<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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 1, 1995 .
--------------------
LYONDELL PETROCHEMICAL COMPANY
- ----------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-10145 95-4160558
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1221 MCKINNEY STREET, SUITE 1600, HOUSTON, TEXAS 77010
- ---------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 652-7200
-------------------
NOT APPLICABLE
---------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
1
<PAGE>
ITEM 2. ACQUISITION OF HIGH-DENSITY POLYETHYLENE BUSINESS FROM OCCIDENTAL
CHEMICAL CORPORATION
On May 1, 1995, Lyondell Petrochemical Company ("Lyondell") completed the
acquisition of Occidental Chemical Corporation's ("Occidental") Alathon(R) high-
density polyethylene (HDPE) business pursuant to the terms of an Asset Purchase
Agreement dated as of April 13, 1995, a copy of which is attached hereto as
Exhibit 10.29 and incorporated herein by reference. The purchase price was $350
million, plus approximately $60 million representing the value of inventories at
May 1, 1995. The assets acquired included two plants, the inventories, related
research and development activities and the rights to the Alathon(R) trademark,
as well as other technology rights. Lyondell funded the transaction through
cash and borrowings under existing credit facilities. Lyondell plans to
continue to operate the HDPE business on substantially the same basis as it was
operated by Occidental. Lyondell issued a press release announcing the closing
of the transaction, dated May 1, 1995, which is attached hereto as Exhibit 99
and incorporated herein by reference.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
INDEX TO FINANCIAL STATEMENTS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
Financial statements for the Alathon Division of Occidental Chemical
Corporation are provided below for the year ended December 31, 1994.
However, it is impracticable to provide the required financial statements
related to the three-month period ended March 31, 1995 at this time.
Registrant will file the required financial statements no later than July
14, 1995.
<TABLE>
<S> <C>
Report of Independent Public Accountants 4
Balance Sheets as of December 31, 1994 and 1993 5
Statements of Operations and Changes in Owner's
Investment for the years ended December 31, 1994 and 1993 6
Statements of Cash Flows for the years ended
December 31, 1994 and 1993 7
Notes to Financial Statements 8
</TABLE>
(B) UNAUDITED PRO FORMA FINANCIAL INFORMATION:
Unaudited pro forma financial information is provided below for the year
ended December 31, 1994. However, it is impracticable to provide the
required pro forma financial information related to the three-month period
ended March 31, 1995 at this time. Registrant will file the required pro
forma financial information no later than July 14, 1995.
<TABLE>
<S> <C>
Unaudited Pro Forma Condensed Statement of Income for the
year ended December 31, 1994 16
Notes to Unaudited Pro Forma Condensed Statement of Income 17
</TABLE>
INDEX TO EXHIBITS
(C) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit Document
------- --------
<C> <S>
10.29 Asset Purchase Agreement, dated April 13, 1995.
99 Press Release, dated May 1, 1995.
</TABLE>
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Occidental Chemical Corporation:
We have audited the accompanying balance sheets of the Alathon Division (as
defined in Note 1) of Occidental Chemical Corporation, an indirect wholly-owned
subsidiary of Occidental Petroleum Corporation, as of December 31, 1994 and
1993, and the related statements of operations and changes in owner's investment
and cash flows for the years then ended. These financial statements are the
responsibility of Occidental Chemical Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Alathon Division of
Occidental Chemical Corporation as of December 31, 1994 and 1993, and the
results of its operations and changes in owner's investment and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
[Signature of Arthur Andersen LLP appears here]
Dallas, Texas,
April 19, 1995
4
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Current Assets:
Cash...................................................... $ 2 $ 1
Trade receivables, net of reserves of $843 in 1994 and
$300 in 1993............................................. 8,814 8,692
Inventories............................................... 53,587 40,429
Deferred income taxes..................................... 2,040 2,504
Other current assets...................................... 397 516
-------- --------
Total current assets.................................... 64,840 52,142
Long-Term Receivables....................................... 894 675
Property, Plant and Equipment, at cost, net of accumulated
depreciation of $123,169 in 1994 and $104,499 in 1993...... 330,444 343,175
Other Assets................................................ 2,714 6,609
-------- --------
Total Assets............................................ $398,892 $402,601
======== ========
Current Liabilities:
Accounts payable.......................................... $ 9,505 $ 9,076
Accrued liabilities....................................... 14,778 20,040
-------- --------
Total current liabilities............................... 24,283 29,116
Deferred Income Taxes....................................... 104,168 102,536
Other Liabilities........................................... 3,195 2,750
-------- --------
Total liabilities....................................... 131,646 134,402
Commitments and Contingencies
Owner's Investment.......................................... 267,246 268,199
-------- --------
Total Liabilities and Owner's Investment................ $398,892 $402,601
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
STATEMENTS OF OPERATIONS AND CHANGES IN OWNER'S INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
External Sales, net.................................... $431,793 $364,047
Sales to Owner at Market Value......................... 722 1,617
-------- --------
Total Sales, net....................................... 432,515 365,664
Operating Costs and Expenses:
Cost of sales........................................ 382,010 361,424
Selling, general and administrative expenses......... 12,980 13,325
Other operating expense.............................. 3,036 1,241
-------- --------
Income (Loss) Before Charge (Credit) from Occidental
Chemical Corporation in Lieu of Federal Taxes
and Provision for State Taxes........................ 34,489 (10,326)
Charge (credit) from Occidental Chemical Corporation
in lieu of federal taxes and provision for state
taxes.............................................. 12,234 (1,010)
-------- --------
Net Income (Loss)...................................... 22,255 (9,316)
Decrease in Owner's Investment......................... (23,208) (11,651)
Owner's Investment, beginning of period................ 268,199 289,166
-------- --------
Owner's Investment, end of period...................... $267,246 $268,199
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Cash Flow from Operating Activities:
Net income (loss)........................................ $ 22,255 $ (9,316)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation......................................... 17,189 21,728
Deferred income taxes................................ 2,096 2,098
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables............... (122) 260
Decrease (increase) in inventories..................... (13,158) 1,559
Decrease in other current assets....................... 119 396
Increase (decrease) in accounts payable
and accrued liabilities............................... (4,833) 4,412
Other operating, net..................................... 5,001 (3,471)
-------- --------
Net cash provided by operating activities.................. 28,547 17,666
Cash Flow from Investing Activities:
Capital expenditures..................................... (5,338) (6,016)
-------- --------
Net cash used by investing activities...................... (5,338) (6,016)
Cash Flow from Financing Activities:
Decrease in owner's investment........................... (23,208) (11,651)
-------- --------
Net cash used by financing activities...................... (23,208) (11,651)
-------- --------
Change in cash............................................. 1 (1)
Cash - beginning of period................................. 1 2
-------- --------
Cash - end of period....................................... $ 2 $ 1
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Organization, business and basis of presentation -
The accompanying financial statements present the financial position,
results of operations and cash flows of the Alathon Division of Occidental
Chemical Corporation (OCC), a New York corporation. The Alathon Division
consists of OCC's high density polyethylene (HDPE) business conducted at
facilities in Victoria and Matagorda, Texas, as well as a research and
development facility located at Chocolate Bayou, adjacent to Alvin, Texas (see
Note 10). All of the outstanding common shares of OCC are owned indirectly by
Occidental Petroleum Corporation (Occidental). Certain amounts in the
accompanying financial statements have been allocated in a reasonable and
consistent manner in order to depict the financial position, results of
operations and cash flows of the Alathon Division on a stand-alone basis.
The Alathon Division manufactures and sells HDPE from raw materials
purchased primarily from OCC. Additionally, the Alathon Division does business
as OCC and enters operating and sales contracts as OCC. These include national
sales agreements as well as purchase and energy agreements.
Occidental utilizes a centralized cash management system for its
operations, including the Alathon Division. Cash distributed to or advanced from
Occidental has been reflected in Owner's Investment in the accompanying balance
sheets. In addition, settlements of transactions with other Occidental
affiliates are recorded through Owner's Investment.
Supplemental cash flow information -
For the years ended December 31, 1994 and 1993, all cash payments for
income taxes were made by Occidental. For the same periods, there were no cash
payments for interest.
As of December 31, 1994 and 1993, trade receivables of $80,036,000 and
$50,183,000, respectively, were transferred to an affiliate (see Note 2).
Property, plant and equipment -
Property additions, major renewals and improvements are capitalized at
cost. Maintenance and repair costs are charged to expense as incurred. The cost
and related accumulated depreciation, depletion and amortization of properties
sold or retired are removed from the property accounts and any resulting gain or
loss is recorded.
Depreciation of plant and equipment has been provided using the
unit-of-production method.
Beginning in 1994, the Alathon Division revised the estimated average
useful lives used to compute units-of-production depreciation for most of its
machinery and equipment from 20 years to 25 years at capacity. This change in
accounting estimate was made to more properly reflect the current economic lives
of the assets based on anticipated industry conditions. The result was an
increase in net income for the year ended December 31, 1994 of approximately
$2.5 million.
8
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
Environmental costs -
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to existing conditions
caused by past operations and that do not contribute to current or future
revenue generation are expensed. No costs relating to existing conditions caused
by past operations were incurred by the Alathon Division during 1994 and 1993.
Reserves for estimated costs are recorded when environmental remedial efforts
are probable and the costs can be reasonably estimated. In determining the
reserves, OCC uses the most current information available, including similar
past experiences, available technology, regulations in effect, the timing of
remediation and cost-sharing arrangements. At December 31, 1994 and 1993, there
were no environmental reserves related to the Alathon Division.
The Alathon Division's estimated operating expenses relating to compliance
with environmental laws and regulations governing ongoing operations were
approximately $2,300,000 and $2,100,000 in 1994 and 1993, respectively. In
addition, estimated capital expenditures for environmental compliance in 1994
and 1993 were approximately $700,000 and $300,000, respectively. Management has
not identified any material environmental matter, nor has the Alathon Division
been identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act (Superfund) and
corresponding state acts.
Income taxes -
The Alathon Division uses the asset and liability method required by
Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes" (see Note 7). The Alathon Division is included in the consolidated
U.S. federal income tax return of Occidental. A portion of the income tax
provision for this return is allocated to the Alathon Division on the basis of a
tax sharing arranging between OCC and Occidental Chemical Holding Corporation
(OCHC), an indirect parent of OCC. Current and deferred income tax provisions
allocated by OCHC are determined as though the Alathon Division filed as an
independent company, making the same tax return elections used in Occidental's
consolidated return. In addition, state taxes are provided for as though
separate state tax returns were filed. Current charges in lieu of taxes are
included in Owner's Investment in the accompanying financial statements.
Research and development costs -
Research and development costs, which are charged to operations as
incurred, were $4,524,000 and $4,668,000 in 1994 and 1993, respectively. These
charges are included in selling, general and administrative costs in the
accompanying financial statements.
Significant customer -
Sales to the major customer accounted for 9% and 12% of external sales in
1994 and 1993, respectively.
9
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(2) RECEIVABLES -
As of December 31, 1994 and 1993, OCC transferred to an Occidental
affiliate trade receivables of the Alathon Division under a revolving sale
program amounting to $80,036,000 and $50,183,000, respectively, without
recourse, in connection with the ultimate sale for cash of such receivables by
the affiliate. OCC transferred the receivables to the affiliate in a noncash
transaction that was reflected as a reduction in the Alathon Division's Owner's
Investment. OCC has retained the collection responsibility with respect to the
receivables sold. An interest in newly created receivables is transferred
monthly, net of collections made from customers. Fees related to the sales of
receivables under this program which are allocated from OCC, were $2,625,000 in
1994 and $1,323,000 in 1993 and are included in Other operating expense.
(3) ACCOUNTING CHANGE -
In December 1992, the Financial Accounting Standards Board issued SFAS No.
112 "Employers' Accounting for Postemployment Benefits," which substantially
changed the existing method of accounting for employer benefits provided to
inactive or former employees after active employment but before retirement. This
statement requires that the cost of postemployment benefits (principally medical
benefits for inactive employees) be recognized in the financial statements
during employees' active working careers. OCC adopted SFAS No 112, effective
January 1, 1994, but the adoption did not have a material impact on the Alathon
Division's financial position or results of operations.
(4) INVENTORIES -
Inventories are valued at the lower of cost of market. The first-in,
first-out (FIFO) cost method was used in determining the costs of raw materials
and finished goods. Materials and supplies inventories were determined using the
weighted average cost method. Inventories consisted of the following as of
December 31 (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Raw materials $ 2,372 $ 2,398
Materials and supplies 2,627 2,581
Work in process 205 113
Finished goods 48,383 35,337
-------- --------
Inventory at lower of cost or market $ 53,587 $ 40,429
======== ========
</TABLE>
10
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(5) PROPERTY, PLANT AND EQUIPMENT -
Property, plant and equipment at December 31 consisted of the following (in
thousands):
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Land and land improvements $ 18,821 $ 18,821
Buildings 21,512 20,936
Machinery and equipment 408,302 401,822
Construction in progress 4,978 6,095
--------- ---------
453,613 447,674
Accumulated depreciation (123,169) (104,499)
--------- ---------
$ 330,444 $ 343,175
========= =========
</TABLE>
(6) LEASE COMMITMENTS -
At December 31, 1994, future minimum lease payments under noncancelable
operating leases were as follows (in thousands):
<TABLE>
<S> <C>
1995.............................. $ 7,066
1996.............................. 6,415
1997.............................. 6,078
1998.............................. 5,920
1999.............................. 5,918
Thereafter........................ 99,542
--------
Total minimum lease payments $130,939
========
</TABLE>
Rental expense totaled approximately $8,791,000 and $8,622,000 for the
years ended December 31, 1994 and 1993, respectively.
11
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1993
(7) CHARGE (CREDIT) FROM OCC IN LIEU OF FEDERAL TAXES AND PROVISION FOR STATE
TAXES-
The charge (credit) allocated by OCC in lieu of federal taxes and provisions
for state taxes for the years ended December 31, 1994 and 1993 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Current U.S. federal charge (credit)
from OCC $10,138 $(3,108)
Deferred U.S. federal charge (credit)
from OCC 1,910 (474)
Deferred U.S. federal income tax rate
increase - 2,618
Deferred state 186 (46)
------- -------
$12,234 $(1,010)
======= =======
</TABLE>
The following table reconciles the maximum statutory U.S. federal income tax
rate multiplied by the Alathon Division's income (loss) before taxes to the
recorded provision for income taxes (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
U.S. federal income tax at 35% $12,071 $(3,614)
State income tax expense, net of U.S.
federal benefit 121 (30)
Nondeductible expenses 42 16
U.S. federal income tax expense resulting
from rate increase on August 10, 1993 - 2,618
------- -------
$12,234 $(1,010)
======= =======
</TABLE>
Deferred income taxes reflect the future tax consequences of temporary
differences between the tax bases of assets and liabilities and their financial
reporting amounts. Temporary differences are associated with the financial
statement assets and liabilities shown in the table below. Deferred income tax
assets and liabilities have been recorded in the following amounts as of
December 31 (in thousands):
<TABLE>
<CAPTION>
1994 1993
--------------------- ---------------------
Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Trade receivables $ 323 $ - $ 115 $ -
Inventories 1,201 - 422 -
Property, plant and equipment - (108,160) - (106,032)
Other assets - (726) - (860)
Accrued liabilities 902 - 2,160 -
Other liabilities 1,156 - 1,053 -
Deferred state income tax 3,176 - 3,110 -
------ --------- ------ ---------
$6,758 $(108,886) $6,860 $(106,892)
====== ========= ====== =========
</TABLE>
12
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1993
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS-
The Alathon Division participates in defined contribution retirement plans
sponsored by Occidental for all of its salaried employees that provide for
periodic contributions by OCC based on the base salary and age level of the
eligible employees. The Alathon Division expensed $2,133,000 and $2,078,000
under the provisions of these plans during the years ended December 31, 1994 and
1993, respectively.
OCC provides medical, dental and life insurance for certain active, retired,
and disabled employees and their eligible dependents. Beginning in 1993, certain
salaried participants pay for all medical cost increases in excess of increases
in the Consumer Price Index (CPI). The benefits generally are funded by OCC as
the benefits are paid during the year. The cost of providing these benefits is
based on claims filed and insurance premiums paid for the period.
The 1994 and 1993 postretirement benefits costs of $388,000 and $289,000, as
discussed in the table below, are based on an allocation of the OCC actuarial
study using participant counts as of January 1, 1994.
The postretirement benefit obligation as of December 31, 1994 and 1993 was
determined by application of the terms of medical, dental, and life insurance
plans, including the effect of established maximums on covered costs, together
with relevant actuarial assumptions and health-care cost trend rates projected
at a CPI increase of 4 percent. Because salaried participants pay for all
medical cost increases in excess of increases in the CPI, there is no effect of
a 1 percent annual increase in these assumed cost trend rates on the accumulated
postretirement benefit obligation or the annual service and interest costs in
1994. The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5 percent as of December 31, 1994 and
1993. The plans are unfunded.
The following table sets forth the accrued postretirement benefit costs at
December 31 (in thousands):
<TABLE>
<CAPTION>
1994 1994
------ -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ -- $ --
Fully eligible active plan participants 593 510
Other active plan participants 2,045 1,760
------ ------
Total accumulated postretirement benefit obligation 2,638 2,270
Unrecognized net loss (570) (590)
------ ------
Accrued postretirement benefit cost $2,068 $1,680
====== ======
</TABLE>
13
<PAGE>
OCCIDENTAL CHEMICAL CORPORATION
ALATHON DIVISION
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1993
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS - (continued)
Net periodic postretirement benefit cost included the following components
for the years ended December 31, 1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Service cost-benefits attributed to service during the period $198 $154
Interest cost on accumulated postretirement benefit obligation 170 132
Net amortization and deferral 20 3
---- ----
Net periodic postretirement benefit cost $388 $289
==== ====
</TABLE>
(9) RELATED PARTY TRANSACTIONS -
Transactions with other plants and affiliates of OCC included purchases of
feedstocks of $280,511,000 in 1994 and $243,943,000 in 1993. These purchases are
recorded at market value.
The Alathon Division has been charged for certain financial and operational
support services provided by OCC. Charges for such support services, included in
selling, general and administrative expenses in the accompanying statements of
operations, totaled $2,072,000 and $1,971,000 in 1994 and 1993, respectively.
These charges were allocated based on ratios including such factors as revenues,
operating income, fixed assets, and working capital in a reasonable and
consistent manner.
(10) SALE OF ALATHON DIVISION
In April 1995, OCC and Lyondell Petrochemical Company (Lyondell) entered
into an asset purchase agreement pursuant to which Lyondell agreed to purchase
the assets, and agreed to assume certain of the liabilities, that constitute
the Alathon Division. Pursuant to the asset purchase agreement, certain of the
Alathon Division's assets and liabilities included in these financial statements
are not included in the sale of Lyondell.
14
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed statement of income gives effect
to the acquisition by Lyondell Petrochemical Company ("Lyondell") of Occidental
Chemical Corporation's (an affiliate of Occidental Petroleum Corporation)
Alathon(R) high-density polyethylene ("HDPE") business (the "Alathon Division")
in a transaction accounted for as a purchase. The unaudited pro forma condensed
statement of income is based on the individual statements of income of Lyondell
and the Alathon Division and combines the results of operations of Lyondell and
the Alathon Division (acquired by Lyondell as of May 1, 1995) for the year ended
December 31, 1994 as if the acquisition occurred on January 1, 1994. This
unaudited pro forma condensed statement of income should be read in conjunction
with both the historical financial statements and notes thereto of Lyondell
which are included in its annual report on Form 10-K for the year ended December
31, 1994, which is incorporated herein by reference, and the historical
financial statements and notes thereto of the Alathon Division included
elsewhere in this Form 8-K.
15
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRO FORMA
ALATHON ADJUSTMENTS
MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS LYONDELL DIVISION (NOTE 2) COMBINED
- -------------------------------------------- -------- -------- ----------- --------
<S> <C> <C> <C> <C>
Sales and other operating revenues $3,857 $ 432 $4,289
Cost of sales 3,296 385 3,681
Selling, general and administrative expenses 137 13 (3)(a) 147
------ ------ ------ ------
3,433 398 (3) 3,828
------ ------ ------ ------
Operating income 424 34 3 461
Interest expense (74) (11)(b) (85)
Interest income 5 5
Minority interest in LYONDELL-CITGO
Refining Company Ltd. (6) (6)
------ ------ ------ ------
Income before income taxes 349 34 (8) 375
Provision for income taxes 126 12 (3)(c) 135
------ ------ ------ ------
NET INCOME $ 223 $ 22 $ (5) $ 240
====== ====== ====== ======
EARNINGS PER SHARE $ 2.78 $ 3.00
====== ======
</TABLE>
See notes to unaudited pro forma condensed statement of income.
16
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
1. BASIS OF PREPARATION
The accompanying unaudited pro forma condensed statement of income has been
prepared to reflect the acquisition of the Alathon Division by Lyondell for a
purchase price of $350 million plus approximately $60 million representing the
value of the Alathon Division's inventory at May 1, 1995.
2. PRO FORMA ADJUSTMENTS
a. Elimination of certain fees incurred by the Alathon Division under a
revolving sale program related to the sales of receivables to its
affiliate, Occidental Chemical Corporation.
b. Annual interest charges for the year ended December 31, 1994 related to
borrowings from Lyondell's revolving credit facility, calculated using
the average interest rates for the year ended December 31, 1994 plus the
rate adjustments, both as specified in the revolving credit facility.
c. Income taxes at statutory rates relating to foregoing adjustments.
17
<PAGE>
SIGNATURES
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.
Dated: May 10, 1995 LYONDELL PETROCHEMICAL COMPANY
By: /s/ Joseph M. Putz
------------------------
Joseph M. Putz
Vice President and Controller
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED PAGE
NO. EXHIBITS WHERE LOCATED
------- -------- -------------
<S> <C> <C>
10.29 Asset Purchase Agreement
99 Press Release
</TABLE>
19
<PAGE>
Exhibit 10.29
ASSET PURCHASE AGREEMENT
BETWEEN
OCCIDENTAL CHEMICAL CORPORATION
AND
LYONDELL PETROCHEMICAL COMPANY
DATED: APRIL 13, 1995
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TABLE OF CONTENTS
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ARTICLE 1. Definitions................................ 1
ARTICLE 2. Purchase and Sale of Assets; Assumption of
Certain Liabilities........................ 7
2.1 Transfer of Assets......................... 7
2.2 Excluded Assets............................ 9
2.3 Instruments of Conveyance and Assignment... 10
2.4 Further Assurances......................... 11
2.5 Assumption of Liabilities.................. 11
2.6 Excluded Liabilities....................... 12
2.7 Technology License......................... 12
2.8 Sublease of Leased Railcars................ 12
2.9 New Lease or Sublease for Certain
Terminals and Warehouses................... 13
2.10 Chocolate Bayou Agreements................. 13
ARTICLE 3. Effective Time; Closing; Payment of
Purchase Price at Closing.................. 13
3.1 Effective Time............................. 13
3.2 Closing Date............................... 13
3.3 Purchase Price and Payment................. 13
3.4 Purchase of Inventory and Stores Inventory;
Reimbursement for Pre-paid Expenses........ 14
3.5 Allocation of Consideration................ 16
ARTICLE 4. Representations and Warranties of the
Seller..................................... 17
4.1 Due Organization; Good Standing and Power.. 17
4.2 Authorization and Validity of Agreements... 17
4.3 No Approvals or Notices Required;
No Conflict with Instruments to which the
Seller is a Party.......................... 17
4.4 Financial Information...................... 18
4.5 Title to Properties; Absence of Liens and
Encumbrances; Leases....................... 18
4.6 Title Matters; Defects in Improvements..... 19
4.7 List of HDPE Technology; Material
Contracts; Government Licenses............. 19
4.8 HDPE Technology and Similar Rights......... 21
4.9 Government Licenses, Permits and Related
Approvals.................................. 21
4.10 All Necessary Assets....................... 21
4.11 Conduct of Business in Compliance with
Regulatory and Contractual Requirements.... 21
4.12 Legal Proceedings.......................... 22
4.13 Employee Benefit Plans..................... 22
4.14 Tax Matters................................ 23
4.15 Certain Fees............................... 24
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4.16 Environmental Matters...................... 24
4.17 Employment Matters......................... 25
4.18 Investigation to Acquire Knowledge......... 26
ARTICLE 5. Representations and Warranties of the Buyer 26
5.1 Due Organization; Good Standing and Power.. 26
5.2 Authorization and Validity of Agreement.... 26
5.3 No Approvals or Notices Required; No
Conflict with Instruments to which the
Buyer is a Party........................... 26
5.4 Employee Benefit Plans..................... 27
5.5 Certain Fees............................... 27
ARTICLE 6. Covenants.................................. 27
6.1 Access to Information...................... 27
6.2 Conduct of the Purchased Business Pending
the Closing Date........................... 28
6.3 Risk of Loss............................... 29
6.4 Title to the Matagorda Land................ 29
6.5 Other Agreements........................... 30
6.6 Further Actions............................ 31
6.7 Antitrust and Other Laws................... 32
6.8 Turnaround at Victoria Facility............ 32
6.9 Notifications.............................. 32
6.10 No Solicitation............................ 33
6.11 Furnishing Financial Information........... 33
6.12 Victoria Metering Facilities............... 34
6.13 Inspection of Rolling Stock................ 34
ARTICLE 7. Conditions Precedent....................... 34
7.1 Conditions Precedent to Obligations of
Both Parties............................... 34
7.2 Conditions Precedent to Obligations of the
Buyer...................................... 34
7.3 Conditions Precedent to the Obligations of
the Seller................................. 36
ARTICLE 8. Employee Relations and Benefits............ 36
8.1 General.................................... 36
8.2 Welfare Benefits........................... 39
8.3 Vacation Pay............................... 40
8.4 Retirement and Defined Contribution Plans.. 40
8.5 Management Compensation Matters............ 41
8.6 Indemnification............................ 41
8.7 Rights of Other Parties.................... 42
8.8 Cooperation................................ 43
ARTICLE 9. Termination................................ 43
9.1 General.................................... 43
9.2 Effect of Termination...................... 43
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ARTICLE 10. Additional Covenants....................... 44
10.1 Access to Books and Records................ 44
10.2 Mail or Other Communications............... 44
10.3 Solicitation of Customers.................. 44
10.4 Return of Product.......................... 44
10.5 Use of Seller's Trade Name................. 45
10.6 Environmental Compliance................... 45
10.7 Collection of Accounts Receivable.......... 45
ARTICLE 11. Survival and Indemnification............... 46
11.1 Survival Limitations....................... 46
11.2 Indemnification............................ 46
11.3 Procedures................................. 50
11.4 Subrogation................................ 52
11.5 Claims for Environmental Work.............. 52
11.6 EXTENT OF INDEMNIFICATION.................. 52
ARTICLE 12. Miscellaneous.............................. 52
12.1 Public Announcements....................... 52
12.2 Disclaimer................................. 52
12.3 Expenses; Payment of Certain Taxes and
Charges.................................... 53
12.4 Notices.................................... 54
12.5 Entire Agreement........................... 56
12.6 Binding Effect; Benefit.................... 56
12.7 Bulk Sales................................. 56
12.8 Assignability.............................. 56
12.9 Amendment; Waiver.......................... 56
12.10 Notice Regarding Coastal Area Property..... 57
12.11 Section Headings........................... 57
12.12 Severability............................... 57
12.13 Counterparts............................... 57
12.14 APPLICABLE LAW............................. 57
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
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Schedules
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Schedule 2.1(c) - Terminals and Warehouses
Schedule 2.1(e) - Equipment
Schedule 2.1(h) - Nissan License and Dupont License
Schedule 2.1(i) - Alathon Trademark
Schedule 2.2 - Specified Excluded Assets
Schedule 2.8 - Financing Leases
Schedule 3.5 - Allocation of Consideration/Section 1060 Statement
Schedule 4.3 - Consents and Approvals
Schedule 4.4(b) - Material Liabilities or Obligations
Schedule 4.5(b) - Liens and Encumbrances on Leaseholds
Schedule 4.5(c) - Encumbrances on Personal Property
Schedule 4.7(a) - Intellectual Property
Schedule 4.7(b) - Material Contracts
Schedule 4.7(c) - Government Licenses
Schedule 4.7(d) - Copies Not Delivered
Schedule 4.8 - Intellectual Property Not Owned
Schedule 4.9 - Government Licenses
Schedule 4.11 - Conduct of Business in Compliance with Regulatory and
Contractual Requirements
Schedule 4.12 - Legal Proceedings
Schedule 4.13 - Employee Benefit Plans, Programs and Agreements
Schedule 4.14 - Tax Matters
Schedule 4.16 - Environmental Matters
Schedule 5.4 - Buyer's ERISA Plans
Schedule 6.8 - Turnaround Schedule
Schedule 7.1(c) - Required Consents for Transferred Government Licenses
Schedule 7.2(d) - Required Consents for Transferred Contracts
Schedule 8.1 - Employees
Schedule 10.5 - Transition Terms for Use of the Seller's Name
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Exhibits
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Exhibit A - Form of Deed for Matagorda, Texas Land
Exhibit B - Form of Assignment of Lease for Victoria, Texas Land
Exhibit C - Form of Bill of Sale and Assignment
Exhibit D - Form of Trademark Assignment
Exhibit E - Form of Patent Assignment
Exhibit F - Form of Assumption Agreement
Exhibit G - Form of Technology License
Exhibit H - Terms of Rolling Stock Sublease
Exhibit I - Terms of SI Warehouse Sublease
Exhibit J - Form of CB Agreement
Exhibit K - Form of Closing Report
Exhibit L - Form of Ethylene Supply Agreement
Exhibit M - Form of Transition Agreement
Exhibit N - Terms of Joint Development Agreement
Exhibit O - Form of Occidental Petroleum Corporation Guarantee
Exhibit P - Form of Opinion of Counsel to the Seller
Exhibit Q - Form of Opinion of Counsel to the Buyer
Exhibit R - Notice Dates for Schedule Regarding Offered Employees
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of April 13, 1995, between
Occidental Chemical Corporation, a New York corporation ("Seller"), and Lyondell
Petrochemical Company, a Delaware corporation ("Buyer").
WHEREAS, the Seller owns and operates an HDPE business consisting of
facilities in Victoria, Texas ("Victoria Facility") and Matagorda, Texas
("Matagorda Facility") for the production of HDPE and a research and development
facility relating to the manufacture and sale of HDPE at Chocolate Bayou
adjacent to Alvin, Texas ("CB Facility"); and
WHEREAS, the Buyer desires to buy and the Seller desires to sell
substantially all of the assets of such HDPE business, and the Buyer is willing
to assume certain liabilities and obligations of the Seller related thereto, all
upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
ARTICLE 1. Definitions. The terms used in this Agreement have the following
definitions or are defined in the Sections referenced below:
"Adjustment Amount" is defined in Section 3.3(a)(iii).
"Assets" is defined in Section 2.1.
"Assignment and Assumption Agreements" means the Deed, the Assignment of
Victoria Lease, the Bill of Sale and Assignment, the Trademark Assignment, the
Patent Assignment and the Assumption Agreement.
"Assignment of Victoria Lease" is defined in Section 2.3(a).
"Associated Rights" is defined in Section 2.1(d).
"Assumed Liabilities" is defined in Section 2.5(a).
"Benefit Programs or Agreements" is defined in Section 4.13(a)(ii).
"Business Assets" means the Assets and the Licensed Technology.
"Buyer" is defined in Preamble.
"Buyer's 401(k) Plan" is defined in Section 8.4(b).
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"Buyer's Qualified Plans" is defined in Section 8.4(b).
"Capital Spares" means the inventory of spare parts used by the Seller in
the Purchased Business and owned by the Seller as of the Effective Time, and
which the Seller has historically accounted for on its books as property, plant
and equipment.
"CB Agreement" is defined in Section 2.10.
"CB Facility" is defined in Preamble.
"CB Lease" is defined in Section 2.10.
"CPP" is defined in Section 8.4(a).
"CERCLA" is defined in Section 4.16(b).
"Charges" is defined in Section 12.3(c).
"Closing Date" is defined in Section 3.2.
"Closing" is defined in Section 3.2.
"Closing Report" is defined in Section 3.4(d).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commonly Controlled Entity" is defined in Section 4.13(f).
"Confidentiality Provisions" is defined in Section 12.5(b).
"Consent" is defined in Section 6.6(b).
"Contracts" is defined in Section 2.1(g).
"Deed" is defined in Section 2.3(a).
"Effective Time" is defined in Section 3.1.
"Employees" is defined in Section 4.13(a).
"Environmental Claim" means (i) any actions, events, circumstances or
responsibilities (including compliance actions or requirements) that are
necessary to comply with Environmental Laws but only to the extent that any of
the foregoing give rise to out of pocket costs or expenses or result in a
liability that is required by GAAP to be reflected on the balance sheet of the
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applicable party or (ii) any third party (including private parties,
governmental agencies and employees acting on each such party's own behalf or on
the behalf of other third parties) actions, lawsuits, claims, investigations or
proceedings arising under Environmental Laws.
"Environmental Laws" means any applicable federal, state or local statute,
law, rule, regulation, ordinance, code 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 the environment, Hazardous
Materials or exposure to Hazardous Materials, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. (S)(S)9601, et seq.; The Hazardous Materials Transportation Act, 49
U.S.C. (S)(S)1801, et seq.; The Resource Conservation and Recovery Act of 1976,
42 U.S.C. (S)(S) 6901, et seq.; the Federal Water Pollution Control Act, 33
U.S.C. (S)(S) 1201, et seq.; the Toxic Substances Control Act, 15 U.S.C. (S)(S)
2601, et seq.; the Clean Air Act, 42 U.S.C. (S)(S) 7401, et seq.; the Safe
Drinking Water Act, 42 U.S.C. (S)(S)3808, et seq.
"Enviroplastics Note" means the Note, having an original issue date of
August 30, 1991, and a stated principal amount of $1,027,886.50, issued by
Enviroplastics Corporation to the Seller as well as all rights under the
InterCreditor Agreement dated April 15, 1993.
"Equipment" is defined in Section 2.1(e).
"ERISA" is defined in Section 4.13(a)(i).
"ERISA Plan" is defined in Section 4.13(a)(i).
"Estimated Adjustment" is defined in Section 3.4(b)
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.6.
"Facilities" is defined in Section 2.1.
"Fixed Amount" is defined in Section 3.3(a)(ii).
"GAAP" means generally accepted accounting principles.
"Government Licenses" means all licenses, permits or franchises issued by
any federal, state, provincial or municipal authority relating to the
development, use, maintenance or occupancy of the Facilities or any other Asset
or of the Purchased Business including without limitation those listed on
Schedule 4.7(c), to the extent that such licenses, permits or franchises relate
principally to the normal operation and conduct of the Purchased Business.
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"Hazardous Materials" means (a) any radioactive material, asbestos, urea
formaldehyde foam insulation, transformers or other equipment that contains
dielectric fluid or other material containing levels of polychlorinated
byphenyls of more than 50 parts per million ("PCBs"), and radon gas; and (b) any
chemicals, materials, waste or substances, as well as mixtures thereof with
other materials and any regulated building materials such as lead, defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances" "toxic pollutants," "contaminants," or "pollutants,"
or words of similar import, under any Environmental Laws.
"HDPE" means any polyethylene polymer having a density greater than or
equal to 0.93 grams per cubic centimeter and having ethylene as a majority
monomer.
"HSR Act" is defined in Section 4.3.
"Indemnified Party" is defined in Section 11.3(a).
"Indemnifying Party" is defined in Section 11.3(a).
"Intellectual Property" is defined in Section 2.1(j).
"Inventory" means the following materials used by the Seller in the
Purchased Business and owned by the Seller as of the Effective Time: raw
materials, feed stocks ,supplies, packaging materials (to the extent the Buyer's
use thereof would be consistent with Section 10.5), catalysts, work-in-process
and finished goods that relate principally to the normal operation and conduct
of the Purchased Business.
"Inventory Tax" is defined in Section 12.3(b)(iv).
"Joint Development Agreement" is defined in Section 6.5(vii).
"knowledge" with respect to the Seller means the actual knowledge of any
officer of the Seller having responsibilities with respect to the Purchased
Business and any Division Director or plant manager and employees reporting
directly to a Division Director or plant manager, in each case employed by the
Seller in connection with the Purchased Business.
"Leased Premises" is defined in Section 4.5(b).
"Leaseholds" is defined in Section 4.5(b).
"Licensed Technology" shall mean the technology licensed to the Buyer
pursuant to the Technology License.
"Loss" is defined in Section 11.2(a).
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"Lowest Cost Response" means the response required or allowed under
Environmental Laws that addresses the Hazardous Materials present at the lowest
cost (considered as a whole taking into consideration any negative impact such
response may have on the conduct of the Purchased 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 Environmental Laws.
Taking no action shall constitute the Lowest Cost Response if, after
investigation, taking no action is determined to be consistent with
Environmental Laws. If taking no action is not consistent with Environmental
Laws, the least costly non-permanent remedy (such as mechanisms to contain or
stabilize Hazardous Materials, including caps, dikes, encapsulation, leachate
collection systems, etc.) shall be the Lowest Cost Response, provided that such
non-permanent remedy is consistent with Environmental Laws and less costly than
the least costly permanent remedy (such as the excavation and removal of soil).
"Matagorda Facility" is defined in Preamble.
"Matagorda Land" is defined in Section 2.1(a).
"Matagorda Plan" is defined in Section 7.2(e).
"Material Adverse Effect" means a material adverse effect on the financial
condition, business, assets or results of operations of the Purchased Business
or the Assets, taken as a whole.
"Material Contracts" is defined in Section 4.7(b).
"Metering Facilities" is defined in Section 6.12.
"Obsolete" when used in reference to Inventory or Stores Inventory means
such items that have no value other than as scrap material.
"Off Spec Product" means finished goods Inventory that cannot be certified
by the applicable plant laboratory as meeting the Seller's applicable product
specifications.
"Offered Employees" is defined in Section 8.1(a).
"Other Agreements" is defined in Section 6.5.
"Patent Assignment" is defined in Section 2.3(a).
"PCBs" is defined in Article 1 in the definition of "Hazardous Materials".
"Prepaid Expenses" means those out-of-pocket, prepaid expenses of the type
listed on the form of Closing Report that (i) have actually been paid by the
Seller to third parties for which the goods or services to be provided have not
yet been received and (ii) relate principally to the
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normal operation and conduct of the Purchased Business by the Buyer after the
Closing, but shall exclude those expenses allocated in accordance with Section
12.3.
"Prime Rate" means the prime commercial lending rate of Citibank, N.A. as
publicly announced to be in effect at the close of business on the Closing Date.
The Prime Rate is not necessarily the lowest rate of interest of Citibank, N.A.
"Property Tax" is defined in Section 12.3(b)(iii).
"Purchase Price" is defined in Section 3.3(a).
"Purchased Business" means the operations relating to the Assets.
"Rolling Stock Sublease" is defined in Section 2.8.
"SEC Financial Information" is defined in Section 6.11(a).
"Section 1060 Statement" is defined in Section 3.5.
"Seller" is defined in Preamble.
"Seller's Account" means the bank account designated by the Seller to the
Buyer in writing prior to the Closing.
"Seller's 401(k) Plan" is defined in Section 8.4(a).
"Seller's Qualified Plans" is defined in Section 8.4(a).
"SI Warehouse" means that warehouse located at 16643 Jacintoport, Houston,
Texas 77015.
"Stores Inventory" means the inventory of spare parts, excluding Capital
Spares, that are used by the Seller in the Purchased Business and owned by the
Seller as of the Effective Time and that consist of items that can generally be
used for several processes or types of equipment, including, but not limited to,
such items as pumps, motors, pipe fitting, electrical wiring, instruments, nuts
and bolts, unfabricated metals, safety items, small hand tools and other
miscellaneous repair parts or supplies.
"Tax Purchase Price" is defined in Section 3.5.
"Taxes" means any foreign, federal, state and local taxes, fees, duties and
other assessments including but not limited to, income taxes, franchise taxes,
withholding taxes, estimated taxes, excise taxes, sales and use taxes, gross
receipt taxes, employment and payroll
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related taxes and assessments, transfer, property, ad valorem, export and import
taxes and duties, plus any interest or penalties thereon or attributable
thereto.
"Technology License" is defined in Section 2.7.
"Terminals and Warehouses" means the terminals and warehouses listed on
Schedule 2.1(c).
"Third Party Claim" is defined in Section 11.3(b).
"TNRCC" means the Texas Natural Resource Conservation Commission.
"Trademark Assignment" is defined in Section 2.3(a).
"Transition Agreement" is defined in Section 6.5(vi).
"TSCA" is defined in Section 4.16(d).
"Unrecorded Assets" is defined in Section 2.1(f).
"Victoria Facility" is defined in Preamble.
"Victoria Lease" is defined in Section 2.1(b).
"WARN" is defined in Section 8.1(d).
ARTICLE 2. Purchase and Sale of Assets; Assumption of Certain Liabilities.
2.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing the Seller shall sell, convey, assign,
transfer and deliver to the Buyer, or shall cause any of its applicable
affiliates to sell, convey, assign, transfer and deliver to the Buyer, and the
Buyer shall purchase and acquire from the Seller, or its applicable affiliates,
if any, all of the assets, rights, properties and business of the Seller that
constitute, on and as of the Closing, (i) the Seller's HDPE operations at the
Victoria Facility, (ii) the Seller's HDPE operations at the Matagorda Facility
and (iii) the research and development operations relating to the manufacture
and sale of HDPE at the Seller's CB Facility (collectively, the facilities
identified in (i), (ii) and (iii), the "Facilities") of every kind, nature,
character and description, tangible and intangible, real, personal or mixed,
wherever located (which assets, rights and properties include, without
limitation, all tangible personal property used exclusively by the Seller in the
operation and conduct of Seller's HDPE business) other than the Excluded Assets;
which assets, rights and properties are sometimes referred to collectively as
the "Assets"; and subject to Section 2.2 the Assets shall include, without
limitation, the following:
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(a) Approximately 2,100 acres of land, more or less, located in Matagorda
County, Texas, described in the deed attached as Exhibit A (the "Matagorda
Land"), together with all buildings, structures, fixtures and other improvements
situated thereon and all rights and interests of the Seller 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 Matagorda Land;
(b) All rights and interests of the Seller under a lease having a primary
term that expires on June 8, 2086 covering approximately 33 acres of land, more
or less, located in Victoria County, Texas (the "Victoria Lease"), which lease
is being assigned pursuant to the Assignment of Lease attached as Exhibit B,
together with all buildings, structures, fixtures and other improvements
situated thereon and, subject to Section 6.6(b), all rights and interests of the
Seller under all easements, privileges, rights-of-way, riparian and other water
rights, appurtenances and licenses pertaining to or accruing to the benefit of
the Victoria Lease;
(c) Subject to Section 6.6(b), all rights and interests of Seller under the
leases for the terminals and warehouses that Schedule 2.1(c) indicates are used
exclusively in the operation of the Purchased Business, including all buildings,
structures, fixtures and other improvements situated thereon, and all rights and
interests of the Seller under all easements, privileges, rights-of-way, riparian
and other water rights, appurtenances and licenses pertaining to or accruing to
the benefit of such leases for the Terminals and Warehouses;
(d) Subject to Section 6.6(b), all rights and interests of the Seller, if
any, in lands, or real property of others, used principally in the normal
operation and conduct of the Purchased Business (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 Purchased Business;
(e) All of the rights and interests of the Seller 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 Purchased Business (A) that are located at the
Facilities and Terminals and Warehouses, including without limitation the items
listed on Schedule 2.1(e), and (B) that are located elsewhere and are
specifically listed on Schedule 2.1(e) (the equipment set forth in this Section
2.1(e), together with the rolling stock covered by the Rolling Stock Sublease or
Subleases, to be referred to collectively as the "Equipment") and all warranties
and guarantees, if any, express or implied, existing for the benefit of the
Seller in connection with the Equipment to the extent assignable;
(f) Subject, to the extent applicable, to Sections 6.6(b) and 10.5, all (i)
customer lists, customer credit information (to the extent the Seller is not
bound to any confidentiality obligation with respect thereto), customer payment
histories and credit limits, vendor lists, catalogs, (ii) research material,
technical information, marketing information, patent rights, patent licenses,
pending patents applications, trade secrets, technical information, technology,
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know-how, management information systems, technology, quality control data, if
any, specifications, designs, and drawings that are used solely in (or are
under development for use solely in) the Purchased Business and (iii) software
that relates principally to the normal operation and conduct of the Purchased
Business and all sales promotion literature and advertising materials used
exclusively for the marketing and promotion of the Purchased Business
(collectively, the "Unrecorded Assets");
(g) Subject to Section 6.6(b), all contracts, maintenance and service
agreements, purchase commitments for materials and other services, advertising
and promotional agreements, leases (excluding the railcar leases listed on
Schedule 2.8), taxation agreements with any governmental authorities, and other
agreements, whether or not entered into in the ordinary course of the business,
that relate principally to the normal operation and conduct of the Purchased
Business, or in the case of any Contracts under which the Seller retains rights
with respect to its other businesses, to the extent any such Contract relates to
the operation of the Purchased Business, including without limitation all the
Material Contracts (excluding the railcar leases listed on Schedule 2.8) that
are listed on Schedule 4.7(b) (all the foregoing excluding Government Licenses,
but, together with all agreements and instruments setting forth the Seller's
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
(f), (h) and (i) of this Section 2.1 to be referred to collectively as the
"Contracts");
(h) All rights and interests of the Seller under the Nissan license and the
Dupont license, each as described on Schedule 2.1(h);
(i) The Alathon trademark described on Schedule 2.1(i);
(j) Subject to Section 6.6(b), any other trade names, trademarks, trademark
registrations or trademark applications, copyrights, copyright applications or
copyright registrations or any derivative thereof or design used in connection
therewith that are used solely in and are uniquely applicable only to the
Purchased Business (all of the items referred to in this Section 2.1(j),
together with the items referred to in clauses (ii) and (iii) of Section 2.1(f),
Section 2.1(h) and Section 2.1(i), collectively the "Intellectual Property");
(k) All Government Licenses that are transferable and as to which consents
to transfer are obtained where required;
(l) To the extent provided in Section 3.4, the Inventory and the Stores
Inventory; and
(m) The Enviroplastics Note.
2.2 Excluded Assets. It is expressly understood and agreed that the
Assets shall not include the following (the "Excluded Assets"):
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(a) Cash and cash equivalents or similar type investments, such as
certificates of deposit, Treasury bills and other marketable securities;
(b) Accounts and notes receivable of the Seller as of the Closing except as
provided in Section 2.1;
(c) Any assets of any qualified or non-qualified pension or welfare plans
or other deferred compensation arrangements maintained by the Seller for
Employees;
(d) Any of the Seller's right, title and interest in and to (i) the names
"Occidental", or "Oxy" or "OxyChem" and the Occidental comet logo and any other
statutory names, trade names or trademarks, indications or descriptions of which
the names "Occidental", "Oxy" or "OxyChem" 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 in connection therewith
that are not used solely in and are not uniquely applicable to the Purchased
Business;
(e) All claims and rights against third parties (including, without
limitation, insurance carriers and suppliers and service providers), to the
extent they relate to liabilities or obligations which are not assumed by the
Buyer hereunder;
(f) Claims for refunds of taxes and other governmental charges for time
periods ending on or before the Closing, which taxes and charges remain the
liability of Seller under this Agreement;
(g) Subject to the Technology License and the Joint Development Agreement,
(i) any and all of the intellectual property of the Seller (excluding software)
that is not used solely in or is not uniquely applicable only to the Purchased
Business and (ii) any and all other assets of the Seller (including software)
that are not used in or do not relate principally to the normal operation and
conduct of the Purchased Business;
(h) All items sold in the ordinary course of business prior to the Closing,
none of which individually or in the aggregate are material to the normal
operation and conduct of the Purchased Business; and
(i) The tangible assets, intangible assets, real properties, contracts and
rights, described in Schedule 2.2.
2.3 Instruments of Conveyance and Assignment. On or prior to the Closing
Date the Seller shall take the following actions:
(a) deliver or cause to be delivered to the Buyer (i) a properly executed
and acknowledged special warranty deed, in substantially the form attached
hereto as Exhibit A (the "Deed"), for all real property and interests in real
property being conveyed hereunder, (ii) an
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assignment of lease for the Victoria Lease in substantially the form attached
hereto as Exhibit B, as modified pursuant to Section 6.12 (the "Assignment of
Victoria Lease"), (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 and assigning the Contracts, (iv) an assignment of the Alathon
trademark and other trademarks included in the Assets in substantially the form
attached hereto as Exhibit D (the "Trademark Assignment") and (v) an assignment
of patent rights, licenses and applications in substantially the form attached
hereto as Exhibit E (the "Patent Assignment"); and
(b) transfer to the Buyer the originals (to the extent the Seller possesses
an original and retains no rights thereunder after the Closing) or copies, as
appropriate, of the 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 Purchased
Business by the Buyer.
2.4 Further Assurances.
(a) On and from time to time after the Closing Date, the Seller will
execute and deliver, or cause to be executed and delivered, such other
instruments of conveyance, assignment, transfer and delivery as the Buyer may
reasonably request in order to fulfill and implement the terms of this
Agreement, to vest in the Buyer title to the Assets, or to enable the Buyer to
realize the benefits intended to be afforded hereby.
(b) On and from time to time after the Closing Date, the Buyer 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 Seller may reasonably request in order to vest in the Buyer all of the
Assumed Liabilities and to enable the Seller to realize the benefits intended to
be afforded hereby.
2.5 Assumption of Liabilities.
(a) On the terms and subject to the conditions set forth in this Agreement
at the Closing, the Buyer shall assume and agree to pay, perform and discharge,
when due, the following debts, liabilities and obligations of the Seller:
(i) All obligations arising after the Closing under the Contracts that
are assigned to the Buyer hereunder at the Closing or after the Closing
pursuant to the provisions of Section 6.6(b) or the benefits of which the
Buyer has been provided pursuant to Section 6.6(b);
(ii) All obligations under purchase orders accepted by the Seller in
the ordinary course of business that are not filled as of the Closing;
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(iii) 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 after the Closing of the Assets or the
Purchased Business;
(iv) All obligations related to the Offered Employees to the extent
provided in Article 8 hereof; and
(v) All obligations and liabilities (contingent or otherwise) of the
Seller or its affiliates arising out of any claim, litigation or proceeding
based upon a product sold or service provided by the Buyer after the
Closing.
The liabilities and obligations assumed by the Buyer pursuant to this Section
are sometimes hereinafter referred to collectively as the "Assumed Liabilities."
(b) On the Closing Date, the Buyer shall deliver to the Seller an
instrument of assumption of the Assumed Liabilities substantially in the form
attached hereto as Exhibit F (the "Assumption Agreement").
2.6 Excluded Liabilities. Except as otherwise expressly provided in this
Agreement (including, without limitation, Sections 8.6(b), 10.6 and 12.3), any
of the Assignment and Assumption Agreements, any of the Other Agreements or any
agreements entered into pursuant to Section 6.6(b), notwithstanding anything in
this Agreement to the contrary the Buyer is assuming only the Assumed
Liabilities, and is not assuming any other liability or obligation of the Seller
of whatever nature, whether presently in existence or arising hereafter, whether
known or unknown, or whether absolute or contingent, and all such other
liabilities and obligations of the Seller that are not Assumed Liabilities shall
be retained by and remain obligations and liabilities of the Seller (all such
liabilities and obligations being herein referred to as the "Excluded
Liabilities"), including the following:
(i) 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 prior to the Closing of the Assets or the Purchased
Business;
(ii) any obligation or liability relating to the Excluded Assets; and
(iii) any trade or accounts payable of the Seller arising prior to
the Closing.
2.7 Technology License. At the Closing, the Seller shall grant to the
Buyer a perpetual and irrevocable, non-exclusive, royalty-free license
("Technology License") substantially in the form of Exhibit G hereto.
2.8 Sublease of Leased Railcars. At the Closing, the Seller and the Buyer
shall execute and deliver a sublease agreement or agreements, as appropriate
(each a "Rolling Stock Sublease"), in form and substance reasonably satisfactory
to the Seller and the Buyer having the
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terms and conditions described in Exhibit H, with respect to the railcars that
are subject to the lease agreements listed on Schedule 2.8.
2.9 New Lease or Sublease for Certain Terminals and Warehouses. At the
Closing, with respect to each Terminal and Warehouse that Schedule 2.1(c)
indicates is not used exclusively in the operation of the Purchased Business,
the Seller and the Buyer either (i) subject to Section 6.6(b), shall use their
commercially reasonable efforts to obtain for the Buyer a new lease from the
owner or lessor with respect to each such Terminal or Warehouse to the extent
such Terminal or Warehouse is used in the Purchased Business or (ii) shall
execute and deliver a lease agreement, or agreements, as appropriate (each a
"Terminal Sublease" or "Warehouse Sublease," as appropriate), in form and
substance reasonably satisfactory to the Buyer and the Seller and with the
Warehouse Sublease for the SI Warehouse having the terms and conditions
described on Exhibit I.
2.10 Chocolate Bayou Agreements. At the Closing, the Seller and the Buyer
shall execute and deliver (i) a Facilities Services Agreement with respect to
the CB Facility ("CB Agreement") in substantially the form of Exhibit J and (ii)
a lease with respect to the CB Facilities ("CB Lease") in form and substance
reasonably satisfactory to the Seller and the Buyer having such provisions as
are normal and customary in commercial office space lease transactions, provided
that such CB Lease shall not have the effect of altering the business
arrangement currently reflected in the CB Agreement, including, without
limitation, the extent of the space to be made available to the Buyer, the term
of the agreement, the nature and extent of the services to be provided by the
Seller, or the compensation payable to the Seller thereunder.
ARTICLE 3. Effective Time; Closing; Payment of Purchase Price at Closing.
3.1 Effective Time. Pursuant to Section 3.4, the physical inventory will
be conducted as of the close of business for accounting purposes on the day
preceding the Closing Date (the "Effective Time").
3.2 Closing Date. The closing with respect to the transactions provided
for in this Agreement (the "Closing") shall take place at the offices of the
Seller, 5005 LBJ Freeway, Dallas, Texas 75244, at 10:00 a.m., local time, on May
1, 1995 or on another mutually agreeable date within three business days after
the satisfaction or waiver of the conditions specified in Article 7. The
actual time and date of the Closing are herein called the "Closing Date."
3.3 Purchase Price and Payment.
(a) The consideration for the Assets shall consist of, subject to the terms
and conditions of this Agreement:
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(i) the Buyer's assumption of the Assumed Liabilities as of the
Closing;
(ii) subject to reduction as provided in Section 9.1, the Buyer's
payment to the Seller at the Closing in immediately available funds by wire
transfer to the Seller's Account of three hundred fifty million United
States dollars ($350,000,000) (the "Fixed Amount"); and
(iii) the Buyer's payment of the amount determined as provided in
Section 3.4 below (the "Adjustment Amount").
The Fixed Amount plus the Adjustment Amount shall be the "Purchase Price."
(b) Subject to the terms and conditions of this Agreement, at the Closing,
the Buyer shall pay to the Seller the Fixed Amount and the Estimated Adjustment.
3.4 Purchase of Inventory and Stores Inventory; Reimbursement for Pre-paid
Expenses.
(a) In connection with the other transactions described in this Agreement
and subject to the conditions and other requirements provided for in this
Section 3.4, the Buyer shall purchase the Inventory and Stores Inventory and
shall reimburse the Seller for the Prepaid Expenses. The amount of the
Adjustment Amount to be paid by the Buyer in respect of the Inventory shall be
the Buyer's cost therefor calculated on a "first in, first out" basis in
accordance with GAAP consistently applied; provided, however, that the Buyer
shall be entitled to reject and shall not be required to pay any amount for any
portion of the Inventory that the Buyer in good faith reasonably determines
constitutes Off Spec Product or Obsolete Inventory and for which an appropriate
reserve or previously expensed write-down is not reflected on the Closing
Report. In the event that the Buyer rejects any Inventory as described in the
preceding sentence, the Seller may at its option (i) require the Buyer to return
any such Inventory to the Seller and the Seller shall be permitted to sell such
Inventory notwithstanding any contrary provision of this Agreement, including
Section 10.3, or (ii) authorize the Buyer to attempt to sell such Inventory to
third parties as soon as reasonably practicable and using commercially
reasonable efforts, with the proceeds of such sales being promptly forwarded to
the Seller or (iii) reduce the amount of the Adjustment Amount to be paid in
respect of such Inventory in accordance with the Buyer's objections to the
Closing Report, as contemplated by Section 3.4(d), or as otherwise agreed by the
Seller and the Buyer. The amount of the Adjustment Amount to be paid by the
Buyer in respect of Stores Inventory shall be equal to the Seller's book value
thereof carried at average acquisition cost for such parts; provided, however,
that such amount shall be adjusted for any Obsolete items that are included in
Stores Inventory and for which an appropriate reserve or previously expensed
write-down is not reflected on the Closing Report. The amount of the Adjustment
Amount to be reimbursed in respect of Prepaid Expenses shall be the actual
amount thereof.
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(b) At least 10 business days prior to the Closing Date, the Seller shall
in good faith estimate the Adjustment Amount and deliver to the Buyer a
certificate of an officer of the Seller in the form of Exhibit K hereto setting
forth in reasonable detail the calculation thereof. At the Closing, the Buyer
shall pay an amount equal to the estimate of the Adjustment Amount (the
"Estimated Adjustment") to the Seller in immediately available funds by wire
transfer to the Seller's Account.
(c) As of the Effective Time the Seller at its sole cost and expense shall
conduct a physical inventory of the Inventory located at the Facilities and at
the SI Warehouse. The Seller shall permit representatives of the Buyer to
observe such physical inventory.
(d) Within five business days following the Closing, the Seller, at its
sole cost and expense, shall deliver a certification to the Buyer in the form of
Exhibit K attached hereto (the "Closing Report"), which shall set forth the
Seller's proposed final Adjustment Amount. The Buyer shall permit the Seller
and its representatives reasonable access to the Facilities and the SI Warehouse
and to the relevant books and records of the Purchased Business to the extent
necessary to complete such physical inventory and prepare the Closing Report.
The Buyer shall have 14 days to verify the accuracy and completeness of the
information provided by the Seller and to notify the Seller of any objection to
the Closing Report; provided, however, that the Buyer shall be deemed to have
agreed to the Adjustment Amount set forth in the Closing Report unless the Buyer
shall have notified the Seller of its objections on or before the expiration of
such 14 day period. Notwithstanding the prior sentence, the Buyer shall have 30
days to verify the accuracy and completeness of the information provided by the
Seller with respect to that portion of the Closing Report relating to the
Inventory contained in rolling stock and to notify the Seller of any objection
to that portion of the Closing Report; provided, however, that the Buyer shall
be deemed to have agreed to the Adjustment Amount set forth in such portion of
the Closing Report unless the Buyer shall have notified the Seller of its
objections on or before the expiration of such 30 day period; provided further
that the Buyer shall make no objections to such portion of the Closing Report
for amounts less than $5,000. In the event that the Buyer has any such
objections, each of the Buyer and the Seller agree to designate officers with
authority to reach agreement to negotiate such objections in good faith and to
take whatever commercially reasonable actions may be necessary to resolve such
objections as promptly as practicable, but in any event prior to the 45th
calendar day after the Closing Date.
(e) If the parties are unable to agree on the Adjustment Amount on or
before the 45th day after the Closing Date, then they shall appoint an
independent, nationally recognized accounting firm (which shall not be an
accounting firm engaged for any purpose within the past five years by either the
Buyer or the Seller) to determine the Adjustment Amount. If the parties are
unable to agree on the selection of such accounting firm within 10 days, either
the Buyer or the Seller may request the American Arbitration Association to
select an independent nationally recognized accounting firm (which shall not be
an accounting firm engaged for any purpose within the past five years by either
the Buyer or the Seller) which firm, upon selection, shall determine the
Adjustment Amount. The selected accounting firm shall have access to the
Buyer's and the Seller's books and records relating to any matter in dispute.
The decision of
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such firm shall be binding and conclusive. The costs and fees of such firm, and
if necessary the American Arbitration Association, shall be borne one-half by
each party.
(f) If the Adjustment Amount as finally determined pursuant to Sections
3.4(c) through (e) above is less than the Estimated Adjustment, the Seller shall
repay to the Buyer the amount of such excess plus interest thereon at a rate per
annum equal to the Prime Rate plus three percentage points from the Closing Date
to the date of payment; provided, however, that the interest on the amount of
such excess that relates to that portion of the Closing Report relating to the
Inventory contained in rolling stock shall only be at the Prime Rate. If the
Adjustment Amount as finally determined pursuant to Sections 3.4(c) through (e)
above is greater than the Estimated Adjustment, the Buyer shall pay to the
Seller the amount of such deficiency plus interest thereon at the rate per annum
equal to the Prime Rate from the Closing Date to the date of payment. Any
payments contemplated by this clause shall be made by wire transfer of
immediately available funds on the business day following the final
determination of the amount thereof.
3.5 Allocation of Consideration.
(a) Buyer and Seller agree that for federal income tax purposes the fair
market value of the Assets shall be the Purchase Price, as finally agreed upon
by the parties under Sections 3.3 and 3.4 plus the amount of Assumed Liabilities
which are included in the Seller's amount realized for federal income tax
purposes ("Tax Purchase Price"). Given the composition of the Assets on the
date hereof, the Tax Purchase Price would be allocated as set forth on Schedule
3.5 (the "Section 1060 Statement"). Such allocation is intended by the parties
to comply with Section 1060 of the Code and the regulations thereunder. The
Closing Report delivered by the Seller shall include a proposed final allocation
of the total consideration furnished by the Buyer (equal to the sum of the Fixed
Amount plus the Adjustment Amount plus the amount of Assumed Liabilities which
are included in the Seller's amount realized for federal income tax purposes).
Such allocation shall be prepared on the same basis and consistently with the
principles used to prepare the Section 1060 Statement and shall comply with
Section 1060 of the Code. In addition, the Closing Report shall include a
completed Internal Revenue Service Form 8594 which is consistent with the
methodology used to prepare the Section 1060 Statement. The parties shall
complete Form 8594 consistently with the Section 1060 Statement and shall timely
file Form 8594 with their respective federal income tax returns for the taxable
year which includes the Closing Date. The Buyer and Seller agree to use the
allocation agreed by the parties and reported on Form 8594 in all returns and
reports filed with all taxing authorities and to report all items on all such
returns and reports consistently with such allocation.
(b) Each party shall take no action inconsistent with the allocation agreed
by the parties and reported on Form 8594. If the Internal Revenue Service, or
any other taxing authority challenges the allocation of the Tax Purchase Price,
the party whose return is being examined shall promptly notify the other party
and shall promptly keep the other party fully informed regarding all
developments with respect to the allocation of the Tax Purchase Price.
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ARTICLE 4. Representations and Warranties of the Seller. The Seller represents
and warrants to the Buyer as follows:
4.1 Due Organization; Good Standing and Power. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York and has the corporate power and authority to own, lease
and operate the properties to be sold hereunder and to conduct the Purchased
Business as now conducted by it. The Seller has all corporate power and
authority to enter into this Agreement, the Assignment and Assumption Agreements
and the Other Agreements and to perform its obligations hereunder and
thereunder. The Seller 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 Purchased 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.
4.2 Authorization and Validity of Agreements. The execution, delivery and
performance of this Agreement, the Assignment and Assumption Agreements and the
Other Agreements by the Seller and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of the Seller. No other corporate or stockholder action is necessary
for the authorization, execution, delivery and performance by the Seller of this
Agreement, the Assignment and Assumption Agreements and the Other Agreements,
and the consummation by the Seller of the transactions contemplated hereby or
thereby. This Agreement has been, and upon the Closing, the Assignment and
Assumption Agreements and the Other Agreements will be, duly executed and
delivered by the Seller and constitute legal, valid and binding obligations of
the Seller, 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 Approvals or Notices Required; No Conflict with Instruments to
which the Seller is a Party. Except for the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and as described in Schedule 4.3, the
execution, delivery and performance of this Agreement, the Assignment and
Assumption Agreements and the Other Agreements by the Seller and the
consummation by it of the transactions contemplated thereby (i) will not violate
(with or without the giving of notice or the lapse of time or both), or require
any consent, approval, filing or notice under, any provision of any law, rule or
regulation, court order, judgment or decree applicable to the Seller, except for
such violations the occurrence of which, and such consents, approvals, filings
or notices the failure of which to obtain or make, would not in the aggregate
reasonably be expected to have a Material Adverse Effect; and (ii) will not
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 Seller under, or result in the creation of a lien, charge
or encumbrance upon a portion of the properties, assets or
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business of the Purchased Business pursuant to, the charter or by-laws of the
Seller, or any indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which the Seller is a party or by
which the Seller or any of the Assets held by it is bound, except for such
conflicts, breaches, terminations, defaults, accelerations or liens which would
not in the aggregate reasonably be expected to have a Material Adverse Effect.
4.4 Financial Information.
(a) Subject to the qualifications, assumptions and other limitations
specified in the SEC Financial Information, the SEC Financial Information (i)
will have been prepared in accordance with GAAP consistently applied, (ii) will
present fairly, in all material respects, the financial condition, results of
operations and cash flow of the Purchased Business as of the dates or for the
periods indicated therein and (iii) will be accompanied by an audit report
issued by Arthur Andersen LLP.
(b) Except as set forth on Schedule 4.4(b), from December 31, 1994 to the
date hereof the Seller has not incurred any material liabilities or obligations,
fixed, contingent, accrued or otherwise, that relate or are allocable to the
Purchased Business and that have had or will have a Material Adverse Effect, and
since December 31, 1994 the Seller has conducted the Purchased Business in all
material respects in the ordinary course, consistent with past practice.
4.5 Title to Properties; Absence of Liens and Encumbrances; Leases.
(a) The Seller has good and indefeasible title to all of the Matagorda Land
described in the Deed, free and clear of all encumbrances or other restrictions
of any kind or nature, except (i) those exceptions contained in the Deed, (ii)
liens for current taxes not yet due and payable and mechanics and similar
statutory liens arising in the ordinary course of business, (iii) liens or
mortgages that will be removed prior to the Closing Date, (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, pledges, charges 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. The Matagorda Facility is located within the boundaries of the
Matagorda Land.
(b) The Seller is the sole lessee under the Victoria Lease and the leases
to the Terminals and Warehouses (collectively, the "Leaseholds," with the
premises the subject of such being referred to herein as the "Leased Premises"),
the sole party entitled to the Leasehold interests in favor of the lessee
thereunder, and the sole owner of the improvements situated on the Victoria
Facility, free and clear of all liens and other matters affecting the Leaseholds
except as described on Schedule 4.5(b) or such imperfections of title,
easements, pledges, charges and 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
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a Material Adverse Effect. Seller has neither received from nor delivered to
the lessors under the Leaseholds any written notice of termination of the
respective Leaseholds. True and complete copies of all written lease agreements
(including any written amendments or modifications thereof) constituting, or
evidencing the terms of, the Leaseholds have been delivered to the Buyer. No
material default or event of default on the part of the Seller under the
provisions of any of the Leaseholds, and to the knowledge of the Seller 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 the Seller, has occurred (which
default or event of default has not been cured). Seller has received no written
notice from any lessor under any Leasehold, that any material default or event
of default on the part of the Seller 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 of
the Seller as lessee, has occurred (which default or event of default has not
been cured). To the knowledge of the Seller, 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).
The Victoria Facility and each of the Terminals and Warehouses are located
within the boundaries of the property covered by their respective Leaseholds.
(c) Except as described on Schedule 4.5(c), the Seller has good title to
all of the personal property purported to be owned by it, free and clear of all
encumbrances and claims, except for liens for taxes not yet due and payable and
such charges and 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.
4.6 Title Matters; Defects in Improvements. To Seller's knowledge, there
are no trespassers or other adverse parties in possession on or affecting the
Matagorda Land or the Leased Premises. The Seller has not granted and is not
party to any unrecorded options, rights of refusal, sales contracts or other
such contractual rights in favor of any third parties relating to the Matagorda
Land or the Leased Premises except as disclosed to Buyer in writing prior to the
Closing. No written notice has been received by Seller from any insurance
company with respect to the Matagorda Land 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).
4.7 List of HDPE Technology; Material Contracts; Government Licenses. The
following Schedules set forth certain information with respect to certain Assets
and the Seller:
(a) Schedule 4.7(a) contains a complete and correct list of (i) all of the
Seller's relevant patents, pending patent applications, invention disclosures,
registered copyrights and registered copyrighted software that are used in and
relate principally to the Purchased Business,
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(ii) all other written or otherwise documented material technical information,
know-how and processes that are used in and relate principally to the Purchased
Business, (iii) any intellectual property under development that the Seller
reasonably believes could have a material application in the Purchased Business,
(iv) all material nongovernmental licenses or sublicenses utilized in the
manufacture, use and sale of HDPE by the Purchased Business granted by or to the
Seller and (v) all material licenses and joint research and development
agreements between Seller and third parties relating to the manufacture, use and
sale of HDPE, and all other material covenants or agreements to which the Seller
is a party, which relate principally to any items of the categories mentioned
above in this paragraph 4.7(a).
(b) Schedule 4.7(b) contains a complete and correct list of all of the
following Contracts ("Material Contracts") as of the date of this Agreement:
(i) maintenance agreements material to the operation of the Purchased
Business or use of the Assets,
(ii) service agreements (other than those with respect to the Victoria
Facility listed pursuant to clause (viii) below) material to the operation
of the Purchased Business or use of the Assets,
(iii) purchase commitments for feedstocks that require an annual
expenditure of more than $50,000 or that are not cancelable on 30 or fewer
days notice without penalty,
(iv) utility agreements and arrangements that require an annual
expenditure of more than $50,000 or that are not cancelable on 30 or fewer
days notice without penalty,
(v) transportation agreements that require an annual expenditure of
more than $50,000 or that are not cancelable on 30 or fewer days notice
without penalty,
(vi) products sales agreements (it being understood that such list
shall not include the names of customers as of the date of this Agreement
but such list shall be supplemented to include such information after the
condition in Section 7.1(b) shall have been satisfied),
(vii) leases under which the Seller is a lessor or lessee (including
railcar leases),
(viii) service agreements related to the Victoria Facility that are
material to the operation of the Purchased Business or use of the Assets;
material access and easement agreements related to the Victoria Facility,
and
(ix) other contracts, advertising and promotional agreements, and
other agreements or arrangements, related principally to the normal
operation and conduct of the Purchased Business to which the Seller is a
party or any of the Assets is subject, but
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excluding any such contracts, agreements or arrangements entered into in
the ordinary course of business that are either (i) cancelable on not more
than 30 days notice without penalty or (ii) do not individually require an
annual expenditure of more than $50,000.
(c) Schedule 4.7(c) is a complete and correct list of all material
Government Licenses; and
(d) Except as described on Schedule 4.7(d), (i) true and complete copies of
all documents relating to the Seller (including all amendments thereto) referred
to in Schedules 4.7(a), 4.7(b) and 4.7(c) have been delivered to the Buyer as of
the date of this Agreement; (ii) all rights, licenses, leases, registrations,
contracts, commitments and other arrangements relating to the Purchased Business
referred to in such Schedules are in full force and effect, except where the
failure to be in full force and effect would not reasonably be expected to have
a Material Adverse Effect; and (iii) except for such breaches, defaults and
events which would not reasonably be expected to have a Material Adverse Effect,
the Seller is not in breach or default in the performance of any obligation
thereunder and, to the Seller's knowledge, no event has occurred or has failed
to occur whereby any of the other parties thereto have been or will be released
therefrom or will be entitled to refuse to perform thereunder.
4.8 HDPE Technology and Similar Rights. Except as described on Schedule
4.8, the Seller owns or is licensed to use all of the Intellectual Property and
all of the Licensed Technology, and the Intellectual Property and the Licensed
Technology together constitute all relevant patents, pending patent
applications, invention disclosures, copyrights, software, trade secrets,
technical information, technology, know-how, and processes necessary for the
normal operation and conduct of the Purchased 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.
4.9 Government Licenses, Permits and Related Approvals. Except as
described on Schedule 4.9, the Government Licenses constitute all those
necessary for the normal operation and conduct of the Purchased 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.
4.10 All Necessary Assets. To the Seller's knowledge, the Assets together
with the rights under the Assignment and Assumption Agreements and the Other
Agreements constitute all property and other rights necessary to enable the
Buyer to operate and conduct the Purchased 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 Buyer 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.
4.11 Conduct of Business in Compliance with Regulatory and Contractual
Requirements. Except as described on Schedule 4.11, the Seller is operating and
conducting the
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Purchased Business in compliance with all applicable laws, ordinances,
regulations, 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.
4.12 Legal Proceedings. Except as described in Schedule 4.12, there is no
litigation, proceeding, claim, grievance, arbitration, investigation or other
action to which the Seller is a party (i) that is pending or, to the knowledge
of the Seller, threatened, (ii) that relates in any way to the Assets, to the
operation or conduct of the Purchased Business, or to the transactions
contemplated by this Agreement, and (iii) that upon resolution would reasonably
be expected to have a Material Adverse Effect. It is understood that the Seller
shall retain all liability for all such litigations, proceedings, claims,
grievances, arbitrations, investigations or other actions and that such
information listed on Schedule 4.12 is provided to the Buyer for informational
purposes only.
4.13 Employee Benefit Plans.
(a) Schedule 4.13 lists the following plans, programs or agreements that
are currently sponsored, maintained or contributed to by the Seller, or to which
the Seller is required to contribute, for the benefit of the employees of the
Seller whose work relates solely and exclusively to the Purchased Business (the
"Employees"):
(i) each "employee benefit plan", as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), ("ERISA Plan"); and
(ii) each written stock option, stock purchase or stock grant plan,
bonus, profit sharing or annuity plan or arrangement, personnel policy,
commission and/or incentive award or compensation plan or arrangement,
vacation policy, severance pay plan, policy or agreement, deferred
compensation agreement or arrangement, executive compensation excess or
supplemental income plan or arrangement, employment agreement, collective
bargaining agreement, or any other plan, agreement, arrangement, program or
practice providing holiday, sickness, option days (including notice),
termination of job guarantee pay or benefits, or fringe benefits and each
other employee benefit plan, agreement, arrangement, program or practice,
which is not described in Section 4.13(a)(i) (collectively, the "Benefit
Programs or Agreements"), under which the Seller has or may have any
liability or obligation, contingent or otherwise.
(b) To the Seller's knowledge, true, correct, and complete copies of each
of the ERISA Plans, including all amendments thereto, have been furnished or
made available to the Buyer. To the Seller's knowledge, there have also been
furnished or made available to the Buyer, true, correct, and complete copies of
all Benefit Programs or Agreements. There have also been furnished to the Buyer
with respect to each ERISA Plan and Benefit Program or Agreement the most recent
summary plan description, if applicable.
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(c) Except as described in Schedule 4.13, to the Seller's knowledge, it is
not obligated under any agreement or other arrangement, other than the ERISA
Plans or Benefit Programs or Agreements, pursuant to which compensation or
benefits will become payable as a result of the consummation of the transactions
contemplated in this Agreement.
(d) None of the Seller's welfare benefit plans (as defined in Section 3(1)
of ERISA) provides for or promises retiree medical, disability or life insurance
benefits to any Employee or any person who was formerly employed by the Seller
primarily in connection with the Purchased Business, other than as disclosed on
Schedule 4.13.
(e) The Seller's Qualified Plans are intended to meet the requirements for
qualification under Section 401(a) of the Code and have received favorable
determination letters from the Internal Revenue Service which are currently
applicable and effective.
(f) With respect to any employee benefit plan, within the meaning of
Section 3(3) of ERISA, which is sponsored, maintained or contributed to by the
Seller or any corporation, trade, business or entity under common control with
the Seller, within the meaning of Section 414(b), (c) or (m) of the Code or
Section 4001 of ERISA ("Commonly Controlled Entity"), (i) no withdrawal
liability, within the meaning of Section 4201 of ERISA, has been incurred by the
Seller or any Commonly Controlled Entity, which withdrawal liability has not
been satisfied and would reasonably be expected to have a Material Adverse
Effect, (ii) no liability to the Pension Benefit Guaranty Corporation has been
incurred by the Seller or any Commonly Controlled Entity, which liability has
not been satisfied and would reasonably be expected to have a Material Adverse
Effect, (iii) no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA or Section 412 of the Code, has been
incurred, which deficiency has resulted in the imposition of a lien on any of
the Assets; and (iv) no liability to any person or governmental entity that
would reasonably be expected to have a Material Adverse Effect has been incurred
by the Seller or any Commonly Controlled Entity for any failure of any such plan
to comply with the requirements of Section 4980B of the Code and Part 6 of Title
I of ERISA.
(g) None of the Seller's ERISA Plans or Benefit Programs or Agreements
require that they be maintained or assumed by the Buyer as a result of the
transactions contemplated by this Agreement.
4.14 Tax Matters. Except as described on Schedule 4.14,
(a) There are no liens for Taxes (other than for current Taxes not yet due
and payable) upon the Assets.
(b) None of the Assets is property which is required to be treated as being
owned by another person pursuant to the so-called "safe harbor lease" provisions
of former Section 168(f)(8) of the Code.
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(c) None of the Assets is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
(d) None of the Assets directly or indirectly secures any debt the interest
on which is tax-exempt.
(e) No taxing authority has proposed any adjustment, assessment or
deficiency with respect to any matter relating to the Purchased Business or the
Assets.
(f) No rulings are pending with any taxing authority with respect to the
Purchased Business or the Assets.
4.15 Certain Fees. Neither the Seller nor any of its officers, directors
or employees, on behalf of the Seller, has employed any broker or finder or
incurred any other liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated hereby.
4.16 Environmental Matters.
(a) Except as described on Schedule 4.16, (i) the Matagorda Land, the
Leased Premises and the Seller's operations in connection with the Purchased
Business are in material compliance with all Environmental Laws and (ii) to the
extent arising out of the Seller's ownership or use of the Assets or operation
of the Purchased Business, there are no Hazardous Materials held, located,
released, generated, treated, stored or disposed of, on, under or from the
Matagorda Land or the Leased Premises or in, on or from any fixtures or
improvement thereon in excess of any standard prescribed or permitted by any
Environmental Laws or which require corrective or other action pursuant to the
provisions of any Environmental Laws.
(b) The Seller has not received any notice from any federal, state, or
local agency naming the Seller as a potentially responsible party ("PRP"), or
otherwise notifying the Seller 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
Hazardous Materials generated by or derived from the operations on the Matagorda
Land or the Leased Premises; nor has the Seller received any comparable claim or
notice from any private party.
(c) The Seller has provided the Buyer with all material written information
in the possession of the Seller with respect to any event or condition which
reasonably could be expected to result in an Environmental Claim with respect to
the Matagorda Land or Leased Premises.
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(d) Except as described on Schedule 4.16, to the knowledge of the Seller,
and without regard to any equipment that may be owned or operated by any public
utility, with respect to PCBs, the Seller neither uses nor stores, on the
Matagorda Land or Leased Premises, any "PCB Transformers," as defined in the
Toxic Substances Control Act of 1976, as amended, 42 USCA Section 2601 et seq.
("TSCA"), and the regulations promulgated thereunder. Except as described on
Schedule 4.16, to the knowledge of the Seller, and without regard to any
equipment that may be owned or operated by any public utility, (i) the Seller
neither uses nor stores any electrical equipment known to contain more than 50
parts per million of PCBs and (ii) all capacitors known to contain more than 50
parts per million of PCBs have been removed from the Matagorda Land and Leased
Premises.
(e) To the knowledge of the Seller, the Seller has submitted any
Premanufacture Notices or Notices of Commencement for products currently
manufactured at the Facilities required by TSCA or the regulations promulgated
thereunder.
(f) Except as described on Schedule 4.16, to the knowledge of the Seller,
the equipment at the Facilities, Terminals and Warehouses is in material
compliance with any applicable New Source Performance Standards, as that term is
defined in Section 111 of the Clean Air Act, as amended, 42 USCA Section 7401 et
seq. and in the regulations promulgated thereunder.
(g) The Seller has, and except as disclosed on Schedule 4.16 is in material
compliance with, all permits, licenses, approvals, permission, or authorizations
necessary for its operations in connection with the Purchased Business to comply
in all material respects with Environmental Laws.
(h) Except as described on Schedule 4.16, (i) the Seller has not received
written notice of any actual, impending, or potential proceedings, allegations,
claims, losses, actions, investigations or inquiries of any kind in connection
with the Purchased Business and Environmental Laws or Hazardous Materials
("Environmental Proceedings") and (ii) the Seller has no knowledge of any facts,
events or occurrences that would reasonably be expected to result in any
Environmental Proceedings being brought which, if determined adversely to the
Seller, would individually or in the aggregate reasonably be expected to have a
Material Adverse Effect.
(i) The Seller is not party to, and is not to Seller's knowledge subject to
the terms of, any consent order, consent judgment, consent decree, court or
administrative order or judgement, agreement, schedule, or decree issued by any
administrative agency or court of competent jurisdiction with respect to the
Purchased Business.
4.17 Employment Matters. Except as described in Schedule 4.12, there are
no material labor or employment controversies pending or, to the knowledge of
the Seller, threatened between the Seller and the Employees. Seller is not a
party to any collective bargaining or union contract applicable to the Employees
and, to the Seller's knowledge, there does not exist any current union
organizational effort with respect to the Employees.
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4.18 Investigation to Acquire Knowledge. Each of the persons covered by
the definition of "knowledge" set forth in Article 1 has reviewed, with counsel
to the Seller, the other representations and warranties contained in, and the
Schedules that relate to, this Article 4 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.
ARTICLE 5. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller as follows:
5.1 Due Organization; Good Standing and Power. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has all corporate power and authority to enter
into this Agreement, the Assignment and Assumption Agreements and the Other
Agreements and to perform its obligations hereunder and thereunder. The Buyer
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 asset, or
the conduct of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify or to be in good standing
would not have a material adverse effect on the ability of the Buyer to perform
its obligations hereunder or under the Assignment and Assumption Agreements or
the Other Agreements.
5.2 Authorization and Validity of Agreement. The execution, delivery and
performance of this Agreement, the Assignment and Assumption Agreements and the
Other Agreements by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby and thereby have been duly authorized by its
Board of Directors. No other corporate action is necessary for the
authorization, execution, delivery and performance by the Buyer of this
Agreement, the Assignment and Assumption Agreements and the Other Agreements and
the consummation by the Buyer of the transactions contemplated hereby or
thereby. This Agreement has been, and upon the Closing the Assignment and
Assumption Agreements and the Other Agreements, will be duly executed and
delivered by the Buyer and constitute legal, valid and binding obligations of
the Buyer, 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.
5.3 No Approvals or Notices Required; No Conflict with Instruments to
which the Buyer is a Party. Except for the HSR Act, the execution, delivery and
performance of this Agreement, the Assignment and Assumption Agreements and the
Other Agreements by the Buyer and the consummation by it of the transactions
contemplated thereby (i) will not violate (with or without the giving of notice
or the lapse of time or both), or require any consent, approval, filing or
notice under, any provision of any law, rule or regulation, court order,
judgment or decree applicable to the Buyer, except for such violations the
occurrence of which, and such consents, approvals, filings or notices the
failure of which to obtain or make, would
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not in the aggregate reasonably be expected to have a material adverse effect on
the Buyer's ability to perform its obligations hereunder or thereunder, and (ii)
will not 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 Buyer under, the charter or bylaws of the
Buyer, or any indenture, mortgage, deed of trust, lease, licensing agreement,
contract, instrument or other agreement to which the Buyer is a party or by
which the Buyer or any of its assets or properties is bound, except for such
conflicts, breaches, terminations, defaults, accelerations or liens which would
not in the aggregate reasonably be expected to have a material adverse effect on
the Buyer's ability to perform its obligations hereunder or thereunder.
5.4 Employee Benefit Plans. Schedule 5.4 lists each ERISA Plan and
Benefit Program or Agreement that is currently sponsored, maintained or
contributed to by the Buyer, or to which the Buyer is required to contribute for
the benefit of the Buyer's employees, in which the Offered Employees will
participate. The Buyer has furnished or made available to the Seller the most
recent summary plan descriptions, if applicable, with respect to each such ERISA
Plan and Benefit Programs or Agreements.
The Buyer's 401(k) and Savings Plans are intended to meet the requirements
for qualification under Section 401(a) of the Code and have received favorable
determination letters from the Internal Revenue Service which are currently
applicable and effective.
The Buyer intends that any successor to the Buyer's 401(k) and Savings
Plans will also meet the requirements for qualification under Sections 401(a)
and 401(k) of the Code and the Buyer shall seek a favorable determination letter
from the Internal Revenue Service as soon as reasonably practicable for any such
successor plan.
5.5 Certain Fees. Except for the fees and expenses of Salomon Brothers
Inc, which will be paid by the Buyer, neither the Buyer, nor its affiliates nor
any of their respective officers, directors or employees, on behalf of any of
them, has employed any broker or finder or incurred any other liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
ARTICLE 6. Covenants.
6.1 Access to Information. The Seller 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 the Buyer and its representatives reasonable access during
normal business hours to the offices, plants, properties, books and records of
the Seller relating to the Assets or Purchased Business, (ii) it will furnish or
cause to be furnished to the Buyer such financial and operating data and any
other information with respect to the business and properties of the Purchased
Business and (iii) the Buyer and its representatives shall be entitled to
reasonable access during normal business hours to the representatives, officers,
employees and contractors of the Seller involved in the
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Purchased Business, in the case of each of (i), (ii) and (iii), as the Buyer may
reasonably request; provided that the Buyer shall not take any action to
supervise the Employees or otherwise operate the Purchased Business. The Seller
shall have the right to have its representatives present at any discussions
between the Buyer and any of the persons specified in this Section, and the
Buyer agrees to schedule such discussions through the Seller. Notwithstanding
the foregoing provisions of this Section, the Buyer (i) shall not be entitled
access to any corporate books and records or records relating to income taxes at
any time and (ii) shall not be entitled to access to any names of customers
unless and until the condition set forth in Section 7.1(b) has been satisfied.
Notwithstanding the foregoing, the Seller shall not be obligated to provide
access to any information with respect to the Nissan license that would result
in a breach of such license until such time that the consent of the licensors
shall have been received. The Seller shall use its commercially reasonable
efforts to obtain such consent as soon as reasonably practicable.
6.2 Conduct of the Purchased Business Pending the Closing Date. The
Seller agrees that, except as required or contemplated by this Agreement or
otherwise consented to or approved in writing by the Buyer, during the period
commencing on the date hereof and ending on the Closing Date, it will:
(a) operate and maintain the Purchased 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, to the extent consistent with such operation and maintenance, use its
commercially reasonable efforts (which shall not require the incurrence of any
expense not otherwise required to be incurred in the ordinary course of
business) to preserve the present business organization of the Purchased
Business intact, keep available the services of the present Employees and
preserve its present relationships with all persons having business dealings
with the Purchased Business;
(b) maintain its books, accounts and records relating to the Purchased
Business in the usual, regular and ordinary manner, on a basis consistent with
past practice, comply in all material respects with all laws and contractual
obligations applicable to the Purchased Business or to the conduct of the
Purchased Business and perform all of its material obligations relating to the
Purchased Business;
(c) not (i) modify or change in any material respect any of the 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) enter into any contract, commitment or
agreement that would be material to the operation of the Purchased Business or
use of the 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, (iii) modify or change in any material respect any
obligation under the Government Licenses, (iv) modify or change in any material
respect the manner in which it markets and sells the products produced
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by the Purchased Business, or (v) agree, whether in writing or otherwise, to do
any of the foregoing;
(d) not (i) permit or allow any of the Assets to become subject to any
liens except liens permitted under clauses (i), (ii) (iv), (v) and (vi) of
Section 4.5(a) hereof, (ii) waive any material claims or rights relating to the
Purchased Business, (iii) grant any increase in the compensation or benefits of
any of the Employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment), except (A) for reasonable
increases in the ordinary course of business that are consistent with past
practice or (B) for reasonable payments in normal sales compensation plans,
including bonuses, or (iv) agree, whether in writing or otherwise, to do any of
the foregoing; and
(e) not take any action that would result in the representations in Section
4.4(b) not being true as of the Closing Date if the representations were given
for the period from December 31, 1994 through the Closing Date;
(f) The Buyer hereby covenants and agrees to respond to any and all of the
Seller's requests for consents required pursuant to this Section as promptly as
reasonably practicable, and in any event within four business days, or in an
emergency, as soon as the circumstances may dictate; provided that, in either
case, the Buyer shall have been provided with all information it may reasonably
request or that is otherwise reasonably necessary to evaluate such request for
consent. The Buyer's failure to respond on the fourth business day following
the Seller's request shall be deemed to be the granting of the Buyer's consent
to the transaction or action requested and the Seller shall be entitled to rely
upon such deemed consent to the same extent as if such consent had been
expressly granted.
6.3 Risk of Loss. On or prior to the Closing, risk of loss, damage or
destruction to the Assets and risk of taking of the Facilities, Terminals,
Warehouses or any other portion of the Purchased Business by eminent domain
shall be borne by the Seller. In the event of any such loss, damage or
destruction not repaired or replaced by the Seller, the Buyer on or prior to the
Closing shall have the option of (a) causing the Seller to assign and transfer
to the Buyer all such proceeds receivable under any insurance policy for any
such loss, damage or destruction or the receivable from any such taking by
eminent domain, as the case may be, or (b) reducing the Purchase Price by the
amount of the reasonable good faith estimate of the cost of repair or
replacement or the reasonable good faith estimate of the amount of proceeds from
such taking by eminent domain, as the case may be, and in either event the
Closing shall be consummated pursuant to this Agreement; provided that if the
reasonable good faith estimate of the cost of repair or replacement related to
the loss, damage or destruction is equal to an aggregate amount in excess of
$75,000,000, the Seller may terminate this Agreement under Article 9. Nothing
in this Section 6.3 shall be deemed to limit the Buyer's rights under Section
7.2(c) or Article 9.
6.4 Title to the Matagorda Land. As soon as possible (and in no event
later than ten days prior to the Closing Date), the Seller shall notify the
Buyer in writing if the Seller
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determines that it is unable to satisfy the conditions on the quality of title
as set forth in Section 4.5 and deliver its deed in substantially the form of
the Deed. Such notice shall specify the particular defect or defects and give a
reasonable good faith estimate of the dollar amounts that would be required to
cure each such defect. In the event the Seller gives such notice and the
defects in the aggregate could not reasonably be expected to have a Material
Adverse Effect, the Seller shall indicate that it will either cure such defects
prior to the Closing Date or provide the Buyer with full indemnification with
respect to such defects. If the defects in the aggregate could reasonably be
expected to have a Material Adverse Effect, the Buyer may reject title by giving
notice to the Seller not more than five days after the Buyer has received notice
from the Seller. If the Buyer shall so reject title, the Seller shall have the
right in its sole discretion: (i) to terminate this Agreement or (ii) to adjourn
the Closing for a period not exceeding 30 days in the aggregate, during which
time the Seller may cure such defects to title. The Buyer's failure to so
reject title shall be deemed an election by the Buyer to waive the noticed
defects in the title, and the Buyer shall thereupon take and accept title to
such property, subject to such matters of which it has received notice from the
Seller, and for which no notice of rejection was given; provided, however, that
at the Seller's option either (i) the Fixed Amount (and thus the Purchase Price)
shall be reduced by the dollar amount estimated by the Seller as necessary to
cure such defects or (ii) the Seller shall provide the Buyer with a separate,
unlimited indemnity in form and substance reasonably satisfactory to the Buyer
with respect to such defects.
6.5 Other Agreements. Contemporaneously with the Closing, the Seller and
the Buyer will enter into the following agreements (the "Other Agreements"):
(i) The Rolling Stock Subleases;
(ii) The Technology License;
(iii) An Ethylene Supply Agreement, substantially in the form of
Exhibit L;
(iv) The CB Agreement;
(v) The CB Lease;
(vi) A Transition Agreement, substantially in the form of Exhibit M
(the "Transition Agreement");
(vii) The Terminal Sublease(s) and Warehouse Sublease(s) in form and
substance reasonably satisfactory to the Buyer and the Seller and with the
Warehouse Sublease for the SI Warehouse having the terms and conditions
described in Exhibit I; and
(viii) A Joint Development Agreement in form and substance reasonably
satisfactory to the Seller and the Buyer having the terms and conditions
described on Exhibit N ("Joint Development Agreement").
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6.6 Further Actions.
(a) Subject to the terms and conditions hereof, the Seller and the Buyer
agree to use their 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 to confirm that such transactions have been accomplished,
including without limitation using all commercially reasonable efforts (without
commencement of litigation): (i) to obtain prior to the Closing Date all
Governmental Licenses or consents to the transfer of any Government Licenses
that are transferable by the Seller and, (ii) to effect all necessary
registrations and filings; and (iii) to furnish to each other such information
and assistance as reasonably may be requested in connection with the foregoing.
(b) The Seller shall use its commercially reasonable efforts to procure all
consents, approvals or waivers (collectively, "Consents") that are necessary to
assign the Contracts. Subject to Section 7.2(d), but notwithstanding any other
provision of this Agreement to the contrary, the parties hereto acknowledge and
agree that at the Closing the Seller will not assign to the Buyer 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
Date. With respect to each such unassigned Contract or warranty, after the
Closing Date, the Seller shall continue as the prime contracting party and, if
required by the Buyer, shall use its commercially reasonable efforts to obtain
any Consents of all required parties to the assignment of such Contract or
warranty, but the Buyer shall be entitled to the benefits of such Contract or
warranty accruing after the Closing Date to the extent that the Seller may
provide the Buyer with such benefits without violating the terms of such
Contract or warranty, and the Buyer agrees to perform at its sole expense all of
the obligations of the Seller to be performed under such Contract or warranty
the benefits of which the Buyer is receiving after the Closing Date. Before and
after the Closing, the Buyer will use its commercially reasonable efforts and
cooperate with the Seller in obtaining any necessary Consents to the assignment
of the Contracts, including, without limitation, by furnishing to the Seller or
other parties to any Contract summary financial information and other
information with respect to the Buyer reasonably requested by the Seller or such
other parties and taking any such other actions (which, subject to any
provisions to the contrary included in any Other Agreement, shall not include
the incurrence of any expense not otherwise required to be incurred) as the
Seller or such other parties may reasonably request for the purpose of obtaining
any releases, waivers or terminations as the Seller may reasonably request on
behalf of itself or any affiliate. If the Seller obtains a Consent to assign
any Contract after the Closing, each such Contract shall be deemed to be
assigned to the Buyer promptly after the Seller obtains such Consent. No
representation is made by the Seller with respect to whether any Consent to
assign a Contract will be obtainable, and in no event shall the Purchase Price
be subject to reduction as a result of any Contract not being assigned to the
Buyer at the Closing by virtue of the necessary Consent not being obtained.
(c) The Seller shall keep the Buyer fully informed from time to time as the
Buyer shall reasonably request as to the status of all Consents as to Material
Contracts being sought by the Seller pursuant to paragraph 6.6(b) above.
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(d) Prior to the Closing, the Seller and the Buyer shall observe their
respective obligations under Sections 3.2(b) and (c) and under Section 3.1(b) as
such section applies to Section 3.1(a)(ii), in each case of the Transition
Agreement.
6.7 Antitrust and Other Laws. Each of the Seller and the Buyer has made
all filings under the HSR Act required by it in connection with the consummation
of the transaction contemplated hereby. In addition, each of the Seller and the
Buyer shall make any additional filings or submissions, and shall furnish to the
other such necessary information and assistance as the other may reasonably
request in connection with its preparation of any such additional filings or
submissions required by any governmental agency, including, without limitation,
any additional filings necessary under the HSR Act.
6.8 Turnaround at Victoria Facility.
(a) The Buyer understands that the Seller intends to perform a maintenance
"turnaround" on the Victoria Facility. The Seller, at its sole cost and
expense, shall take such action that may be reasonably necessary or appropriate
in order for the Seller to perform up to the Closing Date the turnaround in
accordance with the schedule and scope described on Schedule 6.8 (but in all
events consistent with commercially prudent and safe operating practices). To
the extent occurring prior to the Closing Date, the Seller shall notify the
Buyer five days prior to each of the commencement of the turnaround and the
estimated start-up of the Victoria Facility after completion of the turnaround
and shall permit representatives of the Buyer reasonable access to the plant for
the purpose of observing the turnaround, the start-up and the subsequent
operation of the Victoria Facility.
(b) In the event that the turnaround has not been completed in advance of
the Closing Date, which event the parties acknowledge will likely occur given
the schedule described on Schedule 6.8, the Buyer shall take such action as may
be reasonably necessary in order to perform the turnaround in accordance with
the schedule and scope described on Schedule 6.8 (but in all events consistent
with commercially prudent and safe operating practices) and the Seller shall
promptly reimburse the Buyer for all out of pocket costs and expenses of
completing the turnaround (excluding any production costs, lost or prospective
profits, or special, consequential, incidental or indirect losses or damages) in
accordance with Schedule 6.8. The Buyer shall present to the Seller invoices
for any such costs and expenses, which shall include a break down of such costs
and expenses in sufficient detail for the Seller to determine the particular
purposes of the expenditure as it relates to the turnaround and the Buyer will
attach thereto copies of all applicable invoices from third parties. After the
Closing Date, the Buyer shall permit representatives of the Seller reasonable
access to the plant for the purpose of observing the turnaround and the start-up
of the Victoria Facility and reasonable access during normal business hours to
the books, records, officers and representatives of the Buyer for the purpose of
verifying any costs and expenses for which reimbursement is sought under this
Section 6.8(b).
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6.9 Notifications.
(a) The Seller shall notify the Buyer and keep it advised as to (i) any
litigation or administrative proceeding that is either pending or, to its
knowledge, threatened against the Seller which challenges the transactions
contemplated hereby; (ii) any material damage to or destruction of the Assets;
(iii) any change which would reasonably be expected to have a Material Adverse
Effect and (iv) any fact of which the Seller has knowledge that indicates that
any condition to Closing is reasonably likely not to be satisfied.
(b) The Buyer shall notify the Seller and keep it advised as to (i) any
litigation or administrative proceeding that is either pending or, to its
knowledge, threatened against the Buyer which challenges in any material respect
the transactions contemplated hereby, (ii) any change which would reasonably be
expected to have a material adverse effect on the Buyer's ability to perform its
obligations hereunder, (iii) any fact of which it has knowledge that indicates
that any representation or warranty of the Seller herein is reasonably likely
not to be true and correct so that the Seller shall have the opportunity to cure
any claimed breach of a representation or warranty prior to Closing Date and
(iv) any fact of which the Buyer has knowledge that indicates that any condition
to Closing is reasonably likely not to be satisfied.
6.10 No Solicitation. Until the termination of this Agreement, the Seller
will not, directly or indirectly, through any officer, director, agent or
otherwise, (i) solicit or initiate, directly or indirectly, or encourage
submission of inquiries, proposals or offers from, any person relating to any
acquisition or purchase of any or all of the Assets other than sales of HDPE in
the ordinary course of business or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, any of the foregoing; provided, however, that nothing contained in this
Section shall prohibit the Board of Directors of the Seller or the Board of
Directors of Occidental Petroleum Corporation ("Occidental") from (i) furnishing
information to, or entering into discussion or negotiations with, any person or
entity in connection with an unsolicited bona fide proposal in writing by such
person or entity to acquire the Assets or the Purchased Business pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction or to acquire a substantial portion of the stock or assets of the
Seller, if, and only to the extent that the Board of Directors of the Seller or
the Board of Directors of Occidental, after consultation with and based upon the
advice of independent legal counsel (who may be such company's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law.
6.11 Furnishing Financial Information.
(a) On or before April 28, 1995, the Seller will furnish to the Buyer
audited financial statements for the Purchased Business for each of the fiscal
years ended December 31, 1993 and 1994 (collectively, the "SEC Financial
Information").
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(b) As soon as they become available but in any event by June 15, 1995, the
Seller will deliver to the Buyer unaudited financial statements and the notes
thereto (which may be condensed in a manner consistent with the usual
presentation made in the Seller's or its ultimate parent's quarterly financial
statements) relating to the Purchased Business for the three-month period ended
March 31, 1995, including a balance sheet, a statement of income, a statement of
cash flows and the notes thereto, all of which will be prepared consistently
with internal accounting and evaluation procedures applied on a basis consistent
with the SEC Financial Information.
6.12 Victoria Metering Facilities. The Excluded Assets include the
metering facilities (the "Metering Facilities") at the ethylene supply pipeline
up to existing orifice 4092 located at the Victoria Facility, which have not yet
been adequately described. Promptly after the Metering Facilities have been
described, the Assignment of Victoria Lease shall be modified to provide for a
reservation by the Seller of title to the Metering Facilities and a grant by
Buyer to the Seller of an easement free of cost for the real property under the
Metering Facilities.
6.13 Inspection of Rolling Stock. Prior to the Closing, the Buyer shall
have the right to perform a random inspection during normal business hours of
the rolling stock that is subject to the Rolling Stock Subleases.
ARTICLE 7. Conditions Precedent.
7.1 Conditions Precedent to Obligations of Both Parties. The respective
obligations of the Buyer and the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the Closing Date of the following conditions:
(a) No Injunction, etc. No preliminary or permanent injunction or other
order issued by any federal, provincial or state court of competent
jurisdiction in the United States or by any United States federal, provincial or
state governmental or regulatory body nor any statute, rule, regulation or
executive order promulgated or enacted by any United States federal, provincial
or state governmental authority which restrains, enjoins or otherwise prohibits
the transactions contemplated hereby shall be in effect; provided, that before
any determination is made to the effect that this condition has not been
satisfied, the Seller and the Buyer shall each use commercially reasonable
efforts and take such other actions as may be reasonably necessary, at its own
expense, to have such order or injunction lifted or dismissed.
(b) Antitrust Matters. Any filings required to be made by the Buyer and
the Seller under the HSR Act shall have been made, and the specified waiting
periods thereunder shall have expired or been terminated.
(c) Governmental Consents. All consents required in connection with the
assignment of the Governmental Licenses listed on Schedule 7.1(c) shall have
been obtained.
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7.2 Conditions Precedent to Obligations of the Buyer. The obligations of
the Buyer under this Agreement are subject to the satisfaction (or waiver by the
Buyer) on or prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All representations and
warranties, disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect, of the Seller contained
herein shall be true and correct in all respects on and as of the Closing Date,
with the same force and effect as though such representations and warranties had
been made on and as of the Closing Date, with only such exceptions as would not
in the aggregate reasonably be expected to have a Material Adverse Effect;
provided, however, that to the extent that any such representation or warranty
refers to financial or other information that is made as of a specified date,
such financial or other information shall have been true and correct as of such
date.
(b) Performance of Agreements. The Seller shall in all material respects
have performed all obligations and agreements and complied with all covenants
contained in this Agreement to be performed or complied with by it on or prior
to the Closing Date.
(c) Significant Events and Incidental Losses. After the date of this
Agreement, no event, occurrence or other matter has occurred that would
reasonably be expected to have a Material Adverse Effect.
(d) Third Party Consents. All agreements and consents of any third party
required in connection with the assignment of any of the Contracts listed on
Schedule 7.2(d) shall have been obtained.
(e) Draft Amended Permit. In connection with hexane emissions at the
Matagorda Facility that are in excess of the emission levels allowed under the
air operating permit in effect for the Matagorda Facility as of the date of this
Agreement, the TNRCC shall have issued, and the Seller shall have delivered to
the Buyer, draft provisions of an amended air operating permit (including a
compliance plan and schedule) on terms that are substantially consistent with,
and in any event not materially more onerous than, the draft plan submitted to
the TNRCC by the Seller on March 24, 1995 (the "Matagorda Plan").
(f) Officer's Certificate. The Buyer shall have received a certificate,
dated the Closing Date, of the President or a Vice President of the Seller, to
the effect that, to the knowledge, information and belief of such officer, the
conditions specified in the above paragraphs have been fulfilled.
(g) Other Agreements. The Seller shall have executed and delivered to the
Buyer the Other Agreements.
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(h) Occidental Petroleum Corporation Guarantee. The Buyer shall have
received a guarantee substantially in the form of Exhibit O hereto executed by
Occidental Petroleum Corporation.
(i) Opinion. The Buyer shall have received the opinion of an Associate
General Counsel to the Seller, substantially in the form of Exhibit P hereto.
(j) SEC Financial Information. The Seller shall have delivered the SEC
Financial Information to the Buyer in accordance with Section 6.11.
7.3 Conditions Precedent to the Obligations of the Seller. The
obligations of the Seller under this Agreement are subject to the satisfaction
(or waiver by the Seller) on or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All representations and
warranties of the Buyer or any officer of the Buyer contained herein or in any
certificate or document delivered to the Seller pursuant hereto shall be true
and correct in all respects on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made on and as
of the Closing Date, except to the extent that any such representation or
warranty refers to financial or other information that is made as of a specified
date, in which case such financial or other information shall have been true and
correct as of such date.
(b) Performance of Agreements. The Buyer shall in all material respects
have performed all obligations and agreements and complied with all covenants
contained in this Agreement to be performed or complied with by it on or prior
to the Closing Date.
(c) Officer's Certificate. The Seller shall have received a certificate,
dated the Closing Date, of the President or a Vice President of the Buyer to the
effect that, to the knowledge, information and belief of such officer, the
conditions specified in the paragraphs above have been fulfilled.
(d) Other Agreements. The Buyer shall have executed and delivered to the
Seller the Other Agreements.
(e) Opinion. The Seller shall have received the opinion of the General
Counsel of the Buyer, substantially in the form of Exhibit Q hereto.
ARTICLE 8. Employee Relations and Benefits.
8.1 General.
(a) Schedule 8.1 lists the Employees as of the date of this Agreement. The
Buyer shall offer employment to the Employees as of the Closing Date; provided,
however, that the
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Buyer may elect not to offer employment to up to 49 Employees who are designated
in writing by the Buyer to the Seller as soon as possible but no later than the
notice date prior to the applicable Closing Date as set forth on Exhibit R. For
purposes of this Agreement and Schedule 8.1, the Employees in the Purchased
Business shall not include any person who is receiving long term disability
benefits from the Seller. The Employees who are offered and accept employment
by the Buyer as of the Closing Date shall hereinafter be referred to as the
"Offered Employees."
Employment of the Offered Employees with the Buyer shall be effective as of
the Closing Date; provided, however, that if any Employees are eligible for and
receiving short term disability benefits from the Seller, as of the Closing
Date, the Buyer's offer of employment to those Employees shall be conditioned on
the Buyer's receipt of a physician's release to active employment, as verified
by the Buyer's medical provider (with verification not to be withheld
unreasonably and to be determined within a reasonable time after such person's
request for employment with the Buyer). Employment of any such person by the
Buyer shall not be effective until the release is received and verified.
Employees receiving short term disability benefits from the Seller as of the
Closing Date shall remain employees of the Seller until the effective date of
employment with the Buyer or termination by the Seller, if earlier, and the
number of Employees receiving short-term disability benefits as of the Closing
Date shall reduce the number of Employees that the Buyer may elect not to offer
to employ as provided in the preceding paragraph.
As to the Offered Employees, the Buyer will not cause any period of
unemployment between the time employment with the Seller ends and the effective
date of employment with the Buyer. The Buyer shall offer employment to the
Employees at no less than the same base salary previously paid by the Seller as
of the Closing Date. The Buyer, in its sole discretion, also shall provide the
Offered Employees with either (i) benefits that are substantially similar to the
benefits listed on Schedule 4.13 and provided to the Offered Employees by the
Seller as of the Closing Date or (ii) the benefits provided by the Buyer for its
other employees generally in accordance with, and subject to the terms of, the
Buyer's ERISA Plans and Benefit Programs or Agreements listed on Schedule 5.4,
including, without limiting the generality of the foregoing, retiree medical
benefits; provided, however, that for purposes of clause (ii), the Buyer, in its
sole discretion, may give any Offered Employees who, as of the Closing Date, are
participants in a health maintenance organization, the option of continuing as
participants in their respective health maintenance organizations on an interim
basis. In either case, service credit shall be recognized as provided in
Section 8.1(f). Except as otherwise provided in this Agreement, the Buyer will
provide benefits to the Offered Employees effective as of the Closing Date.
(b) The Seller shall retain sole liability to the Employees and their
dependents for any and all claims by such Employees and their dependents arising
prior to, or with respect to, such Employees' termination of employment with the
Seller. The Buyer is not responsible for and does not assume any liability for
the Seller's actions in terminating employment of any Employee (except to the
extent that the liability relates to the Buyer's violation of any applicable law
or regulation in connection with selection of the Employees offered employment
by the
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Buyer under Section 8.1(a)). The Buyer shall have sole liability to the Offered
Employees and their dependents for any and all claims by the Offered Employees
and their dependents during employment with the Buyer on or after the Closing
Date, or for any claims which arise from the Offered Employees' termination of
employment by the Buyer. The Seller is not responsible for and does not assume
any liability for the Buyer's actions in terminating the employment of any
Offered Employee. If the Buyer at any time during the one year period beginning
on the Closing Date terminates the employment of any Offered Employee for any
reason other than for cause, the Buyer shall pay the Offered Employee a
severance benefit which shall not be less than the benefit the terminated
employee would have received under the Seller's severance pay policy in effect
as of the Closing Date.
(c) The Seller shall retain sole liability for and shall pay all premiums,
costs and expenses with respect to unemployment compensation obligations
occurring during the Seller's employment of the Employees. The Seller shall be
liable for all work-related injury claims of Employees occurring prior to
employment of any such Employee by the Buyer, including but not limited to those
claims covered by workers' compensation statutes. The Buyer shall be solely
liable for and shall pay all premiums, costs and expenses with respect to
unemployment compensation obligations occurring during the Buyer's employment of
the Offered Employees. The Buyer shall be liable for all work-related injury
claims of Offered Employees occurring after employment of the Offered Employees
by the Buyer, including but not limited to those claims covered by workers'
compensation statutes.
(d) The Buyer shall not, at any time prior to 60 days after the Closing
Date, effectuate 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 Seller affected by this Agreement without complying fully
with the notice and all other applicable requirements of WARN.
(e) The Buyer shall not be required to, and the Buyer and the Seller agree
that the Buyer does not, assume by law or otherwise by agreement, either implied
or in fact, any of the liabilities for or under any ERISA Plan or any of the
Benefit Programs or Agreements sponsored by the Seller, except for the
following:
(i) Payment of 1995 vacation entitlement for Offered Employees, as
provided under Section 8.3;
(ii) Payment of severance to Offered Employees who terminate within one
year of employment with the Buyer, as provided under Section 8.1(b);
(iii) Payment of benefits of the Offered Employees which are accepted by
and held in the Buyer's 401(k) and Savings Plans as eligible rollover
contributions, according to the terms and conditions of the Buyer's
plans; and
(iv) Payment of medical benefits to Offered Employees, as provided under
Section 8.2(c).
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The Buyer and the Seller agree that the Buyer will not assume or maintain
sponsorship of any of the Seller's ERISA Plans or Benefit Programs or
Agreements. Nothing in this paragraph shall affect the Buyer's obligations
under Article 8.
(f) The Buyer shall recognize all service credited for the Offered
Employees on the Seller's records for purposes of eligibility for benefits and
vesting under the Buyer's benefit plans and programs, and calculation of
benefits under the Buyer's benefit plans and programs, but the Buyer shall not
recognize service credited on the Seller's records for benefit accrual under
Buyer's defined benefit pension plan and only actual periods of service with the
Buyer shall be credited for such benefit accrual purposes.
8.2 Welfare Benefits.
(a) The Seller will retain responsibility for and continue to pay all
hospital, medical, life insurance, disability and other welfare benefit plan
expenses and benefits for each Employee with respect to claims incurred by such
Employee or such Employee's covered dependents prior to the Closing Date.
Except as provided in Section 8.2(b), hospital, life insurance and other welfare
benefit plan expenses and benefits with respect to claims incurred by any
Offered Employee or such Offered Employee's covered dependents on or after the
Closing Date shall be the Buyer's responsibility in accordance with the terms of
any applicable welfare benefit plan maintained by the Buyer for the Offered
Employee. For purposes of this paragraph, a claim is deemed incurred when the
services giving rise to the claim were performed.
(b) At the Buyer's discretion and expense, the Seller shall maintain
coverage for the Offered Employees and their covered dependents in the Seller's
group medical and dental plans for up to 90 days after the Closing Date. With
respect to any period of coverage for the Offered Employees in the Seller's
group medical and dental plans after the Closing Date, the Seller will cause the
Offered Employees' medical and dental expenses to be paid under the Seller's
plans. The Buyer shall promptly reimburse the Seller for the Seller's actual
costs associated with the coverage of the Offered Employees and their covered
dependents and any applicable administrative costs during the period of coverage
upon receipt of an invoice, supported by reasonable documentation, from the
Seller for those costs.
The Offered Employees and their eligible dependents shall become
participants in the group medical and dental plans offered by Buyer on the later
of either (i) the Closing Date or (ii) the date of termination of coverage
(other than coverage for COBRA purposes) under the Seller's group medical and
dental plans pursuant to the preceding paragraph. The Offered Employees and
their eligible dependents shall not be subject to any pre-existing conditions
limitations under the Buyer's group medical, dental, life insurance and
disability plans. Amounts paid by the Offered Employees toward medical and
dental plan deductibles and copayment limitations under the Seller's medical and
dental plans shall be counted toward meeting any similar deductible and
copayment limitations under the Buyer's medical and dental plans.
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(c) If an Offered Employee is eligible for retiree medical coverage under
the Seller's retiree medical plan and if the Offered Employee elects coverage
under the Buyer's Managed Care Health Plan or any successor plan, including any
retiree medical plan ("Buyer's Medical Plan"), then Buyer's Medical Plan will
provide primary coverage to the Offered Employee and his or her eligible
dependents while the Offered Employee is covered under the Buyer's Medical Plan.
8.3 Vacation Pay.
(a) During the 1995 calendar year, the Offered Employees shall be entitled
to any remaining vacation under the Seller's vacation policy for 1995. The
Offered Employee shall be eligible for vacation under the Buyer's vacation
policy beginning in 1996.
(b) On or promptly after the Closing Date, the Seller shall determine for
each Offered Employee the difference (whether positive or negative) between (i)
the amount of 1995 annual vacation entitlement for such Offered Employee under
the Seller's vacation policy determined as if the Offered Employee remained an
employee of the Seller, multiplied by a fraction, the numerator of which is the
number of days in calendar year 1995 preceding the Closing Date and the
denominator of which is 365 and (ii) the amount of 1995 vacation actually used
by such Offered Employee as of the Closing Date. The differences determined by
the Seller pursuant to the preceding sentence shall be expressed in U.S. dollars
and the aggregate net amount of such differences with respect to all Offered
Employees shall be paid by the Seller to the Buyer (if such amount is positive)
or by the Buyer to the Seller (if such amount is negative) within 14 days after
the Closing Date. The Seller shall pay any banked vacation liability relating
to years prior to 1995 to any Offered Employee within 20 days after the Closing
Date.
8.4 Retirement and Defined Contribution Plans.
(a) As of the Closing Date, to the extent the Seller is not otherwise
required to vest Offered Employees as plan participants, each Offered Employee
will become fully vested in his interests in the Occidental Petroleum
Corporation Savings Plan ("Seller's 401(k) Plan") and the Occidental Petroleum
Corporation Retirement Plan maintained by the Seller (hereinafter collectively
referred to as the "Seller's Qualified Plans"). Furthermore, each affected
Offered Employee will continue to be fully vested in his interest in the Cain
Chemical Inc. Pension Plan (the "CPP"). The Seller shall cause the Seller's
Qualified Plans and the CPP to be amended, to the extent necessary, to
accomplish the purpose and intent of this Section 8.4(a).
(b) Each Offered Employee shall become (i) a participant in the Lyondell
Petrochemical Company Retirement Plan for Non-Represented Employees effective as
of the Closing Date and (ii) a participant in the Lyondell Petrochemical Company
Capital Accumulation Plan for Non-Represented Employees ("Buyer's 401(k) Plan")
and the Lyondell Petrochemical Company Savings Plan for Non-Represented
Employees, or any successors thereto, effective as of July 1, 1995, or as soon
as practicable thereafter. The plans described in the immediately
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preceding sentences shall hereinafter sometimes collectively be referred to as
the "Buyer's Qualified Plans."
(c) With respect to the period between the Closing Date, or other date of
employment with the Buyer, if later, and the date an Offered Employee becomes
eligible to participate in the Buyer's 401(k) Plan, the Buyer will pay each
Offered Employee, in cash, an amount equal to the amount the Buyer would have
contributed on behalf of the Offered Employee as a "Company Contribution" to the
Buyer's 401(k) Plan if the Offered Employee had been eligible to participate in
that plan since the date of employment with the Buyer. The amount payable by
the Buyer shall be based on the Offered Employee's contribution percentage (up
to a maximum contribution percentage of 5%) in effect under the Seller's 401(k)
Plan as of the date of this Agreement.
(d) The Seller shall take all necessary steps to cause the Seller's 401(k)
Plan to permit Offered Employees to suspend loan payments without giving rise to
any loan default for any Offered Employee for a period beginning on the Closing
Date and ending on the earliest of (i) the date that is three months after the
date that regular loan payments through payroll deduction or collection through
the employer cease; (ii) the date of the Offered Employee's termination of
employment with the Buyer; (iii) the date of a distribution from the Seller's
401(k) Plan to or on behalf of the Offered Employee; or (iv) December 31, 1995;
provided, however, that this provision shall not be applicable if with respect
to any Offered Employee a loan default is necessary to comply with federal tax
law requirements for continued plan qualification.
(e) Each Offered Employee may elect to make a direct rollover of any
eligible rollover distribution payable in cash from the Seller's Qualified Plans
to the Buyer's 401(k) Plan and, if necessary, the Buyer shall cause its 401(k)
Plan to be amended to accept a direct rollover of an Offered Employee's eligible
rollover distribution.
8.5 Management Compensation Matters. As of the Closing Date, the Seller
will take all necessary action to vest any Offered Employee entitled to benefits
under the Seller's Supplemental Retirement Plan. Any payment to an Offered
Employee for deferred compensation or supplemental benefits related to the
Offered Employee's employment with the Seller shall remain the Seller's
liability and the Buyer shall have no obligation to the Seller or to any such
Offered Employee for non-payment or forfeiture of any such payments. The Seller
also shall retain liability, if any, associated with outstanding stock options
of the Offered Employees.
8.6 Indemnification.
(a) The Buyer hereby agrees to indemnify the Seller and to defend and hold
the Seller harmless from and against any claims, losses, expenses, obligations
and liabilities (including without limitation costs of defense, prosecution,
collection and reasonable attorney's fees) arising out of or otherwise in
respect of the following: (i) the Buyer's termination of any Offered Employee's
employment with the Buyer; (ii) the Buyer's selection of the Employees
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offered employment by the Buyer pursuant to Section 8.1(a); (iii) any failure by
the Buyer to comply with its obligations hereunder or otherwise with respect to
any Offered Employee; (iv) any suit or claim of violation brought against the
Seller under WARN for any actions taken by the Buyer with regard to Offered
Employees at any facility, site of employment or operating unit affected by this
Agreement; or (v) any and all employee claims, charges, grievances or
complaints, including without limitation claims for severance pay (including
severance pay due under Section 8.1(b)), claims arising under any "employee
benefit plan" as defined in Section 3(3) of ERISA, EEO charges and worker's
compensation claims, incurred with respect to any time period from and after the
time the applicable Offered Employee was employed by the Buyer.
(b) The Seller hereby agrees to indemnify the Buyer and to defend and hold
the Buyer harmless from and against any claims, losses, expenses, obligations
and liabilities (including without limitation costs of defense, prosecution,
collection and reasonable attorney's fees) arising out of or otherwise in
respect of the following: (i) the termination by the Seller of any Employee from
the Seller's employment prior to or on the Closing Date (except to the extent
that the claim, loss, expense, obligation or liability relates to the Buyer's
violation of any applicable law or regulation in connection with selection of
the Employees offered employment by the Buyer under Section 8.1(a)); (ii) any
failure by the Seller to comply with its obligations hereunder or otherwise with
respect to any Employee; (iii) any suit or claim of violation brought against
the Buyer under WARN for any actions taken by the Seller before or after the
Closing Date with regard to Employees at any facility, site of employment or
operating unit affected by this Agreement; (iv) any and all employee claims,
charges, grievances or complaints (regardless of whether made before or after
the Closing), including without limitation claims for severance pay (other than
severance pay due under Section 8.1(b)), claims arising under any "employee
benefit plan" as defined in Section 3(3) of ERISA, EEO charges and worker's
compensation claims, incurred with respect to any time period prior to the
Closing Date, except to the extent that any claim, charge, grievance or
complaint relates to any failure by the Buyer to comply with its obligations
with respect to any Offered Employee; and (v) all premiums, costs and expenses
for which the Seller retains liability under Section 8.1(c).
(c) The indemnification provisions of this Article shall be subject to the
provisions of Section 11.3 of this Agreement.
8.7 Rights of Other Parties.
(a) No provision of this Article shall create any rights in any Employee,
former employee or Offered Employee (including any beneficiary or dependent
thereof) of the Seller or the Buyer or any of their affiliates with respect to
continued employment (or resumed employment), and this Agreement shall not
create any rights in any such persons with respect to any benefits that may be
provided, directly or indirectly, under any employee benefit plan or arrangement
sponsored by either the Seller or the Buyer.
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(b) No intention, implication or interpretation of this Agreement shall
convey any guarantee of employment for any Offered Employee for any particular
period of time. The Offered Employees shall be employees-at-will of the Buyer
in the Purchased Business. Except as otherwise provided in this Agreement, the
Buyer shall have the absolute discretion to establish and modify the terms and
conditions of employment for any Offered Employee.
8.8 Cooperation. Prior to and following the Closing Date, the Seller and
the Buyer shall supply each other appropriate and reasonably necessary employee
data and other records to carry out the purposes and terms of this Article,
including but not limited to data appropriate to complete actuarial
computations, evaluations, benefit reports, filings and claims analysis and
government filings.
ARTICLE 9. Termination.
9.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing (a) by the
written consent of the Buyer and the Seller, (b) by the Seller pursuant to the
provisions of Section 6.3 or Section 6.4, (c) by the Buyer if there has been a
material misrepresentation or breach of covenant by the Seller in this Agreement
that (i) if such misrepresentation or breach existed on the Closing Date, would
constitute a failure to satisfy the conditions of the Closing set forth in
Section 7.2(a) or Section 7.2(b) and (ii) has not been cured and cannot
reasonably be cured prior to the Closing, (d) by the Seller if there has been a
material misrepresentation or breach of covenant by the Buyer in this Agreement
that (i) if such misrepresentation or breach existed on the Closing Date, would
constitute a failure to satisfy the conditions of the Closing set forth in
Section 7.3(a) or Section 7.3(b) and (ii) has not been cured and cannot
reasonably be cured prior to the Closing, and (e) by either the Buyer or the
Seller, by notice to the other party in the event that the Closing does not
occur for any reason on or before July 31, 1995; 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 the Agreement pursuant to the provisions of this
Section; provided further that if the Closing does not occur by May 15, 1995
other than by reason of (i) the failure of any of the conditions set forth in
Section 7.1 or Section 7.2(e) or (ii) any matter attributable to an act or
omission of the Buyer (including the Buyer's failure to satisfy or tender
performance of, as the case may be, the conditions set forth in Section 7.3),
beginning on May 16, 1995 for each day that passes without the Closing having
occurred the Fixed Amount (and thus the Purchase Price) shall automatically be
decreased by $170,000 per day.
9.2 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 the Buyer, the Seller or their respective officers or directors; provided,
however, that the obligations of the parties with respect to termination with
respect to this Article, payment of expenses under Section 12.3 and
confidentiality under Section 12.5(b) shall remain in full force and effect and
provided, further,
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that nothing herein will relieve any party from liability for actual damages for
any intentional or willful breach of this Agreement.
ARTICLE 10. Additional Covenants.
10.1 Access to Books and Records. Following the Closing Date, the Buyer
shall afford, and will cause its affiliates to afford, to the Seller, its
counsel, accountants and other authorized representatives, during normal
business hours, reasonable access to the books, records and other data of the
Purchased Business with respect to the period prior to the Closing Date to the
extent that such access may be reasonably required by the Seller to facilitate
(i) the preparation by the Seller of such tax returns as it may be required to
file with respect to the operations of the Assets and the Purchased 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 the Seller in
connection with the Assets and the Purchased Business, (iii) the payment of any
amount in connection with any liabilities or obligations which have not been
assumed by the Buyer under this Agreement and (iv) for any other reasonable
business purpose. For a period of seven years after the date of this Agreement,
the Buyer will not dispose of, alter or destroy any such books, records and
other data without giving 90 days' prior notice to the Seller to permit it, at
its expense, to examine, duplicate or repossess such records, files, documents
and correspondence.
10.2 Mail or Other Communications. The Seller authorizes and empowers the
Buyer on and after the Closing Date to receive and open all mail received by the
Buyer relating to the Purchased Business or the Assets and to deal with the
contents of such communications in any proper manner. The Seller shall promptly
deliver to the Buyer any mail or other communication received by it on and after
the Closing Date pertaining to the Purchased Business or the Assets and any
cash, checks or other instruments of payment to which the Buyer is entitled. The
Buyer shall promptly deliver to the Seller any mail or other communication
received by it after the Closing Date pertaining to the Excluded Assets, and any
cash, checks or other instruments of payment in respect of such.
10.3 Solicitation of Customers. It is understood and agreed by the parties
hereto that the Seller may continue to solicit customers of the Purchased
Business after the Closing Date in connection with the sale of products other
than HDPE by the Seller in the ordinary course of business. The Seller agrees
that, for a period for three years from and after the Closing, the Seller shall
not in the geographic areas in which the Seller sells HDPE as of the date of
this Agreement solicit customers of the Purchased Business to purchase HDPE;
provided that this clause shall not prevent the Seller or its affiliates from
making any acquisition (whether by way of assets, stock or otherwise) of an
interest in, or any investment in, in either case whether directly or
indirectly, any business or entity that derives (i) 10% or less or (ii) in the
event that clause (i) hereof cannot be satisfied, $100,000,000 or less,
annually, of its gross revenues from the sale of HDPE.
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10.4 Return of Product. The Buyer shall act in a commercially reasonable
manner in determining whether to accept returns from customers with respect to
product manufactured and sold by the Seller prior to the Closing. If a customer
returning product has not paid the Seller's invoice applicable to the product
being returned, the Buyer (a) shall accept the return and treat the exchange as
a new sale by the Buyer to the customer, and (b) shall pay the Seller for the
value of the returned product, with an appropriate adjustment for Off-spec
Product, if any. If the customer returning the product has previously paid the
Seller's invoice applicable to the product being returned, the Buyer shall
provide the customer with replacement product and charge the Seller for such
products at the prevailing sales price; provided, however, that the Buyer also
shall pay the Seller for the value of the returned product, with an appropriate
adjustment for Off-spec Product, if any. If the customer does not take any new
product in connection with a return, the Buyer shall pay the Seller for the Off-
spec Product in accordance with the procedures described above, and the Seller
shall have the sole responsibility for making any settlement with the customer.
10.5 Use of Seller's Trade Name. Except pursuant to the terms and for the
periods set forth on Schedule 10.5, after the Closing Date the Buyer shall not
be permitted to use any items of Inventory or packaging material, any sales or
promotional materials, any forms or documents or any other printed material that
bear any of the names "Occidental", "Oxy" or "OxyChem" or the Occidental comet
logo or other statutory names, trade names or trademarks, indications or
descriptions of which the names "Occidental", "Oxy" or "OxyChem" or any name
similar thereto forms a part.
10.6 Environmental Compliance. The Seller and the Buyer acknowledge and
agree that compliance with the emission standards with respect to hexane that
will be included in the final amended air operating permit issued by the TNRCC,
as contemplated by Section 7.2(e) (the "Amended Permit"), will require
modifications to the Matagorda Facility, including the installation of
additional equipment, and each have agreed to bear one-half of all out of pocket
costs and expenses directly attributable to such modifications, including
design, engineering, construction and equipment costs ("Compliance Costs"). The
Seller shall promptly reimburse the Buyer for one-half of all such Compliance
Costs (which shall not in any event include any production cost, lost or
prospective profits, or special, consequential, incidental or indirect losses or
damages). The Buyer shall present to the Seller invoices for any such
Compliance Costs, which shall include a breakdown of such Compliance Costs in
sufficient detail for the Seller to determine the particular purposes of the
expenditure as it relates to compliance with the emission standards with respect
to hexane included in the Amended Permit, and the Buyer will attach thereto
copies of all applicable invoices from third parties. The Buyer shall permit
representatives of the Seller reasonable access to the Matagorda Facility for
the purpose of observing the work necessary to satisfy the emission standards
with respect to hexane included in the Amended Permit and reasonable access
during normal business hours to the books, records, officers and representatives
of the Buyer for the purpose of verifying any costs and expenses for which
reimbursement is sought under this Section 10.6.
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10.7 Collection of Accounts Receivable. In connection with its efforts to
collect the accounts receivable retained pursuant to Section 2.2(b) or
otherwise, the Seller shall only take such actions with respect to the customers
of the Purchased Business as are consistent with the Seller's past collection
practices. The Buyer agrees that upon reasonable notice by the Seller, it will
make available to the Seller reasonable access during normal business hours to
all records and information (and to the Buyer's personnel responsible for
preparing and maintaining such records and information to the extent that same
shall not unreasonably interfere with performance of their work
responsibilities) reasonably relating to any such accounts receivable. The Buyer
shall promptly pay over to the Seller any amounts received by the Buyer in
respect of any accounts receivable attributable to the Seller's operation of the
Purchased Business prior to the Closing.
ARTICLE 11. Survival and Indemnification.
11.1 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 24 months after the Closing Date, except (i)
Section 4.14, which shall survive until the expiration of the applicable statute
of limitations, (ii) Section 4.5, which shall survive without limitation and
(iii) Section 4.16, which shall survive until the date that is 18 months after
the Closing Date. No action can be brought with respect to any breach of any
representation or warranty (except with respect to Section 4.5) pursuant to this
Agreement unless a written notice that complies with Section 11.3 has been
delivered pursuant to such Section 11.3 prior to the termination of 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.
11.2 Indemnification.
(a) Subject to the other provisions of this Article 11, in addition to the
indemnities contained elsewhere in this Agreement, the Seller hereby indemnifies
Buyer and its affiliates against and agrees to hold each of them harmless from,
any and all damage, loss, liability and expense (including, without limitation,
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding (collectively, "Loss") incurred or suffered by Buyer 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 Seller in this Agreement, any schedule or certificate
furnished by the Seller pursuant to this Agreement and the Assignment and
Assumption Agreements;
(ii) Any failure of the Seller to perform any of its covenants or
obligations contained in this Agreement (other than those set forth in
Article 8), any schedule or
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certificate furnished by Seller pursuant to this Agreement, the Deed, the
Assignment of Victoria Lease or the Bill of Sale and Assignment;
(iii) Except with respect to (x) the out-of-pocket costs and expenses
to be borne by the Buyer pursuant to Section 10.6, (y) any matter that is
the subject of the indemnification provisions set forth in Sections
11.2(a)(iv), 11.2(a)(v) and 11.2(a)(vi) below or (z) any matter disclosed
on Schedules 4.5(b), 4.5(c), 4.8 and 4.9 and on Schedule 4.16 with respect
to asbestos and PCBs, any Third Party Claim with respect to the Excluded
Liabilities;
(iv) The failure to comply with statutory provisions relating to bulk
sales and transfers, if applicable, or any failure to perform any
obligations under Section 12.3;
(v) Any action for breach of contract by any third party, to the
extent such action alleges that the assignment of such contract by the
Seller to the Buyer hereunder is a breach of such contract; or
(vi) Subject to Section 11.2(c) and except as otherwise provided in
Section 10.6, any Environmental Claim (including, any Environmental Claim
attributable to the conditions, events or circumstances disclosed on
Schedule 4.16) arising out of, in connection with or related to the
Seller's ownership, operation or use prior to the Closing of the Assets or
the Purchased Business;
provided, however, that the following limitations shall apply to the Seller's
indemnification obligations in clauses (i) through (vi) above:
(A) the Seller shall not have any indemnification obligation under
clauses (i) or (vi) above for any individual Loss, and no Loss shall be
included in any claim pursuant to such clauses for purposes of calculating
either the Aggregate Deductible or the Aggregate Cap, unless the amount of
such Loss exceeds $25,000 (the "Individual Basket") (it being understood
that all Losses arising from the same event, condition or set of
circumstances shall be considered as an individual Loss for purposes of
such calculation), but if the amount of such Loss exceeds the Individual
Basket, the entire amount of such Loss, including the first $25,000 of such
Loss, may be the subject of indemnification hereunder; provided, further,
that the parties agree that the amount of Loss 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 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
Buyer shall (subject to the Aggregate Deductible) be entitled to indemnity
relating back to the first dollar);
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(B) the Seller shall not have any indemnification obligation under
clauses (i) or (vi) above for any Losses unless and until the aggregate
amount of Losses under clauses (i) and (vi) that may be asserted in
accordance with clause (A) above exceeds $3 million (the "Aggregate
Deductible"), and if the aggregate amount of such Losses exceeds the
Aggregate Deductible, then only the amount of such excess may be the
subject of indemnification hereunder; provided, however, that the Aggregate
Deductible shall not apply to any portion of the fines or penalties
included in an Environmental Claim for which the Seller would otherwise be
liable under clause (vi);
(C) excluding for this purpose clause (iv) above, the Seller shall not
have any indemnification liability or obligation under this Section 11.2(a)
for Losses in excess of, and the parties agree that the Seller's maximum
liability hereunder shall be, $200 million (the "Aggregate Cap");
(D) notwithstanding the other provisions set forth in this Agreement,
the indemnification obligations of the Seller with respect to the clauses
of this Section 11.2(a) specified below shall only be effective as to
matters with respect to which a notice that complies with Section 11.3 of
this Agreement has been delivered to the Seller within the following time
periods:
(I) clauses (ii) and (iii), the date that is five years after the
Closing Date;
(II) clauses (iv), until the expiration of the applicable
statutes of limitations;
(III) clause (v), the date that is four years after the Closing
Date; and
(IV) clause (vi), the date that is ten years after the Closing
Date;
provided, however, that any such indemnification obligation shall continue
as to any matter with respect to which a notice of claim complying with
Section 11.3 of this Agreement shall have been delivered to the Seller
prior to the date specified above notwithstanding the subsequent passage of
such date; and
(E) the Aggregate Deductible and the Aggregate Cap shall not be
applicable to any Losses arising out of any actions in which the Seller is
finally determined to have engaged in actual fraud.
(b) Notwithstanding any other provision of this Agreement, neither the
Seller 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 the Buyer with respect to their indemnification
obligations under this Agreement unless any such claim arises out of the
fraudulent actions of the Seller. Notwithstanding any other provision of this
Article, the Seller
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shall not be liable to the Buyer for any Loss attributable to the Buyer's
overhead costs. In determining the amount of any loss, liability, or expense
for which the Buyer 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 Buyer under
policies where the future premium rate will not be affected by claim experience.
(c) Notwithstanding the provisions of Sections 11.2(a)(i) and 11.2(a)(vi),
it is expressly agreed that the Seller shall not be required to indemnify the
Buyer for any Loss arising out of, in connection with or related to any
Environmental Claim to the extent that the condition, event, circumstance or
other basis for the Environmental Claim (i) arose out of or was attributable to
ownership, operation or use of the Assets or Purchased Business by prior owners
thereof and of which the Seller does not have knowledge or (ii) was exacerbated
by the Buyer. The Buyer shall not be deemed to have exacerbated a condition,
event, circumstance or other basis for an Environmental Claim by reason of the
continuance thereof after the Closing (i) under circumstances where the Buyer
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 Buyer 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 Article 11, in addition to the
indemnities contained elsewhere in this Agreement, the Buyer hereby indemnifies
the Seller and its affiliates against and agrees to hold each of them harmless
from any and all Loss incurred or suffered by the Seller or any of its
affiliates arising out of or relating to:
(i) Any misrepresentation in or breach of the representations and
warranties of the Buyer or the failure of the Buyer to perform any of its
covenants or obligations contained in this Agreement (other than those set
forth in Article 8), any schedule or certificate furnished by the Seller
pursuant to this Agreement and the Assignment and Assumption Agreements;
(ii) Except with respect to any matter that is the subject of the
indemnification provisions set forth in Section 11.2(d)(iii) below, Assumed
Liabilities; or
(iii) Any Environmental Claim arising out of, in connection with or
related to the Buyer's ownership, operation or use after the Closing of the
Assets or the Purchased Business.
(e) Notwithstanding any other provision of this Agreement, neither the
Buyer 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 the Seller with respect to their indemnification
obligations under this Agreement unless any such claim arises out of the
fraudulent actions of the Buyer. Notwithstanding any other provision of this
Article, the Buyer shall not be liable to the Seller for any Loss attributable
to the Seller's overhead costs.
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In determining the amount of any loss, liability, or expense for which the
Seller 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 Seller under policies
where the future premium rate will not be affected by claim experience.
(f) The rights provided to the Buyer pursuant to this Article 11, as
limited by and subject to the provisions of this Article 11, shall be the
Buyer's sole remedy for breach of representation and warranty by or covenant or
obligation of the Seller under this Agreement (including any schedule or
certificate furnished by the Seller pursuant to this Agreement) or the
Assignment and Assumption Agreements. The rights provided to the Seller
pursuant to this Article 11, as limited by and subject to the provisions of
this Article 11, shall be the Seller's sole remedy for breach of representation
and warranty by or covenant of obligation of the Buyer under this Agreement
(including any schedule or certificate furnished by the Buyer pursuant to this
Agreement) or the Assignment and Assumption Agreements. To the fullest extent
permitted by applicable law, each of the Seller and the Buyer waives any and all
other rights it may have at law or in equity with respect to any breach of the
representations and warranties and covenants and obligations described in this
Section 11.2(f).
11.3 Procedures.
(a) Any person or entity seeking indemnification under Section 11.2 (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 this
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 by a court of competent jurisdiction.
(b) If any third party shall notify an Indemnified Party with respect to
any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against any Indemnifying Party under this Article, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing (including copies of all papers served with respect to such 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 Article 11 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
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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 (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, at the sole cost and expense of the Indemnifying Party (if the
Indemnified Party is entitled to indemnification hereunder), 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.
(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 11.3, if the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Section 11.3 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
11.3 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.
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(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 Article 11, the Indemnifying Party shall pay or cause to be paid to
the Indemnified Party the amount of the Loss within ten business days of receipt
by the Indemnifying Party of a notice reasonably itemizing the amount of the
Loss.
11.4 Subrogation. In the event of any payment by an Indemnifying Party to
an Indemnified Party in connection with any Loss, 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.
11.5 Claims for Environmental Work. Notwithstanding the other provisions
of this Article 11, in the case of any assertion, claim or demand requiring the
performance of investigatory, removal or remedial work with respect to
(environmental conditions, Environmental Laws or Hazardous Materials for which
the Buyer may seek indemnification, the Buyer 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
Seller 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.
11.6 EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS SET FORTH HEREIN, 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.
ARTICLE 12. Miscellaneous.
12.1 Public Announcements. On or prior to the Closing Date, no news
release or other public announcement pertaining in any way to the transactions
contemplated by this Agreement will be made by either party without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed, unless such release or announcement is required by applicable law or
applicable rules and regulations of any governmental body or stock exchange.
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12.2 Disclaimer. EXCEPT FOR SPECIFIC REPRESENTATIONS AND WARRANTIES SET
FORTH IN ARTICLE 4 AND WARRANTIES OF TITLE SET FORTH IN THE ASSIGNMENT AND
ASSUMPTION AGREEMENTS AND IN THE OTHER AGREEMENTS (COLLECTIVELY, THE "EXPRESS
WARRANTIES"), NO WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, ARE
MADE WITH RESPECT TO THE TITLE, MAINTENANCE, REPAIR, CONDITION, DESIGN OR
MARKETABILITY OF THE PERSONAL PROPERTY, EQUIPMENT, INVENTORY, VEHICLES AND
FIXTURES, INCLUDING, WITHOUT LIMITATION, AS TO ANY PERSONAL PROPERTY, EQUIPMENT,
INVENTORY, VEHICLES OR FIXTURES COMPRISING A PART OF THE ASSETS, (a) ANY IMPLIED
OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS AND (d) ANY CLAIM BY THE BUYER FOR
DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO SUCH
PERSONAL PROPERTY, EQUIPMENT, INVENTORY, VEHICLES OR FIXTURES, IT BEING THE
EXPRESS INTENTION OF THE SELLER AND THE BUYER THAT, EXCEPT FOR THE EXPRESS
WARRANTIES, THE PERSONAL PROPERTY, EQUIPMENT, INVENTORY, VEHICLES AND FIXTURES
SHALL BE CONVEYED AND TRANSFERRED TO THE BUYER IN THEIR PRESENT CONDITION AND
STATE OF REPAIR, "AS IS" "WHERE IS", WITH ALL FAULTS. Nothing in this Section
12.2 is intended to limit or modify the other provisions of this Agreement or
any provisions of the Assignment and Assumption Agreements or the Other
Agreements.
12.3 Expenses; Payment of Certain Taxes and Charges.
(a) Subject to Article 9 and Article 11, whether or not the transfer of
the Assets is completed, each of the parties hereto shall pay the fees and
expenses incurred by it in connection with the negotiation, preparation,
execution and performance of this Agreement, including, without limitation,
attorneys' fees, accountants' fees and brokers' commissions and finders fees.
(b) (i) Subject to the further provisions of this Section 12.3(b), the
Seller shall be responsible for all Taxes attributable to the Seller's
ownership or use of the Assets or operation of the Purchased Business prior
to the Closing and the Buyer shall be responsible for all Taxes
attributable to the Buyer's ownership or use of the Assets or operation of
the Purchased Business after the Closing. The Seller shall be responsible
for any liability of the Buyer 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 the Seller under Title 2,
Texas Tax Code.
(ii) All sales, transfer, or other similar taxes incurred in
connection with the transfer of the Assets shall be borne by the Buyer.
The Buyer and the Seller shall cooperate fully with each other after the
Closing in connection with (a) the preparation and filing of any tax
return, exemption certificate, or other filing in connection with such
taxes, (b) establishing and demonstrating that the requirements for an
occasional sale
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exemption from Texas sales tax pursuant to Texas Tax Code Section
151.304(b)(2) have been met with respect to this transaction, including,
without limitation, providing the Buyer reasonable access to the Seller's
books, records and such other data as the Buyer may reasonably request in
order to support such occasional sale exemption, and (c) any audit
examination by any government taxing authority of the tax returns,
exemption certificates, or other filings referred to above.
(iii) All real property taxes, personal property taxes, ad valorem
taxes, and other similar taxes assessed on any of the Assets in the tax
period in which the Closing Date occurs (other than the Inventory Taxes
referred to in Section 12.3(b)(iv) below) ("Property Taxes") shall be
prorated between the Buyer and the Seller as of the Closing.
(iv) All real property taxes, personal property taxes, ad valorem
taxes, and other similar taxes assessed on the Inventory or Stores
Inventory in the tax period in which the Closing Date occurs ("Inventory
Tax") shall be payable by the Seller.
(v) The Buyer shall pay any title or recordation fees in connection
with the transfer of the Assets. The Buyer shall also pay for any title
insurance policies or surveys of the Matagorda Land that are requested or
ordered by the Buyer.
(vi) After the Closing, the party receiving each Property Tax or
Inventory Tax bill or notice applicable to the Assets for the period in
which the Closing Date occurred shall promptly notify the other party and
shall pay each such tax bill prior to the last day such taxes may be paid
without penalty or interest. The party responsible or liable under this
Agreement with respect to any such amount shall promptly on receipt of a
written request (accompanied by appropriate supporting documentation)
reimburse the paying party with respect to such responsible party's share
of such amount so paid as provided under this Agreement. The Seller and
the Buyer 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.
(vii) If either 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.
(viii) Notwithstanding any other provision of this Agreement, the
obligations of the parties set forth in this Section 12.3(b) 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.
(c) The Seller and the Buyer shall adjust and apportion to the Closing all
power and utility charges incurred with respect to the operation of the
Purchased Business (collectively, the
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"Charges"). All Charges incurred prior to the Closing shall be for the account
of the Seller, and all Charges incurred after the Closing shall be for the
account of the Buyer.
12.4 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) as follows:
(a) If to the Seller:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: General Counsel
(214) 404-3800
Telecopy: (214) 404-3847
with a copy (which shall not constitute notice) to:
Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, California 90024
Attention: General Counsel
(310) 443-6176
Telecopy: (310) 443-6333
(b) If to the Buyer:
Lyondell Petrochemical Company
One Houston Center, Suite 1600
1221 McKinney
Houston, Texas 77010
Attention: President
Telecopy: (713) 652-4538
with a copy (which shall not constitute notice) to:
Lyondell Petrochemical Company
One Houston Center, Suite 1600
1221 McKinney
Houston, Texas 77010
Attention: General Counsel
Telecopy: (713) 652-4631
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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.
12.5 Entire Agreement.
(a) Except as otherwise provided in clause 12.5(b) of this Section, this
Agreement, the Assignment and Assumption Agreements and the Other Agreements
(including any exhibits and schedules thereto) constitute the entire agreement
between the parties thereto and supersede all prior agreements and
understandings, oral and written, between the parties thereto with respect to
the subject matter thereof.
(b) Except as otherwise contemplated by this Agreement, prior to the
Closing Date, but before the termination, if any, of this Agreement, the
confidentiality provisions ("Confidentiality Provisions") of that certain letter
dated January 24, 1995 between the Buyer and the Seller shall remain in force
and effect. If this Agreement is terminated, the terms of the Confidentiality
Provisions shall remain in force and effect. Upon the Closing, the
Confidentiality Provisions shall cease to be of any further force or effect and
shall be superseded in their entirety by the terms of this Agreement.
12.6 Binding Effect; Benefit. Subject to Section 12.8, 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 or their respective permitted successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
12.7 Bulk Sales. The Buyer and the Seller each agree to waive compliance
by the other with the provisions of the Bulk Sales Law of any jurisdiction.
12.8 Assignability. Neither this Agreement nor any of the rights or
obligations hereunder shall be assignable (by operation of law or otherwise) by
the Seller without the prior written consent of the Buyer or shall be assignable
(by operation of law or otherwise) by the Buyer (except to a wholly-owned
subsidiary thereof) without the prior written consent of the Seller. Any
assignment or purported assignment in violation of this Section shall be null
and void.
12.9 Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by either 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 Buyer hereunder or under
applicable law, no investigations by the Buyer heretofore or hereafter made
shall affect the representations and warranties of the Seller, and, except as
otherwise provided in Section 11.1, such representations and warranties shall
survive any such investigation. The
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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.
12.10 Notice Regarding Coastal Area Property.
(a) The real property described in and subject to this Agreement adjoins
and shares a common boundary with the tidally influenced submerged lands of the
state. The boundary is subject to change and can be determined accurately only
by a survey on the ground made by a licensed state land surveyor in accordance
with the original grant from the sovereign. The owner of the property described
in this contract may gain or lose portions of the tract because of changes in
the boundary.
(b) The Buyer, transferor, or grantor has no knowledge of any prior fill as
it relates to the property described in and subject to this Agreement.
(c) State law prohibits the use, encumbrance, construction, or placing of
any structure in, on, or over state-owned submerged lands below the applicable
tide line, without proper permission.
(d) The Buyer or grantee is hereby advised to seek the advice of an
attorney or other qualified person as to the legal nature and effect of the
facts set forth in this notice on the property described in and subject to this
Agreement. Information regarding the location of the applicable tide line as to
the property described in and subject to this Agreement may be obtained from the
surveying division of the General land Office in Austin.
12.11 Section Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.12 Severability. The provisions of this Agreement shall be deemed to
be separable. Therefore, if any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect; provided, however, that if such declaration shall occur
prior to the Closing Date and if the part or parts of this Agreement that are
declared illegal, void or unenforceable shall materially and adversely affect
the rights of either the Buyer or the Seller, that party may cancel and
terminate the Agreement in toto by giving written notice of termination to the
other party.
12.13 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.
12.14 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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
LYONDELL PETROCHEMICAL COMPANY
By:[Signature of Dan F. Smith appears here]
----------------------------------------
Dan F. Smith
President and Chief Operating Officer
OCCIDENTAL CHEMICAL CORPORATION
By:[Signature of J. Roger Hirl appears here]
-----------------------------------------
J. Roger Hirl
President and Chief Executive Officer
0206691.30
049526/1123
<PAGE>
Exhibit 99
[LOGO OF LYONDELL PETROCHEMICAL COMPANY APPEARS HERE]
NEWS
- --------------------------------------------------------------------------------
One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646
(713) 652-7200
LYONDELL PETROCHEMICAL COMPANY TO PURCHASE
ALATHON(R) HIGH-DENSITY POLYETHYLENE BUSINESS
FROM OCCIDENTAL CHEMICAL
HOUSTON, April 17, 1995 -- Lyondell Petrochemical Company (NYSE:LYO)
announced today that it has signed an agreement with Occidental Chemical
Corporation, an affiliate of Occidental Petroleum Corporation, to acquire
Occidental Chemical's Alathon(R) high-density polyethylene (HDPE) business for
$350 million plus inventory. Assets involved in the transaction include resin
production facilities at Victoria and Matagorda, Texas, and the associated
research and development facility. These facilities have a combined annual
capacity of approximately 1.5 billion pounds of HDPE. The business employs a
workforce of approximately 350 people.
HDPE is used to make plastic films and resins for a wide variety of
consumer goods. Among the products produced at the facilities involved in the
transaction is a high molecular weight film resin that is generally regarded
as the benchmark for the industry.
As part of the agreement, Occidental Chemical will supply ethylene, the
principle feedstock for HPDE, to these plants for a transitional period.
Ultimately, Lyondell plans to supply ethylene for the facilities primarily
from its Channelview (Texas) Petrochemical Complex. In addition, Lyondell will
acquire the rights to the Alathon(R) trademark.
"We are very pleased with the opportunities created for Lyondell by this
acquisition," said Bob G. Gower, Chairman and Chief Executive Officer of
Lyondell Petrochemical Company. "Lyondell has been a major factor in the
merchant market for ethylene for many years and we plan to continue to be a
major merchant supplier. However, this transaction will provide important
additional downstream integration, a key part of our strategic plan to build a
stronger earnings floor."
"The transaction is consistent with our goal of creating additional
value in our core petrochemical businesses," said Dan F. Smith, Lyondell's
President and Chief Operating Officer. "This is a good business with quality
assets that fits well with our existing businesses. We plan to take full
advantage of the synergies created between these businesses to enhance our low
cost position."
The transaction is expected to close on or before May 15, 1995. Lyondell
expects to finance the acquisition from internal cash and existing credit
lines.
Lyondell Petrochemical Company produces a wide variety of
petrochemicals, including olefins (ethylene, propylene, butadiene, butylenes
and specialty products), methanol and MTBE, low-density polyethylene and
polypropylene. Lyondell currently has an approximate 90 percent participation
interest in LYONDELL-CITGO Refining Company Ltd., which produces refined
petroleum products, including gasoline, heating oil, jet fuel, aromatics and
lubricants.
For information, contact:
Media - Jackie Wilson (713) 652-4596; Investors - Dave Balderston (713)
652-4590
