EXHIBIT 3.8
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
WINCUP HOLDINGS, L.P.
DATED AS OF
January 1, 1997
I N D E X
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Page
ARTICLE I DEFINED TERMS................................................ 1
1.1 "Act"........................................................ 1
1.2 "Adjusted Capital Account"................................... 1
1.3 "Affiliate".................................................. 2
1.4 "Bankruptcy"................................................. 2
1.5 "Capital Account"............................................ 2
1.6 "Business"................................................... 3
1.7 "Capital Contribution"....................................... 3
1.8 "Capital Gain"............................................... 3
1.9 "Capital Loss"............................................... 3
1.10 "Cash Flow".................................................. 3
1.11 "Code"....................................................... 3
1.12 "Depreciation"............................................... 3
1.13 "Dissolution Event".......................................... 4
1.14 "Dissolution"................................................ 4
1.15 "Economic Risk of Loss"...................................... 4
1.16 "Exempt Income".............................................. 4
1.17 "Fiscal Year"................................................ 4
1.18 "GAAP"....................................................... 4
1.19 "Gross Asset Value".......................................... 4
1.20 "Interest"................................................... 5
1.21 "Minimum Gain Attributable to a Partner Nonrecourse Debt".... 5
1.22 "Net Proceeds of a Sale or Refinance Transaction"............ 5
1.23 "Nondeductible Expenditure".................................. 6
1.24 "Nonrecourse Deductions"..................................... 6
1.25 "Partner".................................................... 6
1.26 "Partner Nonrecourse Debt"................................... 6
1.27 "Partnership"................................................ 6
1.28 "Partnership Accountants".................................... 6
1.29 "Partnership Agreement"...................................... 6
1.30 "Partnership Minimum Gain"................................... 6
1.31 "Partnership Nonrecourse Liability".......................... 6
1.32 "Profits and Losses"......................................... 6
1.33 "Regulations"................................................ 7
1.34 "State"...................................................... 7
1.35 "WinCup Capital Contribution Agreement"...................... 7
ARTICLE II THE PARTNERSHIP.............................................. 7
2.1 Name and Continuation........................................ 7
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2.2 Registered Office............................................ 7
2.3 Purpose...................................................... 7
2.4 Other Business............................................... 7
2.5 Statutory Compliance......................................... 8
2.6 Term......................................................... 8
ARTICLE III CONTROL AND MANAGEMENT....................................... 8
3.1 Management and Operation..................................... 8
3.2 Tax Matters Partner.......................................... 10
3.3 Limitation on Liability of Partners; Indemnification......... 10
3.4 Employment Agreement......................................... 11
3.5 Limited Liability of Limited Partner......................... 11
ARTICLE IV ACCOUNTING RECORDS........................................... 11
4.1 Tax Elections................................................ 11
4.2 Tax Returns.................................................. 11
4.3 Books........................................................ 12
4.4 Fiscal Year.................................................. 12
4.5 Reports...................................................... 12
4.6 Partnership Funds............................................ 12
4.7 Inspections.................................................. 12
4.8 Financial Information........................................ 13
ARTICLE V INTERESTS; CAPITAL ACCOUNT................................... 13
5.1 Interests.................................................... 13
5.2 Capital Accounts; Loans...................................... 13
ARTICLE VI ALLOCATIONS.................................................. 13
6.1 Profits...................................................... 13
6.2 Allocation of Capital Gain and Capital Loss.................. 14
6.3 Losses....................................................... 14
6.4 Special Allocations.......................................... 14
ARTICLE VII CASH DISTRIBUTIONS........................................... 16
7.1 Distribution of Cash Flow.................................... 16
7.2 Distributions of Net Proceeds of a Sale Transaction.......... 17
7.3 Tax Payment Loans............................................ 17
ARTICLE VIII TRANSFER OF PARTNERSHIP INTERESTS............................ 17
8.1 Restrictions on Transfer..................................... 17
8.2 Survival of Restrictions on Transfer......................... 17
8.3 Admission of Substitute Partners............................. 18
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ARTICLE IX DISSOLUTION AND LIQUIDATION.................................. 18
9.1 Dissolution Events........................................... 18
9.2 Liquidation.................................................. 19
ARTICLE X BUY-SELL PROVISIONS.......................................... 19
10.1 Tag-Along Right.............................................. 19
10.2 Take-Along Right............................................. 20
ARTICLE XI MISCELLANEOUS................................................ 21
11.1 Notices...................................................... 21
11.2 Successors and Assigns....................................... 21
11.3 Waiver of Partition.......................................... 21
11.4 No Oral Modifications; Amendments............................ 21
11.5 Captions; References......................................... 22
11.6 Terms........................................................ 22
11.7 Invalidity................................................... 22
11.8 Counterparts................................................. 22
11.9 Further Assurances........................................... 22
11.10 Complete Agreement........................................... 22
11.11 Governing Law................................................ 22
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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
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This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT ("Agreement") is
entered into as of this 1st day of January, 1997, by and between WINCUP
HOLDINGS, INC., a Delaware corporation (the "General Partner") and RADNOR
HOLDINGS CORPORATION, a Delaware corporation (the "Limited Partner")
(individually, a "Partner" and collectively, the "Partners").
W I T N E S E T H:
WHEREAS, WinCup Holdings, L.P. (the "Partnership") was formed as a
limited partnership as of January 20, 1996 under the Delaware Revised Uniform
Limited Partnership Act and has operated under the Limited Partnership Agreement
dated as of January 20, 1996 by and between the General Partner and Xxxxx River
Paper Company, Inc. ("Xxxxx River") as limited partner (the "Original Limited
Partnership Agreement").
WHEREAS, the Limited Partner has purchased the limited partnership
interest of Xxxxx River (the "JR Partnership Interest") pursuant to a
Partnership Interest Purchase Agreement (the "Purchase Agreement"), dated as of
December 5, 1996 by and among the Partnership, the General Partner, Xxxxx River
and the Limited Partner; and
WHEREAS, the parties hereto desire to amend and restate in its entirety
the Original Limited Partnership Agreement of the Partnership with WinCup
Holdings, Inc. as General Partner and Radnor Holdings Corporation as Limited
Partner.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree to amend and restate the Original Limited Partnership Agreement in its
entirety as follows:
ARTICLE I
DEFINED TERMS
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The capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified below:
1.1 "Act" means the Delaware Revised Uniform Limited Partnership Act, as
from time to time amended.
1.2 "Adjusted Capital Account" means, with respect to a Partner, such
Partner's Capital Account as of the end of the relevant Fiscal Year, after
giving effect to the following adjustments:
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(a) Credit to such Capital Account any amounts which such Partner
is obligated, or is treated as obligated, to restore with respect to any deficit
balance in its Capital Account by reason of Regulations Section 1.704-
1(b)(2)(ii)(b)(3) and Section 1.704-1(b)(2)(ii)(c)(3) or is deemed to be
obligated to restore to its Capital Account pursuant to the penultimate sentence
of Regulations Section 1.704-2(g)(1) and Section 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.3 "Affiliate" means:
(a) any person directly or indirectly controlling, controlled by
or under common control with, another person, and
(b) any person owning or controlling 50% or more of the
outstanding voting securities of another person. The term "person" means an
individual, corporation, partnership, association, joint stock company, trust or
unincorporated organization.
1.4 "Bankruptcy" means with respect to any Partner:
(a) the filing by the Partner in any court, pursuant to any
statute of the United States or of any state, of a petition in bankruptcy or
insolvency, or its filing for reorganization or for the appointment of a
receiver or trustee of all (or a material portion of) the Partner's property;
(b) an assignment for the benefit of creditors;
(c) an admission by the Partner in writing of its inability to
pay its debts as they fall due or consenting to or acquiescing in the
appointment of a trustee, receiver or liquidator of any material portion of its
property;
(d) a filing against the Partner in any court, pursuant to any
statute of the United States or of any state, of a petition in bankruptcy,
insolvency, reorganization, or for the appointment of a receiver or a trustee of
all (or a material portion of) the Partner's property, and within ninety (90)
days after the commencement of any such proceeding against the Partner such
petition shall not have been dismissed (or satisfactory evidence that such
Partner is diligently contesting such petition shall not have been received by
the other Partner). In addition, if the whole or any portion of the Interest of
any Partner is subject to levy or attachment, and such levy or attachment is not
released or discharged within sixty (60) days, such Partner shall be deemed
"bankrupt" for purposes of this Agreement.
1.5 "Capital Account" means the Capital Account of each of the Partners
determined and adjusted from time to time in accordance with the rules of
Regulations Section 1.704-1(b)(2)(iv), as the same may be amended or revised.
In the event that the treatment called
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for in such Regulations is inconsistent with the provisions of this Agreement,
then the provisions of the Regulations shall control.
1.6 "Business" means the one piece foam container business conducted
by the Partnership.
1.7 "Capital Contribution" means any cash or any other assets
contributed to the Partnership by a Partner. The value of any non-cash Capital
Contribution shall be its agreed upon fair market value, net of any liabilities
to which it is subject.
1.8 "Capital Gain" means any and all gain realized from a sale or
other disposition of any asset of the Partnership, other than the sale of
inventory in the ordinary course of business.
1.9 "Capital Loss" means any loss realized from a sale or other
disposition of any asset of the Partnership, other than the sale of inventory in
the ordinary course of business.
1.10 "Cash Flow" means, with respect to any Partnership fiscal year, or
portion thereof, the total annual cash gross receipts of the Partnership,
excluding Net Proceeds of a Sale or Refinance Transaction, minus all cash
expenditures of the Partnership including, without limitation, all amounts owed
to a Partner or an Affiliate of a Partner and all amounts which are required to
be paid to lenders to the Partnership in full or partial satisfaction of the
outstanding principal amount of indebtedness of the Partnership under any
applicable note, outside legal and accounting costs, expenditures for
advertising and promotion, salaries, accounting, duplicating or bookkeeping
services, computing or accounting equipment use, travel expenses properly
chargeable to the Partnership, telephone and other expenses incurred by the
Partnership, and minus any cash set aside by the General Partner to provide
reasonable reserves for working capital or capital expenditures. No item set
forth herein shall be accounted for more than once.
1.11 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.12 "Depreciation" means for each fiscal year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period for federal
income tax purposes, except that if the Gross Asset Value of an asset differs
from its adjusted basis for federal income tax purposes at the beginning of such
year or other period, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the
Partners.
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1.13 "Dissolution Event" means the happening of any of the following
events which shall cause a dissolution of the Partnership:
(a) The expiration of the term of the Partnership under Section
2.7 hereof;
(b) The Bankruptcy or the Dissolution of a Partner or its parent
corporation, unless, within sixty (60) days after such event, the other Partner
elects in writing to continue the business of the Partnership, in which event
the Partnership shall be continued.
(c) The sale or other disposition, not including an exchange, of
all or substantially all of the assets of the Partnership;
(d) The bankruptcy of the Partnership (applying the same
definition as the Bankruptcy of a Partner); or
(e) A determination by the Partners that the Partnership should
be dissolved.
1.14 "Dissolution" means:
(a) In the case of a corporate Partner, the earlier of the
adoption of a plan of liquidation by such Partner or the effective date of
dissolution in accordance with applicable statutory law; and
(b) In the case of a partnership Partner, the earlier of the date
of dissolution and termination of such partnership in accordance with the
provisions of the governing partnership agreement or applicable statutory law,
or the date on which such partnership disposes of all or substantially all of
its assets.
1.15 "Economic Risk of Loss" means economic risk of loss within the
meaning of Regulations Section 1.752-2.
1.16 "Exempt Income" means any income and gain of the Partnership that
is exempt from federal income tax.
1.17 "Fiscal Year" means the fiscal year of the Partnership which shall
be the calendar year.
1.18 "GAAP" means United States generally accepted accounting
principles consistently applied.
1.19 "Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
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(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset on
the date of contribution, as determined by the contributing Partner and the
Board;
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values (taking Code Section
7701(g) into account), as determined in good faith by the Partners as of the
following times:
(i) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution;
(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of assets as consideration for an Interest in the
Partnership; and
(iii) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g).
(c) the Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value (taking Code Section 7701(g)
into account) of such asset on the date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m). If the Gross
Asset Value of an asset has been determined or adjusted pursuant to (a), (b) or
(d) hereof, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
1.20 "Interest" means the percent ownership interest of each Partner
in the Partnership, including the rights granted to each Partner under this
Agreement, subject to the responsibilities of each Partner imposed under this
Agreement.
1.21 "Minimum Gain Attributable to a Partner Nonrecourse Debt" means
minimum gain attributable to such Partner Nonrecourse Debt within the meaning of
Regulations Section 1.704-2(i)(3).
1.22 "Net Proceeds of a Sale or Refinance Transaction" means the
proceeds to the Partnership from: (i) the sale, exchange, condemnation (or
similar eminent domain taking), receipt of casualty insurance proceeds
(excluding any business interruption insurance proceeds), or any disposition of
any of the assets of the Partnership (other than the sale of inventory in the
ordinary course of business); or (ii) any financing, refinancing or other
borrowing which provides proceeds in excess of the amounts required to be paid
in respect of existing Partnership indebtedness, minus all cash expenditures of
the Partnership incurred in connection with such
5
disposition or borrowings. "Net Proceeds of a Sale or Refinance Transaction"
shall not include proceeds distributed pursuant to Section 9.2 hereof.
1.23 "Nondeductible Expenditure" means an expenditure described in
Code Section 705(a)(2)(B) or treated as such an expenditure under Regulations
Section 1.704-1(b)(2)(iv)(i).
1.24 "Nonrecourse Deductions" means the nonrecourse deductions
within the meaning of Regulations Section 1.704-2(c).
1.25 "Partner" means each of the Partners, and such successors,
assigns or additional partners as may be admitted, from time to time, pursuant
to the terms of this Agreement.
1.26 "Partner Nonrecourse Debt" means any nonrecourse debt (within
the meaning of Regulations Section 1.704-2(i)(1) for which any Partner bears the
Economic Risk of Loss.
1.27 "Partnership" means the Partnership formed by and governed
pursuant to this Agreement as such Partnership may from time to time be
constituted and amended.
1.28 "Partnership Accountants" means Xxxxxx Xxxxxxxx & Company,
independent certified public accountants, or such other independent certified
accounting firm as may be selected by the General Partner.
1.29 "Partnership Agreement" means this Amended and Restated Limited
Partnership Agreement as it may be amended from time to time.
1.30 "Partnership Minimum Gain" means partnership minimum gain
within the meaning of Regulations Section 1.704-2(d).
1.31 "Partnership Nonrecourse Liability" means any Partnership
liability (or portion thereof) for which no Partner bears the Economic Risk of
Loss.
1.32 "Profits and Losses" means, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined under the accrual method of accounting and in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
any adjustments required under Regulations Section 1.704-1(b), excluding any and
all Capital Gain and Capital Loss from a sale or disposition of any assets of
the Partnership, other than the sale of inventory in the ordinary course of
business.
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1.33 "Regulations" means the Income Tax Regulations promulgated
under the Code, as such Regulations may be amended from time to time, including
corresponding provisions of succeeding regulations.
1.34 "State" means the State of Delaware.
1.35 "WinCup Capital Contribution Agreement" means the Capital
Contribution Agreement entered into as of January 20, 1996 between the General
Partner and the Partnership.
ARTICLE II
THE PARTNERSHIP
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2.1 Name and Continuation. The parties hereby continue the
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Partnership under the name "WinCup Holdings, L.P."
2.2 Registered Office. The registered office of the Partnership shall
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be maintained at Dover and Capitol Corporate Services, Inc., X.X. Xxx 000,
Xxxxx, XX 00000 or at such other place as may be designated from time to time
by the Partners.
2.3 Purpose.
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2.3.1 Statement. The purpose of the Partnership is to own and
operate the Business and to engage in any other activities incidental or related
thereto.
2.3.2 No Other Purposes. The Partnership shall be a partnership
only for the purposes specified hereinabove, and this Agreement shall not be
deemed to create a partnership between the Partners with respect to any
activities whatsoever other than the activities within the purposes specified
immediately above.
2.3.3 No Partner Benefit. The credit and assets of the
Partnership shall be used solely for the benefit of the Partnership and shall
not be used to further the personal gain of any Partner. No asset of the
Partnership shall be transferred or encumbered for or in payment of any
individual obligation of a Partner.
2.4 Other Business. Nothing in this Agreement shall be deemed to
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restrict in any way the rights of any Partner, or any of its shareholders,
partners or affiliates to conduct any business or activity whatsoever without
any accountability to the Partnership or to any other Partner even if such
business or activity competes with the business of the Partnership, it being
understood by each Partner that any other Partner or its shareholders, partners
or affiliates may be interested, directly or indirectly, in various other
businesses and undertakings not included in the Partnership.
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2.5 Statutory Compliance.
--------------------
2.5.1 The Partnership shall exist under, be governed by and this
Agreement shall be construed in accordance with the applicable laws of the
State, including the Act. The Partnership shall make all filings and disclosures
required by, and shall otherwise comply with, all such laws. All real, personal
and intangible property owned by the Partnership shall be deemed owned by the
Partnership as an entity, in its name, and no Partner shall have any ownership
interest in such property in its individual name or right.
2.5.2 The Partners shall execute and file in the appropriate
records any assumed or fictitious name certificate or certificate required by
law to be filed in connection with the formation of the Partnership, and shall
execute and file such other documents and instruments as may be necessary or
appropriate with respect to the formation of, and conduct of business by, the
Partnership.
2.6 Term. The Partnership shall continue until December 31, 2035,
----
unless sooner terminated pursuant to statute or any provision of this Agreement.
ARTICLE III
CONTROL AND MANAGEMENT
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3.1 Management and Operation.
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3.1.1 Partner Powers. Except as otherwise restricted in this
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Agreement, the management and control of the Partnership's business shall be
exercised by the General Partner. The General Partner shall devote such time to
the affairs of the Partnership as is reasonably necessary to manage its affairs.
Except as provided in Section 3.4 hereof, the General Partner and its Affiliates
shall receive no compensation for its services and for performing its duties as
General Partner of the Partnership. Subject to the limitations otherwise
provided in this Agreement, the General Partner shall have all of the rights and
powers of a general partner provided for by the Act, including the power on
behalf and in the name of the Partnership to carry out, exercise and implement
any and all of the purposes and powers of the Partnership set forth in Section
2.3 hereof. Without limiting the generality of the foregoing, the General
Partner shall have the power to:
(a) open, maintain and close bank accounts and draw
checks or other orders for the payment of moneys;
(b) receive, dispose of and deal in all checks,
moneys and other personal property of the Partnership;
(c) employ employees, attorneys, accountants,
engineers, consultants and agents and terminate such employment;
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(d) expend the capital and revenues of the
Partnership in furtherance of the Partnership's purposes and business;
(e) enter into agreements and contracts with third
parties, terminate such agreements and institute, defend and settle litigation
arising therefrom, and give receipts, releases and discharges with respect to
all of the foregoing and any matters incident thereto;
(f) sell, lease, trade, exchange or otherwise
dispose of all or any portion of the assets of the Partnership;
(g) employ, on behalf of the Partnership, such
firms, persons or corporations as it, in its sole judgment, deems necessary or
advisable for the operation of the Partnership's business on such terms and for
such compensation as it shall determine;
(h) maintain at the expense of the Partnership such
insurance coverage for workers' compensation, comprehensive general liability,
product liability, and property liability and any and all other insurance
necessary or appropriate to the business of the Partnership, in such amounts and
of such types as it shall determine from time to time;
(i) borrow money and issue evidences of indebtedness
necessary, convenient or incidental to the accomplishment of the purposes of the
Partnership, secured by a mortgage, pledge or other lien on any of the
Partnership's properties or assets;
(j) execute, in furtherance of any purpose of the
Partnership, any deed, lease, mortgage, deed of trust, mortgage note, promissory
note, xxxx of sale, contract or other instrument purporting to convey or
encumber the real or personal property of the Partnership and amendments
thereof;
(k) determine the accounting methods and conventions
to be used in the preparation of the Partnership's financial statements and tax
returns and make any and all elections under the tax laws of the United States,
the several states and other relevant jurisdictions as to the treatment of items
of income, gain, loss, deduction and credit of the Partnership, or any other
method or procedure related to the preparation of the Partnership's financial
statements and tax returns; and
(l) engage in any kind of activity and perform and
carry out contracts of any kind necessary to, or in connection with, or
convenient or incidental to the accomplishment of the purpose of, the
Partnership, as may be lawfully carried on or performed by a partnership under
the laws of the State.
3.1.2 Limitations on Powers. The General Partner shall not take
---------------------
any action on behalf of or in the name of the Partnership, or enter into any
commitment or other obligation binding upon the Partnership, except for (a)
actions expressly provided for in this Agreement and (b) actions by the General
Partner within the scope of its authority granted in this Agreement.
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Notwithstanding the powers set forth in Section 3.1.1 hereof, the General
Partner shall not be permitted to make any decision to or take any steps toward
effecting the following major actions of the Partnership without the prior
consent of the Limited Partner:
(a) admit a new Partner to the Partnership;
(b) amend the Partnership Agreement;
(c) dissolve the Partnership except in accordance with this Agreement;
(d) commit any act in violation of the terms of the Partnership
Agreement;
(e) possess Partnership Property other than for a Partnership purpose;
(f) engage in any act that would make it impossible for Partnership to
continue to carry on its business;
(g) permit a judgment to be confessed against the Partnership.
3.2 Tax Matters Partner. The General Partner shall serve as the "tax
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matters partner" within the meaning of Section 6231(a)(7) of the Code. The tax
matters partner shall serve as the liaison between the Partnership and the
Internal Revenue Service in the event of an audit of the Partnership, and as the
primary coordinator of Partnership actions in connection with such audit. The
tax matters partner shall provide to the other Partner copies of all notices
sent to the Partnership by the Internal Revenue Service or sent by the
Partnership to the Internal Revenue Service and shall keep the other Partner
informed of the progress of the tax audit. The "tax matters partner" shall have
similar responsibilities and obligations with respect to any state and/or local
tax audits.
3.3 Limitation on Liability of Partners; Indemnification.
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3.3.1 No Partner, its shareholders, employees, agents or
affiliates shall have any liability to the Partnership or to any other Partner
for any loss, cost or expense suffered or incurred by the Partnership or its
Partners which arises out of or relates to any action or inaction of any of such
persons unless such action or omission to act was undertaken in bad faith, or
constituted gross negligence or willful misconduct.
3.3.2 Each Partner, its shareholders, employees, agents and
affiliates shall be indemnified by the Partnership against any losses,
judgments, liabilities, expenses incurred in settling any claim or incurred in
any finally adjudicated legal proceeding, including reasonable attorneys' fees
and costs of removing any liens affecting property of the indemnitee, and/or
amounts paid in settlement of any claims sustained by it arising from or
relating to the Partnership, provided that the same were not the result of
actions by such Partner, its shareholders, employees, agents or affiliates taken
in bad faith and/or in violation of this Agreement.
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3.3.3 The indemnification provided in Section 3.3.2 shall be made
solely from assets of the Partnership and no Partner shall be personally liable
to any indemnitee.
3.3.4 This Section 3.3 shall inure to the benefit of the
Partners, their shareholders, employees, agents and affiliates, and their
respective heirs, executors, administrators and successors and assigns.
3.4 Employment Agreement. The Partnership has entered into an
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EMployment Agreement (the "Xxxxxxx Employment Agreement") dated as of January
20, 1996 with Xxxxxxx X. Xxxxxxx, an Affiliate of the General Partner, in the
form attached as Exhibit A. The Limited Partner and the General Partner hereby
ratify and accept the terms of the Employment Agreement.
3.5 Limited Liability of Limited Partner. No Limited Partner shall be
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liable for any debts, liabilities, contracts or obligations of the Partnership,
except as provided by law. The Limited Partner shall be liable only to make
payments of its Capital Contributions as and when due under this Agreement.
ARTICLE IV
ACCOUNTING RECORDS
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4.1 Tax Elections. Except as provided in the second sentence of this
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Section 4.1, all Partnership tax elections shall be made by the General Partner
in its sole discretion. Upon the request of the Limited Partner made not later
than fifteen (15) days after the close of a Fiscal Year in which the Limited
Partner sells or exchanges all or part of its Interest, the General Partner
shall cause the Partnership to make the election pursuant to Section 754 of the
Code, to adjust the basis of the Partnership's property as required under
Sections 734 and 743 of the Code. Upon the request of the Limited Partner, and
subject to the Limited Partner providing reasonable guidance in such regard, the
Partnership shall maintain records reflecting the adjustments to basis resulting
from such election, and shall reflect such adjustments on its Form 1065 and
Schedules K-1.
4.2 Tax Returns. Each tax return and other statement to be filed by
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the Partnership with the Internal Revenue Service or any other taxing authority,
shall be prepared by the Partnership Accountants at the direction of the General
Partner and at the expense of the Partnership and copies of each such return and
statement shall be distributed to all of the Partners by the General Partner.
All tax information required by the Partners for the preparation of their income
tax returns shall be delivered to them within ninety (90) days after the close
of each Fiscal Year.
4.3 Books. Proper books of account shall be kept for the Partnership
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by or under the supervision of the General Partner on an accrual basis in
accordance with GAAP for financial accounting purposes and in accordance with
the accrual method and this Agreement for book and tax capital accounting
purposes, and entries shall be made therein of all monies
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expended and received by the Partnership as well as all other matters relating
to the Partnership usually or properly entered in books of account. Such books
and all papers, correspondence and other instruments relating or belonging to
the Partnership, shall be kept at the principal office of the Partnership, and
each Partner shall have the right to examine and inspect the books, records,
accounts and other papers of the Partnership at all times during normal business
hours.
4.4 Fiscal Year. The Fiscal Year of the Partnership shall be the
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calendar year. As used in this Agreement, a Fiscal Year shall include any
partial Fiscal Year at the beginning and ending of the Partnership.
4.5 Reports.
-------
4.5.1 Within one hundred twenty (120) days after the end of each
Fiscal Year of the Partnership, a general accounting and audit shall be
completed by the Partnership Accountants at the expense of the Partnership, in
accordance with generally accepted audit standards, covering the assets,
liabilities, cash distributions and net worth of the Partnership and also its
dealings, transactions and operations during such Fiscal Year, and all other
matters customarily included in such audit.
4.5.2 Each Partner shall be furnished with audited financial
statements which shall contain a balance sheet as of the end of the Fiscal Year,
statements of income and changes in Partners' Capital Accounts and a statement
of cash flow for the Fiscal Year then ended.
4.5.3 Each Partner shall be furnished each month with monthly
unaudited financial statements, including a balance sheet, income statement and
statement of cash flow in the same form as prepared for management of the
Partnership no later than seven (7) days after such financial statements are
completed.
4.6 Partnership Funds. All funds of the Partnership shall be kept in
-----------------
segregated accounts of investments in the name of the Partnership and shall not
be commingled with any other funds. To the extent practicable, all funds of the
Partnership shall be invested in short-term U.S. government securities or bank
certificates of deposit or shall be deposited in interest-bearing bank or money-
market accounts. Any remaining funds of the Partnership shall be kept in a
Partnership account or accounts in such bank or banks as the General Partner
shall select and shall be disbursed by the General Partner in accordance with
this Agreement.
4.7 Inspections. Each Partner shall be permitted to inspect any and
-----------
all of the facilities and operations of the Partnership during normal business
hours upon reasonable notice to management of the Partnership, provided that
such inspections are scheduled to minimize the disruption of the business of the
Partnership.
4.8 Financial Information. The Partnership shall provide to each
---------------------
Partner, within thirty (30) days after request, such financial information with
respect to the Partnership's business for the periods in which such Partner
initially contributed assets to the Partnership as the requesting Partner shall
need for the purposes of preparing its own financial statements.
12
ARTICLE V
INTERESTS; CAPITAL ACCOUNT
--------------------------
5.1 Interests.
----------
5.1.1 Limited Partner. The Limited Partner has acquired its
---------------
Interest in exchange for the purchase of the JR Partnership Interest, pursuant
to the Purchase Agreement.
5.1.2 General Partner. The General Partner has acquired its
---------------
Interest in exchange for a Capital Contribution consisting of the Transferred
Assets subject to the Assumed Liabilities (each as defined in the WinCup
Contribution Agreement) in exchange for its Interest in the Partnership.
5.2 Capital Accounts; Loans.
-----------------------
5.2.1 Each Partner shall have a Capital Account.
5.2.2 Except as specifically provided herein, no Partner may
contribute capital to, or withdraw capital from, the Partnership.
5.2.3 Loans by any Partner to the Partnership shall not be
considered Capital Contributions, and shall not increase the Capital Account of
the lending Partner.
5.2.4 No interest shall be paid on any Capital Contribution or
Capital Account to the Partnership by any Partner.
ARTICLE VI
ALLOCATIONS
-----------
6.1 Profits. Profits for each Fiscal Year shall be allocated between
-------
the Partners as follows:
(i) First, to the Partners so that the cumulative allocation
of Profits pursuant to this Section 6.1(i) (over the life of the Partnership) is
equal to the cumulative Losses allocated to each Partner pursuant to Section 6.3
hereof (over the life of the Partnership);
(ii) Second, to each Partner in an amount so that the
cumulative allocation of Profits pursuant to this Section 6.1 (ii) (over the
life of the Partnership) will equal the cumulative Cash Flow distributed to such
Partner pursuant to Section 7.1(i) hereof (over the life of the Partnership);
and
(iii) Third, 55% to the General Partner and 45% to the Limited
Partner.
13
6.2 Allocation of Capital Gain and Capital Loss. Capital Gain and
-------------------------------------------
Capital Loss shall be allocated between the Partners in order to create, as
nearly as possible, positive capital account balances for the Partners that will
result in distributions of liquidation proceeds pursuant to Section 9.2 hereof
between the Partners in accordance with the amounts and priorities set forth in
Section 7.2 hereof.
6.3 Losses. Losses of the Partnership for each Fiscal Year shall be
------
allocated between the Partners as follows:
(i) First, in proportion to, and to the extent of, the positive
Capital Account balances of the Partners;
(ii) Second, 55% to the General Partner and 45% to the Limited
Partner.
6.4 Special Allocations.
-------------------
6.4.1 Special Rules to Comply with Minimum Gain Chargeback
----------------------------------------------------
Requirement of Regulations Section 1.704-2(f). If there is a net decrease in
---------------------------------------------
Partnership Minimum Gain during a fiscal year of the Partnership, then, in
accordance with Regulations Section 1.704-2(f), each Partner shall be allocated
items of Partnership income and gain for such fiscal year (and, if necessary,
succeeding fiscal years) equal to such Partner's share of the net decrease in
Partnership Minimum Gain (such share being determined in the manner provided in
Regulations Section 1.704-2(g)(2)), except to the extent that the Partner's
share of the net decrease in Partnership Minimum Gain is caused by a guarantee,
refinancing, or other change in the debt instrument causing it to become
partially or wholly recourse debt or Partner Nonrecourse Debt, and such Partner
bears the economic risk of loss for the newly guaranteed, refinanced, or
otherwise changed liability, and except to the extent a Partner contributes
capital to the Partnership that is used to repay the Partnership Nonrecourse
Liability and such Partner's share of the net decrease in Partnership Minimum
Gain results from such repayment. Any amount allocated pursuant to this Section
6.4.1 shall be comprised of the items of gain and income specified in
Regulations Section 1.704-2(f)(6).
6.4.2 Special Rules to Comply with Chargeback of Minimum Gain
-------------------------------------------------------
Attributable to Partner Nonrecourse Debt under Regulations Section 1.704-
------------------------------------------------------------------------
2(i)(4). If there is a net decrease during a fiscal year of the Partnership in
-------
the Minimum Gain Attributable to a Partner Nonrecourse Debt, then any Partner
with a share of the Minimum Gain Attributable to such Partner Nonrecourse Debt
at the beginning of such fiscal year (this share being determined in the manner
provided in Regulations Section 1.704-2(i)(5)) shall be allocated items of
Partnership income and gain for such fiscal year (and, if necessary, for
succeeding years) equal to that Partner's share of the net decrease in the
Minimum Gain Attributable to such Partner Nonrecourse Debt, except to the extent
the net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt arises
because the liability ceases to be Partner Nonrecourse Debt due to a conversion,
refinancing, or other change in the debt instrument that causes it to become
partially or wholly a Partnership Nonrecourse Liability. Any amount allocated
pursuant to this
14
Section 6.4.2 shall be comprised of the items of gain and income specified in
Regulations Section 1.704-2(f)(6).
6.4.3 Qualified Income Offset. In the event any Partner
-----------------------
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be allocated to
that Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the deficit in that Partner's Adjusted Capital
Account as quickly as possible; provided, that an allocation pursuant to this
Section 6.4.3 shall be made only if and to the extent that such Partner would
have a deficit in its Adjusted Capital Account after all other allocations
provided for in this Article VI have been tentatively made as if this Section
6.4.3 were not in the Agreement.
6.4.4 Partner Nonrecourse Deductions. Any item of Partnership
------------------------------
loss, deduction or Nondeductible Expenditure that is attributable to a Partner
Nonrecourse Debt shall be allocated to the Partner that bears the Economic Risk
of Loss for such debt. If more than one Partner bears the Economic Risk of Loss
for a Partner Nonrecourse Debt, any such item attributable to such debt shall be
allocated among such Partners in accordance with the ratios in which the
Partners share the Economic Risk of Loss for such debt. The determination of
the items of Partnership loss, deduction and Nondeductible Expenditure that are
attributable to a Partner Nonrecourse Debt shall be made in accordance with
Regulations Section 1.704-2(i)(2).
6.4.5 Nonrecourse Deductions. Nonrecourse Deductions shall be
----------------------
allocated among the Partners 55% to the General Partner and 45% to the Limited
Partner.
6.4.6 Tax Allocations. A Partner's allocable share of the
---------------
Partnership's items of income, gain, deduction and loss for tax purposes shall
be determined under the foregoing provisions of this Article VI except as
provided in this Section 6.4.6.
6.4.6.1 Contributed Property. Income, gain, loss and
--------------------
deduction, as computed for the purpose of determining taxable income, with
respect to any property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to take account
of any variation between the adjusted basis of such property to the Partnership
for federal income tax purposes and its initial Gross Asset Value in accordance
with Code Section 704(c) and the Regulations thereunder.
6.4.6.2 Other Property with Gross Asset Value Different
-----------------------------------------------
from Tax Basis. In the event that the Gross Asset Value of any Partnership asset
--------------
is adjusted, subsequent allocations of income, gain, loss and deduction with
respect to such asset, as computed for the purpose of determining taxable
income, shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the manner
provided in Regulations Section 1.704-1(b)(4)(i).
6.4.6.3 Tax Elections; Effects on Capital Accounts. Any
------------------------------------------
elections or other decisions relating to the allocations addressed by this
Section 6.4.6 shall be made in a
15
manner that reasonably reflects the purposes and intentions of this Agreement.
Allocations made pursuant to this Section 6.4.6 are solely for purposes of
federal, state and local taxes and shall not affect, or be taken into account in
computing, any Partner's Capital Account, share of Profits and Losses, or
distributions pursuant to any provision of this Agreement.
6.4.7 Compliance with Code and Regulations. The provisions of
------------------------------------
this Agreement that relate to the allocations for federal income tax purposes of
items of Partnership income (including Exempt Income), gain, loss, deduction and
Nondeductible Expenditure (including, without limitation, the allocation of such
items with respect to property having a Gross Asset Value different from
adjusted federal income tax basis), that relate to the determination and
maintenance of Capital Accounts, and that relate to the distribution of
Partnership property upon the liquidation of the Partnership or a Partner's
interest therein, are intended to comply with Regulations Section 1.704-1(b) (to
the extent not superseded by Regulations Section 1.704-2) and Regulations
Section 1.704-2, and with Code Section 704(c) and the Regulations promulgated
thereunder and, except as otherwise provided in the definition of a "Capital
Account" as set forth in Section 1.6 hereof, shall be interpreted and applied in
a manner consistent with such statutory and regulatory provisions, which
statutory and regulatory provisions are expressly incorporated into and made a
part of this Agreement. Should such statutory and regulatory provisions be
amended, the affected provisions of this Agreement shall be interpreted and
applied in accordance with such amended provisions.
6.4.8 Allocation in the Event of Transfer. If an Interest in
-----------------------------------
the Partnership is transferred in accordance with Article VIII hereof, there
shall be allocated to each Partner which held the transferred interest during
the Fiscal Year of transfer the product of (a) the Partnership's Profits and
Losses allocable to such transferred interest for such Fiscal Year, and (b) a
fraction the numerator of which is the number of days such Partner held the
transferred interest during such Fiscal Year and the denominator of which is the
total number of days in such Fiscal Year; provided however, that the transferor
and transferee may elect to allocate such Profit or Loss by closing the books of
the Partnership immediately after the transfer of an Interest. If an allocation
is made without a closing of the books of the Partnership, the allocation shall
be made without regard to the date, amount or recipient of any such
distributions which may have been made with respect to such transferred
interest.
ARTICLE VII
CASH DISTRIBUTIONS
------------------
7.1 Distribution of Cash Flow. Except as otherwise provided herein,
-------------------------
Cash Flow with respect to each Fiscal Year of the Partnership shall be
distributed between the Partners 55% to the General Partner and 45%to the
Limited Partner.
7.2 Distributions of Net Proceeds of a Sale Transaction. Except as
---------------------------------------------------
otherwise provided herein, Net Proceeds of a Sale or Refinance Transaction shall
be distributed between the Partners 55% to the General Partner and 45% to the
Limited Partner.
16
7.3 Tax Payment Loans. At the sole option of the General Partner,
------------------
the Partnership shall lend each year to the General Partner funds up to the
amount of money equal to the following (the "General Partner's Tax Liability"):
(i) the taxable income allocated to the General Partner for such Fiscal Year as
a result of the Profit allocation pursuant to Section 6.1 hereof multiplied by
(ii) the highest marginal effective Federal and Pennsylvania corporate income
tax rate applicable to the General Partner with respect to that Fiscal Year, as
and when the General Partner shall be obligated to make payments of estimated
tax with respect to the allocation of such Profits but in no event later than
sixty days after the close of the Fiscal Year of the Partnership with respect to
which the allocation of Profit is made. It shall be a condition to the making of
any loan under this Section 7.3 that there shall be sufficient Cash Flow (after
taking into account any loan under this Section 7.3) available for distribution
to the Limited Partner in accordance with Section 7.1 to equal the following
(the "Limited Partner's Tax Liability"): (i) the taxable income allocated to the
Limited Partner for the Fiscal Year as a result of the Profit allocation
pursuant to Section 6.1 hereof multiplied by (ii) the highest marginal statutory
Federal and Delaware corporate income tax rate with respect to that Fiscal Year
(taking into account the deductibility of the Delaware corporate income tax for
purposes of computing Federal taxable income). If there is insufficient Cash
Flow (before taking into account any loan under this Section 7.3) in any Fiscal
Year to equal the sum of the General Partner's Tax Liability and the Limited
Partner's Tax Liability, then the ratio of (i) the loan amount under this
Section 7.3 for the Fiscal Year, to (ii) the total distributions of Cash Flow to
the Limited Partner under Section 7.1 for such Fiscal Year, shall be, as nearly
as possible, the same as the ratio of (i) the General Partner's Tax Liability to
(ii) the Limited Partner's Tax Liability.
ARTICLE VIII
TRANSFER OF PARTNERSHIP INTERESTS
---------------------------------
8.1 Restrictions on Transfer. Except as provided in Article X
------------------------
hereof, no Partner may, without the prior written consent (which may be
arbitrarily withheld) of the other Partner, sell, convey, transfer, syndicate,
assign, mortgage, pledge, hypothecate or otherwise encumber in any way
(hereinafter referred to as a "transfer") all or any portion of its Interest in
the Partnership or in any property of the Partnership, or withdraw or retire
from the Partnership, and any such attempted transfer, withdrawal or retirement
not permitted hereunder shall be null and void. Notwithstanding the foregoing
sentence, a Partner shall be permitted to transfer its interest to its parent
corporation or to a wholly-owned subsidiary of such Partner or its parent
corporation; provided however, that such transfer will not cause a termination
of the Partnership for Federal income tax purposes, and, with respect to a
transfer of the General Partner's interest, the consent of the Limited Partner
is received, which consent may not be unreasonably withheld.
8.2 Survival of Restrictions on Transfer. In the event of any
------------------------------------
transfer pursuant to this Article VIII, the Interest so transferred shall remain
subject to all restrictions and rights contained in this Article VIII and the
transferee shall execute and deliver written instruments, in form and substance
satisfactory to the Partners, agreeing to be bound by all provisions of this
Agreement.
17
8.3 Admission of Substitute Partners. No assignee of an interest as
--------------------------------
a Partner shall be admitted as a Partner in the Partnership unless the assignee
expressly agrees to be bound by the provisions of this Agreement and to assume
the obligations of its assignor under this Agreement and agrees to pay all
reasonable expenses and legal fees relating to the assignment and its admission
as a Partner in the Partnership. Upon the admission of a substituted Partner,
this Agreement shall be amended to reflect the name and address of the
substituted Partner and eliminate the name and address of the assignor and an
amendment to the certificate of limited partnership of the Partnership shall be
filed, if required by the Act. A Partner who assigns all of its Interest shall
cease to be a Partner and shall no longer have any rights or privileges of a
Partner except that unless and until its assignee is admitted to the Partnership
as a substituted Partner in accordance with this Article VIII, the assignor
Partner shall retain all rights and be subject to all obligations under this
Partnership Agreement and the Act.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
---------------------------
9.1 Dissolution Events.
------------------
9.1.1 Dissolution of the Partnership shall be effective the day
on which a Dissolution Event occurs, but the Partnership shall not terminate
until all of the Cash Flow and other available assets of the Partnership shall
have been distributed as provided in this Agreement. Notwithstanding the
dissolution of the Partnership prior to the termination of the Partnership, as
aforesaid, the business of the Partnership and the affairs of the Partners as
such shall continue to be governed by this Agreement.
9.1.2 Notwithstanding anything in this Agreement to the
contrary, upon a sale of all or substantially all of the assets of the
Partnership where all or any portion of the consideration payable to the
Partnership is to be received by the Partnership more than ninety (90) days
after the date on which such sale occurs, the Partnership shall continue solely
for purposes of collecting the deferred payments and making distributions to the
Partners. In such event (i) Profits and Losses recognized and Net Proceeds of a
Sale or Refinance Transaction distributed in any year as a result of such sale
shall be allocated and distributed among the Partners in the same proportion as
such Profits and Losses and Net Proceeds of a Sale or Refinance Transaction
would have been allocated and distributed were the entire gain resulting from
such sale required to be recognized for Federal income tax purposes in the year
in which such sale occurred; and (ii) income attributable to interest on any
deferred payments shall be allocated between, and such interest shall be
distributed to, the Partners as if the deferred payment obligations received by
the Partnership had been distributed in-kind to the Partners under Section 9.2
hereof in the proportions provided for in Section 7.2 hereof.
18
9.2 Liquidation.
-----------
9.2.1 Upon the occurrence of a Dissolution Event, the Partners
shall liquidate the assets of the Partnership, apply and distribute the Cash
Flow thereof and all other available assets of the Partnership as contemplated
by this Agreement and in compliance with the timing requirements of Regulations
Section 1.704-1(b)(2)(ii)(b)(2). As soon as possible after the Dissolution
Event, a full account of the assets and liabilities of the Partnership shall be
taken, and a statement shall be prepared by the Partnership Accountants setting
forth the assets and liabilities of the Partnership. A copy of such statement
shall be furnished to each of the Partners within ninety (90) days after such
Dissolution Event. The assets of the Partnership shall be liquidated as
promptly as possible, the expenses of the liquidation and the debts of the
Partnership shall be paid, and the net proceeds thereof and the other available
assets of the Partnership shall be distributed in accordance with the positive
Capital Account balances of the Partners.
9.2.1.1 Any reserves shall be established or continued
which the General Partner deems reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership. Such reserves shall be
held by the Partnership for the payment of any of the aforementioned
contingencies, and at the expiration of such period as the General Partner shall
deem advisable, the Partnership shall distribute the balance thereafter
remaining to the Partners in accordance with Section 7.2 hereof.
9.2.2 Upon dissolution and liquidation of the Partnership, each
Partner shall look solely to the assets of the Partnership for the return of and
on its investment, and if the Partnership's assets remaining after payment and
discharge of debts and liabilities of the Partnership, including any debts and
liabilities owed to the Partners, is not sufficient to satisfy the rights of a
Partner, it shall have no recourse or further right or claim against the
Partnership, or any other Partner.
ARTICLE X
BUY-SELL PROVISIONS
-------------------
10.1 Tag-Along Right.
---------------
(a) If at any time the General Partner desires to sell more than
20% but less than all of its Interest to any proposed unaffiliated third party
transferee (the "Tag-Along Transferee"), the General Partner shall so notify
each Limited Partner in writing specifying in such notice the price and other
terms of such sale, and shall make effective arrangement (which shall be a
condition to any sale by the General Partner) so that each such Limited Partner
shall have the right to sell to the Tag-Along Transferee, at the same price and
other terms and conditions as involved in such sale by the General Partner, an
equivalent percentage of the Interest then owned by such Limited Partner.
19
(b) If any Limited Partner desires to so participate in any sale under
this Section 10.1, it shall notify the General Partner in writing of such
intention as soon as practicable after such Limited Partner's receipt of the
notice of the General Partner's proposed sale of the portion of its Interest,
and in any event within thirty (30) days after the date the notice was given.
Such notification shall be delivered in person or mailed to the General Partner.
(c) If any Limited Partner so elects to participate in the sale, the
General Partner and such Limited Partner shall sell to the Tag-Along Transferee
all of the portion of the Interest to be sold by them in accordance with this
Section 10.1 at the price and upon the other terms and conditions specified in
the notice described herein at the closing with the Tag-Along Transferee, which
shall be held on a date selected by the General Partner and the Tag-Along
Transferee.
10.2 Take-Along Right.
----------------
(a) If at any time the General Partner wishes to sell all of the
Interest then owned by it to an unaffiliated third party, in one transaction or
a series of related transactions, it may require each Limited Partner to sell
all (but not less than all) of the Interest held by each such Limited Partner to
such third party in accordance with this Section 10.2, provided that such
Limited Partner shall only be required to sell his or her shares at the same
price and other terms on which the Interest of the General Partner is proposed
to be sold.
(b) If the General Partner elects to exercise its "take-along" right
(described in Section 10.2(a)) in connection with such a transaction, it shall
deliver a notice to each Limited Partner, setting forth the terms of the
transaction (including the proposed closing date for its consummation, which
shall not be less than thirty (30) days from the effective date of such notice)
and all documents required to be executed by each Limited Partner in order to
consummate such transaction. Each Limited Partner shall deliver to the General
Partner at least seven (7) days prior to the proposed closing date referred to
above all documents previously furnished to such Limited Partner for execution
in connection with such transaction. If any Limited Partner fails to deliver
such documents and such transaction is subsequently consummated, the Partnership
shall cause its books and records to show that the Interest owned by such
defaulting Limited Partner are bound by the provisions of this Section 10.2 and
that the Interest held by him shall be transferred only to the third party who
purchased the General Partner's Interest in connection with such transaction.
(c) The General Partner shall have one hundred twenty (120) days from
the date of its notice referred to in subsection (b) above to consummate any
such transaction and, promptly after such consummation, shall notify each
Limited Partner to that effect and shall furnish evidence of such sale,
including the time of sale and the terms thereof, as any Limited Partner may
reasonably request. The General Partner shall also cause to be remitted to each
Limited Partner the proceeds of such sale attributable to the sale of such
Limited Partner's Interest not later than the fifth business day following such
sale. If any such transaction is not consummated prior to the expiration of the
one hundred twenty (120) day period referred to in this Section, the General
Partner may not (without the consent of the Limited Partners) thereafter
20
consummate such transaction and shall return to the Limited Partners all
documents previously delivered to the General Partner in connection with such
transaction.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Notices. Any notice which may or is required to be given
-------
hereunder shall be in writing and shall be deemed given when actually received.
Notice shall be addressed to the Partners at the addresses set forth after their
respective names below, or at such different addresses as to any Partner as it
shall have theretofore given notice hereunder.
General Partner:
WinCup Holdings, Inc.
Three Radnor Corporate Center, Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman
Limited Partner:
Radnor Holdings Corporation
Three Radnor Corporate Center, Xxxxx 000
000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman
11.2 Successors and Assigns. Subject to the restrictions on
----------------------
transfer set forth herein, this Agreement shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
11.3 Waiver of Partition. Unless otherwise expressly authorized in
-------------------
this Agreement, no Partner shall, either directly or indirectly, take any action
to require partition or appraisement of the Partnership or of any of its assets
or properties or cause the sale of any Partnership property, and notwithstanding
any provisions of applicable law to the contrary, each Partner (and its legal
representative, successor or assign) hereby irrevocably waives any and all right
to maintain any action for partition or to compel any sale with respect to its
interest in, or with respect to any assets or properties of the Partnership,
except as expressly provided in this Agreement.
11.4 No Oral Modifications; Amendments. No oral amendment of this
---------------------------------
Agreement shall be binding on the Partners. This Agreement shall be amended
only with the consent of each of the Partners. Any modification or amendment of
this Agreement may be effectuated only by a writing signed by all the Partners.
21
11.5 Captions; References. Any titles or captions contained in this
--------------------
Agreement and the table of contents are for convenience of reference only and
shall not be deemed a part of this Agreement. References in this Agreement to
any articles or sections shall be deemed to be references to articles or
sections of this Agreement unless otherwise indicated.
11.6 Terms. Common nouns and pronouns shall be deemed to refer to
-----
the masculine, feminine, neuter, singular and plural, as the identity of the
person or persons, firm or corporation may in the context require. Any
reference to the Code or other statutes or laws shall include all amendments,
modifications or replacements of the specific sections and provisions concerned.
11.7 Invalidity. If any provision of this Agreement shall be held
----------
invalid, the same shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.
11.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument, binding on the Partners, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
11.9 Further Assurances. The parties hereto agree that they will
------------------
cooperate with each other and will execute and deliver, or cause to be
delivered, all such other instruments, and will take all such other actions, as
any party hereto may reasonably request from time to time in order to effectuate
the provisions and purposes hereof.
11.10 Complete Agreement. This Agreement constitutes the complete
------------------
and exclusive statement of the agreement among the Partners with respect to this
Partnership. It supersedes all prior written and oral statements and no
representation, statement, condition or warranty not contained in this Agreement
shall be binding on the Partners or have any force or effect whatsoever.
11.11 Governing Law. This Agreement shall be construed and enforced
-------------
in accordance with the laws of Delaware.
22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WINCUP HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Chairman
RADNOR HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Chairman
23
EXHIBIT A
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this 20th day of January, 1996, by and
among WINCUP HOLDINGS, L.P., a Delaware limited partnership (the "Employer"),
and XXXXXXX X. XXXXXXX (the "Executive").
RECITAL
-------
The Employer a Delaware limited partnership which manufactures and
distributes foam cups, containers and lids and plastic cups and containers.
WinCup Holdings, Inc., a Delaware corporation ("WinCup"), is the sole general
partner of Employer and Xxxxx River Paper Company, Inc., a Virginia corporation
("Xxxxx River"), is the sole limited partner of Employer.
The Executive has extensive operating and financial experience in the
manufacturing and distribution businesses and has been chief executive officer
and president of WinCup since the date of its incorporation.
The parties hereto desire to enter into this Agreement to provide for
the employment of Executive by Employer and for certain other matters in
connection with such employment, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment.
----------
Employer hereby employs Executive and Executive hereby accepts
employment as President, Chief Executive Officer and Chairman of the Board of
Directors ("Board") of Employer in accordance with the terms and conditions
hereinafter set forth.
2. Term.
----
The term of this Agreement shall be five (5) years commencing on the
date hereof ("Initial Term"), unless earlier terminated pursuant to Paragraph 7
below; provided, however, that unless earlier terminated pursuant to Paragraph 7
below, the Initial Term of this Agreement shall thereafter be renewed from year
to year (each, a "Renewal Term") unless either party gives written notice of
termination to the other at least one hundred eighty (180) days prior to the
expiration of such Initial Term or Renewal Term, as the case may be. The
Initial Term and any Renewal Term(s) are hereinafter referred to, collectively,
as the "Term."
3. Duties.
------
Executive is engaged hereunder as President, Chief Executive Officer
and Chairman of the Board of Employer and agrees to perform such duties and
services as are customarily incident to such offices and such other duties and
services as may be assigned to him from time to time by the Board; provided,
however, that it is expressly understood that Executive will not be required to
relocate in order to perform his duties hereunder. During his employment
hereunder, Executive shall conduct himself at all times so as to advance the
best interests of Employer and shall not undertake or engage in any other
business activity which interferes with the performance of his duties hereunder
without the prior written consent of Employer. It is expressly understood that
nothing in this Agreement shall preclude Executive from owning not more than
five percent (5%) of the issued and outstanding shares of a class of securities
of a
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corporation the securities of which are traded on a national security exchange
or in the over-the-counter market.
4. Compensation.
------------
For all services rendered by Executive under this Agreement, Employer
shall pay Executive a base salary of not less than Three Hundred Sixty Thousand
Dollars ($360,000) per annum, payable in equal semi-monthly installments,
together with such additional compensation, including bonus, if any, as the
Board may determine from time to time in its sole discretion (the "Salary").
The Salary shall be reviewed on or about August 1st of each year and may be
increased in the sole discretion of the Board based on corporate policy and
Executive's performance.
5. Expenses.
--------
Executive is authorized to incur reasonable expenses for promoting
Employer's business, including expenses for entertainment, travel, and similar
items. Employer will reimburse Executive for all such expenses provided such
expenses have been included in an operating plan for Employer which has been
approved by the unanimous consent of the Employer's Board ("Approved Operating
Plan") and provided further Executive shall have presented to Employer
appropriate vouchers itemizing such expenses in a form consistent with
Employer's policy. Notwithstanding the foregoing, Employer shall pay directly
all expenses, including but not limited to rent, staff salaries, utilities and
other reasonable expenses, incurred in the maintenance of Executive's main
office located in Northeastern Pennsylvania, provided such expenses have been
included in an Approved Operating Plan.
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6. Fringe Benefits.
---------------
During the Term of this Agreement, Executive shall be entitled to such
benefits of employment with Employer as are now or may hereafter be in effect
for officers and employees of Employer including without limitation such
insurance, disability, medical, dental and other benefit plans or programs as
are now or hereafter established or maintained by Employer for its executive
officers. Executive shall be included in any profit-sharing, pension,
retirement or other employee benefit plan of Employer that may include as
beneficiaries executive officers of Employer, whether now in force or
subsequently implemented by Employer.
7. Termination of Employment. This Agreement may not be terminated
-------------------------
during the Term, other than as provided below:
(a) Death of Executive. In the event of the death of Executive during
------------------
the Term, this Agreement shall terminate and Employer shall have no further
obligation or liability hereunder except to pay to Executive's executor or
administrator, within sixty (60) days after the date of death, the portion, if
any, of Executive's Salary for the period through the date of Executive's death,
unless previously paid.
(b) Total Disability. In the event of a mental or physical condition
----------------
which in the reasonable opinion of the Board, based upon the independent medical
diagnosis of a physician engaged by Employer for that purpose, renders Executive
unable or incompetent to perform his duties hereunder ("Total Disability"),
which condition continues for a period of ninety (90) consecutive days during
the Term of this Agreement, Employer shall have the right to terminate
Executive's employment hereunder by giving Executive ten (10) days' written
notice thereof and, upon expiration of such ten-day period, Employer shall have
no further obligation or
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liability under this Agreement except to pay to Executive, within sixty (60)
days thereafter, the portion, if any, of Executive's Salary for the period
through the date of termination which is due and remains unpaid.
(c) Resignation. Executive may voluntarily terminate his employment
-----------
under this Agreement by giving Employer no less than one hundred eighty (180)
days written notice of his intention to do so including the date upon which such
termination shall become effective, which date shall not be sooner than one
hundred eighty (180) days from the date on which such notice is given.
Following the effective date of such resignation, Executive shall have no
further obligation or liability under this Agreement and Employer shall have no
further obligation or liability under this Agreement except to pay to Executive
the same amounts which are payable under Paragraph 7(a).
(d) Termination for Cause. The Employer may terminate this Agreement
---------------------
at any time for Cause (as hereinafter defined) upon written notice to Executive,
effective upon the date of such written notice. "Cause" shall be defined as (a)
conviction of the Executive for a felony or misdemeanor involving dishonesty,
fraud or moral turpitude under the laws of the United States or any state
thereof or other jurisdiction in which Executive performs services; (b) breach
of Section 9 hereof; or (c) removal of WinCup as General Partner of Employer
pursuant to Section 8.4 of that certain Limited Partnership Agreement, dated as
of the date hereof, between WinCup and Xxxxx River. In the event of termination
for Cause, the Employer shall have no further obligations or liabilities to
Executive hereunder, except that Executive shall be entitled to receive any
accrued but unpaid Salary and expense reimbursement, and to retain all other
amounts received by Executive pursuant to this Agreement prior to such
termination for Cause.
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8. Non-Disclosure of Trade Secrets and Other Information.
-----------------------------------------------------
Executive agrees that he will not, during the Term of this Agreement
or at any time thereafter, use for himself or divulge to others any secret or
confidential information, knowledge, or data of Employer, developed by him or
obtained by him as a result of his employment, unless authorized by Employer in
writing. It is understood that this applies to information of either a
technical or commercial nature, including secret processes, formulas, machinery,
utensils, manufacturing techniques and arts, customer lists, market information
and the like. The terms 'secret' and 'confidential' shall include all
unpublished information and all information and data known to some but not to
all members of the trade or industry to whom such information or data would be
in any manner useful.
All memoranda, notes, records, or other documents made or compiled by
Executive, or made available to Executive while employed by Employer, are
Employer's property and all copies thereof shall be delivered to Employer on
termination of Executive's employment or at any other time upon the request of
Employer.
9. Restrictive Covenant.
--------------------
(a) Non-Competition.
---------------
Executive agrees that, so long as he is employed by Employer
pursuant to this Agreement and for a period of five (5) years thereafter, he
will not, directly or indirectly, as a sole proprietor, member of a partnership,
stockholder, investor, officer or director of a corporation, or as an employee,
agent, associate or consultant of any person, partnership or corporation other
than Employer or in any other capacity:
(i) own, manage, operate, participate in, perform services for
or otherwise carry on a business which sells or manufactures one-piece foam cups
within the
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United States or Canada (the "Territory"); provided that ownership of not more
than five percent (5%) of the issued and outstanding shares of a class of
securities of a corporation the securities of which are traded on a national
security exchange or in the over-the-counter market shall not be deemed
ownership of the issuer of such shares for the purposes of this section;
(ii) induce or attempt to persuade any employee of Employer or
any of its affiliates to terminate such employment relationship in order to
enter into any such relationship with such person or to enter into any such
relationship on behalf of any other business organization which sells or
manufactures one-piece foam cups in the Territory;
(iii) solicit any business related to the manufacture or sale of
one-piece foam cups in the Territory from any clients, customers, or prospective
or former clients or customers of Employer or its affiliates; or
(iv) perform services of any nature for any entity which
manufactures or sells one-piece foam cups in the Territory.
(b) Injunctive Relief. Without limiting the right of Employer or any
-----------------
of its successors or permitted assigns to pursue all other legal and equitable
rights available to them for violation of the covenants set forth in
subparagraph 9(a) hereof, it is agreed that such other remedies cannot fully
compensate Employer and its successors and assigns for such a violation and that
Employer and its successors and assigns shall be entitled to injunctive relief
to prevent violation or continuing violation hereof. It is the intent and
understanding of each party hereto that if, in any action before any court or
agency legally empowered to enforce this covenant, any term, restriction,
covenant or promise is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such a court or
agency.
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10. Arbitration.
-----------
Except as provided in subparagraph 9(b) hereof, any controversy or
claim arising out of or relating to this Agreement or the breach thereof shall
be settled by arbitration in Wilmington, Delaware, in accordance with the rules
of the American Arbitration Association and any decision made in accordance with
such rules shall be binding on all parties in interest, and judgment upon any
award rendered may be entered in any court having jurisdiction thereof.
11. Waiver of Breach.
----------------
The waiver by Employer or Executive, as the case may be, of a
breach of any provision of this Agreement by Executive or Employer, as the case
may be, will not operate or be construed as a waiver of any subsequent breach by
Executive or Employer, as the case may be.
12. Entire Agreement.
----------------
This instrument contains the entire Agreement of the parties with
respect to the employment of Executive by Employer. It may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
13. Severability.
------------
If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision had been originally
incorporated
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herein as so modified or restricted, or as if such provision had not been
originally incorporated herein, as the case may be.
14. Notices.
-------
All notices required or permitted to be given hereunder shall be
in writing and shall be deemed to have been given when actually received. If
such notice is mailed, it shall be deposited, registered or certified, return
receipt requested, in the United States mail, or by commercial overnight courier
such as Federal Express, addressed to the intended recipient as follows:
If to the Executive:
Xx. Xxxxxxx X. Xxxxxxx
000 Xxxxxx Xxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
If to the Employer:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx, President
Any party hereto may from time to time change its address for the purpose of
notice to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
parties sought to be charged with its contents.
15. Bind and Inure.
--------------
This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors in interest.
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16. Governing Law.
-------------
This Agreement is made in and shall be construed in accordance
with and governed by the laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement on the day and year first above written.
EMPLOYER:
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC., its
general partner
By:/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
President
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx
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