EXHIBIT 3.3
AMENDED AND RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
EQUISTAR CHEMICALS, LP
as amended through November 6, 2002
ORGANIZED UNDER THE DELAWARE
REVISED UNIFORM LIMITED
PARTNERSHIP ACT
TABLE OF CONTENTS
Page
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SECTION 1 ORGANIZATION MATTERS .................................................. 2
1.1 Formation of Partnership; Amended and Restated Agreement ................ 2
1.2 Name .................................................................... 3
1.3 Business Offices ........................................................ 3
1.4 Purpose and Business .................................................... 3
1.5 Filings ................................................................. 3
1.6 Power of Attorney ....................................................... 3
1.7 Term .................................................................... 4
SECTION 2 CAPITAL CONTRIBUTIONS ................................................. 4
2.1 Acquisition of Units; Holdings of Initial Partners ...................... 4
2.2 Transaction Costs ....................................................... 5
2.3 Property Contributions .................................................. 5
2.4 Other Contributions ..................................................... 5
2.5 Capital Accounts ........................................................ 6
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 ......................................................... 7
3.1 Operating Distributions ................................................. 7
3.2 Liquidating Distributions ............................................... 7
3.3 Withholding ............................................................. 7
3.4 Offset .................................................................. 7
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 ................................................. 10
4.5 Other Tax Allocations ................................................... 11
SECTION 5 ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS ....................... 11
5.1 Fiscal Year ............................................................. 11
5.2 Method of Accounting for Financial Reporting Purposes ................... 11
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 .......................... 12
5.6 Taxation ................................................................ 12
5.7 Delegation .............................................................. 15
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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 ......................... 16
6.5 Partnership Governance Committee Meetings ............................... 17
6.6 Partnership Governance Committee Quorum and General Voting Requirement... 18
6.7 Partnership Governance Committee Unanimous Voting Requirements .......... 19
6.8 Control of Interested Partner Issues .................................... 21
6.9 Auxiliary Committees..................................................... 22
6.10 Certain Limitations on Partner Representatives .......................... 22
SECTION 7 OFFICERS AND EMPLOYEES ................................................. 23
7.1 Partnership Officers..................................................... 23
7.2 Selection and Term of Executive Officers ................................ 23
7.3 Removal of Executive Officers ........................................... 24
7.4 Duties .................................................................. 24
7.5 CEO ..................................................................... 25
7.6 Other Officers .......................................................... 25
7.7 Secretary ............................................................... 25
7.8 Salaries ................................................................ 26
7.9 Delegation .............................................................. 26
7.10 Employee Hirings ........................................................ 26
7.11 General Authority ....................................................... 26
SECTION 8 STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS .............................. 27
8.1 Strategic Plan .......................................................... 27
8.2 Annual Budget ........................................................... 27
8.3 Funding of Partnership Expenses ......................................... 28
8.4 Implementation of Budgets and Discretionary Expenditures by CEO ......... 28
8.5 Strategic Plan Deadlock ................................................. 28
8.6 Loans ................................................................... 29
SECTION 9 RIGHTS OF PARTNERS ..................................................... 30
9.1 Delegation and Contracts with Related Parties ........................... 30
9.2 General Authority ....................................................... 30
9.3 Limitation on Fiduciary Duty; Non-Competition; Right of First Opportunity 30
9.4 Limited Partners ........................................................ 32
9.5 Partner Covenants ....................................................... 33
9.6 Special Purpose Entities ................................................ 33
SECTION 10 TRANSFERS AND PLEDGES ................................................. 33
10.1 Restrictions on Transfer and Prohibition on Pledge ...................... 33
10.2 Right of First Option.................................................... 34
10.3 Inclusion of General or Limited Partner Units ........................... 36
10.4 Rights of Transferee..................................................... 36
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10.5 Effective Date of Transfer............................................... 36
10.6 Transfer to Wholly Owned Affiliate....................................... 36
10.7 Invalid Transfer ........................................................ 37
SECTION 11 DEFAULT ............................................................... 37
11.1 Default ................................................................. 37
11.2 Remedies for Default..................................................... 37
11.3 Purchase of Defaulting Partners' Units .................................. 38
11.4 Liquidation ............................................................. 38
11.5 Certain Consequences of Default ......................................... 39
SECTION 12 DISSOLUTION, LIQUIDATION AND TERMINATION .............................. 39
12.1 Dissolution and Termination ............................................. 39
12.2 Procedures Upon Dissolution ............................................. 40
12.3 Termination of the Partnership .......................................... 41
12.4 Asset and Liability Statement ........................................... 41
SECTION 13 MISCELLANEOUS ......................................................... 41
13.1 Confidentiality and Use of Information .................................. 41
13.2 Indemnification ......................................................... 43
13.3 Third Party Claim Reimbursement ......................................... 45
13.4 Dispute Resolution ...................................................... 46
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION, ETC ................. 46
13.6 Further Assurances ...................................................... 46
13.7 Successors and Assigns .................................................. 46
13.8 Benefits of Agreement Restricted to the Parties ......................... 46
13.9 Notices ................................................................. 46
13.10 [Reserved] .............................................................. 47
13.11 Severability............................................................. 47
13.12 Construction............................................................. 47
13.13 Counterparts............................................................. 48
13.14 Waiver of Right to Partition ............................................ 48
13.15 Governing Law ........................................................... 48
13.16 Jurisdiction; Consent to Service of Process; Waiver ..................... 48
13.17 Expenses ................................................................ 48
13.18 Waiver of Jury Trial..................................................... 48
13.19 Payment Terms and Interest Calculations ................................. 49
13.20 Usury Savings Clause..................................................... 49
13.21 Other Waivers ........................................................... 49
13.22 Special Joinder by OCC .................................................. 49
13.23 Amendment ............................................................... 50
SECTION 14 LAKE CHARLES FACILITY ................................................. 50
14.1 Lease Not in Force and Effect ........................................... 50
14.2 LC Partnership Provisions................................................ 50
14.3 No Rebuilding Termination ............................................... 51
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14.4 Other Redemption ........................................................ 51
SECTION 15 ADDITIONAL AGREEMENTS REGARDING THE LAKE CHARLES FACILITY ............. 52
15.1 Receipt of Fee Title .................................................... 52
15.2 Authority to Act ........................................................ 52
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(e) - Capital Accounts
Schedule 8.6(A) - Form of Millennium Indemnity
Schedule 8.6(B) - Form of Indemnity Among Partners
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AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
EQUISTAR CHEMICALS, LP
This Amended and Restated Limited Partnership Agreement of Equistar
Chemicals, LP dated November 6, 2002 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"), Lyondell (Pelican) Petrochemical L.P.1, Inc., a Delaware
corporation ("Lyondell (Pelican) LP1") (formerly Occidental LP1, as defined
below), and Lyondell (Pelican) Petrochemical L.P.2, Inc., a Delaware corporation
("Lyondell (Pelican) LP2") (formerly Occidental LP2, as defined below).
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 Chemical 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 to the Partnership their Initial
Assets 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"), at that time the ultimate parent entity of each of
Occidental Petrochem Partner GP, Inc., a Delaware corporation ("Occidental GP"),
PDG Chemical Inc., a Delaware corporation ("PDG GP"), Occidental Petrochem
Partner 1, Inc., a Delaware corporation ("Occidental LP1"), and Occidental
Petrochem Partner 2, Inc., a Delaware corporation ("Occidental LP2"), Lyondell
and Millennium entered into the Master Transaction Agreement dated May 15, 1998
(the "Second Master Transaction Agreement"), which provides, among other things,
for the admission of PDG 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;
WHEREAS, PDG GP, Occidental LP1 and Occidental LP2 contributed to the
Partnership their Initial Assets and Contributed Business and the Additional
Related Agreements were entered into, all as provided in the Occidental
Contribution Agreement;
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WHEREAS, PDG GP originally received 295 Units in the Partnership, and
pursuant to an amendment to the partnership agreement dated June 30, 1998, PDG
GP converted 294 of its Units to LP Units and transferred those units to
Occidental LP2, and PDG GP transferred its one remaining GP Unit to Occidental
GP, whereupon Occidental GP was admitted as a General Partner and PDG GP
withdrew as a General Partner;
WHEREAS, Lyondell and Occidental Chemical Holding Corporation, a California
corporation, Oxy CH Corporation, a California corporation, and Occidental
Chemical Corporation, a New York corporation ("OCC"), entered into the
Occidental Partner Sub Purchase Agreement dated July 8, 2002 (the "Oxy Partner
Sub Purchase Agreement"), which provides, among other things, for the sale of
the stock of each of Occidental GP, Occidental LP1 and Occidental LP2 to
Lyondell;
WHEREAS, in connection with the closing of the transactions contemplated by
the Oxy Partner Sub Purchase Agreement, Lyondell, Millennium, Occidental,
certain of their affiliates, and the Partnership entered into a Letter Agreement
dated May 31, 2002 (the "Letter Agreement"), which provides, among other things,
for certain amendments to the Amended and Restated Limited Partnership Agreement
of Equistar Chemicals, LP dated August 24, 2002 and the execution and delivery
of an amended and restated limited partnership agreement of the Partnership.
WHEREAS, effective as of August 22, 2002, ownership of Occidental GP,
Occidental LP1 and Occidental LP2 was sold, assigned and delivered to Lyondell
and as of that date Occidental and its Affiliates are no longer the owners of
any interest in the Partnership;
WHEREAS, on September 6, 2002 Occidental GP was merged with and into
Lyondell GP with Lyondell GP the surviving entity; and
WHEREAS, on November 6, 2002, a Certificate of Amendment to the Certificate
of Incorporation of each of Occidental LP1 and Occidental LP2 was filed with the
Secretary of State of the State of Delaware whereby the name of Occidental
Petrochem Partner 1, Inc. was changed to "Lyondell (Pelican) Petrochemical
L.P.1, Inc." and the name of Occidental Petrochem Partner 2, Inc. was changed to
"Lyondell (Pelican) Petrochemical L.P.2, Inc.";
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 all amendments prior to the date hereof
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. Subject to the restrictions set forth
in this Agreement, the Partnership shall
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have the power to exercise all the powers and privileges granted by this
Agreement and by the Act, together with any powers incidental thereto, so far as
such powers and privileges are necessary, appropriate, convenient or incidental
for the conduct, promotion or attainment of the purposes of the Partnership.
1.2 Name. The name of the Partnership is "Equistar Chemicals, LP" The
Partnership's business may be conducted under such name or any other name or
names deemed advisable by the Partnership Governance Committee. The General
Partners will comply or cause the Partnership to comply with all applicable laws
and other requirements relating to fictitious or assumed names.
1.3 Business Offices. The principal place of business of the Partnership
shall be 1221 McKinney Street, Houston, Texas 77010, or such other place as the
General Partners may from time to time determine. The registered agent of the
Partnership in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801.
1.4 Purpose and Business. The business of the Partnership shall be to,
directly or indirectly, (i) engage in the Specified Petrochemicals Businesses,
in the United States and internationally, including research and development,
purchasing, processing and disposing of feedstocks, and manufacturing, marketing
and distributing products, (ii) acquire and dispose of properties and assets
used or useful in connection with the foregoing and (iii) do all things
necessary, appropriate, convenient or incidental in connection with the
ownership, operation or financing of such business and activities, or otherwise
in connection with the foregoing, as are permitted under the Act, including the
acquisition and operation of the Contributed Businesses.
1.5 Filings. The General Partners shall, or shall cause the Partnership to,
execute, swear to, acknowledge, deliver, file or record in public offices and
publish all such certificates, notices, statements or other instruments, and
take all such other actions, as may be required by law for the 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 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
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of or supplement to this Agreement in accordance with the terms of this
Agreement; (ii) all certificates and other instruments and all amendments
thereto which such General Partner deems appropriate or necessary to form,
qualify or continue the Partnership in any jurisdiction, to maintain the limited
liability of such Limited Partner, to preserve the Partnership's status as a
partnership for tax purposes or otherwise to comply with applicable law; and
(iii) all conveyances and other instruments or documents which such General
Partner deems appropriate or necessary to reflect the transfers or assignments
of interests in, to or under, this Agreement, including the Units, the
dissolution, liquidation and termination of the Partnership, and the
distribution of assets of the Partnership in connection therewith, pursuant to
the terms of this Agreement.
Each Limited Partner hereby agrees to execute and deliver to its Affiliated
General Partner within five Business Days after receipt of a written request
therefor such other further statements of interest and holdings, designations,
powers of attorney and other instruments as such General Partner deems
necessary. The power of attorney granted herein is hereby declared irrevocable
and a power coupled with an interest, shall survive the bankruptcy, dissolution
or termination of such Limited Partner and shall extend to and be binding upon
such Limited Partner's successors and permitted assigns. Each Limited Partner
hereby (i) agrees to be bound by any representations made by the agent and
attorney-in-fact acting in good faith pursuant to such power of attorney; and
(ii) waives any and all defenses which may be available to contest, negate, or
disaffirm any action of the agent and attorney-in-fact taken in accordance with
such power of attorney.
1.7 Term. The term for which the Partnership is to exist as a limited
partnership is from the date the Partnership's Certificate of Limited
Partnership was filed with the office of the Secretary of State of the State of
Delaware through the dissolution of the Partnership in accordance with the
provisions of Section 12.
SECTION 2
CAPITAL CONTRIBUTIONS
2.1 Acquisition of Units; Holdings of Initial Partners. In exchange for the
contributions described in Section 2.3, each Partner has received the number of
Units set forth by their names below, and effective on the date hereof, the
Units are owned as follows:
Partner Units
Lyondell GP *821
Millennium GP 590
Lyondell LP 40,180
Millennium LP 28,910
Lyondell (Pelican) LP1 6,623
Lyondell (Pelican) LP2 **22,876
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TOTAL 100,000
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* This number includes the Unit previously held by Occidental GP and
originally held by PDG GP.
** This number includes the 294 Units originally held by PDG GP.
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 its Contribution Agreement, on October 10, 1997, Lyondell
LP contributed or caused to be contributed to the Partnership, the Initial
Assets contemplated thereby subject to the Assumed Liabilities contemplated
thereby.
(b) Pursuant to its Contribution Agreement, on October 10, 1997, Millennium
LP contributed or caused to be contributed to the Partnership, the Initial
Assets contemplated thereby subject to the Assumed Liabilities contemplated
thereby.
(c) Pursuant to their Contribution Agreement, on May 15, 1998, Occidental
LP1, Occidental LP2 and PDG GP contributed or caused to be contributed to the
Partnership, the Initial Assets contemplated thereby subject to the Assumed
Liabilities contemplated thereby (which involved, in the case of Occidental LP2,
the merger of Oxy Petrochemicals and the Partnership, with the Partnership as
the surviving entity).
(d) The Partners intend that the contribution of assets subject to
liabilities heretofore made by the Partners to the Partnership pursuant to
Sections 2.3(a) through (c) has qualified 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 has so filed 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.
(e) Immediately after the contributions by PDG GP, Occidental LP1, and
Occidental LP2, the Capital Accounts of the Initial Partners were adjusted so
that each Partner's Capital Account would be the same per Unit as that of every
other Partner on May 15, 1998 if on such date the special capital distributions
provided in Sections 3.1(e), (f), and (g) of the Amended and Restated Limited
Partnership Agreement of Equistar Chemicals, LP dated May 15, 1998 had been
made. Schedule 2.3(e) sets forth the Capital Accounts of the Partners as if the
contributions and distributions were made, as has since occurred.
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
5
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 ss.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 Partner, 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 ss.1.704-1(b). If any Partner transfers all or a portion of
its Units in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent such Capital
Account relates to the transferred Units.
2.6 No Return of or on Capital. Except as provided in Section 3 and Section
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.
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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, (i) distributions are to be made
to the Partners Pro Rata to the extent of cumulative Profits, and (ii) the
remaining distributions are to be made to the Limited Partners Pro Rata.
For simplicity, however, in the absence of extraordinary transactions, the
Partnership may make monthly distributions to the Partners Pro Rata,
subject to subsequent adjustments as provided below in this Section 3.1.
(b) Return of Excess Distributions. Within 90 days after the end of
each year, each General Partner shall return to the Partnership any amount
it receives for such year that is in excess of its share of the sum of the
cumulative undistributed Profits as of the end of the preceding year and
the Profits for such year.
(c) Effect of Operating Losses. For any year in which a General
Partner's share of a Loss is sustained that exceeds its previously
undistributed Profits, no distributions shall be made to such General
Partner in any subsequent year until such excess Loss is recouped, and for
subsequent years only Profits in excess of such recoupment shall be treated
as Profit for purposes of this Section 3.1.
(d) Makeup Distributions. If for any reason the Partnership does not
make a monthly distribution to all Partners Pro Rata, each General Partner
shall be entitled at the end of the year to 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.
3.2 Liquidating Distributions. Distributions to the Partners of cash or
property arising from a liquidation of the Partnership shall be made in
accordance with the Capital Account balances of the Partners as provided in
Section 12.2(d).
3.3 Withholding. The Partnership is authorized to withhold from
distributions to a Partner and to pay over to a foreign, federal, state or local
government, any amounts required to be withheld pursuant to the Code or any
provisions of any other foreign, federal, state or local law. Any amounts so
withheld shall be treated as distributed to such Partner pursuant to this
Section 3 for all purposes of this Agreement, and shall be offset against any
amounts otherwise distributable to such Partner.
3.4 Offset. Any amount otherwise distributable to a Partner pursuant to
this Section 3 shall, unless otherwise agreed by two Representatives of the
Nonconflicted General Partner 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) Other Notes. 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.
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(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 Section 4.2 and Section 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 May 15, 1998 until gain or income is allocable
under (c) below.
(c) If during any 12 month period the Partnership sells, distributes
to Partners, or otherwise disposes of more than 50% in value of the assets
it owned at the beginning of such period, gain or income recognized in the
taxable period of such sale, distribution or other disposition or
thereafter recognized from the sale, distribution, or other disposition of
property or from the operation of other property shall be allocated to the
Partners in the ratio in which the aggregate amount of deductions described
in (a) and (b) above were allocated to the Partners until the aggregate
amount of such gain and income so allocated equals the aggregate amount of
such deductions.
(d) [Intentionally Deleted.]
(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 Lyondell (Pelican) LP1. Any gain recognized on the disposition of the
Lease shall be allocated to Lyondell (Pelican) 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
8
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 Lyondell (Pelican) 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 Lyondell (Pelican) 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.
(g) To the extent any contribution is made to the Partnership on
behalf of a Partner (the "Beneficiary Partner") pursuant to an indemnity
provided under Section 8.6(b), an amount of Book items of loss, expense or
deduction (other than Book loss, depreciation or amortization with respect
to any property contributed by a Partner to the Partnership) shall be
allocated to the Beneficiary Partner.
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 ss.1.704-2(k), each Partner
shall be allocated items of income and gain for such year equal to such
Partner's share of the net decrease in partnership minimum gain within the
meaning of Regulation ss.1.704-2(g)(2), except to the extent not required
by Regulation ss.1.704-2(f). To the extent that this subsection (a) is
inconsistent with Regulation ss.1.704-2(f) or ss.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 ss. 1.704-2(i)(2), each Partner who has a share of such gain,
determined in accordance with Regulation ss. 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
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Regulation ss. 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
ss.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 ss.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 ss.1.704-2(i) or ss.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 ss.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 ss.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 ss.1.752-3(a)(3), Partnership Profits are allocated to the
Partners Pro Rata.
4.4 Federal Tax Allocations.
(a) General Rule. Except as otherwise provided in the following paragraphs
of this Section 4.4, allocations for federal income tax purposes of items of
income, gain, loss and deduction, and credits and basis therefor, shall be made
in the same manner as book allocations are made.
(b) Elimination of Book/Tax Disparities. Taxable income and tax deductions
shall be shared among the Partners so as to take into account the variation
between the Book Value and the adjusted tax basis of each property at the time
it is contributed to the Partnership and at each time it is revalued.
(i) To account for such variation, effective as of the formation of
the Partnership:
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(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. Reg.ss.ss.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
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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.
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 ss.1.704-1(b) to properly maintain Capital Accounts.
5.6 Taxation.
(a) Status of the Partnership. The Partners acknowledge that the
Partnership is a partnership for federal, foreign and state income tax purposes,
and hereby agree not to elect to be excluded from the application of Subchapter
K of Chapter 1 of Subtitle A of the Code or any similar state statute.
(b) Tax Elections and Reporting.
(i) Generally. The Partnership has made or shall make the following
elections under the Code and the Regulations and any similar state
statutes:
(A) Adopt the calendar year as the annual accounting period;
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(B) Adopt the accrual method of accounting;
(C) Elect to deduct organization costs ratably over a 60-month
period as provided in Section 709 of the Code;
(D) Adopt the LIFO method of accounting for inventory; and
(E) Make any other elections available under the Code that the
Partnership Governance Committee determine are appropriate, with the
determination of whether an election is appropriate to be made
pursuant to the principle that each Partner shall be treated equally
(i.e., no Partner will receive preferential tax treatment to the
disadvantage of another Partner).
(ii) Section 754 Election. The Partnership shall, upon the written
request of any Partner benefitted thereby, cause the Partnership to file an
election under Section 754 of the Code and the Regulations thereunder to
adjust the basis of the Partnership assets under Section 734(b) or 743(b)
of the Code, and a corresponding election under the applicable sections of
state and local law.
(c) Tax Returns. The Tax Matters Partner, on behalf of the Partnership,
shall prepare and file the necessary tax and information returns. Each Partner
shall timely provide such information, if any, as may be needed by the
Partnership for purposes of preparing such tax and information returns. At least
75 days before the due date (as extended) for the Partnership's federal income
tax return, the Tax Matters Partner shall deliver a draft of such return to each
Partner. Each Partner shall have 15 Business Days after receipt of the draft in
which to furnish any objections or comments on the draft to the Tax Matters
Partner. The Tax Matters Partner shall make its best efforts to finalize the
Partnership's federal income tax return at least 30 days before the due date for
filing (as extended) of such return A Partner may not report its share of any
Partnership tax item in a manner inconsistent with the Partnership's reporting
of such item unless the Partner has timely furnished its objection to the Tax
Matters Partner as provided in the immediately preceding sentence. If a Partner
reports its share of any Partnership tax item in a manner inconsistent with the
Partnership's reporting of such item, such Partner shall promptly notify the
Partnership in writing at least 20 Business Days prior to the filing of any
statement with the IRS in which such inconsistent position is reported. The
Partnership shall promptly deliver to each Partner a copy of the federal income
tax return for the Partnership as filed with the appropriate taxing authorities
and a copy of any material state and local income tax return as filed.
(d) Tax Audits.
(i) Federal Tax Matters. The Partnership is authorized to make such
filings with the IRS as may be required to designate Lyondell GP as the Tax
Matters Partner. The Tax Matters Partner, as an authorized representative
of the Partnership, shall direct the defense of any claims made by the IRS
to the extent that such claims relate to the adjustment of Partnership
items at the Partnership level. The Tax Matters Partner shall promptly
deliver to each Partner a copy of all notices, communications, reports or
writings of any kind (including, without limitation, any notice of
beginning of
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administrative proceedings or any report explaining the reasons for a
proposed adjustment) received from the IRS relating to or potentially
resulting in an adjustment of Partnership items, as well as any other
information requested by a Partner that is commercially reasonable to
request. The Tax Matters Partner shall be diligent and act in good faith in
deciding whether to contest at the administrative and judicial level any
proposed adjustment of a Partnership item and whether to appeal any adverse
judicial decision. The Tax Matters Partner shall keep each Partner advised
of all material developments with respect to any proposed adjustment that
comes to its attention. All costs incurred by the Tax Matters Partner in
performing under this subsection (d) shall be paid by the Partnership. The
Tax Matters Partner shall have sole authority to represent the Partnership
in connection with all tax audits, including the power to extend the
statute of limitations, to enter in any settlement, and to litigate any
proposed partnership adjustment, subject to the following: (A) No
settlement will be entered into with respect to an item that would
materially affect any Partner adversely unless each Partner is first
notified of the terms of the settlement; and no Partner will be bound by
any settlement unless it consents thereto; (B) If a Partner does not
consent to a settlement, the settlement will nevertheless be binding on all
partners who do consent; and the non-consenting Partner may, at its sole
cost, pursue such administrative or judicial remedies as it deems
appropriate; (C) If the Tax Matters Partner brings an action in any court,
each Partner, at its sole cost, shall have the right to intervene in the
preceding to the extent permitted by the court; and (D) If a settlement or
litigation causes Partners to be treated differently for tax purposes with
respect to certain tax issues of the Partnership, the income and deductions
of the Partnership thereafter arising will be allocated among the Partners
to reflect the varying manner in which the issues were resolved.
(ii) State and Local Tax Matters. The Partnership shall promptly
deliver to each Partner a copy of all notices, communications, reports or
writings of any kind with respect to income or similar taxes received from
any state or local taxing authority relating to the Partnership which
might, in the judgment of the Tax Matters Partner, materially and adversely
affect any Partner, and shall keep each Partner advised of all material
developments with respect to any proposed adjustment of Partnership items
which come to its attention.
(iii) Continuation of Rights. Each Partner shall continue to have the
rights described in this subsection (d) with respect to tax matters
relating to any period during which it was a Partner, whether or not it is
a Partner at the time of the tax audit or contest.
(e) Tax Rulings. No Person other than the Tax Matters Partner shall request
an administrative ruling (or similar administrative procedures) from any taxing
authority with respect to any tax issue relating to the Partnership or affecting
the taxation of any other Partner unless such Person shall have received written
authorization from the Tax Matters Partner and any such other Partner to make
such request.
(f) Tax Information. At the request of any Partner, the Tax Matters Partner
shall timely furnish all reasonably obtainable information required to prepare
annual earnings and profits computations (as defined in Section 312 of the Code)
with respect to that Partner's share of Partnership income.
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5.7 Delegation. The Partners agree that all of the tasks to be performed
under this Section (other than serving as Tax Matters Partner) may be delegated
to employees and consultants of the Partnership.
SECTION 6
MANAGEMENT
6.1 Partnership Governance Committee.
(a) The General Partners hereby establish a committee (the "Partnership
Governance Committee") to manage and control the business, property and affairs
of the Partnership, including the determination and implementation of the
Partnership's strategic direction. The Partnership Governance Committee (on
behalf of the Partners) shall have (i) the full authority of the General
Partners to exercise all of the powers of the Partnership and (ii) full control
over the business, property and affairs of the Partnership. Except to the extent
set forth in this Agreement, the Partnership Governance Committee shall have
full, exclusive and complete discretion to manage and control the business,
property and affairs of the Partnership, to make all decisions affecting the
business, property and affairs of the Partnership and to take all such actions
as it deems necessary, appropriate, convenient or incidental to accomplish the
purpose of the Partnership as set forth in Section 1.4 (as such purpose may be
expanded in accordance with Section 6.7(i)).
(b) The Partnership Governance Committee shall act exclusively by means of
Partnership Governance Committee Action. As used in this Agreement, "Partnership
Governance Committee Action" means any action which the Partnership Governance
Committee is authorized and empowered to take in accordance with this Agreement
and the Act and which is taken by the Partnership Governance Committee either
(i) by action taken at a meeting of the Partnership Governance Committee duly
called and held in accordance with this Agreement or (ii) by a formal written
consent complying with the requirements of Section 6.5(f). In no event shall the
Partnership Governance Committee be authorized to act other than by Partnership
Governance Committee Action, and any action or purported action by the
Partnership Governance Committee (including any authorization, consent,
approval, waiver, decision or vote) not constituting a Partnership Governance
Committee Action shall be null and void and of no force and effect. Each
Partnership Governance Committee Action shall be binding on the Partnership.
(c) The Partnership Governance Committee shall adopt policies and
procedures, not inconsistent with this Agreement (including Section 6.7) or the
Act, governing financial controls and legal compliance, including delegations of
authority (and limitations thereon) to the officers of the Partnership as
permitted hereby. Such policies and procedures may be revised or revoked (in a
manner consistent with this Agreement and the Act) from time to time as
determined by the Partnership Governance Committee. To the extent any authority
is not delegated to officers of the Partnership in this Agreement or in
accordance with Partnership Governance Committee Action, it shall remain with
the Partnership Governance Committee.
15
6.2 Limitations on Authority of General Partners. Except as expressly set
forth in this Agreement, each General Partner agrees to exercise its authority
to manage and control the Partnership only through Partnership Governance
Committee Action. Each General Partner agrees not to exercise, or purport or
attempt to exercise any authority (i) to act for or incur, create or assume any
obligation, liability or responsibility on behalf of the Partnership or any
other Partner, (ii) to execute any documents on behalf of, or otherwise bind, or
purport or attempt to bind, the Partnership or (iii) to otherwise transact any
business in the Partnership's name, in each case except pursuant to Partnership
Governance Committee Action.
6.3 Lack of Authority of Persons Other Than General Partners and Officers.
Except as expressly set forth in this Agreement, no Person or Persons other than
(i) the General Partners, acting through the Partnership Governance Committee,
and (ii) the officers of the Partnership appointed in accordance with this
Agreement and acting as agents or employees, as applicable, of the Partnership
in conformity with this Agreement and any applicable Partnership Governance
Committee Action, shall be authorized (a) to exercise the powers of the
Partnership, (b) to manage the business, property and affairs of the Partnership
or (c) to contract for, or incur on behalf of, the Partnership any debts,
liabilities or other obligations.
6.4 Composition of Partnership Governance Committee.
(a) The Partnership Governance Committee shall consist of six
Representatives and each General Partner shall designate three Representatives
(each a "Representative"). All the Representatives of both 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 Partner 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 Partner 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.
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(e) Copies of all written notices designating Representatives and
Alternates shall be delivered to the Secretary and shall be placed in the
Partnership minute books, but the failure to deliver a copy of any such notice
to the Secretary shall not affect the validity or effectiveness of such notice
or the designation described therein.
(f) Each Representative, in his capacity as such, shall be the agent of the
General Partner that designated such Representative. Accordingly, (i) each
Representative, as such, shall act (or refrain from acting) with respect to the
business, property and affairs of the Partnership solely in accordance with the
wishes of the General Partner that designated such Representative and (ii) no
Representative, as such, shall owe (or be deemed to owe) any duty (fiduciary or
otherwise) to the Partnership or to any General Partner other than the General
Partner that designated such Representative; provided, however, that nothing in
this Agreement is intended to or shall relieve or discharge any Representative
or General Partner from liability to the Partnership or the Partners on account
of any fraudulent or intentional misconduct of such Representative. Nothing in
this Section 6.4(f) shall limit the duty owed to the Partnership by any person
acting in his capacity as an officer of the Partnership (including any such
officer who is also a Representative).
(g) Representatives shall not receive from the Partnership any compensation
for their service or any reimbursement of expenses for attendance at meetings of
the Partnership Governance Committee.
6.5 Partnership Governance Committee Meetings.
(a) Regular meetings of the Partnership Governance Committee shall be held
at such times and at such places as shall from time to time be determined in
advance and committed to a written schedule by the Partnership Governance
Committee. The first regular meeting of the Partnership Governance Committee
during January of each fiscal year shall be deemed to be the "Annual Meeting."
The Secretary shall deliver by commercial courier service or other hand delivery
or transmit by facsimile transmission (with proof of confirmation from the
transmitting machine), an agenda for each regular meeting to the Representatives
at least five Business Days prior to such meeting. Each agenda for a regular
meeting shall specify, to a reasonable degree, the business to be transacted at
such meeting. Subject to Section 6.6, at any regular meeting of the Partnership
Governance Committee at which a quorum is present, any and all business of the
Partnership may be transacted.
(b) Special meetings of the Partnership Governance Committee may be called
by any Representative by delivering by commercial courier service or other hand
delivery or transmitting by facsimile transmission (with proof of confirmation
from the transmitting machine), written notice of a special meeting to each of
the other Representatives at least two Business Days before such meeting. Each
notice of a special meeting shall specify, to a reasonable degree, the business
to be transacted at, or the purpose of, such meeting. Notice of any special
meeting may be waived before or after the meeting by a written waiver of notice
signed by the Representative entitled to notice. A 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
17
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.
Either co-chair may instruct the Secretary to include one or more items on a
meeting agenda and neither co-chair nor the Secretary may delete or exclude an
agenda item proposed by either co-chair.
(d) Following each meeting of the Partnership Governance Committee, the
Secretary shall promptly draft and distribute minutes of such meeting to the
Representatives for approval at the next meeting, and after such approval shall
retain the minutes in the Partnership minute books.
(e) Representatives, at their discretion, may participate in or hold
regular or special meetings of the Partnership Governance Committee by means of
a telephone conference or any comparable device or technology by which all
individuals participating in the meeting may hear each other, and participation
in such a meeting shall constitute presence in person at such meeting.
(f) Any action required or permitted to be taken at a meeting of the
Partnership Governance Committee may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by at least two
Representatives of each General Partner, and such consent shall have the same
force and effect as a duly conducted vote of the Partnership Governance
Committee. A counterpart of each such consent to action shall be delivered
promptly to each of the Representatives and to the Secretary for placement in
the minute books of the Partnership, but the failure to deliver a counterpart of
any such consent to action to the Secretary shall not affect the validity or
effectiveness of such consent to action.
6.6 Partnership Governance Committee Quorum and General Voting Requirement.
(a) The presence of at least two Representatives (including any duly
present Alternates) of Lyondell GP shall constitute a quorum of the Partnership
Governance Committee for the transaction of business and the taking of
appropriate Partnership Governance Committee Actions at any meeting; provided,
however, that the presence at such meeting of at least two Representatives
(including any duly present Alternates) from each General Partner shall be
necessary for the taking of any action described in Section 6.7; and provided,
further, that no Partnership Governance Committee Actions can be taken at any
meeting with respect to any matter that was not reflected, with a reasonable
level of specificity, on an agenda for such meeting that was delivered in
accordance with Section 6.5 unless at least one Representative of each General
Partner is present. No Partnership Governance Committee Action may be taken at
any meeting at which a quorum is not present.
(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.
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6.7 Partnership Governance Committee Unanimous Voting Requirements. Unless
and until two or more Representatives of Lyondell GP and two or more
Representatives of Millennium GP have given their approval (in which event a
Partnership Governance Committee Action is hereby authorized without the need
for the consent of any other Person), no Partnership Governance Committee Action
will be deemed for any purpose to have been taken at any Partnership Governance
Committee meeting that would cause or permit the Partnership or any subsidiary
thereof (or any Person acting in the name or on behalf of any of them) directly
or indirectly to take (or commit to take), and neither the Partnership nor any
subsidiary thereof nor any person acting in the name or on behalf of any of them
directly or indirectly may take or commit to take, any of the actions described
below in this subsection (whether in a single transaction or series of related
transactions):
(i) to cause the Partnership, directly or indirectly, to engage,
participate or invest in any business outside the scope of its business as
described in Section 1.4;
(ii) to approve any Strategic Plan, as well as any amendments or
updates thereto (including the annual updates provided for in Section 8.1);
(iii) to authorize any disposition of assets having a fair market
value exceeding $30 million in any one transaction or a series of related
transactions not contemplated in an approved Strategic Plan;
(iv) to authorize any acquisition of assets or any capital expenditure
exceeding $30 million that is not contemplated in an approved Strategic
Plan;
(v) to require capital contributions to the Partnership (other than
contributions contemplated by the Contribution Agreements or an approved
Strategic Plan or to achieve or maintain compliance with any HSE Law)
within any fiscal year if the total of such contributions required from the
Partners within that year would exceed $100 million or the total of such
contributions required from the Partners within that year and the
immediately preceding four years would exceed $300 million;
(vi) to authorize the incurrence of debt for borrowed money unless (x)
such debt is contemplated by clause (vii) (b) below, (y) after giving
effect to the incurrence of such debt (and any related transactions) and
the maximum amount of borrowings permitted under clause (vii) below, the
Partnership would be expected to have an "investment grade" debt rating by
Moody's Investor Services Inc. and Standard & Poor's Corporation or (z)
such debt is incurred to refinance the public, bank or other debt assumed
or incurred by the Partnership as contemplated by the Initial Master
Transaction Agreement or the Second Master Transaction Agreement or to
refinance indebtedness under the 1998 Credit Facility or to refinance any
such debt, and in the case of each of (x), (y) and (z), the agreement
relating to 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, no consent shall be required under this Section 6.7(vi) to cause
the Partnership to incur or refinance any debt for
19
borrowed money, which debt is or was incurred originally for purposes of
refinancing all or any part of any of the Partnership's synthetic or
capitalized leases in effect on March 31, 2002, and the aggregate principal
amount of such debt does not exceed the aggregate amount required to
terminate such synthetic or capitalized leases, including related expenses
and fees;
(vii) (a) to enter into the 1998 Credit Facility or (b) to make
borrowings under one or more of the Partnership's bank credit facility or
facilities, its uncommitted lines of credit or any credit facility or debt
instrument of the Partnership of any kind that refinances all or any
portion of the Partnership's credit facility or facilities, at any time, if
as a result of any such borrowing the aggregate principal amount of all
such borrowings outstanding at such time would exceed the sum of $1.25
billion and the amount which becomes available for borrowing under the 1998
Credit Facility;
(viii) to enter into interest rate protection or other hedging
agreements (other than hydrocarbon hedging agreements in the ordinary
course);
(ix) to enter into any capitalized lease or similar off-balance sheet
financing arrangements involving payments (individually or in the
aggregate) by it in excess of $30 million in any fiscal year;
(x) to cause the Partnership or any subsidiary of the Partnership to
issue, sell, redeem or acquire any Units or other equity securities (or any
rights to acquire, or any securities convertible into or exchangeable for,
Units or other equity securities);
(xi) to make Partnership cash distributions in excess of Available Net
Operating Cash or to make non-cash distributions (except as contemplated by
Section 12);
(xii) to appoint or discharge Executive Officers (other than the CEO),
based on the recommendation of the CEO;
(xiii) to approve material compensation and benefit plans and
policies, material employee policies and material collective bargaining
agreements for the Partnership's employees;
(xiv) to initiate or settle any litigation or governmental proceedings
if the effect thereof would be material to the financial condition of the
Partnership;
(xv) to change the independent accountants for the Partnership;
(xvi) to change the Partnership's method of accounting as adopted
pursuant to Section 5.2 or to change the Partnership's method of accounting
as provided in Section 5.5 or to make the elections referred to in Section
5.6(b)(i)(E);
(xvii) to create or change the authority of any Auxiliary Committee;
20
(xviii) to merge, consolidate or convert the Partnership or any
subsidiary thereof with or into any other entity (other than a Wholly Owned
Subsidiary of the Partnership);
(xix) to file a petition in bankruptcy or seeking any reorganization,
liquidation or similar relief on behalf of the Partnership or any
subsidiary; or to consent to the filing of a petition in bankruptcy against
the Partnership or any subsidiary; or to consent to the appointment of a
receiver, custodian, liquidator or trustee for the Partnership or any
subsidiary or for all or any substantial portion of their property;
(xx) to exercise any power or right described in Section 6.8(a)(i) or
(ii) with respect to a Conflict Circumstance involving (a) LYONDELL-CITGO
Refining Company Ltd., its successors or assigns, (b) Lyondell Methanol
Company, L.P., its successors or assigns or (c) any other Affiliate of
Lyondell GP or Millennium GP if such Affiliate's actions with respect to
such Conflict Circumstance are not controlled by Lyondell or Millennium
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) to cause the Partnership to repay either (a) any of its
long-term indebtedness (as defined for purposes of GAAP) or (b) any of its
long-term synthetic leases that are treated as debt for purposes of federal
income tax if, by doing so, the Partnership would reduce the aggregate
amount of all such indebtedness below $1.825 billion prior to May 15, 2005,
and, thereafter, below $1.5 billion.
The Partners hereby acknowledge and confirm that any authorization or approval
by the Partnership Governance Committee pursuant to this Section 6.7 of the
execution, delivery and performance of any agreement or contract entered into by
the Partnership shall be sufficient to authorize and approve any future
performance required by the terms of such agreement or contract, with no further
action being required under this Article VI at the time of any such performance.
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 Partner (through its 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 the Nonconflicted
General Partner. Each General Partner shall, and shall cause its Affiliates to,
take all such
21
actions, execute all such documents and enter into all such agreements as may be
necessary or appropriate to facilitate or further assure the accomplishment of
this Section.
(b) The 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). The Nonconflicted
General Partner shall act through its Representatives, and the approval of two
Representatives acting for the Nonconflicted General Partner will be sufficient
for the Nonconflicted General Partner (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 the
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
22
operation of such Partner or Affiliate that competes with a business or
operation of the Partnership or of the other Partner or its Affiliates, or that
competes with a Business Opportunity offered pursuant to Section 9.3(c) or (d),
shall receive or have access to any competitively sensitive information
regarding the competing business of the Partnership or of the other Partner or
its Affiliates or such Business Opportunity, nor shall such Representative or
Affiliate participate in any decision of the Partnership Governance Committee
relating to such business or operation of the Partnership or the other Partner
or its Affiliates or such Business Opportunity.
SECTION 7
OFFICERS AND EMPLOYEES
7.1 Partnership Officers.
(a) The Partnership Governance Committee may select natural persons who are
(or upon becoming an officer will be) agents or employees of the Partnership to
be designated as officers of the Partnership, with such titles as the
Partnership Governance Committee shall determine.
(b) The executive officers of the Partnership shall consist of a Chief
Executive Officer ("CEO"), and others as determined from time to time by
Partnership Governance Committee (collectively, the "Executive Officers").
(c) The Partnership Governance Committee also shall appoint a Secretary and
may appoint such other officers and assistant officers and agents as may be
deemed necessary or desirable and such persons shall perform such duties in the
management of the Partnership as may be provided in this Agreement or as may be
determined by Partnership Governance Committee Action.
(d) The Partnership Governance Committee may leave unfilled any offices
except those of CEO and Secretary. Two or more offices may be held by the same
person except that the same person may not hold the offices of CEO and
Secretary.
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 Millennium GP. The CEO shall not be required
to be an employee of the Partnership.
(c) Each Executive Officer (other than the CEO) shall hold office until his
or her death, resignation or removal. Upon the death, resignation or removal of
an Executive Officer, or the creation of a new Executive Officer position, the
CEO may nominate a person to fill the vacancy, which shall be subject to
Partnership Governance Committee approval. Executive Officers shall not be
required to be employees of the Partnership. Any Executive Officer also may
serve as an officer or employee of any Partner or Affiliate of a Partner.
23
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), either 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 and two or more
Representatives of Millennium 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 Partner; 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 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.
24
(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.
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
25
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 other General
Partner, 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 either 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 either 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 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.
26
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 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,
27
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 Section 2.4 and
Section 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.
(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 Section 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
28
acceptable Neutral within 30 days after a nomination of a Neutral is made by one
General Partner to the other, then such Neutral shall upon the application of
either 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 Partner and
the Neutral in writing (a "Deadlock Notice") that no agreement resolving the
dispute is likely to be reached.
8.6 Loans.
(a) 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.
Except as provided in Section 8.6(b) or with respect to obligations of Lyondell
existing as of January 1, 2002 with respect to Lyondell Assumed Debt, no Partner
may 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.
(b) Millennium Indemnity. At any time and from time to time, Millennium
America (or Millennium Petrochemicals Inc. or any other Affiliate of Millennium
America) may, in its sole discretion, elect to execute in favor of the
Partnership and the other Partners an indemnity with respect to any debt of the
Partnership substantially in the form of Schedules 8.6(A) and 8.6(B); provided,
however, that the conditions for release from such an indemnity shall be as
specified by the indemnitor; and provided, further, that the existence of such
indemnity shall not prohibit the Partnership from repaying such indemnified debt
at any time subject to the other provisions of this Agreement. The aggregate
amount of the Millennium Indemnity shall not exceed $300 million. The Millennium
Indemnity shall be with respect to any indebtedness of the Partnership that
Millennium America (or such Affiliate) may elect. The Partnership and the
Partners will cooperate with Millennium America (or such Affiliate) in
establishing the Millennium Indemnity, including executing any documents
necessary to establish the Millennium Indemnity.
29
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 either
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 either General
Partner's obligations to the other Partners as set forth elsewhere in this
Agreement.
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
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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
Partner a fiduciary duty in observing the requirement described in Section 6.7
that two or more Representatives of Lyondell GP and two or more Representatives
of Millennium 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
Partner 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.
(i) If a Partner's Affiliate desires to initiate or pursue an
opportunity to undertake, engage in, acquire or invest in a Related
Business by investing in or acquiring a Person whose business is a Related
Business, acquiring assets of a Related Business, or otherwise engaging in
or undertaking a Related Business (a "Business Opportunity"), such Partner
or its Affiliate (such Partner, together with its Affiliates, being called
the "Proposing Partner") shall offer the Partnership the Business
Opportunity on the terms set forth in Section 9.3(c)(ii).
(ii) When a Proposing Partner offers a Business Opportunity to the
Partnership, the Partnership shall elect to do one of the following within
a reasonably prompt period:
(A) acquire or undertake the Business Opportunity for the benefit
of the Partnership as a whole, at the cost, expense and benefit of the
Partnership; provided, however, that, if the Partnership ceases to
actively pursue such 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,
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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.
(c) 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.
(d) 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).
(e) 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
General Partner, but not the other General Partner, desire that the Partnership
acquire or undertake such Business Opportunity, then the Partnership shall
permit such General Partner and its Affiliates to acquire or undertake such
Business Opportunity and Section 9.3(c)(ii)(B) shall be deemed to be applicable
thereto to the same extent as if such General Partner and its 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.
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(b) Each Limited Partner shall have the rights with respect to the
Partnership's books and records as set forth in Section 5.3.
9.5 Partner Covenants. Each Partner covenants and agrees with the
Partnership and with the other Partners as follows:
(i) It shall not exercise, or purport or attempt to exercise, its
authority to withdraw, retire, resign, or assert that it has been expelled
from the Partnership;
(ii) It shall not do any act that would make it impossible or
impracticable to carry on the Partnership's business; and
(iii) It shall not act or purport or attempt to act in a manner
inconsistent with any act of a General Partner acting pursuant to the
Partnership Governance Committee or in a manner contrary to the agreements
of the Partners set forth in this Agreement;
provided, that, nothing in this Section 9.5 shall be deemed to waive its rights
under Sections 10, 11 or 12.
9.6 Special Purpose Entities. Each Partner covenants and agrees that (i)
its business shall be restricted solely to the holding of its Units and the
doing of things necessary or incidental in connection therewith (including,
without limitation, the exercise of its rights and powers under this Agreement),
and (ii) it shall not own any assets, incur any liabilities or engage,
participate or invest in any business outside the scope of such business;
provided, however, that this Section 9.6 shall not be binding upon (a)
Millennium Petrochemicals Inc., a Virginia corporation, or its successors by
operation of law to the extent that any Units shall be Transferred to it in
accordance with Section 10.6 or (b) at its option, any Wholly Owned Affiliate of
any Partner to whom Units shall be Transferred pursuant to Section 10.6 if, at
the date of such Transfer, such Wholly Owned Affiliate 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.
9.7 Notice of Repayment of Debt and Capital Leases. The Partnership shall
notify each Partner of its intent to repay any of its long-term debt (as defined
for purposes of GAAP but excluding any revolver debt under the Bank Credit
Agreement) or capital leases, excluding any regularly scheduled amortization,
lease or other payments that are reflected in the applicable lease, that is
relevant to the determination of the amount of such indebtedness for purposes of
Section 6.7(xxi) at least 30 days prior to the actual repayment of such debt.
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
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"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 both of the
General Partners, no Partner may Transfer less than all of its Units and no
Partner may Transfer its Units for consideration other than cash. Any Limited
Partner (or Limited Partners, if there are Affiliated Limited Partners) and its
(or their) Affiliated General Partner desiring to Transfer all of their Units
(together, the "Selling Partners") shall give written notice (the "Initial
Notice") to the Partnership and the other Partners (the "Offeree Partners")
stating that the Selling Partners desire to Transfer their Units and stating the
cash purchase price and all other terms on which they are willing to sell (the
"Offer Terms"). Delivery of an Initial Notice shall constitute the irrevocable
offer of the Selling Partners to sell their Units to the Offeree Partners
hereunder.
(b) The Offeree Partners shall have the option, exercisable by delivering
written notice (the "Acceptance Notice") of such exercise to the Selling
Partners within 45 days of the date of the Initial Notice, to elect to purchase
all of the Units of the Selling Partners on the Offer Terms described in the
Initial Notice. If all of the Offeree Partners deliver an Acceptance Notice,
then all of the Units shall be transferred to the Offeree Partners on a pro rata
basis (based on the ratio of the number of Units owned by each Offeree Partner
delivering an Acceptance Notice to the number of Units owned by all Offeree
Partners delivering an Acceptance Notice or on any other basis that shall be
mutually agreed upon between the Offeree Partners delivering an Acceptance
Notice). If less than 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
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giving of representations and warranties substantially similar to those set
forth in Sections 2.1 through 2.3 of the Second Master Transaction Agreement).
(c) If none of the Offeree Partners elect to purchase the Selling Partners'
Units within 45 days after the receipt of the Initial Notice, the Selling
Partners shall have a further 180 days during which they may, subject to
Sections 10.2(d) and (e), consummate the sale of their Units to a third party
purchaser at a purchase price and on such other terms that are no more favorable
to such purchaser than the Offer Terms. If the sale is not completed within such
further 180-day period, the Initial Notice shall be deemed to have expired and a
new notice and offer shall be required before the Selling Partners may make any
Transfer of their Units.
(d) Before the Selling Partners may consummate a Transfer of their Units to
a third party in accordance with this Agreement, the Selling Partners shall
demonstrate to the Offeree Partners that the Person willing to serve as the
proposed purchaser's guarantor under the agreement contemplated by Section
10.2(e)(vi) has outstanding indebtedness that is rated investment grade by
Moody's Investors Service, Inc. and Standard & Poor's Corporation, or if such
Person has no rated indebtedness outstanding, such Person shall provide an
opinion from a nationally recognized investment banking firm that such Person
could be reasonably expected to obtain such ratings.
(e) Notwithstanding the foregoing provisions of this Section 10.2, a
Partner may Transfer its Units (other than pursuant to Section 10.6) only if all
of the following occur:
(i) The Transfer is accomplished in a non-public offering in
compliance with, and exempt from, the registration and qualification
requirements of all federal and state securities laws and regulations.
(ii) The Transfer does not cause a default under any material contract
to which the Partnership is a party or by which the Partnership or any of
its properties is bound.
(iii) The transferee executes an appropriate agreement to be bound by
this Agreement.
(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.
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10.3 Inclusion of General or Limited Partner Units. No Limited Partner may
Transfer its Units to any Person (other than in accordance with Section 10.6)
unless the Units of its General Partner Affiliate and its Limited Partner
Affiliate or Affiliates (if any) are simultaneously transferred to such Person
or a Wholly Owned Affiliate of such Person. No General Partner may transfer its
Units to any Person (other than a Wholly Owned Affiliate of such Partner) unless
the Units of its Affiliated Limited Partner (or Limited Partners, if more than
one) are simultaneously transferred to such Person or a Wholly Owned Subsidiary
of such Person.
10.4 Rights of Transferee. Upon consummation of a Transfer in accordance
with Section 10.2, the transferee or transferees shall immediately, and without
any further action of any Person, become (i) a Substitute Limited Partner if and
to the extent Limited Partner Units are transferred and (ii) a Substitute
General Partner, if and to the extent General Partner Units are transferred.
10.5 Effective Date of Transfer. Each Transfer shall become effective as of
the first day of the calendar month following the calendar month during which
the Partnership Governance Committee approves such Transfer and receives a copy
of the instrument of assignment and all such certificates and documents of the
character described in Section 10.2, which the Partnership Governance Committee
may reasonably request.
10.6 Transfer to Wholly Owned Affiliate. Without the need for the consent
of any Person (subject to the provisions contained in this Section 10.6):
(a) any Partner may Transfer its Units to any Wholly Owned Affiliate
of such Partner (other than the Partner that is its Affiliate), provided
the transferee executes an instrument reasonably satisfactory to all of the
General Partners accepting the terms and provisions of this Agreement
(except as may be provided in Section 9.6). Upon consummation of a Transfer
in accordance with this Section 10.6(a), the transferee shall immediately,
and without any further action of any Person, become (i) a Substitute
Limited Partner if and to the extent Limited Partner Units are transferred
and (ii) a Substitute General Partner, if and to the extent General Partner
Units are transferred; and
(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).
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(c) Notwithstanding any of the foregoing provisions of this Section
10.6, provided that such Transfer does not cause a termination of the
Partnership under Section 708(b)(1)(B) of the Code, any Limited Partner may
Transfer all of its Limited Partner Units to any Affiliate of such Limited
Partner that already holds solely Limited Partner Units, and any General
Partner may Transfer all of its General Partner Units to any Affiliate of
such General Partner that already holds solely General Partner Units.
10.7 Invalid Transfer. No Transfer of Units which is in violation of this
Section 10 shall be valid or effective, and the Partnership shall not recognize
the same for the purposes of making any allocation or distribution.
SECTION 11
DEFAULT
11.1 Default.
(a) Each of the following events shall constitute a "Default" and create
the rights provided for in this Section 11 in favor of the Partnership and the
Non-Defaulting Partners against the Defaulting Partners:
(i) the failure by a Partner to make any contribution to the
Partnership as required pursuant to this Agreement (other than pursuant to
the Contribution Agreement), which failure continues for at least five
Business Days from the date that the Partner is notified such contribution
is overdue; or
(ii) 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, the 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,
the Non-Defaulting Affiliated Partner Group may elect to purchase all, but not
less than all, 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, the Non-Defaulting Affiliated Partner Group may elect not to
proceed with a purchase of the Units of the Defaulting Partners, in which case
the Non-Defaulting Affiliated Partner Group shall have an additional 30 days
from their determination not to proceed to elect an alternative remedy under
Section 11.2(b) below; and
37
(b) At any time prior to the expiration of 60 days from the Default Date
(or if the Non-Defaulting Affiliated Partner Group initially elected to pursue
its remedy under Section 11.2(a) above, then at any time prior to the 30-day
extension period), the Non-Defaulting Affiliated Partner Group may elect to
effect a liquidation of the Partnership under Section 11.4 and thereby cause the
Partnership to dissolve under Section 12.1(iv).
11.3 Purchase of Defaulting Partners' Units.
(a) Upon any election pursuant to Section 11.2(a), the purchase price that
the 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, they may first seek a determination of Fair Market
Value by delivering notice in writing to the Defaulting Partners. The
Non-Defaulting Affiliated Partner Group shall have 10 days from the final
determination of Fair Market Value to elect to purchase 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), the
Non-Defaulting Partners 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
38
Section 12.2 shall be reduced by, without duplication, any unrecovered Damages
incurred by the Non-Defaulting Partners and the Non-Defaulting Partners'
Percentage Interest of any unrecovered Damages incurred by the Partnership in
connection with the Default. The Non-Defaulting Partners 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 Partner; 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 both 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 either General
Partner to dissolve the Partnership.
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12.2 Procedures Upon Dissolution.
(a) General. If the Partnership dissolves, it shall commence winding up
pursuant to the appropriate provisions of the Act and the procedures set forth
in this Section 12. Notwithstanding the dissolution of the Partnership, prior to
the termination of the Partnership, the business of the Partnership and the
affairs of the Partners, as such, shall continue to be governed by this
Agreement.
(b) Control of Winding Up. The winding up of the Partnership shall be
conducted under the direction of the Partnership Governance Committee; provided,
however, that if the dissolution is caused by entry of a decree of judicial
dissolution, the winding up shall be carried out in accordance with such decree.
(c) Manner of Winding Up. Unless the provisions of Section 12.2(e) apply,
the Partnership shall attempt to sell all property and apply the proceeds
therefrom in accordance with this Section 12.2(c) and Section 12.2(d) below.
Upon dissolution of the Partnership, the Partnership Governance Committee shall
determine the time, manner and terms of any sale or sales of Partnership
property pursuant to such winding up, consistent with its duties and having due
regard to the activity and condition of the relevant market and general
financial and economic conditions. Except as otherwise agreed by the Partners,
no distributions will be made in kind to any Partner without the consent of each
Partner.
(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
40
apply such sums to the liquidation of such indebtedness and the cost of
operation of such Partnership property during the period of such
liquidation.
(e) Division of Assets upon Deadlock. If dissolution occurs pursuant to
Section 12.1(v), then the provisions of this Section 12.2(e) shall, if elected
by any Partner, apply in lieu of the provisions of Section 12.2(c), but subject
to the provisions of Section 12.2(d)(ii). In such event, the Partnership
properties shall be divided and distributed in kind to the Partners in
accordance with the provisions of Appendix E.
12.3 Termination of the Partnership. Upon the completion of the liquidation
of the Partnership and the distribution of all Partnership assets, the
Partnership's affairs shall terminate and the Partnership shall cause to be
executed and filed a Certificate of Cancellation of the Partnership's
Certificate of Limited Partnership pursuant to the Act, as well as any and all
other documents required to effectuate the termination of the Partnership.
12.4 Asset and Liability Statement. Within a reasonable time following the
completion of the winding-up and liquidation of the Partnership's business, the
Partnership Governance Committee shall supply to each of the Partners a
statement (which may be unaudited) which shall set forth the assets and the
liabilities of the Partnership as of the date of complete liquidation, and each
Partner's pro rata portion of distributions pursuant to Section 12.2.
SECTION 13
MISCELLANEOUS
13.1 Confidentiality and Use of Information.
(a) Except as provided in subsection (c) or (d), 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 (x) to the extent that
any Partner (or its ultimate parent entity) deems it necessary to disclose such
information in connection with a proposed strategic transaction, (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 (i) filings with the SEC or a stock
exchange, (ii) press releases disseminated to the financial community, (iii)
presentations to lenders, (iv) discussions with underwriters for the
Partnership's public debt offerings, (v) presentations to ratings agencies or
(vi) information disclosed to similar audiences or (z) to the
41
extent that in order to sustain a position taken for tax purposes, any Partner
(or former partner in the Partnership if such disclosure is with respect to
periods in which such Person was a partner in the Partnership) deems it
necessary and appropriate to disclose such financial statements or other
information. All Confidential Information disclosed in connection with the
Partnership or pursuant to this Agreement shall remain the property of the
Person whose property it was prior to such disclosure unless such property has
been transferred to the Partnership pursuant to a Contribution Agreement.
(b) No Confidential Information regarding the plans or operations of any
Partner or any Affiliate thereof received or acquired by or disclosed to any
unaffiliated Partner or Affiliate thereof in the course of the conduct of
Partnership business, or otherwise as a result of the existence of the
Partnership, may be used by such unaffiliated Partner or Affiliate thereof for
any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas unrelated to
the business of the Partnership in which any other Partner and their respective
Affiliates compete.
(c) In the event that any Partner is legally required (by interrogatories,
discovery requests for information or documents, subpoena, civil investigative
demand or similar process) to disclose any Confidential Information, it is
agreed that such Partner prior to disclosure will provide the Partnership
Governance Committee (and, if such Confidential Information concerns another
Partner, such Partner) with prompt notice of such request(s) so that the
Partnership Governance Committee (or such other Partner) may seek an appropriate
protective order or other appropriate remedy and/or waive the Partner's
compliance with the provisions of this Section. In the event that 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).
42
13.2 Indemnification.
(a) Indemnification by Partnership. The Partnership agrees, to the fullest
extent permitted by applicable law, to indemnify, defend and hold harmless each
Partner, its Affiliates and their respective officers, directors and employees
from, against and in respect of any Liability which such Indemnified Person may
sustain, incur or assume as a result of, or relative to, a Third Party Claim
arising out of or in connection with the business, property or affairs of the
Partnership, except to the extent that it is Finally Determined that such Third
Party Claim arose out of or was related to actions or omissions of the
indemnified Partner, its Affiliates or any of their respective officers,
directors or employees (acting in their capacities as such) constituting a
breach of this Agreement or any Related Agreement. The Partnership shall
periodically reimburse or advance to any Person entitled to indemnity under this
subsection (a) its legal and other expenses incurred in connection with
defending any claim with respect to such Liability if such Person shall agree to
reimburse promptly the Partnership for such amounts if it is finally determined
that such Person was not entitled to indemnity hereunder. Nothing in this
Section 13.2(a) is intended to, nor shall it, affect or take precedence over the
indemnity provisions contained in any Related Agreement.
(b) Partner's Right of Contribution. Each Partner hereby agrees, to the
fullest extent permitted by law, to indemnify, defend and hold harmless the
other Partners, their Affiliates and their respective officers, directors and
employees from and against the indemnifying Partner's Percentage Interest
(calculated at the time any such Liability was incurred) of any Liability that
such Indemnified Person may sustain, incur or assume as a result of or relating
to any Third Party Claim arising out of or in connection with the business,
property or affairs of the Partnership; provided, however, that such indemnified
Partner, its Affiliates and their respective officers, directors and employees
shall not be entitled to indemnity under this subsection (b) to the extent that
it is Finally Determined that such 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
43
of the amount of damages attributable to the Third Party Claim to the extent
feasible and the basis of the Indemnified Party's request for indemnification
under this Agreement; provided that the failure to so notify the Indemnifying
Party shall not relieve the Indemnifying Party of any liability that it may have
to any Indemnified Party except to the extent the Indemnifying Party
demonstrates that it is prejudiced thereby. In case any Claim that is subject to
indemnification under subsection (a) shall be brought against an Indemnified
Party and it shall give notice to the Indemnifying Party of the commencement
thereof, the Indemnifying Party may, and at the request of the Indemnified Party
shall, participate in and control the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party unless (i) the
employment thereof has been specifically authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party failed to assume the defense and
employ counsel or failed to diligently prosecute or settle the Third Party Claim
or (iii) there shall exist or develop a conflict that would ethically prohibit
counsel to the Indemnifying Party from representing the Indemnified Party. If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, including, without limitation, by
making any counterclaim against the Person asserting the Third Party Claim or
any cross-complaint against any Person, in each case only if and to the extent
that any such counterclaim or cross-complaint arises from the same actions or
facts giving rise to the Third Party Claim. The Indemnifying Party shall be the
sole judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
provided that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the prior written consent of the 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.
44
Notwithstanding the other provisions of this Section 13.2, if the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Section 13.2 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
13.2 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified Party, the Indemnifying Party shall reimburse the Indemnified Party
in full for all costs of the litigation concerning such dispute.
After it has been determined, by acknowledgment, agreement, or ruling of
court of Legal Requirements, that an Indemnifying Party is liable to the
Indemnified Party under this Section 13.2(c), the Indemnifying Party shall pay
or cause to be paid to the Indemnified Party the amount of the Liability within
ten business days of receipt by the Indemnifying Party of a notice reasonably
itemizing the amount of the Liability but only to the extent actually paid or
suffered by the Indemnified Party.
(d) Survival. The indemnities contained in this Section shall survive the
termination and liquidation of the Partnership.
(e) Subrogation. In the event of any payment by or on behalf of an
Indemnifying Party to an Indemnified Party in connection with any Liability, the
Indemnifying Party (or any guarantor who made such payment) shall be subrogated
to and shall stand in the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may have any right or
claim against any third party (not including the Partnership) relating to such
event or indemnification. The Indemnified Party shall cooperate with the
Indemnifying Party (or such guarantor) in any reasonable manner in prosecuting
any subrogated claim.
(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;
45
provided, however, that such General Partner shall reimburse the Partnership for
the Expense only to the extent and in proportion to its Fault.
(b) Any claim by the Partnership for reimbursement under this Section may
be initiated upon written notice from a Nonconflicted General Partner to the
General Partner to whom the Partnership is entitled to look for indemnification,
and the General Partners shall have a period of 60 days during which to reach
unanimous agreement as to the terms on which any reimbursement shall be made. If
the General Partners are unable to agree or there are any disputes over Fault
and reimbursement under this Section, such matters shall be resolved pursuant to
the Dispute Procedures.
13.4 Dispute Resolution. Except as otherwise provided for herein, all
controversies or disputes arising under this Agreement shall be resolved
pursuant to the provisions set forth on Appendix D (the "Dispute Procedures").
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION, ETC. TO THE
FULLEST EXTENT PERMITTED BY LAW AND WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE LIMITATION OF LIABILITY, INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS
SET FORTH HEREIN, A PARTY SHALL BE ENTITLED TO INDEMNIFICATION OR RELEASE
HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS
GIVING RISE TO ANY SUCH INDEMNIFICATION OR RELEASE IS THE RESULT OF THE SOLE,
GROSS, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY
OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY SUCH PARTY. THE PARTIES
AGREE THAT THIS STATEMENT CONSTITUTES A CONSPICUOUS LEGEND.
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 facsimile with proof of confirmation
from the transmitting machine or (ii) delivered by commercial courier or other
hand delivery, as follows:
46
Lyondell Chemical Company Millennium Chemicals Inc.
1221 McKinney Street, Suite 700 230 Half Mile Road
Houston, Texas 77010 Red Bank, New Jersey 07701
Attention: Kerry A. Galvin Attention: William Carmean
Facsimile Number: (713) 309-4718 Facsimile Number: (732) 933-5270
Equistar Chemicals, LP
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Gerald A. O'Brien
Facsimile Number: (713) 309-7312
All notices, requests and other communications that are required or may be given
under Section 14 of this Agreement to OCC 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 facsimile with proof of confirmation from
the transmitting machine or (ii) delivered by commercial courier or other hand
delivery, as follows:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: General Counsel
Facsimile Number: (972) 404-4155
With a copy to:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Facsimile 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"
47
and its syntactic variants mean "includes, but is not limited to" and
corresponding syntactic variant expressions; (v) the plural shall be deemed to
include the singular, and vice versa; (vi) each gender shall be deemed to
include the other gender; and (vii) each appendix, exhibit, attachment and
schedule to this Agreement is a part of this Agreement.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
13.14 Waiver of Right to Partition. Except as provided in Section 12.2(e),
each Person who now or hereafter is a party hereto or who has any right herein
or hereunder irrevocably waives during the term of the Partnership any right to
maintain any action for partition with respect to Partnership property.
13.15 Governing Law. The laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement without giving effect
to any conflicts of law principles.
13.16 Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE UNDER OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER RELATED HERETO
SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF DELAWARE, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES TO THIS
AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO THIS AGREEMENT SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE. THE
FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE SERVICE
OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE
STATE OF 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.
48
13.19 Payment Terms and Interest Calculations.
(a) If the payment due date for any payment hereunder (including capital
contributions and Damages) falls on a Saturday or a bank or federal holiday,
other than a Monday, the payment shall be due on the past preceding business
day. If the payment due date falls on a Sunday or Monday bank or federal
holiday, the payment shall be due on the following business day.
(b) Interest shall accrue on any unpaid and outstanding amount from the
time such amount is due and payable through the date upon which such amount,
together with accrued interest thereon, is paid in full. Interest shall, subject
to the provisions of Section 13.20, accrue at a per annum rate equal to the
lesser of (i) the Agreed Rate plus 2%, compounded quarterly, to the extent
permitted by law or (ii) the Highest Lawful Rate.
(c) A wire transfer or delivery of a check shall not operate to discharge
any payment under this Agreement and shall be accepted subject to collection.
13.20 Usury Savings Clause. Notwithstanding any other provision of this
Agreement, it is the intention of the parties hereto to conform strictly to
Applicable Usury Laws, in each case to the extent they are applicable to this
Agreement. Accordingly, if any payment made pursuant to this Agreement results
in any Person having paid any interest in excess of the Maximum Amount, or if
any transaction contemplated hereby would otherwise be usurious under any
Applicable Usury Laws, then, in that event, it is agreed as follows: (i) the
provisions of this Section 13.20 shall govern and control; (ii) the aggregate of
all interest under Applicable Usury Laws that is contracted for, charged or
received under this Agreement shall under no circumstances exceed the Maximum
Amount, and any excess shall be promptly refunded to the payor by the recipient
hereof; (iii) no Person shall be obligated to pay the amount of such interest to
the extent that it is in excess of the Maximum Amount; and (iv) the effective
rate of any interest payable under this Agreement shall be ipso facto reduced to
the Highest Lawful Rate, as hereinafter defined, and the provisions of this
Agreement immediately shall be deemed reformed, without the necessity of the
execution of any new document or instrument, so as to comply with all Applicable
Usury Laws. All sums paid, or agreed to be paid, to any person pursuant to this
Agreement for the use, forbearance or detention of any indebtedness arising
hereunder shall, to the fullest extent permitted by the Applicable Usury Laws,
be amortized, pro rated, allocated and spread throughout the full term of any
such indebtedness so that the actual 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 OCC. OCC is a party to this Agreement for the sole
purpose of evidencing its agreement to be bound by the provisions set forth in
Section 13.9 (Notices) and Section 14 (Lake Charles Facility). OCC is not a
partner of the Partnership and shall not have any rights or obligations under
this Agreement other than rights and obligations that will apply if Lyondell
(Pelican) LP1 and OCC make the election described in Section 14.1.
49
13.23 Amendment. All waivers, modifications, amendments or alterations of
this Agreement shall require the written approval of each of the General
Partners and each of the Limited Partners.
SECTION 14
LAKE CHARLES FACILITY
14.1 Lease Not in Force and Effect. At any such time as the Lease is
terminated, expires or is otherwise not in force and effect (other than a No
Rebuilding Termination), the following shall occur:
(a) The number of Units held by Lyondell (Pelican) LP1 shall be
reduced from 6,623 Units to 2,541 Units.
(b) If and to the extent Lyondell (Pelican) LP1 and OCC both so elect
in writing, OCC and the Partnership shall form a general partnership (the
"LC Partnership") by entering into a partnership agreement having the
provisions described in Section 14.2 (the "GPA"). Except as provided in
Section 15.1, if Lyondell (Pelican) LP1 and OCC do not make the written
election referred to in the immediately preceeding sentence and satisfy
their obligations under this Section 14, then the provisions of Section
14.4 shall apply as if Lyondell (Pelican) LP1 had breached its obligations
under Section 14.1.
(c) The Partnership shall distribute to Lyondell (Pelican) LP1 the
balance in its Capital Account.
(d) OCC shall cause the Lake Charles Facility to be contributed to the
LC Partnership, and Lyondell (Pelican) LP1 shall pay to the LC Partnership
the amount received pursuant to Section 14.1(c), and OCC shall contribute
to the LC Partnership 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 OCC and the Partnership in the LC Partnership shall
be pro rata in accordance with the partners' equity ownership interests,
and Lyondell (Pelican) 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.
(a) If Lyondell (Pelican) LP1 and OCC make the election described in
Section 14.1, then (a) the LC Partnership shall be formed under the laws of
Delaware, (b) the two partners of the LC Partnership shall be the Partnership
and OCC and (c) the Partnership shall have an equity ownership interest of
49.9%, and OCC 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.
50
(c) All issues relating to the LC Partnership must be decided by mutual
agreement of both partners, except that the LC Partnership shall enter into an
operating agreement with the Partnership (in its individual capacity), as
operator, that shall delegate to the operator the right and obligation to make
all day-to-day decisions of the LC Partnership, which day-to-day decisions shall
for this purpose be deemed to be all decisions of the LC Partnership other than
issues comparable to those issues set forth in Section 6.7 (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, OCC,
shall have the option to contribute to the Partnership within 30 days following
the No Rebuilding Termination an amount (the "Payment Amount") equal to the
excess, if any, of (a) the Proceeds plus the book value (determined in
accordance with GAAP) as recorded on the books of OCC for that portion and
aspect of the Lake Charles Facility that constitutes land, over (b) the payment
made pursuant to Section 26(b) of the Lease in connection with such No
Rebuilding Termination. If within such 30-day period Lyondell (Pelican) LP1
contributes the Payment Amount to the Partnership, (i) Lyondell (Pelican) 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 Lyondell (Pelican) LP1 does not
contribute the Payment Amount to the Partnership within such 30-day period, (A)
Lyondell (Pelican) 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 Lyondell
(Pelican) LP1's Capital Account shall be distributed by the Partnership to
Lyondell (Pelican) LP1, or if there is a deficit in Lyondell (Pelican) LP1's
Capital Account, Lyondell (Pelican) 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), Lyondell (Pelican) LP1's entire interest in the
Partnership shall terminate.
14.4 Other Redemption. If Lyondell (Pelican) LP1 breaches any of its
obligations under Section 14.1, (a) Lyondell (Pelican) 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 Lyondell (Pelican) LP1's Capital Account shall be
distributed by the Partnership to Lyondell (Pelican) LP1, or if there is a
deficit in Lyondell (Pelican) LP1's Capital Account, Lyondell (Pelican) 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), Lyondell
(Pelican) LP1's entire interest in the Partnership shall terminate. In the event
of a forfeiture of Lyondell (Pelican) LP1's 6,623 Units
51
pursuant to this Section 14.4, the Capital Accounts of the Partners shall be
adjusted in accordance with the procedures contained in the definition of "Book
Value" prior to determining any deficit or positive Capital Account balance for
purposes of this Section 14.4. For purposes of this adjustment, any unamortized
portion of the agreed value of the Lease shall be treated as a loss and deducted
from Lyondell (Pelican) LP1's Capital Account.
SECTION 15
ADDITIONAL AGREEMENTS REGARDING THE LAKE CHARLES FACILITY
15.1 Receipt of Fee Title. Notwithstanding the provisions of Section 14, if
at any time the Partnership receives fee title to the Lake Charles Facility,
then (i) Section 14 shall be of no further force or effect, (ii) Lyondell
(Pelican) 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), 4.1(b) and 4.1(c)) and (iii) Sections 4.1(e) and
4.1(f) shall terminate.
15.2 Authority to Act. Notwithstanding the provisions of this Agreement, if
Lyondell GP believes in good faith that it would be in the best interests of the
Partnership, Lyondell GP shall have the sole right to direct the Partnership's
actions with respect to all matters regarding the Lake Charles Facility that (i)
are described in the Occidental Interest Transaction Documents (and Millennium
hereby consents, on behalf of itself and its Affiliates, to all such matters
notwithstanding any provision of the Occidental Interest Transaction Documents
that may contemplate consent by Millennium or its Affiliates to any of such
matters) or (ii) relate to any lease of the Lake Charles Facility by the
Partnership that is or will be on substantially the same terms as the Lease and
any agreements ancillary thereto that are in effect on May 31, 2002; provided,
however, that, notwithstanding anything in the foregoing to the contrary, this
Section 15.2 shall not otherwise limit Millennium GP's rights under Section 6.8.
52
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/ GERALD A. O'BRIEN
-----------------------------------------------
Name: Gerald A. O'Brien
Title: Vice President and General Counsel
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc.,
its Manager
By: /s/ C. WILLIAM CARMEAN
-----------------------------------------------
Name: C. William Carmean
Title: Senior Vice President
[Signature Page for Amended and Restated Limited Partnership Agreement]
LIMITED PARTNERS
LYONDELL PETROCHEMICAL L.P. INC.
By: /s/ FRANCIS P. MCGRAIL
--------------------------------------------
Name: Francis P. McGrail
Title: Vice President and Assistant Treasurer
LYONDELL (PELICAN) PETROCHEMICAL L.P.1, INC.
By: /s/ FRANCIS P. MCGRAIL
--------------------------------------------
Name: Francis P. McGrail
Title: Vice President and Assistant Treasurer
LYONDELL (PELICAN) PETROCHEMICAL L.P.2, INC.
By: /s/ FRANCIS P. MCGRAIL
--------------------------------------------
Name: Francis P. McGrail
Title: Vice President and Assistant Treasurer
MILLENNIUM PETROCHEMICALS LP LLC
By: Millennium Petrochemicals Inc.,
its Manager
By: /s/ C. WILLIAM CARMEAN
--------------------------------------------
Name: C. William Carmean
Title: Senior Vice President
[Signature Page for Amended and Restated Limited Partnership Agreement]
SPECIAL JOINDER PURSUANT TO
SECTION 13.22
OCCIDENTAL CHEMICAL CORPORATION
By: /s/ J.R. HAVERT
-------------------------------------------------
Name: J.R. Havert
Title: Vice President and Treasurer
[Signature Page for Amended and Restated Limited Partnership Agreement]
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
ss.1.704-2(g)(1) and ss.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 ss.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 ss.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, and (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) Occidental 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.
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Affiliated General Partner. In the case of Lyondell LP, Lyondell (Pelican)
LP1 and Lyondell (Pelican) LP2, the "Affiliated General Partner" shall mean
Lyondell GP. In the case of Millennium LP, the "Affiliated General Partner"
shall mean Millennium GP.
Affiliated Limited Partner. In the case of Lyondell GP, the "Affiliated
Limited Partner" shall mean Lyondell LP, Lyondell (Pelican) LP1 and Lyondell
(Pelican) LP2. In the case of Millennium GP, the "Affiliated Limited Partner"
shall mean Millennium LP.
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 Parent Agreement. The Amended and Restated Parent
Agreement dated as of the date of this Agreement between the Partnership,
Lyondell and Millennium.
Annual Budget. See Section 8.2.
Applicable Usury Laws. Laws regarding the use, forbearance or detention of
any indebtedness arising under this Agreement whether such laws are now or
hereafter in effect, including the laws of the United States of America or any
other jurisdiction whose laws are applicable, and including any subsequent
revisions to or judicial interpretations of those laws.
Arbitrator. See Appendix D.
Asset Fair Market Value. With respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such as in an arm's-length negotiated transaction with
an unaffiliated third party without time constraints.
Assumed Liabilities. In the case of Lyondell LP and Lyondell GP, Assumed
Liabilities means the "Assumed Liabilities" as defined in the Contribution
Agreement of Lyondell. In the case of 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.
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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). 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 August 24, 2001
among the Partnership, as Borrower, the lenders from time to time party hereto,
initially consisting of those listed on Schedule 2.01 thereto, Citicorp USA,
Inc. and Credit Suisse First Boston, as Co-Syndication Agents, Bank of America,
N.A., as Servicing Agent and administrative agent, and The Chase Manhattan Bank,
as Collateral Agent and administrative agent.
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,
A-3
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.
Beneficiary Partner. See Section 4.1(g).
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:
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.
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).
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
ss.1.704-1(b)(2)(iv)(f)(5).
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.
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 ss.1.704-1(b)(2)(iv)(m).
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 ss.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.
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Business Day. Any day other than a Saturday, Sunday or other day on which
banks are closed in New York City, New York; provided, however, that for
purposes of the definitions of "Interest Period" and "LIBOR Rate," "Business
Day" shall mean a day of the year on which banks are not required or authorized
to close in Houston, Texas and on which commercial banks are open for
international business (including dealings for dollar deposits) in the London
interbank market.
Business Opportunity. See Section 9.3(c).
Capital Account. The separate capital account established and maintained by
the Partnership for each Partner, as contemplated by Section 2.
Capital Expenditure Budget. See Section 8.2(d).
CEO. See Section 7.1(b).
Claim. See Section 13.2(c).
Code. The Internal Revenue Code of 1986, as amended and in effect from time
to time and any successor thereto.
Competing Opportunity. See Section 9.3(c).
Confidential Information. All confidential documents and information
(including, without limitation, confidential commercial information and
information with respect to customers, trade secrets and proprietary
technologies or processes and the design and development of new products or
services) concerning the Partnership, the Partners or their Affiliates,
furnished to a Partner in connection with the transactions leading up to and
contemplated by this Agreement and the operation of the Partnership, except to
the extent that such information (i) is or becomes generally available to and
known by the public or the petrochemical industry (other than as a result of an
unpermitted disclosure directly or indirectly by the Partnership or a Partner),
(ii) is or becomes available to a Partner on a nonconfidential basis from a
source other than the Partnership or a Partner; provided, however, that such
source is not and was not bound by a confidentiality agreement with, or other
obligation of secrecy to, the Partnership or the other Partner, (iii) has
already been or is hereafter 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."
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Contributed Business. As defined in each of the Contribution Agreements.
Contribution Agreement. In the case of Lyondell LP and Lyondell GP, the
Contribution Agreement shall mean the Asset Contribution Agreement dated
December 1, 1997, between the Partnership, Lyondell and Lyondell LP. In the case
of Millennium LP and Millennium GP, the Contribution Agreement shall mean the
Asset Contribution Agreement dated December 1, 1997, between the Partnership,
Millennium Petrochemicals and Millennium LP. In the case of Occidental LP1,
Occidental LP2 and Occidental GP, the Contribution Agreement shall mean the
Agreement and Plan of Merger and Asset Contribution dated as of the date of this
Agreement between the Partnership, Oxy Petrochemicals, Occidental LP1,
Occidental LP2 and Occidental GP.
Damages. With respect to a Person in connection with a Default, any and all
obligations (including all obligations to take an affirmative or curative act),
liabilities, damages (including damages arising out of any breach of any
representation or warranty, damages related to investigations, proceedings,
audits, the interruption of the Partnership's business, restrictions upon the
use of, or adverse impact on, the Assets or the Partnership's business, or the
interruption, breach or termination of any Related Agreements or other
agreements, including any lost profits attributable thereto), fines, penalties,
deficiencies, losses, judgments, settlements, costs and expenses (including
costs and expenses incurred in connection with performing obligations, bonding
and appellate costs and attorneys', accountants', engineers', health, safety,
environmental and other consultants' and investigators' fees and disbursements,
liquidating, selling or offering for sale the Partnership's business and assets
or winding up the Partnership's business, or other payments in respect of such
payments) suffered or incurred by such Person that arise out of or relate to
such Default, regardless of whether any of the foregoing are foreseeable,
unforeseeable, matured or unmatured, existing or contingent as of the date of
such Default. "Damages" also shall include, if and to the extent interest is not
already included therein under applicable law or other provisions hereof and
subject to Section 13.20, interest on amounts actually due until payment thereof
is made at a rate per annum equal to the rate set forth in Section 13.19(b).
"Damages" shall not include any punitive, exemplary, special or other similar
damages.
Deadlock Notice. See Section 8.5.
Default. See Section 11.1.
Default Date. See Section 11.1.
Defaulting Partners. Lyondell GP, Lyondell LP, Lyondell (Pelican) LP1 and
Lyondell (Pelican) LP2, in the case of a Default by Lyondell GP, Lyondell LP,
Lyondell (Pelican) LP1 or Lyondell (Pelican) LP2 or their Guarantor; and
Millennium GP and Millennium LP, in the case of a Default by Millennium GP,
Millennium LP 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:
The General Partners shall first attempt to agree on such value, which if
agreed to shall be the Fair Market Value.
If the General Partners are unable to agree within 20 days of the first
written notice from one General Partner to the other proposing an amount to be
the Fair Market Value (the "Notice"), then if requested by any General Partner,
either 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.
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 either 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.
The Neutral shall, within 30 days of the appointment of the Neutral,
determine which of the two appraised values (without in any way modifying or
compromising between the two 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.
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Fault. Any act or omission of a Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as such)
that constitutes or results from intentional misconduct, criminal intent or
gross negligence.
Finally Determined. Determined by any final, nonappealable judicial order
or pursuant to a binding alternative dispute resolution procedure.
Funding Notice. See Section 2.4.
GAAP. United States generally accepted accounting principles, as in effect
from time to time.
General Partners. Each Person who executes this Agreement and who is hereby
admitted to the Partnership as a general partner of the Partnership, unless such
General Partner ceases to be a General Partner hereunder or sells, transfers,
forfeits or otherwise disposes of its Units and is replaced by a Substitute
General Partner in accordance with this Agreement and the Act, and each Person
that becomes a Substitute General Partner, if any, of the Partnership as
provided herein, in such Person's capacity as a general partner of the
Partnership.
GPA. See Section 14.1(b).
Guarantor. Lyondell Chemical Company, with respect to Lyondell GP, Lyondell
LP, Lyondell (Pelican) LP1 and Lyondell (Pelican) LP2; Millennium Chemicals
Inc., with respect to Millennium GP and Millennium LP; 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.
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Initial Closing Date. December 1, 1997, the date the closing under the
Initial Master Transaction Agreement took place.
Initial Master Transaction Agreement. The Master Transaction Agreement,
dated July 25, 1997, as amended, between Lyondell and Millennium, providing for
the execution of various agreements concerning the Partnership and the Initial
Assets.
Initial Notice. See Section 10.2(a).
Initial Partners. See first WHEREAS clause.
Initial Related Agreements. The agreements defined as "Related Agreements"
in the Initial Master Transaction Agreement (other than the Partnership
Agreement), as such agreements may be amended from time to time after the
Initial Closing Date.
IRS. Internal Revenue Service.
Lake Charles Facility. The property that is the subject of and leased
pursuant to the Lease.
LC Partnership. See Section 14.1(b).
Lease. The Lease Agreement, dated May 15, 1998, between OCC, as lessor, and
Occidental LP1 (now Lyondell (Pelican) LP1), as lessee.
Letter Agreement. See seventh WHEREAS clause.
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 that 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.
Lyondell LP. See introductory paragraph to this Agreement.
Lyondell (Pelican) LP1. See introductory paragraph to this Agreement.
Lyondell (Pelican) LP2. 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 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.
A-10
OCC. See sixth WHEREAS clause.
Occidental. See third WHEREAS clause.
Occidental GP. See third WHEREAS clause.
Occidental Interest Transaction Documents Shall mean the Oxy Partner Sub
Purchase Agreement, and all exhibits attached thereto.
Occidental LP1. See third WHEREAS clause.
Occidental LP2. See third WHEREAS clause.
Occidental Partners. See third WHEREAS clause.
Offeree Partners. See Section 10.2(a).
Operating Budget. See Section 8.2(c).
Oxy Partner Sub Purchase Agreement. See sixth WHEREAS clause.
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.
PDG GP. See third WHEREAS clause.
Proceeds. The Insurance Proceeds, the Self-Insurance Proceeds and the
Condemnation Proceeds (each as defined in the Lease), to the extent actually
received by the lessor under the Lease pursuant to the Lease.
Profits and Losses. For each applicable period, the Partnership's taxable
income or loss for such period determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in taxable income or loss) with the following adjustments:
(i) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken in account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss.
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as such pursuant to Regulation
ss.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).
Regulations. The income tax regulations promulgated by Department of the
Treasury and in effect from time to time.
A-12
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 co-products consisting of: ethylene, propylene,
butadiene, and mixed butylenes; aromatics and gasoline blending components
(benzene, toluene, MTBE, alkylate, pyrolysis gasolines); mixed C5 hydrocarbons;
resin formers (dicyclopentadiene, isoprene, piperylenes, resin oil); pyrolysis
liquid fuel products (pyrolysis gas oil, pyrolysis fuel oil);
(ii) Polyolefins consisting of: low-density, linear low-density, and
high-density polyethylene; polypropylene; ethylene/propylene copolymers;
rotomolding and polymeric powders; wire and cable resins; adhesive tie layers;
hot melt adhesive resins; colors and concentrates; fuel additives;
(iii) Ethyl alcohol and ethyl ether; and
(iv) Ethylene oxide, ethylene glycol and derivatives thereof.
provided, however that the definition of Specified Petrochemicals shall in no
event include polyvinyl chloride or resins derived from phenol compounds or
dicyclopentadiene.
Specified Petrochemicals Businesses. The businesses related to Specified
Petrochemicals.
Strategic Plan. See Section 8.1.
Substitute General Partner. A Person who is admitted as a General Partner
to the Partnership in place of and with all the rights of a General Partner.
Substitute Limited Partner. A Person who is admitted as a Limited Partner
to the Partnership in place of and with all the rights of a Limited Partner.
A-13
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.
A-14
APPENDIX B
TO LIMITED PARTNERSHIP AGREEMENT
PARTNERSHIP FINANCIAL STATEMENTS AND REPORTS
Item & Frequency Due Dates
- ---------------- ---------
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
and Alternative Minimum Taxable Income 10th work day following quarter-end
Annual
Analysis for Investor Relations and Form 10-K disclosures
- Same as quarterly requirements
- Plant Capacities 15th work day following year-end
Audited Financial Statements 60 days following year-end
B-1
APPENDIX C
TO LIMITED PARTNERSHIP AGREEMENT
EXECUTIVE OFFICERS
Dan F. Smith Chief Executive Officer
Morris Gelb Chief Operating Officer
James W. Bayer Senior Vice President, Manufacturing
W. Norman Phillips, Jr. Senior Vice President, Fuels and Raw Material
Ed J. Dineen Senior Vice President, Chemicals and Polymers
Charles L. Hall Vice President and Controller
J. R. Fontenot Vice President, Research and Development
Jeffrey L. Hemmer Vice President, Materials Management and Supply Chain
John A. Hollinshead Vice President, Human Resources
Gerald A. O'Brien Vice President, General Counsel and Secretary
Jose L. Rodriguez Vice President, Raw Materials, Optimization, Risk Management and Refining
Investment
Eric Silva Vice President, Information Technology
C-1
APPENDIX D
TO LIMITED PARTNERSHIP AGREEMENT
DISPUTE RESOLUTION PROCEDURES
(1) Binding and Exclusive Means. Except as otherwise provided in the
Partnership Agreement, the dispute resolution provisions set forth in this
Appendix shall be the binding and exclusive means to resolve all disputes
arising under the Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the standards and
criteria for resolving such Dispute shall, unless the Partners involved in the
Dispute in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises, the
following procedures shall be implemented (with references to "Partners" meaning
the Partners involved in the Dispute):
(a) Any Partner may at any time invoke the dispute resolution
procedures set forth in this Appendix as to any Dispute by providing
written notice of such action to the Secretary of the Partnership, who
within five Business Days after such notice shall schedule a meeting to be
held in Houston, Texas between the Partners. The Partners' meeting shall
occur within 10 Business Days after notice of the meeting is delivered to
the Partners. The meeting shall be attended by representatives of each
Partner having decision-making authority regarding the Dispute as well as
the dispute resolution process and who shall attempt in a commercially
reasonable manner to negotiate a resolution of the Dispute.
(b) The representatives of the Partners shall cooperate in a
commercially reasonable manner and shall explore whether techniques such as
mediation, minitrials, mock trials or other techniques of alternative
dispute resolution might be useful. In the event that a technique of
alternative dispute resolution is so agreed upon, a specific timetable and
completion date for its implementation shall also be agreed upon. The
representatives will continue to meet and discuss settlement until the date
(the "Interim Decision Date") that is the earliest to occur of the
following events: (i) an agreement shall be reached by the Partners
resolving the Dispute; (ii) one of the Partners shall determine and notify
the other Partners in writing that no agreement resolving the Dispute is
likely to be reached; (iii) if a technique of alternative dispute
resolution is agreed upon, the completion date therefor shall occur without
the Partners having resolved the Dispute; or (iv) if another technique of
alternative dispute resolution is not agreed upon, two full meeting days
(or such other time period as may be agreed upon) shall expire without the
Partners having resolved the Dispute.
(c) If, as of the Interim Decision Date, the Partners have not
succeeded in negotiating a resolution of the Dispute pursuant to subsection
(b), the Partners shall proceed under subsections (d), (e) and (f).
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any
Partner involved in the Dispute (the "Disputing Partner"). 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
D-1
accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date the notice of arbitration is
served, other than as specifically modified herein. In the absence of an
agreement to the contrary, the arbitration shall be held in Houston, Texas.
The Arbitrator (as defined below) will allow reasonable discovery in the
forms permitted by the Federal Rules of Civil Procedure, to the extent
consistent with the purpose of the arbitration. During the pendency of the
Dispute, each Partner shall make available to the Arbitrator and the other
Partners all books, records and other information within its control
requested by the other Partners or the Arbitrator subject to the
confidentiality provisions contained herein, and provided that no such
access shall waive or preclude any objection to such production based on
any privilege recognized by law. Recognizing the express desire of the
Partners for an expeditious means of dispute resolution, the Arbitrator may
limit the scope of discovery between the Partners as may be reasonable
under the circumstances. In deciding the substance of the Partners' claims,
the laws of the State of Delaware shall govern the construction,
interpretation and effect of this Agreement (including this Appendix)
without giving effect to any conflict of law principles. The arbitration
hearing shall be commenced promptly and conducted expeditiously, with each
Partner involved in the Dispute being allocated an equal amount of time for
the presentation of its case. Unless otherwise agreed to by the Partners,
the arbitration hearing shall be conducted on consecutive days. Time is of
the essence in the arbitration proceeding, and the Arbitrator shall have
the right and authority to issue monetary sanctions against any of the
Partners if, upon a showing of good cause, that Partner is unreasonably
delaying the proceeding. To the fullest extent permitted by law, the
arbitration proceedings and award shall be maintained in confidence by the
Arbitrator and the Partners.
(e) The Disputing Partner shall notify the American Arbitration
Association ("AAA") and the other Partners in writing describing in
reasonable detail the nature of the Dispute (the "Dispute Notice"). The
arbitrator (the "Arbitrator") shall be selected within 15 days of the date
of the Dispute Notice by all of the Partners from the members of a panel of
arbitrators of the AAA or, if the AAA fails or refuses to provide a list of
potential arbitrators, of the Center for Public Resources and shall be
experienced in commercial arbitration. In the event that the Partners are
unable to agree on the selection of the Arbitrator, the AAA shall select
the Arbitrator, using the criteria set forth in this Appendix, within 30
days of the date of the Dispute Notice. In the event that the Arbitrator is
unable to serve, his or her replacement will be selected in the same manner
as the Arbitrator to be replaced. The Arbitrator shall be neutral. The
Arbitrator shall have the authority to assess the costs and expenses of the
arbitration proceeding (including the arbitrators', and attorneys' fees and
expenses) against any or all Partners.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive
relief; however, the Arbitrator shall not have any power or authority to
(i) award consequential, incidental, indirect or punitive damages or (ii)
amend this Agreement. The Arbitrator shall render the arbitration award, in
writing, within 20 days following the completion of the arbitration
hearing, and shall set forth the reasons for the award. In the event that
the Arbitrator awards monetary damages in favor of either party, the
Arbitrator must certify in the award that no indirect, consequential,
incidental, indirect or punitive damages are included in such award. If the
Arbitrator's decision results in a 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.
D-2
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.
D-3
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.
D-4
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 Partner.
SCHEDULE 2.3(e)
Effective Date Capital Account Balances
Column I reflects Capital Accounts after the contributions of the Occidental
Partners on May 15, 1998 (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(e). Column II
indicates the amount of the contributions and distributions described in 2.3(e)
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 as of the Effective Date.
Partner I II III IV
- -------- ---------- ----------- ---------- -------
Lyondell GP $ 42,451,400 $ 42,451,400 820
Lyondell GP 1,942,768,600 $ 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
============= =========== =============
* 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.
** Now Lyondell (Pelican LP1).
*** Now Lyondell (Pelican LP2).
SCHEDULE 8.6(A)
FORM OF INDEMNITY
THIS INDEMNITY (this "Indemnity") by [insert name of Millennium
indemnitor], a [insert state] corporation ("Millennium Indemnitor"), is in favor
of EQUISTAR CHEMICALS, LP, a Delaware limited partnership (the "Partnership").
RECITALS:
A. The indemnity provided in this Indemnity reasonably may be expected to
benefit, directly or indirectly, Millennium Indemnitor. Further, it is in the
best interests of Millennium Indemnitor to provide the indemnity set forth
hereunder, and such indemnity is necessary or convenient to the conduct,
promotion or attainment of the business of Millennium Indemnitor.
B. This Indemnity is issued pursuant to Section 8.6(b) of the Amended and
Restated Limited Partnership Agreement of the Partnership, dated as of November
6, 2002, among Lyondell Petrochemical G.P. Inc., Lyondell Petrochemical L.P.
Inc., Millennium Petrochemicals GP LLC ("Millennium GP"), Millennium
Petrochemicals LP LLC ("Millennium LP"), Occidental Petrochem Partner GP, Inc.,
Occidental Petrochem Partner 1, Inc., Occidental Petrochem Partner 2, Inc. and
PDG Chemical Inc., as amended as of the date of this Indemnity (the "Partnership
Agreement").
AGREEMENTS:
NOW, THEREFORE, Millennium Indemnitor hereby agrees as follows:
1. Notwithstanding any other provision of this Indemnity but subject to
paragraph 6 below, Millennium Indemnitor shall be obligated to the Partnership
to pay the Contribution Obligation to the Partnership only after the holders of
the Debt shall have pursued their remedies to compel payment of the Referenced
Obligation by the Issuers, and if, after exhaustion of all available remedies,
including, without limitation, the liquidation of assets, payment cannot be
obtained from the Issuers. For purposes of this Indemnity, the term "Issuers"
shall have the meaning set forth in the Debt.
2. The obligations of Millennium Indemnitor hereunder to the Partnership
shall not be subject to any reduction, limitation, impairment or termination for
any reason, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever, by reason of the invalidity, illegality or
unenforceability of the Referenced Obligation, any impossibility in the
performance of the Referenced Obligation or otherwise, subject to paragraph 6
below. Without limiting the generality of the foregoing, except as aforesaid,
the obligations of Millennium Indemnitor hereunder shall not be discharged or
impaired or otherwise affected by any waiver or modification of any of the
Referenced Obligation, by any default, failure or delay, willful or otherwise,
in the performance of the Referenced Obligation, or by any other act or omission
which may or might in any manner or to any extent vary the risk of Millennium
Indemnitor or otherwise operate as a discharge of Millennium Indemnitor as a
matter of law or equity.
3. Millennium Indemnitor further agrees that its obligations hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Referenced Obligation is
rescinded or must otherwise be restored by the Partnership upon the bankruptcy
or reorganization of an Issuer or otherwise, unless those obligations of
Millennium Indemnitor have otherwise been terminated in accordance with the
terms of this Indemnity.
4. The Partnership agrees that it shall not assign any of its right, title
and interest in and to this Indemnity. This Indemnity shall not be construed to
create any right in the holders of the Debt or any other person (other than
Millennium Indemnitor, the Partnership, [insert the names of the non-Millennium
partners], and, in each case, their respective successors and permitted
assigns), or to be a contract in whole or in part for the benefit of the holders
of the Debt, or any other person except the Partnership. Accordingly, the
holders of the Debt shall not, by reason of this Indemnity, have a greater or
superior claim compared to other obligees of the Partnership, to or as a result
of any amounts contributed by Millennium Indemnitor to the Partnership pursuant
to this Indemnity.
5. Notwithstanding any other provision of this Indemnity, this Indemnity
shall terminate on [insert the termination date or mechanism].
6. This Indemnity shall be construed and interpreted in accordance with and
governed by the laws of the State of [insert state].
7. This Indemnity 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.
8. The existence of this Indemnity shall not prohibit the Partnership from
refinancing or repaying any Debt at any time, subject to the other provisions of
the Partnership Agreement.
9. Nothing in this Indemnity shall be construed or interpreted to amend the
Partnership Agreement in any respect.
10. All notices, requests and other communications that are required or may
be given under this Indemnity shall be in writing and shall be deemed to have
been duly given if and when (i) transmitted by facsimile with proof of
confirmation from the transmitting machine or (ii) delivered by commercial
courier or other hand delivery as follows:
If to the Partnership: Equistar Chemicals, LP
1221 McKinney Street
Houston, Texas 77252-2583
Attention: Gerald A. O'Brien
Facsimile Number: (713) 309-4718
If to Indemnitor:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Attention:
---------------------
Facsimile Number:
--------------
with a copy to:
--------------------------------
--------------------------------
--------------------------------
Attention:
---------------------
Facsimile Number:
--------------
Dated As Of: [insert date]
[MILLENNIUM INDEMNITOR]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ACCEPTED AND AGREED
EQUISTAR CHEMICALS, LP
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
SCHEDULE 8.6(B)
Form of Indemnity Agreement Among Partners
This Indemnity Agreement Among Partners (this "Agreement"), dated as of
[insert date], is entered into among [insert name of Millennium indemnitor]
("Millennium Indemnitor"), [list all the partners in the Partnership].
WHEREAS, Equistar Chemicals, LP, a Delaware limited partnership (the
"Partnership"), is governed by the Amended and Restated Limited Partnership
Agreement of Equistar Chemicals, LP, as amended through [insert date] (the
"Partnership Agreement"), among [insert names of partners] (such partnership
agreement as so amended, the "Partnership Agreement");
WHEREAS, the purpose of this Agreement is to carry out the intention of the
parties hereto that, if the assets of the Partnership are insufficient to
discharge the Partnership's liabilities, then to the extent and in the amount
provided in the Millennium Indemnity, Millennium Indemnitor shall be ultimately
responsible for any liabilities of the Partnership that remain unpaid;
NOW, THEREFORE, the parties to this Agreement agree as follows:
1. Millennium Indemnity. If any Partner, former Partner or a Related Person
of any Partner or former Partner is required to pay any portion of the
Referenced Obligation (whether paid directly, as a result of the Partner's
deficit restoration obligation set forth in Section 12.2(d)(ii) of the
Partnership Agreement or the Partner's right of contribution or otherwise) and,
as a result, the amount Millennium Indemnitor would otherwise be required to pay
pursuant to the Millennium Indemnity is reduced, then Millennium Indemnitor
shall pay to such Partner, former Partner or Related Person an amount equal to
such reduction. For purposes of the Partnership Agreement, any payment made
pursuant to this Section 1 shall be treated as a contribution by the Millennium
Indemnitor to the Partnership for the benefit of the Millennium partner named in
the Millennium Indemnity, and a distribution by the Partnership to the Partner
to which any such payment is made.
2. Duration of Obligations. Except with respect to any amount then owing,
the obligations of Millennium Indemnitor under Section 1 hereof shall terminate
immediately upon the termination of the Millennium Indemnity.
3. Definitions. For purposes of this Agreement,
(a) the assets of the Partnership do not include (i) the obligation of any
Partner to make contributions to the Partnership (including as a result of the
Partner's deficit restoration obligation set forth in Section 12.2(d)(ii) of the
Partnership Agreement); (ii) the obligations of [identify parties to the Parent
Agreement] under the [identify the then current version of the Parent
Agreement]; (iii) the obligations of Millennium Indemnitor under the Millennium
Indemnity; and (iv) the obligations of any Partner or Related Person to perform
under any other guarantee or similar obligation;
(b) "Millennium Indemnity" means that indemnity provided to the Partnership
by [insert name of Millennium indemnitor] pursuant to the Indemnity dated as of
[insert date];
(c) "Partner" has the meaning set forth in the Partnership Agreement;
(d) "Referenced Obligation" has the meaning set forth in the Millennium
Indemnity; and
(e) "Related Person" with respect to any Partner, has the meaning set forth
in Treasury Regulationss.1.752-4(b).
4. No Third Party Beneficiaries. This Agreement is made solely for the
benefit of the parties hereto and the Related Persons and any former partner
referred to herein, and no other person, including the Partnership or any
creditor of the Partnership, shall have any right, claim, or cause of action
under or by virtue of this Agreement.
5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when taken together shall constitute one and the
same original document.
6. 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.
7. Refinancing or Repaying Debt. The existence of this Agreement shall not
prohibit the Partnership from refinancing or repaying any Debt (as defined in
the Millennium Indemnity) at any time, subject to the other provisions of the
Partnership Agreement.
8. No Amendment to the Partnership Agreement. Nothing in this Agreement
shall be construed or interpreted to amend the Partnership Agreement in any
respect.
9. Notices. All notices, requests and other communications that are
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 facsimile with
proof of confirmation from the transmitting machine or (ii) delivered by
commercial courier or other hand delivery as follows:
If to a Partner: that Partner, care of:
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Attention:
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Facsimile Number:
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with a copy to:
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Attention:
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Facsimile Number:
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If to Millennium Indemnitor:
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Attention:
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Facsimile Number:
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with a copy to:
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Attention:
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Facsimile Number:
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Executed as of the date first above written.
[Insert name of Millennium Indemnitor]
[Insert names of all the Partners in Equistar]