atomic energy commission application of general atomic ... · a ~- i. *~ - atomic energy comoqssion...
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ATOMIC ENERGY COMOQSSION
APPLICATION or GZNERAL ATomic compAnY
November 19p 1973
9202100225 910621POR FOXANORRIS90-406 PDR
8289
/CONFORMED COPY/
GE1NERAL ATOMIC COMPANY
November 19. 1973
Mr. L. Manning MuntzingDirector of LicensingOffice of RegulationU.S. Atomic Energy Co: issionWashington, D. C. 20545
Dear Mr. Muntzing:
General Atomic Company ('GACO). a partnership underthe laws of the State of California. hereby applies for writtenconsent to acquire by transfer from Gulf Oil Corporation 1'Gulf")all the right, title and interest, whether direct or indirect.of Gulf in the licenses and applications for licenses set forthin Appendix A. The purpose of this application is to permit.:n accordance with the terms of the partnership agreement datedNovember 19, 1973. GAC. as transferee, to continue withoutinterruption the business performed under or in respect of saidlicenses by Gulf Energy & Environmental Systems Company ("GEES").a division of Gulf (which includes the business of Gulf GeneralAtomic Company. a division of Gulf).
The licenses or interests in licenses to which thisapplication relates fall in three general categories, as follows:
(a) There are a'number of licenses or applicationsfor licenses, described in Part I of Appendix A.which are held or have been made in the nameof Gulf or one of its divisions, GEWS or GulfGeneral Atomic Company.
(b) There are a number of licenses or applicationsfor licenses, described in Part I1 of Appendix A.which are held or have been made by Gulf UnitedNuclear Fuels Corporation(wGUNF'), a wholly-owned subsidiary of Gulf. It is expectedthat GUNF will be merged into Gulf and thatthereafter its business and assets, includingsuch licenses and applications for licenses,will be transferred to GAC.
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(c) There are a number of licenses or applica-tions for licenses, described in Part IIIof Appendix A. which are held or have beenmade by Allied-Gulf Nuclear Services ({AGN'S).a partnership of which Gulf and Allied Chez-icalNuclear Products, Inc., a wholly-ownedsubsidiary of Allied Chemical Corporation.are general partners. Gulf thus has anindirect interest in such licenses or applica-tions for licenses. The interest of Gulf inAG1HS will be transferred to GAC.
Information pertinent to the identification of theanplicant and its general partners and their respectivetinancial qualifications, as required by AEC Regulations1Z C.F.R. 50.33. is set forth in Appendix B. The technicalqualifications of the applicant to carry out the activitiesunlcr the licenses are identical to those of the transferor,sin~e the entire assets of GEES in the United States constitutethe contribution of Gulf to the applicant partnership andpraictically all the personnel of GEES will become employeesoi or otherwise assigned to the applicant.
The applicant hereby agrees that it will not permitany previously unauthorized individual to have access tcRestricted Data until the Civil Service Cc•nission shall havemadt, an investigation and report to the Atomic Energy Co:.issionon the character, associations, and loyalty of such individual.arnl the Atomic Energy Co ission shall have determined thatpesmitting such person to have access to Restricted Data willnot endanger the cov~non defense and security.
Sincerely,
GENERAL ATOMIC COMPANY
byC. A. RolanderPresident
COMMON"WEAL7h OF PENNSYLVANIACOUNTY OF ALLEGHENY
Swnrn to before me this""th day vf November * 1973
Terry OuaidNotary Public
APPENDIX A
License Data
PART 1 - Gulf (and its divisions)
License Nc. Docket No. Facility or Activity
R-67
R.-100
MR-91
50-89.:-
50-163,"
50-227 .-*
50-411.
70-734S.•;M-f96*
TRIGA Mark ISan Diego, California
TRIGA Mark FSan Diego. California
TRIGA Mark IIISan Diego. California
Export of TRIGA components(not radioactive materials) toRomania.
Special Nuclear Material.research and production,
San Diego, California
Special Nuclear Material forproposed YoungsviIle, N.C. HTGRfuel fabrication plant (GYNF).
Export uranium/thorium fuelsamples to France for testingand examination (CEA).
Export of plutonium to UKAEAfor R&D.
Export uranium/thorium fuelsamples to Germany (HOBEG)for testing and examination.
A p pli cation Z 70-1372
X s.1.- 387
XSKM-246
XStlM-428
* including all container licenses or certifications thereunder.
2
PART I - Gulf (and its divisions) continued
License No. Docket No. Facility or Activity
XSN4M-468
XSNM-47 3
SNMt-1409
Pacemaker battery to U.K. fortesting (Pu-238). (AERE Harwell)
Export 2 pacemaker batteries toJapan for testing (Pu-238).
Import uranium/thorium faelsamples from HOBEG. WestGermany, for R&D.
PART I! - cGtNF
License NO. Docket No.
R-4 9
CX -25
SN:;- 3 3
50-101
50-290,.
70-36
70-903
40-6524
Facility or Activity
Lattice Test ReactorPawling, N. Y.
Proof Test ReactorPawling, N. Y.
Chemical OperationHematite. Mo.
Fabrication FacilityNew Haven, Conn.
Engineering OperationsElmsford. N. Y., andPawling, N. Y.,
Plutonium Operation,Pawling, N. Y.
Source MaterialHematite, Mo., andNew Haven, Conn.
Byproduct MaterialHematite, Ho., andNew Haven, Conn.
SNM-87 1
SIM.B-293
24-12988-01
b
3
PART XII - AGNS
License No.
CPCSF-4and pendingapplicationwith respectthereto.
Applicationpending
Docket No. Facility or Activity
50-332
70-1327
Chemical Separations Facility.BKFP, Barnwell, S. C.
UF-6 Conversion FacilityBarnwell. S. C.
All relevant information submitted in support of theabove listed licenses is hereby incorporated by reference in thisapplication. This list is intended to be complete and any omission4s through inadvertence. This application is intended to includeany and all licenses or applications for licenses held or made byGulf relating to the activities of its divisions Gulf Energy &Environmental Systems Company and Gulf General Atomic Company andthose held or made by GUlWF and AGNS.
APPENDIX B
Information Pursuant to 10 C. F. R. 50. 33
I4) Applicant: General Atomic Company ("GAC"I
Address: P. 0. Box 81608San Diego. California 92138
Manufacture, sale and operation of utdizabon facilibes:
acquisition. use and sale of source, byproduct and specialnuclear materials: manufacture and sale of equipment in-
cluding fuel containing such materials; research and develop-
ment; and related activities.
(d3(Zi Applicant is 4 partnership with two general partners each
ou-ning a 50% interest.
The partners are:
(Culf Oil Corporation. a Pennsylvania corporation ("Gulf"i
P. 0. Box 1166Pittsburgh. Pennsylvania 15230
Scallop Nuclear Inc.. a Delaware corporation ("Scallop Nuclear-)
1 Rockefeller Plaza
New York. New York 10020
Trae principal location at which GAC does business is San Diego,
California.
z
3ji) The representatlves to the Partnership Committee and the principal
officers of CAC are as follows:
Partnership Committee:
Representatives of Gulf.
Name
W. L. Ilenry'
Address
ICitizens hi p
USA
USA
USA
P. £. Holloway
W. W. Finley. Jr.
Altcrnate:T. R. Shaver
USA
Retire& entati Ves of Scallop Nuclear:4
E. J. C. Toxopeub
A. 1. W. S. Leonard
Address Citizenship
Nethe rlands
United Etngdom
D. J. Samuel United Kingdom
Alternate:C. H. Boiaardt" Nethe rlAnds
o~tar-ding Cormmdtec.
3
Princ!pal Officers:
Name Address Citizenship
C. A. Rolander, Jr.
W. C. Gallaway
J. K. Warne
President
Exec. Vice Pres.
Exec. Vice Pres.
Vice President.Executive Studies
President, PowerSystems Co. '
Is
USA
USA
USA
H. Hooykaas
J. W. Landis
E. W. O'Ror~c
H. B. Stewart
i. A. Johnston
C. L. Rickard
J. G. Dieter
11. C. Vivian
H. E. Redd
Nethe rIand
USA
Vice Pres. , HTGRPlant. Power SystemsCompany
Vice Pres.. HTGRFuel. Power SystemsCompany
Vice Pres. .'Market-ing. Power SystemsCompany
Vice Pres.. Adv.Power Systems.Power Systems Co.
Vice Pres.. Lawand Secretary
Vice Pres. . Fi-nance L Services
Vice Pres. , L Gen.Ngr.. Environ-mental Systems
USA
USA
USA
USA
USA
USA
USA
sDivision of General Atormic Company
5
Directors: (Cont.
Name
Edwin Singer
James M. Walton
Principal Officers:
Address Citizenship
USA
USA
Na me
B. R. Dorsey
j a nit.,
Z. D.
Ha rold
W. L.
Z.Q
E.B.
Me.rle
F. Lee
Bonnet
H. Hammer
Henry
Johnson
Walker
E. Minks
Title
(CThairman of theBoard and ChiefExecutive Officer
President
Exec. Vice Pres.
Exec. Vice Pres.
Exec. Vice Pres.
Exec. Vice Pre&.
Exec. Vice Pres.
General Counsel
Address Citizenship
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
Herbert C. Manning Vice Pre*. andSecretary
Paul It. Weyrauch. Treasurer
Fred Deering Comptroller
6
Principal Officers: (Cant.)
NArme Title Address
R.W.
P.
A.
'3.
13.
Anderson
Billock
Binsted
Vice
Vice
Vice
Pres.
Pres.
Pres.
ICitizenship
USA
USA
United KingdonIW. C. Brodhead Vice Pres.
F. D. Gassaway Vice Pres.
H. £. Hansen Vice Pres.
Melvin 3. Hill Vice Pres.
Pierre E. Holloway Vice Pres.
E. S. Manning Vice Pres.
USA
USA
USA
USA
USA
USA
USA
USA
William P. Moyles
Paui Sheldon
Vice Pres.
Vice Pres.
G. K. Thompson Vice Pres.
C:I.41111. C. Waild. Jr. %Ice Pres.
F. W. Standefer Director-raxes
USA
USA
USA
L - -- --- - M
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Scallop Nuclear:
Directors:
Name
C. H. roaaardt
G. H. D. Davies
3. H. Ghents
W. R. Koerner
A. 3. W. S. Leonard
M. 3. Paulli
J. D. Ritchie
D. 3. Samuel
E. 3. G. Toxopeus
Principal C(ficers:
Name Titl
E. J. G. Tozopcus Pr
J. D. ltchie Vic
1. If. Chents Vic
Address
C- i
I
e
Citizenship
Netherlands
Ututed Kingdon
USA
USA
United Kingdon
USA
United Ktngdon
United Kingdor
Netherlands
Citizenship
Netherlands
United Klngdon
USA
Addresses
:e Pres.
"e Pres.
m - U ~II -- -.
8
Namre
M. J. Paulli
A.J.W. S. Leonard
D. 1. Samuel
C. H. Bogaardt
. Ii. .D. Davies
W. R. Koerner
Title
Vice Pres.
Vice 'PRyts.
Vice Pres.
Vice Pres.
Treasurer
Secretary
Address
t
Citizenship
IUSA
United Kingdora/ da
United Kingdor
Ne therlands
United Klngdon
USA
(iii) The representatives to the Partnership Cormrnitte and the principaloffcers of AGNS are as foUows:
Partnership Conmmittee:
Representatives of Allied Chemical:
Name
D. H. Bradford
R. C. Baxter
1. W. Kelley
Address
kCitizenship
USA
USA
USA
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Representatives of Gulf (who will become repr'saentatives aof AC):
Nat.ie Address
C. A. Rolander
H4. C. Vivian
L. J. Colby
Citizenship
I USA
USA
' USA
.1
Principal Officers:
Name
H. J. Larson
W. J. Price
J.
R.
R.
0.
H. Nfenken
1. Newman
C. Raveas
T. Stribling
Title
President -
General Manager
Executive VicePresident-Assistant GeneralManager
Vice President -Administration
Vice President -EnvironmentalAffairs
Vice President -Legal - Secretary
Vice President-Marketing
Address Citizenship
USA
USA
USA
USA
USA
USA
II
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(iv) 'Shareholdings of the partners of GAC:
Gulf:
Gulf is a publicly held corporation in the United Statesthe outstanding shares of which are widely held.
Scallop Nuclear:
All the outstanding shares of Scallop Nuclear are ownedby Scallop Holding Incorporated, a Delaware corporation.all the outstanding shares of which are, in turn, ownedby Shell Petroleum N.V., a Netherlands company ("SPNV").S PNV is one of the two principal holding campanies ofthe Royal Dutch/Shell Group of companies, the otherbeing The Shell Petroleum Company Limited, an Englishcompany ("SPCL"). SPNV and SPCL own shares directlyor indirectly in the companies of said Group engagedin branches of the petroleum, petrochemicals and otherbusinesses in more than 100 countries. The shares ofSPNV and SPCL are held in the respective proportionsof 60 : 40 by Royal Dutch Petroleum Company, a publiclyheld Netherlands company ("Royal Dutch") and The "Shell-Transport and Trading Company. Limited, a publicly heldEnglish company.
Iv) Since GAC is owned in equal shares by the two UnitedStates corporations which are partners therein,decisions affecting the conduct of its business willbe reached by negotiation and agreement between thepartners. Neither has the power to subjugate thewill of the other to its own and neither couli over-ride the other or require violation of any regulationor policy affecting the national security or the publichealth and safety. GAC thus is not subject to theownership, control or domination of an alien, a foreigncorporation or foreign government within the meaningof the Atomic Energy Act of 1954, as amended. Eachpartner is subject to service of process and enforce-ment of the United States law and the regulations of theAEC to the same extent as any other United Statescorporation.
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It.is to be noted that the proposed transaction willnot affect or change the operations or the staffingof AGNS. All the individuals who are the presentGulf representatives to the Partnership Committee ofAGNS are to become employees of GAC and, as indicatedabove, it is intended that such individuals willcontinue on such Partnership Committee as the repre-sentatives of GAC. It is further intended that anysuccessors to such individuals nominated by GAC tothe Partnership Committee of AGNS will be drawn fromemployees or representatives of GAC who are citizensof the United States.
It is further to be noted that the present employeesof GEES will constitute practically all the officersand staff of GAC and Gulf will provide such necessaryservices to GAC as it is unable to furnish itself.See the letter agreement re personnel dated November 19,1973, between Gulf and GAC and Scallop Nuclear and theServices Agreement dated as of November 19, 1973,between Gulf and GAC attached hereto. The effect ofthis continuity of staffing will permit the continuedoperation of the businesses to which the listed licensesrelate by the same personnel whose technological capa-bility has heretofore been accepted by the AtomicEnergy Commission.
If) Financial Information:
GAC is a partnership with both Gulf and Scallop Nuclear asits general partners. Thus both are fully liable for theobligations of GAC. The obligations of the partners tocontribute to the capital of GAC as required to finance itsoperations are set forth in Section 2.08 of the PartnershipAgreement dated as of November 19. 1973, a copy of which isattached hereto. The performance of the obligations ofScallop under the Partnership Agreement is guaranteed toGulf by SPNV and SPCL under a Guarantee made as of November 19,1973. a copy of which is attached hereto. Scallop Nuclearwas organized on September 28, 1973, and does not have anyiinancial history. Nevertheless, it is estimated that asof the proposed closing date of the transaction (December 14.1973), Scallop Nuclear will have paid-in capital in excessof $40 million.
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The financial responsibility of Gulf and SPNV and SPCLare respectively shown by the latest annual report andinterim report of Gulf and the latest annual report ofRoyal Dutch and the latest interim report on results ofthe Royal Dutch/Shell Group of companies which are attachedhereto.
The financial statements of the Royal Dutch/Shell Group ofcompanies (which are stated separately in the annual reportof Royal Dutch) represent an aggregation of consolidatedresults of SPNV and SPCL and the companies in which theyhave an interest.
Inasmuch as financial responsibility of Gulf alone hasheretofore been established and accepted by the AtomicEnergy Commission for all purposes of each of the listedlicenses, and inasmuch as the proposed transaction willnot only not diminish that responsibility, but rather, insubstance, will add thereto the strength of the principalholding companies of the Royal Dutch/Shell Group of companies.it is submitted that there is no question about the sufficiencyof financial resources.
Attachments to Appendix B
1. Partnership Agreement dated as of November 19. 1973. betweenGulf and Scallop Nuclear.
2. Guarantee Agreement made as of November 19, 1973. fro,.SPhV and SPCL to Gulf.
3. Letter Agreement dated as of November 19. 1973, re personnelof GAC between Gulf and GAC and Scallop Nuclear.
4. Services Agreement dated as of November 19. 1973. between
Gulf and GAC.
5. 1972 Annual Report of Gulf.
6. Interim Report of Gulf for the nine-month period endedSeptember 30. 1973.
7. 1972 Annual Report of Royal Dutch.
8. Report on the results of the Royal Dutch/Shell Group ofcompanies for January - September. 1973.
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9.
10.
11.
12.
Organization chart of GAC.
Certificate of Secretary of GAC
Certificate of Secretary of Gulf.
Certificate of Secretary'of Scallop Nuclear.
GENERAL ATOMIC COMPANY
PARTNERSHIP' AGREEMENT
Made as of November 19, 1973,
Between
GULF OIL CORPORATION
and
SCALLOP NUCLEAR INC.
I
GENERAL ATOMIC COMPANY
PARTNERSHI? AGREEMENT made as of the 19thday of November, 1973, by and between GULF OILCORPORATION, a Pennsylvania corporation (here-inafter called" Gulf"), and SCALLOP NUCLEARINC., a Delaware corporation (hereinafter called,Scallop').
W I T N E S S E T Ht
WHEREAS, by the Letter of Intent Shell InternationalPetroleum Company Limited and Gulf confirmed their intentionto have Gulf and one or more companies of the Royal Dutch/ShellGroup of companies form a 50/50 partnership to acquire andoperate the assets and business of GEESI and
WHEREAS, to give effect, in part, to the Letter ofIntent, Gulf and Scallop have agreed so to establish a partner-ship in accordance with the provisions, and subject to theterms and conditions, hereinafter set forth.
NOW, THEREFORE, in consideration of the premisesand mutual covenants contained herein, the parties hereto agreeas follows:
ARTICLE I
Definitions
As used in this Agreement, the following termsshall have the meanings specified:
.*Affiliate' shall mean
.(a) when used in relation to Gulf, any companywhich shall for the time being be directly or indirectlycontrolled by Gulfs and
(b) when used in relation to Scallop, N.Y.Koninklijke Nederlandsche Petroleum Maatschappij andThe "Shell" Transport and Trading Company, Limited and anycompany (other than Scallop) which shall for the tirebeing be directly or indirectly controlled by them oreither of them.
.. '.
2
(c) For the purposes of this definition:
M.) a particular company shall bedirectly controlled by another company orcompaniesuwhich shall beneficially ownshares carrying in the aggregate the majorityof votes exercisable at general meetings ofthe particular companyl and
(ii) a particular company shall beindirectly controlled by a company or companies(hereinafter in this definition called theparent company or companiesO) if a series ofcompanies can be specified beginning with theparent company or companies and ending withsuch particular company which shall be sorelated that each company of the series exceptthe parent company or companies shall bedirectly controlled by one or more of thecompanies earlier in the seriess
J rovided, however, that for the purposes of Sections 6.03 and.04 hereoT ýimpany shall not be deemed to he directly or
indirectly controlled, if itshares shall be so held, or itsboard of Directors shall be so constituted, as to preclude orattach adverse legal consequences to the practical exerciseor attempted practical exercise of control of its actions orpolicies.
OAssets Transfer Agreement" shall mean the Agreementdated as of even date herewith to be entered into by the Partner-ship, Gulf and Scallop.
wDollars' or 0$0 shall mean dollars of United Statescurrency.
OGEES" shall mean the Gulf Energy and EnvironmentalSystems Company, General Atomic Company and Gulf EnvironmentalSystems Company, Divisions of Gulf, including all companies,corporations or partnerships relating to the business thereofin which Gulf has an equity or ownership interest.
rGEtES Intangible Property" shall mean IntangibleProperty deriving from the business of GEES, excluding, however,any company, corporate or partnership titles, names or tradenames, or trade marks comprising or containing the word 'Gulf",or any applications or-registrations therefor, or other indiciaused by Gulf or any of its Affiliates outside the business ofGEES.
3
"Gulf" shall moan Gulf Oil Corporation, a FennY'lvaniacorporation, and where the context so admits or recuirvn shal..include any successor to it hereunder pursuant to Lection 7.08(c) hereof.
"Gulf Participant" shall mean Gulf or any cf itsAffiliates 7hiichshall be a party to an Other Nuclear Venturc.
"Independent Accountants" shall mean the inderendentpublic accountants appointed pursuant to Section 5.04 hereof.
"Intangible Property" shall rean all United Statespatent rights (including any inventions, rights tc aoply forpatents, patent applications and patents), technical infcrmaticn,know-how, trade secrets, copyrights, company, corporate orpartnership titles, names or trade names, traderarks, traderarkapplications, trademark registrations, designs, blueprints,drawincs, reports, test data and all technical and nontechnicalknowledge, experience, data and documents in any forr whatsoever,and any transferable or licensable rights thereunder.
"Letter of Intent" shall roan the letter from ShellInternational Fotroleum Company Limited to Gulf doted May 30,1973, confirmed by Gulf on June 4. 1973.
"Net Asset Value" on any date in aucsticn s-all reanthe total o? all properties and assets, less all liabilities,of the rartnership as of such date as determined cn a consolidatedbasis in accordance with generally accepted accounting practice.In fixing Net Asset Value, no consideration shall be civen tc (i)the goodwill, Intangible Property or any other intancgile assetsof the business, or any liabilities related thereto, (ii) anypart of the amount to be contributed by Scallop pursuant toSection 2.08(b) hereof that remains unpaid, or (iii) any provi-sions for future losses cn contractr.
"Other Nuclear Ventureo shall mean a partnershir,joint venture (whether or not through a corporate vehicle) orother reans of joint or common action in or related to the nuclearfield betveen a Gulf Participant and a Shell Participant.
'Participants" shall mean, in respect to an OtherNuclear Venture, the Gulf Participant and the Shell Participantwhich shall be parties thereto.
"Partner or Partners" shall rean a partner cr partnersof the Partnership and includes Gulf and Scallop as the oricinalpartners.
4
OPartnershipl shall mean the partnership formcd bythis Agreement.
"Partnership Committee" shall mean the committeeformed pursuant to Section 3.02 hereof.
'Partnership EntiXy" shall moan a company, corporation,partnership73=o5nt venture or other form of entity or businesscombination in which the Partnership shall have an equity orownership interest.
"President' shall mean the person appointed to thatoffice pursuant to Section 4.01 hereof.
'Profits for Distributionm shall mean the cash avail-able to the"Partnership from operalions and from investmentsof the Partnership and remaining after payment of or provisionfor indebtedness and other obligations of the Partnership,without deduction for depreciation or other non-cash charges.
'Representatives* shall mean the persons apoointedby the Partners to the partnershiv Committee pursuant toSection 3.02 hereof.
Scallop shall mean Scallop Nuclear Corporation, aDelaware corporation, and where the context so admits orrequires shall include any successor to it hereunder pursuantto Section 7.01(c) hereof.
'Secretary* shall mean the Secretary to the Partner-snip appointed pursuant to Section 3.07 hereof.
'Shell Participant' shall mean Scallop or any of itsAffiliates which shall be a party to an Other Nluclear Venture.
'Standing Committee" shall mean the sub-committee ofthe Partnership Committee formed pursuant to Section 3.05 hereof.
'Transitional Period' shall mean the period fromJuly 1, 1973, to and including the day immediately precedingthe date on which Scallop shall have paid the aggregate amountreferred to in Section 2.08(b) hereof.
Wholly-Owned Company* shall mean
(a) when used in relation to an Affiliate of Gulf,any company which shall for the time being be directly or
indirectly wholly owned by Gulf;
(b) when used in relation to Scallop or an Affil-iate of Scallop, any company which shall for the timebeing be directly or indirectly wholly owned by tN.V.
Xoninklijke Nederlandsche Petroleum Maatschappij andThe "Shell" Transport and Trading Company, Limited oreither of thens and
(c) for the purposes of this definition:
(i) a particular company shall be directlywholly owned by another company or companieswhich shall beneficially own shares carrying allthe votes exercisable at general meetings of theparticular company; and
(ii) a particular company shall be indirectlywholly owned by a company or companies (hereinafterin this definition called 'the parent company orcompanies') if a series of companies can bespecified beginning with the parent company orcompanies and ending with such particular com-pany which shall be so related that each companyof the series except the parent company or coin-panies shall be directly wholly owned by one ormore of the companies earlier in the series.
ARTICLE II
Partnership
Section 2.01. Formation. Gulf and Scallop herebyform a partnership for the purposes set forth in Section2.04 hereof pursuant to the provisions of the partnershiplaw of the State of California.
Section 2.02. 'Name Insignia.
(a) The Partnership shall do business under thename "General Atomic Company" and shall, where appropriate,describe itself as 'A Gulf and Royal Dutch/Shell Company".
(b) (i) Gulf agrees that the trade name OGulfOmay be used by the Partnership in the description*A Gulf and Royal Dutch/Shell Companyo, in a manner
6
approved by Gulf. Scallop agrees to use its bestendeavors to obtain for the Partnership the use ofthe designation *Royal Dutch/Shell* in the saiddescription, in a manner approved by Scallop. Theuse of the trade name .'Gulf* and the designation"Royal Dutch/ShellO shall be limited to use inconjunction with said description and the use ofsaid description shall be limited to business docu-mentation of the Partnership and, where appropriate,to its advertising and technical publications andon or in connection vith the products or servicesto be sold or render d by the Partnership. Theprivilege of using .,he said description shall extendto any Partnershi zntity which shall be wholly-owned by the Par. ership, subject to the limitations,acknowledgments and approvals sat forth in subclauses(i), (ii) and (iii) of this clause (b) and for theterm prescribed in clause (d) of this Section 2.02.
(ii) The property rights in and to the tradenames OGulf" and *Shell .and the designation ORoyalDutch/ShellO are hereby acknowledged, and the Part-ners,, on their own behalf and on behalf of theirAffiliates, agree never to make any claim adverseto, or by any act or omission to impair or adverselyaffect, such property rights or the validity thereof,or to make any use, or permit the Partnership or anyPartnership Entity to make any use of said tradenames or designation, in any manner disapprovedby their respective owners.
(iii) Neither the Partnership nor any Partner-ship Entity shall be permitted to use at any time theGulf in Orange Disc Design, or the Shell Emblem, orany other indicia which might be confused with saidDesign or Emblem.
(C) As soon as feasible but in no event morethan six (6) months from the date hereof, the Part-nership shall cause the trade name 'Gulf" to bereplaced in the name of any Partnership Entity bysome word which shall not be likely to be confusedwith the trade names 'Gulf" or "Shell' or the desig-nation 'Royal Dutch/Shell'.
(d) In the event of the termination of the Part-nership in accordance with any of the provisions ofArticle IX hereof or any variation in the intereststherein of the Partners for any reason, it is agreed
7
that the Partnership, unless specifically authorizedby the Partner which shall be the Non-continuing Part-ner or the interest of which shall have varied, shallmake no further use of the privileges made availableby such Non-continuing Partner pursuant to this Sec-tion 2.02.
Section 2.03. Principal Office. The principaloffice of the Partnership shall be at9 San Diego, California,or at such other place as the Partners may from time totime determine.
Section 2.04. P The originating purposesof the Partnership shall oacquire and own certainassets and properties heretofore owned and held by Gulfthrough GEES in the United States and Mexico and to con-tinue, expand and develop enterprises and businesses here-tofore conducted or planned to be conducted by or throughGEES in the United States. Such enterprises and businessesinclude principally the design and sale of nuclear steamsupply systems, in particular high temperature gas-cooledreactor steam supply systems, the fabrication, sale andreprocessing of fuel thereof and the manufacture and saleof steam generators and other components therefor; thedesign and sale of advanced energy systems, includinghigh temperature gas-cooled reactor gas turbine powersupply and process heat supply systems, nuclear fusion andgas-cooled fast breeder reactors; the fabrication andsale of light water reactor fuel, the obt•ining of anddealing in raw material necessary for the foregoing; thereprocessing of spent light water reactor fuel; the designand sale of various environmental control systems, elec-tronic controls, data processing systems and medicalprosthetic devices; and the development and expansionof Intangible Property necessary for, relating to, orarising from the foregoing, and the grant and receipt oflicenses appropriate in connection therewith.
Section 2.05. Extension of Purposes. The origi-nating purposes of the Partnership may be extended fromtime to time by the determination of the Partnership Com-mittee, but only into fields so related to or derived fromsuch purposes that they may properly be regarded as withinthe scope and intention of the Partnership at its incep-tion.
The originating purposes of the Partnership donot include engagement in businesses involving the mining
8
or milling of, or enrichment services with respect to,uraniums however, it is recognized that the Partners ortheir respective Affiliates are or may from time to timebe engaged in such businesses. Nothing in this Agreementcontained shall be deemed, insofar as the Partnershipshall be concerned, either Mi) to give to either Partneror any Affiliate of a Partner engaged in such a businessany special right, or to impose upon such Partner orAffiliate so engaged any special obligation, in respectof such business or (ii) to preclude a Partner or anAffiliate of a Partner engaged in such a business fromentering into transactions on a coamercial basis with thePartnership (if duly authorized hereunder) relating tosuch business.
Section 2.06. Restriction on Activities. ThePartnership shall not engage in any phase of tMe petroleumor petrochemical businesses or in any other area of enter-prise where the Partners and their respective Affiliateshave or shall establish separate and competing marketingorganizations.
It shall be the policy of the Partnership torespect such limitations of the United States AtomicEnergy Act of 1954, as amended, with respect to foreigncorporations as may be applicable. The policy of thePartnership shall also be strict adherence to all appli-cable laws respecting trade regulation and competition.The President shall ensure that all employees of thePartnership shall be properly instructed with respect tosuch policies including directions, where necessary,that adherence to such policies is part of the respon-sibility of management at all levels.
The Secretary shall promptly report to thePresident any matter which in the opinion of suchSecretary might be construed to be an infraction ofthe intent of this Section 2.06 and shall ensure thatthe Partnership Ccacmittee and the senior legal officerof or legal advisor to each of the Partners shall beadvised of such matter.
Section 2.07. Term. The term of the Partner-ship shall commence as of July 1, 1973, and shall continueindefinitely until terminated as herein provided or pur-suant to law.
9
Section 2.08. Capital.
(a) As its initial contribution to the capitalof the Partnership* Gulf shall assign, transfer, anddeliver to the Partnership certain assets, property andbusiness of GEES in accordance with the terms of theAssets Transfer Agreement, subject to the assumption bythe Partnership of certain liabilities of Gulf as pro-vided in said Agreement. Thereafter, Gulf shall nothave any obligation to make further contributions to thecapital of the Partnership until the completion of thecontributions to such capital by Scallop as provided inclause (b) of this Section 2.08.
(b) As its initial contribution to the capitalof the Partnership, Scallop shall from time to time payto the Partnership such amounts as shall be required bythe Partnership for the period commencing July 1, 1973,after the application of any revenues of the Partnershipfor such period, until Scallop shall have so paid anaggregate amount of $175,000,000; rovided, however, thatan appropriate portion of the advances made by an Affil-iate of Scallop to Gulf pursuant to a certain Agreementmade as of July 1, 1973, shall be included as part ofsuch initial contribution.
(c) The payments to be made by Scallop to thePartnership as provided in clause (b) of this Section2.08 during the Transitional Period shall be made atsuch times, in such amounts and under such conditionsas shall be determined by the Partnership Committee tobe necessary to permit the operations of the Partnershipin accordance with its budgets as established from timeto time; provided, however, that, if the establishment ofany of the budgets for a Particular fiscal year includedin the Transitional Period shall be delayed because of afailure of the Partnership Committee to agree on thedesirability of including, or the level of the fundingof, one or more items in such budgets, Scallop shallnevertheless make the payments in such fiscal yearprovided for in clause (b) of this Section 2.08, whichshall be necessary to permit Mi) the funding of all suchoperations of the Partnership covered by items in suchbudgets as to which there shall not be any disagreementin the Partnership C. uittee, (ii) the payment of costsfor staff and overhead at existing levels and amountsnecessary to meet existing obligations and commitments.and (iii) pending final resolution of the disputed items,
10
the funding of only such portions or levels of operationscovered by such disputed items an to which the PartnershipCommittee shall not be in disagreement.
(d) if pursuant to Section 7.02 or Section 7.03of the Assets Transfer Agreement a portion of the assets,property and business or certain of the material agree-ments of GEES shall not be transferred to the Partnershipat the closing thereunder because of the non-receipt ofgovernmental approvals or necessary third party consentswhich shall not thereafter be obtained or, if pursuant toSection 8.06 of said Agreement it shall not be practicableto make reasonable arrangements in respect of the leases,sub-leases, agreements, contracts, sales orders or purchaseorders or equity or ownership or other interests referredto therein the consent to the assignment of which to thePartnership shall not have been obtained, the Partnersshall consider what measures, if any, should be takenbetween them in respect of the Partnership equitably tocompensate for the situation thus created.
(e) Gulf and Scallop shall contribute to thecapital of the Partnership in the ratio of 50/50 allamounts in excess of the contributions provided in clauses(a) and (b) of this Section 2.08 required to financeoperations of the Partnership. The contributions shallbe made at such times, in such amounts and under such con-ditions as shall be determined by the Partnership Committee.
(f) Uo interest shall be paid on any capital
contributed to the Partnership.
Section 2.09. interest in Capital.
(a) An individual capital account shall be main-tained for each Partner and, notwithstanding the differentcontributions to capital to be made by Gulf and Scalloppursuant to clauses (a) and (b) of Section 2.08 hereof,the capital accounts of each Partner shall at all timesbe equal.
(b) A Partner shall not be entitled to withdrawany part of its capital account or to receive any distribu-tion from the Partnership except as provided in Sections2.10 and 9.02 hereof, and a Partner shall not be entitledto make any additional capital contributions to the Part-nership other than the capital contributions required orpermitted to be made by such Partner under Section 2.08hereof.
11
(c) It is expressly agreed that the Partnersshall own and maintain equal interests in the Partnership.
Section 2.10. Profits and Losses.
(a) All profits and losses of the Partnership(including, without limitation, all profits and all lossesattributable to the assets, property and business of GELSto be transferred to the Partnership under the Assets Trans-fer Agreement, for the period between July 1, 1973, and theClosing Date under said Agreement) shall be shared equallyby Gulf and Scallop for the entire period beginning July1, 1973, to and including the dissolution and winding upof the Partnership.
(b) The Profits for Distribution which shall notbe determined by the Partnership Committee to be requiredby the Partnership shall be distributed in cash to the Part-ners substantially on a current basis at such times, in suchamounts and under such conditions as shall be determined bythe Partnership Committee. All distributions shall be madeto the Partners in accordance with their respective inter-ests in the Partnership.
ARTICLE III
Direction
Section 3.01. Direction. The Partners shall haveequal rights in the direction of the conduct of the businessand affairs of the Partnership. The authorization orapproval of the Partnership Conmdttee shall be required forthe matters listed in Annex A hereto and any other mattersdetermined from time to time by the Partnership Committeeto be reserved for its decision.
Section 3.02. Partnership Committee. For thepurpose of directing the conduct of the business and affairsof the Partnership, the Partners shall appoint a permanentPartnership Committee consisting of not more than eightRepresentatives. Not more than four Representatives (andalternates thereof) shall be nominated by each Partnerwhich shall fill vacancies as they shall occur within fif-teen days. A person who shall be an employee of, or beseconded to the staff of, the Partnership, a PartnershipEntity or an Other Nuclear Venture may not at the same timebe a Representative (or an alternate).
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Section 3.03. Action by Partnership Cocittee.The Partnership Committee shall act either by resolutionadopted at a meeting of the Partnership Committee or byunanimous written consent as evidenced by an instrumentsigned (or several instruments in like form togethersigned) by all of the Representatives for the time beingholding such office. Four Representatives Cor theiralternates), tworepresenting each Partner. shall constitutea quorum for meetings of the Partnership Ccaittee. EachPartner shall have one vote without regard to the numberof its Representatives (or their alternates) present. Inthe case of an equality of votes, the Chairman shall nothave the right to cast a deciding vote. The President andother senior management staff of the Partnership may berequested to attend meetings of the Partnership Corm,•ittee.
Section 3.04. Chairman. The Chairmanship of thePartnership Co=mittee shall alternate between the Partnerson the basis of alternate calendar years unless otherwiseagreed. A Representative of Gulf shall be Chairman untilthe end of 1974 and a Representative of Scallop shall beChairman during 1975.
Section 3.05. Standing Committee. The Partnersshall each designate at least one of Its Representatives(and an alternate therefor) to act as a Standing Committeeof the Partnership Ccxzmittee. The Standing Committeeshall meet as often as shall be necessary or desirableand at such places as shall be convenient to its membersand may also act without a meeting by telephone, cable ortelex in such manner as the members thereof shall agree.A quorum for action by the Standing Committee shall be aRepresentative (or his alternate) appointed by each Part-ner. Each Partner shall have one vote at meetings of orfor action by the Standing Committee. Between meetingsof the Partnership Coimtittee the Standing Committee mayexercise all the powers of the Partnership Co=mittee,except powers with respect to those matters which thePartnership Committee shall have from time to timespecifically reserved for determination by the fullPartnership Committee.
Section 3.06. Sub-Comittees. The PartnershipCommittee may appoint other sub-coitmtees with suchpowers and responsibilities as it shall designate. Eachsuch sub-committee shall consist of at least one Repre-sentative (or an alternate thereof) appointed by each
13
Partner. No such sub-committee shall exercise any powerswhich could not be exercised by the Standing Committeeunless specifically authorized to do so by the PartnershipC•-littee.
Section 3.07. Rules of Procedure: Minutes; Secre-tary. The Partnership Committee shall establish rules ofprocedure with respect to its operations and those of theStanding Committee and any other sub-committee of the Part-nership Committee. The Partnership shall appoint a Secretarywho shall be responsible for keeping minutes of the proceed-ings and decisions of the Partnership Committee and the pro-ceedings and decisions of the Standing Committee and any sub-committee of the Partnership Comittoe.
Section 3.08. Appointments and Removals. Allappointments and removals of Representatives and alternatesby a Partner under this Article III shall be made by noticegiven to the Partnership with a copy thereof to the otherPartner.
ARTICLE IV
Management and Staff
Section 4.01. President. The Partnership Committeeshall appoint a President of the Partnership to whom shall bedelegated executive and financial authority, inform andextent to be specified by the Partnership Committee, to enablehim to conduct and supervise the operational management ofthe business and affairs of the Partnership. The first suchPresident shall be the President of GEES at the date hereof.
Section 4.02. Senior Management. The PartnershipCommittee shall from time to time appoint such senior manage-ment personnel for the Partnership as shall be necessary ordesirable and shall specify the duties and responsibilitiesof the personnel so appointed. The initial staffing of thePartnership shall include the appointment of certain personsnominated by Scallop and agreed by the Partnership Committee.
Section 4.03. Staff of GEES. In order to preservecontinuity of management and operations, it is desirable thata substantial portion of those employees of Gulf who constitutethe existing staff of GEES shall become the staff of the Part-nership. In certain cases, with the approval of the Partner-
14
ship Committee, Gulf shall second such employees to thePartnership pursuant to Section 4.05 hereof. Except forsuch employees so seconded, or as may be otherwise agreedby the Partnership Comaittee in particular cases, the Part-nership shall assume from Gulf the employment of allpresent employees of Gulf within GEES and shall assumeGulf's existing rights and responsibilities under employeebenefit plans, programs and policies which apply only toemployees of GEES or adopt substantially similar plans,programs or policies. Those employee benefit plans, pro-grams and policies of Gulf and its Affiliates which donot apply solely to employees of GEES but which are ofgeneral application shall not apply to employees of thePartnership except to the extent as may be approved bythe Partnership Com-ittee. Gulf shall use its bestefforts to persuade such employees to accept employmentwith the Partnership.
Section 4.04. Service Agreement. To the extentand for the period that it shall not be practicable oreconomic to include on the staff of the Partnership per-sonnel capable of providing all management and staffservices required by the Partnershipp the Partnershipshall enter into an appropriate service agreement withGulf or an Affiliate of Gulf for the provision of suchservices.
Section 4.05. Seconded Personnel. The Partner-ship may include on its staff sh peisonn seconded by aPartner or an Affiliate of a Partner as, and on such termsand conditions as, shall be agreed by the Partnership Com-mittee.
ARTICLE V
Financial Matters
Section 5.01. Pr~orams and Budgets. In eachyear, the Partnership Comittee shall establish a researchprogram and budget and an operating and capital expenditurebudget for the next fiscal year. The Partners hereby acceptas the capital and research and development expenditures ofthe Partnership for the balance of the fiscal year 1973 thecorresponding forecasts of GEES for the same period as ineffect at the date of the Letter of Intent.
The Partnership Conimittee shall establish pro-cedures for the determination of programs, budgets and
I
I] Iii
1 r
planning, including the authorization of major or long-term eoreitments or contracts and the development of long-term financial and business forecasts.
Section 5,02. Deposits and Investents. Thefunds of the Partnership shall be deposited in t name ofthe Partnership in accounts in banks or hanking institu-tions to be selected by the Partnership Cocanittee orinvested in such manner as shall be authorized by thePartnership Coittee. The Partnership Committee shallprescribe such procedures as it shall deem necessarywith respect to withdrawals from such accounts andto making such investments.
Section 5.03. Fiscal Year. The fiscal year ofthe Partnership shall and'on Decear 31 in each year.
Section 5.04. Books of Account. Upon the basisof the audited financial statuments of GEES as ofJune 30, 1973, and of this Agreement, the PartnershipComittee shall approve t~ie opening financial stateirentGfor the Partnershiv as mt July I, 1973.
Accurate books of account of the Partnership shallbe kept, on the accrual basis, showing the condition ofthe business and finances of the Partnership. Such booksshall at all times be retained at the principal place ofbusiness of the Partnership and shall at any reasonabletime be available for examination by either Partner or per-sons acting on its behalf. The books of account shall beaudited at December 31 in each year, and at other timesas may be determined by the Partnership Cornittee, by theIndependent Accountants for the Partnership who shall bePrice Waterhouse & Co., unless and until the PartnershipConnittee shall agree to a change thereof.
Section 5.05. Financial Statements.
(a) As promptly as practicable after the closeof each fiscal year of the Partnership there shall beprepared and submitted to each Partner the following finan-cial statements, accompanied by the certificate of the Inde-pendent Accountants:
(iM a balance sheet of the Partnership as atthe end of such fiscal year;
22N
(ii) a statement of profit and loss for suchfiscal year; and
(iii) a statement of Partners' interest forsuch fiscal year.
Any financial statement submitted pursuant to this clause(a) shall be deemed correct, binding and conclusive uponboth Partners unless objection thereto shall be made byeither Partner within forty-five (45) days after suchstatement shall have been received by suct. Partner.
(b) The Partnership shall furnish to each Part-ner such other financial information at such times andprepared in such form as shall reasonably be required bysuch Partner to meet its needs.
(c) The Partnership Committee shall make anynecessary determinations of accounting policy for thePartnership.
Section 5.06. Tax Matters.
(a) Unless otherwise agreed by the Partners,Partnership profits and losses for the year 1973 ahall atDecember 31, 1973, be allocated for the purposes of taxesbased on or measured by income imposed by the United Statesand other applicable taxing jurisdictions between the Part-ners as follows:
(i) all profits and losses for the period fromOctober 1 to December 31, 1973 (but not in excess offifty percent (50t) of the total profits and lossesfor the period from July I to December 31, 1973),shall be allocated to Scallop: and
(ii) all remaining profits and losses for theperiod from July 1 to December 31, 1973, shall beallocated to Gulf.
From and after January 1, 1974, each Partner shall forall purposes of taxes based on or measured by incomeimposed by the United States and other applicable taxingjurisdictions share equally in all profits and losses ofthe Partnership to the extent legally possible.
(b) To the extent that the Partnership may orshall be required to make elections for income tax pur-poses of any jurisdiction, and to the extent that Partners
may or shall be required to make such elections concerningthe properties and business of the Partnership and suchelections may not be made in different ways by differentPartners, such elections shall be made in such manner asshall be determined by the Partnership Committee.
ARTICLE VI
PropErty
Section 6.01. Property Ownership. All assetsand property, including Intangible Property, owned by thePartnership or in which it shall have an interest shall,unless otherwise agreed by the Partnership Conmittee, beheld and recorded in the name of the Partnership.
Section 6.02. Right to Use and License IntangibleProperty. Each Partner and each of its A.fillates shall havethe irrevocable right to use Intangible Property of the Part-nership royalty-free in the various phases of its petroleumand other fossil fuel, chemical and metals operations; pro-vided, however, that such use Mi) shall not be in conflictwthsection 8.01 hereof and (ii) shall not involve an oppor-tunity of the type described in Section 8.04 hereof thatshall either fall or could reasonably be deemed to fallwithin the scope of the business of the Partnership. Unlessotherwise agreed by the Partnership Committee, the term"right to use" as used in the immediately foregoing sentenceincludes only the right to. apply such Intangible Propertyin manufacturing and other internal operations of such Partrnerand its Affiliates.
In all cases not covered by the application of theimmediately foregoing paragraph or any decisions of the Part-nership Committee thereunder, the Partnership shall have theright to grant licenses in respect of such Intangible Propertyon such terms and conditions as shall be established by thePartnership Committee from time to time.
Section 6.03. Intangible Property of Partner. If
either Partner or an Affiliate theroof has or shall developor acquire Intangible Property or any interest therein whichthe Partnership shall desire to utilize and shall not other-wise be entitled to use, then such Partner (or its Affiliate),taking into account the provisions of thin Agreement, may gxzint
or cause to be granted on such terms and conditions as maybe agreed between such Partner (or its Affiliate) and thePartnership a license to the Partnership in respect of suchIntangible Property.
Each Partner shall use its best efforts to drawto the attention of the Partnership any such IntangibleProperty of such Partner or its Affiliate which might beof utility to the Partnership so as to enable the Partner-ship Comnittee to determine whether or not such IntangibleProperty shall be of interest to the Partnership and, if so,to decide on the acceptability to the Partnership of theterns and conditions of the license thereof proposed bysuch Partner (or its Affiliate).
ARTICLE VII
Restrictions on Partners
Section 7.01. Encumbrances and Transfers.
(a) Except as otherwise provided in clause Wb)or clause (c) of this Section 7.01 or in Article XIIIhereof, neithar Partner, nor any per'son acting by author-ity of or for any Partner, shall pledge, mortgage, hypothe-cate, assign or in any manner sell, transfer, or otherwisedispose of its right, title and interest in the Partnershipor in any assets, receivables, liabilities, obligations,records, documents, files or customers of the Partnershipor in, to or under this Agreement, all such right, titleand interest of each Partner being personal and nontransfer-able and nonassignable. Any action is violation of thisclause (a) shall be void.
Mb) Anything in this Agreement to the contrarynotwithstanding, upon notice in writing to the other Part-ner, a Partner may
(i) cause any duty or obligation imposed on itby this Agreement to be assumed, performed or dis-charged by one or more of its Affiliates and "-he dueperformance or discharge thereof by such Affiliateor Affiliates shall satisfy such duty or obligationon the part of such Partner: and
(ii) transtfr and assign any of its rights underthis Agreement to one or more of its Affiliates:
proidd, howvvr, that, except as provided in clause (c)ofthisectibn"7.01, the assumption by any such Affiliate
or Affiliates of such duty or obligation shall not relievesuch Partner of responsibility and liability therefor, andsuch a transfer or assignment shall not relieve such Part-ner or such Affiliate or Affiliates from its duties andobligations under this Agreement with respect to suchrights so transferred and assigned.
(c) Anything in clause (a) of this Section 7.01,to the contrary notwithstanding, a Partner may transferand assign all its right, title and interest in the Part-nership and its assets and in, to and under this Agreementto an Affiliate of such Partner. Any such Affiliate towhich such right, title and interest shall be transferredand assigned shall execute a copy of this Agreement andsuch other documents as shall be necessary to assume allthe duties, liabilities and obligations of the trans-ferring Partner in respect of the Partnership and underthis Agreement. Such Affiliate shall thereupon become andbe a Partner in succession to such transferring Partnerwhich thereupon shall cease to have any right, title orinterest in, or duties, liabilities or obligations inrespect of the Partnership or in, to or under this Agree-ment, except that any liabilities and obligations of anyAffiliate of a Partner hereunder which shall become asuccessor Partner shall, in case such successor Partnershall be an Affiliate of Gulf, be guaranteed by Gulf OilCorporation to Scallop and, in case such successor Partnershall be an Affiliate of Scallop, be guaranteed to Gulfby Shell Petroleum N.V. and The Shell Petroleum CompanyLimited.
(d) Anything in this Article VII to the contrarynotwithstanding, unless otherwise agreed by the other Part-ner, Scallop, or any Affiliate thereof which shall becomeits successor hereunder pursuant to clause (c) of this Sec-tion 7.01, and any Affiliate of Gulf which shall become its,.6uccessor hereunder pursuant to said clause (c) shall each,'4, and for as long as it shall be a Partner remain, a Wholly-cowned Company.
Section 7.02. Acts by Partners. Neither Partnershall subscribe to any bon. sign or endorse any note,accept, sign or endorse any draft or bill of exchange orassume any other liability, oral or written, either in itsown'name in respect of the Partnership or in the name of thePartnership, without the prior approval of the PartnershipCorittee.
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ARTICLE VIII
Best Endeavors
Section 8.01. Promotion of Partnership, EachPartner shall use its best endeavors to promote the activi-ties of the Partnership and to ensure its success.
Section B,02. Information. Both Partners shall,subject to any applicable restriction of law or existingsecrecy agreements with third parties, be fully and cur-rently informed of the activities of the Partnership and ofall Partnership Entities. To the extent that there shallbe any existing secrecy agreements or any applicable lawsor regulations which would have the effect of limitingthe right of a Partner so to be informed, the other Part-ner shall use its best efforts to obtain waivers thereofin favor of the Partnership and the Partner so limited and,failing the obtaining of such waivers, the Partners shallmake such arrangements as shall be practicable to preserveto the Partnership the benefits of the contracts or projectsto which such secrecy agreements or laws or regulationsshall relate.
Section 8.03. Services. Subject to the provisionsof the second paragraph oE Sectlon 2.05 hereof, each Partnershall render to, or use its best endeavors to procure for,the Partnership such services as may be reasonably requiredfrom such Partner by the Partnership for its purposes. ThePartnership Committee shall approve the charges (or the basisof the computation of the charges) paid for such services.Unless otherwise agreed by the Partnership Committee, suchbasis of computation shall, to the extent practicable, beconsistent irrespective of the Partner furnishing or pro-curing such services.
Section 8.04. Business Opportunities. Each Part-ner undertakes that, if an opportunity falling within thescope of the business of the Partnership shall become avail-able to it or any Affiliate of it, such Partner shall, tothe extent it may legally do so, endeavor to make suchopportunity available to the Partnership.
ARTICLE IX
Termination
Section 9.01. Contlnuance. The Partnership shallcontinue until dissolved by the mutual consent of the Partners
in writing or in accordance with the provisions of thisArticle IX.
Section 9.02.- Default.
(a) if a Partner shallt
(4) fail for a period of more than sixty(60) days after the due date to make any con-tributions or other payments to be madec by itto the Partnership in accordance with the pro-visi.ons of this Agreement; or
(ii) withdraw from the Partnership duringthe term hereof without the written consent ofthe other Partner; or
(iii) commit a breach of any of the other cove-nants herein contained and, if such breach shall beremediable, fail to remedy such breach within aperiod of forty-five (45) days after notice fromzthe other Partner in writing to remedy such breachor, in the case of a dispute as to the existenceor occurrence of a breach, forty-five (45) daysafter a final determination that there shall havebeen a breach;
then such other Partner shall be at liberty in every suchcase forthwith to terminate this Agreement by writtennotice given prior to the curing of such default. In anysuch event, the entire cost and expense of conducting anyproceeding to dissolve the Partnership or for an account-ing# or both, shall be borne by the defaulting Partner.
(b) If either Partner shall make an assignmentfor the benefit of creditors or be adjudicated a bankrupt,or shall suffer the appointment of a receiver or trusteeof its business or properties by reason of insolvency orliquidation, or shall file or have filed against it apetition in bankruptcy or for reorganization under theUnited States Bankruptcy Act or under the provisions ofany law of like import unless such petition shall befiled against it and shall be dismissed or stayed withinsixty (60) days, the other Partner shall be at libertyin every such case forthwith to terminate this Agreementby written notice.
M
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(c) If
(i) in respect of any Other Nuclear Venturewhich shall have been declared by the Participantsthereto to be a significant venture there shall haveoccurred such events or circumstances as, under theterms of any applicable agreement relating to suchOther Nuclear Venture, shall permit or entitle oneof the Participants to declare the other in defaultand to terminate such Other Nuclear Venture;
(ii) such non-defaulting Participant shall have,taken such steps as shall be necessary under suchagreenent to declare the other in default and tucause the termination of such Other Nuclear Venture:and
(iii) the declaration of default shall not havebeen rescinded, revoked or set aside;
then Gulf, if the defaulting Participant in such Other NuclearVenture shall be the Shell Participant, or Scallop, if suchdefaulting Participant shall be the Gulf Participant, shallbe at liberty in every such case forthwith to terminate thisAgreement by written notice given prior to the ccring ofsuch default.
(d) In case of any termination of this Agreementin accordance with the provisions of clause (a) or clause(b) or clause (c) of this Section 9,02, the Partnershipshall be dissolved ca of the date of the notice of termina-tion (in this Section 9.02 called the *Dissolution Date'),but the Partner who shall have properly given notice oftermination (in this Section 9.02 called the *TerminatingPartner') shall be entitled to purchase the assets of thePartnership subject to its liabilities and continue its busi-ness on the basis hereinafl.er set forth:
Mi) If the Dissolution Date shall be after theend of the Transitional Period, the Terminating Part-ner desiring to exercise such purchase right (in thisSection 9.02 called the OContinuing Partner') shallpurchase the assets of the Partnership at a priceequal to thirty-five percent (35%) of the Net AssetValue of the Partnership as of the Dissolution Date.
(ii) If the Dissolution Date shall be duringthe Transitional Period, then:
23
(1) if the Continuing Partner shall beGulf, it shall purchase the assets of the Part-nership at a prica which shall be equal to fiftypercent (501) of the excess of (xW the flat AssetValue of the Partnership as of the DissolutionDate over (y) that portion of the aggregate amountrequired to be paid by Scallop pursuant to Section2.08(b) hereof which shall not have been paid asof the Dissolution Date; if, however, the resultof such coonpucation shall be a negative amount,such amount shall be paid to Gulf by Scallop;and
(2) if the Continuing Partner shall beScallop, it shall purchase the assets of thePartnership at a price which shall be equal tofifty percent (50%) of the sum of (x) the NetAsset Value of the Partnership as of the Dis-solution Date and !y) that pcrtion of the aggre-gate amount required to be pa~d by Scallop pur-suant to Section 2.08(b) hereof which shall nothave been paid as of the Dissolution Date.
(iii) Such purchase right shall be exercisableby the Continuing Partner within 180 days after theDissolution Date by notice to the other Partner (inthis Section 9.02 called the ONon-continuing Partner}).The purchase of the assets of the Partnership shall beconsummated within 90 days after the date of suchnotice by the execution and delivery by the Partner-ship of such instruments oY transfer, assignment andconveyance as may reasonably be requested by theContinuing Partner and by payment of one-third ofthe applicable purch2se price to the Partnershipfor Cistribution to the Non-continuing Partner. Thebalance of such purchase price shall be payable in thesame manner one half on the first anniversary of thedate of such transfer, asaignment and conveyance andone-half on the second anniversary thereof. The unpaidbalance of such purchase price shall not bear interest.Pending settlement of any claims which the ContinuingPartner may have against the Non-continuing Partner,buch amounts may be paid by tne Continuing Partnerinto a separate escrow account with a bank or truitccmpany.
tiv) The Continuing Partner shall assume andagree to pay and shall indemnify the Non-continuing
24
Partner against, and hold it harmless from, all lia-bilities and obligations of the Partnership arisingon and after the Dissolution Date.
(e) The remedy provided for in clause Md) of thisSection 9.02 shall be deemed to constitute liquidated damagesfor the breach of this Agreement giving rise to the ternina-tion, but shall be without prejudice, and in addition, toall other rights and remedies at law or in equity to whicha Partner may be entitled for claims arising prior to thetermination other than any claims in respect of the eventsconstituting or giving rise to such breach.
MU In the event that the Partnership shalldissolve and neither Partner shall be entitled to exercisethe purchase right provided in clause Md) of this Section9.02, or a Partner shall be entitled to exercise the pur-chase right provided in said clause Wd) hereof but shallnot do so, the Partnership shall be wound up and liquidatedin accordance with the law and the following provisions:
Mi) If there shall be a Terminating Partner,the Terminating Partner shall have the sole authorityto wind up the Partnership affairs and to superviseits liquidation. If there shall not be a TerminatingPartner, such rights shall be exercised jointly byboth Partners. The Partner (or Partners) authorizedunder this subclause (iM to exercise such rights is (are)herein called the 'Liquidator*.
(ii) Upon dissolution the Liquidator shall ensurethat an account shall be taken as soon as practicableof all property, assets and liabilities of the Partner-ship.
(iii) Upon demand by the Liquidator, each Partnershall pay to the Partnership all amounts owing to thePartnership (except, during the Transitional Period,any amounts which would have been payable by Scalloppursuant to Section 2.08(b) hereof in respect ofperiods after the Dissolution Date), together withsuch Partner's proportion of contributions requiredby law and this Agreement to be made by the Partnersfor the payment of liabilities.
(iv) The assets and property of the Partnershipor the proceeds of any sale thereof, together with con-tributions received pursuant to the preceding subclause
25
(iii), shall be applied by the Liquidator in thefollowing order:
First, to discharge the debts and lia-bilities of the Partnership, other than tothe Partners, and the expenses of liquidation:
Second, ;o pay to each Partner amountsaccrued and owing to it for loans or otherextensions of credit to the Partnership orupon contracts with the Partnership or uponopen account,
Third# in respect of any dissolutionoccurring after the end of the TransitionalPeriod, to divide the surplus if any (in thisSection 9,02 called 'Available Surplus*),between the Partners in proportion to theirrespective interests in the Partnership; and
Fourth, in respect of any dissolutionoccurring during the Transitional Period,to divide the Available Surplus between thePartners as follows:
(x) to Gulf, the lesser of
(I) the Available Surplus and
(II) the sum of
(A) an amount equal tofifty percent (50%) of thatportion of the aggregate sumdue to be paid by Scallop pur-suant to Section 2.08(b) hereofwhich shall not have been paidas of the Dissolution Datesand
(B) an amount equal tofifty percent (SOU) of theexcess, if any, of the Avail-able Surplus over the amountreferred to in the immediatelyforegoing subclause (A) of thissubclause (II);
- -
26
and
(y) to Scallop, an amount equal to theamount, if any, payable to Gulf pursuant tosubclause (x) (11)(0) of this paragraph Fourth.
(v) Distributions to the Partners pursuant toparagraph Third of the preceding subclause (iv) shallbe mado by the Liquidator in such manner that eachwill receive a proportion corresponding to its theninterest in the capital of the Partnership of each ofthe assets or the proceeds of the sale thereof avail-able for such distribution.
(vi) Distributions to the Partners pursuant toparagraph Fourth of the preceding subclause (iv)shall be made by the Liquidator in such manner asto achieve an nearly as possible the division setforth therein.
Section 9.03. Abandonment of Assets TransferAareement. If the Assets Transfer AgreementshMI, pur-sWant to Eection 11.05thereof, be terminated and abandoned,this Agreement shall forthwith terminate and the Partnershipshall be deemed never to have come into existence. Uponsuch termination, all amounts, if any, theretofore paid ordeemed to be paid by Scallop to or in respect of the Part-nership shall be repaid and thereafter there shall not beany other or further obligation of either Partner to theother or to the Partnership.
ARTICLE X
Significant Venture
For the purpose of any Other Nuclear Venturewhich in its governing agreoment shall have a terminationprovision corresponding to Section 9.02(c) hereof, theparties hereto hereby declare the Partnership to be asignificant venture.
ARTICLE XI
Confidential Information
During the continL'ance of the Partnership andfor a period of five (5) years after its termination, no
I
27
Partner or employee thereof shall divulge to any person(except to an Affiliate of such Partner which such Part-ner undertakes shall be bound to the provisions of thisArticle XI) any trade secret, or secret process, methodor means, or. any other confidential information concern-ing the business of the Partnership or the manufacture,sale or licensing of products, processes and designs madeor owned by it that come to the knowledge of such Partneror employee by reason of its or his being a Partner oremployee of the Partnership or of a Partner unless and tothe ex: nt that, in confiection with or subsequent to thetermination of the Partnership, the Partner involved shallobtain rights to manufacture, sell or license products,processes or designs previously made or owned by thePartnership. The obligations under this Article XIshall not apply to any information to the extent thatsuch information is or shall become part of the publicdomain or which the receiving Partner or any suchemployee shall be able to show to have been in its orhis possession prior to the receipt thereof from thePartnership or to have been received from a third partywhich shall not itself have received such informationon a confidential basis from the Partnership.
ARTICLE XII
Notices
All notices, consents, requests, reports andother documents authorized or required to be given pursuantto this Agreement shall be given in writing and either per-sonally served on an officer of the Partner to whichgiven and on the Partnership or mailed by registeredor certified first class mail, postage prepaid, orsent by telex or telegram and addressed to the Partnerto which given at its address on file with the Partner-ship and to the Partnership at its principal office,or at such other address as either of the Partners mayhereafter specify in the =inner herein provided.
ARTICLE XIII
New Partners
Except as may be agreed by both Partners, no newPartners may be admitted to the Partnership.
I I
28
ARTICLE XrV
Reiursment and Xndemnit
If a Partner shall, pursuant to authorization ofor approval by the Partnership.Committee or a final judg-ment of a court of applicable jurisdiction, pay any amountan behalf or for the account of the Partnership withrespect to any liability, obligation, undertaking, damageor claim for which the Partnership shall or may, pursuantto contract or applicable law, be liable or responizble,or with respect to making good any loss or damage sustainedby, or paying any duty, cost, claim or damage incurred by, thePartnership, then the Partnership shall reimburse suchPartner for such amount as shall have been so paid bysuch Partner. If the Partnership shall fail fully toreimburse such paying Partner, the other Partner shallindemnify such paying Partner by paying to it an amountequal to fifty per cent (SO) of the excess of Wx) theaggregate payments by such paying Partner in respect ofsuch liability, loss, damage, cost, claim or expense over(y) the aggregate reimbursement, if any, which such payingPartner shall have received, from the Partnership inrespect of such payments.
ARTICLE XV
Governing Law
This Agreement shall be governed by and construedunder the laws of the State of California.
ARTICLE XVI
Interpretation and Disputes
Section 16.01. Interpretation. If any questionshall arise in regard to the interpretat on of any provisionof this Agreement, the question shall be referred to thePartnership Committee and, if the Partnership Corzuitteeshall reach a determination with respect to such questionthat is recorded in writing and signed on behalf of bothPartnerst then such determination shall be conclusive.
-•-_ _ _ • • v•E- • ,•; VqV7_q -7 -• a- , . , • 1
Section 16.02. Conciliation. Any dispute ordifference between the Pares arisng' out of or in con-nection with this Agreement or as to the rights or lia-bilities of either Partner hereunder may, if it shall notfall within and have been resolved pursuant to Section16.01 hereof, be referred to senior officials of therespective Partners or of Affiliates of the Partners forresolution between them* if possible. Such officialsmay, if they so desire* consult outside experts for assis-tance in arriving at ouch a resolution.
Section 16.03. Arbitration. Any such disputeor difference as is referred "to in Section 16.02 hereofwhich shall not have been resolved pursuant to the fore-going provisions of this Article, or otherwise by agree-ment between the Partners, shall, except as otherwiseprovided in the final paragraph of this Section 16.03,be referred to and finally settled by arbitration. Thearbitration shall be held at New York, New York andconducted in accordance with the Rules of the AmericanArbitration Association.
Judgment upon the award rendered may be enteredin any court having jurisdiction or application may bemade to such court for a judicial acceptance of the awardand an order of enforcement, as the case may be.
No matter listed in Annex A to this Agreementor reserved by the Partnership Committee for its decisionpursuant to Section 3.01 hereof shall, in the event of afailure of agreement or decision thereto, constitute adispute or difference to be referred to or settled byarbitration proceedings.
ARTICLE XVII
Binding on successors
Except as herein otherwise provided, this Agree-ment shall be binding upon and inure to the benefit ofthe Partners, their successors, representatives andassigns.
ARTICLE XVIII
Amendments
This Agreement shall not be amended or modifiedexcept by an instrument in writing executed by both Partners
!
MWX . -_- 114MMOM-0-
as of the effective date of such amendment.
IN WITNESS WHEREOF, the parties heroto have dulycaused the execution of this Agreement by their duly autho-rized officers, an of the day and year first above written.
GULF OIL CORPORATION,
by
SCALLOP NUCLEAR INC.,
byJ. D. PITCHIE
ANNEX A
(referred to in Section 3.01 of this Agreement)
(1) Any change in, addition to or exclusion fromthe purposes of the Partnership and the setting up or sub-stantial alteration or divestment of any major businessactivity or activities.
(2) The establishment of and any change in thebusiness plans of the Partnership for the period in timesubsequent to that for which an approved operating programand budget shall already exist.
(3) Establishment or approval of operating andresearch programs and operating and capital expenditure(including research) budgets for each year and any sub-stantial change or changes therein.
(4) Any specific capital project exceeding$1,000,000 not covered by an approved program and budget.
(5) Any contract or other commitment whichcannot be cancelled by the Partnership without penaltyand requiring, or potentially requiring, the expenditureof more than $1,000,000 or having, or potentially having*a material impact upon the business of the Partnership*except contracts or other commitments in respect of whichauthority to commit the Partnership shall have been dele-gated to the President.
(6) Any contract or arrangement between thePartnership, on the one hand, and one Partner or an Affil-iate of such Partner, on the other handp other than mattersof routine or minimal significance.
(7) The appointment of any person as Presidentor the removal or dismissal of the person holding thatoffice; the establishment of salary and employee benefitsfor the President.
(8) The appointment of any person to, or theremoval or dismissal of any person from a senior managerialposition with the Partnership (other than the President),namely - Head of a division or department or staff func-tion reporting directly to the President or any such otherposition as may be designated by the Partnership Cocmmitteefrom time to time as a senior managerial position; theestablishment of salaries and special employee benefitsfor the holders of such positions.
(9) TIhe commencement or settlement of litiga-tion involving or potentially involving $100,000 or morc
2
in value at issue plus coats.
(10) Any borrowing by the Partnsrship in excessof $1,000,000 and any financing schwa,, including any incur-rence of a contingent liability and any lease cocmitmentwhich is either non-cancellable or only cancellable ata penalty, involving in excess of $1,000,000.
(11) Any mortgage, sale encumbrance or otherdisposal of one or more capital assets of the Partnershiphaving an aggregate original value on the books of thePartnership in excess of $1,000,000.
(12) Any matter relating to company, corporateor partnership titles, names or trade names, designations,descriptions, designs, emblems or insignia used or to beused by the Partnership, subject always to the possibleneed to obtain written authority from the owner thereof.
(13) Adoption or mendment of pension or otheremployee benefit plans.
(14) Approval of all significant tax returnsof the Partnership before filing.
in this Annex *A* the word "Partnership" shall bedeemed to include any Partnership Entity controlled by thePartnership.
THIS GUARANTEE is made the 19th day of..hrr:jber 1973, between SHELL PETROLEUM N.V.,
a .opany organised and existing under thelaws of the Netherlands and THE SHELL PETROLEUMCOMPANY LIMITED, a company organised and exist-ing under the laws of England (hereinaftercalled "the Guarantors') and GULF OIL CORPORATION,a corporation organised and existing under thelaws of the Commonwealth of Pennsylvania, UnitedStates of America (hereinafter called "Gulf").
WHEREAS Gulf Is executing as of even date herewith(i) a partnership agreement with Scallop Nuclear Inc., aDelaware corporation (hereinafter called "Scallop', and suchagreement, as the same may be amended or supplemented fromtime to time, being hereinafter called "the PartnershipAgreement' and the partnership thereby created being herein-after called 'the Partnership") and (ii) an agreement withthe Partnership and Scallop (which agreement is entitled andhereinafter called *the U.S. Assets Transfer Agreement').
NOW THEREFORE in consideration of the premisesand the mutual undertakings contained in the PartnershipAgreements
1. The Guarantors as sureties (1borgen0) herebyjointly and severally unconditionally guarantee to Gulfthat Scallop shall in all respects perform and dischargethe liabilities and obligations to Gulf and to thePartnership that, under the terms and provisions ofthe Partnership Agreement and the U.S. Assets TransferAgreement, shall be established to be due to be per-formed and observed by Scallop; however, if, followingany breach of the Partnership Agreement by Scallop,Gulf shall elect to exercise the purchase right pro-vided in clause (d) of Section 9.02 thereof, such exer-cise shall operate as a discharge of the Guarantorsin respect of that breach.
2. The Guarantors shall not be discharged orreleased from this Guarantee by any revision to ortermination of the Partnership Agreement or the U.S.Assets Transfer Agreement, made with or without theassent of the Guarantors, or by the creation of oralteration of obligations undertaken by the Partnership,or by any forbearance whether as to payment, time,performance or otherwise.
2
3. This Guarantee shall be for the sole benefitof Gulf and may not be asserted against the Guarantorsor either of them by any other person whatsoever;provided, however, that it shall vest in and for thebenefit of any Affiliate of Gulf who shall at any timesucceed Gulf as party to the Partnership Agreement inaccordance with its terms.
4. The Guarantors undertake to guarantee in likemanner to this Guarantee any Affiliate of Scallop whoshall at any time succeed Scallop as party to the Part-nership Agreement in accordance with its terms.
5. This Guarantee shall be construed and takeeffect in accordance with the laws of the Netherlands.The Guarantors expressly waive any notice of acceptanceof this Guarantee and all privileges and exceptionsmentioned under Articles 1868, 1870, 1874, 1675, 1685,1886 and 1887 of the Netherlands Civil Code.
6. For the purposes of this Guarantee, and with-out in any way derogating from the jurisdiction ofthe English Courts, The Shell Petroleum Company Limitedaccepts the jurisdiction of the competent Courts inthe Netherlands.
The Hague 1973
SHELL PETROLEUM N.V.
G. P.. W•AGN'EP.
London 1973
THE SHELL PETROLEUM COMPA¥Y LIMITED
F. S. 11cFADZrA?*6
EMDOQ (D60Gul BuljIslfo, Plilsburgh. Po"ASyNvOMl6 15230
November 19# 1973
Scalloo Nuclear Inc.1 Rockefeller PlazaNlew York, New York 10020
Attention of Pijsident
General Atomic CompanyP. 0. Box 81608San Diego, California 92138
Attention of President
Gentlemen:
This letter refers to the Agreement of even date here-with between Gulf Oil Corporation and Scallop Nuclear Inc. underwhich General Atomic Company (hereinafter called "GAC") wasestablished, such agreement being hereinafter referred to as the"Partnership Agreement". This letter also refers to the U. S.Assets Transfer Agreement of even date herewith between suchparties (hereinafter called the "U. S. Assets Transfer Agree-ment").
The purpose of this letter is to implement certain pro-visions of Article IV of the Partnership Agreement, to providefor the continuity of management and operation of the Dusinessof GEES and to set forth certain principles upon which Gulf andScallop shall staff GAC.
Except as otherwise specifically provided in Clause10 hereof, the terms defined in the Partnership Agreement andthe U. S. Assets Transfer Agreement shall bear the same meaningwhen used herein.
(1) Transitional Period. During the period beginningJuly 1, 1973 and ending January 1, 1974 or such later date asmay be agreed by the Partnership Committee under Clause 3below, Gulf through its GEES personnel shall operate theBusiness of GAC for the account of Gulf and Scallop.
0.I
-2-
(2) Empoyment of GEES Personnel by GAC. Subject tothe provisions set forth below in this Clause (2), GAC shalloffer employment, to be effective on the Personnel TransferDate (as defined in Clause (3)), to employees of GEES uponsubstantially the same terms and conditions as they wereemployed by Gulf with GEES, including employee benefit plans,programs and policies, with no lapse in coverage and recognizingGulf and GEES time-service (including time-service alreadyrecognized by Gulf and GEES) for purposes of determiningeligibility to join, and satisfying any service requirementsfor entitlement to benefits under, employee benefit plans,programs and policies of GAC. Gulf will use its bestefforts to persuade employees of GEES to accept employrentwith GAC.
The foregoing is subject to the following provisions:
(a) GAC shall establish a savings-stock bonus planfor its employees substantially similar to theSavings-Stock Bonus Plan of Gulf Oil Corporation,except that GAC contributions will be invested byMellon Bank N.A., as trustee of such plan, inequal amounts in Capital Stock of Gulf OilCorporation and Shares of N. V. KoninklijkeNederlandsche Petroleum Maatschappij (Royal DutchPetroleum Company).
(b) Members of the Savings-Stock Bonus Plan of Gulf oilCorporation who accept employment with GAC shallcontinue to be merbers of that plan in accordancewith its provisions and no further contributionsshall be made thereafter by them or on their behalfthereunder.
(c) GAC shall adopt and become successor employer underthe Savings and Stock Bonus Plan of Gulf Energy andEnvironmental Systems Company (under which plan allrequired contributions have heretofore been made) andshall amend such plan to reflect such succession andto provide for the eventual transfer of the Long Term.Stock Bonus Fund under such plan to the trust main-tained under the plan established by GAC pursuant tosubparagraph (a) above.
(d) GAC shall adopt and become successor employer underthe Annuities and Benefits Plan of Gulf Energy andEnvironmental Systems Company and shall anend suchplan to reflect such succession. GAC shall also becomesuccessor settlor of the trust through which such planis funded and such trust shall continue to hold all
-3-
assets therein, including contributions made by Gulfwith regard to the period ended June 30, 1973, deterninedby using the same actuarial methods and assumptions usedto determine contributions for 1972, less any disburse-ments required pursuant to the terms of such planin respect of benefits. Based on actuarialassumptions specified, on actuarial advice, bythe committee administering such plan and approvedby the Board of Directors of Gulf Oil Corporation,there are no past service liabilities with respeztto such plan and such plan was fully funded as ofJune 30, 1973.
(e) GAC shall arrange for the continuation of ex:stincGulf contracts or establish new contracts withinsurance companies, or otherwise make ava1lable,plans or programs substantially similar to thosenow provided by Gulf for GELS employees in respectof group life insurance, disability income insurance,medical insurance and travel accident insurance andshall arrange for the offering by an insurance companyof voluntary group accident insurance substantiallysimilar to that made available to GEES e-ployees b-.Connecticut General Life Insurance Company.
(f) GAC shall adopt plans, policies and programs whichare substantially similar to those now made availableto GEES employees in respect of vacations and holidays,sick leave and personal leave, severance pay,survivor payments, medical insurance contributions,authorized paid leave, military le&ve, tuitionassistance and costs of professional cert-fication.
(g) Unless otherwise determined by the PartnershipCormmittee, the Gulf travel card discount privilegeswill be discontinued or replaced.
(h) The Partnership Committee shall determine the specialbenefits to be provided for management and executiveemployees, taking into account prior benefits pro-vided for such employees by Gulf Oil Corporation underits Incentive Compensation Plan and its stock optionplans.
(i) The stock option plans of Gulf Oil Corporation shallnot be applicable to employees of GAC. The matterof existing stock options held by employeestransferred to GAC and scheduled to expire inaccordance with the terms of such plans will bereviewed by Gulf and shall not be a GAC responsibility.
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(j) The Incentive Compensation Plan of Gulf OilCorporation shall not be applicable to GACemployees for periods after December 31, 1973,but such employees shall be eligible toparticipate in the awards thereunder for 1973.Such awards and unpaid instalments of previousawards shall be paid by Gulf in accordance withthe provisions of such plan and, for such purpose,transfers of employment to GAC shall be deemedto be with the consent of Gulf. Financialresponsibility for such awards shall be borneby Gulf except that the portion thereof allocableto the transitional period referred to in Clause(1) above shall be for the account of GAC.
(k) The Partnership Committee shall review the presentarrangements in regard to (i),-.cholarships forchildren of GEES employees and annuitants, and(ii) educational gift matching policies, and shalldetermine what, if any, arrangements shall beapplicable in the future.
(1) For purposes of all employee benefit plans, policiesand programs of GAC, unbroken service with Gulfand/or Scallop intmediately prior to employment withGAC shall be recognized as time-service for purposesof determining eligibility to join, and satisfyingany service requirements for entitlement to benefitsunder, such plans, policies and programs but suchservice shall not be recognized for purposes ofcalculating amounts of pensions the costs of whichare to be borne by GAC.
(m) Unless otherwise determined by the PartnershipCommittee in special cases, the foregoing provisionsshall not apply to employees of Gulf United NuclearFuels Corporation, Allied-Gulf Nuclear Services,Nuclear Power Products Company, Componentes IndustrialesMexicanos, S.A., Gulf Degremont, Inc., Gulf-PreloadStructures Incorporated and Gulf-Dravo SystemsCorporation, or any successor to any such organiza-tions and such present employee benefit plans, pro-grams and policies as are now applicable to suchemployees shall be continued. Action, if any,appropriately to be taken by GAC with respect to anyof such employees and such plans, programs or policies,
-5--
including the adoption of plans, programs andpolicies for employees within the Gulf UnitedN;uclear Fuels division of GAC, shall be determinedby the Partnership Committee. Notwithstanding theforegoing provisions of this paragraph (m), ifGAC acquires Gulf United Nuclear Fuels Corpora-tion or all the assets and liabilities thereof("GUNFC") Gulf shall have the responsibility forthe full funding of any pension plans of GUNFCwith regard to the period ended June 30, 1973,on a sound actuarial basis by an actuary satis-factory to GAC.
(n) Notwithstanding the foregoing, GAC shall have thepower at any time by action of the PartnershipCommittee to amend, modify or terminate any of itsemployee benefit plans, programs and policies.
(o) The employee benefit plans of GAC formulated tomeet the requirements of Section 401 (a) of theInternal Revenue Code shall be submitted to theInternal Revenue Service for approval and shall besubject to such changes therein as may be necessaryto obtain such approval.
(p) References in this Clause (2) to action by GAC shallmean action by the Partnership Committee.
(3) Transferred Personnel. Except as to any personnelseconded to GAC by agreement of the Partnership Committee as pro-vided in Clause (4) below, all GEES personnel who accept employ-ment with GAC shall be transferred to and become employees of GACas of January 1, 1974, or such later date as may be agreed uponby the Partnership Committee (such date as finally determinedbeing referred to herein as the "Personnel Transfer Date").
(4) Seconded Personnel.
(a) If the Partnership Committee agrees, certain Gulf and/orScallop personnel may be temporarily seconded toGAC. Seconded personnel shall remain Gulf orScallop employees, as the case may be, but, unlessotherwise agreed by the Partnership Committee, shallwork for GAC on a full-time basis and such personnelshall not retain any reporting function to Gulf orScallop.
- 6 -
(b) Throughout the period of the secondment to GACof any Gulf and Scallop personnel, Gulf and.Scallop shall charge to GAC and GAC shallreimburse Gulf and Scallop for the payroll andall payroll burdens of such seconded personnel.Gulf and Scallop shall invoice GAC monthlyfor such charges and such invoices shall be dueand payable within thirty (30) days of the datethereof. The out-of-pocket expenses, includingall travel and subsistence expenses incurred bysuch seconded personnel, shall be paid directlyby GAC in accordance with its established procedures.
(c) The status of seconded personnel shall be reviewedperiodically with the objective of keeping thenumber of such personnel to a mirn:muz.
(5) Future Personnel Requirements
(a) Senior Management Personnel. pith respect to allfuture personnel requirements anong the SeniorManagement Perscnnel of GAC, and unless the Partner-ship Committee agrees to seek to look, in thisregard, to the employees of Gulf or Scallop orsources outside the available Gulf and Scalloppersonnel, GAC shall initially seek to fill suchpositions from arong its existinc staff. W-eneverrequested to do so by GAC under the provisionsof this paragraph, Gulf and Scallop shall use theirbest efforts to furnish the most appropriate2yqualified individuals or other qualified individualsacceptable to GAC to fill the pos:tions specifiedby GAC, failing which such positions shall againbe reviewed by the Partnership Com.mittee and filledin whatever manner the Partnership Cormittee determinesto be appropriate.
(b) Other Personnel. With respect to all other futurepersonnel requirements, GAC shall be free to fill suchpositions in whatever manner it deems appropriate,the intention being that GAC shall look prirarily toits existing staff; provided, however, that in caseswhere the position to be filled is of a temporary orspecialized nature the provisions of paragraph (a)of this Clause (5) shall apply mutatis mutandis.
(c) Any personnel furnished to GAC under this Cliuse (5)
- 7 -
may be either transferred to GAC or seconded toGAC as determined by the Partnership Committee.
(6) Treatment of Seconded Personnel Upon Terminationor Expiration of this Letter Agreement
(a) Senior Management and Other Personnel. Upon expira-tion or termination of this Letter Agreement thesecondment of all Senior Management Personnel andother personnel then seconded to GAC by Gulf andScallop shall also terminate unless otherwise agreedby the Partnership Committee. However, if thePartnership Committee desires to retain the servicesof any of such Senior Management Personnel or otherpersonnel GAC shall extend an offer of employmentto the individuals in question upon substantiallythe same terms and conditions as Gulf or Scallop isthen providing. If employment is accepted, GACshall include such individuals in the employee benefitplans of GAC with no lapse in coverage, recognizingGulf or Scallop time-service for purposes ofdetermining eligibility to join, and satisfyinoa anyservice requirements for entitlement to benefitsunder, employee benefit plans, programs and policiesof GAC but such service shall not be recognied forpurposes of calculating amounts of pensions the costsof which are to be borne by GAC.
(b) Any Senior Management Personnel or other personnelwhose secondment is terminated in accordance withparagraph (a) above and whose services the PartnershipCor.mittee does not wish to retain or who are offeredemployment with GAC but decline to accept such offershall be returned to the payroll of Gulf or Scallopas the case may be.
(c) Cost. During the period, if any, of the continueds-econdment of Senior Management Personnel and otherpersonnel to GAC by Gulf or Scallop after the expira-tion or termination of this Agreement, GAC agrees tocontinue to reimburse Gulf and Scallop for all payrolland payroll burdens for such seconded personnel asprovided in Clause 4 (b) hereof.
(7) Term. This Letter Agreeme~nt shall commence onJuly 1, 1973, the cormencement date of the Partnership, and
- 8 -
subject to Clause (8) below, shall continue until December 31,
1976, unless extended by agreement of the Partnership Committee.
(8) Continuance of Partnership. This Letter Agree-ment shall automatically terminate upon terminaticn of thePartnership Agreement during the term hereof.
(9) Records and Audit. Gulf and Scallop shall retainall records relating to charges invoiced to GAC under Clauses4 (b) and 6 (c) hereof for a period of three (3) years followingthe calendar year in which such charges are incurred and GACupon its own initiative or at the request of Gulf or Scallop
(with regard to Scallop or Gulf invoices respectively) shall beentitled through an independent auditor to audit such charges
during such three (3) year retention period.
(10) Definitions.
(a) The term "Gulf" as used herein shall mean Gulf Oil
Corporation and its Affiliates and the term "Scallop"as used herein shall mean Scallop N:uclear Inc. andits Affiliates.
(b) The term "Senior Management Personnel" shall meanthose personnel appointed by the PartnershipCommittee pursuant to paragraph (8) of Annex A tothe Partnership Agreement.
If you agree that the above correctly records the
understanding between us, will you please so signify by counter-
signing and returning to us the attached duplicate of this letter.
Very truly yours,
GULF OIL CORPORAT]ON*
By B.R_ DOpSrY
Agreed:
SCALLOP NUCLEAR INC.
J, 3 ). RiTCruErr Date: 1ov- 12, 'n7fl7
Agreed:
CENERAL ATOMIC COMPANY
SY ~C. A, ~RO!DF-a:1 1Date: N~ov. 19. 1973
SERVICES AGREEMENT
THIS AGREEMENT dated as of the 19th.day of November, 1973, by and between GULFOIL CORPORATION, a Pennsylvania corporation,and GENERAL ATOMIC COMPANY, a partnershiporganized under the laws of the State ofCalifornia (hereinafter called "GACO).
W I T N E S S E T H
WHEREAS GAC has been established as a partnershipby.Gulf and Scallop Nuclear Inc. to acquire, own and operatethe business and certain assets and property employed insuch business heretofore owned, held and operated by Gulf inthe United States and Mexico through its Divisions, GulfEnergy & Environmental Systems Company, Gulf General AtomicCompany and Gulf Environmental Systems Company (hereinaftercalled *GEES") and to continue, expand and develop certainenterprises and businesses heretofore conducted or planned tobe conducted by or through GEES; and
WHEREAS for initial operations it is not practicalor economic for GAC to provide all of the various servicesrequired for its operation; and
WHEREAS Gulf has considerable experience in theoperation of the assets, properties and business of GEES asthe prior ourner and operator thereof; and
WHEREAS GAC wishes to obtain and Gulf is willing tofurnish certain services necessary for the initial operationof GAC:
NOW, THEREFORE, in consideration of the premisesand the mutual covenants hereinafter contained, the partieshereto agree as follows:
ARTICLE I
Definitions
(a) Except as otherwise specifically provided inthis Article I, the terms defined in the Partnership Agreement
2
and the U. S. Assets Transfer Agreement shall bear the samemeaning herein.
(b) As used in this Agreement, the following termsshall have the meanings specified:
"Gulf" shall mean Gulf Oil Corporation, a Pennsyl-vania corporation and its Affiliates.
"Partnership Agreement" shall mean the agreementdated of even date herewith by and between Gulf andScallop establishing GAC as a partnership.
"Scallop" shall mean Scallop Nuclear Inc., a Delawarecorporation-and its Affiliates.
ARTICLE II
Scope of Services
2.01. Services Previously Provided to GEES. Gulfagrees to provide to GACM, the extent Gulf is reasonablyable to do so, the services described in Se-tion 2.02 hereof,such services being substantially the same as Gulf was pro-viding to GEES prior to the establishment ;wf GAC.
2.02. Services to GAC. Upon request of GACGulfwill itself furnish, or, with the consent of GAC. arra.lae tohave furnished by third parties, to GAC the following ser-vices:
(a) Legal. Consultation with regard to all GACrelated legal matters, including but not limited to, suchareas as antitrust, patent, trademark and proprietaryinformation matters, review and assistance in all con-tract and purchase order matters, review and guidancein new legislative and regulatory requirements, guidanceand assistance in acquisitions and divestment; therepresentation of GAC in all litigation threatened orbrought against GAC and the handling of any claims GACwishes to pursue.
(b) Tax. Consultation with and advice to GAC onall GAC reI-e&d tax matters, including but not limitedto compliance responsibility, tax review of projectproposals, tax review of economic analyses and partici-
16N
3
pation in negotiations on behalf of GAC and representa-tion of GAC before taxing authorities.
(c) Treasury. Assistance and advice inbanking, cash management and financing matters, reviewof currency and payment clauses in agreements, functionalsupervision of cashier activities and review of thefinance-related aspects of acquisitions and investment/divestment proposals, and other various economic studies.
(d) Insurance. Recommendation of the scope, natureand extent of insurince that is appropriate for the GACassets, properties and business) negotiation and procure-ment of appropriate coverages, and liaison between GACand the insurance carriers on any GAC insurance matters.GAC shall have the right of prior approval with respectto insurance carriers recommended by Gulf (which approvalshall not be unreasonably withheld) and li,.its ofcoverage.
(e) Government Relations. Consultation with andadvice to GAC in regard to government activities inareas of interest to GAC including but not limited tothe activities of the U. S. Atomic Energy Commissionand liaison between GAC and any other agencies of thefederal government in Washington, D. C. which may berelevant to GAC's operations.
Mf) Medical Services. Various business orientedmedical services including but not limited to periodicphysical examinations, pre-employment evaluaticns andtreatment of GAC employee industrial injuries and ill-nesses, surveillance and control uf employee t:zkenvironments, limited medical conrultation for enpluyeeq;arrangements for outside medical services as requireaand assistance to GAC in preventing and controllingoccupational disease and disability.
(g) Employee/Industrial Relations. Advice to GACconcerning employee/industrial relations and mattersrelated thereto; liaison between GAC and appropriateinsurance carriers witn respect to the establishmvent andmaintenance of employee benefits programs includingactuarial services required therefor; labor relationsassistance and aid in negotiating agreements with labororganizations and assistance to GAC in com;plyina with allapplicable occupational, safety and health laws.
49
(h) Data Processina Services. Comprehensive com-puting and programming services, analytical sc. ce.information system services and comrunication services,including all data processing services necessary tomeet normal accounting control and financial data nro-cessing requirements such as billings, payrolls, accountspayable, business forecasts and records and any othertypes of data processing services which it is capableof performing at the time of GAC's request.
(i) Additional Services. Such other staff andrelated services as are being provided by Gulf to itsother operations at the time of the recuest, includinqbut not limited to the use of corporate aircraft andthe services of Gulf's corporate development, purchas-ing and advertising and public relations depart."ents.
2.03. Independent Contractor; Conflict of Interest.(a) Gulf shall act as an independent contractor in renderingany services requested of it under this Agreement.
Wb) If in rendering any of the services requestedof it hereunder Gulf at any time shall have reason to believethat such services may involve matters as to which the rcspec-tive interests of Gulf and Scallop may differ, Gulf shallimr.ediately advise the Partnership Commnittee and in so doinaGulf shall call to the attention of the Partnership Cornitteeany possible means by which such respective interests nichtbe accommodated.
ARTICLE III
Payment
3.01. Actual Costs. GAC shall reir.burse Gulf forall actual direct costs, as recorded on the books of Gulf,incurred by Gulf in rendering any services requested by GAChereunder. Such costs shall be those identifiable with thelocation from which and the personnel by whom the service shallbe provided and shall include payroll and payroll burdens andreasonable out-of-pocket expenses (including travel and sub-sistence expenses) but shall not include an allocation ofresearch or general corporate overhead expense of Gulf or anyof its Affiliates.
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If any of the services provided to GAC hereunder arealso being provided by Gulf for other entities in additionto GAC, the total costs incurred by Gulf in performing suchservices shall be divided between GAC and such other entities-in the same proportion that the time spent by Gulf employeesin performing the services for GAC bears to the total timespent by such employees in performing the services for GACant such other entities.
3.02. Fee. No fee is presently contemplated 4orthe various services to be provided by Gulf hereunder:however, in the event Gulf later considers a fee to beappropriate for any such services being rendered, it shallconsult with GAC. If as a result of such consultation,agreement cannot be reached between Gulf and GAC with respectto a fee, Gulf shall be under no further obligation to con-tinue furnishing such services.
3.03. Payment All costs reimbursable hereundershall be invoiced by Gulf not more frequently than monthlyand each such invoice shall be due and payable within thirty(30) days from the date thereof.
ARTICLE IV
GAC Facilities
GAC agrees to make available and furnish to Gulf atno cost such secretarial and clerical help, supplies and ser-vices, and space in GAC's facilities as Gulf reasonablyrequires in connection with the services to be rendered here-under.
ARTICLE V
Term of Aareement
This Agreement shall commence on July 1, 1973, thecommencement date of the Partnership, and, subject to ArticleVIII hereof, shall continue until December 31, 1976, unlessextended by agreement of the Partnership Cormittee.
ARTICLE VI
Limitation of Liability
6.01. Indemnity of Gulf. Gulf shall use all reason-
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C
able endeavors in the performance of its obligations underthis Agreement and provided it has done so, Gulf shall notbe liable to GAC for any loss or damage of whatever naturesustained by GAC as a result of the performance of thisAgreement by Gulf. GAC shall indemnify Gulf against allsuch loss or damage including any and all claims by anyemployees to be transferred from GEES to GAC.
GAC shall at its own expense defend all suitsand claims instituted or asserted against Gulf as a resultof the performance of this Agreement by Gulf and shall holdGulf harmless from all costs, damages or expenses, includ-ing attorney's fees, which may be sustained by Gulf as aresult of such suits or claims.
ARTICLE VII
Records and Audit
Gulf shall retain all records relating to thecosts of services rendered during each calendar year underthis Agreement for a period of three (3) years followingsuch calendar year and GAC upon its own initiative or atthe request of Scallop shall be entitled, through an inde-pendent auditor, to audit such costs during such three(3) year retention period.
ARTICLE VIII
Termination
This Agreement shall automatically terminate upontermination of the Partnership Agreement during the termhereof.
ARTICLE IX
Other Services
9.01. Subject to such procedures as may be estab-lished by the Partnership Committee, GAC shall be free tomake arrangements for such other services as it deems nec-essary for the efficient conduct of its operations and thecost thereof shall be borne by GAC.
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9.02. The costs of outside consultants (exceptthose costs, including fees of outside counsel, normallyrequired to be paid by GEES in the conduct of its business)engaged by Gulf during the period July 1, 1973, to theClosing Date shall be for the account of Gulf and shall notbe charged to GAC hereunder.
ARTICLE X
Assignment
This Agreement and all of the provisions hereofshall be binding upon and inure to the benefit of theparties hereto and their respective successors and Ferm:ttedassigns, but neither this Agreement nor any of the rcghts,ihterests or obligations hereunder shall be assigned by anyof the parties hereto without the prior written consent ofthe other parties hereto.
ARTICLE XI
Miscellaneous Provisions
11.01. Arbitration. Any disputes or differencesbetween the parties hereto arising out of or in connectionwith this Agreement or as to the rights or liabilities ofany party hereunder shall, in default of agreementbetween the parties, be referred to and finally decidedby arbitration. The arbitration shall be held in N'ew York,N. Y. and conducted in accordance with the Rules of theAmerican Arbitration Association.
Judgment upon the award rendered may be enteredin any court having jurisdiction or application may be madeto such court for a judicial acceptance of the award and anenforcement, as the case may be.
11.02. Notices. All notices, requests, demands.and other com-unicatlo-s hereunder shall be in writing andshall be deemed to have been duly given if mailed, recisteredmail, first class airmail, postpaid,
if to Gulf:
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Gulf Oil CorporationGulf BuildingP. 0. Box 1166Pittsburgh, Pennsylvania 15230
Attention of Vice President and Secretary
if to GAC:
General Atomic CompanyP. O. Box 81608San Diego, California 92138
Attention of President
or to such other address or to such person as any partyhereto shall have last designated by written notice to theother party hereto.
11.03. Governing Law. This Agreement shall begoverned and interpreted in all respects in accordance withthe laws of the State of California.
11.04. Entire Asreement; Modification. ThisAgreement contains the entire agreement beween the partieshereto with respect to the subject matter set forth hereinand supersedes any and all other agreenents, oral or written,in respect of the subject matter of this Agreement. ThisAgreement shall not be modified or amended except by an instru-ment in writing signed by an authorized representative of theparty or parties to be bound.
I1N WITNESS WHEREOF', the parties have caused thisAgreement to be executed as of the day and year first abovewritten.
GULF OIL CORPORATION,
by13. R. DORSEY
(Ti tle)
GENERAL ATOMIC COMPANY,
byC. A. POLfDEP
(Title)