaking.
(c) Increase the use of Synfuel at other stations owned
by SCE&G or its Affiliates within trucking or rail
distance from the host power station.
(d) Find or develop third-party markets for Synfuel
sales by the Partnership, including industrial
customers or any coal consumer.
The adoption of any such actions shall require the approval of a Super Majority
of the Limited Partners. If a plan to increase production or utilization of the
Project is not so approved and implemented within ninety (90) days after the
date of the notice described above, and the four-month moving average (excluding
any days in a month with power plant outages at the host station or events of
force majeure) of Synfuel purchased for use by the Wateree Power Station falls
below 58,333 tons, then the Partners will seek to find a more suitable location
for the Project, in order to maximize the utilization of the Project.
10.13 Compensation of General Partner. In consideration for the
performance by the General Partner of its services hereunder, the Partnership
shall pay to the General Partner a fee which is equal to Twenty Thousand Dollars
($20,000.00) per month. On or before the fifteenth (15th) day of each calendar
quarter, the Partnership shall pay to the General Partner the fee to which it is
entitled under this Section 10.13 as a result of the operations of the
Partnership during the immediately preceding calendar quarter.
ARTICLE 11
STATUS OF LIMITED PARTNERS
11.1 No Participation in Management of Partnership. Except as
specifically provided in this Agreement, the Limited Partners, as such, shall
not take part in, or interfere in any manner with the conduct or control of the
Partnership's business and shall have no right or authority to act for or bind
the Partnership, said powers being vested solely and exclusively in the General
Partner.
11.2 Liability of Limited Partners. Except as otherwise expressly
provided in Sections 6.2, 10.12 or 20.2 hereof, the Limited Partners, as such,
shall not be personally liable to the Partnership, to any of the Partners, to
the holders of any interests in the Partnership, or the creditors of the
Partnership for the expense, liabilities or obligations of the Partnership
beyond the amount of capital contributions made by each Limited Partner under
this Agreement, and their respective shares of undistributed Net Cash Flow, if
any.
ARTICLE 12
TRANSFER OF LIMITED PARTNER INTERESTS
12.1 Assignment of Interest by Limited Partner.
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(a) Except as provided in Article 17, a Limited Partner shall
not sell, transfer, assign, pledge, or encumber all or any part of its
interest in the Partnership without the prior written consent of a
Super Majority of the other Limited Partners, which consent shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing,
however, a Limited Partner may assign all or any part of its interest
in the Partnership without the consent of any other Partner to a
"Permitted Transferee". For purposes of this Agreement, the term
"Permitted Transferee" shall mean (i) a partnership in which the
Limited Partner is the sole or controlling general partner, (ii) a
corporation of which at least seventy five percent (75%) of the issued
and outstanding voting stock is owned and controlled by the Limited
Partner, or (iii) a limited liability company controlled by the Limited
Partner. In addition, in the case of AJG, a "Permitted Transferee"
shall mean any other Person provided that (A) the Participating
Percentage retained by AJG shall not be less than five percent (5%);
and (B) AJG shall guarantee the performance by any such Permitted
Transferee of all of its financial obligations under this Agreement,
which guarantee shall be secured by the interest in the Partnership of
AJG and such Permitted Transferee; and (C) such other Person shall not
be a competitor of SCANA Corporation or an affiliate in the electric,
gas or telecommunications industries. Notwithstanding anything in this
Section 12.1 to the contrary, a Limited Partner may not assign all or
part of its interest in the Partnership if such assignment would, in
the opinion of counsel to the Partnership, (x) result in assets of the
Partnership being treated as "plan assets" under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), with
respect to one or more Partners, (y) result in the Partnership not
qualifying for an exemption from the registration requirements of the
federal or any applicable state securities laws, or (z) result in the
violation of any term or provision of any agreement to which the
Partnership is a party or to which any of its property is subject, or
the acceleration of any indebtedness of the Partnership or secured by
any property of the Partnership. Any purported transfer or assignment
of an interest in the Partnership, in contravention of the provisions
of this Article 12, shall be null and void.
(b) In the event (i) of the death or adjudication of insanity
or incompetency of an individual Limited Partner, or (ii) any Limited
Partner shall be adjudged bankrupt, enter into proceedings for
reorganization or into an assignment for the benefit of creditors, have
a receiver appointed to administer the Limited Partner's interest in
the Partnership, be the subject of a voluntary or involuntary petition
for bankruptcy, apply to any court for protection from its creditors,
or have its interest in the Partnership seized by a judgment creditor
(such Limited Partner being referred to herein as a "Bankrupt Limited
Partner"), the personal representative or trustee (or
successor-in-interest) of the deceased, insane or incompetent Limited
Partner or Bankrupt Limited Partner shall have the rights of such
Limited Partner in the Profits, Losses and distributions of the
Partnership to the extent of the interest of the deceased, insane or
incompetent Limited Partner or Bankrupt Limited Partner therein,
subject to the terms and conditions of this Agreement, but shall not
have any voting or other approval rights (including the right to
approve or reject Super Majority Decisions or to remove or replace the
General Partner) unless and until such representative or trustee
becomes a substituted Limited Partner in accordance with Section 12.2;
and his estate (or successor-in-interest) shall be liable for all of
his obligations as a Limited Partner. In addition, the personal
representative or trustee (or successor-in-interest) shall have the
same right, subject to the same limitations, as the deceased, insane or
incompetent Limited Partner or Bankrupt Limited Partner would have had
under the provisions of this Article 12 to assign the Partnership
interest of the deceased, insane or incompetent Limited Partner or
Bankrupt Limited Partner; and in the event of any such assignment, the
assignee may become a substituted Limited Partner subject to the
provisions of Section 12.2.
(c) In the event of the dissolution of a Limited Partner that
is a partnership, limited liability company or corporation or the
termination of a Limited Partner that is a trust, the
successors-in-interest of the dissolved or terminated Limited Partner
shall, solely for the purposes of winding up the affairs of the
dissolved or terminated Limited Partner, have all of its rights, and
may become a substituted Limited Partner, subject to the provisions of
Section 12.2. If such a successor-in-interest does not become a
substituted Limited Partner, such successor shall merely be an assignee
of such Limited Partner and as such shall have, to the extent of the
interest assigned, the rights of such Limited Partner in the Profits,
Losses and distributions of the Partnership but shall not have any
voting or other approval rights (including the right to approve or
reject Super Majority Decisions or to remove or replace the General
Partner). In addition, such successors-in-interest shall have the same
right, subject to the same limitations, as the dissolved or terminated
Limited Partner would have had under the provisions of this Section
12.1 to assign its interest as a Limited Partner; and, in the event of
any such assignment, the assignee may become a substituted Limited
Partner subject to the provisions of this Section 12.2.
12.2 Substitution of a Limited Partner.
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(a) A transferee or assignee of a Limited Partner's interest
in the Partnership may become a substituted Limited Partner provided
that (i) such transfer or assignment is permitted under Section
12.1(a); (ii) in the applicable assignment, the assignor consents to
such substitution; (iii) the assignee agrees in writing, in form and
substance reasonably satisfactory to a Super Majority of the other
Limited Partners, to become a Limited Partner and to be bound by the
terms of this Agreement, including the power of attorney set forth in
Article 15; (iv) the assignee's credit rating is equal to or better
than the assigning Limited Partner; (v) the transaction does not
violate or cause the General Partner or the Partnership to violate any
applicable law; and (vi) in the opinion of counsel to the Partnership,
the assignment or transfer would not (x) require registration of any
Partners' interests under the Securities Act of 1933 or any applicable
state securities or blue sky law, or result in any violation of any
such laws; (y) result in assets of the Partnership being treated as
"plan assets" under ERISA with respect to one or more Partners; or (z)
result in the violation of any term or provision of any agreement to
which the Partnership is party or to which any of its property is
subject or the acceleration of any indebtedness of the Partnership or
secured by any property of the Partnership. Subject to the satisfaction
of the foregoing conditions, each Partner hereby consents to the
substitution or admission of a transferee or assignee of Limited
Partner interests as a Limited Partner.
(b) No substitution that has otherwise complied with the
conditions of this Section 12.2 shall be effective until all
certificates and other documents reasonably deemed necessary or
appropriate by a Super Majority of the other Limited Partners, have
been executed, and all acts have been performed to constitute such
assignee a Limited Partner in the Partnership and to preserve the
status of the Partnership as a limited partnership after the completion
of such substitution in accordance with such laws.
(c) Upon the substitution of a Limited Partner as provided,
the General Partner shall file such amendments to the Certificate of
Limited Partnership of the Partnership as may be required under the
provisions of applicable laws.
(d) Except as is provided in Section 12.1(a) above, a person
shall be deemed to be a substituted Limited Partner when he is properly
assigned an interest in the Partnership and the foregoing requirements
of Sections 12.2(a), (b) and (c) above have been met. When the
substitution of a Limited Partner becomes effective, but not before,
the assigning Limited Partner will be relieved of all of his
obligations hereunder thereafter arising to the extent permitted by law
with respect to the assigned interest, at which time the Partnership
shall make distributions to the assignee to which he is then entitled
hereunder, and any such distributions shall acquit the Partnership of
all liability to the Limited Partner who has assigned his interest.
(e) The cost of processing and perfecting an admission
contemplated by Sections 12.1 and 12.2 (including reasonable attorneys'
fees incurred by the Partnership) shall be borne by the party seeking
admission as a Partner to the Partnership.
ARTICLE 13
TRANSFER OF GENERAL PARTNER INTERESTS
13.1 Transfer of Interest of the General Partner. The General Partner
shall not sell, assign or encumber all or any part of its interest in the
Partnership or withdraw or retire from the Partnership without the prior written
consent of a Super Majority of the Limited Partners. Retirement or withdrawal
from the Partnership shall not relieve the General Partner of any obligation
theretofore incurred by it hereunder.
13.2 Retirement of the General Partner. If the General Partner shall be
adjudged bankrupt or shall terminate or dissolve, enter into proceedings for
reorganization or into an assignment for the benefit of creditors, have a
receiver appointed to administer the General Partner's interest in the
Partnership, be the subject of a voluntary or involuntary petition for
bankruptcy, apply to any court for protection from its creditors, or have such
interest seized by a judgment creditor (each of the foregoing events is referred
to herein as an "Event of Retirement"), the General Partner shall immediately
retire as the General Partner of the Partnership. If the General Partner retires
as the General Partner of the Partnership for any reason (i) the General Partner
shall immediately thereupon become a converted Limited Partner and shall be
entitled as such to its former interest as a General Partner in the Profits,
Losses, and Net Cash Flow, but shall not acquire any right or interest in any
payment or distribution to the Limited Partners, as such, pursuant hereto, shall
have no right to participate in the management of the affairs of the
Partnership, and shall be disregarded in determining whether any approval,
consent, or other action has been given or taken by the Limited Partners, and
(ii) the surviving General Partner(s), if any, shall remain as such and the
Partners hereby agree and consent that the Partnership shall continue in effect
and shall not terminate; subject, however, to the provisions of Section 13.5.
13.3 Transferee of the General Partner's Interest. Any person, other
than the General Partner, who acquires, in any manner whatsoever (except as
herein otherwise provided) the interest, or any portion thereof, of the General
Partner, shall not be a General Partner, but shall be entitled to become a
Limited Partner upon written acceptance and adoption of all of the terms and
provisions of this Agreement and compliance with the requirements of Section
12.2 of this Agreement. Such person shall, to the extent of the interest
acquired, be entitled only to the transferor General Partner's rights, if any,
in the Profits, Losses, and Net Cash Flow, but shall not acquire any right or
interest in any payment or distribution to the Limited Partners, as such,
pursuant hereto. No such person shall have any right to participate in the
management of the affairs of the Partnership, and the interest acquired by such
person shall be disregarded in determining whether any approval, consent or
other action has been given or taken by the Limited Partners.
13.4 Retirement of Last Remaining General Partner. If the last
remaining General Partner shall at any time withdraw or suffer an Event of
Retirement, the Limited Partners shall have the right, within ninety (90) days
thereafter by the agreement of a Super Majority of the Limited Partners, to
appoint one or more new General Partners as replacement General Partners. In
such event, the Limited Partners shall create for such replacement General
Partners such interest in the Partnership Profits, Losses, and Net Cash Flow as
a Super Majority of the Limited Partners may agree upon from among the
collective interests in the Partnership of the Limited Partners.
13.5 Continuation of Partnership. In the event of the timely
appointment of a replacement or new General Partner(s) pursuant to this Article
13, the relationship of the Partners shall be governed by the provisions of this
Agreement, the Partnership shall be continued, and the replacement or new
General Partner(s) shall have all of the management rights, duties,
responsibilities, authority and powers provided the General Partner in this
Agreement. If a Super Majority of the Limited Partners fails to select a
replacement or new General Partner(s), as the case may be, within ninety (90)
days following retirement of the last remaining General Partner, the Partnership
shall dissolve and terminate.
ARTICLE 14
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
14.1 Dissolution of the Partnership. The Partnership shall be
dissolved upon the happening of any of the following:
(a) the agreement of a Super Majority of the Limited
Partners to dissolve and wind up the affairs of the
Partnership;
(b) the occurrence of an Event of Retirement to the last
remaining General Partner, unless a Super Majority of the Limited
Partners elects to continue the business of the Partnership pursuant to
the provisions of Section 13.5;
(c) any event that makes it unlawful for the Partnership
business to be continued;
(d) the sale, disposition, or abandonment of all or
substantially all of the noncash property of the
Partnership; or
(e) the expiration of the term of the Partnership.
A dissolution and termination of the Partnership shall not be caused by
the occurrence of an Event of Retirement to any Limited Partner, the dissolution
of a Limited Partner which is a partnership or corporation, the termination of a
Limited Partner which is a trust, or the substitution of a Limited Partner.
14.2 Winding Up of Affairs. In the event of the dissolution and
liquidation of the Partnership for any reason, the General Partner shall
commence to wind up the affairs of the Partnership and shall convert all of the
Partnership's assets to cash or cash equivalents within such reasonable period
of time as may be required to receive fair value therefor. All items of income,
gain, loss, deduction and credit during the period of liquidation shall be
allocated among the Partners in the same manner as before the dissolution.
14.3 Accounting. In the case of the dissolution and termination of the
Partnership, prior to any distributions to Partners pursuant to Section 14.4(c),
a proper accounting shall be made of the Capital Accounts of the Partners and of
each item of income, gain, loss, deduction and credit of the Partnership from
the date of the last previous accounting to the date of dissolution. The General
Partner shall provide a copy of such accounting to all Partners.
14.4 Final Distribution of Partnership Property. Upon
termination of the Partnership, the General Partner shall
apply and distribute the remaining property of Partnership, together
with the proceeds of any sales of same, as follows:
(a) first, all Partnership debts and liabilities
(including those payable to Partners or their Affiliates)
shall be paid and discharged;
(b) second, to establish any reserve for any contingent or
unforeseen liabilities or obligations of the Partnership. Such funds
shall be placed in escrow by the General Partner for the purposes of
disbursing such funds in payment of any of the contingencies,
liabilities, or obligations, and, at the expiration of such period as
the General Partner shall deem advisable, the balance then remaining
shall be distributed pursuant to Section 14.4(c); and
(c) third, to distribute the balance to the Partners in
accordance with their Capital Account balances.
14.5 Certificate of Cancellation. Upon completion of the liquidation of
the Partnership and the distribution of all Partnership property, the
Partnership shall terminate and the General Partner shall have the authority to
execute and record one or more Certificates of Cancellation of the Partnership
as well as any and all other documents required or considered advisable by the
General Partner to effectuate the dissolution and termination of the
Partnership.
ARTICLE 15
POWER OF ATTORNEY
15.1 Power of Attorney. Each Partner, by his or its execution hereof,
irrevocably constitutes and appoints the General Partner, or any substitute or
replacement General Partner, with full power of substitution, as such Partner's
true and lawful attorney-in-fact, in his or its name, place and stead to make,
execute, sign, acknowledge, certify, deliver, file and record on his or its
behalf and on behalf of the Partnership, the following:
(a) All Certificates of Limited Partnership, Certificates of
Doing Business under an Assumed Name, and any other certificates or
instruments which may be required to be filed by the Partnership or the
Partners under the laws of the States of Delaware and South Carolina or
any other jurisdiction;
(b) One or more Certificates of Cancellation of the
Partnership and such other instruments or documents as may be deemed
necessary or desirable by the General Partner upon termination of the
Partnership business; and
(c) Any and all amendments to this Agreement and to the
instruments described in subsections (a) and (b) above, provided such
amendments are either required by law or have been authorized by the
Partner(s) in accordance with this Agreement (any amendment to this
Agreement and to the Certificate of Limited Partnership of the
Partnership to reflect the substitution of a Limited Partner pursuant
to this Agreement or an adjustment to the Participating Percentages in
accordance with Section 6.2 being hereby authorized).
15.2 Grant of Authority Irrevocable. The foregoing grant of authority
(a) is a special power of attorney coupled with an interest, is irrevocable and
shall survive the death or incapacity of a Partner who is a natural person or,
in the case of a Partner that is not a natural person, the merger, dissolution
or other termination of its existence of the Partner, (b) may be exercised by
the General Partner on behalf of each Partner, by a facsimile signature or by
listing all of the Partners executing any instrument with a single signature as
attorney-in-fact for all of them, and (c) shall survive the assignment by a
Partner of the whole or any portion of his or its interest in the Partnership.
ARTICLE 16
AMENDMENT OF PARTNERSHIP AGREEMENT
16.1 Amendment by Partners. This Agreement may be amended only with the
written concurrence of a Super Majority of the Limited Partners; provided,
however, that absent the approval of a Super Majority of the Limited Partners
and any other Partner adversely affected by such amendment, no amendment shall:
(a) add to or otherwise modify the purpose of the
Partnership or the character of its business as set
forth in Article 4;
(b) increase the obligation of any Partner to make
contributions to the capital of the Partnership;
(c) enlarge the liability of the General Partner to the
Limited Partners as provided in this Agreement;
(d) extend the term of the Partnership;
(e) modify the order or allocation of distributions of
the Net Cash Flow, or liquidating distributions, or
the allocation of Profits and Losses among the Partners;
(f) change the Partnership to a general partnership; or
(g) amend this Article 16.
16.2 Amendment of Certificate. If this Agreement shall be amended
pursuant to this Article 16, the General Partner shall cause the Certificate of
Limited Partnership to be amended, to the extent required by applicable law, to
reflect such change. The Partners shall be promptly notified of any amendments
made under this Article 16.
ARTICLE 17
PUT RIGHT OF SCE&G
17.1 Right to Exercise. If (i) the Internal Revenue Service has not
issued a private letter ruling to the effect that the Synfuel to be produced by
the Partnership constitutes "qualified fuels" within the meaning of Section 29
of the Code on or before December 15, 2000, or (ii) on or before June 30, 2000,
the South Carolina Department of Environmental Control fails to permit the
facility in such a way the PSD (prevention of serious deterioration) levels will
not be exceeded, or (iii) on or before May 20, 2000, the South Carolina Public
Service Commission refuses to permit the activity, or (iv) on or before May 1,
2000, the SCANA Corporation Board of Directors fails to approve or otherwise
ratify the Agreement, then SCE&G shall have the right, exercisable in its sole
discretion, to require AJG (or, at the election of AJG, its designee) to
purchase all, but not less than all, of the interest of SCE&G in the
Partnership. For purpose of this Article 17, the interest of SCE&G in the
Partnership shall include any interest held by a Permitted Transferee of SCE&G.
SCE&G shall exercise such right with respect to the condition set forth in (i)
above in this Section 17.1, if at all, by delivering written notice setting
forth its election to exercise such right to AJG on or before December 20, 2000
and, with respect to the condition set forth in (ii) above in this Section 17.1,
SCE&G shall exercise such right, if at all, by delivering written notice setting
forth its election to exercise such right to AJG on or before July 7, 2000 and,
with respect to the condition set forth in (iii) above in this Section 17.1,
SCE&G shall exercise such right, if at all, by delivering written notice setting
forth its election to exercise such right to AJG on or before May 25, 2000 and
with respect to the condition set forth in (iv) above in this Section 17.1,
SCE&G shall exercise such right, if at all, by delivering written notice setting
forth its election to exercise such right to AJG on or before May 5, 2000 (each
an "Election Notice"). In the event SCE&G shall fail to timely deliver an
Election Notice with respect to any of the conditions set forth above in (i),
(ii), (iii) or (iv) of this Section 17.1, then, as to the condition with respect
to which such Election Notice has not been timely delivered, the put right of
SCE&G under this Section 17.1 shall be deemed terminated and of no further force
or effect.
17.2 Closing; Effective Date. The purchase by AJG of the entire
interest in the Partnership of SCE&G pursuant to this Article 17 shall close on
the date that is the later to occur of (a) the fifth (5th) Business Day after
AJG has received the Election Notice and (b) the fifth (5th) Business Day after
all consents, approvals and filings of or with any governmental agency required
to consummate such transaction have been obtained or made. The time of day and
location of the closing shall be reasonably determined by AJG and set forth in a
written notice delivered to SCE&G not later than December 31, 2000.
Notwithstanding the actual date of closing of the purchase and sale of the
Partnership interest of SCE&G pursuant to this Article 17, such purchase and
sale shall be effective for all purposes as of the date the Exercise Notice is
delivered to AJG.
17.3 Purchase Price. The price for the purchase of the entire interest
in SCE&G pursuant to this Article 17 shall be the amount by which (a) the amount
of all capital contributions made by SCE&G to the Partnership prior to the date
of such closing, exceeds (b) the amount of all distributions of Net Cash Flow or
other distributions made by the Partnership to SCE&G prior to the date of such
closing (the "Excess Amount"); provided, however, that, with respect to the
exercise of the put pursuant to Section 17.1(ii) above, the purchase price shall
be the Excess Amount minus a one-time fuel cost adjustment in the amount of Five
Hundred Thousand Dollars ($500,000). The purchase price shall be paid by the
wire transfer of immediately available funds six months from the closing date
provided for in Section 17.2 above.
17.4 Approvals. Each Partner shall each use all commercially reasonable
efforts to obtain in a timely manner all approvals and consents, and to make all
filings with each governmental agency necessary to consummate the purchase and
sale of the entire Partnership interest of SCE&G pursuant to this Article 17.
Each Partner shall cooperate with the other Partners in obtaining such consents
and approvals and in making such filings.
17.5 Representations and Warranties. The sale by SCE&G to AJG of its
entire Partnership interest pursuant to this Article 17 shall be without
representations or warranties other than to the effect that the Partnership
interests being sold are not subject to any charge, claim, lien, restriction,
pledge, option or other incumbrance, except as set forth in this Agreement.
ARTICLE 18
CALL RIGHT OF AJG
18.1 Right to Exercise. If (i) on or before April 17, 2000 SCE&G shall
fail to file with the governmental agency responsible for issuing a temporary
operating permit for the facility all applications and other documentation
required by such agency as a condition to issuing such a temporary operating
permit, or (ii) the application for the permit referred to in Section 17.1(ii)
above has not been submitted by May 22, 2000, then AJG (or, at the election of
AJG, its designee) shall have the right, exercisable in its sole discretion, to
require SCE&G to sell to AJG all, but not less than all, of the interest of
SCE&G in the Partnership. For purposes of this Article 18, the interest of SCE&G
in the Partnership shall include any interest held by a Permitted Transferee of
SCE&G. AJG shall exercise such right, if at all, by delivering written notice
setting forth its election to exercise such right to SCE&G on or before July 7,
2000. In the event AJG shall fail to timely deliver an election notice under
this Section 18.1, then the call right of AJG under this Section 18.1 shall be
deemed terminated and of no further force or effect.
18.2 Closing; Effective Date. The purchase by AJG of the entire
interest in the Partnership of SCE&G pursuant to this Article 18 shall close on
the date that is the later to occur of (a) the fifth (5th) Business Day after
SCE&G has received the election notice referred to in Section 18.1 above and (b)
the fifth (5th) Business Day after all consents, approvals and filings of or
with any governmental agency required to consummate such transaction have been
obtained or made. The time of day and location of the closing shall be
reasonably determined by AJG and set forth in a written notice delivered to
SCE&G. Notwithstanding the actual date of closing of the purchase and sale of
the Partnership interest of SCE&G pursuant to this Article 18, such purchase and
sale shall be effective for all purposes as of the date the exercise notice is
delivered to SCE&G.
18.3 Purchase Price. The price for the purchase of the entire interest
in SCE&G pursuant to this Article 18 shall be the Excess Amount. The purchase
price shall be paid by the wire transfer of immediately available funds six
months from the closing date provided for in Section 18.2 above.
18.4 Approvals. Each Partner shall each use all commercially reasonable
efforts to obtain in a timely manner all approvals and consents, and to make all
filings with each governmental agency necessary to consummate the purchase and
sale of the entire Partnership interest of SCE&G pursuant to this Article 18.
Each Partner shall cooperate with the other Partners in obtaining such consents
and approvals and in making such filings.
18.5 Representations and Warranties. The sale by SCE&G to AJG of its
entire Partnership interest pursuant to this Article 18 shall be without
representations or warranties other than to the effect that the Partnership
interests being sold are not subject to any charge, claim, lien, restriction,
pledge, option or other incumbrance, except as set forth in this Agreement.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Notices. All notices and demands required or permitted under this
Agreement shall be in writing and may be delivered personally to the Person to
whom it is authorized to be given, or sent by private courier, or by registered
or certified U.S. mail, postage prepaid, and if intended for the Partnership,
addressed to the Partnership at the principal office of the Partnership, and if
intended for a Partner, addressed to the Partner at its address on the signature
pages hereof, or to such other person or at such other address designated by
written notice given to the Partnership and all Partners in accordance herewith.
Any notice or demand shall be deemed delivered (i) if delivered personally, upon
actual delivery, (ii) if sent by private courier, on the date the receipt for
delivery is signed or delivery is refused, or (iii) if sent by U.S. mail as
described above, mailed as aforesaid three (3) business days after the date that
such notice or demand is deposited in the U.S. mail.
19.2 Severability. If any provision of this Agreement or the
application of such provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid
shall not be affected, it being the intention of the parties that this Agreement
shall be enforceable to the fullest extent permissible under the laws and public
policies of the jurisdiction in which enforcement is sought. The parties hereto
hereby authorize any court of competent jurisdiction or arbitration panel to
modify the scope of any restrictions set forth in Section 19.10(a) hereof to the
extent necessary to make such restrictions fully enforceable.
19.3 Parties Bound. Any Person acquiring or claiming an interest in the
Partnership, in any manner whatsoever, shall be subject to and bound by all
terms, conditions and obligations of this Agreement to which his or its
predecessor in interest was subject or bound, without regard to whether such
Person has executed a counterpart hereof or any other document contemplated
hereby. No Person, including the legal representative, heir or legatee of a
deceased Partner, shall have any rights or obligations greater than those set
forth in this Agreement and no Person shall acquire an interest in the
Partnership or become a Partner thereof except as permitted by the terms of this
Agreement.
19.4 Successors and Assigns. This Agreement shall inure to the
benefit of, and shall be binding upon the parties
------------------------
hereto.
19.5 Applicable Law. The Partnership and this Agreement shall be
governed by the laws of the State of Delaware.
--------------
19.6 Partition. Each Partner hereby irrevocably waives during the term
of the Partnership any right that he or it may have to maintain any action for
partition with respect to any property of the Partnership.
19.7 Computation of Accountants. Except with respect to matters as to
which the General Partner is granted discretion under this Agreement, the
opinion of the certified public accountants retained by the Partnership from
time to time shall be final and binding with respect to all computations or
determinations of allocations made under Article 7 or distributions made under
Article 8 or Section 14.4.
19.8 Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision.
19.9 Counterparts. This Agreement may be executed in multiple
counterparts with separate signature pages, each such counterpart shall be
considered an original, but all of which together shall constitute one and the
same instrument.
19.10 Confidentiality.
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(a) From and after the date hereof, without the prior written
consent of a Super Majority of the Limited Partners, no Partner, except
on behalf of the Partnership, shall directly or indirectly use any of
the Confidential Information (as defined below) of the Partnership for
such Partner's own purposes or for the benefit of any other person,
firm, corporation, partnership or other entity or directly or
indirectly disclose any Confidential Information of the Partnership to
any person, firm, corporation, partnership or other entity unless (a)
subject to the provisions of this Section 19.10, such Partner is
required to disclose any such Confidential Information by judicial or
administrative process or, in the opinion of its counsel, by other
requirements of law, (b) such Confidential Information is available to
the public through no fault of such Partner, or (c) such Confidential
Information becomes available to such Partner from a third party who is
under no confidential or fiduciary obligation to the Partnership with
respect to such Confidential Information. As used herein, the term
"Confidential Information" of the Partnership shall mean (i) all trade
secrets as defined under applicable statute or common law, and (ii)
other confidential information of or about the Partnership, including,
without limitation, any such information regarding the business of the
Partnership, its manufacturing processes, methods of operation,
products, financial data, sources of supply and customers; and (iii)
the existence or terms of this Agreement or the Partnership between the
parties created hereby. In the event that such Partner receives a
request to disclose all or any part of the information contained in the
Confidential Information under the terms of a valid and effective
subpoena or order issued by a court of competent jurisdiction, such
Partner shall (i) immediately notify the Partners of the existence,
terms and circumstances surrounding such a request, (ii) consult with
the General Partner on the advisability of taking legally available
steps to resist or narrow request, and (iii) if disclosure of such
information is required, exercise such Partner's reasonable best
efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to such portion of the
disclosed information which the Super Majority of the Limited Partners
so designates.
(b) Each Partner, on its own behalf and on behalf of each of
its Affiliates, hereby agrees that the limitations provided for in
Section 19.10(a) above are the minimum such terms necessary to protect
the Partnership and its respective successors and assigns in the use
and employment of the goodwill respecting the business and assets of
the Partnership. Each Partner further agrees that damages cannot
adequately compensate the Partnership in the event of any breach by
such Partner or any of its Affiliates of any of the covenants contained
in Section 19.10(a) above. Accordingly, each Partner agrees that in the
event of a breach of any of such covenants, the Partnership shall be
entitled to obtain injunctive relief against either such Partner or
such Affiliate, without bond but upon due notice, in addition to such
other relief as may appertain at law or in equity. Obtainment of any
such injunction by the Partnership shall not be deemed an election of
remedies or a waiver of any right to assert any other remedies the
Partnership may have at law or in equity. The existence of any claim or
cause of action of either such Partner or any such Affiliate against
the Partnership of whatever nature, shall not constitute a defense to
the Partnership's enforcement of such restrictive covenants.
ARTICLE 20
INDEMNIFICATION
20.1 Partnership Indemnification of General Partner. The Partnership
shall indemnify, defend, and hold the General Partner (in its capacity as
General Partner) and its Affiliates, officers, directors, employees and agents,
or their respective successors, executors, administrators or personal
representatives harmless from and against any loss, liability, damage, cost, or
expense (including reasonable attorneys' fees) sustained or incurred as a result
of any act or omission concerning the business or activities of the Partnership;
provided that the General Partner or any Affiliate, officer, director, employee,
or agent is acting in conformance to the provisions of Exhibit A, is not guilty
of gross negligence, willful misconduct or violation of fiduciary duty and was
acting in good faith within what he or it reasonably believed to be the scope of
his or its authority for a purpose which he or it reasonably believed to be not
opposed to the best interests of the Partnership. The foregoing indemnity shall
not be enforceable against any Limited Partner personally but solely from such
Limited Partner's interest in the Partnership.
20.2 Partner Indemnification of Partnership. If the Partnership is made
a party to any litigation or otherwise incurs any loss or expense as a result of
or in connection with any Partner's personal obligations or liabilities
unrelated to Partnership business, such Partner shall indemnify and reimburse
the Partnership for all such loss and expense incurred, including reasonable
attorneys' fees, and the interest of such Partner in the Partnership may be
charged therefor. The liability of a Partner under this Section 20.2 shall not
be limited to such Partner's interest in the Partnership, but shall be
enforceable against such Partner personally.
ARTICLE 21
DISPUTE RESOLUTION
21.1 Notice of Dispute. Before any demand for arbitration is made by a
party under this Agreement, the party wishing to make the demand agrees to
provide thirty (30) days' prior written notice to the other party specifying in
reasonable detail the nature of the dispute. To attempt to resolve the dispute
without the need for arbitration, upon written notice by either party given
during such period, each party will cause its President or Chief Executive
Officer (or a person with similar authority for the division or operating unit
of the Party substantially involved with the subject of this Agreement), as such
party's representative within thirty (30) days thereafter. If a party fails to
cause its representative to meet within such period, such party will pay the
fees and expenses of the arbitrators and the American Arbitration Association
without regard to who substantially prevails in such action.
21.2 Arbitration.
-----------
(a) In the event that the parties are unable to reach an
agreement for the resolution of any disputes as contemplated by Section 21.1 of
this Agreement, the parties agree that any such controversy or claim shall be
settled by arbitration as herein provided and otherwise in accordance with the
rules of the American Arbitration Association (AAA) for commercial disputes in
effect as of the date hereof; provided, however, that anything in Section 21.1
or this Section 21.2 to the contrary notwithstanding, the Partnership shall be
entitled, at its election, to immediately seek relief for any alleged violation
or breach of Section 19.10 above in any court of competent jurisdiction.
(b) When invoking arbitration, a party shall notify in writing
the other party and the AAA at its office in Charlotte, North Carolina. Each
party shall have seven (7) days to appoint an arbitrator, and in the event any
party shall fail or refuse to appoint such arbitrator within such seven (7) day
period, then such arbitrator shall be appointed by the AAA in its sole
discretion. The two arbitrators appointed by the parties shall have seven (7)
days to appoint a neutral third arbitrator. If such parties are unable to
appoint a neutral third arbitrator, then the American Arbitration Association,
Charlotte, North Carolina office, shall appoint a neutral third arbitrator
within the seven (7) day period from their panel of arbitrators who shall serve
as Chairman.
(c) The decision of the panel of arbitrators shall be final. A
majority of the panel shall be required for a decision. The place of arbitration
shall be Charlotte, North Carolina. Judgment upon the award may be rendered by
the arbitrators in any court having jurisdiction of the parties, as provided in
the United States Arbitration Act, 9 U.S.C. 1-14.
(d) The cost of arbitration, consisting solely of the filing
fees, arbitrator's fees and court reporter's fees, shall be divided equally
between the parties. Each member of the panel of arbitrators shall be entitled
to a reasonable fee, plus a reasonable allowance for travel, lodging, and meals.
AAA shall be paid an administrative fee according to prevailing schedule of fees
for commercial dispute according to the amount of the claim in controversy as
would be calculated over a maximum one-year period (which shall not be deemed to
limit the amount of any claim in the arbitration).
(e) In the event the parties shall waive the requirement of
arbitration in writing, then the dispute with respect to which the arbitration
is waived shall be resolved in the United States District Court for the District
of South Carolina, Columbia Division.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date first set forth above, confirms his or its
agreement to become a General or Limited Partner, as the case may be,
of the Partnership, agrees to be bound by this Agreement and
acknowledges the appointment of attorneys-in-fact as set forth herein,
and swears that the statements set forth herein are true and correct.
GENERAL PARTNER:
COALTECH LLC, an Illinois limited liability company
By:
--------------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
Address: 000 XxXxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
LIMITED PARTNERS:
USA COAL LP, an Illinois limited partnership
By: USA COAL LLC, an Illinois limited liability company
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address: The Xxxxxxxxx Xxxxxx
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
SOUTH CAROLINA ELECTRIC & GAS COMPANY, a South Carolina corporation
By:
--------------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
Address: 0000 Xxxx Xxxxxx
Mail Code 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
161
EXHIBIT A
------------------------
AGREEMENT OF LIMITED PARTNERSHIP
General Partner's Management
Duties and Restrictions
Project Operation: The General Partner hereby agrees to
operate, or cause to be operated on behalf of the Partnership, the
Project for the production of Synfuel using Coal Fines and to enter
into agreements as required to supply for the delivery of raw materials
to the Project and to arrange for the sale of product from the Project.
Environmental Law Compliance: The General Partner hereby
agrees to make any and all improvements and modifications necessary to
bring and maintain the Site in accordance with all applicable
Environmental Laws and the regulations promulgated.
Exclusive Maintenance, Operation and Maximization: The General
Partner hereby agrees to exclusively perform or cause to be performed
all design, engineering, and installation work necessary to maintain,
operate and maximize the efficiency of the Project.
The General Partner hereby agrees to make or cause to be made
such evaluations and conduct such exploration and tests of the Site
(including procurement of necessary testing permits, examination of
Site data and conditions, layout of potential equipment and facility
locations, utility needs, drilling analysis of Coal Fines, and Coal
Fines kinetics), to determine the feasibility of producing Synfuel from
Coal Fines at the Project.
Site and Technology Inspection and Acceptance: The General
Partner hereby agrees that it has had a reasonable opportunity to
inspect the Site and the Equipment and accepts the responsibility for
maintenance and operation of said Project during the term of this
Agreement "As Is" with no warranties or representations offered by any
party, whatsoever.
The General Partner hereby agrees that the Site is suitable
and fit for the purposes intended for the General Partner's use as
directed by this Agreement.
Liability: The General Partner agrees that it shall be at all
times solely responsible for itself, its employees, and agents,
regarding workmanship, accidents, injuries, wages, supervision and
control. The General Partner shall employ only competent workers and
supervisors.
The General Partner hereby agrees, at the Project, to accept
title, sole responsibility and to individually assume all risk of loss
for any and all claims, liabilities, damages, losses, costs or expenses
of whatever nature or character for all injuries or damage of any type
to any person or property, including injuries or damage of third
parties or employees of any Limited Partner, and/or the General Partner
and employees of their subcontractors, occasioned wholly or in part by
any act or omission of the employees of the General Partner or its
subcontractors or of anyone directly or indirectly employed by any of
them or for whose acts any of them may be liable, resulting from or
arising out of any of the activities of the General Partner, its
employees, or any subcontractors or their employees, pursuant to this
Agreement, whether or not such injuries or damage are occasioned in
part by a Limited Partner, its officers, employees, agents or
subcontractors.
The General Partner further agrees, at the Site, to
individually assume all risk of loss for any and all claims,
liabilities, damages, losses, costs or expenses of whatever nature or
character for all injuries or damage of any type to any person or
property, including injuries or damage of third parties or employees of
a Limited Partner and employees of subcontractors, occasioned wholly or
in part by any act or omission of the General Partner, its
subcontractors or anyone directly or indirectly employed by any of them
or for whose acts any of them may be liable which cause or create
pollution, contamination or adverse effects on the environment, due to,
but not limited to, the disposal, discharge, escape, dispersal, release
or saturation of smoke, vapors, soot, fumes, acids, alkalis, toxic
chemicals, liquids, gases, or hazardous substances (as defined in any
hazardous materials or hazardous substances laws), into the atmosphere,
or on, onto, in or into the surface or subsurface soil, groundwaters,
or surface waters whether or not such injuries or damage are caused in
part by a Limited Partner, its officers, employees, agents or
subcontractors.
The General Partner further agrees, at the Site, at its sole
cost and expense, to unconditionally indemnify, defend and hold each
Limited Partner, its directors, officers, employees and agents harmless
against any loss, liability, damage (whether direct or consequential),
expenses, claims, penalties, fines, injunctions, suits, proceedings,
disbursements or expenses (including, without limitation, attorneys'
and experts' fees and disbursements and court costs) (collectively, the
"Liabilities") arising under any hazardous material law, or any other
Liabilities which may be incurred by or asserted against such Limited
Partner directly or indirectly resulting from the General Partner's
performance under this Agreement or the release of all or any part of
the hazardous material prior to the completion of the General Partner's
performance under this Agreement, to the extent that the release
results from any cause.
A Limited Partner may require the General Partner to assume
the burden and expense of defending all suits, administrative
proceedings and disputes of any description with all persons, entities,
political subdivisions or government agencies arising out of the
matters to be indemnified under this Agreement. The General Partner
shall pay, promptly upon entry, any nonappealable order, judgment or
other final resolution of any claim or dispute arising out of the
matters indemnified under this Agreement and shall pay promptly when
due any fines, penalties or agreed settlements arising out of the
matters indemnified under this Agreement. In the event that such
payment is not made, any Limited Partner, at its sole discretion, may
proceed to file suit against the General Partner to compel such
payment.
The General Partner shall also pay to or on behalf of each
Limited Partner all amounts which such Limited Partner is required to
pay under any law imposing liability without regard to fault as
generator of the hazardous material for the environmental cleanup of
any location (other than the Site) where the hazardous material has
been placed, stored, or disposed of in the performance of the
environmental services or any other site to which the hazardous
material has migrated.
Proprietary Information: The General Partner agrees,
recognizes and acknowledges that certain information considered to be
proprietary or confidential by a Limited Partner, including but not
limited to contractual information, trade secrets, computer codes,
formulas, methods, inventions and devices that are or may be in the
future developed, used by or in the possession of a Limited Partner,
constitutes a valuable, special and unique asset of such Limited
Partner or its other vendors. The General Partner shall not, without
written permission of such Limited Partner, disclose such proprietary
or confidential information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever. In
the event of a breach or threatened breach by the General Partner of
the provisions of this paragraph, a Limited Partner shall be entitled
to an injunction restraining the General Partner from so doing. Nothing
herein shall be construed as prohibiting a Limited Partner from
pursuing any other remedies available to such Limited Partner for such
breach or threatened breach.
The General Partner agrees to furnish each Limited Partner
copies of all approvals and permits necessary for the maintenance and
operation of the Project at the Site.
Protection of Employees and Public: The General Partner
represents and warrants that:
----------------------------------
The General Partner is familiar with the Site and its
environment, and shall inspect at all times its activities to discover
and promptly take all precautions and remedies necessary to protect and
warn all employees and third parties against existing conditions or
conditions created which may involve risk of bodily harm or property
damage of all persons, including employees or property of any Limited
Partner, and third parties.
The General Partner is in full compliance with all
requirements of federal, state and local safety standards, codes and
regulations ("Laws"), including those Laws applicable to the protection
of the Limited Partners and the General Partner's employees and members
of the public. Said Laws include, but are not limited to the
Occupational Safety and Health Act of 1970 as amended, and those
prohibiting discrimination against any employee or applicant for
employment because of race, creed, color, sex, national origin, age or
disability.
The General Partner will comply fully with all federal and
state unemployment insurance laws and federal Social Security laws and
to make such reports and payments as are required.
The General Partner will comply fully with all applicable
workers' compensation laws and all requirements of state or federal
Environmental Laws including environmental protection agencies rules
and regulations.
Hazard Communications: The General Partner shall comply with
all applicable hazard communication requirements of the Occupational
Safety and Health Administration (OSHA). The General Partner shall
provide Materials Safety Data Sheets for any hazardous chemicals
brought onto the Site by the General Partner. In addition, the General
Partner shall provide the necessary information and training to its
employees on each hazardous chemical to which they may be exposed on
the Site. Suggestions for appropriate protective measures in handling
those hazardous chemicals shall also be exchanged between the parties,
at the General Partner's request.
Damages: Upon discovering any breach of this Agreement by the
General Partner, the Limited Partner, individually or collectively, may
pursue any and all remedies available under law, including, but not
limited to, removing the General Partner from its position as such
pursuant to Section 10.11 of this Agreement, and/or requiring the
General Partner to replace defective materials, equipment and goods, to
correct the defects or to replace or repair any materials, equipment,
goods, or other property damaged.
Subject to statutes of limitations, each Limited Partner may
pursue the remedies provided above at any time following the date a
breach of this Agreement is discovered or, by exercise of reasonable
diligence, could have been discovered.
No agreement varying or extending any warranties or remedies
herein will be binding unless in writing and agreed to by the parties.
Compliance with Laws: The General Partner shall execute its
services and conditions as specified in this Agreement in compliance
with any and all federal, state and local laws and regulations
applicable, including but not limited to hazardous material and
Environmental Laws, and will have obtained and maintain all licenses,
approvals and permits required by law to engage in the activities
necessary to perform the services and conditions required by this
Agreement.
163
EXHIBIT B
---------------------------
AGREEMENT OF LIMITED PARTNERSHIP
Description of Equipment
EXHIBIT B
The property transferred consists of one double line facility to
process fine coal into a synthetic fuel. The facility was built under
Gencor Job numbers 59213 and 59621 and includes the following
equipment:
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ITEM EQUIPMENT SERIAL NUMBER
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--------------------------------------------------------------------------------
2 BIN COAL FEED 2BCF - 59213 -98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30" X 68' ACCESS CONV. 30598C-59621
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30" X 75' SCALE CONV. V3075SC - 59213 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30" X 13' ACCESS CONV. V3013BC - 59621 - 98 - NA - 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30' X 13' ACCESS CONV. V3013BC - 59621 - 98 - NA - 2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4' X 12' SD VIB SCREEN V412SD - 59621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
MAGNET MAG 4242 - 59621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
METAL XXXXXXXX XX00 - 00000 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AUGER 10X10 SC - 59213 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AUGER 10X10 SC2 - 59213 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PUGMILL MIXER S250CAR - 59621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PUGMILL MIXER X000XXXX - 00000 - 00 - XX
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30" X 128' WASTE CONV. W30128BC - 59621 - 98 - NA -1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30" X 80" DISCHARGE CONVEYOR D3080BC - 59621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30" X 100' STACKER CONV. S30100BC - 59621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PELLET MILL 1 NORTH 399188
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PELLET MILL 2 SOUTH 399189
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PELLET DRYER (2)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DUCTWORK & STACKS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
12" X 36" CONTROL CENTER CC1236 - 59621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BINDER TANK 2 SETS - 730
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ACID TANK
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AIR COMPRESSOR 84546
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AIR COMPRESSOR DRYER 0338-3-9801-2N
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PUMP PALLET - CONDITIONER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PUMP PALLET - BINDER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PUMP PALLET - WATER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PUMP PALLET -BINDER UNLOADING
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DEIONIZED WATER SYSTEM
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
12' X 24' BUILDING W/AIR & WTR SYSTEM BLD1224 - 9621 - 98 - NA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
