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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 15, 1998.
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LYONDELL PETROCHEMICAL COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-10145 95-4160558
(Commission File Number) (I.R.S. Employer Identification No.)
1221 MCKINNEY STREET, SUITE 1600, HOUSTON, TEXAS 77010
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(Address of principal executive offices) (Zip Code)
(713) 652-7200
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On May 15, 1998, Lyondell Petrochemical Company (the "Registrant") issued a
press release (Exhibit 99.1 hereto) detailing the expansion of Equistar
Chemicals, LP (the "Partnership"). On May 15, 1998, the Registrant, Millennium
Chemicals Inc. ("Millennium") and Occidental Petroleum Corporation
("Occidental") completed an expansion of the Partnership, with the addition of
certain Occidental assets. These assets include the ethylene, propylene and
ethylene oxide ("EO") and derivatives businesses and certain pipeline assets
held by Oxy Petrochemicals Inc. ("Oxy Petrochemicals"), a 50% interest in a
joint venture between PDG Chemical Inc. ("PDG Chemical") and du Pont de Nemours
and Company, and a lease to the Partnership of the Lake Charles, Louisiana
olefins plant and related pipelines held by Occidental Chemical Corporation
("Occidental Chemical") ("collectively, the "Occidental Contributed Business").
Occidental Chemical, Oxy Petrochemicals and PDG Chemical are all wholly owned,
indirect subsidiaries of Occidental. The Occidental Contributed Business
included olefins plants at Corpus Christi and Chocolate Bayou, Texas;
EO/ethylene glycol ("EG") and EG derivatives businesses located at Bayport,
Texas, Occidental's 50% ownership of PD Glycol, which operates EO/EG plants at
Beaumont, Texas, 950 miles of owned and leased ethylene/propylene pipelines and
the lease to the Partnership of the Lake Charles, Louisiana olefins plant and
related pipelines.
With the completion of the transaction, the Registrant holds, through its
subsidiaries, an aggregate 41% ownership interest in the Partnership; each of
Millennium and Occidental holds an aggregate 29.5% ownership interest through
their respective subsidiaries. The Partnership was formed December 1, 1997 and
was initially comprised primarily of the olefins and polymers businesses of the
Registrant and Millennium. In a series of transactions effective May 15, 1998,
including asset contributions and assignments, a merger and the lease of certain
assets to the Partnership, the Occidental Contributed Business was transferred
to the Partnership. In exchange for the Occidental Contributed Business, two
subsidiaries of Occidental were admitted as limited partners and a third
subsidiary was admitted as a general partner in the Partnership for an aggregate
partnership interest of 29.5%. In addition, the Partnership assumed
approximately $205 million of Occidental indebtedness and the Partnership issued
a promissory note to an Occidental subsidiary in the amount of $419.7 million.
In connection with the contribution of the Occidental Contributed Business and
the reduction of Millennium's and Lyondell's ownership interests in the
Partnership, the Partnership also issued a promissory note to the Millennium
subsidiary that is a limited partner in the Partnership in the amount of $75
million. The consideration paid for the Occidental Contributed Business was
determined based upon arms-length negotiations between the Registrant,
Millennium and Occidental. In connection with the transaction, the Partnership
and Occidental also entered into a long-term agreement for the Partnership to
supply the ethylene requirements for Occidental Chemical's U.S. manufacturing
plants.
On May 27, 1998, the Registrant issued a press release (Exhibit 99.2
hereto) detailing the expected impact of certain downtime at the refinery
operated by LYONDELL-CITGO Refining Company Ltd., a joint venture owned 58.75%
by the Registrant through a wholly owned subsidiary.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit Document
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10.1 Master Transaction Agreement dated May 15, 1998 among the
Partnership, the Registrant, Millennium and Occidental.
10.2 Amended and Restated Limited Partnership Agreement of the
Partnership dated May 15, 1998.
10.3 Amended and Restated Parent Agreement dated May 15, 1998 among
Occidental Chemical, Oxy CH Corporation, Occidental, the
Registrant, Millennium and the Partnership.
10.4 Agreement and Plan of Merger and Asset Contribution dated May
15, 1998 among Occidental Petrochem Partner 1, Inc., Occidental
Petrochem Partner 2, Inc., Oxy Petrochemicals, PDG Chemical and
the Partnership.
99.1 Press Release dated May 15, 1998.
99.2 Press Release dated May 27, 1998.
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EXHIBIT INDEX
Exhibit Document
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10.1 Master Transaction Agreement dated May 15, 1998 among the
Partnership, the Registrant, Millennium and Occidental.
10.2 Amended and Restated Limited Partnership Agreement of the
Partnership dated May 15, 1998.
10.3 Amended and Restated Parent Agreement dated May 15, 1998 among
Occidental Chemical, Oxy CH Corporation, Occidental, the
Registrant, Millennium and the Partnership.
10.4 Agreement and Plan of Merger and Asset Contribution dated May
15, 1998 among Occidental Petrochem Partner 1, Inc., Occidental
Petrochem Partner 2, Inc., Oxy Petrochemicals, PDG Chemical and
the Partnership.
99.1 Press Release dated May 15, 1998.
99.2 Press Release dated May 27, 1998.
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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 28, 1998 LYONDELL PETROCHEMICAL COMPANY
BY: /s/ KERRY A. GALVIN
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Kerry A. Galvin
Chief Corporate Counsel
and Corporate Secretary
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EXHIBIT 10.1
MASTER TRANSACTION AGREEMENT
BETWEEN
EQUISTAR CHEMICALS, LP,
OCCIDENTAL PETROLEUM
CORPORATION,
LYONDELL PETROCHEMICAL COMPANY
AND
MILLENNIUM CHEMICALS INC.
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TABLE OF CONTENTS
PAGE
SECTION 1 RELATED AGREEMENTS AND CLOSING 2
1.1 Tier 1 Related Agreements 2
1.2 Tier 2 Related Agreements 2
1.3 Closing Date 2
1.4 Partnership Long-term Debt 2
1.5 Closing Transactions 2
SECTION 2 REPRESENTATIONS AND WARRANTIES 3
2.1 Representations and Warranties of the Partnership 3
2.2 Representations and Warranties of Occidental 8
2.3 Representations and Warranties of Lyondell 11
2.4 Representations and Warranties of Millennium 13
SECTION 3 ADDITIONAL AGREEMENTS 15
3.1 Access to Information 15
3.2 Conduct of the Occidental Subject Business Pending the
Closing Date 15
3.3 Conduct of the Partnership Subject Business Pending the
Closing Date 17
3.4 Further Actions 18
3.5 Notifications 20
3.6 Employee Matters 20
3.7 Partnership Unanimous Consent Items 20
SECTION 4 CONDITIONS TO CLOSING 21
4.1 Conditions Precedent to Obligations of All Parties 21
(a) No Injunction, etc. 21
(b) Tier 2 Related Agreements 21
(c) Government Licenses and Consents 21
(d) HSR Act 21
4.2 Conditions Precedent to Obligations of the Partnership 21
(a) Accuracy of Representations and Warranties 22
(b) Performance of Agreements 22
(c) No Material Adverse Change 22
(d) Officer's Certificates 22
4.3 Conditions Precedent to Obligations of Occidental 22
(a) Accuracy of Representations and Warranties 22
(b) Performance of Agreements 22
(c) No Material Adverse Change 23
(d) Board of Directors Approval 23
(e) Officer's Certificates 23
(f) Third Party Consents 23
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SECTION 5 TERMINATION AND WAIVER 23
5.1 General 23
5.2 Effect of Termination 24
SECTION 6 MISCELLANEOUS 24
6.1 Successors and Assigns 24
6.2 Benefits of Agreement Restricted to Parties 24
6.3 Notices 24
6.4 Severability 25
6.5 Press Releases 25
6.6 Confidentiality Agreement 26
6.7 Construction 26
6.8 Counterparts 26
6.9 Governing Law 26
6.10 Transaction Costs 26
6.11 Amendment 27
6.12 Jurisdiction; Consent to Service of Process; Waiver 27
6.13 Waiver of Jury Trial 28
6.14 Action by the Partnership 28
APPENDICES
Appendix A Definitions
Appendix B List of Related Agreements
SCHEDULES
Schedule 2.1 Exceptions to Representations and Warranties of the
Partnership
Schedule 2.2 Exceptions to Representations and Warranties of Occidental
Schedule 2.3 Exceptions to Representations and Warranties of Lyondell
Schedule 2.4 Exceptions to Representations and Warranties of Millennium
Schedule 4.3(f) Occidental Consents
Schedule 6.10 Certain Expenses
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EXHIBITS
Exhibit A Form of Amended and Restated Agreement of Limited Partnership
Exhibit B Form of Occidental Contribution Agreement
Exhibit C Form of Amended and Restated Parent Agreement
Exhibit D Form of Sales Agreement (Ethylene)
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MASTER TRANSACTION AGREEMENT
This Master Transaction Agreement (this "Agreement") dated May 15, 1998 is
entered into by and among Equistar Chemicals, LP, a Delaware limited partnership
(the "Partnership"), Occidental Petroleum Corporation, a Delaware corporation
("Occidental"), Lyondell Petrochemical Company, a Delaware corporation
("Lyondell"), and Millennium Chemicals Inc., a Delaware corporation
("Millennium").
The definitions of capitalized terms used in this Agreement, including the
appendices hereto, are set forth in Appendix A hereto.
WHEREAS, Lyondell and Millennium entered into the Master Transaction
Agreement dated July 25, 1997, as amended, which contemplated, among other
things, the formation of the Partnership;
WHEREAS, the Initial Partners entered into the Limited Partnership
Agreement of the Partnership dated October 10, 1997 and the Certificate of
Limited Partnership with respect to the Partnership became effective October 17,
1997;
WHEREAS, the Partnership commenced operations December 1, 1997 upon its
acquisition of the Subject Businesses of Lyondell and Millennium Petrochemicals
Inc., a Virginia corporation and an indirect wholly owned subsidiary of
Millennium ("Millennium Petrochemicals");
WHEREAS, Lyondell and Millennium, the respective ultimate parent entities
of the Initial Partners, desire to admit to the Partnership (i) PDG Chemical
Inc., a Delaware corporation and an indirect, wholly owned subsidiary of
Occidental ("PDG Chemical"), as a general partner, and (ii) Occidental Petrochem
Partner 1, Inc., a Delaware corporation and a wholly owned Subsidiary ("OCC
Sub") of Occidental Chemical Corporation, a New York corporation ("OCC"), and
Occidental Petrochem Partner 2, Inc., a Delaware corporation and a wholly owned
Subsidiary ("Oxy CH Sub") of Oxy CH Corporation, a California corporation ("Oxy
CH"), as limited partners, upon the transfer to the Partnership of the Subject
Business to be contributed by the Occidental Partners, each a wholly owned
Subsidiary of Occidental;
WHEREAS, upon the terms and subject to the conditions set forth herein, the
Occidental Partners will contribute their Subject Business to the Partnership
through a merger, a partnership interest transfer and certain asset transfers,
the Partnership will issue Units to the Occidental Partners and the Occidental
Partners will become partners in the Partnership, and certain other agreements
will be entered into as provided for herein; and
WHEREAS, the Parties have made all applicable filings under the HSR Act
with respect to the transactions contemplated hereby and have received
confirmation from the Federal Trade Commission of the early termination of the
applicable waiting period under the HSR Act;
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WHEREAS, the parties who have executed this Agreement (the "Parties") wish
to make certain representations and warranties to one another and provide for
the coordination of the closing of all the transactions contemplated by this
Agreement (the "Closing");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the Parties set forth herein, it is hereby agreed as follows:
SECTION 1
RELATED AGREEMENTS AND CLOSING
1.1 Tier 1 Related Agreements. The Tier 1 Related Agreements are
designated as such on Appendix B. Forms of each of the Tier 1 Related
Agreements (including forms of certain of the exhibits and versions of certain
of the schedules thereto current as of the dates indicated therein) are attached
as Exhibits to this Agreement. On the terms and subject to the conditions set
forth herein, the Parties shall cause each such agreement to be executed and
delivered by the appropriate parties thereto at the Closing in substantially the
form attached hereto with such changes as may be agreed to by the Parties in
good faith.
1.2 Tier 2 Related Agreements. The Tier 2 Related Agreements are
designated as such on Appendix B. The forms of each of the Tier 2 Related
Agreements shall be negotiated by the Parties prior to the Closing in good
faith. On the terms and subject to the conditions set forth herein, the Parties
shall cause such agreements to be executed and delivered in such forms by the
appropriate parties thereto at the Closing.
1.3 Closing Date. Provided that the conditions precedent set forth in
Section 4 of this Agreement shall have been satisfied or waived, the Closing
shall be held at a mutually agreeable location on the date hereof or on such
other date as may be agreed to in writing by the Parties (the "Closing Date").
The Closing shall be deemed to occur at 4:00 a.m. Houston, Texas time on the
Closing Date.
1.4 Partnership Long-term Debt. At or immediately subsequent to the
Closing Date, the Partnership's long-term debt shall consist of: (i) borrowings
under a bank credit agreement or agreements providing for maximum borrowings in
the amount of $1.25 billion (inclusive of any amounts to be used for working
capital purposes); (ii) Lyondell Assumed Debt (as defined in the Initial Master
Transaction Agreement) in the amount of $745 million and (iii) Occidental
Assumed Debt in the amount of $205 million; provided, however, that the amount
of the credit agreement or agreements described in (i) above may be adjusted to
such greater amount as may be reasonably satisfactory to the Partnership and
Occidental.
1.5 Closing Transactions. As contemplated by this Agreement and by the
Occidental Contribution Agreement and the Amended and Restated Partnership
Agreement, as applicable, on the Closing Date:
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(a) OCC will contribute or cause to be contributed certain assets to
OCC Sub which will simultaneously contribute such assets to the
Partnership, subject to the assumption by the Partnership of certain
liabilities;
(b) OCC Sub will assign a lease for certain assets to the Partnership;
(c) Oxy CH will contribute all of the issued and outstanding capital
stock of Oxy Petrochemicals to Oxy CH Sub;
(d) Oxy Petrochemicals Inc., a wholly owned direct Subsidiary of Oxy
CH Sub ("Oxy Petrochemicals") and the Partnership will merge, with the
Partnership as the surviving entity;
(e) PDG Chemical will contribute or cause to be contributed certain
assets to the Partnership, subject to the assumption by the Partnership of
certain liabilities;
(f) the Partnership will (i) issue Units to the Occidental Partners
(pursuant to asset contributions, partnership interest transfer or the
merger, as the case may be) and the Occidental Partners will be admitted as
partners of the Partnership and (ii) issue Units to Lyondell LP, Lyondell
GP, Millennium LP and Millennium GP;
(g) OCC will agree to guarantee (with the form and terms thereof to be
substantially in the form attached to that certain letter agreement, of
even date, by and between OCC and the Partnership) $419,700,000 of
indebtedness of the Partnership; and
(h) the Partnership shall deliver (i) a note to Oxy CH Sub obligating
the Partnership to pay $419,700,000 plus interest in accordance with the
terms described therein and (ii) a note to Millennium LP obligating the
Partnership to pay $75 million plus interest in accordance with the terms
described therein.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Partnership. Except as set
forth on Schedule 2.1, the Partnership represents and warrants to each other
Party as follows:
(a) Organization, Good Standing and Power. The Partnership (i) is a
limited partnership duly organized, validly existing and in good standing
under the laws of the state of Delaware and has the power and authority
under its constituent documents to own, lease and operate its assets and to
conduct its Subject Business now being conducted by it, (ii) is duly
authorized, qualified or licensed to do business as a foreign limited
partnership in, and is in good standing in, each of the jurisdictions in
which its right, title or interest in or to any of the assets held by it
requires such authorization, qualification or licensing, except where
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the failure to be so authorized, qualified, licensed or in good standing
would not be reasonably likely to have a Material Adverse Effect with
respect to its Subject Business, and (iii) has, and in the case of the
Related Agreements to be executed by it at or prior to the Closing, will
have, all requisite corporate power and authority, or power and authority
under its constituent documents, to enter into this Agreement and, as
applicable, the Related Agreements to which it is or will be a party and to
perform its obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements.
(i) The execution, delivery and performance by the Partnership of
this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized and approved by all
necessary corporate or similar action on its part. This Agreement has
been duly and validly executed and delivered by the Partnership and is
its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and by
general equity principles.
(ii) The execution, delivery and performance by the Partnership of
the Related Agreements to which it will be a party and the
consummation by it of the transactions contemplated thereby will be,
as of the Closing, duly authorized and approved by all necessary
action on its part. At the Closing, each of the Related Agreements to
which the Partnership will be a party will be duly and validly
executed and delivered by the Partnership and will be upon execution
and delivery a legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws related to or affecting creditors' rights
generally and by general equity principles.
(c) Lack of Conflicts. Except with respect to the HSR Act as set
forth in Section 4.1(d), each of the execution, delivery and performance by
the Partnership of this Agreement and the Related Agreements to which it is
or will be a party and the consummation by it of the transactions
contemplated hereby and thereby does not and, as of the Closing, will not
(i) violate (with or without the giving of notice or the lapse of time or
both) any Legal Requirement applicable to it or its Subsidiaries, other
than those that would not be reasonably likely to have a Material Adverse
Effect with respect to its Subject Business, (ii) conflict with, or result
in the breach of, any provision of the charter or by-laws or similar
governing or organizational documents of it or its Subsidiaries, (iii)
result in the creation of any Encumbrance upon any of their assets, other
than those contemplated by this Agreement or any of the Related Agreements,
or those that would not be reasonably likely to have a Material Adverse
Effect with respect to its Subject Business, or (iv) violate, conflict with
or result in the breach or termination of or otherwise give any other
Person the right to terminate, or constitute a default, event of default or
an event which with notice,
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lapse of time or both, would constitute a default or event of default under
the terms of, any contract, indenture, lease, mortgage, Government License
or other agreement or instrument to which it or any of its Subsidiaries is
a party or by which the properties or businesses of it or any of its
Subsidiaries are bound, except for violations, conflicts, breaches,
terminations and defaults that would not be reasonably likely to have a
Material Adverse Effect with respect to its Subject Business.
(d) Certain Fees. Neither the Partnership nor any of its Affiliates
nor any of its officers, directors or employees, on behalf of it or such
Affiliates, has employed any broker or finder or incurred any other
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(e) Financial Statements. The Partnership's audited financial
statements as of and for the year ended December 31, 1997 and any unaudited
quarterly financial statements prepared pursuant to Section 5.4 of the
Partnership Agreement since December 31, 1997 (in each case including any
notes thereto), were prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis ("GAAP")
throughout the periods indicated (except as may be indicated in the notes
thereto and except that unaudited or quarterly financial statements do not
contain all GAAP notes to such financial statements) and each fairly
presents the consolidated (or combined, as applicable) financial position,
results of operations and changes in partners' equity and cash flows of the
Partnership and its subsidiaries as at the respective dates thereof and for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments).
(f) Absence of Certain Changes. Since December 31, 1997, (i) the
Partnership and its Affiliates have not incurred any material liabilities
or obligations, fixed, contingent, accrued or otherwise, (A) that relate to
or are allocable to its Subject Business and that have had or are
reasonably likely to have a Material Adverse Effect with respect to its
Subject Business, or (B) that would cause the long-term debt of the
Partnership immediately prior to the Closing to exceed the aggregate of
$1.745 billion and any amounts borrowed under the Partnership's bank credit
facility for working capital, (ii) the Partnership and its Affiliates have
conducted its Subject Business in all material respects in the ordinary
course, and (iii) no event, occurrence or other matter has occurred that is
reasonably likely to have a Material Adverse Effect with respect to its
Subject Business, provided that this determination shall be made without
regard to any change in general economic or political conditions or any
change in raw materials prices, product prices, industry capacity or other
matter of industry-wide application that affects its Subject Business and
Occidental's Subject Business in a substantially similar way.
(g) Partnership Documents. The Partnership has provided to Occidental
a true and correct copy of the Partnership Agreement, as amended to date.
The Partnership has provided to Occidental true and correct copies of (i)
all minutes of meetings of the Partnership Governance Committee held to
date and such minutes accurately reflect all
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actions, approvals and authorizations (including with respect to the
Strategic Plan) by or of the Partnership Governance Committee, (ii) the
Strategic Plan and (iii) the current annual budget of the Partnership.
(h) Partnership Interests. Without giving effect to this Agreement or
the transactions contemplated hereby, Lyondell LP, Lyondell GP, Millennium
LP and Millennium GP are the only Partners in the Partnership and the only
holders of Units, in the denominations set forth in the Partnership
Agreement. Without giving effect to this Agreement or the transactions
contemplated hereby, there are no outstanding subscriptions, options,
convertible securities, warrants or calls of any kind issued or granted by,
or binding upon, the Partnership to purchase or otherwise acquire or to
sell or otherwise dispose of any security of or equity interest in the
Partnership.
(i) Conduct of the Partnership Subject Business since December 1,
1997. Except as required or contemplated by approvals or authorizations
(including the Strategic Plan) by or of the Partnership Governance
Committee, since the contribution of their Subject Assets to the
Partnership by Lyondell and Millennium on December 1, 1997, the Partnership
has:
(i) maintained its books, accounts and records relating to its
Subject Business in the usual, regular and ordinary manner,
complied in all material respects with all Legal Requirements and
contractual obligations applicable to its Subject Business or to
the conduct of its Subject Business and performed all of its
material obligations relating to its Subject Business;
(ii) not (A) modified or changed in any material respect any of its
assets or disposed of any material asset except for (1)
inventory, equipment, supplies and other assets sold or otherwise
disposed of in the ordinary course of business and (2) any assets
that in the ordinary course of business were replaced with
substantially similar assets, (B) except in the ordinary course
of business, (x) entered into any contract, commitment or
agreement material to the operation of its Subject Business or
use of its assets or, except as expressly contemplated by or
required pursuant to their respective terms, modified or changed
in any material respect any obligation under any such contract,
commitment or agreement, (y) modified or changed in any material
respect any obligation under its Government Licenses, (z)
modified or changed in any material respect the manner in which
the products produced by its Subject Business are marketed and
sold, or (C) entered into interest rate protection or other
hedging agreements (except for hydrocarbon hedging agreements
entered into in the ordinary course and expiring prior to
December 31, 1998) relating to its Subject Business; provided,
that, for purposes of (A) and (B), "material" shall mean a change
or modification that was subject to the unanimous voting
requirement of Section 6.7 of the Partnership Agreement; and
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(iii) not waived any material claims or rights relating to its
Subject Business.
(j) Employee Benefits.
(i) Each of the Partnership's Defined Benefit and Defined Contribution
Pension Plans covering employees ("Employee Plan") is in substantial
compliance with applicable requirements prescribed by any and all Legal
Requirements, including, but not limited to the Code, except for violations
the occurrence of which would not in the aggregate reasonably be expected
to have a Material Adverse Effect with respect to its Subject Business;
(ii) The Partnership has in all material respects performed all
obligations required to be performed by it under ERISA, the Code and any
other applicable Legal Requirements and under the terms of each Employee
Plan, except such failures to perform which would not in the aggregate
reasonably be expected to have a Material Adverse Effect with respect to
its Subject Business. The Partnership has received no written notice of
the existence of any material default or violation by any other party of
any of such Legal Requirements, terms or requirements applicable to any of
the Employee Plans;
(iii) Other than routine claims for benefits, the Partnership has
not received any written notice of any pending material claims or lawsuits
which have been asserted or instituted against any of the Employee Plans,
the assets of the trust or funds under the Employee Plans, the sponsor or
administrator of any of the Employee Plans, or against any fiduciary of any
of the Employee Plans with respect to the operation of such Plan;
(iv) The Partnership has not received any written notice of any
pending investigation or pending enforcement action by the Pension Benefit
Guaranty Corporation, the Department of Labor, the Internal Revenue Service
or any other Authority with respect to any of the Employee Plans;
(v) All contributions required to be made under the terms of the
Partnership's Employee Plans have been timely made. No Employee Plan has
an "accumulated funding deficiency" (within the meaning of Section 412 of
the Code or Section 302 of ERISA);
(vi) All of the Partnership's "group health plans" (within the meaning
of Code Section 5000(b)(1)) have been operated in substantial compliance
with the group health plan continuation coverage requirements of Section
4980B of the Code and Sections 601 through 608 of ERISA, Title XXII of the
Public Health Service Act and the provisions of the Social Security Act;
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(vii) There has been no act or omission by the Partnership that
has given rise to or may give rise to material fines, penalties, taxes, or
related charges under Section 502(c), (i) or (l) or Section 4071 of ERISA
or Chapter 43 of the Code or the imposition of a lien pursuant to Sections
401(a)(29) or 412(n) of the Code or pursuant to ERISA;
(viii) Except with respect to the transactions contemplated by this
Agreement, no "reportable event" within the meaning of Section 4043 of
ERISA, or prohibited transaction within the meaning of Section 406 of
ERISA, has occurred with respect to any Employee Plan which would
reasonably be expected to have a Material Adverse Effect; and
(ix) No Employee Plan is a "multiemployer plan" as such term is
defined in section 3(37) of ERISA. No Employee Plan is a plan maintained
by more than one employer (a so-called "multiple employer plan") for
purposes of section 413(c) of the Code or otherwise.
(k) Conduct of Business in Compliance with Regulatory and Contractual
Requirements. The Partnership and each Affiliate thereof is operating and
conducting its Subject Business in compliance with all applicable Legal
Requirements, rights of concession, licenses, know-how or other proprietary
rights of others, the failure to comply with which would reasonably be
expected to have a Material Adverse Effect with respect to its Subject
Business.
(l) Legal Proceedings. There is no litigation, proceeding, claim,
grievance, arbitration, investigation or other action to which the
Partnership or any Affiliate thereof is a party (including proceedings or
claims by or before the National Labor Relations Board, the Equal
Employment Opportunity Commission, the Department of Labor or any other
Authority) (i) that is pending or, to the Knowledge of the Partnership,
threatened, (ii) that relates in any way to the operation or conduct of its
Subject Business, or to the transactions contemplated by this Agreement,
and (iii) that upon resolution adverse to Partnership or any Affiliate,
could reasonably be expected to have a Material Adverse Effect with respect
to its Subject Business.
(m) Initial Asset Contributions. To the Partnership's Knowledge,
there is no basis for a claim by the Partnership against Lyondell or
Millennium Petrochemicals for breach of representation or warranty of any
of their respective representations and warranties set forth in the
Lyondell Asset Contribution Agreement or the Millennium Asset Contribution
Agreement.
2.2 Representations and Warranties of Occidental. Except as set forth on
Schedule 2.2, Occidental represents and warrants to each other Party as follows:
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(a) Organization, Good Standing and Power. Occidental and each
member of its Group (i) is a corporation, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, lease and
operate its assets and, if applicable, to conduct the Subject Business now
being conducted by it and to be conducted by it as of the Closing, (ii) is
duly authorized, qualified or licensed to do business as a foreign
corporation in, and is in good standing in, each of the jurisdictions in
which its right, title or interest in or to any of the assets held by it or
the Subject Business conducted by it, if applicable, requires such
authorization, qualification or licensing, except where the failure to be
so authorized, qualified, licensed or in good standing would not be
reasonably likely to have a Material Adverse Effect with respect to its
Subject Business, and (iii) has, and in the case of the Related Agreements
to be executed by it at or prior to the Closing, will have, all requisite
corporate power and authority to enter into this Agreement and, as
applicable, the Related Agreements to which it is or will be a party and to
perform its obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements. Assuming the approval
of Occidental's board of directors referred to in Section 4.3(d):
(i) The execution, delivery and performance by Occidental of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized and approved by all necessary
corporate or similar action on its part. This Agreement has been duly
and validly executed and delivered by Occidental and is its legal,
valid and binding obligation, enforceable against it in accordance
with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
related to or affecting creditors' rights generally and by general
equity principles.
(ii) The execution, delivery and performance by Occidental and
each member of its Group of the Related Agreements to which it or any
member of its Group will be a party and the consummation by it and its
Group of the transactions contemplated thereby will be, as of the
Closing, duly authorized and approved by all necessary corporate or
similar action on its or their part. At the Closing, each of the
Related Agreements to which Occidental or any member of its Group will
be a party will be duly and validly executed and delivered by
Occidental or member and will be upon execution and delivery a legal,
valid and binding obligation, enforceable against it or such member in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and by
general equity principles.
(c) Lack of Conflicts. Assuming satisfaction of the condition in
Section 4.1(c) and receipt of the Consents contemplated by Schedule 4.3(f),
and except with respect to the HSR Act as set forth in Section 4.1(d), each
of the execution, delivery and performance by Occidental and each member of
its Group of this Agreement and the Related Agreements to
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which any of them is or will be a party and the consummation by them of the
transactions contemplated hereby and thereby does not and, as of the
Closing, will not (i) violate (with or without the giving of notice or the
lapse of time or both) any Legal Requirement applicable to any of them or
any of their Subsidiaries, other than those that would not be reasonably
likely to have a Material Adverse Effect with respect to its Subject
Business, (ii) conflict with, or result in the breach of, any provision of
the charter or by-laws or similar governing or organizational documents of
any of them or any of their Subsidiaries, (iii) result in the creation of
any Encumbrance upon any of their assets, other than those contemplated by
this Agreement or any of the Related Agreements, or those that would not be
reasonably likely to have a Material Adverse Effect with respect to its
Subject Business, or (iv) violate, conflict with or result in the breach or
termination of or otherwise give any other Person the right to terminate,
or constitute a default, event of default or an event which with notice,
lapse of time or both, would constitute a default or event of default under
the terms of, any contract, indenture, lease, mortgage, Government License
or other agreement or instrument to which any of them or any of their
Subsidiaries is a party or by which the properties or businesses of any of
them or any of their Subsidiaries are bound, except for violations,
conflicts, breaches, terminations and defaults that would not be reasonably
likely to have a Material Adverse Effect with respect to its Subject
Business.
(d) Certain Fees. Neither Occidental nor any of its Affiliates nor
any of its officers, directors or employees, on behalf of it or such
Affiliates, has employed any broker or finder or incurred any other
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(e) SEC Reports; Financial Statements.
(i) Occidental has filed all material forms, reports and documents
required to be filed by it with the SEC since December 31, 1996 (its
"SEC Reports"). Occidental's SEC Reports were prepared in all
material respects in accordance with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules
and regulations thereunder, and none of Occidental's SEC Reports, as
of the date they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(ii) The financial statements (including any notes thereto)
contained in Occidental's SEC Reports were prepared in accordance with
GAAP throughout the periods indicated (except as may be indicated in
the notes thereto and except that financial statements included with
quarterly reports on Form 10-Q do not contain all GAAP notes to such
financial statements) and each fairly presents the consolidated (or
combined, as applicable) financial position, results of operations and
changes in stockholders' equity and cash flows of Occidental and its
subsidiaries as at the respective dates thereof and for the respective
periods indicated
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therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments).
(f) Absence of Certain Changes. Since December 31, 1996, (i)
Occidental and its Affiliates have not incurred any material liabilities or
obligations, fixed, contingent, accrued or otherwise, that relate to or are
allocable to its Subject Business and that have had or are reasonably
likely to have a Material Adverse Effect with respect to its Subject
Business, (ii) Occidental and its Affiliates have conducted its Subject
Business in all material respects in the ordinary course, consistent with
past practice, and (iii) no event, occurrence or other matter has occurred
that is reasonably likely to have a Material Adverse Effect with respect to
the Subject Business of Occidental, provided that this determination shall
be made without regard to any change in general economic or political
conditions or any change in raw materials prices, product prices, industry
capacity or other matter of industry-wide application that affects the
Partnership's Subject Business and Occidental's Subject Business in a
substantially similar way.
2.3 Representations and Warranties of Lyondell. Except as set forth on
Schedule 2.3, Lyondell represents and warrants to each other Party as follows:
(a) Organization, Good Standing and Power. Lyondell and each member
of its Group (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own, lease and operate its assets, (ii) is duly
authorized, qualified or licensed to do business as a foreign corporation
or other organization in, and is in good standing in, each of the
jurisdictions in which its right, title or interest in or to any of the
assets held by it requires such authorization, qualification or licensing,
except where the failure to be so authorized, qualified, licensed or in
good standing would not be reasonably likely to have a Material Adverse
Effect with respect to the Partnership's Subject Business, and (iii) has,
and in the case of the Related Agreements to be executed by it at or prior
to the Closing, will have, all requisite corporate power and authority, or
power and authority under its constituent documents, to enter into this
Agreement and, as applicable, the Related Agreements to which it is or will
be a party and to perform its obligations hereunder and thereunder.
(b) Authorization and Validity of Agreements.
(i) The execution, delivery and performance by Lyondell of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized and approved by all necessary
corporate or similar action on its part. This Agreement has been duly
and validly executed and delivered by Lyondell and is its legal, valid
and binding obligation, enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws related to or
affecting creditors' rights generally and by general equity
principles.
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(ii) The execution, delivery and performance by Lyondell and each
member of its Group of the Related Agreements to which it or any
member of its Group will be a party and the consummation by it and its
Group of the transactions contemplated thereby will be, as of the
Closing, duly authorized and approved by all necessary corporate or
similar action on its or their part. At the Closing, each of the
Related Agreements to which Lyondell or any member of its Group will
be a party will be duly and validly executed and delivered by Lyondell
or member and will be upon execution and delivery a legal, valid and
binding obligation, enforceable against it or such member in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and by
general equity principles.
(c) Lack of Conflicts. Except with respect to the HSR Act as set
forth in Section 4.1(d), each of the execution, delivery and performance by
Lyondell and each member of its Group of this Agreement and the Related
Agreements to which any of them is or will be a party and the consummation
by them of the transactions contemplated hereby and thereby does not and,
as of the Closing, will not (i) violate (with or without the giving of
notice or the lapse of time or both) any Legal Requirement applicable to
any of them or any of their Subsidiaries, other than those that would not
be reasonably likely to have a Material Adverse Effect with respect to
Lyondell, (ii) conflict with, or result in the breach of, any provision of
the charter or by-laws or similar governing or organizational documents of
any of them or any of their Subsidiaries, (iii) result in the creation of
any Encumbrance upon any of their assets, other than those contemplated by
this Agreement or any of the Related Agreements, or those that would not be
reasonably likely to have a Material Adverse Effect with respect to
Lyondell, or (iv) violate, conflict with or result in the breach or
termination of or otherwise give any other Person the right to terminate,
or constitute a default, event of default or an event which with notice,
lapse of time or both, would constitute a default or event of default under
the terms of, any contract, indenture, lease, mortgage, Government License
or other agreement or instrument to which any of them or any of their
Subsidiaries is a party or by which the properties or businesses of any of
them or any of their Subsidiaries are bound, except for violations,
conflicts, breaches, terminations and defaults that would not be reasonably
likely to have a Material Adverse Effect with respect to Lyondell.
(d) Certain Fees. Neither Lyondell nor any of its Affiliates nor any
of its officers, directors or employees, on behalf of it or such
Affiliates, has employed any broker or finder or incurred any other
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(e) Joint Proxy Statement. The Joint Proxy Statement was prepared in
all material respects in accordance with the requirements of the Securities
Act, or the Exchange Act, as the case may be, and the rules and regulations
thereunder, and, as of the date of the Stockholders' Meetings and insofar
as it relates to the Subject Business of Lyondell, did not
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contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(f) Title to Lyondell Units. Without giving effect to this Agreement
or the transactions contemplated hereby, Lyondell LP and Lyondell GP each
owns the number of Units set forth in Section 2.1 of the Partnership
Agreement opposite its name. Except as contemplated by this Agreement,
there are no outstanding subscriptions, options, convertible securities,
warrants or calls of any kind issued or granted by, or binding upon, the
Partnership or any member of the Lyondell Group to purchase or otherwise
acquire or to sell or otherwise dispose of any security of or equity
interest in the Partnership.
2.4 Representations and Warranties of Millennium. Except as set forth on
Schedule 2.4, Millennium represents and warrants to each other Party as follows:
(a) Organization, Good Standing and Power. Millennium and each
member of its Group (i) is a corporation or a limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the corporate
power and authority or power under its constituent documents to own, lease
and operate its assets, (ii) is duly authorized, qualified or licensed to
do business as a foreign corporation or other organization in, and is in
good standing in, each of the jurisdictions in which its right, title or
interest in or to any of the assets held by it requires such authorization,
qualification or licensing, except where the failure to be so authorized,
qualified, licensed or in good standing would not be reasonably likely to
have a Material Adverse Effect with respect to the Partnership's Subject
Business, and (iii) has, and in the case of the Related Agreements to be
executed by it at or prior to the Closing, will have, all requisite
corporate power and authority, or power and authority under its constituent
documents, to enter into this Agreement and, as applicable, the Related
Agreements to which it is or will be a party and to perform its obligations
hereunder and thereunder.
(b) Authorization and Validity of Agreements.
(i) The execution, delivery and performance by Millennium of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized and approved by all necessary
corporate or similar action on its part. This Agreement has been duly
and validly executed and delivered by Millennium and is its legal,
valid and binding obligation, enforceable against it in accordance
with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
related to or affecting creditors' rights generally and by general
equity principles.
(ii) The execution, delivery and performance by Millennium and
each member of its Group of the Related Agreements to which it or any
member of its Group will be a party and the consummation by it and its
Group of the transactions
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contemplated thereby will be, as of the Closing, duly authorized and
approved by all necessary corporate or similar action on its or their
part. At the Closing, each of the Related Agreements to which
Millennium or any member of its Group will be a party will be duly and
validly executed and delivered by Millennium or member and will be
upon execution and delivery a legal, valid and binding obligation,
enforceable against it or such member in accordance with its terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws related to or
affecting creditors' rights generally and by general equity
principles.
(c) Lack of Conflicts. Except with respect to the HSR Act as set
forth in Section 4.1(d), each of the execution, delivery and performance by
Millennium and each member of its Group of this Agreement and the Related
Agreements to which any of them is or will be a party and the consummation
by them of the transactions contemplated hereby and thereby does not and,
as of the Closing, will not (i) violate (with or without the giving of
notice or the lapse of time or both) any Legal Requirement applicable to
any of them or any of their Subsidiaries, other than those that would not
be reasonably likely to have a Material Adverse Effect with respect to
Millennium, (ii) conflict with, or result in the breach of, any provision
of the charter or by-laws of any of them or any of their Subsidiaries,
(iii) result in the creation of any Encumbrance upon any of their assets,
other than those contemplated by this Agreement or any of the Related
Agreements, or those that would not be reasonably likely to have a Material
Adverse Effect with respect to Millennium, or (iv) violate, conflict with
or result in the breach or termination of or otherwise give any other
Person the right to terminate, or constitute a default, event of default or
an event which with notice, lapse of time or both, would constitute a
default or event of default under the terms of, any contract, indenture,
lease, mortgage, Government License or other agreement or instrument to
which any of them or any of their Subsidiaries is a party or by which the
properties or businesses of any of them or any of their Subsidiaries are
bound, except for violations, conflicts, breaches, terminations and
defaults that would not be reasonably likely to have a Material Adverse
Effect with respect to Millennium.
(d) Certain Fees. Neither Millennium nor any of its Affiliates nor any
of its officers, directors or employees, on behalf of it or such
Affiliates, has employed any broker or finder or incurred any other
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(e) Joint Proxy Statement. The Joint Proxy Statement was prepared in
all material respects in accordance with the requirements of the Securities
Act, or the Exchange Act, as the case may be, and the rules and regulations
thereunder, and, as of the date of the Stockholders' Meetings and insofar
as it relates to the Subject Business of Millennium, did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
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(f) Title to Millennium Units. Without giving effect to this Agreement
or the transactions contemplated hereby, Millennium LP and Millennium GP
each owns the number of Units set forth in Section 2.1 of the Partnership
Agreement opposite its name. Except as contemplated by this Agreement,
there are no outstanding subscriptions, options, convertible securities,
warrants or calls of any kind issued or granted by, or binding upon, the
Partnership or any member of the Millennium Group to purchase or otherwise
acquire or to sell or otherwise dispose of any security of or equity
interest in the Partnership.
SECTION 3
ADDITIONAL AGREEMENTS
3.1 Access to Information. Each of Occidental and the Partnership agrees
that, during the period commencing on the date hereof and ending at the Closing,
(i) it will give or cause to be given to any other Party and its representatives
reasonable access during normal business hours to the offices, plants,
properties, books and records relating to its Subject Business as such other
Party may reasonably request, (ii) it will furnish or cause to be furnished to
any other Party, such financial and operating data and any other information
with respect to the business and properties of its Subject Business as such
other Party may reasonably request (provided such data and information need only
be furnished to the extent it was prepared in the ordinary course) and (iii) any
other Party and its representatives shall be entitled to reasonable access
during normal business hours to the representatives, officers, employees and
contractors of such Party who are involved in its Subject Business as such other
Party may reasonably request; provided, that Lyondell and Millennium also agree
to the foregoing provisions to the extent that any of the foregoing remain in
their possession and have not been transferred to the Partnership; provided,
further that, after consultation, to the extent permissible, with such other
Party, such Party may restrict access and provision of information to the extent
it reasonably believes necessary to (w) comply with existing confidentiality
agreements with third parties (provided that, upon such other Party's reasonable
request, it shall use its commercially reasonable efforts to secure waivers of
any such confidentiality agreements), (x) ensure compliance with antitrust laws,
(y) preserve the secrecy of confidential information to the extent not related
to its Subject Business and (z) preserve legal privilege; and provided, further
that any access or information obtained by any Party and its representatives in
accordance with this Section 3.1 and otherwise in connection with the
consummation of the transactions contemplated by this Agreement and the Related
Agreements shall be subject to the terms and conditions of the Confidentiality
Agreement.
3.2 Conduct of the Occidental Subject Business Pending the Closing Date.
Occidental agrees that, except as required or contemplated by this Agreement or
otherwise consented to or approved in writing by the Partnership, during the
period commencing on the date hereof and ending on the Closing Date, it will and
will cause its Affiliates to:
(a) use its commercially reasonable efforts to operate and maintain
its Subject Business in all material respects only in the usual, regular
and ordinary manner consistent with past practice (including undertaking
scheduled or necessary "turnarounds" or other
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maintenance work and including offsite storage, treatment and disposal of
chemical substances generated prior to the Closing) and, to the extent
consistent with such operation and maintenance, use commercially reasonable
efforts to preserve the present business organization of its Subject
Business intact, keep available the services of, and good relations with,
the present employees and preserve present relationships with all persons
having business dealings with its Subject Business, except in each case for
such matters that, individually and in the aggregate, do not and are not
reasonably likely to have a Material Adverse Effect on its Subject
Business;
(b) maintain its books, accounts and records relating to its Subject
Business in the usual, regular and ordinary manner, on a basis consistent
with past practice, comply in all material respects with all Legal
Requirements and contractual obligations applicable to its Subject Business
or to the conduct of its Subject Business and perform all of its material
obligations relating to its Subject Business;
(c) not (i) modify or change in any material respect any of its
Contributed Assets or dispose of any material Contributed Asset except for
(A) inventory, equipment, supplies and other Contributed Assets sold or
otherwise disposed of in the ordinary course of business and (B) any
Contributed Assets that in the ordinary course of business are replaced
with substantially similar Contributed Assets, (ii) except in the ordinary
course of business after consultation with the Partnership, (x) enter into
any contract, commitment or agreement that would be material to the
operation of its Subject Business or use of the Contributed Assets or,
except as expressly contemplated by this Agreement or expressly
contemplated by or required pursuant to their respective terms, modify or
change in any material respect any obligation under any such contract,
commitment or agreement, (y) modify or change in any material respect any
obligation under its Government Licenses, (z) modify or change in any
material respect the manner in which the products produced by its Subject
Business are marketed and sold, or (iii) enter into interest rate
protection or other hedging agreements (except for hydrocarbon hedging
agreements entered into in the ordinary course and expiring prior to
December 31, 1998) relating to its Subject Business;
(d) not waive any material claims or rights relating to its Subject
Business;
(e) after obtaining Knowledge thereof, give notice to the Partnership
of any claim or litigation (threatened or instituted) or any other event or
occurrence which could reasonably be expected to have a Material Adverse
Effect on its Contributed Assets or Subject Business, other than the types
of events, occurrences or other matters referred to in the proviso set
forth in Section 2.2(f)(iii);
(f) not take any action that is reasonably likely to result in its
representations and warranties in Section 2 hereof, or in the form of
Occidental Contribution Agreement, not being true in all material respects
as of the Closing Date; and
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(g) not agree, whether in writing or otherwise, to take any action it
has agreed pursuant to this Section 3.2 not to take;
provided, however, that notwithstanding anything to the contrary contained in
this Section 3.2, prior to the Closing Date the Occidental Group and the
Partnership will act independently of each other in making decisions as to the
research and development, raw materials, manufacturing, pricing, marketing and
distribution of their products. It is acknowledged by the Parties that the
Originator Receivables Sale Agreement dated as of October 27, 1998, by and among
Occidental Receivables Inc., OCC and other parties, has been terminated with
respect to Oxy Petrochemicals.
3.3 Conduct of the Partnership Subject Business Pending the Closing Date.
The Partnership agrees that, except as required or contemplated by approvals or
authorizations (including the Strategic Plan) by or of the Partnership
Governance Committee prior to the date hereof or by this Agreement (including,
without limitation, Schedule 3.3 hereto) or otherwise consented to or approved
in writing by Occidental, during the period commencing on the date hereof and
ending on the Closing Date, it will and will cause its Affiliates to:
(a) use its commercially reasonable efforts to operate and maintain
its Subject Business in all material respects only in a usual, regular and
ordinary manner consistent with the Strategic Plan (including undertaking
scheduled or necessary "turnarounds" or other maintenance work and
including offsite storage, treatment and disposal of chemical substances
generated prior to the Closing) and, to the extent consistent with such
operation and maintenance, use commercially reasonable efforts to preserve
the present business organization of its Subject Business intact, keep
available the services of, and good relations with, the present employees
and preserve present relationships with all persons having business
dealings with its Subject Business, except in each case for such matters
that, individually and in the aggregate, do not and are not reasonably
likely to have a Material Adverse Effect on its Subject Business;
(b) maintain its books, accounts and records relating to its Subject
Business in the usual, regular and ordinary manner, comply in all material
respects with all Legal Requirements and contractual obligations applicable
to its Subject Business or to the conduct of its Subject Business and
perform all of its material obligations relating to its Subject Business;
(c) not (i) modify or change in any material respect any of its assets
or dispose of any material asset except for (A) inventory, equipment,
supplies and other assets sold or otherwise disposed of in the ordinary
course of business and (B) any assets that in the ordinary course of
business are replaced with substantially similar assets, (ii) except in the
ordinary course of business after consultation with Occidental, (x) enter
into any contract, commitment or agreement that would be material to the
operation of its Subject Business or use of its assets or, except as
expressly contemplated by this Agreement or expressly contemplated by or
required pursuant to their respective terms, modify or change in any
material respect any obligation under any such contract, commitment or
agreement,
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(y) modify or change in any material respect any obligation under its
Government Licenses, (z) modify or change in any material respect the
manner in which the products produced by its Subject Business are marketed
and sold, or (iii) enter into interest rate protection or other hedging
agreements (except for hydrocarbon hedging agreements entered into in the
ordinary course and expiring prior to December 31, 1998) relating to its
Subject Business; provided, that, for purposes of (i) and (ii), "material"
shall mean a change or modification that is subject to the unanimous voting
requirement of Section 6.7 of the Partnership Agreement;
(d) not waive any material claims or rights relating to its Subject
Business;
(e) after obtaining Knowledge thereof, give notice to Occidental of
any claim or litigation (threatened or instituted) or any other event or
occurrence which could reasonably be expected to have a Material Adverse
Effect on its assets or Subject Business, other than the types of events,
occurrences or other matters referred to in the proviso set forth in
Section 2.1(f)(iii);
(f) not take any action that is reasonably likely to result in its
representations and warranties in Section 2 hereof not being true in all
material respects as of the Closing Date;
(g) not to make any distributions that are not in compliance with
Section 3.1 of the Partnership Agreement; and
(h) not agree, whether in writing or otherwise, to take any action it
has agreed pursuant to this Section 3.3 not to take;
provided, however, that notwithstanding anything to the contrary contained in
this Section 3.3, prior to the Closing Date the Occidental Group and the
Partnership will act independently of each other in making decisions as to the
research and development, raw materials, manufacturing, pricing, marketing and
distribution of their products.
3.4 Further Actions.
(a) Each Party will use its commercially reasonable efforts to take,
or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to resolve the objections, if
any, as may be asserted by any Authority with respect to the transactions
contemplated hereby under any antitrust laws or regulations; provided that
no Party shall be required to take any action that could have any material
adverse effect on its or its Affiliates' business, operations, prospects,
assets, condition (financial or otherwise) or results of operations or that
would, or would be reasonably likely to, materially frustrate the financial
or other business benefits reasonably expected to be derived by any Party
from the transactions contemplated by this Agreement.
(b) Subject to the terms and conditions hereof, each Party agrees to
act in good faith and to use its commercially reasonable efforts to take,
or cause to be taken, all actions
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and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement and under the Related Agreements to be entered into by such Party
or its Affiliates at Closing, and to confirm that such transactions have
been accomplished, including without limitation, using all commercially
reasonable efforts: (i) to obtain and effect prior to the Closing Date all
necessary Consents and Filings; and (ii) to, in the case of Occidental,
obtain prior to the Closing Date all Government Licenses or consents to the
transfer of any Government Licenses that are transferable by it or its
Affiliates necessary to consummate the transactions contemplated hereby and
by the Related Agreements and to allow for the prudent and uninterrupted
operation of the Subject Business by the Partnership after the Closing.
Each Party shall furnish to the other Party and its Affiliates such
necessary information and assistance as the other may reasonably request in
connection with its preparation of any such Filings or other materials
required in connection with the foregoing.
(c) Occidental shall use its commercially reasonable efforts to
procure all Consents that are necessary to transfer its Subject Business to
the Partnership. Notwithstanding any other provision of this Agreement to
the contrary, the Parties hereto acknowledge and agree that at the Closing
Occidental or any Occidental Partner, as applicable, will not assign to the
Partnership any Contract or warranties which by their terms require Consent
from any other contracting party thereto unless any such Consent has been
obtained prior to the Closing Date. Before the Closing, the other Parties
and the Partnership will use their commercially reasonable efforts and
cooperate with Occidental and the Occidental Partners (together, the
"Contracting Party") in obtaining any necessary Consents to the assignment
of the Contracts, including, without limitation, by furnishing to the
Contracting Party or other parties to any Contract summary financial
information and other information with respect to the Partnership
reasonably requested by the Contracting Party or such other parties and
taking any such other actions (which, subject to any provisions to the
contrary included in any Related Agreement, shall not include the
incurrence of any expense not otherwise required to be incurred) as the
Contracting Party or such other parties may reasonably request for the
purpose of obtaining any releases, waivers or terminations as the
Contracting Party may reasonably request on behalf of itself or any
Affiliate. No representation is made by the Contracting Party with respect
to whether any Consent to assign a Contract will be obtainable, and in no
event shall the initial capital contributions be subject to reduction as a
result of any Contract not being assigned to the Partnership at the Closing
by virtue of the necessary Consent not being obtained. Following the
Closing, the Partnership, Occidental and the Occidental Partners shall
cooperate with each other and use commercially reasonable efforts to obtain
those Consents that were not obtained prior to the Closing and (i) if such
Consents are obtained following the Closing, Occidental and the Occidental
Partners shall execute and deliver any other and further instruments of
assignment, assumption, transfer and conveyance and take such other and
further action as the Partnership may request in order to assign to the
Partnership any Contract or warranties to which such Consents relate and
(ii) pending such transfer or issuance to the Partnership, shall provide,
to the extent it may lawfully do so, the Partnership with the benefits of
any such Contracts, in which case, as provided for in the Occidental
Contribution Agreement, the
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Partnership shall promptly assume and discharge (or reimburse Occidental or
its Affiliate for) all obligations and liabilities associated with the
benefits of such Contracts so made available to the Partnership.
(d) Occidental shall keep each other Party fully informed from time to
time as any other Party shall reasonably request as to the status of all
Consents being sought by Occidental or a Occidental Partner pursuant to
Section 3.4(c).
(e) Each Party shall furnish to the other Party such information,
cooperation and assistance as reasonably may be requested in connection
with the foregoing.
(f) Each Party shall negotiate and otherwise act in good faith to
complete, execute and deliver the Related Agreements at the Closing and to
effect the Closing at the earliest practicable date.
3.5 Notifications. Each Party shall notify the other Parties and keep
them advised as to (i) any litigation or administrative proceeding that is
either pending or, to its Knowledge, threatened against such Party which
challenges the transactions contemplated hereby; (ii) in the case of the
Partnership or Occidental, any material damage to or destruction of its Subject
Business and (iii) any fact of which such Party has Knowledge that indicates
that any condition to Closing is reasonably likely not to be satisfied in a
timely fashion.
3.6 Employee Matters.
(a) Substantially all employees of Occidental, OCC, Oxy Petrochemicals
or one of the Occidental Partners who are associated primarily with
Occidental's Subject Business shall be offered employment with the
Partnership pursuant to the terms of the Occidental Contribution Agreement.
(b) The Partnership shall provide benefits to such employees who
become employees of the Partnership under the benefit plans and programs of
the Partnership upon employment with the Partnership, subject to the more
specific provisions of the Occidental Contribution Agreement.
(c) No provision of this Agreement shall require OCC, Oxy
Petrochemicals or any of the Occidental Partners to fail to comply with the
terms of any current collective bargaining agreement.
3.7 Partnership Unanimous Consent Items. No action that requires the
consent of Representatives of both Lyondell and Millennium pursuant to Section
6.7 of the Partnership Agreement shall be taken prior to the Closing without the
consent of Occidental (other than actions regarding this Agreement and the
transactions contemplated hereby).
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SECTION 4
CONDITIONS TO CLOSING
4.1 Conditions Precedent to Obligations of All Parties. The respective
obligations of the Parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of each of the following conditions:
(a) No Injunction, etc. No preliminary or permanent injunction or
other order issued by any federal or state court of competent jurisdiction
in the United States or by any United States federal or state governmental
or regulatory body or any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state governmental
authority shall be in effect which materially restrains, enjoins or
otherwise prohibits (i) the transactions contemplated hereby; (ii) the
ownership by the Partnership (including enjoyment of any rights relating
thereto) of its Subject Business or Occidental's Subject Business at and
after the Closing; or (iii) the operation by the Partnership of its Subject
Business or Occidental's Subject Business at and after the Closing; and no
Proceeding seeking any such injunction or order shall be pending; provided,
that before any determination is made to the effect that this condition has
not been satisfied, each Party shall each use commercially reasonable
efforts to have such order or injunction lifted, vacated or dismissed.
(b) Tier 2 Related Agreements. The Parties shall have reached
agreement with respect to definitive execution forms of the Tier 2 Related
Agreements in accordance with Section 1.2.
(c) Government Licenses and Consents. Occidental shall have obtained
and effected all Government Licenses and Consents required from any
Authority for the consummation of the transactions contemplated hereunder
and under the Related Agreements to be entered into at the Closing and
required to allow for the prudent and uninterrupted operation of its
Subject Business by the Partnership after the Closing in a manner
consistent with past practices, except for those Government Licenses and
Consents, the absence of which is not, in the aggregate, reasonably likely
to have a Material Adverse Effect with respect to Occidental's Subject
Business.
(d) HSR Act. The waiting period applicable to the Closing under the
HSR Act shall have expired or been terminated, and no consent, approval,
permit or authorization in connection therewith shall impose terms or
conditions that would have, or would be reasonably likely to have, a
material adverse effect on any Party (assuming the Closing has taken place)
or that would, or would be reasonably likely to, materially frustrate the
financial or other business benefits reasonably expected to be derived by
any Party from the transactions contemplated by this Agreement.
4.2 Conditions Precedent to Obligations of the Partnership. The
obligations of the Partnership under this Agreement are subject to the
satisfaction (or waiver by the Partnership) on or prior to the Closing Date of
each of the following conditions:
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(a) Accuracy of Representations and Warranties. Notwithstanding any
investigation, inspection or evaluation conducted or notice or Knowledge
obtained by any member of the Equistar Group, all representations and
warranties of members of the Occidental Group contained in this Agreement
and the Related Agreements that contain qualifications and exceptions
relating to materiality or Material Adverse Effect shall be true and
correct on and as of the Closing Date, and all other representations and
warranties of the members of such Group contained in such agreements shall
be true and correct in all material respects as of the Closing Date.
(b) Performance of Agreements. Occidental and its Affiliates shall
in all material respects have performed and complied with all obligations
and agreements contained in this Agreement, and executed all agreements and
documents (including the Tier 1 Related Agreements and the Tier 2 Related
Agreements) to be performed, complied with or executed by it or them on or
prior to the Closing Date.
(c) No Material Adverse Change. After the date of this Agreement, no
event, occurrence or other matter shall have occurred that is reasonably
likely to have a Material Adverse Effect with respect to Occidental's
Subject Business, provided that this determination shall be made without
regard to any change in general economic or political conditions or any
change in raw materials prices, product prices, industry capacity or other
matter of industry-wide application that affects the Partnership's Subject
Business and Occidental's Subject Business in a substantially similar way.
(d) Officer's Certificates. The Partnership shall have received a
certificate, dated the Closing Date, signed by the President or a Vice
President of Occidental to the effect that, to the Knowledge of Occidental,
the conditions specified in the above paragraphs have been fulfilled.
4.3 Conditions Precedent to Obligations of Occidental. The obligations of
Occidental under this Agreement are subject to the satisfaction (or waiver by
Occidental) on or prior to the Closing Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. Notwithstanding any
investigation, inspection or evaluation conducted or notice or Knowledge
obtained by any member of the Occidental Group, all representations and
warranties of the Partnership and of members of the Lyondell Group and the
Millennium Group contained in this Agreement and the Related Agreements
that contain qualifications and exceptions relating to materiality or
Material Adverse Effect shall be true and correct on and as of the Closing
Date, and all other representations and warranties of such Persons
contained in such agreements shall be true and correct in all material
respects as of the Closing Date.
(b) Performance of Agreements. Each of the Partnership, Lyondell and
its Affiliates and Millennium and its Affiliates shall in all material
respects have performed and complied with all obligations and agreements
contained in this Agreement, and executed all
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agreements and documents (including the Tier 1 Related Agreements and the
Tier 2 Related Agreements) to be performed, complied with or executed by it
or them on or prior to the Closing Date.
(c) No Material Adverse Change. After the date of this Agreement, no
event, occurrence or other matter shall have occurred that is reasonably
likely to have a Material Adverse Effect with respect to the Partnership's
Subject Business, provided that this determination shall be made without
regard to any change in general economic or political conditions or any
change in raw materials prices, product prices, industry capacity or other
matter of industry-wide application that affects the Partnership's Subject
Business and Occidental's Subject Business in a substantially similar way.
(d) Board of Directors Approval. This Agreement and the Tier 1
Related Agreements, and the transactions contemplated by such agreements,
shall have been duly authorized and approved by Occidental's board of
directors.
(e) Officer's Certificates. Occidental shall have received
certificates, dated the Closing Date, signed by the President or a Vice
President of each of the Partnership, Lyondell and Millennium to the effect
that, to the Knowledge of such Party, the conditions specified in the above
paragraphs have been fulfilled; provided, that, with respect to the
conditions set forth in Sections 4.3(a) and 4.3(b), such certificates shall
only concern the accuracy of representations and warranties and performance
of agreements of the Partnership, the Lyondell Group and the Millennium
Group, respectively.
(f) Third Party Consents. All Consents of any third party listed on
Schedule 4.3(f) shall have been obtained.
SECTION 5
TERMINATION AND WAIVER
5.1 General. This Agreement may be terminated and the transactions
contemplated herein and in the Related Agreements may be abandoned at any time
prior to the Closing:
(a) by the written consent of the Parties;
(b) by the Partnership, by notice to Occidental, if there has been a
material misrepresentation or a breach of an agreement by Occidental in
this Agreement that (i) if such misrepresentation or breach existed on the
Closing Date, would constitute a failure to satisfy the conditions to
Closing set forth in Section 4.2(b) and (ii) has not been cured and cannot
reasonably be cured within 30 days after all other conditions to Closing
have been satisfied;
(c) by Occidental, by notice to the Partnership, if there has been a
material misrepresentation or a breach of an agreement by any of the
Partnership, Lyondell or
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Millennium in this Agreement that (i) if such misrepresentation or breach
existed on the Closing Date, would constitute a failure to satisfy the
conditions to Closing set forth in Section 4.3(b) and (ii) has not been
cured and cannot reasonably be cured within 30 days after all other
conditions to Closing have been satisfied;
(d) by any Party, by notice to each other Party, if after the date
hereof and prior to the Closing any final, non-appealable order or
injunction shall be issued by any federal or state court of competent
jurisdiction in the United States or by any United States Authority, or any
Legal Requirement shall be promulgated or enacted by any United States
Authority, that would have the effect of prohibiting or making unlawful the
performance of this Agreement, the execution, delivery or performance of
any Related Agreement or the consummation of the Closing; and
(e) by any Party, by notice to each other Party, in the event that,
for any reason, the Closing does not occur on or before December 31, 1998;
provided, however, that if the Closing does not occur due to the act or
omission of one of the Parties, that Party may not terminate this Agreement
pursuant to the provisions of this Section 5.1(e).
5.2 Effect of Termination. In the event of any termination of this
Agreement as provided above, this Agreement shall forthwith become wholly void
and of no further force and effect and there shall be no liability on the part
of any Party, its Subsidiaries or their respective officers or directors;
provided, however, that upon any such termination the obligations of the Parties
with respect to this Section 5, expenses under Section 6.10 and confidentiality
under Section 6.6 shall remain in full force and effect; and provided, further,
that nothing herein will relieve any party from liability for damages for any
breach of this Agreement.
SECTION 6
MISCELLANEOUS
6.1 Successors and Assigns. Except as may be expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the successors
of all of the Parties. No Party may otherwise assign or delegate any of its
rights or obligations under this Agreement without the prior written consent of
all of the other Parties, which consent shall be in the sole and absolute
discretion of each such Party. Any purported assignment or delegation without
such consent shall be void and ineffective.
6.2 Benefits of Agreement Restricted to Parties. This Agreement is made
solely for the benefit of the Parties, and no other Person (including employees)
shall have any right, claim or cause of action under or by virtue of this
Agreement.
6.3 Notices. All notices, requests and other communications that are
required or may be given under this Agreement shall, unless otherwise provided
for elsewhere in this Agreement, be in writing and shall be deemed to have been
duly given if and when (i) transmitted by telecopier
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facsimile with proof of confirmation from the transmitting machine or (ii)
delivered by commercial courier or other hand delivery, as follows:
Equistar Chemicals, LP: Occidental Petroleum Corporation:
Gerald A. O'Brien 10889 Wilshire Boulevard
Vice President and Secretary Los Angeles, California 90024
Equistar Chemicals, LP Attention: President
1221 McKinney Street Telecopy Number: (310) 443-6977
Houston, Texas 77010
Telecopy Number: (713) 309-4718
with a copy to: with a copy to:
Baker & Botts, L.L.P. Occidental Petroleum Corporation
910 Louisiana Street 10889 Wilshire Boulevard
Houston, Texas 77002 Los Angeles, California 90024
Attention: Stephen A. Massad Attention: General Counsel
Telecopy Number: (713) 229-1522 Telecopy Number: (310) 443-6333
Lyondell Petrochemical Company: Millennium Chemicals Inc.:
Kerry A. Galvin George H. Hempstead, III
Chief Corporate Counsel and Senior Vice President,
Corporate Secretary Law and Administration and Secretary
Lyondell Petrochemical Company Millennium Chemicals Inc.
1221 McKinney Street 99 Wood Avenue South
Houston, Texas 77010 Iselin, New Jersey 08830
Telecopy Number: (713) 309-4718 Telecopy Number: 908-603-6857
6.4 Severability. In the event that any provision of this Agreement shall
finally be determined to be unlawful, such provision shall, so long as the
economic and legal substance of the transactions contemplated hereby is not
affected in any materially adverse manner as to any of the Parties, be deemed
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
6.5 Press Releases. Unless otherwise mutually agreed, no Party shall make
or authorize any public release of information regarding the matters
contemplated by, or any provisions or terms of, this Agreement or the Related
Agreements, and Occidental shall not make or authorize any public release of
information regarding the Partnership, except (i) that a press release or press
releases in mutually agreed upon form or forms shall be issued by the Parties as
promptly as is practicable following the execution of this Agreement, (ii) that
the Parties may, after consultation with each other, communicate with employees,
customers, suppliers, stockholders, lenders, lessors, and other particular
groups as may be necessary or appropriate and not inconsistent with the prompt
consummation of the transactions contemplated by this Agreement and (iii) after
consultation with
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each other, as required by law or stock exchange rule or as necessary for the
assertion or enforcement of contractual rights.
6.6 Confidentiality Agreement. Lyondell, on behalf of the Partnership,
and Occidental have heretofore entered into the Confidentiality Agreement
relating to the exchange between Lyondell and the Partnership, on the one hand,
and Occidental and the Occidental Partners, on the other hand, of certain
confidential information related or otherwise pertinent to the transactions
contemplated by this Agreement. Nothing in this Agreement shall be construed as
impairing or otherwise limiting the obligations assumed pursuant to the
Confidentiality Agreement by the parties thereto. The Confidentiality Agreement
shall remain in full force and effect in accordance with its terms until the
earlier of Closing or its expiration date. The Partnership and Millennium shall
be bound by, and shall be entitled to the benefits of, such Confidentiality
Agreement to the same extent as if they were parties thereto.
6.7 Construction. In construing this Agreement, the following principles
shall be followed: (i) no consideration shall be given to the captions of the
articles, sections, subsections or clauses, which are inserted for convenience
in locating the provisions of this Agreement and not as an aid in construction;
(ii) no consideration shall be given to the fact or presumption that any of the
Parties had a greater or lesser hand in drafting this Agreement; (iii) examples
shall not be construed to limit, expressly or by implication, the matter they
illustrate; (iv) the word "includes" and its syntactic variants mean "includes,
but is not limited to" and corresponding syntactic variant expressions; (v) the
plural shall be deemed to include the singular, and vice versa; (vi) each gender
shall be deemed to include the other genders; (vii) each exhibit, appendix,
attachment and schedule to this Agreement is a part of this Agreement; and
(viii) any reference herein or in any schedule hereto to any agreements entered
into prior to the date hereof shall include any amendments or supplements made
thereto.
6.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
6.9 Governing Law. The laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement without giving effect
to any conflicts of law principles.
6.10 Transaction Costs.
(a) Subject to subsection (b) and Section 2.8 of the Occidental
Contribution Agreement, and except as provided on Schedule 6.10, all
reasonable out-of-pocket costs, fees and expenses incurred at any time by
any Party in connection with the negotiation, execution and delivery of
this Agreement, the satisfaction of the conditions to Closing under this
Agreement and the consummation of the transactions contemplated hereby
shall be reimbursed by the Partnership (if the cost, fee or expense was
incurred by a Party other than the Partnership) and if incurred or
reimbursed by the Partnership shall be shared by Lyondell, Millennium and
Occidental pro rata in accordance with the relative interests to be held by
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their Subsidiaries in the Partnership after Closing; provided, however,
that if any one expense item or series of directly related expenses exceeds
$5 million, all of such expense or expenses in excess of such $5 million
shall be paid by the Party incurring such expense.
(b) Notwithstanding the foregoing, each Party shall be solely
responsible for and bear all of its own respective costs, fees and expenses
if this Agreement is terminated and the Closing does not occur.
6.11 Amendment. All waivers, modifications, amendments or alterations of
this Agreement shall require the written approval of each of the Parties.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including any investigation by or on behalf of any Party, shall be
deemed to constitute a waiver by the Party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein and in
any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any Party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
6.12 Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE UNDER OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER RELATED HERETO
SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF DELAWARE, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES TO THIS
AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO THIS AGREEMENT SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE, AND
EACH OF THE PARTIES TO THIS AGREEMENT SHALL MAINTAIN THE APPOINTMENT OF SUCH
AGENT (OR A SUBSTITUTE AGENT) FROM THE DATE HEREOF UNTIL THE EARLIER OF THE
CLOSING DATE OR THE TERMINATION OF THIS AGREEMENT AND SATISFACTION OF ALL
OBLIGATIONS HEREUNDER. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS
OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO
SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED
ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE
PARTIES HERETO. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED ON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS.
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6.13 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND INTENTIONALLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
6.14 Action by the Partnership. Any determination (including as to the
satisfaction of any and all conditions precedent to the obligations of the
Partnership set forth in Section 4.2 of this Agreement), consent, approval,
waiver, other action or right to be made, given, taken or exercised by the
Partnership pursuant to or as contemplated by this Agreement shall be subject to
the Partnership Governance Committee unanimous voting requirements set forth in
Section 6.7 of the Partnership Agreement; provided, however, that the
Partnership's exercise of its right of termination set forth in Section 5.1(b)
of this Agreement shall only require the approval of either two or more
Representatives of Lyondell or two or more Representatives of Millennium, acting
separately.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Master Transaction Agreement has been executed on
behalf of each of the Parties, by their respective officers thereunto duly
authorized, effective as of the date first written above.
EQUISTAR CHEMICALS, LP
By: /s/ Eugene R. Allspach
-----------------------------------------
Name: Eugene R. Allspach
Title: President and Chief Operating
Officer
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ S.P. Dominick, Jr.
-----------------------------------------
Name: S.P. Dominick, Jr.
Title: Vice President and Controller
LYONDELL PETROCHEMICAL COMPANY
By: /s/ Dan F. Smith
-----------------------------------------
Name: Dan F. Smith
Title: Chief Executive Officer
MILLENNIUM CHEMICALS INC.
By: /s/ George H. Hempstead, III
-----------------------------------------
Name: George H. Hempstead, III
Title: Senior Vice President
[Signature Page to Master Transaction Agreement]
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APPENDIX A
TO
MASTER TRANSACTION AGREEMENT
DEFINITIONS
-----------
"Affiliate" shall mean any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified; provided, however, that for purposes of this
Agreement (i) Canadian Occidental Petroleum Ltd. and any entities controlled by
it shall not be considered an Affiliate of the Occidental Group, (ii) Suburban
Propane Partners, L.P. and any entities controlled by it shall not be considered
an Affiliate of the Millennium Group, (iii) neither the Partnership nor any
entity controlled by it shall be considered an Affiliate of the Occidental
Group, the Lyondell Group or the Millennium Group, (iv) no member of the
Occidental Group, the Lyondell Group or the Millennium Group shall be considered
an Affiliate of the Partnership and (v) the Partnership shall not be considered
an Affiliate of any member of the Occidental Group, the Lyondell Group or the
Millennium Group. For purposes of this definition, the term "control" shall
have the meaning set forth in 17 CFR 230.405, as in effect on the date hereof.
"Agreement" shall mean this Master Transaction Agreement entered into between
the Parties as of the date hereof.
"Amended and Restated Partnership Agreement" shall mean that certain Amended and
Restated Partnership Agreement of the Partnership to be executed and delivered
at the Closing in substantially the form attached hereto as Exhibit A.
"Assumed Liabilities" shall have the meaning assigned to such term in the
Occidental Contribution Agreement.
"Authority" shall mean any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, department or instrumentality thereof, or any court or
arbitrator (public or private).
"Business Day" shall mean any day other than a Saturday, Sunday or other day on
which banks are closed in New York City, New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Closing" shall have the meaning set forth in the seventh WHEREAS clause of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 1.3.
A-1
<PAGE>
"Confidentiality Agreement" shall mean that certain Confidentiality Agreement
dated December 11, 1997 between Lyondell and Occidental.
"Consent" shall mean any consent, waiver, approval, authorization, exemption,
registration, license or declaration of or by any other Person or any Authority,
or any expiration or termination of any applicable waiting period under any
Legal Requirement, required with respect to any Party or any party to the
Related Agreements in connection with (i) the execution and delivery of this
Agreement or any of the Related Agreements or (ii) the consummation of any of
the transactions provided for hereby or thereby.
"Contracts" shall have the meaning assigned to such term in the Occidental
Contribution Agreement.
"Contributed Assets" shall have the meaning assigned to the term "Assets" in the
Occidental Contribution Agreement.
"Encumbrance" shall mean any lien, charge, encumbrance, security interest, title
defect, option or any other restriction or third-party right.
"ERISA" shall mean the Employee Retirement Income Security Act, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Equistar Group" shall mean the Partnership, the Initial Partners, Lyondell,
Millennium and Millennium Petrochemicals.
"Filing" shall mean any filing with any Person or any Authority required with
respect to any Party in connection with (i) the execution and delivery of this
Agreement or any of the Related Agreements or (ii) the consummation of any of
the transactions provided for hereby or thereby.
"GAAP" shall have the meaning set forth in Section 2.1(e).
"Government License" shall have the meaning assigned to such term in the
Occidental Contribution Agreement.
"Group" shall mean the Equistar Group, the Occidental Group, the Lyondell Group
or the Millennium Group, as appropriate.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Initial Master Transaction Agreement" shall mean the Master Transaction
Agreement dated July 25, 1997, between Lyondell and Millennium, as amended.
"Initial Partners" shall mean Lyondell LP, Lyondell GP, Millennium LP and
Millennium GP.
A-2
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"Joint Proxy Statement" shall mean the Joint Proxy Statement of Lyondell and
Millennium dated October 17, 1997.
"Knowledge" shall mean with respect to any Party the actual knowledge of (i) any
current plant manager, (ii) any current officer of such Party having
responsibilities with respect to an applicable Subject Business or the
transactions contemplated in this Agreement, (iii) in the case of Occidental,
any current officer of OCC, Oxy Petrochemicals or of an Occidental Partner
having responsibilities with respect to Occidental's Subject Business or the
transactions contemplated in this Agreement, and (iv) any current employee
reporting directly to an officer described in clause (ii) or (iii).
"Legal Requirement" shall mean any law, statute, rule, ordinance, decree,
regulation, requirement, order or judgment of any Authority including the terms
of any Government License.
"Lyondell" shall have the meaning set forth in the first paragraph of this
Agreement.
"Lyondell Asset Contribution Agreement" shall mean that certain Asset
Contribution Agreement dated December 1, 1997, to which Lyondell and the
Partnership are parties.
"Lyondell GP" shall mean Lyondell Petrochemical G.P. Inc., a Delaware
corporation and a wholly owned Subsidiary of Lyondell.
"Lyondell Group" shall mean Lyondell, Lyondell LP and Lyondell GP.
"Lyondell LP" shall mean Lyondell Petrochemical L.P. Inc., a Delaware
corporation and a wholly owned Subsidiary of Lyondell.
"Lyondell Note" shall mean that certain promissory note in the aggregate
principal amount of $345 million dated December 1, 1997 payable to the
Partnership by Lyondell LP.
"Material Adverse Effect" shall mean any adverse circumstance or consequence
that, individually or in the aggregate, has an effect that is material to the
financial condition, results of operations, assets or business of the applicable
Party or Subject Business (taken as a whole), as the case may be.
"Millennium" shall have the meaning set forth in the first paragraph of this
Agreement.
"Millennium Asset Contribution Agreement" shall mean that certain Asset
Contribution Agreement dated December 1, 1997, to which Millennium
Petrochemicals and the Partnership are parties.
"Millennium GP" shall mean Millennium GP LLC, a Delaware limited liability
company and an indirect, wholly owned Subsidiary of Millennium.
"Millennium Group" shall mean Millennium, Millennium Petrochemicals, Millennium
LP and Millennium GP.
A-3
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"Millennium LP" shall mean Millennium LP LLC, a Delaware limited liability
company and an indirect, wholly owned Subsidiary of Millennium.
"Millennium Petrochemicals" shall have the meaning set forth in the third
WHEREAS clause of this Agreement.
"Occidental" shall have the meaning set forth in the first paragraph of this
Agreement.
"Occidental Contribution Agreement" shall mean that certain Agreement and Plan
of Merger and Asset Contribution between the Occidental Partners, Oxy
Petrochemicals and the Partnership to be executed and delivered at the Closing
in substantially the form attached hereto as Exhibit B.
"Occidental Assumed Debt" shall mean the Lease Intended for Security, dated
December 18, 1991, among OCC, the institutions listed on Schedule I thereto,
Norwest Bank Minnesota, National Association, as Agent and Chemical Bank and the
Bank of Nova Scotia, as Information Agents, and having an amount outstanding as
of the date of this Agreement of $205 million.
"Occidental Group" shall mean Occidental, OCC, Oxy CH, and the Occidental
Partners and, prior to the Closing, Oxy Petrochemicals.
"Occidental Partners" shall mean PDG Chemical, OCC Sub and Oxy CH Sub.
"OCC" shall have the meaning set forth in the fourth WHEREAS clause of this
Agreement.
"OCC Sub" shall have the meaning set forth in the fourth WHEREAS clause.
"Oxy CH" shall have the meaning set forth in the fourth WHEREAS clause of this
Agreement.
"Oxy CH Sub" shall have the meaning set forth in the fourth WHEREAS clause of
this Agreement.
"Oxy Petrochemicals" shall have the meaning set forth in Section 1.5(d).
"Parties" shall have the meaning set forth in the seventh WHEREAS clause of this
Agreement.
"Partnership" shall have the meaning set forth in the first paragraph of this
Agreement.
"Partnership Agreement" shall mean the Agreement of Limited Partnership of the
Partnership dated October 10, 1997.
"Partnership Governance Committee" shall mean the "Partnership Governance
Committee" as defined in the Partnership Agreement.
"PDG Chemical" shall have the meaning set forth in the fourth WHEREAS clause of
this Agreement.
A-4
<PAGE>
"Person" shall mean any natural person, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization.
"Proceeding" shall mean any action, suit, claim or legal, administrative or
arbitration proceeding or governmental investigation to which any Party or an
Affiliate is a party.
"Related Agreements" shall mean the Tier 1 Related Agreements and the Tier 2
Related Agreements.
"Representatives" shall mean the "Representatives," as defined in the
Partnership Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 2.2.(e).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders' Meetings" shall mean the special stockholders meetings of each of
Lyondell and Millennium held November 20, 1997.
"Strategic Plan" shall mean the Five-Year Strategic Plan adopted by the
Partnership Governance Committee, as amended and modified prior to the date
hereof pursuant to action of the Partnership Governance Committee, as set forth
in minutes of their meetings.
"Subject Business" shall mean (i) in the case of Occidental, the "Contributed
Business" as defined in the Occidental Contribution Agreement, including the
Contributed Assets and the Assumed Liabilities related thereto; (ii) in the case
of each of Lyondell and Millennium, their respective "Contributed Businesses" as
defined in their respective Asset Contribution Agreements dated December 1,
1997; and (iii) in the case of the Partnership, the business of the Partnership,
which consists substantially of the Subject Business of Lyondell and Millennium.
"Subsidiary" shall mean, with respect to any Party, any Person of which such
Party, either directly or indirectly, owns 50% or more of the equity or voting
interests, except, in the case of Lyondell, Lyondell-CITGO Refining Company Ltd.
and Equistar Chemicals, LP.
"Tier 1 Related Agreements" shall mean those agreements so designated on
Appendix B, forms of each of which (including forms of the exhibits and certain
of the schedules thereto current as of the dates indicated therein), are
attached hereto as Exhibits.
"Tier 2 Related Agreements" shall mean those agreements so designated on
Appendix B (including Appendix B-2), descriptions of certain terms of which are
included thereon.
"Unit" shall mean a unit representing a partnership interest in the Partnership.
A-5
<PAGE>
APPENDIX B
TO
MASTER TRANSACTION AGREEMENT
LIST OF RELATED AGREEMENTS
--------------------------
Tier 1 Related Agreements
1. Amended and Restated Agreement of Limited Partnership
2. Agreement and Plan of Merger and Asset Contribution among the Occidental
Partners, Oxy Petrochemicals and the Partnership
3. Amended and Restated Parent Agreement
4. Sales Agreement (Ethylene)
Tier 2 Related Agreements
1. Agreements the form of which is an exhibit to the Occidental Agreement
and Plan of Merger and Contribution.
2. Operating Agreement by and between the Partnership and OCC.
3. Tolling Processing Agreement by and between the Partnership and OCC.
4. Amended and Restated Indemnity Agreement among OCC, PDG Chemical, Oxy
Petrochemicals, OCC Sub, Oxy CH Sub, Lyondell GP, Lyondell LP,
Millennium GP, Millennium LP and Millennium America Inc., a Delaware
corporation, amending and restating the Indemnity Agreement, dated
December 1, 1997.
5. Agreement between OCC and the Partnership obligating OCC to provide a
guarantee for the collection of $419,700,000 of Partnership debt and
obligating the Partnership to extend or refinance such debt for a term
at least equivalent to the term of such guarantee.
6. Agreement between OCC and the Partnership obligating the Partnership to
prepay or restructure the Occidental Assumed Debt within an agreed
period of time.
7. Promissory Note for $419,700,000 of the Partnership payable to Oxy CH
Sub.
B-1
<PAGE>
8. Promissory Note for $75 million of the Partnership payable to Millennium
LP.
9. Agreement for Assumption of Lease Intended for Security dated December
18, 1991 ($205 million).
10. Assignment and Assumption Agreement related to Lease Intended for
Security dated March 28,1994 (Pitney Bowes).
11. Agreement regarding termination of Lyondell guaranty of certain
Partnership railcar leases.
12. Sublease by OCC to the Partnership related to 1990 railcar lease.
13. Sublease by Oxy Petrochemicals to the Partnership related to 1995
railcar lease.
14. Tax Indemnity Agreement between OCC and the Partnership related to the
1990 railcar sublease.
15. Tax Indemnity Agreement between Oxy Petrochemicals and the Partnership
related to the 1995 railcar sublease.
16. Master Arbitration Amendment to Related Agreements.
17. First Amendment to Lyondell Asset Contribution Agreement.
18. First Amendment to Millennium Asset Contribution Agreement.
19. Transition Services Agreement between the Partnership and OCC.
20. Pipeline Acquisition Agreement between OCC and the Partnership related
to the Cyclohexane pipeline.
B-2
<PAGE>
SCHEDULE 2.1
TO
MASTER TRANSACTION AGREEMENT
EXCEPTIONS TO REPRESENTATIONS
AND WARRANTIES OF THE PARTNERSHIP
---------------------------------
None.
<PAGE>
SCHEDULE 2.2
TO
MASTER TRANSACTION AGREEMENT
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES OF OCCIDENTAL
----------------------------------------------------------
None.
<PAGE>
SCHEDULE 2.3
TO
MASTER TRANSACTION AGREEMENT
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES OF LYONDELL
--------------------------------------------------------
None.
<PAGE>
SCHEDULE 2.4
TO
MASTER TRANSACTION AGREEMENT
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES OF MILLENNIUM
----------------------------------------------------------
None.
<PAGE>
SCHEDULE 3.3
TO
MASTER TRANSACTION AGREEMENT
SELECTED CAPITAL PROJECTS AND CEILING EXPENDITURES
--------------------------------------------------
EQUISTAR CHEMICALS, LP
CAPITAL EXPENDITURE SUMMARY
AMOUNTS IN MILLIONS
1998 1999 2000 2001 2002
-------------------------------------
Petrochemicals (1):
Asset Maintenance $ 18 $ 22 $ 34 $ 34 $ 34
HS&E 10 10 10 10 10
Profit generating - minor 13 17 24 24 34
Profit generating - major 72 66 90 121 67
-------------------------------------
Total 113 115 158 189 145
-------------------------------------
Polymers (2):
Asset maintenance $ 7 $ 10 $ 12 $ 16 $ 14
HS&E 10 10 13 13 13
Profit generating - minor 11 16 24 20 23
Profit generating - major 59 111 40 47 35
-------------------------------------
Total 87 147 89 96 85
-------------------------------------
Other 4 4 4 4 4
-------------------------------------
Total capital expenditures $ 204 $ 266 $ 251 $ 289 $ 234
=====================================
Lyondell $ 223 $ 139 $ 128 $ 207 $ 143
Millennium 82 140 181 147 91
Synergies (101) (13) (58) (65) -
-------------------------------------
Total capital expenditures $ 204 $ 266 $ 251 $ 289 $ 234
=====================================
(1) The $25 petrochemical capital reduction for 1998 and 1999 was $12 and $13
for asset maintenance and profit generating - minor, respectively.
(2) The $25 polymer capital reduction for 1998 and 1999 was $2, $3 and $20 for
asset maintenance, HS&E and profit generating - minor, respectively.
<PAGE>
EQUISTAR CHEMICALS, LP
SUMMARY OF MAJOR PROFIT GENERATING PROJECTS
PETROCHEMICALS
AMOUNTS IN MILLIONS
1998 1999 2000 2001 2002
-------------------------------------
Lyondell:
JOV (33%) - - 30 65 65
Feed frac - - 20 53 -
AOF engineering study 15 5 - - -
BT debottleneck 7 15 - - -
BD debottleneck - - 8 - -
C3 = pumping upgrade 2 - - - -
BD pipeline connection - 2 - - -
Aspentech 3 4 2 1 -
C2 = pipeline to LA 50 - - - -
-------------------------------------
77 26 60 119 65
-------------------------------------
Lyondell synergies:
C3 = pipeline conn 5 - - - -
Accelerate Bd projects 5 3 (8) - -
Delete ethylene pipeline to LA (50) - - - -
C5 debottleneck 5 - - - -
-------------------------------------
(35) 3 (8) - -
-------------------------------------
Lyondell 42 29 52 119 65
-------------------------------------
Millennium:
Ethylene debottleneck - Morris 5 6 - - -
Ethylene debottleneck - Clinton - - 11 - -
JOV - 30 65 65 -
ARU recycle rerouting - LaPorte - 1 7 - -
MCS upgrade - - - 2 2
-------------------------------------
5 37 83 67 2
-------------------------------------
Millennium synergies:
JOV (30) (65) (65)
QE1 feed flex 25 30 20
-------------------------------------
25 - (45) (65) -
-------------------------------------
Millennium 30 37 38 2 2
-------------------------------------
Petrochemicals $ 72 $ 66 $ 90 $ 121 $ 67
=====================================
<PAGE>
EQUISTAR CHEMICALS, LP
SUMMARY OF MAJOR PROFIT GENERATING PROJECTS
POLYMERS
AMOUNTS IN MILLIONS
1998 1999 2000 2001 2002
-------------------------------------
Lyondell:
MTO line 4/Original spending 62 37 - - -
Future major projects - - - 20 10
Victoria expansion/pipeline 20 3 - - -
Comm Development/Tech 1 1 5 5 5
Research center 9 9 - - -
-------------------------------------
92 50 5 25 15
-------------------------------------
Lyondell synergies:
MTO line 4/pipeline (25) 46 10 - -
Research center (9) (9) - - -
-------------------------------------
(34) 37 10 - -
-------------------------------------
Lyondell 58 87 15 25 15
-------------------------------------
Millennium:
LDPE High EVA expansion 1 10 4 - -
LDPE debottleneck - Pt Arthur - 2 5 1 -
PP supported catalyst - Morris - 4 1 - -
LDPE silo vent emissions - Pt Arthur - - 2 8 -
LDPE silo vent emissions - Clinton - - 3 3 -
LLDPE metallocene license - - 10 - -
Mid size projects - 8 10 10 20
-------------------------------------
1 24 35 22 20
-------------------------------------
Millennium synergies:
LLDPE metallocene license - - (10) -
-------------------------------------
- - (10) - -
-------------------------------------
Millennium 1 24 25 22 20
-------------------------------------
Polymers $ 59 $ 111 $ 40 $ 47 $ 35
=====================================
<PAGE>
SCHEDULE 4.3(F)
TO
MASTER TRANSACTION AGREEMENT
THIRD PARTY CONSENTS AS CONDITIONS PRECEDENT TO CLOSING
-------------------------------------------------------
(OCCIDENTAL)
Any consent required in connection with the following:
1. Lease Intended for Security, dated as of December 18, 1991, among
Occidental Chemical Corporation, as Lessee, The Institutions Listed on
Schedule I thereto, as Lessors, Norwest Bank Minnesota, N.A., as Agent and
Chemical Bank and The Bank of Nova Scotia, as Information Agents, as
amended.
2. Lease Intended for Security, dated as of March 28, 1994, between Occidental
Chemical Corporation as Lessee and Pitney Bowes Credit Corporation, as
Lessor.
3. Partnership Agreement, dated as of April 30, 1987, by and among PDG
Acquisition Company, E. I. du Pont de Nemours and Company and PPG Chemicals
Inc., as amended.
4. Lease Agreement, dated as of April 30, 1987 between PPG Industries, Inc.
and PD Glycol.
<PAGE>
SCHEDULE 6.10
TO
TO MASTER TRANSACTION AGREEMENT
CERTAIN EXPENSES
----------------
Each Party shall bear (i) all investment banking fees and disbursements
incurred by it and (ii) all costs, fees and expenses incurred by it in
connection with obtaining consents or waivers from holders of indebtedness for
borrowed money of such Party or its Affiliates.
Costs incurred pursuant to that certain joint retention letter agreement
between Arnold & Porter, Occidental Chemical Corporation and Equistar Chemicals,
LP dated December 17, 1997 shall be borne by the parties as provided for
therein.
<PAGE>
EXHIBIT 10.2
AMENDED AND RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
EQUISTAR CHEMICALS, LP
- --------------------------------------------------------------------------------
ORGANIZED UNDER THE DELAWARE
REVISED UNIFORM LIMITED PARTNERSHIP ACT
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
SECTION 1 ORGANIZATION MATTERS.................................................... 2
1.1 Formation of Partnership; Amended and Restated Agreement................. 2
1.2 Name..................................................................... 2
1.3 Business Offices......................................................... 2
1.4 Purpose and Business..................................................... 2
1.5 Filings.................................................................. 3
1.6 Power of Attorney........................................................ 3
1.7 Term..................................................................... 3
SECTION 2 CAPITAL CONTRIBUTIONS................................................... 4
2.1 Acquisition of Units; Holdings of Initial Partners....................... 4
2.2 Transaction Costs........................................................ 4
2.3 Property Contributions................................................... 4
2.4 Other Contributions...................................................... 5
2.5 Capital Accounts......................................................... 5
2.6 No Return of or on Capital............................................... 6
2.7 Partner Loans............................................................ 6
2.8 Administration and Investment of Funds................................... 6
SECTION 3 DISTRIBUTIONS........................................................... 6
3.1 Operating Distributions.................................................. 6
3.2 Liquidating Distributions................................................ 7
3.3 Withholding.............................................................. 7
3.4 Offset................................................................... 8
SECTION 4 BOOK AND TAX ALLOCATIONS................................................ 8
4.1 General Book Allocations................................................. 8
4.2 Change in Partner's Units................................................ 9
4.3 Deficit Capital Account and Nonrecourse Debt Rules....................... 9
4.4 Federal Tax Allocations.................................................. 11
4.5 Other Tax Allocations.................................................... 12
SECTION 5 ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS......................... 12
5.1 Fiscal Year.............................................................. 12
5.2 Method of Accounting for Financial Reporting Purposes.................... 12
5.3 Books and Records; Right of Partners to Audit............................ 12
5.4 Reports and Financial Statements......................................... 12
5.5 Method of Accounting for Book and Tax Purposes........................... 13
5.6 Taxation................................................................. 13
5.7 Delegation............................................................... 15
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 6 MANAGEMENT.............................................................. 15
6.1 Partnership Governance Committee......................................... 15
6.2 Limitations on Authority of General Partners............................. 16
6.3 Lack of Authority of Persons Other Than General Partners and Officers.... 16
6.4 Composition of Partnership Governance Committee.......................... 17
6.5 Partnership Governance Committee Meetings................................ 18
6.6 Partnership Governance Committee Quorum and General Voting
Requirement............................................................. 19
6.7 Partnership Governance Committee Unanimous Voting Requirements........... 19
6.8 Control of Interested Partner Issues..................................... 22
6.9 Auxiliary Committees..................................................... 23
6.10 Certain Limitations on Partner Representatives.......................... 23
SECTION 7 OFFICERS AND EMPLOYEES.................................................. 24
7.1 Partnership Officers..................................................... 24
7.2 Selection and Term of Executive Officers................................. 24
7.3 Removal of Executive Officers............................................ 25
7.4 Duties................................................................... 25
7.5 CEO...................................................................... 26
7.6 Other Officers........................................................... 26
7.7 Secretary................................................................ 27
7.8 Salaries................................................................. 27
7.9 Delegation............................................................... 27
7.10 Employee Hirings........................................................ 27
7.11 General Authority....................................................... 27
SECTION 8 STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS............................... 28
8.1 Strategic Plan........................................................... 28
8.2 Annual Budget............................................................ 28
8.3 Funding of Partnership Expenses.......................................... 29
8.4 Implementation of Budgets and Discretionary Expenditures by CEO.......... 29
8.5 Strategic Plan Deadlock.................................................. 30
8.6 Loans.................................................................... 30
SECTION 9 RIGHTS OF PARTNERS...................................................... 32
9.1 Delegation and Contracts with Related Parties............................ 32
9.2 General Authority........................................................ 32
9.3 Limitation on Fiduciary Duty; Non-Competition............................ 33
9.4 Limited Partners......................................................... 35
9.5 Partner Covenants........................................................ 35
9.6 Special Purpose Entities................................................. 35
SECTION 10 TRANSFERS AND PLEDGES................................................... 36
10.1 Restrictions on Transfer and Prohibition on Pledge....................... 36
10.2 Right of First Option.................................................... 36
10.3 Inclusion of General or Limited Partner Units............................ 38
</TABLE>
-ii-
<PAGE>
<TABLE>
<C> <S> <C>
10.4 Rights of Transferee..................................................... 38
10.5 Effective Date of Transfer............................................... 38
10.6 Transfer to Wholly Owned Affiliate....................................... 39
10.7 Invalid Transfer......................................................... 39
SECTION 11 DEFAULT................................................................. 39
11.1 Default.................................................................. 39
11.2 Remedies for Default..................................................... 40
11.3 Purchase of Defaulting Partners' Units................................... 41
11.4 Liquidation.............................................................. 41
11.5 Certain Consequences of Default.......................................... 42
SECTION 12 DISSOLUTION, LIQUIDATION AND TERMINATION................................ 42
12.1 Dissolution and Termination.............................................. 42
12.2 Procedures Upon Dissolution.............................................. 42
12.3 Termination of the Partnership........................................... 44
12.4 Asset and Liability Statement............................................ 44
SECTION 13 MISCELLANEOUS........................................................... 44
13.1 Confidentiality and Use of Information................................... 44
13.2 Indemnification.......................................................... 45
13.3 Third Party Claim Reimbursement.......................................... 48
13.4 Dispute Resolution....................................................... 49
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION, ETC.................. 49
13.6 Further Assurances....................................................... 49
13.7 Successors and Assigns................................................... 49
13.8 Benefits of Agreement Restricted to the Parties.......................... 49
13.9 Notices.................................................................. 49
13.10 [Reserved].............................................................. 50
13.11 Severability............................................................ 50
13.12 Construction............................................................ 50
13.13 Counterparts............................................................ 50
13.14 Waiver of Right to Partition............................................ 51
13.15 Governing Law........................................................... 51
13.16 Jurisdiction; Consent to Service of Process; Waiver..................... 51
13.17 Expenses................................................................ 51
13.18 Waiver of Jury Trial.................................................... 51
13.19 Payment Terms and Interest Calculations................................. 51
13.20 Usury Savings Clause.................................................... 52
13.21 Other Waivers........................................................... 52
13.22 Special Joinder by Millennium America................................... 52
13.23 Amendment............................................................... 52
SECTION 14 LAKE CHARLES FACILITY................................................... 53
14.1 Lease Not in Force and Effect........................................... 53
</TABLE>
-iii-
<PAGE>
<TABLE>
<C> <S> <C>
14.2 LC Partnership Provisions............................................... 53
14.3 No Rebuilding Termination............................................... 54
14.4 Other Redemption........................................................ 54
</TABLE>
APPENDICES
APPENDIX A - Defined Terms
APPENDIX B - Partnership Financial Statements and Reports
APPENDIX C - Executive Officers
APPENDIX D - Dispute Resolution Procedures
APPENDIX E - Division of Partnership Business
SCHEDULES
Schedule 2.3(d) - Capital Accounts
-iv-
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
EQUISTAR CHEMICALS, LP
This Amended and Restated Limited Partnership Agreement of Equistar
Chemicals, LP dated May 15, 1998 is entered into by and among Lyondell
Petrochemical G.P. Inc., a Delaware corporation ("Lyondell GP"), Lyondell
Petrochemical L.P. Inc., a Delaware corporation ("Lyondell LP"), Millennium
Petrochemicals GP LLC, a Delaware limited liability company ("Millennium GP"),
Millennium Petrochemicals LP LLC, a Delaware limited liability company
("Millennium LP"), PDG Chemical Inc., a Delaware corporation ("Occidental GP"),
Occidental Petrochem Partner 1, Inc., a Delaware corporation ("Occidental
LP1"), and Occidental Petrochem Partner 2, Inc., a Delaware corporation
("Occidental LP2," and together with Occidental LP1, "Occidental LP").
The definitions of capitalized terms used in this Agreement, including the
appendices hereto, are set forth in Appendix A hereto.
WHEREAS, Lyondell GP, Lyondell LP, Millennium GP and Millennium LP
(together, the "Initial Partners") entered into the Limited Partnership
Agreement of Equistar Chemicals, LP dated October 10, 1997 (the "Initial
Agreement"), pursuant to the Initial Master Transaction Agreement between
Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"), the
ultimate parent entity of each of Lyondell GP and Lyondell LP, and Millennium
Chemicals Inc., a Delaware corporation ("Millennium"), the ultimate parent
entity of each of Millennium GP and Millennium LP;
WHEREAS, the Initial Partners contributed their Initial Assets to the
Partnership on the Initial Closing Date and the Initial Related Agreements
relating to the Partnership and their Contributed Businesses were entered into,
all as provided in the Initial Master Transaction Agreement;
WHEREAS, the Partnership, Occidental Petroleum Corporation , a Delaware
corporation ("Occidental"), the ultimate parent entity of each of Occidental GP,
Occidental LP1 and Occidental LP2 (together, the "Occidental Partners"),
Lyondell and Millennium have entered into the Master Transaction Agreement dated
May 15, 1998 (the "Second Master Transaction Agreement"), which provides, among
other things, for the admission of Occidental GP as a general partner of the
Partnership and of each of Occidental LP1 and Occidental LP2 as a limited
partner of the Partnership, subject to and upon the terms and conditions set
forth therein; and
WHEREAS, simultaneous with the execution and delivery of this Agreement,
(i) the Occidental Partners are contributing to the Partnership their Initial
Assets and Contributed Business in accordance with the Occidental Contribution
Agreement (which involves, in the case of Occidental LP2, the merger of Oxy
Petrochemicals and the Partnership, with the Partnership as the surviving
entity); (ii) Lyondell, Millennium, Occidental and certain Occidental Affiliates
are entering
<PAGE>
into the Amended and Restated Parent Agreement and (iii) the Additional Related
Agreements are being entered into;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties hereto, it is hereby agreed as follows:
SECTION 1
ORGANIZATION MATTERS
--------------------
1.1 Formation of Partnership; Amended and Restated Agreement. The
Certificate of Limited Partnership was filed with the Secretary of State of the
State of Delaware on October 17, 1997. The Initial Agreement was entered into
October 10, 1997. The Partners desire to enter into this Agreement which amends
and restates the Initial Agreement and constitutes the limited partnership
agreement of the Partnership as of the date hereof. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. Without the need for the consent of any other Person, upon the execution
of this Agreement by each of the parties hereto, (i) Occidental GP is hereby
admitted to the Partnership as a general partner of the Partnership, (ii)
Occidental LP1 is hereby admitted to the Partnership as a limited partner of the
Partnership and (iii) Occidental LP2 is hereby admitted to the Partnership as a
limited partner of the Partnership. Subject to the restrictions set forth in
this Agreement, the Partnership shall have the power to exercise all the powers
and privileges granted by this Agreement and by the Act, together with any
powers incidental thereto, so far as such powers and privileges are necessary,
appropriate, convenient or incidental for the conduct, promotion or attainment
of the purposes of the Partnership.
1.2 Name. The name of the Partnership is "Equistar Chemicals, LP" The
Partnership's business may be conducted under such name or any other name or
names deemed advisable by the Partnership Governance Committee. The General
Partners will comply or cause the Partnership to comply with all applicable laws
and other requirements relating to fictitious or assumed names.
1.3 Business Offices. The principal place of business of the Partnership
shall be 1221 McKinney Street, Houston, Texas 77010, or such other place as the
General Partners may from time to time determine. The registered agent of the
Partnership in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801.
1.4 Purpose and Business. The business of the Partnership shall be to,
directly or indirectly, (i) engage in the Specified Petrochemicals Businesses,
in the United States and internationally, including research and development,
purchasing, processing and disposing of feedstocks, and manufacturing,
marketing and distributing products, (ii) acquire and dispose of properties and
assets used or useful in connection with the foregoing and (iii) do all things
necessary, appropriate, convenient or incidental in connection with the
ownership, operation or financing of such business and activities, or otherwise
in connection with the foregoing, as are permitted under the Act, including the
acquisition and operation of the Contributed Businesses.
-2-
<PAGE>
1.5 Filings. The General Partners shall, or shall cause the Partnership
to, execute, swear to, acknowledge, deliver, file or record in public offices
and publish all such certificates, notices, statements or other instruments, and
take all such other actions, as may be required by law for the formation,
reformation, qualification, registration, operation or continuation of the
Partnership in any jurisdiction, to maintain the limited liability of the
Limited Partners, to preserve the Partnership's status as a partnership for tax
purposes or otherwise to comply with applicable law. Upon request of the
General Partners, the Limited Partners shall execute all such certificates and
other documents as may be necessary, in the sole judgment of the General
Partners, in order for the General Partners to accomplish all such executions,
swearings, acknowledgments, deliveries, filings, recordings in public offices,
publishings and other acts. Each General Partner hereby agrees and covenants
that it will execute any appropriate amendment to the Certificate of Limited
Partnership of the Partnership pursuant to Section 17-204 of the Act to reflect
any admission of a Substitute General Partner and of Occidental GP in accordance
with this Agreement.
1.6 Power of Attorney. Each Limited Partner hereby irrevocably makes,
constitutes and appoints its Affiliated General Partner and any successor
thereto permitted as provided herein, with full power of substitution and
resubstitution, as the true and lawful agent and attorney-in-fact of such
Limited Partner, with full power and authority in the name, place and stead of
such Limited Partner to execute, swear, acknowledge, deliver, file or record in
public offices and publish: (i) all certificates and other instruments
(including counterparts thereof) which such General Partner deems appropriate to
reflect any amendment, change or modification of or supplement to this Agreement
in accordance with the terms of this Agreement; (ii) all certificates and other
instruments and all amendments thereto which such General Partner deems
appropriate or necessary to form, qualify or continue the Partnership in any
jurisdiction, to maintain the limited liability of such Limited Partner, to
preserve the Partnership's status as a partnership for tax purposes or otherwise
to comply with applicable law; and (iii) all conveyances and other instruments
or documents which such General Partner deems appropriate or necessary to
reflect the transfers or assignments of interests in, to or under, this
Agreement, including the Units, the dissolution, liquidation and termination of
the Partnership, and the distribution of assets of the Partnership in connection
therewith, pursuant to the terms of this Agreement.
Each Limited Partner hereby agrees to execute and deliver to its Affiliated
General Partner within five Business Days after receipt of a written request
therefor such other further statements of interest and holdings, designations,
powers of attorney and other instruments as such General Partner deems
necessary. The power of attorney granted herein is hereby declared irrevocable
and a power coupled with an interest, shall survive the bankruptcy, dissolution
or termination of such Limited Partner and shall extend to and be binding upon
such Limited Partner's successors and permitted assigns. Each Limited Partner
hereby (i) agrees to be bound by any representations made by the agent and
attorney-in-fact acting in good faith pursuant to such power of attorney; and
(ii) waives any and all defenses which may be available to contest, negate, or
disaffirm any action of the agent and attorney-in-fact taken in accordance with
such power of attorney.
1.7 Term. The term for which the Partnership is to exist as a limited
partnership is from the date the Partnership's Certificate of Limited
Partnership was filed with the office of the Secretary
-3-
<PAGE>
of State of the State of Delaware through the dissolution of the Partnership in
accordance with the provisions of Section 12.
SECTION 2
CAPITAL CONTRIBUTIONS
2.1 Acquisition of Units; Holdings of Initial Partners. In exchange for
the contributions provided for in Section 2.3, Occidental LP1, Occidental LP2
and Occidental GP shall receive the Units set forth by their names below, and
effective on the date hereof, the Units shall be owned as follows:
PARTNER UNITS
Lyondell GP 820
Millennium GP 590
Occidental GP 295
Lyondell LP 40,180
Millennium LP 28,910
Occidental LP1 6,623
Occidental LP2 22,582
TOTAL 100,000
The Units shall entitle the holder to the distributions set forth in Section 3
and to the allocation of Profits, Losses and other items as set forth in Section
4. Units shall not be represented by certificates.
2.2 Transaction Costs. If the Partnership is entitled to deductions with
respect to costs described in either Section 6.10 of the Initial Master
Transaction Agreement or Section 6.10 of the Second Master Transaction
Agreement to which a Partner is not entitled to reimbursement, the incurrence of
such costs shall not increase the Capital Account of such a Partner, and such
Partner shall be entitled to any deductions attributable to such costs.
2.3 Property Contributions.
(a) Pursuant to their Contribution Agreement, on the date hereof,
Occidental LP1, Occidental LP2 and Occidental GP have contributed or caused to
be contributed to the Partnership, the Initial Assets contemplated thereby
subject to the Assumed Liabilities contemplated thereby (which involves, in the
case of Occidental LP2, the merger of Oxy Petrochemicals and the Partnership,
with the Partnership as the surviving entity).
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(b) The Partners intend that the contribution of assets subject to
liabilities heretofore made by the Partners to the Partnership and to be made
pursuant to Section 2.3(a) has qualified and will qualify as a tax-free
contribution under Section 721 of the Code in which no Partner has recognized or
will recognize gain or loss. The Partners agree that the Partnership will so
file its tax return, and each Partner agrees to file its tax return on the same
basis and to maintain such position consistently at all times thereafter.
(c) Immediately after the contributions by Occidental GP, Occidental LP1,
and Occidental LP2, the Capital Accounts of the Initial Partners shall be
adjusted so that each Partner's Capital Account would be the same per Unit as
that of every other Partner on the date hereof if on such date the principal and
accrued interest on the Lyondell Note were paid and the special capital
distributions accrued interest provided in Sections 3.1(e), (f), and (g) were
made.
(d) Schedule 2.3(d) sets forth the Capital Accounts of the Partners as if
the contributions and distributions referred to in Section 2.3(c) were made.
2.4 Other Contributions. From time to time and subject to the limitations
of Section 6.7, if applicable, the Partnership Governance Committee (or the CEO
acting pursuant to Section 8.3), on behalf of the Partnership, may issue a
written notice ("Funding Notice") to the Limited Partners calling for an
additional capital contribution to the Partnership. Any Funding Notice will set
forth:
(a) the use of funds therefor;
(b) the aggregate amount of the capital contribution required, which amount
shall be apportioned among the Limited Partners Pro Rata; and
(c) the date by which the capital contribution must be received by the
Partnership, which date will not be earlier than seven Business Days from the
date the Funding Notice is issued.
Each Limited Partner shall timely wire transfer its Pro Rata share of the amount
set forth in the Funding Notice to the Partnership's bank account. Except as
expressly set forth in this Agreement, no Partner shall be permitted or required
to make any additional capital contribution to the Partnership.
2.5 Capital Accounts. Each Partner's Capital Account shall be determined
and maintained in accordance with Regulation (S)1.704-1(b)(2)(iv) as reasonably
interpreted by the Tax Matters Partner. The Tax Matters Partner shall have the
discretion, after consultation with the other General Partners, to make those
determinations, valuations, adjustments and allocations with respect to each
Partner's Capital Account as it deems appropriate so that the allocations made
pursuant to this Agreement will have substantial economic effect as such term is
used in Regulation (S)1.704-1(b). If any Partner transfers all or a portion of
its Units in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent such Capital
Account relates to the transferred Units.
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2.6 No Return of or on Capital. Except as provided in Sections 3 and 4,
no Partner shall receive any interest or other return on its capital
contributions or on the balance in its Capital Account and no return of its
capital contributions.
2.7 Partner Loans. A Partner or its Affiliates may loan funds to the
Partnership on such terms and conditions as may be approved by the Partnership
Governance Committee, and, subject to other applicable law, have the same rights
and obligations with respect thereto as a Person who is neither a Partner nor an
Affiliate of a Partner. The existence of such a relationship and acting in such
a capacity will not result in a Limited Partner being deemed to be participating
in the control of the business of the Partnership or otherwise affect the
limited liability of a Partner. If a Partner or any Affiliate thereof is a
lender, in exercising its rights as a lender, including making its decision
whether to foreclose on property of the Partnership, such lender will have no
duty to consider (i) its status as a Partner or an Affiliate of a Partner, (ii)
the interests of the Partnership, or (iii) any duty it may have to any other
Partner or the Partnership.
2.8 Administration and Investment of Funds. The administration and
investment of Partnership funds shall be in accordance with the procedures and
guidelines as shall be adopted by the Partnership Governance Committee. The
Partnership may delegate to a third party (which may be an Affiliate of one of
the Partners) the responsibility for administering and investing Partnership
funds pursuant to such guidelines.
SECTION 3
DISTRIBUTIONS
-------------
3.1 Operating Distributions. Subject to Section 17-607 of the Act and
other applicable law, Available Net Operating Cash shall be distributed as soon
as practicable following the end of each month to the Partners as follows:
(a) General. On a cumulative basis from the date of the admission of
Occidental GP, Occidental LP1 and Occidental LP2, (i) distributions are to be
made to the Partners Pro Rata to the extent of cumulative Profits, and (ii) the
remaining distributions are to be made to the Limited Partners Pro Rata. For
simplicity, however, in the absence of extraordinary transactions, the
Partnership may make monthly distributions to the Partners Pro Rata, subject to
subsequent adjustments as provided below in this Section 3.1.
(b) Return of Excess Distributions. Within 90 days after the end of each
year, each General Partner shall return to the Partnership any amount it
receives for such year that is in excess of its share of the sum of the
cumulative undistributed Profits as of the end of the preceding year and the
Profits for such year.
(c) Effect of Operating Losses. For any year in which a General Partner's
share of a Loss is sustained that exceeds its previously undistributed Profits,
no distributions shall be made to such General Partner in any subsequent year
until such excess Loss is recouped, and for subsequent
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years only Profits in excess of such recoupment shall be treated as Profit for
purposes of this Section 3.1.
(d) Makeup Distributions. If for any reason the Partnership does not make
a monthly distribution to all Partners Pro Rata, each General Partner shall be
entitled at the end of the year to receive the amount necessary to make its
aggregate distributions for the year equal the amount it was entitled to receive
and keep pursuant to the preceding criteria.
(e) Lyondell Note Proceeds. All principal and interest received on the
Lyondell Note shall be distributed among the Initial Partners in the ratio of
the Units owned by them prior to the admission of the Occidental Partners.
(f) 1998 Credit Facility Proceeds. At such time as the Partnership enters
into the 1998 Credit Facility, the Partnership shall make a special distribution
to Millennium LP of $75 million, plus interest on such amounts from May 15,
1998, until such distribution at a per annum rate (based on a year of 360 days
and the number of days elapsed) equal to the LIBOR Rate plus 60 basis points
(.60%). The interest payments shall be treated as payment for the use of
capital to which section 707(c) of the Code applies.
(g) Bank Credit Agreement Proceeds. At such time as the Partnership enters
into the 1998 Credit Facility, the Partnership shall draw down the Bank Credit
Agreement Repayment Amount under the 1998 Credit Facility and shall apply the
Bank Credit Agreement Repayment Amount to the repayment of the principal amount
then outstanding under the Bank Credit Agreement. Two Business Days after such
repayment, the Partnership shall draw down $419,700,000 under the Bank Credit
Agreement and make a special distribution to Occidental LP2 of the $419,700,000
proceeds of such drawdown plus interest on such $419,700,000 from May 15, 1998
until the date of such distribution at a per annum rate (based on a year of 360
days and the number of days elapsed) equal to the LIBOR Rate plus 60 basis
points (.60%), provided that Occidental Chemical Corporation has executed the
Amended and Restated Indemnity Agreement. The interest payment shall be treated
as payment for the use of capital to which section 707(c) of the Code applies.
3.2 Liquidating Distributions. Distributions to the Partners of cash or
property arising from a liquidation of the Partnership shall be made in
accordance with the Capital Account balances of the Partners as provided in
Section 12.2(d).
3.3 Withholding. The Partnership is authorized to withhold from
distributions to a Partner and to pay over to a foreign, federal, state or local
government, any amounts required to be withheld pursuant to the Code or any
provisions of any other foreign, federal, state or local law. Any amounts so
withheld shall be treated as distributed to such Partner pursuant to this
Section 3 for all purposes of this Agreement, and shall be offset against any
amounts otherwise distributable to such Partner.
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3.4 Offset. Any amount otherwise distributable to a Partner pursuant to
this Section 3 shall, unless otherwise agreed by two Representatives of each of
the Nonconflicted General Partners pursuant to Section 6.8, be applied by the
Partnership to satisfy any of the following obligations that are owed by such
Partner or its Affiliate to the Partnership and that are not paid when due:
(a) Lyondell Note and Other Notes. In the case of Lyondell LP, the failure
to pay any interest or principal when due on the Lyondell Note or, in the case
of any Partner, the failure to pay any interest or principal when due on any
indebtedness for borrowed money of such Partner or any Affiliate of such Partner
to the Partnership.
(b) Contribution Agreement. In the case of any Partner, the failure of such
Partner or any Affiliate of such Partner to make any payment pursuant to Section
6 of its Contribution Agreement that has been Finally Determined to be due.
(c) Contribution. In the case of any Partner, the failure to make any
capital contribution required pursuant to this Agreement (other than pursuant to
its Contribution Agreement).
SECTION 4
BOOK AND TAX ALLOCATIONS
------------------------
4.1 General Book Allocations. This section controls partnership
allocations for book purposes. As used herein, "book" means the allocations
used to determine debits and credits to the Capital Accounts of the Partners and
to determine the amounts distributable to the Partners pursuant to Section 3 and
Section 12.2(d). It does not refer to the method in which books are maintained
for financial reporting purposes pursuant to Section 5.2. Except as otherwise
provided in Sections 4.2 and 4.3, Profits or Losses for book purposes shall be
allocated each year among the Partners Pro Rata, subject to the following:
(a) If the tax basis in Partnership assets is increased as a result of the
distribution of $75 million to Millennium LP as provided in Section 3.1(f), book
deductions equal to the tax deductions resulting from such increase shall be
allocated to Millennium LP until such time as gain or income is allocable under
(c) below.
(b) If the tax basis in Partnership assets is increased as a result of the
distribution of 43% of the proceeds of the Lyondell Note to Millennium LP, book
deductions equal to the tax deductions resulting from such increase shall be
allocated among the Initial Partners in the ratio of the Units owned by each
prior to the admission of the Occidental Partners until gain or income is
allocable under (c) below.
(c) If during any 12 month period the Partnership sells, distributes to
Partners, or otherwise disposes of more than 50% in value of the assets it owned
at the beginning of such period, gain or income recognized in the taxable period
of such sale, distribution or other disposition or thereafter recognized from
the sale, distribution, or other disposition of property or from the
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operation of other property shall be allocated to the Partners in the ratio in
which the aggregate amount of deductions described in (a) and (b) above were
allocated to the Partners until the aggregate amount of such gain and income so
allocated equals the aggregate amount of such deductions.
(d) Interest accruing on the Lyondell Note shall continue to be allocated
among the Initial Partners in the ratio of the Units owned by them prior to the
admission of the Occidental Partners.
(e) The initial agreed value of the Lease will be amortized ratably over
the term of the Lease, and the resulting deductions shall be allocated to
Occidental LP1. Any gain recognized on the disposition of the Lease shall be
allocated to Occidental LP1. If, prior to such disposition, the Partnership
has made capital improvements to such assets that have been borne by the
Partners Pro Rata, then upon the disposition of the Lease with such
improvements, gain shall be deemed to be attributable to such improvements to
the extent of the excess of its depreciated value for GAAP purposes at the time
of the disposition over its Book Value at such time, and such gain shall be
allocated to the Partners Pro Rata.
(f) Deductions attributable to the Book Value of the assets of the
Partnership as they exist immediately after the contributions described in
Section 2.3(a) other than the Lease will be allocated among the Partners other
than Occidental LP1 in the ratio of the Units owned by each, and any gain
recognized on the disposition of such contributed assets will be allocated to
the Partners other than Occidental LP1 in the ratio of the Units owned by each.
If, prior to disposition of such asset sale, the Partnership has made capital
improvements to such assets that have been borne by the Partners Pro Rata, then
upon the disposition of a contributed asset with such improvements, gain shall
be deemed to be attributable to such improvements to the extent of the excess of
its depreciated value for GAAP purposes at the time of disposition over its Book
Value at such time, and such gain shall be allocated to the Partners Pro Rata.
4.2 Change in Partner's Units. If during a year Units are transferred or
new Units issued, allocations among the Partners shall be made in accordance
with their interests in the Partnership from time to time during such year in
accordance with Section 706 of the Code, using the closing-of-the-books method,
except that depreciation and other amortization with respect to each Partnership
asset shall be deemed to accrue ratably on a daily basis over the entire period
during such year that the asset is owned and in service by the Partnership.
4.3 Deficit Capital Account and Nonrecourse Debt Rules. The special rules
in this Section 4.3 apply in the following order to take into account the
possibility of the Partners' having deficit Capital Account balances for which
they are not economically responsible and the effect of the Partnership's
incurring nonrecourse debt, directly or indirectly.
(a) Partnership Minimum Gain Chargeback. If there is a net decrease in
"partnership minimum gain" during any year, determined in accordance with the
tiered partnership rules of Regulation (S)1.704-2(k), each Partner shall be
allocated items of income and gain for such year equal to such Partner's share
of the net decrease in partnership minimum gain within the meaning of
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Regulation (S)1.704-2(g)(2), except to the extent not required by Regulation
(S)1.704-2(f). To the extent that this subsection (a) is inconsistent with
Regulation (S)1.704-2(f) or (S)1.704-2(k) or incomplete with respect to such
regulations, the minimum gain chargeback provided for herein shall be applied
and interpreted in accordance with such regulations.
(b) Partner Minimum Gain Chargeback. If there is a net decrease in
"partner nonrecourse debt minimum gain" during any year, within the meaning of
Regulation (S) 1.704-2(i)(2), each Partner who has a share of such gain,
determined in accordance with Regulation (S) 1.704-2(i)(5), shall be allocated
items of income and gain for such year (and, if necessary, subsequent years)
equal to such Partner's share of the net decrease in partner nonrecourse debt
minimum gain. To the extent that this subsection (b) is inconsistent with
Regulation (S) 1.704-2(i) or 1.704-2(k) or incomplete with respect to such
regulations, the partner nonrecourse debt minimum gain chargeback provided for
herein shall be applied and interpreted in accordance with such regulations.
(c) Deficit Account Chargeback and Qualified Income. If any Partner has an
Adjusted Capital Account Deficit at the end of any year, including an Adjusted
Capital Account Deficit for such Partner caused or increased by an adjustment,
allocation or distribution described in Regulation (S)1.704-1(b)(2)(ii)(d)(4),
(5) or (6), such Partner shall be allocated items of income and gain (consisting
of a pro rata portion of each item of Partnership income, including gross income
and gain) in an amount and manner sufficient to eliminate such Adjusted Capital
Account Deficit as quickly as possible. This subsection (c) is intended to
constitute a "qualified income offset" pursuant to Regulation (S)1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d) Partner Nonrecourse Deductions. Any partner nonrecourse deductions for
any year or other period shall be allocated to the Partner who bears the
economic risk of loss with respect to the partner nonrecourse debt to which such
partner nonrecourse deductions are attributable in accordance with Regulation
(S)1.704-2(i) or (S)1.704-2(k).
(e) Curative Allocations. The Allocations provided by this Section 4.3 may
not be consistent with the manner in which the Partners intend to divide
Profits, Losses and similar items. Accordingly, Profits, Losses and other items
will be reallocated among the Partners (in the same year and to the extent
necessary, in subsequent years) in a manner consistent with Regulation (S)1.704-
1(b) and 1.704-2 so as to prevent such allocations from distorting the manner in
which Profits, Losses and other items are intended to be allocated among the
Partners pursuant to Sections 4.1 and 4.2.
(f) Nonrecourse Debt Sharing. For purposes of this Agreement, nonrecourse
deductions, within the meaning of Regulation (S)1.704-2(b), shall be deemed to
be allocated among the Partners Pro Rata. Solely for purposes of determining a
Partner's proportionate share of the "excess nonrecourse liabilities" of the
Partnership within the meaning of Regulation (S)1.752-3(a)(3), Partnership
Profits are allocated to the Partners Pro Rata.
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4.4 Federal Tax Allocations.
-----------------------
(a) General Rule. Except as otherwise provided in the following paragraphs
of this Section 4.4, allocations for federal income tax purposes of items of
income, gain, loss and deduction, and credits and basis therefor, shall be made
in the same manner as book allocations are made.
(b) Elimination of Book/Tax Disparities. Taxable income and tax deductions
shall be shared among the Partners so as to take into account the variation
between the Book Value and the adjusted tax basis of each property at the time
it is contributed to the Partnership and at each time it is revalued.
(i) To account for such variation, effective as of the formation of
the Partnership:
(A) the depreciation and other deductions attributable to the
basis that the contributing Partner had in each property at the time
of contribution shall be allocated to such Partner, and
(B) upon disposition of a contributed property, the excess of its
Book Value at such time over its tax basis at such time shall be
allocated to the Partner who contributed the property.
(ii) If the Book Value of a Partnership property is revalued as of a
date subsequent to the date of its acquisition by the Partnership, the
portion of its Book Value at the time of its disposition that is
attributable to the increase resulting from such revaluation:
(A) shall be disregarded in applying Section 4.4(b)(i)(B) to the
partner who contributed such property, and
(B) shall be treated for purposes of this Section 4.4(b) as a
separate property that was contributed on the revaluation date by the
persons who were partners immediately prior to the revaluation date.
(iii) The Partners agree that the foregoing allocations constitute a
reasonable method for purposes of Reg. 1.704-3(a)(1) and will be so
reported and defended by the Partnership and all Partners unless and until
the Partners otherwise agree or a court otherwise requires.
(c) Allocation of Items Among Partners. Each item of income, gain, loss,
deduction and credit and all other items governed by Section 702(a) of the Code
shall be allocated among the Partners in proportion to the allocation of
Profits, Losses and other items to such Partners hereunder, provided that any
gain treated as ordinary income because it is attributable to the recapture of
any depreciation or amortization shall be allocated among the Partners in
accordance with Prop. Treas.
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Reg. (S)(S) 1.1245-1(e)(2) and 1.1250-1(f), or, upon promulgation of final
regulations with respect to the matters covered therein, such final regulations.
(d) Section 754 Election Allocations. Income and deductions of the
Partnership that are attributable to the Section 754 election shall be allocated
to the Partners entitled thereto.
4.5 Other Tax Allocations. Items of income, gain, loss, deduction, credit
and tax preference for state, local and foreign income tax purposes shall be
allocated among the Partners in a manner consistent with the allocation of such
items for federal income tax purposes in accordance with the foregoing
provisions of this Section.
SECTION 5
ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS
-----------------------------------------------
5.1 Fiscal Year. The fiscal year of the Partnership shall be the calendar
year.
5.2 Method of Accounting for Financial Reporting Purposes. For financial
reporting purposes, the Partnership shall adopt a standard set of accounting
policies and shall maintain separate books of account, all in accordance with
GAAP. The Partnership's financial reports shall comply with requirements of the
SEC to the extent applicable to the Partnership and any Partner or any
controlling Person of such Partner, to the extent such information is necessary,
in conjunction with the financial reporting obligations of such Person under
applicable SEC requirements.
5.3 Books and Records; Right of Partners to Audit.
---------------------------------------------
(a) Proper and complete records and books of account of the Partnership's
business, including all such transactions and other matters as are usually
entered into records and books of account maintained by businesses of like
character or as are required by law, shall be kept by the Partnership at the
Partnership's principal place of business. None of the Partnership's funds
shall be commingled with the funds of any Partner.
(b) Each Partner and its internal and independent auditors, at the expense
of such Partner, shall have full and complete access to the internal and
independent auditors of the Partnership and shall have the right to inspect such
books and records and the physical properties of the Partnership during normal
business hours and, at its own expense, to cause an independent audit thereof.
The Partnership shall make all books and records of the Partnership available to
such Partner and its internal and independent auditors in connection with such
audit and shall cooperate with such Partner and auditors and to provide any
assistance reasonably necessary in connection with such audit.
5.4 Reports and Financial Statements. The Partnership shall prepare and
deliver to the Partners the Partnership financial statements and reports
described on Appendix B as soon as reasonably practicable and in any event on or
prior to the due date indicated on Appendix B.
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5.5 Method of Accounting for Book and Tax Purposes. For purposes of
making allocations and distributions hereunder (including distributions in
liquidation of the Partnership in accordance with Capital Account balances as
required by Section 12.3), Capital Accounts and Profits, Losses and other items
described in Section 4.1 shall be determined in accordance with federal income
tax accounting principles utilizing the accrual method of accounting, with the
adjustments required by Regulation (S)1.704-1(b) to properly maintain Capital
Accounts.
5.6 Taxation.
--------
(a) Status of the Partnership. The Partners acknowledge that the
Partnership is a partnership for federal, foreign and state income tax purposes,
and hereby agree not to elect to be excluded from the application of Subchapter
K of Chapter 1 of Subtitle A of the Code or any similar state statute.
(b) Tax Elections and Reporting.
---------------------------
(i) Generally. The Partnership has made or shall make the following
elections under the Code and the Regulations and any similar state
statutes:
(A) Adopt the calendar year as the annual accounting period;
(B) Adopt the accrual method of accounting;
(C) Elect to deduct organization costs ratably over a 60-month
period as provided in Section 709 of the Code;
(D) Adopt the LIFO method of accounting for inventory; and
(E) Make any other elections available under the Code that the
Partnership Governance Committee determine are appropriate, with the
determination of whether an election is appropriate to be made
pursuant to the principle that each Partner shall be treated equally
(i.e., no Partner will receive preferential tax treatment to the
disadvantage of another Partner).
(ii) Section 754 Election. The Partnership shall, upon the written
request of any Partner benefitted thereby, cause the Partnership to file an
election under Section 754 of the Code and the Regulations thereunder to
adjust the basis of the Partnership assets under Section 734(b) or 743(b)
of the Code, and a corresponding election under the applicable sections of
state and local law.
(c) Tax Returns. The Tax Matters Partner, on behalf of the Partnership,
shall prepare and file the necessary tax and information returns. Each Partner
shall timely provide such information, if any, as may be needed by the
Partnership for purposes of preparing such tax and information returns. At
least 75 days before the due date (as extended) for the Partnership's federal
income tax
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return, the Tax Matters Partner shall deliver a draft of such return to each
Partner. Each Partner shall have 15 Business Days after receipt of the draft in
which to furnish any objections or comments on the draft to the Tax Matters
Partner. The Tax Matters Partner shall make its best efforts to finalize the
Partnership's federal income tax return at least 30 days before the due date for
filing (as extended) of such return A Partner may not report its share of any
Partnership tax item in a manner inconsistent with the Partnership's reporting
of such item unless the Partner has timely furnished its objection to the Tax
Matters Partner as provided in the immediately preceding sentence. If a Partner
reports its share of any Partnership tax item in a manner inconsistent with the
Partnership's reporting of such item, such Partner shall promptly notify the
Partnership in writing at least 20 Business Days prior to the filing of any
statement with the IRS in which such inconsistent position is reported. The
Partnership shall promptly deliver to each Partner a copy of the federal income
tax return for the Partnership as filed with the appropriate taxing authorities
and a copy of any material state and local income tax return as filed.
(d) Tax Audits.
----------
(i) Federal Tax Matters. The Partnership is authorized to make such
filings with the IRS as may be required to designate Lyondell GP as the Tax
Matters Partner. The Tax Matters Partner, as an authorized representative
of the Partnership, shall direct the defense of any claims made by the IRS
to the extent that such claims relate to the adjustment of Partnership
items at the Partnership level. The Tax Matters Partner shall promptly
deliver to each Partner a copy of all notices, communications, reports or
writings of any kind (including, without limitation, any notice of
beginning of administrative proceedings or any report explaining the
reasons for a proposed adjustment) received from the IRS relating to or
potentially resulting in an adjustment of Partnership items, as well as any
other information requested by a Partner that is commercially reasonable to
request. The Tax Matters Partner shall be diligent and act in good faith
in deciding whether to contest at the administrative and judicial level any
proposed adjustment of a Partnership item and whether to appeal any adverse
judicial decision. The Tax Matters Partner shall keep each Partner advised
of all material developments with respect to any proposed adjustment that
comes to its attention. All costs incurred by the Tax Matters Partner in
performing under this subsection (d) shall be paid by the Partnership. The
Tax Matters Partner shall have sole authority to represent the Partnership
in connection with all tax audits, including the power to extend the
statute of limitations, to enter in any settlement, and to litigate any
proposed partnership adjustment, subject to the following: (A) No
settlement will be entered into with respect to an item that would
materially affect any Partner adversely unless each Partner is first
notified of the terms of the settlement; and no Partner will be bound by
any settlement unless it consents thereto; (B) If a Partner does not
consent to a settlement, the settlement will nevertheless be binding on all
partners who do consent; and the non-consenting Partner may, at its sole
cost, pursue such administrative or judicial remedies as it deems
appropriate; (C) If the Tax Matters Partner brings an action in any court,
each Partner, at its sole cost, shall have the right to intervene in the
preceding to the extent permitted by the court; and (D) If a settlement or
litigation causes Partners to be treated differently for tax purposes with
respect to certain tax issues of the Partnership, the income and deductions
of the Partnership
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thereafter arising will be allocated among the Partners to reflect the
varying manner in which the issues were resolved.
(ii) State and Local Tax Matters. The Partnership shall promptly
deliver to each Partner a copy of all notices, communications, reports or
writings of any kind with respect to income or similar taxes received from
any state or local taxing authority relating to the Partnership which
might, in the judgment of the Tax Matters Partner, materially and adversely
affect any Partner, and shall keep each Partner advised of all material
developments with respect to any proposed adjustment of Partnership items
which come to its attention.
(iii) Continuation of Rights. Each Partner shall continue to have the
rights described in this subsection (d) with respect to tax matters
relating to any period during which it was a Partner, whether or not it is
a Partner at the time of the tax audit or contest.
(e) Tax Rulings. No Person other than the Tax Matters Partner shall
request an administrative ruling (or similar administrative procedures) from any
taxing authority with respect to any tax issue relating to the Partnership or
affecting the taxation of any other Partner unless such Person shall have
received written authorization from the Tax Matters Partner and any such other
Partner to make such request.
(f) Tax Information. At the request of any Partner, the Tax Matters
Partner shall timely furnish all reasonably obtainable information required to
prepare annual earnings and profits computations (as defined in Section 312 of
the Code) with respect to that Partner's share of Partnership income.
5.7 Delegation. The Partners agree that all of the tasks to be performed
under this Section (other than serving as Tax Matters Partner) may be delegated
to employees and consultants of the Partnership.
SECTION 6
MANAGEMENT
----------
6.1 Partnership Governance Committee.
--------------------------------
(a) The General Partners hereby establish a committee (the "Partnership
Governance Committee") to manage and control the business, property and affairs
of the Partnership, including the determination and implementation of the
Partnership's strategic direction. The Partnership Governance Committee (on
behalf of the Partners) shall have (i) the full authority of the General
Partners to exercise all of the powers of the Partnership and (ii) full control
over the business, property and affairs of the Partnership. Except to the
extent set forth in this Agreement, the Partnership Governance Committee shall
have full, exclusive and complete discretion to manage and control the business,
property and affairs of the Partnership, to make all decisions affecting the
business, property and affairs of the Partnership and to take all such actions
as it deems necessary,
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appropriate, convenient or incidental to accomplish the purpose of the
Partnership as set forth in Section 1.4 (as such purpose may be expanded in
accordance with Section 6.7(i)).
(b) The Partnership Governance Committee shall act exclusively by means of
Partnership Governance Committee Action. As used in this Agreement,
"Partnership Governance Committee Action" means any action which the Partnership
Governance Committee is authorized and empowered to take in accordance with this
Agreement and the Act and which is taken by the Partnership Governance Committee
either (i) by action taken at a meeting of the Partnership Governance Committee
duly called and held in accordance with this Agreement or (ii) by a formal
written consent complying with the requirements of Section 6.5(f). In no event
shall the Partnership Governance Committee be authorized to act other than by
Partnership Governance Committee Action, and any action or purported action by
the Partnership Governance Committee (including any authorization, consent,
approval, waiver, decision or vote) not constituting a Partnership Governance
Committee Action shall be null and void and of no force and effect. Each
Partnership Governance Committee Action shall be binding on the Partnership.
(c) The Partnership Governance Committee shall adopt policies and
procedures, not inconsistent with this Agreement (including Section 6.7) or the
Act, governing financial controls and legal compliance, including delegations of
authority (and limitations thereon) to the officers of the Partnership as
permitted hereby. Such policies and procedures may be revised or revoked (in a
manner consistent with this Agreement and the Act) from time to time as
determined by the Partnership Governance Committee. To the extent any authority
is not delegated to officers of the Partnership in this Agreement or in
accordance with Partnership Governance Committee Action, it shall remain with
the Partnership Governance Committee.
6.2 Limitations on Authority of General Partners. Except as expressly set
forth in this Agreement, each General Partner agrees to exercise its authority
to manage and control the Partnership only through Partnership Governance
Committee Action. Each General Partner agrees not to exercise, or purport or
attempt to exercise any authority (i) to act for or incur, create or assume any
obligation, liability or responsibility on behalf of the Partnership or any
other Partner, (ii) to execute any documents on behalf of, or otherwise bind, or
purport or attempt to bind, the Partnership or (iii) to otherwise transact any
business in the Partnership's name, in each case except pursuant to Partnership
Governance Committee Action.
6.3 Lack of Authority of Persons Other Than General Partners and Officers.
Except as expressly set forth in this Agreement, no Person or Persons other than
(i) the General Partners, acting through the Partnership Governance Committee,
and (ii) the officers of the Partnership appointed in accordance with this
Agreement and acting as agents or employees, as applicable, of the Partnership
in conformity with this Agreement and any applicable Partnership Governance
Committee Action, shall be authorized (a) to exercise the powers of the
Partnership, (b) to manage the business, property and affairs of the Partnership
or (c) to contract for, or incur on behalf of, the Partnership any debts,
liabilities or other obligations.
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6.4 Composition of Partnership Governance Committee.
-----------------------------------------------
(a) The Partnership Governance Committee shall consist of nine
Representatives and each General Partner shall designate three Representatives
(each a "Representative"). All the Representatives of all three General
Partners shall together constitute the Partnership Governance Committee.
(b) Each General Partner may designate one or more individuals (each an
"Alternate") who (i) shall be authorized, in the event a Representative is
absent from any meeting of the Partnership Governance Committee (and in the
order of succession designated by the General Partner so designating the
Alternates), to attend such meeting in the place of, and as substitute for, such
Representative and (ii) shall be vested with all the powers to take action on
behalf of such General Partner which the absent Representative could have
exercised at such meeting. The term "Representative," when used herein with
reference to any Representative who is absent from a meeting of the Partnership
Governance Committee, shall mean and refer to any Alternate attending such
meeting in place of such absent Representative.
(c) On or before the date hereof, each General Partner shall have delivered
to the other General Partners a written notice (i) designating the three persons
to serve as such General Partner's initial Representatives and (ii) designating
the person or persons, if any, who are to serve as initial Alternates and their
order of succession.
(d) Each General Partner may, in its sole discretion and by written notice
delivered to the other General Partners and the Partnership at any time or from
time to time, remove or replace one or more of its Representatives or change one
or more of its Alternates. If a Representative or Alternate dies, resigns or
becomes disabled or incapacitated, the General Partner that designated such
Representative or Alternate, as the case may be, shall promptly designate a
replacement. Each Representative and each Alternate shall serve until replaced
by the General Partner that designated such Representative or Alternate, as the
case may be.
(e) Copies of all written notices designating Representatives and
Alternates shall be delivered to the Secretary and shall be placed in the
Partnership minute books, but the failure to deliver a copy of any such notice
to the Secretary shall not affect the validity or effectiveness of such notice
or the designation described therein.
(f) Each Representative, in his capacity as such, shall be the agent of the
General Partner that designated such Representative. Accordingly, (i) each
Representative, as such, shall act (or refrain from acting) with respect to the
business, property and affairs of the Partnership solely in accordance with the
wishes of the General Partner that designated such Representative and (ii) no
Representative, as such, shall owe (or be deemed to owe) any duty (fiduciary or
otherwise) to the Partnership or to any General Partner other than the General
Partner that designated such Representative; provided, however, that nothing in
this Agreement is intended to or shall relieve or discharge any Representative
or General Partner from liability to the Partnership or the Partners on account
of any fraudulent or intentional misconduct of such Representative. Nothing in
this
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Section 6.4(f) shall limit the duty owed to the Partnership by any person acting
in his capacity as an officer of the Partnership (including any such officer who
is also a Representative).
(g) Representatives shall not receive from the Partnership any compensation
for their service or any reimbursement of expenses for attendance at meetings of
the Partnership Governance Committee.
6.5 Partnership Governance Committee Meetings.
-----------------------------------------
(a) Regular meetings of the Partnership Governance Committee shall be held
at such times and at such places as shall from time to time be determined in
advance and committed to a written schedule by the Partnership Governance
Committee. The first regular meeting of the Partnership Governance Committee
during January of each fiscal year shall be deemed to be the "Annual Meeting."
The Secretary shall deliver by commercial courier service or other hand delivery
or transmit by facsimile transmission (with proof of confirmation from the
transmitting machine), an agenda for each regular meeting to the Representatives
at least five Business Days prior to such meeting. Each agenda for a regular
meeting shall specify, to a reasonable degree, the business to be transacted at
such meeting. Subject to Section 6.6, at any regular meeting of the Partnership
Governance Committee at which a quorum is present, any and all business of the
Partnership may be transacted.
(b) Special meetings of the Partnership Governance Committee may be called
by any Representative by delivering by commercial courier service or other hand
delivery or transmitting by facsimile transmission (with proof of confirmation
from the transmitting machine), written notice of a special meeting to each of
the other Representatives at least two Business Days before such meeting. Each
notice of a special meeting shall specify, to a reasonable degree, the business
to be transacted at, or the purpose of, such meeting. Notice of any special
meeting may be waived before or after the meeting by a written waiver of notice
signed by the Representative entitled to notice. A Representative's attendance
at a special meeting shall constitute a waiver of notice unless the
Representative states at the beginning of the meeting his objection to the
transaction of business because the meeting was not lawfully called or convened.
Special meetings of the Partnership Governance Committee shall be held at the
Partnership's offices (or at such other place or in such other manner as the
Representatives shall agree) at such time as may be stated in the notice of such
meeting.
(c) One Representative of each General Partner shall serve as a co-chair of
each meeting (regular and special) of the Partnership Governance Committee. Any
co-chair may instruct the Secretary to include one or more items on a meeting
agenda and none of the co-chairs nor the Secretary may delete or exclude an
agenda item proposed by any other co-chair.
(d) Following each meeting of the Partnership Governance Committee, the
Secretary shall promptly draft and distribute minutes of such meeting to the
Representatives for approval at the next meeting, and after such approval shall
retain the minutes in the Partnership minute books.
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(e) Representatives, at their discretion, may participate in or hold
regular or special meetings of the Partnership Governance Committee by means of
a telephone conference or any comparable device or technology by which all
individuals participating in the meeting may hear each other, and participation
in such a meeting shall constitute presence in person at such meeting.
(f) Any action required or permitted to be taken at a meeting of the
Partnership Governance Committee may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by at least two
Representatives of each General Partner, and such consent shall have the same
force and effect as a duly conducted vote of the Partnership Governance
Committee. A counterpart of each such consent to action shall be delivered
promptly to each of the Representatives and to the Secretary for placement in
the minute books of the Partnership, but the failure to deliver a counterpart of
any such consent to action to the Secretary shall not affect the validity or
effectiveness of such consent to action.
6.6 Partnership Governance Committee Quorum and General Voting
----------------------------------------------------------
Requirement.
(a) The presence of at least two Representatives (including any duly
present Alternates) of Lyondell GP shall constitute a quorum of the Partnership
Governance Committee for the transaction of business and the taking of
appropriate Partnership Governance Committee Actions at any meeting; provided,
however, that the presence at such meeting of at least two Representatives
(including any duly present Alternates) from each General Partner shall be
necessary for the taking of any action described in Section 6.7; and provided,
further, that no Partnership Governance Committee Actions can be taken at any
meeting with respect to any matter that was not reflected, with a reasonable
level of specificity, on an agenda for such meeting that was delivered in
accordance with Section 6.5 unless at least one Representative of each General
Partner is present. No Partnership Governance Committee Action may be taken at
any meeting at which a quorum is not present.
(b) Except as otherwise provided in Section 6.7 or elsewhere in this
Agreement, the approval of two or more Representatives acting for Lyondell GP
will be sufficient for the Partnership Governance Committee to take any
Partnership Governance Committee Action and in such case the Partnership shall
be authorized to take such action without the consent of any other Person.
6.7 Partnership Governance Committee Unanimous Voting Requirements.
Unless and until two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP have given their approval (in which event a Partnership Governance Committee
Action is hereby authorized without the need for the consent of any other
Person), no Partnership Governance Committee Action will be deemed for any
purpose to have been taken at any Partnership Governance Committee meeting that
would cause or permit the Partnership or any subsidiary thereof (or any Person
acting in the name or on behalf of any of them) directly or indirectly to take
(or commit to take), and neither the Partnership nor any subsidiary thereof nor
any person acting in the name or on behalf of any of them directly or indirectly
may take or commit to take, any of the actions described below in this
subsection (whether in a single transaction or series of related transactions):
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(i) to cause the Partnership, directly or indirectly, to engage,
participate or invest in any business outside the scope of its business as
described in Section 1.4;
(ii) to approve any Strategic Plan, as well as any amendments or
updates thereto (including the annual updates provided for in Section 8.1);
(iii) to authorize any disposition of assets having a fair market
value exceeding $30 million in any one transaction or a series of related
transactions not contemplated in an approved Strategic Plan;
(iv) to authorize any acquisition of assets or any capital expenditure
exceeding $30 million that is not contemplated in an approved Strategic
Plan;
(v) to require capital contributions to the Partnership (other than
contributions contemplated by the Contribution Agreements or an approved
Strategic Plan or to achieve or maintain compliance with any HSE Law)
within any fiscal year if the total of such contributions required from the
Partners within that year would exceed $100 million or the total of such
contributions required from the Partners within that year and the
immediately preceding four years would exceed $300 million;
(vi) to authorize the incurrence of debt for borrowed money unless (x)
such debt is contemplated by clause (vii) (b) below, (y) after giving
effect to the incurrence of such debt (and any related transactions) and
the maximum amount of borrowings permitted under clause (vii) below, the
Partnership would be expected to have an "investment grade" debt rating by
Moody's Investor Services Inc. and Standard & Poor's Corporation or (z)
such debt is incurred to refinance the public, bank or other debt assumed
or incurred by the Partnership as contemplated by the Initial Master
Transaction Agreement or the Second Master Transaction Agreement or to
refinance indebtedness under the 1998 Credit Facility or to refinance any
such debt, and in the case of each of (x), (y) and (z), the agreement
relating to such debt does not provide that the Transfer by a Partner of
its Units (or a change of control with respect to any Partner or any of its
Affiliates) would constitute a default thereunder, otherwise accelerate the
maturity thereof or give the lender or holder any "put rights" or similar
rights with respect thereto; provided, however, that notwithstanding the
foregoing, the provisions of Sections 6.7(xxi) and 6.7(xxii), if
applicable, must be satisfied with respect to any refinancing;
(vii) (a) to enter into the 1998 Credit Facility or (b) to make
borrowings under one or more of the Partnership's bank credit facility or
facilities, its uncommitted lines of credit or any credit facility or debt
instrument of the Partnership of any kind that refinances all or any
portion of the Partnership's credit facility or facilities, at any time, if
as a result of any such borrowing the aggregate principal amount of all
such borrowings outstanding at such time would exceed the sum of $1.25
billion and the amount which becomes available for borrowing under the 1998
Credit Facility.
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<PAGE>
(viii) to enter into interest rate protection or other hedging
agreements (other than hydrocarbon hedging agreements in the ordinary
course);
(ix) to enter into any capitalized lease or similar off-balance sheet
financing arrangements involving payments (individually or in the
aggregate) by it in excess of $30 million in any fiscal year;
(x) to cause the Partnership or any subsidiary of the Partnership to
issue, sell, redeem or acquire any Units or other equity securities (or any
rights to acquire, or any securities convertible into or exchangeable for,
Units or other equity securities);
(xi) to make Partnership cash distributions in excess of Available Net
Operating Cash or to make non-cash distributions (except as contemplated by
Section 12);
(xii) to appoint or discharge Executive Officers (other than the
CEO), based on the recommendation of the CEO;
(xiii) to approve material compensation and benefit plans and
policies, material employee policies and material collective bargaining
agreements for the Partnership's employees;
(xiv) to initiate or settle any litigation or governmental proceedings
if the effect thereof would be material to the financial condition of the
Partnership;
(xv) to change the independent accountants for the Partnership;
(xvi) to change the Partnership's method of accounting as adopted
pursuant to Section 5.2 or to change the Partnership's method of accounting
as provided in Section 5.5 or to make the elections referred to in Section
5.6(b)(i)(E);
(xvii) to create or change the authority of any Auxiliary Committee;
(xviii) to merge, consolidate or convert the Partnership or any
subsidiary thereof with or into any other entity (other than a Wholly Owned
Subsidiary of the Partnership);
(xix) to file a petition in bankruptcy or seeking any reorganization,
liquidation or similar relief on behalf of the Partnership or any
subsidiary; or to consent to the filing of a petition in bankruptcy against
the Partnership or any subsidiary; or to consent to the appointment of a
receiver, custodian, liquidator or trustee for the Partnership or any
subsidiary or for all or any substantial portion of their property;
(xx) to exercise any power or right described in Section 6.8(a)(i) or
(ii) with respect to a Conflict Circumstance involving (a) LYONDELL-CITGO
Refining Company Ltd., its successors or assigns, (b) Lyondell Methanol
Company, L.P., its successors or
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assigns or (c) any other Affiliate of Lyondell GP, Millennium GP or
Occidental GP if such Affiliate's actions with respect to such Conflict
Circumstance are not controlled by Lyondell, Millennium or Occidental
respectively, other than a Conflict Circumstance involving the exercise of
any rights and remedies with respect to a default under any agreement that
is the subject of such Conflict Circumstance;
(xxi) (a) prior to the seventh anniversary of the Initial Closing
Date, to repay any Millennium America Guaranteed Debt, other than through
refinancing or (b) to refinance any Millennium America Guaranteed Debt
prior to the seventh anniversary of the Initial Closing Date if any of the
principal of the debt refinancing such Millennium America Guaranteed Debt
would be due and payable after the seventh anniversary of the Initial
Closing Date; provided, however, that if the Millennium America Guaranteed
Debt continues to be guaranteed by Millennium America or its successors
after the seventh anniversary of the Initial Closing Date, then the term of
such debt shall not exceed 365 days; and
(xxii) (a) prior to 30 days after the seventh anniversary of the date
of this Agreement, to repay any Oxy Guaranteed Debt, other than through
refinancing or (b) to refinance any Oxy Guaranteed Debt prior to 30 days
after the seventh anniversary of the date of this Agreement if any of the
principal of the debt refinancing such Oxy Guaranteed Debt would be due and
payable after 30 days after the seventh anniversary of the date of this
Agreement; provided, however, that if the Oxy Guaranteed Debt continues to
be guaranteed by Occidental Chemical Corporation or its successors after 30
days after the seventh anniversary of the date of this Agreement, then the
term of such debt shall not exceed 365 days.
6.8 Control of Interested Partner Issues.
------------------------------------
(a) Notwithstanding anything to the contrary contained in this Agreement,
with respect to any Conflict Circumstance (other than a Conflict Circumstance
described in Section 6.7(xx), which shall be governed by Section 6.7), the
Nonconflicted General Partners acting jointly (through their respective
Representatives) shall, subject to Section 6.8(b), have the sole and exclusive
power and right for and on behalf, and at the sole expense, of the Partnership
(i) to control all decisions, elections, notifications, actions, exercises or
nonexercises and waivers of all rights, privileges and remedies provided to, or
possessed by, the Partnership with respect to a Conflict Circumstance and (ii)
in the event of any potential, threatened or asserted claim, dispute or action
with respect to a Conflict Circumstance, to retain and direct legal counsel and
to control, assert, enforce, defend, litigate, mediate, arbitrate, settle,
compromise or waive any and all such claims, disputes and actions. Accordingly,
Partnership Governance Committee Action with respect to a Conflict Circumstance
(other than a Conflict Circumstance described in Section 6.7(xx), which shall be
governed by Section 6.7) shall require the approval of two Representatives of
each of the Nonconflicted General Partners. Each General Partner shall, and
shall cause its Affiliates to, take all such actions, execute all such documents
and enter into all such agreements as may be necessary or appropriate to
facilitate or further assure the accomplishment of this Section.
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(b) Each Nonconflicted General Partner, in exercising its control, power
and rights pursuant to this Section, shall act in good faith and in a manner it
believes to be in the best interests of the Partnership; provided that it shall
never be deemed to be in the best interests of the Partnership not to pay,
perform and observe all of the obligations to be paid, performed or observed by
or on the part of the Partnership under the terms of any of the Other Agreements
(as defined in the Amended and Restated Parent Agreement). Each Nonconflicted
General Partner shall act through its Representatives, and the approval of two
Representatives acting for each of the Nonconflicted General Partners will be
sufficient for the Nonconflicted General Partners (and therefore the Partnership
Governance Committee on behalf of the Partnership) to take any action in respect
of the relevant Conflict Circumstance. The Conflicted General Partner (or its
Affiliates) shall have the right to deal with the Partnership and with each
Nonconflicted General Partner on an arm's-length basis and in a manner it
believes to be in its own best interests, but in any event must deal with them
in good faith.
6.9 Auxiliary Committees.
--------------------
(a) From time to time, the Partnership Governance Committee may, by
Partnership Governance Committee Action, designate one or more committees
("Auxiliary Committees") or disband any Auxiliary Committee. Each Auxiliary
Committee shall (i) operate under the specific authority delegated to it by the
Partnership Governance Committee (consistent with Section 6.7) for the purpose
of assisting the Partnership Governance Committee in managing (on behalf of the
General Partners) the business, property and affairs of the Partnership and (ii)
report to the Partnership Governance Committee.
(b) Each General Partner shall have the right to appoint an equal number of
members on each Auxiliary Committee. Auxiliary Committee members may (but need
not) be members of the Partnership Governance Committee. No Auxiliary Committee
member shall be compensated or reimbursed by the Partnership for service as a
member of such Auxiliary Committee.
(c) Each Partnership Governance Committee Action designating an Auxiliary
Committee shall be in writing and shall set forth (i) the name of such
Auxiliary Committee, (ii) the number of members and (iii) in such detail as the
Partnership Governance Committee deems appropriate, the purposes, powers and
authorities (consistent with Section 6.7) of such Auxiliary Committee; provided,
however, that in no event shall any Auxiliary Committee have any powers or
authority in reference to amending this Agreement, adopting an agreement of
merger, consolidation or conversion of the Partnership, authorizing the sale,
lease or exchange of all or substantially all of the property and assets of the
Partnership, authorizing a dissolution of the Partnership or declaring a
distribution. Each Auxiliary Committee shall keep regular minutes of its
meetings and promptly deliver the same to the Partnership Governance Committee.
6.10 Certain Limitations on Partner Representatives. No Representative or
Alternate of a Partner who, as an officer, director or employee of such Partner
or any of its Affiliates, participates in material operational decisions by such
Partner or Affiliate regarding a business or operation of such Partner or
Affiliate that competes with a business or operation of the Partnership or of
the other
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Partner or its Affiliates, or that competes with a Business Opportunity offered
pursuant to Section 9.3(c) or (d), shall receive or have access to any
competitively sensitive information regarding the competing business of the
Partnership or of the other Partner or its Affiliates or such Business
Opportunity, nor shall such Representative or Affiliate participate in any
decision of the Partnership Governance Committee relating to such business or
operation of the Partnership or the other Partner or its Affiliates or such
Business Opportunity.
SECTION 7
OFFICERS AND EMPLOYEES
----------------------
7.1 Partnership Officers.
--------------------
(a) The Partnership Governance Committee may select natural persons who are
(or upon becoming an officer will be) agents or employees of the Partnership to
be designated as officers of the Partnership, with such titles as the
Partnership Governance Committee shall determine.
(b) The executive officers of the Partnership shall consist of a Chief
Executive Officer ("CEO"), and others as determined from time to time by
Partnership Governance Committee (collectively, the "Executive Officers").
(c) The Partnership Governance Committee also shall appoint a Secretary and
may appoint such other officers and assistant officers and agents as may be
deemed necessary or desirable and such persons shall perform such duties in the
management of the Partnership as may be provided in this Agreement or as may be
determined by Partnership Governance Committee Action.
(d) The Partnership Governance Committee may leave unfilled any offices
except those of CEO and Secretary. Two or more offices may be held by the same
person except that the same person may not hold the offices of CEO and
Secretary.
7.2 Selection and Term of Executive Officers.
----------------------------------------
(a) The Executive Officers as of the date of this Agreement are listed on
Appendix C.
(b) The CEO shall hold office for a five-year term, subject to the CEO's
earlier death, resignation or removal. Upon the expiration of such term or
earlier vacancy, Lyondell GP shall designate the CEO, provided that such person
shall be reasonably acceptable to both of Millennium GP and Occidental GP. The
CEO shall not be required to be an employee of the Partnership.
(c) Each Executive Officer (other than the CEO) shall hold office until his
or her death, resignation or removal. Upon the death, resignation or removal of
an Executive Officer, or the creation of a new Executive Officer position, the
CEO may nominate a person to fill the vacancy, which shall be subject to
Partnership Governance Committee approval. Executive Officers shall not
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be required to be employees of the Partnership. Any Executive Officer also may
serve as an officer or employee of any Partner or Affiliate of a Partner.
7.3 Removal of Executive Officers.
-----------------------------
(a) The CEO may be removed, at any time, by Partnership Governance
Committee Action taken pursuant to Section 6.6, with or without cause, whenever
in the judgment of the Partnership Governance Committee the best interests of
the Partnership would be served thereby.
(b) Any Executive Officer (other than the CEO), or any other officer or
agent may be removed, at any time, by Partnership Governance Committee Action
taken pursuant to Section 6.7(xii), with or without cause, upon the
recommendation of the CEO, whenever in the judgment of the Partnership
Governance Committee the best interests of the Partnership would be served
thereby.
(c) Notwithstanding anything to the contrary in Sections 6.7(xii), 7.3(a)
and 7.3(b), any General Partner may, by action of two or more of its
Representatives, remove from office any Executive Officer who takes or causes
the Partnership to take any action described in Section 6.7 that has not been
approved by two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP as contemplated by Section 6.7. Any such removal shall be effected by
delivery by such Representatives of written notice of such removal (i) to such
Executive Officer and (ii) to the Representatives of the other General Partners;
provided that such removal shall not be effective if such action is rescinded or
cured (to the reasonable satisfaction of the General Partner who has delivered
such notice) promptly after such notice is delivered.
7.4 Duties.
------
(a) Each officer or employee of the Partnership shall owe to the
Partnership, but not to any Partner, all such duties (fiduciary or otherwise) as
are imposed upon such an officer or employee of a Delaware corporation. Without
limitation of the foregoing, each officer and employee in any dealings with a
Partner shall have a duty to act in good faith and to deal fairly; provided,
that, no officer shall be liable to the Partnership or to any Partner for his or
her good faith reliance on the provisions of this Agreement. Notwithstanding
the foregoing, it is understood that any officer or employee of the Partnership
who is also a Representative of a General Partner shall, in his capacity as a
Representative, owe no duty (fiduciary or otherwise) to any Person other than
such General Partner.
(b) The policies and procedures of the Partnership adopted by the
Partnership Governance Committee may set forth the powers and duties of the
officers of the Partnership to the extent not set forth in or inconsistent with
this Agreement. The officers of the Partnership shall have such powers and
duties, except as modified by the Partnership Governance Committee, as generally
pertain to their respective offices in the case of a publicly held Delaware
corporation, as well as other such powers and duties as from time to time may be
conferred by the Partnership Governance
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Committee and by this Agreement. The CEO and the other officers and employees of
the Partnership shall develop and implement management and other policies and
procedures consistent with this Agreement and the general policies and
procedures established by the Partnership Governance Committee.
(c) Notwithstanding any other provision of this Agreement, no Partner,
Representative, officer, employee or agent of the Partnership shall have the
power or authority, without specific authorization from the Partnership
Governance Committee, to undertake any of the following:
(i) to do any act which contravenes (or otherwise is inconsistent
with) this Agreement or which would make it impracticable or impossible to
carry on the Partnership's business;
(ii) to confess a judgment against the Partnership;
(iii) to possess Partnership property other than in the ordinary
conduct of the Partnership's business; or
(iv) to take, or cause to be taken, any of the actions described in
Section 6.7.
7.5 CEO. Subject to the terms of this Agreement, the CEO shall have
general authority and discretion comparable to that of a chief executive officer
of a publicly held Delaware corporation of similar size to direct and control
the business and affairs of the Partnership, including without limitation its
day-to-day operations in a manner consistent with the Annual Budget and the most
recently approved Strategic Plan. The CEO shall take steps to implement all
orders and resolutions of the Partnership Governance Committee or, as
applicable, any Auxiliary Committee. The CEO shall be authorized to execute and
deliver, in the name and on behalf of the Partnership, (i) contracts or other
instruments authorized by Partnership Governance Committee Action and (ii)
contracts or instruments in the usual and regular course of business (not
otherwise requiring Partnership Governance Committee Action), except in cases
when the execution and delivery thereof shall be expressly delegated by the
Partnership Governance Committee to some other officer or agent of the
Partnership, and, in general, shall perform all duties incident to the office of
CEO as well as such other duties as from time to time may be assigned to him or
her by the Partnership Governance Committee or as are prescribed by this
Agreement.
7.6 Other Officers. The President (if any) and the Vice Presidents shall
perform such duties as may, from time to time, be assigned to them by the
Partnership Governance Committee or by the CEO. In addition, at the request of
the CEO, or in the absence or disability of the CEO, the President (if any) or
any Vice President, in any order determined by the Partnership Governance
Committee, temporarily shall perform all (or if limited through the scope of the
delegation, some of) the duties of the CEO, and, when so acting, shall have all
the powers of, and be subject to all restrictions upon, the CEO.
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7.7 Secretary. The Secretary shall keep the minutes of all meetings (and
copies of written records of action taken without a meeting) of the Partnership
Governance Committee in minute books provided for such purpose and shall see
that all notices are duly given in accordance with the provisions of this
Agreement. The Secretary shall be the custodian of the records and of the seal,
if any. The Secretary shall have general charge of books and papers of the
Partnership as the Partnership Governance Committee may direct and, in general,
shall perform all duties and exercise all powers incident to the office of
Secretary and such other duties and powers as the Partnership Governance
Committee or the CEO from time to time may assign to or confer upon the
Secretary.
7.8 Salaries. Salaries or other compensation of the other Executive
Officers of the Partnership shall be established by the CEO consistent with
plans approved by the Partnership Governance Committee. Except as approved by
the Partnership Governance Committee, all fees and compensation of the officers
and employees of the Partnership other than the CEO with respect to their
services as such officers and employees shall be payable solely by the
Partnership and no Partner or its Affiliates shall pay (or offer to pay) any
such fees or compensation to any officer or employee, except to the extent that
the Partnership shall have agreed with a Partner or one of its Affiliates
pursuant to a separate agreement that a portion of the compensation of such
officer or employee shall be paid by such Partner or Affiliate.
7.9 Delegation. The Partnership Governance Committee may delegate
temporarily the powers and duties of any officer of the Partnership, in case of
absence or for any other reason, to any other officer of the Partnership, and
may authorize the delegation by any officer of the Partnership of any of such
officer's powers and duties to any other officer or employee of the Partnership,
subject to the general supervision of such officer.
7.10 Employee Hirings. Without the prior approval of the two other General
Partners, which approval shall not be unreasonably withheld, a General Partner
(or its Affiliates) shall not be entitled to hire employees of the Partnership
who at the time of such employment are eligible to participate in the incentive
compensation programs available to senior managers or executives or to hire
specific individuals who had been employed by the Partnership within the
previous year and who prior to the termination of their employment were eligible
to participate in the incentive compensation programs available to senior
managers or executives. Without the prior approval of the relevant General
Partner, which approval shall not be unreasonably withheld, the Partnership
shall not be entitled to hire employees of such General Partner (or its
Affiliates) who at the time of such employment are eligible to participate in
the incentive compensation programs available to senior managers or executives
or to hire specific individuals who had been employed by such General Partner
(or its Affiliates) within the previous year and who prior to the termination of
their employment were eligible to participate in the incentive compensation
programs available to senior managers or executives.
7.11 General Authority. Persons dealing with the Partnership are entitled
to rely conclusively on the power and authority of each of the officers as set
forth in this Agreement. In no event shall any Person dealing with any officer
with respect to any business or property of the Partnership be obligated to
ascertain that the terms of this Agreement have been complied with, or
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be obligated to inquire into the necessity or expedience of any act or action of
the officer; and every contract, agreement, deed, mortgage, security agreement,
promissory note or other instrument or document executed by the officer with
respect to any business or property of the Partnership shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and/or delivery thereof, this Agreement
was in full force and effect, (ii) the instrument or document was duly executed
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership, and (iii) the officer was duly authorized and empowered to
execute and deliver any and every such instrument or document for and on behalf
of the Partnership.
SECTION 8
STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS
-----------------------------------------
8.1 Strategic Plan.
--------------
(a) The Partnership shall be managed in accordance with a five-year
strategic business plan (the "Strategic Plan") which shall be updated annually
under the direction of the CEO and presented for approval by the Partnership
Governance Committee pursuant to Section 6.7 no later than 90 days prior to the
start of the first fiscal year covered by the updated plan.
(b) The Strategic Plan shall establish the strategic direction of the
Partnership, including plans relating to capital maintenance and enhancement,
geographic expansion, acquisitions and dispositions, new product lines,
technology, long-term supply and customer arrangements, internal and external
financing, environmental and legal compliance, and plans, programs and policies
relating to compensation and industrial relations. The Strategic Plan shall
include projected income statements, balance sheets and cash flow statements,
including the expected timing and amounts of capital contributions and cash
distributions. The format and level of detail of each Strategic Plan shall be
consistent with that of the initial Strategic Plan agreed to by the Initial
Partners on or prior to the Initial Closing Date or the Strategic Plan most
recently approved pursuant to Section 6.7.
8.2 Annual Budget.
-------------
(a) The Executive Officers of the Partnership shall prepare an Annual
Budget (each, an "Annual Budget") for each fiscal year, including an Operating
Budget and Capital Expenditure Budget; provided that each Annual Budget shall be
consistent with the information for such fiscal year included in the Strategic
Plan most recently approved pursuant to Section 6.7; and provided, further, that
unless provided otherwise in the most recently approved Strategic Plan, the
Annual Budget (including any Annual Budget prepared under Section 8.2(b)) shall
utilize a format and provide a level of detail consistent with the Partnership's
initial Annual Budget. The Annual Budget for each year shall be submitted to
the Partnership Governance Committee for approval at least 60 days prior to the
start of the fiscal year covered by such budget. Each Annual Budget shall
incorporate (i) a projected income statement, balance sheet and a cash flow
statement, (ii) the amount of any corresponding cash deficiency or surplus and
(iii) the estimated amount, if any, and expected
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timing for all required capital contributions. Each proposed Annual Budget shall
be prepared on a basis consistent with the Partnership's financial statements.
(b) If for any fiscal year the Partnership Governance Committee has failed
to approve an updated Strategic Plan, then, subject to Section 8.5, for such
year and each subsequent year prior to approval of an updated Strategic Plan,
the Executive Officers of the Partnership shall prepare (and promptly furnish to
the Partnership Governance Committee) the Annual Budget consistent with the
projections and other information for that year included in the Strategic Plan
most recently approved pursuant to Section 6.7; provided, however, that the CEO,
acting in good faith, shall be entitled to modify any such Annual Budget in
order to satisfy current contractual and compliance obligations and to account
for other changes in circumstances resulting from the passage of time or the
occurrence of events beyond the control of the Partnership; provided, further,
that the CEO shall not be authorized to cause the Partnership to proceed with
capital expenditures to accomplish capital enhancement projects except to the
extent that such expenditures would enable the Partnership to continue or
complete any such capital project reflected in the last Strategic Plan that was
approved by the Partnership Governance Committee pursuant to Section 6.7.
(c) Each "Operating Budget" shall constitute an estimate for each
applicable period of all operating income, which shall include expenses required
to maintain, repair and restore to good and usable condition the Partnership's
assets.
(d) Each "Capital Expenditure Budget" shall constitute an estimate for the
applicable period of the capital expenditures required to (i) accomplish capital
enhancement projects included in the most recently approved Strategic Plan, (ii)
maintain and preserve the Partnership's assets in good operating condition and
repair and (iii) achieve or maintain compliance with any HSE Law.
8.3 Funding of Partnership Expenses. All Partnership expenses (both
operating and capital expenses), regardless of whether included in any Strategic
Plan or Annual Budget, shall be funded from operating cash flows or authorized
borrowings under available lines of credit, unless otherwise agreed by the
Partnership Governance Committee. Subject to the limitations of Sections 2.4
and 6.7(v), if applicable, to the extent that the CEO determines at any time
that funds are needed to fund Partnership operations, the CEO may issue a
Funding Notice to the Limited Partners calling for an additional capital
contribution. The Limited Partners will take all steps necessary to cause
compliance with such Funding Notice.
8.4 Implementation of Budgets and Discretionary Expenditures by CEO.
(a) After a Strategic Plan and an Annual Budget have been approved by the
Partnership Governance Committee (or an Annual Budget has been developed in
accordance with Section 8.2(b)), the CEO will be authorized, without further
action by the Partnership Governance Committee, to cause the Partnership to make
expenditures consistent with such Strategic Plan and Annual Budget; provided,
however, that all internal control policies and procedures, including those
regarding the required authority for certain expenditures, shall have been
followed.
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(b) In any emergency, the CEO or the CEO's designee shall be authorized to
take such actions and to make such expenditures as may be reasonably necessary
to react to the emergency, regardless of whether such expenditures have been
included in an approved Strategic Plan or Annual Budget. Promptly after
learning of an emergency, the CEO or such designee shall notify the
Representatives of the nature of the emergency and the response that has been
made, or is committed or proposed to be made, with respect to the emergency.
8.5 Strategic Plan Deadlock. If the Partnership Governance Committee has
not agreed upon and approved an updated Strategic Plan, as contemplated by
Sections 6.7 and 8.1, by such date as is 12 months after the beginning of the
first fiscal year that would have been covered by such plan, then the General
Partners shall submit their disagreements to non-binding mediation by a Neutral.
If the General Partners are unable to agree upon a mutually acceptable Neutral
within 30 days after a nomination of a Neutral is made by one General Partner to
the other General Partners, then such Neutral shall upon the application of any
General Partner be appointed within 70 days of such nomination by the Center for
Public Resources, or if such appointment is not so made promptly then promptly
thereafter by the American Arbitration Association in Philadelphia,
Pennsylvania, or if such appointment is not so made promptly then promptly
thereafter by the senior United States District Court judge sitting in
Wilmington, Delaware. The fees of the Neutral shall be paid equally by the
General Partners. Within 20 days of selection of the Neutral, two persons
having decision-making authority on behalf of each General Partner shall meet
with the Neutral and agree upon procedures and a schedule for attempting to
resolve the differences between the General Partners. They shall continue to
meet thereafter on a regular basis until (i) agreement is reached by the General
Partners (acting through their Representatives) on an updated Strategic Plan or
(ii) at least 24 months have elapsed since the beginning of the first fiscal
year that was to be covered by the first updated plan for which agreement was
not reached and one General Partner shall determine and notify the other General
Partners and the Neutral in writing (a "Deadlock Notice") that no agreement
resolving the dispute is likely to be reached.
8.6 Loans.
-----
(a) 1998 Credit Facility. Each General Partner agrees that it will use its
reasonable best efforts to cause the Partnership to enter into a credit facility
or facilities (whether one or more, the "1998 Credit Facility") on or prior to
December 15, 1998, which 1998 Credit Facility would allow the Partnership to
borrow at least $500 million aggregate principal amount (inclusive of the Bank
Credit Agreement Repayment Amount but exclusive of any other portion of the 1998
Credit Facility which may be dedicated to the satisfaction of working capital
needs or used for refinancing any indebtedness of the Partnership existing at
such time) thereunder, notwithstanding the amount ($1.25 billion) that may be
borrowed by the Partnership under its bank credit facility in existence as of
the date of this Agreement. Each General Partner further agrees to cause the
Partnership to draw down the Bank Credit Agreement Repayment Amount under the
1998 Credit Facility and to apply the Bank Credit Agreement Repayment Amount to
the repayment of any principal amount outstanding under the Bank Credit
Agreement on or prior to December 15, 1998, and two Business Days after such
repayment to cause the Partnership to draw down $419,700,000 under the Bank
Credit Agreement for distribution to Occidental LP2 as provided in Section
3.1(g).
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(b) Other Loans. The Partnership Governance Committee may by Partnership
Governance Committee Action authorize the CEO to cause the Partnership to borrow
funds from third party lenders. No Partner shall be required, and the
Partnership Governance Committee shall not be authorized to require any Partner,
to guarantee or to provide other credit or financial support for any loan. Any
Partner may, at its sole discretion, guarantee or provide other credit or
financial support for all or any portion of any debt, including any refinancing
of the Bank Credit Agreement or any uncommitted lines of credit of the
Partnership, for such period of time and on such other terms as the Partner
shall determine.
(c) Millennium Guarantee. Millennium America, an Affiliate of Millennium
GP and Millennium LP, issued a full and unconditional guarantee (the "Millennium
America Guarantee") in respect of $750 million of principal owed by the
Partnership pursuant to the Bank Credit Agreement, together with interest
thereon, as set forth in the Bank Credit Agreement. Millennium America (or its
successors or assigns) shall maintain the Millennium America Guarantee in full
force and effect in respect of $750 million of principal, together with
interest thereon, under the Bank Credit Agreement or any refinancings thereof
(including, without limitation, any further refinancings of such refinancings)
indefinitely; provided, however, that Millennium America may terminate the
Millennium America Guarantee at any time on or after the seventh anniversary of
the Initial Closing Date if, and only if: (i) the Partnership's ratio of Total
Indebtedness to Total Capitalization is, as of the end of the most recently
completed fiscal quarter of the Partnership lower than such ratio as of December
31, 1998, (ii) the Partnership's ratio of EBITDA to Net Interest for the most
recent 12 month period is at least 105% of such ratio for the 12 month period
ending December 31, 1998, (iii) the Partnership is not then in default in the
payment of principal of, or interest on, any indebtedness for borrowed money in
excess of $15 million and (iv) the Partnership is not then in default in respect
of any covenants relating to any indebtedness for borrowed money if the effect
of any such default shall be to accelerate, or to permit the holder or obligee
of such indebtedness (or any trustee on behalf of such holder or obligee) to
accelerate (with or without the giving of notice or lapse of time or both), such
indebtedness in an aggregate amount in excess of $50 million; provided, further,
that if Millennium GP and Millennium LP sell all of their respective interests
in the Partnership, or if Millennium Petrochemicals Inc. sells all of its equity
interests in both Millennium GP and Millennium LP, in each case to an
unaffiliated third party (or parties) at any time in accordance with the terms
of this Agreement, Millennium America may terminate the Millennium America
Guarantee if, at the time of such sale or at the time of such termination, (A)
the Partnership has an "investment grade" credit rating issued by Moody's
Investor Service Inc. or Standard & Poor's Corporation (or, if the Partnership
has no rated indebtedness outstanding at such time, Millennium America
demonstrates to the reasonable satisfaction of the Partnership that the
Partnership could obtain such an "investment grade" credit rating), or (B) the
fair market value of the Partnership's assets is at least 140% of the gross
amount of its liabilities. For purposes of this paragraph (c), "EBITDA" means,
with respect to any period, operating income before interest, taxes,
depreciation and amortization, as determined in accordance with GAAP; "Net
Interest" means, with respect to any period, (i) the amount which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" (or any
like caption) on a consolidated income statement of the Partnership and all
other Persons with which the Partnership's financial statements are to be
consolidated in accordance with GAAP for the relevant period ended on such date
less (ii) the amount which, in conformity with GAAP,
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would be set forth opposite the caption "interest income" (or any like caption)
on such consolidated income statement; "Total Indebtedness" means at the time of
determination all indebtedness of the Partnership and its subsidiaries on a
consolidated basis, as determined in accordance with GAAP; "Total
Capitalization" means, at the time of determination, the sum of Total
Indebtedness plus the partner's equity reflected on a balance sheet of the
Partnership prepared in accordance with GAAP.
SECTION 9
RIGHTS OF PARTNERS
------------------
9.1 Delegation and Contracts with Related Parties.
---------------------------------------------
(a) The Partners acknowledge that the General Partners (acting through the
Partnership Governance Committee) are permitted to delegate responsibility for
day-to-day operations of the Partnership to officers and employees of the
Partnership.
(b) Upon receipt of any required approval by the Partnership Governance
Committee (including, as applicable, any approval required by Section 6.8), all
contracts and transactions between the Partnership and a Partner or its
Affiliates shall be deemed to be entered into on an arm's-length basis and to be
subject to ordinary contract and commercial law, without any other duties or
rights being implied by reason of a Partner being a Partner or by reason of any
provision of this Agreement or the existence of the Partnership.
9.2 General Authority. Persons dealing with the Partnership are entitled
to rely conclusively on the power and authority of each of the General Partners
as set forth in this Agreement. In no event shall any Person dealing with any
General Partner or such General Partner's representatives with respect to any
business or property of the Partnership be obligated to ascertain that the terms
of this Agreement have been complied with, or be obligated to inquire into the
necessity or expedience of any act or action of the General Partner or the
General Partner's representatives; and every contract, agreement, deed,
mortgage, security agreement, promissory note or other instrument or document
executed by the General Partner or the General Partner's representatives with
respect to any business or property of the Partnership shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and/or delivery thereof, this Agreement
was in full force and effect, (ii) the instrument or document was duly executed
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership, and (iii) the General Partner or the General Partner's
representative was duly authorized and empowered to execute and deliver any and
every such instrument or document for and on behalf of the Partnership. Nothing
in this Section 9.2 shall be deemed to be a waiver or release of any General
Partner's obligations to the other Partners as set forth elsewhere in this
Agreement.
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9.3 Limitation on Fiduciary Duty; Non-Competition; Right of First
-------------------------------------------------------------
Opportunity.
------------
(a) Each Partner (directly or through its Affiliates) is a sophisticated
party possessing extensive knowledge of and experience relating to, and is
actively engaged in, significant businesses in addition to its Contributed
Businesses, has been represented by legal counsel, is capable of evaluating and
has thoroughly considered the merits, risks and consequences of the provisions
of this Section 9.3 and is agreeing to such provision knowingly and advisedly.
The liability of each of the General Partners (including any liability of its
Affiliates or its and their respective officers, directors, agents and
employees) or of any Limited Partner (including any liability of its Affiliates
or its and their respective officers, agents, directors and employees), either
to the Partnership or to any other Partner, for any act or omission by such
Partner in its capacity as a partner of the Partnership that is imposed by such
Partner's status as a "general partner" or "limited partner" (as such terms are
used in the Act) of a limited partnership is hereby eliminated, waived and
limited to the fullest extent permitted by law; provided, however, that each
General Partner shall at all times owe to the other General Partners a fiduciary
duty in observing the requirement described in Section 6.7 that two or more
Representatives of Lyondell GP, two or more Representatives of Millennium GP and
two or more Representatives of Occidental GP shall be required to give their
approval before the Partnership may undertake any of the actions listed in
Section 6.7. Nothing in this subsection shall relieve any Partner from
liability for any breach of this Agreement and each General Partner shall at all
times owe to the other General Partners a duty to act in good faith with respect
to all matters involving the Partnership.
(b) Except as set forth in Section 9.3(c), each Partner's Affiliates shall
be free to engage in or possess an interest in any other business of any type,
including any business in direct competition with the Partnership, and to avail
itself of any business opportunity available to it without having to offer the
Partnership or any Partner the opportunity to participate in such business.
Except as set forth in Section 9.3(c), it is expressly agreed that the legal
doctrine of "corporate or business opportunities" sometimes applied to a Person
deemed to be subject to fiduciary or other similar duties so as to prevent such
Persons from engaging in or enjoying the benefits of certain additional business
opportunities shall not be applied in the case of any investment, acquisition,
business, activity or operation of any Partner's Affiliates.
(c) (i) If a Partner's Affiliate desires to initiate or pursue an
opportunity to undertake, engage in, acquire or invest in a Related
Business by investing in or acquiring a Person whose business is a Related
Business, acquiring assets of a Related Business, or otherwise engaging in
or undertaking a Related Business (a "Business Opportunity"), such Partner
or its Affiliate (such Partner, together with its Affiliates, being called
the "Proposing Partner") shall offer the Partnership the Business
Opportunity on the terms set forth in Section 9.3(c)(ii).
(ii) When a Proposing Partner offers a Business Opportunity to the
Partnership, the Partnership shall elect to do one of the following within
a reasonably prompt period:
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(A) acquire or undertake the Business Opportunity for the benefit of the
Partnership as a whole, at the cost, expense and benefit of the
Partnership; provided, however, that, if the Partnership ceases to
actively pursue such opportunity for any reason, then the Proposing
Partner will be entitled to proceed under clause (B) below; or
(B) permit the Proposing Partner to acquire or undertake the Business
Opportunity for its own benefit and account without any duty to the
Partnership or the other Partners with respect thereto; provided,
however, that if the Business Opportunity is in direct competition with
the then existing business of the Partnership (a "Competing
Opportunity"), then the Proposing Partner and the Partnership shall, if
either so elects, seek to negotiate and implement an arrangement
whereby the Partnership would either (i) acquire or undertake the
Competing Opportunity at the sole cost, expense and benefit of the
Proposing Partner under a mutually acceptable arrangement whereby the
Competing Opportunity is treated as a separate business within the
Partnership with the costs, expenses and benefits related thereto being
borne and enjoyed solely by the Proposing Partner, or (ii) enter into a
management agreement with the Proposing Partner to manage the Competing
Opportunity on behalf of the Proposing Partner on terms and conditions
mutually acceptable to the Proposing Partner and the Partnership. If
the Partnership and the Proposing Partner do not reach agreement as to
such arrangement, the Proposing Partner may acquire or undertake the
Competing Opportunity for its own benefit and account without any duty
to the Partnership or the other Partners with respect thereto.
(d) Notwithstanding the provisions of Section 9.3(c)(ii), (i) if the
Business Opportunity constitutes less than 25% (based on annual revenues for the
most recently completed fiscal year) of an acquisition of or investment in
assets, activities, operations or businesses that is not otherwise a Related
Business, then a Proposing Partner may acquire or invest in such Business
Opportunity without first offering it to the Partnership; provided, that, after
completion of the acquisition or investment thereof, such Proposing Partner must
offer the Business Opportunity to the Partnership pursuant to the terms of
Section 9.3(c)(ii); and if the Partnership elects option (A) of Section
9.3(c)(ii) with respect thereto, the Business Opportunity shall be acquired by
the Partnership at its fair market value as of the date of such acquisition and
(ii) if the Business Opportunity is (A) part of an integrated project, a
substantial element of which is the development, exploration, production and/or
sale of oil or gas reserves and (B) located in a country other than the United
States, Canada or Mexico then such Partner or its Affiliate may acquire or
invest in such Business Opportunity without first offering it to the
Partnership; provided, that subject to any requisite consents and approvals from
third parties or governmental authorities, the Partner or its Affiliate will use
commercially reasonable efforts to include the Partnership to the maximum extent
practicable in such integrated project with respect to the Business Opportunity
portion of the project.
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(e) Notwithstanding the provisions of Section 9.3(c), any direct or
indirect expansion by LYONDELL-CITGO Refining Company Ltd. of its aromatics
business shall not be deemed to constitute a Business Opportunity for purposes
of Section 9.3(c).
(f) If (i) the Partnership is presented with an opportunity to acquire or
undertake a Business Opportunity (other than pursuant to Section 9.3(c)) that it
determines not to acquire or undertake and (ii) the Representatives of one or
two General Partners, but not the other General Partner(s), desire that the
Partnership acquire or undertake such Business Opportunity, then the Partnership
shall permit such General Partner(s) and its or their respective Affiliates to
acquire or undertake such Business Opportunity (or in the event two of the
General Partners desire to so undertake, then, as between those two General
Partners and their respective Affiliates, the Business Opportunity may be
pursued or acquired either jointly or independently and Section 9.3(c)(ii)(B)
shall be deemed to be applicable thereto to the same extent as if such General
Partner(s) and its or their respective Affiliates were a Proposing Partner with
respect to such Business Opportunity.
9.4 Limited Partners.
----------------
(a) No Limited Partner shall take part in the management or control of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise to bind the Partnership.
(b) Each Limited Partner shall have the rights with respect to the
Partnership's books and records as set forth in Section 5.3.
9.5 Partner Covenants. Each Partner covenants and agrees with the
Partnership and with the other Partners as follows:
(i) It shall not exercise, or purport or attempt to exercise, its
authority to withdraw, retire, resign, or assert that it has been expelled
from the Partnership;
(ii) It shall not do any act that would make it impossible or
impracticable to carry on the Partnership's business; and
(iii) It shall not act or purport or attempt to act in a manner
inconsistent with any act of a General Partner acting pursuant to the
Partnership Governance Committee or in a manner contrary to the agreements
of the Partners set forth in this Agreement;
provided, that, nothing in this Section 9.5 shall be deemed to waive its rights
under Sections 10, 11 or 12.
9.6 Special Purpose Entities. Each Partner covenants and agrees that (i)
its business shall be restricted solely to the holding of its Units and the
doing of things necessary or incidental in connection therewith (including,
without limitation, the exercise of its rights and powers under this Agreement),
and (ii) it shall not own any assets, incur any liabilities or engage,
participate or invest
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in any business outside the scope of such business; provided, however, that this
Section 9.6 shall not be binding upon (a) Millennium Petrochemicals Inc., a
Virginia corporation, or its successors by operation of law to the extent that
any Units shall be Transferred to it in accordance with Section 10.6 or (b) at
its option, any Wholly Owned Affiliate of any Partner to whom Units shall be
Transferred pursuant to Section 10.6 if, at the date of such Transfer, such
Wholly Owned Affiliate shall have a consolidated net worth, as determined in
accordance with GAAP, of at least $50 million. Notwithstanding the foregoing
provisions of this Section 9.6, this Section 9.6 shall not prohibit any Partner
from incurring debt payable to its Parent or an Affiliate so long such debt is
permitted under Section 2.4 of the Parent Agreement.
SECTION 10
TRANSFERS AND PLEDGES
---------------------
10.1 Restrictions on Transfer and Prohibition on Pledge. Except pursuant
to Section 11 or the procedures described below in this Section, a Partner shall
not, in any transaction or series of transactions, directly or indirectly
Transfer all or any part of its Units. A Partner shall not, in any transaction
or series of transactions, directly or indirectly Pledge all or any part of its
Units or its interest in the Partnership. Neither the term "Transfer" nor the
term "Pledge," however, shall include an assignment by a Partner of such
Partner's right to receive distributions from the Partnership so long as such
assignment does not purport to assign any right of such Partner to participate
in or manage the affairs of the Partnership, to receive any information or
accounting of the affairs of the Partnership, or to inspect the books or records
of the Partnership or any other right of a Partner pursuant to this Agreement or
the Act. Any attempt by a Partner to Transfer or Pledge all or a portion of its
Units in violation of this Agreement shall be void ab initio and shall not be
effective to Transfer or Pledge such Units or any portion thereof. Subject to
any applicable restrictions imposed by the Amended and Restated Parent
Agreement, nothing in this Agreement shall prevent the Transfer or Pledge by the
owner thereof of any capital stock, equity ownership interests or other security
of a Partner or any Affiliate of a Partner.
10.2 Right of First Option.
---------------------
(a) Except as set forth in Section 10.6, without the consent of all of the
General Partners, no Partner may Transfer less than all of its Units and no
Partner may Transfer its Units for consideration other than cash. Any Limited
Partner (or Limited Partners, if there are Affiliated Limited Partners) and its
(or their) Affiliated General Partner desiring to Transfer all of their Units
(together, the "Selling Partners") shall give written notice (the "Initial
Notice") to the Partnership and the other Partners (the "Offeree Partners")
stating that the Selling Partners desire to Transfer their Units and stating the
cash purchase price and all other terms on which they are willing to sell (the
"Offer Terms"). Delivery of an Initial Notice shall constitute the irrevocable
offer of the Selling Partners to sell their Units to the Offeree Partners
hereunder.
(b) The Offeree Partners shall have the option, exercisable by delivering
written notice (the "Acceptance Notice") of such exercise to the Selling
Partners within 45 days of the date of the
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Initial Notice, to elect to purchase all of the Units of the Selling Partners on
the Offer Terms described in the Initial Notice. If all of the Offeree Partners
deliver an Acceptance Notice, then all of the Units shall be transferred to the
Offeree Partners on a pro rata basis (based on the ratio of the number of Units
owned by each Offeree Partner delivering an Acceptance Notice to the number of
Units owned by all Offeree Partners delivering an Acceptance Notice or on any
other basis that shall be mutually agreed upon between the Offeree Partners
delivering an Acceptance Notice). If less than all of the Offeree Partners
deliver an Acceptance Notice, the Selling Partners shall give written notice
thereof (the "Additional Notice") to the Offeree Partners electing to purchase,
and such Offeree Partners shall have the option, exercisable by delivery of an
Acceptance Notice of such exercise to the Selling Partners within 15 days of
such Additional Notice, to purchase all of the Units, including the Units it had
not previously elected to purchase; provided, however, that any election by an
Offeree Partner not to purchase all such Units shall be deemed a rescission of
such Offeree Partner's original Acceptance Notice and an election not to
purchase any of the Units of the Selling Partners. The Acceptance Notice shall
set a date for closing the purchase, such date to be not less than 30 nor more
than 90 days after delivery of the Acceptance Notice; provided that such time
period shall be subject to extension as reasonably necessary (up to a maximum of
an additional 120 days after such 90 day period) in order to comply with any
applicable filing and waiting period requirements under the Hart-Scott-Rodino
Antitrust Improvements Act. The closing shall be held at the Partnership's
offices. The purchase price for the Selling Partners' Units shall be paid in
cash delivered at the closing. The purchase shall be consummated by appropriate
and customary documentation (including the giving of representations and
warranties substantially similar to those set forth in Sections 2.1 through 2.3
of the Second Master Transaction Agreement).
(c) If none of the Offeree Partners elect to purchase the Selling Partners'
Units within 45 days after the receipt of the Initial Notice, the Selling
Partners shall have a further 180 days during which they may, subject to
Sections 10.2(d) and (e), consummate the sale of their Units to a third party
purchaser at a purchase price and on such other terms that are no more favorable
to such purchaser than the Offer Terms. If the sale is not completed within
such further 180-day period, the Initial Notice shall be deemed to have expired
and a new notice and offer shall be required before the Selling Partners may
make any Transfer of their Units.
(d) Before the Selling Partners may consummate a Transfer of their Units to
a third party in accordance with this Agreement, the Selling Partners shall
demonstrate to the Offeree Partners that the Person willing to serve as the
proposed purchaser's guarantor under the agreement contemplated by Section
10.2(e)(vi) has outstanding indebtedness that is rated investment grade by
Moody's Investors Service, Inc. and Standard & Poor's Corporation, or if such
Person has no rated indebtedness outstanding, such Person shall provide an
opinion from a nationally recognized investment banking firm that such Person
could be reasonably expected to obtain such ratings.
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(e) Notwithstanding the foregoing provisions of this Section 10.2, a
Partner may Transfer its Units (other than pursuant to Section 10.6) only if all
of the following occur:
(i) The Transfer is accomplished in a non-public offering in
compliance with, and exempt from, the registration and qualification
requirements of all federal and state securities laws and regulations.
(ii) The Transfer does not cause a default under any material contract
to which the Partnership is a party or by which the Partnership or any of
its properties is bound.
(iii) The transferee executes an appropriate agreement to be bound by
this Agreement.
(iv) The transferor and/or transferee bears all reasonable costs
incurred by the Partnership in connection with the Transfer.
(v) The business and activities of the transferee comply with Section
9.6.
(vi) The guarantor of the transferee satisfies the criteria set forth
in Section 10.2(d) and delivers an agreement to the ultimate parent entity
of the Offeree Partners and to the Partnership, substantially in the form
of the Amended and Restated Parent Agreement.
(vii) The proposed transferor is not in default in the timely
performance of any of its material obligations to the Partnership.
(viii) The provisions of Section 10.3 are satisfied.
10.3 Inclusion of General or Limited Partner Units. No Limited Partner may
Transfer its Units to any Person (other than in accordance with Section 10.6)
unless the Units of its General Partner Affiliate and its Limited Partner
Affiliate or Affiliates (if any) are simultaneously transferred to such Person
or a Wholly Owned Affiliate of such Person. No General Partner may transfer its
Units to any Person (other than a Wholly Owned Affiliate of such Partner) unless
the Units of its Affiliated Limited Partner (or Limited Partners, if more than
one) are simultaneously transferred to such Person or a Wholly Owned Subsidiary
of such Person.
10.4 Rights of Transferee. Upon consummation of a Transfer in accordance
with Section 10.2, the transferee or transferees shall immediately, and without
any further action of any Person, become (i) a Substitute Limited Partner if and
to the extent Limited Partner Units are transferred and (ii) a Substitute
General Partner, if and to the extent General Partner Units are transferred.
10.5 Effective Date of Transfer. Each Transfer shall become effective as
of the first day of the calendar month following the calendar month during which
the Partnership Governance Committee approves such Transfer and receives a copy
of the instrument of assignment and all such
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certificates and documents of the character described in Section 10.2, which the
Partnership Governance Committee may reasonably request.
10.6 Transfer to Wholly Owned Affiliate. Without the need for the consent
of any Person (subject to the provisions contained in this Section 10.6):
(a) any Partner may Transfer its Units to any Wholly Owned Affiliate of
such Partner (other than the Partner that is its Affiliate), provided the
transferee executes an instrument reasonably satisfactory to all of the General
Partners accepting the terms and provisions of this Agreement (except as may be
provided in Section 9.6). Upon consummation of a Transfer in accordance with
this Section 10.6(a), the transferee shall immediately, and without any further
action of any Person, become (i) a Substitute Limited Partner if and to the
extent Limited Partner Units are transferred and (ii) a Substitute General
Partner, if and to the extent General Partner Units are transferred; and
(b) any Limited Partner may, at its option and at any time, (i) Transfer up
to 99% of its Limited Partner Units to its Affiliated General Partner, whereupon
such Limited Partner Units shall, without any further action, become General
Partner Units or (ii) Transfer all of the Limited Partner Units held by such
Limited Partner to its Affiliated Limited Partner. Promptly following any
Transfer of Limited Partner Units in accordance with this Section 10.6(b), each
Partner shall take such actions and execute such instruments or documents
(including, without limitation, amendments to this Agreement or supplemental
agreements hereto) as may be reasonably necessary to ensure that each Affiliated
Partner Group shall, taken as a whole and following such Transfer, maintain all
of its rights under this Agreement as in effect immediately prior to such
Transfer (including, without limitation, the portion of Available Net Operating
Cash distributable to such Affiliated Partner Group).
10.7 Invalid Transfer. No Transfer of Units which is in violation of this
Section 10 shall be valid or effective, and the Partnership shall not recognize
the same for the purposes of making any allocation or distribution.
SECTION 11
DEFAULT
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11.1 Default.
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(a) Each of the following events shall constitute a "Default" and create
the rights provided for in this Section 11 in favor of the Partnership and the
Non-Defaulting Partners against the Defaulting Partners:
(i) the failure by a Partner to make any contribution to the
Partnership as required pursuant to this Agreement (other than pursuant to
the Contribution Agreement), which failure continues for at least five
Business Days from the date that the Partner is notified such contribution
is overdue;
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(ii) in the case of each of Lyondell GP and Lyondell LP, the failure
to pay principal, when due, on the Lyondell Note, which failure continues
for at least five Business Days from the date such payment is due; or
(iii) the withdrawal, retirement, resignation or dissolution of a
Partner (other than in connection with a Transfer of all of a Partner's
Units in accordance with this Agreement); or the Bankruptcy of a Partner or
its Guarantor.
(b) The day upon which the Default commences or occurs (or if the Default
is subject to a cure period and is not timely cured, then the day following the
end of the applicable cure period) shall be the "Default Date." Without
prejudice to a Partner's (or any of its Affiliates') rights to seek temporary or
preliminary judicial relief, prior to any such Default Date all rights and
obligations of the Partners under this Agreement shall remain in full force and
effect.
11.2 Remedies for Default. Provided that there shall be no duplication of
remedies, without prejudice to any right to pursue independently and at any
time, including simultaneously, any other remedy it may have under law,
including the right to seek to recover Damages, or equity, each Non-Defaulting
Affiliated Partner Group in its sole discretion may elect to pursue the
following remedies:
(a) At any time prior to the expiration of 60 days from the Default Date,
each Non-Defaulting Affiliated Partner Group may elect to purchase its pro rata
share (based on the ratio of the number of Units owned by such Partners to the
number of Units owned by all Non-Defaulting Partners electing to purchase) of
the Units of the Defaulting Partners as described in Section 11.3; provided,
however, that within 10 days after the determination of the Fair Market Value,
either Non-Defaulting Affiliated Partner Group may withdraw its election. If a
Non-Defaulting Affiliated Partner Group withdraws its election to purchase after
the determination of Fair Market Value, and the other Non-Defaulting Affiliated
Partner Group has elected and not so withdrawn, the withdrawing Affiliated
Partner Group shall provide notice within 5 days of its withdrawal to such other
Affiliated Partner Group. At any time prior to the expiration of 10 days from
receipt of such notice, the Affiliated Partner Group receiving such notice may
elect to purchase the Units as to which the election to purchase has been
withdrawn. If on the later to occur of (i) a Non-Defaulting Affiliated Partner
Group's withdrawal of its election to purchase or (ii) the expiration of 10 days
from receipt of the notice provided for in the foregoing sentence, no election
to purchase is in effect with respect to all of the Units of the Defaulting
Partners, then each Non-Defaulting Partner Affiliated Partner Group shall have
an additional 30 days from such time to elect an alternative remedy under
Section 11.2(b) below; and
(b) At any time prior to the expiration of 60 days from the Default Date
(or if any Non-Defaulting Affiliated Partner Group initially elected to pursue
its remedy under Section 11.2(a) above and no elections to purchase all Units of
the Defaulting Partners are made and not withdrawn, at any time within the 30
days following the last applicable waiting period under Section 11.2(a)), any
Non-Defaulting Affiliated Partner Group may elect to effect a liquidation of the
Partnership under Section 11.4 and thereby cause the Partnership to dissolve
under Section 12.1(iv).
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11.3 Purchase of Defaulting Partners' Units.
--------------------------------------
(a) Upon any election pursuant to Section 11.2(a), the purchase price that
such Non-Defaulting Partners shall pay, in the aggregate, to the Defaulting
Partners for their Units shall be an amount equal to (i) the amount that the
Defaulting Partners would receive in a liquidation (assuming that any sale under
Section 12.2 were for an amount equal to the Fair Market Value, without giving
effect to any Damages) reduced by (ii) the unrecovered Damages attributable to
the Default by the Defaulting Partners.
(b) If the Non-Defaulting Partners have a right to purchase the Units of
the Defaulting Partners, any Non-Defaulting Partner may first seek a
determination of Fair Market Value by delivering notice in writing to the
Defaulting Partners. Each such Non-Defaulting Affiliated Partner Group shall
have 10 days from the final determination of Fair Market Value (or if purchasing
pursuant to the withdrawal of election to purchase, 10 days from receipt of
notice as provided in Section 11.2(b)) to elect to purchase its share of the
Defaulting Partner Units by delivering notice of such election in writing, and
the purchase shall be consummated prior to the expiration of 60 days from the
date such notice is delivered; provided that, such time period shall be subject
to extension as reasonably necessary (up to a maximum of an additional 120 days
after such 60 day period) in order to comply with any applicable filing and
waiting period requirements under the Hart-Scott-Rodino Antitrust Improvements
Act.
(c) The purchase price so determined shall be payable in cash at a closing
held at the Partnership's offices. The purchase shall be consummated by
appropriate and customary documentation (including the giving of representations
and warranties substantially similar to those set forth in Sections 2.1 through
2.4 of the Second Master Transaction Agreement) as soon as practicable and in
any event within the applicable time period specified in subsection (b).
(d) The Non-Defaulting Partners may assign, in whole or in part, their
right to purchase the Units of the Defaulting Partners to one or more third
parties without the consent of any Partner hereunder.
(e) If Units are transferred in accordance with this Section 11.3, whether
to the Non-Defaulting Partners or a third party (under subsection (d) above),
upon the consummation of such Transfer, each such transferee shall immediately,
and without any further action on the part of any Person, become (i) a
Substitute Limited Partner if and to the extent that Limited Partner Units were
transferred to such Person and (ii) a Substitute General Partner if and to the
extent that General Partner Units were transferred to such Person.
11.4 Liquidation. Upon any election pursuant to Section 11.2(b), any Non-
Defaulting Partner shall have the right to elect to dissolve and liquidate the
Partnership pursuant to the procedures in Section 12.1(iv) (such procedures
constituting a "Liquidation"); provided, however, that any amount payable to the
Defaulting Partners in such Liquidation pursuant to Section 12.2 shall be
reduced by, without duplication, any unrecovered Damages incurred by the Non-
Defaulting Partners and the Non-Defaulting Partners' Percentage Interest of any
unrecovered Damages incurred
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by the Partnership in connection with the Default. The Non-Defaulting Partner
shall deliver notice of such election to dissolve and liquidate in writing to
the Partnership and the other Partners.
11.5 Certain Consequences of Default. Notwithstanding any other provision
of this Agreement, commencing on the Default Date and (i) prior to the Non-
Defaulting Partners' collection of Damages through the exercise of its legal
remedies or otherwise, or (ii) while the Non-Defaulting Partners are pursuing
their remedies under Section 11.2(a) or (b), the Representatives of the
Defaulting General Partner shall not have any voting or decisional rights with
respect to matters requiring Partnership Governance Committee Action, and such
matters shall be determined solely by the Representatives of the Non-Defaulting
General Partners; provided, however, that the foregoing loss of voting and
decisional rights shall not occur as a result of a Default caused solely by the
Bankruptcy of a Partner or a Guarantor described in Section 11.1(a)(iii); and
provided further, that in the case of a Default under Section 11.1(a)(i) or
(ii), the foregoing loss of voting and decisional rights shall not apply to
those voting and decisional rights contained in Sections 6.7(i), (x), (xvi) or
(xviii) of this Agreement, which rights shall continue in full force and effect
at all times.
SECTION 12
DISSOLUTION, LIQUIDATION AND TERMINATION
----------------------------------------
12.1 Dissolution and Termination. As long as there is at least one other
General Partner (who is hereby authorized in such event to conduct the business
of the Partnership without dissolution), the withdrawal, retirement,
resignation, dissolution or Bankruptcy of a General Partner shall not dissolve
the Partnership, but rather shall be a Default covered by Section 11. The
Partnership shall be dissolved upon the happening of any one of the following
events:
(i) the written determination of all General Partners to dissolve the
Partnership;
(ii) the entry of a judicial decree of dissolution;
(iii) any other act or event which results in the dissolution of a
limited partnership under the Act (except as provided in the first sentence
of this Section 12.1);
(iv) the election of a Non-Defaulting Affiliated Partner Group to
effect a dissolution of the Partnership under Section 11.4; or
(v) after the delivery of a Deadlock Notice by a General Partner
pursuant to Section 8.5, the written determination by any General Partner
to dissolve the Partnership.
12.1 Procedures Upon Dissolution.
---------------------------
(a) General. If the Partnership dissolves, it shall commence winding up
pursuant to the appropriate provisions of the Act and the procedures set forth
in this Section 12. Notwithstanding
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the dissolution of the Partnership, prior to the termination of the Partnership,
the business of the Partnership and the affairs of the Partners, as such, shall
continue to be governed by this Agreement.
(b) Control of Winding Up. The winding up of the Partnership shall be
conducted under the direction of the Partnership Governance Committee; provided,
however, that if the dissolution is caused by entry of a decree of judicial
dissolution, the winding up shall be carried out in accordance with such decree.
(c) Manner of Winding Up. Unless the provisions of Section 12.2(e) apply,
the Partnership shall attempt to sell all property and apply the proceeds
therefrom in accordance with this Section 12.2(c) and Section 12.2(d) below.
Upon dissolution of the Partnership, the Partnership Governance Committee shall
determine the time, manner and terms of any sale or sales of Partnership
property pursuant to such winding up, consistent with its duties and having due
regard to the activity and condition of the relevant market and general
financial and economic conditions. Except as otherwise agreed by the Partners,
no distributions will be made in kind to any Partner without the consent of each
Partner.
(d) Application of Assets. In the case of a dissolution and winding-up of
the Partnership, the Partnership's assets shall be applied as follows:
(i) First, to satisfaction of the liabilities of the Partnership owing
to creditors (including Partners and Affiliates of Partners who are
creditors), whether by payment or reasonable provision for payment. Any
reserves created to make any such provision for payment may be paid over by
the Partnership to an independent escrow holder or trustee, to be held in
escrow or trust for the purpose of paying any such contingent, conditional
or unmatured liabilities or obligations, and, at the expiration of such
period as the Partnership Governance Committee may deem advisable, such
reserves shall be distributed to the Partners or their assigns in the
manner set forth in subsection (d)(ii) below.
(ii) Second, after all allocations of Profits or Losses and other
items pursuant to Section 4, to the Partners in accordance with the
balances in their Capital Accounts. Any Partner that then has a deficit in
its Capital Account shall contribute cash in the amount necessary to
eliminate such deficit. Such contributions shall be made within 90 days
after the date in which all undistributed assets of the Partnership have
been converted to cash.
(iii) Notwithstanding the foregoing, if any Partner shall be indebted
to the Partnership, then until payment in full of the principal of and
accrued but unpaid interest on such indebtedness, regardless of the stated
maturity or maturities thereof, the Partnership shall retain such Partner's
distributive share of Partnership property and apply such sums to the
liquidation of such indebtedness and the cost of operation of such
Partnership property during the period of such liquidation.
(e) Division of Assets upon Deadlock. If dissolution occurs pursuant to
Section 12.1(v), then the provisions of this Section 12.2(e) shall, if elected
by any Partner, apply in lieu of
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the provisions of Section 12.2(c), but subject to the provisions of Section
12.2(d)(ii). In such event, the Partnership properties shall be divided and
distributed in kind to the Partners in accordance with the provisions of
Appendix E.
12.3 Termination of the Partnership. Upon the completion of the
liquidation of the Partnership and the distribution of all Partnership assets,
the Partnership's affairs shall terminate and the Partnership shall cause to be
executed and filed a Certificate of Cancellation of the Partnership's
Certificate of Limited Partnership pursuant to the Act, as well as any and all
other documents required to effectuate the termination of the Partnership.
12.4 Asset and Liability Statement. Within a reasonable time following the
completion of the winding-up and liquidation of the Partnership's business, the
Partnership Governance Committee shall supply to each of the Partners a
statement (which may be unaudited) which shall set forth the assets and the
liabilities of the Partnership as of the date of complete liquidation, and each
Partner's pro rata portion of distributions pursuant to Section 12.2.
SECTION 13
MISCELLANEOUS
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13.1 Confidentiality and Use of Information.
--------------------------------------
(a) Except as provided in subsection (c) or (d) hereof, each Partner shall,
and shall cause each of its Affiliates and its and their respective partners,
shareholders, directors, officers, employees and agents (collectively, "Related
Persons") to, keep secret, retain in strictest confidence, and not distribute,
disseminate or disclose any and all Confidential Information except to (i) the
Partnership and its officers and employees, (ii) any lender to the Partnership
or (iii) any Partner or any of their respective Affiliates or other Related
Persons on a "need to know" basis in connection with the transactions leading up
to and contemplated by this Agreement and the operation of the Partnership, and
such Partner disclosing Confidential Information pursuant to this Section
13.1(a) shall use, and shall cause its Affiliates and other Related Persons to
use, such Confidential Information only for the benefit of the Partnership in
conducting the Partnership's business or for any other specific purposes for
which it was disclosed to such party; provided that the disclosure of financial
statements of, or other information relating to the Partnership shall not be
deemed to be the disclosure of Confidential Information (y) to the extent that
any Partner (or its ultimate parent entity) deems it necessary, appropriate or
customary pursuant to law, regulation or stock exchange rule (in the reasonable
good faith judgment of such parent entity) to disclose such information in or in
connection with filings with the SEC, press releases disseminated to the
financial community, presentations to lenders, presentations to ratings agencies
or information disclosed to similar audiences or (z) to the extent that in order
to sustain a position taken for tax purposes, any Partner deems it necessary and
appropriate to disclose such financial statements or other information. All
Confidential Information disclosed in connection with the Partnership or
pursuant to this Agreement shall remain the property of the Person whose
property it was prior to such disclosure unless such property has been
transferred to the Partnership pursuant to a Contribution Agreement.
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(b) No Confidential Information regarding the plans or operations of
any Partner or any Affiliate thereof received or acquired by or disclosed to any
unaffiliated Partner or Affiliate thereof in the course of the conduct of
Partnership business, or otherwise as a result of the existence of the
Partnership, may be used by such unaffiliated Partner or Affiliate thereof for
any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas unrelated to
the business of the Partnership in which any other Partner and their respective
Affiliates compete.
(c) In the event that any Partner is legally required (by
interrogatories, discovery requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, it is agreed that such Partner prior to disclosure will provide the
Partnership Governance Committee (and, if such Confidential Information concerns
another Partner, such Partner) with prompt notice of such request(s) so that the
Partnership Governance Committee (or such other Partner) may seek an appropriate
protective order or other appropriate remedy and/or waive the Partner's
compliance with the provisions of this Section. In the event that such
protective order or other remedy is not obtained, or that the Partnership
Governance Committee (and, if such Confidential Information concerns another
Partner, such Partner) grants a waiver hereunder, the Partner required to
furnish Confidential Information may furnish that portion (and only that
portion) of the Confidential Information which, in the opinion of such Partner's
counsel, such Partner is legally compelled to disclose, and such Partner will
exercise its commercially reasonable best efforts to obtain reliable assurance
that confidential treatment will be accorded any Confidential Information so
furnished.
(d) Any Partner may disclose Confidential Information to a third party
who requires such Confidential Information for the purpose of evaluating a
possible purchase of such Partner's Units in accordance with Section 10;
provided, however, that such third party shall be informed by such Partner of
the confidential nature of the information and the existence of this Section
13.1 and prior to any disclosure shall execute a written confidentiality
agreement with such Partner substantially identical in scope to this Section and
providing that such confidentiality agreement is also made for the benefit of
the Partnership and each of the other Partners.
(e) The Partners and their Affiliates shall consult with each other on
an ongoing basis with respect to disclosures regarding the Partnership and its
business and affairs permitted under Section 13.1(a)(y).
13.2 Indemnification.
---------------
(a) Indemnification by Partnership. The Partnership agrees, to the fullest
extent permitted by applicable law, to indemnify, defend and hold harmless each
Partner, its Affiliates and their respective officers, directors and employees
from, against and in respect of any Liability which such Indemnified Person may
sustain, incur or assume as a result of, or relative to, a Third Party Claim
arising out of or in connection with the business, property or affairs of the
Partnership, except
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to the extent that it is Finally Determined that such Third Party Claim arose
out of or was related to actions or omissions of the indemnified Partner, its
Affiliates or any of their respective officers, directors or employees (acting
in their capacities as such) constituting a breach of this Agreement or any
Related Agreement. The Partnership shall periodically reimburse or advance to
any Person entitled to indemnity under this subsection (a) its legal and other
expenses incurred in connection with defending any claim with respect to such
Liability if such Person shall agree to reimburse promptly the Partnership for
such amounts if it is finally determined that such Person was not entitled to
indemnity hereunder. Nothing in this Section 13.2(a) is intended to, nor shall
it, affect or take precedence over the indemnity provisions contained in any
Related Agreement.
(b) Partner's Right of Contribution. Each Partner hereby agrees, to the
fullest extent permitted by law, to indemnify, defend and hold harmless the
other Partners, their Affiliates and their respective officers, directors and
employees from and against the indemnifying Partner's Percentage Interest
(calculated at the time any such Liability was incurred) of any Liability that
such Indemnified Person may sustain, incur or assume as a result of or relating
to any Third Party Claim arising out of or in connection with the business,
property or affairs of the Partnership; provided, however, that such indemnified
Partner, its Affiliates and their respective officers, directors and employees
shall not be entitled to indemnity under this subsection (b) to the extent that
it is Finally Determined that such Third Party Claim arose out of or was related
to actions or omissions of the indemnified Partner, its Affiliates or any of
their respective officers, directors or employees (acting in their capacities as
such) constituting a breach of this Agreement or any Related Agreement;
provided, further, that such indemnified Partner, its Affiliates and their
respective officers, directors and employees shall not be entitled to indemnity
under this subsection (b) unless (x) the indemnified Partner shall first make a
written demand for indemnification from the Partnership in accordance with
subsection (a) above and subsection (c) below and the Partnership shall fail to
satisfy such demand in a manner reasonably satisfactory to the indemnified
Partner within 60 days of such notice or (y) the Partnership is insolvent or
otherwise unable to satisfy its obligations. The indemnifying Partner shall
periodically reimburse any Person entitled to indemnity under this subsection
(b) for its legal and other expenses incurred in connection with defending any
claim with respect to such Liability if such Person shall agree to reimburse
promptly the indemnifying Partner for such amounts if it is Finally Determined
that such Person was not entitled to indemnity hereunder.
(c) Procedures. Promptly after receipt by a Person entitled to
indemnification under subsection (a) or (b) (an "Indemnified Party") of notice
of any pending or threatened claim against it (a "Claim"), such Indemnified
Party shall give prompt written notice (including copies of all papers served
with respect to such claim) to the party to whom the Indemnified Party is
entitled to look for indemnification (the "Indemnifying Party") of the
commencement thereof, which notice shall describe in reasonable detail the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible and the basis of
the Indemnified Party's request for indemnification under this Agreement;
provided that the failure to so notify the Indemnifying Party shall not relieve
the Indemnifying Party of any liability that it may have to any Indemnified
Party except to the extent the Indemnifying Party demonstrates that it is
prejudiced thereby. In case any Claim that is subject to indemnification under
subsection (a) shall be brought against an Indemnified Party and it shall give
notice to the Indemnifying Party of the commencement
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thereof, the Indemnifying Party may, and at the request of the Indemnified Party
shall, participate in and control the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party unless (i) the
employment thereof has been specifically authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party failed to assume the defense and
employ counsel or failed to diligently prosecute or settle the Third Party Claim
or (iii) there shall exist or develop a conflict that would ethically prohibit
counsel to the Indemnifying Party from representing the Indemnified Party. If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, including, without limitation, by
making any counterclaim against the Person asserting the Third Party Claim or
any cross-complaint against any Person, in each case only if and to the extent
that any such counterclaim or cross-complaint arises from the same actions or
facts giving rise to the Third Party Claim. The Indemnifying Party shall be the
sole judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
provided that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the prior written consent of the Indemnified
Party, which shall not be unreasonably withheld. The Indemnifying Party (if the
Indemnified Party is entitled to indemnification hereunder) shall reimburse the
Indemnified Party for its reasonable out of pocket costs incurred with respect
to such cooperation.
If the Indemnifying Party fails to assume the defense of a Third Party
Claim within a reasonable period after receipt of written notice pursuant to the
first sentence of this subparagraph (c), or if the Indemnifying Party assumes
the defense of the Indemnified Party pursuant to this subparagraph (c) but fails
diligently to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings; provided that the Indemnified Party shall not
settle such Third Party Claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section, and the Indemnifying Party shall
bear its own costs and expenses with respect to such participation.
Notwithstanding the other provisions of this Section 13.2, if the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Section 13.2 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
13.2 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified
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Party, the Indemnifying Party shall reimburse the Indemnified Party in full for
all costs of the litigation concerning such dispute.
After it has been determined, by acknowledgment, agreement, or ruling
of court of Legal Requirements, that an Indemnifying Party is liable to the
Indemnified Party under this Section 13.2(c), the Indemnifying Party shall pay
or cause to be paid to the Indemnified Party the amount of the Liability within
ten business days of receipt by the Indemnifying Party of a notice reasonably
itemizing the amount of the Liability but only to the extent actually paid or
suffered by the Indemnified Party.
(d) Survival. The indemnities contained in this Section shall survive the
termination and liquidation of the Partnership.
(e) Subrogation. In the event of any payment by or on behalf of an
Indemnifying Party to an Indemnified Party in connection with any Liability, the
Indemnifying Party (or any guarantor who made such payment) shall be subrogated
to and shall stand in the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may have any right or
claim against any third party (not including the Partnership) relating to such
event or indemnification. The Indemnified Party shall cooperate with the
Indemnifying Party (or such guarantor) in any reasonable manner in prosecuting
any subrogated claim.
(f) Nothing in this Agreement shall be deemed to limit the Partnership's
power to indemnify its officers, employees, agents or any other person, to the
fullest extent permitted by law.
13.3 Third Party Claim Reimbursement.
-------------------------------
(a) In the case of a Liability relating to a Third Party Claim and caused
by the Fault of a General Partner, its Affiliates or any of their respective
officers, directors or employees (acting in their capacities as such) against
whom reimbursement is being sought, such General Partner hereby agrees to
reimburse the Partnership for such Liability to the extent that:
(i) the Liability relates to a Third Party Claim that has been finally
resolved and that the Partnership has actually paid (an "Expense");
(ii) the Expense is not covered by insurance carried by the
Partnership (excluding any amounts relating to insured claims to the extent that
they fall within deductibles or self-insured retentions or are above applicable
coverage limits); and
(iii) the Expense is not offset by third party indemnification or
otherwise;
provided, however, that such General Partner shall reimburse the Partnership for
the Expense only to the extent and in proportion to its Fault.
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(b) Any claim by the Partnership for reimbursement under this Section
may be initiated upon written notice from a Nonconflicted General Partner to the
General Partner to whom the Partnership is entitled to look for indemnification,
and the General Partners shall have a period of 60 days during which to reach
unanimous agreement as to the terms on which any reimbursement shall be made.
If the General Partners are unable to agree or there are any disputes over Fault
and reimbursement under this Section, such matters shall be resolved pursuant to
the Dispute Procedures.
13.4 Dispute Resolution. Except as otherwise provided for herein, all
controversies or disputes arising under this Agreement shall be resolved
pursuant to the provisions set forth on Appendix D (the "Dispute Procedures").
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION, ETC. TO THE
FULLEST EXTENT PERMITTED BY LAW AND WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE LIMITATION OF LIABILITY, INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS
SET FORTH HEREIN, A PARTY SHALL BE ENTITLED TO INDEMNIFICATION OR RELEASE
HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS
GIVING RISE TO ANY SUCH INDEMNIFICATION OR RELEASE IS THE RESULT OF THE SOLE,
GROSS, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY
OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY SUCH PARTY. THE PARTIES
AGREE THAT THIS STATEMENT CONSTITUTES A CONSPICUOUS LEGEND.
13.6 Further Assurances. From time to time, each Partner agrees to execute
and deliver such additional documents, and will provide such additional
information and assistance, as the Partnership may reasonably require to carry
out the terms of this Agreement and to accomplish the Partnership's business.
13.7 Successors and Assigns. Except as may be expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the successors
of the Partners, but no Partner may assign or delegate any of its rights or
obligations under this Agreement. Except as expressly provided herein, any
purported assignment or delegation shall be void and ineffective.
13.8 Benefits of Agreement Restricted to the Parties. This Agreement is
made solely for the benefit of the Partnership and the Partners, and no other
Person, including any officer or employee of the Partnership or any Partner,
shall have any right, claim or cause of action under or by virtue of this
Agreement.
13.9 Notices. All notices, requests and other communications that are
required or may be given under this Agreement shall, unless otherwise provided
for elsewhere in this Agreement, be in writing and shall be deemed to have been
duly given if and when (i) transmitted by telecopier facsimile with proof of
confirmation from the transmitting machine or (ii) delivered by commercial
courier or other hand delivery, as follows:
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Lyondell Petrochemical Company Millennium Chemicals Inc.
1221 McKinney Street 99 Wood Avenue South
Houston, Texas 77010 Iselin, New Jersey 08830
Attention: Kerry A. Galvin Attention: George H. Hempstead, III
Telecopy Number: (713) 309-4718 Telecopy Number: (908) 603-6857
Occidental Petroleum Corporation Equistar Chemicals, LP
10889 Wilshire Blvd. P.O. Box 2583
Los Angeles, CA 90004 1221 McKinney Street
Attention: President Houston, Texas 77252-2583
Telecopy Number: (310) 443-6333 Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
With a copy to:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Telecopy Number: (310) 443-6333
13.10 [Reserved]
13.11 Severability. In the event that any provisions of this Agreement
shall be Finally Determined to be unenforceable, such provision shall, so long
as the economic and legal substance of the transactions contemplated hereby is
not affected in any materially adverse manner as to any Partner, be deemed
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
13.12 Construction. In construing this Agreement, the following principles
shall be followed: (i) no consideration shall be given to the captions of the
articles, sections, subsections or clauses, which are inserted for convenience
in locating the provisions of this Agreement and not as an aid in construction;
(ii) no consideration shall be given to the fact or presumption that any Partner
had a greater or lesser hand in drafting this Agreement; (iii) examples shall
not be construed to limit, expressly or by implication, the matter they
illustrate; (iv) the word "includes" and its syntactic variants mean "includes,
but is not limited to" and corresponding syntactic variant expressions; (v) the
plural shall be deemed to include the singular, and vice versa; (vi) each gender
shall be deemed to include the other gender; and (vii) each appendix, exhibit,
attachment and schedule to this Agreement is a part of this Agreement.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
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13.14 Waiver of Right to Partition. Except as provided in Section 12.2(e),
each Person who now or hereafter is a party hereto or who has any right herein
or hereunder irrevocably waives during the term of the Partnership any right to
maintain any action for partition with respect to Partnership property.
13.5 Governing Law. The laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement without giving effect
to any conflicts of law principles.
13.16 Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE UNDER OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER RELATED HERETO
SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF DELAWARE, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES TO THIS
AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO THIS AGREEMENT SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE. THE
FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE SERVICE
OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE
STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE
DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES HERETO.
13.17 Expenses. Except as otherwise provided herein or in the Second
Master Transaction Agreement, each party hereto shall be responsible for its own
expenses incurred in connection with this Agreement.
13.18 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND INTENTIONALLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.19 Payment Terms and Interest Calculations.
---------------------------------------
(a) If the payment due date for any payment hereunder (including capital
contributions and Damages) falls on a Saturday or a bank or federal holiday,
other than a Monday, the payment shall be due on the past preceding business
day. If the payment due date falls on a Sunday or Monday bank or federal
holiday, the payment shall be due on the following business day.
(b) Interest shall accrue on any unpaid and outstanding amount from the
time such amount is due and payable through the date upon which such amount,
together with accrued interest
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thereon, is paid in full. Interest shall, subject to the provisions of Section
13.20, accrue at a per annum rate equal to the lesser of (i) the Agreed Rate
plus 2%, compounded quarterly, to the extent permitted by law or (ii) the
Highest Lawful Rate.
(c) A wire transfer or delivery of a check shall not operate to discharge
any payment under this Agreement and shall be accepted subject to collection.
13.20 Usury Savings Clause. Notwithstanding any other provision of this
Agreement, it is the intention of the parties hereto to conform strictly to
Applicable Usury Laws, in each case to the extent they are applicable to this
Agreement. Accordingly, if any payment made pursuant to this Agreement results
in any Person having paid any interest in excess of the Maximum Amount, or if
any transaction contemplated hereby would otherwise be usurious under any
Applicable Usury Laws, then, in that event, it is agreed as follows: (i) the
provisions of this Section 13.20 shall govern and control; (ii) the aggregate of
all interest under Applicable Usury Laws that is contracted for, charged or
received under this Agreement shall under no circumstances exceed the Maximum
Amount, and any excess shall be promptly refunded to the payor by the recipient
hereof; (iii) no Person shall be obligated to pay the amount of such interest to
the extent that it is in excess of the Maximum Amount; and (iv) the effective
rate of any interest payable under this Agreement shall be ipso facto reduced to
the Highest Lawful Rate, as hereinafter defined, and the provisions of this
Agreement immediately shall be deemed reformed, without the necessity of the
execution of any new document or instrument, so as to comply with all Applicable
Usury Laws. All sums paid, or agreed to be paid, to any person pursuant to this
Agreement for the use, forbearance or detention of any indebtedness arising
hereunder shall, to the fullest extent permitted by the Applicable Usury Laws,
be amortized, pro rated, allocated and spread throughout the full term of any
such indebtedness so that the actual rate of interest does not exceed the
Highest Lawful Rate in effect at any particular time during the full term
thereof.
13.21 Other Waivers. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-
CONVENIENS.
13.22 Special Joinder by Millennium America. Millennium America is a party
to this Agreement for the sole purpose of evidencing its agreement to be bound
by the provisions set forth in Section 8.6(c) and is not a partner of the
Partnership and shall not have any rights under this Agreement or any other
obligations under this Agreement.
13.23 Amendment. All waivers, modifications, amendments or alterations of
this Agreement shall require the written approval of each of the General
Partners and each of the Limited Partners.
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SECTION 14
LAKE CHARLES FACILITY
---------------------
14.1 Lease Not in Force and Effect. At any such time as the Lease is
terminated, expires or is otherwise not in force and effect (other than a No
Rebuilding Termination), the following shall occur:
(a) The number of Units held by Occidental LP1 shall be reduced from 6,623
Units to 2,541 Units.
(b) The Partnership and Occidental LP1 shall form a general partnership
(the "LC Partnership") by entering into a partnership agreement having the
provisions described in Section 14.2 (the "GPA").
(c) The Partnership shall distribute to Occidental LP1 the balance in its
Capital Account.
(d) Occidental LP1 shall cause the Lake Charles Facility to be contributed
to the LC Partnership and shall contribute to the LC Partnership the amount
received pursuant to Section 14.1(c), plus an amount equal to any proceeds of a
partial condemnation of the Lake Charles Facility received by OCC under the
terms of the Lease, and the Partnership shall contribute to the LC Partnership
the amount received pursuant to Section 26(b) of the Lease in connection with
such termination of the Lease.
(e) Immediately after and as a result of the foregoing transactions, the
capital account of each of Occidental LP1 and the Partnership in the LC
Partnership shall be pro rata in accordance with the partners' equity ownership
interests, and Occidental LP1's Capital Account shall be the same per Unit as
the Capital Accounts of the other Partners (determined without regard to the
special allocations in Sections 4.1(a) through (c)).
(f) Sections 4.1(e) and (f) shall terminate.
14.2 LC Partnership Provisions. The GPA shall include provisions to the
following effect, as well as other customary provisions:
(a) The LC Partnership shall be formed under the laws of Delaware. The two
partners shall be the Partnership and Occidental LP1. The Partnership shall
have an equity ownership interest of 49.9%, and Occidental LP1 shall have an
equity ownership interest of 50.1%
(b) The term of the GPA shall be the same as the term of this Agreement.
(c) All issues relating to the LC Partnership must be decided by mutual
agreement of both partners, except that the LC Partnership shall enter into an
operating agreement with the Partnership (in its individual capacity), as
operator, that shall delegate to the operator the right and obligation to make
all day-to-day decisions of the LC Partnership, which day-to-day decisions shall
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for this purpose be deemed to be all decisions of the LC Partnership other than
issues comparable to those issues set forth in Section 6.7 hereof (which issues
must be decided by the partners of the LC Partnership). Such operating
agreement shall provide for the LC Partnership to pay and reimburse the operator
for all costs whatsoever incurred or paid by the operator in performing its
obligations under the operating agreement. The term of such operating agreement
shall be the same as the term of the LC Partnership.
(d) All contributions and distributions will be made, and all book income
and deductions will be allocated, in accordance with the partners' equity
ownership interests. Tax items will be allocated between the partners in a
manner similar to that set forth in this Agreement.
(e) No partner in the LC Partnership may transfer (except a transfer to a
Wholly Owned Affiliate) or encumber its equity ownership without the consent of
the other partner.
14.3 No Rebuilding Termination. Upon a No Rebuilding Termination,
Occidental LP1 shall have the option to contribute to the Partnership within 30
days following the No Rebuilding Termination an amount (the "Payment Amount")
equal to the excess, if any, of (a) the Proceeds plus the book value (determined
in accordance with GAAP) as recorded on the books of OCC for that portion and
aspect of the Lake Charles Facility that consititutes land, over (b) the payment
made pursuant to Section 26(b) of the Lease in connection with such No
Rebuilding Termination. If within such 30-day period Occidental LP1 contributes
the Payment Amount to the Partnership, (i) Occidental LP1's 6,623 Units shall
remain outstanding, (ii) its Capital Account shall be credited with the Payment
Amount, (iii) the assets of the Partnership shall be revalued so that the
Capital Account of each Partner is the same per Unit (determined without regard
to the special allocations in Sections 4.1(a) through (c)), and (iv) Sections
4.1(e) and (f) shall terminate. If Occidental LP1 does not contribute the
Payment Amount to the Partnership within such 30-day period, (A) Occidental
LP1's 6,623 Units shall be redeemed and canceled and of no further force and
effect and (B) an amount equal to the balance in Occidental LP1's Capital
Account shall be distributed by the Partnership to Occidental LP1, or if there
is a deficit in Occidental LP1's Capital Account, Occidental LP1 shall
contribute to the Partnership an amount of cash necessary to eliminate such
deficit. Upon completion of the steps in clauses (A) and (B), Occidental LP1's
entire interest in the Partnership shall terminate.
14.4 Other Redemption. If Occidental LP1 breaches any of its obligations
under Section 14.1, (a) Occidental LP1's 6,623 Units shall be redeemed and
canceled and of no further force and effect and (b) an amount equal to the
balance in Occidental LP1's Capital Account shall be distributed by the
Partnership to Occidental LP1, or if there is a deficit in Occidental LP1's
Capital Account, Occidental LP1 shall contribute to the Partnership an amount of
cash necessary to eliminate such deficit. Upon completion of the steps in
clauses (a) and (b), Occidental LP1's entire interest in the Partnership shall
terminate.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed on behalf of each of
the parties hereto, by their respective officers thereunto duly authorized,
effective as of the date first written above.
GENERAL PARTNERS
LYONDELL PETROCHEMICAL G.P. INC.
By: /s/ DAN F. SMITH
------------------------------------------
Name: Dan F. Smith
------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc., its Manager
By: /s/ GEORGE H. HEMPSTEAD, III
------------------------------------
Name George H. Hempstead, III
------------------------------------
Title: Senior Vice President
------------------------------------
PDG CHEMICAL INC.
By: /s/ R. J. SCHUH
---------------------------------------------
Name: R. J. Schuh
-------------------------------------------
Title: President
------------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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<PAGE>
LIMITED PARTNERS
LYONDELL PETROCHEMICAL L.P. INC.
By: /s/ DAN F. SMITH
-------------------------------------------
Name: Dan F. Smith
-------------------------------------------
Title: President and Chief Executive Officer
-------------------------------------------
MILLENNIUM PETROCHEMICALS LP LLC
By: Millennium Petrochemicals Inc., its Manager
By: /s/ GEORGE H. HEMPSTEAD, III
--------------------------------------------
Name: George H. Hempstead, III
--------------------------------------------
Title: Senior Vice President
--------------------------------------------
OCCIDENTAL PETROCHEM PARTNER 1, INC.
By: /s/ JOHN W. MORGAN
--------------------------------------------
Name: John W. Morgan
--------------------------------------------
Title: Vice President
--------------------------------------------
OCCIDENTAL PETROCHEM PARTNER 2, INC.
By: /s/ JOHN W. MORGAN
-------------------------------------------
Name: John W. Morgan
-------------------------------------------
Title: Vice President
-------------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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<PAGE>
SPECIAL JOINDER PURSUANT TO
SECTION 13.22
MILLENNIUM AMERICA INC.
By: /s/ GEORGE H. HEMPSTEAD, III
-----------------------------------------------
Name: George H. Hempstead, III
---------------------------------------------
Title: Senior Vice President
--------------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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<PAGE>
APPENDIX A
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
DEFINED TERMS
-------------
1998 Credit Facility. See Section 8.6(a).
AAA. See Appendix D.
Acceptance Notice. See Section 10.2(b).
Act. The Delaware Revised Uniform Limited Partnership Act, as amended and
in effect from time to time.
Additional Related Agreements. The agreements defined as "Related
Agreements" in the Second Master Transaction Agreement (other than this
Agreement), as such agreements may be amended from time to time after the date
hereof.
Adjusted Capital Account Deficit. With respect to any Partner, the deficit
balance, if any, in such Partner's Capital Account as of the end of the relevant
fiscal year, after giving effect to the following adjustments:
(i) Such Capital Account shall be deemed to be increased by any
amounts which such Partner is obligated to restore to the Partnership
(pursuant to this Agreement or otherwise) or is deemed to be obligated to
restore pursuant to the second to last sentence of Regulation (S)1.704-
2(g)(1) and (S)1.704-2(i)(5) (relating to allocations attributable to
nonrecourse debt).
(ii) Such Capital Account shall be deemed to be decreased by the items
described in Regulation (S)1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Deficit is intended to comply with
the provisions of Regulation (S)1.704-1(b)(2)(ii)(d) and shall be interpreted
and applied consistently therewith.
Additional Notice. See Section 10.2(b).
Affiliate. As to any specified Person, any other Person that directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with the specified Person; provided, however, that for
purposes of this Agreement such term shall not include (i) the Partnership or
any entities controlled by it, (ii) in the case of Millennium GP and Millennium
LP shall not include Suburban Propane Partners, L.P. and any entities controlled
by it and (iii) in the case of Occidental GP, Occidental LP1 and Occidental LP2,
shall not include Canadian Occidental Petroleum Ltd. and any entities controlled
by it. For purposes of this definition the term "control" shall have the
meaning set forth in 17 CFR 230.405, as in effect on the date hereof.
Appendix A-1
<PAGE>
Affiliated General Partner. In the case of Lyondell LP, the "Affiliated
General Partner" shall mean Lyondell GP. In the case of Millennium LP, the
"Affiliated General Partner" shall mean Millennium GP. In the case of each of
Occidental LP1 and Occidental LP2, the "Affiliated General Partner" shall mean
Occidental GP.
Affiliated Limited Partner. In the case of Lyondell GP, the "Affiliated
Limited Partner" shall mean Lyondell LP. In the case of Millennium GP, the
"Affiliated Limited Partner" shall mean Millennium LP. In the case of
Occidental GP, each of Occidental LP1 and Occidental LP2 shall be "Affiliated
Limited Partner".
Affiliated Partner Group. A General Partner and its Affiliated Limited
Partner or Affiliated Limited Partners, if more than one.
Agreed Rate. The base commercial lending rate announced by Citibank, N.A.
(or its successor) at its principal office, in effect from time to time, such
interest rate to change automatically, effective as of the date of each change
in such base rate.
Agreement. This Amended and Restated Limited Partnership Agreement of
Equistar Chemicals, LP, as amended from time to time.
Alternate. See Section 6.4(b).
Amended and Restated Indemnity Agreement. The Amended and Restated
Indemnity Agreement dated as of the date of this Agreement among Lyondell GP,
Lyondell LP, Millennium GP, Millennium LP, Millennium America, Occidental GP,
Occidental LP1, Occidental LP2 and OCC.
Amended and Restated Parent Agreement. The Amended and Restated Parent
Agreement dated as of the date of this Agreement between the Partnership,
Lyondell, Millennium, Occidental, Occidental Chemical Corporation and Oxy CH
Corporation.
Annual Budget. See Section 8.2.
Applicable Usury Laws. Laws regarding the use, forbearance or detention of
any indebtedness arising under this Agreement whether such laws are now or
hereafter in effect, including the laws of the United States of America or any
other jurisdiction whose laws are applicable, and including any subsequent
revisions to or judicial interpretations of those laws.
Arbitrator. See Appendix D.
Asset Fair Market Value. With respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such as in an arm's-length negotiated transaction with
an unaffiliated third party without time constraints.
Appendix A-2
<PAGE>
Assumed Liabilities. In the case of Lyondell LP and Lyondell GP, Assumed
Liabilities means the "Assumed Liabilities" as defined in the Contribution
Agreement of Lyondell. In the case of Millennium LP and Millennium GP, Assumed
Liabilities shall mean the "Assumed Liabilities" as defined in the Contribution
Agreement of Millennium Petrochemicals. In the case of Occidental LP1,
Occidental LP2 and Occidental GP, Assumed Liabilities means the "Assumed
Liabilities" as defined in the Contribution Agreement of Occidental.
Auxiliary Committee. See Section 6.9.
Available Net Operating Cash. At the time of determination, (a) all cash
and cash equivalents on hand in the Partnership as of the most recent month end,
plus the excess, if any, of the Partnership Target Debt over the Partnership's
actual indebtedness (as determined in accordance with GAAP) as of such month
end, less (b) the Projected Cash Requirements, if any, of the Partnership as of
such month end, as determined by the Executive Officers of the Partnership. For
purposes of this definition, "Projected Cash Requirements" means, for the 12-
month period following any such month end, the excess, if any, of the sum of (a)
forecast capital expenditures, plus (b) forecast cash payments for Taxes, debt
service including principal and interest requirements and other non-cash credits
to income, plus (c) forecast cash reserves for future operations or other
requirements, over the sum of (1) forecast net income of the Partnership, plus
(2) the sum of forecast depreciation, amortization, other non-cash charges to
income, interest expenses, and Tax expenses, in each case to the extent deducted
in determining net income, plus or minus (3) forecast decreases or increases,
respectively, in working capital, plus (4) the forecast cash proceeds of
dispositions of assets (net of expenses) plus (5) an amount equal to the
forecast net proceeds of debt financings, contributions and payments of the
Lyondell Note. For purposes of this definition, "Partnership Target Debt" means
for such month end, the level of indebtedness (as determined in accordance with
GAAP) projected for the Partnership in the most recently approved Strategic
Plan, except to the extent the Executive Officers of the Partnership determine
that changes in the financial condition, results of operations, assets, business
or prospects of the Partnership make a change advisable, in which case the
Partnership shall advise the General Partners promptly regarding the basis for
the change. Projected Cash Requirements shall be calculated consistent with the
most recently approved Strategic Plan, except to the extent the Executive
Officers of the Partnership determine that changes in the financial condition,
results of operations, assets, business or prospects of the Partnership make a
change advisable, in which case the Partnership shall advise the General
Partners promptly regarding the basis for the change.
Bank Credit Agreement. The Credit Agreement dated as of November 25, 1997
among the Partnership, as Borrower, Millennium America, as Guarantor and the
lenders party thereto.
Bank Credit Agreement Repayment Amount. An amount equal to (i)
$419,700,000 less (ii) the Bank Credit Agreement Available Amount, but in no
event shall the Bank Credit Agreement Repayment Amount be less than zero. The
"Bank Credit Agreement Available Amount" shall equal (i) $1.25 billion less (ii)
the total principal amount outstanding under the Bank Credit Agreement at the
date of calculation.
Appendix A-3
<PAGE>
Bankruptcy. The occurrence of any of the following: (i) a Partner or its
Guarantor shall file a voluntary petition in bankruptcy or shall be adjudicated
a bankrupt or insolvent, or shall file any petition or answer or consent seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future applicable
federal, state or other statute or law relating to bankruptcy, insolvency, or
other relief for debtors, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver, conservator or liquidator of such Partner
or its Guarantor or of all or any substantial part of its properties or its
Units (the term "acquiesce," as used in this definition, includes the failure to
file a petition or motion to vacate or discharge any order, judgment or decree
within ten Business Days after entry of such order, judgment or decree); (ii) a
court of competent jurisdiction shall enter an order, judgment or decree
approving a petition filed against any Partner or its Guarantor seeking a
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the present or any future federal bankruptcy act, or any
other present or future applicable federal, state or other statute or law
relating to bankruptcy, insolvency, or other relief for debtors, and such
Partner or its Guarantor shall acquiesce in the entry of such order, judgment or
decree or such other order, judgment or decree shall remain unvacated and
unstayed for an aggregate of 60 days (whether or not consecutive) from the date
of entry thereof, or any trustee, receiver, conservator or liquidator of such
Partner or its Guarantor or of all or any substantial part of its property or
its Units shall be appointed without the consent or acquiescence of such Partner
or its Guarantor and such appointment shall remain unvacated and unstayed for an
aggregate of 60 days (whether or not consecutive); (iii) a Partner or its
Guarantor shall admit in writing its inability to pay its debts as they mature;
(iv) a Partner or its Guarantor shall give notice to any governmental body of
insolvency or pending insolvency, or suspension or pending suspension of
operations; or (v) a Partner or its Guarantor shall make an assignment for the
benefit of creditors or take any other similar action for the protection or
benefit of creditors.
Book Value. With respect to any asset of the Partnership, the asset's
adjusted basis as of the relevant date for federal income tax purposes, except
as follows:
(i) The initial aggregate Book Value of all of the assets of the
Partnership as of the Initial Closing Date shall be equal to the sum of (A)
the beginning aggregate Capital Accounts of the Partners immediately after
the Initial Closing Date, and (B) the aggregate amount of all liabilities
of the Partnership for federal income tax purposes immediately after the
Initial Closing Date.
(ii) The initial Book Value of any asset contributed by a Partner to
the Partnership after the Initial Closing Date shall be the gross fair
market value of such asset, which shall be equal to the amount credited to
such Partner's Capital Account for such contribution (increased by the
amount of any liabilities which the Partnership assumes or takes subject
to).
(iii) The Book Values of all Partnership assets (including intangible
assets such as goodwill) shall be adjusted (at the election of the
Partnership Governance Committee) to equal their respective gross fair
market values upon the occurrence of any of the events described in
Regulation (S)1.704-1(b)(2)(iv)(f)(5).
Appendix A-4
<PAGE>
(iv) The Book Value of any asset distributed by the Partnership to a
Partner shall be equal to the gross fair market value of such asset on the
date of the distribution.
(v) The Book Value of any Partnership asset with respect to which an
adjustment to tax basis has occurred by reason of the application of
Section 734(b) or 754(b) of the Code shall be adjusted to the extent such
adjustment to tax basis is taken into account pursuant to Regulation
(S)1.704-1(b)(2)(iv)(m).
(vi) If the Book Value of an asset is not equal to its adjusted tax
basis for federal income tax purposes, such Book Value shall be adjusted by
the Depreciation taken into account with respect to such asset for purposes
of computing Profits and Losses and other items allocated pursuant to
Section 4.1.
The foregoing definition of Book Value is intended to comply with the provisions
of Regulation (S)1.704-1(b)(2)(iv) and shall be interpreted and applied
consistently therewith. Any determinations of "gross fair market value" in this
definition of Book Value shall be made by the Partnership Governance Committee.
Business Day. Any day other than a Saturday, Sunday or other day on which
banks are closed in New York City, New York; provided, however, that for
purposes of the definitions of "Interest Period" and "LIBOR Rate," "Business
Day" shall mean a day of the year on which banks are not required or authorized
to close in Houston, Texas and on which commercial banks are open for
international business (including dealings for dollar deposits) in the London
interbank market.
Business Opportunity. See Section 9.3(c).
Capital Account. The separate capital account established and maintained
by the Partnership for each Partner, as contemplated by Section 2.
Capital Expenditure Budget. See Section 8.2(d).
CEO. See Section 7.1(b).
Claim. See Section 13.2(c).
Code. The Internal Revenue Code of 1986, as amended and in effect from
time to time and any successor thereto.
Competing Opportunity. See Section 9.3(c).
Confidential Information. All confidential documents and information
(including, without limitation, confidential commercial information and
information with respect to customers, trade secrets and proprietary
technologies or processes and the design and development of new products or
services) concerning the Partnership, the Partners or their Affiliates,
furnished to a Partner in connection with the transactions leading up to and
contemplated by this Agreement and the operation
Appendix A-5
<PAGE>
of the Partnership, except to the extent that such information (i) is or becomes
generally available to and known by the public or the petrochemical industry
(other than as a result of an unpermitted disclosure directly or indirectly by
the Partnership or a Partner), (ii) is or becomes available to a Partner on a
nonconfidential basis from a source other than the Partnership or a Partner;
provided, however, that such source is not and was not bound by a
confidentiality agreement with, or other obligation of secrecy to, the
Partnership or the other Partner, (iii) has already been or is hereafter
independently acquired or developed by a Partner without violating any
confidentiality agreement with or other obligation of secrecy to the Partnership
or another Partner or (iv) is otherwise generated by the Partnership with the
intention that it not be held as confidential.
Conflict Circumstance. Any transaction or dealing between the Partnership
(or any Wholly Owned Subsidiary) and a General Partner (the "Conflicted General
Partner") or any of its Affiliates pursuant to any agreement (including this
Agreement or any other Related Agreements) or otherwise, including action to be
taken by the Partnership pursuant to Section 9.3(c) or (d) or 13.3(b); provided,
however, that a Conflict Circumstance shall cease to exist if and when the third
party with which the transaction or dealing exists shall cease to be an
Affiliate of a General Partner.
Conflicted General Partner. As defined in the definition of "Conflict
Circumstance."
Contributed Business. As defined in each of the Contribution Agreements.
Contribution Agreement. In the case of Lyondell LP and Lyondell GP, the
Contribution Agreement shall mean the Asset Contribution Agreement dated
December 1, 1997, between the Partnership, Lyondell and Lyondell LP. In the
case of Millennium LP and Millennium GP, the Contribution Agreement shall mean
the Asset Contribution Agreement dated December 1, 1997, between the
Partnership, Millennium Petrochemicals and Millennium LP. In the case of
Occidental LP1, Occidental LP2 and Occidental GP, the Contribution Agreement
shall mean the Agreement and Plan of Merger and Asset Contribution dated as of
the date of this Agreement between the Partnership, Oxy Petrochemicals,
Occidental LP1, Occidental LP2 and Occidental GP.
Damages. With respect to a Person in connection with a Default, any and
all obligations (including all obligations to take an affirmative or curative
act), liabilities, damages (including damages arising out of any breach of any
representation or warranty, damages related to investigations, proceedings,
audits, the interruption of the Partnership's business, restrictions upon the
use of, or adverse impact on, the Assets or the Partnership's business, or the
interruption, breach or termination of any Related Agreements or other
agreements, including any lost profits attributable thereto), fines, penalties,
deficiencies, losses, judgments, settlements, costs and expenses (including
costs and expenses incurred in connection with performing obligations, bonding
and appellate costs and attorneys', accountants', engineers', health, safety,
environmental and other consultants' and investigators' fees and disbursements,
liquidating, selling or offering for sale the Partnership's business and assets
or winding up the Partnership's business, or other payments in respect of such
payments) suffered or incurred by such Person that arise out of or relate to
such Default, regardless of whether any of the foregoing are foreseeable,
unforeseeable, matured or unmatured, existing or contingent as of the date of
such Default. "Damages" also shall include, if and to the extent interest is
not already included therein under applicable law or other provisions hereof and
subject to
Appendix A-6
<PAGE>
Section 13.20, interest on amounts actually due until payment thereof is made at
a rate per annum equal to the rate set forth in Section 13.19(b). "Damages"
shall not include any punitive, exemplary, special or other similar damages.
Deadlock Notice. See Section 8.5.
Default. See Section 11.1.
Default Date. See Section 11.1.
Defaulting Partners. Lyondell GP and Lyondell LP, in the case of a Default
by Lyondell GP, Lyondell LP or their Guarantor; Millennium GP and Millennium LP,
in the case of a Default by Millennium GP, Millennium LP or their Guarantor; and
Occidental GP, Occidental LP1 and Occidental LP2, in the case of a Default by
Occidental GP, Occidental LP1, Occidental LP2 or their Guarantor.
Depreciation. For each fiscal year or part thereof, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such year or other
period, except that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year,
Depreciation shall be (i) an amount which bears the same ratio to such Book
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such adjusted tax basis, or, (ii) if
the federal income tax depreciation, amortization or other cost recovery
deduction for such year is equal to zero, an amount determined with reference to
such Book Value using a reasonable method selected by the Tax Matters Partner.
Dispute Notice. See Appendix D.
Disputing Partner. See Appendix D.
Executive Officers. See Section 7.1(b).
Expense. See Section 13.3(a).
Fair Market Value. "Fair Market Value" with respect to the Partnership
shall mean the Asset Fair Market Value of all of the Partnership's assets
decreased by the fair value of all its liabilities, as of the most recently
ended fiscal quarter. "Fair Market Value" with respect to a Related Business
shall mean the Asset Fair Market Value of all the assets of such Related
Business decreased by the fair value of all its liabilities, as of the most
recently ended fiscal quarter. In either case, the following shall apply to the
determination of Fair Market Value:
(i) The General Partners shall first attempt to agree on such value,
which if agreed to shall be the Fair Market Value.
Appendix A-7
<PAGE>
(ii) If the General Partners are unable to agree within 20 days of the
first written notice from one General Partner to the others proposing an
amount to be the Fair Market Value (the "Notice"), then if requested by any
General Partner, each General Partner shall (at its own cost) cause an
independent, qualified appraiser to deliver a written appraisal of its
determination of the Fair Market Value within 50 days of the Notice. If
both of the two lowest appraised values are greater than or equal to 90% of
the highest appraised value, then the middle of the three appraised values
shall be the Fair Market Value.
(iii) If either of the two lowest appraised values are lower than 90%
of the highest appraised value, then the General Partners shall jointly
appoint a Neutral within 20 days of the delivery of both such appraisals.
If the General Partners have been unable to agree upon such appointment
within such 20 days, then such Neutral shall upon the application of any
General Partner be appointed within 10 days of the filing of such
application by the Center for Public Resources, or if such appointment is
not so made promptly then promptly thereafter by the American Arbitration
Association in Philadelphia, Pennsylvania, or if such appointment is not so
made promptly then promptly thereafter by the senior United States District
Court judge sitting in Wilmington, Delaware. The fees and expenses of the
Neutral shall be paid equally by the Partners.
(iv) The Neutral shall, within 30 days of the appointment of the
Neutral, determine which of the three appraised values (without in any way
modifying or compromising between the three appraised values) is closest to
the fair market value of the enterprise's assets as determined by the
Neutral, and that appraised value shall be the Fair Market Value.
Fault. Any act or omission of a Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as such)
that constitutes or results from intentional misconduct, criminal intent or
gross negligence.
Finally Determined. Determined by any final, nonappealable judicial order
or pursuant to a binding alternative dispute resolution procedure.
Funding Notice. See Section 2.4.
GAAP. United States generally accepted accounting principles, as in effect
from time to time.
General Partners. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a general partner of the Partnership,
unless such General Partner ceases to be a General Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Units and is replaced by a
Substitute General Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute General Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a general partner
of the Partnership.
GPA. See Section 14.1(b).
Appendix A-8
<PAGE>
Guarantor. Lyondell Petrochemical Company, with respect to Lyondell GP and
Lyondell LP; Millennium Chemicals Inc., with respect to Millennium GP and
Millennium LP; Occidental Chemical Corporation and Oxy CH Corporation, with
respect to Occidental GP, Occidental LP1 and Occidental LP2; and any successor
or additional guarantor party to an agreement substantially in the form of the
Amended and Restated Parent Agreement and entered into in accordance with
Section 10.
Highest Lawful Rate. The maximum rate of interest, if any, that may be
charged to any person under all Applicable Usury Laws on any principal balance
from time to time outstanding pursuant to this Agreement.
HSE Law. "HSE Law," as defined in Section 1 of the Contribution Agreement.
Indemnified Party. See Section 13.2(c).
Indemnifying Party. See Section 13.2(c).
Interest Period. The period commencing on the date of this Agreement and
ending one month thereafter and, thereafter, each subsequent period commencing
on the last day of the immediately preceding Interest Period and ending one
month thereafter; provided, however, that whenever the last day of any Interest
Period would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding Business
Day.
Initial Agreement. See first WHEREAS clause.
Initial Assets. "Assets," as defined in Section 1 of the applicable
Contribution Agreement.
Initial Closing Date. December 1, 1997, the date the closing under the
Initial Master Transaction Agreement took place.
Initial Master Transaction Agreement. The Master Transaction Agreement,
dated July 25, 1997, as amended, between Lyondell and Millennium, providing for
the execution of various agreements concerning the Partnership and the Initial
Assets.
Initial Notice. See Section 10.2(a).
Initial Partners. See first WHEREAS clause.
Initial Related Agreements. The agreements defined as "Related Agreements"
in the Initial Master Transaction Agreement (other than the Partnership
Agreement), as such agreements may be amended from time to time after the
Initial Closing Date.
IRS. Internal Revenue Service.
Lake Charles Facility. The property that is the subject of and leased
pursuant to the Lease.
Appendix A-9
<PAGE>
LC Partnership. See Section 14.1(b).
Lease. The Lease Agreement, dated May 15, 1998, between OCC, as lessor,
and Occidental LP1, as lessee.
Liability. Any loss, claim, damages, fine, penalty, assessment by public
agencies, settlement, cost or expense (including costs of investigation, defense
and attorneys' fees) or other liability.
LIBOR Rate. For any Interest Period, the rate per annum (rounded upwards,
if necessary, to the nearest 1/16th of 1%) published in the Wall Street Journal
as the London Interbank Offered Rate for a one month period as of two Business
Days prior to the first day of such Interest Period; provided if no such rate
appears the rate shall be as shown on page 3750 of the Dow Jones & Company
Telerate screen or any successor page as the composite offered rate for London
interbank deposits with a period equal to one month, as shown under the heading
"USD" as of 11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period; provided that if no such rate appears, the rate shall be
the rate per annum equal to the arithmetic mean (which shall be rounded upward
to the nearest 1/16 of 1% per annum) of which U.S. dollar deposits with an
Interest Period equal to one month are displayed on page "LIBO" of the Reuters
Monitor Money Rates Service or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period.
Limited Partner. Each Person who executes this Agreement and who is hereby
admitted to the Partnership as a limited partner of the Partnership, unless such
Limited Partner ceases to be a Limited Partner hereunder or sells, transfers,
forfeits or otherwise disposes of its Units and is replaced by a Substitute
Limited Partner in accordance with this Agreement and the Act, and each Person
that becomes a Substitute Limited Partner, if any, of the Partnership as
provided herein, in such Person's capacity as a limited partner of the
Partnership.
Limited Partners Pro Rata. From or to the Limited Partners in the ratio of
the Units owned by each.
Liquidation. See Section 11.4.
Losses. See definition of "Profits and Losses."
Lyondell. See first WHEREAS clause.
Lyondell Assumed Debt. Debt issued by Lyondell having an aggregate
principal amount of $745 million, as specified in the Contribution Agreement
with respect to Lyondell.
Lyondell GP. See introductory paragraph to this Agreement.
Appendix A-10
<PAGE>
Lyondell LP. See introductory paragraph to this Agreement.
Lyondell Note. The promissory note dated December 1, 1997, in the amount
of $345 million payable by Lyondell LP to the Partnership.
Maximum Amount. The maximum nonusurious amount of interest that may be
lawfully contracted for, charged or received by any person in connection with
any indebtedness arising under this Agreement under all Applicable Usury Laws.
Millennium. See first WHEREAS clause.
Millennium America. Millennium America Inc., a Delaware corporation.
Millennium America Guarantee. See Section 8.6(c).
Millennium America Guaranteed Debt. The portion, if any, of the debt
outstanding under the Bank Credit Agreement and the portion, if any, of any debt
that refinances the debt outstanding under the Bank Credit Agreement or any
subsequent refinancing thereof (in any case, not to exceed a guarantee of $750
million principal amount), in each case to the extent such debt is guaranteed by
Millennium America, or an Affiliate thereof, as contemplated by Section 8.6(c).
Millennium GP. See introductory paragraph to this Agreement.
Millennium LP. See introductory paragraph to this Agreement.
Neutral. A neutral Person acceptable to all of the appointing Partners and
not affiliated with any of the Partners, except where otherwise specifically
provided.
No Rebuilding Termination. A total termination of the Lease pursuant to
Section 12(b) or 13 thereof.
Nonconflicted General Partner. With respect to any Conflict Circumstance,
any General Partner that is not the Conflicted General Partner with respect
thereto.
Non-Defaulting Partners. The Partners other than the Defaulting Partners.
OCC. Occidental Chemical Corporation, a New York corporation.
Occidental. See third WHEREAS clause.
Occidental GP. See introductory paragraph to this Agreement.
Occidental LP1. See introductory paragraph to this Agreement.
Occidental LP2. See introductory paragraph to this Agreement.
Appendix A-11
<PAGE>
Occidental Partners. See third WHEREAS clause.
Offeree Partners. See Section 10.2(a).
Operating Budget. See Section 8.2(c).
Oxy Guaranteed Debt. The $419,700,000 drawdown under the Bank Credit
Agreement pursuant to Section 8.6(a) and the portion, if any, of any debt that
refinances the $419,700,000 drawdown under the Bank Credit Agreement or any
subsequent refinancing thereof (in any case, not to exceed a guarantee of
$419,700,000 principal amount), in each case to the extent such debt is
guaranteed by Occidental Chemical Corporation, a New York corporation, or an
Affiliate thereof and the proceeds thereof have been distributed to Occidental
LP2 pursuant to Section 3.1(g) and, until such amount has been so drawn and
distributed, "Oxy Guaranteed Debt" shall mean the Oxy Note to the extent the
obligations thereunder are indemnified by OCC pursuant to the Amended and
Restated Indemnity Agreement.
Oxy Note. The Promissory Note dated May 15, 1998 in the principal amount
of $419,700,000 payable by the Partnership to Occidental LP2.
Oxy Petrochemicals. Oxy Petrochemicals Inc., a Delaware corporation.
Partners. The General Partners and the Limited Partners on the date of
this Agreement until such Person ceases to be a partner of the Partnership.
Partners Pro Rata. From or to all Partners in the ratio of the Units
owned by each.
Partnership. Equistar Chemicals, LP, a Delaware limited partnership, the
limited partnership formed and continued under the Act and this Agreement.
Partnership Governance Committee. See Section 6.1.
Partnership Governance Committee Action. See Section 6.1.
Payment Amount. See Section 14.3.
Proceeds. The Insurance Proceeds, the Self-Insurance Proceeds and the
Condemnation Proceeds (each as defined in the Lease), to the extent actually
received by the lessor under the Lease pursuant to the Lease.
Profits and Losses. For each applicable period, the Partnership's taxable
income or loss for such period determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in taxable income or loss) with the following adjustments:
Appendix A-12
<PAGE>
(i) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken in account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss.
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as such pursuant to Regulation
(S)1.704-1(b)(2)(iv)(i) and not otherwise taken in account in computing
Profits or Losses pursuant to this definition shall be subtracted from such
taxable income or loss.
(iii) Depreciation for such period shall be taken into account in
lieu of the depreciation, amortization and other cost recovery deductions
taken into account in computing such taxable income or loss.
(iv) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed with reference to the Book Value of
the property disposed of, rather than the adjusted tax basis of such
property.
(v) If any property is distributed in kind to any Partner, the
difference between its fair market value and its Book Value at the time of
distribution shall be treated as Profit or Loss, as the case may be,
recognized by the Partnership.
(vi) The amount of any adjustment to the Book Value of any Partnership
asset pursuant to clause (iii) of the definition of Book Value herein shall
be taken into account as Profit or Loss from the disposition of such asset.
Percentage Interest. The percentage determined by dividing the number of
Units owned by a Partner by the total number of outstanding Units.
Person. Any natural person or any corporation, limited liability company,
partnership, joint venture, association, trust or other entity.
Pledge. To mortgage, pledge, encumber or create or suffer to exist any
pledge, lien or encumbrance upon or security interest in. Such defined term is
used in this Agreement as both a noun and a verb.
Pro Rata. In the ratio of the Units owned by a Partner to the total number
of applicable Units.
Proposing Partner. See Section 9.3(c).
Reconstituted Basis. As to each Partnership property, the Partnership's
basis in such property immediately after it is contributed to the Partnership
reduced by any depreciation and other deductions allocated to a Partner pursuant
to Section 4.4(b)(i)(a).
Appendix A-13
<PAGE>
Regulations. The income tax regulations promulgated by Department of the
Treasury and in effect from time to time.
Related Agreements. The Initial Related Agreements and the Occidental
Related Agreements.
Related Business. Any business related to (i) the manufacturing, marketing
and distribution of Specified Petrochemicals; (ii) the purchasing, processing
and disposing of feedstocks in connection with the manufacturing, marketing and
distributing of Specified Petrochemicals; and (iii) any research and development
in connection with the foregoing.
Related Persons. See Section 13.1.
Representative. See Section 6.4(a).
SEC. Securities and Exchange Commission.
Second Master Transaction Agreement. See third WHEREAS clause.
Selling Partners. See Section 10.2(a).
Specified Petrochemicals.
(i) Olefins and olefins coproducts consisting of: ethylene, propylene,
butadiene, and mixed butylenes; aromatics and gasoline blending components
(benzene, toluene, MTBE, alkylate, pyrolysis gasolines); mixed C5 hydrocarbons;
resin formers (dicyclopentadiene, isoprene, piperylenes, resin oil); pyrolysis
liquid fuel products (pyrolysis gas oil, pyrolysis fuel oil);
(ii) Polyolefins consisting of: low-density, linear low-density, and high-
density polyethylene; polypropylene; ethylene/propylene copolymers; rotomolding
and polymeric powders; wire and cable resins; adhesive tie layers; hot melt
adhesive resins; colors and concentrates; fuel additives;
(iii) Ethyl alcohol and ethyl ether; and
(iv) Ethylene oxide, ethylene glycol and derivatives thereof.
provided, however that the definition of Specified Petrochemicals shall in no
event include polyvinyl chloride or resins derived from phenol compounds or
dicyclopentadiene.
Specified Petrochemicals Businesses. The businesses related to Specified
Petrochemicals.
Strategic Plan. See Section 8.1.
Appendix A-14
<PAGE>
Substitute General Partner. A Person who is admitted as a General Partner
to the Partnership in place of and with all the rights of a General Partner.
Substitute Limited Partner. A Person who is admitted as a Limited Partner
to the Partnership in place of and with all the rights of a Limited Partner.
Taxes. All taxes, charges, fees, levies or other assessments imposed by
any taxing authority, including, but not limited to, income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments) and "Tax
Return" means any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
Tax Matters Partner. Lyondell GP.
Third Party Claim. Any allegation, claim, civil, criminal or other action,
proceeding, charge or prosecution brought by any Person other than the
Partnership, any Partner or any Affiliate of a Partner.
Transfer. To sell, assign or otherwise in any manner dispose of, whether
by act, deed, merger, consolidation, conversion or otherwise. Such defined term
is used in this Agreement as both a noun and a verb.
Unit. A unit representing a partnership interest in the Partnership.
Wholly Owned Affiliate. As to any Person, an Affiliate of such Person all
of the equity interests of which are owned, directly or indirectly, by a
Partner, by another Wholly Owned Affiliate of such Person or by the ultimate
parent entity thereof.
Wholly Owned Subsidiary. As to any Person, a subsidiary of such Person
all of the equity interests of which are owned, directly or indirectly, by such
Person.
Appendix A-15
<PAGE>
APPENDIX B
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
PARTNERSHIP FINANCIAL STATEMENTS AND REPORTS
--------------------------------------------
<TABLE>
<CAPTION>
Item & Frequency Due Dates
- ---------------- ---------
<S> <C>
Monthly:
- -------
Income Statement - current period and year-to-date 10th work day following month-end
Balance Sheet - current period 10th work day following month-end
Cash Flow Statement - current period and year-to-date 10th work day following month-end
Schedule of Income Allocation - preliminary 5th work day following month-end
Schedule of Income Allocation - final 10th work day following month-end
Calculation of Distribution of Available Net Operating
Cash - final 15th work day following month-end
Results of Operations Analysis 10th work day following month-end
Quarterly:
- ---------
Analysis for Investor Relations and Form 10-Q
disclosures:
- Results of Operations 15th work day following quarter-end
- Cash Flow 15th work day following quarter-end
- Sales Variances 15th work day following quarter-end
- Capital Expenditures 15th work day following quarter-end
- Intercompany Transactions 15th work day following quarter-end
- Volumes 15th work day following quarter-end
- Prices 15th work day following quarter-end
- Unusual Items 15th work day following quarter-end
Income Statement - current quarter and year-to-date 10th work day following quarter-end
Balance Sheet - current period 10th work day following quarter-end
Cash Flow Statement - current quarter and year-to-date 10th work day following quarter-end
Estimate of Each Partner's Regular Taxable Income 10th work day following quarter-end
and Alternative Minimum Taxable Income
</TABLE>
Appendix B-1
<PAGE>
<TABLE>
<CAPTION>
Item & Frequency Due Dates
- ---------------- ---------
<S> <C>
Annual:
- ------
Analysis for Investor Relations and Form 10-K 15th work day following year-end
disclosures
- Same as quarterly requirements
- Plant Capacities
Audited Financial Statements 60 days following year-end
</TABLE>
Appendix B-2
<PAGE>
APPENDIX C
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
EXECUTIVE OFFICERS
------------------
Dan F. Smith Chief Executive Officer
Eugene R. Allspach President and Chief Operating Officer
Joseph M. Putz Senior Vice President, Finance and Administration
Debra L. Starnes Senior Vice President, Polymers
John R. Beard Vice President, Manufacturing
Clifton B. Currin, Jr. Vice President, Supply and Optimization
J. R. Fontenot Vice President, Engineering
Brian A. Gittings Vice President, Oxygenated Chemicals
Alan Houlton Vice President, Customer Supply Chain
Gerald A. O'Brien Vice President and Secretary
Myra J. Perkinson Vice President, Human Resources
W. Norman Phillips, Jr. Vice President, Petrochemicals
Kerry F. Williams Vice President, Research and Development
Jeffrey L. Hemmer Director, Business Process Improvement
Appendix C-1
<PAGE>
APPENDIX D
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
DISPUTE RESOLUTION PROCEDURES
-----------------------------
(1) Binding and Exclusive Means. Except as otherwise provided in the
Partnership Agreement, the dispute resolution provisions set forth in this
Appendix shall be the binding and exclusive means to resolve all disputes
arising under the Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the standards and
criteria for resolving such Dispute shall, unless the Partners involved in the
Dispute in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises, the
following procedures shall be implemented (with references to "Partners" meaning
the Partners involved in the Dispute):
(a) Any Partner may at any time invoke the dispute resolution procedures set
forth in this Appendix as to any Dispute by providing written notice of such
action to the Secretary of the Partnership, who within five Business Days after
such notice shall schedule a meeting to be held in Houston, Texas between the
Partners. The Partners' meeting shall occur within 10 Business Days after
notice of the meeting is delivered to the Partners. The meeting shall be
attended by representatives of each Partner having decision-making authority
regarding the Dispute as well as the dispute resolution process and who shall
attempt in a commercially reasonable manner to negotiate a resolution of the
Dispute.
(b) The representatives of the Partners shall cooperate in a commercially
reasonable manner and shall explore whether techniques such as mediation,
minitrials, mock trials or other techniques of alternative dispute resolution
might be useful. In the event that a technique of alternative dispute
resolution is so agreed upon, a specific timetable and completion date for its
implementation shall also be agreed upon. The representatives will continue to
meet and discuss settlement until the date (the "Interim Decision Date") that is
the earliest to occur of the following events: (i) an agreement shall be
reached by the Partners resolving the Dispute; (ii) one of the Partners shall
determine and notify the other Partners in writing that no agreement resolving
the Dispute is likely to be reached; (iii) if a technique of alternative dispute
resolution is agreed upon, the completion date therefor shall occur without the
Partners having resolved the Dispute; or (iv) if another technique of
alternative dispute resolution is not agreed upon, two full meeting days (or
such other time period as may be agreed upon) shall expire without the Partners
having resolved the Dispute.
(c) If, as of the Interim Decision Date, the Partners have not succeeded in
negotiating a resolution of the Dispute pursuant to subsection (b), the Partners
shall proceed under subsections (d), (e) and (f).
Appendix D-1
<PAGE>
(d) After satisfying the requirements above, such Dispute shall be submitted
to mandatory and binding arbitration at the election of any Partner involved in
the Dispute (the "Disputing Partner"). The arbitration shall be subject to the
Federal Arbitration Act as supplemented by the conditions set forth in this
Appendix. The arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect on the date
the notice of arbitration is served, other than as specifically modified herein.
In the absence of an agreement to the contrary, the arbitration shall be held in
Houston, Texas. The Arbitrator (as defined below) will allow reasonable
discovery in the forms permitted by the Federal Rules of Civil Procedure, to the
extent consistent with the purpose of the arbitration. During the pendency of
the Dispute, each Partner shall make available to the Arbitrator and the other
Partners all books, records and other information within its control requested
by the other Partners or the Arbitrator subject to the confidentiality
provisions contained herein, and provided that no such access shall waive or
preclude any objection to such production based on any privilege recognized by
law. Recognizing the express desire of the Partners for an expeditious means of
dispute resolution, the Arbitrator may limit the scope of discovery between the
Partners as may be reasonable under the circumstances. In deciding the
substance of the Partners' claims, the laws of the State of Delaware shall
govern the construction, interpretation and effect of this Agreement (including
this Appendix) without giving effect to any conflict of law principles. The
arbitration hearing shall be commenced promptly and conducted expeditiously,
with each Partner involved in the Dispute being allocated an equal amount of
time for the presentation of its case. Unless otherwise agreed to by the
Partners, the arbitration hearing shall be conducted on consecutive days. Time
is of the essence in the arbitration proceeding, and the Arbitrator shall have
the right and authority to issue monetary sanctions against any of the Partners
if, upon a showing of good cause, that Partner is unreasonably delaying the
proceeding. To the fullest extent permitted by law, the arbitration proceedings
and award shall be maintained in confidence by the Arbitrator and the Partners.
(e) The Disputing Partner shall notify the American Arbitration Association
("AAA") and the other Partners in writing describing in reasonable detail the
nature of the Dispute (the "Dispute Notice"). The arbitrator (the "Arbitrator")
shall be selected within 15 days of the date of the Dispute Notice by all of the
Partners from the members of a panel of arbitrators of the AAA or, if the AAA
fails or refuses to provide a list of potential arbitrators, of the Center for
Public Resources and shall be experienced in commercial arbitration. In the
event that the Partners are unable to agree on the selection of the Arbitrator,
the AAA shall select the Arbitrator, using the criteria set forth in this
Appendix, within 30 days of the date of the Dispute Notice. In the event that
the Arbitrator is unable to serve, his or her replacement will be selected in
the same manner as the Arbitrator to be replaced. The Arbitrator shall be
neutral. The Arbitrator shall have the authority to assess the costs and
expenses of the arbitration proceeding (including the arbitrators', and
attorneys' fees and expenses) against any or all Partners.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect or punitive damages or (ii) amend this
Agreement. The Arbitrator shall render the arbitration award, in writing,
within 20 days following the completion of the arbitration hearing, and
Appendix D-2
<PAGE>
shall set forth the reasons for the award. In the event that the Arbitrator
awards monetary damages in favor of either party, the Arbitrator must certify in
the award that no indirect, consequential, incidental, indirect or punitive
damages are included in such award. If the Arbitrator's decision results in a
monetary award, the interest to be granted on such award, if any, and the rate
of such interest shall be determined by the Arbitrator in his or her discretion.
The arbitration award shall be final and binding on the Partners, and judgment
thereon may be entered in any court of competent jurisdiction, and may not be
appealed except to the extent permitted by the Federal Arbitration Act.
(4) Continuation of Business. Notwithstanding the existence of any Dispute
or the pendency of any procedures pursuant to this Appendix, the Partners agree
and undertake that all payments not in dispute shall continue to be made and all
obligations not in dispute shall continue to be performed.
Appendix D-3
<PAGE>
APPENDIX 1 TO APPENDIX D
------------------------
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the Partners and their Affiliates as set forth in the Partnership Agreement.
(b) Second priority shall be given to resolution of the Dispute in a manner
which best achieves the objectives of the business activities and arrangements
under the Partnership Agreement and the Related Agreements and permits the
Partners to realize the benefits intended to be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
Partners or the Arbitrator shall determine to be appropriate under the
circumstances.
Appendix D-4
<PAGE>
APPENDIX E
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
DIVISION OF PARTNERSHIP BUSINESS
--------------------------------
If the Partnership is dissolved and Section 12.2(e) applies to the winding
up of the affairs of the Partnership, the Partnership properties shall, to the
extent legally and contractually feasible and, after satisfaction of the
liabilities of the Partnership (whether by payment or reasonable provision for
payment), be distributed in kind to the Partners in accordance with a division
(the "Division") of the properties. The Division shall be implemented by
dividing the properties, to the extent feasible, in accordance with the
following priorities and principles:
A. First priority shall be given to maximizing the consistency of the Division
with a division of the Partnership properties that allocates to each Partner
(subject to such Partner's Percentage Interest of the Partnership's
liabilities) Partnership properties in proportion to the value of such
Partner's Percentage Interest in the Partnership's business taking into
account the aggregate Asset Fair Market Value of the Partnership's
properties and the value and benefits afforded to such Partner under the
Partnership Agreement and the other Related Agreements.
B. Second priority shall be given to the allocation of the Partnership's
various assets and business units between the Partners so as to maximize the
aggregate going concern value of the respective assets and business units
allocated to each Partner, taking into account, without limitation, the
potential synergies and efficiencies that are reasonably achievable in
connection with the operation of such allocated assets and business units as
an independent business entity.
C. Third priority shall be given to maximizing the consistency of the Division
with the nature and quality of the Assets and Contributed Business
originally transferred to the Partnership by the respective Partners or
their Affiliates.
Absent an agreement by the Partners or direction by the Neutral as to both
(i) how the Partners should allocate Partnership debt and (ii) the process for
relieving each Partner of liability for that portion of Partnership debt
allocated to the other Partner, the Partners (A) shall be jointly and severally
liable to the holders of all Partnership debt and (B) as between the Partners,
each Partner shall be obligated to pay to holders of the debt its Percentage
Interest of all payments of principal and interest on Partnership Debt.
Notwithstanding the foregoing, the Neutral shall be entitled to direct, and any
Partner may propose, an alternative allocation of Partnership debt in any
circumstance where such alternative allocation is reasonably likely to result in
a Division that is more consistent with the priorities outlined above.
For purposes of this Appendix E, Lyondell GP and Lyondell LP shall be
treated as if they were a single Partner, Millennium GP and Millennium LP shall
be treated as if they were a single Partner and Occidental GP, Occidental LP1
and Occidental LP2 shall be treated as if they were a single Partner.
Appendix E-1
<PAGE>
The Partners shall attempt to agree on a plan for a mutually acceptable
Division. If they are unable to so agree after 60 days following the occurrence
of the dissolution, a Neutral shall be appointed in accordance with Appendix D
and each Partner shall submit to the Neutral a written proposal for a Division.
The Neutral shall decide which of the three proposals (without in any way
modifying or compromising between the three proposals) more closely follows the
priorities and principles set forth above, and the proposal so chosen shall
thereupon be binding upon all Partners and shall be promptly implemented under
the direction of the Neutral. The Neutral shall be entitled to employ (at the
expense of the Partnership) such financial and accounting advisors and legal
counsel as he or she shall select, provided that no such advisor or counsel
shall have any affiliation with any Partner.
Appendix E-2
<PAGE>
SCHEDULE 2.3(D)
Effective Date Capital Account Balances
---------------------------------------
Column I reflects Capital Accounts after the contributions of the Occidental
Partners on the Effective Date and the Effective Date adjustments to the Capital
Accounts of the Initial Partners, but before the other contributions and
distributions described in Section 2.3(c). Column II indicates the amount of
the contributions and distributions described in 2.3(c) other than accrued
interest. Column III reflects the Capital Accounts if such contributions and
distributions were made (and accrued interest was paid and distributed) on the
Effective Date. Column IV reflects the number of Units owned by each Partner.
<TABLE>
<CAPTION>
PARTNER I II III IV
- ----------------- --------------- --------------- --------------- ------
<S> <C> <C> <C> <C>
Lyondell GP $ 42,451,400 $ 42,451,400 820
Lyondell GP 1,931,768,600 $ 148,350,000 2,080,118,600 40,180
------
41,000
Millennium GP 30,544,300 30,544,300 590
Millennium GP 1,720,020,000 (223,350,000) 1,496,670,000 28,910
------
29,500
Occidental GP 15,272,150 15,272,150 295
Occidental LP1 342,872,650 342,872,650 6,623
Occidental LP2 1,588,770,000 (419,700,000) 1,169,070,000 22,582
-------------- ------------- -------------- ------
29,500
$5,671,699,100 $(494,700,000) $5,176,999,100
============== ============= ==============
</TABLE>
*The difference between Lyondell LP's contribution of $345 million to satisfy
the Lyondell Note and the distribution to it of $196,650,000 (57%) of the
proceeds from such note.
<PAGE>
EXHIBIT 10.3
AMENDED AND RESTATED PARENT AGREEMENT
AMONG
OCCIDENTAL CHEMICAL CORPORATION,
OXY CH CORPORATION,
OCCIDENTAL PETROLEUM CORPORATION,
LYONDELL PETROCHEMICAL COMPANY,
MILLENNIUM CHEMICALS INC.
AND
EQUISTAR CHEMICALS, LP
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1 GUARANTEE OF OBLIGATIONS 3
1.1 Guarantee. 3
1.2 Guarantee Regarding Interested Owner Agreements 4
1.3 No Demand or Notice 4
1.4 Waiver of Resort to Security 4
1.5 No Discharge. 5
1.6 Waivers by the Parent 5
1.7 No Reduction. 5
1.8 Enforcement. 5
1.9 Continued Effectiveness. 5
1.10 Certain Defenses. 5
1.11 Parties in Interest. 6
1.12 Parent Net Worth 6
SECTION 2 OWNERSHIP AND BUSINESS OF PARTNER SUBS 7
2.1 Restrictions on Transfer and Pledge of Partner Sub Stock. 7
2.2 Right of First Option 9
2.3 Prohibition on Affiliated Obligor Bankruptcy, Etc. 11
2.4 Special Purpose Subsidiaries. 12
SECTION 3 STANDSTILL AGREEMENT AND CERTAIN OTHER MATTERS 12
3.1 Standstill. 12
3.2 Exceptions 13
3.3 OPC Indemnity 14
3.4 Mutual Indemnity 14
SECTION 4 MISCELLANEOUS 16
4.1 No Waivers. 16
4.2 Expenses in Connection with Exercise. 16
4.3 Subordination and Subrogation 16
4.4 Confidentiality and Use of Information 16
4.5 Competing Businesses 16
4.6 Further Assurances. 17
4.7 Assignment; Successors and Assigns 17
4.8 Benefits of Agreement Restricted to the Parties 17
4.9 Notices 17
4.10 Severability 19
4.11 Termination 19
4.12 Construction and Certain Definitions 19
4.13 Counterparts 20
4.14 Governing Law 20
4.15 Jurisdiction; Consent to Service of Process; Waiver 20
i
<PAGE>
4.16 Waiver of Jury Trial 20
4.17 Dispute Resolution 20
4.18 Obligations Regarding Affiliates 20
4.19 Amendment 20
APPENDICES
Appendix A List of Related Agreements
Appendix B Dispute Resolution Procedures
ii
<PAGE>
AMENDED AND RESTATED PARENT AGREEMENT
This Amended and Restated Parent Agreement (this "Agreement") is made as of
this 15th day of May, 1998 among Occidental Chemical Corporation, a New York
corporation ("OCC"), Oxy CH Corporation, a California corporation ("Oxy CH"),
Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"), Millennium
Chemicals Inc., a Delaware corporation ("Millennium"), Occidental Petroleum
Corporation, a Delaware corporation ("OPC"), and Equistar Chemicals, LP, a
Delaware limited partnership (the "Partnership," and together with OCC, Oxy CH,
Lyondell, Millennium and OPC, the "Parties").
WHEREAS, except as provided in Section 3, OCC and Oxy CH, taken together
and jointly and severally, are the "Occidental Parent" for purposes of this
Agreement, and the Occidental Parent (except as provided in Section 3), Lyondell
and Millennium are each a "Parent" for purposes of this Agreement.
WHEREAS, Lyondell Petrochemical G.P. Inc. ("Lyondell GP") and Lyondell
Petrochemical L.P. Inc. ("Lyondell LP" and, together with Lyondell GP, the
"Lyondell Partner Subs") are both Delaware corporations and direct or indirect
wholly owned subsidiaries of Lyondell.
WHEREAS, Millennium Petrochemicals GP LLC ("Millennium GP") and Millennium
Petrochemicals LP LLC ("Millennium LP" and, together with Millennium GP, the
"Millennium Partner Subs") are both Delaware limited liability companies and
direct or indirect wholly owned subsidiaries of Millennium.
WHEREAS, PDG Chemical Inc. ("Occidental GP") and Occidental Petrochem
Partner 2, Inc. ("Occidental LP2") are both Delaware corporations and direct or
indirect wholly owned subsidiaries of Oxy CH; Occidental Petrochem Partner 1,
Inc. ("Occidental LP1" and, together with Occidental GP and Occidental LP2, the
"Occidental Partner Subs") is a Delaware corporation and a wholly owned
subsidiary of OCC; and Oxy CH and OCC are both direct or indirect wholly owned
subsidiaries of OPC.
WHEREAS, for purposes of this Agreement, the Occidental Partner Subs are
the Partner Subs of the Occidental Parent.
WHEREAS, pursuant to the terms of the Master Transaction Agreement dated as
of July 25, 1997 between Lyondell and Millennium (the "Initial Master
Transaction Agreement"), the Partnership was formed under the laws of the State
of Delaware pursuant to the Limited Partnership Agreement dated October 10, 1997
(the "Old Partnership Agreement"), with Lyondell GP and Millennium GP as the
general partners and Lyondell LP and Millennium LP as the limited partners of
the Partnership.
WHEREAS, in connection with the closing of the transactions contemplated by
the Initial Master Transaction Agreement, Lyondell and Millennium entered into
the Parent Agreement with the Partnership dated as of December 1, 1997 (the
"Initial Parent Agreement"), providing for, among
<PAGE>
other things, certain guarantees of performance by their respective Affiliated
Obligors (as defined therein) and for certain restrictions on the transfer of
their respective Partner Sub Stock (as defined therein);
WHEREAS, the Partnership, OPC, Lyondell and Millennium entered into a
Master Transaction Agreement dated May 15, 1998 (the "Second Master Transaction
Agreement"), providing for, among other things, the admission of the Occidental
Partner Subs as partners in the Partnership. The Occidental Partner Subs,
together with any other Affiliate of the Occidental Parent that is a party to
any of the Related Agreements (as defined herein), are referred to herein as the
"Occidental Affiliated Obligors." The Lyondell Partner Subs, together with any
other Affiliate of Lyondell that is a party to any of the Related Agreements,
are referred to herein as the "Lyondell Affiliated Obligors." The Millennium
Partner Subs, together with any other Affiliate of Millennium that is a party to
any of the Related Agreements, are referred to herein as the "Millennium
Affiliated Obligors." The Occidental Affiliated Obligors, the Lyondell
Affiliated Obligors and the Millennium Affiliated Obligors, collectively or
individually as the context may require, are referred to herein as the
"Affiliated Obligors." The Occidental Partner Subs, the Lyondell Partner Subs
and the Millennium Partner Subs, collectively or individually as the context may
require, are referred to herein as the "Partner Subs."
WHEREAS, in connection with the closing of the transactions effected
pursuant to the Initial Master Transaction Agreement and to be effected in
connection with the closing of the Second Master Transaction Agreement, the
Parents and certain of their respective Affiliates, have entered into or are
entering into various agreements and other legal documents, including the
Amended and Restated Limited Partnership Agreement of the Partnership dated as
of the date of this Agreement (the "Partnership Agreement"), the Agreement and
Plan of Merger and Asset Contribution dated as of the date of this Agreement
(the "Occidental Contribution Agreement") among the Partnership, the Occidental
Partner Subs and Oxy Petrochemicals Inc. ("OPI"), services agreements and other
asset contribution agreements, as applicable (including this Agreement, the
"Related Agreements"), each of which is integrally related to the capitalization
or operations of the Partnership and is listed on Appendix A hereto. The
Related Agreements (other than this Agreement) and any additional agreements
that may from time to time be added to Appendix A hereto by agreement of the
Parents, as they may in the future be amended, supplemented, restated or
otherwise modified, are referred to herein as the "Other Agreements". The Other
Agreements to be entered into in connection with the Second Master Transaction
Agreement are herein called the "Additional Other Agreements".
WHEREAS, the Parties desire to amend and restate the Initial Parent
Agreement in connection with the admission of the Occidental Partner Subs to the
Partnership and the closing of the other transactions contemplated by the Second
Master Transaction Agreement.
WHEREAS, this Agreement is essential to the consummation of the closing
pursuant to the Second Master Transaction Agreement and the entering into and
effectiveness of the Additional Other Agreements and each of the parties to such
agreements is relying on this Agreement in connection with entering into each of
the Additional Other Agreements.
2
<PAGE>
WHEREAS, this Agreement provides for the continuation of obligations and
restrictions set forth in the Initial Parent Agreement, which were essential to
the consummation of the closing pursuant to the Initial Master Transaction
Agreement and the entering into and effectiveness of the Other Agreements
entered into in connection therewith.
WHEREAS, each Parent is willing, solely for the benefit of the
Beneficiaries (as defined below in Section 1.11) and their successors and
assigns, to guarantee the performance by its Affiliated Obligors of certain of
the obligations of such Affiliated Obligors as set forth in this Agreement.
WHEREAS, each Parent is willing to subject the Partner Sub Stock (as
defined herein) to certain restrictions on transfer, as set forth in this
Agreement.
WHEREAS, OPC is willing to (i) indemnify the Partnership from certain
potential liabilities that the Partnership would not otherwise be subject to but
for the merger of OPI with and into the Partnership, and (ii) agree to certain
other covenants in connection with the closing of the transactions contemplated
by the Second Master Transaction Agreement.
NOW THEREFORE, in, consideration of the foregoing and the mutual promises
and covenants of the Parties hereto, the Parties hereby agree as follows:
SECTION 1
GUARANTEE OF OBLIGATIONS
1.1 Guarantee. Each Parent hereby unconditionally, absolutely and
irrevocably guarantees, undertakes and promises to cause, as herein provided,
the due and punctual payment and the full and prompt performance by its
Affiliated Obligors of all of the amounts to be paid and all of the terms and
provisions to be performed or observed by or on the part of its Affiliated
Obligors under the Other Agreements in accordance with the terms thereof (all
such terms and provisions as now or hereafter in existence being collectively
called the "Obligations") as follows: in the event that its Affiliated Obligors
shall fail in any manner whatsoever to pay, perform or observe any of their
Obligations, when and as the same shall be required to be paid, performed or
observed under the terms of the Other Agreements, such Parent will itself duly
and punctually pay, or fully and promptly perform or observe, as the case may
be, such Obligations, or cause the same to be duly and punctually paid, or fully
and promptly performed or observed, in each case as if such Parent were itself
the obligor with respect to such Obligations under the Other Agreements.
Insofar as this Section 1.1 relates to the obligations of an Affiliated Obligor
under the Partnership Agreement, no Parent shall be required to make, or cause a
Partner Sub to make, any contribution to the Partnership that such Partner Sub
is not otherwise required to make pursuant to the terms of Section 2.3, 2.4, or
12.2(d)(ii) of the Partnership Agreement. Insofar as this Section 1.1 applies
to Other Agreements
3
<PAGE>
other than the Partnership Agreement, the term "Affiliated Obligors" will not
include the Partnership nor any partner in the Partnership in its capacity as
such. Notwithstanding the foregoing, this Section 1.1 shall not apply to
Obligations that are within the scope of Section 1.2.
1.2 Guarantee Regarding Interested Owner Agreements. Each Parent
acknowledges that the Partnership Agreement sets forth definitions of
"Conflicted General Partner" and "Nonconflicted General Partner," and provides
that the Nonconflicted General Partners (whether one or more) have certain
exclusive rights to control the Partnership with respect to any Conflict
Circumstance (as defined in the Partnership Agreement); and accordingly, without
limiting the rights of its Partner Subs under Section 6.8 of the Partnership
Agreement, and without prejudice to any rights, remedies or defenses the
Partnership may have in respect of any such Other Agreement or Conflict
Circumstance, each Parent hereby agrees to cause its Partner Subs (i) to cause
the Partnership to pay, perform and observe all of the Obligations to be paid,
performed or observed by or on the part of the Partnership under the Other
Agreements, in accordance with the terms thereof, to the extent that such
Partner Sub is a Nonconflicted General Partner and is thereby entitled to cause
the payment, performance and observance of such Obligations and (ii) except to
the extent inconsistent with its obligations under Section 1.2(i), to abide by
its obligations as a Nonconflicted General Partner with respect to any Conflict
Circumstance arising in connection with any Other Agreement in accordance with
the terms of the Partnership Agreement applicable thereto; provided, however,
that each Parent's responsibility under this Section 1.2 for a failure of the
Partnership to pay, perform or observe its Obligations under the Other
Agreements shall be limited to the circumstances in which the Partnership's
failure to so pay, perform or observe its obligations under the Other Agreements
was directly caused by an act or failure to act of its Partner Sub, provided,
further, that nothing in this Section 1.2 shall require a Parent to make or
cause such Partner Sub (i) to cure or mitigate any inability of the Partnership
to make any payment or to perform or observe any Obligations under any Other
Agreements, (ii) to cause the Partnership to require from the Partner Subs any
cash contributions in respect of any payment, performance or observance involved
in such Conflict Circumstance, or (iii) to make any contribution to the
Partnership that such Partner Sub is not otherwise required to make pursuant to
Section 2.3, 2.4, or 12.2(d)(ii) of the Partnership Agreement.
1.3 No Demand or Notice. It shall not be a condition to the guarantees
and agreements set forth in Sections 1.1 and 1.2 above (together, the
"Guarantee") that a Beneficiary shall have first made any request of or demand
upon, or given any notice of the occurrence of a default under the Other
Agreements or any other notice whatsoever to, any Parent or its Affiliated
Obligors or any other Person, or shall have instituted any action or proceeding
against any Affiliated Obligor or any other Person in respect thereof, or shall
have joined any Affiliated Obligor or the Partnership in any such action or
proceeding. A Beneficiary in asserting the benefit of the Guarantee shall give
prompt notice to a Parent of any failure by its Affiliated Obligors or the
Partnership to pay, perform or observe any Obligation; provided, however, that
any failure, delay or defect in the giving of such notice shall not alter or
affect the Guarantee under this Agreement.
1.4 Waiver of Resort to Security. Each Parent further agrees that this
Agreement, insofar as it constitutes a guarantee of monetary Obligations,
constitutes a guarantee of payment when due and not of collection, and each
Parent waives any right to require as a condition to its Guarantee that any
resort be had by a Beneficiary to any security held for the payment of any
Obligations.
4
<PAGE>
1.5 No Discharge. The Guarantee is and shall remain absolute and
unconditional irrespective of any circumstance that might otherwise constitute a
legal or equitable discharge of a surety or guarantor, as the case may be, with
respect to its Guarantee.
1.6 Waivers by the Parent. Each Parent hereby waives, with respect to the
Guarantee but without prejudice to the rights of the parties to the Other
Agreements, any notice of acceptance of this Agreement, grace, presentment,
demand, protest, notice of the occurrence of a default under the Other
Agreements and any other notice of any kind whatsoever and promptness in making
any claim or demand hereunder. The Guarantee shall not be affected by (i) the
failure of a Beneficiary to assert any claim or demand or to enforce any right
or remedy under the provisions of any of the Other Agreements or any agreement
related thereto or otherwise, (ii) any extension or renewal of any of the Other
Agreements or any agreement related thereto, (iii) any rescission, waiver,
amendment or modification of any of the terms or provisions of any of the Other
Agreements or of any agreement related thereto, including, without limitation,
any change in the time, manner or place of payment or performance of any of the
obligations under the Other Agreements, or (iv) the release of any security held
for payment of any Obligations.
1.7 No Reduction. The Guarantee shall not be subject to any reduction,
limitation, impairment or termination for any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever, except as provided in Section 1.10.
1.8 Enforcement. Notwithstanding anything herein to the contrary, a
Beneficiary may proceed to enforce the Guarantee without first pursuing or
exhausting any right or remedy that it or any of its successors or assigns may
have against any Affiliated Obligor or any Parent or any other person.
1.9 Continued Effectiveness. The Guarantee shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any Obligation of an Affiliated Obligor is rescinded or must
otherwise be restored or returned by the Person receiving such payment upon the
insolvency, bankruptcy or reorganization of an Affiliated Obligor, all as though
such payment or part thereof had not been made.
1.10 Certain Defenses. Nothing herein is intended to deny to any Parent,
and it is expressly agreed that each Parent shall have and may assert, any and
all of the defenses, set-offs, counterclaims and other rights (other than those
relating to insolvency, bankruptcy or reorganization as described in Section
1.9) with regard to any Obligations that its Affiliated Obligors may possess
except any defense its Affiliated Obligors may possess relating to lack of
validity or enforceability of the Other Agreements or any other agreement or
instrument relating thereto as against its Affiliated Obligors arising from the
defective incorporation or other defective organization of its Affiliated
Obligors, their lack of qualification to do business in any applicable
jurisdiction or their defective corporate or other organizational authority to
enter into, deliver or perform the Other Agreements.
5
<PAGE>
1.11 Parties in Interest. Section 1 of this Agreement shall inure
solely to the benefit of the Beneficiaries, each of whom has the right to
enforce the Guarantee against the Parents, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement. As used in this Agreement, "Beneficiaries" shall mean (i) as to any
obligations of the Occidental Parent, except for its obligations pursuant to
Section 1.1 hereof with respect to the Partnership Agreement, the Partnership,
Lyondell, the Lyondell Affiliated Obligors, Millennium and the Millennium
Affiliated Obligors, (ii) as to any obligations of Millennium, except for its
obligations pursuant to Section 1.1 hereof with respect to the Partnership
Agreement, the Partnership, the Occidental Parent, the Occidental Affiliated
Obligors, Lyondell and the Lyondell Affiliated Obligors, (iii) as to any
obligations of Lyondell, except for its obligations pursuant to Section 1.1
hereof with respect to the Partnership Agreement, the Partnership, the
Occidental Parent, the Occidental Affiliated Obligors, Millennium and the
Millennium Affiliated Obligors, and (iv) as to any obligations of any Parent
pursuant to Section 1.1 hereof with respect to the Partnership Agreement, the
other Parents. As used in this Agreement, the term Parent includes any
successor or transferee of the Parent, and the term Affiliated Obligors includes
any successor to or transferee of the Affiliated Obligors' interest in the
Partnership permitted pursuant to the Partnership Agreement.
1.12 Parent Net Worth.
(a) Each Parent shall at all times maintain a GAAP Net Worth in an
amount sufficient to satisfy its known and potential obligations under this
Agreement.
(b) Each Parent agrees that, as of the end of each fiscal quarter,
either (i) the excess of its GAAP Net Worth at such time over its Partnership
Investment at such time or (ii) the excess of its Equity Market Capitalization
at such time over its Adjusted Partnership Investment at such time, shall be at
least $250 million.
(c) The term "GAAP Net Worth" means, for a Parent at any time, such
Parent's consolidated stockholders equity, determined in accordance with
generally accepted accounting principles ("GAAP"), as of the end of its most
recent fiscal quarter. The term "Equity Market Capitalization" means, for a
Parent at any time, (x) the aggregate market value of such Parent's outstanding
publicly traded equity securities, as of the end of its most recent fiscal
quarter (based on the average closing price for the most recent 20 trading days
on the principal stock exchange on which such securities are traded) plus (y)
the amount of stockholders equity, determined in accordance with GAAP,
attributable at such time to any equity securities of such Parent that are not
publicly traded. The term "Partnership Investment" means, for a Parent at any
time, its investment in the Partnership, determined in accordance with GAAP as
of the end of the most recent fiscal quarter. The term "Adjusted Partnership
Investment" means, for a Parent at any time, (A) Lyondell's investment in the
Partnership, determined in accordance with GAAP as of the end of the most recent
fiscal quarter, multiplied by (B) a fraction the numerator of which is the
aggregate Percentage Interest at such time of the Partner Subs owned by the
Parent whose Partnership Investment is being determined and the denominator of
which is the aggregate Percentage Interest at such time of the Partner Subs
owned by Lyondell. The term "Percentage Interest" is used as defined in the
Partnership Agreement.
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(d) The provisions of Section 1.12(b) shall expire as to a Parent at
such time after the seventh anniversary of the Closing Date at which no material
Seven Year PCCL Claim (as defined in the Asset Contribution Agreement (as
defined in the Partnership Agreement) applicable to such Parent, its Affiliated
Obligors or, if applicable, its predecessor Parent or its Affiliated Obligors)
is outstanding against such Parent, any of its Affiliated Obligors or, if
applicable, its predecessor Parent or its Affiliated Obligors.
SECTION 2
OWNERSHIP AND BUSINESS OF PARTNER SUBS
2.1 Restrictions on Transfer and Pledge of Partner Sub Stock. (a) Each
Parent agrees that except as otherwise provided below in this Section 2.1 or
Section 2.2 or with the written consent of each of the other Parents, which
consent may be granted or withheld in such Parent's sole discretion, it will
not, in any transaction or series of transactions, directly or indirectly, (i)
sell, assign or otherwise in any manner dispose of, whether by act, deed, merger
or otherwise ("Transfer") or (ii) mortgage, pledge, encumber or create or suffer
to exist any pledge, lien or encumbrance upon or security interest in
("Pledge"), all or any part of the capital stock (including any securities
convertible into or exchangeable for or carrying any rights to purchase,
subscribe for or otherwise acquire any such capital stock) of its Partner Subs
(collectively, the "Partner Sub Stock"). (Each of the defined terms
"Transfer"and "Pledge" is used herein both as a noun and as a verb.) Any
attempt by a Parent to Transfer or Pledge all or a portion of its Partner Sub
Stock in violation of this Agreement shall be void ab initio and shall not be
effective to Transfer such Partner Sub Stock or any portion thereof. The
Partnership Agreement contains provisions relating to the Transfer and Pledge of
the Partner Subs' direct interests in the Partnership.
(b) Each Parent agrees that all certificates representing shares of Partner
Sub Stock, whether currently owned or hereafter acquired, shall carry the
following legend, which legend each Parent agrees to cause to be placed thereon
and to cause to remain thereon as long as such shares are subject to the
restrictions of this Agreement:
THE SALE, ASSIGNMENT, PLEDGE OR OTHER TRANSFER OR HYPOTHECATION OF THE
STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS
PURSUANT TO AND MAY NOT BE EFFECTED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF AN AGREEMENT BINDING UPON THE OWNER OF THE STOCK REPRESENTED
HEREBY. THE OWNER OR ISSUER WILL FURNISH A COPY OF SUCH AGREEMENT TO ANY
PROPOSED TRANSFEREE OR PLEDGEE WITHOUT CHARGE UPON REQUEST.
(c) Without the need for the consent of any Person, any Parent may Transfer
its Partner Sub Stock to any wholly-owned Affiliate of such Parent or of a
common parent.
(d) Without the need for the consent of any Person, each Parent (other than
OCC or Oxy CH) may Transfer all (but not less than all) of its Partner Sub
Stock, if such Transfer is in connection with (i) a merger, consolidation,
conversion or share exchange of such Parent or (ii) a sale or other
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disposition of (x) the Partner Sub Stock plus (y) other assets representing at
least fifty-percent (50%) of the book value of such Parent's assets excluding
the Partner Sub Stock, as reflected on its most recent audited consolidated (or
combined) financial statements; provided, however, that the Successor Parent, if
any, (A) shall succeed to and be substituted for such Parent, with the same
effect as if it had been named herein and (B) shall execute an instrument
wherein such Successor Parent shall agree to be bound by the obligations of such
Parent under this Agreement, with the same effect as if it had been named
herein, whereupon, unless such Parent shall become a direct or indirect
subsidiary of such Successor Parent, such Parent shall thereupon be released
from all obligations under Sections 1, 2 and 4 of this Agreement.
(e) Without the need for the consent of any Person, OCC may Transfer all
(but not less than all) of its Partner Sub Stock, if such Transfer is in
connection with:
(i) a merger, consolidation, conversion or share exchange of OCC,
(ii) a sale or other disposition of (x) the Partner Sub Stock plus (y)
other assets representing at least fifty percent (50%) of the
book value of Oxy CH's assets excluding the Partner Sub Stock, as
reflected on its most recently unaudited consolidated (or
combined) financial statements, or
(iii) any Transfer permitted by Section 2.1(f);
and following the consummation of any such transaction, the Partner Sub
Stock held directly or indirectly by OCC and Oxy CH on the date hereof
shall be held by the same transferee or one or more transferees that are
wholly-owned Affiliates of each other or of a common parent entity;
provided, however, that the Successor Parent, if any, (A) shall succeed to
and be substituted for OCC, with the same effect as if it had been named
herein, and (B) shall execute an instrument wherein such Successor Parent
shall agree to be bound by the obligations of OCC hereunder, with the same
effect as if it had been named herein, whereupon, unless OCC shall become a
direct or indirect subsidiary of such Successor Parent, OCC shall thereupon
be released from all obligations under Sections 1, 2 and 4 of this
Agreement.
(f) Without the need for the consent of any Person, Oxy CH may Transfer all
(but not less than all) of its Partner Sub Stock, if such Transfer is in
connection with:
(i) a merger, consolidation, conversion or share exchange of Oxy CH,
(ii) a sale or other disposition of (A) the Partner Sub Stock plus (B)
other assets representing at least fifty percent (50%) of the
book value of Oxy CH's assets excluding the Partner Sub Stock, as
reflected on its most recently prepared unaudited consolidated
(or combined) financial statements, or
(iii) any Transfer permitted by Section 2.1(e) or (g);
and following the consummation of any such transaction, the Partner Sub
Stock held directly or indirectly by OCC and Oxy CH on the date hereof
shall be held by the same transferee or one or more transferees that are
wholly-owned Affiliates of each other or of a common parent entity;
provided, however, that the Successor Parent, if any, (A) shall succeed to
and
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be substituted for Oxy CH, with the same effect as if it had been named
herein, and (B) shall execute an instrument wherein such Successor Parent
shall agree to be bound by the obligations of Oxy CH hereunder, with the
same effect as if it had been named herein, whereupon, unless Oxy CH shall
become a direct or indirect subsidiary of such Successor Parent, Oxy CH
shall thereupon be released from all obligations under Sections 1, 2 and 4
of this Agreement.
(g) Nothing in this Agreement shall prevent or restrict the Transfer or
Pledge of the capital stock, equity ownership interests or other securities of a
Parent (or, in the case of the Occidental Parent, either of OCC or Oxy CH), and
no such Transfer or Pledge of securities issued by a Parent (or, in the case of
the Occidental Parent, either of OCC or Oxy CH) shall be deemed to constitute a
Transfer or Pledge of Partner Sub Stock hereunder; provided that, (i) in the
event of a Transfer in the form of a transaction described in clause (i) of
Section 2.1(d), (e) or (f), the Successor Parent, if any, shall execute an
instrument to the effect described in clause (B) of Section 2.1(d), (e) or (f),
as applicable, and (ii) following the consummation of any such Transfer or
Pledge of securities of a Parent, all the Partner Sub Stock of such Parent shall
be held by the same transferee or one or more transferees that are wholly-owned
Affiliates of each other or of a common parent entity or shall be Pledged to the
same pledgee or pledgees.
(h) For purposes of this Section 2.1, the term "Successor Parent" shall
mean the acquiring, succeeding or surviving entity in any transaction
contemplated by Section 2.1 (d), (e) or (f) that owns the applicable Partner Sub
Stock following such transaction, if other than a Parent.
(i) Each Parent may Pledge all (but not less than all) of its Partner Sub
Stock to any one or more Approved Lenders; provided that the Pledge shall be
evidenced by an instrument, reasonably satisfactory to the Partnership, wherein
the Approved Lender receiving such Pledge shall agree that in the event such
Approved Lender obtains a right of foreclosure on such Parent's Partner Sub
Stock, such Approved Lender will foreclose on the Partner Sub Stock of each of
such Parent's Partner Subs equally so that such Approved Lender will in all
events hold equal portions of Partner Sub Stock of Occidental GP, Occidental LP1
and Occidental LP2, Lyondell GP and Lyondell LP or Millennium GP and Millennium
LP, as the case may be. An "Approved Lender" shall be any bank, insurance
company, investment bank or other financial institution that is regularly
engaged in the business of making loans.
2.2 Right of First Option.
(a) Without the consent of each of the other Parents, no Parent may
Transfer less than all of its Partner Sub Stock, and unless such Transfer is
otherwise permitted by Section 2.1, no Parent may Transfer its Partner Sub Stock
for consideration other than cash. Unless such Transfer is otherwise permitted
by Section 2.1, any Parent (the "Selling Parent") desiring to Transfer all of
its Partner Sub Stock to any person (including another Parent or any Affiliate
thereof) shall give written notice (the "Initial Notice") to the Partnership and
each of the other Parents (the "Offeree Parents") stating that the Selling
Parent desires to Transfer its Partner Sub Stock and stating the cash
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purchase price and all other terms on which it is willing to sell (the "Offer
Terms"). Delivery of an Initial Notice shall constitute the irrevocable offer
of the Selling Parent to sell its Partner Sub Stock to the Offeree Parents
hereunder.
(b) Each Offeree Parent shall have the option, exercisable by
delivering written notice (the "Acceptance Notice") of such exercise to the
Selling Parent within 45 days of the date of the Initial Notice, to elect to
purchase its pro rata share in the case of both of the limited partner and the
general partner (based on the ratio of the number of Units held by its Partner
Subs to the number of Units held by all of the Partner Subs of the Offeree
Parents or on any other basis that shall be mutually agreed upon between the
Offeree Parents delivering an Acceptance Notice) of all of the Partner Sub Stock
of the Selling Parent on the Offer Terms described in the Initial Notice. If
one Offeree Parent, but not the other, elects to so purchase, the Selling Parent
shall give written notice thereof (the "Additional Notice") to the Offeree
Parent electing to purchase and such Parent shall have the option, exercisable
by delivery of an Acceptance Notice, of such exercise to the Selling Parent
within 15 days of such notice, to purchase all of the Partner Sub Stock held by
the Selling Parent, including the Partner Sub Stock it has not previously
elected to purchase; provided, however, that any election by an Offeree Parent
not to purchase all such Partner Sub Stock shall be deemed a rescission of such
Offeree Parent's original Acceptance Notice and an election not to purchase any
of the Partner Sub Stock of the Selling Parent. Each Acceptance Notice shall
set a date for closing the purchase, such date to be not less than 30 nor more
than 90 days after delivery of the Acceptance Notice; provided that such time
period shall be subject to extension as reasonably necessary (up to a maximum of
an additional 120 days after such 90 day period) in order to comply with any
applicable filing and waiting period requirements under the Hart-Scott-Rodino
Antitrust Improvements Act. The closing shall be held at the Partnership's
offices. The purchase price for the Selling Parent's Partner Sub Stock shall be
paid in cash delivered at the closing. The purchase shall be consummated by
appropriate and customary documentation (including the giving of representations
and warranties substantially similar to (i) in the case of Lyondell or
Millennium, those set forth in Sections 2.1 through 2.4 of the Initial Master
Transaction Agreement, and in the case of the Occidental Parent, those set forth
in Section 2.2 of the Second Master Transaction Agreement, and (ii) customary
representations and warranties regarding the Selling Parent's title to its
Partner Sub Stock).
(c) If one or both of the Offeree Parents does not elect to purchase
all of the Selling Parent's Partner Sub Stock within 45 days after the receipt
of the Initial Notice or within 15 days after the receipt of the Additional
Notice, if applicable, the Selling Parent shall have a further 180 days during
which it may, subject to Sections 2.2(d) and (e), consummate the sale of its
Partner Sub Stock to a third party purchaser at a purchase price and on such
other terms that are no more favorable to such purchaser than the Offer Terms.
If the sale is not completed within such further 180-day period, the Initial
Notice shall be deemed to have expired and a new notice and offer shall be
required before the Selling Parent may make any Transfer of its Partner Sub
Stock.
(d) Before the Selling Parent may consummate a Transfer of its Partner
Sub Stock to a third party in accordance with this Agreement, the Selling Parent
shall demonstrate to the other two Parents that such proposed purchaser (or the
Person willing to serve as its guarantor as contemplated by Section 2.2(e)) has
outstanding indebtedness that is rated investment grade by either
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Moody's Investor Services Inc. or Standard & Poor's Ltd, or if such proposed
purchaser (or such other Person) has no rated indebtedness outstanding, such
Person shall provide an opinion from one of such entities or from a nationally
recognized investment banking firm that it could be reasonably expected to
obtain such a rating.
(e) Notwithstanding the foregoing provisions of this Section 2.2, a
Parent may Transfer its Partner Sub Stock (other than pursuant to Section 2.1)
only if all of the following occur:
(i) The Transfer is accomplished in a non-public offering in
compliance with, and exempt from, the registration and qualification
requirements of all federal and state securities laws and regulations.
(ii) The Transfer does not cause a default under any material
contract which has been approved unanimously by the Partnership
Governance Committee (as defined in the Partnership Agreement) and to
which the Partnership is a party or by which the Partnership or any of
its properties is bound.
(iii) The transferee executes an appropriate agreement to be
bound by this Agreement.
(iv) The transferor and/or transferee bears all reasonable costs
incurred by the Partnership in connection with the Transfer.
(v) The transferee (or the guarantor of the obligations of the
transferee) satisfies the criteria set forth in Section 2.2(d) and
delivers an agreement to each of the other Parents and the Partnership
substantially in the form of this Agreement.
(vi) The proposed transferor is not in default in the timely
performance of any of its material obligations to the Partnership.
(vii) The provisions of Section 2.2(f) are satisfied.
(f) No Parent may Transfer the Partner Sub Stock of any of its Partner
Subs to any Person unless such Parent simultaneously Transfers the Partner Sub
Stock of its other Partner Sub or Partner Subs (if the Parent has more than one
Partner Sub), to such Person or a wholly-owned Affiliate of such Person or of a
common parent.
2.3 Prohibition on Affiliated Obligor Bankruptcy, Etc. Each Parent hereby
agrees that it will not, without the written consent of each of the other
Parents, permit any of its Affiliated Obligors (or their successors or assigns)
(i) to commence a voluntary action under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, (ii) to institute a proceeding to be
adjudicated a voluntary bankrupt, (iii) to consent to the filing of a bankruptcy
proceeding against it, (iv) to fail to contest a bankruptcy proceeding against
it, (v) to consent to the appointment of a receiver, custodian, liquidator or
trustee for it or for all or any substantial portion of its property, (vi) in
the case of its
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Partner Subs, to issue or sell other than to such Parent any of its own Partner
Sub Stock or (vii) to effect, recognize or permit any transfer of any of its own
Partner Sub Stock other than in accordance with the provisions of Section 2 of
this Agreement.
2.4 Special Purpose Subsidiaries. Each Parent agrees that (i) the
business of its Partner Subs shall be restricted solely to the holding of the
respective interests in the Partnership and the doing of things necessary or
incidental in connection therewith, and (ii) it will cause its Partner Subs not
to own any assets, incur any liabilities or engage, participate or invest in any
business outside the scope of their businesses as described in clause (i);
provided, however, that this Section 2.4 shall not apply with respect to any
wholly-owned Affiliates to whom such Partner Subs shall transfer their
respective interests in the Partnership if such wholly-owned Affiliates are not
bound by Section 9.6 of the Partnership Agreement. Notwithstanding the
foregoing provisions of this Section 2.4, this Section 2.4 shall not prohibit
any Partner Sub from incurring debt payable to its Parent or an Affiliate as
long as:
(i) such debt is not transferable (by contract or operation of law) to any
Person other than Parent or an Affiliate of Parent;
(ii) no payment on such debt is permitted or required to be made if at the time
of such payment such Partner Sub is in Default under (and as defined in)
the Partnership Agreement or by making such payment such Partner Sub would
not be able to perform its obligations under the Partnership Agreement.
Each Parent hereby agrees that it and its Affiliates shall not be entitled to,
and that the Partner Sub shall not be required to make, any payments on any such
debt payable by its Partner Sub if: (i) at the time of such payment such
Partner Sub is in Default under the Partnership Agreement, (ii) by making such
payment such Partner Sub would not be able to perform its obligations under the
Partnership Agreement, or (iii) such Parent is in default of its obligations
under Section 1.12 of this Agreement.
SECTION 3
STANDSTILL AGREEMENT AND CERTAIN OTHER MATTERS
3.1 Standstill. For purposes of this Section 3 only, the term "Parent"
means and includes OPC, Oxy CH, OCC, Lyondell and Millennium. Each Parent
agrees that with respect to each of the other Parents (each a "Subject Parent",
provided that no Parent shall be a "Subject Parent" from and after the
expiration of 24 months from the date on which such Parent and its Affiliates no
longer hold an interest in the Partnership; and provided, further, that none of
OPC, Oxy CH or OCC is a Subject Parent with respect to each other), neither it,
nor any of its Affiliates shall, without prior written invitation or request of
another Subject Parent: (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities, assets or property
of such other Subject Parent, whether such agreement or proposal is made with or
to such other Subject Parent or a third party; (ii) make any unsolicited
proposal to enter into, directly or indirectly, any merger or other business
combination involving such other Subject Parent; (iii) make, or in any way
participate,
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directly or indirectly, in any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) to vote, or
seek to advise or influence any person with respect to the voting of, any voting
securities of such other Subject Parent; (iv) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) with respect to any voting securities of such
other Subject Parent; (v) otherwise act, alone or in concert with others, to
seek to control the management, Board of Directors or policies of such other
Subject Parent; (vi) disclose any intention, plan or arrangement inconsistent
with the foregoing; or (vii) advise, encourage, provide assistance (including
financial assistance) to or hold discussions with any other persons in
connection with any of the foregoing. Each Parent also agrees during such period
not to: (i) request that such other Subject Parent (or its respective directors,
officers, employees or agents), directly or indirectly, amend or waive any
provision of this Section 3.1 (including this sentence); or (ii) take any action
which might reasonably be expected to require that such other Subject Parent to
make a public announcement regarding the possibility of a business combination
or merger.
3.2 Exceptions. Notwithstanding the provisions of Section 3.1:
(a) Any Parent may, by notice to another Parent, terminate the provisions
of Section 3.1 (as applied to the relationship between such two Parents, but not
as to their respective relationships with the third Parent) at any time within
30 days after the occurrence of any of the following events with respect to such
other Parent: (i) a Change of Control (as defined below) of such other Parent
shall have occurred, (ii) such other Parent shall have entered into a definitive
agreement providing for, or publicly announced its intention to effect, any
transaction involving a Change of Control of such other Parent or (iii) a tender
offer or exchange offer shall have been commenced or publicly announced that, if
consummated, would have the effect with respect to such other Parent described
in clause (c) of the definition of "Change of Control." A "Change of Control"
of a Parent shall mean the occurrence of any of the following events: (a) there
shall be consummated any consolidation, merger or share exchange of such Parent
(i) in which such Parent is not the continuing or surviving Person (other than a
consolidation, merger or share exchange with a wholly owned subsidiary of such
Parent in which all shares of common stock of such Parent outstanding
immediately prior to the effectiveness thereof are changed into or exchanged for
the same number of shares of common stock of such subsidiary) or (ii) pursuant
to which the common stock of such Parent is converted into cash, securities or
other property, other than, in each case, a consolidation, merger or share
exchange of such Parent in which the holders of the common stock immediately
prior to the consolidation, merger or share exchange hold, directly or
indirectly, at least a majority of the voting power and common equity of the
continuing or surviving Person immediately after such consolidation, merger or
share exchange; (b) such Parent's properties and assets are sold or otherwise
disposed of substantially as an entirety on a consolidated basis to any Person
or group of Persons in any one transaction or a series of related transactions,
other than as contemplated by the Initial Master Transaction Agreement or the
Second Master Transaction Agreement; or (c) any Person or any Persons acting
together which would constitute a "group" (as defined in Section 3.1) (other
than such Parent, any subsidiary of such Parent, any employee stock purchase
plan, stock option plan or other stock incentive plan or program, retirement
plan or automatic dividend reinvestment plan or any substantially similar plan
of such Parent or any subsidiary of such Parent or any Person holding securities
of such Parent for or pursuant to the terms of any such employee benefit plan),
together
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with any Affiliates thereof, shall acquire beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of 50% or more of the
voting stock of such Parent.
(b) The terms of the first sentence of Section 3.1 shall not be applicable
to the purchase and sale of any securities of a Parent by independent third-
party managers of any pension or other related employee benefit plans who are
acting as passive investors in such Parent.
3.3 OPC Indemnity. OPC hereby agrees, to the fullest extent permitted by
applicable law, to indemnify, defend and hold harmless the Partnership and its
Affiliates and their respective officers, directors and employees from, against
and in respect of any Liability (as defined in Section 6.2(a) of the Occidental
Contribution Agreement) incurred or suffered by the Partnership or any of its
Affiliates, arising out of, in connection with, or relating to:
(a) all income taxes, and all interest and penalties incurred with respect
thereto, that are imposed on OPC or any member of its affiliated group; and
(b) any obligation arising under Title IV of ERISA (as defined in the
Occidental Contribution Agreement) with respect to any Employee Plan (as defined
in the Occidental Contribution Agreement) maintained by any Contributor (as
defined in the Occidental Contribution Agreement) or any member of a controlled
group (as defined in Section 414 of the Code (as defined in the Occidental
Contribution Agreement)) with the Contributor, but excluding obligations arising
under the Cain Plan (as defined in the Occidental Contribution Agreement) and
obligations under the PDG Plan (as defined in the Occidental Contribution
Agreement with respect to funding requirements arising after the Closing Date.
3.4 Mutual Indemnity.
(a) From the date hereof through the twenty-fifth anniversary hereof, each
of OPC, Lyondell and Millennium (an "Indemnifying Party") hereby agrees, to the
fullest extent permitted by applicable law, to indemnify, defend and hold
harmless the Partnership, its partners, their Affiliates and their respective
officers, directors, and employees (collectively, the "Indemnified Parties")
from, against and in respect of any Liability incurred by any of the Indemnified
Parties arising out of, in connection with, or relating to, any Third Party
Claim (as defined in the Occidental Contribution Agreement) (whether in
contract, tort, statute or otherwise) arising out of, in connection with, or
relating to the failure of the Indemnifying Party or any of its Affiliates to
give notice to, obtain any consent of, or obtain any waiver by, or any breach by
the Indemnifying Party or any of its Affiliates of any obligation owing to, any
Person (as defined in the Occidental Contribution Agreement), in each case with
respect to such Indemnifying Party's or its Affiliates' entering into the
Related Agreements or performing their respective obligations thereunder;
provided, however, that the following limitations shall apply to the
indemnification obligations in Sections 3.3 and 3.4 above:
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(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE FULLEST
EXTENT PERMITTED BY LAW, NO INDEMNIFYING PARTY OR ANY OF ITS AFFILIATES OR THEIR
RESPECTIVE AGENTS, EMPLOYEES, OR REPRESENTATIVES SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
DIRECT CLAIMS BY AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY
THAT DOES NOT SEEK REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY THE
INDEMNIFIED PARTY) WITH RESPECT TO THE INDEMNIFICATION OBLIGATIONS UNDER THIS
AGREEMENT UNLESS ANY SUCH CLAIM ARISES OUT OF THE FRAUDULENT ACTIONS OF AN
INDEMNIFYING PARTY OR ITS AFFILIATES. IN DETERMINING THE AMOUNT OF ANY LOSS,
LIABILITY, OR EXPENSE FOR WHICH ANY INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION UNDER THIS AGREEMENT, THE GROSS AMOUNT THEREOF WILL BE REDUCED
(BUT NOT BELOW ZERO) BY THE NET PRESENT VALUE OF ANY CORRELATIVE INSURANCE
PROCEEDS ACTUALLY REALIZED BY THE INDEMNIFIED PARTY UNDER POLICIES TO THE EXTENT
THAT THE FUTURE PREMIUM RATE WILL NOT BE INCREASED BY CLAIM EXPERIENCE RELATING
TO SUCH LOSS, LIABILITY OR EXPENSE.
(c) Indemnification pursuant to Sections 3.3 and 3.4 shall be subject to
the indemnification provisions set forth in Section 6.3 of the Occidental
Contribution Agreement, as if the Indemnified Parties and Indemnifying Party
were the "Indemnified Parties" and the "Indemnifying Party" thereunder.
(d) The rights provided to each Indemnified Party pursuant to Sections 3.3
and 3.4 of this Agreement and Section 14 of the Partnership Agreement, as
limited by and subject to the provisions of this Section 3 shall be such
Indemnified Party's sole remedy for any matter arising out of, relating to, or
in connection with, the matters described in Section 3.3 and 3.4 of this
Agreement and Section 14 of the Partnership and shall be without duplication of
any rights provided to such Indemnified Party under the Master Transaction
Agreement or any of the Related Agreements.
(e) EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE INDEMNIFICATION OBLIGATIONS SET FORTH HEREIN, TO THE FULLEST EXTENT
PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION
HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE
INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION OBLIGATION IS THE
RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY
SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT CONSTITUTES A
CONSPICUOUS LEGEND.
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SECTION 4
MISCELLANEOUS
4.1 No Waivers. No failure or delay by a Beneficiary or a Party in
exercising any right or power under this Agreement, or any single or partial
exercise of any such right or power, shall preclude any other or further
exercise thereof or the exercise of any other right or power. Such single or
partial exercise of any right or power shall be cumulative and not exclusive of
any rights or remedies provided by law.
4.2 Expenses in Connection with Exercise. In the event of a dispute
between Parties regarding the exercise or enforcement of any of the rights of a
Beneficiary under this Agreement or the failure by a Party to perform or observe
any of the provisions of this Agreement, the Party that does not ultimately
prevail in such dispute shall be liable, and hereby agrees, to reimburse, on
demand, each other such Party for any and all costs and expenses, including the
fees and expenses of legal counsel and of any other counsel, experts,
consultants or agents, that such other Party may incur in connection therewith.
4.3 Subordination and Subrogation. The rights of a Parent against its
Affiliated Obligors arising from any payment or performance by a Parent
hereunder shall be subordinate in all respects to the rights of the
Beneficiaries against such Affiliated Obligors, and such Parent shall not
compete in any way with a Beneficiary in any winding-up or dissolution of such
Affiliated Obligors unless and until all sums due and to become due from such
Affiliated Obligors to the Beneficiaries have been paid in full. If any amount
shall be paid to a Parent in violation of this Section, such amount shall be
held in trust for the benefit of the Beneficiaries and shall forthwith be paid
to the Beneficiaries to be credited and applied to any sums owed or to be owed
by such Parent's Affiliated Obligors. Subject to the foregoing, upon payment of
all sums due or to become due by Affiliated Obligors to the Beneficiaries, the
Parent of such Affiliated Obligors shall be subrogated to the rights of the
Beneficiary against such Affiliated Obligors, and the Beneficiaries agree to
take at such Parent's expense such steps as such Parent may reasonably request
to implement such subrogation.
4.4 Confidentiality and Use of Information. (a) Each Parent agrees that
it and its Affiliates shall be bound by the terms and conditions of Section 13.1
of the Partnership Agreement as if such Person was a "Partner" as defined in
such agreement.
(b) Lyondell, Millennium and OPC shall consult with each other on an
ongoing basis with respect to disclosures regarding the Partnership and its
business and affairs that each is required to make in reports filed from time to
time with the Securities and Exchange Commission.
(c) The letter agreement regarding confidentiality dated December 11, 1997
between Lyondell and OPC is hereby terminated.
4.5 Competing Businesses. If any Parent or an Affiliate thereof desires
to initiate or pursue any opportunity to undertake, engage in, acquire or invest
in a Business Opportunity (as such term is defined in the Partnership
Agreement), such Person shall offer such Business Opportunity to the Partnership
under the terms and conditions set forth in Sections 9.3(c) and (d) of the
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Partnership Agreement as if such Person were the "Proposing Partner" (as defined
in the Partnership Agreement) with respect thereto, and in such event the
Partnership shall have the rights and obligations with respect thereto set forth
in such Sections 9.3(c) and (d).
4.6 Further Assurances. From time to time, each Party agrees to execute
and deliver such additional documents and provide such additional information
and assistance as the Beneficiaries may reasonably require to carry out the
terms of this Agreement.
4.7 Assignment; Successors and Assigns. (a) Except as provided in this
Agreement and except that a Parent may assign its rights or obligations under
this Agreement to a third party in connection with a transfer of direct
interests in the Partnership owned by its Partner Subs if such transfer is
permitted and consummated in accordance with the Partnership Agreement, no
Parent may assign or delegate any of its rights or obligations under this
Agreement without the prior written consent of all the Beneficiaries, which
consent shall be in the sole and absolute discretion of such Beneficiaries. Any
purported assignment or delegation without such consent shall be void and
ineffective.
(b) Except as may be expressly provided herein, this Agreement shall be
binding upon and inure to the benefit of the successors of the Beneficiaries.
(c) Within six months after the date of this Agreement, Oxy CH and OCC
shall be entitled to assign their respective rights and obligations under
Section 1 to Occidental Chemical Holding Corporation, a California corporation
and an indirect wholly owned subsidiary of OPC ("OCHC"), provided that OCHC
executes an instrument wherein OCHC shall agree to be bound by the obligations
of Oxy CH and OCC thereunder and under Section 4 in a form reasonably acceptable
to the Partnership. Upon such execution, OCHC shall become the "Occidental
Parent" for purposes of Section 1, and Oxy CH and OCC shall thereupon be
released from all obligations under Section 1.
4.8 Benefits of Agreement Restricted to the Parties. This Agreement is
made solely for the benefit of the Parties and, with respect to Sections 1 and 4
(excluding Sections 4.4 and 4.5), the Beneficiaries (as defined in Section
1.11), and no other Person shall have any right, claim or cause of action under
or by virtue of this Agreement.
4.9 Notices. All notices, requests, demands and other communications
(collectively, "notices") required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if and when (i)
transmitted by telecopier facsimile with proof of confirmation from the
transmitting machine or (ii) delivered by commercial courier or other hand
delivery, as follows:
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If to OPC If to OCC, Oxy CH, the Occidental Partner
Subs
Occidental Petroleum Company c/o Occidental Petroleum Corporation
10889 Wilshire Blvd. 10889 Wilshire Blvd.
Los Angeles, CA 90024 Los Angeles, CA 90024
Attention: President Attention: President
Telecopy Number: (310) 443-6977 Telecopy Number:(310) 443-6977
With a copy to With a copy to
Occidental Petroleum Corporation Occidental Petroleum Corporation
10889 Wilshire Boulevard 10889 Wilshire Boulevard
Los Angeles, California 90024 Los Angeles, California 90024
Attention: General Counsel Attention: General Counsel
Telecopy Number: (310) 443-6333 Telecopy Number: (310) 443-6333
If to Lyondell If to the Lyondell Partner Subs
Lyondell Petrochemical Company c/o Lyondell Petrochemical Company
1221 McKinney Street 1221 McKinney Street
Houston, Texas 77010 Houston, Texas 77010
Attention: Kerry A. Galvin Attention: Kerry A. Galvin
Telecopy Number: (713) 309-4718 Telecopy Number: (713) 309-4718
If to Millennium If to the Millennium Partner Subs
Millennium Chemicals Inc. c/o Millennium Chemicals Inc.
99 Wood Avenue South 99 Wood Avenue South
Iselin, New Jersey 08830 Iselin, New Jersey 08830
Attention: George H. Hempstead, III Attention: George H. Hempstead, III
Telecopy Number: (908) 603-6857 Telecopy Number: (908) 603-6857
If to the Partnership
Equistar Chemicals, LP
1221 McKinney Street
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
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<PAGE>
or to such other address as such Party or Beneficiary shall have specified by
notice to the other Parent.
4.10 Severability. In the event that any provisions of this Agreement
shall finally be determined to be unlawful, such provision shall, so long as the
economic and legal substance of the transactions contemplated hereby is not
affected in any materially adverse manner as to any Party, be deemed severed
from this Agreement and every other provision of this Agreement shall remain in
full force and effect.
4.11 Termination. Except for Sections 3.1, 3.2 and 3.4 (which
sections shall terminate only as provided therein), this Agreement shall
terminate and be of no further force and effect as to a Parent (i) as and when
provided in Section 2.1(d), (e) or (f) or (ii) if and when such Parent Transfers
all of its Partner Sub Stock in a transaction permitted by Section 2.2;
provided, however, that such termination shall not discharge (x) any accrued
Obligations owed by a Parent as of the date of such termination or (y) any
Obligations, whether arising before or after such termination, under such
Parent's Asset Contribution Agreement (as such term is defined in the
Partnership Agreement) or any Related Agreement executed pursuant to such Asset
Contribution Agreement. In addition, the Guarantee by a Parent of Obligations
of an Affiliated Obligor other than a Partner Sub shall terminate as and when
the Parent ceases to be an Affiliate of such Affiliated Obligor, insofar as such
Guarantee relates to Obligations arising thereafter. The obligations of OPC and
the obligations of each of Lyondell and Millennium to OPC, in each case pursuant
to Section 4.4(b), shall terminate and be of no further force and effect at such
time as OPC is no longer required to make the disclosures referred to in Section
4.4(b) to the Securities and Exchange Commission.
4.12 Construction and Certain Definitions.
(a) In construing this Agreement, the following principles shall be
followed: (i) no consideration shall be given to the captions of the articles,
sections, subsections or clauses, which are inserted for convenience in locating
the provisions of this Agreement and not as an aid in construction; (ii) no
consideration shall be given to the fact or presumption that any Party had a
greater or lesser hand in drafting this Agreement; (iii) examples shall not be
construed to limit, expressly or by implication, the matter they illustrate;
(iv) the word "includes" and its syntactic variants mean "includes, but is not
limited to" and corresponding syntactic variant expressions; (v) the plural
shall be deemed to include the singular, and vice versa; (vi) each gender shall
be deemed to include the other gender; and (vii) each exhibit, attachment and
schedule to this Agreement is a part of this Agreement.
(b) The term "Affiliate" shall mean any Person that directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the Person specified; provided, however, that, in the case
of OPC and its Affiliates, for purposes of this Agreement, such term shall not
include Canadian Occidental Petroleum Ltd. For purposes of this definition, the
term "control" shall have the meaning set forth in 17 CFR 230.405 as in effect
on the date hereof.
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(c) The term "Person" shall mean any natural person or any corporation,
partnership, limited liability company, joint venture, association, trust or
other entity or organization.
4.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
4.14 Governing Law. The laws of the State of Delaware shall govern
the construction, interpretation and effect of this Agreement without giving
effect to any conflicts of law principles.
4.15 Jurisdiction; Consent to Service of Process; Waiver. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO THIS
AGREEMENT SHALL APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL
CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE
ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE
STATE OF DELAWARE. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF
AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO
SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED
ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE
PARTIES HERETO. EACH PARENT HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS.
4.16 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
4.17 Dispute Resolution. All disputes under this Agreement shall be
resolved in accordance with the Dispute Resolution Procedures set forth in
Appendix B.
4.18 Obligations Regarding Affiliates. Each Parent shall cause its
Affiliates (including any person controlling such Parent) to comply with all
provisions of this Agreement that apply to Affiliates of such Parent, and each
Parent shall be responsible for any failure of any such Affiliate to comply with
any such provision.
4.19 Amendment. All waivers, modifications, amendments or alterations
of this Agreement shall require the execution of a written instrument signed by
each of the Parties.
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IN WITNESS WHEREOF, the Parties have executed and delivered this Amended
and Restated Parent Agreement as of the date first above written.
OCCIDENTAL CHEMICAL CORPORATION
By: /s/ R. J. Schuh
-------------------------
Name: R. J. Schuh
Title: Executive Vice President
OXY CH CORPORATION
By: /s/ Keith C. McDole
------------------------------
Name: Keith C. McDole
Title: Senior Vice President
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ S.P. Dominick, Jr.
------------------------------------
Name: S.P. Dominick, Jr.
Title: Vice President and Controller
[Signature Page to Amended and Restated Parent Agreement]
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
By: /s/ Dan F. Smith
------------------------------
Name: Dan F. Smith
Title: President and Chief Executive Officer
MILLENNIUM CHEMICALS INC.
By: /s/ Geprge H. Hempstead, III
----------------------------------------
Name: George H. Hempstead, III
Title: Senior Vice President
EQUISTAR CHEMICALS, LP
By: /s/ Eugene R. Allspach
--------------------------------------
Name: Eugene R. Allspach
Title: President and Chief Operating Officer
[Signature Page to Amended and Restated Parent Agreement]
<PAGE>
APPENDIX A
TO
PARENT AGREEMENT
LIST OF RELATED AGREEMENTS
1. Old Partnership Agreement.
2. $345 million promissory note dated December 1, 1997, of Lyondell LP payable
to the Partnership.
3. Asset Contribution Agreement dated as of December 1, 1997, between
Lyondell, Lyondell LP and the Partnership.
4. Asset Contribution Agreement dated as of December 1, 1997, between
Millennium Petrochemicals, Millennium LP and the Partnership.
5. Bill of Sale and Assignment dated December 1, 1997 from Lyondell to the
Partnership with respect to property specified on attached schedule.
6. Assignment of Trademarks dated November 25, 1997 from Lyondell to the
Partnership with respect to certain O&P Trademarks as listed on attached
schedule.
7. Assignment of Patents dated November 25, 1997 from Lyondell to the
Partnership with respect to certain O&P Patents as listed on attached
schedule.
8. Assumption Agreement dated December 1, 1997 between Lyondell as Assignor
and the Partnership as Assignee pursuant to the Asset Contribution
Agreement with respect to the assumption by Assignee of certain
liabilities.
9. Master Intellectual Property Agreement dated December 1, 1997 by and
between Lyondell and the Partnership.
10. Assignment dated December 1, 1997 between Lyondell as "Assignor" and the
Partnership as "Assignee" with respect to the contribution by Assignor of
LCR Agreements.
11. Assignment dated December 1, 1997 between Lyondell and the Partnership, of
Ground Lease (LMC) with respect to certain real property specified therein.
12. Assignment dated December 1, 1997 between Lyondell and the Partnership, of
Operating Agreement, Natural Gas Sales and Methanol Supply with respect to
Lyondell Methanol Company.
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13. Administrative Services Agreement (as amended or otherwise modified from
time to time) effective as of December 1, 1997 between the Partnership and
Lyondell with respect to the provision of services as described in Appendix
A attached.
14. Letter Agreement dated December 1, 1997 between Lyondell and the
Partnership with respect to the net payment by the Partnership to Lyondell
for certain Administrative Services as described in Attachment 1 thereto.
15. Assignment dated November 25, 1997, but effective December 1, 1997, from
Lyondell to the Partnership, of leases specified therein (Channelview,
Texas Golf Courses).
16. Assignment dated November 25, 1997, but effective December 1, 1997, from
Lyondell to the Partnership, of leases specified therein (Alvin, Texas).
17. Assignment dated November 25, 1997, but effective as of December 1, 1997,
from Lyondell to the Partnership, of leases specified therein (Plano,
Texas).
18. Assignment dated November 25, 1997, but effective as of December 1, 1997,
from Lyondell to the Partnership, of leases specified therein (Chicago,
Illinois - CALPERS Lease).
19. Assignment of Sublease dated November 25, 1997, but effective as of
December 1, 1997, from Lyondell to the Partnership, of leases specified
therein (Chicago, Illinois - MATRIX Partners Sublease).
20. Assignment dated November 25, 1997, but effective as of December 1, 1997,
from Lyondell to the Partnership, of leases specified therein
(Philadelphia, Pennsylvania).
21. Assignment dated November 25, 1997, but effective December 1, 1997, from
Lyondell to the Partnership, of leases specified therein (Victoria, Texas).
22. Sublease Agreement dated November 25, 1997, but effective December 1, 1997,
by and between Lyondell and the Partnership with respect to Office Lease
Agreement dated December 31, 1985 and amended by 19 Amendments as described
on Exhibit A as attached thereto (Administrative Office Space, OHC).
23. General Warranty Deed dated November 25, 1997, but effective as of December
1, 1997, from Lyondell to the Partnership with respect to certain real
property specified therein (Channelview, Texas).
24. General Warranty Deed dated November 25, 1997, but effective as of December
1, 1997, from Lyondell to the Partnership, with respect to certain real
property specified therein (Mount Belvieu, Texas).
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25. General Warranty Deed dated, November 25, 1997, but effective December 1,
1997, from Lyondell to the Partnership with respect to certain real
property specified therein (Bayport, Texas).
26. General Warranty Deed dated November 25, 1997, but effective December 1,
1997, from Lyondell to the Partnership with respect to certain real
property specified therein (Matagorda, Texas).
27. Conveyance and Assignment of Easements, Rights of Way, and Licenses dated
November 25, 1997, but effective as of December 1, 1997, from Lyondell to
the Partnership with respect to certain real property specified therein
(Pipeline Right of Way).
28. Bill of Sale and Assignment dated December 1, 1997 from Millennium
Petrochemicals to the Partnership with respect to the property set forth on
Schedule A attached.
29. Assignment of Trademarks dated November 21, 1997 between Millennium
Petrochemicals as Assignor and the Partnership as Assignee with respect to
the transfer of O&P Trademarks as set forth in the schedule attached.
30. Assignment of Patents dated November 21, 1997 between Millennium
Petrochemicals as Assignor and the Partnership as Assignee with respect to
the transfer of O&P Patents as set forth in the schedule attached.
31. Assumption Agreement effective as of December 1, 1997 between Millennium
Petrochemicals as Assignor and the Partnership as Assignee pursuant to the
Asset Contribution Agreement with respect to the assumption by the assignee
of certain liabilities.
32. Master Intellectual Property Agreement dated December 1, 1997 by and
between Millennium Petrochemicals and the Partnership.
33. Shared Services Agreement for Wastewater effective as of December 1, 1997
by and between Millennium Petrochemicals and the Partnership.
34. Shared Services Agreement for the LaPorte Complex effective as of December
1, 1997 by and between Millennium Petrochemicals and the Partnership with
respect to the services as specified therein and on the attachments and
appendix.
35. Shared Services Agreement for Water and Utility Instrument Air effective as
of December 1, 1997 by and between Millennium Petrochemicals and the
Partnership with respect to the services as specified therein and on the
attachments, exhibits and appendix.
36. Shared Services Agreement for the Northlake Office Complex effective as of
December 1, 1997 by and between Millennium Petrochemicals and the
Partnership with respect to services as specified therein and on
attachments and appendix.
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37. Agreement for Interim Study at the LaPorte Complex effective as of December
1, 1997 by and between Millennium Petrochemicals and the Partnership.
38. Fuel Stream Agreement effective as of December 1, 1997 by and between
Millennium Petrochemicals and the Partnership.
39. Electricity Service Agreement effective as of December 1, 1997 by and
between Millennium Petrochemicals and the Partnership.
40. Sales Agreement (Vinyl Acetate Monomer), effective December 1, 1997 between
Millennium Petrochemicals as "Seller" and the Partnership as "Buyer".
41. Sales Agreement (Ethylene), effective December 1, 1997 between the
Partnership as "Seller" and Millennium Petrochemicals as "Buyer".
42. Sales Agreement (Purified Hydrogen), between the Partnership as "Seller"
and Millennium Petrochemicals as "Buyer" effective December 1, 1997.
43. Sales Agreement (Natural Gas), effective December 1, 1997 between the
Partnership as "Seller" and Millennium Petrochemicals as "Buyer".
44. Letter Agreement dated December 1, 1997 between Millennium Petrochemicals
and the Partnership regarding interim distribution logistics support.
45. Letter Agreement dated December 1, 1997 between Millennium Petrochemicals
and the Partnership with respect to the net payment for various shared
services.
46. Assignment of Railcar Lease dated December 3, 1997 by and between
Millennium Petrochemicals Inc. as "Assignor" and the Partnership as
"Assignee" (The Sumitomo Bank Leasing and Finance, Inc. Lease).
47. Assignment of Leasehold dated November 25, 1997 by and between Millennium
Petrochemicals and the Partnership with respect to certain real property
specified therein (Tuscola, Illinois).
48. Assignment of Leasehold dated December 1, 1997 by and between Millennium
Petrochemicals and the Partnership with respect to certain real property
specified therein (Fairport Harbor, Ohio).
49. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of lease specified therein (Clinton, Iowa).
50. Quit Claim Deed dated December 1, 1997 from Millennium Petrochemicals to
the Partnership with respect to certain real property specified therein
(Clinton, Iowa).
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51. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Credit Union Sublease (Clinton, Iowa).
52. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Appurtenant Easements (Clinton, Iowa).
53. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Dock Lease and Agreement (Clinton, Iowa).
54. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Sub-lease Option to Purchase Agreement (Clinton, Iowa).
55. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Cellular Telephone Sublease (Clinton, Iowa).
56. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Farm Leases (Clinton, Iowa).
57. Assignment dated December 1, 1997 between Millennium Petrochemicals and the
Partnership of Eastern Iowa Propane Lease (Clinton, Iowa).
58. Lease Agreement dated December 1, 1997 between Millennium Petrochemicals
and the Partnership with respect to certain real property specified therein
(Lease for Cincinnati Research Laboratory).
59. Warranty Deed dated December 1, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain Real Property specified therein
(Clinton, Iowa).
60. General Warranty Deed dated December 1, 1997 from Millennium Petrochemicals
to the Partnership with respect to certain real property specified therein
(LaPorte, Texas).
61. Letter agreement dated December 1, 1997 from Millennium Petrochemicals to
the Partnership with respect to Millennium Petrochemicals agreement to
provide the Partnership an option on approximately 20+ acres of land
(LaPorte Expansion Land).
62. Warranty Deed dated November 25, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain real property specified therein
(Morris, Illinois).
63. General Warranty Deed dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Port Arthur, Texas).
64. General Warranty Deed dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Chocolate Bayou, Texas).
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65. Warranty Deed dated December 1, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain real property specified therein
(Tuscola, Illinois).
66. General Warranty Deed dated December 1, 1997 from Millennium Petrochemicals
to the Partnership with respect to certain real property specified therein
(Heath, Ohio)
67. General Warranty Deed dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Crockett, Texas)
68. Deed dated November 24, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain real property specified therein
(Newark, New Jersey).
69. Grant Deed dated December 1, 1997 from Millennium Petrochemicals to the
Partnership with respect to certain real property specified therein
(Anaheim, California).
70. Limited Warranty Deed dated December 1, 1997 from the Partnership to
Millennium Petrochemicals with respect to certain real property specified
therein (the Northlake Drive 0.1553 Acre Parcel Cincinnati-Research Center-
Northlake, Ohio).
71. General Warranty Deed (Conveyance between Adjoining Lot Owners) dated
December 1, 1997 from Millennium Petrochemicals to the Partnership with
respect to certain real property specified therein (Cincinnati-Research
Center-Northlake, Ohio).
72. General Warranty Deed (Conveyance between Adjoining Lot Owners) dated
December 1, 1997 from Millennium Petrochemicals to the Partnership with
respect to certain real property specified therein, the Northlake Drive
0.0987 Acre Parcel (Cincinnati-Research Center-Northlake, Ohio).
73. General Warranty Deed dated December 1, 1997 from Millennium Petrochemicals
to the Partnership with respect to certain real property specified therein,
the East Kemper Road and Northlake Drive 25.0864 Acre Parcel (Cincinnati-
Research Center-Northlake).
74. Declaration of Easements and Restrictive Covenants dated December 1, 1997
by Millennium Petrochemicals and the Partnership with respect to certain
real property specified therein (Cincinnati-Research Center-Northlake,
Ohio).
75. Assignment and Assumption dated December 1, 1997 by and between Millennium
Petrochemicals and the Partnership, of Service Agreement (Cincinnati-
Research Center-Northlake, Ohio).
76. Letter Agreement dated November 20, 1997 from Millennium Petrochemicals to
the Partnership with respect to Fiber-Optic Cable System, Northlake Drive
Property, Cincinnati, Ohio (Cincinnati-Research Center-Northlake, Ohio).
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77. Parking Agreement dated December 1, 1997 between Millennium Petrochemicals
and the Partnership with respect to additional parking at the Northlake
Facility (Cincinnati-Research Center-Northlake, Ohio).
78. General Warranty Deed dated December 1, 1997 from Millennium Petrochemicals
to the Partnership with respect to certain real property specified therein
(Fairport Harbor, Ohio).
79. Assignment of Easements dated November 25, 1997 from Millennium
Petrochemicals to the Partnership with respect to certain real property
specified therein (Chocolate Bayou, Texas).
80. Easement Agreement dated December 1, 1997 to Millennium Petrochemicals from
the Partnership with respect to certain real property specified therein
(LaPorte, Texas).
81. Easement Agreement dated December 1, 1997 to the Partnership from
Millennium Petrochemicals with respect to certain real property specified
therein (LaPorte, Texas).
82. Assignment (Mont Belvieu Pipeline Easements) dated November 25, 1997 from
Millennium Petrochemicals to the Partnership with respect to certain real
property specified therein.
83. General Warranty (Mont Belvieu Pipeline Fee Parcels) dated November 25,
1997 from Millennium Petrochemicals to the Partnership with respect to
certain real property specified therein.
84. Partnership Agreement.
85. Agreement and Plan of Merger and Asset Contribution dated as of May 15,
1998, among Occidental GP, Occidental LP1, Occidental LP2, OPI and the
Partnership.
86. Sales Agreement (Ethylene) dated as of May 15, 1998 by and between the
Partnership and OCC with respect to the sale of Ethylene by the Partnership
to OCC.
87. Operating Agreement dated as of May 15, 1998 by and between the Partnership
and OCC with respect to OCC providing certain services to the Partnership
after May 15, 1998.
88. Toll Processing Agreement dated May 15, 1998 between the Partnership and
OCC with respect to Ashtabula EO/EG tolling.
89. Amended and Restated Indemnity Agreement among OCC, Occidental GP,
Occidental LP1, Occidental LP2, Lyondell GP, Lyondell LP, Millennium GP,
Millennium LP and Millennium America Inc.
90. Letter Agreement dated May 15, 1998 between OCC and the Partnership with
respect to OCC providing a guarantee for the collection of $419,700,000 of
Partnership debt.
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91. Letter Agreement dated May 15, 1998 between OCC and the Partnership with
respect to the prepayment or restructuring of the Occidental Assumed Debt.
92. Promissory Note for $419,700,000 dated May 15, 1998 of the Partnership
payable to Occidental LP2.
93. Promissory Note for $75 million dated May 15, 1998 of the Partnership
payable to Millennium LP.
94. Bill of Sale and Assignment dated May 15, 1998 from OCC to Occidental LP1
with respect to property specified on attached schedule.
95. Bill of Sale and Assignment dated May 15, 1998 from Occidental LP1 to the
Partnership with respect to property specified on attached schedule.
96. Patent Assignment dated May 15, 1998 from OCC to the Partnership with
respect to patents as listed on attached schedule.
97. Assumption Agreement dated May 15, 1998 between Occidental LP1, Occidental
LP2 and Occidental GP, as Assignors, and the Partnership, as Assignee,
pursuant to the Agreement and Plan of Merger and Asset Contribution with
respect to the assumption by Assignee of certain liabilities.
98. Master Intellectual Property Agreement dated May 15, 1998 by and between
the Partnership and OCC.
99. Assignment of Partnership Interests dated May 15, 1998 from Occidental GP
to the Partnership with respect to interests in PD Glycol, a Texas limited
partnership.
100. Assignment of Leases dated May 15, 1998 from OCC to the Occidental LP1 with
respect to leases specified therein.
101. Assignment of Lease and Act of Exchange dated May 15, 1998 from Occidental
LP1 to the Partnership with respect to the lease specified therein,
together with such lease.
102. Assignment of Leases dated May 15, 1998 from Occidental LP1 to the
Partnership with respect to leases specified therein.
103. Assumption Agreement dated May 15, 1998 between OPI as Assignor and the
Partnership as Assignee with respect to Lease Intended for Security dated
December 18, 1991 ($205 million).
104. Termination and Release of Guaranty dated May 15, 1998 between Lyondell and
OCC with respect to the termination of Lyondell guaranty of certain
Partnership railcar leases.
A-8
<PAGE>
105. Sublease dated May 15, 1998 from OCC to the Partnership with respect to
1990 railcar lease.
106. Sublease dated May 15, 1998 from OPI to the Partnership with respect to
1995 railcar lease.
107. Tax Indemnity Agreement dated May 15, 1998 between OCC and the Partnership
with respect to Sublease of 1990 railcar lease.
108. Tax Indemnity Agreement dated May 15, 1998 between OPI and the Partnership
with respect to Sublease of 1998 railcar lease.
109. Master Arbitration Amendment to Related Agreements dated May 15, 1998
between the Partnership, Lyondell and Millennium.
110. First Amendment to Lyondell Asset Contribution Agreement dated May 15, 1998
between the Partnership, Lyondell and Lyondell LP.
111. First Amendment to Millennium Asset Contribution Agreement dated May 15,
1998 between the Partnership, Millennium Petrochemicals and Millennium LP.
112. Transition Services Agreement between the Partnership and OCC to be entered
into pursuant to the Operating Agreement with respect to OCC providing
certain services to the Partnership.
113. Pipeline Acquisition Agreement dated as of May 15, 1998 between OCC and
the Partnership with respect to the Cyclohexane pipeline.
114. Trademark License Agreement dated as of May 15, 1998 among OCC, Occidental
and the Partnership with respect to the trademarks as set forth on the
schedule attached.
115. Assignment of Excluded Assets dated May 14, 1998 between OPI as Assignor
and OCC as Assignee with respect to certain assets described therein.
116. Assumption Agreement dated May 14, 1998 between OPI as Assignor and OCC as
Assignee with respect to certain liabilities described therein.
117. Termination Agreement and General Release dated May 15, 1998 among
Occidental, OPI, Occidental LP2 and Occidental Holding Company with respect
to certain intercompany debts.
118. Assumption Agreement dated May 15, 1998 between OPI as Assignor and
Occidental LP2 as Assignee with respect to certain intercompany debts.
119. Assignment and Assumption Agreement dated May 15, 1998 between OCC as
Assignor and the Partnership as Assignee with respect to Lease intended for
security dated March 28, 1994 by and between OCC and Pitney Bowes Credit
Corporation.
A-9
<PAGE>
120. Letter from Lyondell to OCC and the Partnership regarding PVC technology.
121. Agreement regarding provision by the Partnership of certain support
facilities associated with the Lake Charles propylene fractionation unit to
be entered into pursuant to the Operating Agreement.
A-10
<PAGE>
APPENDIX B
TO
PARENT AGREEMENT
DISPUTE RESOLUTION PROCEDURES
(1) Binding and Exclusive Means. The dispute resolution provisions set
forth in this Appendix B shall be the binding and exclusive means to resolve all
disputes arising under this Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the standards and
criteria for resolving such dispute shall, unless the Parties involved in the
Dispute in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix B.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises, the
following procedures shall be implemented (with references to "Parties" meaning
the Parties involved in the Dispute):
(a) Any Party may at any time invoke the dispute resolution procedures set
forth in this Appendix B as to any Dispute by providing written notice of such
action to the other Parties, and all Parties within five Business Days after
such notice shall schedule a meeting to be held in Houston, Texas between the
Parties. The meeting shall occur within 10 Business Days after notice of the
meeting is delivered to the other Parties. The meeting shall be attended by
representatives of each Party having decision-making authority regarding the
Dispute as well as the dispute resolution process and who shall attempt in a
commercially reasonable manner to negotiate a resolution of the Dispute.
(b) The representatives of the Parties shall cooperate in a commercially
reasonable manner and shall explore whether techniques such as mediation,
minitrials, mock trials or other techniques of alternative dispute resolution
might be useful. In the event that a technique of alternative dispute
resolution is so agreed upon, a specific timetable and completion date for its
implementation shall also be agreed upon. The representatives will continue to
meet and discuss settlement until the date (the "Interim Decision Date") that is
the earliest to occur of the following events: (i) an agreement shall be reached
by the Parties resolving the Dispute; (ii) one of the Parties shall determine
and notify the other Parties in writing that no agreement resolving the Dispute
is likely to be reached; (iii) if a technique of alternative dispute resolution
is agreed upon, the completion date therefor shall occur without the Parties
having resolved the Dispute; or (iv) if another technique of alternative dispute
resolution is not agreed upon, two full meeting days (or such other time period
as may be agreed upon) shall expire without the Parties having resolved the
Dispute.
(c) If, as of the Interim Decision Date, the Parties have not succeeded in
negotiating a resolution of the dispute pursuant to subsection (b), the Parties
shall proceed under subsections (d), (e) and (f).
B-1
<PAGE>
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any Party
involved in the Dispute (the "Disputing Party"). The arbitration shall be
subject to the Federal Arbitration Act as supplemented by the conditions set
forth in this Appendix B. The arbitration shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association in
effect on the date the notice of arbitration is served, other than as
specifically modified herein. In the absence of an agreement to the contrary,
the arbitration shall be held in Houston, Texas. The Arbitrator (as defined
below) will allow reasonable discovery in the forms permitted by the Federal
Rules of Civil Procedure, to the extent consistent with the purpose of the
arbitration. During the pendency of the Dispute, each Party shall make
available to the Arbitrator and the other Parties all books, records and other
information within its control requested by the other Parties or the Arbitrator
subject to the confidentiality provisions contained herein, and provided that no
such access shall waive or preclude any objection to such production based on
any privilege recognized by law. Recognizing the express desire of the Parties
for an expeditious means of dispute resolution, the Arbitrator may limit the
scope of discovery between the Parties as may be reasonable under the
circumstances. In deciding the substance of the Parties' claims, the laws of
the State of Delaware shall govern the construction, interpretation and effect
of this Agreement (including this Appendix B) without giving effect to any
conflict of law principles. The arbitration hearing shall be commenced promptly
and conducted expeditiously, with each Party involved in the Dispute being
allocated an equal amount of time for the presentation of its case. Unless
otherwise agreed to by the Parties, the arbitration hearing shall be conducted
on consecutive days. Time is of the essence in the arbitration proceeding, and
the Arbitrator shall have the right and authority to issue monetary sanctions
against any of the Parties if, upon a showing of good cause, that Party is
unreasonably delaying the proceeding. To the fullest extent permitted by law,
the arbitration proceedings and award shall be maintained in confidence by the
Arbitrator and the Parties.
(e) The Disputing Party shall notify the American Arbitration Association
("AAA") and the other Parties in writing describing in reasonable detail the
nature of the Dispute (the "Dispute Notice"). The arbitrator (the "Arbitrator")
shall be selected within 15 days of the date of the Dispute Notice by all of the
Parties from the members of a panel of arbitrators of the AAA or, if the AAA
fails or refuses to provide a list of potential arbitrators, of the Center for
Public Resources and shall be experienced in commercial arbitration. In the
event that the Parties are unable to agree on the selection of the Arbitrator,
the AAA shall select the Arbitrator, using the criteria set forth in this
Appendix B, within 30 days of the date of the Dispute Notice. In the event that
the Arbitrator is unable to serve, his or her replacement will be selected in
the same manner as the Arbitrator to be replaced. The Arbitrator shall be
neutral. The Arbitrator shall have the authority to assess the costs and
expenses of the arbitration proceeding (including the arbitrators', and
attorneys' fees and expenses) against any or all Parties.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect or punitive damages or (ii) amend this
Agreement. The Arbitrator shall render the arbitration award, in writing,
within 20 days following the completion of the arbitration hearing, and
B-2
<PAGE>
shall set forth the reasons for the award. In the event that the Arbitrator
awards monetary damages in favor of any Party, the Arbitrator must certify in
the award that no indirect, consequential, incidental, indirect or punitive
damages are included in such award. If the Arbitrator's decision results in a
monetary award, the interest to be granted on such award, if any, and the rate
of such interest shall be determined by the Arbitrator in his or her discretion.
The arbitration award shall be final and binding on the Parties, and judgment
thereon may be entered in any court of competent jurisdiction, and may not be
appealed except to the extent permitted by the Federal Arbitration Act.
(4) Continuation of Business. Notwithstanding the existence of any Dispute
or the pendency of any procedures pursuant to this Appendix B, the Parties agree
and undertake that all payments not in dispute shall continue to be made and all
obligations not in dispute shall continue to be performed.
B-3
<PAGE>
Appendix 1
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the Parties and their Affiliates as set forth in the Agreement.
(b) Second priority shall be given to resolution of the Dispute in a manner
which best achieves the objectives of the business activities and arrangements
under the Agreement and permits the Parties to realize the benefits intended to
be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
Parties or the Arbitrator determine to be appropriate under the circumstances.
B-4
<PAGE>
EXHIBIT 10.4
AGREEMENT AND PLAN OF MERGER
AND
ASSET CONTRIBUTION
AMONG
OCCIDENTAL PETROCHEM PARTNER 1, INC.,
OCCIDENTAL PETROCHEM PARTNER 2, INC.,
OXY PETROCHEMICALS INC.,
PDG CHEMICAL INC.
AND
EQUISTAR CHEMICALS, LP
DATED: MAY 15, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1 THE MERGER 2
1.1 The Merger 2
1.2 Effects of the Merger 2
1.3 Closing; Effective Time 2
1.4 Certificate of Limited Partnership; Partnership Agreement;
Partnership Governance Committee 3
1.5 Conversion of Certificates 3
1.6 Exchange of Certificates 3
1.7 Transfer of Excluded Assets 4
1.8 Assumption of Excluded Liabilities 4
1.9 Transfer of Oxy Petrochemicals Assets 4
SECTION 2 CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES 5
2.1 Transfer of Assets 5
2.2 Excluded Assets 6
2.3 Instruments of Conveyance and Assignment 7
2.4 Further Assurances 8
2.5 Assumption of Liabilities 9
2.6 Excluded Liabilities 10
2.7 Master Intellectual Property Agreement 11
2.8 Employee Matters 11
2.9 Joint Contracts 17
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS 18
3.1 Due Organization; Good Standing and Power 18
3.2 Authorization and Validity of Agreements 18
3.3 No Consents Required; No Conflict with Instruments to which a
Contributor is a Party 18
3.4 Employee Benefits 19
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases 20
3.6 Title Matters; Defects in Improvements 21
3.7 Working Capital 21
3.8 Technology and Similar Rights 21
3.9 Government Licenses, Permits and Related Approvals 22
3.10 All Necessary Assets 22
3.11 Conduct of Business in Compliance with Regulatory and Contractual
Requirements 22
3.12 Legal Proceedings 22
3.13 [Reserved] 22
i
<PAGE>
3.14 Tax Matters 22
3.15 [Reserved] 22
3.16 HSE Matters 22
3.17 Investigation to Acquire Knowledge 23
SECTION 3A ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
OXY CH SUB 24
3A.1 Capitalization. 24
3A.2 Ownership of Common Stock 24
3A.3 No Undisclosed Liabilities 24
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP 24
4.1 Due Organization; Good Standing and Power 24
4.2 Authorization and Validity of Agreement 25
4.3 No Consents Required; No Conflict with Instruments to which
the Partnership is a Party 25
SECTION 5 COVENANTS SUBSEQUENT TO CLOSING DATE 25
5.1 Access to Information 25
5.2 Mail or Other Communications 26
5.3 Use of Trade Name 26
5.4 Closing Date Balance Sheet 26
5.5 [Reserved] 26
5.6 Collection of Accounts Receivable 26
5.7 Reimbursement for Prepaid Expenses 27
SECTION 6 SURVIVAL AND INDEMNIFICATION 27
6.1 Survival Limitations 27
6.2 Indemnification 27
6.3 Procedures 30
6.4 Subrogation 32
6.5 Claims for HSE Work 32
6.6 EXTENT OF INDEMNIFICATION 33
SECTION 7 MISCELLANEOUS 33
7.1 Construction 33
7.2 Payment of Certain Expenses and Taxes 33
7.3 Notices 34
7.4 [Reserved] 35
7.5 Binding Effect; Benefit 35
7.6 Occasional and Bulk Sales 35
7.7 Assignability 35
7.8 Amendment; Waiver 36
7.9 Dispute Resolution 36
ii
<PAGE>
7.10 Severability 36
7.11 Counterparts 36
7.12 APPLICABLE LAW 36
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER 36
7.14 WAIVER OF JURY TRIAL 37
SECTION 8 DEFINITIONS 37
iii
<PAGE>
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule A Contributed Business
Schedule 2.1(a) Fee Interests
Schedule 2.1(b) Leases
Schedule 2.1(d) Equipment
Schedule 2.1(k) Contributed Subsidiaries
Schedule 2.2(c) Excluded Tradenames and Logos
Schedule 2.2(h) Certain Excluded Assets
Schedule 2.5(a)(vii) Assumed Indebtedness
Schedule 2.5(a)(x) Assumed Long-Term Liabilities
Schedule 2.8(b) Basic Severance
Schedule 3 Disclosure Schedule
Appendices
Appendix A Dispute Resolution Procedures
Exhibits
--------
Exhibit A Form of Assignment of Lease and Act of Exchange
Exhibit B Form of Assignment of Leases
Exhibit C Form of Bill of Sale and Assignment
Exhibit D Form of Trademark License
Exhibit E Form of Patent Assignment
Exhibit F Form of Partnership Assumption Agreement
Exhibit G Form of Master Intellectual Property Agreement
Exhibit H Form of Assignment of Partnership Interests
Exhibit I Form of Assignment of Excluded Assets of Oxy
Petrochemicals
Exhibit J Form of Oxy CH Sub Assumption Agreement
Exhibit K Form of $419,700,000 Promissory Note
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AND
ASSET CONTRIBUTION
This AGREEMENT AND PLAN OF MERGER AND ASSET CONTRIBUTION (this
"Agreement"), dated as of May 15, 1998, is entered into among Occidental
Petrochem Partner 1, Inc., a Delaware corporation ("Occidental Chemical Sub"),
Occidental Petrochem Partner 2, Inc., a Delaware corporation ("Oxy CH Sub"),
Oxy Petrochemicals Inc., a Delaware corporation ("Oxy Petrochemicals"), PDG
Chemical Inc., a Delaware corporation ("PDG Chemical"), and Equistar Chemicals,
LP, a Delaware limited partnership (the "Partnership").
The definitions of capitalized terms used in this Agreement, including the
appendices hereto, are set forth in Section 8 hereof.
WHEREAS, Oxy Petrochemicals is a direct wholly owned subsidiary of Oxy CH
Sub, Oxy CH Sub is a direct wholly owned subsidiary of Oxy CH Corporation, a
California corporation ("Oxy CH") and Oxy CH is a wholly owned indirect
subsidiary of Occidental Petroleum Corporation, a Delaware corporation
("Occidental").
WHEREAS, the Partnership, Occidental, Lyondell Petrochemical Company and
Millennium Chemicals, Inc. are parties to that certain Master Transaction
Agreement of even date (the "Master Transaction Agreement").
WHEREAS, Occidental Chemical Sub, PDG Chemical and Oxy CH Sub will be
admitted as partners in the Partnership upon the Closing pursuant to an Amended
and Restated Agreement of Limited Partnership of the Partnership.
WHEREAS, Occidental Chemical Sub wishes to contribute certain assets and a
lease of certain other assets, in each case subject to certain liabilities
associated with the olefins, polyolefins and related petrochemicals businesses
to the Partnership, and the Partnership wishes to accept such assets and lease
and assume such liabilities, all upon the terms and conditions hereinafter set
forth.
WHEREAS, PDG Chemical wishes to contribute all of its right, title and
interest in and to PD Glycol, a Texas limited partnership ("PD Gylcol"), and the
Partnership wishes to accept such right, title and interest, all upon the terms
and conditions hereinafter set forth. Occidental Chemical Sub and PDG Chemical,
collectively or individually as the context may require, are referred to herein
as the "Asset Contributors."
WHEREAS, the respective Boards of Directors of Oxy Petrochemicals and Oxy
CH Sub and the Partnership Governance Committee of the Partnership deem it
advisable and in the best interest of their respective entities that Oxy
Petrochemicals merge with and into the Partnership (the "Merger"), upon the
terms and conditions of this Agreement, and the applicable provisions of the
<PAGE>
laws of the State of Delaware. The Asset Contributors and Oxy Petrochemicals,
collectively or individually as the context may require, are referred to herein
as the "Contributors."
WHEREAS, upon the Closing, the Partnership will consummate certain
transactions and enter into certain agreements as provided for in the Master
Transaction Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
of the parties hereto, it is hereby agreed as follows:
SECTION 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and in accordance with the provisions of the DGCL, at the Effective
Time, Oxy Petrochemicals shall be merged with and into the Partnership, and the
separate corporate existence of Oxy Petrochemicals shall cease and the
Partnership shall continue as the surviving entity (hereinafter sometimes
referred to as the "Surviving Partnership") under the laws of the State of
Delaware under the name of "Equistar Chemicals, LP".
1.2 Effects of the Merger. The Merger shall have the effects provided
therefor by the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time:
(a) All of the assets, properties, rights, privileges, powers and
franchises of a public as well as a private nature of Oxy Petrochemicals of
every kind, nature, character and description, tangible and intangible, real,
personal or mixed, wherever located shall be taken and deemed to be transferred
to, and vested in, the Surviving Partnership without further act or deed; and
all such assets, properties, rights, privileges, powers and franchises and all
and every other interest shall be thereafter the property of the Surviving
Partnership, as such interests were the property of Oxy Petrochemicals.
(b) The Surviving Partnership shall be subject to all of the restrictions,
disabilities and duties of Oxy Petrochemicals and the debts, liabilities and
duties of Oxy Petrochemicals shall attach to the Surviving Partnership and the
Surviving Partnership agrees to pay, perform and discharge all such debts,
liabilities and duties when due.
1.3 Closing; Effective Time.
(a) The consummation of the transactions contemplated by Sections 1 and 2
hereof is referred to as the "Closing." Subject to the terms and conditions
hereof, the Closing shall take place at the office of Baker & Botts, L.L.P., One
Shell Plaza, 910 Louisiana, Houston Texas 77002-4995, at 10:00 a.m. local time
on the date hereof (the "Closing Date"), or (ii) such other place or date as
may be agreed to by the Partnership and Oxy CH Sub.
2
<PAGE>
(b) Subject to the terms and provisions of this Agreement, there shall be
filed with the Secretary of State of the State of Delaware (the "Secretary of
State"), on the Closing Date, a certificate of merger with respect to the Merger
in such form as required by, and executed in accordance with, the applicable
provisions of the DGCL. Such certificate of merger shall designate that the
Merger shall become effective as of the time (the "Effective Time") that such
certificate of merger is so filed with the Secretary of State.
1.4 Certificate of Limited Partnership; Partnership Agreement;
Partnership Governance Committee. The certificate of limited partnership of the
Surviving Partnership from and after the Effective Time shall be the Amended
Certificate of Limited Partnership filed contemporaneously with the filing of
the certificate of merger referenced herein, continuing until thereafter amended
in accordance with the provisions provided by the DRULPA. The partnership
agreement of the Surviving Partnership from and after the Effective Time shall
be the Amended and Restated Agreement of Limited Partnership executed and
delivered on the Closing Date, continuing until thereafter amended in accordance
with the terms therein and as provided by the DRULPA. The Partnership
Governance Committee of the Partnership as of the Closing Date shall be
designated in accordance with such Amended and Restated Agreement of Limited
Partnership.
1.5 Conversion of Certificates. As of the Effective Time, by virtue of
the Merger and without any action on the part of any Party or the holder of any
of the following securities, the following shall occur:
(a) Oxy Petrochemicals Common Stock. The aggregate of all of the
common stock, par value $300.00, of Oxy Petrochemicals (the "Oxy Petrochemicals
Common Stock") shall be converted into the right to receive (i) Oxy CH Sub's
limited partnership interest in the Partnership as set forth in the Amended and
Restated Agreement of Limited Partnership of the Partnership and (ii) a
promissory note of the Partnership in the form of Exhibit K. All such shares of
Oxy Petrochemicals Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the limited partnership
interest and note to be issued pursuant to this Section 1.5(a) with respect
thereto upon the surrender of such certificate in accordance with Section 1.6,
without interest.
(b) Cancellation of Other Capital Stock of Oxy Petrochemicals. All
shares of capital stock of Oxy Petrochemicals that are owned directly or
indirectly by Oxy Petrochemicals shall be canceled and no stock or other
consideration shall be delivered in exchange therefor.
1.6 Exchange of Certificates.
(a) Oxy Petrochemicals Common Stock. At the Closing, Oxy CH Sub shall
deliver to the Partnership, subject to the terms of this Agreement, all
certificates representing each share of Oxy Petrochemicals Common Stock together
with duly executed stock powers endorsed to the Partnership or other assignments
or instruments of conveyance and transfer, in form and substance satisfactory to
the Partnership and its counsel, as shall be effective to vest in the
Partnership at the
3
<PAGE>
Effective Time, all of Oxy CH Sub's right, title and interest in and to such
shares of Oxy Petrochemicals Common Stock. Until surrendered to the Partnership
pursuant to this Section 1.6, each such certificate shall, at and after the
Effective Time, represent for all purposes only the right to receive the
consideration provided for in Section 1.5(a). The certificates representing
shares of Oxy Petrochemicals Common Stock so surrendered shall be canceled as of
the Effective Time.
(b) No Further Ownership Rights in Capital Stock of Oxy Petrochemicals.
The limited partnership interest in the Partnership and the note delivered upon
the surrender for exchange of shares of Oxy Petrochemicals in accordance with
the terms hereof shall be deemed to have been delivered in full satisfaction of
all rights pertaining to such securities, and following the Effective Time, no
Person shall have any further rights to, or ownership in, shares of capital
stock of Oxy Petrochemicals. There shall be no further registration of
transfers on the stock transfer books of Oxy Petrochemicals of the shares of
capital stock of Oxy Petrochemicals which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, any certificates for shares
of the capital stock of Oxy Petrochemicals are presented to the Surviving
Partnership for any reason, such certificates shall be canceled.
(c) No Liability. Notwithstanding anything to the contrary in this Section
1, neither the Surviving Partnership nor any other party shall be liable to a
holder of shares of any of the capital stock of Oxy Petrochemicals for any
amount paid to a public official pursuant to and in compliance with any
applicable abandoned property, escheat or similar law.
1.7 Transfer of Excluded Assets. It is expressly understood that,
immediately prior to the Effective Time, any and all assets of Oxy
Petrochemicals included in the Excluded Assets pursuant to Section 2.2 shall
have been contributed, conveyed, assigned or transferred by Oxy Petrochemicals
to Oxy CH Sub pursuant to an assignment in the form attached as Exhibit I (the
"Excluded Asset Assignment") and shall not be part of the assets deemed
transferred to the Partnership pursuant to the Merger.
1.8 Assumption of Excluded Liabilities. It is expressly understood that,
immediately prior to the Effective Time, any and all obligations and liabilities
of Oxy Petrochemicals included in the Excluded Liabilities pursuant to Section
2.6 shall be assumed by Oxy CH Sub pursuant to an assumption agreement in the
form attached as Exhibit J ("Oxy CH Sub Assumption Agreement").
1.9 Transfer of Oxy Petrochemicals Assets. Notwithstanding that pursuant
to Section 1.2, title to the Assets of Oxy Petrochemicals shall be deemed
transferred from Oxy Petrochemicals to the Partnership as of the Effective Time,
as between the parties hereto, the benefits and burdens associated with
ownership of such Assets shall be deemed to have been transferred effective as
of the Asset Transfer Effective Time.
4
<PAGE>
SECTION 2
CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES
2.1 Transfer of Assets. On the terms and subject to the conditions set
forth in this Agreement, on the date hereof and effective as of the Asset
Transfer Effective Time, each Asset Contributor is contributing, conveying,
assigning, transferring and delivering to the Partnership, or shall cause to be
contributed, conveyed, assigned, transferred and delivered to the Partnership,
and the Partnership shall accept, acquire and assume all of the assets, rights,
and properties used or held for use in the contemplated operation and conduct of
the Contributed Business of every kind, nature, character and description,
tangible and intangible, real, personal or mixed, whether held by such Asset
Contributor or an Affiliate thereof, wherever located other than the Excluded
Assets (provided that the assets of Oxy Petrochemicals are being transferred to
the Partnership pursuant to the Merger); and which conveyance, subject to
Section 2.2, shall include, without limitation, the following:
(a) All right, title and interest of such Asset Contributor and any
Affiliate thereof in the Fee Interests;
(b) All right, title and interest of such Asset Contributor and any
Affiliate thereof under the Leaseholds;
(c) All right, title and interest of such Asset Contributor and any
Affiliate thereof, if any, in the Associated Rights, including, without
limitation, all contracts, easements, rights-of-way, permits, licenses and
leases and other similar rights for related equipment, power and communications
cables, and other related property and equipment used principally in the normal
operation and conduct of the Contributed Business;
(d) All of the right, title and interest of such Asset Contributor and any
Affiliate thereof in the Equipment and all warranties and guarantees, if any,
express or implied, existing for the benefit of such Asset Contributor or any
Affiliate thereof in connection with the Equipment to the extent assignable;
(e) Subject, to the extent applicable, to Section 5.3, all of the right,
title and interest of such Asset Contributor and any Affiliate thereof in the
Unrecorded Assets;
(f) All of the right, title and interest of such Asset Contributor and any
Affiliate thereof in any Contributed Contracts;
(g) Any right, title and interest of such Asset Contributor in any
Trademarks to the extent used or contemplated to be used principally in the
normal operation and conduct of the Contributed Business;
(h) All Government Licenses that are transferable and as to which Consents
to transfer are obtained where required;
5
<PAGE>
(i) The Inventory, Stores Inventory and Prepaid Expenses;
(j) Subject to Section 5.6, Accounts Receivable together with any reserve
or allowance for doubtful accounts, returned products or potential price
adjustment;
(k) All right, title and interest of such Asset Contributor and any
Affiliate thereof in the subsidiaries listed on Schedule 2.1(k) (the
"Contributed Subsidiaries");
(l) All claims and rights against third parties (including, without
limitation, insurance carriers, indemnitors, suppliers and service providers) to
the extent, but only to the extent that, they relate to the Assumed Liabilities;
provided, however, that to the extent that any claims or rights of such Asset
Contributor against any third parties are not assigned to the Partnership, and
the partnership incurs Liabilities that would create such claims or rights on
behalf of such Asset Contributor, such Asset Contributor shall enforce such
claims or rights for the benefit (and at the cost) of the Partnership to the
extent it may lawfully do so, except that the Asset Contributor shall not be
required to enforce insurance claims against fronting, captive or
retrospectively rated policies which would ultimately result in such claims
being ultimately borne, directly or indirectly, by the Asset Contributor;
(m) A fifty percent (50%) interest in PD Glycol, a Texas limited
partnership;
(n) Any claims of the Contributors against Union Pacific for service delays
related to the Contributed Business; and
(o) Any other asset of such Asset Contributor or its Affiliate contributed
to the Partnership pursuant to the terms of this Agreement.
2.2 Excluded Assets. It is expressly understood and agreed that the
Assets shall not include the following (the "Excluded Assets"):
(a) Except as otherwise provided in Section 2.1(j), cash and cash
equivalents or similar type investments, such as certificates of deposit,
Treasury bills and other marketable securities;
(b) Except as may be agreed pursuant to Section 2.8(g), any assets of any
qualified or non-qualified pension or welfare plans or other deferred
compensation arrangements maintained by any Contributor or any Affiliate thereof
for employees of such Contributor or any Affiliate thereof prior to the Closing
Date;
(c) Any of the Contributors' or any Affiliates' right, title and interest
in and to (i) the names and logos set forth on Schedule 2.2(c) and any other
statutory names, trade names or trademarks, indications or descriptions of which
such names or any name similar thereto forms a part and (ii) any other trade
names, trademarks, trademark registrations or trademark applications,
copyrights, copyright applications or copyright registrations or any derivative
thereof or design used
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in connection therewith that are not used principally in the normal operation
and conduct of and are not uniquely applicable to the Contributed Business;
(d) All claims and rights against third parties (including, without
limitation, insurance carriers, indemnitors, suppliers and service providers),
to the extent they do not relate to the Assumed Liabilities;
(e) Claims for refunds of Taxes for time periods ending on or before the
Closing Date, which Taxes remain the liability of the Contributor under this
Agreement;
(f) Subject to the Master Intellectual Property Agreement, any and all of
the Intellectual Property and Trademarks of a Contributor or any Affiliate
thereof to the extent not used principally in the normal operation and conduct
of or to the extent not applicable to the Contributed Business;
(g) All items sold in the ordinary course of business prior to the Closing
Date, none of which individually or in the aggregate are material to the normal
operation and conduct of the Contributed Business;
(h) The tangible assets, intangible assets, real properties, contracts and
rights, described in Schedule 2.2(h);
(i) All assets of Oxy Petrochemicals not used or held for use in the
contemplated operation and conduct of the Contributed Business;
(j) Any claims of the Contributors against Union Pacific for service delays
not related to the Contributed Business; and
(k) The Lake Charles Leased Assets.
2.3 Instruments of Conveyance and Assignment. On the Closing Date:
(a) Occidental Chemical Sub shall deliver or cause to be delivered to the
Partnership, as needed, (i) an Assignment of Lease and Act of Exchange for the
Lake Charles Lease being assigned pursuant to this Section 2 in substantially
the form attached hereto as Exhibit A ("Assignment of Lake Charles Lease"), (ii)
an assignment of leases for such other Leases being assigned pursuant to this
Section 2 in substantially the form attached hereto as Exhibit B (the
"Assignment of Leases"), (iii) a bill of sale and assignment in substantially
the form attached hereto as Exhibit C (the "Bill of Sale and Assignment")
conveying title to the Assets (other than the Fee Interests, Leaseholds and Lake
Charles Leased Assets) being conveyed pursuant to this Section 2 and assigning
the Contracts of such Asset Contributor or its Affiliates, (iv) a license of
certain trademarks in substantially the form attached hereto as Exhibit D (the
"Trademark License") and (v) an assignment of patent rights, licenses and
applications included in the Assets conveyed pursuant to this Section 2 in
substantially the form attached hereto as Exhibit E (the "Patent Assignment");
and
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(b) Each Asset Contributor shall transfer to the Partnership the originals
(to the extent such Contributor or any Affiliate thereof possesses an original
and retained no rights thereunder after the Closing Date) or copies, as
appropriate, of the Contributed Contracts and the originals or copies, as
appropriate, of all current records, files and other data that relate to the
Assets and that are necessary for continuing the normal operation and conduct of
the Contributed Business by the Partnership.
(c) PDG Chemical shall deliver or cause to be delivered to the Partnership
an assignment of partnership interests in substantially the form attached hereto
as Exhibit H ("Assignment of Partnership Interests").
2.4 Further Assurances.
(a) On and from time to time after the Closing Date, each Asset Contributor
and Oxy CH Sub will execute and deliver, or cause to be executed and delivered,
such other instruments of conveyance, assignment, transfer and delivery as the
Partnership may reasonably request in order to fulfill and implement the terms
of this Agreement, to vest in the Partnership title to the Assets, to confirm
the assumption of Excluded Liabilities or to enable the Partnership to continue
the normal operation and conduct of the Contributed Business and otherwise to
realize the benefits intended to be afforded hereby.
(b) On and from time to time after the Closing Date, the Partnership will
execute and deliver, or cause to be executed and delivered, such other
instruments of assumption, conveyance, assignment, transfer, power of attorney
or assurance as the Asset Contributors and Oxy CH Sub may reasonably request in
order to fulfill and implement the terms of this Agreement, to vest in the
Partnership all of the Assumed Liabilities, to confirm the transfer of Excluded
Assets or to enable the Asset Contributors and Oxy CH Sub to realize the
benefits intended to be afforded hereby.
(c) Notwithstanding any other provision of this Agreement to the contrary,
the Partnership and each Asset Contributor acknowledge and agree that any
Government Licenses, Contributed Contracts, warranties or other Assets related
to the Contributed Business and required to be conveyed pursuant to this
Agreement which by their terms require Consent from any other unaffiliated
contracting party thereto shall not be assigned to the Partnership unless any
such Consent has been obtained prior to the Closing Date. Following the
Closing, the Partnership and each Asset Contributor shall cooperate with each
other and use commercially reasonable efforts to obtain those Consents that were
not obtained prior to the Closing and (i) if such Consents are obtained
following the Closing, the Partnership and the Asset Contributors shall execute
and deliver any other and further instruments of assignment, assumption,
transfer and conveyance and take such other and further action as the
Partnership may reasonably request in order to vest in the Partnership any
Government Licenses, Contributed Contracts, warranties or other Assets to which
such Consents relate and (ii) pending such transfer or issuance to the
Partnership, shall provide, to the extent it may lawfully do so, the Partnership
with the benefits of any such Government Licenses, Contributed Contracts,
warranties or other Assets, in which case, the Partnership shall promptly assume
and discharge (or reimburse the Asset Contributors or their Affiliates for) all
obligations and liabilities
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associated with the benefits of such Government Licenses, Contributed Contracts,
warranties or other Assets so made available to the Partnership. If an Asset
Contributor obtains a Consent to assign any Government Licenses, Contributed
Contracts, warranties or other Assets related to the Contributed Businesses and
required to be conveyed pursuant to this Agreement after the Closing, each such
Government License, Contributed Contract, warranty or other Asset shall be
deemed to be assigned to the Partnership promptly after such Consent is
obtained.
(d) Following the Closing, the Asset Contributors, Oxy CH Sub and the
Partnership shall cooperate in good faith and in a commercially reasonable
manner with respect to all matters pertinent to the carrying into effect of this
Agreement and the discharge by each party of its obligations and liabilities
hereunder and thereunder, and shall furnish to each other such information,
cooperation and assistance as reasonably may be requested in connection with the
foregoing, including any and all financial information necessary for the
Partnership's operation of the Contributed Business or required for financial
reporting or other purposes.
2.5 Assumption of Liabilities.
(a) On the terms and subject to the conditions, including Sections 1.2,
2.8 and 6.2, set forth in this Agreement, on the Closing Date, the debts,
liabilities and obligations of each Contributor and its Contributed Subsidiaries
set forth in this Section 2.5 shall be assumed by the Partnership in connection
with the transfer of Assets to it, and the Partnership agrees to pay, perform
and discharge all such debts, liabilities and obligations when due:
(i) All obligations arising on or after the Closing Date under the
Lake Charles Lease, the Contributed Contracts and Leases that are assigned
to the Partnership hereunder unless and to the extent that such obligation
arises out of a violation of such Lake Charles Lease, Contributed Contract
or Lease prior to the Closing Date;
(ii) All obligations under purchase orders accepted by a Contributor
or its Contributed Subsidiaries in the ordinary course of business of the
Contributed Business prior to the Closing Date that are not filled as of
the Closing Date;
(iii) Trade Accounts Payable;
(iv) All obligations and liabilities, of every kind and nature,
without limitation, arising out of, in connection with or related to the
ownership, operation or use on or after the Closing Date of the Assets or
the Contributed Business;
(v) Seven Year PCCL Claims to the extent the aggregate thereof borne
by the Partnership does not exceed $7,000,000;
(vi) Third Party Claims that are related to Pre-Closing Contingent
Liabilities and that are first asserted seven years or more after the
Closing Date;
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(vii) The obligations for indebtedness described on Schedule
2.5(a)(vii);
(viii) [RESERVED];
(ix) All Liabilities associated with products sold after the Closing
Date regardless of when manufactured;
(x) The long-term liabilities set forth on Schedule 2.5(a)(x); and
(xi) Any other Liability specifically assumed by the Partnership
pursuant to the terms of this Agreement.
The liabilities and obligations assumed by the Partnership pursuant to this
Section are sometimes hereinafter referred to collectively as the "Assumed
Liabilities."
(b) On the Closing Date, the Partnership shall deliver to each Asset
Contributor an instrument of assumption of the Assumed Liabilities substantially
in the form attached hereto as Exhibit F (the "Partnership Assumption
Agreement").
2.6 Excluded Liabilities. Each Contributor or Affiliate thereof, as
applicable, shall remain liable for (or, in the case of Oxy Petrochemicals, Oxy
CH Sub shall assume in accordance with Section 1.8), and each Asset Contributor
and Oxy CH shall indemnify and hold harmless the Partnership in accordance with
Section 6.2 against, any liability or obligation of such Contributor or
Affiliate thereof, of whatever nature, whether presently in existence or arising
hereafter, whether known or unknown, or whether absolute or contingent, that
does not constitute an Assumed Liability (all such liabilities and obligations
being herein referred to as the "Excluded Liabilities"), including the
following:
(i) Any Pre-Closing Contingent Liability that is not an Assumed
Liability;
(ii) any obligation or liability relating to the Excluded Assets;
(iii) any obligation (A) for the payment of severance benefits to
employees of a Contributor or any of its Affiliates except as set forth in
Sections 2.8(b) or (c), (B) attributable to a Contributor's or any of its
Affiliates' employment of any employee, agent or independent contractor
prior to the Expiration Date or (C) any obligation or liability assumed by
the Contributors pursuant to Section 2.8; and
(iv) all Taxes imposed on Oxy Petrochemicals or any of its Affiliates
that would not be assumed by the Partnership if Oxy Petrochemicals were
contributing its Assets to the Partnership and remaining in existence as a
member of its current affiliated group.
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2.7 Master Intellectual Property Agreement. On the Closing Date, the
Partnership and Occidental Chemical Corporation, a New York corporation ("OCC"),
shall execute and deliver a master intellectual property agreement (the "Master
Intellectual Property Agreement") in substantially the form attached hereto as
Exhibit G providing, among other things, the following:
(a) Non-exclusive, royalty-free licenses to the Partnership of any
Intellectual Property used, contemplated for use or that could be used, in the
Contributed Business that is not conveyed to the Partnership pursuant to Section
1.2 or 2.1.
(b) Non-exclusive, royalty-free licenses to OCC or its Affiliates of any
Contributed Intellectual Property acquired by the Partnership pursuant to
Section 1.2 or 2.1 of this Agreement used, contemplated for use or that could be
used in the business of OCC or its Affiliates.
(c) The assignment of the Contributed Intellectual Property to the
Partnership.
2.8 Employee Matters.
(a) "Employees" shall mean all employees of a Contributor or an Affiliate
whose work relates primarily to the Assets or the Contributed Business and who
are immediately prior to the Closing in the active employment of a Contributor
or an Affiliate. A true and complete list of names; positions; salaries or
hourly wage rates, as applicable; years of service, and the last bonus of the
Employees shall be provided by a Contributor or its designee to the Partnership
from time to time up to the Closing. In accordance with and subject to Section
3.6 of the Master Transaction Agreement, as of the Expiration Date, the
Partnership shall offer employment to certain Employees who are immediately
prior to the Expiration Date in the active employment of a Contributor or an
Affiliate pursuant to a schedule prepared by the Contributors prior to the
Closing Date and agreed to by the Partnership. The Partnership agrees that no
Employee will fail to receive an offer of employment from the Partnership unless
the Contributor or Affiliate employing such Employee has given its approval,
which approval shall not be unreasonably withheld. Any such Employee that
accepts such offer is herein called a "Partnership Employee." Partnership
Employees shall be employed effective as of the Expiration Date, except as
otherwise provided in Section 2.8(e). The Contributors agree that, from the
Expiration Date until December 31, 1998, the Contributors, Occidental or an
Affiliate shall provide payroll services and benefit plan administration for
Partnership Employees, subject to the terms of any agreement for transition
services between the Partnership and OCC.
(b) Except with respect to employees of a Contributor or any Affiliate
thereof located in Occidental's Dallas, Texas facility ("Non-Plant Employees"),
if, within six months after the Expiration Date or in anticipation of the
Expiration Date, a Contributor or any Affiliate thereof terminates (other than
for cause) the employment of any Employee who does not become a Partnership
Employee, then the Partnership will pay to such Contributor an amount, not to
exceed the Basic Severance, to the extent such Contributor or any Affiliate
thereof pays severance to such employee under any plan or policy of the
Contributor or Affiliate. "Basic Severance" means a severance payment according
to the severance pay formula as set forth in Schedule 2.8(b). The
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Contributors shall remain responsible for all severance and other compensation
or payment to Non-Plant Employees who do not become Partnership Employees and
for bonus or other executive compensation, if any, to plant employees covered by
Occidental's bonus or executive compensation programs. The Contributors shall
pay bonus or executive compensation payable to Partnership Employees on a pro-
rata basis determined based on the Partnership Employee's months of employment
with a Contributor prior to the Expiration Date.
(c) Any Partnership Employee whose employment is terminated by the
Partnership (other than for cause) within six months after the Expiration Date
shall be entitled to receive a severance benefit from the Partnership equal to
the Basic Severance (which, for purposes of calculating service time, shall
include the employee's time of service with a Contributor, its predecessors or
Affiliates (to the extent service therefor would have been credited by a
Contributor) and the Partnership).
(d) Any employees of a Contributor that the Partnership and such
Contributor agree are necessary for the orderly transfer of the Contributed
Business to the Partnership but who will not become Partnership Employees
("Transition Employees") shall be compensated by such Contributor on terms and
conditions and for a duration to be agreed upon by the Partnership and such
Contributor. The Partnership shall reimburse such Contributor for any such
agreed upon compensation, including payroll taxes, benefit costs and workers
compensation premiums and claims, paid by such Contributor to or with respect to
any Transition Employee.
(e) If, as of the Expiration Date, any Employee is eligible for and
receiving short term disability benefits or sick pay, or is on leave of absence,
and the Partnership has offered such Employee employment by the Partnership,
that Employee shall become employed by the Partnership (and become a Partnership
Employee for purposes of this Section 2.8) upon eligibility to return to active
employment with such Contributor under the applicable conditions of the short
term disability benefits or sick pay plan of the Contributor, or upon return
from leave of absence. Partnership employment shall not be effective until the
employing Contributor verifies that the Employee has satisfied the conditions
(if any) to return to active employment. Until such time as such Employee
becomes a Partnership Employee such Contributor shall continue to bear all costs
and expenses associated with such Employee.
(f) None of the Contributors nor any of their Affiliates shall, at any time
prior to 60 days after the Expiration Date, effect a "plant closing" or "mass
layoff", as those terms are defined in the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN"), affecting in whole or in part any facility,
site of employment, operating unit or employee of the Contributors or any of
their Affiliates without complying fully with the notice and all other
applicable requirements of WARN. With regard to the Contributed Business, the
Partnership shall not at any time prior to 60 days after the Expiration Date,
effectuate a "plant closing" or a "mass layoff", as those terms are defined in
WARN, affecting in whole or in part, any facility, site of employment or
operating unit, or any Employees without complying fully with the notice and all
other applicable requirements of that Act.
(g) In connection with the provision by the Partnership of benefit plans
and programs for Partnership Employees as provided in the Master Transaction
Agreement,
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(i) The Partnership shall recognize all service credited for the
Partnership Employees or any other employee of Contributors or their
Affiliates directly transferred to the Partnership after the Expiration
Date on the records of a Contributor (or its Affiliate) for purposes of
eligibility for benefits and vesting under the Partnership's benefit plans
and programs and calculation of benefits under the Partnership's benefit
plans and programs, other than the Partnership's defined benefit pension
plan. For purposes of this Section 2.8(g)(i), an employee shall be
directly transferred if the person is employed by the Contributors or their
Affiliates immediately prior to his or her employment with the Partnership
and if such employment with the Partnership is the result of an agreement
between the Partnership and the Contributors or their Affiliates. The
Partnership shall not recognize service credited on a Contributor's records
for benefit accrual under the Partnership's defined benefit pension plan
and only actual periods of service with the Partnership shall be credited
for such benefit accrual purposes;
(ii) As of the Expiration Date, to the extent a Contributor (or its
Affiliate) is not otherwise required to vest Partnership Employees as plan
participants, the Contributors shall cause each Partnership Employee to
become fully vested in his interests in the Occidental Petroleum
Corporation Savings Plan (the "PSA"), the Occidental Chemical Corporation
Savings and Investment Plan (the "SIP") and the Occidental Petroleum
Corporation Retirement Plan (the "PRA") (hereinafter collectively referred
to as "Occidental's Qualified Plans");
(iii) As of the Expiration Date, the Partnership shall provide each
Partnership Employee who was not covered by a collective bargaining
agreement immediately prior to the Closing Date (a "Non-Union Employee")
with "Partnership Benefit Plans", which shall mean the benefit plans and
programs under (a) all employee plans applicable to employees of the
Partnership in similar jobs, other than any employee plan that provides
benefits under section 401(k) of the Code ("Partnership 401(k) Plan"), and
(b) a plan sponsored by the Partnership that is substantially identical to
the PSA (the "Mirror Plan"); provided, however that the Mirror Plan will
(w) provide for a level of matching contributions and forms of distribution
identical to that provided by the Partnership 401(k) Plan (except as
required by law for benefits transferred from the PSA and SIP), (x) not
offer investment in guaranteed investment contracts, (y) not offer new
investments in Occidental common stock and (z) not offer investments in
Occidental common stock after September 30, 1998. From and after the
Expiration Date, each Non-Union Employee shall be eligible to participate
in such Partnership Benefit Plans in accordance with the terms and
conditions thereof; provided, however, that from and after January 1, 1999
such Non-Union Employee shall commence participation in the Partnership
401(k) Plan and shall no longer be entitled to contributions under the
Mirror Plan. Under such Partnership Benefit Plans which are Employee
Welfare Benefit Plans, Non-Union Employees and their eligible dependents,
if a participant in any health, long term disability or life insurance
plans, as applicable, of a Contributor or its Affiliates immediately prior
to the Expiration Date, (a) shall participate in such Partnership Benefit
Plans as of the Expiration Date, and (b) shall be deemed to satisfy any
pre-existing condition limitations under group medical, dental, life
insurance or disability plans that shall
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<PAGE>
be provided after the Expiration Date. In addition, subject to the
agreement of the third-party administrator, amounts paid by such Non-Union
Employees towards deductibles and co-payment limitations under the health
plans of a Contributor or its Affiliates shall be counted toward meeting
any similar deductible and copayment limitations under the health plans
that shall be provided under the Partnership Benefit Plans.
(iv) The Contributors shall, or shall cause its Affiliates, as
appropriate to, and the Partnership shall take all necessary and reasonable
steps to prevent a loan default under the PSA and the SIP (collectively the
"Contributors' 401(k) Plans"), including the following: (a) the
Contributors shall, or shall cause its Affiliates, as appropriate, to allow
Partnership Employees to repay their loans under the Contributors' 401(k)
Plans during any period during which the Contributors or its Affiliates
provide payroll services, and (b) the Contributors shall cause Occidental
to agree and the Partnership agrees to take the necessary and reasonable
steps to provide for a plan to plan transfer (as such transfer is defined
in Section 414(l) of the Code) of account balances (including outstanding
loans) of Partnership Employees from the Contributor's 401(k) Plans to the
appropriate Partnership's 401(k) Plan. Notwithstanding the foregoing, any
steps which in the sole discretion of the Contributors or its Affiliates
jeopardizes the tax-qualified status of any of its Employee Plans shall be
deemed unreasonable.
(v) From and after the Expiration Date, Non-Union Employees shall be
entitled to retain and take any paid vacation days accrued but not taken
under a Contributor's vacation policy for the period from January 1, 1998
through the Expiration Date. Upon or promptly after the Expiration Date,
the Contributor shall pay any Banked Vacation and Carryover Vacation.
"Banked Vacation" shall mean vacation time accrued on the Contributor's
records as payable to any Partnership Employee who is a Non-Union Employee
for which vacation time has not been taken for the period prior to January
1, 1982, 1986 or 1988, as appropriate for such Partnership Employee.
"Carryover Vacation" shall mean vacation time which (a) is not Banked
Vacation; (b) has been accrued on the Contributor's records as payable and
approved by designated personnel for any Partnership Employee who is a Non-
Union Employee; and (c) such vacation time has not been taken prior to the
Expiration Date and which was earned for any period prior to January 1,
1998.
(h) Subject to the representations in Section 3.4 hereof, as soon as
possible after the Expiration Date the Contributor and the Partnership shall
take all actions necessary to cause (i) the Contributor to cease to be the plan
sponsor of the Cain Pension Plan ("Cain Plan") and the PDG Chemical Inc. Pension
Plan ("PDG Plan"), (ii) the Partnership to become the plan sponsor of the Cain
Plan and the PDG Plan and to assume all present and future obligations and
liabilities of the Contributor with respect to such plan, and (iii) the
Partnership shall recognize service with Occidental or its Affiliates for early
retirement eligibility purposes under the Cain Plan and the PDG Plan. From and
after the Expiration Date until the instruction to liquidate assets from the
Contributor's master trust for the purpose of transferring assets to the
Partnership's trust, assets relating to the Cain Plan and the PDG Plan shall be
invested at the discretion of the fiduciaries of such plans, in the normal
course, subject to all applicable laws and plan and trust provisions. Any
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<PAGE>
earnings or losses on such assets after the Expiration Date shall be based on
the return of the Contributor's trust as determined by the Contributor's
trustee. After liquidation of assets until the date of transfer of the assets
of the Cain Plan and PDG Plan, earnings or losses on such assets shall be based
on the Short Term Investment Fund ("STIF") rate of The Northern Trust Company,
the trustee of such plans.
(i) As of the Expiration Date, the Partnership Employees shall cease to
accrue service credit, except as expressly provided in this Section 2.8, under
any and all of the Employee Welfare Benefit Plans of the Contributors or its
Affiliates, under any and all of the Employee Pension Benefit Plans of the
Contributor or its Affiliates, and any and all non-ERISA plans or programs of
the Contributor or its Affiliates, in which participation had been available to
such Employees prior to the Expiration Date. The Contributors agree that, with
respect to any Partnership Employee directly transferred from the Partnership to
employment with the Contributors or their Affiliates, they will recognize all
service credited for such Partnership Employee on the records of the Partnership
for purposes of eligibility for benefits and vesting under the benefit plans and
programs of the Contributors and their Affiliates and calculation of benefits
under the benefit plans and programs of the Contributors and their Affiliates,
other than the defined benefit pension plan of the Contributors and their
Affiliates. For purposes of this Section 2.8(i), an employee shall be directly
transferred if the person is employed by the Partnership immediately prior to
his or her employment with the Contributors or their Affiliates and if such
employment with the Contributors or their Affiliates is the result of an
agreement between the Partnership and the Contributors or their Affiliates.
(j) The Contributors or their Affiliates shall retain the sole
responsibility for, and shall continue to pay, all hospital, medical, and health
care continuation coverage benefits as described in section 4980B of the Code,
life insurance, disability, other welfare plan expenses and benefits (including
all benefits under the Employee Plans), and worker's compensation for employees
of the Contributors (including each Employee) and their covered dependents,
including "qualified beneficiaries" within the meaning of section 607(3) of
ERISA, with respect to claims incurred prior to the Expiration Date. In
addition, the Contributors or their Affiliates shall retain sole responsibility
for the payment of any claim for medical benefits, health care continuation
coverage benefits as described in section 4980B of the Code, life insurance or
other welfare benefits by, or any other item of compensation or benefits payable
under any Contributor Employee Welfare Benefit Plan to (i) any employee of the
Contributor on and after the Expiration Date, (ii) any former employee of the
Contributor who retired, died, became long-term disabled or otherwise terminated
employment prior to the Expiration Date, and (iii) any "qualified beneficiary"
of a Partnership Employee with respect to whom a "qualifying event" (as such
terms are defined in sections 603 and 607 of ERISA) has occurred prior to the
Expiration Date. Except as set forth above, expenses and benefits relating to
such types of claims incurred by Partnership Employees and their covered
dependents on or after the Expiration Date shall be the sole responsibility of
the Partnership to the extent covered under the terms of its benefit plans. For
the purposes of this Section 2.8(j), a claim is deemed incurred when the
services giving rise to the claim were performed.
(k) The Contributors and the Partnership agree that they will satisfy their
respective obligations, if any, under the National Labor Relations Act regarding
union represented employees
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of the Contributor at the Beaumont, Texas, PD Glycol Plant. Further, the
Partnership will recognize the Oil, Chemical and Atomic Workers International
Union and its Local No. 4-243, Production and Maintenance Group, at the
Beaumont, Texas, PD Glycol Plant.
(l) Except as otherwise specified in this Section 2.8, in the event that a
Contributor or its Affiliates terminates any of its employees other than the
Employees at any time prior to the Expiration Date, the Contributor shall be
solely responsible for any liability with respect to such termination, including
liability for all severance benefit payments to such employees pursuant to its
severance plan and any costs associated with violation of any applicable
Authority. Notwithstanding the foregoing, the Partnership hereby agrees to
indemnify the Contributors and their Affiliates and to defend and hold the
Contributors and their Affiliates harmless from and against any claims, losses,
expenses, obligations, and liabilities (including cost of defense and reasonable
attorney's fees) asserted against and imposed on the Contributors and their
Affiliates and arising out of or otherwise in respect of the following: (i) the
Partnership's termination of any Partnership Employee's employment with the
Partnership; (ii) any failure by the Partnership to comply with its obligations
hereunder or otherwise with respect to any Partnership Employee; (iii) any suit
or claim of violation brought against the Contributors or their Affiliates under
WARN for any actions taken by the Partnership after the Expiration Date with
regard to the Partnership Employees at any facility, site of employment or
operating unit affected by this Agreement; or (iv) all claims by any Partnership
Employee after the Expiration Date whom the Partnership or its Affiliates
actually or constructively terminates or by any spouse, dependent, estate or
other beneficiary of such Employee, and (v) from any claims or charges by or
relating to Employee concerning wrongful termination, discrimination,
harassment, or violation of (a) the Fair Labor Standards Act, (b) the Labor
Management Relations Act, (c) WARN, (d) the Americans With Disabilities Act, (e)
ERISA, (f) the Consolidated Omnibus Budget Reconciliation Act of 1985, (g) the
National Labor Relations Act, (h) the Family and Medical Leave Act, (i) the
Health Insurance Portability and Accountability Act, (j) Title VII of the Civil
Rights Act of 1964, (k) the Age Discrimination in Employment Act, or (l) any and
all applicable state and local laws relating to employees or labor relations,
all as attributable to the conduct of the Partnership or its Affiliates with
respect to such Employee relating to the period subsequent to the Expiration
Date. The Partnership hereby agrees to indemnify the Contributors and their
Affiliates and to defend and hold Contributors and their Affiliates harmless
from and against fifty percent of any claims, losses, expenses, obligations and
liabilities (including cost of defense and reasonable attorney's fees) asserted
against and imposed on the Contributors and their Affiliates and arising out of
the Partnership's and Contributor's joint selection of the Employees offered
employment by the Partnership.
(m) Nothing expressed or implied in this Agreement shall confer upon any
Employee, or any legal representative thereof, any rights or remedies, including
any right to employment, whether directly or as a third party beneficiary, or
continued employment for any specified period, of any nature or kind whatsoever.
(n) Except as otherwise specified in this Section 2.8, the Contributors
agree to indemnify the Partnership and to defend and hold the Partnership and
its Affiliates harmless from and against claims, losses, expenses, obligations,
and liabilities (including costs of defense and reasonable
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attorney's fees) arising out of or otherwise in respect of the following (i) any
Contributor employee benefit plans, or claims of employees or former employees
of the Contributor or of any spouse, dependent, estate, or other beneficiary of
such employees or former employees that in any case arose prior to the
Expiration Date, including, without limitation, any such liability or obligation
which may arise under Section 2.8(j) and from (ii) any claims or charges
relating to wrongful termination, discrimination, harassment, or violation of
(a) the Fair Labor Standards Act, (b) the Labor Management Relations Act, (c)
WARN, (d) the Americans With Disabilities Act, (e) ERISA, (f) the Consolidated
Omnibus Budget Reconciliation Act of 1985, (g) the National Labor Relations Act,
(h) the Family and Medical Leave Act, (i) the Health Insurance Portability and
Accountability Act, (j) Title VII of the Civil Rights Act of 1964, (k) the Age
Discrimination in Employment Act, or (l) any and all applicable state and local
laws relating to employees or labor relations, all as attributable to the
conduct of the Contributor or its Affiliates with respect to (A) any employees
or former employees of the Contributor who do not become Partnership Employees
relating to the periods both before and after the Expiration Date, and (B) the
Employees, relating to the period prior to the Expiration Date.
(o) Representatives of the Partnership shall be entitled to meet with the
Employees at mutually agreeable times prior to the Expiration Date to explain
and answer questions about the conditions, policies and benefits of employment
by Partnership after the Expiration Date. The Contributors shall cooperate with
the Partnership until Expiration Date in communicating to such Employees any
additional information concerning employment after the Expiration Date which
such Employees may seek, or which the Partnership may desire to provide, and
during normal business hours shall allow additional meetings by representatives
of the Partnership with such Employees upon the reasonable request of the
Partnership. In addition, the Contributor and the Partnership agree to furnish
each other with appropriate records for each of the Employees as may be
necessary to assist in proper benefit administration.
(p) The indemnity provisions of this Section shall be subject to the
requirements of Section 6.3 of this Agreement.
2.9 Joint Contracts.
(a) Any Contributed Contracts contributed to the Partnership pursuant to
Section 1.2 or 2.1 that relate principally to the Contributed Business but also
relate to the business (other than the Contributed Business) of an Asset
Contributor or its Affiliates will be made available to the appropriate Asset
Contributor and its Affiliates by the Partnership pursuant to arrangements by
which such Asset Contributor and its Affiliates will enjoy the benefits of such
Contributed Contracts as they relate to their business (other than the
Contributed Business) on the same terms and conditions as the Partnership.
(b) Any Contracts that relate principally to the business (other than the
Contributed Business) of an Asset Contributor or its Affiliates but also relate
to the Contributed Business will be made available to the Partnership by such
Asset Contributor or its Affiliates pursuant to other
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arrangements by which the Partnership will enjoy the benefits of such Contracts
as they relate to the Contributed Business on the same terms and conditions as
such Asset Contributor or its Affiliates.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Except as set forth on Schedule 3 or in the SEC Reports, each Contributor
and Oxy CH Sub represent and warrant to the Partnership as follows:
3.1 Due Organization; Good Standing and Power. Each Contributor and Oxy
CH Sub are corporations duly organized, validly existing and in good standing
under the laws of its state of organization and each Contributor has the
requisite power and authority to own, lease and operate the properties to be
contributed hereunder and to conduct the Contributed Business as now conducted
by it. Each Contributor and Oxy CH Sub has all requisite power and authority to
enter into this Agreement and the Assignment and Assumption Agreements and to
perform its obligations hereunder and thereunder. Each Contributor is duly
authorized, qualified or licensed to do business as a foreign corporation and is
in good standing, in the State of Texas and in each of the other jurisdictions
in which its right, title or interest in or to any of the Assets held by it, or
the conduct of the Contributed Business by it, requires such authorization,
qualification or licensing, except where the failure to so qualify or to be in
good standing would not reasonably be expected to have a Material Adverse
Effect.
3.2 Authorization and Validity of Agreements. The execution, delivery and
performance of this Agreement and the other Related Agreements by each
Contributor and Oxy CH Sub and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of such Person. Except to the extent heretofore obtained, no other
corporate action or action by stockholders is necessary for the authorization,
execution, delivery and performance by a Contributor and Oxy CH Sub of this
Agreement and the other Related Agreements and the consummation by any such
Person of the transactions contemplated hereby or thereby. This Agreement and
the other Related Agreements have been duly executed and delivered by each
Contributor and Oxy CH Sub and constitute legal, valid and binding obligations
of such Person, enforceable in accordance with their terms, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general equity
principles.
3.3 No Consents Required; No Conflict with Instruments to which a
Contributor is a Party. The execution, delivery and performance of this
Agreement and the other Related Agreements by the Contributors, Oxy CH Sub and
any of their Affiliates that is a party thereto and the consummation by each
such Person or any such Affiliate of the transactions contemplated thereby (i)
will not require any Consent except for such Consents the failure of which to be
obtained or made, would not in the aggregate reasonably be expected to have a
Material Adverse Effect; and (ii) will not violate (with or without the giving
of notice or the lapse of time or both), or conflict with, or result in the
breach or termination of any provision of, or constitute a default under, or
result in the acceleration of the performance of the obligations of such Person,
or result in the creation of
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an Encumbrance upon any Assets or a portion of the Contributed Business pursuant
to, the charter or by-laws of such Person, or any indenture, mortgage, deed of
trust, lease, licensing agreement, contract, instrument or other agreement to
which such Person is a party or by which such Person or any of the Assets held
by such Person is bound, except for such violations, conflicts, breaches,
terminations, defaults, accelerations or Encumbrances which would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
3.4 Employee Benefits.
(a) (i) Each of the Contributor's Defined Benefit and Defined
Contribution Pension Plans covering employees ("Employee Plan") is in
substantial compliance with applicable requirements prescribed by any and
all Legal Requirements, including, but not limited to the Code, except for
violations the occurrence of which would not in the aggregate reasonably be
expected to have a Material Adverse Effect. Each Employee Plan that is
intended to be qualified under Section 401(a) of the Code currently has a
favorable determination letter from the Internal Revenue Service as to that
Plan's qualification under Section 401(a) of the Code and nothing has
occurred since the date of such letter that could reasonably be expected to
cause the loss of such qualification.
(ii) Each Contributor has in all material respects performed all
obligations required to be performed by it under ERISA, the Code and any
other applicable Legal Requirements and under the terms of each Employee
Plan, except such failures to perform which would not in the aggregate
reasonably be expected to have a Material Adverse Effect. No Contributor
has received any written notice of the existence of any material default or
violation by any other party of any of such Legal Requirements, terms or
requirements applicable to any of the Employee Plans.
(iii) Other than routine claims for benefits, no Contributor has
received any written notice of any pending material claims or lawsuits
which have been asserted or instituted against any of the Employee Plans,
the assets of the trust or funds under the Employee Plans, the sponsor or
administrator of any of the Employee Plans, or against any fiduciary of any
of the Employee Plans with respect to the operation of such Plan.
(iv) No Contributor has received any written notice of any pending
investigation or pending enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service or any
other Authority with respect to any of the Employee Plans.
(v) All contributions required to be made under the terms of each
Contributor's Employee Plans have been timely made. No Employee Plan has
an "accumulated funding deficiency" (within the meaning of section 412 of
the Code or Section 302 of ERISA).
(b) Each Contributor's "group health plans" (within the meaning of Code
Section 5000(b)(1)) have been operated in substantial compliance with the group
health plan continuation
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coverage requirements of Section 4980B of the Code and Sections 601 through 608
of ERISA, Title XXII of the Public Health Service Act and the provisions of the
Social Security Act.
(c) There has been no act or omission by a Contributor that has given rise
to or may give rise to material fines, penalties, taxes, or related charges
under Section 502(c), (i) or (l) or Section 4071 of ERISA or Chapter 43 of the
Code or the imposition of a lien pursuant to Sections 401(a)(29) or 412(n) of
the Code or pursuant to ERISA.
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases.
(a) Each Contributor has good and marketable title to all of its Fee
Interests, free and clear of all Encumbrances, except (i) any prior
reservations, easements and other matters of record to the extent valid,
subsisting and affecting the Assets, (ii) any prior unrecorded easements for
which improvements have been constructed in such a manner as to be apparent to
the Partnership from inspection of the Assets to the extent valid, subsisting
and affecting the Assets, (iii) liens for current taxes not yet due and payable
and mechanics and similar statutory liens arising in the ordinary course of
business, (iv) liens of employees and laborers for current wages not yet due,
(v) building, zoning and health regulations of the jurisdictions in which the
Assets are located; and (vi) such imperfections of title, easements and
Encumbrances, if any, as do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets as they are currently
being used or as otherwise would not reasonably be expected to have a Material
Adverse Effect.
(b) Each Contributor is the sole lessee under its Leases and the sole party
entitled to its Leasehold interests in favor of the lessee thereunder, and the
sole owner or, in the case of OCC Sub, the sole lessee, of the improvements
(other than fixtures) situated on its Leased Premises, free and clear of all
Encumbrances affecting its Leaseholds except (i) any prior reservations,
easements and other matters of record to the extent valid, subsisting and
affecting the Assets, (ii) any prior unrecorded easements for which improvements
have been constructed in such a manner as to be apparent to the Partnership from
inspection of the Assets to the extent valid, subsisting and affecting the
Assets, (iii) liens for current taxes not yet due and payable and mechanics and
similar statutory liens arising in the ordinary course of business, (iv) liens
of employees and laborers for current wages not yet due, (v) building, zoning
and health regulations of the jurisdictions in which the Assets are located; and
(vi) such imperfections of title, easements and such Encumbrances, if any, as do
not in the aggregate materially detract from the value or materially interfere
with the use of the Assets or as otherwise would not reasonably be expected to
have a Material Adverse Effect. No Contributor or any Affiliate thereof has
received from or delivered to the lessors under such Leaseholds any written
notice of termination or threat of termination of such respective Leaseholds.
True and complete copies of all written lease agreements (including any written
amendments or modifications thereof) constituting, or evidencing the terms of,
such Leaseholds have been delivered or made available to the Partnership. No
material default or event of default on the part of a Contributor or any
Affiliate thereof under the provisions of any of such Leaseholds, and no event
that with the giving of notice or passage of time or both would constitute such
default or event of default on the part of such Contributor, has occurred (which
default or event of default has not been cured). No Contributor or any
Affiliate thereof has received any written notice from any lessor under any
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Leasehold, that any material default or event of default on the part of such
Contributor or such Affiliate as lessee under the provisions of any Leaseholds,
or that any event that with the giving of notice or passage of time or both
would constitute such a default or an event of default on the part of such
Contributor or any such Affiliate, as lessee, has occurred (which default or
event of default has not been cured). No material default or event of default
on the part of the lessor under the provisions of any of such Leaseholds, and no
event that with the giving of notice or passage of time or both would constitute
such default or event of default on the part of any such lessor, has occurred
(which default or event of default has not been cured).
(c) Each Contributor or an Affiliate thereof has good title to all of the
personal property constituting Assets purported to be owned by it, free and
clear of all Encumbrances, except for liens for Taxes not yet due and payable
and such Encumbrances, if any, that do not in the aggregate materially detract
from the value or materially interfere with the use of the Assets (as they are
currently being used) or as otherwise would not reasonably be expected to have a
Material Adverse Effect.
3.6 Title Matters; Defects in Improvements. There are no trespassers or
other adverse parties in possession on or affecting the Fee Interests or the
Leased Premises of a Contributor or any Affiliate thereof that would reasonably
be expected to have a Material Adverse Effect. No Contributor or any Affiliate
thereof has granted and none of the foregoing is party to any unrecorded
options, rights of refusal, sales contracts or other such contractual rights in
favor of any third parties relating to its Fee Interests or the Leased Premises.
No written notice has been received by a Contributor or any Affiliate thereof
from any insurance company with respect to its Fee Interests or the Leased
Premises or by any board of fire underwriters claiming any material defects or
deficiencies or requiring the performance of any repairs, replacement,
alteration or other work relating to the improvements situated thereon (in each
case, which have not been cured).
3.7 Working Capital. Each Contributor has operated the Contributed
Business in the ordinary course of business from September 30, 1997 to the
Closing Date such that its Inventory, Stores Inventory, Prepaid Expenses,
Accounts Receivable (and all reserves or allowances for doubtful accounts,
returned products or potential price adjustments) and Trade Accounts Payable, as
of the Closing Date, are at substantially the same level as would have existed
for such Contributor without regard to the transactions contemplated by the
Master Transaction Agreement. In connection with this Section 3.7, it is
understood among the parties that the Originator Receivables Sale Agreement
dated as of October 29, 1998, by and among Occidental Receivables Inc., OCC and
other parties, has been terminated with respect to Oxy Petrochemicals.
3.8 Technology and Similar Rights. Each Contributor owns or is licensed
to use all of its Intellectual Property, Licensed Technology and Licensed
Trademarks, and such Intellectual Property, Licensed Technology and Licensed
Trademarks together with the rights assigned or licensed under the Related
Agreements constitute all relevant patents, pending patent applications,
invention disclosures, copyrights, software, trade secrets, technical
information, technology, know-how, processes, tradenames, trademarks, trademark
registrations or applications, copyrights, copyright applications or
registrations or any derivative thereof or design used in connection
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therewith necessary for the normal operation and conduct of the Contributed
Business as it is currently operated and conducted, except where the failure to
have such ownership or licenses would not reasonably be expected to have a
Material Adverse Effect.
3.9 Government Licenses, Permits and Related Approvals. The Government
Licenses constitute all those necessary for the normal operation and conduct of
the Contributed Business as it is currently operated and conducted, except where
the failure to have such Government Licenses would not reasonably be expected to
have a Material Adverse Effect.
3.10 All Necessary Assets. The Assets together with the rights under the
Related Agreements constitute all property and other rights necessary to enable
the Partnership to operate and conduct the Contributed Business in substantially
the same manner as it is being operated and conducted on the date of this
Agreement, except in all cases where the failure of the Partnership to acquire
such property or other rights by conveyance or license would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
3.11 Conduct of Business in Compliance with Regulatory and Contractual
Requirements. Each Contributor, and any Affiliate thereof, is operating and
conducting the Contributed Business in compliance with all applicable Legal
Requirements, rights of concession, licenses, know-how or other proprietary
rights of others, the failure to comply with which would reasonably be expected
to have a Material Adverse Effect.
3.12 Legal Proceedings. There is no litigation, proceeding, claim,
grievance, arbitration, investigation or other action to which a Contributor or
any Affiliate thereof is a party (i) that is pending or, to the Knowledge of a
Contributor, threatened, (ii) that relates in any way to the Assets, to the
operation or conduct of the Contributed Business, or to the transactions
contemplated by this Agreement, and (iii) that upon resolution adverse to a
Contributor or any of its Affiliates, could reasonably be expected to have a
Material Adverse Effect.
3.13 [Reserved].
3.14 Tax Matters.
(a) There are no material liens for Taxes (other than for current Taxes not
yet due and payable) upon the Assets.
(b) None of the Assets directly or indirectly secures any indebtedness for
money borrowed the interest on which is tax-exempt.
3.15 [Reserved].
3.16 HSE Matters. Except as would not be reasonably likely to have a
Material Adverse Effect:
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(a) (i) The Fee Interests, the Leased Premises and the operations of each
Contributor and any Affiliate thereof in connection with the Contributed
Business are in compliance with all HSE Laws and (ii) to the extent arising out
of a Contributor's or any Affiliate's ownership or use of the Assets or
operation of the Contributed Business, there are no Chemical Substances held,
located, released, generated, treated, stored or disposed of, on, under or from
such Fee Interests or such Leased Premises or in, on or from any fixtures or
improvement thereon in excess of any standard prescribed or permitted by any HSE
Laws or which require corrective or other action pursuant to the provisions of
any HSE Laws.
(b) No Contributor or any Affiliate has received any notice from any
federal, state, or local agency naming such Contributor or such Affiliate as a
potentially responsible party ("PRP"), or otherwise notifying such Contributor
or such Affiliate of any potential liability under either the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA" or "Superfund"), the Resource Conservation and Recovery Act of 1976,
as amended ("RCRA"), or any state statute, rule or local regulation imposing
liability similar to CERCLA or RCRA that relates in any way to any Chemical
Substances generated by or derived from the operations on the Fee Interests, or
the Leased Premises of such Contributor or any Affiliate; nor has either
Contributor or any of its Affiliates received any comparable claim or notice
from any private party.
(c) Each Contributor or an Affiliate thereof, as applicable, has been and
is, in compliance with, all permits, licenses, approvals, permission, or
authorizations necessary for its operations in connection with the Contributed
Business to comply in all respects with HSE Laws.
(d) (i) No Contributor or any Affiliate thereof has received written notice
of any actual, impending, or potential proceedings, allegations, claims, losses,
actions, investigations or inquiries of any kind in connection with the
Contributed Business and HSE Laws or Chemical Substances ("HSE Proceedings") and
(ii) no Contributor nor any Affiliate thereof has any Knowledge of any facts,
events or occurrences that would reasonably be expected to result in any HSE
Proceedings being brought.
(e) No Contributor or any Affiliate thereof is party to, or is subject to
the terms of, any consent order, consent judgment, consent decree, court or
administrative order or judgment, agreement, schedule, or decree issued by any
Authority with respect to the Contributed Business.
3.17 Investigation to Acquire Knowledge. Each of the persons covered by
clauses (i) and (ii) of the definition of "Knowledge" set forth in Section 1 has
reviewed, with counsel to such Contributor, the other representations and
warranties contained in, and the Schedules that relate to, this Section 3 to the
extent that they relate to such person's area of responsibility or expertise and
has made a reasonable inquiry as to the accuracy and completeness of such
representations, warranties and Schedules.
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SECTION 3A
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF OXY CH SUB
Except as set forth on Schedule 3, Oxy CH Sub represents and warrants to
the Partnership as follows:
3A.1 Capitalization. At the Effective Time, the authorized capital
stock of Oxy Petrochemicals will consist of 1,100 shares of common stock, of
which 1,100 shares will be issued and outstanding. All shares of the capital
stock of Oxy Petrochemicals which will be outstanding as of the Effective Time
will be duly authorized, validly issued, fully paid and non-assessable, and will
not be subject to or have been issued in violation of any preemptive rights.
Except as contemplated by this Agreement, there are no other shares of capital
stock of Oxy Petrochemicals authorized or outstanding and there are no
subscriptions, options to purchase, rights of refusal, rights of first offer,
conversion or exchange rights, warrants, preemptive rights or other agreements,
claims or commitments of any kind obligating Oxy Petrochemicals or any Affiliate
thereof to issue, transfer, deliver or sell shares of the capital stock or other
securities of, or interests in, Oxy Petrochemicals or obligating Oxy
Petrochemicals or an Affiliate thereof to grant, extend or enter into any such
agreement or commitment. At the Effective Time, there will be no shareholder
agreements, voting trusts or other agreements or understandings to which Oxy
Petrochemicals or an Affiliate thereof is a party or by which Oxy Petrochemicals
or such Affiliate is bound, relating to the voting of any shares of the capital
stock of Oxy Petrochemicals.
3A.2 Ownership of Common Stock. Oxy CH Sub is the beneficial owner of
all of the issued and outstanding shares of Oxy Petrochemicals Common Stock, in
each case, free and clear of any Encumbrances or limitations on the voting or
transfer thereof.
3A.3 No Undisclosed Liabilities. As of the Effective Time, Oxy
Petrochemicals will have no debts, liabilities or obligations whether accrued,
absolute, contingent or otherwise and whether due or to become due, other than
(a) the Assumed Liabilities and (b) the Excluded Liabilities assumed by Oxy CH
Sub pursuant to Section 1.8.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to each Contributor as follows:
4.1 Due Organization; Good Standing and Power. The Partnership is a
limited partnership duly formed and validly existing under the laws of the State
of Delaware. The Partnership has all partnership power and authority to enter
into this Agreement and the other Related Agreements and to perform its
obligations hereunder and thereunder. The Partnership is duly authorized,
qualified or licensed to do business as a foreign partnership, in each of the
jurisdictions in which its right, title or interest in or to any asset, or the
conduct of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify would
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not have a material adverse effect on the ability of the Partnership to perform
its obligations hereunder or under the Assignment and Assumption Agreements.
4.2 Authorization and Validity of Agreement. The execution, delivery and
performance of this Agreement and the other Related Agreements by the
Partnership and the consummation by the Partnership of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
partnership action on the part of the Partnership. No other partnership action
is necessary for the authorization, execution, delivery and performance by the
Partnership of this Agreement, the other Related Agreements and the consummation
by the Partnership of the transactions contemplated hereby or thereby. This
Agreement and the other Related Agreements have been duly executed and delivered
by the Partnership and constitute legal, valid and binding obligations of the
Partnership, enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equity
principles.
4.3 No Consents Required; No Conflict with Instruments to which the
Partnership is a Party. The execution, delivery and performance of this
Agreement and the other Related Agreements by the Partnership and the
consummation by it of the transactions contemplated thereby (i) will not require
any Consent except for such Consents the failure of which to be obtained or
made, would not in the aggregate reasonably be expected to have a Material
Adverse Effect on the Partnership's ability to perform its obligations hereunder
or thereunder, and (ii) will not violate (with or without the giving of notice
or the lapse of time or both), conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of the Partnership under, the
partnership agreement of the Partnership, or any indenture, mortgage, deed of
trust, lease, licensing agreement, contract, instrument or other agreement to
which the Partnership is a party or by which the Partnership or any of its
assets or properties is bound, except for such violations, conflicts, breaches,
terminations, defaults, accelerations or liens which would not in the aggregate
reasonably be expected to have a material adverse effect on the Partnership's
ability to perform its obligations hereunder or thereunder.
SECTION 5
COVENANTS SUBSEQUENT TO CLOSING DATE
5.1 Access to Information. Following the Closing Date, the Partnership
shall afford, and will cause its Affiliates to afford, to the Asset
Contributors, Oxy CH Sub, their counsel, accountants and other authorized
representatives, during normal business hours, reasonable access to the books,
records and other data of the Contributed Business with respect to the period
prior to the Closing Date (and any personnel familiar therewith) to the extent
that such access may be reasonably required by an Asset Contributor or Oxy CH
Sub to facilitate (i) the preparation by such Asset Contributor or Oxy CH Sub of
such tax returns as it may be required to file with respect to the operations of
the Assets and the Contributed Business or in connection with any audit, amended
return, claim for refund or any proceeding with respect thereto, (ii) the
investigation, litigation and final disposition of any claims which may have
been or may be made against such Asset Contributor
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or Oxy CH Sub in connection with the Assets and the Contributed Business, (iii)
the payment of any amount in connection with any liabilities or obligations
which have not been assumed by the Partnership under this Agreement and (iv) for
any other reasonable business purpose. For a period of ten years after the date
of this Agreement, the Partnership will not dispose of, alter or destroy any
such books, records and other data without giving 90 days' prior notice to such
Asset Contributor or Oxy CH Sub to permit it, at its expense, to examine,
duplicate or repossess such records, files, documents and correspondence.
5.2 Mail or Other Communications. Each Asset Contributor or Oxy CH Sub
authorizes and empowers the Partnership on and after the Closing Date to receive
and open all mail received by the Partnership relating to the Contributed
Business or the Assets and to deal with the contents of such communications in
any proper manner. Each Asset Contributor and Oxy CH Sub shall promptly deliver
to the Partnership any mail or other communication received by it on and after
the Closing Date pertaining to the Contributed Business or the Assets and any
cash, checks or other instruments of payment to which the Partnership is
entitled. The Partnership shall promptly deliver to the appropriate Asset
Contributor or Oxy CH Sub any mail or other communication received by it after
the Closing Date pertaining to the Excluded Assets or Excluded Liabilities, and
any cash, checks or other instruments of payment in respect of such.
5.3 Use of Trade Name. Pursuant to the Trademark License to be granted to
the Partnership by Occidental and OCC, after the Closing Date the Partnership
shall be permitted to use any items of Inventory or packaging material, any
sales or promotional materials, any forms or documents or any other printed
materials that bear the names set forth on Schedule 2.2(c) or other trademarks
or trade names of which such names or any name similar thereto forms a part.
5.4 Closing Date Balance Sheet. Not later than 60 days after the Closing
Date, each Contributor shall cause Arthur Andersen LLP to prepare and deliver to
such Contributor and the Partnership an audited balance sheet of the Contributed
Business as of the Closing Date (the "Closing Date Balance Sheet"). In
addition, each Contributor shall prepare and deliver to the Partnership such
other financial statements or information as the Partnership may reasonably
request in connection with any proposed Partnership financing; it is currently
anticipated that the Partnership will request the Contributors to provide the
Partnership with audited financial statements related to the operation of the
Contributed Business for the past three (3) fiscal years.
5.5 [Reserved]
5.6 Collection of Accounts Receivable. The Partnership shall take all
commercially reasonable efforts to collect any Accounts Receivable; provided,
however, to the extent any Accounts Receivable set forth on the Closing Date
Balance Sheet are not collected within 180 days after the Closing Date by the
Partnership, the appropriate Contributor (or, in the case of Oxy Petrochemicals,
Oxy CH Sub) will buy such uncollected Accounts Receivable from the Partnership
at the amount set forth on the Closing Date Balance Sheet; provided, further,
that the amount to be paid by the appropriate Contributor (or, in the case of
Oxy Petrochemicals, Oxy CH Sub) for such uncollected Accounts Receivable shall
be reduced by the amount of any reserve or allowance for
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doubtful accounts, returned products or potential price adjustments, transferred
to the Partnership pursuant to Section 2.1(j); and provided, further, that any
payments or reimbursements that are made by the Partnership as a result of
volume or price rebates or adjustments and that are attributable (in whole or in
part) to transactions prior to the Closing Date shall be for the account of the
Contributor (or, in the case of Oxy Petrochemicals, Oxy CH Sub), to the extent
so attributable. Collections on Accounts Receivable shall be applied on a
specific identification basis. The Partnership will report monthly in writing to
each Contributor (or, in the case of Oxy Petrochemicals, Oxy CH Sub) on the
amounts collected during the preceding month, and shall provide an aging summary
of uncollected accounts and a detailed description of each problem account (45
or more days overdue). On reasonable notice to the Partnership, each Contributor
(or, in the case of Oxy Petrochemicals, Oxy CH Sub) shall have the right to take
over the collection process for any problem account.
5.7 Reimbursement for Prepaid Expenses. The Partnership and each
Contributor acknowledge that the Prepaid Expenses attributable to its
Contributed Business have been conveyed to the Partnership solely in order to
facilitate the timely and efficient transfer of the Contributed Business to the
Partnership. Consequently, the Partnership shall reimburse such Contributor
(or, in the case of Oxy Petrochemicals, Oxy CH Sub) for the Prepaid Expenses
associated with its Contributed Business (other than the prepaid expenses for
"turnaround" costs) within 10 days following the receipt of the Closing Date
Balance Sheet.
SECTION 6
SURVIVAL AND INDEMNIFICATION
6.1 Survival Limitations. The representations and warranties of the
parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the date that is 60 months after the Closing Date, except (i)
Section 3.14, which shall survive until the expiration of the applicable statute
of limitations and (ii) Section 3.5, which shall survive without limitation and
shall not be merged with the Assignment and Assumption Agreements. No action can
be brought with respect to any breach of any representation or warranty (except
with respect to Section 3.5) pursuant to this Agreement unless a written notice
that complies with Section 6.3 has been delivered pursuant to such Section 6.3
prior to the expiration of the survival period applicable to such representation
or warranty; provided that upon the giving of such notice, notwithstanding any
other provision of this Agreement the representation and warranty that is the
basis of such action shall continue with respect to such action beyond the time
at which the representation and warranty would otherwise terminate.
6.2 Indemnification.
(a) Subject to the other provisions of this Section 6, each Asset
Contributor and Oxy CH Sub hereby agrees, to the fullest extent permitted by
applicable law, to indemnify, defend and hold harmless the Partnership, its
partners, their Affiliates and their respective officers, directors and
employees from, against and in respect of any losses, claims, damages, fines,
penalties, assessments by public agencies, settlement, cost or expenses
(including costs of defense and attorneys' fees) and
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other liabilities (any of the foregoing being a "Liability") incurred or
suffered by the Partnership or any of its Affiliates, arising out of, in
connection with or relating to:
(i) Any misrepresentation in or breach of the representations and
warranties of a Contributor, Oxy CH Sub or any of its Affiliates in this
Agreement, the Assignment and Assumption Agreements, the Master
Intellectual Property Agreement, or the Master Transaction Agreement,
provided that any Liability arising out of, in connection with or relating
to any breach of the warranties in any Assignment and Assumption Agreement
that is not a breach of the warranties in this Agreement shall not be
indemnified against pursuant to this Section 6;
(ii) Any failure of a Contributor, Oxy CH Sub or any of its Affiliates
to perform any of its covenants or obligations contained in this Agreement,
the Assignment and Assumption Agreements, the Master Intellectual Property
Agreement, or the Master Transaction Agreement;
(iii) Excluded Liabilities; or
(iv) Any Pre-Closing Contingent Liability that is not an Assumed
Liability.
provided, however, that the following limitations shall apply to the
indemnification obligations in clauses (i) and (iv) above:
(A) the Asset Contributors and Oxy CH Sub, in the aggregate, shall not
have any indemnification obligation under clause (i) and (iv) above for any
individual Liability unless the amount of such Liability exceeds $25,000
(the "Individual Basket") (it being understood that all Liabilities arising
from the same event, condition or set of circumstances shall be considered
as an individual Liability for purposes of such calculation), but if the
amount of such Liability exceeds the Individual Basket, the entire amount
of such Liability, including the first $25,000 of such Liability, may be
the subject of indemnification hereunder; provided, further, that the
parties agree that the amount of Liability for which indemnification may be
sought for breach of any representation or warranty under clause (i) above
shall be calculated taking into account the Individual Basket but without
regard to any qualification or exception regarding materiality or Material
Adverse Effect qualification contained in such representation or warranty
(it being understood that such materiality or Material Adverse Effect
qualifications shall apply for purposes of determining whether there has
been such a breach in the first place, but once it has been established
that there is such a breach, the Partnership shall be entitled to indemnity
relating back to the first dollar); and
(B) to the extent any misrepresentation in or breach of the
representations and warranties of a Contributor or Oxy CH Sub results in a
Liability of the Partnership in excess of the Individual Basket and such
Liability would also constitute a Pre-Closing Contingent Liability, such
misrepresentation or breach shall be treated as a Pre-Closing Contingent
Liability.
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(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE FULLEST
EXTENT PERMITTED BY LAW, NO ASSET CONTRIBUTOR, OXY CH SUB OR ANY OF THEIR
AGENTS, EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
DIRECT CLAIMS BY AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY
THAT DOES NOT SEEK REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY SUCH
INDEMNIFIED PARTY) WITH RESPECT TO THEIR INDEMNIFICATION OBLIGATIONS UNDER THIS
AGREEMENT UNLESS ANY SUCH CLAIM ARISES OUT OF THE FRAUDULENT ACTIONS OF AN ASSET
CONTRIBUTOR OR OXY CH SUB. IN DETERMINING THE AMOUNT OF ANY LOSS, LIABILITY, OR
EXPENSE FOR WHICH AN INDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS
AGREEMENT, THE GROSS AMOUNT THEREOF WILL BE REDUCED (BUT NOT BELOW ZERO) BY THE
NET PRESENT VALUE OF ANY CORRELATIVE INSURANCE PROCEEDS ACTUALLY REALIZED BY
SUCH INDEMNIFIED PARTY UNDER POLICIES TO THE EXTENT THAT THE FUTURE PREMIUM RATE
WILL NOT BE INCREASED BY CLAIM EXPERIENCE RELATING TO SUCH LOSS, LIABILITY OR
EXPENSE.
(c) Notwithstanding the provisions of Sections 6.2(a)(i) and 6.2(a)(iv), it
is expressly agreed that no Asset Contributor or Oxy CH Sub shall be required to
indemnify the Partnership for any Liability arising out of, in connection with
or related to any HSE Claim to the extent that the condition, event,
circumstance or other basis for the HSE Claim was exacerbated or accelerated by
the Partnership. The Partnership shall not be deemed to have exacerbated a
condition, event, circumstance or other basis for an HSE Claim by reason of the
continuance thereof after the Closing (i) under circumstances where the
Partnership does not know of its existence and has not breached any legal duty
to have conducted an investigation or inquiry that would have uncovered the
matter or (ii) under circumstances where the Partnership does know of its
existence but is taking commercially reasonable actions to cure the matter or to
otherwise achieve compliance in a commercially reasonable and prudent manner.
(d) Subject to the other provisions of this Section 6, the Partnership
hereby indemnifies, to the fullest extent permitted by law each Asset
Contributor, Oxy CH Sub and their Affiliates and their respective officers,
directors and employees against and agrees to hold each of them harmless from
any and all Liability incurred or suffered by such Person arising out of or
relating to:
(i) Any misrepresentation in or breach of the representations and
warranties of the Partnership or the failure of the Partnership to perform
any of its covenants or obligations contained in this Agreement, the
Assignment and Assumption Agreements, the Master Intellectual Property
Agreement or the Master Transaction Agreement;
(ii) Assumed Liabilities; or
(iii) Any HSE Claim to the extent arising out of the Partnership's
exacerbation or acceleration of such HSE Claim.
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(e) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE FULLEST
EXTENT PERMITTED BY LAW, NEITHER THE PARTNERSHIP NOR ANY OF ITS AGENTS,
EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH DIRECT CLAIMS BY AN
INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY THAT DOES NOT SEEK
REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY
) WITH RESPECT TO THEIR INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT UNLESS
ANY SUCH CLAIM ARISES OUT OF THE FRAUDULENT ACTIONS OF THE PARTNERSHIP. IN
DETERMINING THE AMOUNT OF ANY LOSS, LIABILITY, OR EXPENSE FOR WHICH AN
INDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT, THE GROSS
AMOUNT THEREOF WILL BE REDUCED (BUT NOT BELOW ZERO) BY THE NET PRESENT VALUE OF
ANY CORRELATIVE INSURANCE PROCEEDS ACTUALLY REALIZED BY SUCH INDEMNIFIED PARTY
UNDER POLICIES TO THE EXTENT THE FUTURE PREMIUM RATE WILL NOT BE INCREASED BY
CLAIM EXPERIENCE RELATING TO SUCH LOSS, LIABILITY OR EXPENSE.
(f) The rights provided to each Indemnified Party pursuant to this Section
6, as limited by and subject to the provisions of this Section 6, shall be such
Indemnified Party's sole remedy for breach of any representation or warranty by
or covenant or obligation of any Indemnifying Party under this Agreement, the
Assignment and Assumption Agreements, the Master Intellectual Property Agreement
and the Master Transaction Agreement.
6.3 Procedures.
(a) Any Person seeking indemnification under Section 6.2 (the "Indemnified
Party") agrees to give prompt written notice to the party against whom indemnity
is sought (the "Indemnifying Party") of the assertion of any claim that does not
involve a Third Party Claim, which notice shall describe in reasonable detail
the nature of the claim, an estimate of the amount of damages attributable to
such claim to the extent feasible and the basis of the Indemnified Party's
request for indemnification under this Agreement. If the Indemnifying Party
disputes such claim and such dispute is not resolved by the parties, such
dispute shall be resolved in accordance with Section 7.9.
(b) If an Indemnified Party is notified of a Third Party Claim which may
give rise to a claim for indemnification against any Indemnifying Party under
this Section, then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing (including copies of all papers served with respect to
such Third Party Claim), which notice shall describe in reasonable detail the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible and the basis of
the Indemnified Party's request for indemnification under this Agreement;
provided that any failure to timely give such notice shall not relieve the
Indemnifying Party of any of its obligations under this Section 6 except to the
extent that such failure prejudices or impairs, in any material respect, any of
the rights or obligations of the Indemnifying Party.
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(c) Any Indemnifying Party may, and at the request of the Indemnified Party
shall, participate in and control the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party unless (i) the
employment thereof has been specifically authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party failed to assume the defense and
employ counsel or failed to diligently prosecute or settle the Third Party Claim
or (iii) there shall exist or develop a conflict that would ethically prohibit
counsel to the Indemnifying Party from representing the Indemnified Party. If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, including, without limitation, by
making any counterclaim against the person or entity asserting the Third Party
Claim or any cross-complaint against any person or entity, in each case only if
and to the extent that any such counterclaim or cross-complaint arises from the
same actions or facts giving rise to the Third Party Claim. The Indemnifying
Party shall be the sole judge of the acceptability of any compromise or
settlement of any claim, litigation or proceeding in respect of which indemnity
may be sought hereunder, provided that the Indemnifying Party will give the
Indemnified Party reasonable prior written notice of any such proposed
settlement or compromise and will not consent to the entry of any judgment or
enter into any settlement with respect to any Third Party Claim without the
prior written consent of the Indemnified Party, which shall not be unreasonably
withheld. The Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder) shall reimburse the Indemnified Party for its
reasonable out of pocket costs incurred with respect to such cooperation.
(d) If the Indemnifying Party fails to assume the defense of a Third Party
Claim within a reasonable period after receipt of written notice pursuant to the
first sentence of subparagraph (c), or if the Indemnifying Party assumes the
defense of the Indemnified Party pursuant to subparagraph (c) but fails
diligently to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings; provided that the Indemnified Party shall not
settle such Third Party Claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section, and the Indemnifying Party shall
bear its own costs and expenses with respect to such participation.
(e) Notwithstanding the other provisions of this Section 6.3, if the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Section 6.3 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
6.3 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation
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concerning such dispute. If a dispute over potential liability is resolved in
favor of the Indemnified Party, the Indemnifying Party shall reimburse the
Indemnified Party in full for all costs of the litigation concerning such
dispute.
(f) After it has been determined, by acknowledgment, agreement, or ruling
of court of law, that an Indemnifying Party is liable to the Indemnified Party
under this Section 6, the Indemnifying Party shall pay or cause to be paid to
the Indemnified Party the amount of the Liability within ten business days of
receipt by the Indemnifying Party of a notice reasonably itemizing the amount of
the Liability but only to the extent actually paid or suffered by the
Indemnified Party.
(g) In the event a Third Party Claim is brought in which the liability as
between the Partnership and any or all Contributors is alleged to be joint (it
being agreed that any Third Party Claim related to a Pre-Closing Contingent
Liability shall be deemed joint) or in which the entitlement to indemnification
under this Section 6 has not been determined, the Partnership and the
appropriate Contributors shall cooperate in the joint defense of such Third
Party Claim and shall offer to each other such assistance as may reasonably be
requested in order to ensure the proper and adequate defense of any such matter.
Such joint defense shall be under the general management and supervision of the
party which is expected to bear the greater share of the liability, unless
otherwise agreed; provided, however, that neither party shall settle or
compromise any such joint defense matter without the consent of the other, which
consent shall not be unreasonably withheld or delayed. Any uninsured costs of
such joint defense shall be borne as the parties may agree, provided, however,
that in the absence of such agreement, the defense costs shall be borne by the
party incurring such costs; provided, further, that, if it is determined that
one party was entitled to indemnification under this Section 6, the other party
shall reimburse the party entitled to indemnification for all of its costs
incurred in connection with such defense.
6.4 Subrogation. In the event of any payment by an Indemnifying Party to
an Indemnified Party in connection with any Liability, the Indemnifying Party
shall be subrogated to and shall stand in the place of the Indemnified Party as
to any events or circumstances in respect of which the Indemnified Party may
have any right or claim against any third party relating to such event or
indemnification. The Indemnified Party shall cooperate with the Indemnifying
Party in any reasonable manner in prosecuting any subrogated claim.
6.5 Claims for HSE Work. Notwithstanding the other provisions of this
Section 6, in the case of any assertion, claim or demand requiring the
performance of investigatory, removal or remedial work with respect to
environmental conditions, HSE Laws or Chemical Substances for which the
Partnership may seek indemnification, the Partnership shall have the right to
conduct and control such work provided (i) it uses its good faith, commercially
reasonable efforts to achieve the Lowest Cost Response and (ii) it provides the
Contributors with the opportunity to: (A) review and comment upon any work plans
for any remedial action prior to finalization and implementation; (B) attend
meetings with regulators concerning the remedial action; and (C) have a
representative present during the performance of any remedial action.
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6.6 EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS SET FORTH HEREIN, TO THE
FULLEST EXTENT PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO
INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF
WHETHER THE INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION
OBLIGATION IS THE RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW
OF OR BY ANY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT
CONSTITUTES A CONSPICUOUS LEGEND.
SECTION 7
MISCELLANEOUS
7.1 Construction. In construing this Agreement, the following principles
shall be followed: (i) no consideration shall be given to the captions of the
articles, sections, subsections or clauses, which are inserted for convenience
in locating the provisions of this Agreement and not as an aid in construction:
(ii) no consideration shall be given to the fact or presumption that any of the
parties had a greater or lesser hand in drafting this Agreement; (iii) examples
shall not be construed to limit, expressly or by implication, the matter they
illustrate; (iv) the word "includes" and its syntactic variants mean "includes,
but is not limited to" and corresponding syntactic variant expressions; (v) the
plural shall be deemed to include the singular, and vice versa; (vi) each gender
shall be deemed to include the other gender; and (vii) each exhibit, appendix,
attachment and schedule to this Agreement is a part of this Agreement.
7.2 Payment of Certain Expenses and Taxes.
(a) Subject to the further provisions of this Section 7.2, (i) each
Contributor shall be responsible for all Taxes attributable to such
Contributor's ownership or use of the Assets or operation of the Contributed
Business prior to the Closing, (ii) Oxy CH Sub shall be responsible for all
Taxes attributable to Oxy Petrochemical's ownership or use of the Assets or
operation of the Contributed Business prior to the Closing, and (iii) the
Partnership shall be responsible for all Taxes attributable to the Partnership's
ownership or use of the Assets or operation of the Contributed Business after
the Closing. Each Contributor and Oxy CH Sub shall be responsible for any
liability of the Partnership pursuant to Texas Tax Code Section 111.020
(including interest, penalties and attorneys' fees in connection therewith) with
respect to any amounts owed or owing by such Person under Title 2, Texas Tax
Code.
(b) All sales, transfer, or other similar taxes incurred in connection with
the transfer of the Assets shall be borne by the Partnership. The Partnership,
each Contributor and Oxy CH Sub shall cooperate fully with each other after the
Closing in connection with (i) the preparation and filing of any tax return,
exemption certificate, or other filing in connection with such taxes, and (ii)
any audit examination by any taxing Authority of the tax returns, exemption
certificates, or other filings referred to above.
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(c) All real property taxes, personal property taxes, ad valorem taxes, and
other similar taxes (or payments in lieu of such taxes) assessed on any of the
Assets (including Inventory) in the tax period in which the Closing Date occurs
("Property Taxes") shall be prorated between the Partnership and the Asset
Contributors or Oxy CH Sub, as appropriate, as of the Closing.
(d) [RESERVED]
(e) The Partnership shall pay any title or recordation fees in connection
with the transfer of the Assets. The Partnership shall also pay for any title
insurance policies or surveys of the Fee Interests that are requested or ordered
by the Partnership.
(f) After the Closing, either a Contributor (or, in the case of Oxy
Petrochemicals, Oxy CH Sub) or the Partnership receiving each Property Tax bill
or notice applicable to the Assets for the period in which the Closing Date
occurred shall, if other than the Partnership, promptly notify the Partnership
and shall pay each such tax bill prior to the last day such taxes may be paid
without penalty or interest. If paid by a Contributor (or, in the case of Oxy
Petrochemicals, Oxy CH Sub) the Partnership shall promptly on receipt of a
written request (accompanied by appropriate supporting documentation) reimburse
the paying party with respect to the share of the Partnership of such amount so
paid as provided under this Agreement. If paid by the Partnership, the
Contributor (or, in the case of Oxy Petrochemicals, Oxy CH Sub) shall promptly
on receipt of a written request (accompanied by appropriate supporting
documentation) reimburse the Partnership with respect to the share of the
Contributor (or, in the case of Oxy Petrochemicals, Oxy CH Sub) of such amount
so paid as provided under this Agreement. The Contributors and the Partnership
shall cooperate fully with each other on and after Closing with respect to any
Property Tax assessment or valuation (or protest in connection therewith) by any
taxing Authority with respect to the tax period in which the Closing Date
occurs.
(g) If any party receives a refund of any Taxes for which the other is
liable or responsible under this Agreement, the party receiving such refund
shall, within 30 days after the receipt of such refund, remit it to the party
who is liable.
(h) Any Taxes, Property Taxes or other liabilities to be paid by a
Contributor pursuant to this Section 7.2 that relate to the Assets or
Contributed Business of Oxy Petrochemicals shall be paid by Oxy CH Sub.
(i) Notwithstanding any other provision of this Agreement, the obligations
of the parties set forth in this Section 7.2 shall be unconditional and absolute
and shall remain in effect until audit, assessment and collection of any such
taxes are barred by the applicable statute of limitations.
7.3 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall unless otherwise
provided for elsewhere in this Agreement, be in writing and shall be deemed to
have been duly given if and when (i) transmitted by telecopier facsimile with
proof of confirmation from the transmitting machine, or (ii) delivered by
courier or other hand delivery, as follows:
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(a) If to a Contributor or Oxy CH Sub:
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90004
Attention: President
Telecopy Number: (310) 443-6977
with a copy to:
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90004
Attention: General Counsel
Telecopy Number: (310) 443-6333
(b) If to the Partnership:
Equistar Chemicals, LP
1221 McKinney Street
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
or to such other address or telecopy number as either party shall have specified
by notice in writing to the other party. All such notices, requests, demands
and communications shall be deemed to be effective upon receipt.
7.4 [Reserved].
7.5 Binding Effect; Benefit. Subject to Section 7.7, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto and their Affiliates or their respective permitted successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
7.6 Occasional and Bulk Sales. To the extent applicable, the Partnership
and the Contributors each agree to waive, to the fullest extent permitted by
law, compliance by the other with the provisions of the Bulk Sales Law of any
jurisdiction.
7.7 Assignability. Neither this Agreement nor any of the rights or
obligations hereunder shall be assignable (by operation of law or otherwise) by
a Contributor without the prior written consent of the Partnership or shall be
assignable (by operation of law or otherwise) by the Partnership (except to a
wholly-owned subsidiary thereof) without the prior written consent of each
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Contributor. Any assignment or purported assignment in violation of this
Section shall be null and void.
7.8 Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. Subject
to the agreements and obligations of the Partnership hereunder or under
applicable Legal Requirements, no investigations by the Partnership heretofore
or hereafter made shall affect the representations and warranties of a
Contributor, and, except as otherwise provided in Section 6.1, such
representations and warranties shall survive any such investigation. The waiver
by any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
7.9 Dispute Resolution. All disputes under this Agreement shall be
resolved in accordance with the Dispute Resolution Procedures set forth in
Appendix A.
7.10 Severability. In the event that any provisions of this Agreement
shall finally be determined to be unlawful, such provision shall, so long as the
economic and legal substance of the transactions contemplated hereby is not
affected in any materially adverse manner as to the Contributors or the
Partnership, be deemed severed from this Agreement and every other provision of
this Agreement shall remain in full force and effect.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.12 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE EXCLUDING CONFLICTS OF LAW
PRINCIPLES OF SUCH JURISDICTION EXCEPT TO THE EXTENT SUCH MATTERS ARE
MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION.
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE UNDER OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER RELATED HERETO
SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF DELAWARE, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES TO THIS
AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT EXCEPT TO THE EXTENT THIS AGREEMENT RELATES TO
THE CONVEYANCE OR ASSIGNMENT OF ANY INTEREST IN REAL ESTATE OR THE CREATION,
PERFECTION, PRIORITY OR FORECLOSURE OF ANY LIEN ON ANY INTEREST IN REAL ESTATE
IN WHICH CASE, SUCH COURTS
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JURISDICTION SHALL BE NON-EXCLUSIVE. EACH OF THE PARTIES TO THIS AGREEMENT SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE BY
ENTERING INTO AN AGREEMENT AS OF THE DATE OF THIS AGREEMENT WITH THE AGENT TO
SUCH EFFECT. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO
RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF
PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND
SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES
HERETO. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
7.14 WAIVER OF JURY TRIAL. THE PARTNERSHIP AND THE CONTRIBUTORS HEREBY
KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
SECTION 8
DEFINITIONS
The terms used in this Agreement have the following definitions or are
defined in the Sections referenced below:
"AAA" is defined in Appendix A.
"Accounts Receivable" constitute, as of the Closing Date and as further
defined below, all uncollected accounts receivable that have been generated by,
or are attributable to, the Contributors' operation prior to the Closing Date of
the Contributed Business in the ordinary course and in all respects in a manner
consistent with the provisions of Section 3.2 of the Master Transaction
Agreement. Accounts Receivable shall not include any reserves or accruals.
"Affiliate" means any Person that directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified; provided, however, that for purposes of this
Agreement none of the Partnership, any Person controlled by it, Canadian
Occidental Petroleum Ltd. or any Person controlled by it shall be considered an
Affiliate of any Contributor. For purposes of this definition, the term
"control" shall have the meaning set forth in 17 CFR 230.405 as in effect on the
date hereof. With respect to the period from and after the date hereof, Oxy
Petrochemicals shall not be considered an Affiliate of the Asset Contributors.
"Agreement" is defined in the first paragraph of this Agreement.
"Arbitrator" is defined in Appendix A.
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"Asset Contributors" is defined in the fifth WHEREAS clause.
"Asset Transfer Effective Time" means 4:00 A.M., local time, where the
respective Assets are located, on the Closing Date.
"Assets" means all of the assets, rights and properties being contributed,
conveyed, assigned, transferred and delivered to the Partnership pursuant to
Sections 1.2(a) and 2.1.
"Assignment and Assumption Agreements" means the Assignment of Lake Charles
Lease, the Assignment of Leases, the Bill of Sale and Assignment, the Trademark
License, the Patent Assignment, the Assumption of Partnership Interests, the
Partnership Assumption Agreement, the Excluded Assets Assignment and the Oxy CH
Sub Assumption Agreement.
"Assignment of Lake Charles Lease" is defined in Section 2.3(a).
"Assignment of Leases" is defined in Section 2.3(a).
"Assignment of Partnership Interests" is defined in Section 2.3(c).
"Associated Rights" means all right, title and interest of a Contributor
and any Affiliate thereof, if any, in lands, or real property of others, used
principally in the normal operation and conduct of the Contributed Business.
"Assumed Liabilities" is defined in Section 2.5(a).
"Authority" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal (or any commonwealth,
territory or possession thereof), state, local or foreign, or any agency,
department or instrumentality thereof, or any court or arbitrator (public or
private).
"Banked Vacation" is defined in Section 2.8(g).
"Basic Severance" is defined in Section 2.8(b).
"Cain Plan" is defined in Section 2.8(h).
"Capital Spares" means the inventory of spare parts used by a Contributor
in the Contributed Business and owned by a Contributor as of the Closing Date.
"Carryover Vacation" is defined in Section 2.8(g).
"CERCLA" is defined in Section 3.16(b).
38
<PAGE>
"Chemical Substance" means any (i) chemical substance, pollutant,
contaminant, constituent, chemical, mixture, raw material, intermediate, product
or byproduct that is regulated (including any requirement for the reporting of
any Release thereof) under any HSE Law or defined or listed as an industrial,
toxic, deleterious, harmful, radioactive, infectious, disease-causing or
hazardous substance, material or waste under any HSE Law, and (ii) petroleum or
any fraction thereof, asbestos or asbestos-containing material or
polychlorinated biphenyls ("PCBs").
"Closing" is defined in Section 1.3(a).
"Closing Date" is defined in Section 1.3(a).
"Closing Date Balance Sheet" is defined in Section 5.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent" means any consent, waiver, appraisal, authorization, exception,
registration, license or declaration of or by any Person or any Authority, or
any expiration or termination of any applicable waiting period under any Legal
Requirement, required with respect to the Contributed Business or a Contributor
or any Affiliate thereof in connection with (i) the execution and delivery of
this Agreement or any of the Related Agreements or (ii) the consummation of the
transactions contemplated hereby or thereby.
"Contracts" means contracts, maintenance and service agreements, purchase
commitments for materials and other services, advertising and promotional
agreements, leases, taxation agreements with any Authority, and other
agreements.
"Contributed Contracts" means, other than Government Licenses, (i) all
Contracts to which a Contributor or an Affiliate thereof is a party, whether or
not entered into in the ordinary course of business, that relate principally to
the normal operation and conduct of the Contributed Business, but in the case of
any Contracts under which either such Asset Contributor or any Affiliate thereof
retains rights with respect to its other businesses, only to the extent any such
Contract relates to the operation of the Contributed Business and (ii) all
agreements and instruments setting forth such Contributor's and any of its
Affiliates' rights with respect to rights-of-way, privileges, riparian and other
rights, appurtenances, licenses or franchises and in respect of intellectual
property rights, in each case that constitute Assets described in clauses (a)
through (e), of Section 2.1.
"Contributed Business" is defined in Schedule A.
"Contributed Intellectual Property" means all of the items referred to in
Section 2.1(g) to the extent such item is not an Excluded Asset, together with
the items referred to in clause (ii) of the definition of Unrecorded Assets.
"Contributed Subsidiaries" is defined in Section 2.1(k).
39
<PAGE>
"Contributor(s)" is defined in the sixth WHEREAS clause.
"Contributors' 401(k) Plans" is defined in Section 2.8(g).
"Deeds" is defined in Section 2.3(a).
"De Minimis Claim" means any Third Party Claim for which the Liability
associated therewith is less than $25,000.
"DGCL" is defined as the Delaware General Corporation Law, as amended.
"Dispute Notice" is defined in Appendix A.
"Disputing Party" is defined in Appendix A.
"DRULPA" is defined as the Delaware Revised Uniform Limited Partnership
Act, as amended.
"Effective Time" is defined in Section 1.3(b).
"Employee Pension Benefit Plan" is defined in ERISA Section 3(2).
"Employee Plan" is defined in Section 3.4(a)(i).
"Employee Welfare Benefit Plan" is defined in ERISA Section 3.1.
"Employees" is defined in Section 2.8(a).
"Encumbrance" means any lien, charge, encumbrance, security interest, title
defect, option or any other restriction or third party right.
"Environment" is defined in this Section 1 in the definition of "HSE Laws".
"Equipment" means all of the right, title and interest of a Contributor and
any Affiliate thereof in and to the equipment, furniture, furnishings, fixtures,
machinery, Capital Spares, vehicles, tools, computers and other tangible
personal property used principally in the normal operation and conduct of the
Contributed Business including without limitation the items listed on Schedule
2.1(d).
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Excluded Assets" is defined in Section 2.2.
"Excluded Assets Assignment" is defined in Section 1.7.
40
<PAGE>
"Excluded Liabilities" is defined in Section 2.6.
"Expiration Date" shall mean the date that the term of the Operating
Agreement shall expire or shall be terminated in accordance with the provisions
thereof.
"Fee Interests" means all right, title and interest of a Contributor and
any Affiliate thereof in the parcels of land described as fee property on
Schedule 2.1(a), together with all buildings, structures, fixtures and other
improvements situated thereon and all right, title and interest of such
Contributor and any Affiliate thereof under easements, privileges, rights-of-
way, riparian and other water rights, lands underlying any adjacent streets or
roads, appurtenances and licenses to the extent pertaining to or accruing to the
benefit of the land.
"GAAP" means United States generally accepted accounting principles, as in
effect from time to time.
"Government Licenses" means all licenses, permits or franchises issued by
any Authority relating to the operation, development, use, maintenance or
occupancy of the Facilities or any other Asset or of the Contributed Business to
extent that such licenses, permits or franchises relate principally to the
normal operation and conduct of the Contributed Business.
"HSE Claim" means (i) any action, event, circumstance or responsibility
(including any compliance action or requirement) that is necessary to comply
with HSE Laws but only to the extent that any of the foregoing gives rise to out
of pocket costs or expenses or results in a Liability that is required by GAAP
to be reflected on the balance sheet of the applicable party or (ii) any third
party (including private parties, Authorities and employees acting on each such
party's own behalf or on the behalf of other third parties) action, lawsuit,
claim, investigation or proceeding arising under HSE Laws.
"HSE Laws" means any Legal Requirements or rule of common law now in effect
(including any amendments now in effect) and any current judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree, or judgment, relating to (i) any ambient air, surface
water, drinking water, groundwater, land surface, subsurface strata, river
sediment, natural resources or real property and the physical buildings,
structures and fixtures thereon, including sewer, septic and waste treatment,
storage or disposal systems (the "Environment"), including pollution,
contamination, cleanup, preservation, protection and reclamation of the
Environment; (ii) health or safety, including the exposure of employees and
other Persons to any Chemical Substance; (iii) the Release or threatened Release
of any Chemical Substance, noxious noise or odor, including investigation,
study, assessment, testing, monitoring, containment, removal, remediation,
response, cleanup and abatement of such Release or threatened Release; and (iv)
the management of any Chemical Substance, including the manufacture, generation,
formulation, processing, labeling, use, treatment, handling, storage, disposal,
transportation, distribution, re-use, recycling or reclamation of any Chemical
Substance.
"HSE Proceeding" is defined in Section 3.16(d).
41
<PAGE>
"Indemnified Party" is defined in Section 6.3(a).
"Indemnifying Party" is defined in Section 6.3(a).
"Intellectual Property" means research material, technical information,
marketing information, patent rights, patent licenses, pending patent
applications, trade secrets, technical information, know-how, management
information systems, technology, quality control data, specifications, designs,
drawings, software, sales promotion literature and advertising materials.
"Inventory" means materials used by a Contributor in the Contributed
Business and owned by a Contributor as of the Closing Date including raw
materials, feed stocks, supplies, additives, pigments, process chemicals,
packaging materials (to the extent the Partnership's use thereof would be
consistent with Section 5.3), catalysts, work-in-process and finished goods that
relate principally to the normal operation and conduct of the Contributed
Business. Inventory shall include any FIFO or LIFO reserves, as well as any
reserve for slow moving or obsolete items and for any volume or price
adjustments.
"Knowledge" with respect to a Contributor means the actual knowledge of (i)
any plant manager, (ii) any officer of such Contributor having responsibilities
with respect to the Contributed Business, and (iii) any employee reporting
directly to an officer described in clause (ii), in each case employed, as of
the Closing Date, by such Contributor in connection with the Contributed
Business.
"Lake Charles Facility" means the Plant Site, Plant and Pipeline (each as
defined in the Lake Charles Lease).
"Lake Charles Lease" means that certain Lease dated May 15, 1998 between
OCC and Occidental Chemical Sub with respect to the Lake Charles Leased Assets.
"Lake Charles Leased Assets" means all of the tangible assets and
properties, real, personal or mixed, used or held for use in the contemplated
operation and conduct of the Contributed Business at the Lake Charles Facility,
excluding the Lake Charles Transferred Assets and any Excluded Assets listed in
Schedule 2.2(h).
"Lake Charles Transferred Assets" means those Assets set forth in the
schedule to Exhibit C.
"Leased Premises" means, generally, the premises described in the Leases
and specifically, with respect to the Lake Charles Lease, the Lake Charles
Leased Assets.
"Leaseholds" means all right, title and interest of a Contributor and any
Affiliate thereof under the Leases, for the use and occupancy of the Leased
Premises, together with all buildings, structures, fixtures and other
improvements situated thereon and, all rights and interests of such Contributor
and any Affiliate thereof under all easements, privileges, rights-of-way,
riparian and other water rights, appurtenances and licenses pertaining to the
Leases or accruing to the benefit of the tenant under the Leases.
42
<PAGE>
"Leases" means the Lake Charles Lease and the leases and subleases, all
amendments thereto and all agreements related thereto described on Schedule
2.1(b).
"Legal Requirement" means any law, statute, rule, ordinance, decree,
requirement, regulation, order or judgment of any Authority, including the terms
of any Government License.
"Liability" is defined in Section 6.2(a).
"Licensed Technology" means the technology licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Licensed Trademarks" means the trademarks licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Lowest Cost Response" means the response required or allowed under HSE
Laws that addresses the Chemical Substances present at the lowest cost
(considered as a whole taking into consideration any negative impact such
response may have on the conduct of the Contributed Business and any potential
additional costs or liabilities that may arise as a result of such response) as
compared to any other response that is consistent with HSE Laws. Taking no
action shall constitute the Lowest Cost Response if, after investigation, taking
no action is determined to be consistent with HSE Laws. If taking no action is
not consistent with HSE Laws, the least costly non-permanent remedy (such as
mechanisms to contain or stabilize Chemical Substances, including caps, dikes,
encapsulation, leachate collection systems, etc.) shall be the Lowest Cost
Response, provided that such non-permanent remedy is consistent with HSE Laws
and less costly than the least costly permanent remedy (such as the excavation
and removal of soil).
"Master Intellectual Property Agreement" is defined in Section 2.7.
"Master Transaction Agreement" is defined in the second WHEREAS clause.
"Material Adverse Effect" means any adverse circumstance or consequence
that, individually or in the aggregate, has an effect that is material to the
financial condition, results of operations, assets or business of the
Contributed Business or the Assets, taken as a whole.
"Merger" is defined in the sixth WHEREAS clause.
"Mirror Plan" is defined in Section 2.8(g).
"Non-Plant Employees" is defined in Section 2.8(b).
"Non-Union Employee" is defined in Section 2.8(g).
"OCC" is defined in Section 2.7.
43
<PAGE>
"Occidental" is defined in the first WHEREAS clause.
"Occidental Chemical Sub" is defined in the first paragraph of this
Agreement.
"Occidental's Qualified Plan" is defined in Section 2.8(g).
"Operating Agreement" means that certain Operating Agreement, dated May 15,
1998, between OCC and the Partnership.
"Oxy CH" is defined in the first WHEREAS clause.
"Oxy CH Sub" is defined in the first paragraph of this Agreement.
"Oxy CH Sub Assumption Agreement" is defined in Section 1.8.
"Oxy Petrochemicals" is defined in the first paragraph of this Agreement.
"Oxy Petrochemicals Common Stock" is defined in Section 1.5(a).
"Partnership" is defined in the first paragraph of this Agreement.
"Partnership Benefit Plans" is defined in Section 2.8(g).
"Partnership Employees" is defined in Section 28(a).
"Partnership 401(k) plan is defined in Section 2.8(g).
"Partnership Governance Committee" shall have the meaning assigned to it in
the Amended and Restated Agreement of Limited Partnership of the Partnership.
"Patent Assignment" is defined in Section 2.3(a).
"PCBs" is defined in this Section in the definition of "Chemical
Substance".
"PDG Chemical" is defined in the first paragraph of this Agreement.
"PDG Plan" is defined in Section 2.8(h).
"PD Glycol" is defined in the fifth WHEREAS clause.
"Partnership Assumption Agreement" is defined in Section 2.5(b).
"Person" means any natural person or any corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization.
44
<PAGE>
"Pipeline" means pipe and related equipment used primarily for the
transportation of ethylene and propylene in connection with the Contributed
Business, but excluding pipe and related equipment located within the property
boundaries of facilities not part of the Contributed Business.
"Pre-Closing Contingent Liabilities" means all Liabilities of every kind
and nature arising out of, in connection with or related to the ownership,
operation or use prior to the Closing Date of the Assets or the Contributed
Business other than the Liabilities referred to in Sections 2.5(a)(i), (ii),
(iii), (vii) and (ix).
"Prepaid Expenses" means the balances in the prepaid accounts consistent
with GAAP of a Contributor or its Affiliates, as of the Closing Date, that are
associated with the Contributed Business and that will have value to the
Partnership in owning and operating the Contributed Business after the Closing
Date.
"PRA" is defined in Section 2.8(g).
"Property Tax" is defined in Section 7.2(c).
"PSA" is defined in Section 2.8(g).
"Related Agreements" means the Master Transaction Agreement, Tier 1 Related
Agreements (other than this Agreement) and Tier 2 Related Agreements, as such
terms are defined in the Master Transaction Agreement.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, dumping, discharge, dispersal, leaching, escaping, emanation
or migration of any Chemical Substance in, into or onto the Environment of any
kind whatsoever, including the movement of any Chemical Substance through or in
the Environment, exposure of any type in any workplace, any release as defined
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or any other HSE Law and any noxious noise or odor
emission.
"SEC Reports" means (i) the 1996 Annual Report on Form 10-K and the
Quarterly Reports on Form 10-Q for the first three quarters of 1997 of
Occidental required to be filed with the Securities and Exchange Commission or
(ii) if filed by Occidental on or prior to the date of this Agreement, its 1997
Annual Report on Form 10-K.
"Secretary of State" is defined in Section 1.3(b).
"Seven Year PCCL Claims" means Third Party Claims (other than any De
Minimis Claim) related to Pre-Closing Contingent Liabilities that have been or
are asserted within seven years after the Closing Date.
"SIP" is defined in Section 2.8(g).
45
<PAGE>
"STIF" is defined in Section 2.8(h).
"Stores Inventory" means the inventory of spare parts, excluding Capital
Spares, that are used by a Contributor or any Affiliate thereof in the
Contributed Business and owned by such Contributor or any Affiliate thereof as
of the Closing Date and that consist of items that generally can be used for
several processes or types of equipment, including, but not limited to, such
items as pumps, motors, pipe fittings, electrical wiring, instruments, nuts and
bolts, unfabricated metals, safety items, small hand tools and other
miscellaneous repair parts or supplies. Stores Inventory shall include any
reserve for slow moving or obsolete materials and supplies, and for any
inventory volume or price adjustments.
"Surviving Partnership" is defined in Section 1.1.
"Taxes" means all taxes, charges, fees, levies or other assessments imposed
by any taxing Authority, including, but not limited to, income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments).
"Third Party Claim" means any allegation, claim, civil or criminal action,
proceeding, charge or prosecution brought by a Person other than a Contributor,
any Affiliate thereof, the Partnership, any member of the Millennium Group (as
defined in the Master Transaction Agreement), any member of the Lyondell Group
(as defined in the Master Transaction Agreement) or any member of the Occidental
Group (as defined in the Master Transaction Agreement).
"Trade Accounts Payable" means, as of the Closing Date, all current trade
accounts payable and current accrued expenses, including salaries and wages due
to Partnership Employees that are generated by and result from the execution by
the Contributors and their Affiliates of normal and customary payment and month-
end closing processes prior to the Closing Date. Trade Accounts Payable
includes unpaid invoices or accruals for services, materials, supplies,
feedstocks and products received in the ordinary course of business prior to the
Closing Date and which are attributable to the Contributed Business. Trade
Accounts Payable shall not include any payments due to an Affiliate of the
Contributors including any payments due for services, rent, overhead or similar
items.
"Trademarks" means trade names, trademarks, trademark registrations or
trademark applications, copyrights, copyright applications or copyright
registrations or any derivative thereof or design used in connection therewith.
"Trademark License" is defined in Section 2.3(a).
"Transition Employees" is defined in Section 2.8(d).
46
<PAGE>
"Unrecorded Assets" means all (i) right, title and interest in customer
lists, customer credit information (to the extent neither a Contributor nor any
Affiliate thereof is bound to any confidentiality obligation with respect
thereto), customer payment histories and credit limits, vendor lists, catalogs,
and (ii) right, title and interest in Intellectual Property to the extent used
or contemplated for use principally in the normal operation and conduct of (or
to the extent under development for use principally in the normal operation and
conduct of) or the marketing or promotion of, the Contributed Business.
"WARN" is defined in Section 28(f).
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
OCCIDENTAL PETROCHEM PARTNER 1, INC.,
a Delaware corporation
By: /s/ John W. Morgan
-------------------------------------------
Name: John W. Morgan
Title: Vice President
OCCIDENTAL PETROCHEM PARTNER 2, INC.,
a Delaware corporation
By: /s/ John W. Morgan
-----------------------------------------
Name: John W. Morgan
Title: Vice President
OXY PETROCHEMICALS INC.,
a Delaware corporation
By: /s/ R.J. Schuh
-----------------------------------------
Name: R.J. Schuh
Title: Executive Vice President
PDG CHEMICAL INC.,
a Delaware corporation
By: /s/ R.J. Schuh
-----------------------------------------
Name: R.J. Schuh
Title: President
[Signature Page of Agreement and Plan of Merger and Asset Contribution]
48
<PAGE>
EQUISTAR CHEMICALS, LP,
a Delaware limited partnership
By: /s/ Eugene R. Allspach
-----------------------------------------
Name: Eugene R. Allspach
Title: President and Chief Operating
Officer
[Signature Page of Agreement and Plan of Merger and Asset Contribution]
49
<PAGE>
Schedule A
Contributed Business
"Contributed Business" means the Contributors' business of owning, leasing
and operating manufacturing facilities and related assets for the production of
olefins, olefins co-products and certain ethylene derivatives (including
ethylene, propylene, butadiene and mixed butylenes, benzene, mixed C5
hydrocarbons, ethylene oxide, ethylene glycol, glycol ethers and ethanolamines)
and the Contributors' right, title and interest in certain transportation,
equipment, storage facilities and rights of way used in connection with the
foregoing products. The manufacturing facilities listed below are included in
the Contributed Business in addition to: (i) a fifty percent interest in a
limited partnership known as PD Glycol which owns manufacturing facilities
located at 3510 Gulf States Road, Beaumont, TX 77701, the remaining fifty
percent interest in which is owned by E. I. du Pont de Nemours and Company
pursuant to a Partnership Agreement, dated as of April 30, 1987, by and among
PDG Acquisition Company, E. I. du Pont de Nemours and Company and PPG Chemicals
Inc., as amended.
The products and Effective Annual Capacities of the Beaumont
facility/1/ are as follows:
Effective Annual
Site Product Capacity
- ---- ------- ----------------
Beaumont, TX Ethylene Oxide 657 MM#/Yr
Ethylene Glycol 910 MM#/Yr; and
(ii) a leasehold interest to be conveyed to the partnership covering the
facility described below, together with its Effective Annual Capacity:
Effective Annual
Site Product Capacity
- ---- ------- ----------------
Lake Charles Ethylene 850 MM#/Yr
4300 State Highway 108, Propylene (PG) 200 MM#/Yr
South Sulphur, LA 70633
The other facilities (with their respective Effective Annual Capacities)
are as follows:
- --------------
/1/ The Effective Annual Capacities listed for Beaumont are for the entire
facility and not just PD Glycol's 50% interest.
<PAGE>
Effective Annual
Site Product Capacity
- ---- ------- ----------------
Bayport Ethylene Oxide 750 MM#/Yr
5761 Underwood Road Ethylene Glycol 650 MM#/Yr
Pasadena, TX 77507 Glycol Ethers 180 MM#/Yr
Ethanolamines 45 MM#/Yr
Ethylene 1,178 MM#/Yr
Chocolate Bayou Propylene (CG) 725 MM#/Yr
FM 2917 Butadiene 150 MM#/Yr
(12 Miles south of Alvin, TX) Benzene 105 MMGal/Yr
Alvin, TX 77512 MTBE 190 MMGal/Yr
Corpus Christi Ethylene 1,682 MM#/Yr
1501 McKenzie Road at Propylene (PG) 664 MM#/Yr
Highway 44 Butadiene 195 MM#/Yr
Corpus Christi, TX 78410 Benzene 79 MMGal/Yr
MTBE 165 MM#/Yr
The transportation equipment and storage facilities included in the Contributed
Business consist of the Contributors' interests in approximately 738 rail cars
(subject to operational adjustments) used exclusively in connection with the
manufacture and distribution of the products described above, ethylene and
propylene storage facilities in Markham, Texas, and more than 950 miles of
feedstock and finished product pipelines, related facilities and rights of way
serving the foregoing manufacturing facilities and located across south Texas
and southwestern Louisiana.
<PAGE>
Schedule 2.1(a)
Fee Interests
1. Bayport
5761 Underwood Road
Pasadena, TX 77507
2. Chocolate Bayou
12 miles south of Alvin, Texas, on F.M. 2917
Alvin, TX 77512
(land adjacent to the facility).
3. a. Corpus Christi
1501 McKenzie Road @ Highway 44
Corpus Christi, TX 78410
b. Land adjacent to the Corpus Christi Ship Channel and which is not
contiguous to the plant site.
4. The office building located at 2947 E. Broadway, Pearland, TX 77581.
5. Various parcels of real property upon which portions of the Pipeline are
located excepting any real property related to the Lake Charles Facility.
<PAGE>
Schedule 2.1(b)
Leases
1. Chocolate Bayou
a. Sublease Agreement, dated June 9, 1987, between E.I. du Pont de Nemours
and Company and Cain Chemical Inc. (facility ground lease).
b. Agreement for Office Lease and Facilities Services, effective May 1,
1995, between Occidental Chemical Corporation and Lyondell Petrochemical
Company.
c. Tank Sites Lease Agreement, dated April 1, 1987, between Monsanto
Company and E. I. du Pont de Nemours and Company, Inc.
d. Grazing Lease, dated December 22, 1992, between Oxy Petrochemicals
Inc. and Vernon Gray.
2. Corpus Christi
a. Lease Intended for Security, Corpus Christi Ethylene Cracking Facility,
dated December 18, 1991, among Occidental Chemical Corporation, as
Lessee, The Institutions Listed on Schedule I thereto, as Lessors,
Norwest Bank Minnesota, N.A., as Agent and Chemical Bank and The Bank of
Nova Scotia, as Information Agents.
b. Farm Lease Agreement, dated December 15, 1996, between Oxy
Petrochemicals Inc. and George W. Hoelscher.
c. Farm Lease Agreement, dated December 15, 1996, between Oxy
Petrochemicals Inc. and Thomas Kocurek, Richard Kocurek and Charles
Kocurek.
d. Farm Lease Agreement, dated December 15, 1996, between Oxy
Petrochemicals Inc. and Roy Smith.
e. Lease Agreement, dated September 30, 1996, between Occidental Chemical
Corporation and Calallen Independent School District.
f. Lease Agreement, dated January 1, 1997, between Occidental Chemical
Corporation and Northwest Corpus Christi Girls Softball League.
g. Lease Agreement, dated November 9, 1995, between Occidental Chemical
Corporation and Northwest Pony League.
<PAGE>
h. Lease Agreement, dated February 19, 1997, between Occidental Chemical
Corporation and South Texas Adult Baseball League.
i. Lease Agreement, dated September 27, 1996, between Occidental Chemical
Corporation and Tuloso-Midway Independent School District.
j. Lease Agreement, dated January 1, 1997, between Occidental Chemical
Corporation and C.C. Girls Fast Pitch, Inc.
3. Pipeline
a. Pipeline Lease Agreement, commencing January 1. 1995, between Oxy
Petrochemicals Inc. and Amoco Pipeline Company.
b. Pipeline Lease, commencing May 1, 1996, between West Texas Gas, Inc. and
Oxy Petrochemicals Inc.
c. Partial Sublease and Assignment, dated March 1, 1977, between Texas
Brine Corporation and Corpus Christi Petrochemical Company.
d. Modification of Pipeline Corridor Agreement, dated March 18, 1996, among
Exxon Pipeline Company, Friendswood Development Company and Oxy
Petrochemicals Inc.
e. Agreement, effective as of January 1, 1992, between Amoco Chemical
Company and Oxy Petrochemicals Inc. (storage of propylene and use of
pipeline between Chocolate Bayou and Stratton Ridge).
<PAGE>
Schedule 2.1(d)
Equipment
The equipment set forth in the Equipment list dated as of April 1, 1998, and on
Attachment "A" of this Schedule. Any item appearing on both Schedule 2.1(d) and
Schedule 2.2(h) shall be an Excluded Asset.
<PAGE>
Attachment "A"
[Delivered by the Contributors and on file with the Partnership]
<PAGE>
Schedule 2.1(k)
Contributed Subsidiaries
None.
<PAGE>
Schedule 2.2(c)
Names, logos, tradenames, trademarks, etc.
All trade names, logos, trademarks and any derivative thereof or design used in
connection therewith of the following:
OXY (word and design)
OxyChem
Occidental
Occidental Chemical
OXY Petrochemicals
<PAGE>
Schedule 2.2(h)
Certain Excluded Assets
1. Leases
a) Lease Agreement dated March 1, 1996, between Copano Ranch, Inc. and
Occidental Chemical Corporation for approximately 50 acres of waterfront
property; and
b) Lease Agreement dated August 18, 1987 between Greenway Plaza, Ltd. and
Cain Chemical Inc., and all subsequent amendments for office space under
lease at property commonly known as Five Greenway Plaza, Houston, Texas.
2. Contributors' policy and procedure manuals which are not used in or do not
pertain to the Contributed Business or its facilities.
3. Any files, records, descriptions, drawings and technical manuals which are
not used in or do not pertain to the Contributed Business or its
facilities.
4. All systems, equipment and software constituting any part of or residing in
the Occidental Petroleum Corporation Data Center (Tulsa, OK).
5. Claims against third parties outstanding as of the Closing Date which do
not relate to the Assumed Liabilities, including, without limitation:
a) December 28, 1996 turbine failure and subsequent fire at the Bayport
facility; and
b) January 13, 1997 outage at the Lake Charles facility.
6. Receivables relating to returned insurance premiums in respect of the
operations of the Contributed Business prior to Closing Date.
7. Potential subrogation receipts from litigation related to December 28, 1996
turbine failure and subsequent fire at the Bayport facility.
8. 17.5 mile pipeline right of way corridor owned by OxyChem between Mount
Belvieu and Deer Park.
9. Subject to the Pipeline Acquisition Agreement between OCC and the
Partnership dated May 15, 1998, rights of the Contributors or any
Affiliates in respect of the approximately 65 mile 4" cyclohexane pipeline
from the Ingleside, Texas chemical manufacturing facility owned by OCC to
the Bloomington, Texas Chemical manufacturing facility owned by E. I. du
Pont de Nemours and Company.
<PAGE>
10. Various contracts that meet the description in Section 2.9(b).
11. Service Repertory License Agreement dated December 31, 1997 between
Copyright Clearance Center, Inc. and Occidental Petroleum Corporation.
12. Amended and Restated Ethylene Sales Agreement by and between Oxymar and
Occidental Chemical Corporation dated August 31, 1990.
13. The following retrospectively rated insurance policies issued by Companies
of the American International Group to Cain Chemicals Inc. for the period
April 30, 1987 to July 1, 1988:
Auto Liability AL 526-5274
General Liability GL 501-0646
General Liability GL 501-0645
Workers' Comp WC 524-6180
Workers' Comp WC 524-5688
<PAGE>
Schedule 2.5(a)(vii)
Obligations for Indebtedness
1. Lease Intended for Security, dated as of December 18, 1991, among
Occidental Chemical Corporation, as Lessee, The Institutions Listed on
Schedule I thereto, as Lessors, Norwest Bank Minnesota, N.A., as Agent and
Chemical Bank and The Bank of Nova Scotia, as Information Agents, as
amended and supplemented.
2. Leveraged Lease Financing of Certain Hopper and Tank Cars, dated as of
December 14, 1990, among Occidental Chemical Corporation, as Lessee, NYNEX
Credit Company, as Owner Participant, Sun Life Insurance Company of
America, as Loan Participant, Occidental Petroleum Corporation, as
Guarantor, The Connecticut National Bank, as Owner Trustee and Mercantile-
Safe Deposit & Trust Company, as Indenture Trustee, as amended and
supplemented.
3. Participation Agreement dated as of January 25, 1995, among Oxy
Petrochemicals Inc., Lessee, Norlease Inc., Owner Participant, Norwest Bank
of Minnesota, N.A., as Owner Trustee, Principal Mutual Life Insurance
Company, Loan Participant, Occidental Petroleum Corporation, Guarantor and
Manufacturers and Traders Trust Company, as Indenture Trustee, as amended
and supplemented.
4. Lease Intended for Security, dated as of March 28, 1994, between Occidental
Chemical Corporation, as Lessee, and Pitney Bowes Credit Corporation, as
Lessor, as amended and supplemented.
<PAGE>
Schedule 2.5(a)(x)
Assumed Long-Term Liabilities
Post-retirement benefit plan funding obligations applicable to all the employees
of the Contributed Business, but excluding (except the defined benefit pension
plan applicable to the Beaumont facility) all defined benefit pension plans and
defined contribution pension plans.
<PAGE>
Schedule 2.8(b)
Basic Severance
The following schedule of Basic Severance provides enhanced benefits contingent
on the execution by the Employee of a separation agreement, the terms of which
shall be mutually acceptable to Occidental, the Contributors and the
Partnership:
WEEKS OF BASE PAY WEEKS OF BASE PAY
WITHOUT WITH SEPARATION
YEARS OF SERVICE SEPARATION AGREEMENT (A&B)
AGREEMENT (A)
0-6 months 5 13
6 months - 1 year 6 14
1 year 6 14
2 years 7 15
3 years 8 16
4 years 9 17
5 years 10 18
6 years 11 19
7 years 12 20
8 years 13 21
9 years 14 22
10 years 15 23
11 years 16 24
12 years 17 25
13 years 18 26
14 years 19 27
15 years 20 28
16 years 22 30
17 years 24 32
18 years 26 34
19 years 28 36
20 years 30 38
21 years 32 40
22 years 34 42
23 years 36 44
24 years 38 46
25 years 52 60
MAXIMUM PAY 52 60
A. Outplacement Assistance 3 months 6 months
up to a maximum of
<PAGE>
WEEKS OF BASE PAY WEEKS OF BASE PAY
WITHOUT WITH SEPARATION
YEARS OF SERVICE SEPARATION AGREEMENT (A&B)
AGREEMENT (A)
B.Transition allowance in N/A Applicable
an amount of 10% of
base pay up to a
maximum of $6,500
(including any gross- up
for taxes).
<PAGE>
Schedule 3
Exceptions to the Representations and Warranties
3.1 None.
3.2 None.
3.3 See Attachment A to Schedule 3.
3.4 (a) (ii), (iii) and (iv) Contributors have been served with a civil
investigative demand from the US Department of Justice requesting documents
concerning the exchange of salary and benefit information between petrochemical
plants in Texas and Louisiana for non-exempt employees and engineers.
(ii), (iii) and (iv) Contributors have been improperly served with a
subpoena in the Todd v. Exxon antitrust class action requesting documents
regarding the exchange of salary information between chemical companies for
salaried, nonunion employees. Contributors are not currently a party to the
above referenced class action.
(b) None.
(c) None.
3.5 (a) None.
(b) Lease Intended for Security, Corpus Christi Ethylene Cracking Facility,
dated December 18, 1991, among Occidental Chemical Corporation, as Lessee, The
institutions listed on Schedule I thereto, as Lessors, Norwest Bank Minnesota,
N.A., as Agent and Chemical Bank and The Bank of Nova Scotia, as Information
Agents, as amended and supplemented.
(c) Lease Intended for Security, Corpus Christi Ethylene Cracking Facility,
dated December 18, 1991, among Occidental Chemical Corporation, as Lessee, the
institutions listed on Schedule I thereto, as lessors, Norwest Bank Minnesota,
N.A., as Agent and Chemical Bank and The Bank of Nova Scotia, as Information
Agents, as amended and supplemented.
Occidental Chemical Corporation and CITGO Refining Company are
currently engaged in discussions regarding the ownership of the following assets
listed on the Corpus Christi equipment list:
<PAGE>
MIC6 6" meter Champlin
MIC8 6" meter Champlin
MIC9 6" meter Champlin
MIC10 6" meter Champlin
MIC11 10" meter Champlin
MIC12 10" meter Champlin
3.6 Partial Sublease and Assignment between Texas Brine Corporation and Corpus
Christi Petrochemical Company, dated March 1, 1997.
Pipeline Lease Agreement, commencing January 1, 1995, between Oxy
Petrochemicals Inc. and Amoco Pipeline Company.
3.7 None.
3.8 None.
3.9 None.
3.10 Excepting the Excluded Assets.
3.11 The butadiene unit boilers at the Corpus Christi facility are not in
compliance with permit number TNRCC-C-6745B. The facility has requested an
amendment to the permit.
The Glycol Unit II at the Beaumont facility is not in compliance with TNRCC
permit number 8639A. The facility has requested an amendment to the permit.
3.12 Contributors have been notified of claims involving potential liability for
remediation and response costs, natural resources damages and third party claims
arising out of alleged contamination of the Calcasieu Estuary.
Contributors have been served with a civil investigative demand from the US
Department of Justice requesting documents concerning the exchange of salary and
benefit information between petrochemical plants in Texas and Louisiana for
nonexempt employees and engineers.
Contributors have been improperly served with a subpoena in the Todd v.
Exxon antitrust class action requesting documents regarding the exchange of
salary information between chemical companies for salaried, nonunion employees.
Contributors are not currently a party to the above referenced class action.
3.13 Not applicable.
3.14 None.
<PAGE>
3.15 Not applicable.
3.16 (a) (i) The butadiene unit boilers at the Corpus Christi facility are not
in compliance with permit number TNRCC-C-6745B. The facility has requested an
amendment to the permit.
(ii) The Glycol Unit II at the Beaumont facility is not in compliance
with TNRCC permit number 8639A. The facility has requested an amendment to the
permit.
(iii) Contributors have been notified of claims involving
potential liability for remediation and response costs, natural resources
damages and third party claims arising out of alleged contamination of the
Calcasieu Estuary.
(b) Contributors have been notified of claims involving potential liability
for remediation and response costs, natural resources damages and third party
claims arising out of alleged contamination of the Calcasieu Estuary.
(c) The butadiene unit boilers at the Corpus Christi facility are not in
compliance with permit number TNRCC-C-6745B. The facility has requested an
amendment to the permit.
The Glycol Unit II at the Beaumont facility is not in compliance with
TNRCC permit number 8639A. The facility has requested an amendment to the
permit.
(d) Contributors have been notified of claims involving potential liability
for remediation and response costs, natural resources damages and third party
claims arising out of alleged contamination of the Calcasieu Estuary.
(e) The Agreed Order, Docket No. 95-0386-AIR-E, In the Matter of an
Enforcement Action Concerning Occidental Chemical Corporation, Account No. NE-
0051-B.
3.17 Not applicable.
<PAGE>
Appendix A
Dispute Resolution Procedures
(1) Binding and Exclusive Means. The dispute resolution provisions set
forth in this Appendix A shall be the binding and exclusive means to resolve all
disputes arising under this Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the standards and
criteria for resolving such dispute shall, unless the Contributors and the
Partnership in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix A.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises, the
following procedures shall be implemented:
(a) Any party to this Agreement may at any time invoke the dispute
resolution procedures set forth in this Appendix A as to any Dispute by
providing written notice of such action to the other party or parties to the
Dispute, who within five Business Days after such notice shall schedule a
meeting to be held in Houston, Texas between the parties. The meeting shall
occur within 10 Business Days after notice of the meeting is delivered to the
other party or parties. The meeting shall be attended by representatives of
each party having decision-making authority regarding the Dispute as well as the
dispute resolution process and who shall attempt in a commercially reasonable
manner to negotiate a resolution of the Dispute.
(b) The representatives of the parties shall cooperate in a commercially
reasonable manner and shall explore whether techniques such as mediation,
minitrials, mock trials or other techniques of alternative dispute resolution
might be useful. In the event that a technique of alternative dispute
resolution is so agreed upon, a specific timetable and completion date for its
implementation shall also be agreed upon. The representatives will continue to
meet and discuss settlement until the date (the "Interim Decision Date") that is
the earliest to occur of the following events: (i) an agreement shall be reached
by the parties resolving the Dispute; (ii) one of the parties shall determine
and notify the other party in writing that no agreement resolving the Dispute is
likely to be reached; (iii) if a technique of alternative dispute resolution is
agreed upon, the completion date therefor shall occur without the parties having
resolved the Dispute; or (iv) if another technique of alternative dispute
resolution is not agreed upon, two full meeting days (or such other time period
as may be agreed upon) shall expire without the parties having resolved the
Dispute.
(c) If, as of the Interim Decision Date, the parties have not succeeded in
negotiating a resolution of the dispute pursuant to subsection (b), the parties
shall proceed under subsections (d), (e) and (f).
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any party
involved in the Dispute (the
<PAGE>
"Disputing Party"). The arbitration shall be subject to the Federal Arbitration
Act as supplemented by the conditions set forth in this Appendix. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association in effect on the date the notice
of arbitration is served, other than as specifically modified herein. In the
absence of an agreement to the contrary, the arbitration shall be held in
Houston, Texas. The Arbitrator (as defined below) will allow reasonable
discovery in the forms permitted by the Federal Rules of Civil Procedure, to the
extent consistent with the purpose of the arbitration. During the pendency of
the Dispute, each party shall make available to the Arbitrator and the other
parties all books, records and other information within its control requested by
the other parties or the Arbitrator subject to the confidentiality provisions
contained herein, and provided that no such access shall waive or preclude any
objection to such production based on any privilege recognized by law.
Recognizing the express desire of the parties for an expeditious means of
dispute resolution, the Arbitrator may limit the scope of discovery between the
parties as may be reasonable under the circumstances. In deciding the substance
of the parties' claims, the laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement (including this
Appendix) without giving effect to any conflict of law principles. The
arbitration hearing shall be commenced promptly and conducted expeditiously,
with each party involved in the Dispute being allocated an equal amount of time
for the presentation of its case. Unless otherwise agreed to by the parties, the
arbitration hearing shall be conducted on consecutive days. Time is of the
essence in the arbitration proceeding, and the Arbitrator shall have the right
and authority to issue monetary sanctions against any of the parties if, upon a
showing of good cause, that party is unreasonably delaying the proceeding. To
the fullest extent permitted by law, the arbitration proceedings and award shall
be maintained in confidence by the Arbitrator and the parties.
(e) The Disputing Party shall notify the American Arbitration Association
("AAA") and the other parties involved in the Dispute in writing describing in
reasonable detail the nature of the Dispute (the "Dispute Notice"). The
arbitrator (the "Arbitrator") shall be selected within 15 days of the date of
the Dispute Notice by all of the parties from the members of a panel of
arbitrators of the AAA or, if the AAA fails or refuses to provide a list of
potential arbitrators, of the Center for Public Resources and shall be
experienced in commercial arbitration. In the event that the parties are unable
to agree on the selection of the Arbitrator, the AAA shall select the
Arbitrator, using the criteria set forth in this Appendix, within 30 days of the
date of the Dispute Notice. In the event that the Arbitrator is unable to
serve, his or her replacement will be selected in the same manner as the
Arbitrator to be replaced. The Arbitrator shall be neutral. The Arbitrator
shall have the authority to assess the costs and expenses of the arbitration
proceeding (including the arbitrators', and attorneys' fees and expenses)
against any or all parties.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect or punitive damages or (ii) amend this
Agreement. The Arbitrator shall render the arbitration award, in writing,
within 20 days following the completion of the arbitration hearing, and shall
set forth the reasons for the award. In the event that the Arbitrator awards
monetary damages
<PAGE>
in favor of either party, the Arbitrator must certify in the award that no
indirect, consequential, incidental, indirect or punitive damages are included
in such award. If the Arbitrator's decision results in a monetary award, the
interest to be granted on such award, if any, and the rate of such interest
shall be determined by the Arbitrator in his or her discretion. The arbitration
award shall be final and binding on the parties, and judgment thereon may be
entered in any court of competent jurisdiction, and may not be appealed except
to the extent permitted by the Federal Arbitration Act.
(4) Continuation of Business. Notwithstanding the existence of any
Dispute or the pendency of any procedures pursuant to this Appendix A, the
parties agree and undertake that all payments not in dispute shall continue to
be made and all obligations not in dispute shall continue to be performed.
<PAGE>
Appendix 1
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the parties and their Affiliates as set forth in the Agreement.
(b) Second priority shall be given to resolution of the Dispute in a manner
which best achieves the objectives of the business activities and arrangements
under the Agreement and permits the parties to realize the benefits intended to
be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
parties or the Arbitrator shall determine to be appropriate under the
circumstances.
<PAGE>
EXHIBIT 99.1
EQUISTAR CHEMICALS INCREASES SYNERGY OPPORTUNITIES WITH COMPLETION
OF TRANSACTION WITH OCCIDENTAL
Houston, TX; Red Bank, NJ; London, England; Los Angeles, CA - May 15, 1998 -
Lyondell Petrochemical Company (NYSE:LYO), Millennium Chemicals Inc. (NYSE:MCH)
and Occidental Petroleum Corporation (NYSE:OXY) today announced the completion
of the transaction to expand Equistar Chemicals, LP with the addition of the
ethylene, propylene, ethylene oxide (EO) and derivatives operations of
Occidental Chemical Corporation, a subsidiary of Occidental Petroleum
Corporation.
"It is very good news for Equistar and its owners that we were able to close
the transaction less than two months after it was originally announced," said
Dan F. Smith, President and Chief Executive Officer of Lyondell, who also serves
as CEO of Equistar. "We are now able to focus on quickly integrating these
businesses into Equistar and capturing the additional synergies that this
expansion creates. This will provide additional earnings for Lyondell and our
partners during all parts of the business cycle."
Equistar now ranks as one of the world's largest chemical producers with total
annual revenues of almost $6 billion. The company is the second-largest
producer of ethylene in the world, with more than 11.4 billion pounds of annual
capacity, and the world's third-largest producer of propylene, with almost 5
billion pounds of annual capacity. Equistar is already the largest producer of
polyethylene in North America.
With the completion of the transaction, Lyondell Petrochemical Company has a 41%
ownership interest in Equistar; Millennium and Occidental each have a 29.5%
share.
The expansion of the Equistar partnership:
. Increases Equistar's profit improvement synergy opportunities to more
than $275 million per year by year-end 2000.
. Diversifies the product line into additional ethylene derivatives
with the addition of ethylene oxide, ethylene glycol and ethylene
oxide derivatives.
. Improves Equistar's distribution system with the addition of more
than 950 miles of owned and leased ethylene/propylene pipelines that
span from Corpus Christi to Lake Charles on the U.S. Gulf Coast.
Included in the transaction are Occidental's olefins business, with operations
at Corpus Christi and Chocolate Bayou, TX; ethylene oxide, ethylene glycol and
ethylene oxide derivatives businesses located at Bayport, TX; and Occidental's
50% ownership of PD Glycol, which operates EO/EG plants at Beaumont, TX. (PD
Glycol is a 50/50 joint venture with DuPont.) Additionally, the Occidental Lake
Charles, LA, olefins plant and related pipeline will be leased to Equistar.
In connection with the transaction, Occidental Petroleum will contribute $205
million of debt to Equistar and receive $420 million. Millennium will receive
$75 million.
William M. Landuyt, Chairman and CEO of Millennium Chemicals Inc., said,
"Successfully closing this transaction earlier than expected is a testament to
the spirit of the partnership and teamwork that defines Equistar. That kind of
attitude gives us confidence that we will meet or exceed our synergy and value-
creation goals in what is now an even more EVA(R) and earnings-accretive
combination."
<PAGE>
Dr. Dale Laurance, President of Occidental Petroleum, said, "Because this
partnership is a world leader in its industry, it will enjoy significant
economies of scale and operating synergies, which will result in Occidental
earning a stronger return on its petrochemical assets. In addition, we received
$625 million upon entering the partnership, which helped us achieve our goal of
raising $4.7 billion to fund our acquisition of the Elk Hills field and our
common stock repurchase program."
Lyondell Petrochemical Company is a major chemical and refining company, with
majority ownership positions in the premier olefins, polymers and refining
companies in North America Lyondell is:
. The largest producer of ethylene, propylene and polyethylene in North
America and a leading producer of performance polymers including
color concentrates and compounds, wire and cable resins and
compounds, adhesive resins and fine powers through its 41% interest
in Equistar Chemicals, LP.
. One of the largest and most profitable refiners in the United States,
processing very heavy Venezuelan crude oil to produce conventional
and reformulated gasoline, low sulfur diesel and jet fuel, through
its 58.75% interest in LYONDELL-CITGO Refining Company Ltd.
. The third-largest methanol producer in the U.S., through its 75%
interest in Lyondell Methanol Company LP.
Millennium Chemicals Inc. is a major international chemical company, with
leading market positions in a broad range of commodity, industrial performance
and specialty chemicals.
Millennium Chemicals Inc. is:
. The second-largest producer of TiO(2) in the world and a leading
producer of titanium tetrachloride;
. The second-largest producer of acetic acid and vinyl acetate monomer
in the United States;
. A leading producer of fragrance and flavor chemicals and other
products, including cadmium/selenium pigments and silica gel; and
. Through its partnership interest in Equistar Chemicals LP, a partner
in the largest producer of ethylene, propylene and polyethylene in
North America and a leading producer of high value-added specialty
polymers, color concentrates and polymeric powders.
Occidental Petroleum Corporation has operations in two main businesses: oil and
gas and chemicals. In oil and gas, Occidental has ongoing production and
exploration in 19 countries, including the United States. Occidental's OxyChem
subsidiary is one of the world's largest commodity chemical producers, with
interests in chlorovinyl and, specialty businesses.
The statements in this release relating to matters that are not historical facts
are forward-looking statements that involve risks and uncertainties, including,
but not limited to, future global economic conditions, production capacity,
competitive products and prices and other risks and uncertainties detailed in
the Securities and Exchange Commission filings of Lyondell, Millennium Chemicals
and Occidental Petroleum.
<PAGE>
EXHIBIT 99.2
[LYONDELL LOGO APPEARS HERE]
NEWS
- --------------------------------------------------------------------------------
ONE HOUSTON CENTER, 1221 MCKINNEY AVE., P.O. BOX 3646, HOUSTON, TEXAS
77253-3646 (713)652-7200
FOR IMMEDIATE RELEASE
LYONDELL PROVIDES UPDATE ON COKER DOWNTIME
Houston, May 27, 1998 - Lyondell Petrochemical Company (NYSE:LYO) reported
today that results for LYONDELL-CITGO Refining Company Ltd. (LCR) for the second
quarter of 1998 are expected to be impacted by unplanned downtime at the older
of the refinery's two coking units, as well as previously announced planned
maintenance at other units at the refinery. These events have limited LCR's
ability to fully upgrade the crude oil to light products thereby impacting the
favorable economics of running the Venezuelan crude oil.
Repairs on the coker unit, which has been down since May 17, as well as the
scheduled maintenance turnarounds are currently expected to be completed by the
first week in June, at which time the units will be returned to service.
Nevertheless, the impact of the downtime at the units, as well as a
significantly weaker aromatics market, are expected to result in an
approximately $20 million reduction in LCR's before tax operating profit from
the first quarter of 1998. This will impact Lyondell's earnings per share by
approximately 10 cents per share in the second quarter. However, LCR's second
half performance is expected to enable LCR to achieve its targeted earnings for
the year.
LYONDELL PETROCHEMICAL COMPANY is a major chemical and refining company, with
majority ownership positions in the premier olefins, polymers and refining
companies in North America. Lyondell currently has a 58.75% interest in
LYONDELL-CITGO Refining Company Ltd., one of the largest refiners in the United
States, processing very heavy Venezuelan crude oil to produce gasoline, low
sulfur diesel and jet fuel.
###
For information, contact:
Media - Jackie Wilson (713)652-4596
Investors - Kevin DeNicola (713)652-4590
