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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MAY 15, 1998
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Item 2. Acquisition or Disposition of Assets
On May 15, 1998, Lyondell Petrochemical Company ("Lyondell"), Millennium
Chemicals Inc. ("Millennium"), Occidental Petroleum Corporation ("Occidental")
and Equistar Chemicals, LP, a Delaware limited partnership ("Equistar"),
consummated a series of transactions to expand Equistar through the addition of
certain Occidental petrochemical assets. Equistar, which was formed December 1,
1997, initially comprised the olefins and polymers businesses of Lyondell and
Millennium.
These contributed Occidental assets include the ethylene, propylene and
ethylene oxide ("EO") and derivatives businesses and certain pipeline assets
held by Oxy Petrochemicals Inc. ("Oxy Petrochemicals"), a 50 percent interest in
a joint venture between PDG Chemical Inc. ("PDG Chemical") and E. I. DuPont de
Nemours & Co., and a leasehold interest in assets of Occidental Chemical
Corporation ("Occidental Chemical") (collectively, the "Occidental Contributed
Business"). Occidental Chemical, Oxy Petrochemicals and PDG Chemical are all
wholly-owned, indirect subsidiaries of Occidental. The Occidental Contributed
Businesses included olefins plants at Corpus Christi and Chocolate Bayou, Texas;
EO/ethylene glycol ("EG") and EG derivatives businesses located at Bayport,
Texas, Occidental's 50 percent ownership of PD Glycol, which operated EO/EG
plants at Beaumont, Texas, and 950 miles of owned and leased ethylene/propylene
pipelines. In addition, Occidental Chemical leased to Equistar its Lake Charles,
Louisiana olefins plant and related pipelines.
In a series of transactions effective May 15, 1998, including asset
contributions and assignments, a merger and the lease of certain assets to
Equistar, the Occidental Contributed Business was transferred to Equistar. In
exchange for the Occidental Contributed Business, two subsidiaries of Occidental
were admitted as limited partners and a third subsidiary was admitted as a
general partner in Equistar for an aggregate partnership interest of 29.5
percent (the "Occidental Interest"). With the completion of the transaction,
Lyondell holds a 41 percent ownership interest in Equistar and Millennium and
Occidental each hold a 29.5 percent ownership interest through their respective
subsidiaries. In addition, Equistar assumed approximately $205 million of
Occidental indebtedness and Equistar issued a promissory note to an Occidental
subsidiary for approximately $420 million. It is currently anticipated that the
note will be repaid with proceeds of a financing expected to be consummated by
Equistar next month.
In connection with the contribution of the Occidental Contributed
Business and the reduction of Millennium and Lyondell's original ownership
interests in Equistar, Equistar also issued a promissory note to the Millennium
subsidiary that is a limited partner in Equistar
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for approximately $75 million.
The consideration paid for the Occidental Contributed Business was
determined based upon arms-length negotiations among Lyondell, Millennium and
Occidental.
In connection with these transactions, Equistar and Occidental also
entered into a long-term agreement for Equistar to supply the ethylene
requirements for certain U.S. facilities of Occidental Chemical.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
1. To be filed by amendment.*
(b) Pro forma financial information.
1. Pro forma information with respect to the acquisition of the
Occidental Interest in Equistar to be filed by amendment.*
2. The pro forma information with respect to the disposition of the
Occidental Contributed Business is incorporated by reference from the pro forma
information included in Occidental's Current Report on Form 8-K, dated February
10, 1998, which was filed with the SEC on April 21, 1998. Although the
principal purpose of such report was to complete Occidental's filing obligations
with respect to the acquisition of the interest in the Elk Hills Naval Petroleum
Reserve, in connection with the preparation of the pro forma financial
statements reflecting such acquisition, Occidental has also provided disclosure
therein of other recent developments which may materially impact Occidental's
financial statements.
(c) Exhibits.
10.1 Master Transaction Agreement, dated May 15, 1998 (the
"Closing Date"), by and among Equistar Chemicals, LP ("Equistar"), Occidental
Petroleum Corporation ("OPC"), Lyondell Petrochemical Company ("Lyondell") and
Millennium Chemicals Inc. ("Millennium").
10.2 Amended and Restated Limited Partnership Agreement of Equistar,
dated the Closing Date, by and among the partners named therein.
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* Financial statements and pro forma information with respect to the acquisition
of the Occidental Interest in Equistar are to be filed by amendment not later
than 75 days after consummation of the acquisition.
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10.3 Agreement and Plan of Merger and Asset Contribution, dated as of
the Closing Date, by and among Equistar, Occidental Petrochem Partner 1, Inc.,
Occidental Petrochem Partner 2, Inc., Oxy Petrochemicals Inc. and PDG Chemical
Inc.
10.4 Amended and Restated Parent Agreement, dated as of the Closing
Date, among Occidental Chemical Corporation, Oxy CH Corporation, OPC,
Lyondell, Millennium and Equistar.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: May 29, 1998 S. P. Dominick, Jr.
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S. P. Dominick, Jr., Vice President
and Controller
(Chief Accounting and Duly Authorized
Officer)
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
10.1 Master Transaction Agreement, dated May 15, 1998 (the "Closing
Date"), by and among Equistar Chemicals, LP ("Equistar"),
Occidental Petroleum Corporation ("OPC"), Lyondell Petrochemical
Company ("Lyondell") and Millennium Chemicals Inc. ("Millennium").
10.2 Amended and Restated Limited Partnership Agreement of Equistar,
dated the Closing Date, by and among the partners named therein.
10.3 Agreement and Plan of Merger and Asset Contribution, dated as of
the Closing Date, by and among Equistar, Occidental Petrochem
Partner 1, Inc., Occidental Petrochem Partner 2, Inc., Oxy
Petrochemicals Inc. and PDG Chemical Inc.
10.4 Amended and Restated Parent Agreement, dated as of the Closing
Date, among Occidental Chemical Corporation, Oxy CH Corporation,
OPC, Lyondell, Millennium and Equistar.
</TABLE>
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EXHIBIT 10.1
MASTER TRANSACTION AGREEMENT
BETWEEN
EQUISTAR CHEMICALS, LP,
OCCIDENTAL PETROLEUM
CORPORATION,
LYONDELL PETROCHEMICAL COMPANY
AND
MILLENNIUM CHEMICALS INC.
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TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C> <C>
SECTION 1 RELATED AGREEMENTS AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Tier 1 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Tier 2 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Partnership Long-term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Closing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Representations and Warranties of the Partnership . . . . . . . . . . . . . . . . . . . 3
2.2 Representations and Warranties of Occidental . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Representations and Warranties of Lyondell . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Representations and Warranties of Millennium . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Conduct of the Occidental Subject Business Pending the Closing Date . . . . . . . . . . 15
3.3 Conduct of the Partnership Subject Business Pending the Closing Date . . . . . . . . . . 17
3.4 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 Notifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.6 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.7 Partnership Unanimous Consent Items . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4 CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Conditions Precedent to Obligations of All Parties . . . . . . . . . . . . . . . . . . . 21
(a) No Injunction, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Tier 2 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Government Licenses and Consents . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Conditions Precedent to Obligations of the Partnership . . . . . . . . . . . . . . . . . 21
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . 22
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Conditions Precedent to Obligations of Occidental . . . . . . . . . . . . . . . . . . . 22
(a) Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . 22
(b) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) Board of Directors Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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<TABLE>
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SECTION 5 TERMINATION AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Benefits of Agreement Restricted to Parties . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.11 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.12 Jurisdiction; Consent to Service of Process; Waiver . . . . . . . . . . . . . . . . . . 27
6.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.14 Action by the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
APPENDICES
Appendix A Definitions
Appendix B List of Related Agreements
SCHEDULES
Schedule 2.1 Exceptions to Representations and Warranties of the
Partnership
Schedule 2.2 Exceptions to Representations and Warranties of Occidental
Schedule 2.3 Exceptions to Representations and Warranties of Lyondell
Schedule 2.4 Exceptions to Representations and Warranties of Millennium
Schedule 4.3(f) Occidental Consents
Schedule 6.10 Certain Expenses
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EXHIBITS
Exhibit A Form of Amended and Restated Agreement of Limited Partnership
Exhibit B Form of Occidental Contribution Agreement
Exhibit C Form of Amended and Restated Parent Agreement
Exhibit D Form of Sales Agreement (Ethylene)
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MASTER TRANSACTION AGREEMENT
This Master Transaction Agreement (this "Agreement") dated May 15, 1998
is entered into by and among Equistar Chemicals, LP, a Delaware limited
partnership (the "Partnership"), Occidental Petroleum Corporation, a Delaware
corporation ("Occidental"), Lyondell Petrochemical Company, a Delaware
corporation ("Lyondell"), and Millennium Chemicals Inc., a Delaware corporation
("Millennium").
The definitions of capitalized terms used in this Agreement, including
the appendices hereto, are set forth in Appendix A hereto.
WHEREAS, Lyondell and Millennium entered into the Master Transaction
Agreement dated July 25, 1997, as amended, which contemplated, among other
things, the formation of the Partnership;
WHEREAS, the Initial Partners entered into the Limited Partnership
Agreement of the Partnership dated October 10, 1997 and the Certificate of
Limited Partnership with respect to the Partnership became effective October
17, 1997;
WHEREAS, the Partnership commenced operations December 1, 1997 upon its
acquisition of the Subject Businesses of Lyondell and Millennium Petrochemicals
Inc., a Virginia corporation and an indirect wholly owned subsidiary of
Millennium ("Millennium Petrochemicals");
WHEREAS, Lyondell and Millennium, the respective ultimate parent entities
of the Initial Partners, desire to admit to the Partnership (i) PDG Chemical
Inc., a Delaware corporation and an indirect, wholly owned subsidiary of
Occidental ("PDG Chemical"), as a general partner, and (ii) Occidental
Petrochem Partner 1, Inc., a Delaware corporation and a wholly owned Subsidiary
("OCC Sub") of Occidental Chemical Corporation, a New York corporation ("OCC"),
and Occidental Petrochem Partner 2, Inc., a Delaware corporation and a wholly
owned Subsidiary ("Oxy CH Sub") of Oxy CH Corporation, a California corporation
("Oxy CH"), as limited partners, upon the transfer to the Partnership of the
Subject Business to be contributed by the Occidental Partners, each a wholly
owned Subsidiary of Occidental;
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Occidental Partners will contribute their Subject Business to the
Partnership through a merger, a partnership interest transfer and certain asset
transfers, the Partnership will issue Units to the Occidental Partners and the
Occidental Partners will become partners in the Partnership, and certain other
agreements will be entered into as provided for herein; and
WHEREAS, the Parties have made all applicable filings under the HSR Act
with respect to the transactions contemplated hereby and have received
confirmation from the Federal Trade Commission of the early termination of the
applicable waiting period under the HSR Act;
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WHEREAS, the parties who have executed this Agreement (the "Parties") wish
to make certain representations and warranties to one another and provide for
the coordination of the closing of all the transactions contemplated by this
Agreement (the "Closing");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the Parties set forth herein, it is hereby agreed as follows:
SECTION 1
RELATED AGREEMENTS AND CLOSING
1.1 Tier 1 Related Agreements. The Tier 1 Related Agreements are
designated as such on Appendix B. Forms of each of the Tier 1 Related
Agreements (including forms of certain of the exhibits and versions of certain
of the schedules thereto current as of the dates indicated therein) are
attached as Exhibits to this Agreement. On the terms and subject to the
conditions set forth herein, the Parties shall cause each such agreement to be
executed and delivered by the appropriate parties thereto at the Closing in
substantially the form attached hereto with such changes as may be agreed to by
the Parties in good faith.
1.2 Tier 2 Related Agreements. The Tier 2 Related Agreements are
designated as such on Appendix B. The forms of each of the Tier 2 Related
Agreements shall be negotiated by the Parties prior to the Closing in good
faith. On the terms and subject to the conditions set forth herein, the
Parties shall cause such agreements to be executed and delivered in such forms
by the appropriate parties thereto at the Closing.
1.3 Closing Date. Provided that the conditions precedent set
forth in Section 4 of this Agreement shall have been satisfied or waived, the
Closing shall be held at a mutually agreeable location on the date hereof or on
such other date as may be agreed to in writing by the Parties (the "Closing
Date"). The Closing shall be deemed to occur at 4:00 a.m. Houston, Texas time
on the Closing Date.
1.4 Partnership Long-term Debt. At or immediately subsequent to
the Closing Date, the Partnership's long-term debt shall consist of: (i)
borrowings under a bank credit agreement or agreements providing for maximum
borrowings in the amount of $1.25 billion (inclusive of any amounts to be used
for working capital purposes); (ii) Lyondell Assumed Debt (as defined in the
Initial Master Transaction Agreement) in the amount of $745 million and (iii)
Occidental Assumed Debt in the amount of $205 million; provided, however, that
the amount of the credit agreement or agreements described in (i) above may be
adjusted to such greater amount as may be reasonably satisfactory to the
Partnership and Occidental.
1.5 Closing Transactions. As contemplated by this Agreement and
by the Occidental Contribution Agreement and the Amended and Restated
Partnership Agreement, as applicable, on the Closing Date:
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(a) OCC will contribute or cause to be contributed
certain assets to OCC Sub which will simultaneously contribute such
assets to the Partnership, subject to the assumption by the Partnership
of certain liabilities;
(b) OCC Sub will assign a lease for certain assets to the
Partnership;
(c) Oxy CH will contribute all of the issued and
outstanding capital stock of Oxy Petrochemicals to Oxy CH Sub;
(d) Oxy Petrochemicals Inc., a wholly owned direct
Subsidiary of Oxy CH Sub ("Oxy Petrochemicals") and the Partnership will
merge, with the Partnership as the surviving entity;
(e) PDG Chemical will contribute or cause to be
contributed certain assets to the Partnership, subject to the assumption
by the Partnership of certain liabilities;
(f) the Partnership will (i) issue Units to the
Occidental Partners (pursuant to asset contributions, partnership
interest transfer or the merger, as the case may be) and the Occidental
Partners will be admitted as partners of the Partnership and (ii) issue
Units to Lyondell LP, Lyondell GP, Millennium LP and Millennium GP;
(g) OCC will agree to guarantee (with the form and terms
thereof to be substantially in the form attached to that certain letter
agreement, of even date, by and between OCC and the Partnership)
$419,700,000 of indebtedness of the Partnership; and
(h) the Partnership shall deliver (i) a note to Oxy CH
Sub obligating the Partnership to pay $419,700,000 plus interest in
accordance with the terms described therein and (ii) a note to Millennium
LP obligating the Partnership to pay $75 million plus interest in
accordance with the terms described therein.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Partnership. Except as
set forth on Schedule 2.1, the Partnership represents and warrants to each
other Party as follows:
(a) Organization, Good Standing and Power. The
Partnership (i) is a limited partnership duly organized, validly existing
and in good standing under the laws of the state of Delaware and has the
power and authority under its constituent documents to own, lease and
operate its assets and to conduct its Subject Business now being
conducted by it, (ii) is duly authorized, qualified or licensed to do
business as a foreign limited partnership in, and is in good standing in,
each of the jurisdictions in which its right, title or interest in or to
any of the assets held by it requires such authorization, qualification
or licensing, except where the failure to be so authorized, qualified,
licensed or in good standing would not be reasonably
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likely to have a Material Adverse Effect with respect to its Subject
Business, and (iii) has, and in the case of the Related Agreements to be
executed by it at or prior to the Closing, will have, all requisite
corporate power and authority, or power and authority under its
constituent documents, to enter into this Agreement and, as applicable,
the Related Agreements to which it is or will be a party and to perform
its obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements.
(i) The execution, delivery and performance by
the Partnership of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly
authorized and approved by all necessary corporate or similar
action on its part. This Agreement has been duly and validly
executed and delivered by the Partnership and is its legal,
valid and binding obligation, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws related to or affecting creditors'
rights generally and by general equity principles.
(ii) The execution, delivery and performance by
the Partnership of the Related Agreements to which it will be
a party and the consummation by it of the transactions
contemplated thereby will be, as of the Closing, duly
authorized and approved by all necessary action on its part.
At the Closing, each of the Related Agreements to which the
Partnership will be a party will be duly and validly executed
and delivered by the Partnership and will be upon execution
and delivery a legal, valid and binding obligation,
enforceable against it in accordance with its terms, except
as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws related
to or affecting creditors' rights generally and by general
equity principles.
(c) Lack of Conflicts. Except with respect to the HSR
Act as set forth in Section 4.1(d), each of the execution, delivery and
performance by the Partnership of this Agreement and the Related
Agreements to which it is or will be a party and the consummation by it
of the transactions contemplated hereby and thereby does not and, as of
the Closing, will not (i) violate (with or without the giving of notice
or the lapse of time or both) any Legal Requirement applicable to it or
its Subsidiaries, other than those that would not be reasonably likely to
have a Material Adverse Effect with respect to its Subject Business, (ii)
conflict with, or result in the breach of, any provision of the charter
or by-laws or similar governing or organizational documents of it or its
Subsidiaries, (iii) result in the creation of any Encumbrance upon any of
their assets, other than those contemplated by this Agreement or any of
the Related Agreements, or those that would not be reasonably likely to
have a Material Adverse Effect with respect to its Subject Business, or
(iv) violate, conflict with or result in the breach or termination of or
otherwise give any other Person the right to terminate, or constitute a
default, event of default or an event which with notice, lapse of time or
both, would constitute a default or event of default under the terms of,
any contract, indenture, lease, mortgage, Government License or other
agreement or instrument to which it or any of its Subsidiaries is a party
or by which the properties or businesses of it or any of
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its Subsidiaries are bound, except for violations, conflicts, breaches,
terminations and defaults that would not be reasonably likely to have a
Material Adverse Effect with respect to its Subject Business.
(d) Certain Fees. Neither the Partnership nor any of its
Affiliates nor any of its officers, directors or employees, on behalf of
it or such Affiliates, has employed any broker or finder or incurred any
other liability for any financial advisory fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
(e) Financial Statements. The Partnership's audited
financial statements as of and for the year ended December 31, 1997 and
any unaudited quarterly financial statements prepared pursuant to Section
5.4 of the Partnership Agreement since December 31, 1997 (in each case
including any notes thereto), were prepared in accordance with United
States generally accepted accounting principles applied on a consistent
basis ("GAAP") throughout the periods indicated (except as may be
indicated in the notes thereto and except that unaudited or quarterly
financial statements do not contain all GAAP notes to such financial
statements) and each fairly presents the consolidated (or combined, as
applicable) financial position, results of operations and changes in
partners' equity and cash flows of the Partnership and its subsidiaries
as at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments).
(f) Absence of Certain Changes. Since December 31, 1997,
(i) the Partnership and its Affiliates have not incurred any material
liabilities or obligations, fixed, contingent, accrued or otherwise, (A)
that relate to or are allocable to its Subject Business and that have had
or are reasonably likely to have a Material Adverse Effect with respect
to its Subject Business, or (B) that would cause the long-term debt of
the Partnership immediately prior to the Closing to exceed the aggregate
of $1.745 billion and any amounts borrowed under the Partnership's bank
credit facility for working capital, (ii) the Partnership and its
Affiliates have conducted its Subject Business in all material respects
in the ordinary course, and (iii) no event, occurrence or other matter
has occurred that is reasonably likely to have a Material Adverse Effect
with respect to its Subject Business, provided that this determination
shall be made without regard to any change in general economic or
political conditions or any change in raw materials prices, product
prices, industry capacity or other matter of industry-wide application
that affects its Subject Business and Occidental's Subject Business in a
substantially similar way.
(g) Partnership Documents. The Partnership has provided
to Occidental a true and correct copy of the Partnership Agreement, as
amended to date. The Partnership has provided to Occidental true and
correct copies of (i) all minutes of meetings of the Partnership
Governance Committee held to date and such minutes accurately reflect all
actions, approvals and authorizations (including with respect to the
Strategic Plan) by or of the Partnership Governance Committee, (ii) the
Strategic Plan and (iii) the current annual budget of the Partnership.
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(h) Partnership Interests. Without giving effect to this
Agreement or the transactions contemplated hereby, Lyondell LP, Lyondell
GP, Millennium LP and Millennium GP are the only Partners in the
Partnership and the only holders of Units, in the denominations set forth
in the Partnership Agreement. Without giving effect to this Agreement or
the transactions contemplated hereby, there are no outstanding
subscriptions, options, convertible securities, warrants or calls of any
kind issued or granted by, or binding upon, the Partnership to purchase
or otherwise acquire or to sell or otherwise dispose of any security of
or equity interest in the Partnership.
(i) Conduct of the Partnership Subject Business since
December 1, 1997. Except as required or contemplated by approvals or
authorizations (including the Strategic Plan) by or of the Partnership
Governance Committee, since the contribution of their Subject Assets to
the Partnership by Lyondell and Millennium on December 1, 1997, the
Partnership has:
(i) maintained its books, accounts and records relating
to its Subject Business in the usual, regular and
ordinary manner, complied in all material respects
with all Legal Requirements and contractual
obligations applicable to its Subject Business or to
the conduct of its Subject Business and performed all
of its material obligations relating to its Subject
Business;
(ii) not (A) modified or changed in any material respect
any of its assets or disposed of any material asset
except for (1) inventory, equipment, supplies and
other assets sold or otherwise disposed of in the
ordinary course of business and (2) any assets that
in the ordinary course of business were replaced with
substantially similar assets, (B) except in the
ordinary course of business, (x) entered into any
contract, commitment or agreement material to the
operation of its Subject Business or use of its
assets or, except as expressly contemplated by or
required pursuant to their respective terms, modified
or changed in any material respect any obligation
under any such contract, commitment or agreement, (y)
modified or changed in any material respect any
obligation under its Government Licenses, (z)
modified or changed in any material respect the
manner in which the products produced by its Subject
Business are marketed and sold, or (C) entered into
interest rate protection or other hedging agreements
(except for hydrocarbon hedging agreements entered
into in the ordinary course and expiring prior to
December 31, 1998) relating to its Subject Business;
provided, that, for purposes of (A) and (B),
"material" shall mean a change or modification that
was subject to the unanimous voting requirement of
Section 6.7 of the Partnership Agreement; and
(iii) not waived any material claims or rights relating to
its Subject Business.
(j) Employee Benefits.
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<PAGE> 11
(i) Each of the Partnership's Defined Benefit and Defined
Contribution Pension Plans covering employees
("Employee Plan") is in substantial compliance with
applicable requirements prescribed by any and all
Legal Requirements, including, but not limited to the
Code, except for violations the occurrence of which
would not in the aggregate reasonably be expected to
have a Material Adverse Effect with respect to its
Subject Business;
(ii) The Partnership has in all material respects
performed all obligations required to be performed by
it under ERISA, the Code and any other applicable
Legal Requirements and under the terms of each
Employee Plan, except such failures to perform which
would not in the aggregate reasonably be expected to
have a Material Adverse Effect with respect to its
Subject Business. The Partnership has received no
written notice of the existence of any material
default or violation by any other party of any of
such Legal Requirements, terms or requirements
applicable to any of the Employee Plans;
(iii) Other than routine claims for benefits, the
Partnership has not received any written notice of
any pending material claims or lawsuits which have
been asserted or instituted against any of the
Employee Plans, the assets of the trust or funds
under the Employee Plans, the sponsor or
administrator of any of the Employee Plans, or
against any fiduciary of any of the Employee Plans
with respect to the operation of such Plan;
(iv) The Partnership has not received any written notice
of any pending investigation or pending enforcement
action by the Pension Benefit Guaranty Corporation,
the Department of Labor, the Internal Revenue Service
or any other Authority with respect to any of the
Employee Plans;
(v) All contributions required to be made under the terms
of the Partnership's Employee Plans have been timely
made. No Employee Plan has an "accumulated funding
deficiency" (within the meaning of Section 412 of the
Code or Section 302 of ERISA);
(vi) All of the Partnership's "group health plans" (within
the meaning of Code Section 5000(b)(1)) have been
operated in substantial compliance with the group
health plan continuation coverage requirements of
Section 4980B of the Code and Sections 601 through
608 of ERISA, Title XXII of the Public Health Service
Act and the provisions of the Social Security Act;
(vii) There has been no act or omission by the Partnership
that has given rise to or may give rise to material
fines, penalties, taxes, or related charges under
Section 502(c), (i) or (l) or Section 4071 of ERISA
or Chapter 43 of the Code or the imposition of a lien
pursuant to Sections 401(a)(29) or 412(n) of the Code
or pursuant to ERISA;
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<PAGE> 12
(viii) Except with respect to the transactions contemplated
by this Agreement, no "reportable event" within the
meaning of Section 4043 of ERISA, or prohibited
transaction within the meaning of Section 406 of
ERISA, has occurred with respect to any Employee Plan
which would reasonably be expected to have a Material
Adverse Effect; and
(ix) No Employee Plan is a "multiemployer plan" as such
term is defined in section 3(37) of ERISA. No
Employee Plan is a plan maintained by more than one
employer (a so-called "multiple employer plan") for
purposes of section 413(c) of the Code or otherwise.
(k) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. The Partnership and each Affiliate thereof is
operating and conducting its Subject Business in compliance with all
applicable Legal Requirements, rights of concession, licenses, know-how
or other proprietary rights of others, the failure to comply with which
would reasonably be expected to have a Material Adverse Effect with
respect to its Subject Business.
(l) Legal Proceedings. There is no litigation,
proceeding, claim, grievance, arbitration, investigation or other action
to which the Partnership or any Affiliate thereof is a party (including
proceedings or claims by or before the National Labor Relations Board,
the Equal Employment Opportunity Commission, the Department of Labor or
any other Authority) (i) that is pending or, to the Knowledge of the
Partnership, threatened, (ii) that relates in any way to the operation or
conduct of its Subject Business, or to the transactions contemplated by
this Agreement, and (iii) that upon resolution adverse to Partnership or
any Affiliate, could reasonably be expected to have a Material Adverse
Effect with respect to its Subject Business.
(m) Initial Asset Contributions. To the Partnership's
Knowledge, there is no basis for a claim by the Partnership against
Lyondell or Millennium Petrochemicals for breach of representation or
warranty of any of their respective representations and warranties set
forth in the Lyondell Asset Contribution Agreement or the Millennium
Asset Contribution Agreement.
2.2 Representations and Warranties of Occidental. Except as set
forth on Schedule 2.2, Occidental represents and warrants to each other Party
as follows:
(a) Organization, Good Standing and Power. Occidental
and each member of its Group (i) is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation and has the corporate power and authority to own,
lease and operate its assets and, if applicable, to conduct the Subject
Business now being conducted by it and to be conducted by it as of the
Closing, (ii) is duly authorized, qualified or licensed to do business as
a foreign corporation in, and is in good standing in, each of the
jurisdictions in which its right, title or interest in or to any of the
assets held by it or the Subject Business conducted by it, if applicable,
requires such authorization, qualification or
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<PAGE> 13
licensing, except where the failure to be so authorized, qualified,
licensed or in good standing would not be reasonably likely to have a
Material Adverse Effect with respect to its Subject Business, and (iii)
has, and in the case of the Related Agreements to be executed by it at or
prior to the Closing, will have, all requisite corporate power and
authority to enter into this Agreement and, as applicable, the Related
Agreements to which it is or will be a party and to perform its
obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements. Assuming
the approval of Occidental's board of directors referred to in Section
4.3(d):
(i) The execution, delivery and performance by
Occidental of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly
authorized and approved by all necessary corporate or similar
action on its part. This Agreement has been duly and validly
executed and delivered by Occidental and is its legal, valid
and binding obligation, enforceable against it in accordance
with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other laws related to or affecting creditors' rights
generally and by general equity principles.
(ii) The execution, delivery and performance by
Occidental and each member of its Group of the Related
Agreements to which it or any member of its Group will be a
party and the consummation by it and its Group of the
transactions contemplated thereby will be, as of the Closing,
duly authorized and approved by all necessary corporate or
similar action on its or their part. At the Closing, each of
the Related Agreements to which Occidental or any member of
its Group will be a party will be duly and validly executed
and delivered by Occidental or member and will be upon
execution and delivery a legal, valid and binding obligation,
enforceable against it or such member in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and
by general equity principles.
(c) Lack of Conflicts. Assuming satisfaction of the
condition in Section 4.1(c) and receipt of the Consents contemplated by
Schedule 4.3(f), and except with respect to the HSR Act as set forth in
Section 4.1(d), each of the execution, delivery and performance by
Occidental and each member of its Group of this Agreement and the Related
Agreements to which any of them is or will be a party and the
consummation by them of the transactions contemplated hereby and thereby
does not and, as of the Closing, will not (i) violate (with or without
the giving of notice or the lapse of time or both) any Legal Requirement
applicable to any of them or any of their Subsidiaries, other than those
that would not be reasonably likely to have a Material Adverse Effect
with respect to its Subject Business, (ii) conflict with, or result in
the breach of, any provision of the charter or by-laws or similar
governing or organizational documents of any of them or any of their
Subsidiaries, (iii) result in the creation of any Encumbrance upon any of
their assets, other than those contemplated by this Agreement or any of
the Related Agreements, or those that would not be reasonably likely to
have a Material Adverse Effect with respect to its Subject Business, or
(iv) violate, conflict
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<PAGE> 14
with or result in the breach or termination of or otherwise give any
other Person the right to terminate, or constitute a default, event of
default or an event which with notice, lapse of time or both, would
constitute a default or event of default under the terms of, any
contract, indenture, lease, mortgage, Government License or other
agreement or instrument to which any of them or any of their Subsidiaries
is a party or by which the properties or businesses of any of them or any
of their Subsidiaries are bound, except for violations, conflicts,
breaches, terminations and defaults that would not be reasonably likely
to have a Material Adverse Effect with respect to its Subject Business.
(d) Certain Fees. Neither Occidental nor any of its
Affiliates nor any of its officers, directors or employees, on behalf of
it or such Affiliates, has employed any broker or finder or incurred any
other liability for any financial advisory fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
(e) SEC Reports; Financial Statements.
(i) Occidental has filed all material forms,
reports and documents required to be filed by it with the SEC
since December 31, 1996 (its "SEC Reports"). Occidental's
SEC Reports were prepared in all material respects in
accordance with the requirements of the Securities Act, or
the Exchange Act, as the case may be, and the rules and
regulations thereunder, and none of Occidental's SEC Reports,
as of the date they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ii) The financial statements (including any notes
thereto) contained in Occidental's SEC Reports were prepared
in accordance with GAAP throughout the periods indicated
(except as may be indicated in the notes thereto and except
that financial statements included with quarterly reports on
Form 10-Q do not contain all GAAP notes to such financial
statements) and each fairly presents the consolidated (or
combined, as applicable) financial position, results of
operations and changes in stockholders' equity and cash flows
of Occidental and its subsidiaries as at the respective dates
thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and
recurring year-end adjustments).
(f) Absence of Certain Changes. Since December 31, 1996,
(i) Occidental and its Affiliates have not incurred any material
liabilities or obligations, fixed, contingent, accrued or otherwise, that
relate to or are allocable to its Subject Business and that have had or
are reasonably likely to have a Material Adverse Effect with respect to
its Subject Business, (ii) Occidental and its Affiliates have conducted
its Subject Business in all material respects in the ordinary course,
consistent with past practice, and (iii) no event, occurrence or other
matter has occurred that is reasonably likely to have a Material Adverse
Effect with respect to the Subject Business of Occidental, provided that
this determination shall be made without regard to any change in general
economic or political conditions or any change in raw
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<PAGE> 15
materials prices, product prices, industry capacity or other matter of
industry-wide application that affects the Partnership's Subject Business
and Occidental's Subject Business in a substantially similar way.
2.3 Representations and Warranties of Lyondell. Except as set
forth on Schedule 2.3, Lyondell represents and warrants to each other Party as
follows:
(a) Organization, Good Standing and Power. Lyondell and
each member of its Group (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the corporate power and authority to own, lease and operate its
assets, (ii) is duly authorized, qualified or licensed to do business as
a foreign corporation or other organization in, and is in good standing
in, each of the jurisdictions in which its right, title or interest in or
to any of the assets held by it requires such authorization,
qualification or licensing, except where the failure to be so authorized,
qualified, licensed or in good standing would not be reasonably likely to
have a Material Adverse Effect with respect to the Partnership's Subject
Business, and (iii) has, and in the case of the Related Agreements to be
executed by it at or prior to the Closing, will have, all requisite
corporate power and authority, or power and authority under its
constituent documents, to enter into this Agreement and, as applicable,
the Related Agreements to which it is or will be a party and to perform
its obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements.
(i) The execution, delivery and performance by
Lyondell of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized
and approved by all necessary corporate or similar action on
its part. This Agreement has been duly and validly executed
and delivered by Lyondell and is its legal, valid and binding
obligation, enforceable against it in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and
by general equity principles.
(ii) The execution, delivery and performance by
Lyondell and each member of its Group of the Related
Agreements to which it or any member of its Group will be a
party and the consummation by it and its Group of the
transactions contemplated thereby will be, as of the Closing,
duly authorized and approved by all necessary corporate or
similar action on its or their part. At the Closing, each of
the Related Agreements to which Lyondell or any member of its
Group will be a party will be duly and validly executed and
delivered by Lyondell or member and will be upon execution
and delivery a legal, valid and binding obligation,
enforceable against it or such member in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and
by general equity principles.
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<PAGE> 16
(c) Lack of Conflicts. Except with respect to the HSR
Act as set forth in Section 4.1(d), each of the execution, delivery and
performance by Lyondell and each member of its Group of this Agreement
and the Related Agreements to which any of them is or will be a party and
the consummation by them of the transactions contemplated hereby and
thereby does not and, as of the Closing, will not (i) violate (with or
without the giving of notice or the lapse of time or both) any Legal
Requirement applicable to any of them or any of their Subsidiaries, other
than those that would not be reasonably likely to have a Material Adverse
Effect with respect to Lyondell, (ii) conflict with, or result in the
breach of, any provision of the charter or by-laws or similar governing
or organizational documents of any of them or any of their Subsidiaries,
(iii) result in the creation of any Encumbrance upon any of their assets,
other than those contemplated by this Agreement or any of the Related
Agreements, or those that would not be reasonably likely to have a
Material Adverse Effect with respect to Lyondell, or (iv) violate,
conflict with or result in the breach or termination of or otherwise give
any other Person the right to terminate, or constitute a default, event
of default or an event which with notice, lapse of time or both, would
constitute a default or event of default under the terms of, any
contract, indenture, lease, mortgage, Government License or other
agreement or instrument to which any of them or any of their Subsidiaries
is a party or by which the properties or businesses of any of them or any
of their Subsidiaries are bound, except for violations, conflicts,
breaches, terminations and defaults that would not be reasonably likely
to have a Material Adverse Effect with respect to Lyondell.
(d) Certain Fees. Neither Lyondell nor any of its
Affiliates nor any of its officers, directors or employees, on behalf of
it or such Affiliates, has employed any broker or finder or incurred any
other liability for any financial advisory fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
(e) Joint Proxy Statement. The Joint Proxy Statement was
prepared in all material respects in accordance with the requirements of
the Securities Act, or the Exchange Act, as the case may be, and the
rules and regulations thereunder, and, as of the date of the
Stockholders' Meetings and insofar as it relates to the Subject Business
of Lyondell, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(f) Title to Lyondell Units. Without giving effect to
this Agreement or the transactions contemplated hereby, Lyondell LP and
Lyondell GP each owns the number of Units set forth in Section 2.1 of the
Partnership Agreement opposite its name. Except as contemplated by this
Agreement, there are no outstanding subscriptions, options, convertible
securities, warrants or calls of any kind issued or granted by, or
binding upon, the Partnership or any member of the Lyondell Group to
purchase or otherwise acquire or to sell or otherwise dispose of any
security of or equity interest in the Partnership.
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<PAGE> 17
2.4 Representations and Warranties of Millennium. Except as set
forth on Schedule 2.4, Millennium represents and warrants to each other Party
as follows:
(a) Organization, Good Standing and Power. Millennium
and each member of its Group (i) is a corporation or a limited liability
company duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
corporate power and authority or power under its constituent documents to
own, lease and operate its assets, (ii) is duly authorized, qualified or
licensed to do business as a foreign corporation or other organization
in, and is in good standing in, each of the jurisdictions in which its
right, title or interest in or to any of the assets held by it requires
such authorization, qualification or licensing, except where the failure
to be so authorized, qualified, licensed or in good standing would not be
reasonably likely to have a Material Adverse Effect with respect to the
Partnership's Subject Business, and (iii) has, and in the case of the
Related Agreements to be executed by it at or prior to the Closing, will
have, all requisite corporate power and authority, or power and authority
under its constituent documents, to enter into this Agreement and, as
applicable, the Related Agreements to which it is or will be a party and
to perform its obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements.
(i) The execution, delivery and performance by
Millennium of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly
authorized and approved by all necessary corporate or similar
action on its part. This Agreement has been duly and validly
executed and delivered by Millennium and is its legal, valid
and binding obligation, enforceable against it in accordance
with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other laws related to or affecting creditors' rights
generally and by general equity principles.
(ii) The execution, delivery and performance by
Millennium and each member of its Group of the Related
Agreements to which it or any member of its Group will be a
party and the consummation by it and its Group of the
transactions contemplated thereby will be, as of the Closing,
duly authorized and approved by all necessary corporate or
similar action on its or their part. At the Closing, each of
the Related Agreements to which Millennium or any member of
its Group will be a party will be duly and validly executed
and delivered by Millennium or member and will be upon
execution and delivery a legal, valid and binding obligation,
enforceable against it or such member in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and
by general equity principles.
(c) Lack of Conflicts. Except with respect to the HSR
Act as set forth in Section 4.1(d), each of the execution, delivery and
performance by Millennium and each member of its Group of this Agreement
and the Related Agreements to which any of them is or will be a party and
the consummation by them of the transactions contemplated hereby
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<PAGE> 18
and thereby does not and, as of the Closing, will not (i) violate (with or
without the giving of notice or the lapse of time or both) any Legal
Requirement applicable to any of them or any of their Subsidiaries, other
than those that would not be reasonably likely to have a Material Adverse
Effect with respect to Millennium, (ii) conflict with, or result in the
breach of, any provision of the charter or by- laws of any of them or any
of their Subsidiaries, (iii) result in the creation of any Encumbrance
upon any of their assets, other than those contemplated by this Agreement
or any of the Related Agreements, or those that would not be reasonably
likely to have a Material Adverse Effect with respect to Millennium, or
(iv) violate, conflict with or result in the breach or termination of or
otherwise give any other Person the right to terminate, or constitute a
default, event of default or an event which with notice, lapse of time or
both, would constitute a default or event of default under the terms of,
any contract, indenture, lease, mortgage, Government License or other
agreement or instrument to which any of them or any of their Subsidiaries
is a party or by which the properties or businesses of any of them or any
of their Subsidiaries are bound, except for violations, conflicts,
breaches, terminations and defaults that would not be reasonably likely
to have a Material Adverse Effect with respect to Millennium.
(d) Certain Fees. Neither Millennium nor any of its
Affiliates nor any of its officers, directors or employees, on behalf of
it or such Affiliates, has employed any broker or finder or incurred any
other liability for any financial advisory fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
(e) Joint Proxy Statement. The Joint Proxy Statement was
prepared in all material respects in accordance with the requirements of
the Securities Act, or the Exchange Act, as the case may be, and the
rules and regulations thereunder, and, as of the date of the
Stockholders' Meetings and insofar as it relates to the Subject Business
of Millennium, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(f) Title to Millennium Units. Without giving effect to
this Agreement or the transactions contemplated hereby, Millennium LP and
Millennium GP each owns the number of Units set forth in Section 2.1 of
the Partnership Agreement opposite its name. Except as contemplated by
this Agreement, there are no outstanding subscriptions, options,
convertible securities, warrants or calls of any kind issued or granted
by, or binding upon, the Partnership or any member of the Millennium
Group to purchase or otherwise acquire or to sell or otherwise dispose of
any security of or equity interest in the Partnership.
SECTION 3
ADDITIONAL AGREEMENTS
3.1 Access to Information. Each of Occidental and the
Partnership agrees that, during the period commencing on the date hereof and
ending at the Closing, (i) it will give or cause to be given to any other Party
and its representatives reasonable access during normal business hours to
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<PAGE> 19
the offices, plants, properties, books and records relating to its Subject
Business as such other Party may reasonably request, (ii) it will furnish or
cause to be furnished to any other Party, such financial and operating data and
any other information with respect to the business and properties of its
Subject Business as such other Party may reasonably request (provided such data
and information need only be furnished to the extent it was prepared in the
ordinary course) and (iii) any other Party and its representatives shall be
entitled to reasonable access during normal business hours to the
representatives, officers, employees and contractors of such Party who are
involved in its Subject Business as such other Party may reasonably request;
provided, that Lyondell and Millennium also agree to the foregoing provisions
to the extent that any of the foregoing remain in their possession and have not
been transferred to the Partnership; provided, further that, after
consultation, to the extent permissible, with such other Party, such Party may
restrict access and provision of information to the extent it reasonably
believes necessary to (w) comply with existing confidentiality agreements with
third parties (provided that, upon such other Party's reasonable request, it
shall use its commercially reasonable efforts to secure waivers of any such
confidentiality agreements), (x) ensure compliance with antitrust laws, (y)
preserve the secrecy of confidential information to the extent not related to
its Subject Business and (z) preserve legal privilege; and provided, further
that any access or information obtained by any Party and its representatives in
accordance with this Section 3.1 and otherwise in connection with the
consummation of the transactions contemplated by this Agreement and the Related
Agreements shall be subject to the terms and conditions of the Confidentiality
Agreement.
3.2 Conduct of the Occidental Subject Business Pending the
Closing Date. Occidental agrees that, except as required or contemplated by
this Agreement or otherwise consented to or approved in writing by the
Partnership, during the period commencing on the date hereof and ending on the
Closing Date, it will and will cause its Affiliates to:
(a) use its commercially reasonable efforts to operate
and maintain its Subject Business in all material respects only in the
usual, regular and ordinary manner consistent with past practice
(including undertaking scheduled or necessary "turnarounds" or other
maintenance work and including offsite storage, treatment and disposal of
chemical substances generated prior to the Closing) and, to the extent
consistent with such operation and maintenance, use commercially
reasonable efforts to preserve the present business organization of its
Subject Business intact, keep available the services of, and good
relations with, the present employees and preserve present relationships
with all persons having business dealings with its Subject Business,
except in each case for such matters that, individually and in the
aggregate, do not and are not reasonably likely to have a Material
Adverse Effect on its Subject Business;
(b) maintain its books, accounts and records relating to
its Subject Business in the usual, regular and ordinary manner, on a
basis consistent with past practice, comply in all material respects with
all Legal Requirements and contractual obligations applicable to its
Subject Business or to the conduct of its Subject Business and perform
all of its material obligations relating to its Subject Business;
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<PAGE> 20
(c) not (i) modify or change in any material respect any
of its Contributed Assets or dispose of any material Contributed Asset
except for (A) inventory, equipment, supplies and other Contributed
Assets sold or otherwise disposed of in the ordinary course of business
and (B) any Contributed Assets that in the ordinary course of business
are replaced with substantially similar Contributed Assets, (ii) except
in the ordinary course of business after consultation with the
Partnership, (x) enter into any contract, commitment or agreement that
would be material to the operation of its Subject Business or use of the
Contributed Assets or, except as expressly contemplated by this Agreement
or expressly contemplated by or required pursuant to their respective
terms, modify or change in any material respect any obligation under any
such contract, commitment or agreement, (y) modify or change in any
material respect any obligation under its Government Licenses, (z) modify
or change in any material respect the manner in which the products
produced by its Subject Business are marketed and sold, or (iii) enter
into interest rate protection or other hedging agreements (except for
hydrocarbon hedging agreements entered into in the ordinary course and
expiring prior to December 31, 1998) relating to its Subject Business;
(d) not waive any material claims or rights relating to
its Subject Business;
(e) after obtaining Knowledge thereof, give notice to the
Partnership of any claim or litigation (threatened or instituted) or any
other event or occurrence which could reasonably be expected to have a
Material Adverse Effect on its Contributed Assets or Subject Business,
other than the types of events, occurrences or other matters referred to
in the proviso set forth in Section 2.2(f)(iii);
(f) not take any action that is reasonably likely to
result in its representations and warranties in Section 2 hereof, or in
the form of Occidental Contribution Agreement, not being true in all
material respects as of the Closing Date; and
(g) not agree, whether in writing or otherwise, to take
any action it has agreed pursuant to this Section 3.2 not to take;
provided, however, that notwithstanding anything to the contrary contained in
this Section 3.2, prior to the Closing Date the Occidental Group and the
Partnership will act independently of each other in making decisions as to the
research and development, raw materials, manufacturing, pricing, marketing and
distribution of their products. It is acknowledged by the Parties that the
Originator Receivables Sale Agreement dated as of October 27, 1998, by and
among Occidental Receivables Inc., OCC and other parties, has been terminated
with respect to Oxy Petrochemicals.
3.3 Conduct of the Partnership Subject Business Pending the
Closing Date. The Partnership agrees that, except as required or contemplated
by approvals or authorizations (including the Strategic Plan) by or of the
Partnership Governance Committee prior to the date hereof or by this Agreement
(including, without limitation, Schedule 3.3 hereto) or otherwise consented to
or approved in writing by Occidental, during the period commencing on the date
hereof and ending on the Closing Date, it will and will cause its Affiliates
to:
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<PAGE> 21
(a) use its commercially reasonable efforts to operate
and maintain its Subject Business in all material respects only in a
usual, regular and ordinary manner consistent with the Strategic Plan
(including undertaking scheduled or necessary "turnarounds" or other
maintenance work and including offsite storage, treatment and disposal of
chemical substances generated prior to the Closing) and, to the extent
consistent with such operation and maintenance, use commercially
reasonable efforts to preserve the present business organization of its
Subject Business intact, keep available the services of, and good
relations with, the present employees and preserve present relationships
with all persons having business dealings with its Subject Business,
except in each case for such matters that, individually and in the
aggregate, do not and are not reasonably likely to have a Material
Adverse Effect on its Subject Business;
(b) maintain its books, accounts and records relating to
its Subject Business in the usual, regular and ordinary manner, comply in
all material respects with all Legal Requirements and contractual
obligations applicable to its Subject Business or to the conduct of its
Subject Business and perform all of its material obligations relating to
its Subject Business;
(c) not (i) modify or change in any material respect any
of its assets or dispose of any material asset except for (A) inventory,
equipment, supplies and other assets sold or otherwise disposed of in the
ordinary course of business and (B) any assets that in the ordinary
course of business are replaced with substantially similar assets, (ii)
except in the ordinary course of business after consultation with
Occidental, (x) enter into any contract, commitment or agreement that
would be material to the operation of its Subject Business or use of its
assets or, except as expressly contemplated by this Agreement or
expressly contemplated by or required pursuant to their respective terms,
modify or change in any material respect any obligation under any such
contract, commitment or agreement, (y) modify or change in any material
respect any obligation under its Government Licenses, (z) modify or
change in any material respect the manner in which the products produced
by its Subject Business are marketed and sold, or (iii) enter into
interest rate protection or other hedging agreements (except for
hydrocarbon hedging agreements entered into in the ordinary course and
expiring prior to December 31, 1998) relating to its Subject Business;
provided, that, for purposes of (i) and (ii), "material" shall mean a
change or modification that is subject to the unanimous voting
requirement of Section 6.7 of the Partnership Agreement;
(d) not waive any material claims or rights relating to
its Subject Business;
(e) after obtaining Knowledge thereof, give notice to
Occidental of any claim or litigation (threatened or instituted) or any
other event or occurrence which could reasonably be expected to have a
Material Adverse Effect on its assets or Subject Business, other than the
types of events, occurrences or other matters referred to in the proviso
set forth in Section 2.1(f)(iii);
(f) not take any action that is reasonably likely to
result in its representations and warranties in Section 2 hereof not
being true in all material respects as of the Closing Date;
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<PAGE> 22
(g) not to make any distributions that are not in
compliance with Section 3.1 of the Partnership Agreement; and
(h) not agree, whether in writing or otherwise, to take
any action it has agreed pursuant to this Section 3.3 not to take;
provided, however, that notwithstanding anything to the contrary contained in
this Section 3.3, prior to the Closing Date the Occidental Group and the
Partnership will act independently of each other in making decisions as to the
research and development, raw materials, manufacturing, pricing, marketing and
distribution of their products.
3.4 Further Actions.
(a) Each Party will use its commercially reasonable
efforts to take, or cause to be taken, all other action and do, or cause
to be done, all other things necessary, proper or appropriate to resolve
the objections, if any, as may be asserted by any Authority with respect
to the transactions contemplated hereby under any antitrust laws or
regulations; provided that no Party shall be required to take any action
that could have any material adverse effect on its or its Affiliates'
business, operations, prospects, assets, condition (financial or
otherwise) or results of operations or that would, or would be reasonably
likely to, materially frustrate the financial or other business benefits
reasonably expected to be derived by any Party from the transactions
contemplated by this Agreement.
(b) Subject to the terms and conditions hereof, each
Party agrees to act in good faith and to use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement and under the
Related Agreements to be entered into by such Party or its Affiliates at
Closing, and to confirm that such transactions have been accomplished,
including without limitation, using all commercially reasonable efforts:
(i) to obtain and effect prior to the Closing Date all necessary Consents
and Filings; and (ii) to, in the case of Occidental, obtain prior to the
Closing Date all Government Licenses or consents to the transfer of any
Government Licenses that are transferable by it or its Affiliates
necessary to consummate the transactions contemplated hereby and by the
Related Agreements and to allow for the prudent and uninterrupted
operation of the Subject Business by the Partnership after the Closing.
Each Party shall furnish to the other Party and its Affiliates such
necessary information and assistance as the other may reasonably request
in connection with its preparation of any such Filings or other materials
required in connection with the foregoing.
(c) Occidental shall use its commercially reasonable
efforts to procure all Consents that are necessary to transfer its
Subject Business to the Partnership. Notwithstanding any other provision
of this Agreement to the contrary, the Parties hereto acknowledge and
agree that at the Closing Occidental or any Occidental Partner, as
applicable, will not assign to the Partnership any Contract or warranties
which by their terms require Consent from any other contracting party
thereto unless any such Consent has been obtained prior to the Closing
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<PAGE> 23
Date. Before the Closing, the other Parties and the Partnership will use
their commercially reasonable efforts and cooperate with Occidental and
the Occidental Partners (together, the "Contracting Party") in obtaining
any necessary Consents to the assignment of the Contracts, including,
without limitation, by furnishing to the Contracting Party or other
parties to any Contract summary financial information and other
information with respect to the Partnership reasonably requested by the
Contracting Party or such other parties and taking any such other actions
(which, subject to any provisions to the contrary included in any Related
Agreement, shall not include the incurrence of any expense not otherwise
required to be incurred) as the Contracting Party or such other parties
may reasonably request for the purpose of obtaining any releases, waivers
or terminations as the Contracting Party may reasonably request on behalf
of itself or any Affiliate. No representation is made by the Contracting
Party with respect to whether any Consent to assign a Contract will be
obtainable, and in no event shall the initial capital contributions be
subject to reduction as a result of any Contract not being assigned to
the Partnership at the Closing by virtue of the necessary Consent not
being obtained. Following the Closing, the Partnership, Occidental and
the Occidental Partners shall cooperate with each other and use
commercially reasonable efforts to obtain those Consents that were not
obtained prior to the Closing and (i) if such Consents are obtained
following the Closing, Occidental and the Occidental Partners shall
execute and deliver any other and further instruments of assignment,
assumption, transfer and conveyance and take such other and further
action as the Partnership may request in order to assign to the
Partnership any Contract or warranties to which such Consents relate and
(ii) pending such transfer or issuance to the Partnership, shall provide,
to the extent it may lawfully do so, the Partnership with the benefits of
any such Contracts, in which case, as provided for in the Occidental
Contribution Agreement, the Partnership shall promptly assume and
discharge (or reimburse Occidental or its Affiliate for) all obligations
and liabilities associated with the benefits of such Contracts so made
available to the Partnership.
(d) Occidental shall keep each other Party fully informed
from time to time as any other Party shall reasonably request as to the
status of all Consents being sought by Occidental or a Occidental Partner
pursuant to Section 3.4(c).
(e) Each Party shall furnish to the other Party such
information, cooperation and assistance as reasonably may be requested in
connection with the foregoing.
(f) Each Party shall negotiate and otherwise act in good
faith to complete, execute and deliver the Related Agreements at the
Closing and to effect the Closing at the earliest practicable date.
3.5 Notifications. Each Party shall notify the other Parties and
keep them advised as to (i) any litigation or administrative proceeding that is
either pending or, to its Knowledge, threatened against such Party which
challenges the transactions contemplated hereby; (ii) in the case of the
Partnership or Occidental, any material damage to or destruction of its Subject
Business and (iii) any fact of which such Party has Knowledge that indicates
that any condition to Closing is reasonably likely not to be satisfied in a
timely fashion.
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<PAGE> 24
3.6 Employee Matters.
(a) Substantially all employees of Occidental, OCC, Oxy
Petrochemicals or one of the Occidental Partners who are associated
primarily with Occidental's Subject Business shall be offered employment
with the Partnership pursuant to the terms of the Occidental Contribution
Agreement.
(b) The Partnership shall provide benefits to such
employees who become employees of the Partnership under the benefit plans
and programs of the Partnership upon employment with the Partnership,
subject to the more specific provisions of the Occidental Contribution
Agreement.
(c) No provision of this Agreement shall require OCC, Oxy
Petrochemicals or any of the Occidental Partners to fail to comply with
the terms of any current collective bargaining agreement.
3.7 Partnership Unanimous Consent Items. No action that requires
the consent of Representatives of both Lyondell and Millennium pursuant to
Section 6.7 of the Partnership Agreement shall be taken prior to the Closing
without the consent of Occidental (other than actions regarding this Agreement
and the transactions contemplated hereby).
SECTION 4
CONDITIONS TO CLOSING
4.1 Conditions Precedent to Obligations of All Parties. The
respective obligations of the Parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the Closing Date of each of the following conditions:
(a) No Injunction, etc. No preliminary or permanent
injunction or other order issued by any federal or state court of
competent jurisdiction in the United States or by any United States
federal or state governmental or regulatory body or any statute, rule,
regulation or executive order promulgated or enacted by any United States
federal or state governmental authority shall be in effect which
materially restrains, enjoins or otherwise prohibits (i) the transactions
contemplated hereby; (ii) the ownership by the Partnership (including
enjoyment of any rights relating thereto) of its Subject Business or
Occidental's Subject Business at and after the Closing; or (iii) the
operation by the Partnership of its Subject Business or Occidental's
Subject Business at and after the Closing; and no Proceeding seeking any
such injunction or order shall be pending; provided, that before any
determination is made to the effect that this condition has not been
satisfied, each Party shall each use commercially reasonable efforts to
have such order or injunction lifted, vacated or dismissed.
(b) Tier 2 Related Agreements. The Parties shall have
reached agreement with respect to definitive execution forms of the Tier
2 Related Agreements in accordance with Section 1.2.
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<PAGE> 25
(c) Government Licenses and Consents. Occidental shall
have obtained and effected all Government Licenses and Consents required
from any Authority for the consummation of the transactions contemplated
hereunder and under the Related Agreements to be entered into at the
Closing and required to allow for the prudent and uninterrupted operation
of its Subject Business by the Partnership after the Closing in a manner
consistent with past practices, except for those Government Licenses and
Consents, the absence of which is not, in the aggregate, reasonably
likely to have a Material Adverse Effect with respect to Occidental's
Subject Business.
(d) HSR Act. The waiting period applicable to the
Closing under the HSR Act shall have expired or been terminated, and no
consent, approval, permit or authorization in connection therewith shall
impose terms or conditions that would have, or would be reasonably likely
to have, a material adverse effect on any Party (assuming the Closing has
taken place) or that would, or would be reasonably likely to, materially
frustrate the financial or other business benefits reasonably expected to
be derived by any Party from the transactions contemplated by this
Agreement.
4.2 Conditions Precedent to Obligations of the Partnership. The
obligations of the Partnership under this Agreement are subject to the
satisfaction (or waiver by the Partnership) on or prior to the Closing Date of
each of the following conditions:
(a) Accuracy of Representations and Warranties.
Notwithstanding any investigation, inspection or evaluation conducted or
notice or Knowledge obtained by any member of the Equistar Group, all
representations and warranties of members of the Occidental Group
contained in this Agreement and the Related Agreements that contain
qualifications and exceptions relating to materiality or Material Adverse
Effect shall be true and correct on and as of the Closing Date, and all
other representations and warranties of the members of such Group
contained in such agreements shall be true and correct in all material
respects as of the Closing Date.
(b) Performance of Agreements. Occidental and its
Affiliates shall in all material respects have performed and complied
with all obligations and agreements contained in this Agreement, and
executed all agreements and documents (including the Tier 1 Related
Agreements and the Tier 2 Related Agreements) to be performed, complied
with or executed by it or them on or prior to the Closing Date.
(c) No Material Adverse Change. After the date of this
Agreement, no event, occurrence or other matter shall have occurred that
is reasonably likely to have a Material Adverse Effect with respect to
Occidental's Subject Business, provided that this determination shall be
made without regard to any change in general economic or political
conditions or any change in raw materials prices, product prices,
industry capacity or other matter of industry-wide application that
affects the Partnership's Subject Business and Occidental's Subject
Business in a substantially similar way.
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<PAGE> 26
(d) Officer's Certificates. The Partnership shall have
received a certificate, dated the Closing Date, signed by the President
or a Vice President of Occidental to the effect that, to the Knowledge of
Occidental, the conditions specified in the above paragraphs have been
fulfilled.
4.3 Conditions Precedent to Obligations of Occidental. The
obligations of Occidental under this Agreement are subject to the satisfaction
(or waiver by Occidental) on or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties.
Notwithstanding any investigation, inspection or evaluation conducted or
notice or Knowledge obtained by any member of the Occidental Group, all
representations and warranties of the Partnership and of members of the
Lyondell Group and the Millennium Group contained in this Agreement and
the Related Agreements that contain qualifications and exceptions
relating to materiality or Material Adverse Effect shall be true and
correct on and as of the Closing Date, and all other representations and
warranties of such Persons contained in such agreements shall be true and
correct in all material respects as of the Closing Date.
(b) Performance of Agreements. Each of the Partnership,
Lyondell and its Affiliates and Millennium and its Affiliates shall in
all material respects have performed and complied with all obligations
and agreements contained in this Agreement, and executed all agreements
and documents (including the Tier 1 Related Agreements and the Tier 2
Related Agreements) to be performed, complied with or executed by it or
them on or prior to the Closing Date.
(c) No Material Adverse Change. After the date of this
Agreement, no event, occurrence or other matter shall have occurred that
is reasonably likely to have a Material Adverse Effect with respect to
the Partnership's Subject Business, provided that this determination
shall be made without regard to any change in general economic or
political conditions or any change in raw materials prices, product
prices, industry capacity or other matter of industry-wide application
that affects the Partnership's Subject Business and Occidental's Subject
Business in a substantially similar way.
(d) Board of Directors Approval. This Agreement and the
Tier 1 Related Agreements, and the transactions contemplated by such
agreements, shall have been duly authorized and approved by Occidental's
board of directors.
(e) Officer's Certificates. Occidental shall have
received certificates, dated the Closing Date, signed by the President or
a Vice President of each of the Partnership, Lyondell and Millennium to
the effect that, to the Knowledge of such Party, the conditions specified
in the above paragraphs have been fulfilled; provided, that, with respect
to the conditions set forth in Sections 4.3(a) and 4.3(b), such
certificates shall only concern the accuracy of representations and
warranties and performance of agreements of the Partnership, the Lyondell
Group and the Millennium Group, respectively.
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<PAGE> 27
(f) Third Party Consents. All Consents of any third
party listed on Schedule 4.3(f) shall have been obtained.
SECTION 5
TERMINATION AND WAIVER
5.1 General. This Agreement may be terminated and the
transactions contemplated herein and in the Related Agreements may be abandoned
at any time prior to the Closing:
(a) by the written consent of the Parties;
(b) by the Partnership, by notice to Occidental, if there
has been a material misrepresentation or a breach of an agreement by
Occidental in this Agreement that (i) if such misrepresentation or breach
existed on the Closing Date, would constitute a failure to satisfy the
conditions to Closing set forth in Section 4.2(b) and (ii) has not been
cured and cannot reasonably be cured within 30 days after all other
conditions to Closing have been satisfied;
(c) by Occidental, by notice to the Partnership, if there
has been a material misrepresentation or a breach of an agreement by any
of the Partnership, Lyondell or Millennium in this Agreement that (i) if
such misrepresentation or breach existed on the Closing Date, would
constitute a failure to satisfy the conditions to Closing set forth in
Section 4.3(b) and (ii) has not been cured and cannot reasonably be cured
within 30 days after all other conditions to Closing have been satisfied;
(d) by any Party, by notice to each other Party, if after
the date hereof and prior to the Closing any final, non-appealable order
or injunction shall be issued by any federal or state court of competent
jurisdiction in the United States or by any United States Authority, or
any Legal Requirement shall be promulgated or enacted by any United
States Authority, that would have the effect of prohibiting or making
unlawful the performance of this Agreement, the execution, delivery or
performance of any Related Agreement or the consummation of the Closing;
and
(e) by any Party, by notice to each other Party, in the
event that, for any reason, the Closing does not occur on or before
December 31, 1998; provided, however, that if the Closing does not occur
due to the act or omission of one of the Parties, that Party may not
terminate this Agreement pursuant to the provisions of this Section
5.1(e).
5.2 Effect of Termination. In the event of any termination of
this Agreement as provided above, this Agreement shall forthwith become wholly
void and of no further force and effect and there shall be no liability on the
part of any Party, its Subsidiaries or their respective officers or directors;
provided, however, that upon any such termination the obligations of the
Parties with respect to this Section 5, expenses under Section 6.10 and
confidentiality under Section 6.6 shall remain in full force and effect; and
provided, further, that nothing herein will relieve any party from liability
for damages for any breach of this Agreement.
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<PAGE> 28
SECTION 6
MISCELLANEOUS
6.1 Successors and Assigns. Except as may be expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
successors of all of the Parties. No Party may otherwise assign or delegate
any of its rights or obligations under this Agreement without the prior written
consent of all of the other Parties, which consent shall be in the sole and
absolute discretion of each such Party. Any purported assignment or delegation
without such consent shall be void and ineffective.
6.2 Benefits of Agreement Restricted to Parties. This Agreement
is made solely for the benefit of the Parties, and no other Person (including
employees) shall have any right, claim or cause of action under or by virtue of
this Agreement.
6.3 Notices. All notices, requests and other communications that
are required or may be given under this Agreement shall, unless otherwise
provided for elsewhere in this Agreement, be in writing and shall be deemed to
have been duly given if and when (i) transmitted by telecopier facsimile with
proof of confirmation from the transmitting machine or (ii) delivered by
commercial courier or other hand delivery, as follows:
<TABLE>
<S> <C>
Equistar Chemicals, LP: Occidental Petroleum Corporation:
Gerald A. O'Brien 10889 Wilshire Boulevard
Vice President and Secretary Los Angeles, California 90024
Equistar Chemicals, LP Attention: President
1221 McKinney Street Telecopy Number: (310) 443-6977
Houston, Texas 77010
Telecopy Number: (713) 309-4718
with a copy to: with a copy to:
Baker & Botts, L.L.P. Occidental Petroleum Corporation
910 Louisiana Street 10889 Wilshire Boulevard
Houston, Texas 77002 Los Angeles, California 90024
Attention: Stephen A. Massad Attention: General Counsel
Telecopy Number: (713) 229-1522 Telecopy Number: (310) 443-6333
Lyondell Petrochemical Company: Millennium Chemicals Inc.:
Kerry A. Galvin George H. Hempstead, III
Chief Corporate Counsel and Senior Vice President,
Corporate Secretary Law and Administration and Secretary
Lyondell Petrochemical Company Millennium Chemicals Inc.
1221 McKinney Street 99 Wood Avenue South
Houston, Texas 77010 Iselin, New Jersey 08830
Telecopy Number: (713) 309-4718 Telecopy Number: 908-603-6857
</TABLE>
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<PAGE> 29
6.4 Severability. In the event that any provision of this
Agreement shall finally be determined to be unlawful, such provision shall, so
long as the economic and legal substance of the transactions contemplated
hereby is not affected in any materially adverse manner as to any of the
Parties, be deemed severed from this Agreement and every other provision of
this Agreement shall remain in full force and effect.
6.5 Press Releases. Unless otherwise mutually agreed, no Party
shall make or authorize any public release of information regarding the matters
contemplated by, or any provisions or terms of, this Agreement or the Related
Agreements, and Occidental shall not make or authorize any public release of
information regarding the Partnership, except (i) that a press release or press
releases in mutually agreed upon form or forms shall be issued by the Parties
as promptly as is practicable following the execution of this Agreement, (ii)
that the Parties may, after consultation with each other, communicate with
employees, customers, suppliers, stockholders, lenders, lessors, and other
particular groups as may be necessary or appropriate and not inconsistent with
the prompt consummation of the transactions contemplated by this Agreement and
(iii) after consultation with each other, as required by law or stock exchange
rule or as necessary for the assertion or enforcement of contractual rights.
6.6 Confidentiality Agreement. Lyondell, on behalf of the
Partnership, and Occidental have heretofore entered into the Confidentiality
Agreement relating to the exchange between Lyondell and the Partnership, on the
one hand, and Occidental and the Occidental Partners, on the other hand, of
certain confidential information related or otherwise pertinent to the
transactions contemplated by this Agreement. Nothing in this Agreement shall
be construed as impairing or otherwise limiting the obligations assumed
pursuant to the Confidentiality Agreement by the parties thereto. The
Confidentiality Agreement shall remain in full force and effect in accordance
with its terms until the earlier of Closing or its expiration date. The
Partnership and Millennium shall be bound by, and shall be entitled to the
benefits of, such Confidentiality Agreement to the same extent as if they were
parties thereto.
6.7 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or
presumption that any of the Parties had a greater or lesser hand in drafting
this Agreement; (iii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iv) the word "includes" and its
syntactic variants mean "includes, but is not limited to" and corresponding
syntactic variant expressions; (v) the plural shall be deemed to include the
singular, and vice versa; (vi) each gender shall be deemed to include the other
genders; (vii) each exhibit, appendix, attachment and schedule to this
Agreement is a part of this Agreement; and (viii) any reference herein or in
any schedule hereto to any agreements entered into prior to the date hereof
shall include any amendments or supplements made thereto.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
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<PAGE> 30
6.9 Governing Law. The laws of the State of Delaware shall
govern the construction, interpretation and effect of this Agreement without
giving effect to any conflicts of law principles.
6.10 Transaction Costs.
(a) Subject to subsection (b) and Section 2.8 of the
Occidental Contribution Agreement, and except as provided on Schedule
6.10, all reasonable out-of-pocket costs, fees and expenses incurred at
any time by any Party in connection with the negotiation, execution and
delivery of this Agreement, the satisfaction of the conditions to Closing
under this Agreement and the consummation of the transactions
contemplated hereby shall be reimbursed by the Partnership (if the cost,
fee or expense was incurred by a Party other than the Partnership) and if
incurred or reimbursed by the Partnership shall be shared by Lyondell,
Millennium and Occidental pro rata in accordance with the relative
interests to be held by their Subsidiaries in the Partnership after
Closing; provided, however, that if any one expense item or series of
directly related expenses exceeds $5 million, all of such expense or
expenses in excess of such $5 million shall be paid by the Party
incurring such expense.
(b) Notwithstanding the foregoing, each Party shall be
solely responsible for and bear all of its own respective costs, fees and
expenses if this Agreement is terminated and the Closing does not occur.
6.11 Amendment. All waivers, modifications, amendments or
alterations of this Agreement shall require the written approval of each of the
Parties. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including any investigation by or on behalf of any
Party, shall be deemed to constitute a waiver by the Party taking such action
of compliance with any representations, warranties, covenants or agreements
contained herein and in any documents delivered or to be delivered pursuant to
this Agreement and in connection with the Closing hereunder. The waiver by any
Party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
6.12 Jurisdiction; Consent to Service of Process; Waiver. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO
THIS AGREEMENT SHALL APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL
CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE
ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE
STATE OF DELAWARE, AND EACH OF THE PARTIES TO THIS AGREEMENT SHALL MAINTAIN THE
APPOINTMENT OF SUCH AGENT (OR A SUBSTITUTE AGENT) FROM THE DATE HEREOF UNTIL
THE EARLIER OF THE
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<PAGE> 31
CLOSING DATE OR THE TERMINATION OF THIS AGREEMENT AND SATISFACTION OF ALL
OBLIGATIONS HEREUNDER. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS
OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO
SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED
ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE
PARTIES HERETO. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED ON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS.
6.13 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
6.14 Action by the Partnership. Any determination (including as
to the satisfaction of any and all conditions precedent to the obligations of
the Partnership set forth in Section 4.2 of this Agreement), consent, approval,
waiver, other action or right to be made, given, taken or exercised by the
Partnership pursuant to or as contemplated by this Agreement shall be subject
to the Partnership Governance Committee unanimous voting requirements set forth
in Section 6.7 of the Partnership Agreement; provided, however, that the
Partnership's exercise of its right of termination set forth in Section 5.1(b)
of this Agreement shall only require the approval of either two or more
Representatives of Lyondell or two or more Representatives of Millennium,
acting separately.
[SIGNATURE PAGES FOLLOW]
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<PAGE> 32
IN WITNESS WHEREOF, this Master Transaction Agreement has been executed
on behalf of each of the Parties, by their respective officers thereunto duly
authorized, effective as of the date first written above.
EQUISTAR CHEMICALS, LP
By: /s/ Eugene R. Allspach
-------------------------------------
Name: Eugene R. Allspach
Title: President and Chief
Operating Officer
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ S.P. Dominick, Jr.
-------------------------------------
Name: S.P. Dominick, Jr.
Title: Vice President and Controller
LYONDELL PETROCHEMICAL COMPANY
By: /s/ Dan F. Smith
-------------------------------------
Name: Dan F. Smith
Title: Chief Executive Officer
MILLENNIUM CHEMICALS INC.
By: /s/ George H. Hempstead, III
-------------------------------------
Name: George H. Hempstead, III
Title: Senior Vice President
[Signature Page to Master Transaction Agreement]
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<PAGE> 33
APPENDIX A
TO
MASTER TRANSACTION AGREEMENT
DEFINITIONS
"Affiliate" shall mean any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified; provided, however, that for purposes of this
Agreement (i) Canadian Occidental Petroleum Ltd. and any entities controlled by
it shall not be considered an Affiliate of the Occidental Group, (ii) Suburban
Propane Partners, L.P. and any entities controlled by it shall not be
considered an Affiliate of the Millennium Group, (iii) neither the Partnership
nor any entity controlled by it shall be considered an Affiliate of the
Occidental Group, the Lyondell Group or the Millennium Group, (iv) no member of
the Occidental Group, the Lyondell Group or the Millennium Group shall be
considered an Affiliate of the Partnership and (v) the Partnership shall not be
considered an Affiliate of any member of the Occidental Group, the Lyondell
Group or the Millennium Group. For purposes of this definition, the term
"control" shall have the meaning set forth in 17 CFR 230.405, as in effect on
the date hereof.
"Agreement" shall mean this Master Transaction Agreement entered into between
the Parties as of the date hereof.
"Amended and Restated Partnership Agreement" shall mean that certain Amended
and Restated Partnership Agreement of the Partnership to be executed and
delivered at the Closing in substantially the form attached hereto as
Exhibit A.
"Assumed Liabilities" shall have the meaning assigned to such term in the
Occidental Contribution Agreement.
"Authority" shall mean any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, department or instrumentality thereof, or any court or
arbitrator (public or private).
"Business Day" shall mean any day other than a Saturday, Sunday or other day on
which banks are closed in New York City, New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Closing" shall have the meaning set forth in the seventh WHEREAS clause of
this Agreement.
"Closing Date" shall have the meaning set forth in Section 1.3.
"Confidentiality Agreement" shall mean that certain Confidentiality Agreement
dated December 11, 1997 between Lyondell and Occidental.
A-1
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"Consent" shall mean any consent, waiver, approval, authorization, exemption,
registration, license or declaration of or by any other Person or any
Authority, or any expiration or termination of any applicable waiting period
under any Legal Requirement, required with respect to any Party or any party to
the Related Agreements in connection with (i) the execution and delivery of
this Agreement or any of the Related Agreements or (ii) the consummation of any
of the transactions provided for hereby or thereby.
"Contracts" shall have the meaning assigned to such term in the Occidental
Contribution Agreement.
"Contributed Assets" shall have the meaning assigned to the term "Assets" in
the Occidental Contribution Agreement.
"Encumbrance" shall mean any lien, charge, encumbrance, security interest,
title defect, option or any other restriction or third-party right.
"ERISA" shall mean the Employee Retirement Income Security Act, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Equistar Group" shall mean the Partnership, the Initial Partners, Lyondell,
Millennium and Millennium Petrochemicals.
"Filing" shall mean any filing with any Person or any Authority required with
respect to any Party in connection with (i) the execution and delivery of this
Agreement or any of the Related Agreements or (ii) the consummation of any of
the transactions provided for hereby or thereby.
"GAAP" shall have the meaning set forth in Section 2.1(e).
"Government License" shall have the meaning assigned to such term in the
Occidental Contribution Agreement.
"Group" shall mean the Equistar Group, the Occidental Group, the Lyondell Group
or the Millennium Group, as appropriate.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Initial Master Transaction Agreement" shall mean the Master Transaction
Agreement dated July 25, 1997, between Lyondell and Millennium, as amended.
"Initial Partners" shall mean Lyondell LP, Lyondell GP, Millennium LP and
Millennium GP.
"Joint Proxy Statement" shall mean the Joint Proxy Statement of Lyondell and
Millennium dated October 17, 1997.
A-2
<PAGE> 35
"Knowledge" shall mean with respect to any Party the actual knowledge of (i)
any current plant manager, (ii) any current officer of such Party having
responsibilities with respect to an applicable Subject Business or the
transactions contemplated in this Agreement, (iii) in the case of Occidental,
any current officer of OCC, Oxy Petrochemicals or of an Occidental Partner
having responsibilities with respect to Occidental's Subject Business or the
transactions contemplated in this Agreement, and (iv) any current employee
reporting directly to an officer described in clause (ii) or (iii).
"Legal Requirement" shall mean any law, statute, rule, ordinance, decree,
regulation, requirement, order or judgment of any Authority including the terms
of any Government License.
"Lyondell" shall have the meaning set forth in the first paragraph of this
Agreement.
"Lyondell Asset Contribution Agreement" shall mean that certain Asset
Contribution Agreement dated December 1, 1997, to which Lyondell and the
Partnership are parties.
"Lyondell GP" shall mean Lyondell Petrochemical G.P. Inc., a Delaware
corporation and a wholly owned Subsidiary of Lyondell.
"Lyondell Group" shall mean Lyondell, Lyondell LP and Lyondell GP.
"Lyondell LP" shall mean Lyondell Petrochemical L.P. Inc., a Delaware
corporation and a wholly owned Subsidiary of Lyondell.
"Lyondell Note" shall mean that certain promissory note in the aggregate
principal amount of $345 million dated December 1, 1997 payable to the
Partnership by Lyondell LP.
"Material Adverse Effect" shall mean any adverse circumstance or consequence
that, individually or in the aggregate, has an effect that is material to the
financial condition, results of operations, assets or business of the
applicable Party or Subject Business (taken as a whole), as the case may be.
"Millennium" shall have the meaning set forth in the first paragraph of this
Agreement.
"Millennium Asset Contribution Agreement" shall mean that certain Asset
Contribution Agreement dated December 1, 1997, to which Millennium
Petrochemicals and the Partnership are parties.
"Millennium GP" shall mean Millennium GP LLC, a Delaware limited liability
company and an indirect, wholly owned Subsidiary of Millennium.
"Millennium Group" shall mean Millennium, Millennium Petrochemicals, Millennium
LP and Millennium GP.
"Millennium LP" shall mean Millennium LP LLC, a Delaware limited liability
company and an indirect, wholly owned Subsidiary of Millennium.
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<PAGE> 36
"Millennium Petrochemicals" shall have the meaning set forth in the third
WHEREAS clause of this Agreement.
"Occidental" shall have the meaning set forth in the first paragraph of this
Agreement.
"Occidental Contribution Agreement" shall mean that certain Agreement and Plan
of Merger and Asset Contribution between the Occidental Partners, Oxy
Petrochemicals and the Partnership to be executed and delivered at the Closing
in substantially the form attached hereto as Exhibit B.
"Occidental Assumed Debt" shall mean the Lease Intended for Security, dated
December 18, 1991, among OCC, the institutions listed on Schedule I thereto,
Norwest Bank Minnesota, National Association, as Agent and Chemical Bank and
the Bank of Nova Scotia, as Information Agents, and having an amount
outstanding as of the date of this Agreement of $205 million.
"Occidental Group" shall mean Occidental, OCC, Oxy CH, and the Occidental
Partners and, prior to the Closing, Oxy Petrochemicals.
"Occidental Partners" shall mean PDG Chemical, OCC Sub and Oxy CH Sub.
"OCC" shall have the meaning set forth in the fourth WHEREAS clause of this
Agreement.
"OCC Sub" shall have the meaning set forth in the fourth WHEREAS clause.
"Oxy CH" shall have the meaning set forth in the fourth WHEREAS clause of this
Agreement.
"Oxy CH Sub" shall have the meaning set forth in the fourth WHEREAS clause of
this Agreement.
"Oxy Petrochemicals" shall have the meaning set forth in Section 1.5(d).
"Parties" shall have the meaning set forth in the seventh WHEREAS clause of
this Agreement.
"Partnership" shall have the meaning set forth in the first paragraph of this
Agreement.
"Partnership Agreement" shall mean the Agreement of Limited Partnership of the
Partnership dated October 10, 1997.
"Partnership Governance Committee" shall mean the "Partnership Governance
Committee" as defined in the Partnership Agreement.
"PDG Chemical" shall have the meaning set forth in the fourth WHEREAS clause of
this Agreement.
"Person" shall mean any natural person, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization.
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<PAGE> 37
"Proceeding" shall mean any action, suit, claim or legal, administrative or
arbitration proceeding or governmental investigation to which any Party or an
Affiliate is a party.
"Related Agreements" shall mean the Tier 1 Related Agreements and the Tier 2
Related Agreements.
"Representatives" shall mean the "Representatives," as defined in the
Partnership Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 2.2.(e).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders' Meetings" shall mean the special stockholders meetings of each
of Lyondell and Millennium held November 20, 1997.
"Strategic Plan" shall mean the Five-Year Strategic Plan adopted by the
Partnership Governance Committee, as amended and modified prior to the date
hereof pursuant to action of the Partnership Governance Committee, as set forth
in minutes of their meetings.
"Subject Business" shall mean (i) in the case of Occidental, the "Contributed
Business" as defined in the Occidental Contribution Agreement, including the
Contributed Assets and the Assumed Liabilities related thereto; (ii) in the
case of each of Lyondell and Millennium, their respective "Contributed
Businesses" as defined in their respective Asset Contribution Agreements dated
December 1, 1997; and (iii) in the case of the Partnership, the business of the
Partnership, which consists substantially of the Subject Business of Lyondell
and Millennium.
"Subsidiary" shall mean, with respect to any Party, any Person of which such
Party, either directly or indirectly, owns 50% or more of the equity or voting
interests, except, in the case of Lyondell, Lyondell-CITGO Refining Company
Ltd. and Equistar Chemicals, LP.
"Tier 1 Related Agreements" shall mean those agreements so designated on
Appendix B, forms of each of which (including forms of the exhibits and certain
of the schedules thereto current as of the dates indicated therein), are
attached hereto as Exhibits.
"Tier 2 Related Agreements" shall mean those agreements so designated on
Appendix B (including Appendix B-2), descriptions of certain terms of which are
included thereon.
"Unit" shall mean a unit representing a partnership interest in the
Partnership.
A-5
<PAGE> 38
APPENDIX B
TO
MASTER TRANSACTION AGREEMENT
LIST OF RELATED AGREEMENTS
Tier 1 Related Agreements
1. Amended and Restated Agreement of Limited Partnership
2. Agreement and Plan of Merger and Asset Contribution among the
Occidental Partners, Oxy Petrochemicals and the Partnership
3. Amended and Restated Parent Agreement
4. Sales Agreement (Ethylene)
Tier 2 Related Agreements
1. Agreements the form of which is an exhibit to the Occidental
Agreement and Plan of Merger and Contribution.
2. Operating Agreement by and between the Partnership and OCC.
3. Tolling Processing Agreement by and between the Partnership
and OCC.
4. Amended and Restated Indemnity Agreement among OCC, PDG
Chemical, Oxy Petrochemicals, OCC Sub, Oxy CH Sub, Lyondell
GP, Lyondell LP, Millennium GP, Millennium LP and Millennium
America Inc., a Delaware corporation, amending and restating
the Indemnity Agreement, dated December 1, 1997.
5. Agreement between OCC and the Partnership obligating OCC to
provide a guarantee for the collection of $419,700,000 of
Partnership debt and obligating the Partnership to extend or
refinance such debt for a term at least equivalent to the
term of such guarantee.
6. Agreement between OCC and the Partnership obligating the
Partnership to prepay or restructure the Occidental Assumed
Debt within an agreed period of time.
7. Promissory Note for $419,700,000 of the Partnership payable
to Oxy CH Sub.
8. Promissory Note for $75 million of the Partnership payable to
Millennium LP.
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<PAGE> 39
9. Agreement for Assumption of Lease Intended for Security dated
December 18, 1991 ($205 million).
10. Assignment and Assumption Agreement related to Lease Intended
for Security dated March 28,1994 (Pitney Bowes).
11. Agreement regarding termination of Lyondell guaranty of
certain Partnership railcar leases.
12. Sublease by OCC to the Partnership related to 1990 railcar
lease.
13. Sublease by Oxy Petrochemicals to the Partnership related to
1995 railcar lease.
14. Tax Indemnity Agreement between OCC and the Partnership
related to the 1990 railcar sublease.
15. Tax Indemnity Agreement between Oxy Petrochemicals and the
Partnership related to the 1995 railcar sublease.
16. Master Arbitration Amendment to Related Agreements.
17. First Amendment to Lyondell Asset Contribution Agreement.
18. First Amendment to Millennium Asset Contribution Agreement.
19. Transition Services Agreement between the Partnership and
OCC.
20. Pipeline Acquisition Agreement between OCC and the
Partnership related to the Cyclohexane pipeline.
B-2
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
EQUISTAR CHEMICALS, LP
- --------------------------------------------------------------------------------
ORGANIZED UNDER THE DELAWARE
REVISED UNIFORM LIMITED PARTNERSHIP ACT
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1 ORGANIZATION MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Formation of Partnership; Amended and Restated Agreement . . . . . . . . . . . . . . . 2
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Business Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Purpose and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Acquisition of Units; Holdings of Initial Partners . . . . . . . . . . . . . . . . . . 4
2.2 Transaction Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Property Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Other Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 No Return of or on Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Partner Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Administration and Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Operating Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Liquidating Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4 BOOK AND TAX ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 General Book Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Change in Partner's Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Deficit Capital Account and Nonrecourse Debt Rules . . . . . . . . . . . . . . . . . . 9
4.4 Federal Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Other Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5 ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS . . . . . . . . . . . . . . . . . . . 12
5.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Method of Accounting for Financial Reporting Purposes . . . . . . . . . . . . . . . . 12
5.3 Books and Records; Right of Partners to Audit . . . . . . . . . . . . . . . . . . . . 12
5.4 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Method of Accounting for Book and Tax Purposes. . . . . . . . . . . . . . . . . . . . 13
5.6 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Partnership Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Limitations on Authority of General Partners . . . . . . . . . . . . . . . . . . . . . 16
6.3 Lack of Authority of Persons Other Than General Partners and Officers . . . . . . . . 16
6.4 Composition of Partnership Governance Committee . . . . . . . . . . . . . . . . . . . 17
6.5 Partnership Governance Committee Meetings . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Partnership Governance Committee Quorum and General Voting
Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Partnership Governance Committee Unanimous Voting Requirements . . . . . . . . . . . . 19
6.8 Control of Interested Partner Issues . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Auxiliary Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Certain Limitations on Partner Representatives. . . . . . . . . . . . . . . . . . . . 23
SECTION 7 OFFICERS AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Partnership Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Selection and Term of Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Removal of Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.7 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.8 Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.9 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.10 Employee Hirings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.11 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8 STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Annual Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.3 Funding of Partnership Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 Implementation of Budgets and Discretionary Expenditures by CEO . . . . . . . . . . . 29
8.5 Strategic Plan Deadlock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.6 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 RIGHTS OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Delegation and Contracts with Related Parties . . . . . . . . . . . . . . . . . . . . 32
9.2 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Limitation on Fiduciary Duty; Non-Competition . . . . . . . . . . . . . . . . . . . . 33
9.4 Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 Partner Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Special Purpose Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 10 TRANSFERS AND PLEDGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Restrictions on Transfer and Prohibition on Pledge . . . . . . . . . . . . . . . . . . 36
10.2 Right of First Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Inclusion of General or Limited Partner Units . . . . . . . . . . . . . . . . . . . . 38
10.4 Rights of Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
10.5 Effective Date of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.6 Transfer to Wholly Owned Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.7 Invalid Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Remedies for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Purchase of Defaulting Partners' Units . . . . . . . . . . . . . . . . . . . . . . . . 41
11.4 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5 Certain Consequences of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 12 DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 42
12.1 Dissolution and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.2 Procedures Upon Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.3 Termination of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.4 Asset and Liability Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.1 Confidentiality and Use of Information . . . . . . . . . . . . . . . . . . . . . . . . 44
13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.3 Third Party Claim Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.4 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION,
ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.8 Benefits of Agreement Restricted to the Parties . . . . . . . . . . . . . . . . . . . 49
13.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.10 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.14 Waiver of Right to Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.16 Jurisdiction; Consent to Service of Process; Waiver . . . . . . . . . . . . . . . . . 51
13.17 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.19 Payment Terms and Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . 51
13.20 Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.21 Other Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.22 Special Joinder by Millennium America . . . . . . . . . . . . . . . . . . . . . . . . 52
13.23 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 14 LAKE CHARLES FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.1 Lease Not in Force and Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.2 LC Partnership Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.3 No Rebuilding Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
14.4 Other Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
APPENDICES
APPENDIX A - Defined Terms
APPENDIX B - Partnership Financial Statements and Reports
APPENDIX C - Executive Officers
APPENDIX D - Dispute Resolution Procedures
APPENDIX E - Division of Partnership Business
SCHEDULES
Schedule 2.3(d) - Capital Accounts
-iv-
<PAGE> 6
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
EQUISTAR CHEMICALS, LP
This Amended and Restated Limited Partnership Agreement of Equistar
Chemicals, LP dated May 15, 1998 is entered into by and among Lyondell
Petrochemical G.P. Inc., a Delaware corporation ("Lyondell GP"), Lyondell
Petrochemical L.P. Inc., a Delaware corporation ("Lyondell LP"), Millennium
Petrochemicals GP LLC, a Delaware limited liability company ("Millennium GP"),
Millennium Petrochemicals LP LLC, a Delaware limited liability company
("Millennium LP"), PDG Chemical Inc., a Delaware corporation ("Occidental
GP"), Occidental Petrochem Partner 1, Inc., a Delaware corporation_
("Occidental LP1"), and Occidental Petrochem Partner 2, Inc., a Delaware
corporation ("Occidental LP2," and together with Occidental LP1, "Occidental
LP").
The definitions of capitalized terms used in this Agreement, including
the appendices hereto, are set forth in Appendix A hereto.
WHEREAS, Lyondell GP, Lyondell LP, Millennium GP and Millennium LP
(together, the "Initial Partners") entered into the Limited Partnership
Agreement of Equistar Chemicals, LP dated October 10, 1997 (the "Initial
Agreement"), pursuant to the Initial Master Transaction Agreement between
Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"), the
ultimate parent entity of each of Lyondell GP and Lyondell LP, and Millennium
Chemicals Inc., a Delaware corporation ("Millennium"), the ultimate parent
entity of each of Millennium GP and Millennium LP;
WHEREAS, the Initial Partners contributed their Initial Assets to the
Partnership on the Initial Closing Date and the Initial Related Agreements
relating to the Partnership and their Contributed Businesses were entered into,
all as provided in the Initial Master Transaction Agreement;
WHEREAS, the Partnership, Occidental Petroleum Corporation , a
Delaware corporation ("Occidental"), the ultimate parent entity of each of
Occidental GP, Occidental LP1 and Occidental LP2 (together, the "Occidental
Partners"), Lyondell and Millennium have entered into the Master Transaction
Agreement dated May 15, 1998 (the "Second Master Transaction Agreement"), which
provides, among other things, for the admission of Occidental GP as a general
partner of the Partnership and of each of Occidental LP1 and Occidental LP2 as
a limited partner of the Partnership, subject to and upon the terms and
conditions set forth therein; and
WHEREAS, simultaneous with the execution and delivery of this
Agreement, (i) the Occidental Partners are contributing to the Partnership
their Initial Assets and Contributed Business in accordance with the Occidental
Contribution Agreement (which involves, in the case of Occidental LP2, the
merger of Oxy Petrochemicals and the Partnership, with the Partnership as the
surviving entity); (ii) Lyondell, Millennium, Occidental and certain Occidental
Affiliates are entering into the Amended and Restated Parent Agreement and
(iii) the Additional Related Agreements are being entered into;
<PAGE> 7
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION 1
ORGANIZATION MATTERS
1.1 Formation of Partnership; Amended and Restated Agreement. The
Certificate of Limited Partnership was filed with the Secretary of State of the
State of Delaware on October 17, 1997. The Initial Agreement was entered into
October 10, 1997. The Partners desire to enter into this Agreement which
amends and restates the Initial Agreement and constitutes the limited
partnership agreement of the Partnership as of the date hereof. Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. Without the need for the consent of any other Person,
upon the execution of this Agreement by each of the parties hereto, (i)
Occidental GP is hereby admitted to the Partnership as a general partner of the
Partnership, (ii) Occidental LP1 is hereby admitted to the Partnership as a
limited partner of the Partnership and (iii) Occidental LP2 is hereby admitted
to the Partnership as a limited partner of the Partnership. Subject to the
restrictions set forth in this Agreement, the Partnership shall have the power
to exercise all the powers and privileges granted by this Agreement and by the
Act, together with any powers incidental thereto, so far as such powers and
privileges are necessary, appropriate, convenient or incidental for the
conduct, promotion or attainment of the purposes of the Partnership.
1.2 Name. The name of the Partnership is "Equistar Chemicals, LP"
The Partnership's business may be conducted under such name or any other name
or names deemed advisable by the Partnership Governance Committee. The General
Partners will comply or cause the Partnership to comply with all applicable
laws and other requirements relating to fictitious or assumed names.
1.3 Business Offices. The principal place of business of the
Partnership shall be 1221 McKinney Street, Houston, Texas 77010, or such other
place as the General Partners may from time to time determine. The registered
agent of the Partnership in the State of Delaware is The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801.
1.4 Purpose and Business. The business of the Partnership shall
be to, directly or indirectly, (i) engage in the Specified Petrochemicals
Businesses, in the United States and internationally, including research and
development, purchasing, processing and disposing of feedstocks, and
manufacturing, marketing and distributing products, (ii) acquire and dispose
of properties and assets used or useful in connection with the foregoing and
(iii) do all things necessary, appropriate, convenient or incidental in
connection with the ownership, operation or financing of such business and
activities, or otherwise in connection with the foregoing, as are permitted
under the Act, including the acquisition and operation of the Contributed
Businesses.
1.5 Filings. The General Partners shall, or shall cause the
Partnership to, execute, swear to, acknowledge, deliver, file or record in
public offices and publish all such certificates, notices, statements or other
instruments, and take all such other actions, as may be required by law for the
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<PAGE> 8
formation, reformation, qualification, registration, operation or continuation
of the Partnership in any jurisdiction, to maintain the limited liability of
the Limited Partners, to preserve the Partnership's status as a partnership for
tax purposes or otherwise to comply with applicable law. Upon request of the
General Partners, the Limited Partners shall execute all such certificates and
other documents as may be necessary, in the sole judgment of the General
Partners, in order for the General Partners to accomplish all such executions,
swearings, acknowledgments, deliveries, filings, recordings in public offices,
publishings and other acts. Each General Partner hereby agrees and covenants
that it will execute any appropriate amendment to the Certificate of Limited
Partnership of the Partnership pursuant to Section 17- 204 of the Act to
reflect any admission of a Substitute General Partner and of Occidental GP in
accordance with this Agreement.
1.6 Power of Attorney. Each Limited Partner hereby irrevocably
makes, constitutes and appoints its Affiliated General Partner and any
successor thereto permitted as provided herein, with full power of substitution
and resubstitution, as the true and lawful agent and attorney-in-fact of such
Limited Partner, with full power and authority in the name, place and stead of
such Limited Partner to execute, swear, acknowledge, deliver, file or record in
public offices and publish: (i) all certificates and other instruments
(including counterparts thereof) which such General Partner deems appropriate
to reflect any amendment, change or modification of or supplement to this
Agreement in accordance with the terms of this Agreement; (ii) all certificates
and other instruments and all amendments thereto which such General Partner
deems appropriate or necessary to form, qualify or continue the Partnership in
any jurisdiction, to maintain the limited liability of such Limited Partner, to
preserve the Partnership's status as a partnership for tax purposes or
otherwise to comply with applicable law; and (iii) all conveyances and other
instruments or documents which such General Partner deems appropriate or
necessary to reflect the transfers or assignments of interests in, to or under,
this Agreement, including the Units, the dissolution, liquidation and
termination of the Partnership, and the distribution of assets of the
Partnership in connection therewith, pursuant to the terms of this Agreement.
Each Limited Partner hereby agrees to execute and deliver to its
Affiliated General Partner within five Business Days after receipt of a written
request therefor such other further statements of interest and holdings,
designations, powers of attorney and other instruments as such General Partner
deems necessary. The power of attorney granted herein is hereby declared
irrevocable and a power coupled with an interest, shall survive the bankruptcy,
dissolution or termination of such Limited Partner and shall extend to and be
binding upon such Limited Partner's successors and permitted assigns. Each
Limited Partner hereby (i) agrees to be bound by any representations made by
the agent and attorney-in-fact acting in good faith pursuant to such power of
attorney; and (ii) waives any and all defenses which may be available to
contest, negate, or disaffirm any action of the agent and attorney-in-fact
taken in accordance with such power of attorney.
1.7 Term. The term for which the Partnership is to exist as a
limited partnership is from the date the Partnership's Certificate of Limited
Partnership was filed with the office of the Secretary of State of the State of
Delaware through the dissolution of the Partnership in accordance with the
provisions of Section 12.
-3-
<PAGE> 9
SECTION 2
CAPITAL CONTRIBUTIONS
2.1 Acquisition of Units; Holdings of Initial Partners. In
exchange for the contributions provided for in Section 2.3, Occidental LP1,
Occidental LP2 and Occidental GP shall receive the Units set forth by their
names below, and effective on the date hereof, the Units shall be owned as
follows:
<TABLE>
<CAPTION>
PARTNER UNITS
<S> <C>
Lyondell GP 820
Millennium GP 590
Occidental GP 295
Lyondell LP 40,180
Millennium LP 28,910
Occidental LP1 6,623
Occidental LP2 22,582
TOTAL 100,000
</TABLE>
The Units shall entitle the holder to the distributions set forth in Section 3
and to the allocation of Profits, Losses and other items as set forth in
Section 4. Units shall not be represented by certificates.
2.2 Transaction Costs. If the Partnership is entitled to
deductions with respect to costs described in either Section 6.10 of the
Initial Master Transaction Agreement or Section 6.10 of the Second Master
Transaction Agreement to which a Partner is not entitled to reimbursement, the
incurrence of such costs shall not increase the Capital Account of such a
Partner, and such Partner shall be entitled to any deductions attributable to
such costs.
2.3 Property Contributions.
(a) Pursuant to their Contribution Agreement, on the date hereof,
Occidental LP1, Occidental LP2 and Occidental GP have contributed or caused to
be contributed to the Partnership, the Initial Assets contemplated thereby
subject to the Assumed Liabilities contemplated thereby (which involves, in the
case of Occidental LP2, the merger of Oxy Petrochemicals and the Partnership,
with the Partnership as the surviving entity).
(b) The Partners intend that the contribution of assets subject to
liabilities heretofore made by the Partners to the Partnership and to be made
pursuant to Section 2.3(a) has qualified and will qualify as a tax-free
contribution under Section 721 of the Code in which no Partner has recognized
or will recognize gain or loss. The Partners agree that the Partnership will
so file its tax return, and
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<PAGE> 10
each Partner agrees to file its tax return on the same basis and to maintain
such position consistently at all times thereafter.
(c) Immediately after the contributions by Occidental GP,
Occidental LP1, and Occidental LP2, the Capital Accounts of the Initial
Partners shall be adjusted so that each Partner's Capital Account would be the
same per Unit as that of every other Partner on the date hereof if on such date
the principal and accrued interest on the Lyondell Note were paid and the
special capital distributions accrued interest provided in Sections 3.1(e),
(f), and (g) were made.
(d) Schedule 2.3(d) sets forth the Capital Accounts of the
Partners as if the contributions and distributions referred to in Section
2.3(c) were made.
2.4 Other Contributions. From time to time and subject to the
limitations of Section 6.7, if applicable, the Partnership Governance Committee
(or the CEO acting pursuant to Section 8.3), on behalf of the Partnership, may
issue a written notice ("Funding Notice") to the Limited Partners calling for
an additional capital contribution to the Partnership. Any Funding Notice will
set forth:
(a) the use of funds therefor;
(b) the aggregate amount of the capital contribution required,
which amount shall be apportioned among the Limited Partners Pro Rata; and
(c) the date by which the capital contribution must be received by
the Partnership, which date will not be earlier than seven Business Days from
the date the Funding Notice is issued.
Each Limited Partner shall timely wire transfer its Pro Rata share of the
amount set forth in the Funding Notice to the Partnership's bank account.
Except as expressly set forth in this Agreement, no Partner shall be permitted
or required to make any additional capital contribution to the Partnership.
2.5 Capital Accounts. Each Partner's Capital Account shall be
determined and maintained in accordance with Regulation Section
1.704-1(b)(2)(iv) as reasonably interpreted by the Tax Matters Partner. The
Tax Matters Partner shall have the discretion, after consultation with the
other General Partners, to make those determinations, valuations, adjustments
and allocations with respect to each Partner's Capital Account as it deems
appropriate so that the allocations made pursuant to this Agreement will have
substantial economic effect as such term is used in Regulation Section
1.704-1(b). If any Partner transfers all or a portion of its Units in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent such Capital Account
relates to the transferred Units.
2.6 No Return of or on Capital. Except as provided in Sections 3
and 4, no Partner shall receive any interest or other return on its capital
contributions or on the balance in its Capital Account and no return of its
capital contributions.
-5-
<PAGE> 11
2.7 Partner Loans. A Partner or its Affiliates may loan funds to
the Partnership on such terms and conditions as may be approved by the
Partnership Governance Committee, and, subject to other applicable law, have
the same rights and obligations with respect thereto as a Person who is neither
a Partner nor an Affiliate of a Partner. The existence of such a relationship
and acting in such a capacity will not result in a Limited Partner being deemed
to be participating in the control of the business of the Partnership or
otherwise affect the limited liability of a Partner. If a Partner or any
Affiliate thereof is a lender, in exercising its rights as a lender, including
making its decision whether to foreclose on property of the Partnership, such
lender will have no duty to consider (i) its status as a Partner or an
Affiliate of a Partner, (ii) the interests of the Partnership, or (iii) any
duty it may have to any other Partner or the Partnership.
2.8 Administration and Investment of Funds. The administration
and investment of Partnership funds shall be in accordance with the procedures
and guidelines as shall be adopted by the Partnership Governance Committee.
The Partnership may delegate to a third party (which may be an Affiliate of one
of the Partners) the responsibility for administering and investing Partnership
funds pursuant to such guidelines.
SECTION 3
DISTRIBUTIONS
3.1 Operating Distributions. Subject to Section 17-607 of the Act
and other applicable law, Available Net Operating Cash shall be distributed as
soon as practicable following the end of each month to the Partners as follows:
(a) General. On a cumulative basis from the date of the admission
of Occidental GP, Occidental LP1 and Occidental LP2, (i) distributions are to
be made to the Partners Pro Rata to the extent of cumulative Profits, and (ii)
the remaining distributions are to be made to the Limited Partners Pro Rata.
For simplicity, however, in the absence of extraordinary transactions, the
Partnership may make monthly distributions to the Partners Pro Rata, subject to
subsequent adjustments as provided below in this Section 3.1.
(b) Return of Excess Distributions. Within 90 days after the end
of each year, each General Partner shall return to the Partnership any amount
it receives for such year that is in excess of its share of the sum of the
cumulative undistributed Profits as of the end of the preceding year and the
Profits for such year.
(c) Effect of Operating Losses. For any year in which a General
Partner's share of a Loss is sustained that exceeds its previously
undistributed Profits, no distributions shall be made to such General Partner
in any subsequent year until such excess Loss is recouped, and for subsequent
years only Profits in excess of such recoupment shall be treated as Profit for
purposes of this Section 3.1.
(d) Makeup Distributions. If for any reason the Partnership does
not make a monthly distribution to all Partners Pro Rata, each General Partner
shall be entitled at the end of the year to
-6-
<PAGE> 12
receive the amount necessary to make its aggregate distributions for the year
equal the amount it was entitled to receive and keep pursuant to the preceding
criteria.
(e) Lyondell Note Proceeds. All principal and interest received
on the Lyondell Note shall be distributed among the Initial Partners in the
ratio of the Units owned by them prior to the admission of the Occidental
Partners.
(f) 1998 Credit Facility Proceeds. At such time as the
Partnership enters into the 1998 Credit Facility, the Partnership shall make a
special distribution to Millennium LP of $75 million, plus interest on such
amounts from May 15, 1998, until such distribution at a per annum rate (based
on a year of 360 days and the number of days elapsed) equal to the LIBOR Rate
plus 60 basis points (.60%). The interest payments shall be treated as payment
for the use of capital to which section 707(c) of the Code applies.
(g) Bank Credit Agreement Proceeds. At such time as the
Partnership enters into the 1998 Credit Facility, the Partnership shall draw
down the Bank Credit Agreement Repayment Amount under the 1998 Credit Facility
and shall apply the Bank Credit Agreement Repayment Amount to the repayment of
the principal amount then outstanding under the Bank Credit Agreement. Two
Business Days after such repayment, the Partnership shall draw down
$419,700,000 under the Bank Credit Agreement and make a special distribution to
Occidental LP2 of the $419,700,000 proceeds of such drawdown plus interest on
such $419,700,000 from May 15, 1998 until the date of such distribution at a
per annum rate (based on a year of 360 days and the number of days elapsed)
equal to the LIBOR Rate plus 60 basis points (.60%), provided that Occidental
Chemical Corporation has executed the Amended and Restated Indemnity Agreement.
The interest payment shall be treated as payment for the use of capital to
which section 707(c) of the Code applies.
3.2 Liquidating Distributions. Distributions to the Partners of
cash or property arising from a liquidation of the Partnership shall be made in
accordance with the Capital Account balances of the Partners as provided in
Section 12.2(d).
3.3 Withholding. The Partnership is authorized to withhold from
distributions to a Partner and to pay over to a foreign, federal, state or
local government, any amounts required to be withheld pursuant to the Code or
any provisions of any other foreign, federal, state or local law. Any amounts
so withheld shall be treated as distributed to such Partner pursuant to this
Section 3 for all purposes of this Agreement, and shall be offset against any
amounts otherwise distributable to such Partner.
3.4 Offset. Any amount otherwise distributable to a Partner
pursuant to this Section 3 shall, unless otherwise agreed by two
Representatives of each of the Nonconflicted General Partners pursuant to
Section 6.8, be applied by the Partnership to satisfy any of the following
obligations that are owed by such Partner or its Affiliate to the Partnership
and that are not paid when due:
(a) Lyondell Note and Other Notes. In the case of Lyondell LP,
the failure to pay any interest or principal when due on the Lyondell Note or,
in the case of any Partner, the failure to pay any interest or principal when
due on any indebtedness for borrowed money of such Partner or any Affiliate of
such Partner to the Partnership.
-7-
<PAGE> 13
(b) Contribution Agreement. In the case of any Partner, the
failure of such Partner or any Affiliate of such Partner to make any payment
pursuant to Section 6 of its Contribution Agreement that has been Finally
Determined to be due.
(c) Contribution. In the case of any Partner, the failure to make
any capital contribution required pursuant to this Agreement (other than
pursuant to its Contribution Agreement).
SECTION 4
BOOK AND TAX ALLOCATIONS
4.1 General Book Allocations. This section controls partnership
allocations for book purposes. As used herein, "book" means the allocations
used to determine debits and credits to the Capital Accounts of the Partners
and to determine the amounts distributable to the Partners pursuant to Section
3 and Section 12.2(d). It does not refer to the method in which books are
maintained for financial reporting purposes pursuant to Section 5.2. Except as
otherwise provided in Sections 4.2 and 4.3, Profits or Losses for book purposes
shall be allocated each year among the Partners Pro Rata, subject to the
following:
(a) If the tax basis in Partnership assets is increased as a
result of the distribution of $75 million to Millennium LP as provided in
Section 3.1(f), book deductions equal to the tax deductions resulting from such
increase shall be allocated to Millennium LP until such time as gain or income
is allocable under (c) below.
(b) If the tax basis in Partnership assets is increased as a
result of the distribution of 43% of the proceeds of the Lyondell Note to
Millennium LP, book deductions equal to the tax deductions resulting from such
increase shall be allocated among the Initial Partners in the ratio of the
Units owned by each prior to the admission of the Occidental Partners until
gain or income is allocable under (c) below.
(c) If during any 12 month period the Partnership sells,
distributes to Partners, or otherwise disposes of more than 50% in value of the
assets it owned at the beginning of such period, gain or income recognized in
the taxable period of such sale, distribution or other disposition or
thereafter recognized from the sale, distribution, or other disposition of
property or from the operation of other property shall be allocated to the
Partners in the ratio in which the aggregate amount of deductions described in
(a) and (b) above were allocated to the Partners until the aggregate amount of
such gain and income so allocated equals the aggregate amount of such
deductions.
(d) Interest accruing on the Lyondell Note shall continue to be
allocated among the Initial Partners in the ratio of the Units owned by them
prior to the admission of the Occidental Partners.
(e) The initial agreed value of the Lease will be amortized
ratably over the term of the Lease, and the resulting deductions shall be
allocated to Occidental LP1. Any gain recognized on the disposition of the
Lease shall be allocated to Occidental LP1. If, prior to such disposition,
the Partnership has made capital improvements to such assets that have been
borne by the Partners Pro
-8-
<PAGE> 14
Rata, then upon the disposition of the Lease with such improvements, gain shall
be deemed to be attributable to such improvements to the extent of the excess
of its depreciated value for GAAP purposes at the time of the disposition over
its Book Value at such time, and such gain shall be allocated to the Partners
Pro Rata.
(f) Deductions attributable to the Book Value of the assets of the
Partnership as they exist immediately after the contributions described in
Section 2.3(a) other than the Lease will be allocated among the Partners other
than Occidental LP1 in the ratio of the Units owned by each, and any gain
recognized on the disposition of such contributed assets will be allocated to
the Partners other than Occidental LP1 in the ratio of the Units owned by each.
If, prior to disposition of such asset sale, the Partnership has made capital
improvements to such assets that have been borne by the Partners Pro Rata, then
upon the disposition of a contributed asset with such improvements, gain shall
be deemed to be attributable to such improvements to the extent of the excess
of its depreciated value for GAAP purposes at the time of disposition over its
Book Value at such time, and such gain shall be allocated to the Partners Pro
Rata.
4.2 Change in Partner's Units. If during a year Units are
transferred or new Units issued, allocations among the Partners shall be made
in accordance with their interests in the Partnership from time to time during
such year in accordance with Section 706 of the Code, using the
closing-of-the-books method, except that depreciation and other amortization
with respect to each Partnership asset shall be deemed to accrue ratably on a
daily basis over the entire period during such year that the asset is owned and
in service by the Partnership.
4.3 Deficit Capital Account and Nonrecourse Debt Rules. The
special rules in this Section 4.3 apply in the following order to take into
account the possibility of the Partners' having deficit Capital Account
balances for which they are not economically responsible and the effect of the
Partnership's incurring nonrecourse debt, directly or indirectly.
(a) Partnership Minimum Gain Chargeback. If there is a net
decrease in "partnership minimum gain" during any year, determined in
accordance with the tiered partnership rules of Regulation Section 1.704-2(k),
each Partner shall be allocated items of income and gain for such year equal to
such Partner's share of the net decrease in partnership minimum gain within the
meaning of Regulation Section 1.704-2(g)(2), except to the extent not required
by Regulation Section 1.704-2(f). To the extent that this subsection (a) is
inconsistent with Regulation Section 1.704-2(f) or Section 1.704-2(k) or
incomplete with respect to such regulations, the minimum gain chargeback
provided for herein shall be applied and interpreted in accordance with such
regulations.
(b) Partner Minimum Gain Chargeback. If there is a net decrease
in "partner nonrecourse debt minimum gain" during any year, within the meaning
of Regulation Section 1.704-2(i)(2), each Partner who has a share of such
gain, determined in accordance with Regulation Section 1.704-2(i)(5), shall be
allocated items of income and gain for such year (and, if necessary, subsequent
years) equal to such Partner's share of the net decrease in partner nonrecourse
debt minimum gain. To the extent that this subsection (b) is inconsistent with
Regulation Section 1.704-2(i) or 1.704-2(k) or incomplete with respect to such
regulations, the partner nonrecourse debt minimum gain chargeback provided for
herein shall be applied and interpreted in accordance with such regulations.
-9-
<PAGE> 15
(c) Deficit Account Chargeback and Qualified Income. If any
Partner has an Adjusted Capital Account Deficit at the end of any year,
including an Adjusted Capital Account Deficit for such Partner caused or
increased by an adjustment, allocation or distribution described in Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner shall be allocated
items of income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain) in an amount and manner
sufficient to eliminate such Adjusted Capital Account Deficit as quickly as
possible. This subsection (c) is intended to constitute a "qualified income
offset" pursuant to Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(d) Partner Nonrecourse Deductions. Any partner nonrecourse
deductions for any year or other period shall be allocated to the Partner who
bears the economic risk of loss with respect to the partner nonrecourse debt to
which such partner nonrecourse deductions are attributable in accordance with
Regulation Section 1.704-2(i) or Section 1.704-2(k).
(e) Curative Allocations. The Allocations provided by this
Section 4.3 may not be consistent with the manner in which the Partners intend
to divide Profits, Losses and similar items. Accordingly, Profits, Losses and
other items will be reallocated among the Partners (in the same year and to the
extent necessary, in subsequent years) in a manner consistent with Regulation
Section 1.704-1(b) and 1.704-2 so as to prevent such allocations from
distorting the manner in which Profits, Losses and other items are intended to
be allocated among the Partners pursuant to Sections 4.1 and 4.2.
(f) Nonrecourse Debt Sharing. For purposes of this Agreement,
nonrecourse deductions, within the meaning of Regulation Section 1.704-2(b),
shall be deemed to be allocated among the Partners Pro Rata. Solely for
purposes of determining a Partner's proportionate share of the "excess
nonrecourse liabilities" of the Partnership within the meaning of Regulation
Section 1.752-3(a)(3), Partnership Profits are allocated to the Partners Pro
Rata.
4.4 Federal Tax Allocations.
(a) General Rule. Except as otherwise provided in the following
paragraphs of this Section 4.4, allocations for federal income tax purposes of
items of income, gain, loss and deduction, and credits and basis therefor,
shall be made in the same manner as book allocations are made.
(b) Elimination of Book/Tax Disparities. Taxable income and tax
deductions shall be shared among the Partners so as to take into account the
variation between the Book Value and the adjusted tax basis of each property at
the time it is contributed to the Partnership and at each time it is revalued.
(i) To account for such variation, effective as of the
formation of the Partnership:
(A) the depreciation and other deductions
attributable to the basis that the contributing Partner had in
each property at the time of contribution shall be allocated
to such Partner, and
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(B) upon disposition of a contributed property,
the excess of its Book Value at such time over its tax basis
at such time shall be allocated to the Partner who contributed
the property.
(ii) If the Book Value of a Partnership property is
revalued as of a date subsequent to the date of its acquisition by the
Partnership, the portion of its Book Value at the time of its
disposition that is attributable to the increase resulting from such
revaluation:
(A) shall be disregarded in applying Section
4.4(b)(i)(B) to the partner who contributed such property, and
(B) shall be treated for purposes of this Section
4.4(b) as a separate property that was contributed on the
revaluation date by the persons who were partners immediately
prior to the revaluation date.
(iii) The Partners agree that the foregoing allocations
constitute a reasonable method for purposes of Reg. 1.704-3(a)(1) and
will be so reported and defended by the Partnership and all Partners
unless and until the Partners otherwise agree or a court otherwise
requires.
(c) Allocation of Items Among Partners. Each item of income, gain,
loss, deduction and credit and all other items governed by Section 702(a) of the
Code shall be allocated among the Partners in proportion to the allocation of
Profits, Losses and other items to such Partners hereunder, provided that any
gain treated as ordinary income because it is attributable to the recapture of
any depreciation or amortization shall be allocated among the Partners in
accordance with Prop. Treas. Reg. Sections 1.1245-1(e)(2) and 1.1250-1(f), or,
upon promulgation of final regulations with respect to the matters covered
therein, such final regulations.
(d) Section 754 Election Allocations. Income and deductions of
the Partnership that are attributable to the Section 754 election shall be
allocated to the Partners entitled thereto.
4.5 Other Tax Allocations. Items of income, gain, loss,
deduction, credit and tax preference for state, local and foreign income tax
purposes shall be allocated among the Partners in a manner consistent with the
allocation of such items for federal income tax purposes in accordance with the
foregoing provisions of this Section.
SECTION 5
ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS
5.1 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
5.2 Method of Accounting for Financial Reporting Purposes. For
financial reporting purposes, the Partnership shall adopt a standard set of
accounting policies and shall maintain separate books of account, all in
accordance with GAAP. The Partnership's financial reports shall comply
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with requirements of the SEC to the extent applicable to the Partnership and
any Partner or any controlling Person of such Partner, to the extent such
information is necessary, in conjunction with the financial reporting
obligations of such Person under applicable SEC requirements.
5.3 Books and Records; Right of Partners to Audit.
(a) Proper and complete records and books of account of the
Partnership's business, including all such transactions and other matters as
are usually entered into records and books of account maintained by businesses
of like character or as are required by law, shall be kept by the Partnership
at the Partnership's principal place of business. None of the Partnership's
funds shall be commingled with the funds of any Partner.
(b) Each Partner and its internal and independent auditors, at the
expense of such Partner, shall have full and complete access to the internal
and independent auditors of the Partnership and shall have the right to inspect
such books and records and the physical properties of the Partnership during
normal business hours and, at its own expense, to cause an independent audit
thereof. The Partnership shall make all books and records of the Partnership
available to such Partner and its internal and independent auditors in
connection with such audit and shall cooperate with such Partner and auditors
and to provide any assistance reasonably necessary in connection with such
audit.
5.4 Reports and Financial Statements. The Partnership shall
prepare and deliver to the Partners the Partnership financial statements and
reports described on Appendix B as soon as reasonably practicable and in any
event on or prior to the due date indicated on Appendix B.
5.5 Method of Accounting for Book and Tax Purposes. For purposes
of making allocations and distributions hereunder (including distributions in
liquidation of the Partnership in accordance with Capital Account balances as
required by Section 12.3), Capital Accounts and Profits, Losses and other items
described in Section 4.1 shall be determined in accordance with federal income
tax accounting principles utilizing the accrual method of accounting, with the
adjustments required by Regulation Section 1.704-1(b) to properly maintain
Capital Accounts.
5.6 Taxation.
(a) Status of the Partnership. The Partners acknowledge that the
Partnership is a partnership for federal, foreign and state income tax
purposes, and hereby agree not to elect to be excluded from the application of
Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state
statute.
(b) Tax Elections and Reporting.
(i) Generally. The Partnership has made or shall make
the following elections under the Code and the Regulations and any
similar state statutes:
(A) Adopt the calendar year as the annual
accounting period;
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(B) Adopt the accrual method of accounting;
(C) Elect to deduct organization costs ratably
over a 60-month period as provided in Section 709 of the Code;
(D) Adopt the LIFO method of accounting for
inventory; and
(E) Make any other elections available under the
Code that the Partnership Governance Committee determine are
appropriate, with the determination of whether an election is
appropriate to be made pursuant to the principle that each
Partner shall be treated equally (i.e., no Partner will
receive preferential tax treatment to the disadvantage of
another Partner).
(ii) Section 754 Election. The Partnership shall, upon
the written request of any Partner benefitted thereby, cause the
Partnership to file an election under Section 754 of the Code and the
Regulations thereunder to adjust the basis of the Partnership assets
under Section 734(b) or 743(b) of the Code, and a corresponding
election under the applicable sections of state and local law.
(c) Tax Returns. The Tax Matters Partner, on behalf of the
Partnership, shall prepare and file the necessary tax and information returns.
Each Partner shall timely provide such information, if any, as may be needed by
the Partnership for purposes of preparing such tax and information returns. At
least 75 days before the due date (as extended) for the Partnership's federal
income tax return, the Tax Matters Partner shall deliver a draft of such return
to each Partner. Each Partner shall have 15 Business Days after receipt of the
draft in which to furnish any objections or comments on the draft to the Tax
Matters Partner. The Tax Matters Partner shall make its best efforts to
finalize the Partnership's federal income tax return at least 30 days before
the due date for filing (as extended) of such return A Partner may not report
its share of any Partnership tax item in a manner inconsistent with the
Partnership's reporting of such item unless the Partner has timely furnished
its objection to the Tax Matters Partner as provided in the immediately
preceding sentence. If a Partner reports its share of any Partnership tax item
in a manner inconsistent with the Partnership's reporting of such item, such
Partner shall promptly notify the Partnership in writing at least 20 Business
Days prior to the filing of any statement with the IRS in which such
inconsistent position is reported. The Partnership shall promptly deliver to
each Partner a copy of the federal income tax return for the Partnership as
filed with the appropriate taxing authorities and a copy of any material state
and local income tax return as filed.
(d) Tax Audits.
(i) Federal Tax Matters. The Partnership is authorized
to make such filings with the IRS as may be required to designate
Lyondell GP as the Tax Matters Partner. The Tax Matters Partner, as
an authorized representative of the Partnership, shall direct the
defense of any claims made by the IRS to the extent that such claims
relate to the adjustment of Partnership items at the Partnership
level. The Tax Matters Partner shall promptly deliver to each Partner
a copy of all notices, communications, reports or writings of any kind
(including,
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without limitation, any notice of beginning of administrative
proceedings or any report explaining the reasons for a proposed
adjustment) received from the IRS relating to or potentially resulting
in an adjustment of Partnership items, as well as any other
information requested by a Partner that is commercially reasonable to
request. The Tax Matters Partner shall be diligent and act in good
faith in deciding whether to contest at the administrative and
judicial level any proposed adjustment of a Partnership item and
whether to appeal any adverse judicial decision. The Tax Matters
Partner shall keep each Partner advised of all material developments
with respect to any proposed adjustment that comes to its attention.
All costs incurred by the Tax Matters Partner in performing under this
subsection (d) shall be paid by the Partnership. The Tax Matters
Partner shall have sole authority to represent the Partnership in
connection with all tax audits, including the power to extend the
statute of limitations, to enter in any settlement, and to litigate
any proposed partnership adjustment, subject to the following: (A)
No settlement will be entered into with respect to an item that would
materially affect any Partner adversely unless each Partner is first
notified of the terms of the settlement; and no Partner will be bound
by any settlement unless it consents thereto; (B) If a Partner does
not consent to a settlement, the settlement will nevertheless be
binding on all partners who do consent; and the non-consenting Partner
may, at its sole cost, pursue such administrative or judicial remedies
as it deems appropriate; (C) If the Tax Matters Partner brings an
action in any court, each Partner, at its sole cost, shall have the
right to intervene in the preceding to the extent permitted by the
court; and (D) If a settlement or litigation causes Partners to be
treated differently for tax purposes with respect to certain tax
issues of the Partnership, the income and deductions of the
Partnership thereafter arising will be allocated among the Partners to
reflect the varying manner in which the issues were resolved.
(ii) State and Local Tax Matters. The Partnership shall
promptly deliver to each Partner a copy of all notices,
communications, reports or writings of any kind with respect to income
or similar taxes received from any state or local taxing authority
relating to the Partnership which might, in the judgment of the Tax
Matters Partner, materially and adversely affect any Partner, and
shall keep each Partner advised of all material developments with
respect to any proposed adjustment of Partnership items which come to
its attention.
(iii) Continuation of Rights. Each Partner shall continue
to have the rights described in this subsection (d) with respect to
tax matters relating to any period during which it was a Partner,
whether or not it is a Partner at the time of the tax audit or
contest.
(e) Tax Rulings. No Person other than the Tax Matters Partner
shall request an administrative ruling (or similar administrative procedures)
from any taxing authority with respect to any tax issue relating to the
Partnership or affecting the taxation of any other Partner unless such Person
shall have received written authorization from the Tax Matters Partner and any
such other Partner to make such request.
(f) Tax Information. At the request of any Partner, the Tax
Matters Partner shall timely furnish all reasonably obtainable information
required to prepare annual earnings and profits
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computations (as defined in Section 312 of the Code) with respect to that
Partner's share of Partnership income.
5.7 Delegation. The Partners agree that all of the tasks to be
performed under this Section (other than serving as Tax Matters Partner) may be
delegated to employees and consultants of the Partnership.
SECTION 6
MANAGEMENT
6.1 Partnership Governance Committee.
(a) The General Partners hereby establish a committee (the
"Partnership Governance Committee") to manage and control the business,
property and affairs of the Partnership, including the determination and
implementation of the Partnership's strategic direction. The Partnership
Governance Committee (on behalf of the Partners) shall have (i) the full
authority of the General Partners to exercise all of the powers of the
Partnership and (ii) full control over the business, property and affairs of
the Partnership. Except to the extent set forth in this Agreement, the
Partnership Governance Committee shall have full, exclusive and complete
discretion to manage and control the business, property and affairs of the
Partnership, to make all decisions affecting the business, property and affairs
of the Partnership and to take all such actions as it deems necessary,
appropriate, convenient or incidental to accomplish the purpose of the
Partnership as set forth in Section 1.4 (as such purpose may be expanded in
accordance with Section 6.7(i)).
(b) The Partnership Governance Committee shall act exclusively by
means of Partnership Governance Committee Action. As used in this Agreement,
"Partnership Governance Committee Action" means any action which the
Partnership Governance Committee is authorized and empowered to take in
accordance with this Agreement and the Act and which is taken by the
Partnership Governance Committee either (i) by action taken at a meeting of the
Partnership Governance Committee duly called and held in accordance with this
Agreement or (ii) by a formal written consent complying with the requirements
of Section 6.5(f). In no event shall the Partnership Governance Committee be
authorized to act other than by Partnership Governance Committee Action, and
any action or purported action by the Partnership Governance Committee
(including any authorization, consent, approval, waiver, decision or vote) not
constituting a Partnership Governance Committee Action shall be null and void
and of no force and effect. Each Partnership Governance Committee Action shall
be binding on the Partnership.
(c) The Partnership Governance Committee shall adopt policies and
procedures, not inconsistent with this Agreement (including Section 6.7) or
the Act, governing financial controls and legal compliance, including
delegations of authority (and limitations thereon) to the officers of the
Partnership as permitted hereby. Such policies and procedures may be revised
or revoked (in a manner consistent with this Agreement and the Act) from time
to time as determined by the Partnership Governance Committee. To the extent
any authority is not delegated to officers of the Partnership in this Agreement
or in accordance with Partnership Governance Committee Action, it shall remain
with the Partnership Governance Committee.
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6.2 Limitations on Authority of General Partners. Except as
expressly set forth in this Agreement, each General Partner agrees to exercise
its authority to manage and control the Partnership only through Partnership
Governance Committee Action. Each General Partner agrees not to exercise, or
purport or attempt to exercise any authority (i) to act for or incur, create or
assume any obligation, liability or responsibility on behalf of the Partnership
or any other Partner, (ii) to execute any documents on behalf of, or otherwise
bind, or purport or attempt to bind, the Partnership or (iii) to otherwise
transact any business in the Partnership's name, in each case except pursuant
to Partnership Governance Committee Action.
6.3 Lack of Authority of Persons Other Than General Partners and
Officers. Except as expressly set forth in this Agreement, no Person or
Persons other than (i) the General Partners, acting through the Partnership
Governance Committee, and (ii) the officers of the Partnership appointed in
accordance with this Agreement and acting as agents or employees, as
applicable, of the Partnership in conformity with this Agreement and any
applicable Partnership Governance Committee Action, shall be authorized (a) to
exercise the powers of the Partnership, (b) to manage the business, property
and affairs of the Partnership or (c) to contract for, or incur on behalf of,
the Partnership any debts, liabilities or other obligations.
6.4 Composition of Partnership Governance Committee.
(a) The Partnership Governance Committee shall consist of nine
Representatives and each General Partner shall designate three Representatives
(each a "Representative"). All the Representatives of all three General
Partners shall together constitute the Partnership Governance Committee.
(b) Each General Partner may designate one or more individuals
(each an "Alternate") who (i) shall be authorized, in the event a
Representative is absent from any meeting of the Partnership Governance
Committee (and in the order of succession designated by the General Partner so
designating the Alternates), to attend such meeting in the place of, and as
substitute for, such Representative and (ii) shall be vested with all the
powers to take action on behalf of such General Partner which the absent
Representative could have exercised at such meeting. The term
"Representative," when used herein with reference to any Representative who is
absent from a meeting of the Partnership Governance Committee, shall mean and
refer to any Alternate attending such meeting in place of such absent
Representative.
(c) On or before the date hereof, each General Partner shall have
delivered to the other General Partners a written notice (i) designating the
three persons to serve as such General Partner's initial Representatives and
(ii) designating the person or persons, if any, who are to serve as initial
Alternates and their order of succession.
(d) Each General Partner may, in its sole discretion and by
written notice delivered to the other General Partners and the Partnership at
any time or from time to time, remove or replace one or more of its
Representatives or change one or more of its Alternates. If a Representative
or Alternate dies, resigns or becomes disabled or incapacitated, the General
Partner that designated such Representative or Alternate, as the case may be,
shall promptly designate a replacement. Each
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Representative and each Alternate shall serve until replaced by the General
Partner that designated such Representative or Alternate, as the case may be.
(e) Copies of all written notices designating Representatives and
Alternates shall be delivered to the Secretary and shall be placed in the
Partnership minute books, but the failure to deliver a copy of any such notice
to the Secretary shall not affect the validity or effectiveness of such notice
or the designation described therein.
(f) Each Representative, in his capacity as such, shall be the
agent of the General Partner that designated such Representative. Accordingly,
(i) each Representative, as such, shall act (or refrain from acting) with
respect to the business, property and affairs of the Partnership solely in
accordance with the wishes of the General Partner that designated such
Representative and (ii) no Representative, as such, shall owe (or be deemed to
owe) any duty (fiduciary or otherwise) to the Partnership or to any General
Partner other than the General Partner that designated such Representative;
provided, however, that nothing in this Agreement is intended to or shall
relieve or discharge any Representative or General Partner from liability to
the Partnership or the Partners on account of any fraudulent or intentional
misconduct of such Representative. Nothing in this Section 6.4(f) shall limit
the duty owed to the Partnership by any person acting in his capacity as an
officer of the Partnership (including any such officer who is also a
Representative).
(g) Representatives shall not receive from the Partnership any
compensation for their service or any reimbursement of expenses for attendance
at meetings of the Partnership Governance Committee.
6.5 Partnership Governance Committee Meetings.
(a) Regular meetings of the Partnership Governance Committee shall
be held at such times and at such places as shall from time to time be
determined in advance and committed to a written schedule by the Partnership
Governance Committee. The first regular meeting of the Partnership Governance
Committee during January of each fiscal year shall be deemed to be the "Annual
Meeting." The Secretary shall deliver by commercial courier service or other
hand delivery or transmit by facsimile transmission (with proof of confirmation
from the transmitting machine), an agenda for each regular meeting to the
Representatives at least five Business Days prior to such meeting. Each agenda
for a regular meeting shall specify, to a reasonable degree, the business to be
transacted at such meeting. Subject to Section 6.6, at any regular meeting of
the Partnership Governance Committee at which a quorum is present, any and all
business of the Partnership may be transacted.
(b) Special meetings of the Partnership Governance Committee may
be called by any Representative by delivering by commercial courier service or
other hand delivery or transmitting by facsimile transmission (with proof of
confirmation from the transmitting machine), written notice of a special
meeting to each of the other Representatives at least two Business Days before
such meeting. Each notice of a special meeting shall specify, to a reasonable
degree, the business to be transacted at, or the purpose of, such meeting.
Notice of any special meeting may be waived before or after the meeting by a
written waiver of notice signed by the Representative entitled to notice. A
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Representative's attendance at a special meeting shall constitute a waiver of
notice unless the Representative states at the beginning of the meeting his
objection to the transaction of business because the meeting was not lawfully
called or convened. Special meetings of the Partnership Governance Committee
shall be held at the Partnership's offices (or at such other place or in such
other manner as the Representatives shall agree) at such time as may be stated
in the notice of such meeting.
(c) One Representative of each General Partner shall serve as a
co-chair of each meeting (regular and special) of the Partnership Governance
Committee. Any co-chair may instruct the Secretary to include one or more
items on a meeting agenda and none of the co-chairs nor the Secretary may
delete or exclude an agenda item proposed by any other co-chair.
(d) Following each meeting of the Partnership Governance
Committee, the Secretary shall promptly draft and distribute minutes of such
meeting to the Representatives for approval at the next meeting, and after such
approval shall retain the minutes in the Partnership minute books.
(e) Representatives, at their discretion, may participate in or
hold regular or special meetings of the Partnership Governance Committee by
means of a telephone conference or any comparable device or technology by which
all individuals participating in the meeting may hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting.
(f) Any action required or permitted to be taken at a meeting of
the Partnership Governance Committee may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by at
least two Representatives of each General Partner, and such consent shall have
the same force and effect as a duly conducted vote of the Partnership
Governance Committee. A counterpart of each such consent to action shall be
delivered promptly to each of the Representatives and to the Secretary for
placement in the minute books of the Partnership, but the failure to deliver a
counterpart of any such consent to action to the Secretary shall not affect the
validity or effectiveness of such consent to action.
6.6 Partnership Governance Committee Quorum and General Voting
Requirement.
(a) The presence of at least two Representatives (including any
duly present Alternates) of Lyondell GP shall constitute a quorum of the
Partnership Governance Committee for the transaction of business and the taking
of appropriate Partnership Governance Committee Actions at any meeting;
provided, however, that the presence at such meeting of at least two
Representatives (including any duly present Alternates) from each General
Partner shall be necessary for the taking of any action described in Section
6.7; and provided, further, that no Partnership Governance Committee Actions
can be taken at any meeting with respect to any matter that was not reflected,
with a reasonable level of specificity, on an agenda for such meeting that was
delivered in accordance with Section 6.5 unless at least one Representative of
each General Partner is present. No Partnership Governance Committee Action
may be taken at any meeting at which a quorum is not present.
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(b) Except as otherwise provided in Section 6.7 or elsewhere in
this Agreement, the approval of two or more Representatives acting for Lyondell
GP will be sufficient for the Partnership Governance Committee to take any
Partnership Governance Committee Action and in such case the Partnership shall
be authorized to take such action without the consent of any other Person.
6.7 Partnership Governance Committee Unanimous Voting
Requirements. Unless and until two or more Representatives of Lyondell GP, two
or more Representatives of Millennium GP and two or more Representatives of
Occidental GP have given their approval (in which event a Partnership
Governance Committee Action is hereby authorized without the need for the
consent of any other Person), no Partnership Governance Committee Action will
be deemed for any purpose to have been taken at any Partnership Governance
Committee meeting that would cause or permit the Partnership or any subsidiary
thereof (or any Person acting in the name or on behalf of any of them) directly
or indirectly to take (or commit to take), and neither the Partnership nor any
subsidiary thereof nor any person acting in the name or on behalf of any of
them directly or indirectly may take or commit to take, any of the actions
described below in this subsection (whether in a single transaction or series
of related transactions):
(i) to cause the Partnership, directly or indirectly, to
engage, participate or invest in any business outside the scope of its
business as described in Section 1.4;
(ii) to approve any Strategic Plan, as well as any
amendments or updates thereto (including the annual updates provided
for in Section 8.1);
(iii) to authorize any disposition of assets having a fair
market value exceeding $30 million in any one transaction or a series
of related transactions not contemplated in an approved Strategic
Plan;
(iv) to authorize any acquisition of assets or any capital
expenditure exceeding $30 million that is not contemplated in an
approved Strategic Plan;
(v) to require capital contributions to the Partnership
(other than contributions contemplated by the Contribution Agreements
or an approved Strategic Plan or to achieve or maintain compliance
with any HSE Law) within any fiscal year if the total of such
contributions required from the Partners within that year would exceed
$100 million or the total of such contributions required from the
Partners within that year and the immediately preceding four years
would exceed $300 million;
(vi) to authorize the incurrence of debt for borrowed
money unless (x) such debt is contemplated by clause (vii) (b) below,
(y) after giving effect to the incurrence of such debt (and any
related transactions) and the maximum amount of borrowings permitted
under clause (vii) below, the Partnership would be expected to have an
"investment grade" debt rating by Moody's Investor Services Inc. and
Standard & Poor's Corporation or (z) such debt is incurred to
refinance the public, bank or other debt assumed or incurred by the
Partnership as contemplated by the Initial Master Transaction
Agreement or the Second Master Transaction Agreement or to refinance
indebtedness under the 1998 Credit Facility or to refinance any such
debt, and in the case of each of (x), (y) and (z), the agreement
relating to
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such debt does not provide that the Transfer by a Partner of its Units
(or a change of control with respect to any Partner or any of its
Affiliates) would constitute a default thereunder, otherwise
accelerate the maturity thereof or give the lender or holder any "put
rights" or similar rights with respect thereto; provided, however,
that notwithstanding the foregoing, the provisions of Sections
6.7(xxi) and 6.7(xxii), if applicable, must be satisfied with respect
to any refinancing;
(vii) (a) to enter into the 1998 Credit Facility or (b) to
make borrowings under one or more of the Partnership's bank credit
facility or facilities, its uncommitted lines of credit or any credit
facility or debt instrument of the Partnership of any kind that
refinances all or any portion of the Partnership's credit facility or
facilities, at any time, if as a result of any such borrowing the
aggregate principal amount of all such borrowings outstanding at such
time would exceed the sum of $1.25 billion and the amount which
becomes available for borrowing under the 1998 Credit Facility.
(viii) to enter into interest rate protection or other
hedging agreements (other than hydrocarbon hedging agreements in the
ordinary course);
(ix) to enter into any capitalized lease or similar
off-balance sheet financing arrangements involving payments
(individually or in the aggregate) by it in excess of $30 million in
any fiscal year;
(x) to cause the Partnership or any subsidiary of the
Partnership to issue, sell, redeem or acquire any Units or other
equity securities (or any rights to acquire, or any securities
convertible into or exchangeable for, Units or other equity
securities);
(xi) to make Partnership cash distributions in excess of
Available Net Operating Cash or to make non-cash distributions (except
as contemplated by Section 12);
(xii) to appoint or discharge Executive Officers (other
than the CEO), based on the recommendation of the CEO;
(xiii) to approve material compensation and benefit plans
and policies, material employee policies and material collective
bargaining agreements for the Partnership's employees;
(xiv) to initiate or settle any litigation or governmental
proceedings if the effect thereof would be material to the financial
condition of the Partnership;
(xv) to change the independent accountants for the
Partnership;
(xvi) to change the Partnership's method of accounting as
adopted pursuant to Section 5.2 or to change the Partnership's method
of accounting as provided in Section 5.5 or to make the elections
referred to in Section 5.6(b)(i)(E);
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(xvii) to create or change the authority of any Auxiliary
Committee;
(xviii) to merge, consolidate or convert the Partnership or
any subsidiary thereof with or into any other entity (other than a
Wholly Owned Subsidiary of the Partnership);
(xix) to file a petition in bankruptcy or seeking any
reorganization, liquidation or similar relief on behalf of the
Partnership or any subsidiary; or to consent to the filing of a
petition in bankruptcy against the Partnership or any subsidiary; or
to consent to the appointment of a receiver, custodian, liquidator or
trustee for the Partnership or any subsidiary or for all or any
substantial portion of their property;
(xx) to exercise any power or right described in Section
6.8(a)(i) or (ii) with respect to a Conflict Circumstance involving
(a) LYONDELL-CITGO Refining Company Ltd., its successors or assigns,
(b) Lyondell Methanol Company, L.P., its successors or assigns or (c)
any other Affiliate of Lyondell GP, Millennium GP or Occidental GP if
such Affiliate's actions with respect to such Conflict Circumstance
are not controlled by Lyondell, Millennium or Occidental
respectively, other than a Conflict Circumstance involving the
exercise of any rights and remedies with respect to a default under
any agreement that is the subject of such Conflict Circumstance;
(xxi) (a) prior to the seventh anniversary of the Initial
Closing Date, to repay any Millennium America Guaranteed Debt, other
than through refinancing or (b) to refinance any Millennium America
Guaranteed Debt prior to the seventh anniversary of the Initial
Closing Date if any of the principal of the debt refinancing such
Millennium America Guaranteed Debt would be due and payable after the
seventh anniversary of the Initial Closing Date; provided, however,
that if the Millennium America Guaranteed Debt continues to be
guaranteed by Millennium America or its successors after the seventh
anniversary of the Initial Closing Date, then the term of such debt
shall not exceed 365 days; and
(xxii) (a) prior to 30 days after the seventh anniversary of
the date of this Agreement, to repay any Oxy Guaranteed Debt, other
than through refinancing or (b) to refinance any Oxy Guaranteed Debt
prior to 30 days after the seventh anniversary of the date of this
Agreement if any of the principal of the debt refinancing such Oxy
Guaranteed Debt would be due and payable after 30 days after the
seventh anniversary of the date of this Agreement; provided, however,
that if the Oxy Guaranteed Debt continues to be guaranteed by
Occidental Chemical Corporation or its successors after 30 days after
the seventh anniversary of the date of this Agreement, then the term
of such debt shall not exceed 365 days.
6.8 Control of Interested Partner Issues.
(a) Notwithstanding anything to the contrary contained in this
Agreement, with respect to any Conflict Circumstance (other than a Conflict
Circumstance described in Section 6.7(xx), which shall be governed by Section
6.7), the Nonconflicted General Partners acting jointly (through their
respective Representatives) shall, subject to Section 6.8(b), have the sole and
exclusive power and
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right for and on behalf, and at the sole expense, of the Partnership (i) to
control all decisions, elections, notifications, actions, exercises or
nonexercises and waivers of all rights, privileges and remedies provided to, or
possessed by, the Partnership with respect to a Conflict Circumstance and (ii)
in the event of any potential, threatened or asserted claim, dispute or action
with respect to a Conflict Circumstance, to retain and direct legal counsel and
to control, assert, enforce, defend, litigate, mediate, arbitrate, settle,
compromise or waive any and all such claims, disputes and actions.
Accordingly, Partnership Governance Committee Action with respect to a Conflict
Circumstance (other than a Conflict Circumstance described in Section 6.7(xx),
which shall be governed by Section 6.7) shall require the approval of two
Representatives of each of the Nonconflicted General Partners. Each General
Partner shall, and shall cause its Affiliates to, take all such actions,
execute all such documents and enter into all such agreements as may be
necessary or appropriate to facilitate or further assure the accomplishment of
this Section.
(b) Each Nonconflicted General Partner, in exercising its control,
power and rights pursuant to this Section, shall act in good faith and in a
manner it believes to be in the best interests of the Partnership; provided
that it shall never be deemed to be in the best interests of the Partnership
not to pay, perform and observe all of the obligations to be paid, performed or
observed by or on the part of the Partnership under the terms of any of the
Other Agreements (as defined in the Amended and Restated Parent Agreement).
Each Nonconflicted General Partner shall act through its Representatives, and
the approval of two Representatives acting for each of the Nonconflicted
General Partners will be sufficient for the Nonconflicted General Partners (and
therefore the Partnership Governance Committee on behalf of the Partnership) to
take any action in respect of the relevant Conflict Circumstance. The
Conflicted General Partner (or its Affiliates) shall have the right to deal
with the Partnership and with each Nonconflicted General Partner on an
arm's-length basis and in a manner it believes to be in its own best interests,
but in any event must deal with them in good faith.
6.9 Auxiliary Committees.
(a) From time to time, the Partnership Governance Committee may,
by Partnership Governance Committee Action, designate one or more committees
("Auxiliary Committees") or disband any Auxiliary Committee. Each Auxiliary
Committee shall (i) operate under the specific authority delegated to it by the
Partnership Governance Committee (consistent with Section 6.7) for the purpose
of assisting the Partnership Governance Committee in managing (on behalf of the
General Partners) the business, property and affairs of the Partnership and
(ii) report to the Partnership Governance Committee.
(b) Each General Partner shall have the right to appoint an equal
number of members on each Auxiliary Committee. Auxiliary Committee members may
(but need not) be members of the Partnership Governance Committee. No
Auxiliary Committee member shall be compensated or reimbursed by the
Partnership for service as a member of such Auxiliary Committee.
(c) Each Partnership Governance Committee Action designating an
Auxiliary Committee shall be in writing and shall set forth (i) the name of
such Auxiliary Committee, (ii) the number of members and (iii) in such detail
as the Partnership Governance Committee deems appropriate, the
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purposes, powers and authorities (consistent with Section 6.7) of such
Auxiliary Committee; provided, however, that in no event shall any Auxiliary
Committee have any powers or authority in reference to amending this Agreement,
adopting an agreement of merger, consolidation or conversion of the
Partnership, authorizing the sale, lease or exchange of all or substantially
all of the property and assets of the Partnership, authorizing a dissolution of
the Partnership or declaring a distribution. Each Auxiliary Committee shall
keep regular minutes of its meetings and promptly deliver the same to the
Partnership Governance Committee.
6.10 Certain Limitations on Partner Representatives. No
Representative or Alternate of a Partner who, as an officer, director or
employee of such Partner or any of its Affiliates, participates in material
operational decisions by such Partner or Affiliate regarding a business or
operation of such Partner or Affiliate that competes with a business or
operation of the Partnership or of the other Partner or its Affiliates, or that
competes with a Business Opportunity offered pursuant to Section 9.3(c) or (d),
shall receive or have access to any competitively sensitive information
regarding the competing business of the Partnership or of the other Partner or
its Affiliates or such Business Opportunity, nor shall such Representative or
Affiliate participate in any decision of the Partnership Governance Committee
relating to such business or operation of the Partnership or the other Partner
or its Affiliates or such Business Opportunity.
SECTION 7
OFFICERS AND EMPLOYEES
7.1 Partnership Officers.
(a) The Partnership Governance Committee may select natural
persons who are (or upon becoming an officer will be) agents or employees of
the Partnership to be designated as officers of the Partnership, with such
titles as the Partnership Governance Committee shall determine.
(b) The executive officers of the Partnership shall consist of a
Chief Executive Officer ("CEO"), and others as determined from time to time by
Partnership Governance Committee (collectively, the "Executive Officers").
(c) The Partnership Governance Committee also shall appoint a
Secretary and may appoint such other officers and assistant officers and agents
as may be deemed necessary or desirable and such persons shall perform such
duties in the management of the Partnership as may be provided in this
Agreement or as may be determined by Partnership Governance Committee Action.
(d) The Partnership Governance Committee may leave unfilled any
offices except those of CEO and Secretary. Two or more offices may be held by
the same person except that the same person may not hold the offices of CEO and
Secretary.
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7.2 Selection and Term of Executive Officers.
(a) The Executive Officers as of the date of this Agreement are
listed on Appendix C.
(b) The CEO shall hold office for a five-year term, subject to the
CEO's earlier death, resignation or removal. Upon the expiration of such term
or earlier vacancy, Lyondell GP shall designate the CEO, provided that such
person shall be reasonably acceptable to both of Millennium GP and Occidental
GP. The CEO shall not be required to be an employee of the Partnership.
(c) Each Executive Officer (other than the CEO) shall hold office
until his or her death, resignation or removal. Upon the death, resignation or
removal of an Executive Officer, or the creation of a new Executive Officer
position, the CEO may nominate a person to fill the vacancy, which shall be
subject to Partnership Governance Committee approval. Executive Officers shall
not be required to be employees of the Partnership. Any Executive Officer also
may serve as an officer or employee of any Partner or Affiliate of a Partner.
7.3 Removal of Executive Officers.
(a) The CEO may be removed, at any time, by Partnership Governance
Committee Action taken pursuant to Section 6.6, with or without cause, whenever
in the judgment of the Partnership Governance Committee the best interests of
the Partnership would be served thereby.
(b) Any Executive Officer (other than the CEO), or any other
officer or agent may be removed, at any time, by Partnership Governance
Committee Action taken pursuant to Section 6.7(xii), with or without cause,
upon the recommendation of the CEO, whenever in the judgment of the Partnership
Governance Committee the best interests of the Partnership would be served
thereby.
(c) Notwithstanding anything to the contrary in Sections 6.7(xii),
7.3(a) and 7.3(b), any General Partner may, by action of two or more of its
Representatives, remove from office any Executive Officer who takes or causes
the Partnership to take any action described in Section 6.7 that has not been
approved by two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP as contemplated by Section 6.7. Any such removal shall be effected by
delivery by such Representatives of written notice of such removal (i) to such
Executive Officer and (ii) to the Representatives of the other General
Partners; provided that such removal shall not be effective if such action is
rescinded or cured (to the reasonable satisfaction of the General Partner who
has delivered such notice) promptly after such notice is delivered.
7.4 Duties.
(a) Each officer or employee of the Partnership shall owe to the
Partnership, but not to any Partner, all such duties (fiduciary or otherwise)
as are imposed upon such an officer or employee of a Delaware corporation.
Without limitation of the foregoing, each officer and employee in any dealings
with a Partner shall have a duty to act in good faith and to deal fairly;
provided, that, no
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officer shall be liable to the Partnership or to any Partner for his or her
good faith reliance on the provisions of this Agreement. Notwithstanding the
foregoing, it is understood that any officer or employee of the Partnership who
is also a Representative of a General Partner shall, in his capacity as a
Representative, owe no duty (fiduciary or otherwise) to any Person other than
such General Partner.
(b) The policies and procedures of the Partnership adopted by the
Partnership Governance Committee may set forth the powers and duties of the
officers of the Partnership to the extent not set forth in or inconsistent with
this Agreement. The officers of the Partnership shall have such powers and
duties, except as modified by the Partnership Governance Committee, as
generally pertain to their respective offices in the case of a publicly held
Delaware corporation, as well as other such powers and duties as from time to
time may be conferred by the Partnership Governance Committee and by this
Agreement. The CEO and the other officers and employees of the Partnership
shall develop and implement management and other policies and procedures
consistent with this Agreement and the general policies and procedures
established by the Partnership Governance Committee.
(c) Notwithstanding any other provision of this Agreement, no
Partner, Representative, officer, employee or agent of the Partnership shall
have the power or authority, without specific authorization from the
Partnership Governance Committee, to undertake any of the following:
(i) to do any act which contravenes (or otherwise is
inconsistent with) this Agreement or which would make
it impracticable or impossible to carry on the
Partnership's business;
(ii) to confess a judgment against the Partnership;
(iii) to possess Partnership property other than in the
ordinary conduct of the Partnership's business; or
(iv) to take, or cause to be taken, any of the actions
described in Section 6.7.
7.5 CEO. Subject to the terms of this Agreement, the CEO shall
have general authority and discretion comparable to that of a chief executive
officer of a publicly held Delaware corporation of similar size to direct and
control the business and affairs of the Partnership, including without
limitation its day-to-day operations in a manner consistent with the Annual
Budget and the most recently approved Strategic Plan. The CEO shall take steps
to implement all orders and resolutions of the Partnership Governance Committee
or, as applicable, any Auxiliary Committee. The CEO shall be authorized to
execute and deliver, in the name and on behalf of the Partnership, (i)
contracts or other instruments authorized by Partnership Governance Committee
Action and (ii) contracts or instruments in the usual and regular course of
business (not otherwise requiring Partnership Governance Committee Action),
except in cases when the execution and delivery thereof shall be expressly
delegated by the Partnership Governance Committee to some other officer or
agent of the Partnership, and, in general, shall perform all duties incident to
the office of CEO as well as such other duties as from time to time may be
assigned to him or her by the Partnership Governance Committee or as are
prescribed by this Agreement.
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7.6 Other Officers. The President (if any) and the Vice
Presidents shall perform such duties as may, from time to time, be assigned to
them by the Partnership Governance Committee or by the CEO. In addition, at
the request of the CEO, or in the absence or disability of the CEO, the
President (if any) or any Vice President, in any order determined by the
Partnership Governance Committee, temporarily shall perform all (or if limited
through the scope of the delegation, some of) the duties of the CEO, and, when
so acting, shall have all the powers of, and be subject to all restrictions
upon, the CEO.
7.7 Secretary. The Secretary shall keep the minutes of all
meetings (and copies of written records of action taken without a meeting) of
the Partnership Governance Committee in minute books provided for such purpose
and shall see that all notices are duly given in accordance with the provisions
of this Agreement. The Secretary shall be the custodian of the records and of
the seal, if any. The Secretary shall have general charge of books and papers
of the Partnership as the Partnership Governance Committee may direct and, in
general, shall perform all duties and exercise all powers incident to the
office of Secretary and such other duties and powers as the Partnership
Governance Committee or the CEO from time to time may assign to or confer upon
the Secretary.
7.8 Salaries. Salaries or other compensation of the other
Executive Officers of the Partnership shall be established by the CEO
consistent with plans approved by the Partnership Governance Committee. Except
as approved by the Partnership Governance Committee, all fees and compensation
of the officers and employees of the Partnership other than the CEO with
respect to their services as such officers and employees shall be payable
solely by the Partnership and no Partner or its Affiliates shall pay (or offer
to pay) any such fees or compensation to any officer or employee, except to the
extent that the Partnership shall have agreed with a Partner or one of its
Affiliates pursuant to a separate agreement that a portion of the compensation
of such officer or employee shall be paid by such Partner or Affiliate.
7.9 Delegation. The Partnership Governance Committee may delegate
temporarily the powers and duties of any officer of the Partnership, in case of
absence or for any other reason, to any other officer of the Partnership, and
may authorize the delegation by any officer of the Partnership of any of such
officer's powers and duties to any other officer or employee of the
Partnership, subject to the general supervision of such officer.
7.10 Employee Hirings. Without the prior approval of the two other
General Partners, which approval shall not be unreasonably withheld, a General
Partner (or its Affiliates) shall not be entitled to hire employees of the
Partnership who at the time of such employment are eligible to participate in
the incentive compensation programs available to senior managers or executives
or to hire specific individuals who had been employed by the Partnership within
the previous year and who prior to the termination of their employment were
eligible to participate in the incentive compensation programs available to
senior managers or executives. Without the prior approval of the relevant
General Partner, which approval shall not be unreasonably withheld, the
Partnership shall not be entitled to hire employees of such General Partner (or
its Affiliates) who at the time of such employment are eligible to participate
in the incentive compensation programs available to senior managers or
executives or to hire specific individuals who had been employed by such
General Partner (or its Affiliates) within the previous year and who prior to
the termination of their
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employment were eligible to participate in the incentive compensation programs
available to senior managers or executives.
7.11 General Authority. Persons dealing with the Partnership are
entitled to rely conclusively on the power and authority of each of the
officers as set forth in this Agreement. In no event shall any Person dealing
with any officer with respect to any business or property of the Partnership be
obligated to ascertain that the terms of this Agreement have been complied
with, or be obligated to inquire into the necessity or expedience of any act or
action of the officer; and every contract, agreement, deed, mortgage, security
agreement, promissory note or other instrument or document executed by the
officer with respect to any business or property of the Partnership shall be
conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and/or delivery
thereof, this Agreement was in full force and effect, (ii) the instrument or
document was duly executed in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership, and (iii) the officer was duly
authorized and empowered to execute and deliver any and every such instrument
or document for and on behalf of the Partnership.
SECTION 8
STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS
8.1 Strategic Plan.
(a) The Partnership shall be managed in accordance with a
five-year strategic business plan (the "Strategic Plan") which shall be updated
annually under the direction of the CEO and presented for approval by the
Partnership Governance Committee pursuant to Section 6.7 no later than 90 days
prior to the start of the first fiscal year covered by the updated plan.
(b) The Strategic Plan shall establish the strategic direction of
the Partnership, including plans relating to capital maintenance and
enhancement, geographic expansion, acquisitions and dispositions, new product
lines, technology, long-term supply and customer arrangements, internal and
external financing, environmental and legal compliance, and plans, programs and
policies relating to compensation and industrial relations. The Strategic Plan
shall include projected income statements, balance sheets and cash flow
statements, including the expected timing and amounts of capital contributions
and cash distributions. The format and level of detail of each Strategic Plan
shall be consistent with that of the initial Strategic Plan agreed to by the
Initial Partners on or prior to the Initial Closing Date or the Strategic Plan
most recently approved pursuant to Section 6.7.
8.2 Annual Budget.
(a) The Executive Officers of the Partnership shall prepare an
Annual Budget (each, an "Annual Budget") for each fiscal year, including an
Operating Budget and Capital Expenditure Budget; provided that each Annual
Budget shall be consistent with the information for such fiscal year included
in the Strategic Plan most recently approved pursuant to Section 6.7; and
provided, further, that unless provided otherwise in the most recently approved
Strategic Plan, the Annual
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Budget (including any Annual Budget prepared under Section 8.2(b)) shall
utilize a format and provide a level of detail consistent with the
Partnership's initial Annual Budget. The Annual Budget for each year shall be
submitted to the Partnership Governance Committee for approval at least 60 days
prior to the start of the fiscal year covered by such budget. Each Annual
Budget shall incorporate (i) a projected income statement, balance sheet and a
cash flow statement, (ii) the amount of any corresponding cash deficiency or
surplus and (iii) the estimated amount, if any, and expected timing for all
required capital contributions. Each proposed Annual Budget shall be prepared
on a basis consistent with the Partnership's financial statements.
(b) If for any fiscal year the Partnership Governance Committee
has failed to approve an updated Strategic Plan, then, subject to Section 8.5,
for such year and each subsequent year prior to approval of an updated
Strategic Plan, the Executive Officers of the Partnership shall prepare (and
promptly furnish to the Partnership Governance Committee) the Annual Budget
consistent with the projections and other information for that year included in
the Strategic Plan most recently approved pursuant to Section 6.7; provided,
however, that the CEO, acting in good faith, shall be entitled to modify any
such Annual Budget in order to satisfy current contractual and compliance
obligations and to account for other changes in circumstances resulting from
the passage of time or the occurrence of events beyond the control of the
Partnership; provided, further, that the CEO shall not be authorized to cause
the Partnership to proceed with capital expenditures to accomplish capital
enhancement projects except to the extent that such expenditures would enable
the Partnership to continue or complete any such capital project reflected in
the last Strategic Plan that was approved by the Partnership Governance
Committee pursuant to Section 6.7.
(c) Each "Operating Budget" shall constitute an estimate for each
applicable period of all operating income, which shall include expenses
required to maintain, repair and restore to good and usable condition the
Partnership's assets.
(d) Each "Capital Expenditure Budget" shall constitute an estimate
for the applicable period of the capital expenditures required to (i)
accomplish capital enhancement projects included in the most recently approved
Strategic Plan, (ii) maintain and preserve the Partnership's assets in good
operating condition and repair and (iii) achieve or maintain compliance with
any HSE Law.
8.3 Funding of Partnership Expenses. All Partnership expenses
(both operating and capital expenses), regardless of whether included in any
Strategic Plan or Annual Budget, shall be funded from operating cash flows or
authorized borrowings under available lines of credit, unless otherwise agreed
by the Partnership Governance Committee. Subject to the limitations of
Sections 2.4 and 6.7(v), if applicable, to the extent that the CEO determines
at any time that funds are needed to fund Partnership operations, the CEO may
issue a Funding Notice to the Limited Partners calling for an additional
capital contribution. The Limited Partners will take all steps necessary to
cause compliance with such Funding Notice.
8.4 Implementation of Budgets and Discretionary Expenditures by
CEO.
(a) After a Strategic Plan and an Annual Budget have been approved
by the Partnership Governance Committee (or an Annual Budget has been developed
in accordance with Section
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8.2(b)), the CEO will be authorized, without further action by the Partnership
Governance Committee, to cause the Partnership to make expenditures consistent
with such Strategic Plan and Annual Budget; provided, however, that all
internal control policies and procedures, including those regarding the
required authority for certain expenditures, shall have been followed.
(b) In any emergency, the CEO or the CEO's designee shall be
authorized to take such actions and to make such expenditures as may be
reasonably necessary to react to the emergency, regardless of whether such
expenditures have been included in an approved Strategic Plan or Annual Budget.
Promptly after learning of an emergency, the CEO or such designee shall notify
the Representatives of the nature of the emergency and the response that has
been made, or is committed or proposed to be made, with respect to the
emergency.
8.5 Strategic Plan Deadlock. If the Partnership Governance
Committee has not agreed upon and approved an updated Strategic Plan, as
contemplated by Sections 6.7 and 8.1, by such date as is 12 months after the
beginning of the first fiscal year that would have been covered by such plan,
then the General Partners shall submit their disagreements to non-binding
mediation by a Neutral. If the General Partners are unable to agree upon a
mutually acceptable Neutral within 30 days after a nomination of a Neutral is
made by one General Partner to the other General Partners, then such Neutral
shall upon the application of any General Partner be appointed within 70 days
of such nomination by the Center for Public Resources, or if such appointment
is not so made promptly then promptly thereafter by the American Arbitration
Association in Philadelphia, Pennsylvania, or if such appointment is not so
made promptly then promptly thereafter by the senior United States District
Court judge sitting in Wilmington, Delaware. The fees of the Neutral shall be
paid equally by the General Partners. Within 20 days of selection of the
Neutral, two persons having decision-making authority on behalf of each General
Partner shall meet with the Neutral and agree upon procedures and a schedule
for attempting to resolve the differences between the General Partners. They
shall continue to meet thereafter on a regular basis until (i) agreement is
reached by the General Partners (acting through their Representatives) on an
updated Strategic Plan or (ii) at least 24 months have elapsed since the
beginning of the first fiscal year that was to be covered by the first updated
plan for which agreement was not reached and one General Partner shall
determine and notify the other General Partners and the Neutral in writing (a
"Deadlock Notice") that no agreement resolving the dispute is likely to be
reached.
8.6 Loans.
(a) 1998 Credit Facility. Each General Partner agrees that it
will use its reasonable best efforts to cause the Partnership to enter into a
credit facility or facilities (whether one or more, the "1998 Credit
Facility") on or prior to December 15, 1998, which 1998 Credit Facility would
allow the Partnership to borrow at least $500 million aggregate principal
amount (inclusive of the Bank Credit Agreement Repayment Amount but exclusive
of any other portion of the 1998 Credit Facility which may be dedicated to the
satisfaction of working capital needs or used for refinancing any indebtedness
of the Partnership existing at such time) thereunder, notwithstanding the
amount ($1.25 billion) that may be borrowed by the Partnership under its bank
credit facility in existence as of the date of this Agreement. Each General
Partner further agrees to cause the Partnership to draw down the Bank Credit
Agreement Repayment Amount under the 1998 Credit Facility and to apply the Bank
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Credit Agreement Repayment Amount to the repayment of any principal amount
outstanding under the Bank Credit Agreement on or prior to December 15, 1998,
and two Business Days after such repayment to cause the Partnership to draw
down $419,700,000 under the Bank Credit Agreement for distribution to
Occidental LP2 as provided in Section 3.1(g).
(b) Other Loans. The Partnership Governance Committee may by
Partnership Governance Committee Action authorize the CEO to cause the
Partnership to borrow funds from third party lenders. No Partner shall be
required, and the Partnership Governance Committee shall not be authorized to
require any Partner, to guarantee or to provide other credit or financial
support for any loan. Any Partner may, at its sole discretion, guarantee or
provide other credit or financial support for all or any portion of any debt,
including any refinancing of the Bank Credit Agreement or any uncommitted lines
of credit of the Partnership, for such period of time and on such other terms
as the Partner shall determine.
(c) Millennium Guarantee. Millennium America, an Affiliate of
Millennium GP and Millennium LP, issued a full and unconditional guarantee (the
"Millennium America Guarantee") in respect of $750 million of principal owed by
the Partnership pursuant to the Bank Credit Agreement, together with interest
thereon, as set forth in the Bank Credit Agreement. Millennium America (or its
successors or assigns) shall maintain the Millennium America Guarantee in full
force and effect in respect of $750 million of principal, together with
interest thereon, under the Bank Credit Agreement or any refinancings thereof
(including, without limitation, any further refinancings of such refinancings)
indefinitely; provided, however, that Millennium America may terminate the
Millennium America Guarantee at any time on or after the seventh anniversary of
the Initial Closing Date if, and only if: (i) the Partnership's ratio of Total
Indebtedness to Total Capitalization is, as of the end of the most recently
completed fiscal quarter of the Partnership lower than such ratio as of
December 31, 1998, (ii) the Partnership's ratio of EBITDA to Net Interest for
the most recent 12 month period is at least 105% of such ratio for the 12 month
period ending December 31, 1998, (iii) the Partnership is not then in default
in the payment of principal of, or interest on, any indebtedness for borrowed
money in excess of $15 million and (iv) the Partnership is not then in default
in respect of any covenants relating to any indebtedness for borrowed money if
the effect of any such default shall be to accelerate, or to permit the holder
or obligee of such indebtedness (or any trustee on behalf of such holder or
obligee) to accelerate (with or without the giving of notice or lapse of time
or both), such indebtedness in an aggregate amount in excess of $50 million;
provided, further, that if Millennium GP and Millennium LP sell all of their
respective interests in the Partnership, or if Millennium Petrochemicals Inc.
sells all of its equity interests in both Millennium GP and Millennium LP, in
each case to an unaffiliated third party (or parties) at any time in accordance
with the terms of this Agreement, Millennium America may terminate the
Millennium America Guarantee if, at the time of such sale or at the time of
such termination, (A) the Partnership has an "investment grade" credit rating
issued by Moody's Investor Service Inc. or Standard & Poor's Corporation (or,
if the Partnership has no rated indebtedness outstanding at such time,
Millennium America demonstrates to the reasonable satisfaction of the
Partnership that the Partnership could obtain such an "investment grade" credit
rating), or (B) the fair market value of the Partnership's assets is at least
140% of the gross amount of its liabilities. For purposes of this paragraph
(c), "EBITDA" means, with respect to any period, operating income before
interest, taxes, depreciation and amortization, as determined in accordance
with GAAP; "Net Interest" means, with respect to any period, (i) the amount
which,
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in conformity with GAAP, would be set forth opposite the caption "interest
expense" (or any like caption) on a consolidated income statement of the
Partnership and all other Persons with which the Partnership's financial
statements are to be consolidated in accordance with GAAP for the relevant
period ended on such date less (ii) the amount which, in conformity with GAAP,
would be set forth opposite the caption "interest income" (or any like caption)
on such consolidated income statement; "Total Indebtedness" means at the time
of determination all indebtedness of the Partnership and its subsidiaries on a
consolidated basis, as determined in accordance with GAAP; "Total
Capitalization" means, at the time of determination, the sum of Total
Indebtedness plus the partner's equity reflected on a balance sheet of the
Partnership prepared in accordance with GAAP.
SECTION 9
RIGHTS OF PARTNERS
9.1 Delegation and Contracts with Related Parties.
(a) The Partners acknowledge that the General Partners (acting
through the Partnership Governance Committee) are permitted to delegate
responsibility for day-to-day operations of the Partnership to officers and
employees of the Partnership.
(b) Upon receipt of any required approval by the Partnership
Governance Committee (including, as applicable, any approval required by
Section 6.8), all contracts and transactions between the Partnership and a
Partner or its Affiliates shall be deemed to be entered into on an arm's-length
basis and to be subject to ordinary contract and commercial law, without any
other duties or rights being implied by reason of a Partner being a Partner or
by reason of any provision of this Agreement or the existence of the
Partnership.
9.2 General Authority. Persons dealing with the Partnership are
entitled to rely conclusively on the power and authority of each of the General
Partners as set forth in this Agreement. In no event shall any Person dealing
with any General Partner or such General Partner's representatives with respect
to any business or property of the Partnership be obligated to ascertain that
the terms of this Agreement have been complied with, or be obligated to inquire
into the necessity or expedience of any act or action of the General Partner or
the General Partner's representatives; and every contract, agreement, deed,
mortgage, security agreement, promissory note or other instrument or document
executed by the General Partner or the General Partner's representatives with
respect to any business or property of the Partnership shall be conclusive
evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and/or delivery thereof, this
Agreement was in full force and effect, (ii) the instrument or document was
duly executed in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership, and (iii) the General Partner or the General
Partner's representative was duly authorized and empowered to execute and
deliver any and every such instrument or document for and on behalf of the
Partnership. Nothing in this Section 9.2 shall be deemed to be a waiver or
release of any General Partner's obligations to the other Partners as set forth
elsewhere in this Agreement.
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9.3 Limitation on Fiduciary Duty; Non-Competition; Right of First
Opportunity.
(a) Each Partner (directly or through its Affiliates) is a
sophisticated party possessing extensive knowledge of and experience relating
to, and is actively engaged in, significant businesses in addition to its
Contributed Businesses, has been represented by legal counsel, is capable of
evaluating and has thoroughly considered the merits, risks and consequences of
the provisions of this Section 9.3 and is agreeing to such provision knowingly
and advisedly. The liability of each of the General Partners (including any
liability of its Affiliates or its and their respective officers, directors,
agents and employees) or of any Limited Partner (including any liability of its
Affiliates or its and their respective officers, agents, directors and
employees), either to the Partnership or to any other Partner, for any act or
omission by such Partner in its capacity as a partner of the Partnership that
is imposed by such Partner's status as a "general partner" or "limited partner"
(as such terms are used in the Act) of a limited partnership is hereby
eliminated, waived and limited to the fullest extent permitted by law;
provided, however, that each General Partner shall at all times owe to the
other General Partners a fiduciary duty in observing the requirement described
in Section 6.7 that two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP shall be required to give their approval before the Partnership may
undertake any of the actions listed in Section 6.7. Nothing in this
subsection shall relieve any Partner from liability for any breach of this
Agreement and each General Partner shall at all times owe to the other General
Partners a duty to act in good faith with respect to all matters involving the
Partnership.
(b) Except as set forth in Section 9.3(c), each Partner's
Affiliates shall be free to engage in or possess an interest in any other
business of any type, including any business in direct competition with the
Partnership, and to avail itself of any business opportunity available to it
without having to offer the Partnership or any Partner the opportunity to
participate in such business. Except as set forth in Section 9.3(c), it is
expressly agreed that the legal doctrine of "corporate or business
opportunities" sometimes applied to a Person deemed to be subject to fiduciary
or other similar duties so as to prevent such Persons from engaging in or
enjoying the benefits of certain additional business opportunities shall not be
applied in the case of any investment, acquisition, business, activity or
operation of any Partner's Affiliates.
(c) (i) If a Partner's Affiliate desires to initiate or
pursue an opportunity to undertake, engage in, acquire or invest in a
Related Business by investing in or acquiring a Person whose business
is a Related Business, acquiring assets of a Related Business, or
otherwise engaging in or undertaking a Related Business (a "Business
Opportunity"), such Partner or its Affiliate (such Partner, together
with its Affiliates, being called the "Proposing Partner") shall offer
the Partnership the Business Opportunity on the terms set forth in
Section 9.3(c)(ii).
(ii) When a Proposing Partner offers a Business
Opportunity to the Partnership, the Partnership shall elect to do one
of the following within a reasonably prompt period:
(A) acquire or undertake the Business Opportunity for the
benefit of the Partnership as a whole, at the cost,
expense and benefit of the Partnership; provided,
however, that, if the Partnership ceases to actively
pursue such
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opportunity for any reason, then the Proposing
Partner will be entitled to proceed under clause
(B) below; or
(B) permit the Proposing Partner to acquire or undertake
the Business Opportunity for its own benefit and
account without any duty to the Partnership or the
other Partners with respect thereto; provided,
however, that if the Business Opportunity is in
direct competition with the then existing business of
the Partnership (a "Competing Opportunity"), then the
Proposing Partner and the Partnership shall, if
either so elects, seek to negotiate and implement an
arrangement whereby the Partnership would either (i)
acquire or undertake the Competing Opportunity at the
sole cost, expense and benefit of the Proposing
Partner under a mutually acceptable arrangement
whereby the Competing Opportunity is treated as a
separate business within the Partnership with the
costs, expenses and benefits related thereto being
borne and enjoyed solely by the Proposing Partner, or
(ii) enter into a management agreement with the
Proposing Partner to manage the Competing Opportunity
on behalf of the Proposing Partner on terms and
conditions mutually acceptable to the Proposing
Partner and the Partnership. If the Partnership and
the Proposing Partner do not reach agreement as to
such arrangement, the Proposing Partner may acquire
or undertake the Competing Opportunity for its own
benefit and account without any duty to the
Partnership or the other Partners with respect
thereto.
(d) Notwithstanding the provisions of Section 9.3(c)(ii), (i) if
the Business Opportunity constitutes less than 25% (based on annual revenues
for the most recently completed fiscal year) of an acquisition of or investment
in assets, activities, operations or businesses that is not otherwise a Related
Business, then a Proposing Partner may acquire or invest in such Business
Opportunity without first offering it to the Partnership; provided, that, after
completion of the acquisition or investment thereof, such Proposing Partner
must offer the Business Opportunity to the Partnership pursuant to the terms of
Section 9.3(c)(ii); and if the Partnership elects option (A) of Section
9.3(c)(ii) with respect thereto, the Business Opportunity shall be acquired by
the Partnership at its fair market value as of the date of such acquisition and
(ii) if the Business Opportunity is (A) part of an integrated project, a
substantial element of which is the development, exploration, production and/or
sale of oil or gas reserves and (B) located in a country other than the United
States, Canada or Mexico then such Partner or its Affiliate may acquire or
invest in such Business Opportunity without first offering it to the
Partnership; provided, that subject to any requisite consents and approvals
from third parties or governmental authorities, the Partner or its Affiliate
will use commercially reasonable efforts to include the Partnership to the
maximum extent practicable in such integrated project with respect to the
Business Opportunity portion of the project.
(e) Notwithstanding the provisions of Section 9.3(c), any direct
or indirect expansion by LYONDELL-CITGO Refining Company Ltd. of its aromatics
business shall not be deemed to constitute a Business Opportunity for purposes
of Section 9.3(c).
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(f) If (i) the Partnership is presented with an opportunity to
acquire or undertake a Business Opportunity (other than pursuant to Section
9.3(c)) that it determines not to acquire or undertake and (ii) the
Representatives of one or two General Partners, but not the other General
Partner(s), desire that the Partnership acquire or undertake such Business
Opportunity, then the Partnership shall permit such General Partner(s) and its
or their respective Affiliates to acquire or undertake such Business
Opportunity (or in the event two of the General Partners desire to so
undertake, then, as between those two General Partners and their respective
Affiliates, the Business Opportunity may be pursued or acquired either jointly
or independently and Section 9.3(c)(ii)(B) shall be deemed to be applicable
thereto to the same extent as if such General Partner(s) and its or their
respective Affiliates were a Proposing Partner with respect to such Business
Opportunity.
9.4 Limited Partners.
(a) No Limited Partner shall take part in the management or
control of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise to bind
the Partnership.
(b) Each Limited Partner shall have the rights with respect to the
Partnership's books and records as set forth in Section 5.3.
9.5 Partner Covenants. Each Partner covenants and agrees with the
Partnership and with the other Partners as follows:
(i) It shall not exercise, or purport or attempt to
exercise, its authority to withdraw, retire, resign, or assert that it
has been expelled from the Partnership;
(ii) It shall not do any act that would make it impossible
or impracticable to carry on the Partnership's business; and
(iii) It shall not act or purport or attempt to act in a
manner inconsistent with any act of a General Partner acting pursuant
to the Partnership Governance Committee or in a manner contrary to the
agreements of the Partners set forth in this Agreement;
provided, that, nothing in this Section 9.5 shall be deemed to waive its rights
under Sections 10, 11 or 12.
9.6 Special Purpose Entities. Each Partner covenants and agrees
that (i) its business shall be restricted solely to the holding of its Units
and the doing of things necessary or incidental in connection therewith
(including, without limitation, the exercise of its rights and powers under
this Agreement), and (ii) it shall not own any assets, incur any liabilities or
engage, participate or invest in any business outside the scope of such
business; provided, however, that this Section 9.6 shall not be binding upon
(a) Millennium Petrochemicals Inc., a Virginia corporation, or its successors
by operation of law to the extent that any Units shall be Transferred to it in
accordance with Section 10.6 or (b) at its option, any Wholly Owned Affiliate
of any Partner to whom Units shall be Transferred pursuant to Section 10.6 if,
at the date of such Transfer, such Wholly Owned Affiliate
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shall have a consolidated net worth, as determined in accordance with GAAP, of
at least $50 million. Notwithstanding the foregoing provisions of this Section
9.6, this Section 9.6 shall not prohibit any Partner from incurring debt
payable to its Parent or an Affiliate so long such debt is permitted under
Section 2.4 of the Parent Agreement.
SECTION 10
TRANSFERS AND PLEDGES
10.1 Restrictions on Transfer and Prohibition on Pledge. Except
pursuant to Section 11 or the procedures described below in this Section, a
Partner shall not, in any transaction or series of transactions, directly or
indirectly Transfer all or any part of its Units. A Partner shall not, in any
transaction or series of transactions, directly or indirectly Pledge all or any
part of its Units or its interest in the Partnership. Neither the term
"Transfer" nor the term "Pledge," however, shall include an assignment by a
Partner of such Partner's right to receive distributions from the Partnership
so long as such assignment does not purport to assign any right of such Partner
to participate in or manage the affairs of the Partnership, to receive any
information or accounting of the affairs of the Partnership, or to inspect the
books or records of the Partnership or any other right of a Partner pursuant to
this Agreement or the Act. Any attempt by a Partner to Transfer or Pledge all
or a portion of its Units in violation of this Agreement shall be void ab
initio and shall not be effective to Transfer or Pledge such Units or any
portion thereof. Subject to any applicable restrictions imposed by the
Amended and Restated Parent Agreement, nothing in this Agreement shall prevent
the Transfer or Pledge by the owner thereof of any capital stock, equity
ownership interests or other security of a Partner or any Affiliate of a
Partner.
10.2 Right of First Option.
(a) Except as set forth in Section 10.6, without the consent of
all of the General Partners, no Partner may Transfer less than all of its Units
and no Partner may Transfer its Units for consideration other than cash. Any
Limited Partner (or Limited Partners, if there are Affiliated Limited Partners)
and its (or their) Affiliated General Partner desiring to Transfer all of their
Units (together, the "Selling Partners") shall give written notice (the
"Initial Notice") to the Partnership and the other Partners (the "Offeree
Partners") stating that the Selling Partners desire to Transfer their Units and
stating the cash purchase price and all other terms on which they are willing
to sell (the "Offer Terms"). Delivery of an Initial Notice shall constitute
the irrevocable offer of the Selling Partners to sell their Units to the
Offeree Partners hereunder.
(b) The Offeree Partners shall have the option, exercisable by
delivering written notice (the "Acceptance Notice") of such exercise to the
Selling Partners within 45 days of the date of the Initial Notice, to elect to
purchase all of the Units of the Selling Partners on the Offer Terms described
in the Initial Notice. If all of the Offeree Partners deliver an Acceptance
Notice, then all of the Units shall be transferred to the Offeree Partners on a
pro rata basis (based on the ratio of the number of Units owned by each Offeree
Partner delivering an Acceptance Notice to the number of Units owned by all
Offeree Partners delivering an Acceptance Notice or on any other basis that
shall be mutually agreed upon between the Offeree Partners delivering an
Acceptance Notice). If less than
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all of the Offeree Partners deliver an Acceptance Notice, the Selling Partners
shall give written notice thereof (the "Additional Notice") to the Offeree
Partners electing to purchase, and such Offeree Partners shall have the option,
exercisable by delivery of an Acceptance Notice of such exercise to the Selling
Partners within 15 days of such Additional Notice, to purchase all of the
Units, including the Units it had not previously elected to purchase; provided,
however, that any election by an Offeree Partner not to purchase all such Units
shall be deemed a rescission of such Offeree Partner's original Acceptance
Notice and an election not to purchase any of the Units of the Selling
Partners. The Acceptance Notice shall set a date for closing the purchase,
such date to be not less than 30 nor more than 90 days after delivery of the
Acceptance Notice; provided that such time period shall be subject to extension
as reasonably necessary (up to a maximum of an additional 120 days after such
90 day period) in order to comply with any applicable filing and waiting period
requirements under the Hart-Scott-Rodino Antitrust Improvements Act. The
closing shall be held at the Partnership's offices. The purchase price for the
Selling Partners' Units shall be paid in cash delivered at the closing. The
purchase shall be consummated by appropriate and customary documentation
(including the giving of representations and warranties substantially similar
to those set forth in Sections 2.1 through 2.3 of the Second Master Transaction
Agreement).
(c) If none of the Offeree Partners elect to purchase the Selling
Partners' Units within 45 days after the receipt of the Initial Notice, the
Selling Partners shall have a further 180 days during which they may, subject
to Sections 10.2(d) and (e), consummate the sale of their Units to a third
party purchaser at a purchase price and on such other terms that are no more
favorable to such purchaser than the Offer Terms. If the sale is not completed
within such further 180-day period, the Initial Notice shall be deemed to have
expired and a new notice and offer shall be required before the Selling
Partners may make any Transfer of their Units.
(d) Before the Selling Partners may consummate a Transfer of their
Units to a third party in accordance with this Agreement, the Selling Partners
shall demonstrate to the Offeree Partners that the Person willing to serve as
the proposed purchaser's guarantor under the agreement contemplated by Section
10.2(e)(vi) has outstanding indebtedness that is rated investment grade by
Moody's Investors Service, Inc. and Standard & Poor's Corporation, or if such
Person has no rated indebtedness outstanding, such Person shall provide an
opinion from a nationally recognized investment banking firm that such Person
could be reasonably expected to obtain such ratings.
(e) Notwithstanding the foregoing provisions of this Section 10.2,
a Partner may Transfer its Units (other than pursuant to Section 10.6) only if
all of the following occur:
(i) The Transfer is accomplished in a non-public offering
in compliance with, and exempt from, the registration and
qualification requirements of all federal and state securities laws
and regulations.
(ii) The Transfer does not cause a default under any
material contract to which the Partnership is a party or by which the
Partnership or any of its properties is bound.
(iii) The transferee executes an appropriate agreement to
be bound by this Agreement.
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(iv) The transferor and/or transferee bears all reasonable
costs incurred by the Partnership in connection with the Transfer.
(v) The business and activities of the transferee comply
with Section 9.6.
(vi) The guarantor of the transferee satisfies the
criteria set forth in Section 10.2(d) and delivers an agreement to the
ultimate parent entity of the Offeree Partners and to the Partnership,
substantially in the form of the Amended and Restated Parent
Agreement.
(vii) The proposed transferor is not in default in the
timely performance of any of its material obligations to the
Partnership.
(viii) The provisions of Section 10.3 are satisfied.
10.3 Inclusion of General or Limited Partner Units. No Limited
Partner may Transfer its Units to any Person (other than in accordance with
Section 10.6) unless the Units of its General Partner Affiliate and its Limited
Partner Affiliate or Affiliates (if any) are simultaneously transferred to such
Person or a Wholly Owned Affiliate of such Person. No General Partner may
transfer its Units to any Person (other than a Wholly Owned Affiliate of such
Partner) unless the Units of its Affiliated Limited Partner (or Limited
Partners, if more than one) are simultaneously transferred to such Person or a
Wholly Owned Subsidiary of such Person.
10.4 Rights of Transferee. Upon consummation of a Transfer in
accordance with Section 10.2, the transferee or transferees shall immediately,
and without any further action of any Person, become (i) a Substitute Limited
Partner if and to the extent Limited Partner Units are transferred and (ii) a
Substitute General Partner, if and to the extent General Partner Units are
transferred.
10.5 Effective Date of Transfer. Each Transfer shall become
effective as of the first day of the calendar month following the calendar
month during which the Partnership Governance Committee approves such Transfer
and receives a copy of the instrument of assignment and all such certificates
and documents of the character described in Section 10.2, which the Partnership
Governance Committee may reasonably request.
10.6 Transfer to Wholly Owned Affiliate. Without the need for the
consent of any Person (subject to the provisions contained in this Section
10.6):
(a) any Partner may Transfer its Units to any Wholly Owned
Affiliate of such Partner (other than the Partner that is its Affiliate),
provided the transferee executes an instrument reasonably satisfactory to all
of the General Partners accepting the terms and provisions of this Agreement
(except as may be provided in Section 9.6). Upon consummation of a Transfer in
accordance with this Section 10.6(a), the transferee shall immediately, and
without any further action of any Person, become (i) a Substitute Limited
Partner if and to the extent Limited Partner Units are transferred and (ii) a
Substitute General Partner, if and to the extent General Partner Units are
transferred; and
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(b) any Limited Partner may, at its option and at any time, (i)
Transfer up to 99% of its Limited Partner Units to its Affiliated General
Partner, whereupon such Limited Partner Units shall, without any further
action, become General Partner Units or (ii) Transfer all of the Limited
Partner Units held by such Limited Partner to its Affiliated Limited Partner.
Promptly following any Transfer of Limited Partner Units in accordance with
this Section 10.6(b), each Partner shall take such actions and execute such
instruments or documents (including, without limitation, amendments to this
Agreement or supplemental agreements hereto) as may be reasonably necessary to
ensure that each Affiliated Partner Group shall, taken as a whole and following
such Transfer, maintain all of its rights under this Agreement as in effect
immediately prior to such Transfer (including, without limitation, the portion
of Available Net Operating Cash distributable to such Affiliated Partner
Group).
10.7 Invalid Transfer. No Transfer of Units which is in violation
of this Section 10 shall be valid or effective, and the Partnership shall not
recognize the same for the purposes of making any allocation or distribution.
SECTION 11
DEFAULT
11.1 Default.
(a) Each of the following events shall constitute a "Default" and
create the rights provided for in this Section 11 in favor of the Partnership
and the Non-Defaulting Partners against the Defaulting Partners:
(i) the failure by a Partner to make any contribution to
the Partnership as required pursuant to this Agreement (other than
pursuant to the Contribution Agreement), which failure continues for
at least five Business Days from the date that the Partner is notified
such contribution is overdue;
(ii) in the case of each of Lyondell GP and Lyondell LP,
the failure to pay principal, when due, on the Lyondell Note, which
failure continues for at least five Business Days from the date such
payment is due; or
(iii) the withdrawal, retirement, resignation or
dissolution of a Partner (other than in connection with a Transfer of
all of a Partner's Units in accordance with this Agreement); or the
Bankruptcy of a Partner or its Guarantor.
(b) The day upon which the Default commences or occurs (or if the
Default is subject to a cure period and is not timely cured, then the day
following the end of the applicable cure period) shall be the "Default Date."
Without prejudice to a Partner's (or any of its Affiliates') rights to seek
temporary or preliminary judicial relief, prior to any such Default Date all
rights and obligations of the Partners under this Agreement shall remain in
full force and effect.
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11.2 Remedies for Default. Provided that there shall be no
duplication of remedies, without prejudice to any right to pursue independently
and at any time, including simultaneously, any other remedy it may have under
law, including the right to seek to recover Damages, or equity, each
Non-Defaulting Affiliated Partner Group in its sole discretion may elect to
pursue the following remedies:
(a) At any time prior to the expiration of 60 days from the
Default Date, each Non-Defaulting Affiliated Partner Group may elect to
purchase its pro rata share (based on the ratio of the number of Units owned by
such Partners to the number of Units owned by all Non-Defaulting Partners
electing to purchase) of the Units of the Defaulting Partners as described in
Section 11.3; provided, however, that within 10 days after the determination of
the Fair Market Value, either Non-Defaulting Affiliated Partner Group may
withdraw its election. If a Non-Defaulting Affiliated Partner Group withdraws
its election to purchase after the determination of Fair Market Value, and the
other Non- Defaulting Affiliated Partner Group has elected and not so
withdrawn, the withdrawing Affiliated Partner Group shall provide notice within
5 days of its withdrawal to such other Affiliated Partner Group. At any time
prior to the expiration of 10 days from receipt of such notice, the Affiliated
Partner Group receiving such notice may elect to purchase the Units as to which
the election to purchase has been withdrawn. If on the later to occur of (i) a
Non-Defaulting Affiliated Partner Group's withdrawal of its election to
purchase or (ii) the expiration of 10 days from receipt of the notice provided
for in the foregoing sentence, no election to purchase is in effect with
respect to all of the Units of the Defaulting Partners, then each
Non-Defaulting Partner Affiliated Partner Group shall have an additional 30
days from such time to elect an alternative remedy under Section 11.2(b) below;
and
(b) At any time prior to the expiration of 60 days from the
Default Date (or if any Non-Defaulting Affiliated Partner Group initially
elected to pursue its remedy under Section 11.2(a) above and no elections to
purchase all Units of the Defaulting Partners are made and not withdrawn, at
any time within the 30 days following the last applicable waiting period under
Section 11.2(a)), any Non-Defaulting Affiliated Partner Group may elect to
effect a liquidation of the Partnership under Section 11.4 and thereby cause
the Partnership to dissolve under Section 12.1(iv).
11.3 Purchase of Defaulting Partners' Units.
(a) Upon any election pursuant to Section 11.2(a), the purchase
price that such Non-Defaulting Partners shall pay, in the aggregate, to the
Defaulting Partners for their Units shall be an amount equal to (i) the amount
that the Defaulting Partners would receive in a liquidation (assuming that any
sale under Section 12.2 were for an amount equal to the Fair Market Value,
without giving effect to any Damages) reduced by (ii) the unrecovered Damages
attributable to the Default by the Defaulting Partners.
(b) If the Non-Defaulting Partners have a right to purchase the
Units of the Defaulting Partners, any Non-Defaulting Partner may first seek a
determination of Fair Market Value by delivering notice in writing to the
Defaulting Partners. Each such Non-Defaulting Affiliated Partner Group shall
have 10 days from the final determination of Fair Market Value (or if
purchasing pursuant to the withdrawal of election to purchase, 10 days from
receipt of notice as provided in
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Section 11.2(b)) to elect to purchase its share of the Defaulting Partner Units
by delivering notice of such election in writing, and the purchase shall be
consummated prior to the expiration of 60 days from the date such notice is
delivered; provided that, such time period shall be subject to extension as
reasonably necessary (up to a maximum of an additional 120 days after such 60
day period) in order to comply with any applicable filing and waiting period
requirements under the Hart-Scott-Rodino Antitrust Improvements Act.
(c) The purchase price so determined shall be payable in cash at a
closing held at the Partnership's offices. The purchase shall be consummated
by appropriate and customary documentation (including the giving of
representations and warranties substantially similar to those set forth in
Sections 2.1 through 2.4 of the Second Master Transaction Agreement) as soon as
practicable and in any event within the applicable time period specified in
subsection (b).
(d) The Non-Defaulting Partners may assign, in whole or in part,
their right to purchase the Units of the Defaulting Partners to one or more
third parties without the consent of any Partner hereunder.
(e) If Units are transferred in accordance with this Section 11.3,
whether to the Non-Defaulting Partners or a third party (under subsection (d)
above), upon the consummation of such Transfer, each such transferee shall
immediately, and without any further action on the part of any Person, become
(i) a Substitute Limited Partner if and to the extent that Limited Partner
Units were transferred to such Person and (ii) a Substitute General Partner if
and to the extent that General Partner Units were transferred to such Person.
11.4 Liquidation. Upon any election pursuant to Section 11.2(b),
any Non-Defaulting Partner shall have the right to elect to dissolve and
liquidate the Partnership pursuant to the procedures in Section 12.1(iv) (such
procedures constituting a "Liquidation"); provided, however, that any amount
payable to the Defaulting Partners in such Liquidation pursuant to Section 12.2
shall be reduced by, without duplication, any unrecovered Damages incurred by
the Non-Defaulting Partners and the Non-Defaulting Partners' Percentage
Interest of any unrecovered Damages incurred by the Partnership in connection
with the Default. The Non-Defaulting Partner shall deliver notice of such
election to dissolve and liquidate in writing to the Partnership and the other
Partners.
11.5 Certain Consequences of Default. Notwithstanding any other
provision of this Agreement, commencing on the Default Date and (i) prior to
the Non-Defaulting Partners' collection of Damages through the exercise of its
legal remedies or otherwise, or (ii) while the Non-Defaulting Partners are
pursuing their remedies under Section 11.2(a) or (b), the Representatives of
the Defaulting General Partner shall not have any voting or decisional rights
with respect to matters requiring Partnership Governance Committee Action, and
such matters shall be determined solely by the Representatives of the
Non-Defaulting General Partners; provided, however, that the foregoing loss of
voting and decisional rights shall not occur as a result of a Default caused
solely by the Bankruptcy of a Partner or a Guarantor described in Section
11.1(a)(iii); and provided further, that in the case of a Default under Section
11.1(a)(i) or (ii), the foregoing loss of voting and decisional rights shall
not apply to those voting and decisional rights contained in Sections 6.7(i),
(x), (xvi) or (xviii) of this Agreement, which rights shall continue in full
force and effect at all times.
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SECTION 12
DISSOLUTION, LIQUIDATION AND TERMINATION
12.1 Dissolution and Termination. As long as there is at least one
other General Partner (who is hereby authorized in such event to conduct the
business of the Partnership without dissolution), the withdrawal, retirement,
resignation, dissolution or Bankruptcy of a General Partner shall not dissolve
the Partnership, but rather shall be a Default covered by Section 11. The
Partnership shall be dissolved upon the happening of any one of the following
events:
(i) the written determination of all General Partners to
dissolve the Partnership;
(ii) the entry of a judicial decree of dissolution;
(iii) any other act or event which results in the
dissolution of a limited partnership under the Act (except as provided
in the first sentence of this Section 12.1);
(iv) the election of a Non-Defaulting Affiliated Partner
Group to effect a dissolution of the Partnership under Section 11.4;
or
(v) after the delivery of a Deadlock Notice by a General
Partner pursuant to Section 8.5, the written determination by any
General Partner to dissolve the Partnership.
12.2 Procedures Upon Dissolution.
(a) General. If the Partnership dissolves, it shall commence
winding up pursuant to the appropriate provisions of the Act and the procedures
set forth in this Section 12. Notwithstanding the dissolution of the
Partnership, prior to the termination of the Partnership, the business of the
Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement.
(b) Control of Winding Up. The winding up of the Partnership
shall be conducted under the direction of the Partnership Governance Committee;
provided, however, that if the dissolution is caused by entry of a decree of
judicial dissolution, the winding up shall be carried out in accordance with
such decree.
(c) Manner of Winding Up. Unless the provisions of Section
12.2(e) apply, the Partnership shall attempt to sell all property and apply the
proceeds therefrom in accordance with this Section 12.2(c) and Section 12.2(d)
below. Upon dissolution of the Partnership, the Partnership Governance
Committee shall determine the time, manner and terms of any sale or sales of
Partnership property pursuant to such winding up, consistent with its duties
and having due regard to the activity and condition of the relevant market and
general financial and economic conditions. Except as otherwise agreed by the
Partners, no distributions will be made in kind to any Partner without the
consent of each Partner.
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(d) Application of Assets. In the case of a dissolution and
winding-up of the Partnership, the Partnership's assets shall be applied as
follows:
(i) First, to satisfaction of the liabilities of the
Partnership owing to creditors (including Partners and Affiliates of
Partners who are creditors), whether by payment or reasonable
provision for payment. Any reserves created to make any such
provision for payment may be paid over by the Partnership to an
independent escrow holder or trustee, to be held in escrow or trust
for the purpose of paying any such contingent, conditional or
unmatured liabilities or obligations, and, at the expiration of such
period as the Partnership Governance Committee may deem advisable,
such reserves shall be distributed to the Partners or their assigns in
the manner set forth in subsection (d)(ii) below.
(ii) Second, after all allocations of Profits or Losses
and other items pursuant to Section 4, to the Partners in accordance
with the balances in their Capital Accounts. Any Partner that then
has a deficit in its Capital Account shall contribute cash in the
amount necessary to eliminate such deficit. Such contributions shall
be made within 90 days after the date in which all undistributed
assets of the Partnership have been converted to cash.
(iii) Notwithstanding the foregoing, if any Partner shall
be indebted to the Partnership, then until payment in full of the
principal of and accrued but unpaid interest on such indebtedness,
regardless of the stated maturity or maturities thereof, the
Partnership shall retain such Partner's distributive share of
Partnership property and apply such sums to the liquidation of such
indebtedness and the cost of operation of such Partnership property
during the period of such liquidation.
(e) Division of Assets upon Deadlock. If dissolution occurs
pursuant to Section 12.1(v), then the provisions of this Section 12.2(e) shall,
if elected by any Partner, apply in lieu of the provisions of Section 12.2(c),
but subject to the provisions of Section 12.2(d)(ii). In such event, the
Partnership properties shall be divided and distributed in kind to the Partners
in accordance with the provisions of Appendix E.
12.3 Termination of the Partnership. Upon the completion of the
liquidation of the Partnership and the distribution of all Partnership assets,
the Partnership's affairs shall terminate and the Partnership shall cause to be
executed and filed a Certificate of Cancellation of the Partnership's
Certificate of Limited Partnership pursuant to the Act, as well as any and all
other documents required to effectuate the termination of the Partnership.
12.4 Asset and Liability Statement. Within a reasonable time
following the completion of the winding-up and liquidation of the Partnership's
business, the Partnership Governance Committee shall supply to each of the
Partners a statement (which may be unaudited) which shall set forth the assets
and the liabilities of the Partnership as of the date of complete liquidation,
and each Partner's pro rata portion of distributions pursuant to Section 12.2.
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SECTION 13
MISCELLANEOUS
13.1 Confidentiality and Use of Information.
(a) Except as provided in subsection (c) or (d) hereof, each
Partner shall, and shall cause each of its Affiliates and its and their
respective partners, shareholders, directors, officers, employees and agents
(collectively, "Related Persons") to, keep secret, retain in strictest
confidence, and not distribute, disseminate or disclose any and all
Confidential Information except to (i) the Partnership and its officers and
employees, (ii) any lender to the Partnership or (iii) any Partner or any of
their respective Affiliates or other Related Persons on a "need to know" basis
in connection with the transactions leading up to and contemplated by this
Agreement and the operation of the Partnership, and such Partner disclosing
Confidential Information pursuant to this Section 13.1(a) shall use, and shall
cause its Affiliates and other Related Persons to use, such Confidential
Information only for the benefit of the Partnership in conducting the
Partnership's business or for any other specific purposes for which it was
disclosed to such party; provided that the disclosure of financial statements
of, or other information relating to the Partnership shall not be deemed to be
the disclosure of Confidential Information (y) to the extent that any Partner
(or its ultimate parent entity) deems it necessary, appropriate or customary
pursuant to law, regulation or stock exchange rule (in the reasonable good
faith judgment of such parent entity) to disclose such information in or in
connection with filings with the SEC, press releases disseminated to the
financial community, presentations to lenders, presentations to ratings
agencies or information disclosed to similar audiences or (z) to the extent
that in order to sustain a position taken for tax purposes, any Partner deems
it necessary and appropriate to disclose such financial statements or other
information. All Confidential Information disclosed in connection with the
Partnership or pursuant to this Agreement shall remain the property of the
Person whose property it was prior to such disclosure unless such property has
been transferred to the Partnership pursuant to a Contribution Agreement.
(b) No Confidential Information regarding the plans or
operations of any Partner or any Affiliate thereof received or acquired by or
disclosed to any unaffiliated Partner or Affiliate thereof in the course of the
conduct of Partnership business, or otherwise as a result of the existence of
the Partnership, may be used by such unaffiliated Partner or Affiliate thereof
for any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas unrelated to
the business of the Partnership in which any other Partner and their respective
Affiliates compete.
(c) In the event that any Partner is legally required (by
interrogatories, discovery requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, it is agreed that such Partner prior to disclosure will provide
the Partnership Governance Committee (and, if such Confidential Information
concerns another Partner, such Partner) with prompt notice of such request(s)
so that the Partnership Governance Committee (or such other Partner) may seek
an appropriate protective order or other appropriate remedy and/or waive the
Partner's compliance with the provisions of this Section. In the event that
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such protective order or other remedy is not obtained, or that the Partnership
Governance Committee (and, if such Confidential Information concerns another
Partner, such Partner) grants a waiver hereunder, the Partner required to
furnish Confidential Information may furnish that portion (and only that
portion) of the Confidential Information which, in the opinion of such
Partner's counsel, such Partner is legally compelled to disclose, and such
Partner will exercise its commercially reasonable best efforts to obtain
reliable assurance that confidential treatment will be accorded any
Confidential Information so furnished.
(d) Any Partner may disclose Confidential Information to
a third party who requires such Confidential Information for the purpose of
evaluating a possible purchase of such Partner's Units in accordance with
Section 10; provided, however, that such third party shall be informed by such
Partner of the confidential nature of the information and the existence of this
Section 13.1 and prior to any disclosure shall execute a written
confidentiality agreement with such Partner substantially identical in scope to
this Section and providing that such confidentiality agreement is also made for
the benefit of the Partnership and each of the other Partners.
(e) The Partners and their Affiliates shall consult with
each other on an ongoing basis with respect to disclosures regarding the
Partnership and its business and affairs permitted under Section 13.1(a)(y).
13.2 Indemnification.
(a) Indemnification by Partnership. The Partnership agrees, to
the fullest extent permitted by applicable law, to indemnify, defend and hold
harmless each Partner, its Affiliates and their respective officers, directors
and employees from, against and in respect of any Liability which such
Indemnified Person may sustain, incur or assume as a result of, or relative to,
a Third Party Claim arising out of or in connection with the business, property
or affairs of the Partnership, except to the extent that it is Finally
Determined that such Third Party Claim arose out of or was related to actions
or omissions of the indemnified Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as
such) constituting a breach of this Agreement or any Related Agreement. The
Partnership shall periodically reimburse or advance to any Person entitled to
indemnity under this subsection (a) its legal and other expenses incurred in
connection with defending any claim with respect to such Liability if such
Person shall agree to reimburse promptly the Partnership for such amounts if it
is finally determined that such Person was not entitled to indemnity hereunder.
Nothing in this Section 13.2(a) is intended to, nor shall it, affect or take
precedence over the indemnity provisions contained in any Related Agreement.
(b) Partner's Right of Contribution. Each Partner hereby agrees,
to the fullest extent permitted by law, to indemnify, defend and hold harmless
the other Partners, their Affiliates and their respective officers, directors
and employees from and against the indemnifying Partner's Percentage Interest
(calculated at the time any such Liability was incurred) of any Liability that
such Indemnified Person may sustain, incur or assume as a result of or relating
to any Third Party Claim arising out of or in connection with the business,
property or affairs of the Partnership; provided, however, that such
indemnified Partner, its Affiliates and their respective officers, directors
and employees shall not be entitled to indemnity under this subsection (b) to
the extent that it is Finally Determined that such
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Third Party Claim arose out of or was related to actions or omissions of the
indemnified Partner, its Affiliates or any of their respective officers,
directors or employees (acting in their capacities as such) constituting a
breach of this Agreement or any Related Agreement; provided, further, that such
indemnified Partner, its Affiliates and their respective officers, directors
and employees shall not be entitled to indemnity under this subsection (b)
unless (x) the indemnified Partner shall first make a written demand for
indemnification from the Partnership in accordance with subsection (a) above
and subsection (c) below and the Partnership shall fail to satisfy such demand
in a manner reasonably satisfactory to the indemnified Partner within 60 days
of such notice or (y) the Partnership is insolvent or otherwise unable to
satisfy its obligations. The indemnifying Partner shall periodically reimburse
any Person entitled to indemnity under this subsection (b) for its legal and
other expenses incurred in connection with defending any claim with respect to
such Liability if such Person shall agree to reimburse promptly the
indemnifying Partner for such amounts if it is Finally Determined that such
Person was not entitled to indemnity hereunder.
(c) Procedures. Promptly after receipt by a Person entitled to
indemnification under subsection (a) or (b) (an "Indemnified Party") of notice
of any pending or threatened claim against it (a "Claim"), such Indemnified
Party shall give prompt written notice (including copies of all papers served
with respect to such claim) to the party to whom the Indemnified Party is
entitled to look for indemnification (the "Indemnifying Party") of the
commencement thereof, which notice shall describe in reasonable detail the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible and the basis of
the Indemnified Party's request for indemnification under this Agreement;
provided that the failure to so notify the Indemnifying Party shall not relieve
the Indemnifying Party of any liability that it may have to any Indemnified
Party except to the extent the Indemnifying Party demonstrates that it is
prejudiced thereby. In case any Claim that is subject to indemnification under
subsection (a) shall be brought against an Indemnified Party and it shall give
notice to the Indemnifying Party of the commencement thereof, the Indemnifying
Party may, and at the request of the Indemnified Party shall, participate in
and control the defense of the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party. The Indemnified Party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless (i) the employment thereof has been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party failed to assume the defense and employ counsel or failed to
diligently prosecute or settle the Third Party Claim or (iii) there shall exist
or develop a conflict that would ethically prohibit counsel to the Indemnifying
Party from representing the Indemnified Party. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, including, without limitation, by making
any counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person, in each case only if and to the extent that
any such counterclaim or cross-complaint arises from the same actions or facts
giving rise to the Third Party Claim. The Indemnifying Party shall be the sole
judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
provided that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the prior written consent of the
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Indemnified Party, which shall not be unreasonably withheld. The Indemnifying
Party (if the Indemnified Party is entitled to indemnification hereunder) shall
reimburse the Indemnified Party for its reasonable out of pocket costs incurred
with respect to such cooperation.
If the Indemnifying Party fails to assume the defense of a
Third Party Claim within a reasonable period after receipt of written notice
pursuant to the first sentence of this subparagraph (c), or if the Indemnifying
Party assumes the defense of the Indemnified Party pursuant to this
subparagraph (c) but fails diligently to prosecute or settle the Third Party
Claim, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (if the Indemnified Party is
entitled to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Party to a final conclusion or settled. The
Indemnified Party shall have full control of such defense and proceedings;
provided that the Indemnified Party shall not settle such Third Party Claim
without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this Section, and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
Notwithstanding the other provisions of this Section 13.2, if
the Indemnifying Party disputes its potential liability to the Indemnified
Party under this Section 13.2 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
13.2 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified Party, the Indemnifying Party shall reimburse the Indemnified Party
in full for all costs of the litigation concerning such dispute.
After it has been determined, by acknowledgment, agreement, or
ruling of court of Legal Requirements, that an Indemnifying Party is liable to
the Indemnified Party under this Section 13.2(c), the Indemnifying Party shall
pay or cause to be paid to the Indemnified Party the amount of the Liability
within ten business days of receipt by the Indemnifying Party of a notice
reasonably itemizing the amount of the Liability but only to the extent
actually paid or suffered by the Indemnified Party.
(d) Survival. The indemnities contained in this Section shall
survive the termination and liquidation of the Partnership.
(e) Subrogation. In the event of any payment by or on behalf of
an Indemnifying Party to an Indemnified Party in connection with any Liability,
the Indemnifying Party (or any guarantor who made such payment) shall be
subrogated to and shall stand in the place of the Indemnified Party as to any
events or circumstances in respect of which the Indemnified Party may have any
right or claim against any third party (not including the Partnership) relating
to such event or indemnification. The Indemnified Party shall cooperate with
the Indemnifying Party (or such guarantor) in any reasonable manner in
prosecuting any subrogated claim.
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(f) Nothing in this Agreement shall be deemed to limit the
Partnership's power to indemnify its officers, employees, agents or any other
person, to the fullest extent permitted by law.
13.3 Third Party Claim Reimbursement.
(a) In the case of a Liability relating to a Third Party Claim and
caused by the Fault of a General Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as
such) against whom reimbursement is being sought, such General Partner hereby
agrees to reimburse the Partnership for such Liability to the extent that:
(i) the Liability relates to a Third Party Claim
that has been finally resolved and that the Partnership has actually paid (an
"Expense");
(ii) the Expense is not covered by insurance
carried by the Partnership (excluding any amounts relating to insured claims to
the extent that they fall within deductibles or self-insured retentions or are
above applicable coverage limits); and
(iii) the Expense is not offset by third party
indemnification or otherwise;
provided, however, that such General Partner shall reimburse the Partnership
for the Expense only to the extent and in proportion to its Fault.
(b) Any claim by the Partnership for reimbursement under
this Section may be initiated upon written notice from a Nonconflicted General
Partner to the General Partner to whom the Partnership is entitled to look for
indemnification, and the General Partners shall have a period of 60 days during
which to reach unanimous agreement as to the terms on which any reimbursement
shall be made. If the General Partners are unable to agree or there are any
disputes over Fault and reimbursement under this Section, such matters shall be
resolved pursuant to the Dispute Procedures.
13.4 Dispute Resolution. Except as otherwise provided for herein,
all controversies or disputes arising under this Agreement shall be resolved
pursuant to the provisions set forth on Appendix D (the "Dispute Procedures").
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION, ETC. TO
THE FULLEST EXTENT PERMITTED BY LAW AND WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE LIMITATION OF LIABILITY, INDEMNIFICATION, RELEASE AND ASSUMPTION
OBLIGATIONS SET FORTH HEREIN, A PARTY SHALL BE ENTITLED TO INDEMNIFICATION OR
RELEASE HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER
THE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION OR RELEASE IS THE RESULT OF
THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY SUCH PARTY. THE
PARTIES AGREE THAT THIS STATEMENT CONSTITUTES A CONSPICUOUS LEGEND.
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13.6 Further Assurances. From time to time, each Partner agrees to
execute and deliver such additional documents, and will provide such additional
information and assistance, as the Partnership may reasonably require to carry
out the terms of this Agreement and to accomplish the Partnership's business.
13.7 Successors and Assigns. Except as may be expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
successors of the Partners, but no Partner may assign or delegate any of its
rights or obligations under this Agreement. Except as expressly provided
herein, any purported assignment or delegation shall be void and ineffective.
13.8 Benefits of Agreement Restricted to the Parties. This
Agreement is made solely for the benefit of the Partnership and the Partners,
and no other Person, including any officer or employee of the Partnership or
any Partner, shall have any right, claim or cause of action under or by virtue
of this Agreement.
13.9 Notices. All notices, requests and other communications that
are required or may be given under this Agreement shall, unless otherwise
provided for elsewhere in this Agreement, be in writing and shall be deemed to
have been duly given if and when (i) transmitted by telecopier facsimile with
proof of confirmation from the transmitting machine or (ii) delivered by
commercial courier or other hand delivery, as follows:
Lyondell Petrochemical Company Millennium Chemicals Inc.
1221 McKinney Street 99 Wood Avenue South
Houston, Texas 77010 Iselin, New Jersey 08830
Attention: Kerry A. Galvin Attention: George H. Hempstead, III
Telecopy Number: (713) 309-4718 Telecopy Number: (908) 603-6857
Occidental Petroleum Corporation Equistar Chemicals, LP
10889 Wilshire Blvd. P.O. Box 2583
Los Angeles, CA 90004 1221 McKinney Street
Attention: President Houston, Texas 77252-2583
Telecopy Number: (310) 443-6333 Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
With a copy to:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Telecopy Number: (310) 443-6333
13.10 [Reserved]
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13.11 Severability. In the event that any provisions of this
Agreement shall be Finally Determined to be unenforceable, such provision
shall, so long as the economic and legal substance of the transactions
contemplated hereby is not affected in any materially adverse manner as to any
Partner, be deemed severed from this Agreement and every other provision of
this Agreement shall remain in full force and effect.
13.12 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or
presumption that any Partner had a greater or lesser hand in drafting this
Agreement; (iii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iv) the word "includes" and its
syntactic variants mean "includes, but is not limited to" and corresponding
syntactic variant expressions; (v) the plural shall be deemed to include the
singular, and vice versa; (vi) each gender shall be deemed to include the other
gender; and (vii) each appendix, exhibit, attachment and schedule to this
Agreement is a part of this Agreement.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
13.14 Waiver of Right to Partition. Except as provided in Section
12.2(e), each Person who now or hereafter is a party hereto or who has any
right herein or hereunder irrevocably waives during the term of the Partnership
any right to maintain any action for partition with respect to Partnership
property.
13.15 Governing Law. The laws of the State of Delaware shall govern
the construction, interpretation and effect of this Agreement without giving
effect to any conflicts of law principles.
13.16 Jurisdiction; Consent to Service of Process; Waiver. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO
THIS AGREEMENT SHALL APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL
CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE
ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE
STATE OF DELAWARE. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF
AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO
SERVICE OF PROCESS IN THE STATE OF
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DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO
CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES HERETO.
13.17 Expenses. Except as otherwise provided herein or in the
Second Master Transaction Agreement, each party hereto shall be responsible for
its own expenses incurred in connection with this Agreement.
13.18 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
13.19 Payment Terms and Interest Calculations.
(a) If the payment due date for any payment hereunder (including
capital contributions and Damages) falls on a Saturday or a bank or federal
holiday, other than a Monday, the payment shall be due on the past preceding
business day. If the payment due date falls on a Sunday or Monday bank or
federal holiday, the payment shall be due on the following business day.
(b) Interest shall accrue on any unpaid and outstanding amount
from the time such amount is due and payable through the date upon which such
amount, together with accrued interest thereon, is paid in full. Interest
shall, subject to the provisions of Section 13.20, accrue at a per annum rate
equal to the lesser of (i) the Agreed Rate plus 2%, compounded quarterly, to
the extent permitted by law or (ii) the Highest Lawful Rate.
(c) A wire transfer or delivery of a check shall not operate to
discharge any payment under this Agreement and shall be accepted subject to
collection.
13.20 Usury Savings Clause. Notwithstanding any other provision of
this Agreement, it is the intention of the parties hereto to conform strictly
to Applicable Usury Laws, in each case to the extent they are applicable to
this Agreement. Accordingly, if any payment made pursuant to this Agreement
results in any Person having paid any interest in excess of the Maximum Amount,
or if any transaction contemplated hereby would otherwise be usurious under any
Applicable Usury Laws, then, in that event, it is agreed as follows: (i) the
provisions of this Section 13.20 shall govern and control; (ii) the aggregate
of all interest under Applicable Usury Laws that is contracted for, charged or
received under this Agreement shall under no circumstances exceed the Maximum
Amount, and any excess shall be promptly refunded to the payor by the recipient
hereof; (iii) no Person shall be obligated to pay the amount of such interest
to the extent that it is in excess of the Maximum Amount; and (iv) the
effective rate of any interest payable under this Agreement shall be ipso facto
reduced to the Highest Lawful Rate, as hereinafter defined, and the provisions
of this Agreement immediately shall be deemed reformed, without the necessity
of the execution of any new document or instrument, so as to comply with all
Applicable Usury Laws. All sums paid, or agreed to be paid, to any person
pursuant to this Agreement for the use, forbearance or detention of any
indebtedness arising hereunder shall, to the fullest extent permitted by the
Applicable Usury Laws, be amortized, pro rated, allocated and spread throughout
the full term of any such indebtedness so that the actual
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rate of interest does not exceed the Highest Lawful Rate in effect at any
particular time during the full term thereof.
13.21 Other Waivers. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON-CONVENIENS.
13.22 Special Joinder by Millennium America. Millennium America is
a party to this Agreement for the sole purpose of evidencing its agreement to
be bound by the provisions set forth in Section 8.6(c) and is not a partner of
the Partnership and shall not have any rights under this Agreement or any other
obligations under this Agreement.
13.23 Amendment. All waivers, modifications, amendments or
alterations of this Agreement shall require the written approval of each of the
General Partners and each of the Limited Partners.
SECTION 14
LAKE CHARLES FACILITY
14.1 Lease Not in Force and Effect. At any such time as the Lease
is terminated, expires or is otherwise not in force and effect (other than a No
Rebuilding Termination), the following shall occur:
(a) The number of Units held by Occidental LP1 shall be reduced
from 6,623 Units to 2,541 Units.
(b) The Partnership and Occidental LP1 shall form a general
partnership (the "LC Partnership") by entering into a partnership agreement
having the provisions described in Section 14.2 (the "GPA").
(c) The Partnership shall distribute to Occidental LP1 the balance
in its Capital Account.
(d) Occidental LP1 shall cause the Lake Charles Facility to be
contributed to the LC Partnership and shall contribute to the LC Partnership
the amount received pursuant to Section 14.1(c), plus an amount equal to any
proceeds of a partial condemnation of the Lake Charles Facility received by OCC
under the terms of the Lease, and the Partnership shall contribute to the LC
Partnership the amount received pursuant to Section 26(b) of the Lease in
connection with such termination of the Lease.
(e) Immediately after and as a result of the foregoing
transactions, the capital account of each of Occidental LP1 and the Partnership
in the LC Partnership shall be pro rata in accordance with the partners' equity
ownership interests, and Occidental LP1's Capital Account shall be the same per
Unit as the Capital Accounts of the other Partners (determined without regard
to the special allocations in Sections 4.1(a) through (c)).
(f) Sections 4.1(e) and (f) shall terminate.
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14.2 LC Partnership Provisions. The GPA shall include provisions
to the following effect, as well as other customary provisions:
(a) The LC Partnership shall be formed under the laws of Delaware.
The two partners shall be the Partnership and Occidental LP1. The Partnership
shall have an equity ownership interest of 49.9%, and Occidental LP1 shall have
an equity ownership interest of 50.1%
(b) The term of the GPA shall be the same as the term of this
Agreement.
(c) All issues relating to the LC Partnership must be decided by
mutual agreement of both partners, except that the LC Partnership shall enter
into an operating agreement with the Partnership (in its individual capacity),
as operator, that shall delegate to the operator the right and obligation to
make all day-to-day decisions of the LC Partnership, which day-to-day decisions
shall for this purpose be deemed to be all decisions of the LC Partnership
other than issues comparable to those issues set forth in Section 6.7 hereof
(which issues must be decided by the partners of the LC Partnership). Such
operating agreement shall provide for the LC Partnership to pay and reimburse
the operator for all costs whatsoever incurred or paid by the operator in
performing its obligations under the operating agreement. The term of such
operating agreement shall be the same as the term of the LC Partnership.
(d) All contributions and distributions will be made, and all book
income and deductions will be allocated, in accordance with the partners'
equity ownership interests. Tax items will be allocated between the partners
in a manner similar to that set forth in this Agreement.
(e) No partner in the LC Partnership may transfer (except a
transfer to a Wholly Owned Affiliate) or encumber its equity ownership without
the consent of the other partner.
14.3 No Rebuilding Termination. Upon a No Rebuilding Termination,
Occidental LP1 shall have the option to contribute to the Partnership within 30
days following the No Rebuilding Termination an amount (the "Payment Amount")
equal to the excess, if any, of (a) the Proceeds plus the book value
(determined in accordance with GAAP) as recorded on the books of OCC for that
portion and aspect of the Lake Charles Facility that constitutes land, over
(b) the payment made pursuant to Section 26(b) of the Lease in connection with
such No Rebuilding Termination. If within such 30-day period Occidental LP1
contributes the Payment Amount to the Partnership, (i) Occidental LP1's 6,623
Units shall remain outstanding, (ii) its Capital Account shall be credited with
the Payment Amount, (iii) the assets of the Partnership shall be revalued so
that the Capital Account of each Partner is the same per Unit (determined
without regard to the special allocations in Sections 4.1(a) through (c)), and
(iv) Sections 4.1(e) and (f) shall terminate. If Occidental LP1 does not
contribute the Payment Amount to the Partnership within such 30-day period, (A)
Occidental LP1's 6,623 Units shall be redeemed and canceled and of no further
force and effect and (B) an amount equal to the balance in Occidental LP1's
Capital Account shall be distributed by the Partnership to Occidental LP1, or
if there is a deficit in Occidental LP1's Capital Account, Occidental LP1 shall
contribute to the Partnership an amount of cash necessary to eliminate such
deficit. Upon completion of the steps in clauses (A) and (B), Occidental LP1's
entire interest in the Partnership shall terminate.
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<PAGE> 58
14.4 Other Redemption. If Occidental LP1 breaches any of its
obligations under Section 14.1, (a) Occidental LP1's 6,623 Units shall be
redeemed and canceled and of no further force and effect and (b) an amount equal
to the balance in Occidental LP1's Capital Account shall be distributed by the
Partnership to Occidental LP1, or if there is a deficit in Occidental LP1's
Capital Account, Occidental LP1 shall contribute to the Partnership an amount of
cash necessary to eliminate such deficit. Upon completion of the steps in
clauses (a) and (b), Occidental LP1's entire interest in the Partnership shall
terminate.
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<PAGE> 59
IN WITNESS WHEREOF, this Agreement has been executed on behalf of each
of the parties hereto, by their respective officers thereunto duly authorized,
effective as of the date first written above.
GENERAL PARTNERS
LYONDELL PETROCHEMICAL G.P. INC.
By: /s/ Dan F. Smith
-----------------------------------------
Name: Dan F. Smith
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc.,
its Manager
By: /s/ George H. Hempstead, III
-------------------------------------
Name George H. Hempstead, III
-------------------------------
Title: Senior Vice President
-----------------------------
PDG CHEMICAL INC.
By: /s/ R.J. Schuh
-----------------------------------------
Name: R.J. Schuh
---------------------------------------
Title: President
--------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
-54-
<PAGE> 60
LIMITED PARTNERS
LYONDELL PETROCHEMICAL L.P. INC.
By: /s/ Dan F. Smith
-----------------------------------------
Name: Dan F. Smith
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc.,
its Manager
By: /s/ George H. Hempstead, III
-------------------------------------
Name George H. Hempstead, III
-------------------------------
Title: Senior Vice President
-----------------------------
OCCIDENTAL PETROCHEM PARTNER 1, INC.
By: /s/ John W. Morgan
-----------------------------------------
Name: John W. Morgan
---------------------------------------
Title: Vice President
--------------------------------------
OCCIDENTAL PETROCHEM PARTNER 2, INC.
By: /s/ John W. Morgan
-----------------------------------------
Name: John W. Morgan
---------------------------------------
Title: Vice President
--------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
-55-
<PAGE> 61
SPECIAL JOINDER PURSUANT TO
SECTION 13.22
MILLENNIUM AMERICA INC.
By: /s/ George H. Hempstead, III
-----------------------------------------
Name: George H. Hempstead, III
---------------------------------------
Title: Senior Vice President
--------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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<PAGE> 62
APPENDIX A
TO LIMITED PARTNERSHIP AGREEMENT
DEFINED TERMS
1998 Credit Facility. See Section 8.6(a).
AAA. See Appendix D.
Acceptance Notice. See Section 10.2(b).
Act. The Delaware Revised Uniform Limited Partnership Act, as amended
and in effect from time to time.
Additional Related Agreements. The agreements defined as "Related
Agreements" in the Second Master Transaction Agreement (other than this
Agreement), as such agreements may be amended from time to time after the date
hereof.
Adjusted Capital Account Deficit. With respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
(i) Such Capital Account shall be deemed to be increased
by any amounts which such Partner is obligated to restore to the
Partnership (pursuant to this Agreement or otherwise) or is deemed to
be obligated to restore pursuant to the second to last sentence of
Regulation Section 1.704-2(g)(1) and Section 1.704-2(i)(5) (relating
to allocations attributable to nonrecourse debt).
(ii) Such Capital Account shall be deemed to be decreased
by the items described in Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
The foregoing definition of Adjusted Capital Deficit is intended to comply with
the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted and applied consistently therewith.
Additional Notice. See Section 10.2(b).
Affiliate. As to any specified Person, any other Person that directly
or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with the specified Person; provided, however, that
for purposes of this Agreement such term shall not include (i) the Partnership
or any entities controlled by it, (ii) in the case of Millennium GP and
Millennium LP shall not include Suburban Propane Partners, L.P. and any
entities controlled by it and (iii) in the case of Occidental GP, Occidental
LP1 and Occidental LP2, shall not include Canadian Occidental Petroleum Ltd.
and any entities controlled by it. For purposes of this definition the term
"control" shall have the meaning set forth in 17 CFR 230.405, as in effect on
the date hereof.
Appendix A - 1
<PAGE> 63
Affiliated General Partner. In the case of Lyondell LP, the
"Affiliated General Partner" shall mean Lyondell GP. In the case of Millennium
LP, the "Affiliated General Partner" shall mean Millennium GP. In the case of
each of Occidental LP1 and Occidental LP2, the "Affiliated General Partner"
shall mean Occidental GP.
Affiliated Limited Partner. In the case of Lyondell GP, the
"Affiliated Limited Partner" shall mean Lyondell LP. In the case of Millennium
GP, the "Affiliated Limited Partner" shall mean Millennium LP. In the case of
Occidental GP, each of Occidental LP1 and Occidental LP2 shall be "Affiliated
Limited Partner".
Affiliated Partner Group. A General Partner and its Affiliated
Limited Partner or Affiliated Limited Partners, if more than one.
Agreed Rate. The base commercial lending rate announced by Citibank,
N.A. (or its successor) at its principal office, in effect from time to time,
such interest rate to change automatically, effective as of the date of each
change in such base rate.
Agreement. This Amended and Restated Limited Partnership Agreement of
Equistar Chemicals, LP, as amended from time to time.
Alternate. See Section 6.4(b).
Amended and Restated Indemnity Agreement. The Amended and Restated
Indemnity Agreement dated as of the date of this Agreement among Lyondell GP,
Lyondell LP, Millennium GP, Millennium LP, Millennium America, Occidental GP,
Occidental LP1, Occidental LP2 and OCC.
Amended and Restated Parent Agreement. The Amended and Restated
Parent Agreement dated as of the date of this Agreement between the
Partnership, Lyondell, Millennium, Occidental, Occidental Chemical Corporation
and Oxy CH Corporation.
Annual Budget. See Section 8.2.
Applicable Usury Laws. Laws regarding the use, forbearance or
detention of any indebtedness arising under this Agreement whether such laws
are now or hereafter in effect, including the laws of the United States of
America or any other jurisdiction whose laws are applicable, and including any
subsequent revisions to or judicial interpretations of those laws.
Arbitrator. See Appendix D.
Asset Fair Market Value. With respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such as in an arm's-length negotiated transaction with
an unaffiliated third party without time constraints.
Assumed Liabilities. In the case of Lyondell LP and Lyondell GP,
Assumed Liabilities means the "Assumed Liabilities" as defined in the
Contribution Agreement of Lyondell. In the case of
Appendix A - 2
<PAGE> 64
Millennium LP and Millennium GP, Assumed Liabilities shall mean the "Assumed
Liabilities" as defined in the Contribution Agreement of Millennium
Petrochemicals. In the case of Occidental LP1, Occidental LP2 and Occidental
GP, Assumed Liabilities means the "Assumed Liabilities" as defined in the
Contribution Agreement of Occidental.
Auxiliary Committee. See Section 6.9.
Available Net Operating Cash. At the time of determination, (a) all
cash and cash equivalents on hand in the Partnership as of the most recent
month end, plus the excess, if any, of the Partnership Target Debt over the
Partnership's actual indebtedness (as determined in accordance with GAAP) as of
such month end, less (b) the Projected Cash Requirements, if any, of the
Partnership as of such month end, as determined by the Executive Officers of
the Partnership. For purposes of this definition, "Projected Cash
Requirements" means, for the 12-month period following any such month end, the
excess, if any, of the sum of (a) forecast capital expenditures, plus (b)
forecast cash payments for Taxes, debt service including principal and interest
requirements and other non-cash credits to income, plus (c) forecast cash
reserves for future operations or other requirements, over the sum of (1)
forecast net income of the Partnership, plus (2) the sum of forecast
depreciation, amortization, other non-cash charges to income, interest
expenses, and Tax expenses, in each case to the extent deducted in determining
net income, plus or minus (3) forecast decreases or increases, respectively, in
working capital, plus (4) the forecast cash proceeds of dispositions of assets
(net of expenses) plus (5) an amount equal to the forecast net proceeds of debt
financings, contributions and payments of the Lyondell Note. For purposes of
this definition, "Partnership Target Debt" means for such month end, the level
of indebtedness (as determined in accordance with GAAP) projected for the
Partnership in the most recently approved Strategic Plan, except to the extent
the Executive Officers of the Partnership determine that changes in the
financial condition, results of operations, assets, business or prospects of
the Partnership make a change advisable, in which case the Partnership shall
advise the General Partners promptly regarding the basis for the change.
Projected Cash Requirements shall be calculated consistent with the most
recently approved Strategic Plan, except to the extent the Executive Officers
of the Partnership determine that changes in the financial condition, results
of operations, assets, business or prospects of the Partnership make a change
advisable, in which case the Partnership shall advise the General Partners
promptly regarding the basis for the change.
Bank Credit Agreement. The Credit Agreement dated as of November 25,
1997 among the Partnership, as Borrower, Millennium America, as Guarantor and
the lenders party thereto.
Bank Credit Agreement Repayment Amount. An amount equal to (i)
$419,700,000 less (ii) the Bank Credit Agreement Available Amount, but in no
event shall the Bank Credit Agreement Repayment Amount be less than zero. The
"Bank Credit Agreement Available Amount" shall equal (i) $1.25 billion less
(ii) the total principal amount outstanding under the Bank Credit Agreement at
the date of calculation.
Bankruptcy. The occurrence of any of the following: (i) a Partner or
its Guarantor shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer or
consent seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future applicable federal, state or other statute or law relating to
bankruptcy, insolvency, or other relief for debtors, or shall seek or
Appendix A - 3
<PAGE> 65
consent to or acquiesce in the appointment of any trustee, receiver,
conservator or liquidator of such Partner or its Guarantor or of all or any
substantial part of its properties or its Units (the term "acquiesce," as used
in this definition, includes the failure to file a petition or motion to vacate
or discharge any order, judgment or decree within ten Business Days after entry
of such order, judgment or decree); (ii) a court of competent jurisdiction
shall enter an order, judgment or decree approving a petition filed against any
Partner or its Guarantor seeking a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the present or
any future federal bankruptcy act, or any other present or future applicable
federal, state or other statute or law relating to bankruptcy, insolvency, or
other relief for debtors, and such Partner or its Guarantor shall acquiesce in
the entry of such order, judgment or decree or such other order, judgment or
decree shall remain unvacated and unstayed for an aggregate of 60 days (whether
or not consecutive) from the date of entry thereof, or any trustee, receiver,
conservator or liquidator of such Partner or its Guarantor or of all or any
substantial part of its property or its Units shall be appointed without the
consent or acquiescence of such Partner or its Guarantor and such appointment
shall remain unvacated and unstayed for an aggregate of 60 days (whether or not
consecutive); (iii) a Partner or its Guarantor shall admit in writing its
inability to pay its debts as they mature; (iv) a Partner or its Guarantor
shall give notice to any governmental body of insolvency or pending insolvency,
or suspension or pending suspension of operations; or (v) a Partner or its
Guarantor shall make an assignment for the benefit of creditors or take any
other similar action for the protection or benefit of creditors.
Book Value. With respect to any asset of the Partnership, the asset's
adjusted basis as of the relevant date for federal income tax purposes, except
as follows:
(i) The initial aggregate Book Value of all of the assets
of the Partnership as of the Initial Closing Date shall be equal to
the sum of (A) the beginning aggregate Capital Accounts of the
Partners immediately after the Initial Closing Date, and (B) the
aggregate amount of all liabilities of the Partnership for federal
income tax purposes immediately after the Initial Closing Date.
(ii) The initial Book Value of any asset contributed by a
Partner to the Partnership after the Initial Closing Date shall be the
gross fair market value of such asset, which shall be equal to the
amount credited to such Partner's Capital Account for such
contribution (increased by the amount of any liabilities which the
Partnership assumes or takes subject to).
(iii) The Book Values of all Partnership assets (including
intangible assets such as goodwill) shall be adjusted (at the election
of the Partnership Governance Committee) to equal their respective
gross fair market values upon the occurrence of any of the events
described in Regulation Section 1.704-1(b)(2)(iv)(f)(5).
(iv) The Book Value of any asset distributed by the
Partnership to a Partner shall be equal to the gross fair market value
of such asset on the date of the distribution.
(v) The Book Value of any Partnership asset with respect
to which an adjustment to tax basis has occurred by reason of the
application of Section 734(b) or 754(b) of the Code
Appendix A - 4
<PAGE> 66
shall be adjusted to the extent such adjustment to tax basis is taken
into account pursuant to Regulation Section 1.704-1(b)(2)(iv)(m).
(vi) If the Book Value of an asset is not equal to its
adjusted tax basis for federal income tax purposes, such Book Value
shall be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses and other
items allocated pursuant to Section 4.1.
The foregoing definition of Book Value is intended to comply with the
provisions of Regulation Section 1.704-1(b)(2)(iv) and shall be interpreted and
applied consistently therewith. Any determinations of "gross fair market
value" in this definition of Book Value shall be made by the Partnership
Governance Committee.
Business Day. Any day other than a Saturday, Sunday or other day on
which banks are closed in New York City, New York; provided, however, that for
purposes of the definitions of "Interest Period" and "LIBOR Rate," "Business
Day" shall mean a day of the year on which banks are not required or authorized
to close in Houston, Texas and on which commercial banks are open for
international business (including dealings for dollar deposits) in the London
interbank market.
Business Opportunity. See Section 9.3(c).
Capital Account. The separate capital account established and
maintained by the Partnership for each Partner, as contemplated by Section 2.
Capital Expenditure Budget. See Section 8.2(d).
CEO. See Section 7.1(b).
Claim. See Section 13.2(c).
Code. The Internal Revenue Code of 1986, as amended and in effect
from time to time and any successor thereto.
Competing Opportunity. See Section 9.3(c).
Confidential Information. All confidential documents and information
(including, without limitation, confidential commercial information and
information with respect to customers, trade secrets and proprietary
technologies or processes and the design and development of new products or
services) concerning the Partnership, the Partners or their Affiliates,
furnished to a Partner in connection with the transactions leading up to and
contemplated by this Agreement and the operation of the Partnership, except to
the extent that such information (i) is or becomes generally available to and
known by the public or the petrochemical industry (other than as a result of an
unpermitted disclosure directly or indirectly by the Partnership or a Partner),
(ii) is or becomes available to a Partner on a nonconfidential basis from a
source other than the Partnership or a Partner; provided, however, that such
source is not and was not bound by a confidentiality agreement with, or other
obligation of secrecy to, the Partnership or the other Partner, (iii) has
already been or is hereafter
Appendix A - 5
<PAGE> 67
independently acquired or developed by a Partner without violating any
confidentiality agreement with or other obligation of secrecy to the
Partnership or another Partner or (iv) is otherwise generated by the
Partnership with the intention that it not be held as confidential.
Conflict Circumstance. Any transaction or dealing between the
Partnership (or any Wholly Owned Subsidiary) and a General Partner (the
"Conflicted General Partner") or any of its Affiliates pursuant to any
agreement (including this Agreement or any other Related Agreements) or
otherwise, including action to be taken by the Partnership pursuant to Section
9.3(c) or (d) or 13.3(b); provided, however, that a Conflict Circumstance shall
cease to exist if and when the third party with which the transaction or
dealing exists shall cease to be an Affiliate of a General Partner.
Conflicted General Partner. As defined in the definition of "Conflict
Circumstance."
Contributed Business. As defined in each of the Contribution
Agreements.
Contribution Agreement. In the case of Lyondell LP and Lyondell GP,
the Contribution Agreement shall mean the Asset Contribution Agreement dated
December 1, 1997, between the Partnership, Lyondell and Lyondell LP. In the
case of Millennium LP and Millennium GP, the Contribution Agreement shall mean
the Asset Contribution Agreement dated December 1, 1997, between the
Partnership, Millennium Petrochemicals and Millennium LP. In the case of
Occidental LP1, Occidental LP2 and Occidental GP, the Contribution Agreement
shall mean the Agreement and Plan of Merger and Asset Contribution dated as of
the date of this Agreement between the Partnership, Oxy Petrochemicals,
Occidental LP1, Occidental LP2 and Occidental GP.
Damages. With respect to a Person in connection with a Default, any
and all obligations (including all obligations to take an affirmative or
curative act), liabilities, damages (including damages arising out of any
breach of any representation or warranty, damages related to investigations,
proceedings, audits, the interruption of the Partnership's business,
restrictions upon the use of, or adverse impact on, the Assets or the
Partnership's business, or the interruption, breach or termination of any
Related Agreements or other agreements, including any lost profits attributable
thereto), fines, penalties, deficiencies, losses, judgments, settlements, costs
and expenses (including costs and expenses incurred in connection with
performing obligations, bonding and appellate costs and attorneys',
accountants', engineers', health, safety, environmental and other consultants'
and investigators' fees and disbursements, liquidating, selling or offering for
sale the Partnership's business and assets or winding up the Partnership's
business, or other payments in respect of such payments) suffered or incurred
by such Person that arise out of or relate to such Default, regardless of
whether any of the foregoing are foreseeable, unforeseeable, matured or
unmatured, existing or contingent as of the date of such Default. "Damages"
also shall include, if and to the extent interest is not already included
therein under applicable law or other provisions hereof and subject to Section
13.20, interest on amounts actually due until payment thereof is made at a rate
per annum equal to the rate set forth in Section 13.19(b). "Damages" shall not
include any punitive, exemplary, special or other similar damages.
Deadlock Notice. See Section 8.5.
Default. See Section 11.1.
Appendix A - 6
<PAGE> 68
Default Date. See Section 11.1.
Defaulting Partners. Lyondell GP and Lyondell LP, in the case of a
Default by Lyondell GP, Lyondell LP or their Guarantor; Millennium GP and
Millennium LP, in the case of a Default by Millennium GP, Millennium LP or
their Guarantor; and Occidental GP, Occidental LP1 and Occidental LP2, in the
case of a Default by Occidental GP, Occidental LP1, Occidental LP2 or their
Guarantor.
Depreciation. For each fiscal year or part thereof, an amount equal
to the depreciation, amortization, or other cost recovery deduction allowable
for federal income tax purposes with respect to an asset for such year or other
period, except that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year,
Depreciation shall be (i) an amount which bears the same ratio to such Book
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such adjusted tax basis, or, (ii) if
the federal income tax depreciation, amortization or other cost recovery
deduction for such year is equal to zero, an amount determined with reference
to such Book Value using a reasonable method selected by the Tax Matters
Partner.
Dispute Notice. See Appendix D.
Disputing Partner. See Appendix D.
Executive Officers. See Section 7.1(b).
Expense. See Section 13.3(a).
Fair Market Value. "Fair Market Value" with respect to the
Partnership shall mean the Asset Fair Market Value of all of the Partnership's
assets decreased by the fair value of all its liabilities, as of the most
recently ended fiscal quarter. "Fair Market Value" with respect to a Related
Business shall mean the Asset Fair Market Value of all the assets of such
Related Business decreased by the fair value of all its liabilities, as of the
most recently ended fiscal quarter. In either case, the following shall apply
to the determination of Fair Market Value:
(i) The General Partners shall first attempt to agree on
such value, which if agreed to shall be the Fair Market Value.
(ii) If the General Partners are unable to agree within 20
days of the first written notice from one General Partner to the
others proposing an amount to be the Fair Market Value (the "Notice"),
then if requested by any General Partner, each General Partner shall
(at its own cost) cause an independent, qualified appraiser to deliver
a written appraisal of its determination of the Fair Market Value
within 50 days of the Notice. If both of the two lowest appraised
values are greater than or equal to 90% of the highest appraised
value, then the middle of the three appraised values shall be the Fair
Market Value.
(iii) If either of the two lowest appraised values are
lower than 90% of the highest appraised value, then the General
Partners shall jointly appoint a Neutral within 20 days of
Appendix A - 7
<PAGE> 69
the delivery of both such appraisals. If the General Partners have
been unable to agree upon such appointment within such 20 days, then
such Neutral shall upon the application of any General Partner be
appointed within 10 days of the filing of such application by the
Center for Public Resources, or if such appointment is not so made
promptly then promptly thereafter by the American Arbitration
Association in Philadelphia, Pennsylvania, or if such appointment is
not so made promptly then promptly thereafter by the senior United
States District Court judge sitting in Wilmington, Delaware. The fees
and expenses of the Neutral shall be paid equally by the Partners.
(iv) The Neutral shall, within 30 days of the appointment
of the Neutral, determine which of the three appraised values (without
in any way modifying or compromising between the three appraised
values) is closest to the fair market value of the enterprise's assets
as determined by the Neutral, and that appraised value shall be the
Fair Market Value.
Fault. Any act or omission of a Partner, its Affiliates or any of
their respective officers, directors or employees (acting in their capacities
as such) that constitutes or results from intentional misconduct, criminal
intent or gross negligence.
Finally Determined. Determined by any final, nonappealable judicial
order or pursuant to a binding alternative dispute resolution procedure.
Funding Notice. See Section 2.4.
GAAP. United States generally accepted accounting principles, as in
effect from time to time.
General Partners. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a general partner of the Partnership,
unless such General Partner ceases to be a General Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Units and is replaced by a
Substitute General Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute General Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a general partner
of the Partnership.
GPA. See Section 14.1(b).
Guarantor. Lyondell Petrochemical Company, with respect to Lyondell
GP and Lyondell LP; Millennium Chemicals Inc., with respect to Millennium GP
and Millennium LP; Occidental Chemical Corporation and Oxy CH Corporation, with
respect to Occidental GP, Occidental LP1 and Occidental LP2; and any successor
or additional guarantor party to an agreement substantially in the form of the
Amended and Restated Parent Agreement and entered into in accordance with
Section 10.
Highest Lawful Rate. The maximum rate of interest, if any, that may
be charged to any person under all Applicable Usury Laws on any principal
balance from time to time outstanding pursuant to this Agreement.
HSE Law. "HSE Law," as defined in Section 1 of the Contribution
Agreement.
Appendix A - 8
<PAGE> 70
Indemnified Party. See Section 13.2(c).
Indemnifying Party. See Section 13.2(c).
Interest Period. The period commencing on the date of this Agreement
and ending one month thereafter and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending one month thereafter; provided, however, that whenever the last day of
any Interest Period would otherwise occur on a day other than a Business Day,
the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day.
Initial Agreement. See first WHEREAS clause.
Initial Assets. "Assets," as defined in Section 1 of the applicable
Contribution Agreement.
Initial Closing Date. December 1, 1997, the date the closing under
the Initial Master Transaction Agreement took place.
Initial Master Transaction Agreement. The Master Transaction
Agreement, dated July 25, 1997, as amended, between Lyondell and Millennium,
providing for the execution of various agreements concerning the Partnership
and the Initial Assets.
Initial Notice. See Section 10.2(a).
Initial Partners. See first WHEREAS clause.
Initial Related Agreements. The agreements defined as "Related
Agreements" in the Initial Master Transaction Agreement (other than the
Partnership Agreement), as such agreements may be amended from time to time
after the Initial Closing Date.
IRS. Internal Revenue Service.
Lake Charles Facility. The property that is the subject of and leased
pursuant to the Lease.
LC Partnership. See Section 14.1(b).
Lease. The Lease Agreement, dated May 15, 1998, between OCC, as
lessor, and Occidental LP1, as lessee.
Liability. Any loss, claim, damages, fine, penalty, assessment by
public agencies, settlement, cost or expense (including costs of investigation,
defense and attorneys' fees) or other liability.
LIBOR Rate. For any Interest Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) published in the Wall
Street Journal as the London Interbank Offered Rate for a one month period as
of two Business Days prior to the first day of such Interest Period; provided
if no such rate appears the rate shall be as shown on page 3750 of the Dow
Jones & Company Telerate screen or any successor page as the composite offered
rate for London interbank
Appendix A - 9
<PAGE> 71
deposits with a period equal to one month, as shown under the heading "USD" as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period; provided that if no such rate appears, the rate shall be the
rate per annum equal to the arithmetic mean (which shall be rounded upward to
the nearest 1/16 of 1% per annum) of which U.S. dollar deposits with an
Interest Period equal to one month are displayed on page "LIBO" of the Reuters
Monitor Money Rates Service or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period.
Limited Partner. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a limited partner of the Partnership,
unless such Limited Partner ceases to be a Limited Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Units and is replaced by a
Substitute Limited Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute Limited Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a limited partner
of the Partnership.
Limited Partners Pro Rata. From or to the Limited Partners in the
ratio of the Units owned by each.
Liquidation. See Section 11.4.
Losses. See definition of "Profits and Losses."
Lyondell. See first WHEREAS clause.
Lyondell Assumed Debt. Debt issued by Lyondell having an aggregate
principal amount of $745 million, as specified in the Contribution Agreement
with respect to Lyondell.
Lyondell GP. See introductory paragraph to this Agreement.
Lyondell LP. See introductory paragraph to this Agreement.
Lyondell Note. The promissory note dated December 1, 1997, in the
amount of $345 million payable by Lyondell LP to the Partnership.
Maximum Amount. The maximum nonusurious amount of interest that may
be lawfully contracted for, charged or received by any person in connection
with any indebtedness arising under this Agreement under all Applicable Usury
Laws.
Millennium. See first WHEREAS clause.
Millennium America. Millennium America Inc., a Delaware corporation.
Millennium America Guarantee. See Section 8.6(c).
Appendix A - 10
<PAGE> 72
Millennium America Guaranteed Debt. The portion, if any, of the debt
outstanding under the Bank Credit Agreement and the portion, if any, of any
debt that refinances the debt outstanding under the Bank Credit Agreement or
any subsequent refinancing thereof (in any case, not to exceed a guarantee of
$750 million principal amount), in each case to the extent such debt is
guaranteed by Millennium America, or an Affiliate thereof, as contemplated by
Section 8.6(c).
Millennium GP. See introductory paragraph to this Agreement.
Millennium LP. See introductory paragraph to this Agreement.
Neutral. A neutral Person acceptable to all of the appointing
Partners and not affiliated with any of the Partners, except where otherwise
specifically provided.
No Rebuilding Termination. A total termination of the Lease pursuant
to Section 12(b) or 13 thereof.
Nonconflicted General Partner. With respect to any Conflict
Circumstance, any General Partner that is not the Conflicted General Partner
with respect thereto.
Non-Defaulting Partners. The Partners other than the Defaulting
Partners.
OCC. Occidental Chemical Corporation, a New York corporation.
Occidental. See third WHEREAS clause.
Occidental GP. See introductory paragraph to this Agreement.
Occidental LP1. See introductory paragraph to this Agreement.
Occidental LP2. See introductory paragraph to this Agreement.
Occidental Partners. See third WHEREAS clause.
Offeree Partners. See Section 10.2(a).
Operating Budget. See Section 8.2(c).
Oxy Guaranteed Debt. The $419,700,000 drawdown under the Bank Credit
Agreement pursuant to Section 8.6(a) and the portion, if any, of any debt that
refinances the $419,700,000 drawdown under the Bank Credit Agreement or any
subsequent refinancing thereof (in any case, not to exceed a guarantee of
$419,700,000 principal amount), in each case to the extent such debt is
guaranteed by Occidental Chemical Corporation, a New York corporation, or an
Affiliate thereof and the proceeds thereof have been distributed to Occidental
LP2 pursuant to Section 3.1(g) and, until such amount has been so drawn and
distributed, "Oxy Guaranteed Debt" shall mean the Oxy Note to the extent the
obligations thereunder are indemnified by OCC pursuant to the Amended and
Restated Indemnity Agreement.
Appendix A - 11
<PAGE> 73
Oxy Note. The Promissory Note dated May 15, 1998 in the principal
amount of $419,700,000 payable by the Partnership to Occidental LP2.
Oxy Petrochemicals. Oxy Petrochemicals Inc., a Delaware corporation.
Partners. The General Partners and the Limited Partners on the date
of this Agreement until such Person ceases to be a partner of the Partnership.
Partners Pro Rata. From or to all Partners in the ratio of the Units
owned by each.
Partnership. Equistar Chemicals, LP, a Delaware limited partnership,
the limited partnership formed and continued under the Act and this Agreement.
Partnership Governance Committee. See Section 6.1.
Partnership Governance Committee Action. See Section 6.1.
Payment Amount. See Section 14.3.
Proceeds. The Insurance Proceeds, the Self-Insurance Proceeds and the
Condemnation Proceeds (each as defined in the Lease), to the extent actually
received by the lessor under the Lease pursuant to the Lease.
Profits and Losses. For each applicable period, the Partnership's
taxable income or loss for such period determined in accordance with Section
703(a) of the Code (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss) with the following
adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken in account in computing
Profits or Losses pursuant to this definition shall be added to such
taxable income or loss.
(ii) Any expenditures of the Partnership described in
Section 705(a)(2)(B) of the Code or treated as such pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken in
account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss.
(iii) Depreciation for such period shall be taken into
account in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss.
(iv) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed with reference to
the Book Value of the property disposed of, rather than the adjusted
tax basis of such property.
Appendix A - 12
<PAGE> 74
(v) If any property is distributed in kind to any
Partner, the difference between its fair market value and its Book
Value at the time of distribution shall be treated as Profit or Loss,
as the case may be, recognized by the Partnership.
(vi) The amount of any adjustment to the Book Value of any
Partnership asset pursuant to clause (iii) of the definition of Book
Value herein shall be taken into account as Profit or Loss from the
disposition of such asset.
Percentage Interest. The percentage determined by dividing the number
of Units owned by a Partner by the total number of outstanding Units.
Person. Any natural person or any corporation, limited liability
company, partnership, joint venture, association, trust or other entity.
Pledge. To mortgage, pledge, encumber or create or suffer to exist
any pledge, lien or encumbrance upon or security interest in. Such defined
term is used in this Agreement as both a noun and a verb.
Pro Rata. In the ratio of the Units owned by a Partner to the total
number of applicable Units.
Proposing Partner. See Section 9.3(c).
Reconstituted Basis. As to each Partnership property, the
Partnership's basis in such property immediately after it is contributed to the
Partnership reduced by any depreciation and other deductions allocated to a
Partner pursuant to Section 4.4(b)(i)(a).
Regulations. The income tax regulations promulgated by Department of
the Treasury and in effect from time to time.
Related Agreements. The Initial Related Agreements and the Occidental
Related Agreements.
Related Business. Any business related to (i) the manufacturing,
marketing and distribution of Specified Petrochemicals; (ii) the purchasing,
processing and disposing of feedstocks in connection with the manufacturing,
marketing and distributing of Specified Petrochemicals; and (iii) any research
and development in connection with the foregoing.
Related Persons. See Section 13.1.
Representative. See Section 6.4(a).
SEC. Securities and Exchange Commission.
Second Master Transaction Agreement. See third WHEREAS clause.
Selling Partners. See Section 10.2(a).
Appendix A - 13
<PAGE> 75
Specified Petrochemicals.
(i) Olefins and olefins coproducts consisting of: ethylene,
propylene, butadiene, and mixed butylenes; aromatics and gasoline blending
components (benzene, toluene, MTBE, alkylate, pyrolysis gasolines); mixed C5
hydrocarbons; resin formers (dicyclopentadiene, isoprene, piperylenes, resin
oil); pyrolysis liquid fuel products (pyrolysis gas oil, pyrolysis fuel oil);
(ii) Polyolefins consisting of: low-density, linear low-density,
and high-density polyethylene; polypropylene; ethylene/propylene copolymers;
rotomolding and polymeric powders; wire and cable resins; adhesive tie layers;
hot melt adhesive resins; colors and concentrates; fuel additives;
(iii) Ethyl alcohol and ethyl ether; and
(iv) Ethylene oxide, ethylene glycol and derivatives thereof.
provided, however that the definition of Specified Petrochemicals shall in no
event include polyvinyl chloride or resins derived from phenol compounds or
dicyclopentadiene.
Specified Petrochemicals Businesses. The businesses related to
Specified Petrochemicals.
Strategic Plan. See Section 8.1.
Substitute General Partner. A Person who is admitted as a General
Partner to the Partnership in place of and with all the rights of a General
Partner.
Substitute Limited Partner. A Person who is admitted as a Limited
Partner to the Partnership in place of and with all the rights of a Limited
Partner.
Taxes. All taxes, charges, fees, levies or other assessments imposed
by any taxing authority, including, but not limited to, income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments) and
"Tax Return" means any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
Tax Matters Partner. Lyondell GP.
Third Party Claim. Any allegation, claim, civil, criminal or other
action, proceeding, charge or prosecution brought by any Person other than the
Partnership, any Partner or any Affiliate of a Partner.
Transfer. To sell, assign or otherwise in any manner dispose of,
whether by act, deed, merger, consolidation, conversion or otherwise. Such
defined term is used in this Agreement as both a noun and a verb.
Appendix A - 14
<PAGE> 76
Unit. A unit representing a partnership interest in the Partnership.
Wholly Owned Affiliate. As to any Person, an Affiliate of such Person
all of the equity interests of which are owned, directly or indirectly, by a
Partner, by another Wholly Owned Affiliate of such Person or by the ultimate
parent entity thereof.
Wholly Owned Subsidiary. As to any Person, a subsidiary of such
Person all of the equity interests of which are owned, directly or indirectly,
by such Person.
Appendix A - 15
<PAGE> 77
APPENDIX B
TO LIMITED PARTNERSHIP AGREEMENT
PARTNERSHIP FINANCIAL STATEMENTS AND REPORTS
<TABLE>
<CAPTION>
Item & Frequency Due Dates
---------------- ---------
<S> <C>
Monthly:
-------
Income Statement - current period and year-to-date 10th work day following month-end
Balance Sheet - current period 10th work day following month-end
Cash Flow Statement - current period and year-to-date 10th work day following month-end
Schedule of Income Allocation - preliminary 5th work day following month-end
Schedule of Income Allocation - final 10th work day following month-end
Calculation of Distribution of Available Net Operating
Cash - final 15th work day following month-end
Results of Operations Analysis 10th work day following month-end
Quarterly:
---------
Analysis for Investor Relations and Form 10-Q
disclosures:
- Results of Operations 15th work day following quarter-end
- Cash Flow 15th work day following quarter-end
- Sales Variances 15th work day following quarter-end
- Capital Expenditures 15th work day following quarter-end
- Intercompany Transactions 15th work day following quarter-end
- Volumes 15th work day following quarter-end
- Prices 15th work day following quarter-end
- Unusual Items 15th work day following quarter-end
Income Statement - current quarter and year-to-date 10th work day following quarter-end
Balance Sheet - current period 10th work day following quarter-end
Cash Flow Statement - current quarter and year-to-date 10th work day following quarter-end
Estimate of Each Partner's Regular Taxable Income 10th work day following quarter-end
and Alternative Minimum Taxable Income
</TABLE>
Appendix B - 1
<PAGE> 78
<TABLE>
<CAPTION>
Item & Frequency Due Dates
---------------- ---------
<S> <C>
Annual:
------
Analysis for Investor Relations and Form 10-K 15th work day following year-end
disclosures
- Same as quarterly requirements
- Plant Capacities
Audited Financial Statements 60 days following year-end
</TABLE>
Appendix B - 2
<PAGE> 79
APPENDIX C
TO LIMITED PARTNERSHIP AGREEMENT
EXECUTIVE OFFICERS
Dan F. Smith Chief Executive Officer
Eugene R. Allspach President and Chief Operating Officer
Joseph M. Putz Senior Vice President, Finance and
Administration
Debra L. Starnes Senior Vice President, Polymers
John R. Beard Vice President, Manufacturing
Clifton B. Currin, Jr. Vice President, Supply and Optimization
J. R. Fontenot Vice President, Engineering
Brian A. Gittings Vice President, Oxygenated Chemicals
Alan Houlton Vice President, Customer Supply Chain
Gerald A. O'Brien Vice President and Secretary
Myra J. Perkinson Vice President, Human Resources
W. Norman Phillips, Jr. Vice President, Petrochemicals
Kerry F. Williams Vice President, Research and Development
Jeffrey L. Hemmer Director, Business Process Improvement
Appendix C - 1
<PAGE> 80
APPENDIX D
TO LIMITED PARTNERSHIP AGREEMENT
DISPUTE RESOLUTION PROCEDURES
(1) Binding and Exclusive Means. Except as otherwise provided in the
Partnership Agreement, the dispute resolution provisions set forth in this
Appendix shall be the binding and exclusive means to resolve all disputes
arising under the Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the standards and
criteria for resolving such Dispute shall, unless the Partners involved in the
Dispute in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises, the
following procedures shall be implemented (with references to "Partners"
meaning the Partners involved in the Dispute):
(a) Any Partner may at any time invoke the dispute resolution procedures
set forth in this Appendix as to any Dispute by providing written notice of
such action to the Secretary of the Partnership, who within five Business Days
after such notice shall schedule a meeting to be held in Houston, Texas between
the Partners. The Partners' meeting shall occur within 10 Business Days after
notice of the meeting is delivered to the Partners. The meeting shall be
attended by representatives of each Partner having decision-making authority
regarding the Dispute as well as the dispute resolution process and who shall
attempt in a commercially reasonable manner to negotiate a resolution of the
Dispute.
(b) The representatives of the Partners shall cooperate in a
commercially reasonable manner and shall explore whether techniques such as
mediation, minitrials, mock trials or other techniques of alternative dispute
resolution might be useful. In the event that a technique of alternative
dispute resolution is so agreed upon, a specific timetable and completion date
for its implementation shall also be agreed upon. The representatives will
continue to meet and discuss settlement until the date (the "Interim Decision
Date") that is the earliest to occur of the following events: (i) an agreement
shall be reached by the Partners resolving the Dispute; (ii) one of the
Partners shall determine and notify the other Partners in writing that no
agreement resolving the Dispute is likely to be reached; (iii) if a technique
of alternative dispute resolution is agreed upon, the completion date therefor
shall occur without the Partners having resolved the Dispute; or (iv) if
another technique of alternative dispute resolution is not agreed upon, two
full meeting days (or such other time period as may be agreed upon) shall
expire without the Partners having resolved the Dispute.
(c) If, as of the Interim Decision Date, the Partners have not succeeded
in negotiating a resolution of the Dispute pursuant to subsection (b), the
Partners shall proceed under subsections (d), (e) and (f).
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any Partner
involved in the Dispute (the "Disputing Partner").
Appendix D - 1
<PAGE> 81
The arbitration shall be subject to the Federal Arbitration Act as supplemented
by the conditions set forth in this Appendix. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date the notice of arbitration is
served, other than as specifically modified herein. In the absence of an
agreement to the contrary, the arbitration shall be held in Houston, Texas.
The Arbitrator (as defined below) will allow reasonable discovery in the forms
permitted by the Federal Rules of Civil Procedure, to the extent consistent
with the purpose of the arbitration. During the pendency of the Dispute, each
Partner shall make available to the Arbitrator and the other Partners all
books, records and other information within its control requested by the other
Partners or the Arbitrator subject to the confidentiality provisions contained
herein, and provided that no such access shall waive or preclude any objection
to such production based on any privilege recognized by law. Recognizing the
express desire of the Partners for an expeditious means of dispute resolution,
the Arbitrator may limit the scope of discovery between the Partners as may be
reasonable under the circumstances. In deciding the substance of the Partners'
claims, the laws of the State of Delaware shall govern the construction,
interpretation and effect of this Agreement (including this Appendix) without
giving effect to any conflict of law principles. The arbitration hearing shall
be commenced promptly and conducted expeditiously, with each Partner involved
in the Dispute being allocated an equal amount of time for the presentation of
its case. Unless otherwise agreed to by the Partners, the arbitration hearing
shall be conducted on consecutive days. Time is of the essence in the
arbitration proceeding, and the Arbitrator shall have the right and authority
to issue monetary sanctions against any of the Partners if, upon a showing of
good cause, that Partner is unreasonably delaying the proceeding. To the
fullest extent permitted by law, the arbitration proceedings and award shall be
maintained in confidence by the Arbitrator and the Partners.
(e) The Disputing Partner shall notify the American Arbitration
Association ("AAA") and the other Partners in writing describing in reasonable
detail the nature of the Dispute (the "Dispute Notice"). The arbitrator (the
"Arbitrator") shall be selected within 15 days of the date of the Dispute
Notice by all of the Partners from the members of a panel of arbitrators of the
AAA or, if the AAA fails or refuses to provide a list of potential arbitrators,
of the Center for Public Resources and shall be experienced in commercial
arbitration. In the event that the Partners are unable to agree on the
selection of the Arbitrator, the AAA shall select the Arbitrator, using the
criteria set forth in this Appendix, within 30 days of the date of the Dispute
Notice. In the event that the Arbitrator is unable to serve, his or her
replacement will be selected in the same manner as the Arbitrator to be
replaced. The Arbitrator shall be neutral. The Arbitrator shall have the
authority to assess the costs and expenses of the arbitration proceeding
(including the arbitrators', and attorneys' fees and expenses) against any or
all Partners.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect or punitive damages or (ii) amend this
Agreement. The Arbitrator shall render the arbitration award, in writing,
within 20 days following the completion of the arbitration hearing, and shall
set forth the reasons for the award. In the event that the Arbitrator awards
monetary damages in favor of either party, the Arbitrator must certify in the
award that no indirect, consequential, incidental, indirect or punitive damages
are included in such award. If the Arbitrator's decision results in a
Appendix D - 2
<PAGE> 82
monetary award, the interest to be granted on such award, if any, and the rate
of such interest shall be determined by the Arbitrator in his or her
discretion. The arbitration award shall be final and binding on the Partners,
and judgment thereon may be entered in any court of competent jurisdiction, and
may not be appealed except to the extent permitted by the Federal Arbitration
Act.
(4) Continuation of Business. Notwithstanding the existence of any
Dispute or the pendency of any procedures pursuant to this Appendix, the
Partners agree and undertake that all payments not in dispute shall continue to
be made and all obligations not in dispute shall continue to be performed.
Appendix D - 3
<PAGE> 83
APPENDIX 1 TO APPENDIX D
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the Partners and their Affiliates as set forth in the Partnership Agreement.
(b) Second priority shall be given to resolution of the Dispute in a
manner which best achieves the objectives of the business activities and
arrangements under the Partnership Agreement and the Related Agreements and
permits the Partners to realize the benefits intended to be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
Partners or the Arbitrator shall determine to be appropriate under the
circumstances.
Appendix D - 4
<PAGE> 84
APPENDIX E
TO LIMITED PARTNERSHIP AGREEMENT
DIVISION OF PARTNERSHIP BUSINESS
If the Partnership is dissolved and Section 12.2(e) applies to the
winding up of the affairs of the Partnership, the Partnership properties shall,
to the extent legally and contractually feasible and, after satisfaction of the
liabilities of the Partnership (whether by payment or reasonable provision for
payment), be distributed in kind to the Partners in accordance with a division
(the "Division") of the properties. The Division shall be implemented by
dividing the properties, to the extent feasible, in accordance with the
following priorities and principles:
A. First priority shall be given to maximizing the consistency of the
Division with a division of the Partnership properties that allocates to
each Partner (subject to such Partner's Percentage Interest of the
Partnership's liabilities) Partnership properties in proportion to the
value of such Partner's Percentage Interest in the Partnership's
business taking into account the aggregate Asset Fair Market Value of
the Partnership's properties and the value and benefits afforded to such
Partner under the Partnership Agreement and the other Related
Agreements.
B. Second priority shall be given to the allocation of the Partnership's
various assets and business units between the Partners so as to maximize
the aggregate going concern value of the respective assets and business
units allocated to each Partner, taking into account, without
limitation, the potential synergies and efficiencies that are reasonably
achievable in connection with the operation of such allocated assets and
business units as an independent business entity.
C. Third priority shall be given to maximizing the consistency of the
Division with the nature and quality of the Assets and Contributed
Business originally transferred to the Partnership by the respective
Partners or their Affiliates.
Absent an agreement by the Partners or direction by the Neutral as to
both (i) how the Partners should allocate Partnership debt and (ii) the process
for relieving each Partner of liability for that portion of Partnership debt
allocated to the other Partner, the Partners (A) shall be jointly and severally
liable to the holders of all Partnership debt and (B) as between the Partners,
each Partner shall be obligated to pay to holders of the debt its Percentage
Interest of all payments of principal and interest on Partnership Debt.
Notwithstanding the foregoing, the Neutral shall be entitled to direct, and any
Partner may propose, an alternative allocation of Partnership debt in any
circumstance where such alternative allocation is reasonably likely to result
in a Division that is more consistent with the priorities outlined above.
For purposes of this Appendix E, Lyondell GP and Lyondell LP shall be
treated as if they were a single Partner, Millennium GP and Millennium LP shall
be treated as if they were a single Partner and Occidental GP, Occidental LP1
and Occidental LP2 shall be treated as if they were a single Partner.
Appendix E - 1
<PAGE> 85
The Partners shall attempt to agree on a plan for a mutually acceptable
Division. If they are unable to so agree after 60 days following the occurrence
of the dissolution, a Neutral shall be appointed in accordance with Appendix D
and each Partner shall submit to the Neutral a written proposal for a Division.
The Neutral shall decide which of the three proposals (without in any way
modifying or compromising between the three proposals) more closely follows the
priorities and principles set forth above, and the proposal so chosen shall
thereupon be binding upon all Partners and shall be promptly implemented under
the direction of the Neutral. The Neutral shall be entitled to employ (at the
expense of the Partnership) such financial and accounting advisors and legal
counsel as he or she shall select, provided that no such advisor or counsel
shall have any affiliation with any Partner.
Appendix E - 2
<PAGE> 86
SCHEDULE 2.3(d)
Effective Date Capital Account Balances
Column I reflects Capital Accounts after the contributions of the Occidental
Partners on the Effective Date and the Effective Date adjustments to the
Capital Accounts of the Initial Partners, but before the other contributions
and distributions described in Section 2.3(c). Column II indicates the amount
of the contributions and distributions described in 2.3(c) other than accrued
interest. Column III reflects the Capital Accounts if such contributions and
distributions were made (and accrued interest was paid and distributed) on the
Effective Date. Column IV reflects the number of Units owned by each Partner.
<TABLE>
<CAPTION>
PARTNER I II III IV
------- - -- --- --
<S> <C> <C> <C> <C>
Lyondell GP $ 42,451,400 $ 42,451,400 820
Lyondell GP 1,931,768,600 $ 148,350,000 2,080,118,600 40,180
------
41,000
Millennium GP 30,544,300 30,544,300 590
Millennium GP 1,720,020,000 (223,350,000) 1,496,670,000 28,910
------
29,500
Occidental GP 15,272,150 15,272,150 295
Occidental LP1 342,872,650 342,872,650 6,623
Occidental LP2 1,588,770,000 (419,700,000) 1,169,070,000 22,582
--------------- -------------- --------------- ------
29,500
$ 5,671,699,100 $ (494,700,000) $ 5,176,999,100
=============== ============== ===============
</TABLE>
*The difference between Lyondell LP's contribution of $345 million to satisfy
the Lyondell Note and the distribution to it of $196,650,000 (57%) of the
proceeds from such note.
<PAGE> 1
EXHIBIT 10.3
AGREEMENT AND PLAN OF MERGER
AND
ASSET CONTRIBUTION
AMONG
OCCIDENTAL PETROCHEM PARTNER 1, INC.,
OCCIDENTAL PETROCHEM PARTNER 2, INC.,
OXY PETROCHEMICALS INC.,
PDG CHEMICAL INC.
AND
EQUISTAR CHEMICALS, LP
DATED: MAY 15, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Limited Partnership; Partnership Agreement; Partnership
Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Conversion of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Transfer of Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Assumption of Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Transfer of Oxy Petrochemicals Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2 CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Instruments of Conveyance and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Master Intellectual Property Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Joint Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS . . . . . . . . . . . . . . . . . . . . 18
3.1 Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Authorization and Validity of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 No Consents Required; No Conflict with Instruments to which a
Contributor is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases . . . . . . . . . . . . . . . . 20
3.6 Title Matters; Defects in Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.7 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 Technology and Similar Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.9 Government Licenses, Permits and Related Approvals . . . . . . . . . . . . . . . . . . . . 22
3.10 All Necessary Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.11 Conduct of Business in Compliance with Regulatory and Contractual
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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<TABLE>
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3.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.15 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.16 HSE Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.17 Investigation to Acquire Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3A ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
OXY CH SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3A.1 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3A.2 Ownership of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3A.3 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . 24
4.1 Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.3 No Consents Required; No Conflict with Instruments to which the
Partnership is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5 COVENANTS SUBSEQUENT TO CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Mail or Other Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Use of Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Closing Date Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Reimbursement for Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6 SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Survival Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Claims for HSE Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 EXTENT OF INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Payment of Certain Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.5 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.6 Occasional and Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.7 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.9 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
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<TABLE>
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7.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.12 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER . . . . . . . . . . . . . . . . . . . 36
7.14 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<PAGE> 5
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule A - Contributed Business
Schedule 2.1(a) - Fee Interests
Schedule 2.1(b) - Leases
Schedule 2.1(d) - Equipment
Schedule 2.1(k) - Contributed Subsidiaries
Schedule 2.2(c) - Excluded Tradenames and Logos
Schedule 2.2(h) - Certain Excluded Assets
Schedule 2.5(a)(vii) - Assumed Indebtedness
Schedule 2.5(a)(x) - Assumed Long-Term Liabilities
Schedule 2.8(b) - Basic Severance
Schedule 3 - Disclosure Schedule
Appendices
Appendix A - Dispute Resolution Procedures
Exhibits
Exhibit A - Form of Assignment of Lease and Act
of Exchange
Exhibit B - Form of Assignment of Leases
Exhibit C - Form of Bill of Sale and Assignment
Exhibit D - Form of Trademark License
Exhibit E - Form of Patent Assignment
Exhibit F - Form of Partnership Assumption Agreement
Exhibit G - Form of Master Intellectual Property
Agreement
Exhibit H - Form of Assignment of Partnership Interests
Exhibit I - Form of Assignment of Excluded Assets of Oxy
Petrochemicals
Exhibit J - Form of Oxy CH Sub Assumption Agreement
Exhibit K - Form of $419,700,000 Promissory Note
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AND
ASSET CONTRIBUTION
This AGREEMENT AND PLAN OF MERGER AND ASSET CONTRIBUTION (this
"Agreement"), dated as of May 15, 1998, is entered into among Occidental
Petrochem Partner 1, Inc., a Delaware corporation ("Occidental Chemical Sub"),
Occidental Petrochem Partner 2, Inc., a Delaware corporation ("Oxy CH Sub"),
Oxy Petrochemicals Inc., a Delaware corporation ("Oxy Petrochemicals"), PDG
Chemical Inc., a Delaware corporation ("PDG Chemical"), and Equistar Chemicals,
LP, a Delaware limited partnership (the "Partnership").
The definitions of capitalized terms used in this Agreement, including
the appendices hereto, are set forth in Section 8 hereof.
WHEREAS, Oxy Petrochemicals is a direct wholly owned subsidiary of
Oxy CH Sub, Oxy CH Sub is a direct wholly owned subsidiary of Oxy CH
Corporation, a California corporation ("Oxy CH") and Oxy CH is a wholly owned
indirect subsidiary of Occidental Petroleum Corporation, a Delaware corporation
("Occidental").
WHEREAS, the Partnership, Occidental, Lyondell Petrochemical Company
and Millennium Chemicals, Inc. are parties to that certain Master Transaction
Agreement of even date (the "Master Transaction Agreement").
WHEREAS, Occidental Chemical Sub, PDG Chemical and Oxy CH Sub will be
admitted as partners in the Partnership upon the Closing pursuant to an Amended
and Restated Agreement of Limited Partnership of the Partnership.
WHEREAS, Occidental Chemical Sub wishes to contribute certain assets
and a lease of certain other assets, in each case subject to certain
liabilities associated with the olefins, polyolefins and related petrochemicals
businesses to the Partnership, and the Partnership wishes to accept such assets
and lease and assume such liabilities, all upon the terms and conditions
hereinafter set forth.
WHEREAS, PDG Chemical wishes to contribute all of its right, title and
interest in and to PD Glycol, a Texas limited partnership ("PD Gylcol"), and
the Partnership wishes to accept such right, title and interest, all upon the
terms and conditions hereinafter set forth. Occidental Chemical Sub and PDG
Chemical, collectively or individually as the context may require, are referred
to herein as the "Asset Contributors."
WHEREAS, the respective Boards of Directors of Oxy Petrochemicals and
Oxy CH Sub and the Partnership Governance Committee of the Partnership deem it
advisable and in the best interest of their respective entities that Oxy
Petrochemicals merge with and into the Partnership (the "Merger"), upon the
terms and conditions of this Agreement, and the applicable provisions of the
<PAGE> 7
laws of the State of Delaware. The Asset Contributors and Oxy Petrochemicals,
collectively or individually as the context may require, are referred to herein
as the "Contributors."
WHEREAS, upon the Closing, the Partnership will consummate certain
transactions and enter into certain agreements as provided for in the Master
Transaction Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the provisions of the DGCL, at the
Effective Time, Oxy Petrochemicals shall be merged with and into the
Partnership, and the separate corporate existence of Oxy Petrochemicals shall
cease and the Partnership shall continue as the surviving entity (hereinafter
sometimes referred to as the "Surviving Partnership") under the laws of the
State of Delaware under the name of "Equistar Chemicals, LP".
1.2 Effects of the Merger. The Merger shall have the effects
provided therefor by the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time:
(a) All of the assets, properties, rights, privileges, powers
and franchises of a public as well as a private nature of Oxy Petrochemicals of
every kind, nature, character and description, tangible and intangible, real,
personal or mixed, wherever located shall be taken and deemed to be transferred
to, and vested in, the Surviving Partnership without further act or deed; and
all such assets, properties, rights, privileges, powers and franchises and all
and every other interest shall be thereafter the property of the Surviving
Partnership, as such interests were the property of Oxy Petrochemicals.
(b) The Surviving Partnership shall be subject to all of the
restrictions, disabilities and duties of Oxy Petrochemicals and the debts,
liabilities and duties of Oxy Petrochemicals shall attach to the Surviving
Partnership and the Surviving Partnership agrees to pay, perform and discharge
all such debts, liabilities and duties when due.
1.3 Closing; Effective Time.
(a) The consummation of the transactions contemplated by Sections
1 and 2 hereof is referred to as the "Closing." Subject to the terms and
conditions hereof, the Closing shall take place at the office of Baker & Botts,
L.L.P., One Shell Plaza, 910 Louisiana, Houston Texas 77002-4995, at 10:00 a.m.
local time on the date hereof (the "Closing Date"), or (ii) such other place
or date as may be agreed to by the Partnership and Oxy CH Sub.
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<PAGE> 8
(b) Subject to the terms and provisions of this Agreement, there
shall be filed with the Secretary of State of the State of Delaware (the
"Secretary of State"), on the Closing Date, a certificate of merger with
respect to the Merger in such form as required by, and executed in accordance
with, the applicable provisions of the DGCL. Such certificate of merger shall
designate that the Merger shall become effective as of the time (the "Effective
Time") that such certificate of merger is so filed with the Secretary of State.
1.4 Certificate of Limited Partnership; Partnership Agreement;
Partnership Governance Committee. The certificate of limited partnership of the
Surviving Partnership from and after the Effective Time shall be the Amended
Certificate of Limited Partnership filed contemporaneously with the filing of
the certificate of merger referenced herein, continuing until thereafter
amended in accordance with the provisions provided by the DRULPA. The
partnership agreement of the Surviving Partnership from and after the Effective
Time shall be the Amended and Restated Agreement of Limited Partnership
executed and delivered on the Closing Date, continuing until thereafter amended
in accordance with the terms therein and as provided by the DRULPA. The
Partnership Governance Committee of the Partnership as of the Closing Date
shall be designated in accordance with such Amended and Restated Agreement of
Limited Partnership.
1.5 Conversion of Certificates. As of the Effective Time, by
virtue of the Merger and without any action on the part of any Party or the
holder of any of the following securities, the following shall occur:
(a) Oxy Petrochemicals Common Stock. The aggregate of
all of the common stock, par value $300.00, of Oxy Petrochemicals (the "Oxy
Petrochemicals Common Stock") shall be converted into the right to receive (i)
Oxy CH Sub's limited partnership interest in the Partnership as set forth in
the Amended and Restated Agreement of Limited Partnership of the Partnership
and (ii) a promissory note of the Partnership in the form of Exhibit K. All
such shares of Oxy Petrochemicals Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the limited
partnership interest and note to be issued pursuant to this Section 1.5(a) with
respect thereto upon the surrender of such certificate in accordance with
Section 1.6, without interest.
(b) Cancellation of Other Capital Stock of Oxy
Petrochemicals. All shares of capital stock of Oxy Petrochemicals that are
owned directly or indirectly by Oxy Petrochemicals shall be canceled and no
stock or other consideration shall be delivered in exchange therefor.
1.6 Exchange of Certificates.
(a) Oxy Petrochemicals Common Stock. At the Closing, Oxy CH Sub
shall deliver to the Partnership, subject to the terms of this Agreement, all
certificates representing each share of Oxy Petrochemicals Common Stock
together with duly executed stock powers endorsed to the Partnership or other
assignments or instruments of conveyance and transfer, in form and substance
satisfactory to the Partnership and its counsel, as shall be effective to vest
in the Partnership at the
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<PAGE> 9
Effective Time, all of Oxy CH Sub's right, title and interest in and to such
shares of Oxy Petrochemicals Common Stock. Until surrendered to the
Partnership pursuant to this Section 1.6, each such certificate shall, at and
after the Effective Time, represent for all purposes only the right to receive
the consideration provided for in Section 1.5(a). The certificates
representing shares of Oxy Petrochemicals Common Stock so surrendered shall be
canceled as of the Effective Time.
(b) No Further Ownership Rights in Capital Stock of Oxy
Petrochemicals. The limited partnership interest in the Partnership and the
note delivered upon the surrender for exchange of shares of Oxy Petrochemicals
in accordance with the terms hereof shall be deemed to have been delivered in
full satisfaction of all rights pertaining to such securities, and following
the Effective Time, no Person shall have any further rights to, or ownership
in, shares of capital stock of Oxy Petrochemicals. There shall be no further
registration of transfers on the stock transfer books of Oxy Petrochemicals of
the shares of capital stock of Oxy Petrochemicals which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
certificates for shares of the capital stock of Oxy Petrochemicals are
presented to the Surviving Partnership for any reason, such certificates shall
be canceled.
(c) No Liability. Notwithstanding anything to the contrary in
this Section 1, neither the Surviving Partnership nor any other party shall be
liable to a holder of shares of any of the capital stock of Oxy Petrochemicals
for any amount paid to a public official pursuant to and in compliance with any
applicable abandoned property, escheat or similar law.
1.7 Transfer of Excluded Assets. It is expressly understood that,
immediately prior to the Effective Time, any and all assets of Oxy
Petrochemicals included in the Excluded Assets pursuant to Section 2.2 shall
have been contributed, conveyed, assigned or transferred by Oxy Petrochemicals
to Oxy CH Sub pursuant to an assignment in the form attached as Exhibit I (the
"Excluded Asset Assignment") and shall not be part of the assets deemed
transferred to the Partnership pursuant to the Merger.
1.8 Assumption of Excluded Liabilities. It is expressly
understood that, immediately prior to the Effective Time, any and all
obligations and liabilities of Oxy Petrochemicals included in the Excluded
Liabilities pursuant to Section 2.6 shall be assumed by Oxy CH Sub pursuant to
an assumption agreement in the form attached as Exhibit J ("Oxy CH Sub
Assumption Agreement").
1.9 Transfer of Oxy Petrochemicals Assets. Notwithstanding that
pursuant to Section 1.2, title to the Assets of Oxy Petrochemicals shall be
deemed transferred from Oxy Petrochemicals to the Partnership as of the
Effective Time, as between the parties hereto, the benefits and burdens
associated with ownership of such Assets shall be deemed to have been
transferred effective as of the Asset Transfer Effective Time.
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SECTION 2
CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES
2.1 Transfer of Assets. On the terms and subject to the
conditions set forth in this Agreement, on the date hereof and effective as of
the Asset Transfer Effective Time, each Asset Contributor is contributing,
conveying, assigning, transferring and delivering to the Partnership, or shall
cause to be contributed, conveyed, assigned, transferred and delivered to the
Partnership, and the Partnership shall accept, acquire and assume all of the
assets, rights, and properties used or held for use in the contemplated
operation and conduct of the Contributed Business of every kind, nature,
character and description, tangible and intangible, real, personal or mixed,
whether held by such Asset Contributor or an Affiliate thereof, wherever
located other than the Excluded Assets (provided that the assets of Oxy
Petrochemicals are being transferred to the Partnership pursuant to the
Merger); and which conveyance, subject to Section 2.2, shall include, without
limitation, the following:
(a) All right, title and interest of such Asset Contributor and
any Affiliate thereof in the Fee Interests;
(b) All right, title and interest of such Asset Contributor and
any Affiliate thereof under the Leaseholds;
(c) All right, title and interest of such Asset Contributor and
any Affiliate thereof, if any, in the Associated Rights, including, without
limitation, all contracts, easements, rights-of-way, permits, licenses and
leases and other similar rights for related equipment, power and communications
cables, and other related property and equipment used principally in the normal
operation and conduct of the Contributed Business;
(d) All of the right, title and interest of such Asset Contributor
and any Affiliate thereof in the Equipment and all warranties and guarantees,
if any, express or implied, existing for the benefit of such Asset Contributor
or any Affiliate thereof in connection with the Equipment to the extent
assignable;
(e) Subject, to the extent applicable, to Section 5.3, all of the
right, title and interest of such Asset Contributor and any Affiliate thereof
in the Unrecorded Assets;
(f) All of the right, title and interest of such Asset Contributor
and any Affiliate thereof in any Contributed Contracts;
(g) Any right, title and interest of such Asset Contributor in any
Trademarks to the extent used or contemplated to be used principally in the
normal operation and conduct of the Contributed Business;
(h) All Government Licenses that are transferable and as to which
Consents to transfer are obtained where required;
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<PAGE> 11
(i) The Inventory, Stores Inventory and Prepaid Expenses;
(j) Subject to Section 5.6, Accounts Receivable together with any
reserve or allowance for doubtful accounts, returned products or potential
price adjustment;
(k) All right, title and interest of such Asset Contributor and
any Affiliate thereof in the subsidiaries listed on Schedule 2.1(k) (the
"Contributed Subsidiaries");
(l) All claims and rights against third parties (including,
without limitation, insurance carriers, indemnitors, suppliers and service
providers) to the extent, but only to the extent that, they relate to the
Assumed Liabilities; provided, however, that to the extent that any claims or
rights of such Asset Contributor against any third parties are not assigned to
the Partnership, and the partnership incurs Liabilities that would create such
claims or rights on behalf of such Asset Contributor, such Asset Contributor
shall enforce such claims or rights for the benefit (and at the cost) of the
Partnership to the extent it may lawfully do so, except that the Asset
Contributor shall not be required to enforce insurance claims against fronting,
captive or retrospectively rated policies which would ultimately result in such
claims being ultimately borne, directly or indirectly, by the Asset
Contributor;
(m) A fifty percent (50%) interest in PD Glycol, a Texas limited
partnership;
(n) Any claims of the Contributors against Union Pacific for
service delays related to the Contributed Business; and
(o) Any other asset of such Asset Contributor or its Affiliate
contributed to the Partnership pursuant to the terms of this Agreement.
2.2 Excluded Assets. It is expressly understood and agreed that
the Assets shall not include the following (the "Excluded Assets"):
(a) Except as otherwise provided in Section 2.1(j), cash and cash
equivalents or similar type investments, such as certificates of deposit,
Treasury bills and other marketable securities;
(b) Except as may be agreed pursuant to Section 2.8(g), any
assets of any qualified or non-qualified pension or welfare plans or other
deferred compensation arrangements maintained by any Contributor or any
Affiliate thereof for employees of such Contributor or any Affiliate thereof
prior to the Closing Date;
(c) Any of the Contributors' or any Affiliates' right, title and
interest in and to (i) the names and logos set forth on Schedule 2.2(c) and any
other statutory names, trade names or trademarks, indications or descriptions
of which such names or any name similar thereto forms a part and (ii) any other
trade names, trademarks, trademark registrations or trademark applications,
copyrights, copyright applications or copyright registrations or any derivative
thereof or design used
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<PAGE> 12
in connection therewith that are not used principally in the normal operation
and conduct of and are not uniquely applicable to the Contributed Business;
(d) All claims and rights against third parties (including,
without limitation, insurance carriers, indemnitors, suppliers and service
providers), to the extent they do not relate to the Assumed Liabilities;
(e) Claims for refunds of Taxes for time periods ending on or
before the Closing Date, which Taxes remain the liability of the Contributor
under this Agreement;
(f) Subject to the Master Intellectual Property Agreement, any and
all of the Intellectual Property and Trademarks of a Contributor or any
Affiliate thereof to the extent not used principally in the normal operation
and conduct of or to the extent not applicable to the Contributed Business;
(g) All items sold in the ordinary course of business prior to the
Closing Date, none of which individually or in the aggregate are material to
the normal operation and conduct of the Contributed Business;
(h) The tangible assets, intangible assets, real properties,
contracts and rights, described in Schedule 2.2(h);
(i) All assets of Oxy Petrochemicals not used or held for use in
the contemplated operation and conduct of the Contributed Business;
(j) Any claims of the Contributors against Union Pacific for
service delays not related to the Contributed Business; and
(k) The Lake Charles Leased Assets.
2.3 Instruments of Conveyance and Assignment. On the Closing
Date:
(a) Occidental Chemical Sub shall deliver or cause to be delivered
to the Partnership, as needed, (i) an Assignment of Lease and Act of Exchange
for the Lake Charles Lease being assigned pursuant to this Section 2 in
substantially the form attached hereto as Exhibit A ("Assignment of Lake
Charles Lease"), (ii) an assignment of leases for such other Leases being
assigned pursuant to this Section 2 in substantially the form attached hereto
as Exhibit B (the "Assignment of Leases"), (iii) a bill of sale and assignment
in substantially the form attached hereto as Exhibit C (the "Bill of Sale and
Assignment") conveying title to the Assets (other than the Fee Interests,
Leaseholds and Lake Charles Leased Assets) being conveyed pursuant to this
Section 2 and assigning the Contracts of such Asset Contributor or its
Affiliates, (iv) a license of certain trademarks in substantially the form
attached hereto as Exhibit D (the "Trademark License") and (v) an assignment of
patent rights, licenses and applications included in the Assets conveyed
pursuant to this Section 2 in substantially the form attached hereto as Exhibit
E (the "Patent Assignment"); and
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<PAGE> 13
(b) Each Asset Contributor shall transfer to the Partnership the
originals (to the extent such Contributor or any Affiliate thereof possesses an
original and retained no rights thereunder after the Closing Date) or copies,
as appropriate, of the Contributed Contracts and the originals or copies, as
appropriate, of all current records, files and other data that relate to the
Assets and that are necessary for continuing the normal operation and conduct
of the Contributed Business by the Partnership.
(c) PDG Chemical shall deliver or cause to be delivered to the
Partnership an assignment of partnership interests in substantially the form
attached hereto as Exhibit H ("Assignment of Partnership Interests").
2.4 Further Assurances.
(a) On and from time to time after the Closing Date, each Asset
Contributor and Oxy CH Sub will execute and deliver, or cause to be executed
and delivered, such other instruments of conveyance, assignment, transfer and
delivery as the Partnership may reasonably request in order to fulfill and
implement the terms of this Agreement, to vest in the Partnership title to the
Assets, to confirm the assumption of Excluded Liabilities or to enable the
Partnership to continue the normal operation and conduct of the Contributed
Business and otherwise to realize the benefits intended to be afforded hereby.
(b) On and from time to time after the Closing Date, the
Partnership will execute and deliver, or cause to be executed and delivered,
such other instruments of assumption, conveyance, assignment, transfer, power
of attorney or assurance as the Asset Contributors and Oxy CH Sub may
reasonably request in order to fulfill and implement the terms of this
Agreement, to vest in the Partnership all of the Assumed Liabilities, to
confirm the transfer of Excluded Assets or to enable the Asset Contributors and
Oxy CH Sub to realize the benefits intended to be afforded hereby.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the Partnership and each Asset Contributor acknowledge and agree that
any Government Licenses, Contributed Contracts, warranties or other Assets
related to the Contributed Business and required to be conveyed pursuant to
this Agreement which by their terms require Consent from any other unaffiliated
contracting party thereto shall not be assigned to the Partnership unless any
such Consent has been obtained prior to the Closing Date. Following the
Closing, the Partnership and each Asset Contributor shall cooperate with each
other and use commercially reasonable efforts to obtain those Consents that
were not obtained prior to the Closing and (i) if such Consents are obtained
following the Closing, the Partnership and the Asset Contributors shall execute
and deliver any other and further instruments of assignment, assumption,
transfer and conveyance and take such other and further action as the
Partnership may reasonably request in order to vest in the Partnership any
Government Licenses, Contributed Contracts, warranties or other Assets to which
such Consents relate and (ii) pending such transfer or issuance to the
Partnership, shall provide, to the extent it may lawfully do so, the
Partnership with the benefits of any such Government Licenses, Contributed
Contracts, warranties or other Assets, in which case, the Partnership shall
promptly assume and discharge (or reimburse the Asset Contributors or their
Affiliates for) all obligations and liabilities associated with
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<PAGE> 14
the benefits of such Government Licenses, Contributed Contracts, warranties or
other Assets so made available to the Partnership. If an Asset Contributor
obtains a Consent to assign any Government Licenses, Contributed Contracts,
warranties or other Assets related to the Contributed Businesses and required
to be conveyed pursuant to this Agreement after the Closing, each such
Government License, Contributed Contract, warranty or other Asset shall be
deemed to be assigned to the Partnership promptly after such Consent is
obtained.
(d) Following the Closing, the Asset Contributors , Oxy CH Sub and
the Partnership shall cooperate in good faith and in a commercially reasonable
manner with respect to all matters pertinent to the carrying into effect of
this Agreement and the discharge by each party of its obligations and
liabilities hereunder and thereunder, and shall furnish to each other such
information, cooperation and assistance as reasonably may be requested in
connection with the foregoing, including any and all financial information
necessary for the Partnership's operation of the Contributed Business or
required for financial reporting or other purposes.
2.5 Assumption of Liabilities.
(a) On the terms and subject to the conditions, including
Sections 1.2, 2.8 and 6.2, set forth in this Agreement, on the Closing Date,
the debts, liabilities and obligations of each Contributor and its Contributed
Subsidiaries set forth in this Section 2.5 shall be assumed by the Partnership
in connection with the transfer of Assets to it, and the Partnership agrees to
pay, perform and discharge all such debts, liabilities and obligations when
due:
(i) All obligations arising on or after the Closing Date
under the Lake Charles Lease, the Contributed Contracts and Leases
that are assigned to the Partnership hereunder unless and to the
extent that such obligation arises out of a violation of such Lake
Charles Lease, Contributed Contract or Lease prior to the Closing
Date;
(ii) All obligations under purchase orders accepted by a
Contributor or its Contributed Subsidiaries in the ordinary course of
business of the Contributed Business prior to the Closing Date that
are not filled as of the Closing Date;
(iii) Trade Accounts Payable;
(iv) All obligations and liabilities, of every kind and
nature, without limitation, arising out of, in connection with or
related to the ownership, operation or use on or after the Closing
Date of the Assets or the Contributed Business;
(v) Seven Year PCCL Claims to the extent the aggregate
thereof borne by the Partnership does not exceed $7,000,000;
(vi) Third Party Claims that are related to Pre-Closing
Contingent Liabilities and that are first asserted seven years or more
after the Closing Date;
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<PAGE> 15
(vii) The obligations for indebtedness described on
Schedule 2.5(a)(vii);
(viii) [RESERVED];
(ix) All Liabilities associated with products sold after
the Closing Date regardless of when manufactured;
(x) The long-term liabilities set forth on Schedule
2.5(a)(x); and
(xi) Any other Liability specifically assumed by the
Partnership pursuant to the terms of this Agreement.
The liabilities and obligations assumed by the Partnership pursuant to this
Section are sometimes hereinafter referred to collectively as the "Assumed
Liabilities."
(b) On the Closing Date, the Partnership shall deliver to each
Asset Contributor an instrument of assumption of the Assumed Liabilities
substantially in the form attached hereto as Exhibit F (the "Partnership
Assumption Agreement").
2.6 Excluded Liabilities. Each Contributor or Affiliate thereof,
as applicable, shall remain liable for (or, in the case of Oxy Petrochemicals,
Oxy CH Sub shall assume in accordance with Section 1.8), and each Asset
Contributor and Oxy CH shall indemnify and hold harmless the Partnership in
accordance with Section 6.2 against, any liability or obligation of such
Contributor or Affiliate thereof, of whatever nature, whether presently in
existence or arising hereafter, whether known or unknown, or whether absolute
or contingent, that does not constitute an Assumed Liability (all such
liabilities and obligations being herein referred to as the "Excluded
Liabilities"), including the following:
(i) Any Pre-Closing Contingent Liability that is not an
Assumed Liability;
(ii) any obligation or liability relating to the Excluded
Assets;
(iii) any obligation (A) for the payment of severance
benefits to employees of a Contributor or any of its Affiliates except
as set forth in Sections 2.8(b) or (c), (B) attributable to a
Contributor's or any of its Affiliates' employment of any employee,
agent or independent contractor prior to the Expiration Date or (C)
any obligation or liability assumed by the Contributors pursuant to
Section 2.8; and
(iv) all Taxes imposed on Oxy Petrochemicals or any of its
Affiliates that would not be assumed by the Partnership if Oxy
Petrochemicals were contributing its Assets to the Partnership and
remaining in existence as a member of its current affiliated group.
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<PAGE> 16
2.7 Master Intellectual Property Agreement. On the Closing Date,
the Partnership and Occidental Chemical Corporation, a New York corporation
("OCC"), shall execute and deliver a master intellectual property agreement
(the "Master Intellectual Property Agreement") in substantially the form
attached hereto as Exhibit G providing, among other things, the following:
(a) Non-exclusive, royalty-free licenses to the Partnership of any
Intellectual Property used, contemplated for use or that could be used, in the
Contributed Business that is not conveyed to the Partnership pursuant to
Section 1.2 or 2.1.
(b) Non-exclusive, royalty-free licenses to OCC or its Affiliates
of any Contributed Intellectual Property acquired by the Partnership pursuant
to Section 1.2 or 2.1 of this Agreement used, contemplated for use or that
could be used in the business of OCC or its Affiliates.
(c) The assignment of the Contributed Intellectual Property to the
Partnership.
2.8 Employee Matters.
(a) "Employees" shall mean all employees of a Contributor or an
Affiliate whose work relates primarily to the Assets or the Contributed
Business and who are immediately prior to the Closing in the active employment
of a Contributor or an Affiliate. A true and complete list of names;
positions; salaries or hourly wage rates, as applicable; years of service, and
the last bonus of the Employees shall be provided by a Contributor or its
designee to the Partnership from time to time up to the Closing. In accordance
with and subject to Section 3.6 of the Master Transaction Agreement, as of the
Expiration Date, the Partnership shall offer employment to certain Employees
who are immediately prior to the Expiration Date in the active employment of a
Contributor or an Affiliate pursuant to a schedule prepared by the Contributors
prior to the Closing Date and agreed to by the Partnership. The Partnership
agrees that no Employee will fail to receive an offer of employment from the
Partnership unless the Contributor or Affiliate employing such Employee has
given its approval, which approval shall not be unreasonably withheld. Any
such Employee that accepts such offer is herein called a "Partnership
Employee." Partnership Employees shall be employed effective as of the
Expiration Date, except as otherwise provided in Section 2.8(e). The
Contributors agree that, from the Expiration Date until December 31, 1998, the
Contributors, Occidental or an Affiliate shall provide payroll services and
benefit plan administration for Partnership Employees, subject to the terms of
any agreement for transition services between the Partnership and OCC.
(b) Except with respect to employees of a Contributor or any
Affiliate thereof located in Occidental's Dallas, Texas facility ("Non-Plant
Employees"), if, within six months after the Expiration Date or in anticipation
of the Expiration Date, a Contributor or any Affiliate thereof terminates
(other than for cause) the employment of any Employee who does not become a
Partnership Employee, then the Partnership will pay to such Contributor an
amount, not to exceed the Basic Severance, to the extent such Contributor or
any Affiliate thereof pays severance to such employee under any plan or policy
of the Contributor or Affiliate. "Basic Severance" means a severance payment
according to the severance pay formula as set forth in Schedule 2.8(b). The
Contributors shall remain responsible for all severance and other compensation
or payment to Non-Plant Employees who do not become
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<PAGE> 17
Partnership Employees and for bonus or other executive compensation, if any, to
plant employees covered by Occidental's bonus or executive compensation
programs. The Contributors shall pay bonus or executive compensation payable
to Partnership Employees on a pro-rata basis determined based on the
Partnership Employee's months of employment with a Contributor prior to the
Expiration Date.
(c) Any Partnership Employee whose employment is terminated by the
Partnership (other than for cause) within six months after the Expiration Date
shall be entitled to receive a severance benefit from the Partnership equal to
the Basic Severance (which, for purposes of calculating service time, shall
include the employee's time of service with a Contributor, its predecessors or
Affiliates (to the extent service therefor would have been credited by a
Contributor) and the Partnership).
(d) Any employees of a Contributor that the Partnership and such
Contributor agree are necessary for the orderly transfer of the Contributed
Business to the Partnership but who will not become Partnership Employees
("Transition Employees") shall be compensated by such Contributor on terms and
conditions and for a duration to be agreed upon by the Partnership and such
Contributor. The Partnership shall reimburse such Contributor for any such
agreed upon compensation, including payroll taxes, benefit costs and workers
compensation premiums and claims, paid by such Contributor to or with respect
to any Transition Employee.
(e) If, as of the Expiration Date, any Employee is eligible for
and receiving short term disability benefits or sick pay, or is on leave of
absence, and the Partnership has offered such Employee employment by the
Partnership, that Employee shall become employed by the Partnership (and become
a Partnership Employee for purposes of this Section 2.8) upon eligibility to
return to active employment with such Contributor under the applicable
conditions of the short term disability benefits or sick pay plan of the
Contributor, or upon return from leave of absence. Partnership employment
shall not be effective until the employing Contributor verifies that the
Employee has satisfied the conditions (if any) to return to active employment.
Until such time as such Employee becomes a Partnership Employee such
Contributor shall continue to bear all costs and expenses associated with such
Employee.
(f) None of the Contributors nor any of their Affiliates shall, at
any time prior to 60 days after the Expiration Date, effect a "plant closing"
or "mass layoff", as those terms are defined in the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN"), affecting in whole or in part any
facility, site of employment, operating unit or employee of the Contributors or
any of their Affiliates without complying fully with the notice and all other
applicable requirements of WARN. With regard to the Contributed Business, the
Partnership shall not at any time prior to 60 days after the Expiration Date,
effectuate a "plant closing" or a "mass layoff", as those terms are defined in
WARN, affecting in whole or in part, any facility, site of employment or
operating unit, or any Employees without complying fully with the notice and
all other applicable requirements of that Act.
(g) In connection with the provision by the Partnership of benefit
plans and programs for Partnership Employees as provided in the Master
Transaction Agreement,
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<PAGE> 18
(i) The Partnership shall recognize all service credited
for the Partnership Employees or any other employee of Contributors or
their Affiliates directly transferred to the Partnership after the
Expiration Date on the records of a Contributor (or its Affiliate) for
purposes of eligibility for benefits and vesting under the
Partnership's benefit plans and programs and calculation of benefits
under the Partnership's benefit plans and programs, other than the
Partnership's defined benefit pension plan. For purposes of this
Section 2.8(g)(i), an employee shall be directly transferred if the
person is employed by the Contributors or their Affiliates immediately
prior to his or her employment with the Partnership and if such
employment with the Partnership is the result of an agreement between
the Partnership and the Contributors or their Affiliates. The
Partnership shall not recognize service credited on a Contributor's
records for benefit accrual under the Partnership's defined benefit
pension plan and only actual periods of service with the Partnership
shall be credited for such benefit accrual purposes;
(ii) As of the Expiration Date, to the extent a
Contributor (or its Affiliate) is not otherwise required to vest
Partnership Employees as plan participants, the Contributors shall
cause each Partnership Employee to become fully vested in his
interests in the Occidental Petroleum Corporation Savings Plan (the
"PSA"), the Occidental Chemical Corporation Savings and Investment
Plan (the "SIP") and the Occidental Petroleum Corporation Retirement
Plan (the "PRA") (hereinafter collectively referred to as
"Occidental's Qualified Plans");
(iii) As of the Expiration Date, the Partnership shall
provide each Partnership Employee who was not covered by a collective
bargaining agreement immediately prior to the Closing Date (a
"Non-Union Employee") with "Partnership Benefit Plans", which shall
mean the benefit plans and programs under (a) all employee plans
applicable to employees of the Partnership in similar jobs, other than
any employee plan that provides benefits under section 401(k) of the
Code ("Partnership 401(k) Plan"), and (b) a plan sponsored by the
Partnership that is substantially identical to the PSA (the "Mirror
Plan"); provided, however that the Mirror Plan will (w) provide for a
level of matching contributions and forms of distribution identical to
that provided by the Partnership 401(k) Plan (except as required by
law for benefits transferred from the PSA and SIP), (x) not offer
investment in guaranteed investment contracts, (y) not offer new
investments in Occidental common stock and (z) not offer investments
in Occidental common stock after September 30, 1998. From and after
the Expiration Date, each Non-Union Employee shall be eligible to
participate in such Partnership Benefit Plans in accordance with the
terms and conditions thereof; provided, however, that from and after
January 1, 1999 such Non-Union Employee shall commence participation
in the Partnership 401(k) Plan and shall no longer be entitled to
contributions under the Mirror Plan. Under such Partnership Benefit
Plans which are Employee Welfare Benefit Plans, Non-Union Employees
and their eligible dependents, if a participant in any health, long
term disability or life insurance plans, as applicable, of a
Contributor or its Affiliates immediately prior to the Expiration
Date, (a) shall participate in such Partnership Benefit Plans as of
the Expiration Date, and (b) shall be deemed to satisfy any
pre-existing condition limitations under group medical, dental, life
insurance or disability plans that shall be provided after the
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<PAGE> 19
Expiration Date. In addition, subject to the agreement of the
third-party administrator, amounts paid by such Non-Union Employees
towards deductibles and co-payment limitations under the health plans
of a Contributor or its Affiliates shall be counted toward meeting any
similar deductible and copayment limitations under the health plans
that shall be provided under the Partnership Benefit Plans.
(iv) The Contributors shall, or shall cause its
Affiliates, as appropriate to, and the Partnership shall take all
necessary and reasonable steps to prevent a loan default under the PSA
and the SIP (collectively the "Contributors' 401(k) Plans"), including
the following: (a) the Contributors shall, or shall cause its
Affiliates, as appropriate, to allow Partnership Employees to repay
their loans under the Contributors' 401(k) Plans during any period
during which the Contributors or its Affiliates provide payroll
services, and (b) the Contributors shall cause Occidental to agree and
the Partnership agrees to take the necessary and reasonable steps to
provide for a plan to plan transfer (as such transfer is defined in
Section 414(l) of the Code) of account balances (including outstanding
loans) of Partnership Employees from the Contributor's 401(k) Plans to
the appropriate Partnership's 401(k) Plan. Notwithstanding the
foregoing, any steps which in the sole discretion of the Contributors
or its Affiliates jeopardizes the tax- qualified status of any of its
Employee Plans shall be deemed unreasonable.
(v) From and after the Expiration Date, Non-Union
Employees shall be entitled to retain and take any paid vacation days
accrued but not taken under a Contributor's vacation policy for the
period from January 1, 1998 through the Expiration Date. Upon or
promptly after the Expiration Date, the Contributor shall pay any
Banked Vacation and Carryover Vacation. "Banked Vacation" shall mean
vacation time accrued on the Contributor's records as payable to any
Partnership Employee who is a Non-Union Employee for which vacation
time has not been taken for the period prior to January 1, 1982, 1986
or 1988, as appropriate for such Partnership Employee. "Carryover
Vacation" shall mean vacation time which (a) is not Banked Vacation;
(b) has been accrued on the Contributor's records as payable and
approved by designated personnel for any Partnership Employee who is a
Non-Union Employee; and (c) such vacation time has not been taken
prior to the Expiration Date and which was earned for any period prior
to January 1, 1998.
(h) Subject to the representations in Section 3.4 hereof, as soon
as possible after the Expiration Date the Contributor and the Partnership shall
take all actions necessary to cause (i) the Contributor to cease to be the plan
sponsor of the Cain Pension Plan ("Cain Plan") and the PDG Chemical Inc.
Pension Plan ("PDG Plan"), (ii) the Partnership to become the plan sponsor of
the Cain Plan and the PDG Plan and to assume all present and future obligations
and liabilities of the Contributor with respect to such plan, and (iii) the
Partnership shall recognize service with Occidental or its Affiliates for early
retirement eligibility purposes under the Cain Plan and the PDG Plan. From and
after the Expiration Date until the instruction to liquidate assets from the
Contributor's master trust for the purpose of transferring assets to the
Partnership's trust, assets relating to the Cain Plan and the PDG Plan shall be
invested at the discretion of the fiduciaries of such plans, in the normal
course, subject to all applicable laws and plan and trust provisions. Any
earnings or losses on such
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<PAGE> 20
assets after the Expiration Date shall be based on the return of the
Contributor's trust as determined by the Contributor's trustee. After
liquidation of assets until the date of transfer of the assets of the Cain Plan
and PDG Plan, earnings or losses on such assets shall be based on the Short
Term Investment Fund ("STIF") rate of The Northern Trust Company, the trustee
of such plans.
(i) As of the Expiration Date, the Partnership Employees shall
cease to accrue service credit, except as expressly provided in this Section
2.8, under any and all of the Employee Welfare Benefit Plans of the
Contributors or its Affiliates, under any and all of the Employee Pension
Benefit Plans of the Contributor or its Affiliates, and any and all non-ERISA
plans or programs of the Contributor or its Affiliates, in which participation
had been available to such Employees prior to the Expiration Date. The
Contributors agree that, with respect to any Partnership Employee directly
transferred from the Partnership to employment with the Contributors or their
Affiliates, they will recognize all service credited for such Partnership
Employee on the records of the Partnership for purposes of eligibility for
benefits and vesting under the benefit plans and programs of the Contributors
and their Affiliates and calculation of benefits under the benefit plans and
programs of the Contributors and their Affiliates, other than the defined
benefit pension plan of the Contributors and their Affiliates. For purposes of
this Section 2.8(i), an employee shall be directly transferred if the person is
employed by the Partnership immediately prior to his or her employment with the
Contributors or their Affiliates and if such employment with the Contributors
or their Affiliates is the result of an agreement between the Partnership and
the Contributors or their Affiliates.
(j) The Contributors or their Affiliates shall retain the sole
responsibility for, and shall continue to pay, all hospital, medical, and
health care continuation coverage benefits as described in section 4980B of the
Code, life insurance, disability, other welfare plan expenses and benefits
(including all benefits under the Employee Plans), and worker's compensation
for employees of the Contributors (including each Employee) and their covered
dependents, including "qualified beneficiaries" within the meaning of section
607(3) of ERISA, with respect to claims incurred prior to the Expiration Date.
In addition, the Contributors or their Affiliates shall retain sole
responsibility for the payment of any claim for medical benefits, health care
continuation coverage benefits as described in section 4980B of the Code, life
insurance or other welfare benefits by, or any other item of compensation or
benefits payable under any Contributor Employee Welfare Benefit Plan to (i) any
employee of the Contributor on and after the Expiration Date, (ii) any former
employee of the Contributor who retired, died, became long-term disabled or
otherwise terminated employment prior to the Expiration Date, and (iii) any
"qualified beneficiary" of a Partnership Employee with respect to whom a
"qualifying event" (as such terms are defined in sections 603 and 607 of ERISA)
has occurred prior to the Expiration Date. Except as set forth above, expenses
and benefits relating to such types of claims incurred by Partnership Employees
and their covered dependents on or after the Expiration Date shall be the sole
responsibility of the Partnership to the extent covered under the terms of its
benefit plans. For the purposes of this Section 2.8(j), a claim is deemed
incurred when the services giving rise to the claim were performed.
(k) The Contributors and the Partnership agree that they will
satisfy their respective obligations, if any, under the National Labor
Relations Act regarding union represented employees of the Contributor at the
Beaumont, Texas, PD Glycol Plant. Further, the Partnership will recognize
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<PAGE> 21
the Oil, Chemical and Atomic Workers International Union and its Local No.
4-243, Production and Maintenance Group, at the Beaumont, Texas, PD Glycol
Plant.
(l) Except as otherwise specified in this Section 2.8, in the
event that a Contributor or its Affiliates terminates any of its employees
other than the Employees at any time prior to the Expiration Date, the
Contributor shall be solely responsible for any liability with respect to such
termination, including liability for all severance benefit payments to such
employees pursuant to its severance plan and any costs associated with
violation of any applicable Authority. Notwithstanding the foregoing, the
Partnership hereby agrees to indemnify the Contributors and their Affiliates
and to defend and hold the Contributors and their Affiliates harmless from and
against any claims, losses, expenses, obligations, and liabilities (including
cost of defense and reasonable attorney's fees) asserted against and imposed on
the Contributors and their Affiliates and arising out of or otherwise in
respect of the following: (i) the Partnership's termination of any Partnership
Employee's employment with the Partnership; (ii) any failure by the Partnership
to comply with its obligations hereunder or otherwise with respect to any
Partnership Employee; (iii) any suit or claim of violation brought against the
Contributors or their Affiliates under WARN for any actions taken by the
Partnership after the Expiration Date with regard to the Partnership Employees
at any facility, site of employment or operating unit affected by this
Agreement; or (iv) all claims by any Partnership Employee after the Expiration
Date whom the Partnership or its Affiliates actually or constructively
terminates or by any spouse, dependent, estate or other beneficiary of such
Employee, and (v) from any claims or charges by or relating to Employee
concerning wrongful termination, discrimination, harassment, or violation of
(a) the Fair Labor Standards Act, (b) the Labor Management Relations Act, (c)
WARN, (d) the Americans With Disabilities Act, (e) ERISA, (f) the Consolidated
Omnibus Budget Reconciliation Act of 1985, (g) the National Labor Relations
Act, (h) the Family and Medical Leave Act, (i) the Health Insurance Portability
and Accountability Act, (j) Title VII of the Civil Rights Act of 1964, (k) the
Age Discrimination in Employment Act, or (l) any and all applicable state and
local laws relating to employees or labor relations, all as attributable to the
conduct of the Partnership or its Affiliates with respect to such Employee
relating to the period subsequent to the Expiration Date. The Partnership
hereby agrees to indemnify the Contributors and their Affiliates and to defend
and hold Contributors and their Affiliates harmless from and against fifty
percent of any claims, losses, expenses, obligations and liabilities (including
cost of defense and reasonable attorney's fees) asserted against and imposed on
the Contributors and their Affiliates and arising out of the Partnership's and
Contributor's joint selection of the Employees offered employment by the
Partnership.
(m) Nothing expressed or implied in this Agreement shall confer
upon any Employee, or any legal representative thereof, any rights or remedies,
including any right to employment, whether directly or as a third party
beneficiary, or continued employment for any specified period, of any nature or
kind whatsoever.
(n) Except as otherwise specified in this Section 2.8, the
Contributors agree to indemnify the Partnership and to defend and hold the
Partnership and its Affiliates harmless from and against claims, losses,
expenses, obligations, and liabilities (including costs of defense and
reasonable attorney's fees) arising out of or otherwise in respect of the
following (i) any Contributor employee
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<PAGE> 22
benefit plans, or claims of employees or former employees of the Contributor or
of any spouse, dependent, estate, or other beneficiary of such employees or
former employees that in any case arose prior to the Expiration Date,
including, without limitation, any such liability or obligation which may arise
under Section 2.8(j) and from (ii) any claims or charges relating to wrongful
termination, discrimination, harassment, or violation of (a) the Fair Labor
Standards Act, (b) the Labor Management Relations Act, (c) WARN, (d) the
Americans With Disabilities Act, (e) ERISA, (f) the Consolidated Omnibus Budget
Reconciliation Act of 1985, (g) the National Labor Relations Act, (h) the
Family and Medical Leave Act, (i) the Health Insurance Portability and
Accountability Act, (j) Title VII of the Civil Rights Act of 1964, (k) the Age
Discrimination in Employment Act, or (l) any and all applicable state and local
laws relating to employees or labor relations, all as attributable to the
conduct of the Contributor or its Affiliates with respect to (A) any employees
or former employees of the Contributor who do not become Partnership Employees
relating to the periods both before and after the Expiration Date, and (B) the
Employees, relating to the period prior to the Expiration Date.
(o) Representatives of the Partnership shall be entitled to meet
with the Employees at mutually agreeable times prior to the Expiration Date to
explain and answer questions about the conditions, policies and benefits of
employment by Partnership after the Expiration Date. The Contributors shall
cooperate with the Partnership until Expiration Date in communicating to such
Employees any additional information concerning employment after the Expiration
Date which such Employees may seek, or which the Partnership may desire to
provide, and during normal business hours shall allow additional meetings by
representatives of the Partnership with such Employees upon the reasonable
request of the Partnership. In addition, the Contributor and the Partnership
agree to furnish each other with appropriate records for each of the Employees
as may be necessary to assist in proper benefit administration.
(p) The indemnity provisions of this Section shall be subject to
the requirements of Section 6.3 of this Agreement.
2.9 Joint Contracts.
(a) Any Contributed Contracts contributed to the Partnership
pursuant to Section 1.2 or 2.1 that relate principally to the Contributed
Business but also relate to the business (other than the Contributed Business)
of an Asset Contributor or its Affiliates will be made available to the
appropriate Asset Contributor and its Affiliates by the Partnership pursuant to
arrangements by which such Asset Contributor and its Affiliates will enjoy the
benefits of such Contributed Contracts as they relate to their business (other
than the Contributed Business) on the same terms and conditions as the
Partnership.
(b) Any Contracts that relate principally to the business (other
than the Contributed Business) of an Asset Contributor or its Affiliates but
also relate to the Contributed Business will be made available to the
Partnership by such Asset Contributor or its Affiliates pursuant to other
arrangements by which the Partnership will enjoy the benefits of such Contracts
as they relate to the Contributed Business on the same terms and conditions as
such Asset Contributor or its Affiliates.
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<PAGE> 23
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Except as set forth on Schedule 3 or in the SEC Reports, each
Contributor and Oxy CH Sub represent and warrant to the Partnership as follows:
3.1 Due Organization; Good Standing and Power. Each Contributor
and Oxy CH Sub are corporations duly organized, validly existing and in good
standing under the laws of its state of organization and each Contributor has
the requisite power and authority to own, lease and operate the properties to
be contributed hereunder and to conduct the Contributed Business as now
conducted by it. Each Contributor and Oxy CH Sub has all requisite power and
authority to enter into this Agreement and the Assignment and Assumption
Agreements and to perform its obligations hereunder and thereunder. Each
Contributor is duly authorized, qualified or licensed to do business as a
foreign corporation and is in good standing, in the State of Texas and in each
of the other jurisdictions in which its right, title or interest in or to any
of the Assets held by it, or the conduct of the Contributed Business by it,
requires such authorization, qualification or licensing, except where the
failure to so qualify or to be in good standing would not reasonably be
expected to have a Material Adverse Effect.
3.2 Authorization and Validity of Agreements. The execution,
delivery and performance of this Agreement and the other Related Agreements by
each Contributor and Oxy CH Sub and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of such Person. Except to the extent heretofore obtained, no other
corporate action or action by stockholders is necessary for the authorization,
execution, delivery and performance by a Contributor and Oxy CH Sub of this
Agreement and the other Related Agreements and the consummation by any such
Person of the transactions contemplated hereby or thereby. This Agreement and
the other Related Agreements have been duly executed and delivered by each
Contributor and Oxy CH Sub and constitute legal, valid and binding obligations
of such Person, enforceable in accordance with their terms, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general equity
principles.
3.3 No Consents Required; No Conflict with Instruments to which a
Contributor is a Party. The execution, delivery and performance of this
Agreement and the other Related Agreements by the Contributors, Oxy CH Sub and
any of their Affiliates that is a party thereto and the consummation by each
such Person or any such Affiliate of the transactions contemplated thereby (i)
will not require any Consent except for such Consents the failure of which to
be obtained or made, would not in the aggregate reasonably be expected to have
a Material Adverse Effect; and (ii) will not violate (with or without the
giving of notice or the lapse of time or both), or conflict with, or result in
the breach or termination of any provision of, or constitute a default under,
or result in the acceleration of the performance of the obligations of such
Person, or result in the creation of an Encumbrance upon any Assets or a
portion of the Contributed Business pursuant to, the charter or by-laws of
such Person, or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which such Person is a
party or by which such Person or
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any of the Assets held by such Person is bound, except for such violations,
conflicts, breaches, terminations, defaults, accelerations or Encumbrances
which would not in the aggregate reasonably be expected to have a Material
Adverse Effect.
3.4 Employee Benefits.
(a) (i) Each of the Contributor's Defined Benefit and Defined
Contribution Pension Plans covering employees ("Employee Plan") is in
substantial compliance with applicable requirements prescribed by any
and all Legal Requirements, including, but not limited to the Code,
except for violations the occurrence of which would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
Each Employee Plan that is intended to be qualified under Section
401(a) of the Code currently has a favorable determination letter from
the Internal Revenue Service as to that Plan's qualification under
Section 401(a) of the Code and nothing has occurred since the date of
such letter that could reasonably be expected to cause the loss of
such qualification.
(ii) Each Contributor has in all material respects
performed all obligations required to be performed by it under ERISA,
the Code and any other applicable Legal Requirements and under the
terms of each Employee Plan, except such failures to perform which
would not in the aggregate reasonably be expected to have a Material
Adverse Effect. No Contributor has received any written notice of the
existence of any material default or violation by any other party of
any of such Legal Requirements, terms or requirements applicable to
any of the Employee Plans.
(iii) Other than routine claims for benefits, no
Contributor has received any written notice of any pending material
claims or lawsuits which have been asserted or instituted against any
of the Employee Plans, the assets of the trust or funds under the
Employee Plans, the sponsor or administrator of any of the Employee
Plans, or against any fiduciary of any of the Employee Plans with
respect to the operation of such Plan.
(iv) No Contributor has received any written notice of any
pending investigation or pending enforcement action by the Pension
Benefit Guaranty Corporation, the Department of Labor, the Internal
Revenue Service or any other Authority with respect to any of the
Employee Plans.
(v) All contributions required to be made under the terms
of each Contributor's Employee Plans have been timely made. No
Employee Plan has an "accumulated funding deficiency" (within the
meaning of section 412 of the Code or Section 302 of ERISA).
(b) Each Contributor's "group health plans" (within the meaning of
Code Section 5000(b)(1)) have been operated in substantial compliance with the
group health plan continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA, Title XXII of the Public Health
Service Act and the provisions of the Social Security Act.
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<PAGE> 25
(c) There has been no act or omission by a Contributor that has
given rise to or may give rise to material fines, penalties, taxes, or related
charges under Section 502(c), (i) or (l) or Section 4071 of ERISA or Chapter 43
of the Code or the imposition of a lien pursuant to Sections 401(a)(29) or
412(n) of the Code or pursuant to ERISA.
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases.
(a) Each Contributor has good and marketable title to all of its
Fee Interests, free and clear of all Encumbrances, except (i) any prior
reservations, easements and other matters of record to the extent valid,
subsisting and affecting the Assets, (ii) any prior unrecorded easements for
which improvements have been constructed in such a manner as to be apparent to
the Partnership from inspection of the Assets to the extent valid, subsisting
and affecting the Assets, (iii) liens for current taxes not yet due and payable
and mechanics and similar statutory liens arising in the ordinary course of
business, (iv) liens of employees and laborers for current wages not yet due,
(v) building, zoning and health regulations of the jurisdictions in which the
Assets are located; and (vi) such imperfections of title, easements and
Encumbrances, if any, as do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets as they are currently
being used or as otherwise would not reasonably be expected to have a Material
Adverse Effect.
(b) Each Contributor is the sole lessee under its Leases and the
sole party entitled to its Leasehold interests in favor of the lessee
thereunder, and the sole owner or, in the case of OCC Sub, the sole lessee, of
the improvements (other than fixtures) situated on its Leased Premises, free and
clear of all Encumbrances affecting its Leaseholds except (i) any prior
reservations, easements and other matters of record to the extent valid,
subsisting and affecting the Assets, (ii) any prior unrecorded easements for
which improvements have been constructed in such a manner as to be apparent to
the Partnership from inspection of the Assets to the extent valid, subsisting
and affecting the Assets, (iii) liens for current taxes not yet due and payable
and mechanics and similar statutory liens arising in the ordinary course of
business, (iv) liens of employees and laborers for current wages not yet due,
(v) building, zoning and health regulations of the jurisdictions in which the
Assets are located; and (vi) such imperfections of title, easements and such
Encumbrances, if any, as do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets or as otherwise would
not reasonably be expected to have a Material Adverse Effect. No Contributor or
any Affiliate thereof has received from or delivered to the lessors under such
Leaseholds any written notice of termination or threat of termination of such
respective Leaseholds. True and complete copies of all written lease agreements
(including any written amendments or modifications thereof) constituting, or
evidencing the terms of, such Leaseholds have been delivered or made available
to the Partnership. No material default or event of default on the part of a
Contributor or any Affiliate thereof under the provisions of any of such
Leaseholds, and no event that with the giving of notice or passage of time or
both would constitute such default or event of default on the part of such
Contributor, has occurred (which default or event of default has not been
cured). No Contributor or any Affiliate thereof has received any written notice
from any lessor under any Leasehold, that any material default or event of
default on the part of such Contributor or such Affiliate as lessee under the
provisions of any Leaseholds, or that any event that with the giving of notice
or passage of time or both would constitute such a default or an event of
default on the part
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<PAGE> 26
of such Contributor or any such Affiliate, as lessee, has occurred (which
default or event of default has not been cured). No material default or event
of default on the part of the lessor under the provisions of any of such
Leaseholds, and no event that with the giving of notice or passage of time or
both would constitute such default or event of default on the part of any such
lessor, has occurred (which default or event of default has not been cured).
(c) Each Contributor or an Affiliate thereof has good title to all
of the personal property constituting Assets purported to be owned by it, free
and clear of all Encumbrances, except for liens for Taxes not yet due and
payable and such Encumbrances, if any, that do not in the aggregate materially
detract from the value or materially interfere with the use of the Assets (as
they are currently being used) or as otherwise would not reasonably be expected
to have a Material Adverse Effect.
3.6 Title Matters; Defects in Improvements. There are no
trespassers or other adverse parties in possession on or affecting the Fee
Interests or the Leased Premises of a Contributor or any Affiliate thereof
that would reasonably be expected to have a Material Adverse Effect. No
Contributor or any Affiliate thereof has granted and none of the foregoing is
party to any unrecorded options, rights of refusal, sales contracts or other
such contractual rights in favor of any third parties relating to its Fee
Interests or the Leased Premises. No written notice has been received by a
Contributor or any Affiliate thereof from any insurance company with respect to
its Fee Interests or the Leased Premises or by any board of fire underwriters
claiming any material defects or deficiencies or requiring the performance of
any repairs, replacement, alteration or other work relating to the improvements
situated thereon (in each case, which have not been cured).
3.7 Working Capital. Each Contributor has operated the
Contributed Business in the ordinary course of business from September 30, 1997
to the Closing Date such that its Inventory, Stores Inventory, Prepaid
Expenses, Accounts Receivable (and all reserves or allowances for doubtful
accounts, returned products or potential price adjustments) and Trade Accounts
Payable, as of the Closing Date, are at substantially the same level as would
have existed for such Contributor without regard to the transactions
contemplated by the Master Transaction Agreement. In connection with this
Section 3.7, it is understood among the parties that the Originator Receivables
Sale Agreement dated as of October 29, 1998, by and among Occidental
Receivables Inc., OCC and other parties, has been terminated with respect to
Oxy Petrochemicals.
3.8 Technology and Similar Rights. Each Contributor owns or is
licensed to use all of its Intellectual Property, Licensed Technology and
Licensed Trademarks, and such Intellectual Property, Licensed Technology and
Licensed Trademarks together with the rights assigned or licensed under the
Related Agreements constitute all relevant patents, pending patent
applications, invention disclosures, copyrights, software, trade secrets,
technical information, technology, know-how, processes, tradenames, trademarks,
trademark registrations or applications, copyrights, copyright applications or
registrations or any derivative thereof or design used in connection therewith
necessary for the normal operation and conduct of the Contributed Business as
it is currently operated and conducted, except where the failure to have such
ownership or licenses would not reasonably be expected to have a Material
Adverse Effect.
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<PAGE> 27
3.9 Government Licenses, Permits and Related Approvals. The
Government Licenses constitute all those necessary for the normal operation and
conduct of the Contributed Business as it is currently operated and conducted,
except where the failure to have such Government Licenses would not reasonably
be expected to have a Material Adverse Effect.
3.10 All Necessary Assets. The Assets together with the rights
under the Related Agreements constitute all property and other rights necessary
to enable the Partnership to operate and conduct the Contributed Business in
substantially the same manner as it is being operated and conducted on the date
of this Agreement, except in all cases where the failure of the Partnership to
acquire such property or other rights by conveyance or license would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
3.11 Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Each Contributor, and any Affiliate thereof, is
operating and conducting the Contributed Business in compliance with all
applicable Legal Requirements, rights of concession, licenses, know-how or
other proprietary rights of others, the failure to comply with which would
reasonably be expected to have a Material Adverse Effect.
3.12 Legal Proceedings. There is no litigation, proceeding, claim,
grievance, arbitration, investigation or other action to which a Contributor or
any Affiliate thereof is a party (i) that is pending or, to the Knowledge of a
Contributor, threatened, (ii) that relates in any way to the Assets, to the
operation or conduct of the Contributed Business, or to the transactions
contemplated by this Agreement, and (iii) that upon resolution adverse to a
Contributor or any of its Affiliates, could reasonably be expected to have a
Material Adverse Effect.
3.13 [Reserved].
3.14 Tax Matters.
(a) There are no material liens for Taxes (other than for current
Taxes not yet due and payable) upon the Assets.
(b) None of the Assets directly or indirectly secures any
indebtedness for money borrowed the interest on which is tax-exempt.
3.15 [Reserved].
3.16 HSE Matters. Except as would not be reasonably likely to have
a Material Adverse Effect:
(a) (i) The Fee Interests, the Leased Premises and the
operations of each Contributor and any Affiliate thereof in connection with the
Contributed Business are in compliance with all HSE Laws and (ii) to the extent
arising out of a Contributor's or any Affiliate's ownership or use of the
Assets or operation of the Contributed Business, there are no Chemical
Substances held, located,
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<PAGE> 28
released, generated, treated, stored or disposed of, on, under or from such Fee
Interests or such Leased Premises or in, on or from any fixtures or improvement
thereon in excess of any standard prescribed or permitted by any HSE Laws or
which require corrective or other action pursuant to the provisions of any HSE
Laws.
(b) No Contributor or any Affiliate has received any notice from
any federal, state, or local agency naming such Contributor or such Affiliate
as a potentially responsible party ("PRP"), or otherwise notifying such
Contributor or such Affiliate of any potential liability under either the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA" or "Superfund"), the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA"), or any state statute, rule or local
regulation imposing liability similar to CERCLA or RCRA that relates in any way
to any Chemical Substances generated by or derived from the operations on the
Fee Interests, or the Leased Premises of such Contributor or any Affiliate; nor
has either Contributor or any of its Affiliates received any comparable claim
or notice from any private party.
(c) Each Contributor or an Affiliate thereof, as applicable, has
been and is, in compliance with, all permits, licenses, approvals, permission,
or authorizations necessary for its operations in connection with the
Contributed Business to comply in all respects with HSE Laws.
(d) (i) No Contributor or any Affiliate thereof has received
written notice of any actual, impending, or potential proceedings, allegations,
claims, losses, actions, investigations or inquiries of any kind in connection
with the Contributed Business and HSE Laws or Chemical Substances ("HSE
Proceedings") and (ii) no Contributor nor any Affiliate thereof has any
Knowledge of any facts, events or occurrences that would reasonably be expected
to result in any HSE Proceedings being brought.
(e) No Contributor or any Affiliate thereof is party to, or is
subject to the terms of, any consent order, consent judgment, consent decree,
court or administrative order or judgment, agreement, schedule, or decree
issued by any Authority with respect to the Contributed Business.
3.17 Investigation to Acquire Knowledge. Each of the persons
covered by clauses (i) and (ii) of the definition of "Knowledge" set forth in
Section 1 has reviewed, with counsel to such Contributor, the other
representations and warranties contained in, and the Schedules that relate to,
this Section 3 to the extent that they relate to such person's area of
responsibility or expertise and has made a reasonable inquiry as to the
accuracy and completeness of such representations, warranties and Schedules.
SECTION 3A
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF OXY CH SUB
Except as set forth on Schedule 3, Oxy CH Sub represents and warrants
to the Partnership as follows:
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<PAGE> 29
3A.1 Capitalization. At the Effective Time, the authorized capital
stock of Oxy Petrochemicals will consist of 1,100 shares of common stock, of
which 1,100 shares will be issued and outstanding. All shares of the capital
stock of Oxy Petrochemicals which will be outstanding as of the Effective Time
will be duly authorized, validly issued, fully paid and non-assessable, and
will not be subject to or have been issued in violation of any preemptive
rights. Except as contemplated by this Agreement, there are no other shares of
capital stock of Oxy Petrochemicals authorized or outstanding and there are no
subscriptions, options to purchase, rights of refusal, rights of first offer,
conversion or exchange rights, warrants, preemptive rights or other agreements,
claims or commitments of any kind obligating Oxy Petrochemicals or any
Affiliate thereof to issue, transfer, deliver or sell shares of the capital
stock or other securities of, or interests in, Oxy Petrochemicals or obligating
Oxy Petrochemicals or an Affiliate thereof to grant, extend or enter into any
such agreement or commitment. At the Effective Time, there will be no
shareholder agreements, voting trusts or other agreements or understandings to
which Oxy Petrochemicals or an Affiliate thereof is a party or by which Oxy
Petrochemicals or such Affiliate is bound, relating to the voting of any shares
of the capital stock of Oxy Petrochemicals.
3A.2 Ownership of Common Stock. Oxy CH Sub is the beneficial owner
of all of the issued and outstanding shares of Oxy Petrochemicals Common Stock,
in each case, free and clear of any Encumbrances or limitations on the voting
or transfer thereof.
3A.3 No Undisclosed Liabilities. As of the Effective Time, Oxy
Petrochemicals will have no debts, liabilities or obligations whether accrued,
absolute, contingent or otherwise and whether due or to become due, other than
(a) the Assumed Liabilities and (b) the Excluded Liabilities assumed by Oxy CH
Sub pursuant to Section 1.8.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to each Contributor as
follows:
4.1 Due Organization; Good Standing and Power. The Partnership is
a limited partnership duly formed and validly existing under the laws of the
State of Delaware. The Partnership has all partnership power and authority to
enter into this Agreement and the other Related Agreements and to perform its
obligations hereunder and thereunder. The Partnership is duly authorized,
qualified or licensed to do business as a foreign partnership, in each of the
jurisdictions in which its right, title or interest in or to any asset, or the
conduct of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify would not have a material
adverse effect on the ability of the Partnership to perform its obligations
hereunder or under the Assignment and Assumption Agreements.
4.2 Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement and the other Related Agreements by
the Partnership and the consummation by the Partnership of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
partnership action on the part of the Partnership. No other partnership action
is necessary
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<PAGE> 30
for the authorization, execution, delivery and performance by the Partnership
of this Agreement, the other Related Agreements and the consummation by the
Partnership of the transactions contemplated hereby or thereby. This Agreement
and the other Related Agreements have been duly executed and delivered by the
Partnership and constitute legal, valid and binding obligations of the
Partnership, enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equity
principles.
4.3 No Consents Required; No Conflict with Instruments to which
the Partnership is a Party. The execution, delivery and performance of this
Agreement and the other Related Agreements by the Partnership and the
consummation by it of the transactions contemplated thereby (i) will not
require any Consent except for such Consents the failure of which to be
obtained or made, would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Partnership's ability to perform its obligations
hereunder or thereunder, and (ii) will not violate (with or without the giving
of notice or the lapse of time or both), conflict with, or result in the breach
or termination of any provision of, or constitute a default under, or result in
the acceleration of the performance of the obligations of the Partnership
under, the partnership agreement of the Partnership, or any indenture,
mortgage, deed of trust, lease, licensing agreement, contract, instrument or
other agreement to which the Partnership is a party or by which the Partnership
or any of its assets or properties is bound, except for such violations,
conflicts, breaches, terminations, defaults, accelerations or liens which would
not in the aggregate reasonably be expected to have a material adverse effect
on the Partnership's ability to perform its obligations hereunder or
thereunder.
SECTION 5
COVENANTS SUBSEQUENT TO CLOSING DATE
5.1 Access to Information. Following the Closing Date, the
Partnership shall afford, and will cause its Affiliates to afford, to the Asset
Contributors, Oxy CH Sub, their counsel, accountants and other authorized
representatives, during normal business hours, reasonable access to the books,
records and other data of the Contributed Business with respect to the period
prior to the Closing Date (and any personnel familiar therewith) to the extent
that such access may be reasonably required by an Asset Contributor or Oxy CH
Sub to facilitate (i) the preparation by such Asset Contributor or Oxy CH Sub
of such tax returns as it may be required to file with respect to the
operations of the Assets and the Contributed Business or in connection with any
audit, amended return, claim for refund or any proceeding with respect thereto,
(ii) the investigation, litigation and final disposition of any claims which
may have been or may be made against such Asset Contributor or Oxy CH Sub in
connection with the Assets and the Contributed Business, (iii) the payment of
any amount in connection with any liabilities or obligations which have not
been assumed by the Partnership under this Agreement and (iv) for any other
reasonable business purpose. For a period of ten years after the date of this
Agreement, the Partnership will not dispose of, alter or destroy any such
books, records and other data without giving 90 days' prior notice to such
Asset Contributor or Oxy CH Sub to permit it, at its expense, to examine,
duplicate or repossess such records, files, documents and correspondence.
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<PAGE> 31
5.2 Mail or Other Communications. Each Asset Contributor or Oxy
CH Sub authorizes and empowers the Partnership on and after the Closing Date to
receive and open all mail received by the Partnership relating to the
Contributed Business or the Assets and to deal with the contents of such
communications in any proper manner. Each Asset Contributor and Oxy CH Sub
shall promptly deliver to the Partnership any mail or other communication
received by it on and after the Closing Date pertaining to the Contributed
Business or the Assets and any cash, checks or other instruments of payment to
which the Partnership is entitled. The Partnership shall promptly deliver to
the appropriate Asset Contributor or Oxy CH Sub any mail or other communication
received by it after the Closing Date pertaining to the Excluded Assets or
Excluded Liabilities, and any cash, checks or other instruments of payment in
respect of such.
5.3 Use of Trade Name. Pursuant to the Trademark License to be
granted to the Partnership by Occidental and OCC, after the Closing Date the
Partnership shall be permitted to use any items of Inventory or packaging
material, any sales or promotional materials, any forms or documents or any
other printed materials that bear the names set forth on Schedule 2.2(c) or
other trademarks or trade names of which such names or any name similar thereto
forms a part.
5.4 Closing Date Balance Sheet. Not later than 60 days after the
Closing Date, each Contributor shall cause Arthur Andersen LLP to prepare and
deliver to such Contributor and the Partnership an audited balance sheet of the
Contributed Business as of the Closing Date (the "Closing Date Balance Sheet").
In addition, each Contributor shall prepare and deliver to the Partnership such
other financial statements or information as the Partnership may reasonably
request in connection with any proposed Partnership financing; it is currently
anticipated that the Partnership will request the Contributors to provide the
Partnership with audited financial statements related to the operation of the
Contributed Business for the past three (3) fiscal years.
5.5 [Reserved]
5.6 Collection of Accounts Receivable. The Partnership shall take
all commercially reasonable efforts to collect any Accounts Receivable;
provided, however, to the extent any Accounts Receivable set forth on the
Closing Date Balance Sheet are not collected within 180 days after the Closing
Date by the Partnership, the appropriate Contributor (or, in the case of Oxy
Petrochemicals, Oxy CH Sub) will buy such uncollected Accounts Receivable from
the Partnership at the amount set forth on the Closing Date Balance Sheet;
provided, further, that the amount to be paid by the appropriate Contributor
(or, in the case of Oxy Petrochemicals, Oxy CH Sub) for such uncollected
Accounts Receivable shall be reduced by the amount of any reserve or allowance
for doubtful accounts, returned products or potential price adjustments,
transferred to the Partnership pursuant to Section 2.1(j); and provided,
further, that any payments or reimbursements that are made by the Partnership
as a result of volume or price rebates or adjustments and that are attributable
(in whole or in part) to transactions prior to the Closing Date shall be for
the account of the Contributor (or, in the case of Oxy Petrochemicals, Oxy CH
Sub), to the extent so attributable. Collections on Accounts Receivable shall
be applied on a specific identification basis. The Partnership will report
monthly in writing to each Contributor (or, in the case of Oxy Petrochemicals,
Oxy CH Sub) on the amounts collected during the preceding month, and shall
provide an aging summary of uncollected
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<PAGE> 32
accounts and a detailed description of each problem account (45 or more days
overdue). On reasonable notice to the Partnership, each Contributor (or, in
the case of Oxy Petrochemicals, Oxy CH Sub) shall have the right to take over
the collection process for any problem account.
5.7 Reimbursement for Prepaid Expenses. The Partnership and each
Contributor acknowledge that the Prepaid Expenses attributable to its
Contributed Business have been conveyed to the Partnership solely in order to
facilitate the timely and efficient transfer of the Contributed Business to the
Partnership. Consequently, the Partnership shall reimburse such Contributor
(or, in the case of Oxy Petrochemicals, Oxy CH Sub) for the Prepaid Expenses
associated with its Contributed Business (other than the prepaid expenses for
"turnaround" costs) within 10 days following the receipt of the Closing Date
Balance Sheet.
SECTION 6
SURVIVAL AND INDEMNIFICATION
6.1 Survival Limitations. The representations and warranties of
the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the date that is 60 months after the Closing Date, except (i)
Section 3.14, which shall survive until the expiration of the applicable
statute of limitations and (ii) Section 3.5, which shall survive without
limitation and shall not be merged with the Assignment and Assumption
Agreements. No action can be brought with respect to any breach of any
representation or warranty (except with respect to Section 3.5) pursuant to
this Agreement unless a written notice that complies with Section 6.3 has been
delivered pursuant to such Section 6.3 prior to the expiration of the survival
period applicable to such representation or warranty; provided that upon the
giving of such notice, notwithstanding any other provision of this Agreement
the representation and warranty that is the basis of such action shall continue
with respect to such action beyond the time at which the representation and
warranty would otherwise terminate.
6.2 Indemnification.
(a) Subject to the other provisions of this Section 6, each Asset
Contributor and Oxy CH Sub hereby agrees, to the fullest extent permitted by
applicable law, to indemnify, defend and hold harmless the Partnership, its
partners, their Affiliates and their respective officers, directors and
employees from, against and in respect of any losses, claims, damages, fines,
penalties, assessments by public agencies, settlement, cost or expenses
(including costs of defense and attorneys' fees) and other liabilities (any of
the foregoing being a "Liability") incurred or suffered by the Partnership or
any of its Affiliates, arising out of, in connection with or relating to:
(i) Any misrepresentation in or breach of the
representations and warranties of a Contributor, Oxy CH Sub or any of
its Affiliates in this Agreement, the Assignment and Assumption
Agreements, the Master Intellectual Property Agreement, or the Master
Transaction Agreement, provided that any Liability arising out of, in
connection with or relating to any breach of the warranties in any
Assignment and Assumption Agreement that
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is not a breach of the warranties in this Agreement shall not be
indemnified against pursuant to this Section 6;
(ii) Any failure of a Contributor, Oxy CH Sub or any of
its Affiliates to perform any of its covenants or obligations
contained in this Agreement, the Assignment and Assumption Agreements,
the Master Intellectual Property Agreement, or the Master Transaction
Agreement;
(iii) Excluded Liabilities; or
(iv) Any Pre-Closing Contingent Liability that is not an
Assumed Liability.
provided, however, that the following limitations shall apply to the
indemnification obligations in clauses (i) and (iv) above:
(A) the Asset Contributors and Oxy CH Sub, in the
aggregate, shall not have any indemnification obligation under clause
(i) and (iv) above for any individual Liability unless the amount of
such Liability exceeds $25,000 (the "Individual Basket") (it being
understood that all Liabilities arising from the same event, condition
or set of circumstances shall be considered as an individual Liability
for purposes of such calculation), but if the amount of such Liability
exceeds the Individual Basket, the entire amount of such Liability,
including the first $25,000 of such Liability, may be the subject of
indemnification hereunder; provided, further, that the parties agree
that the amount of Liability for which indemnification may be sought
for breach of any representation or warranty under clause (i) above
shall be calculated taking into account the Individual Basket but
without regard to any qualification or exception regarding materiality
or Material Adverse Effect qualification contained in such
representation or warranty (it being understood that such materiality
or Material Adverse Effect qualifications shall apply for purposes of
determining whether there has been such a breach in the first place,
but once it has been established that there is such a breach, the
Partnership shall be entitled to indemnity relating back to the first
dollar); and
(B) to the extent any misrepresentation in or breach of
the representations and warranties of a Contributor or Oxy CH Sub
results in a Liability of the Partnership in excess of the Individual
Basket and such Liability would also constitute a Pre-Closing
Contingent Liability, such misrepresentation or breach shall be
treated as a Pre-Closing Contingent Liability.
(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, NO ASSET CONTRIBUTOR, OXY CH SUB OR ANY OF
THEIR AGENTS, EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
DIRECT CLAIMS BY AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY
THAT DOES NOT SEEK REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY
SUCH INDEMNIFIED PARTY) WITH RESPECT TO
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THEIR INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT UNLESS ANY SUCH CLAIM
ARISES OUT OF THE FRAUDULENT ACTIONS OF AN ASSET CONTRIBUTOR OR OXY CH SUB. IN
DETERMINING THE AMOUNT OF ANY LOSS, LIABILITY, OR EXPENSE FOR WHICH AN
INDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT, THE
GROSS AMOUNT THEREOF WILL BE REDUCED (BUT NOT BELOW ZERO) BY THE NET PRESENT
VALUE OF ANY CORRELATIVE INSURANCE PROCEEDS ACTUALLY REALIZED BY SUCH
INDEMNIFIED PARTY UNDER POLICIES TO THE EXTENT THAT THE FUTURE PREMIUM RATE
WILL NOT BE INCREASED BY CLAIM EXPERIENCE RELATING TO SUCH LOSS, LIABILITY OR
EXPENSE.
(c) Notwithstanding the provisions of Sections 6.2(a)(i) and
6.2(a)(iv), it is expressly agreed that no Asset Contributor or Oxy CH Sub
shall be required to indemnify the Partnership for any Liability arising out
of, in connection with or related to any HSE Claim to the extent that the
condition, event, circumstance or other basis for the HSE Claim was exacerbated
or accelerated by the Partnership. The Partnership shall not be deemed to have
exacerbated a condition, event, circumstance or other basis for an HSE Claim by
reason of the continuance thereof after the Closing (i) under circumstances
where the Partnership does not know of its existence and has not breached any
legal duty to have conducted an investigation or inquiry that would have
uncovered the matter or (ii) under circumstances where the Partnership does
know of its existence but is taking commercially reasonable actions to cure the
matter or to otherwise achieve compliance in a commercially reasonable and
prudent manner.
(d) Subject to the other provisions of this Section 6, the
Partnership hereby indemnifies, to the fullest extent permitted by law each
Asset Contributor, Oxy CH Sub and their Affiliates and their respective
officers, directors and employees against and agrees to hold each of them
harmless from any and all Liability incurred or suffered by such Person arising
out of or relating to:
(i) Any misrepresentation in or breach of the
representations and warranties of the Partnership or the failure of
the Partnership to perform any of its covenants or obligations
contained in this Agreement, the Assignment and Assumption Agreements,
the Master Intellectual Property Agreement or the Master Transaction
Agreement;
(ii) Assumed Liabilities; or
(iii) Any HSE Claim to the extent arising out of the
Partnership's exacerbation or acceleration of such HSE Claim.
(e) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, NEITHER THE PARTNERSHIP NOR ANY OF ITS AGENTS,
EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH DIRECT CLAIMS BY AN
INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY THAT DOES NOT SEEK
REIMBURSEMENT FOR A THIRD
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<PAGE> 35
PARTY CLAIM PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY ) WITH RESPECT TO THEIR
INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT UNLESS ANY SUCH CLAIM ARISES
OUT OF THE FRAUDULENT ACTIONS OF THE PARTNERSHIP. IN DETERMINING THE AMOUNT OF
ANY LOSS, LIABILITY, OR EXPENSE FOR WHICH AN INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION UNDER THIS AGREEMENT, THE GROSS AMOUNT THEREOF WILL BE REDUCED
(BUT NOT BELOW ZERO) BY THE NET PRESENT VALUE OF ANY CORRELATIVE INSURANCE
PROCEEDS ACTUALLY REALIZED BY SUCH INDEMNIFIED PARTY UNDER POLICIES TO THE
EXTENT THE FUTURE PREMIUM RATE WILL NOT BE INCREASED BY CLAIM EXPERIENCE
RELATING TO SUCH LOSS, LIABILITY OR EXPENSE.
(f) The rights provided to each Indemnified Party pursuant to this
Section 6, as limited by and subject to the provisions of this Section 6, shall
be such Indemnified Party's sole remedy for breach of any representation or
warranty by or covenant or obligation of any Indemnifying Party under this
Agreement, the Assignment and Assumption Agreements, the Master Intellectual
Property Agreement and the Master Transaction Agreement.
6.3 Procedures.
(a) Any Person seeking indemnification under Section 6.2 (the
"Indemnified Party") agrees to give prompt written notice to the party against
whom indemnity is sought (the "Indemnifying Party") of the assertion of any
claim that does not involve a Third Party Claim, which notice shall describe in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim to the extent feasible and the basis of the
Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party disputes such claim and such dispute is not resolved by the
parties, such dispute shall be resolved in accordance with Section 7.9.
(b) If an Indemnified Party is notified of a Third Party Claim
which may give rise to a claim for indemnification against any Indemnifying
Party under this Section, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing (including copies of all papers served
with respect to such Third Party Claim), which notice shall describe in
reasonable detail the nature of the Third Party Claim, an estimate of the
amount of damages attributable to the Third Party Claim to the extent feasible
and the basis of the Indemnified Party's request for indemnification under this
Agreement; provided that any failure to timely give such notice shall not
relieve the Indemnifying Party of any of its obligations under this Section 6
except to the extent that such failure prejudices or impairs, in any material
respect, any of the rights or obligations of the Indemnifying Party.
(c) Any Indemnifying Party may, and at the request of the
Indemnified Party shall, participate in and control the defense of the Third
Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless (i) the employment thereof has been specifically
authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party
failed to
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<PAGE> 36
assume the defense and employ counsel or failed to diligently prosecute or
settle the Third Party Claim or (iii) there shall exist or develop a conflict
that would ethically prohibit counsel to the Indemnifying Party from
representing the Indemnified Party. If requested by the Indemnifying Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, by making any counterclaim against
the person or entity asserting the Third Party Claim or any cross-complaint
against any person or entity, in each case only if and to the extent that any
such counterclaim or cross-complaint arises from the same actions or facts
giving rise to the Third Party Claim. The Indemnifying Party shall be the sole
judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
provided that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the prior written consent of the Indemnified
Party, which shall not be unreasonably withheld. The Indemnifying Party (if
the Indemnified Party is entitled to indemnification hereunder) shall reimburse
the Indemnified Party for its reasonable out of pocket costs incurred with
respect to such cooperation.
(d) If the Indemnifying Party fails to assume the defense of a
Third Party Claim within a reasonable period after receipt of written notice
pursuant to the first sentence of subparagraph (c), or if the Indemnifying
Party assumes the defense of the Indemnified Party pursuant to subparagraph (c)
but fails diligently to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings; provided that the
Indemnified Party shall not settle such Third Party Claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section, and the Indemnifying Party shall bear its own costs and expenses with
respect to such participation.
(e) Notwithstanding the other provisions of this Section 6.3, if
the Indemnifying Party disputes its potential liability to the Indemnified
Party under this Section 6.3 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
6.3 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified Party, the Indemnifying Party shall reimburse the Indemnified Party
in full for all costs of the litigation concerning such dispute.
(f) After it has been determined, by acknowledgment, agreement, or
ruling of court of law, that an Indemnifying Party is liable to the Indemnified
Party under this Section 6, the
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<PAGE> 37
Indemnifying Party shall pay or cause to be paid to the Indemnified Party the
amount of the Liability within ten business days of receipt by the
Indemnifying Party of a notice reasonably itemizing the amount of the Liability
but only to the extent actually paid or suffered by the Indemnified Party.
(g) In the event a Third Party Claim is brought in which the
liability as between the Partnership and any or all Contributors is alleged to
be joint (it being agreed that any Third Party Claim related to a Pre-Closing
Contingent Liability shall be deemed joint) or in which the entitlement to
indemnification under this Section 6 has not been determined, the Partnership
and the appropriate Contributors shall cooperate in the joint defense of such
Third Party Claim and shall offer to each other such assistance as may
reasonably be requested in order to ensure the proper and adequate defense of
any such matter. Such joint defense shall be under the general management and
supervision of the party which is expected to bear the greater share of the
liability, unless otherwise agreed; provided, however, that neither party shall
settle or compromise any such joint defense matter without the consent of the
other, which consent shall not be unreasonably withheld or delayed. Any
uninsured costs of such joint defense shall be borne as the parties may agree,
provided, however, that in the absence of such agreement, the defense costs
shall be borne by the party incurring such costs; provided, further, that, if
it is determined that one party was entitled to indemnification under this
Section 6, the other party shall reimburse the party entitled to
indemnification for all of its costs incurred in connection with such defense.
6.4 Subrogation. In the event of any payment by an Indemnifying
Party to an Indemnified Party in connection with any Liability, the
Indemnifying Party shall be subrogated to and shall stand in the place of the
Indemnified Party as to any events or circumstances in respect of which the
Indemnified Party may have any right or claim against any third party relating
to such event or indemnification. The Indemnified Party shall cooperate with
the Indemnifying Party in any reasonable manner in prosecuting any subrogated
claim.
6.5 Claims for HSE Work. Notwithstanding the other provisions of
this Section 6, in the case of any assertion, claim or demand requiring the
performance of investigatory, removal or remedial work with respect to
environmental conditions, HSE Laws or Chemical Substances for which the
Partnership may seek indemnification, the Partnership shall have the right to
conduct and control such work provided (i) it uses its good faith, commercially
reasonable efforts to achieve the Lowest Cost Response and (ii) it provides the
Contributors with the opportunity to: (A) review and comment upon any work
plans for any remedial action prior to finalization and implementation; (B)
attend meetings with regulators concerning the remedial action; and (C) have a
representative present during the performance of any remedial action.
6.6 EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE
SCOPE OF THE INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS SET FORTH
HEREIN, TO THE FULLEST EXTENT PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE
ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF,
REGARDLESS OF WHETHER THE INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH
INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE,
CONCURRENT OR
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<PAGE> 38
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW
OF OR BY ANY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT
CONSTITUTES A CONSPICUOUS LEGEND.
SECTION 7
MISCELLANEOUS
7.1 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction: (ii) no consideration shall be given to the fact or
presumption that any of the parties had a greater or lesser hand in drafting
this Agreement; (iii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iv) the word "includes" and its
syntactic variants mean "includes, but is not limited to" and corresponding
syntactic variant expressions; (v) the plural shall be deemed to include the
singular, and vice versa; (vi) each gender shall be deemed to include the other
gender; and (vii) each exhibit, appendix, attachment and schedule to this
Agreement is a part of this Agreement.
7.2 Payment of Certain Expenses and Taxes.
(a) Subject to the further provisions of this Section 7.2, (i)
each Contributor shall be responsible for all Taxes attributable to such
Contributor's ownership or use of the Assets or operation of the Contributed
Business prior to the Closing, (ii) Oxy CH Sub shall be responsible for all
Taxes attributable to Oxy Petrochemical's ownership or use of the Assets or
operation of the Contributed Business prior to the Closing, and (iii) the
Partnership shall be responsible for all Taxes attributable to the
Partnership's ownership or use of the Assets or operation of the Contributed
Business after the Closing. Each Contributor and Oxy CH Sub shall be
responsible for any liability of the Partnership pursuant to Texas Tax Code
Section 111.020 (including interest, penalties and attorneys' fees in
connection therewith) with respect to any amounts owed or owing by such Person
under Title 2, Texas Tax Code.
(b) All sales, transfer, or other similar taxes incurred in
connection with the transfer of the Assets shall be borne by the Partnership.
The Partnership, each Contributor and Oxy CH Sub shall cooperate fully with
each other after the Closing in connection with (i) the preparation and filing
of any tax return, exemption certificate, or other filing in connection with
such taxes, and (ii) any audit examination by any taxing Authority of the tax
returns, exemption certificates, or other filings referred to above.
(c) All real property taxes, personal property taxes, ad valorem
taxes, and other similar taxes (or payments in lieu of such taxes) assessed on
any of the Assets (including Inventory) in the tax period in which the Closing
Date occurs ("Property Taxes") shall be prorated between the Partnership and
the Asset Contributors or Oxy CH Sub, as appropriate, as of the Closing.
(d) [RESERVED]
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<PAGE> 39
(e) The Partnership shall pay any title or recordation fees in
connection with the transfer of the Assets. The Partnership shall also pay for
any title insurance policies or surveys of the Fee Interests that are requested
or ordered by the Partnership.
(f) After the Closing, either a Contributor (or, in the case of
Oxy Petrochemicals, Oxy CH Sub) or the Partnership receiving each Property Tax
bill or notice applicable to the Assets for the period in which the Closing
Date occurred shall, if other than the Partnership, promptly notify the
Partnership and shall pay each such tax bill prior to the last day such taxes
may be paid without penalty or interest. If paid by a Contributor (or, in the
case of Oxy Petrochemicals, Oxy CH Sub) the Partnership shall promptly on
receipt of a written request (accompanied by appropriate supporting
documentation) reimburse the paying party with respect to the share of the
Partnership of such amount so paid as provided under this Agreement. If paid
by the Partnership, the Contributor (or, in the case of Oxy Petrochemicals, Oxy
CH Sub) shall promptly on receipt of a written request (accompanied by
appropriate supporting documentation) reimburse the Partnership with respect to
the share of the Contributor (or, in the case of Oxy Petrochemicals, Oxy CH
Sub) of such amount so paid as provided under this Agreement. The Contributors
and the Partnership shall cooperate fully with each other on and after Closing
with respect to any Property Tax assessment or valuation (or protest in
connection therewith) by any taxing Authority with respect to the tax period in
which the Closing Date occurs.
(g) If any party receives a refund of any Taxes for which the
other is liable or responsible under this Agreement, the party receiving such
refund shall, within 30 days after the receipt of such refund, remit it to the
party who is liable.
(h) Any Taxes, Property Taxes or other liabilities to be paid by a
Contributor pursuant to this Section 7.2 that relate to the Assets or
Contributed Business of Oxy Petrochemicals shall be paid by Oxy CH Sub.
(i) Notwithstanding any other provision of this Agreement, the
obligations of the parties set forth in this Section 7.2 shall be unconditional
and absolute and shall remain in effect until audit, assessment and collection
of any such taxes are barred by the applicable statute of limitations.
7.3 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall
unless otherwise provided for elsewhere in this Agreement, be in writing and
shall be deemed to have been duly given if and when (i) transmitted by
telecopier facsimile with proof of confirmation from the transmitting machine,
or (ii) delivered by courier or other hand delivery, as follows:
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(a) If to a Contributor or Oxy CH Sub:
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90004
Attention: President
Telecopy Number: (310) 443-6977
with a copy to:
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90004
Attention: General Counsel
Telecopy Number: (310) 443-6333
(b) If to the Partnership:
Equistar Chemicals, LP
1221 McKinney Street
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
or to such other address or telecopy number as either party shall have
specified by notice in writing to the other party. All such notices, requests,
demands and communications shall be deemed to be effective upon receipt.
7.4 [Reserved].
7.5 Binding Effect; Benefit. Subject to Section 7.7, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective permitted successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto and their Affiliates or their respective permitted
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
7.6 Occasional and Bulk Sales. To the extent applicable, the
Partnership and the Contributors each agree to waive, to the fullest extent
permitted by law, compliance by the other with the provisions of the Bulk Sales
Law of any jurisdiction.
7.7 Assignability. Neither this Agreement nor any of the rights
or obligations hereunder shall be assignable (by operation of law or otherwise)
by a Contributor without the prior written consent of the Partnership or shall
be assignable (by operation of law or otherwise) by the Partnership
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<PAGE> 41
(except to a wholly-owned subsidiary thereof) without the prior written consent
of each Contributor. Any assignment or purported assignment in violation of
this Section shall be null and void.
7.8 Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by the
parties hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and executed by the party
so waiving. Subject to the agreements and obligations of the Partnership
hereunder or under applicable Legal Requirements, no investigations by the
Partnership heretofore or hereafter made shall affect the representations and
warranties of a Contributor, and, except as otherwise provided in Section 6.1,
such representations and warranties shall survive any such investigation. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
7.9 Dispute Resolution. All disputes under this Agreement shall
be resolved in accordance with the Dispute Resolution Procedures set forth in
Appendix A.
7.10 Severability. In the event that any provisions of this
Agreement shall finally be determined to be unlawful, such provision shall, so
long as the economic and legal substance of the transactions contemplated
hereby is not affected in any materially adverse manner as to the Contributors
or the Partnership, be deemed severed from this Agreement and every other
provision of this Agreement shall remain in full force and effect.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.12 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE EXCLUDING
CONFLICTS OF LAW PRINCIPLES OF SUCH JURISDICTION EXCEPT TO THE EXTENT SUCH
MATTERS ARE MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION PURSUANT TO
THE LAWS OF SUCH OTHER JURISDICTION.
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT EXCEPT TO THE EXTENT THIS
AGREEMENT RELATES TO THE CONVEYANCE OR ASSIGNMENT OF ANY INTEREST IN REAL
ESTATE OR THE CREATION, PERFECTION, PRIORITY OR FORECLOSURE OF ANY LIEN ON ANY
INTEREST IN REAL ESTATE IN WHICH CASE, SUCH COURTS
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<PAGE> 42
JURISDICTION SHALL BE NON-EXCLUSIVE. EACH OF THE PARTIES TO THIS AGREEMENT
SHALL APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION
SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS
BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF
DELAWARE BY ENTERING INTO AN AGREEMENT AS OF THE DATE OF THIS AGREEMENT WITH
THE AGENT TO SUCH EFFECT. THE FOREGOING CONSENTS TO JURISDICTION AND
APPOINTMENTS OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE
GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE
EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON
OTHER THAN THE PARTIES HERETO. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS.
7.14 WAIVER OF JURY TRIAL. THE PARTNERSHIP AND THE CONTRIBUTORS
HEREBY KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
SECTION 8
DEFINITIONS
The terms used in this Agreement have the following definitions or are
defined in the Sections referenced below:
"AAA" is defined in Appendix A.
"Accounts Receivable" constitute, as of the Closing Date and as
further defined below, all uncollected accounts receivable that have been
generated by, or are attributable to, the Contributors' operation prior to the
Closing Date of the Contributed Business in the ordinary course and in all
respects in a manner consistent with the provisions of Section 3.2 of the
Master Transaction Agreement. Accounts Receivable shall not include any
reserves or accruals.
"Affiliate" means any Person that directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified; provided, however, that for purposes of this
Agreement none of the Partnership, any Person controlled by it, Canadian
Occidental Petroleum Ltd. or any Person controlled by it shall be considered an
Affiliate of any Contributor. For purposes of this definition, the term
"control" shall have the meaning set forth in 17 CFR 230.405 as in effect on
the date hereof. With respect to the period from and after the date hereof,
Oxy Petrochemicals shall not be considered an Affiliate of the Asset
Contributors.
"Agreement" is defined in the first paragraph of this Agreement.
"Arbitrator" is defined in Appendix A.
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"Asset Contributors" is defined in the fifth WHEREAS clause.
"Asset Transfer Effective Time" means 4:00 A.M., local time, where the
respective Assets are located, on the Closing Date.
"Assets" means all of the assets, rights and properties being
contributed, conveyed, assigned, transferred and delivered to the Partnership
pursuant to Sections 1.2(a) and 2.1.
"Assignment and Assumption Agreements" means the Assignment of Lake
Charles Lease, the Assignment of Leases, the Bill of Sale and Assignment, the
Trademark License, the Patent Assignment, the Assumption of Partnership
Interests, the Partnership Assumption Agreement, the Excluded Assets Assignment
and the Oxy CH Sub Assumption Agreement.
"Assignment of Lake Charles Lease" is defined in Section 2.3(a).
"Assignment of Leases" is defined in Section 2.3(a).
"Assignment of Partnership Interests" is defined in Section 2.3(c).
"Associated Rights" means all right, title and interest of a
Contributor and any Affiliate thereof, if any, in lands, or real property of
others, used principally in the normal operation and conduct of the Contributed
Business.
"Assumed Liabilities" is defined in Section 2.5(a).
"Authority" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal (or any
commonwealth, territory or possession thereof), state, local or foreign, or any
agency, department or instrumentality thereof, or any court or arbitrator
(public or private).
"Banked Vacation" is defined in Section 2.8(g).
"Basic Severance" is defined in Section 2.8(b).
"Cain Plan" is defined in Section 2.8(h).
"Capital Spares" means the inventory of spare parts used by a
Contributor in the Contributed Business and owned by a Contributor as of the
Closing Date.
"Carryover Vacation" is defined in Section 2.8(g).
"CERCLA" is defined in Section 3.16(b).
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<PAGE> 44
"Chemical Substance" means any (i) chemical substance, pollutant,
contaminant, constituent, chemical, mixture, raw material, intermediate,
product or byproduct that is regulated (including any requirement for the
reporting of any Release thereof) under any HSE Law or defined or listed as an
industrial, toxic, deleterious, harmful, radioactive, infectious,
disease-causing or hazardous substance, material or waste under any HSE Law,
and (ii) petroleum or any fraction thereof, asbestos or asbestos-containing
material or polychlorinated biphenyls ("PCBs").
"Closing" is defined in Section 1.3(a).
"Closing Date" is defined in Section 1.3(a).
"Closing Date Balance Sheet" is defined in Section 5.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent" means any consent, waiver, appraisal, authorization,
exception, registration, license or declaration of or by any Person or any
Authority, or any expiration or termination of any applicable waiting period
under any Legal Requirement, required with respect to the Contributed Business
or a Contributor or any Affiliate thereof in connection with (i) the execution
and delivery of this Agreement or any of the Related Agreements or (ii) the
consummation of the transactions contemplated hereby or thereby.
"Contracts" means contracts, maintenance and service agreements,
purchase commitments for materials and other services, advertising and
promotional agreements, leases, taxation agreements with any Authority, and
other agreements.
"Contributed Contracts" means, other than Government Licenses, (i) all
Contracts to which a Contributor or an Affiliate thereof is a party, whether or
not entered into in the ordinary course of business, that relate principally to
the normal operation and conduct of the Contributed Business, but in the case
of any Contracts under which either such Asset Contributor or any Affiliate
thereof retains rights with respect to its other businesses, only to the
extent any such Contract relates to the operation of the Contributed Business
and (ii) all agreements and instruments setting forth such Contributor's and
any of its Affiliates' rights with respect to rights-of-way, privileges,
riparian and other rights, appurtenances, licenses or franchises and in respect
of intellectual property rights, in each case that constitute Assets described
in clauses (a) through (e), of Section 2.1.
"Contributed Business" is defined in Schedule A.
"Contributed Intellectual Property" means all of the items referred to
in Section 2.1(g) to the extent such item is not an Excluded Asset, together
with the items referred to in clause (ii) of the definition of Unrecorded
Assets.
"Contributed Subsidiaries" is defined in Section 2.1(k).
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<PAGE> 45
"Contributor(s)" is defined in the sixth WHEREAS clause.
"Contributors' 401(k) Plans" is defined in Section 2.8(g).
"Deeds" is defined in Section 2.3(a).
"De Minimis Claim" means any Third Party Claim for which the Liability
associated therewith is less than $25,000.
"DGCL" is defined as the Delaware General Corporation Law, as amended.
"Dispute Notice" is defined in Appendix A.
"Disputing Party" is defined in Appendix A.
"DRULPA" is defined as the Delaware Revised Uniform Limited
Partnership Act, as amended.
"Effective Time" is defined in Section 1.3(b).
"Employee Pension Benefit Plan" is defined in ERISA Section 3(2).
"Employee Plan" is defined in Section 3.4(a)(i).
"Employee Welfare Benefit Plan" is defined in ERISA Section 3.1.
"Employees" is defined in Section 2.8(a).
"Encumbrance" means any lien, charge, encumbrance, security interest,
title defect, option or any other restriction or third party right.
"Environment" is defined in this Section 1 in the definition of "HSE
Laws".
"Equipment" means all of the right, title and interest of a
Contributor and any Affiliate thereof in and to the equipment, furniture,
furnishings, fixtures, machinery, Capital Spares, vehicles, tools, computers
and other tangible personal property used principally in the normal operation
and conduct of the Contributed Business including without limitation the items
listed on Schedule 2.1(d).
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.
"Excluded Assets" is defined in Section 2.2.
"Excluded Assets Assignment" is defined in Section 1.7.
- 40 -
<PAGE> 46
"Excluded Liabilities" is defined in Section 2.6.
"Expiration Date" shall mean the date that the term of the Operating
Agreement shall expire or shall be terminated in accordance with the provisions
thereof.
"Fee Interests" means all right, title and interest of a Contributor
and any Affiliate thereof in the parcels of land described as fee property on
Schedule 2.1(a), together with all buildings, structures, fixtures and other
improvements situated thereon and all right, title and interest of such
Contributor and any Affiliate thereof under easements, privileges,
rights-of-way, riparian and other water rights, lands underlying any adjacent
streets or roads, appurtenances and licenses to the extent pertaining to or
accruing to the benefit of the land.
"GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
"Government Licenses" means all licenses, permits or franchises issued
by any Authority relating to the operation, development, use, maintenance or
occupancy of the Facilities or any other Asset or of the Contributed Business
to extent that such licenses, permits or franchises relate principally to the
normal operation and conduct of the Contributed Business.
"HSE Claim" means (i) any action, event, circumstance or
responsibility (including any compliance action or requirement) that is
necessary to comply with HSE Laws but only to the extent that any of the
foregoing gives rise to out of pocket costs or expenses or results in a
Liability that is required by GAAP to be reflected on the balance sheet of the
applicable party or (ii) any third party (including private parties,
Authorities and employees acting on each such party's own behalf or on the
behalf of other third parties) action, lawsuit, claim, investigation or
proceeding arising under HSE Laws.
"HSE Laws" means any Legal Requirements or rule of common law now in
effect (including any amendments now in effect) and any current judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree, or judgment, relating to (i) any ambient air, surface
water, drinking water, groundwater, land surface, subsurface strata, river
sediment, natural resources or real property and the physical buildings,
structures and fixtures thereon, including sewer, septic and waste treatment,
storage or disposal systems (the "Environment"), including pollution,
contamination, cleanup, preservation, protection and reclamation of the
Environment; (ii) health or safety, including the exposure of employees and
other Persons to any Chemical Substance; (iii) the Release or threatened
Release of any Chemical Substance, noxious noise or odor, including
investigation, study, assessment, testing, monitoring, containment, removal,
remediation, response, cleanup and abatement of such Release or threatened
Release; and (iv) the management of any Chemical Substance, including the
manufacture, generation, formulation, processing, labeling, use, treatment,
handling, storage, disposal, transportation, distribution, re-use, recycling or
reclamation of any Chemical Substance.
"HSE Proceeding" is defined in Section 3.16(d).
- 41 -
<PAGE> 47
"Indemnified Party" is defined in Section 6.3(a).
"Indemnifying Party" is defined in Section 6.3(a).
"Intellectual Property" means research material, technical
information, marketing information, patent rights, patent licenses, pending
patent applications, trade secrets, technical information, know-how, management
information systems, technology, quality control data, specifications, designs,
drawings, software, sales promotion literature and advertising materials.
"Inventory" means materials used by a Contributor in the Contributed
Business and owned by a Contributor as of the Closing Date including raw
materials, feed stocks, supplies, additives, pigments, process chemicals,
packaging materials (to the extent the Partnership's use thereof would be
consistent with Section 5.3), catalysts, work-in-process and finished goods
that relate principally to the normal operation and conduct of the Contributed
Business. Inventory shall include any FIFO or LIFO reserves, as well as any
reserve for slow moving or obsolete items and for any volume or price
adjustments.
"Knowledge" with respect to a Contributor means the actual knowledge
of (i) any plant manager, (ii) any officer of such Contributor having
responsibilities with respect to the Contributed Business, and (iii) any
employee reporting directly to an officer described in clause (ii), in each
case employed, as of the Closing Date, by such Contributor in connection with
the Contributed Business.
"Lake Charles Facility" means the Plant Site, Plant and Pipeline (each
as defined in the Lake Charles Lease).
"Lake Charles Lease" means that certain Lease dated May 15, 1998
between OCC and Occidental Chemical Sub with respect to the Lake Charles
Leased Assets.
"Lake Charles Leased Assets" means all of the tangible assets and
properties, real, personal or mixed, used or held for use in the contemplated
operation and conduct of the Contributed Business at the Lake Charles Facility,
excluding the Lake Charles Transferred Assets and any Excluded Assets listed in
Schedule 2.2(h).
"Lake Charles Transferred Assets" means those Assets set forth in the
schedule to Exhibit C.
"Leased Premises" means, generally, the premises described in the
Leases and specifically, with respect to the Lake Charles Lease, the Lake
Charles Leased Assets.
"Leaseholds" means all right, title and interest of a Contributor
and any Affiliate thereof under the Leases, for the use and occupancy of the
Leased Premises, together with all buildings, structures, fixtures and other
improvements situated thereon and, all rights and interests of such Contributor
and any Affiliate thereof under all easements, privileges, rights-of-way,
riparian and other water rights, appurtenances and licenses pertaining to the
Leases or accruing to the benefit of the tenant under the Leases.
- 42 -
<PAGE> 48
"Leases" means the Lake Charles Lease and the leases and subleases,
all amendments thereto and all agreements related thereto described on Schedule
2.1(b).
"Legal Requirement" means any law, statute, rule, ordinance, decree,
requirement, regulation, order or judgment of any Authority, including the
terms of any Government License.
"Liability" is defined in Section 6.2(a).
"Licensed Technology" means the technology licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Licensed Trademarks" means the trademarks licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Lowest Cost Response" means the response required or allowed under
HSE Laws that addresses the Chemical Substances present at the lowest cost
(considered as a whole taking into consideration any negative impact such
response may have on the conduct of the Contributed Business and any potential
additional costs or liabilities that may arise as a result of such response) as
compared to any other response that is consistent with HSE Laws. Taking no
action shall constitute the Lowest Cost Response if, after investigation,
taking no action is determined to be consistent with HSE Laws. If taking no
action is not consistent with HSE Laws, the least costly non-permanent remedy
(such as mechanisms to contain or stabilize Chemical Substances, including
caps, dikes, encapsulation, leachate collection systems, etc.) shall be the
Lowest Cost Response, provided that such non-permanent remedy is consistent
with HSE Laws and less costly than the least costly permanent remedy (such as
the excavation and removal of soil).
"Master Intellectual Property Agreement" is defined in Section 2.7.
"Master Transaction Agreement" is defined in the second WHEREAS
clause.
"Material Adverse Effect" means any adverse circumstance or
consequence that, individually or in the aggregate, has an effect that is
material to the financial condition, results of operations, assets or business
of the Contributed Business or the Assets, taken as a whole.
"Merger" is defined in the sixth WHEREAS clause.
"Mirror Plan" is defined in Section 2.8(g).
"Non-Plant Employees" is defined in Section 2.8(b).
"Non-Union Employee" is defined in Section 2.8(g).
"OCC" is defined in Section 2.7.
- 43 -
<PAGE> 49
"Occidental" is defined in the first WHEREAS clause.
"Occidental Chemical Sub" is defined in the first paragraph of this
Agreement.
"Occidental's Qualified Plan" is defined in Section 2.8(g).
"Operating Agreement" means that certain Operating Agreement, dated
May 15, 1998, between OCC and the Partnership.
"Oxy CH" is defined in the first WHEREAS clause.
"Oxy CH Sub" is defined in the first paragraph of this Agreement.
"Oxy CH Sub Assumption Agreement" is defined in Section 1.8.
"Oxy Petrochemicals" is defined in the first paragraph of this
Agreement.
"Oxy Petrochemicals Common Stock" is defined in Section 1.5(a).
"Partnership" is defined in the first paragraph of this Agreement.
"Partnership Benefit Plans" is defined in Section 2.8(g).
"Partnership Employees" is defined in Section 2.8(a).
"Partnership 401(k) plan is defined in Section 2.8(g).
"Partnership Governance Committee" shall have the meaning assigned to
it in the Amended and Restated Agreement of Limited Partnership of the
Partnership.
"Patent Assignment" is defined in Section 2.3(a).
"PCBs" is defined in this Section in the definition of "Chemical
Substance".
"PDG Chemical" is defined in the first paragraph of this Agreement.
"PDG Plan" is defined in Section 2.8(h).
"PD Glycol" is defined in the fifth WHEREAS clause.
"Partnership Assumption Agreement" is defined in Section 2.5(b).
"Person" means any natural person or any corporation, partnership,
limited liability company, joint venture, association, trust or other entity or
organization.
- 44 -
<PAGE> 50
"Pipeline" means pipe and related equipment used primarily for the
transportation of ethylene and propylene in connection with the Contributed
Business, but excluding pipe and related equipment located within the property
boundaries of facilities not part of the Contributed Business.
"Pre-Closing Contingent Liabilities" means all Liabilities of every
kind and nature arising out of, in connection with or related to the ownership,
operation or use prior to the Closing Date of the Assets or the Contributed
Business other than the Liabilities referred to in Sections 2.5(a)(i), (ii),
(iii), (vii) and (ix).
"Prepaid Expenses" means the balances in the prepaid accounts
consistent with GAAP of a Contributor or its Affiliates, as of the Closing
Date, that are associated with the Contributed Business and that will have
value to the Partnership in owning and operating the Contributed Business after
the Closing Date.
"PRA" is defined in Section 2.8(g).
"Property Tax" is defined in Section 7.2(c).
"PSA" is defined in Section 2.8(g).
"Related Agreements" means the Master Transaction Agreement, Tier 1
Related Agreements (other than this Agreement) and Tier 2 Related Agreements,
as such terms are defined in the Master Transaction Agreement.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching,
escaping, emanation or migration of any Chemical Substance in, into or onto the
Environment of any kind whatsoever, including the movement of any Chemical
Substance through or in the Environment, exposure of any type in any workplace,
any release as defined under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other HSE Law and
any noxious noise or odor emission.
"SEC Reports" means (i) the 1996 Annual Report on Form 10-K and the
Quarterly Reports on Form 10-Q for the first three quarters of 1997 of
Occidental required to be filed with the Securities and Exchange Commission or
(ii) if filed by Occidental on or prior to the date of this Agreement, its 1997
Annual Report on Form 10-K.
"Secretary of State" is defined in Section 1.3(b).
"Seven Year PCCL Claims" means Third Party Claims (other than any De
Minimis Claim) related to Pre-Closing Contingent Liabilities that have been or
are asserted within seven years after the Closing Date.
"SIP" is defined in Section 2.8(g).
- 45 -
<PAGE> 51
"STIF" is defined in Section 2.8(h).
"Stores Inventory" means the inventory of spare parts, excluding
Capital Spares, that are used by a Contributor or any Affiliate thereof in the
Contributed Business and owned by such Contributor or any Affiliate thereof as
of the Closing Date and that consist of items that generally can be used for
several processes or types of equipment, including, but not limited to, such
items as pumps, motors, pipe fittings, electrical wiring, instruments, nuts and
bolts, unfabricated metals, safety items, small hand tools and other
miscellaneous repair parts or supplies. Stores Inventory shall include any
reserve for slow moving or obsolete materials and supplies, and for any
inventory volume or price adjustments.
"Surviving Partnership" is defined in Section 1.1.
"Taxes" means all taxes, charges, fees, levies or other assessments
imposed by any taxing Authority, including, but not limited to, income, gross
receipts, excise, property, sales, use, transfer, payroll, license, ad valorem,
value added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments).
"Third Party Claim" means any allegation, claim, civil or criminal
action, proceeding, charge or prosecution brought by a Person other than a
Contributor, any Affiliate thereof, the Partnership, any member of the
Millennium Group (as defined in the Master Transaction Agreement), any member
of the Lyondell Group (as defined in the Master Transaction Agreement) or any
member of the Occidental Group (as defined in the Master Transaction
Agreement).
"Trade Accounts Payable" means, as of the Closing Date, all current
trade accounts payable and current accrued expenses, including salaries and
wages due to Partnership Employees that are generated by and result from the
execution by the Contributors and their Affiliates of normal and customary
payment and month-end closing processes prior to the Closing Date. Trade
Accounts Payable includes unpaid invoices or accruals for services, materials,
supplies, feedstocks and products received in the ordinary course of business
prior to the Closing Date and which are attributable to the Contributed
Business. Trade Accounts Payable shall not include any payments due to an
Affiliate of the Contributors including any payments due for services, rent,
overhead or similar items.
"Trademarks" means trade names, trademarks, trademark registrations or
trademark applications, copyrights, copyright applications or copyright
registrations or any derivative thereof or design used in connection therewith.
"Trademark License" is defined in Section 2.3(a).
"Transition Employees" is defined in Section 2.8(d).
- 46 -
<PAGE> 52
"Unrecorded Assets" means all (i) right, title and interest in
customer lists, customer credit information (to the extent neither a
Contributor nor any Affiliate thereof is bound to any confidentiality
obligation with respect thereto), customer payment histories and credit limits,
vendor lists, catalogs, and (ii) right, title and interest in Intellectual
Property to the extent used or contemplated for use principally in the normal
operation and conduct of (or to the extent under development for use
principally in the normal operation and conduct of) or the marketing or
promotion of, the Contributed Business.
"WARN" is defined in Section 2.8(f).
- 47 -
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
OCCIDENTAL PETROCHEM PARTNER 1, INC.,
a Delaware corporation
By: /s/ John W. Morgan
------------------------------------------
Name: John W. Morgan
Title: Vice President
OCCIDENTAL PETROCHEM PARTNER 2, INC.,
a Delaware corporation
By: /s/ John W. Morgan
------------------------------------------
Name: John W. Morgan
Title: Vice President
OXY PETROCHEMICALS INC.,
a Delaware corporation
By: /s/ R. J. Schuh
------------------------------------------
Name: R. J. Schuh
Title: Executive Vice President
PDG CHEMICAL INC.,
a Delaware corporation
By: /s/ R.J. Schuh
------------------------------------------
Name: R.J. Schuh
Title: President
[Signature Page of Agreement and Plan of Merger and Asset Contribution]
- 48 -
<PAGE> 54
EQUISTAR CHEMICALS, LP,
a Delaware limited partnership
By: /s/ Eugene R. Allspach
------------------------------------------
Name: Eugene R. Allspach
Title: President and Chief Operating Officer
[Signature Page of Agreement and Plan of Merger and Asset Contribution]
- 49 -
<PAGE> 1
EXHIBIT 10.4
AMENDED AND RESTATED PARENT AGREEMENT
AMONG
OCCIDENTAL CHEMICAL CORPORATION,
OXY CH CORPORATION,
OCCIDENTAL PETROLEUM CORPORATION,
LYONDELL PETROCHEMICAL COMPANY,
MILLENNIUM CHEMICALS INC.
AND
EQUISTAR CHEMICALS, LP
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 1 GUARANTEE OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Guarantee Regarding Interested Owner Agreements . . . . . . . . . . . . . . . . . . . . 4
1.3 No Demand or Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Waiver of Resort to Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 No Discharge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Waivers by the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 No Reduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Continued Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Certain Defenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12 Parent Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2 OWNERSHIP AND BUSINESS OF PARTNER SUBS . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Restrictions on Transfer and Pledge of Partner Sub Stock. . . . . . . . . . . . . . . . 7
2.2 Right of First Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Prohibition on Affiliated Obligor Bankruptcy, Etc. . . . . . . . . . . . . . . . . . . 11
2.4 Special Purpose Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3 STANDSTILL AGREEMENT AND CERTAIN OTHER MATTERS . . . . . . . . . . . . . . . . . . . . 12
3.1 Standstill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 OPC Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Mutual Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 No Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Expenses in Connection with Exercise. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Subordination and Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Confidentiality and Use of Information . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Competing Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Assignment; Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Benefits of Agreement Restricted to the Parties . . . . . . . . . . . . . . . . . . . . 17
4.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.11 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.12 Construction and Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.15 Jurisdiction; Consent to Service of Process; Waiver . . . . . . . . . . . . . . . . . . 20
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C> <C>
4.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.17 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.18 Obligations Regarding Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.19 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
APPENDICES
Appendix A List of Related Agreements
Appendix B Dispute Resolution Procedures
- ii -
<PAGE> 4
AMENDED AND RESTATED PARENT AGREEMENT
This Amended and Restated Parent Agreement (this "Agreement") is made
as of this 15th day of May, 1998 among Occidental Chemical Corporation, a New
York corporation ("OCC"), Oxy CH Corporation, a California corporation ("Oxy
CH"), Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"),
Millennium Chemicals Inc., a Delaware corporation ("Millennium"), Occidental
Petroleum Corporation, a Delaware corporation ("OPC"), and Equistar Chemicals,
LP, a Delaware limited partnership (the "Partnership," and together with OCC,
Oxy CH, Lyondell, Millennium and OPC, the "Parties").
WHEREAS, except as provided in Section 3, OCC and Oxy CH, taken
together and jointly and severally, are the "Occidental Parent" for purposes of
this Agreement, and the Occidental Parent (except as provided in Section 3),
Lyondell and Millennium are each a "Parent" for purposes of this Agreement.
WHEREAS, Lyondell Petrochemical G.P. Inc. ("Lyondell GP") and Lyondell
Petrochemical L.P. Inc. ("Lyondell LP" and, together with Lyondell GP, the
"Lyondell Partner Subs") are both Delaware corporations and direct or indirect
wholly owned subsidiaries of Lyondell.
WHEREAS, Millennium Petrochemicals GP LLC ("Millennium GP") and
Millennium Petrochemicals LP LLC ("Millennium LP" and, together with Millennium
GP, the "Millennium Partner Subs") are both Delaware limited liability
companies and direct or indirect wholly owned subsidiaries of Millennium.
WHEREAS, PDG Chemical Inc. ("Occidental GP") and Occidental Petrochem
Partner 2, Inc. ("Occidental LP2") are both Delaware corporations and direct or
indirect wholly owned subsidiaries of Oxy CH; Occidental Petrochem Partner 1,
Inc. ("Occidental LP1" and, together with Occidental GP and Occidental LP2, the
"Occidental Partner Subs") is a Delaware corporation and a wholly owned
subsidiary of OCC; and Oxy CH and OCC are both direct or indirect wholly owned
subsidiaries of OPC.
WHEREAS, for purposes of this Agreement, the Occidental Partner Subs
are the Partner Subs of the Occidental Parent.
WHEREAS, pursuant to the terms of the Master Transaction Agreement
dated as of July 25, 1997 between Lyondell and Millennium (the "Initial Master
Transaction Agreement"), the Partnership was formed under the laws of the State
of Delaware pursuant to the Limited Partnership Agreement dated October 10,
1997 (the "Old Partnership Agreement"), with Lyondell GP and Millennium GP as
the general partners and Lyondell LP and Millennium LP as the limited partners
of the Partnership.
WHEREAS, in connection with the closing of the transactions
contemplated by the Initial Master Transaction Agreement, Lyondell and
Millennium entered into the Parent Agreement with the Partnership dated as of
December 1, 1997 (the "Initial Parent Agreement"), providing for, among
<PAGE> 5
other things, certain guarantees of performance by their respective Affiliated
Obligors (as defined therein) and for certain restrictions on the transfer of
their respective Partner Sub Stock (as defined therein);
WHEREAS, the Partnership, OPC, Lyondell and Millennium entered into a
Master Transaction Agreement dated May 15, 1998 (the "Second Master Transaction
Agreement"), providing for, among other things, the admission of the Occidental
Partner Subs as partners in the Partnership. The Occidental Partner Subs,
together with any other Affiliate of the Occidental Parent that is a party to
any of the Related Agreements (as defined herein), are referred to herein as
the "Occidental Affiliated Obligors." The Lyondell Partner Subs, together with
any other Affiliate of Lyondell that is a party to any of the Related
Agreements, are referred to herein as the "Lyondell Affiliated Obligors." The
Millennium Partner Subs, together with any other Affiliate of Millennium that
is a party to any of the Related Agreements, are referred to herein as the
"Millennium Affiliated Obligors." The Occidental Affiliated Obligors, the
Lyondell Affiliated Obligors and the Millennium Affiliated Obligors,
collectively or individually as the context may require, are referred to herein
as the "Affiliated Obligors." The Occidental Partner Subs, the Lyondell
Partner Subs and the Millennium Partner Subs, collectively or individually as
the context may require, are referred to herein as the "Partner Subs."
WHEREAS, in connection with the closing of the transactions effected
pursuant to the Initial Master Transaction Agreement and to be effected in
connection with the closing of the Second Master Transaction Agreement, the
Parents and certain of their respective Affiliates, have entered into or are
entering into various agreements and other legal documents, including the
Amended and Restated Limited Partnership Agreement of the Partnership dated as
of the date of this Agreement (the "Partnership Agreement"), the Agreement and
Plan of Merger and Asset Contribution dated as of the date of this Agreement
(the "Occidental Contribution Agreement") among the Partnership, the Occidental
Partner Subs and Oxy Petrochemicals Inc. ("OPI"), services agreements and other
asset contribution agreements, as applicable (including this Agreement, the
"Related Agreements"), each of which is integrally related to the
capitalization or operations of the Partnership and is listed on Appendix A
hereto. The Related Agreements (other than this Agreement) and any additional
agreements that may from time to time be added to Appendix A hereto by
agreement of the Parents, as they may in the future be amended, supplemented,
restated or otherwise modified, are referred to herein as the "Other
Agreements". The Other Agreements to be entered into in connection with the
Second Master Transaction Agreement are herein called the "Additional Other
Agreements".
WHEREAS, the Parties desire to amend and restate the Initial Parent
Agreement in connection with the admission of the Occidental Partner Subs to
the Partnership and the closing of the other transactions contemplated by the
Second Master Transaction Agreement.
WHEREAS, this Agreement is essential to the consummation of the
closing pursuant to the Second Master Transaction Agreement and the entering
into and effectiveness of the Additional Other Agreements and each of the
parties to such agreements is relying on this Agreement in connection with
entering into each of the Additional Other Agreements.
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WHEREAS, this Agreement provides for the continuation of obligations
and restrictions set forth in the Initial Parent Agreement, which were
essential to the consummation of the closing pursuant to the Initial Master
Transaction Agreement and the entering into and effectiveness of the Other
Agreements entered into in connection therewith.
WHEREAS, each Parent is willing, solely for the benefit of the
Beneficiaries (as defined below in Section 1.11) and their successors and
assigns, to guarantee the performance by its Affiliated Obligors of certain of
the obligations of such Affiliated Obligors as set forth in this Agreement.
WHEREAS, each Parent is willing to subject the Partner Sub Stock (as
defined herein) to certain restrictions on transfer, as set forth in this
Agreement.
WHEREAS, OPC is willing to (i) indemnify the Partnership from certain
potential liabilities that the Partnership would not otherwise be subject to
but for the merger of OPI with and into the Partnership, and (ii) agree to
certain other covenants in connection with the closing of the transactions
contemplated by the Second Master Transaction Agreement.
NOW THEREFORE, in, consideration of the foregoing and the mutual
promises and covenants of the Parties hereto, the Parties hereby agree as
follows:
SECTION 1
GUARANTEE OF OBLIGATIONS
1.1 Guarantee. Each Parent hereby unconditionally, absolutely and
irrevocably guarantees, undertakes and promises to cause, as herein provided,
the due and punctual payment and the full and prompt performance by its
Affiliated Obligors of all of the amounts to be paid and all of the terms and
provisions to be performed or observed by or on the part of its Affiliated
Obligors under the Other Agreements in accordance with the terms thereof (all
such terms and provisions as now or hereafter in existence being collectively
called the "Obligations") as follows: in the event that its Affiliated Obligors
shall fail in any manner whatsoever to pay, perform or observe any of their
Obligations, when and as the same shall be required to be paid, performed or
observed under the terms of the Other Agreements, such Parent will itself duly
and punctually pay, or fully and promptly perform or observe, as the case may
be, such Obligations, or cause the same to be duly and punctually paid, or
fully and promptly performed or observed, in each case as if such Parent were
itself the obligor with respect to such Obligations under the Other Agreements.
Insofar as this Section 1.1 relates to the obligations of an Affiliated Obligor
under the Partnership Agreement, no Parent shall be required to make, or cause
a Partner Sub to make, any contribution to the Partnership that such Partner
Sub is not otherwise required to make pursuant to the terms of Section 2.3,
2.4, or 12.2(d)(ii) of the Partnership Agreement. Insofar as this Section 1.1
applies to Other Agreements
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other than the Partnership Agreement, the term "Affiliated Obligors" will not
include the Partnership nor any partner in the Partnership in its capacity as
such. Notwithstanding the foregoing, this Section 1.1 shall not apply to
Obligations that are within the scope of Section 1.2.
1.2 Guarantee Regarding Interested Owner Agreements. Each Parent
acknowledges that the Partnership Agreement sets forth definitions of
"Conflicted General Partner" and "Nonconflicted General Partner," and provides
that the Nonconflicted General Partners (whether one or more) have certain
exclusive rights to control the Partnership with respect to any Conflict
Circumstance (as defined in the Partnership Agreement); and accordingly,
without limiting the rights of its Partner Subs under Section 6.8 of the
Partnership Agreement, and without prejudice to any rights, remedies or
defenses the Partnership may have in respect of any such Other Agreement or
Conflict Circumstance, each Parent hereby agrees to cause its Partner Subs (i)
to cause the Partnership to pay, perform and observe all of the Obligations to
be paid, performed or observed by or on the part of the Partnership under the
Other Agreements, in accordance with the terms thereof, to the extent that such
Partner Sub is a Nonconflicted General Partner and is thereby entitled to cause
the payment, performance and observance of such Obligations and (ii) except to
the extent inconsistent with its obligations under Section 1.2(i), to abide by
its obligations as a Nonconflicted General Partner with respect to any Conflict
Circumstance arising in connection with any Other Agreement in accordance with
the terms of the Partnership Agreement applicable thereto; provided, however,
that each Parent's responsibility under this Section 1.2 for a failure of the
Partnership to pay, perform or observe its Obligations under the Other
Agreements shall be limited to the circumstances in which the Partnership's
failure to so pay, perform or observe its obligations under the Other
Agreements was directly caused by an act or failure to act of its Partner Sub,
provided, further, that nothing in this Section 1.2 shall require a Parent to
make or cause such Partner Sub (i) to cure or mitigate any inability of the
Partnership to make any payment or to perform or observe any Obligations under
any Other Agreements, (ii) to cause the Partnership to require from the Partner
Subs any cash contributions in respect of any payment, performance or
observance involved in such Conflict Circumstance, or (iii) to make any
contribution to the Partnership that such Partner Sub is not otherwise required
to make pursuant to Section 2.3, 2.4, or 12.2(d)(ii) of the Partnership
Agreement.
1.3 No Demand or Notice. It shall not be a condition to the
guarantees and agreements set forth in Sections 1.1 and 1.2 above (together,
the "Guarantee") that a Beneficiary shall have first made any request of or
demand upon, or given any notice of the occurrence of a default under the Other
Agreements or any other notice whatsoever to, any Parent or its Affiliated
Obligors or any other Person, or shall have instituted any action or proceeding
against any Affiliated Obligor or any other Person in respect thereof, or shall
have joined any Affiliated Obligor or the Partnership in any such action or
proceeding. A Beneficiary in asserting the benefit of the Guarantee shall give
prompt notice to a Parent of any failure by its Affiliated Obligors or the
Partnership to pay, perform or observe any Obligation; provided, however, that
any failure, delay or defect in the giving of such notice shall not alter or
affect the Guarantee under this Agreement.
1.4 Waiver of Resort to Security. Each Parent further agrees that
this Agreement, insofar as it constitutes a guarantee of monetary Obligations,
constitutes a guarantee of payment when due and not of collection, and each
Parent waives any right to require as a condition to its Guarantee that any
resort be had by a Beneficiary to any security held for the payment of any
Obligations.
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1.5 No Discharge. The Guarantee is and shall remain absolute and
unconditional irrespective of any circumstance that might otherwise constitute
a legal or equitable discharge of a surety or guarantor, as the case may be,
with respect to its Guarantee.
1.6 Waivers by the Parent. Each Parent hereby waives, with
respect to the Guarantee but without prejudice to the rights of the parties to
the Other Agreements, any notice of acceptance of this Agreement, grace,
presentment, demand, protest, notice of the occurrence of a default under the
Other Agreements and any other notice of any kind whatsoever and promptness in
making any claim or demand hereunder. The Guarantee shall not be affected by
(i) the failure of a Beneficiary to assert any claim or demand or to enforce
any right or remedy under the provisions of any of the Other Agreements or any
agreement related thereto or otherwise, (ii) any extension or renewal of any of
the Other Agreements or any agreement related thereto, (iii) any rescission,
waiver, amendment or modification of any of the terms or provisions of any of
the Other Agreements or of any agreement related thereto, including, without
limitation, any change in the time, manner or place of payment or performance
of any of the obligations under the Other Agreements, or (iv) the release of
any security held for payment of any Obligations.
1.7 No Reduction. The Guarantee shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever, except as provided in Section 1.10.
1.8 Enforcement. Notwithstanding anything herein to the contrary,
a Beneficiary may proceed to enforce the Guarantee without first pursuing or
exhausting any right or remedy that it or any of its successors or assigns may
have against any Affiliated Obligor or any Parent or any other person.
1.9 Continued Effectiveness. The Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation of an Affiliated Obligor is rescinded or must
otherwise be restored or returned by the Person receiving such payment upon the
insolvency, bankruptcy or reorganization of an Affiliated Obligor, all as
though such payment or part thereof had not been made.
1.10 Certain Defenses. Nothing herein is intended to deny to any
Parent, and it is expressly agreed that each Parent shall have and may assert,
any and all of the defenses, set-offs, counterclaims and other rights (other
than those relating to insolvency, bankruptcy or reorganization as described in
Section 1.9) with regard to any Obligations that its Affiliated Obligors may
possess except any defense its Affiliated Obligors may possess relating to lack
of validity or enforceability of the Other Agreements or any other agreement or
instrument relating thereto as against its Affiliated Obligors arising from the
defective incorporation or other defective organization of its Affiliated
Obligors, their lack of qualification to do business in any applicable
jurisdiction or their defective corporate or other organizational authority to
enter into, deliver or perform the Other Agreements.
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<PAGE> 9
1.11 Parties in Interest. Section 1 of this Agreement shall inure
solely to the benefit of the Beneficiaries, each of whom has the right to
enforce the Guarantee against the Parents, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement. As used in this Agreement, "Beneficiaries" shall mean (i) as
to any obligations of the Occidental Parent, except for its obligations
pursuant to Section 1.1 hereof with respect to the Partnership Agreement, the
Partnership, Lyondell, the Lyondell Affiliated Obligors, Millennium and the
Millennium Affiliated Obligors, (ii) as to any obligations of Millennium,
except for its obligations pursuant to Section 1.1 hereof with respect to the
Partnership Agreement, the Partnership, the Occidental Parent, the Occidental
Affiliated Obligors, Lyondell and the Lyondell Affiliated Obligors, (iii) as to
any obligations of Lyondell, except for its obligations pursuant to Section 1.1
hereof with respect to the Partnership Agreement, the Partnership, the
Occidental Parent, the Occidental Affiliated Obligors, Millennium and the
Millennium Affiliated Obligors, and (iv) as to any obligations of any Parent
pursuant to Section 1.1 hereof with respect to the Partnership Agreement, the
other Parents. As used in this Agreement, the term Parent includes any
successor or transferee of the Parent, and the term Affiliated Obligors
includes any successor to or transferee of the Affiliated Obligors' interest in
the Partnership permitted pursuant to the Partnership Agreement.
1.12 Parent Net Worth.
(a) Each Parent shall at all times maintain a GAAP Net
Worth in an amount sufficient to satisfy its known and potential obligations
under this Agreement.
(b) Each Parent agrees that, as of the end of each fiscal
quarter, either (i) the excess of its GAAP Net Worth at such time over its
Partnership Investment at such time or (ii) the excess of its Equity Market
Capitalization at such time over its Adjusted Partnership Investment at such
time, shall be at least $250 million.
(c) The term "GAAP Net Worth" means, for a Parent at any
time, such Parent's consolidated stockholders equity, determined in accordance
with generally accepted accounting principles ("GAAP"), as of the end of its
most recent fiscal quarter. The term "Equity Market Capitalization" means, for
a Parent at any time, (x) the aggregate market value of such Parent's
outstanding publicly traded equity securities, as of the end of its most recent
fiscal quarter (based on the average closing price for the most recent 20
trading days on the principal stock exchange on which such securities are
traded) plus (y) the amount of stockholders equity, determined in accordance
with GAAP, attributable at such time to any equity securities of such Parent
that are not publicly traded. The term "Partnership Investment" means, for a
Parent at any time, its investment in the Partnership, determined in accordance
with GAAP as of the end of the most recent fiscal quarter. The term "Adjusted
Partnership Investment" means, for a Parent at any time, (A) Lyondell's
investment in the Partnership, determined in accordance with GAAP as of the end
of the most recent fiscal quarter, multiplied by (B) a fraction the numerator
of which is the aggregate Percentage Interest at such time of the Partner Subs
owned by the Parent whose Partnership Investment is being determined and the
denominator of which is the aggregate Percentage Interest at such time of the
Partner Subs owned by Lyondell. The term "Percentage Interest" is used as
defined in the Partnership Agreement.
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<PAGE> 10
(d) The provisions of Section 1.12(b) shall expire as to
a Parent at such time after the seventh anniversary of the Closing Date at
which no material Seven Year PCCL Claim (as defined in the Asset Contribution
Agreement (as defined in the Partnership Agreement) applicable to such Parent,
its Affiliated Obligors or, if applicable, its predecessor Parent or its
Affiliated Obligors) is outstanding against such Parent, any of its Affiliated
Obligors or, if applicable, its predecessor Parent or its Affiliated Obligors.
SECTION 2
OWNERSHIP AND BUSINESS OF PARTNER SUBS
2.1 Restrictions on Transfer and Pledge of Partner Sub Stock. (a)
Each Parent agrees that except as otherwise provided below in this Section 2.1
or Section 2.2 or with the written consent of each of the other Parents, which
consent may be granted or withheld in such Parent's sole discretion, it will
not, in any transaction or series of transactions, directly or indirectly, (i)
sell, assign or otherwise in any manner dispose of, whether by act, deed,
merger or otherwise ("Transfer") or (ii) mortgage, pledge, encumber or create
or suffer to exist any pledge, lien or encumbrance upon or security interest in
("Pledge"), all or any part of the capital stock (including any securities
convertible into or exchangeable for or carrying any rights to purchase,
subscribe for or otherwise acquire any such capital stock) of its Partner Subs
(collectively, the "Partner Sub Stock"). (Each of the defined terms
"Transfer"and "Pledge" is used herein both as a noun and as a verb.) Any
attempt by a Parent to Transfer or Pledge all or a portion of its Partner Sub
Stock in violation of this Agreement shall be void ab initio and shall not be
effective to Transfer such Partner Sub Stock or any portion thereof. The
Partnership Agreement contains provisions relating to the Transfer and Pledge
of the Partner Subs' direct interests in the Partnership.
(b) Each Parent agrees that all certificates representing shares
of Partner Sub Stock, whether currently owned or hereafter acquired, shall
carry the following legend, which legend each Parent agrees to cause to be
placed thereon and to cause to remain thereon as long as such shares are
subject to the restrictions of this Agreement:
THE SALE, ASSIGNMENT, PLEDGE OR OTHER TRANSFER OR HYPOTHECATION OF THE
STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS PURSUANT TO AND MAY NOT BE EFFECTED EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF AN AGREEMENT BINDING UPON THE OWNER OF THE
STOCK REPRESENTED HEREBY. THE OWNER OR ISSUER WILL FURNISH A COPY OF
SUCH AGREEMENT TO ANY PROPOSED TRANSFEREE OR PLEDGEE WITHOUT CHARGE
UPON REQUEST.
(c) Without the need for the consent of any Person, any Parent may
Transfer its Partner Sub Stock to any wholly-owned Affiliate of such Parent or
of a common parent.
(d) Without the need for the consent of any Person, each Parent
(other than OCC or Oxy CH) may Transfer all (but not less than all) of its
Partner Sub Stock, if such Transfer is in connection with (i) a merger,
consolidation, conversion or share exchange of such Parent or (ii) a sale or
other
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<PAGE> 11
disposition of (x) the Partner Sub Stock plus (y) other assets representing at
least fifty-percent (50%) of the book value of such Parent's assets excluding
the Partner Sub Stock, as reflected on its most recent audited consolidated (or
combined) financial statements; provided, however, that the Successor Parent,
if any, (A) shall succeed to and be substituted for such Parent, with the same
effect as if it had been named herein and (B) shall execute an instrument
wherein such Successor Parent shall agree to be bound by the obligations of
such Parent under this Agreement, with the same effect as if it had been named
herein, whereupon, unless such Parent shall become a direct or indirect
subsidiary of such Successor Parent, such Parent shall thereupon be released
from all obligations under Sections 1, 2 and 4 of this Agreement.
(e) Without the need for the consent of any Person, OCC may
Transfer all (but not less than all) of its Partner Sub Stock, if such Transfer
is in connection with:
(i) a merger, consolidation, conversion or share exchange
of OCC,
(ii) a sale or other disposition of (x) the Partner Sub
Stock plus (y) other assets representing at least
fifty percent (50%) of the book value of Oxy CH's
assets excluding the Partner Sub Stock, as reflected
on its most recently unaudited consolidated (or
combined) financial statements, or
(iii) any Transfer permitted by Section 2.1(f);
and following the consummation of any such transaction, the Partner
Sub Stock held directly or indirectly by OCC and Oxy CH on the date
hereof shall be held by the same transferee or one or more transferees
that are wholly-owned Affiliates of each other or of a common parent
entity; provided, however, that the Successor Parent, if any, (A)
shall succeed to and be substituted for OCC, with the same effect as
if it had been named herein, and (B) shall execute an instrument
wherein such Successor Parent shall agree to be bound by the
obligations of OCC hereunder, with the same effect as if it had been
named herein, whereupon, unless OCC shall become a direct or indirect
subsidiary of such Successor Parent, OCC shall thereupon be released
from all obligations under Sections 1, 2 and 4 of this Agreement.
(f) Without the need for the consent of any Person, Oxy CH may
Transfer all (but not less than all) of its Partner Sub Stock, if such Transfer
is in connection with:
(i) a merger, consolidation, conversion or share exchange
of Oxy CH,
(ii) a sale or other disposition of (A) the Partner Sub
Stock plus (B) other assets representing at least
fifty percent (50%) of the book value of Oxy CH's
assets excluding the Partner Sub Stock, as reflected
on its most recently prepared unaudited consolidated
(or combined) financial statements, or
(iii) any Transfer permitted by Section 2.1(e) or (g);
and following the consummation of any such transaction, the Partner
Sub Stock held directly or indirectly by OCC and Oxy CH on the date
hereof shall be held by the same transferee or one or more transferees
that are wholly-owned Affiliates of each other or of a common parent
entity; provided, however, that the Successor Parent, if any, (A)
shall succeed to and
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<PAGE> 12
be substituted for Oxy CH, with the same effect as if it had been
named herein, and (B) shall execute an instrument wherein such
Successor Parent shall agree to be bound by the obligations of Oxy CH
hereunder, with the same effect as if it had been named herein,
whereupon, unless Oxy CH shall become a direct or indirect subsidiary
of such Successor Parent, Oxy CH shall thereupon be released from all
obligations under Sections 1, 2 and 4 of this Agreement.
(g) Nothing in this Agreement shall prevent or restrict the
Transfer or Pledge of the capital stock, equity ownership interests or other
securities of a Parent (or, in the case of the Occidental Parent, either of OCC
or Oxy CH), and no such Transfer or Pledge of securities issued by a Parent
(or, in the case of the Occidental Parent, either of OCC or Oxy CH) shall be
deemed to constitute a Transfer or Pledge of Partner Sub Stock hereunder;
provided that, (i) in the event of a Transfer in the form of a transaction
described in clause (i) of Section 2.1(d), (e) or (f), the Successor Parent, if
any, shall execute an instrument to the effect described in clause (B) of
Section 2.1(d), (e) or (f), as applicable, and (ii) following the consummation
of any such Transfer or Pledge of securities of a Parent, all the Partner Sub
Stock of such Parent shall be held by the same transferee or one or more
transferees that are wholly-owned Affiliates of each other or of a common
parent entity or shall be Pledged to the same pledgee or pledgees.
(h) For purposes of this Section 2.1, the term "Successor Parent"
shall mean the acquiring, succeeding or surviving entity in any transaction
contemplated by Section 2.1 (d), (e) or (f) that owns the applicable Partner
Sub Stock following such transaction, if other than a Parent.
(i) Each Parent may Pledge all (but not less than all) of its
Partner Sub Stock to any one or more Approved Lenders; provided that the Pledge
shall be evidenced by an instrument, reasonably satisfactory to the
Partnership, wherein the Approved Lender receiving such Pledge shall agree that
in the event such Approved Lender obtains a right of foreclosure on such
Parent's Partner Sub Stock, such Approved Lender will foreclose on the Partner
Sub Stock of each of such Parent's Partner Subs equally so that such Approved
Lender will in all events hold equal portions of Partner Sub Stock of
Occidental GP, Occidental LP1 and Occidental LP2, Lyondell GP and Lyondell LP
or Millennium GP and Millennium LP, as the case may be. An "Approved Lender"
shall be any bank, insurance company, investment bank or other financial
institution that is regularly engaged in the business of making loans.
2.2 Right of First Option.
(a) Without the consent of each of the other Parents, no
Parent may Transfer less than all of its Partner Sub Stock, and unless such
Transfer is otherwise permitted by Section 2.1, no Parent may Transfer its
Partner Sub Stock for consideration other than cash. Unless such Transfer is
otherwise permitted by Section 2.1, any Parent (the "Selling Parent") desiring
to Transfer all of its Partner Sub Stock to any person (including another
Parent or any Affiliate thereof) shall give written notice (the "Initial
Notice") to the Partnership and each of the other Parents (the "Offeree
Parents") stating that the Selling Parent desires to Transfer its Partner Sub
Stock and stating the cash
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purchase price and all other terms on which it is willing to sell (the "Offer
Terms"). Delivery of an Initial Notice shall constitute the irrevocable offer
of the Selling Parent to sell its Partner Sub Stock to the Offeree Parents
hereunder.
(b) Each Offeree Parent shall have the option,
exercisable by delivering written notice (the "Acceptance Notice") of such
exercise to the Selling Parent within 45 days of the date of the Initial
Notice, to elect to purchase its pro rata share in the case of both of the
limited partner and the general partner (based on the ratio of the number of
Units held by its Partner Subs to the number of Units held by all of the
Partner Subs of the Offeree Parents or on any other basis that shall be
mutually agreed upon between the Offeree Parents delivering an Acceptance
Notice) of all of the Partner Sub Stock of the Selling Parent on the Offer
Terms described in the Initial Notice. If one Offeree Parent, but not the
other, elects to so purchase, the Selling Parent shall give written notice
thereof (the "Additional Notice") to the Offeree Parent electing to purchase
and such Parent shall have the option, exercisable by delivery of an Acceptance
Notice, of such exercise to the Selling Parent within 15 days of such notice,
to purchase all of the Partner Sub Stock held by the Selling Parent, including
the Partner Sub Stock it has not previously elected to purchase; provided,
however, that any election by an Offeree Parent not to purchase all such
Partner Sub Stock shall be deemed a rescission of such Offeree Parent's
original Acceptance Notice and an election not to purchase any of the Partner
Sub Stock of the Selling Parent. Each Acceptance Notice shall set a date for
closing the purchase, such date to be not less than 30 nor more than 90 days
after delivery of the Acceptance Notice; provided that such time period shall
be subject to extension as reasonably necessary (up to a maximum of an
additional 120 days after such 90 day period) in order to comply with any
applicable filing and waiting period requirements under the Hart-Scott-Rodino
Antitrust Improvements Act. The closing shall be held at the Partnership's
offices. The purchase price for the Selling Parent's Partner Sub Stock shall
be paid in cash delivered at the closing. The purchase shall be consummated by
appropriate and customary documentation (including the giving of
representations and warranties substantially similar to (i) in the case of
Lyondell or Millennium, those set forth in Sections 2.1 through 2.4 of the
Initial Master Transaction Agreement, and in the case of the Occidental Parent,
those set forth in Section 2.2 of the Second Master Transaction Agreement, and
(ii) customary representations and warranties regarding the Selling Parent's
title to its Partner Sub Stock).
(c) If one or both of the Offeree Parents does not elect
to purchase all of the Selling Parent's Partner Sub Stock within 45 days after
the receipt of the Initial Notice or within 15 days after the receipt of the
Additional Notice, if applicable, the Selling Parent shall have a further 180
days during which it may, subject to Sections 2.2(d) and (e), consummate the
sale of its Partner Sub Stock to a third party purchaser at a purchase price
and on such other terms that are no more favorable to such purchaser than the
Offer Terms. If the sale is not completed within such further 180-day period,
the Initial Notice shall be deemed to have expired and a new notice and offer
shall be required before the Selling Parent may make any Transfer of its
Partner Sub Stock.
(d) Before the Selling Parent may consummate a Transfer
of its Partner Sub Stock to a third party in accordance with this Agreement,
the Selling Parent shall demonstrate to the other two Parents that such
proposed purchaser (or the Person willing to serve as its guarantor as
contemplated by Section 2.2(e)) has outstanding indebtedness that is rated
investment grade by either
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<PAGE> 14
Moody's Investor Services Inc. or Standard & Poor's Ltd, or if such proposed
purchaser (or such other Person) has no rated indebtedness outstanding, such
Person shall provide an opinion from one of such entities or from a nationally
recognized investment banking firm that it could be reasonably expected to
obtain such a rating.
(e) Notwithstanding the foregoing provisions of this
Section 2.2, a Parent may Transfer its Partner Sub Stock (other than pursuant
to Section 2.1) only if all of the following occur:
(i) The Transfer is accomplished in a non-public
offering in compliance with, and exempt from, the registration
and qualification requirements of all federal and state
securities laws and regulations.
(ii) The Transfer does not cause a default under
any material contract which has been approved unanimously by
the Partnership Governance Committee (as defined in the
Partnership Agreement) and to which the Partnership is a party
or by which the Partnership or any of its properties is bound.
(iii) The transferee executes an appropriate
agreement to be bound by this Agreement.
(iv) The transferor and/or transferee bears all
reasonable costs incurred by the Partnership in connection
with the Transfer.
(v) The transferee (or the guarantor of the
obligations of the transferee) satisfies the criteria set
forth in Section 2.2(d) and delivers an agreement to each of
the other Parents and the Partnership substantially in the
form of this Agreement.
(vi) The proposed transferor is not in default in
the timely performance of any of its material obligations to
the Partnership.
(vii) The provisions of Section 2.2(f) are
satisfied.
(f) No Parent may Transfer the Partner Sub Stock of any
of its Partner Subs to any Person unless such Parent simultaneously Transfers
the Partner Sub Stock of its other Partner Sub or Partner Subs (if the Parent
has more than one Partner Sub), to such Person or a wholly-owned Affiliate of
such Person or of a common parent.
2.3 Prohibition on Affiliated Obligor Bankruptcy, Etc. Each
Parent hereby agrees that it will not, without the written consent of each of
the other Parents, permit any of its Affiliated Obligors (or their successors
or assigns) (i) to commence a voluntary action under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or State
bankruptcy, insolvency or other similar law, (ii) to institute a proceeding to
be adjudicated a voluntary bankrupt, (iii) to consent to the filing of a
bankruptcy proceeding against it, (iv) to fail to contest a bankruptcy
proceeding against it, (v) to consent to the appointment of a receiver,
custodian, liquidator or trustee for it or for all or any substantial portion
of its property, (vi) in the case of its
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<PAGE> 15
Partner Subs, to issue or sell other than to such Parent any of its own Partner
Sub Stock or (vii) to effect, recognize or permit any transfer of any of its
own Partner Sub Stock other than in accordance with the provisions of Section 2
of this Agreement.
2.4 Special Purpose Subsidiaries. Each Parent agrees that (i) the
business of its Partner Subs shall be restricted solely to the holding of the
respective interests in the Partnership and the doing of things necessary or
incidental in connection therewith, and (ii) it will cause its Partner Subs not
to own any assets, incur any liabilities or engage, participate or invest in
any business outside the scope of their businesses as described in clause (i);
provided, however, that this Section 2.4 shall not apply with respect to any
wholly-owned Affiliates to whom such Partner Subs shall transfer their
respective interests in the Partnership if such wholly-owned Affiliates are not
bound by Section 9.6 of the Partnership Agreement. Notwithstanding the
foregoing provisions of this Section 2.4, this Section 2.4 shall not prohibit
any Partner Sub from incurring debt payable to its Parent or an Affiliate as
long as:
(i) such debt is not transferable (by contract or operation of law) to any
Person other than Parent or an Affiliate of Parent;
(ii) no payment on such debt is permitted or required to be made if at the
time of such payment such Partner Sub is in Default under (and as
defined in) the Partnership Agreement or by making such payment such
Partner Sub would not be able to perform its obligations under the
Partnership Agreement.
Each Parent hereby agrees that it and its Affiliates shall not be entitled to,
and that the Partner Sub shall not be required to make, any payments on any
such debt payable by its Partner Sub if: (i) at the time of such payment such
Partner Sub is in Default under the Partnership Agreement, (ii) by making such
payment such Partner Sub would not be able to perform its obligations under the
Partnership Agreement, or (iii) such Parent is in default of its obligations
under Section 1.12 of this Agreement.
SECTION 3
STANDSTILL AGREEMENT AND CERTAIN OTHER MATTERS
3.1 Standstill. For purposes of this Section 3 only, the term
"Parent" means and includes OPC, Oxy CH, OCC, Lyondell and Millennium. Each
Parent agrees that with respect to each of the other Parents (each a "Subject
Parent", provided that no Parent shall be a "Subject Parent" from and after the
expiration of 24 months from the date on which such Parent and its Affiliates
no longer hold an interest in the Partnership; and provided, further, that none
of OPC, Oxy CH or OCC is a Subject Parent with respect to each other), neither
it, nor any of its Affiliates shall, without prior written invitation or
request of another Subject Parent: (i) in any manner acquire, agree to acquire
or make any proposal to acquire, directly or indirectly, any securities, assets
or property of such other Subject Parent, whether such agreement or proposal is
made with or to such other Subject Parent or a third party; (ii) make any
unsolicited proposal to enter into, directly or indirectly, any merger or other
business combination involving such other Subject Parent; (iii) make, or in any
way participate,
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<PAGE> 16
directly or indirectly, in any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) to vote, or
seek to advise or influence any person with respect to the voting of, any
voting securities of such other Subject Parent; (iv) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) with respect to any voting securities of such
other Subject Parent; (v) otherwise act, alone or in concert with others, to
seek to control the management, Board of Directors or policies of such other
Subject Parent; (vi) disclose any intention, plan or arrangement inconsistent
with the foregoing; or (vii) advise, encourage, provide assistance (including
financial assistance) to or hold discussions with any other persons in
connection with any of the foregoing. Each Parent also agrees during such
period not to: (i) request that such other Subject Parent (or its respective
directors, officers, employees or agents), directly or indirectly, amend or
waive any provision of this Section 3.1 (including this sentence); or (ii) take
any action which might reasonably be expected to require that such other
Subject Parent to make a public announcement regarding the possibility of a
business combination or merger.
3.2 Exceptions. Notwithstanding the provisions of Section 3.1:
(a) Any Parent may, by notice to another Parent, terminate the
provisions of Section 3.1 (as applied to the relationship between such two
Parents, but not as to their respective relationships with the third Parent) at
any time within 30 days after the occurrence of any of the following events
with respect to such other Parent: (i) a Change of Control (as defined below)
of such other Parent shall have occurred, (ii) such other Parent shall have
entered into a definitive agreement providing for, or publicly announced its
intention to effect, any transaction involving a Change of Control of such
other Parent or (iii) a tender offer or exchange offer shall have been
commenced or publicly announced that, if consummated, would have the effect
with respect to such other Parent described in clause (c) of the definition of
"Change of Control." A "Change of Control" of a Parent shall mean the
occurrence of any of the following events: (a) there shall be consummated any
consolidation, merger or share exchange of such Parent (i) in which such Parent
is not the continuing or surviving Person (other than a consolidation, merger
or share exchange with a wholly owned subsidiary of such Parent in which all
shares of common stock of such Parent outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same number of
shares of common stock of such subsidiary) or (ii) pursuant to which the common
stock of such Parent is converted into cash, securities or other property,
other than, in each case, a consolidation, merger or share exchange of such
Parent in which the holders of the common stock immediately prior to the
consolidation, merger or share exchange hold, directly or indirectly, at least
a majority of the voting power and common equity of the continuing or surviving
Person immediately after such consolidation, merger or share exchange; (b) such
Parent's properties and assets are sold or otherwise disposed of substantially
as an entirety on a consolidated basis to any Person or group of Persons in any
one transaction or a series of related transactions, other than as contemplated
by the Initial Master Transaction Agreement or the Second Master Transaction
Agreement; or (c) any Person or any Persons acting together which would
constitute a "group" (as defined in Section 3.1) (other than such Parent, any
subsidiary of such Parent, any employee stock purchase plan, stock option plan
or other stock incentive plan or program, retirement plan or automatic dividend
reinvestment plan or any substantially similar plan of such Parent or any
subsidiary of such Parent or any Person holding securities of such Parent for
or pursuant to the terms of any such employee benefit plan), together
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<PAGE> 17
with any Affiliates thereof, shall acquire beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of 50% or more of the
voting stock of such Parent.
(b) The terms of the first sentence of Section 3.1 shall not be
applicable to the purchase and sale of any securities of a Parent by
independent third-party managers of any pension or other related employee
benefit plans who are acting as passive investors in such Parent.
3.3 OPC Indemnity. OPC hereby agrees, to the fullest extent
permitted by applicable law, to indemnify, defend and hold harmless the
Partnership and its Affiliates and their respective officers, directors and
employees from, against and in respect of any Liability (as defined in Section
6.2(a) of the Occidental Contribution Agreement) incurred or suffered by the
Partnership or any of its Affiliates, arising out of, in connection with, or
relating to:
(a) all income taxes, and all interest and penalties incurred with
respect thereto, that are imposed on OPC or any member of its affiliated group;
and
(b) any obligation arising under Title IV of ERISA (as defined in
the Occidental Contribution Agreement) with respect to any Employee Plan (as
defined in the Occidental Contribution Agreement) maintained by any Contributor
(as defined in the Occidental Contribution Agreement) or any member of a
controlled group (as defined in Section 414 of the Code (as defined in the
Occidental Contribution Agreement)) with the Contributor, but excluding
obligations arising under the Cain Plan (as defined in the Occidental
Contribution Agreement) and obligations under the PDG Plan (as defined in the
Occidental Contribution Agreement with respect to funding requirements arising
after the Closing Date.
3.4 Mutual Indemnity.
(a) From the date hereof through the twenty-fifth anniversary
hereof, each of OPC, Lyondell and Millennium (an "Indemnifying Party") hereby
agrees, to the fullest extent permitted by applicable law, to indemnify, defend
and hold harmless the Partnership, its partners, their Affiliates and their
respective officers, directors, and employees (collectively, the "Indemnified
Parties") from, against and in respect of any Liability incurred by any of the
Indemnified Parties arising out of, in connection with, or relating to, any
Third Party Claim (as defined in the Occidental Contribution Agreement)
(whether in contract, tort, statute or otherwise) arising out of, in connection
with, or relating to the failure of the Indemnifying Party or any of its
Affiliates to give notice to, obtain any consent of, or obtain any waiver by,
or any breach by the Indemnifying Party or any of its Affiliates of any
obligation owing to, any Person (as defined in the Occidental Contribution
Agreement), in each case with respect to such Indemnifying Party's or its
Affiliates' entering into the Related Agreements or performing their respective
obligations thereunder;
provided, however, that the following limitations shall apply to the
indemnification obligations in Sections 3.3 and 3.4 above:
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<PAGE> 18
(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, NO INDEMNIFYING PARTY OR ANY OF ITS AFFILIATES
OR THEIR RESPECTIVE AGENTS, EMPLOYEES, OR REPRESENTATIVES SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
DIRECT CLAIMS BY AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY
THAT DOES NOT SEEK REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY THE
INDEMNIFIED PARTY) WITH RESPECT TO THE INDEMNIFICATION OBLIGATIONS UNDER THIS
AGREEMENT UNLESS ANY SUCH CLAIM ARISES OUT OF THE FRAUDULENT ACTIONS OF AN
INDEMNIFYING PARTY OR ITS AFFILIATES. IN DETERMINING THE AMOUNT OF ANY LOSS,
LIABILITY, OR EXPENSE FOR WHICH ANY INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION UNDER THIS AGREEMENT, THE GROSS AMOUNT THEREOF WILL BE REDUCED
(BUT NOT BELOW ZERO) BY THE NET PRESENT VALUE OF ANY CORRELATIVE INSURANCE
PROCEEDS ACTUALLY REALIZED BY THE INDEMNIFIED PARTY UNDER POLICIES TO THE
EXTENT THAT THE FUTURE PREMIUM RATE WILL NOT BE INCREASED BY CLAIM EXPERIENCE
RELATING TO SUCH LOSS, LIABILITY OR EXPENSE.
(c) Indemnification pursuant to Sections 3.3 and 3.4 shall be
subject to the indemnification provisions set forth in Section 6.3 of the
Occidental Contribution Agreement, as if the Indemnified Parties and
Indemnifying Party were the "Indemnified Parties" and the "Indemnifying Party"
thereunder.
(d) The rights provided to each Indemnified Party pursuant to
Sections 3.3 and 3.4 of this Agreement and Section 14 of the Partnership
Agreement, as limited by and subject to the provisions of this Section 3 shall
be such Indemnified Party's sole remedy for any matter arising out of, relating
to, or in connection with, the matters described in Section 3.3 and 3.4 of this
Agreement and Section 14 of the Partnership and shall be without duplication of
any rights provided to such Indemnified Party under the Master Transaction
Agreement or any of the Related Agreements.
(e) EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE
SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH HEREIN, TO THE FULLEST
EXTENT PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO
INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF
WHETHER THE INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION
OBLIGATION IS THE RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW
OF OR BY ANY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT
CONSTITUTES A CONSPICUOUS LEGEND.
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<PAGE> 19
SECTION 4
MISCELLANEOUS
4.1 No Waivers. No failure or delay by a Beneficiary or a Party
in exercising any right or power under this Agreement, or any single or partial
exercise of any such right or power, shall preclude any other or further
exercise thereof or the exercise of any other right or power. Such single or
partial exercise of any right or power shall be cumulative and not exclusive of
any rights or remedies provided by law.
4.2 Expenses in Connection with Exercise. In the event of a
dispute between Parties regarding the exercise or enforcement of any of the
rights of a Beneficiary under this Agreement or the failure by a Party to
perform or observe any of the provisions of this Agreement, the Party that does
not ultimately prevail in such dispute shall be liable, and hereby agrees, to
reimburse, on demand, each other such Party for any and all costs and expenses,
including the fees and expenses of legal counsel and of any other counsel,
experts, consultants or agents, that such other Party may incur in connection
therewith.
4.3 Subordination and Subrogation. The rights of a Parent against
its Affiliated Obligors arising from any payment or performance by a Parent
hereunder shall be subordinate in all respects to the rights of the
Beneficiaries against such Affiliated Obligors, and such Parent shall not
compete in any way with a Beneficiary in any winding-up or dissolution of such
Affiliated Obligors unless and until all sums due and to become due from such
Affiliated Obligors to the Beneficiaries have been paid in full. If any amount
shall be paid to a Parent in violation of this Section, such amount shall be
held in trust for the benefit of the Beneficiaries and shall forthwith be paid
to the Beneficiaries to be credited and applied to any sums owed or to be owed
by such Parent's Affiliated Obligors. Subject to the foregoing, upon payment
of all sums due or to become due by Affiliated Obligors to the Beneficiaries,
the Parent of such Affiliated Obligors shall be subrogated to the rights of the
Beneficiary against such Affiliated Obligors, and the Beneficiaries agree to
take at such Parent's expense such steps as such Parent may reasonably request
to implement such subrogation.
4.4 Confidentiality and Use of Information. (a) Each Parent
agrees that it and its Affiliates shall be bound by the terms and conditions of
Section 13.1 of the Partnership Agreement as if such Person was a "Partner" as
defined in such agreement.
(b) Lyondell, Millennium and OPC shall consult with each other on
an ongoing basis with respect to disclosures regarding the Partnership and its
business and affairs that each is required to make in reports filed from time
to time with the Securities and Exchange Commission.
(c) The letter agreement regarding confidentiality dated December
11, 1997 between Lyondell and OPC is hereby terminated.
4.5 Competing Businesses. If any Parent or an Affiliate thereof
desires to initiate or pursue any opportunity to undertake, engage in, acquire
or invest in a Business Opportunity (as such term is defined in the Partnership
Agreement), such Person shall offer such Business Opportunity to the
Partnership under the terms and conditions set forth in Sections 9.3(c) and (d)
of the
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<PAGE> 20
Partnership Agreement as if such Person were the "Proposing Partner" (as
defined in the Partnership Agreement) with respect thereto, and in such event
the Partnership shall have the rights and obligations with respect thereto set
forth in such Sections 9.3(c) and (d).
4.6 Further Assurances. From time to time, each Party agrees to
execute and deliver such additional documents and provide such additional
information and assistance as the Beneficiaries may reasonably require to carry
out the terms of this Agreement.
4.7 Assignment; Successors and Assigns. (a) Except as provided in
this Agreement and except that a Parent may assign its rights or obligations
under this Agreement to a third party in connection with a transfer of direct
interests in the Partnership owned by its Partner Subs if such transfer is
permitted and consummated in accordance with the Partnership Agreement, no
Parent may assign or delegate any of its rights or obligations under this
Agreement without the prior written consent of all the Beneficiaries, which
consent shall be in the sole and absolute discretion of such Beneficiaries.
Any purported assignment or delegation without such consent shall be void and
ineffective.
(b) Except as may be expressly provided herein, this Agreement
shall be binding upon and inure to the benefit of the successors of the
Beneficiaries.
(c) Within six months after the date of this Agreement, Oxy CH and
OCC shall be entitled to assign their respective rights and obligations under
Section 1 to Occidental Chemical Holding Corporation, a California corporation
and an indirect wholly owned subsidiary of OPC ("OCHC"), provided that OCHC
executes an instrument wherein OCHC shall agree to be bound by the obligations
of Oxy CH and OCC thereunder and under Section 4 in a form reasonably
acceptable to the Partnership. Upon such execution, OCHC shall become the
"Occidental Parent" for purposes of Section 1, and Oxy CH and OCC shall
thereupon be released from all obligations under Section 1.
4.8 Benefits of Agreement Restricted to the Parties. This
Agreement is made solely for the benefit of the Parties and, with respect to
Sections 1 and 4 (excluding Sections 4.4 and 4.5), the Beneficiaries (as
defined in Section 1.11), and no other Person shall have any right, claim or
cause of action under or by virtue of this Agreement.
4.9 Notices. All notices, requests, demands and other
communications (collectively, "notices") required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
and when (i) transmitted by telecopier facsimile with proof of confirmation
from the transmitting machine or (ii) delivered by commercial courier or other
hand delivery, as follows:
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<PAGE> 21
<TABLE>
<S> <C>
If to OPC If to OCC, Oxy CH, the Occidental Partner Subs
Occidental Petroleum Company c/o Occidental Petroleum Corporation
10889 Wilshire Blvd. 10889 Wilshire Blvd.
Los Angeles, CA 90024 Los Angeles, CA 90024
Attention: President Attention: President
Telecopy Number: (310) 443-6977 Telecopy Number:(310) 443-6977
With a copy to With a copy to
Occidental Petroleum Corporation Occidental Petroleum Corporation
10889 Wilshire Boulevard 10889 Wilshire Boulevard
Los Angeles, California 90024 Los Angeles, California 90024
Attention: General Counsel Attention: General Counsel
Telecopy Number: (310) 443-6333 Telecopy Number: (310) 443-6333
If to Lyondell If to the Lyondell Partner Subs
Lyondell Petrochemical Company c/o Lyondell Petrochemical Company
1221 McKinney Street 1221 McKinney Street
Houston, Texas 77010 Houston, Texas 77010
Attention: Kerry A. Galvin Attention: Kerry A. Galvin
Telecopy Number: (713) 309-4718 Telecopy Number: (713) 309-4718
If to Millennium If to the Millennium Partner Subs
Millennium Chemicals Inc. c/o Millennium Chemicals Inc.
99 Wood Avenue South 99 Wood Avenue South
Iselin, New Jersey 08830 Iselin, New Jersey 08830
Attention: George H. Hempstead, III Attention: George H. Hempstead, III
Telecopy Number: (908) 603-6857 Telecopy Number: (908) 603-6857
If to the Partnership
Equistar Chemicals, LP
1221 McKinney Street
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
</TABLE>
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<PAGE> 22
or to such other address as such Party or Beneficiary shall have specified by
notice to the other Parent.
4.10 Severability. In the event that any provisions of this
Agreement shall finally be determined to be unlawful, such provision shall, so
long as the economic and legal substance of the transactions contemplated
hereby is not affected in any materially adverse manner as to any Party, be
deemed severed from this Agreement and every other provision of this Agreement
shall remain in full force and effect.
4.11 Termination. Except for Sections 3.1, 3.2 and 3.4 (which
sections shall terminate only as provided therein), this Agreement shall
terminate and be of no further force and effect as to a Parent (i) as and when
provided in Section 2.1(d), (e) or (f) or (ii) if and when such Parent
Transfers all of its Partner Sub Stock in a transaction permitted by Section
2.2; provided, however, that such termination shall not discharge (x) any
accrued Obligations owed by a Parent as of the date of such termination or (y)
any Obligations, whether arising before or after such termination, under such
Parent's Asset Contribution Agreement (as such term is defined in the
Partnership Agreement) or any Related Agreement executed pursuant to such Asset
Contribution Agreement. In addition, the Guarantee by a Parent of Obligations
of an Affiliated Obligor other than a Partner Sub shall terminate as and when
the Parent ceases to be an Affiliate of such Affiliated Obligor, insofar as
such Guarantee relates to Obligations arising thereafter. The obligations of
OPC and the obligations of each of Lyondell and Millennium to OPC, in each case
pursuant to Section 4.4(b), shall terminate and be of no further force and
effect at such time as OPC is no longer required to make the disclosures
referred to in Section 4.4(b) to the Securities and Exchange Commission.
4.12 Construction and Certain Definitions.
(a) In construing this Agreement, the following principles shall
be followed: (i) no consideration shall be given to the captions of the
articles, sections, subsections or clauses, which are inserted for convenience
in locating the provisions of this Agreement and not as an aid in construction;
(ii) no consideration shall be given to the fact or presumption that any Party
had a greater or lesser hand in drafting this Agreement; (iii) examples shall
not be construed to limit, expressly or by implication, the matter they
illustrate; (iv) the word "includes" and its syntactic variants mean "includes,
but is not limited to" and corresponding syntactic variant expressions; (v) the
plural shall be deemed to include the singular, and vice versa; (vi) each
gender shall be deemed to include the other gender; and (vii) each exhibit,
attachment and schedule to this Agreement is a part of this Agreement.
(b) The term "Affiliate" shall mean any Person that directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with the Person specified; provided, however, that, in
the case of OPC and its Affiliates, for purposes of this Agreement, such term
shall not include Canadian Occidental Petroleum Ltd. For purposes of this
definition, the term "control" shall have the meaning set forth in
17 CFR230.405 as in effect on the date hereof.
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<PAGE> 23
(c) The term "Person" shall mean any natural person or any
corporation, partnership, limited liability company, joint venture,
association, trust or other entity or organization.
4.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
4.14 Governing Law. The laws of the State of Delaware shall govern
the construction, interpretation and effect of this Agreement without giving
effect to any conflicts of law principles.
4.15 Jurisdiction; Consent to Service of Process; Waiver. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO
THIS AGREEMENT SHALL APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL
CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE
ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE
STATE OF DELAWARE. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF
AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO
SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED
ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE
PARTIES HERETO. EACH PARENT HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS.
4.16 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
4.17 Dispute Resolution. All disputes under this Agreement shall
be resolved in accordance with the Dispute Resolution Procedures set forth in
Appendix B.
4.18 Obligations Regarding Affiliates. Each Parent shall cause its
Affiliates (including any person controlling such Parent) to comply with all
provisions of this Agreement that apply to Affiliates of such Parent, and each
Parent shall be responsible for any failure of any such Affiliate to comply
with any such provision.
4.19 Amendment. All waivers, modifications, amendments or
alterations of this Agreement shall require the execution of a written
instrument signed by each of the Parties.
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<PAGE> 24
IN WITNESS WHEREOF, the Parties have executed and delivered this
Amended and Restated Parent Agreement as of the date first above written.
OCCIDENTAL CHEMICAL CORPORATION
By: /s/ R. J. Schuh
-------------------------------------
Name: R. J. Schuh
Title: Executive Vice President
OXY CH CORPORATION
By: /s/ Keith C. McDole
-------------------------------------
Name: Keith C. McDole
Title: Senior Vice President
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ S.P. Dominick, Jr.
-------------------------------------
Name: S.P. Dominick, Jr.
Title: Vice President and
Controller
[Signature Page to Amended and Restated Parent Agreement]
<PAGE> 25
LYONDELL PETROCHEMICAL COMPANY
By: /s/ Dan F. Smith
-------------------------------------
Name: Dan F. Smith
Title: President and Chief Executive
Officer
MILLENNIUM CHEMICALS INC.
By: /s/ George H. Hempstead, III
-------------------------------------
Name: George H. Hempstead, III
Title: Senior Vice President
EQUISTAR CHEMICALS, LP
By: /s/ Eugene R. Allspach
-------------------------------------
Name: Eugene R. Allspach
Title: President and Chief Operating
Officer
[Signature Page to Amended and Restated Parent Agreement]
<PAGE> 26
APPENDIX A
TO
PARENT AGREEMENT
LIST OF RELATED AGREEMENTS
1. Old Partnership Agreement.
2. $345 million promissory note dated December 1, 1997, of Lyondell LP
payable to the Partnership.
3. Asset Contribution Agreement dated as of December 1, 1997, between
Lyondell, Lyondell LP and the Partnership.
4. Asset Contribution Agreement dated as of December 1, 1997, between
Millennium Petrochemicals, Millennium LP and the Partnership.
5. Bill of Sale and Assignment dated December 1, 1997 from Lyondell to the
Partnership with respect to property specified on attached schedule.
6. Assignment of Trademarks dated November 25, 1997 from Lyondell to the
Partnership with respect to certain O&P Trademarks as listed on
attached schedule.
7. Assignment of Patents dated November 25, 1997 from Lyondell to the
Partnership with respect to certain O&P Patents as listed on attached
schedule.
8. Assumption Agreement dated December 1, 1997 between Lyondell as
Assignor and the Partnership as Assignee pursuant to the Asset
Contribution Agreement with respect to the assumption by Assignee of
certain liabilities.
9. Master Intellectual Property Agreement dated December 1, 1997 by and
between Lyondell and the Partnership.
10. Assignment dated December 1, 1997 between Lyondell as "Assignor" and
the Partnership as "Assignee" with respect to the contribution by
Assignor of LCR Agreements.
11. Assignment dated December 1, 1997 between Lyondell and the Partnership,
of Ground Lease (LMC) with respect to certain real property specified
therein.
12. Assignment dated December 1, 1997 between Lyondell and the Partnership,
of Operating Agreement, Natural Gas Sales and Methanol Supply with
respect to Lyondell Methanol Company.
A-1
<PAGE> 27
13. Administrative Services Agreement (as amended or otherwise modified
from time to time) effective as of December 1, 1997 between the
Partnership and Lyondell with respect to the provision of services as
described in Appendix A attached.
14. Letter Agreement dated December 1, 1997 between Lyondell and the
Partnership with respect to the net payment by the Partnership to
Lyondell for certain Administrative Services as described in Attachment
1 thereto.
15. Assignment dated November 25, 1997, but effective December 1, 1997,
from Lyondell to the Partnership, of leases specified therein
(Channelview, Texas Golf Courses).
16. Assignment dated November 25, 1997, but effective December 1, 1997,
from Lyondell to the Partnership, of leases specified therein (Alvin,
Texas).
17. Assignment dated November 25, 1997, but effective as of December 1,
1997, from Lyondell to the Partnership, of leases specified therein
(Plano, Texas).
18. Assignment dated November 25, 1997, but effective as of December 1,
1997, from Lyondell to the Partnership, of leases specified therein
(Chicago, Illinois - CALPERS Lease).
19. Assignment of Sublease dated November 25, 1997, but effective as of
December 1, 1997, from Lyondell to the Partnership, of leases specified
therein (Chicago, Illinois - MATRIX Partners Sublease).
20. Assignment dated November 25, 1997, but effective as of December 1,
1997, from Lyondell to the Partnership, of leases specified therein
(Philadelphia, Pennsylvania).
21. Assignment dated November 25, 1997, but effective December 1, 1997,
from Lyondell to the Partnership, of leases specified therein
(Victoria, Texas).
22. Sublease Agreement dated November 25, 1997, but effective December 1,
1997, by and between Lyondell and the Partnership with respect to
Office Lease Agreement dated December 31, 1985 and amended by 19
Amendments as described on Exhibit A as attached thereto
(Administrative Office Space, OHC).
23. General Warranty Deed dated November 25, 1997, but effective as of
December 1, 1997, from Lyondell to the Partnership with respect to
certain real property specified therein (Channelview, Texas).
24. General Warranty Deed dated November 25, 1997, but effective as of
December 1, 1997, from Lyondell to the Partnership, with respect to
certain real property specified therein (Mount Belvieu, Texas).
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25. General Warranty Deed dated, November 25, 1997, but effective December
1, 1997, from Lyondell to the Partnership with respect to certain real
property specified therein (Bayport, Texas).
26. General Warranty Deed dated November 25, 1997, but effective December
1, 1997, from Lyondell to the Partnership with respect to certain real
property specified therein (Matagorda, Texas).
27. Conveyance and Assignment of Easements, Rights of Way, and Licenses
dated November 25, 1997, but effective as of December 1, 1997, from
Lyondell to the Partnership with respect to certain real property
specified therein (Pipeline Right of Way).
28. Bill of Sale and Assignment dated December 1, 1997 from Millennium
Petrochemicals to the Partnership with respect to the property set
forth on Schedule A attached.
29. Assignment of Trademarks dated November 21, 1997 between Millennium
Petrochemicals as Assignor and the Partnership as Assignee with respect
to the transfer of O&P Trademarks as set forth in the schedule
attached.
30. Assignment of Patents dated November 21, 1997 between Millennium
Petrochemicals as Assignor and the Partnership as Assignee with respect
to the transfer of O&P Patents as set forth in the schedule attached.
31. Assumption Agreement effective as of December 1, 1997 between
Millennium Petrochemicals as Assignor and the Partnership as Assignee
pursuant to the Asset Contribution Agreement with respect to the
assumption by the assignee of certain liabilities.
32. Master Intellectual Property Agreement dated December 1, 1997 by and
between Millennium Petrochemicals and the Partnership.
33. Shared Services Agreement for Wastewater effective as of December 1,
1997 by and between Millennium Petrochemicals and the Partnership.
34. Shared Services Agreement for the LaPorte Complex effective as of
December 1, 1997 by and between Millennium Petrochemicals and the
Partnership with respect to the services as specified therein and on
the attachments and appendix.
35. Shared Services Agreement for Water and Utility Instrument Air
effective as of December 1, 1997 by and between Millennium
Petrochemicals and the Partnership with respect to the services as
specified therein and on the attachments, exhibits and appendix.
36. Shared Services Agreement for the Northlake Office Complex effective as
of December 1, 1997 by and between Millennium Petrochemicals and the
Partnership with respect to services as specified therein and on
attachments and appendix.
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37. Agreement for Interim Study at the LaPorte Complex effective as of
December 1, 1997 by and between Millennium Petrochemicals and the
Partnership.
38. Fuel Stream Agreement effective as of December 1, 1997 by and between
Millennium Petrochemicals and the Partnership.
39. Electricity Service Agreement effective as of December 1, 1997 by and
between Millennium Petrochemicals and the Partnership.
40. Sales Agreement (Vinyl Acetate Monomer), effective December 1, 1997
between Millennium Petrochemicals as "Seller" and the Partnership as
"Buyer".
41. Sales Agreement (Ethylene), effective December 1, 1997 between the
Partnership as "Seller" and Millennium Petrochemicals as "Buyer".
42. Sales Agreement (Purified Hydrogen), between the Partnership as
"Seller" and Millennium Petrochemicals as "Buyer" effective December 1,
1997.
43. Sales Agreement (Natural Gas), effective December 1, 1997 between the
Partnership as "Seller" and Millennium Petrochemicals as "Buyer".
44. Letter Agreement dated December 1, 1997 between Millennium
Petrochemicals and the Partnership regarding interim distribution
logistics support.
45. Letter Agreement dated December 1, 1997 between Millennium
Petrochemicals and the Partnership with respect to the net payment for
various shared services.
46. Assignment of Railcar Lease dated December 3, 1997 by and between
Millennium Petrochemicals Inc. as "Assignor" and the Partnership as
"Assignee" (The Sumitomo Bank Leasing and Finance, Inc. Lease).
47. Assignment of Leasehold dated November 25, 1997 by and between
Millennium Petrochemicals and the Partnership with respect to certain
real property specified therein (Tuscola, Illinois).
48. Assignment of Leasehold dated December 1, 1997 by and between
Millennium Petrochemicals and the Partnership with respect to certain
real property specified therein (Fairport Harbor, Ohio).
49. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of lease specified therein (Clinton, Iowa).
50. Quit Claim Deed dated December 1, 1997 from Millennium Petrochemicals
to the Partnership with respect to certain real property specified
therein (Clinton, Iowa).
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51. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Credit Union Sublease (Clinton, Iowa).
52. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Appurtenant Easements (Clinton, Iowa).
53. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Dock Lease and Agreement (Clinton, Iowa).
54. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Sub-lease Option to Purchase Agreement (Clinton,
Iowa).
55. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Cellular Telephone Sublease (Clinton, Iowa).
56. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Farm Leases (Clinton, Iowa).
57. Assignment dated December 1, 1997 between Millennium Petrochemicals and
the Partnership of Eastern Iowa Propane Lease (Clinton, Iowa).
58. Lease Agreement dated December 1, 1997 between Millennium
Petrochemicals and the Partnership with respect to certain real
property specified therein (Lease for Cincinnati Research Laboratory).
59. Warranty Deed dated December 1, 1997 from Millennium Petrochemicals to
the Partnership with respect to certain Real Property specified therein
(Clinton, Iowa).
60. General Warranty Deed dated December 1, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (LaPorte, Texas).
61. Letter agreement dated December 1, 1997 from Millennium Petrochemicals
to the Partnership with respect to Millennium Petrochemicals agreement
to provide the Partnership an option on approximately 20+ acres of land
(LaPorte Expansion Land).
62. Warranty Deed dated November 25, 1997 from Millennium Petrochemicals to
the Partnership with respect to certain real property specified therein
(Morris, Illinois).
63. General Warranty Deed dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Port Arthur, Texas).
64. General Warranty Deed dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Chocolate Bayou, Texas).
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<PAGE> 31
65. Warranty Deed dated December 1, 1997 from Millennium Petrochemicals to
the Partnership with respect to certain real property specified therein
(Tuscola, Illinois).
66. General Warranty Deed dated December 1, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Heath, Ohio)
67. General Warranty Deed dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Crockett, Texas)
68. Deed dated November 24, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain real property specified therein
(Newark, New Jersey).
69. Grant Deed dated December 1, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain real property specified therein
(Anaheim, California).
70. Limited Warranty Deed dated December 1, 1997 from the Partnership to
Millennium Petrochemicals with respect to certain real property
specified therein (the Northlake Drive 0.1553 Acre Parcel
Cincinnati-Research Center-Northlake, Ohio).
71. General Warranty Deed (Conveyance between Adjoining Lot Owners) dated
December 1, 1997 from Millennium Petrochemicals to the Partnership with
respect to certain real property specified therein (Cincinnati-Research
Center-Northlake, Ohio).
72. General Warranty Deed (Conveyance between Adjoining Lot Owners) dated
December 1, 1997 from Millennium Petrochemicals to the Partnership with
respect to certain real property specified therein, the Northlake Drive
0.0987 Acre Parcel (Cincinnati-Research Center-Northlake, Ohio).
73. General Warranty Deed dated December 1, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein, the East Kemper Road and Northlake Drive 25.0864
Acre Parcel (Cincinnati-Research Center-Northlake).
74. Declaration of Easements and Restrictive Covenants dated December 1,
1997 by Millennium Petrochemicals and the Partnership with respect to
certain real property specified therein (Cincinnati-Research
Center-Northlake, Ohio).
75. Assignment and Assumption dated December 1, 1997 by and between
Millennium Petrochemicals and the Partnership, of Service Agreement
(Cincinnati-Research Center-Northlake, Ohio).
76. Letter Agreement dated November 20, 1997 from Millennium Petrochemicals
to the Partnership with respect to Fiber-Optic Cable System, Northlake
Drive Property, Cincinnati, Ohio (Cincinnati-Research Center-Northlake,
Ohio).
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<PAGE> 32
77. Parking Agreement dated December 1, 1997 between Millennium
Petrochemicals and the Partnership with respect to additional parking
at the Northlake Facility (Cincinnati-Research Center-Northlake, Ohio).
78. General Warranty Deed dated December 1, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Fairport Harbor, Ohio).
79. Assignment of Easements dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Chocolate Bayou, Texas).
80. Easement Agreement dated December 1, 1997 to Millennium Petrochemicals
from the Partnership with respect to certain real property specified
therein (LaPorte, Texas).
81. Easement Agreement dated December 1, 1997 to the Partnership from
Millennium Petrochemicals with respect to certain real property
specified therein (LaPorte, Texas).
82. Assignment (Mont Belvieu Pipeline Easements) dated November 25, 1997
from Millennium Petrochemicals to the Partnership with respect to
certain real property specified therein.
83. General Warranty (Mont Belvieu Pipeline Fee Parcels) dated November 25,
1997 from Millennium Petrochemicals to the Partnership with respect to
certain real property specified therein.
84. Partnership Agreement.
85. Agreement and Plan of Merger and Asset Contribution dated as of May 15,
1998, among Occidental GP, Occidental LP1, Occidental LP2, OPI and the
Partnership.
86. Sales Agreement (Ethylene) dated as of May 15, 1998 by and between the
Partnership and OCC with respect to the sale of Ethylene by the
Partnership to OCC.
87. Operating Agreement dated as of May 15, 1998 by and between the
Partnership and OCC with respect to OCC providing certain services to
the Partnership after May 15, 1998.
88. Toll Processing Agreement dated May 15, 1998 between the Partnership
and OCC with respect to Ashtabula EO/EG tolling.
89. Amended and Restated Indemnity Agreement among OCC, Occidental GP,
Occidental LP1, Occidental LP2, Lyondell GP, Lyondell LP, Millennium
GP, Millennium LP and Millennium America Inc.
90. Letter Agreement dated May 15, 1998 between OCC and the Partnership
with respect to OCC providing a guarantee for the collection of
$419,700,000 of Partnership debt.
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<PAGE> 33
91. Letter Agreement dated May 15, 1998 between OCC and the Partnership
with respect to the prepayment or restructuring of the Occidental
Assumed Debt.
92. Promissory Note for $419,700,000 dated May 15, 1998 of the Partnership
payable to Occidental LP2.
93. Promissory Note for $75 million dated May 15, 1998 of the Partnership
payable to Millennium LP.
94. Bill of Sale and Assignment dated May 15, 1998 from OCC to Occidental
LP1 with respect to property specified on attached schedule.
95. Bill of Sale and Assignment dated May 15, 1998 from Occidental LP1 to
the Partnership with respect to property specified on attached
schedule.
96. Patent Assignment dated May 15, 1998 from OCC to the Partnership with
respect to patents as listed on attached schedule.
97. Assumption Agreement dated May 15, 1998 between Occidental LP1,
Occidental LP2 and Occidental GP, as Assignors, and the Partnership, as
Assignee, pursuant to the Agreement and Plan of Merger and Asset
Contribution with respect to the assumption by Assignee of certain
liabilities.
98. Master Intellectual Property Agreement dated May 15, 1998 by and
between the Partnership and OCC.
99. Assignment of Partnership Interests dated May 15, 1998 from Occidental
GP to the Partnership with respect to interests in PD Glycol, a Texas
limited partnership.
100. Assignment of Leases dated May 15, 1998 from OCC to the Occidental LP1
with respect to leases specified therein.
101. Assignment of Lease and Act of Exchange dated May 15, 1998 from
Occidental LP1 to the Partnership with respect to the lease specified
therein, together with such lease.
102. Assignment of Leases dated May 15, 1998 from Occidental LP1 to the
Partnership with respect to leases specified therein.
103. Assumption Agreement dated May 15, 1998 between OPI as Assignor and the
Partnership as Assignee with respect to Lease Intended for Security
dated December 18, 1991 ($205 million).
104. Termination and Release of Guaranty dated May 15, 1998 between Lyondell
and OCC with respect to the termination of Lyondell guaranty of certain
Partnership railcar leases.
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<PAGE> 34
105. Sublease dated May 15, 1998 from OCC to the Partnership with respect to
1990 railcar lease.
106. Sublease dated May 15, 1998 from OPI to the Partnership with respect to
1995 railcar lease.
107. Tax Indemnity Agreement dated May 15, 1998 between OCC and the
Partnership with respect to Sublease of 1990 railcar lease.
108. Tax Indemnity Agreement dated May 15, 1998 between OPI and the
Partnership with respect to Sublease of 1998 railcar lease.
109. Master Arbitration Amendment to Related Agreements dated May 15, 1998
between the Partnership, Lyondell and Millennium.
110. First Amendment to Lyondell Asset Contribution Agreement dated May 15,
1998 between the Partnership, Lyondell and Lyondell LP.
111. First Amendment to Millennium Asset Contribution Agreement dated May
15, 1998 between the Partnership, Millennium Petrochemicals and
Millennium LP.
112. Transition Services Agreement between the Partnership and OCC to be
entered into pursuant to the Operating Agreement with respect to OCC
providing certain services to the Partnership.
113. Pipeline Acquisition Agreement dated as of May 15, 1998 between OCC and
the Partnership with respect to the Cyclohexane pipeline.
114. Trademark License Agreement dated as of May 15, 1998 among OCC,
Occidental and the Partnership with respect to the trademarks as set
forth on the schedule attached.
115. Assignment of Excluded Assets dated May 14, 1998 between OPI as
Assignor and OCC as Assignee with respect to certain assets described
therein.
116. Assumption Agreement dated May 14, 1998 between OPI as Assignor and OCC
as Assignee with respect to certain liabilities described therein.
117. Termination Agreement and General Release dated May 15, 1998 among
Occidental, OPI, Occidental LP2 and Occidental Holding Company with
respect to certain intercompany debts.
118. Assumption Agreement dated May 15, 1998 between OPI as Assignor and
Occidental LP2 as Assignee with respect to certain intercompany debts.
119. Assignment and Assumption Agreement dated May 15, 1998 between OCC as
Assignor and the Partnership as Assignee with respect to Lease intended
for security dated March 28, 1994 by and between OCC and Pitney Bowes
Credit Corporation.
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<PAGE> 35
120. Letter from Lyondell to OCC and the Partnership regarding PVC
technology.
121. Agreement regarding provision by the Partnership of certain support
facilities associated with the Lake Charles propylene fractionation
unit to be entered into pursuant to the Operating Agreement.
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<PAGE> 36
APPENDIX B
TO
PARENT AGREEMENT
DISPUTE RESOLUTION PROCEDURES
(1) Binding and Exclusive Means. The dispute resolution
provisions set forth in this Appendix B shall be the binding and exclusive
means to resolve all disputes arising under this Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the
standards and criteria for resolving such dispute shall, unless the Parties
involved in the Dispute in their discretion jointly stipulate otherwise, be as
set forth in Appendix 1 to this Appendix B.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises,
the following procedures shall be implemented (with references to "Parties"
meaning the Parties involved in the Dispute):
(a) Any Party may at any time invoke the dispute resolution
procedures set forth in this Appendix B as to any Dispute by providing written
notice of such action to the other Parties, and all Parties within five
Business Days after such notice shall schedule a meeting to be held in Houston,
Texas between the Parties. The meeting shall occur within 10 Business Days
after notice of the meeting is delivered to the other Parties. The meeting
shall be attended by representatives of each Party having decision-making
authority regarding the Dispute as well as the dispute resolution process and
who shall attempt in a commercially reasonable manner to negotiate a resolution
of the Dispute.
(b) The representatives of the Parties shall cooperate in a
commercially reasonable manner and shall explore whether techniques such as
mediation, minitrials, mock trials or other techniques of alternative dispute
resolution might be useful. In the event that a technique of alternative
dispute resolution is so agreed upon, a specific timetable and completion date
for its implementation shall also be agreed upon. The representatives will
continue to meet and discuss settlement until the date (the "Interim Decision
Date") that is the earliest to occur of the following events: (i) an agreement
shall be reached by the Parties resolving the Dispute; (ii) one of the Parties
shall determine and notify the other Parties in writing that no agreement
resolving the Dispute is likely to be reached; (iii) if a technique of
alternative dispute resolution is agreed upon, the completion date therefor
shall occur without the Parties having resolved the Dispute; or (iv) if another
technique of alternative dispute resolution is not agreed upon, two full
meeting days (or such other time period as may be agreed upon) shall expire
without the Parties having resolved the Dispute.
(c) If, as of the Interim Decision Date, the Parties have not
succeeded in negotiating a resolution of the dispute pursuant to subsection
(b), the Parties shall proceed under subsections (d), (e) and (f).
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<PAGE> 37
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any Party
involved in the Dispute (the "Disputing Party"). The arbitration shall be
subject to the Federal Arbitration Act as supplemented by the conditions set
forth in this Appendix B. The arbitration shall be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
in effect on the date the notice of arbitration is served, other than as
specifically modified herein. In the absence of an agreement to the contrary,
the arbitration shall be held in Houston, Texas. The Arbitrator (as defined
below) will allow reasonable discovery in the forms permitted by the Federal
Rules of Civil Procedure, to the extent consistent with the purpose of the
arbitration. During the pendency of the Dispute, each Party shall make
available to the Arbitrator and the other Parties all books, records and other
information within its control requested by the other Parties or the Arbitrator
subject to the confidentiality provisions contained herein, and provided that
no such access shall waive or preclude any objection to such production based
on any privilege recognized by law. Recognizing the express desire of the
Parties for an expeditious means of dispute resolution, the Arbitrator may
limit the scope of discovery between the Parties as may be reasonable under the
circumstances. In deciding the substance of the Parties' claims, the laws of
the State of Delaware shall govern the construction, interpretation and effect
of this Agreement (including this Appendix B) without giving effect to any
conflict of law principles. The arbitration hearing shall be commenced
promptly and conducted expeditiously, with each Party involved in the Dispute
being allocated an equal amount of time for the presentation of its case.
Unless otherwise agreed to by the Parties, the arbitration hearing shall be
conducted on consecutive days. Time is of the essence in the arbitration
proceeding, and the Arbitrator shall have the right and authority to issue
monetary sanctions against any of the Parties if, upon a showing of good cause,
that Party is unreasonably delaying the proceeding. To the fullest extent
permitted by law, the arbitration proceedings and award shall be maintained in
confidence by the Arbitrator and the Parties.
(e) The Disputing Party shall notify the American Arbitration
Association ("AAA") and the other Parties in writing describing in reasonable
detail the nature of the Dispute (the "Dispute Notice"). The arbitrator (the
"Arbitrator") shall be selected within 15 days of the date of the Dispute
Notice by all of the Parties from the members of a panel of arbitrators of the
AAA or, if the AAA fails or refuses to provide a list of potential arbitrators,
of the Center for Public Resources and shall be experienced in commercial
arbitration. In the event that the Parties are unable to agree on the
selection of the Arbitrator, the AAA shall select the Arbitrator, using the
criteria set forth in this Appendix B, within 30 days of the date of the
Dispute Notice. In the event that the Arbitrator is unable to serve, his or
her replacement will be selected in the same manner as the Arbitrator to be
replaced. The Arbitrator shall be neutral. The Arbitrator shall have the
authority to assess the costs and expenses of the arbitration proceeding
(including the arbitrators', and attorneys' fees and expenses) against any or
all Parties.
(f) The Arbitrator shall decide all Disputes and all substantive
and procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect or punitive damages or (ii) amend this
Agreement. The Arbitrator shall render the arbitration award, in writing,
within 20 days following the completion of the arbitration hearing, and
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<PAGE> 38
shall set forth the reasons for the award. In the event that the Arbitrator
awards monetary damages in favor of any Party, the Arbitrator must certify in
the award that no indirect, consequential, incidental, indirect or punitive
damages are included in such award. If the Arbitrator's decision results in a
monetary award, the interest to be granted on such award, if any, and the rate
of such interest shall be determined by the Arbitrator in his or her
discretion. The arbitration award shall be final and binding on the Parties,
and judgment thereon may be entered in any court of competent jurisdiction, and
may not be appealed except to the extent permitted by the Federal Arbitration
Act.
(4) Continuation of Business. Notwithstanding the existence of
any Dispute or the pendency of any procedures pursuant to this Appendix B, the
Parties agree and undertake that all payments not in dispute shall continue to
be made and all obligations not in dispute shall continue to be performed.
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<PAGE> 39
Appendix 1
(a) First priority shall be given to maximizing the consistency of
the resolution of the Dispute with the satisfaction of all express obligations
of the Parties and their Affiliates as set forth in the Agreement.
(b) Second priority shall be given to resolution of the Dispute in
a manner which best achieves the objectives of the business activities and
arrangements under the Agreement and permits the Parties to realize the
benefits intended to be afforded thereby.
(c) Third priority shall be given to such other matters, if any,
as the Parties or the Arbitrator determine to be appropriate under the
circumstances.
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