EXHIBIT 10.36
AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF EQUISTAR
EXECUTION COPY
AMENDED AND RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
EQUISTAR CHEMICALS, LP
ORGANIZED UNDER THE DELAWARE
REVISED UNIFORM LIMITED PARTNERSHIP ACT
TABLE OF CONTENTS
PAGE
APPENDICES
APPENDIX A - Defined Terms
APPENDIX B - Partnership Financial Statements and Reports
APPENDIX C - Executive Officers
APPENDIX D - Dispute Resolution Procedures
APPENDIX E - Division of Partnership Business
SCHEDULES
Schedule 2.3(d) - Capital Accounts
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
EQUISTAR CHEMICALS, LP
This Amended and Restated Limited Partnership Agreement of Equistar
Chemicals, LP dated May 15, 1998 is entered into by and among Lyondell
Petrochemical G.P. Inc., a Delaware corporation ("Lyondell GP"), Lyondell
Petrochemical L.P. Inc., a Delaware corporation ("Lyondell LP"), Millennium
Petrochemicals GP LLC, a Delaware limited liability company ("Millennium GP"),
Millennium Petrochemicals LP LLC, a Delaware limited liability company
("Millennium LP"), PDG Chemical Inc., a Delaware corporation ("Occidental GP"),
Occidental Petrochem Partner 1, Inc., a Delaware corporation ____ ("Occidental
LP1"), and Occidental Petrochem Partner 2, Inc., a Delaware corporation
("Occidental LP2," and together with Occidental LP1, "Occidental LP").
The definitions of capitalized terms used in this Agreement, including the
appendices hereto, are set forth in Appendix A hereto.
WHEREAS, Lyondell GP, Lyondell LP, Millennium GP and Millennium LP
(together, the "Initial Partners") entered into the Limited Partnership
Agreement of Equistar Chemicals, LP dated October 10, 1997 (the "Initial
Agreement"), pursuant to the Initial Master Transaction Agreement between
Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"), the
ultimate parent entity of each of Lyondell GP and Lyondell LP, and Millennium
Chemicals Inc., a Delaware corporation ("Millennium"), the ultimate parent
entity of each of Millennium GP and Millennium LP;
WHEREAS, the Initial Partners contributed their Initial Assets to the
Partnership on the Initial Closing Date and the Initial Related Agreements
relating to the Partnership and their Contributed Businesses were entered into,
all as provided in the Initial Master Transaction Agreement;
WHEREAS, the Partnership, Occidental Petroleum Corporation , a Delaware
corporation ("Occidental"), the ultimate parent entity of each of Occidental GP,
Occidental LP1 and Occidental LP2 (together, the "Occidental Partners"),
Lyondell and Millennium have entered into the Master Transaction Agreement dated
May 15, 1998 (the "Second Master Transaction Agreement"), which provides, among
other things, for the admission of Occidental GP as a general partner of the
Partnership and of each of Occidental LP1 and Occidental LP2 as a limited
partner of the Partnership, subject to and upon the terms and conditions set
forth therein; and
WHEREAS, simultaneous with the execution and delivery of this Agreement,
(i) the Occidental Partners are contributing to the Partnership their Initial
Assets and Contributed Business in accordance with the Occidental Contribution
Agreement (which involves, in the case of Occidental LP2, the merger of Oxy
Petrochemicals and the Partnership, with the Partnership as the surviving
entity); (ii) Lyondell, Millennium, Occidental and certain Occidental Affiliates
are entering into the Amended and Restated Parent Agreement and (iii) the
Additional Related Agreements are being entered into;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties hereto, it is hereby agreed as follows:
The Certificate of Limited Partnership was filed with the Secretary of
State of the State of Delaware on October 17, 1997. The Initial Agreement was
entered into October 10, 1997. The Partners desire to enter into this Agreement
which amends and restates the Initial Agreement and constitutes the limited
partnership agreement of the Partnership as of the date hereof. Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. Without the need for the consent of any other Person, upon
the execution of this Agreement by each of the parties hereto, (i) Occidental GP
is hereby admitted to the Partnership as a general partner of the Partnership,
(ii) Occidental LP1 is hereby admitted to the Partnership as a limited partner
of the Partnership and (iii) Occidental LP2 is hereby admitted to the
Partnership as a limited partner of the Partnership. Subject to the restrictions
set forth in this Agreement, the Partnership shall have the power to exercise
all the powers and privileges granted by this Agreement and by the Act, together
with any powers incidental thereto, so far as such powers and privileges are
necessary, appropriate, convenient or incidental for the conduct, promotion or
attainment of the purposes of the Partnership.
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.
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.
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.
The General Partners shall, or shall cause the Partnership to, execute,
swear to, acknowledge, deliver, file or record in public offices and publish
all such certificates, notices, statements or other instruments, and take
all such other actions, as may be required by law for the formation,
reformation, qualification, registration, operation or continuation of the
Partnership in any jurisdiction, to maintain the limited liability of the
Limited Partners, to preserve the Partnership's status as a partnership for tax
purposes or otherwise to comply with applicable law. Upon request of the General
Partners, the Limited Partners shall execute all such certificates and other
documents as may be necessary, in the sole judgment of the General Partners, in
order for the General Partners to accomplish all such executions, swearings,
acknowledgments, deliveries, filings, recordings in public offices, publishings
and other acts. Each General Partner hereby agrees and covenants that it will
execute any appropriate amendment to the Certificate of Limited Partnership of
the Partnership pursuant to Section 17-204 of the Act to reflect any admission
of a Substitute General Partner and of Occidental GP in accordance with this
Agreement.
Each Limited Partner hereby irrevocably makes, constitutes and appoints its
Affiliated General Partner and any successor thereto permitted as provided
herein, with full power of substitution and resubstitution, as the true and
lawful agent and attorney-in-fact of such Limited Partner, with full power and
authority in the name, place and stead of such Limited Partner to execute,
swear, acknowledge, deliver, file or record in public offices and publish: (i)
all certificates and other instruments (including counterparts thereof) which
such General Partner deems appropriate to reflect any amendment, change or
modification of or supplement to this Agreement in accordance with the terms of
this Agreement; (ii) all certificates and other instruments and all amendments
thereto which such General Partner deems appropriate or necessary to form,
qualify or continue the Partnership in any jurisdiction, to maintain the limited
liability of such Limited Partner, to preserve the Partnership's status as a
partnership for tax purposes or otherwise to comply with applicable law; and
(iii) all conveyances and other instruments or documents which such General
Partner deems appropriate or necessary to reflect the transfers or assignments
of interests in, to or under, this Agreement, including the Units, the
dissolution, liquidation and termination of the Partnership, and the
distribution of assets of the Partnership in connection therewith, pursuant to
the terms of this Agreement.
Each Limited Partner hereby agrees to execute and deliver to its Affiliated
General Partner within five Business Days after receipt of a written request
therefor such other further statements of interest and holdings, designations,
powers of attorney and other instruments as such General Partner deems
necessary. The power of attorney granted herein is hereby declared irrevocable
and a power coupled with an interest, shall survive the bankruptcy, dissolution
or termination of such Limited Partner and shall extend to and be binding upon
such Limited Partner's successors and permitted assigns. Each Limited Partner
hereby (i) agrees to be bound by any representations made by the agent and
attorney-in-fact acting in good faith pursuant to such power of attorney; and
(ii) waives any and all defenses which may be available to contest, negate, or
disaffirm any action of the agent and attorney-in-fact taken in accordance with
such power of attorney.
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.
In exchange for the contributions provided for in Section 2.3, Occidental
LP1, Occidental LP2 and Occidental GP shall receive the Units set forth by their
names below, and effective on the date hereof, the Units shall be owned as
follows:
PARTNER UNITS
Lyondell GP 820
Millennium GP 590
Occidental GP 295
Lyondell LP 40,180
Millennium LP 28,910
Occidental LP1 6,623
Occidental LP2 22,582
TOTAL 100,000
The Units shall entitle the holder to the distributions set forth in Section 3
and to the allocation of Profits, Losses and other items as set forth in Section
4. Units shall not be represented by certificates.
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.
(a) Pursuant to their Contribution Agreement, on the date hereof,
Occidental LP1, Occidental LP2 and Occidental GP have contributed or caused to
be contributed to the Partnership, the Initial Assets contemplated thereby
subject to the Assumed Liabilities contemplated thereby (which involves, in the
case of Occidental LP2, the merger of Oxy Petrochemicals and the Partnership,
with the Partnership as the surviving entity).
(b) The Partners intend that the contribution of assets subject to
liabilities heretofore made by the Partners to the Partnership and to be made
pursuant to Section 2.3(a) has qualified and will qualify as a tax-free
contribution under Section 721 of the Code in which no Partner has recognized or
will recognize gain or loss. The Partners agree that the Partnership will so
file its tax return, and each Partner agrees to file its tax return on the same
basis and to maintain such position consistently at all times thereafter.
(c) Immediately after the contributions by Occidental GP, Occidental LP1,
and Occidental LP2, the Capital Accounts of the Initial Partners shall be
adjusted so that each Partner's Capital Account would be the same per Unit as
that of every other Partner on the date
hereof if on such date the principal and accrued interest on the Lyondell Note
were paid and the special capital distributions accrued interest provided in
Sections 3.1(e), (f), and (g) were made.
(d) Schedule 2.3(d) sets forth the Capital Accounts of the Partners as if
the contributions and distributions referred to in Section 2.3(c) were made.
From time to time and subject to the limitations of Section 6.7, if
applicable, the Partnership Governance Committee (or the CEO acting pursuant to
Section 8.3), on behalf of the Partnership, may issue a written notice ("Funding
Notice") to the Limited Partners calling for an additional capital contribution
to the Partnership. Any Funding Notice will set forth:
(a) the use of funds therefor;
(b) the aggregate amount of the capital contribution required, which amount
shall be apportioned among the Limited Partners Pro Rata; and
(c) the date by which the capital contribution must be received by the
Partnership, which date will not be earlier than seven Business Days from the
date the Funding Notice is issued.
Each Limited Partner shall timely wire transfer its Pro Rata share of the amount
set forth in the Funding Notice to the Partnership's bank account. Except as
expressly set forth in this Agreement, no Partner shall be permitted or required
to make any additional capital contribution to the Partnership.
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 Partners, to make those
determinations, valuations, adjustments and allocations with respect to each
Partner's Capital Account as it deems appropriate so that the allocations made
pursuant to this Agreement will have substantial economic effect as such term
is used in Regulation '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.
Except as provided in Sections 3 and 4, no Partner shall receive any
interest or other return on its capital contributions or on the balance in its
Capital Account and no return of its capital contributions.
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.
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.
Subject to Section 17-607 of the Act and other applicable law, Available
Net Operating Cash shall be distributed as soon as practicable following the
end of each month to the Partners as follows:
(a) General. On a cumulative basis from the date of the admission of
Occidental GP, Occidental LP1 and Occidental LP2, (i) distributions are to be
made to the Partners Pro Rata to the extent of cumulative Profits, and (ii) the
remaining distributions are to be made to the Limited Partners Pro Rata. For
simplicity, however, in the absence of extraordinary transactions, the
Partnership may make monthly distributions to the Partners Pro Rata, subject to
subsequent adjustments as provided below in this Section 3.1.
(b) Return of Excess Distributions. Within 90 days after the end of each
year, each General Partner shall return to the Partnership any amount it
receives for such year that is in excess of its share of the sum of the
cumulative undistributed Profits as of the end of the preceding year and the
Profits for such year.
(c) Effect of Operating Losses. For any year in which a General Partner's
share of a Loss is sustained that exceeds its previously undistributed Profits,
no distributions shall be made to such General Partner in any subsequent year
until such excess Loss is recouped, and for subsequent years only Profits in
excess of such recoupment shall be treated as Profit for purposes of this
Section 3.1.
(d) Makeup Distributions. If for any reason the Partnership does not make a
monthly distribution to all Partners Pro Rata, each General Partner shall be
entitled at the end of the year to receive the amount necessary to make its
aggregate distributions for the year equal the amount it was entitled to receive
and keep pursuant to the preceding criteria.
(e) Lyondell Note Proceeds. All principal and interest received on the
Lyondell Note shall be distributed among the Initial Partners in the ratio of
the Units owned by them prior to the admission of the Occidental Partners.
(f) 1998 Credit Facility Proceeds. At such time as the Partnership enters
into the 1998 Credit Facility, the Partnership shall make a special distribution
to Millennium LP of $75 million, plus interest on such amounts from May 15,
1998, until such distribution at a per annum rate (based on a year of 360 days
and the number of days elapsed) equal to the LIBOR Rate plus 60 basis points
(.60%). The interest payments shall be treated as payment for the use of capital
to which section 707(c) of the Code applies.
(g) Bank Credit Agreement Proceeds. At such time as the Partnership enters
into the 1998 Credit Facility, the Partnership shall draw down the Bank Credit
Agreement Repayment
Amount under the 1998 Credit Facility and shall apply the Bank Credit Agreement
Repayment Amount to the repayment of the principal amount then outstanding under
the Bank Credit Agreement. Two Business Days after such repayment, the
Partnership shall draw down $419,700,000 under the Bank Credit Agreement and
make a special distribution to Occidental LP2 of the $419,700,000 proceeds of
such drawdown plus interest on such $419,700,000 from May 15, 1998 until the
date of such distribution at a per annum rate (based on a year of 360 days and
the number of days elapsed) equal to the LIBOR Rate plus 60 basis points (.60%),
provided that Occidental Chemical Corporation has executed the Amended and
Restated Indemnity Agreement. The interest payment shall be treated as payment
for the use of capital to which section 707(c) of the Code applies.
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).
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.
Any amount otherwise distributable to a Partner pursuant to this Section 3
shall, unless otherwise agreed by two Representatives of each of the
Nonconflicted General Partners pursuant to Section 6.8, be applied by the
Partnership to satisfy any of the following obligations that are owed by such
Partner or its Affiliate to the Partnership and that are not paid when due:
(a) Lyondell Note and Other Notes. In the case of Lyondell LP, the failure
to pay any interest or principal when due on the Lyondell Note or, in the case
of any Partner, the failure to pay any interest or principal when due on any
indebtedness for borrowed money of such Partner or any Affiliate of such Partner
to the Partnership.
(b) Contribution Agreement. In the case of any Partner, the failure of such
Partner or any Affiliate of such Partner to make any payment pursuant to Section
6 of its Contribution Agreement that has been Finally Determined to be due.
(c) Contribution. In the case of any Partner, the failure to make any
capital contribution required pursuant to this Agreement (other than pursuant to
its Contribution Agreement).
This section controls partnership allocations for book purposes. As used
herein, "book" means the allocations used to determine debits and credits to the
Capital Accounts of the Partners and to determine the amounts distributable to
the Partners pursuant to Section 3 and Section 12.2(d). It does not refer to the
method in which books are maintained for financial reporting purposes pursuant
to Section 5.2. Except as otherwise provided in Sections 4.2 and 4.3, Profits or
Losses
for book purposes shall be allocated each year among the Partners Pro Rata,
subject to the following:
(a) If the tax basis in Partnership assets is increased as a result of the
distribution of $75 million to Millennium LP as provided in Section 3.1(f), book
deductions equal to the tax deductions resulting from such increase shall be
allocated to Millennium LP until such time as gain or income is allocable under
(c) below.
(b) If the tax basis in Partnership assets is increased as a result of the
distribution of 43% of the proceeds of the Lyondell Note to Millennium LP, book
deductions equal to the tax deductions resulting from such increase shall be
allocated among the Initial Partners in the ratio of the Units owned by each
prior to the admission of the Occidental Partners until gain or income is
allocable under (c) below.
(c) If during any 12 month period the Partnership sells, distributes to
Partners, or otherwise disposes of more than 50% in value of the assets it owned
at the beginning of such period, gain or income recognized in the taxable period
of such sale, distribution or other disposition or thereafter recognized from
the sale, distribution, or other disposition of property or from the operation
of other property shall be allocated to the Partners in the ratio in which the
aggregate amount of deductions described in (a) and (b) above were allocated to
the Partners until the aggregate amount of such gain and income so allocated
equals the aggregate amount of such deductions.
(d) Interest accruing on the Lyondell Note shall continue to be allocated
among the Initial Partners in the ratio of the Units owned by them prior to the
admission of the Occidental Partners.
(e) The initial agreed value of the Lease will be amortized ratably over
the term of the Lease, and the resulting deductions shall be allocated to
Occidental LP1. Any gain recognized on the disposition of the Lease shall be
allocated to Occidental LP1. If, prior to such disposition, the Partnership has
made capital improvements to such assets that have been borne by the Partners
Pro Rata, then upon the disposition of the Lease with such improvements, gain
shall be deemed to be attributable to such improvements to the extent of the
excess of its depreciated value for GAAP purposes at the time of the disposition
over its Book Value at such time, and such gain shall be allocated to the
Partners Pro Rata.
(f) Deductions attributable to the Book Value of the assets of the
Partnership as they exist immediately after the contributions described in
Section 2.3(a) other than the Lease will be allocated among the Partners other
than Occidental LP1 in the ratio of the Units owned by each, and any gain
recognized on the disposition of such contributed assets will be allocated to
the Partners other than Occidental LP1 in the ratio of the Units owned by each.
If, prior to disposition of such asset sale, the Partnership has made capital
improvements to such assets that have been borne by the Partners Pro Rata, then
upon the disposition of a contributed asset with such improvements, gain shall
be deemed to be attributable to such improvements to the extent of the excess of
its depreciated value for GAAP purposes at the time of disposition over its Book
Value at such time, and such gain shall be allocated to the Partners Pro Rata.
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.
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 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.
(a) General Rule. Except as otherwise provided in the following paragraphs
of this Section 4.4, allocations for federal income tax purposes of items of
income, gain, loss and deduction, and credits and basis therefor, shall be made
in the same manner as book allocations are made.
(b) Elimination of Book/Tax Disparities. Taxable income and tax deductions
shall be shared among the Partners so as to take into account the variation
between the Book Value and the adjusted tax basis of each property at the time
it is contributed to the Partnership and at each time it is revalued.
(i) To account for such variation, effective as of the formation
of the Partnership:
(A) the depreciation and other deductions attributable to
the basis that the contributing Partner had in each property at
the time of contribution shall be allocated to such Partner, and
(B) upon disposition of a contributed property, the excess
of its Book Value at such time over its tax basis at such time
shall be allocated to the Partner who contributed the property.
(ii) If the Book Value of a Partnership property is revalued as
of a date subsequent to the date of its acquisition by the Partnership,
the portion of its Book Value at the time of its disposition that is
attributable to the increase resulting from such revaluation:
(A) shall be disregarded in applying Section 4.4(b)(i)(B)
to the partner who contributed such property, and
(B) shall be treated for purposes of this Section 4.4(b)
as a separate property that was contributed on the revaluation
date by the persons who were partners immediately prior to the
revaluation date.
(iii) The Partners agree that the foregoing allocations
constitute a reasonable method for purposes of Reg. 1.704-3(a)(1) and
will be so reported and defended by the Partnership and all Partners
unless and until the Partners otherwise agree or a court otherwise
requires.
(c) Allocation of Items Among Partners. Each item of income, gain, loss,
deduction and credit and all other items governed by Section 702(a) of the Code
shall be allocated among the Partners in proportion to the allocation of
Profits, Losses and other items to such Partners hereunder, provided that any
gain treated as ordinary income because it is attributable to the recapture of
any depreciation or amortization shall be allocated among the Partners in
accordance with Prop. Treas. 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.
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.
The fiscal year of the Partnership shall be the calendar year.
For financial reporting purposes, the Partnership shall adopt a standard
set of accounting policies and shall maintain separate books of account, all in
accordance with GAAP. The Partnership's financial reports shall comply with
requirements of the SEC to the extent applicable to the Partnership and any
Partner or any controlling Person of such Partner, to the extent such
information is necessary, in conjunction with the financial reporting
obligations of such Person under applicable SEC requirements.
(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.
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.
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.
(a) Status of the Partnership. The Partners acknowledge that the
Partnership is a partnership for federal, foreign and state income tax purposes,
and hereby agree not to elect to be excluded from the application of Subchapter
K of Chapter 1 of Subtitle A of the Code or any similar state statute.
(b) Tax Elections and Reporting.
(i) Generally. The Partnership has made or shall make the
following elections under the Code and the Regulations and any similar
state statutes:
(A) Adopt the calendar year as the annual accounting
period;
(B) Adopt the accrual method of accounting;
(C) Elect to deduct organization costs ratably over a
60-month period as provided in Section 709 of the Code;
(D) Adopt the LIFO method of accounting for inventory; and
(E) Make any other elections available under the Code that
the Partnership Governance Committee determine are appropriate,
with the determination of whether an election is appropriate to
be made pursuant to the principle that each Partner shall be
treated equally (i.e., no Partner will receive preferential tax
treatment to the disadvantage of another Partner).
(ii) Section 754 Election. The Partnership shall, upon the
written request of any Partner benefitted thereby, cause the Partnership
to file an election under Section 754 of the Code and the Regulations
thereunder to adjust the basis of the Partnership assets under Section
734(b) or 743(b) of the Code, and a corresponding election under the
applicable sections of state and local law.
(c) Tax Returns. The Tax Matters Partner, on behalf of the Partnership,
shall prepare and file the necessary tax and information returns. Each Partner
shall timely provide such information, if any, as may be needed by the
Partnership for purposes of preparing such tax and information returns. At least
75 days before the due date (as extended) for the Partnership's federal income
tax return, the Tax Matters Partner shall deliver a draft of such return to each
Partner. Each Partner shall have 15 Business Days after receipt of the draft in
which to furnish any objections or comments on the draft to the Tax Matters
Partner. The Tax Matters Partner shall make its best efforts to finalize the
Partnership's federal income tax return at least 30 days before the due date for
filing (as extended) of such return A Partner may not report its share of
any Partnership tax item in a manner inconsistent with the Partnership's
reporting of such item unless the Partner has timely furnished its objection to
the Tax Matters Partner as provided in the immediately preceding sentence. If a
Partner reports its share of any Partnership tax item in a manner inconsistent
with the Partnership's reporting of such item, such Partner shall promptly
notify the Partnership in writing at least 20 Business Days prior to the filing
of any statement with the IRS in which such inconsistent position is reported.
The Partnership shall promptly deliver to each Partner a copy of the federal
income tax return for the Partnership as filed with the appropriate taxing
authorities and a copy of any material state and local income tax return as
filed.
(d) Tax Audits.
(i) Federal Tax Matters. The Partnership is authorized to make
such filings with the IRS as may be required to designate Lyondell GP as
the Tax Matters Partner. The Tax Matters Partner, as an authorized
representative of the Partnership, shall direct the defense of any
claims made by the IRS to the extent that such claims relate to the
adjustment of Partnership items at the Partnership level. The Tax
Matters Partner shall promptly deliver to each Partner a copy of all
notices, communications, reports or writings of any kind (including,
without limitation, any notice of beginning of administrative
proceedings or any report explaining the reasons for a proposed
adjustment) received from the IRS relating to or potentially resulting
in an adjustment of Partnership items, as well as any other information
requested by a Partner that is commercially reasonable to request. The
Tax Matters Partner shall be diligent and act in good faith in deciding
whether to contest at the administrative and judicial level any proposed
adjustment of a Partnership item and whether to appeal any adverse
judicial decision. The Tax Matters Partner shall keep each Partner
advised of all material developments with respect to any proposed
adjustment that comes to its attention. All costs incurred by the Tax
Matters Partner in performing under this subsection (d) shall be paid by
the Partnership. The Tax Matters Partner shall have sole authority to
represent the Partnership in connection with all tax audits, including
the power to extend the statute of limitations, to enter in any
settlement, and to litigate any proposed partnership adjustment, subject
to the following: (A) No settlement will be entered into with respect to
an item that would materially affect any Partner adversely unless each
Partner is first notified of the terms of the settlement; and no Partner
will be bound by any settlement unless it consents thereto; (B) If a
Partner does not consent to a settlement, the settlement will
nevertheless be binding on all partners who do consent; and the
non-consenting Partner may, at its sole cost, pursue such administrative
or judicial remedies as it deems appropriate; (C) If the Tax Matters
Partner brings an action in any court, each Partner, at its sole cost,
shall have the right to intervene in the preceding to the extent
permitted by the court; and (D) If a settlement or litigation causes
Partners to be treated differently for tax purposes with respect to
certain tax issues of the Partnership, the income and deductions of the
Partnership 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.
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.
(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.
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.
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.
(a) The Partnership Governance Committee shall consist of nine
Representatives and each General Partner shall designate three Representatives
(each a "Representative"). All the Representatives of all three General Partners
shall together constitute the Partnership Governance Committee.
(b) Each General Partner may designate one or more individuals (each an
"Alternate") who (i) shall be authorized, in the event a Representative is
absent from any meeting of the Partnership Governance Committee (and in the
order of succession designated by the General Partner so designating the
Alternates), to attend such meeting in the place of, and as substitute for, such
Representative and (ii) shall be vested with all the powers to take action on
behalf of such General Partner which the absent Representative could have
exercised at such meeting. The term "Representative," when used herein with
reference to any Representative who is absent from a meeting of the Partnership
Governance Committee, shall mean and refer to any Alternate attending such
meeting in place of such absent Representative.
(c) On or before the date hereof, each General Partner shall have delivered
to the other General Partners a written notice (i) designating the three persons
to serve as such General
Partner's initial Representatives and (ii) designating the person or persons, if
any, who are to serve as initial Alternates and their order of succession.
(d) Each General Partner may, in its sole discretion and by written notice
delivered to the other General Partners and the Partnership at any time or from
time to time, remove or replace one or more of its Representatives or change one
or more of its Alternates. If a Representative or Alternate dies, resigns or
becomes disabled or incapacitated, the General Partner that designated such
Representative or Alternate, as the case may be, shall promptly designate a
replacement. Each Representative and each Alternate shall serve until replaced
by the General Partner that designated such Representative or Alternate, as the
case may be.
(e) Copies of all written notices designating Representatives and
Alternates shall be delivered to the Secretary and shall be placed in the
Partnership minute books, but the failure to deliver a copy of any such notice
to the Secretary shall not affect the validity or effectiveness of such notice
or the designation described therein.
(f) Each Representative, in his capacity as such, shall be the agent of the
General Partner that designated such Representative. Accordingly, (i) each
Representative, as such, shall act (or refrain from acting) with respect to the
business, property and affairs of the Partnership solely in accordance with the
wishes of the General Partner that designated such Representative and (ii) no
Representative, as such, shall owe (or be deemed to owe) any duty (fiduciary or
otherwise) to the Partnership or to any General Partner other than the General
Partner that designated such Representative; provided, however, that nothing in
this Agreement is intended to or shall relieve or discharge any Representative
or General Partner from liability to the Partnership or the Partners on account
of any fraudulent or intentional misconduct of such Representative. Nothing in
this 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.
(a) Regular meetings of the Partnership Governance Committee shall be held
at such times and at such places as shall from time to time be determined in
advance and committed to a written schedule by the Partnership Governance
Committee. The first regular meeting of the Partnership Governance Committee
during January of each fiscal year shall be deemed to be the "Annual Meeting."
The Secretary shall deliver by commercial courier service or other hand delivery
or transmit by facsimile transmission (with proof of confirmation from the
transmitting machine), an agenda for each regular meeting to the Representatives
at least five Business Days prior to such meeting. Each agenda for a regular
meeting shall specify, to a reasonable degree, the business to be transacted at
such meeting. Subject to Section 6.6, at any regular meeting of the Partnership
Governance Committee at which a quorum is present, any and all business of the
Partnership may be transacted.
(b) Special meetings of the Partnership Governance Committee may be called
by any Representative by delivering by commercial courier service or other hand
delivery or
transmitting by facsimile transmission (with proof of confirmation from the
transmitting machine), written notice of a special meeting to each of the other
Representatives at least two Business Days before such meeting. Each notice of a
special meeting shall specify, to a reasonable degree, the business to be
transacted at, or the purpose of, such meeting. Notice of any special meeting
may be waived before or after the meeting by a written waiver of notice signed
by the Representative entitled to notice. A Representative's attendance at a
special meeting shall constitute a waiver of notice unless the Representative
states at the beginning of the meeting his objection to the transaction of
business because the meeting was not lawfully called or convened. Special
meetings of the Partnership Governance Committee shall be held at the
Partnership's offices (or at such other place or in such other manner as the
Representatives shall agree) at such time as may be stated in the notice of such
meeting.
(c) One Representative of each General Partner shall serve as a co-chair of
each meeting (regular and special) of the Partnership Governance Committee. Any
co-chair may instruct the Secretary to include one or more items on a meeting
agenda and none of the co-chairs nor the Secretary may delete or exclude an
agenda item proposed by any other co-chair.
(d) Following each meeting of the Partnership Governance Committee, the
Secretary shall promptly draft and distribute minutes of such meeting to the
Representatives for approval at the next meeting, and after such approval shall
retain the minutes in the Partnership minute books.
(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.
(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.
Unless and until two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP have given their approval (in which event a Partnership Governance Committee
Action is hereby authorized without the need for the consent of any other
Person), no Partnership Governance Committee Action will be deemed for any
purpose to have been taken at any Partnership Governance Committee meeting that
would cause or permit the Partnership or any subsidiary thereof (or any Person
acting in the name or on behalf of any of them) directly or indirectly to take
(or commit to take), and neither the Partnership nor any subsidiary thereof nor
any person acting in the name or on behalf of any of them directly or indirectly
may take or commit to take, any of the actions described below in this
subsection (whether in a single transaction or series of related transactions):
(i) to cause the Partnership, directly or indirectly, to engage,
participate or invest in any business outside the scope of its business
as described in Section 1.4;
(ii) to approve any Strategic Plan, as well as any amendments or
updates thereto (including the annual updates provided for in Section
8.1);
(iii) to authorize any disposition of assets having a fair market
value exceeding $30 million in any one transaction or a series of
related transactions not contemplated in an approved Strategic Plan;
(iv) to authorize any acquisition of assets or any capital
expenditure exceeding $30 million that is not contemplated in an
approved Strategic Plan;
(v) to require capital contributions to the Partnership (other
than contributions contemplated by the Contribution Agreements or an
approved Strategic Plan or to achieve or maintain compliance with any
HSE Law) within any fiscal year if the total of such contributions
required from the Partners within that year would exceed $100 million or
the total of such contributions required from the Partners within that
year and the immediately preceding four years would exceed $300 million;
(vi) to authorize the incurrence of debt for borrowed money
unless (x) such debt is contemplated by clause (vii) (b) below, (y)
after giving effect to the incurrence of such debt (and any related
transactions) and the maximum amount of borrowings permitted under
clause (vii) below, the Partnership would be expected to have an
"investment grade" debt rating by Moody's Investor Services Inc. and
Standard & Poor's Corporation or (z) such debt is incurred to refinance
the public, bank or other debt assumed or incurred by the Partnership as
contemplated by the Initial Master Transaction Agreement or the Second
Master Transaction Agreement or to refinance indebtedness under the 1998
Credit Facility or to refinance any such debt, and in the case of each
of (x), (y) and (z), the agreement relating to such debt does not
provide that the Transfer by
a Partner of its Units (or a change of control with respect to any
Partner or any of its Affiliates) would constitute a default thereunder,
otherwise accelerate the maturity thereof or give the lender or holder
any "put rights" or similar rights with respect thereto; provided,
however, that notwithstanding the foregoing, the provisions of Sections
6.7(xxi) and 6.7(xxii), if applicable, must be satisfied with respect to
any refinancing;
(vii) (a) to enter into the 1998 Credit Facility or (b) to make
borrowings under one or more of the Partnership's bank credit facility
or facilities, its uncommitted lines of credit or any credit facility or
debt instrument of the Partnership of any kind that refinances all or
any portion of the Partnership's credit facility or facilities, at any
time, if as a result of any such borrowing the aggregate principal
amount of all such borrowings outstanding at such time would exceed the
sum of $1.25 billion and the amount which becomes available for
borrowing under the 1998 Credit Facility.
(viii) to enter into interest rate protection or other hedging
agreements (other than hydrocarbon hedging agreements in the ordinary
course);
(ix) to enter into any capitalized lease or similar off-balance
sheet financing arrangements involving payments (individually or in the
aggregate) by it in excess of $30 million in any fiscal year;
(x) to cause the Partnership or any subsidiary of the Partnership
to issue, sell, redeem or acquire any Units or other equity securities
(or any rights to acquire, or any securities convertible into or
exchangeable for, Units or other equity securities);
(xi) to make Partnership cash distributions in excess of
Available Net Operating Cash or to make non-cash distributions (except
as contemplated by Section 12);
(xii) to appoint or discharge Executive Officers (other than the
CEO), based on the recommendation of the CEO;
(xiii) to approve material compensation and benefit plans and
policies, material employee policies and material collective bargaining
agreements for the Partnership's employees;
(xiv) to initiate or settle any litigation or governmental
proceedings if the effect thereof would be material to the financial
condition of the Partnership;
(xv) to change the independent accountants for the Partnership;
(xvi) to change the Partnership's method of accounting as adopted
pursuant to Section 5.2 or to change the Partnership's method of
accounting as provided in Section 5.5 or to make the elections referred
to in Section 5.6(b)(i)(E);
(xvii) to create or change the authority of any Auxiliary
Committee;
(xviii) to merge, consolidate or convert the Partnership or any
subsidiary thereof with or into any other entity (other than a Wholly
Owned Subsidiary of the Partnership);
(xix) to file a petition in bankruptcy or seeking any
reorganization, liquidation or similar relief on behalf of the
Partnership or any subsidiary; or to consent to the filing of a petition
in bankruptcy against the Partnership or any subsidiary; or to consent
to the appointment of a receiver, custodian, liquidator or trustee for
the Partnership or any subsidiary or for all or any substantial portion
of their property;
(xx) to exercise any power or right described in Section
6.8(a)(i) or (ii) with respect to a Conflict Circumstance involving (a)
LYONDELL-CITGO Refining Company Ltd., its successors or assigns, (b)
Lyondell Methanol Company, L.P., its successors or assigns or (c) any
other Affiliate of Lyondell GP, Millennium GP or Occidental GP if such
Affiliate's actions with respect to such Conflict Circumstance are not
controlled by Lyondell, Millennium or Occidental respectively, other
than a Conflict Circumstance involving the exercise of any rights and
remedies with respect to a default under any agreement that is the
subject of such Conflict Circumstance;
(xxi) (a) prior to the seventh anniversary of the Initial Closing
Date, to repay any Millennium America Guaranteed Debt, other than
through refinancing or (b) to refinance any Millennium America
Guaranteed Debt prior to the seventh anniversary of the Initial Closing
Date if any of the principal of the debt refinancing such Millennium
America Guaranteed Debt would be due and payable after the seventh
anniversary of the Initial Closing Date; provided, however, that if the
Millennium America Guaranteed Debt continues to be guaranteed by
Millennium America or its successors after the seventh anniversary of
the Initial Closing Date, then the term of such debt shall not exceed
365 days; and
(xxii) (a) prior to 30 days after the seventh anniversary of the
date of this Agreement, to repay any Oxy Guaranteed Debt, other than
through refinancing or (b) to refinance any Oxy Guaranteed Debt prior to
30 days after the seventh anniversary of the date of this Agreement if
any of the principal of the debt refinancing such Oxy Guaranteed Debt
would be due and payable after 30 days after the seventh anniversary of
the date of this Agreement; provided, however, that if the Oxy
Guaranteed Debt continues to be guaranteed by Occidental Chemical
Corporation or its successors after 30 days after the seventh
anniversary of the date of this Agreement, then the term of such debt
shall not exceed 365 days.
(a) Notwithstanding anything to the contrary contained in this Agreement,
with respect to any Conflict Circumstance (other than a Conflict Circumstance
described in Section 6.7(xx), which shall be governed by Section 6.7), the
Nonconflicted General Partners acting jointly (through their respective
Representatives) shall, subject to Section 6.8(b), have the sole and exclusive
power and right for and on behalf, and at the sole expense, of the Partnership
(i) to control all decisions, elections, notifications, actions, exercises or
nonexercises and waivers of all rights, privileges and remedies provided to, or
possessed by, the Partnership with respect to a Conflict Circumstance and (ii)
in the event of any potential, threatened or asserted claim, dispute or action
with respect to a Conflict Circumstance, to retain and direct legal counsel and
to control, assert, enforce, defend, litigate, mediate, arbitrate, settle,
compromise or waive any and all such claims, disputes and actions. Accordingly,
Partnership Governance Committee Action
with respect to a Conflict Circumstance (other than a Conflict Circumstance
described in Section 6.7(xx), which shall be governed by Section 6.7) shall
require the approval of two Representatives of each of the Nonconflicted General
Partners. Each General Partner shall, and shall cause its Affiliates to, take
all such actions, execute all such documents and enter into all such agreements
as may be necessary or appropriate to facilitate or further assure the
accomplishment of this Section.
(b) Each Nonconflicted General Partner, in exercising its control, power
and rights pursuant to this Section, shall act in good faith and in a manner it
believes to be in the best interests of the Partnership; provided that it shall
never be deemed to be in the best interests of the Partnership not to pay,
perform and observe all of the obligations to be paid, performed or observed by
or on the part of the Partnership under the terms of any of the Other Agreements
(as defined in the Amended and Restated Parent Agreement). Each Nonconflicted
General Partner shall act through its Representatives, and the approval of two
Representatives acting for each of the Nonconflicted General Partners will be
sufficient for the Nonconflicted General Partners (and therefore the Partnership
Governance Committee on behalf of the Partnership) to take any action in respect
of the relevant Conflict Circumstance. The Conflicted General Partner (or its
Affiliates) shall have the right to deal with the Partnership and with each
Nonconflicted General Partner on an arm's-length basis and in a manner it
believes to be in its own best interests, but in any event must deal with them
in good faith.
(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.
No Representative or Alternate of a Partner who, as an officer, director or
employee of such Partner or any of its Affiliates, participates in material
operational decisions by such Partner or Affiliate regarding a business or
operation of such Partner or Affiliate that competes with a business or
operation of the Partnership or of the other Partner or its Affiliates, or that
competes with a Business Opportunity offered pursuant to Section 9.3(c) or (d),
shall receive or have access to any competitively sensitive information
regarding the competing business of the Partnership or of the other Partner or
its Affiliates or such Business Opportunity, nor shall such Representative or
Affiliate participate in any decision of the Partnership Governance Committee
relating to such business or operation of the Partnership or the other Partner
or its Affiliates or such Business Opportunity.
(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.
(a) The Executive Officers as of the date of this Agreement are listed
on Appendix C.
(b) The CEO shall hold office for a five-year term, subject to the CEO's
earlier death, resignation or removal. Upon the expiration of such term or
earlier vacancy, Lyondell GP shall designate the CEO, provided that such person
shall be reasonably acceptable to both of Millennium GP and Occidental GP. The
CEO shall not be required to be an employee of the Partnership.
(c) Each Executive Officer (other than the CEO) shall hold office until his
or her death, resignation or removal. Upon the death, resignation or removal of
an Executive Officer, or the creation of a new Executive Officer position, the
CEO may nominate a person to fill the vacancy, which shall be subject to
Partnership Governance Committee approval. Executive
Officers shall not be required to be employees of the Partnership. Any Executive
Officer also may serve as an officer or employee of any Partner or Affiliate of
a Partner.
(a) The CEO may be removed, at any time, by Partnership Governance
Committee Action taken pursuant to Section 6.6, with or without cause, whenever
in the judgment of the Partnership Governance Committee the best interests of
the Partnership would be served thereby.
(b) Any Executive Officer (other than the CEO), or any other officer or
agent may be removed, at any time, by Partnership Governance Committee Action
taken pursuant to Section 6.7(xii), with or without cause, upon the
recommendation of the CEO, whenever in the judgment of the Partnership
Governance Committee the best interests of the Partnership would be served
thereby.
(c) Notwithstanding anything to the contrary in Sections 6.7(xii), 7.3(a)
and 7.3(b), any General Partner may, by action of two or more of its
Representatives, remove from office any Executive Officer who takes or causes
the Partnership to take any action described in Section 6.7 that has not been
approved by two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP as contemplated by Section 6.7. Any such removal shall be effected by
delivery by such Representatives of written notice of such removal (i) to such
Executive Officer and (ii) to the Representatives of the other General Partners;
provided that such removal shall not be effective if such action is rescinded or
cured (to the reasonable satisfaction of the General Partner who has delivered
such notice) promptly after such notice is delivered.
(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.
(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.
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 instru-ments
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.
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.
The Secretary shall keep the minutes of all meetings (and copies of written
records of action taken without a meeting) of the Partnership Governance
Committee in minute books provided for such purpose and shall see that all
notices are duly given in accordance with the provisions of this Agreement. The
Secretary shall be the custodian of the records and of the seal, if any. The
Secretary shall have general charge of books and papers of the Partnership as
the Partnership Governance Committee may direct and, in general, shall perform
all duties and exercise all powers incident to the office of Secretary and such
other duties and powers as the Partnership Governance Committee or the CEO from
time to time may assign to or confer upon the Secretary.
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.
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 super-vision of such officer.
Without the prior approval of the two other General Partners, which
approval shall not be unreasonably withheld, a General Partner (or its
Affiliates) shall not be entitled to hire employees of the Partnership who at
the time of such employment are eligible to participate in the incentive
compensation programs available to senior managers or executives or to hire
specific individuals who had been employed by the Partnership within the
previous year and who prior to the termination of their employment were eligible
to participate in the incentive compensation programs available to senior
managers or executives. Without the prior approval of the relevant General
Partner, which approval shall not be unreasonably withheld, the Partnership
shall not be entitled to hire employees of such General Partner (or its
Affiliates) who at the time of such employment are eligible to participate in
the incentive compensation programs available to senior managers or executives
or to hire specific individuals who had been employed by such General Partner
(or its Affiliates) within the previous year and who prior to the termination of
their employment were eligible to participate in the incentive compensation
programs available to senior managers or executives.
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.
(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.
(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, 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.
All Partnership expenses (both operating and capital expenses), regardless
of whether included in any Strategic Plan or Annual Budget, shall be funded from
operating cash flows or authorized borrowings under available lines of credit,
unless otherwise agreed by the Partnership Governance Committee. Subject to the
limitations of Sections 2.4 and 6.7(v), if applicable, to the extent that the
CEO determines at any time that funds are needed to fund Partnership operations,
the CEO may issue a Funding Notice to the Limited Partners calling for an
additional capital contribution. The Limited Partners will take all steps
necessary to cause compliance with such Funding Notice.
(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.
If the Partnership Governance Committee has not agreed upon and approved an
updated Strategic Plan, as contemplated by Sections 6.7 and 8.1, by such date as
is 12 months after the beginning of the first fiscal year that would have been
covered by such plan, then the General Partners shall submit their disagreements
to non-binding mediation by a Neutral. If the General Partners are unable to
agree upon a mutually acceptable Neutral within 30 days after a nomination of a
Neutral is made by one General Partner to the other General Partners, then such
Neutral shall upon the application of any General Partner be appointed within 70
days of such nomination by the Center for Public Resources, or if such
appointment is not so made promptly then promptly thereafter by the American
Arbitration Association in Philadelphia, Pennsylvania, or if such appointment is
not so made promptly then promptly thereafter by the senior United States
District Court judge sitting in Wilmington, Delaware. The fees of the Neutral
shall be paid equally by the General Partners. Within 20 days of selection of
the Neutral, two persons having decision-making authority on behalf of each
General Partner shall meet with the Neutral
and agree upon procedures and a schedule for attempting to resolve the
differences between the General Partners. They shall continue to meet thereafter
on a regular basis until (i) agreement is reached by the General Partners
(acting through their Representatives) on an updated Strategic Plan or (ii) at
least 24 months have elapsed since the beginning of the first fiscal year that
was to be covered by the first updated plan for which agreement was not reached
and one General Partner shall determine and notify the other General Partners
and the Neutral in writing (a "Deadlock Notice") that no agreement resolving the
dispute is likely to be reached.
(a) 1998 Credit Facility. Each General Partner agrees that it will use its
reasonable best efforts to cause the Partnership to enter into a credit facility
or facilities (whether one or more, the "1998 Credit Facility") on or prior to
December 15, 1998, which 1998 Credit Facility would allow the Partnership to
borrow at least $500 million aggregate principal amount (inclusive of the Bank
Credit Agreement Repayment Amount but exclusive of any other portion of the 1998
Credit Facility which may be dedicated to the satisfaction of working capital
needs or used for refinancing any indebtedness of the Partnership existing at
such time) thereunder, notwithstanding the amount ($1.25 billion) that may be
borrowed by the Partnership under its bank credit facility in existence as of
the date of this Agreement. Each General Partner further agrees to cause the
Partnership to draw down the Bank Credit Agreement Repayment Amount under the
1998 Credit Facility and to apply the Bank Credit Agreement Repayment Amount to
the repayment of any principal amount outstanding under the Bank Credit
Agreement on or prior to December 15, 1998, and two Business Days after such
repayment to cause the Partnership to draw down $419,700,000 under the Bank
Credit Agreement for distribution to Occidental LP2 as provided in Section
3.1(g).
(b) Other Loans. The Partnership Governance Committee may by Partnership
Governance Committee Action authorize the CEO to cause the Partnership to borrow
funds from third party lenders. No Partner shall be required, and the
Partnership Governance Committee shall not be authorized to require any Partner,
to guarantee or to provide other credit or financial support for any loan. Any
Partner may, at its sole discretion, guarantee or provide other credit or
financial support for all or any portion of any debt, including any refinancing
of the Bank Credit Agreement or any uncommitted lines of credit of the
Partnership, for such period of time and on such other terms as the Partner
shall determine.
(c) Millennium Guarantee. Millennium America, an Affiliate of Millennium GP
and Millennium LP, issued a full and unconditional guarantee (the "Millennium
America Guarantee") in respect of $750 million of principal owed by the
Partnership pursuant to the Bank Credit Agreement, together with interest
thereon, as set forth in the Bank Credit Agreement. Millennium America (or its
successors or assigns) shall maintain the Millennium America Guarantee in full
force and effect in respect of $750 million of principal, together with interest
thereon, under the Bank Credit Agreement or any refinancings thereof (including,
without limitation, any further refinancings of such refinancings) indefinitely;
provided, however, that Millennium America may terminate the Millennium America
Guarantee at any time on or after the seventh anniversary of the Initial Closing
Date if, and only if: (i) the Partnership's ratio of Total Indebtedness to Total
Capitalization is, as of the end of the most recently completed fiscal quarter
of the Partnership lower than such ratio as of December 31, 1998, (ii) the
Partnership's ratio of EBITDA to Net Interest for the most recent 12 month
period is at least 105% of such ratio for the 12 month period ending December
31, 1998, (iii) the Partnership is not then in default in the payment of
principal of, or interest on, any indebtedness for borrowed money in
excess of $15 million and (iv) the Partnership is not then in default in respect
of any covenants relating to any indebtedness for borrowed money if the effect
of any such default shall be to accelerate, or to permit the holder or obligee
of such indebtedness (or any trustee on behalf of such holder or obligee) to
accelerate (with or without the giving of notice or lapse of time or both), such
indebtedness in an aggregate amount in excess of $50 million; provided, further,
that if Millennium GP and Millennium LP sell all of their respective interests
in the Partnership, or if Millennium Petrochemicals Inc. sells all of its equity
interests in both Millennium GP and Millennium LP, in each case to an
unaffiliated third party (or parties) at any time in accordance with the terms
of this Agreement, Millennium America may terminate the Millennium America
Guarantee if, at the time of such sale or at the time of such termination, (A)
the Partnership has an "investment grade" credit rating issued by Moody's
Investor Service Inc. or Standard & Poor's Corporation (or, if the Partnership
has no rated indebtedness outstanding at such time, Millennium America
demonstrates to the reasonable satisfaction of the Partnership that the
Partnership could obtain such an "investment grade" credit rating), or (B) the
fair market value of the Partnership's assets is at least 140% of the gross
amount of its liabilities. For purposes of this paragraph (c), "EBITDA" means,
with respect to any period, operating income before interest, taxes,
depreciation and amortization, as determined in accordance with GAAP; "Net
Interest" means, with respect to any period, (i) the amount which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" (or any
like caption) on a consolidated income statement of the Partnership and all
other Persons with which the Partnership's financial statements are to be
consolidated in accordance with GAAP for the relevant period ended on such date
less (ii) the amount which, in conformity with GAAP, would be set forth opposite
the caption "interest income" (or any like caption) on such consolidated income
statement; "Total Indebtedness" means at the time of determination all
indebtedness of the Partnership and its subsidiaries on a consolidated basis, as
determined in accordance with GAAP; "Total Capitalization" means, at the time of
determination, the sum of Total Indebtedness plus the partner's equity reflected
on a balance sheet of the Partnership prepared in accordance with GAAP.
(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.
Persons dealing with the Partnership are entitled to rely conclusively on
the power and authority of each of the General Partners as set forth in this
Agreement. In no event shall any Person dealing with any General Partner or such
General Partner's representatives with respect to any business or property of
the Partnership be obligated to ascertain that the terms of this
Agreement have been complied with, or be obligated to inquire into the necessity
or expedience of any act or action of the General Partner or the General
Partner's representatives; and every contract, agreement, deed, mortgage,
security agreement, promissory note or other instrument or document executed by
the General Partner or the General Partner's representatives with respect to any
business or property of the Partnership shall be conclusive evidence in favor of
any and every Person relying thereon or claiming thereunder that (i) at the time
of the execution and/or delivery thereof, this Agreement was in full force and
effect, (ii) the instrument or document was duly executed in accordance with the
terms and provisions of this Agreement and is binding upon the Partnership, and
(iii) the General Partner or the General Partner's representative was duly
authorized and empowered to execute and deliver any and every such instrument or
document for and on behalf of the Partnership. Nothing in this Section 9.2 shall
be deemed to be a waiver or release of any General Partner's obligations to the
other Partners as set forth elsewhere in this Agreement.
; Right of First Opportunity.
(a) Each Partner (directly or through its Affiliates) is a sophisticated
party possessing extensive knowledge of and experience relating to, and is
actively engaged in, significant businesses in addition to its Contributed
Businesses, has been represented by legal counsel, is capable of evaluating and
has thoroughly considered the merits, risks and consequences of the provisions
of this Section 9.3 and is agreeing to such provision knowingly and advisedly.
The liability of each of the General Partners (including any liability of its
Affiliates or its and their respective officers, directors, agents and
employees) or of any Limited Partner (including any liability of its Affiliates
or its and their respective officers, agents, directors and employees), either
to the Partnership or to any other Partner, for any act or omission by such
Partner in its capacity as a partner of the Partnership that is imposed by such
Partner's status as a "general partner" or "limited partner" (as such terms are
used in the Act) of a limited partnership is hereby eliminated, waived and
limited to the fullest extent permitted by law; provided, however, that each
General Partner shall at all times owe to the other General Partners a fiduciary
duty in observing the requirement described in Section 6.7 that two or more
Representatives of Lyondell GP, two or more Representatives of Millennium GP and
two or more Representatives of Occidental GP shall be required to give their
approval before the Partnership may undertake any of the actions listed in
Section 6.7. Nothing in this subsection shall relieve any Partner from liability
for any breach of this Agreement and each General Partner shall at all times owe
to the other General Partners a duty to act in good faith with respect to all
matters involving the Partnership.
(b) Except as set forth in Section 9.3(c), each Partner's Affiliates shall
be free to engage in or possess an interest in any other business of any type,
including any business in direct competition with the Partnership, and to avail
itself of any business opportunity available to it without having to offer the
Partnership or any Partner the opportunity to participate in such business.
Except as set forth in Section 9.3(c), it is expressly agreed that the legal
doctrine of "corporate or business opportunities" sometimes applied to a Person
deemed to be subject to fiduciary or other similar duties so as to prevent such
Persons from engaging in or enjoying the benefits of certain additional business
opportunities shall not be applied in the case of any investment, acquisition,
business, activity or operation of any Partner's Affiliates.
(c) (i) If a Partner's Affiliate desires to initiate or pursue an
opportunity to undertake, engage in, acquire or invest in a Related
Business by investing in or acquiring
a Person whose business is a Related Business, acquiring assets of a
Related Business, or otherwise engaging in or undertaking a Related
Business (a "Business Opportunity"), such Partner or its Affiliate
(such Partner, together with its Affiliates, being called the
"Proposing Partner") shall offer the Partnership the Business
Opportunity on the terms set forth in Section 9.3(c)(ii).
(ii) When a Proposing Partner offers a Business Opportunity to
the Partnership, the Partnership shall elect to do one of the following
within a reasonably prompt period:
(A) acquire or undertake the Business Opportunity for the benefit of
the Partnership as a whole, at the cost, expense and benefit of the
Partnership; provided, however, that, if the Partnership ceases to
actively pursue such opportunity for any reason, then the Proposing
Partner will be entitled to proceed under clause (B) below; or
(B) permit the Proposing Partner to acquire or undertake the Business
Opportunity for its own benefit and account without any duty to the
Partnership or the other Partners with respect thereto; provided,
however, that if the Business Opportunity is in direct competition
with the then existing business of the Partnership (a "Competing
Opportunity"), then the Proposing Partner and the Partnership
shall, if either so elects, seek to negotiate and implement an
arrangement whereby the Partnership would either (i) acquire or
undertake the Competing Opportunity at the sole cost, expense and
benefit of the Proposing Partner under a mutually acceptable
arrangement whereby the Competing Opportunity is treated as a
separate business within the Partnership with the costs, expenses
and benefits related thereto being borne and enjoyed solely by the
Proposing Partner, or (ii) enter into a management agreement with
the Proposing Partner to manage the Competing Opportunity on behalf
of the Proposing Partner on terms and conditions mutually
acceptable to the Proposing Partner and the Partnership. If the
Partnership and the Proposing Partner do not reach agreement as to
such arrangement, the Proposing Partner may acquire or undertake
the Competing Opportunity for its own benefit and account without
any duty to the Partnership or the other Partners with respect
thereto.
(d) Notwithstanding the provisions of Section 9.3(c)(ii), (i) if the
Business Opportunity constitutes less than 25% (based on annual revenues for the
most recently completed fiscal year) of an acquisition of or investment in
assets, activities, operations or businesses that is not otherwise a Related
Business, then a Proposing Partner may acquire or invest in such Business
Opportunity without first offering it to the Partnership; provided, that, after
completion of the acquisition or investment thereof, such Proposing Partner must
offer the Business Opportunity to the Partnership pursuant to the terms of
Section 9.3(c)(ii); and if the Partnership elects option (A) of Section
9.3(c)(ii) with respect thereto, the Business Opportunity shall be acquired by
the Partnership at its fair market value as of the date of such acquisition and
(ii) if the Business Opportunity is (A) part of an integrated project, a
substantial element of which is the development, exploration, production and/or
sale of oil or gas reserves and (B) located in a country other than the United
States, Canada or Mexico then such Partner or its
Affiliate may acquire or invest in such Business Opportunity without first
offering it to the Partnership; provided, that subject to any requisite consents
and approvals from third parties or governmental authorities, the Partner or its
Affiliate will use commercially reasonable efforts to include the Partnership to
the maximum extent practicable in such integrated project with respect to the
Business Opportunity portion of the project.
(e) Notwithstanding the provisions of Section 9.3(c), any direct or
indirect expansion by LYONDELL-CITGO Refining Company Ltd. of its aromatics
business shall not be deemed to constitute a Business Opportunity for purposes
of Section 9.3(c).
(f) If (i) the Partnership is presented with an opportunity to acquire or
undertake a Business Opportunity (other than pursuant to Section 9.3(c)) that it
determines not to acquire or undertake and (ii) the Representatives of one or
two General Partners, but not the other General Partner(s), desire that the
Partnership acquire or undertake such Business Opportunity, then the Partnership
shall permit such General Partner(s) and its or their respective Affiliates to
acquire or undertake such Business Opportunity (or in the event two of the
General Partners desire to so undertake, then, as between those two General
Partners and their respective Affiliates, the Business Opportunity may be
pursued or acquired either jointly or independently and Section 9.3(c)(ii)(B)
shall be deemed to be applicable thereto to the same extent as if such General
Partner(s) and its or their respective Affiliates were a Proposing Partner with
respect to such Business Opportunity.
(a) No Limited Partner shall take part in the management or control of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise to bind the Partnership.
(b) Each Limited Partner shall have the rights with respect to the
Partnership's books and records as set forth in Section 5.3.
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.
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.
Except pursuant to Section 11 or the procedures described below in this
Section, a Partner shall not, in any transaction or series of transactions,
directly or indirectly Transfer all or any part of its Units. A Partner shall
not, in any transaction or series of transactions, directly or indirectly Pledge
all or any part of its Units or its interest in the Partnership. Neither the
term "Transfer" nor the term "Pledge," however, shall include an assignment by a
Partner of such Partner's right to receive distributions from the Partnership so
long as such assignment does not purport to assign any right of such Partner to
participate in or manage the affairs of the Partnership, to receive any
information or accounting of the affairs of the Partnership, or to inspect the
books or records of the Partnership or any other right of a Partner pursuant to
this Agreement or the Act. Any attempt by a Partner to Transfer or Pledge all or
a portion of its Units in violation of this Agreement shall be void ab initio
and shall not be effective to Transfer or Pledge such Units or any portion
thereof. Subject to any applicable restrictions imposed by the Amended and
Restated Parent Agreement, nothing in this Agreement shall prevent the Transfer
or Pledge by the owner thereof of any capital stock, equity ownership interests
or other security of a Partner or any Affiliate of a Partner.
(a) Except as set forth in Section 10.6, without the consent of all of the
General Partners, no Partner may Transfer less than all of its Units and no
Partner may Transfer its Units for consideration other than cash. Any Limited
Partner (or Limited Partners, if there are Affiliated Limited Partners) and its
(or their) Affiliated General Partner desiring to Transfer all of their Units
(together, the "Selling Partners") shall give written notice (the "Initial
Notice") to the Partnership and the other Partners (the "Offeree Partners")
stating that the Selling Partners desire to Transfer their Units and stating the
cash purchase price and all other terms on which they are willing to sell (the
"Offer Terms"). Delivery of an Initial Notice shall constitute the irrevocable
offer of the Selling Partners to sell their Units to the Offeree Partners
hereunder.
(b) The Offeree Partners shall have the option, exercisable by delivering
written notice (the "Acceptance Notice") of such exercise to the Selling
Partners within 45 days of the date of the Initial Notice, to elect to purchase
all of the Units of the Selling Partners on the Offer Terms described in the
Initial Notice. If all of the Offeree Partners deliver an Acceptance Notice,
then all of the Units shall be transferred to the Offeree Partners on a pro rata
basis (based on the ratio of the number of Units owned by each Offeree Partner
delivering an Acceptance Notice to the number of Units owned by all Offeree
Partners delivering an Acceptance Notice or on any other basis that shall be
mutually agreed upon between the Offeree Partners delivering an
Acceptance Notice). If less than all of the Offeree Partners deliver an
Acceptance Notice, the Selling Partners shall give written notice thereof
(the "Additional Notice") to the Offeree Partners electing to purchase, and
such Offeree Partners shall have the option, exercisable by delivery of an
Acceptance Notice of such exercise to the Selling Partners within 15 days
of such Additional Notice, to purchase all of the Units, including the Units
it had not previously elected to purchase; provided, however, that any election
by an Offeree Partner not to purchase all such Units shall be deemed a
rescission of such Offeree Partner's original Acceptance Notice and an election
not to purchase any of the Units of the Selling Partners. The Acceptance Notice
shall set a date for closing the purchase, such date to be not less than 30
nor more than 90 days after delivery of the Acceptance Notice; provided that
such time period shall be subject to extension as reasonably necessary (up to a
maximum of an additional 120 days after such 90 day period) in order to comply
with any applicable filing and waiting period requirements under the Hart-Scott-
Rodino Antitrust Improvements Act. The closing shall be held at the
Partnership's offices. The purchase price for the Selling Partners' Units shall
be paid in cash delivered at the closing. The purchase shall be consummated by
appropriate and customary documentation (including the giving of representations
and warranties substantially similar to those set forth in Sections 2.1 through
2.3 of the Second Master Transaction Agreement).
(c) If none of the Offeree Partners elect to purchase the Selling Partners'
Units within 45 days after the receipt of the Initial Notice, the Selling
Partners shall have a further 180 days during which they may, subject to
Sections 10.2(d) and (e), consummate the sale of their Units to a third party
purchaser at a purchase price and on such other terms that are no more favorable
to such purchaser than the Offer Terms. If the sale is not completed within such
further 180-day period, the Initial Notice shall be deemed to have expired and a
new notice and offer shall be required before the Selling Partners may make any
Transfer of their Units.
(d) Before the Selling Partners may consummate a Transfer of their Units to
a third party in accordance with this Agreement, the Selling Partners shall
demonstrate to the Offeree Partners that the Person willing to serve as the
proposed purchaser's guarantor under the agreement contemplated by Section
10.2(e)(vi) has outstanding indebtedness that is rated investment grade by
Moody's Investors Service, Inc. and Standard & Poor's Corporation, or if such
Person has no rated indebtedness outstanding, such Person shall provide an
opinion from a nationally recognized investment banking firm that such Person
could be reasonably expected to obtain such ratings.
(e) Notwithstanding the foregoing provisions of this Section 10.2, a
Partner may Transfer its Units (other than pursuant to Section 10.6) only if all
of the following occur:
(i) The Transfer is accomplished in a non-public offering in
compliance with, and exempt from, the registration and qualification
requirements of all federal and state securities laws and regulations.
(ii) The Transfer does not cause a default under any material
contract to which the Partnership is a party or by which the Partnership
or any of its properties is bound.
(iii) The transferee executes an appropriate agreement to be
bound by this Agreement.
(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.
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.
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.
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.
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).
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.
(a) Each of the following events shall constitute a "Default" and create
the rights provided for in this Section 11 in favor of the Partnership and the
Non-Defaulting Partners against the Defaulting Partners:
(i) the failure by a Partner to make any contribution to the
Partnership as required pursuant to this Agreement (other than pursuant
to the Contribution Agreement), which failure continues for at least
five Business Days from the date that the Partner is notified such
contribution is overdue;
(ii) in the case of each of Lyondell GP and Lyondell LP, the
failure to pay principal, when due, on the Lyondell Note, which failure
continues for at least five Business Days from the date such payment is
due; or
(iii) the withdrawal, retirement, resignation or dissolution of a
Partner (other than in connection with a Transfer of all of a Partner's
Units in accordance with this Agreement); or the Bankruptcy of a Partner
or its Guarantor.
(b) The day upon which the Default commences or occurs (or if the Default
is subject to a cure period and is not timely cured, then the day following the
end of the applicable cure period) shall be the "Default Date." Without
prejudice to a Partner's (or any of its Affiliates') rights to seek temporary or
preliminary judicial relief, prior to any such Default Date all rights and
obligations of the Partners under this Agreement shall remain in full force and
effect.
Provided that there shall be no duplication of remedies, without prejudice
to any right to pursue independently and at any time, including simultaneously,
any other remedy it may have under law, including the right to seek to recover
Damages, or equity, each Non-Defaulting Affiliated Partner Group in its sole
discretion may elect to pursue the following remedies:
(a) At any time prior to the expiration of 60 days from the Default Date,
each Non-Defaulting Affiliated Partner Group may elect to purchase its pro rata
share (based on the ratio of the number of Units owned by such Partners to the
number of Units owned by all Non-Defaulting Partners electing to purchase) of
the Units of the Defaulting Partners as described in
Section 11.3; provided, however, that within 10 days after the determination of
the Fair Market Value, either Non-Defaulting Affiliated Partner Group may
withdraw its election. If a Non-Defaulting Affiliated Partner Group withdraws
its election to purchase after the determination of Fair Market Value, and the
other Non-Defaulting Affiliated Partner Group has elected and not so withdrawn,
the withdrawing Affiliated Partner Group shall provide notice within 5 days of
its withdrawal to such other Affiliated Partner Group. At any time prior to the
expiration of 10 days from receipt of such notice, the Affiliated Partner Group
receiving such notice may elect to purchase the Units as to which the election
to purchase has been withdrawn. If on the later to occur of (i) a Non-Defaulting
Affiliated Partner Group's withdrawal of its election to purchase or (ii) the
expiration of 10 days from receipt of the notice provided for in the foregoing
sentence, no election to purchase is in effect with respect to all of the Units
of the Defaulting Partners, then each Non-Defaulting Partner Affiliated Partner
Group shall have an additional 30 days from such time to elect an alternative
remedy under Section 11.2(b) below; and
(b) At any time prior to the expiration of 60 days from the Default Date
(or if any Non-Defaulting Affiliated Partner Group initially elected to pursue
its remedy under Section 11.2(a) above and no elections to purchase all Units of
the Defaulting Partners are made and not withdrawn, at any time within the 30
days following the last applicable waiting period under Section 11.2(a)), any
Non-Defaulting Affiliated Partner Group may elect to effect a liquidation of the
Partnership under Section 11.4 and thereby cause the Partnership to dissolve
under Section 12.1(iv).
(a) Upon any election pursuant to Section 11.2(a), the purchase price that
such Non-Defaulting Partners shall pay, in the aggregate, to the Defaulting
Partners for their Units shall be an amount equal to (i) the amount that the
Defaulting Partners would receive in a liquidation (assuming that any sale under
Section 12.2 were for an amount equal to the Fair Market Value, without giving
effect to any Damages) reduced by (ii) the unrecovered Damages attributable to
the Default by the Defaulting Partners.
(b) If the Non-Defaulting Partners have a right to purchase the Units of
the Defaulting Partners, any Non-Defaulting Partner may first seek a
determination of Fair Market Value by delivering notice in writing to the
Defaulting Partners. Each such Non-Defaulting Affiliated Partner Group shall
have 10 days from the final determination of Fair Market Value (or if purchasing
pursuant to the withdrawal of election to purchase, 10 days from receipt of
notice as provided in Section 11.2(b)) to elect to purchase its share of the
Defaulting Partner Units by delivering notice of such election in writing, and
the purchase shall be consummated prior to the expiration of 60 days from the
date such notice is delivered; provided that, such time period shall be subject
to extension as reasonably necessary (up to a maximum of an additional 120 days
after such 60 day period) in order to comply with any applicable filing and
waiting period requirements under the Hart-Scott-Rodino Antitrust Improvements
Act.
(c) The purchase price so determined shall be payable in cash at a closing
held at the Partnership's offices. The purchase shall be consummated by
appropriate and customary documentation (including the giving of representations
and warranties substantially similar to those set forth in Sections 2.1 through
2.4 of the Second Master Transaction Agreement) as soon as practicable and in
any event within the applicable time period specified in subsection (b).
(d) The Non-Defaulting Partners may assign, in whole or in part, their
right to purchase the Units of the Defaulting Partners to one or more third
parties without the consent of any Partner hereunder.
(e) If Units are transferred in accordance with this Section 11.3, whether
to the Non-Defaulting Partners or a third party (under subsection (d) above),
upon the consummation of such Transfer, each such transferee shall immediately,
and without any further action on the part of any Person, become (i) a
Substitute Limited Partner if and to the extent that Limited Partner Units were
transferred to such Person and (ii) a Substitute General Partner if and to the
extent that General Partner Units were transferred to such Person.
Upon any election pursuant to Section 11.2(b), any Non-Defaulting Partner
shall have the right to elect to dissolve and liquidate the Partnership pursuant
to the procedures in Section 12.1(iv) (such procedures constituting a
"Liquidation"); provided, however, that any amount payable to the Defaulting
Partners in such Liquidation pursuant to Section 12.2 shall be reduced by,
without duplication, any unrecovered Damages incurred by the Non-Defaulting
Partners and the Non-Defaulting Partners' Percentage Interest of any unrecovered
Damages incurred by the Partnership in connection with the Default. The
Non-Defaulting Partner shall deliver notice of such election to dissolve and
liquidate in writing to the Partnership and the other Partners.
Notwithstanding any other provision of this Agreement, commencing on the
Default Date and (i) prior to the Non-Defaulting Partners' collection of Damages
through the exercise of its legal remedies or otherwise, or (ii) while the
Non-Defaulting Partners are pursuing their remedies under Section 11.2(a) or
(b), the Representatives of the Defaulting General Partner shall not have any
voting or decisional rights with respect to matters requiring Partnership
Governance Committee Action, and such matters shall be determined solely by the
Representatives of the Non-Defaulting General Partners; provided, however, that
the foregoing loss of voting and decisional rights shall not occur as a result
of a Default caused solely by the Bankruptcy of a Partner or a Guarantor
described in Section 11.1(a)(iii); and provided further, that in the case of a
Default under Section 11.1(a)(i) or (ii), the foregoing loss of voting and
decisional rights shall not apply to those voting and decisional rights
contained in Sections 6.7(i), (x), (xvi) or (xviii) of this Agreement, which
rights shall continue in full force and effect at all times.
As long as there is at least one other General Partner (who is hereby
authorized in such event to conduct the business of the Partnership without
dissolution), the withdrawal, retirement, resignation, dissolution or Bankruptcy
of a General Partner shall not dissolve the Partnership, but rather shall be a
Default covered by Section 11. The Partnership shall be dissolved upon the
happening of any one of the following events:
(i) the written determination of all General Partners to
dissolve the Partnership;
(ii) the entry of a judicial decree of dissolution;
(iii) any other act or event which results in the dissolution of
a limited partnership under the Act (except as provided in the first
sentence of this Section 12.1);
(iv) the election of a Non-Defaulting Affiliated Partner Group to
effect a dissolution of the Partnership under Section 11.4; or
(v) after the delivery of a Deadlock Notice by a General Partner
pursuant to Section 8.5, the written determination by any General
Partner to dissolve the Partnership.
(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 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.
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.
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.
(a) Except as provided in subsection (c) or (d) hereof, each Partner shall,
and shall cause each of its Affiliates and its and their respective partners,
shareholders, directors, officers, employees and agents (collectively, "Related
Persons") to, keep secret, retain in strictest confidence, and not distribute,
disseminate or disclose any and all Confidential Information except to (i) the
Partnership and its officers and employees, (ii) any lender to the Partnership
or (iii) any Partner or any of their respective Affiliates or other Related
Persons on a "need to know" basis in connection with the transactions leading up
to and contemplated by this Agreement and the operation of the Partnership, and
such Partner disclosing Confidential Information pursuant to this Section
13.1(a) shall use, and shall cause its Affiliates and other Related Persons to
use, such Confidential Information only for the benefit of the Partnership in
conducting the Partnership's business or for any other specific purposes for
which it was disclosed to such party; provided that the disclosure of financial
statements of, or other information relating to the Partnership shall not be
deemed to be the disclosure of Confidential Information (y) to the extent that
any Partner (or its ultimate parent entity) deems it necessary, appropriate or
customary pursuant to law, regulation or stock exchange rule (in the reasonable
good faith judgment of such parent entity) to disclose such information in or in
connection with filings with the SEC, press releases disseminated to the
financial community, presentations to lenders, presentations to ratings agencies
or information disclosed to similar audiences or (z) to the extent that in order
to sustain a position taken for tax purposes, any Partner deems it
necessary and appropriate to disclose such financial statements or other
information. All Confidential Information disclosed in connection with the
Partnership or pursuant to this Agreement shall remain the property of the
Person whose property it was prior to such disclosure unless such property has
been transferred to the Partnership pursuant to a Contribution Agreement.
(b) No Confidential Information regarding the plans or operations of any
Partner or any Affiliate thereof received or acquired by or disclosed to any
unaffiliated Partner or Affiliate thereof in the course of the conduct of
Partnership business, or otherwise as a result of the existence of the
Partnership, may be used by such unaffiliated Partner or Affiliate thereof for
any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas unrelated to
the business of the Partnership in which any other Partner and their respective
Affiliates compete.
(c) In the event that any Partner is legally required (by
interrogatories, discovery requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, it is agreed that such Partner prior to disclosure will provide the
Partnership Governance Committee (and, if such Confidential Information concerns
another Partner, such Partner) with prompt notice of such request(s) so that the
Partnership Governance Committee (or such other Partner) may seek an appropriate
protective order or other appropriate remedy and/or waive the Partner's
compliance with the provisions of this Section. In the event that 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).
(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 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.
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.
(a) In the case of a Liability relating to a Third Party Claim and caused
by the Fault of a General Partner, its Affiliates or any of their respective
officers, directors or employees (acting in their capacities as such) against
whom reimbursement is being sought, such General Partner hereby agrees to
reimburse the Partnership for such Liability to the extent that:
(i) the Liability relates to a Third Party Claim that has been
finally resolved and that the Partnership has actually paid (an "Expense");
(ii) the Expense is not covered by insurance carried by the
Partnership (excluding any amounts relating to insured claims to the extent that
they fall within deductibles or self-insured retentions or are above applicable
coverage limits); and
(iii) the Expense is not offset by third party indemnification or
otherwise;
provided, however, that such General Partner shall reimburse the Partnership for
the Expense only to the extent and in proportion to its Fault.
(b) Any claim by the Partnership for reimbursement under this Section
may be initiated upon written notice from a Nonconflicted General Partner to the
General Partner to whom the Partnership is entitled to look for indemnification,
and the General Partners shall have a period of 60 days during which to reach
unanimous agreement as to the terms on which any reimbursement shall be made. If
the General Partners are unable to agree or there are any disputes over Fault
and reimbursement under this Section, such matters shall be resolved pursuant to
the Dispute Procedures.
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").
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.
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.
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.
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.
All notices, requests and other communications that are required or may be
given under this Agreement shall, unless otherwise provided for elsewhere in
this Agreement, be in writing and shall be deemed to have been duly given if and
when (i) transmitted by telecopier facsimile with proof of confirmation from the
transmitting machine or (ii) delivered by commercial courier or other hand
delivery, as follows:
Lyondell Petrochemical Company Millennium Chemicals Inc.
1221 McKinney Street 99 Wood Avenue South
Houston, Texas 77010 Iselin, New Jersey 08830
Attention: Kerry A. Galvin Attention: George H. Hempstead, III
Telecopy Number: (713) 309-4718 Telecopy Number: (908) 603-6857
Occidental Petroleum Corporation Equistar Chemicals, LP
10889 Wilshire Blvd. P.O. Box 2583
Los Angeles, CA 90004 1221 McKinney Street
Attention: President Houston, Texas 77252-2583
Telecopy Number: (310) 443-6333 Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
With a copy to:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Telecopy Number: (310) 443-6333
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.
In construing this Agreement, the following principles shall be followed:
(i) no consideration shall be given to the captions of the articles, sections,
subsections or clauses, which are inserted for convenience in locating the
provisions of this Agreement and not as an aid in construction; (ii) no
consideration shall be given to the fact or presumption that any Partner had a
greater or lesser hand in drafting this Agreement; (iii) examples shall not be
construed to limit, expressly or by implication, the matter they illustrate;
(iv) the word "includes" and its syntactic variants mean "includes, but is not
limited to" and corresponding syntactic variant expressions; (v) the plural
shall be deemed to include the singular, and vice versa; (vi) each gender shall
be deemed to include the other gender; and (vii) each appendix, exhibit,
attachment and schedule to this Agreement is a part of this Agreement.
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.
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.
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.
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.
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.
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.
(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.
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.
EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS.
Millennium America is a party to this Agreement for the sole purpose of
evidencing its agreement to be bound by the provisions set forth in Section
8.6(c) and is not a partner of the Partnership and shall not have any rights
under this Agreement or any other obligations under this Agreement.
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.
At any such time as the Lease is terminated, expires or is otherwise not in
force and effect (other than a No Rebuilding Termination), the following shall
occur:
(a) The number of Units held by Occidental LP1 shall be reduced from 6,623
Units to 2,541 Units.
(b) The Partnership and Occidental LP1 shall form a general partnership
(the "LC Partnership") by entering into a partnership agreement having the
provisions described in Section 14.2 (the "GPA").
(c) The Partnership shall distribute to Occidental LP1 the balance in its
Capital Account.
(d) Occidental LP1 shall cause the Lake Charles Facility to be contributed
to the LC Partnership and shall contribute to the LC Partnership the amount
received pursuant to Section 14.1(c), plus an amount equal to any proceeds of a
partial condemnation of the Lake Charles Facility received by OCC under the
terms of the Lease, and the Partnership shall contribute to the LC Partnership
the amount received pursuant to Section 26(b) of the Lease in connection with
such termination of the Lease.
(e) Immediately after and as a result of the foregoing transactions, the
capital account of each of Occidental LP1 and the Partnership in the LC
Partnership shall be pro rata in accordance with the partners' equity ownership
interests, and Occidental LP1's Capital Account shall be the same per Unit as
the Capital Accounts of the other Partners (determined without regard to the
special allocations in Sections 4.1(a) through (c)).
(f) Sections 4.1(e) and (f) shall terminate.
The GPA shall include provisions to the following effect, as well as
other customary provisions:
(a) The LC Partnership shall be formed under the laws of Delaware. The two
partners shall be the Partnership and Occidental LP1. The Partnership shall have
an equity ownership interest of 49.9%, and Occidental LP1 shall have an equity
ownership interest of 50.1%.
(b) The term of the GPA shall be the same as the term of this Agreement.
(c) All issues relating to the LC Partnership must be decided by mutual
agreement of both partners, except that the LC Partnership shall enter into an
operating agreement with the Partnership (in its individual capacity), as
operator, that shall delegate to the operator the right and obligation to make
all day-to-day decisions of the LC Partnership, which day-to-day decisions shall
for this purpose be deemed to be all decisions of the LC Partnership other than
issues comparable to those issues set forth in Section 6.7 hereof (which issues
must be decided by the partners of the LC Partnership). Such operating agreement
shall provide for the LC Partnership to pay and reimburse the operator for all
costs whatsoever incurred or paid by the operator in performing its obligations
under the operating agreement. The term of such operating agreement shall be the
same as the term of the LC Partnership.
(d) All contributions and distributions will be made, and all book income
and deductions will be allocated, in accordance with the partners' equity
ownership interests. Tax items will be allocated between the partners in a
manner similar to that set forth in this Agreement.
(e) No partner in the LC Partnership may transfer (except a transfer to a
Wholly Owned Affiliate) or encumber its equity ownership without the consent of
the other partner.
Upon a No Rebuilding Termination, Occidental LP1 shall have the option to
contribute to the Partnership within 30 days following the No Rebuilding
Termination an amount (the "Payment Amount") equal to the excess, if any, of (a)
the Proceeds plus the book value (determined in accordance with GAAP) as
recorded on the books of OCC for that portion and aspect of the Lake Charles
Facility that consititutes land, over (b) the payment made pursuant to Section
26(b) of the Lease in connection with such No Rebuilding Termination. If within
such 30-day period Occidental LP1 contributes the Payment Amount to the
Partnership, (i) Occidental LP1's 6,623 Units shall remain outstanding, (ii) its
Capital Account shall be credited with the Payment Amount, (iii) the assets of
the Partnership shall be revalued so that the Capital Account of each Partner is
the same per Unit (determined without regard to the special allocations in
Sections 4.1(a) through (c)), and (iv) Sections 4.1(e) and (f) shall terminate.
If Occidental LP1 does not contribute the Payment Amount to the Partnership
within such 30-day period, (A) Occidental LP1's 6,623 Units shall be redeemed
and canceled and of no further force and effect and (B) an amount equal to the
balance in Occidental LP1's Capital Account shall be distributed by the
Partnership to Occidental LP1, or if there is a deficit in Occidental LP1's
Capital Account, Occidental LP1 shall contribute to the Partnership an amount of
cash necessary to eliminate such deficit. Upon completion of the steps in
clauses (A) and (B), Occidental LP1's entire interest in the Partnership shall
terminate.
If Occidental LP1 breaches any of its obligations under Section 14.1, (a)
Occidental LP1's 6,623 Units shall be redeemed and canceled and of no further
force and effect and (b) an amount equal to the balance in Occidental LP1's
Capital Account shall be distributed by the Partnership to Occidental LP1, or if
there is a deficit in Occidental LP1's Capital Account, Occidental LP1
shall contribute to the Partnership an amount of cash necessary to eliminate
such deficit. Upon completion of the steps in clauses (a) and (b), Occidental
LP1's entire interest in the Partnership shall terminate.
IN WITNESS WHEREOF, this Agreement has been executed on behalf of each of
the parties hereto, by their respective officers thereunto duly authorized,
effective as of the date first written above.
GENERAL PARTNERS
LYONDELL PETROCHEMICAL G.P. INC.
By: /s/ Dan F. Smith
--------------------------------------------
Name: Dan F. Smith
Title: President and Chief Executive Officer
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc., its Manager
By: /s/ George H. Hempstead III
---------------------------------------------
Name: George H. Hempstead III.
Title: Senior Vice President
PDG CHEMICAL INC.
By: /s/ R.J. Schuh
---------------------------------------------
Name: R.J. Schuh
Title: President
[Signature Page 1 of 3 for Amended and Restated Limited Partnership Agreement]
LIMITED PARTNERS
LYONDELL PETROCHEMICAL L.P. INC.
By:
--------------------------------------------
Name:
Title:
MILLENNIUM PETROCHEMICALS LP LLC
By: Millennium Petrochemicals Inc., its Manager
By: /s/ George H. Hempstead, III
-------------------------------------------
Name: George H. Hempstead, III
Title: Senior Vice President
OCCIDENTAL PETROCHEM PARTNER 1, INC.
By: /s/ John W. Morgan
-------------------------------------------
Name:John W. Morgan
Title: Vice President
OCCIDENTAL PETROCHEM PARTNER 2, INC.
By: /s/ John W. Morgan
-------------------------------------------
Name: John W. Morgan
Title: Vice President
[Signature Page 2 of 3 for Amended and Restated Limited Partnership Agreement]
SPECIAL JOINDER PURSUANT TO
SECTION 13.22
MILLENNIUM AMERICA INC.
By: /s/ George H. Hempstead, III
-------------------------------------------
Name: George H. Hempstead, III
Title: Senior Vice President
[Signature Page 3 of 3 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, (ii) in the case of Millennium GP and Millennium
LP shall not include Suburban Propane Partners, L.P. and any entities controlled
by it and (iii) in the case of Occidental GP, Occidental LP1 and Occidental LP2,
shall not include Canadian Occidental Petroleum Ltd. and any entities controlled
by it. For purposes of this definition the term "control" shall have the meaning
set forth in 17 CFR 230.405, as in effect on the date hereof.
Affiliated General Partner. In the case of Lyondell LP, the "Affiliated
General Partner" shall mean Lyondell GP. In the case of Millennium LP, the
"Affiliated General Partner" shall mean Millennium GP. In the case of each of
Occidental LP1 and Occidental LP2, the "Affiliated General Partner" shall mean
Occidental GP.
Affiliated Limited Partner. In the case of Lyondell GP, the "Affiliated
Limited Partner" shall mean Lyondell LP. In the case of Millennium GP, the
"Affiliated Limited Partner" shall mean Millennium LP. In the case of Occidental
GP, each of Occidental LP1 and Occidental LP2 shall be "Affiliated Limited
Partner".
Affiliated Partner Group. A General Partner and its Affiliated Limited
Partner or Affiliated Limited Partners, if more than one.
Agreed Rate. The base commercial lending rate announced by Citibank, N.A.
(or its successor) at its principal office, in effect from time to time, such
interest rate to change automatically, effective as of the date of each change
in such base rate.
Agreement. This Amended and Restated Limited Partnership Agreement of
Equistar Chemicals, LP, as amended from time to time.
Alternate. See Section 6.4(b).
Amended and Restated Indemnity Agreement. The Amended and Restated
Indemnity Agreement dated as of the date of this Agreement among Lyondell GP,
Lyondell LP, Millennium GP, Millennium LP, Millennium America, Occidental GP,
Occidental LP1, Occidental LP2 and OCC.
Amended and Restated Parent Agreement. The Amended and Restated Parent
Agreement dated as of the date of this Agreement between the Partnership,
Lyondell, Millennium, Occidental, Occidental Chemical Corporation and Oxy CH
Corporation.
Annual Budget. See Section 8.2.
Applicable Usury Laws. Laws regarding the use, forbearance or detention of
any indebtedness arising under this Agreement whether such laws are now or
hereafter in effect, including the laws of the United States of America or any
other jurisdiction whose laws are applicable, and including any subsequent
revisions to or judicial interpretations of those laws.
Arbitrator. See Appendix D.
Asset Fair Market Value. With respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such as in an arm's-length negotiated transaction with
an unaffiliated third party without time constraints.
Assumed Liabilities. In the case of Lyondell LP and Lyondell GP, Assumed
Liabilities means the "Assumed Liabilities" as defined in the Contribution
Agreement of Lyondell. In the case of Millennium LP and Millennium GP, Assumed
Liabilities shall mean the "Assumed Liabilities" as defined in the Contribution
Agreement of Millennium Petrochemicals. In the case of Occidental LP1,
Occidental LP2 and Occidental GP, Assumed Liabilities means the "Assumed
Liabilities" as defined in the Contribution Agreement of Occidental.
Auxiliary Committee. See Section 6.9.
Available Net Operating Cash. At the time of determination, (a) all cash
and cash equivalents on hand in the Partnership as of the most recent month end,
plus the excess, if any, of the Partnership Target Debt over the Partnership's
actual indebtedness (as determined in accordance with GAAP) as of such month
end, less (b) the Projected Cash Requirements, if any, of the Partnership as of
such month end, as determined by the Executive Officers of the Partnership. For
purposes of this definition, "Projected Cash Requirements" means, for the
12-month period following any such month end, the excess, if any, of the sum of
(a) forecast capital expenditures, plus (b) forecast cash payments for Taxes,
debt service including principal and
interest requirements and other non-cash credits to income, plus (c) forecast
cash reserves for future operations or other requirements, over the sum of (1)
forecast net income of the Partnership, plus (2) the sum of forecast
depreciation, amortization, other non-cash charges to income, interest expenses,
and Tax expenses, in each case to the extent deducted in determining net income,
plus or minus (3) forecast decreases or increases, respectively, in working
capital, plus (4) the forecast cash proceeds of dispositions of assets (net of
expenses) plus (5) an amount equal to the forecast net proceeds of debt
financings, contributions and payments of the Lyondell Note. For purposes of
this definition, "Partnership Target Debt" means for such month end, the level
of indebtedness (as determined in accordance with GAAP) projected for the
Partnership in the most recently approved Strategic Plan, except to the extent
the Executive Officers of the Partnership determine that changes in the
financial condition, results of operations, assets, business or prospects of the
Partnership make a change advisable, in which case the Partnership shall advise
the General Partners promptly regarding the basis for the change. Projected Cash
Requirements shall be calculated consistent with the most recently approved
Strategic Plan, except to the extent the Executive Officers of the Partnership
determine that changes in the financial condition, results of operations,
assets, business or prospects of the Partnership make a change advisable, in
which case the Partnership shall advise the General Partners promptly regarding
the basis for the change.
Bank Credit Agreement. The Credit Agreement dated as of November 25, 1997
among the Partnership, as Borrower, Millennium America, as Guarantor and the
lenders party thereto.
Bank Credit Agreement Repayment Amount. An amount equal to (i) $419,700,000
less (ii) the Bank Credit Agreement Available Amount, but in no event shall the
Bank Credit Agreement Repayment Amount be less than zero. The "Bank Credit
Agreement Available Amount" shall equal (i) $1.25 billion less (ii) the total
principal amount outstanding under the Bank Credit Agreement at the date of
calculation.
Bankruptcy. The occurrence of any of the following: (i) a Partner or its
Guarantor shall file a voluntary petition in bankruptcy or shall be adjudicated
a bankrupt or insolvent, or shall file any petition or answer or consent seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future applicable
federal, state or other statute or law relating to bankruptcy, insolvency, or
other relief for debtors, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver, conservator or liquidator of such Partner
or its Guarantor or of all or any substantial part of its properties or its
Units (the term "acquiesce," as used in this definition, includes the failure to
file a petition or motion to vacate or discharge any order, judgment or decree
within ten Business Days after entry of such order, judgment or decree); (ii) a
court of competent jurisdiction shall enter an order, judgment or decree
approving a petition filed against any Partner or its Guarantor seeking a
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the present or any future federal bankruptcy act, or any
other present or future applicable federal, state or other statute or law
relating to bankruptcy, insolvency, or other relief for debtors, and such
Partner or its Guarantor shall acquiesce in the entry of such order, judgment or
decree or such other order, judgment or decree shall remain unvacated and
unstayed for an aggregate of 60 days (whether or not consecutive) from the date
of entry thereof, or any trustee, receiver, conservator or liquidator of such
Partner or its Guarantor or of all or any substantial part of its property or
its Units shall be appointed without the consent or acquiescence of such Partner
or its Guarantor and such appointment shall remain unvacated and unstayed for an
aggregate of 60 days (whether or not consecutive); (iii) a Partner or its
Guarantor shall admit
in writing its inability to pay its debts as they mature; (iv) a Partner or its
Guarantor shall give notice to any governmental body of insolvency or pending
insolvency, or suspension or pending suspension of operations; or (v) a Partner
or its Guarantor shall make an assignment for the benefit of creditors or take
any other similar action for the protection or benefit of creditors.
Book Value. With respect to any asset of the Partnership, the asset's
adjusted basis as of the relevant date for federal income tax purposes, except
as follows:
(i) The initial aggregate Book Value of all of the assets of the
Partnership as of the Initial Closing Date shall be equal to the sum of
(A) the beginning aggregate Capital Accounts of the Partners immediately
after the Initial Closing Date, and (B) the aggregate amount of all
liabilities of the Partnership for federal income tax purposes
immediately after the Initial Closing Date.
(ii) The initial Book Value of any asset contributed by a Partner
to the Partnership after the Initial Closing Date shall be the gross
fair market value of such asset, which shall be equal to the amount
credited to such Partner's Capital Account for such contribution
(increased by the amount of any liabilities which the Partnership
assumes or takes subject to).
(iii) The Book Values of all Partnership assets (including
intangible assets such as goodwill) shall be adjusted (at the election
of the Partnership Governance Committee) to equal their respective gross
fair market values upon the occurrence of any of the events described in
Regulation 'SS'1.704-1(b)(2)(iv)(f)(5).
(iv) The Book Value of any asset distributed by the Partnership
to a Partner shall be equal to the gross fair market value of such asset
on the date of the distribution.
(v) The Book Value of any Partnership asset with respect to which
an adjustment to tax basis has occurred by reason of the application of
Section 734(b) or 754(b) of the Code 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).
(vi) If the Book Value of an asset is not equal to its adjusted
tax basis for federal income tax purposes, such Book Value shall be
adjusted by the Depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses and other items
allocated pursuant to Section 4.1.
The foregoing definition of Book Value is intended to comply with the provisions
of Regulation '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.
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."
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 and Lyondell LP, in the case of a Default
by Lyondell GP, Lyondell LP or their Guarantor; Millennium GP and Millennium LP,
in the case of a Default by Millennium GP, Millennium LP or their Guarantor; and
Occidental GP, Occidental LP1 and Occidental LP2, in the case of a Default by
Occidental GP, Occidental LP1, Occidental LP2 or their Guarantor.
Depreciation. For each fiscal year or part thereof, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such year or other
period, except that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year,
Depreciation shall be (i) an amount which bears the same ratio to such Book
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such adjusted tax basis, or, (ii) if
the federal income tax depreciation, amortization or other cost recovery
deduction for such year is equal to zero, an amount determined with reference to
such Book Value using a reasonable method selected by the Tax Matters Partner.
Dispute Notice. See Appendix D.
Disputing Partner. See Appendix D.
Executive Officers. See Section 7.1(b).
Expense. See Section 13.3(a).
Fair Market Value. "Fair Market Value" with respect to the Partnership
shall mean the Asset Fair Market Value of all of the Partnership's assets
decreased by the fair value of all its liabilities, as of the most recently
ended fiscal quarter. "Fair Market Value" with respect to a Related Business
shall mean the Asset Fair Market Value of all the assets of such Related
Business decreased by the fair value of all its liabilities, as of the most
recently ended fiscal quarter. In either case, the following shall apply to the
determination of Fair Market Value:
(i) The General Partners shall first attempt to agree on such
value, which if agreed to shall be the Fair Market Value.
(ii) If the General Partners are unable to agree within 20 days
of the first written notice from one General Partner to the others
proposing an amount to be the Fair Market Value (the "Notice"), then if
requested by any General Partner, each General Partner shall (at its own
cost) cause an independent, qualified appraiser to deliver a written
appraisal of its determination of the Fair Market Value within 50 days
of the Notice. If both of the two lowest appraised values are greater
than or equal to 90% of the highest appraised value, then the middle of
the three appraised values shall be the Fair Market Value.
(iii) If either of the two lowest appraised values are lower than
90% of the highest appraised value, then the General Partners shall
jointly appoint a Neutral within 20 days of the delivery of both such
appraisals. If the General Partners have been unable to agree upon such
appointment within such 20 days, then such Neutral shall upon the
application of any General Partner be appointed within 10 days of the
filing of such application by the Center for Public Resources, or if
such appointment is not so made promptly then promptly thereafter by the
American Arbitration Association in Philadelphia, Pennsylvania, or if
such appointment is not so made promptly then promptly thereafter by the
senior United States District Court judge sitting in Wilmington,
Delaware. The fees and expenses of the Neutral shall be paid equally by
the Partners.
(iv) The Neutral shall, within 30 days of the appointment of the
Neutral, determine which of the three appraised values (without in any
way modifying or compromising between the three appraised values) is
closest to the fair market value of the enterprise's assets as
determined by the Neutral, and that appraised value shall be the Fair
Market Value.
Fault. Any act or omission of a Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as such)
that constitutes or results from intentional misconduct, criminal intent or
gross negligence.
Finally Determined. Determined by any final, nonappealable judicial
order or pursuant to a binding alternative dispute resolution procedure.
Funding Notice. See Section 2.4.
GAAP. United States generally accepted accounting principles, as in effect
from time to time.
General Partners. Each Person who executes this Agreement and who is hereby
admitted to the Partnership as a general partner of the Partnership, unless such
General Partner ceases to be a General Partner hereunder or sells, transfers,
forfeits or otherwise disposes of its Units and is replaced by a Substitute
General Partner in accordance with this Agreement and the Act, and each Person
that becomes a Substitute General Partner, if any, of the Partnership as
provided herein, in such Person's capacity as a general partner of the
Partnership.
GPA. See Section 14.1(b).
Guarantor. Lyondell Petrochemical Company, with respect to Lyondell GP and
Lyondell LP; Millennium Chemicals Inc., with respect to Millennium GP and
Millennium LP; Occidental Chemical Corporation and Oxy CH Corporation, with
respect to Occidental GP, Occidental LP1 and Occidental LP2; and any successor
or additional guarantor party to an agreement substantially in the form of the
Amended and Restated Parent Agreement and entered into in accordance with
Section 10.
Highest Lawful Rate. The maximum rate of interest, if any, that may be
charged to any person under all Applicable Usury Laws on any principal balance
from time to time outstanding pursuant to this Agreement.
HSE Law. "HSE Law," as defined in Section 1 of the Contribution Agreement.
Indemnified Party. See Section 13.2(c).
Indemnifying Party. See Section 13.2(c).
Interest Period. The period commencing on the date of this Agreement and
ending one month thereafter and, thereafter, each subsequent period commencing
on the last day of the immediately preceding Interest Period and ending one
month thereafter; provided, however, that whenever the last day of any Interest
Period would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding Business
Day.
Initial Agreement. See first WHEREAS clause.
Initial Assets. "Assets," as defined in Section 1 of the applicable
Contribution Agreement.
Initial Closing Date. December 1, 1997, the date the closing under the
Initial Master Transaction Agreement took place.
Initial Master Transaction Agreement. The Master Transaction Agreement,
dated July 25, 1997, as amended, between Lyondell and Millennium, providing for
the execution of various agreements concerning the Partnership and the Initial
Assets.
Initial Notice. See Section 10.2(a).
Initial Partners. See first WHEREAS clause.
Initial Related Agreements. The agreements defined as "Related Agreements"
in the Initial Master Transaction Agreement (other than the Partnership
Agreement), as such agreements may be amended from time to time after the
Initial Closing Date.
IRS. Internal Revenue Service.
Lake Charles Facility. The property that is the subject of and leased
pursuant to the Lease.
LC Partnership. See Section 14.1(b).
Lease. The Lease Agreement, dated May 15, 1998, between OCC, as lessor,
and Occidental LP1, as lessee.
Liability. Any loss, claim, damages, fine, penalty, assessment by public
agencies, settlement, cost or expense (including costs of investigation, defense
and attorneys' fees) or other liability.
LIBOR Rate. For any Interest Period, the rate per annum (rounded upwards,
if necessary, to the nearest 1/16th of 1%) published in the Wall Street Journal
as the London Interbank Offered Rate for a one month period as of two Business
Days prior to the first day of such Interest Period; provided if no such rate
appears the rate shall be as shown on page 3750 of the Dow Jones & Company
Telerate screen or any successor page as the composite offered rate for London
interbank deposits with a period equal to one month, as shown under the heading
"USD" as of 11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period; provided that if no such rate appears, the rate shall be
the rate per annum equal to the arithmetic mean (which shall be rounded upward
to the nearest 1/16 of 1% per annum) of which U.S. dollar deposits with an
Interest Period equal to one month are displayed on page "LIBO" of the Reuters
Monitor Money Rates Service or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period.
Limited Partner. Each Person who executes this Agreement and who is hereby
admitted to the Partnership as a limited partner of the Partnership, unless such
Limited Partner ceases to be a Limited Partner hereunder or sells, transfers,
forfeits or otherwise disposes of its Units and is replaced by a Substitute
Limited Partner in accordance with this Agreement and the Act, and each Person
that becomes a Substitute Limited Partner, if any, of the Partnership as
provided herein, in such Person's capacity as a limited partner of the
Partnership.
Limited Partners Pro Rata. From or to the Limited Partners in the ratio
of the Units owned by each.
Liquidation. See Section 11.4.
Losses. See definition of "Profits and Losses."
Lyondell. See first WHEREAS clause.
Lyondell Assumed Debt. Debt issued by Lyondell having an aggregate
principal amount of $745 million, as specified in the Contribution Agreement
with respect to Lyondell.
Lyondell GP. See introductory paragraph to this Agreement.
Lyondell LP. See introductory paragraph to this Agreement.
Lyondell Note. The promissory note dated December 1, 1997, in the
amount of $345 million payable by Lyondell LP to the Partnership.
Maximum Amount. The maximum nonusurious amount of interest that may be
lawfully contracted for, charged or received by any person in connection with
any indebtedness arising under this Agreement under all Applicable Usury Laws.
Millennium. See first WHEREAS clause.
Millennium America. Millennium America Inc., a Delaware corporation.
Millennium America Guarantee. See Section 8.6(c).
Millennium America Guaranteed Debt. The portion, if any, of the debt
outstanding under the Bank Credit Agreement and the portion, if any, of any debt
that refinances the debt outstanding under the Bank Credit Agreement or any
subsequent refinancing thereof (in any case, not to exceed a guarantee of $750
million principal amount), in each case to the extent such debt is guaranteed by
Millennium America, or an Affiliate thereof, as contemplated by Section 8.6(c).
Millennium GP. See introductory paragraph to this Agreement.
Millennium LP. See introductory paragraph to this Agreement.
Neutral. A neutral Person acceptable to all of the appointing Partners
and not affiliated with any of the Partners, except where otherwise
specifically provided.
No Rebuilding Termination. A total termination of the Lease pursuant to
Section 12(b) or 13 thereof.
Nonconflicted General Partner. With respect to any Conflict Circumstance,
any General Partner that is not the Conflicted General Partner with
respect thereto.
Non-Defaulting Partners. The Partners other than the Defaulting Partners.
OCC. Occidental Chemical Corporation, a New York corporation.
Occidental. See third WHEREAS clause.
Occidental GP. See introductory paragraph to this Agreement.
Occidental LP1. See introductory paragraph to this Agreement.
Occidental LP2. See introductory paragraph to this Agreement.
Occidental Partners. See third WHEREAS clause.
Offeree Partners. See Section 10.2(a).
Operating Budget. See Section 8.2(c).
Oxy Guaranteed Debt. The $419,700,000 drawdown under the Bank Credit
Agreement pursuant to Section 8.6(a) and the portion, if any, of any debt that
refinances the $419,700,000 drawdown under the Bank Credit Agreement or any
subsequent refinancing thereof (in any case, not to exceed a guarantee of
$419,700,000 principal amount), in each case to the extent such debt is
guaranteed by Occidental Chemical Corporation, a New York corporation, or an
Affiliate thereof and the proceeds thereof have been distributed to Occidental
LP2 pursuant to Section 3.1(g) and, until such amount has been so drawn and
distributed, "Oxy Guaranteed Debt" shall mean the Oxy Note to the extent the
obligations thereunder are indemnified by OCC pursuant to the Amended and
Restated Indemnity Agreement.
Oxy Note. The Promissory Note dated May 15, 1998 in the principal amount of
$419,700,000 payable by the Partnership to Occidental LP2.
Oxy Petrochemicals. Oxy Petrochemicals Inc., a Delaware corporation.
Partners. The General Partners and the Limited Partners on the date of this
Agreement until such Person ceases to be a partner of the Partnership.
Partners Pro Rata. From or to all Partners in the ratio of the Units
owned by each.
Partnership. Equistar Chemicals, LP, a Delaware limited partnership, the
limited partnership formed and continued under the Act and this Agreement.
Partnership Governance Committee. See Section 6.1.
Partnership Governance Committee Action. See Section 6.1.
Payment Amount. See Section 14.3.
Proceeds. The Insurance Proceeds, the Self-Insurance Proceeds and the
Condemnation Proceeds (each as defined in the Lease), to the extent actually
received by the lessor under the Lease pursuant to the Lease.
Profits and Losses. For each applicable period, the Partnership's taxable
income or loss for such period determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in taxable income or loss) with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken in account in computing Profits or
Losses pursuant to this definition shall be added to such taxable income
or loss.
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as such pursuant to Regulation
'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.
Related Agreements. The Initial Related Agreements and the Occidental
Related Agreements.
Related Business. Any business related to (i) the manufacturing, marketing
and distribution of Specified Petrochemicals; (ii) the purchasing, processing
and disposing of feedstocks in connection with the manufacturing, marketing and
distributing of Specified Petrochemicals; and (iii) any research and development
in connection with the foregoing.
Related Persons. See Section 13.1.
Representative. See Section 6.4(a).
SEC. Securities and Exchange Commission.
Second Master Transaction Agreement. See third WHEREAS clause.
Selling Partners. See Section 10.2(a).
Specified Petrochemicals.
(i) Olefins and olefins coproducts consisting of: ethylene, propylene,
butadiene, and mixed butylenes; aromatics and gasoline blending components
(benzene, toluene, MTBE, alkylate, pyrolysis gasolines); mixed C5 hydrocarbons;
resin formers (dicyclopentadiene, isoprene, piperylenes, resin oil); pyrolysis
liquid fuel products (pyrolysis gas oil, pyrolysis fuel oil);
(ii) Polyolefins consisting of: low-density, linear low-density, and
high-density polyethylene; polypropylene; ethylene/propylene copolymers;
rotomolding and polymeric powders; wire and cable resins; adhesive tie layers;
hot melt adhesive resins; colors and concentrates; fuel additives;
(iii) Ethyl alcohol and ethyl ether; and
(iv) Ethylene oxide, ethylene glycol and derivatives thereof.
provided, however that the definition of Specified Petrochemicals shall in no
event include polyvinyl chloride or resins derived from phenol compounds or
dicyclopentadiene.
Specified Petrochemicals Businesses. The businesses related to Specified
Petrochemicals.
Strategic Plan. See Section 8.1.
Substitute General Partner. A Person who is admitted as a General Partner
to the Partnership in place of and with all the rights of a General Partner.
Substitute Limited Partner. A Person who is admitted as a Limited Partner
to the Partnership in place of and with all the rights of a Limited Partner.
Taxes. All taxes, charges, fees, levies or other assessments imposed by any
taxing authority, including, but not limited to, income, gross receipts, excise,
property, sales, use,
transfer, payroll, license, ad valorem, value added, withholding, social
security, national insurance (or other similar contributions or payments),
franchise, severance and stamp taxes (including any interest, fines, penalties
or additions attributable to, or imposed on or with respect to, any such taxes,
charges, fees, levies or other assessments) and "Tax Return" means any return,
report, information return or other document (including any related or
supporting information) with respect to Taxes.
Tax Matters Partner. Lyondell GP.
Third Party Claim. Any allegation, claim, civil, criminal or other action,
proceeding, charge or prosecution brought by any Person other than the
Partnership, any Partner or any Affiliate of a Partner.
Transfer. To sell, assign or otherwise in any manner dispose of, whether by
act, deed, merger, consolidation, conversion or otherwise. Such defined term is
used in this Agreement as both a noun and a verb.
Unit. A unit representing a partnership interest in the Partnership.
Wholly Owned Affiliate. As to any Person, an Affiliate of such Person all
of the equity interests of which are owned, directly or indirectly, by a
Partner, by another Wholly Owned Affiliate of such Person or by the ultimate
parent entity thereof.
Wholly Owned Subsidiary. As to any Person, a subsidiary of such Person all
of the equity interests of which are owned, directly or indirectly, by such
Person.
APPENDIX 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 10th work day following quarter-end
and Alternative Minimum Taxable Income
Item & Frequency Due Dates
- ---------------- ---------
Annual:
- -------
Analysis for Investor Relations and Form 10-K 15th work day following year-end
disclosures
- Same as quarterly requirements
- Plant Capacities
Audited Financial Statements 60 days following year-end
APPENDIX C
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
EXECUTIVE OFFICERS
------------------
Dan F. Smith Chief Executive Officer
Eugene R. Allspach President and Chief Operating Officer
Joseph M. Putz Senior Vice President, Finance and Administration
Debra L. Starnes Senior Vice President, Polymers
John R. Beard Vice President, Manufacturing
Clifton B. Currin, Jr. Vice President, Supply and Optimization
J. R. Fontenot Vice President, Engineering
Brian A. Gittings Vice President, Oxygenated Chemicals
Alan Houlton Vice President, Customer Supply Chain
Gerald A. O'Brien Vice President and Secretary
Myra J. Perkinson Vice President, Human Resources
W. Norman Phillips, Jr. Vice President, Petrochemicals
Kerry F. Williams Vice President, Research and Development
Jeffrey L. Hemmer Director, Business Process Improvement
APPENDIX 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 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. The arbitration
award shall be final and binding on the Partners, and judgment thereon may be
entered in any court of competent jurisdiction, and may not be appealed except
to the extent permitted by the Federal Arbitration Act.
(4) Continuation of Business. Notwithstanding the existence of any Dispute
or the pendency of any procedures pursuant to this Appendix, the Partners agree
and undertake that all payments not in dispute shall continue to be made and all
obligations not in dispute shall continue to be performed.
APPENDIX 1 TO APPENDIX D
------------------------
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the Partners and their Affiliates as set forth in the Partnership Agreement.
(b) Second priority shall be given to resolution of the Dispute in a
manner which best achieves the objectives of the business activities and
arrangements under the Partnership Agreement and the Related Agreements and
permits the Partners to realize the benefits intended to be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
Partners or the Arbitrator shall determine to be appropriate under the
circumstances.
APPENDIX E
TO LIMITED PARTNERSHIP AGREEMENT
--------------------------------
DIVISION OF PARTNERSHIP BUSINESS
--------------------------------
If the Partnership is dissolved and Section 12.2(e) applies to the winding
up of the affairs of the Partnership, the Partnership properties shall, to the
extent legally and contractually feasible and, after satisfaction of the
liabilities of the Partnership (whether by payment or reasonable provision for
payment), be distributed in kind to the Partners in accordance with a division
(the "Division") of the properties. The Division shall be implemented by
dividing the properties, to the extent feasible, in accordance with the
following priorities and principles:
A. First priority shall be given to maximizing the consistency of the
Division with a division of the Partnership properties that allocates to
each Partner (subject to such Partner's Percentage Interest of the
Partnership's liabilities) Partnership properties in proportion to the
value of such Partner's Percentage Interest in the Partnership's business
taking into account the aggregate Asset Fair Market Value of the
Partnership's properties and the
value and benefits afforded to such Partner under the Partnership
Agreement and the other Related Agreements.
B. Second priority shall be given to the allocation of the Partnership's
various assets and business units between the Partners so as to maximize
the aggregate going concern value of the respective assets and business
units allocated to each Partner, taking into account, without limitation,
the potential synergies and efficiencies that are reasonably achievable in
connection with the operation of such allocated assets and business units
as an independent business entity.
C. Third priority shall be given to maximizing the consistency of the
Division with the nature and quality of the Assets and Contributed
Business originally transferred to the Partnership by the respective
Partners or their Affiliates.
Absent an agreement by the Partners or direction by the Neutral as to both
(i) how the Partners should allocate Partnership debt and (ii) the process for
relieving each Partner of liability for that portion of Partnership debt
allocated to the other Partner, the Partners (A) shall be jointly and severally
liable to the holders of all Partnership debt and (B) as between the Partners,
each Partner shall be obligated to pay to holders of the debt its Percentage
Interest of all payments of principal and interest on Partnership Debt.
Notwithstanding the foregoing, the Neutral shall be entitled to direct, and any
Partner may propose, an alternative allocation of Partnership debt in any
circumstance where such alternative allocation is reasonably likely to result in
a Division that is more consistent with the priorities outlined above.
For purposes of this Appendix E, Lyondell GP and Lyondell LP shall be
treated as if they were a single Partner, Millennium GP and Millennium LP shall
be treated as if they were a single Partner and Occidental GP, Occidental LP1
and Occidental LP2 shall be treated as if they were a single Partner.
The Partners shall attempt to agree on a plan for a mutually acceptable
Division. If they are unable to so agree after 60 days following the occurrence
of the dissolution, a Neutral shall be appointed in accordance with Appendix D
and each Partner shall submit to the Neutral a written proposal for a Division.
The Neutral shall decide which of the three proposals (without in any way
modifying or compromising between the three proposals) more closely follows the
priorities and principles set forth above, and the proposal so chosen shall
thereupon be binding upon all Partners and shall be promptly implemented under
the direction of the Neutral. The Neutral shall be entitled to employ (at the
expense of the Partnership) such financial and accounting advisors and legal
counsel as he or she shall select, provided that no such advisor or counsel
shall have any affiliation with any Partner.
SCHEDULE 2.3(d)
Effective Date Capital Account Balances
---------------------------------------
Column I reflects Capital Accounts after the contributions of the Occidental
Partners on the Effective Date and the Effective Date adjustments to the Capital
Accounts of the Initial Partners, but before the other contributions and
distributions described in Section 2.3(c). Column II indicates the amount of the
contributions and distributions described in 2.3(c) other than accrued interest.
Column III reflects the Capital Accounts if such contributions and distributions
were
made (and accrued interest was paid and distributed) on the Effective Date.
Column IV reflects the number of Units owned by each Partner.
PARTNER I II III IV
------- - -- --- --
Lyondell GP $ 42,451,400 $ 42,451,400 820
Lyondell GP 1,931,768,600 $ 148,350,000 2,080,118,600 40,180
------
41,000
Millennium GP 30,544,300 30,544,300 590
Millennium GP 1,720,020,000 (223,350,000) 1,496,670,000 28,910
------
29,500
Occidental GP 15,272,150 15,272,150 295
Occidental LP1 342,872,650 342,872,650 6,623
Occidental LP2 1,588,770,000 (419,700,000) 1,169,070,000 22,582
------------- ------------- ------------- ------
29,500
$5,671,699,100 $ (494,700,000) $5,176,999,100
============== =============== ==============
* 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.