EXHIBIT 2.1
_______________________________________________
ASSET TRANSFER AGREEMENT
BETWEEN
OCCIDENTAL CHEMICAL CORPORATION
AS SELLER
AND
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
AS BUYER
DATED AS OF AUGUST 12, 1994
___________________________
PVC PRODUCTION ASSETS
ADDIS, LOUISIANA
___________________________
_______________________________________________
LIST OF SCHEDULES
Schedule Description
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1.1 Permitted Liens
2.2(b) Addis Contracts
2.2(c) Addis Equipment
2.2(d) Addis Permits
2.2(e) Addis Real Estate Interests
2.2(f) Addis Technology and Know How
2.2(i) Addis Technical Materials
2.4(j) Excluded Patent and Technology Assets
5.3 Exceptions to Title
5.4 Excepted Defaults
5.5 Litigation and Proceedings
5.6 Seller's Third Party Approvals
5.7 Other Liabilities
5.8 Non-Compliance
5.9 Exceptions to Required Permits
5.11(a) Employee Listing
5.11(b) Labor Disputes
5.12 Seller's Employee Benefit Plans
5.14 Off Site Waste Disposal
5.18 Financial Data
5.19 Environmental Condition
6.3 Buyer's Employee Benefit Plans
6.4 Buyer's Third Party Approvals
7.5 Environmental Assessment
7.6 Construction Debris Removal
LIST OF ANNEXES
Annex Description
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A Change Adjustment Worksheet
B Form of Seller's Opinion of Counsel
C Form of Buyer's Opinion of Counsel
D Form of VCM Supply Agreement
E Form of PVC Tolling Agreement
F Form of Deed
G Form of Assignment and Assumption Agreement
TABLE OF CONTENTS
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Parties and Recitals 1
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.................................... 1
SECTION 1.2 Accounting Terms............................... 5
SECTION 1.3 Accounting and Financial Determinations........ 5
SECTION 1.4 Other Defined Terms; Use of Defined Terms...... 5
ARTICLE II
AGREEMENTS OF PURCHASE AND SALE; ASSUMPTION OF CERTAIN
LIABILITIES
SECTION 2.1 Purchase and Sale.............................. 5
SECTION 2.2 Scope of Included Assets....................... 5
SECTION 2.3 Seller's Retention of Excluded Assets.......... 6
SECTION 2.4 Scope of Excluded Assets....................... 6
SECTION 2.5 Assumption of Liabilities...................... 6
SECTION 2.6 Excluded Liabilities........................... 6
SECTION 2.7 License........................................ 6
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ARTICLE III
PURCHASE PRICE; ADJUSTMENT FOR CHANGES
SECTION 3.1 Purchase Price................................. 7
SECTION 3.2 Allocation of Purchase Price................... 7
SECTION 3.3 Purchase Price Adjustment...................... 7
ARTICLE IV
CLOSING
SECTION 4.1 Time and Location.............................. 8
SECTION 4.2 Delivery of Instruments and Payment............ 8
SECTION 4.3 Taxes.......................................... 9
SECTION 4.4 Exemption From Hart-Scott-Rodino Filing........ 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 5.1 Corporate Organization......................... 9
SECTION 5.2 Corporate Authority............................ 9
SECTION 5.3 Good Title..................................... 9
SECTION 5.4 No Defaults.................................... 10
SECTION 5.5 Litigation and Proceedings..................... 10
SECTION 5.6 Governmental and Third Party Approvals......... 10
SECTION 5.7 Other Liabilities.............................. 10
SECTION 5.8 No Violations.................................. 10
SECTION 5.9 Permits........................................ 10
SECTION 5.10 Acquisition of All Assets...................... 11
SECTION 5.11 Employees; Labor Relations..................... 11
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SECTION 5.12 Employee Benefit Plans......................... 11
SECTION 5.13 Taxes.......................................... 11
SECTION 5.14 Off Site Disposal.............................. 11
SECTION 5.15 Material Contracts and Agreements.............. 11
SECTION 5.16 Technology and Know-How Being Transferred...... 12
SECTION 5.17 Equipment Being Transferred.................... 12
SECTION 5.18 Financial Information Accurate................. 12
SECTION 5.19 Environmental Condition........................ 12
SECTION 5.20 No Other Representations or Warranties......... 13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 6.1 Partnership Organization....................... 13
SECTION 6.2 Authority...................................... 13
SECTION 6.3 Employee Benefit Plans......................... 14
SECTION 6.4 Governmental and Third Party Approvals......... 14
ARTICLE VII
COVENANTS OF SELLER
SECTION 7.1 Operation of the Included Assets............... 14
SECTION 7.2 Further Assurances............................. 14
SECTION 7.3 Further Investigation.......................... 14
SECTION 7.4 Transitional Assistance........................ 15
SECTION 7.5 Environmental Assessment....................... 15
SECTION 7.6 Construction Debris Commitment................. 16
SECTION 7.7 First Month's Resin Production................. 16
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SECTION 7.8 First Month's VCM Supply....................... 16
SECTION 7.9 Financial Statements........................... 16
SECTION 7.10 Clean Reactor System........................... 16
ARTICLE VIII
COVENANTS OF BUYER
SECTION 8.1 Confidentiality................................ 16
SECTION 8.2 Occidental Name................................ 16
SECTION 8.3 Post Closing Access............................ 17
SECTION 8.4 Records Access; Transitional Assistance........ 17
SECTION 8.5 Prohibition Against Recruitment................ 17
SECTION 8.6 Wastewater Treatment Ponds..................... 17
SECTION 8.7 Construction Debris Commitment................. 18
SECTION 8.8 First Month's Resin Production................. 18
SECTION 8.8A First Month's VCM Supply....................... 18
SECTION 8.9 No Reduction in Compensation................... 18
SECTION 8.10 Participation in Health Maintenance
Organization.................................. 18
SECTION 8.11 Diligent Pursuit of Financing.................. 18
SECTION 8.12 License to Operate the .... 19
ARTICLE IX
EMPLOYEE MATTERS
SECTION 9.1 Offers of Employment........................... 19
SECTION 9.2 Participation in Buyer's Employee Benefit
Plans......................................... 20
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SECTION 9.3 Liability for Severance Benefits............... 20
SECTION 9.4 Certain Medical Plan Deductibles and Benefits.. 20
SECTION 9.5 Benefit Plans Transfer......................... 20
SECTION 9.6 Coordination of Benefit Plans for Retirees..... 21
SECTION 9.7 Final Payroll.................................. 22
SECTION 9.8 Certain Employee Related Liabilities........... 22
SECTION 9.9 Buyer's Compensation Practices and Benefit
Plans......................................... 22
SECTION 9.10 No Restriction on Seller's or Buyer's Rights
to Amend or Terminate......................... 22
ARTICLE X
TERMINATION
SECTION 10.1 Mutual Consent................................. 23
SECTION 10.2 Failure of Financing Contingency............... 23
SECTION 10.3 Misrepresentation or Breach.................... 23
SECTION 10.4 Court Order.................................... 23
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF BUYER
SECTION 11.1 Performance.................................... 23
SECTION 11.2 Collateral Agreements.......................... 24
SECTION 11.3 Corporate Authorization........................ 24
SECTION 11.4 Opinion of Seller's Counsel.................... 24
SECTION 11.5 Representations and Warranties True............ 24
SECTION 11.6 No Violations of Statutes...................... 24
SECTION 11.7 Federal Trade Commission Approval.............. 24
SECTION 11.8 Licenses, Consents and Approvals............... 25
SECTION 11.9 Results of Environmental Assessment............ 25
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ARTICLE XII
CONDITIONS TO OBLIGATIONS OF SELLER
SECTION 12.1 Performance.................................... 25
SECTION 12.2 Authorizations................................. 25
SECTION 12.3 Opinion of Buyer's Counsel..................... 25
SECTION 12.4 Representations and Warranties True............ 26
SECTION 12.5 No Violations of Statutes...................... 26
SECTION 12.6 Federal Trade Commission Approval.............. 26
SECTION 12.7 Licenses, Consents and Approvals............... 26
ARTICLE XIII
INDEMNITIES; SURVIVAL
SECTION 13.1 Seller's Indemnity - General and Contractual... 26
SECTION 13.2 Seller's Indemnity - Environmental............. 26
SECTION 13.3 Buyer's Indemnity - General and Contractual.... 27
SECTION 13.4 Buyer's Indemnity - Environmental.............. 27
SECTION 13.5 Limitations.................................... 28
SECTION 13.6 Threshold for Claims........................... 28
SECTION 13.7 Claim Deductibles.............................. 29
SECTION 13.8 Claim Limits................................... 29
SECTION 13.9 Notice of Claims............................... 30
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Inability to Obtain Certain Consents........... 30
SECTION 14.2 Costs and Expenses; Brokerage.................. 31
SECTION 14.3 Bulk Sales Laws................................ 31
SECTION 14.4 Titles for Convenience......................... 31
SECTION 14.5 Successors and Assigns......................... 31
SECTION 14.6 Entire Agreement; Amendment.................... 31
SECTION 14.7 Governing Law.................................. 31
SECTION 14.8 Notices........................................ 32
SECTION 14.9 Public Statements.............................. 32
SECTION 14.10 Third Party Beneficiaries...................... 33
ASSET TRANSFER AGREEMENT
THIS AGREEMENT, dated as of August 12, 1994, is between OCCIDENTAL CHEMICAL
CORPORATION, a New York corporation (hereinafter called "Seller") and BORDEN
CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP, a Delaware limited
partnership (hereinafter called "Buyer"). Seller and Buyer are hereinafter
sometimes collectively referred to as the "parties" and each singularly as a
"party".
WITNESSETH:
WHEREAS, Seller is engaged in the business of producing and marketing PVC (as
such term and certain other terms used with initial capital letters in this
Agreement are defined in Article I hereof) resins, which business consists of
the facilities, machinery, equipment, technology, intellectual property rights,
inventories, permits and licenses, real and personal property, contracts, leases
and other assets, wheresoever located throughout the world, owned, leased,
employed or otherwise used by Seller in connection with the manufacture and
marketing of PVC resins (the "Business"); and
WHEREAS, Seller wishes to sell to Buyer certain of the assets used in the
Business (the "Included Assets" as hereinafter more specifically defined), and
to retain that portion of the Business constituting the Excluded Assets; and
WHEREAS, Buyer wishes to purchase the Included Assets from Seller;
NOW, THEREFORE, in consideration of the premises and the mutual benefits,
covenants, and agreements herein contained, the parties have agreed and do
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated
(such meanings to be equally applicable to both the singular and the plural
forms of the terms defined):
"Addis Business Records" means (i) originals or copies of the books of
account; records; files; invoices; customer lists; supplier lists; health,
safety or environmental records and other similar data used in connection with
the Facility, excluding any portion of such data that relates to a production
facility other than the Facility, and (ii) the name and address of, and the name
and telephone number of the contact person(s) at, each of the customers to whom
Seller has supplied suspension PVC homopolymer jointly from the Facility and
from another production facility owned by Seller, and (iii) that portion of the
customer records and files for each such customer that relates solely to sales
to such customer from the Facility, and (iv) a copy of all other customer
records and files for each such
customer excluding any portion of such records and files that relates solely to
sales to such customer from a production facility other than the Facility.
"Addis Confidential Technology Information" means all portions and aspects of
the OxyChem Addis Technology except that which at the Closing Date is or
subsequently becomes part of the public domain through no fault of Buyer, or
information that Buyer demonstrates by documentary evidence was in Buyer's
possession free of any obligation of secrecy at the time of receipt from Seller,
or information that subsequent to the Closing Date comes into Buyer's possession
from an independent third party not under obligation of secrecy to Seller.
Aspects or portions of the OxyChem Addis Technology which are specific shall not
be deemed to be within the foregoing exceptions solely because they are embraced
by more general information in the public domain or in the prior possession of
Buyer. In addition, any combination of features shall not be deemed to be
within the foregoing exceptions solely because individual features are in the
public domain or in the possession of Buyer, but only if the combination itself
and its principle of operation are in the public domain or in the possession of
Buyer.
"Addis Contracts" means originals or copies of all the contracts, licenses,
leases, commitments, sales orders and purchase orders that pertain to the
operation of the Facility including, without limitation, the material items set
forth in Schedule 2.2(b).
"Addis Equipment" means all machinery, equipment, plant, vehicles, office
furniture, fixtures, tools, machine and electrical parts, computer equipment and
programs and other tangible personal property owned by Seller and located at the
Facility except to the extent specifically set forth in the definition of
Excluded Assets, and including, without limitation, the major items of equipment
set forth in Schedule 2.2(c).
"Addis Permits" means the permits, approvals, orders, licenses, variances and
exemptions issued by any federal, state or local governmental entity and
necessary for the lawful operation of the Facility.
"Addis Plant" means the buildings, equipment, facilities and real estate
interests constituting Seller's commodity PVC resin production facility located
at Addis, Louisiana.
"Addis Real Estate Interests" means the interests in real estate owned,
leased or used by Seller in connection with the operation of the Facility as set
forth in Schedule 2.2(e).
"Addis Working Capital" means the inventories of raw materials, work in
process, finished goods and spare parts purchased or manufactured by Seller and
located at the Facility as of the Closing Date.
"Affiliate" means an entity which is, directly or indirectly, Controlling,
Controlled by or under common Control with the predicate entity.
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"Assumed Liabilities" means the executory obligations of Seller with respect
to the Included Assets under the express terms of the documents, agreements,
contracts, leases, licenses, and permits pertaining to the Included Assets as
set forth in Schedules 2.2(b) and (d) and the liabilities assumed by Buyer
pursuant to Article IX.
"Business" has the meaning set forth in the first recital of this Agreement.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" means the date specified for the Closing by the Seller in a
written notice to Buyer, subject to the requirements of Section 10.2 of this
Agreement or upon such other date as the parties may mutually agree.
"Code" means the Internal Revenue Code of 1986, as amended. All citations to
the Code shall include any amendments or any substitute or successor provisions
thereto.
"Confidentiality Agreement" means that certain agreement entered into between
Occidental Chemical Corporation and Borden Chemicals and Plastics Operating
Limited Partnership dated February 14, 1994.
"Control" (including the terms "Controlling", "Controlled by" and "under
common Control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of the
predicate entity whether through the ownership of voting securities, by
contract, or otherwise.
"dollars" means dollars of the United States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Evaluation Material" means the information furnished by Seller and
designated as "Evaluation Material" under the terms of the Confidentiality
Agreement.
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"Excluded Assets" has the meaning assigned to it in Section 2.4 of this
Agreement.
"Facility" means the Addis Plant.
"Included Assets" means the rights, properties and assets of Seller described
in Section 2.2 of this Agreement.
"OxyChem Addis Technology" means all the technology owned by, or licensed to,
Seller, or which Seller has the right to use, and which is practiced at or
embodied in equipment or processes operated at the Addis Plant on the Closing
Date. OxyChem Addis Technology does not include that technology or those rights
to use technology which are set out in Section 2.4. OxyChem Addis Technology
may include confidential technology, non-confidential technology, and technology
covered by United States patents.
"Pension Plan" has the meaning set forth in Section 3(2) of ERISA.
"Permitted Exceptions" means (i) liens for taxes that are not in default or
taxes that are being contested in good faith by appropriate proceedings; (ii)
easements, restrictions and other limitations set forth in any policy of title
insurance that may be obtained in respect of the transfer to Buyer of the Addis
Real Estate Interests and which are (a) not substantial in amount, (b) do not
materially detract from the value of the Included Assets, and (c) do not
materially interfere with the ability to operate the Included Assets; and (iii)
encumbrances, easements, restrictions and other limitations arising in
connection with the Included Assets which are set forth in Schedule 1.1.
"Promotional Literature" means all catalogues, sales promotional literature,
advertising materials and trademarks owned or used by Seller in connection with
the sale of PVC manufactured at the Facility, excepting those rights set forth
in Section 2.4(f) of this Agreement.
"PVC" means polyvinyl chloride.
"PVC Tolling Agreement" means the agreement in the form of Annex E hereto.
"SEC" means the Securities and Exchange Commission of the United States.
"VCM" means vinyl chloride monomer.
"VCM Supply Agreement" means the agreement in the form of Annex D hereto.
"Welfare Plan" has the meaning set forth in Section 3(1) of ERISA.
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SECTION 1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles currently in effect, including, without limitation, applicable
statements, bulletins and interpretations issued by the Financial Accounting
Standards Board and bulletins, opinions, interpretations and statements issued
by the American Institute of Certified Public Accountants or its committees.
SECTION 1.3 Accounting and Financial Determinations. When the character or
amount of any assets or liability or item of income or expense is required to be
determined, for the purpose of this Agreement such determination or calculation
shall, to the extent applicable and except as otherwise specified in this
Agreement, be made in accordance with generally accepted accounting principles
applied on a consistent basis.
SECTION 1.4 Other Defined Terms; Use of Defined Terms. The words "hereof",
"herein", and "hereunder", and words of similar import, when used in this
Agreement, shall refer to this Agreement, and Article, Section, Schedule, Annex
and like references are intended to refer to this Agreement unless otherwise
specified. Terms for which meanings are provided in this Agreement shall,
unless otherwise defined or the context otherwise requires, have such meanings
when used in each notice or other communication delivered or given from time to
time under or in connection with this Agreement.
ARTICLE II
AGREEMENTS OF PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
SECTION 2.1 Purchase and Sale. On the terms and conditions set forth in this
Agreement, Seller agrees to sell, convey, transfer and assign, or to cause to be
sold, conveyed, transferred and assigned, to Buyer or to a wholly-owned
subsidiary of Buyer designated by Buyer, and Buyer agrees to purchase, or to
cause such subsidiary to purchase, on the Closing Date, all of the Included
Assets.
SECTION 2.2 Scope of Included Assets. The Included Assets shall consist of
the following, as of the Closing Date:
(a) Addis Business Records;
(b) rights of Seller under the Addis Contracts;
(c) Addis Equipment;
(d) rights of Seller under the Addis Permits;
(e) Addis Real Estate Interests;
(f) the license set forth in Section 2.7;
(g) Addis Working Capital;
(h) Promotional Literature; and
(i) Addis technical material set out in Schedule 2.2(i).
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SECTION 2.3 Seller's Retention of the Excluded Assets. Expressly excluded
from this transaction are the Excluded Assets and Seller shall retain all right,
title and interest in and to the Excluded Assets.
SECTION 2.4 Scope of Excluded Assets. The Excluded Assets shall include the
following as of the Closing Date:
(a) all intracompany and intercompany accounts of Seller;
(b) all cash and bank accounts of Seller;
(c) all claims of Seller against third parties (including, without
limitation, those not yet ascertained and/or unliquidated) relating to
operations at the Facility for the period prior to the Closing Date;
(d) all accounts and notes receivable;
(e) prepaid expenses;
(f) all rights to use of the designations "Oxy", "OxyChem" "Occidental" and
the Occidental logo;
(g) all insurance policies of Seller and all rights of the Seller of every
nature and description under or arising out of such insurance policies;
(h) all losses, carryovers and rights to receive refunds with respect to any
and all taxes of the Seller, including interest receivable with respect
thereto;
(i) the basic books and records of account relating to any taxes of the
Seller;
(j) title to Seller's patent and technology portfolio as well as rights to
technology set forth in Schedule 2.4(j);
(k) the Business of Seller except as expressly included in the
definition of the Included Assets;
(l) all computer equipment and programs used in the Business other than
those used exclusively in connection with the Included Assets;
(m) inventories of bagged and labeled PVC located at the Facility; and
(n) all policies and procedures of Seller other than those used exclusively
in connection with the Included Assets.
SECTION 2.5. Assumption of Liabilities. As additional consideration for the
purchase of the Included Assets and subject to the provisions of Section 2.6,
Buyer shall assume as of the Closing Date and thereafter pay and perform or
discharge (and indemnify Seller against or reimburse Seller for any payments
made or performance rendered by or on Buyer's behalf with respect to) the
Assumed Liabilities.
SECTION 2.6 Excluded Liabilities. Buyer and Seller hereby agree that Buyer
shall not be liable for any of the obligations or liabilities of Seller other
than those specifically assumed by Buyer pursuant to Section 2.5.
SECTION 2.7 License. Seller hereby grants to Buyer an irrevocable royalty-
free non-exclusive license to use the OxyChem Addis Technology, including
Seller's patents, at the Addis Plant (and any expansions of the Addis Plant) for
the purposes of operating, maintaining, improving or expanding the Addis Plant
(or any expansions thereof). This license does not include the
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This
license cannot be sub-licensed or assigned without the prior written permission
of Seller except upon the sale of all or substantially all of the assets at any
of Buyer's PVC production sites to which the license relates.
ARTICLE III
PURCHASE PRICE; ADJUSTMENT FOR CHANGES
SECTION 3.1 Purchase Price.
(a) Buyer agrees to transfer to the Seller on the Closing Date the sum of one
hundred four million three hundred thousand dollars ($104,300,000.00) (the
"Purchase Price") as payment for the Included Assets and to assume the Assumed
Liabilities of the Seller as provided in Section 2.5. The Purchase Price shall
be delivered at the Closing in immediately available funds by wire transfer to
such bank account as Seller may designate in writing prior to the Closing Date.
The Purchase Price shall be subject to adjustment as provided in Section 3.3.
(b) Included in the Purchase Price is the estimated value, as of the Closing
Date, of Addis Working Capital in the amount of nine million seven hundred
thousand dollars ($9,700,000.00).
SECTION 3.2 Allocation of Purchase Price. The Purchase Price (including any
adjustments described in Section 3.3 below) shall be allocated among the
Included Assets by each of Buyer and Seller in the manner required by section
1060 of the Code. Buyer and Seller shall endeavor to agree to an allocation of
the Purchase Price among the Included Assets prior to Closing, but neither party
shall be obligated to so agree if (in the sole opinion of either of the parties)
it is not in its best interest to do so.
SECTION 3.3 Purchase Price Adjustment.
(a) Within ten (10) days after the Closing Date or on such other date as Buyer
and Seller may mutually agree, Seller will prepare and deliver to Buyer an
unaudited statement of items that will require adjustment on or after the
Closing Date, in the form of, and with all listed attachments, of Annex A (the
"Change Adjustment Worksheet").
(b) The Change Adjustment Worksheet will be prepared in accordance with
Section 1.3 from data developed as a result of physical counts and inspections
taken jointly on the Closing Date or on such other date as Buyer and Seller may
mutually agree by representatives of both Buyer and Seller.
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(c) Within thirty (30) business days after receipt of the Change Adjustment
Worksheet and subject to the provisions of Section 3.3(d) below, Buyer will pay
Seller or Seller will pay Buyer, as the case may be, the adjustment amounts
specified as then due and payable in the Change Adjustment Worksheet. Any
amounts which are, by the terms of the Change Adjustment Worksheet, payable on a
later date, will be paid promptly after such amount has been determined in
accordance with the provisions of the Change Adjustment Worksheet (collectively,
the "Adjustment Amounts").
(d) If Buyer has any objection to any Adjustment Amount, it shall notify
Seller specifying the item or items to which it objects within thirty (30) days
after delivery to Buyer of the Change Adjustment Worksheet. Payments as to
which the parties are in agreement shall be promptly made. If Buyer and Seller
cannot resolve any such remaining objections within forty-five (45) days after
delivery to Seller of Buyer's notice under this subparagraph (d), the item or
items in dispute will be submitted to a mutually acceptable, nationally
recognized public accounting firm for resolution as promptly as possible. The
decision of such accounting firm shall be binding on the parties. The fees and
expenses of the accounting firm shall be borne by the party from which such
accounting firm differs most in aggregate dollars in its final resolution of the
disputed amounts. Payment of the award shall be made by the Buyer or Seller, as
the case may be, by wire transfer of immediately available funds within seven
(7) days of the accounting firm's notice of its decision.
ARTICLE IV
CLOSING
SECTION 4.1 Time and Location. The Closing shall be held at the offices of
the Seller in New York, New York at 11:00 a.m. local time on the Closing Date.
SECTION 4.2 Delivery of Instruments and Payment. On the Closing Date:
(a) Seller shall execute and deliver to Buyer such deeds, bills of sale,
assignments, endorsements and other instruments and documents as shall satisfy
the requirements of Section 2.1 hereof in form and substance reasonably
satisfactory to the Buyer;
(b) Seller shall execute and deliver to Buyer a deed for the transfer of land
in the form attached hereto as Annex F conveying good and marketable title to
the real estate being acquired by Buyer pursuant to this Agreement, free of all
liens, easements and encumbrances, except for Permitted Exceptions.
(c) Seller and Buyer shall execute and deliver the VCM Supply Agreement (as
may be required by Buyer pursuant to the provisions of Sections 11.2 of this
Agreement), and the PVC Tolling Agreement (as may be required by Buyer pursuant
to the provisions of Sections 11.2 of this Agreement);
(d) Seller shall deliver the executed agreements, opinions, certificates and
other documents required by Sections 11.3, 11.4, 11.5, 11.7 and 11.8 hereof in
form and substance reasonably satisfactory to the Buyer and Buyer shall deliver
the executed agreements, opinions, certificates and other documents required by
Sections 12.2, 12.3, 12.4 and 12.7 hereof in form and substance reasonably
satisfactory to the Seller; and
(e) Buyer shall make payment of the Purchase Price as required by Section 3.1
hereof; and
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(f) Buyer and Seller shall execute and deliver the Assignment and Assumption
Agreement in the form attached hereto as Annex G and such other instruments and
documents as shall evidence Seller's satisfaction of Section 2.1 and as shall
evidence Buyer's satisfaction of Section 2.5.
SECTION 4.3 Taxes. Buyer shall pay all sales and use taxes, if any,
applicable to the transfer of the Included Assets pursuant to this Agreement and
all documentary and stamp taxes and any recording and filing fees arising as a
result of or in connection with the transfer of the Included Assets under this
Agreement, if any. Property taxes and any payments in lieu of property taxes,
if applicable to any of the Included Assets, shall be prorated between the
parties as of the Closing Date.
SECTION 4.4 Exemption From Hart-Scott-Rodino Filing. Buyer and Seller
recognize and agree that pursuant to certain rules of the United States Federal
Trade Commission (16 C.F.R. 802.70), closing of the transactions contemplated
hereby is exempt from the notification and filing requirements of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
The following representations and warranties are hereby made to Buyer:
SECTION 5.1 Corporate Organization. Seller has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of New York. Seller has full corporate power and authority to own and operate
the Included Assets as and in the places where such Included Assets are now
owned and operated, and to sell, convey, transfer and assign the Included Assets
as described in this Agreement.
SECTION 5.2 Corporate Authority. All corporate actions have been taken which
are necessary to the due authorization of the execution and delivery of this
Agreement and the performance of the acts to be performed by Seller hereunder,
and this Agreement constitutes, and the other agreements to be entered into by
Seller hereunder will constitute, legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms. The entering
into of this Agreement and the other agreements to be entered into hereunder and
the consummation of the transactions contemplated hereby and thereby do not and
will not violate the provisions of Seller's Articles of Incorporation or by-
laws, or of any note, indenture, mortgage, lease, license agreement or other
agreement or instrument to which Seller is a party, is maker or by which it is
bound or result in the creation of any lien, charge or encumbrance upon the
Included Assets.
SECTION 5.3 Good Title. Except as set forth in Schedule 5.3, Seller has, and
shall convey, transfer and assign to Buyer at the Closing, good title to all
Included Assets and properties described
9
in Section 2.2 free and clear of any liens, easements, or encumbrances of any
kind not referred to therein and except for Permitted Exceptions.
SECTION 5.4 No Defaults. Except as set forth in Schedule 5.4, Seller has
performed all material obligations required to be performed by it and is not in
default in any material respect under any material agreement to which it is a
party or by which it is bound relating to the conduct of that portion of the
Business constituting the Included Assets, and no event has occurred which with
notice or lapse of time or both, would constitute such a default. Except as set
forth in Schedule 5.4, to the best of Seller's knowledge no other party to any
Addis Contract is in material default under any of said agreements.
SECTION 5.5 Litigation and Proceedings. Except as set forth in Schedule 5.5,
there are no suits, actions, proceedings or governmental investigations pending,
or to Seller's knowledge, threatened relating to the Included Assets in any
court or before any federal (U.S. or Canada), provincial, state, county,
municipal or other governmental department, commission, bureau or agency which
would have a material adverse effect.
SECTION 5.6 Governmental and Third Party Approvals. Except as set forth in
Schedule 5.6, no approval, authorization, consent or other order or action of,
or filing with, or notification to, (i) any court, administrative agency or
other governmental authority, or (ii) any other third party, is required in
connection with the execution and delivery by Seller of this Agreement or the
other agreements and instruments to be executed and delivered by Seller pursuant
hereto or its consummation of the transactions contemplated hereby or thereby.
SECTION 5.7 Other Liabilities. Except as set forth in Schedule 5.7, there
are no liabilities of any kind relating to the Included Assets, whether accrued,
fixed, absolute, contingent, determined or determinable, other than liabilities
incurred in the ordinary course of business since May 1, 1994.
SECTION 5.8 No Violations. Except as set forth in Schedule 5.8, Seller is
not in violation of any applicable federal, state, local or foreign law, rule or
regulation, permit or order of any governmental, regulatory or administrative
agency or court in respect of its ownership and operation of the Included
Assets.
SECTION 5.9 Permits. Except as set forth in Schedule 5.9, Seller possesses
in its own name all federal, state and local licenses, permits or other
authorizations of governmental, regulatory or administrative agencies required
to own and operate the Included Assets, where a failure to obtain such license,
permit or other authorization would have a material adverse effect on the
Buyer's ability to operate the Facility in the manner in which it is operated by
Seller as of the Closing Date. Schedule 2.2(d) contains a complete listing of
all such permits, licenses or other authorizations required for the operation of
the Facility as of the Closing Date the absence of which would have material
adverse effect on the Buyer's ability to operate the Facility in the manner in
which it is operated by Seller as of the Closing Date.
10
SECTION 5.10 Acquisition of All Assets. Excepting only the Excluded Assets,
the Included Assets include all assets employed in connection with the
operation of the Facility as of the date hereof.
SECTION 5.11 Employees; Labor Relations. Set forth in Schedule 5.11(a) is a
complete listing of employees of Seller, hourly and salaried, employed
exclusively in connection with the operation of the Facility. Except as set
forth in Schedule 5.11(b), since January 1, 1990 there has not been any
unresolved dispute with any labor organization or any strike, picketing,
slowdown, unfair labor practice charges filed with the National Labor Relations
Board, or work stoppage relating to the Included Assets, nor to the knowledge of
Seller, is there threatened or contemplated any strike, picketing, slowdown or
work stoppage relating to the Included Assets. As of the Closing Date there is
no labor organization recognized as a representative of the hourly workers at
the Facility and, to Seller's knowledge, there has not been since January 1,
1990 any organized effort to form a collective bargaining unit to represent the
hourly workers at the Facility.
SECTION 5.12 Employee Benefit Plans. Set forth in Schedule 5.12 is a
description of Seller's current employee benefit plans, including but not
limited to those defined in Section 3(3) of ERISA, including all bonus, deferred
compensation, health, dental and severance plans and programs currently
maintained or contributed to by the Seller for the benefit of any of the
employees listed in Schedule 5.11(a). None of the plans is a multi-employer
plan as defined in Section 4001(a)(3) of ERISA. With respect to any partial or
total withdrawal by Sellers from any multi-employer plan formerly maintained for
any employee of Seller with respect to the Facility, there was either (a) no
withdrawal liability as defined in Title IV of ERISA, or (b) such withdrawal
liability has been fully satisfied by Seller.
SECTION 5.13 Taxes. There are no tax liens against any of the Included
Assets and there are no federal, state, local or foreign taxes of any kind
(other than (i) those which are not yet due and payable, or (ii) those which are
subject to a good faith contest by appropriate proceedings) which are owed and
unpaid or for which Seller is liable and which could result in or constitute a
lien or encumbrance on the Included Assets or could result in a claim by any
taxing authority against Buyer with respect to its acquisition of the Included
Assets.
SECTION 5.14 Off Site Disposal. Schedule 5.14 contains a complete and
accurate listing of all locations away from the real estate upon which the
Facility is located where Seller has disposed of or arranged for the disposal of
waste materials generated as a result of Seller's operation of the Facility.
SECTION 5.15 Material Contracts and Agreements. Schedule 2.2(b) contains a
listing of and Seller has provided Buyer true and complete copies of all
contracts, licenses, leases, commitments, sales orders and purchase orders
pertaining to the Included Assets as of the Closing Date which have
11
(i) a stated value greater than one hundred thousand dollars ($100,000.00), or
(ii) a term in excess of one year.
SECTION 5.16 Technology and Know-How Being Transferred.
(a) Except as set forth in Schedule 2.4(j) and except as otherwise provided
pursuant to the provisions of Section 8.12, the right to practice and utilize
OxyChem Addis Technology licensed to Buyer pursuant to this Agreement includes
the right to employ at the Facility all technology used by Seller in connection
with the operation of the Facility as of the Closing Date. Additionally, and
subject to the same exceptions stated above, the technical information
transferred to Buyer pursuant to Section 2.1 and Section 2.2(i) is complete and
sufficient to operate the Facility as it is operated as of the Closing Date.
(b) For a period of twelve months after the Closing Date, there will be
commercially available to Buyer adequate supplies of a primary suspending
agent(s) necessary to enable Buyer (i) to operate the Facility at productivity
rates consistent with the historical performance of the Facility, and (ii) to
produce PVC products reasonably acceptable to Seller's contract customers as of
the Closing Date. Notwithstanding the provisions of Section 13.5(c), Seller's
obligations of indemnity in case of a breach of the representation in this
subparagraph (b) shall include direct damage claims asserted against Buyer by
Buyer's customers and arising out of or attributable to Seller's breach of this
representation and provided further, that in the event that Seller's breach of
the representation in this subparagraph (b) shall cause Buyer to breach its
product warranty contained in Section 8.2 of the PVC Tolling Agreement such
breach by Buyer shall be excused.
SECTION 5.17 Equipment Being Transferred. Schedule 2.2(c) contains a listing
of all major items of machinery, equipment, vehicles, machine and electrical
parts, computer equipment and programs and other tangible personal property
located at the Facility and owned by Seller and used in connection with the
operation of the Facility as of the Closing Date. Excepting only the Excluded
Assets, Buyer's acquisition of the Addis Equipment together with Buyer's
acquisition of the Addis Contracts vests in Buyer the right to utilize all
equipment necessary to operate the Facility in the manner operated by Seller as
of the Closing.
SECTION 5.18 Financial Information Accurate. Except to the extent that
financial data provided as part of the Evaluation Material consists of or
incorporates, expressly or by reference, estimates, opinions, projections or
forecasts, the financial data provided to Buyer by Seller as part of the
Evaluation Material and set forth in Schedule 5.18 is accurate and has been
compiled from the books and records of Seller which have been prepared and
maintained in accordance with the requirements of generally accepted accounting
principles consistently applied.
SECTION 5.19 Environmental Condition. Except as set forth in Schedule 5.19
and excepting any conditions disclosed upon completion of the environmental
assessment conducted pursuant to Section 7.5, Seller is not aware of any solid,
liquid or gaseous material present at the surface or subsurface levels of the
Facility, or present in the air above, or the water on or under, or the air and
water immediately surrounding the Facility, which is in excess of any
concentration, levels or standards prescribed or permitted by any applicable
law, rule, regulation, ordinance, judgment, decree, order, injunction or
decision of any court or governmental authority, in each case as in effect
12
and applicable to the Facility as of the Closing Date; nor is Seller aware of
any condition existing on or about the Facility that would require corrective
action or closure under the provisions of the Resource Conservation and Recovery
Act, or remedial or other action under the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act or the regulations
promulgated under such Acts, or that would constitute a public nuisance under
the laws of the State of Louisiana, in each case as such laws are in effect and
applicable to the Facility as of the Closing Date, except as disclosed in
Schedule 5.19. All underground storage tanks located at the Facility are listed
in Schedule 5.19.
SECTION 5.20 No Other Representations or Warranties. There are no
representations or warranties of any kind made in connection with the
transactions contemplated hereby other than those expressed in this Agreement.
It is expressly understood and agreed that (a) except as otherwise specifically
and expressly provided in this Agreement, Seller has made no warranty or
agreement as to the condition or performance of the Included Assets which are
sold to Buyer AS IS, WHERE IS, and (b) Seller has not made any warranty or
agreement, express or implied, as to the tax consequences of this transaction or
the tax consequences of any transaction pursuant to or arising out of this
Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The following representations and warranties are hereby made to Seller:
SECTION 6.1 Partnership Organization. Buyer has been duly organized and is
validly existing as a limited partnership in good standing under the laws of the
State of Delaware. Buyer has full power and authority to acquire, own and
operate the Included Assets as described in this Agreement.
SECTION 6.2 Authority. Buyer has all requisite partnership power to
execute, deliver and perform this Agreement. The execution, delivery and
performance by Buyer of this Agreement has been duly authorized by all necessary
partnership and corporate action on the part of Buyer and BCP Management, Inc.,
respectively. This Agreement constitutes, and the other agreements to be
entered into by Buyer hereunder will constitute, legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.
The entering into of this Agreement and the other agreements to be entered into
hereunder and the consummation of the transactions contemplated hereby and
thereby do not and will not violate the provisions of Buyer's amended and
restated agreement of limited partnership, or of any note, indenture, mortgage,
lease, license agreement or other agreement or instrument to which Buyer is a
party, is maker or by which it is bound. BCP Management Inc., a Delaware
corporation and a wholly owned subsidiary of Borden, Inc., a New Jersey
corporation, is the general partner of Buyer.
13
SECTION 6.3 Employee Benefit Plans. Set forth in Schedule 6.3 is a
description of Buyer's current employee benefit plans, including but not limited
to those defined in Section 3(3) of ERISA, including all bonus, deferred
compensation, health, dental and severance plans and programs currently
maintained or contributed to by the Buyer for the benefit of its employees.
Each of the plans set forth in Schedule 6.3 that is an employee benefit plan as
defined in section 3(3) of ERISA complies substantially in form and in operation
in all material respects with ERISA and the Code, and that each such plan is
current in the filing of annual returns and reports required to be filed with
the Internal Revenue Service. All such plans which are qualified pension plans
comply in form and in operation with the requirements of Code section 401(a),
and have received favorable determination letters from the Internal Revenue
Service.
SECTION 6.4 Governmental and Third Party Approvals. Except as set forth in
Schedule 6.4, no approval, authorization, consent or other order or action of,
or filing with, or notification to, (i) any court, administrative agency or
other governmental authority, or (ii) any other party, is required in connection
with the execution and delivery by Buyer of this Agreement or the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto or its consummation of the transactions contemplated hereby or thereby.
ARTICLE VII
COVENANTS OF SELLER
Seller covenants that:
SECTION 7.1 Operation of the Included Assets. Between the date hereof and
the Closing Date, Seller will take all measures reasonably required to
maintain the Facility in its present condition, excepting normal wear and tear,
and will maintain inventory at levels consistent with operation of the Facility
in the ordinary course of business. Except in each case as allowed by this
Agreement or consented to in writing by Buyer, and except for transactions in
the ordinary course of business, Seller will not, insofar as the Included Assets
are concerned, (a) incur or become subject to obligations or liabilities
(absolute or contingent) which have or are likely to have a material adverse
effect; (b) mortgage, pledge or voluntarily subject to lien, charge or other
encumbrance any assets, tangible or intangible to be sold hereunder; (c) sell or
transfer any of its tangible or intangible assets; (d) waive any rights of any
material value; or (e) accept any business not within Seller's normal credit
terms where shipment will be made after the Closing Date.
SECTION 7.2 Further Assurances. At any time and from time to time after the
Closing Date, at Buyer's reasonable request and without further consideration,
Seller will execute and deliver such other instruments of conveyance and
transfer and take such other action as Buyer reasonably may require more
effectively to convey to, transfer to, and vest in Buyer, or to put Buyer in
possession of, any or all of the assets and properties intended to be
transferred, conveyed or assigned to Buyer hereunder.
SECTION 7.3 Further Investigation. Prior to the Closing Date, Seller will
provide to designated employees, agents and representatives of Buyer access at
reasonable times to the Facility
14
premises and to such financial and operating data and other information with
respect to the Included Assets as Buyer shall from time to time reasonably
request, provided, however, that Buyer shall not have access to Addis
Confidential Technology Information (except as reasonably necessary to
facilitate Buyer's diligent pursuit of its obligations pursuant to Section 8.11)
prior to the satisfaction or waiver by Buyer of the conditions set forth in
Sections 11.7 and 10.2.
SECTION 7.4 Transitional Assistance. For a period of twelve (12) months
after the Closing, Seller will make its personnel reasonably available for the
purpose of (a) providing Buyer, upon Buyer's reasonable request, with assistance
in locating information which was unavailable at the time of Closing, (b)
providing Buyer, upon Buyer's reasonable request, with appropriate verifications
of documents and information in Seller's possession, (c) providing Buyer, upon
Buyer's reasonable request, technical assistance to enable Buyer to operate the
OxyChem Addis Technology at the Facility, provided however, that Buyer shall
reimburse Seller's full cost of providing such additional technology and know-
how, or (d) otherwise providing reasonable assistance which the parties mutually
deem appropriate, provided further however, that with respect to any of the
foregoing Seller shall be under no obligation to insure the availability of
particular individuals or employees for purposes of performing its obligations
pursuant to this Section.
SECTION 7.5 Environmental Assessment. As soon as possible after the date of
this Agreement and prior to the Closing Date, Buyer and Seller shall carry out,
by an independent contractor mutually acceptable to Buyer and Seller, an
environmental baseline assessment of the real estate upon which the Facility is
situated in the manner described in Schedule 7.5. Seller shall afford
reasonable access to the Facility for the purpose of carrying out the
assessment. On site assessment activities shall be conducted so as to minimize
interference with or disruption of Seller's operation and use of the Facility.
The results of the assessment and all reports and other data collected or
prepared in connection therewith will be provided to Seller and Buyer provided,
however that Buyer shall not disclose the contents of the assessment, reports or
data to any third party without the Seller's prior written consent. Prior to
the Closing Date, Seller shall have full title to the assessment, reports and
other data collected or prepared in connection therewith and shall be entitled
to share the information with any third parties without the need for Buyer's
consent. After the Closing Date, Buyer shall have title to such materials,
provided however, that Seller may retain copies of any or all of such materials
for the purpose of ensuring Seller's and Buyer's compliance with the provisions
of this Agreement. In any case where any portion of such information is
required by law, rule, regulation, or ordinance to be disclosed, the manner and
extent of such compliance shall be determined in Seller's sole discretion and
shall be Seller's sole responsibility and Buyer shall have no liability
therefore. In the event that this Agreement shall terminate for any reason,
Buyer shall forward all copies of the assessment and all reports and other data
collected or prepared in connection therewith in its possession to the Seller
and all such materials shall be deemed to be Evaluation Material subject to the
terms of the Confidentiality Agreement. Buyer and Seller shall share equally
the costs of the assessment conducted pursuant to this provision.
15
SECTION 7.6 Construction Debris Commitment. Seller shall diligently pursue
the performance of its obligations pursuant to the provisions of Schedule 7.6.
SECTION 7.7 First Month's Resin Production. Prior to the Closing Date,
Seller shall mutually agree with Buyer on the quantities of PVC to be
manufactured by Buyer during the first calendar month after the Closing,
pursuant to the provisions of the PVC Tolling Agreement.
SECTION 7.8 First Month's VCM Supply. Prior to the Closing Date, Seller
shall mutually agree with Buyer on the quantities of VCM to be supplied to Buyer
during the first calendar month after the Closing, pursuant to the provisions of
the VCM Supply Agreement.
SECTION 7.9 Financial Statements. Not later than September 30, 1994, Seller
shall, at Buyer's expense, furnish to Buyer such audited and/or unaudited
statements of income and cash flows and balance sheets of the business comprised
of the Included Assets and the Assumed Liabilities or such other business
required by Rule 3-05 of Regulation S-X of the SEC as are required to be
included in a Report on Form 8-K or Registration Statement on Form S-3 of Buyer.
Prior to the Closing Date, Seller shall furnish such additional audited
statements and/or unaudited statements as may be required by such Rule 3-05.
Without limiting the foregoing, it is understood and agreed that the audited and
unaudited financial statements contemplated by the immediately preceding
sentence shall constitute the financial statements described in Rule 3-05 of
Regulation S-X of the SEC as required to be included by Buyer in a Report on
Form 8-K or Registration Statement on Form S-3.
SECTION 7.10 Buyer having elected to operate the
Facility after the Closing Date with the Seller will
have installed the at the Facility and shall
have the operational as of the Closing Date and Seller
shall have demonstrated the ability of the modified Facility (i) to operate at
productivity rates consistent with the historical performance of the Facility,
and (ii) to produce PVC products reasonably acceptable to Seller's contract
customers as of the Closing Date.
ARTICLE VIII
COVENANTS OF BUYER
Buyer covenants that:
SECTION 8.1 Confidentiality. Buyer and its Affiliates will remain subject to
the obligations of confidentiality set forth in the Confidentiality Agreement.
Additionally, Buyer agrees to maintain all aspects of the Addis Confidential
Technology Information confidential for the period of fifteen years from the
date of this Agreement.
SECTION 8.2 Occidental Name. On and after the Closing Date Buyer: (a) will
clearly mark or cause to be clearly marked all products manufactured in respect
of the Included Assets to indicate Buyer's ownership thereof, and (b) will not
use, nor permit to be used on its behalf, (i) the
16
comet logo, or (ii) the words "Oxy", "OxyChem" or "Occidental", provided,
however, that Buyer shall have a period of no longer than sixty (60) days
following the Closing Date within which to change all signs at the Facility that
contain the logo or words described in sub-paragraphs (i) and (ii) above.
SECTION 8.3 Post Closing Access. On and after the Closing Date (without
regard to Section 13.5) Buyer shall allow Seller, its employees, agents,
contractors and subcontractors to have access to the Facility at all reasonable
times for the purposes of undertaking all necessary monitoring and environmental
cleanup activities or as may otherwise be necessary or appropriate to carry out
the provisions of this Agreement.
SECTION 8.4 Records Access; Transitional Assistance. With respect to the
files, records and other documents constituting part of the Included Assets, for
a period of ten (10) years after the Closing Date, Buyer will give Seller access
to such files, records and other documents acquired from Seller as part of the
Included Assets and will make its personnel reasonably available for the purpose
of providing Seller, upon Seller's reasonable request, with assistance in
locating information from such records, providing appropriate verifications of
documents and information, developing information, reports, submissions and the
like relating to Seller's operation of the Included Assets prior to the Closing,
or otherwise providing reasonable assistance which the parties mutually deem
appropriate; provided, however, that Buyer shall be under no obligation to
retain any such files, records and other documents beyond the periods of time
applicable under Buyer's records retention policies and procedures or until the
expiration of one month after the applicable statute of limitations for the
assessment of additional state and/or local sales and use taxes (including any
extension thereof), if later.
SECTION 8.5 Prohibition Against Recruitment. In the event this Agreement is
terminated for any reason, for a period of three (3) years after the date of
such termination, Buyer shall not recruit or otherwise solicit in any manner the
employment of any employee of Seller.
SECTION 8.6 Wastewater Treatment Ponds. At such time after the Closing Date
as Buyer determines that it desires to or is required by applicable law to cease
operating the aeration and effluent ponds located at the Facility as of the
Closing Date (the "ponds"), Buyer shall prepare a closure plan for the ponds in
accordance with the requirements of applicable laws and regulations and submit
such plan in a timely manner for approval by the appropriate regulatory
agencies. Buyer shall consult with Seller in the preparation of the closure
plan and shall allow the participation of Seller in the negotiation of the
closure plan with the involved agencies so long as such participation by Seller
does not materially adversely affect or delay the permitting, construction or
operation of Buyer's new or modified wastewater system. Buyer and Seller shall
cooperate reasonably and in good faith in negotiating an appropriate closure
plan with the relevant agencies. Buyer shall close the ponds in a manner
consistent with the approved closure plan. Seller shall be afforded an
opportunity to
17
participate in all phases of the implementation of the closure plan, including
but not limited to, any sampling plans, collection and analyses activity and the
establishment of the closure criteria. Buyer shall make all required reports to
relevant state or federal agencies and take all actions requested by such
agencies consistent with the closure plan. Buyer shall maintain accurate
records with respect to the cost of preparing and implementing the closure plan,
and Seller shall have the right to audit such records. Buyer shall submit its
invoice, and Seller shall promptly reimburse Buyer, for all costs incurred by
Buyer in excess of in
implementing the closure plan. Buyer shall use its best efforts to minimize
costs, consistent with the requirements of the closure plan.
SECTION 8.7 Construction Debris Commitment. Buyer shall diligently pursue
the performance of its obligations pursuant to the provisions of Schedule 7.6.
SECTION 8.8 First Month's Resin Production. Prior to the Closing, Buyer
shall mutually agree with Seller on the quantities of PVC to be manufactured by
Buyer during the first calendar month after the Closing, pursuant to the
provisions of the PVC Tolling Agreement.
SECTION 8.8A First Month's VCM Supply. Prior to the Closing Date, Seller
shall mutually agree with Buyer on the quantities of VCM to be supplied to Buyer
during the first calendar month after the Closing, pursuant to the provisions of
the VCM Supply Agreement.
SECTION 8.9 No Reduction in Compensation. For a period of twelve months
after the Closing Buyer shall not institute any across the board reductions in
compensation applicable to the Transferred Employees.
SECTION 8.10 Participation in Health Maintenance Organization. For a period
of twelve months after the Closing, Buyer shall allow Transferred Employees to
continue participation in Community Health Network of Louisiana, Inc.,
("Community Health") pursuant to a contract to be entered into between Buyer and
Community Health which shall provide the same plan design and premium payments
for Transferred Employees as administered under the Seller's program with
Community Health prior to the Closing.
SECTION 8.11 Diligent Pursuit of Financing. Subject to Seller's compliance
with Section 7.9, Buyer shall diligently and in good faith exercise its best
commercial efforts to pursue and secure commitments for the financing necessary
for Buyer's acquisition of the Included Assets pursuant to this Agreement. Such
diligence shall include, without limitation, Buyer's good faith efforts to file,
within five (5) business days after Seller shall have provided such financial
statements as are required pursuant to the provisions of Section 7.9 of this
Agreement, for such approvals from the SEC for public or private placement
offerings as may be necessary or appropriate for Buyer's acquisition of the
Included Assets pursuant to this Agreement within six (6) weeks after the later
of (i) approvals having been received from the Federal Trade Commission, and
(ii) approvals having been received from the SEC.
18
SECTION 8.12 License to Operate the . On or before the
Closing Date, Buyer shall have entered into an agreement with
which shall be effective no later than the Closing Date, licensing
Buyer to operate the and the
installed at the Facility pursuant to Section 7.10.
ARTICLE IX
EMPLOYEE MATTERS
SECTION 9.1 Offers of Employment.
(a) On or before the Closing Date, Buyer shall extend offers of employment to
all of Seller's active employees who are employed on an hourly basis at the
Facility as of the Closing Date and who are not on long-term disability or sick
leave (short-term disability) on such terms and conditions as Buyer, in its
discretion, shall determine. Notwithstanding the above, any such employee who is
on sick leave (short-term disability) as of the Closing Date and who is
authorized by a Doctor to return to work within twenty six (26) weeks after the
Closing Date shall be offered employment by the Buyer.
(b) On or before the Closing Date, Buyer may extend offers of employment to
such of Seller's active, salaried employees who are employed in connection with
the operation of the Facility as of the Closing Date, and who are not on long-
term disability or sick leave (short-term disability) on such terms and
conditions, as Buyer, in its discretion, shall determine. Notwithstanding the
above, any such employee who is on sick leave (short-term disability) as of the
Closing Date and who is authorized by a Doctor to return to work within twenty
six (26) weeks after the Closing Date may be offered employment by the Buyer.
(c) The employment of all such employees accepting offers of employment with
Buyer shall commence on the Closing Date and such employees shall be referred to
as the "Transferred Employee(s)". As to any Transferred Employee, no provision
of this Agreement shall be construed, either expressly or by implication, as
requiring or otherwise providing for the termination of such employee's
employment by Seller and the commencement of new employment by the Buyer; it
being the intention of Buyer and Seller that the employment of Transferred
Employees shall be continuous and uninterrupted.
(d) Seller shall be responsible for all salaries, wages and benefits
(including employees on long-term disability and sick leave), if any, of each
employee accruing after the Closing Date and prior to the date that such
employee commences (or returns to) work as a Transferred Employee of Buyer.
Except as expressly set forth herein, Buyer shall have no liability for Seller's
employees who do not become Transferred Employees on or after the Closing Date,
and with respect to Transferred Employees, Buyer shall have no liability for
salaries, wages or benefits accrued or relating to periods prior to the date
that the employees become Transferred Employees.
19
SECTION 9.2 Participation in Buyer's Employee Benefit Plans. Effective as of
the Closing Date and except as otherwise provided in this Article IX, Buyer
shall permit all Transferred Employees to participate in Buyer's employee
benefit plans which are described in Schedule 6.3 of this Agreement. With
respect to Transferred Employees, Buyer shall recognize and give full credit for
all years of service with Seller for purposes of vesting and eligibility under
all employee benefit plans (including early retirement but excluding retiree
medical as contained in Section 9.6) maintained by Buyer, and all Transferred
Employees shall be immediately eligible for enrollment under Buyer's medical
plan without limitation or exclusion for any pre-existing condition. Seller
assumes no liability or obligations under any of Buyer's employee benefit plans.
SECTION 9.3 Liability for Severance Benefits.
(a) If Buyer at any time during the one year period beginning on the Closing
Date terminates the employment of any Transferred Employee for any reason other
than for cause, Buyer shall pay such individual a severance benefit equal to the
benefit the terminated employee would have received under Seller's severance pay
policy in effect on the Closing Date. Buyer shall not be obligated under this
Section to extend participation to such severed employees in its other benefit
plans beyond that which it would under its severance policy.
(b) If Seller or Buyer incurs any liability as a result of constructive
termination claims by or on behalf of any Transferred Employee, the Buyer and
Seller shall share equally the liability and expenses.
SECTION 9.4 Certain Medical Plan Deductibles and Benefits. Transferred
Employees shall be required to satisfy only the annual medical plan deductibles
(medical, dental and pharmaceutical) for the calendar year in which the Closing
Date occurs which is the lesser of such deductibles required by Seller's medical
plan or Buyer's medical plan, and Transferred Employees shall receive full
credit under Buyer's plan for all amounts paid by such employee under Seller's
plan including, without limitation, any such amounts paid which are applicable
to the calendar year in which the Closing shall occur. Any plan benefits paid
to or on behalf of a Transferred Employee under Seller's medical plan in the
calendar year in which the Closing shall occur shall be applicable to the
calculation of Buyer's medical plan benefit limits applicable to such
Transferred Employee for such calendar year. At the Closing and for a period of
three (3) months thereafter, Seller shall provide Buyer with a list of each
Transferred Employee's amounts applied to the annual deductibles and stop loss
under Seller's Plans.
SECTION 9.5 Benefit Plans Transfer
(a) All Transferred Employees shall cease to accrue service credit except as
expressly provided herein, under any and all of Seller's or any of its
affiliate's or subsidiaries' Welfare Plans, or under any and all of Seller's or
any of its affiliate's or subsidiaries' Pension Plans, in which participation
had been available to such Transferred Employees, including, but not limited to,
retirement and profit sharing plans, life, health, dismemberment, vacation
benefits and deferred compensation pay. Expenses incurred and expenses for
continuous periods of disability or hospitalization commencing but not completed
as of the Closing Date shall be responsibility of the Seller. Seller's
liability shall end when the disability or hospitalization ends. Seller shall
retain responsibility for the administration of the account balances of the
Transferred Employees who do not elect to transfer their assets to the Buyer
from the Occidental Petroleum Corporation Savings Plan and the Occidental
Petroleum Corporation
20
Retirement Plan. Effective as of the Closing Date, Seller agrees to cause
Occidental Petroleum Corporation to vest fully the Transferred Employees in
their account balances in the Occidental Petroleum Corporation Savings Plan and
Occidental Petroleum Corporation Retirement Plan. In that both the Seller, its
affiliates and Buyer wish to accommodate Transferred Employees in effecting a
one time plan to plan asset transfer of their individual account balance under
the Occidental Petroleum Corporation Savings Plan, for each Transferred Employee
who so elects, Seller and Buyer shall facilitate such plan to plan individual
asset transfer, including outstanding loan balances, as soon as reasonably
possible following the Closing Date, and in no event later than three (3) full
calendar months following the Closing Date. Seller agrees to facilitate such
plan to plan individual asset transfer as prescribed in the administrative
procedure to be developed by the Seller and Buyer no later than thirty (30) days
following the Closing Date. Buyer agrees to accept the assets including
outstanding loan balances into its Borden Inc. Consolidated Retirement Savings
and Employee Stock Ownership Plan and credit such assets, including outstanding
loans, to each of the Transferred Employee's respective individual employee
account, for those who so elect such transfer of his/her account balance
subject to the individual employee promptly executing loan authorization
transfer documentation in a form acceptable to the Buyer.
(b) Seller agrees that uninterrupted service with Buyer during the period of
five (5) years immediately following the Closing Date shall be credited to each
Transferred Employee for purposes of service and age under the retiree medical
provisions of the Occidental Petroleum Corporation Medical Care Plan under which
any such Transferred Employee was a participant prior to the date such employee
became a Transferred Employee (if continued employment during that five (5) year
period with Seller or its affiliates would entitle such Transferred Employee to
benefits under such medical plan providing benefits to retiree upon retirement).
Such employee shall be entitled to such benefits under such plans which are then
generally available to Seller's employees retiring directly from employment, and
separation of service from Buyer shall be treated as a separation of service
from Seller for the purposes of eligibility under Seller's medical plan.
(c) On or after the Closing Date, Seller shall calculate the amount of pro
rated vacation entitlement for each of the Transferred Employees earned in 1994
based on Seller's vacation policy. The net amount of vacation liability shall
be included as a Post Closing Price Adjustment. Banked Vacation liabilities for
Transferred Employees shall be paid by Seller promptly after the Closing Date to
the Transferred Employees.
(d) Both Seller and Buyer shall take, or shall use their best efforts to
cause its affiliates to take, whatever action is necessary, including but not
limited to amendment of applicable benefit plans, in order to effect Seller's
and Buyer's agreement with respect to the provision of this Article 9.
SECTION 9.6 Coordination of Benefit Plans for Retirees.
(a) With respect to Transferred Employees immediately eligible for benefit
under the Seller's medical plan as of the Closing Date, the coverage provided
under Seller's plan shall be primary when
21
the Transferred Employees terminate employment with the Buyer, and the coverage
provided under Buyer's plan shall be secondary.
(b) Seller's medical plan shall be primary for Transferred Employees over
fifty years of age as of the Closing Date who, (i) retire from employment with
Buyer, and (ii) provide written notice to Seller of their election to
participate in Seller's medical plan, provided that such employee otherwise
meets the eligibility requirements for participation in Seller's plan.
(c) With respect to Transferred Employees who are forty-five years of age or
older as of the Closing Date, Buyer shall recognize the period of such
employees' service as recognized by Seller immediately prior to the Closing Date
for purposes of eligibility under Buyer's retiree medical plan, not to exceed
five years.
SECTION 9.7 Final Payroll. Seller shall pay the Transferred Employees
directly the amount of salaries and wages earned to the Closing Date. Such
payment shall reflect such employee's share of payroll and employment taxes.
SECTION 9.8 Certain Employee Related Liabilities. Except as otherwise
specifically provided in this Article IX, all employee related liabilities
arising with respect to events or relating to periods which occurred on or
before the Closing Date and all employee related liabilities with respect to all
employees who are not hired by Buyer shall be the sole responsibility of Seller.
Except as otherwise specifically provided in this Article IX, all employee
related liabilities arising with respect to events or relating to periods after
the Closing Date and all employee related liabilities with respect to the
Transferred Employees shall be the sole responsibility of Buyer.
SECTION 9.9 Buyer's Compensation Practices and Benefit Plans. Except as
otherwise required by the provisions of this Article IX, Buyer shall establish
such compensation practices and employee benefit programs for Transferred
Employees as it determines appropriate or desirable. Buyer shall provide the
following to Transferred Employees for purposes of addressing disparities
between Buyer's compensation and benefit package and Seller's compensation and
benefit package: for those Transferred Employees who are on Buyer's payroll on
December 15, 1995, 1996 and 1997, Buyer shall pay such Transferred Employee by
December 31st of each year an allowance of .
SECTION 9.10 No Restriction on Seller's or Buyer's Rights to Amend or
Terminate. Nothing in this Article IX shall be construed as restricting or
eliminating the parties' or their affiliates' rights to amend or terminate their
employee benefit plans or policies, nor shall this Article IX be construed as
causing any Transferred Employee to be vested in any entitlement to benefits
under any Welfare Plan sponsored by either party or any of their affiliates.
Except as specifically provided in this Article IX, nothing shall be construed
as creating or expanding the right of Transferred Employees or any other of
Seller's active employees at the Facility to benefits under any Welfare Plan,
Pension Plan, or other employee benefit plan sponsored by the parties or any of
their affiliates. Nothing expressed or implied in the Agreement is intended or
shall be construed to confer upon or give any person, firm, or corporation other
than the parties hereto, any rights or remedies under or by reason of this
Agreement or the transactions contemplated hereby.
22
ARTICLE X
TERMINATION
This Agreement and the transactions contemplated hereby may be terminated at
any time prior to the Closing Date:
SECTION 10.1 Mutual Consent. By mutual written consent of Buyer and Seller;
SECTION 10.2 Failure of Financing Contingency. By Seller or Buyer if Buyer
has not (i) made such filings with the SEC as are described in Section 8.11
within the time limit set forth in such Section, or (ii) within six weeks of the
later of the parties having obtained such approvals from the Federal Trade
Commission as are required pursuant to Sections 11.7 and 12.6 of this Agreement
and the Buyer having obtained such approvals from the SEC as are required for
its financing offering, completed the acquisition of financing necessary for the
closing of the transactions contemplated by this Agreement.
SECTION 10.3 Misrepresentation or Breach. Without prejudice to any other
rights or remedies it might have, by either party if there has been a material
misrepresentation or breach of warranty or covenant herein or in any signed
writing delivered pursuant hereto on the part of the other party or if such
other party has failed to satisfy or caused to be satisfied the conditions to
the obligations of the terminating party hereunder other than those contained in
Section 11.7 and 12.6 and subject to the provisions of Section 14.1.
SECTION 10.4 Court Order. By either party upon written notice to the other
(a) if consummation of the transactions contemplated hereby shall violate any
non-appealable final order, decree or judgment of any court or governmental body
having competent jurisdiction, or (b) in the event that Seller and Buyer shall
not have received such approvals from the Federal Trade Commission as are
required pursuant to Section 11.7 and Section 12.6 of this Agreement and the
parties do not agree to pursue gaining such approvals through the Federal court
system.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to be performed at Closing shall be subject to the
satisfaction or the waiver in writing by Buyer on or prior to the Closing Date
of the following conditions:
SECTION 11.1 Performance. Each agreement and covenant of Seller to be
performed on or before the Closing Date pursuant hereto shall have been duly
performed in all material respects;
23
SECTION 11.2 Collateral Agreements.
(a) If requested by Buyer, Buyer shall have entered into a partial assignment
agreement with Seller and OxyMar, a Texas general partnership, pursuant to which
certain of Seller's rights to purchase VCM from OxyMar pursuant to that certain
Amended and Restated VCM Purchase Agreement (OxyChem) dated August 30, 1990 in
quantities sufficient to supply one hundred percent (100%) of the requirements
of the Facility as of the date of this Agreement shall be assigned to Buyer; or
(b) If Buyer has not requested the partial assignment described in sub-
paragraph (a) or if the consent of OxyMar to such a partial assignment is
requested by Buyer but cannot be obtained prior to the Closing Date, then Seller
shall have executed and delivered to Buyer the VCM Supply Agreement; and
(c) Seller shall have executed and delivered to Buyer the PVC Tolling
Agreement.
SECTION 11.3 Corporate Authorization. Seller shall have furnished to Buyer
(a) a copy of Seller's certificate of incorporation, certified as of a recent
date by the Secretary of State of New York, and (b) a certificate of the
Secretary or an Assistant Secretary of Seller (i) including a copy of Seller's
by-laws, (ii) a copy of resolutions adopted by the Board of Directors of Seller
authorizing the execution, delivery and performance of this Agreement by Seller,
and (iii) as to the incumbency and signatures of officers, no amendment of the
certificate of incorporation or by-laws, and no proceedings for dissolution or
liquidation;
SECTION 11.4 Opinion of Seller's Counsel. Buyer shall have received the
opinion of Duane Stamp, Associate General Counsel for Seller, in the form
attached hereto as Annex B;
SECTION 11.5 Representations and Warranties True. The representations and
warranties of Seller contained herein and in any other signed writing delivered
by Seller pursuant hereto or in connection herewith shall be true in all
material respects on and as of the Closing Date and with the same effect as
though made on and as of such date, and Buyer shall have received at the Closing
a certificate to such effect dated the Closing Date and executed on behalf of
Seller by an officer of Seller;
SECTION 11.6 No Violations of Statutes. There shall not be any statute, rule
or regulation which makes it illegal for Buyer to consummate the transactions
contemplated hereby or any order, decree or judgment enjoining Buyer from
consummating the transactions contemplated hereby;
SECTION 11.7 Federal Trade Commission Approval. Seller shall have provided
evidence to Buyer of Seller's receipt of such approvals from the Federal Trade
Commission as are required pursuant to the Stipulation and Final Order of the
United States Court of Appeals for the Second Circuit in Occidental Petroleum
--------------------
Corporation, et al. v. The Federal Trade Commission, Docket 93-4122, modifying
- ----------------------------------------------------
the order of the Federal Trade Commission entered December 22, 1992 in
Commission Docket No. 9205;
24
SECTION 11.8 Licenses, Consents and Approvals. Buyer and Seller have
received such consents of other parties as are set forth in Schedule 5.6 and
Schedule 6.4, except where the failure to obtain such consent would not have a
material adverse effect.
SECTION 11.9 Results of Environmental Assessment. Buyer shall be satisfied
with the results of the environmental assessment conducted pursuant to Section
7.5 provided, however, that Buyer shall be required to proceed with the Closing
unless the environmental assessment reveals a condition that would in Buyer's
reasonable judgment materially adversely affect Buyer's future use of the Real
Estate and provided further that Seller has not been able to remedy the
condition within a reasonable time. Buyer's election to proceed to complete the
transactions contemplated by this Agreement shall not relieve or limit Seller's
obligations of indemnity pursuant to Section 13.2, which shall include the
obligation to indemnify Buyer for such costs and expenses incurred by Buyer in
correcting any condition revealed as a result of the assessment which is within
the scope of Section 13.2(c), subject to the application of such thresholds,
deductibles and limitations of claims as are applicable to such indemnity
pursuant to the provisions of Article XIII.
ARTICLE XII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to be performed at Closing shall be subject to the
satisfaction or the waiver in writing by Seller on or prior to the Closing Date
of the following conditions:
SECTION 12.1 Performance. Each agreement and covenant of Buyer to be
performed on or before the Closing Date pursuant hereto shall have been duly
performed in all material respects;
SECTION 12.2 Authorizations. Buyer shall have furnished to Seller (a) a
copy of the certificate of limited partnership of Buyer, certified as of a
recent date by the Secretary of State of Delaware, (b) a copy of the
certificate of incorporation of BCP Management Inc., certified as of a recent
date by the Secretary of State of Delaware, (c) a certificate of the Secretary
or an Assistant Secretary of BCP Management, Inc. attesting to (i) no amendment
of the amended and restated agreement of limited partnership of Buyer, and no
proceedings for dissolution or liquidation of Buyer and (ii) the adoption of
resolutions by the Board of Directors of BCP Management Inc. authorizing the
execution, delivery and performance of this Agreement by Buyer, and (iii) the
incumbency and signatures of officers of BCP Management, Inc., no amendment of
the certificate of incorporation or by-laws of BCP Management, Inc. and no
proceedings for its dissolution or liquidation;
SECTION 12.3 Opinion of Buyer's Counsel. Seller shall have received the
opinion of Lawrence Dieker, Assistant General Counsel for Borden, Inc., in the
form attached hereto as Annex C;
25
SECTION 12.4 Representations and Warranties True. The representations and
warranties of Buyer contained herein and in any other signed writing delivered
by Buyer pursuant hereto or in connection herewith shall be true in all material
respects on and as of the Closing Date and with the same effect as though made
on and as of such date, and Seller shall have received at the Closing a
certificate to such effect dated the Closing Date and executed on behalf of
Buyer by its Chief Financial Officer;
SECTION 12.5 No Violations of Statutes. There shall not be any statute, rule
or regulation which makes it illegal for Seller to consummate the transactions
contemplated hereby or any order, decree or judgment enjoining Seller from
consummating the transactions contemplated hereby;
SECTION 12.6 Federal Trade Commission Approval. Seller shall have received
such approvals from the Federal Trade Commission as are required pursuant to the
Stipulation and Final Order of the United States Court of Appeals for the Second
Circuit in Occidental Petroleum Corporation, et al. v. The Federal Trade
--------------------------------------------------------------
Commission, Docket 93-4122, modifying the order of the Federal Trade Commission
- ----------
entered December 22, 1992 in Commission Docket No. 9205;
SECTION 12.7 Licenses, Consents and Approvals. Buyer and Seller have
received such consents of other parties as are set forth in Schedule 5.6 and
Schedule 6.4, except where the failure to obtain such consent would not have a
material adverse effect.
ARTICLE XIII
INDEMNITIES; SURVIVAL
SECTION 13.1 Seller's Indemnity - General and Contractual. Except for
environmental matters for which indemnification is provided pursuant to Section
13.2, Seller will indemnify and defend Buyer, its Affiliates and their
respective directors, officers, employees and agents from and against any and
all claims, demands, suits, damages, liabilities, loss or other expense
(including reasonable attorneys' fees), whether for property damages, bodily
injury, governmental fines (including, without limitation, for the violation of
operating permits) or otherwise to the extent such claims, demands, suits,
damages, liabilities, loss or other expense arise out of, result from or are
attributable to:
(a) Seller's operation of the Included Assets prior to the Closing Date; or
(b) product liability claims for all products shipped by Seller prior to the
Closing; or
(c) allegations which, if true, would render any representation or warranty
of Seller contained herein false when made; or
(d) the breach of any covenant or other promise of Seller contained herein;
or
(e) any other liability or obligation of Seller of any nature, accrued or
contingent, and not assumed by Buyer.
SECTION 13.2 Seller's Indemnity - Environmental. To the extent arising from
(a) the manufacture, generation, treatment, storage, handling, processing,
disposal, discharge, loss, leak, escape or spillage of any product, waste or
substance (generated or handled by Seller on or off the
26
premises of the Facility) prior to the Closing Date, or (b) any condition
resulting therefrom relating to acts, omissions or operations of Seller prior to
the Closing Date, or (c) any duty, obligation or responsibility imposed upon
Seller or its Affiliates prior to the Closing Date under any environmental law
in effect prior to the Closing Date to prevent or remedy any such condition,
Seller agrees to defend and indemnify Buyer, its Affiliates and their respective
directors, officers, employees and agents from and against all actions or causes
of action, losses, damages, costs and expenses (including reasonable attorneys'
fees) arising out of, relating to or resulting from any condition or action
described in clause (a), (b) or (c) of this Section 13.2. In no event shall
this provision be construed so as to entitle Buyer to indemnification if the
claim for indemnification would not exist but for a change in applicable law
occurring after the Closing Date. The preceding sentence shall not apply
however, to any claims with respect to any sites away from the real estate upon
which the Facility is located where Seller may have disposed of waste materials,
including, without limitation, the locations referred to in Schedule 5.14.
SECTION 13.3 Buyer's Indemnity - General and Contractual. Except for
environmental matters for which indemnification is provided pursuant to Section
13.4, Buyer will indemnify and defend Seller, its Affiliates and their
respective directors, officers, employees and agents from and against any and
all claims, demands, suits, damages, liabilities, loss or other expense
(including reasonable attorneys' fees), whether for property damages, bodily
injury, governmental fines (including, without limitation, for the violation of
operating permits) or otherwise, to the extent such claims, demands, suits,
damages, liabilities, loss or other expense arise out of, result from or are
attributable to:
(a) Buyer's operation of the Included Assets on and after the Closing Date;
or
(b) product liability claims for any products shipped by Buyer after the
Closing; or
(c) allegations which, if true, would render any representation or warranty
of Buyer contained herein false when made; or
(d) the breach of any covenant or other promise of Buyer contained herein; or
(e) any other liability or obligation of Seller of any nature, accrued or
contingent, assumed by Buyer hereunder.
SECTION 13.4 Buyer's Indemnity - Environmental. To the extent arising from
(a) the manufacture, generation, treatment, storage, handling, processing,
disposal, discharge, loss, leak, escape or spillage of any product, waste or
substance (generated or handled by Buyer on or off the premises of the Facility)
after the Closing Date, or (b) any condition resulting therefrom relating to
acts, omissions or operations of Buyer after the Closing Date, or (c) any duty,
obligation or responsibility of Buyer, its parents or its subsidiaries or
affiliates under any environmental law to prevent or remedy any such condition,
Buyer agrees to defend and indemnify Seller, its Affiliates and their respective
directors, officers, employees and agents from and against all actions or causes
of action, losses, damages, costs and expenses (including reasonable attorneys'
fees) arising out of,
27
relating to or resulting from any condition or action described in clause (a) or
(b) or (c) of this Section 13.4.
SECTION 13.5 Limitations. Unless otherwise specifically provided, all
representations, warranties and covenants made by the parties in this Agreement
and in any certificates or other instruments delivered pursuant hereto shall
survive the Closing, provided however,
(a) representations and warranties concerning environmental matters and
Seller's warranty in Section 5.16 shall . Representations
and warranties concerning tax matters shall survive for a period of
after the relevant authorities shall no longer be entitled to assess
liability for tax against Buyer for any particular fiscal year ended on or prior
to the Closing Date. All other representations and warranties shall only
survive for a period of from the Closing Date; provided, however,
that Buyer's or Seller's sole remedy for a breach of any representation or
warranty herein shall, in the absence of fraud, consist of the right to
indemnification as provided in this Article XIII. If no claim shall have been
made under this Agreement against a party for any incorrectness in or breach of
any representation or warranty made in this Agreement prior to the expiry of
these survival periods, such party shall have no further liability under this
Agreement with respect to such representation or warranty, and
(b) notwithstanding the limitations set out in subsection (a) above, any
claim which is based on title to the Included Assets, intentional
misrepresentations or fraud may be brought at any time.
(c) notwithstanding any other provision of this Article XIII, neither party
nor any of their Affiliates shall be liable to the other for consequential,
incidental, indirect or punitive damages in connection with their
indemnification obligations under this Agreement unless such obligation is
incurred as a result of willful misrepresentation. The remedies set forth in
this Agreement are in lieu of, and not in addition to, any other legal or
equitable remedies to which the parties might be entitled.
(d) notwithstanding any other provision of this Article XIII, Seller's
damages for a breach by Buyer of its obligations pursuant to Section 8.11 shall
be limited to third party costs incurred by Seller in connection with Seller's
efforts to sell the Included Assets to Buyer, not to exceed
.
SECTION 13.6 Threshold for Claims.
(a) Representations and Warranties. Except for any claims based upon the
-------------------------------
warranty in Section 5.16, no claim shall be made by either party against the
other based upon the provisions of Section 13.1(c) and Section 13.3(c) unless
the aggregate of all such claims by the claiming party shall exceed
in the aggregate, whereupon the party against
which such claims are made shall be liable for the aggregate amount of all such
claims made against it.
(b) General and Contractual. No claim shall be made by either party against
------------------------
the other based upon the provisions of Sections 13.1(a), (d) or (e) or Sections
13.3 (a), (d) or (e) unless the aggregate of all such claims by the claiming
party shall exceed in the aggregate,
whereupon the party against which such claims are made shall be liable for the
aggregate amount of all such claims made against it.
(c) Product Liability and Personal Injury Claims. No claim shall be made by
---------------------------------------------
either party against the other based upon the provisions of Section 13.1(a)
(only to the extent such claims consist of personal injury claims), Section 13.1
(b) or Section 13.3 (b) unless the aggregate of all such claims by the claiming
party shall exceed in the aggregate,
28
whereupon the party against which such claims are made shall be liable for the
aggregate amount of all such claims made against it.
(d) Environmental. No claim shall be made by either party against the other
--------------
based upon the provisions of Section 13.2 or Section 13.4 unless the aggregate
of all such claims by the claiming party shall exceed
in the aggregate, whereupon the party against which such
claims are made shall be liable for the aggregate amount of all such claims made
against it.
SECTION 13.7 Claim Deductibles.
(a) Representations and Warranties. Except for any claims based upon the
-------------------------------
warranty in Section 5.16, Seller and Buyer shall each have a deductible of
per claim and an aggregate and
cumulative deductible of
against any and all claims for indemnity under Sections 13.1(c) and 13.3(c) of
this Agreement.
(b) General and Contractual. Seller and Buyer shall each have an aggregate
------------------------
and cumulative deductible of against
any and all claims for indemnity under Sections 13.1(a), (d) and (e) and
Sections 13.3(a), (d) and (e) of this Agreement.
(c) Product Liability and Personal Injury Claims. Seller and Buyer shall each
---------------------------------------------
have an aggregate and cumulative deductible of
against any and all claims for indemnity under Section 13.1(a)
(only to the extent such claims consist of personal injury claims), Section
13.1(b) and Section 13.3(b) of this Agreement.
(d) Environmental. Seller and Buyer shall each have an aggregate and
--------------
cumulative deductible of
against any and all claims for indemnity under Section 13.2 and Section 13.4 of
this Agreement.
SECTION 13.8 Claim Limits.
(a) General and Contractual. The maximum aggregate and cumulative amount that
------------------------
either party may recover from the other based upon the provisions of Sections
13.1(a) (excepting personal injury claims), (d) and (e) or Sections 13.3 (a),
(d) and (e) of this Agreement shall be . In
addition, upon the expiration of the period ending from the Closing
Date, the percentage of Seller's obligation to indemnify Buyer pursuant to
Sections 13.1 (a), (d) and (e) of this Agreement shall be reduced by
and each year thereafter such that at the expiration of the
after the Closing Date, Seller's obligation of indemnification pursuant to
the aforementioned provisions of this Agreement shall terminate. The maximum
aggregate and cumulative amount that Buyer may recover from Seller based upon
the warranty in Section 5.16 shall be limited to the Purchase Price less the
Addis Working Capital.
(b) Environmental. During the period ending from the Closing
--------------
Date, Seller shall be liable for of its
indemnification obligation pursuant to Section 13.2 of this Agreement. For the
period of period referred
to in the preceding sentence, Seller shall be liable for of
its indemnification obligation pursuant to Section 13.2. Upon the expiration of
the period
29
referred to in the preceding sentence, Seller's obligation to indemnify pursuant
to Section 13.2 shall terminate.
SECTION 13.9 Notice of Claims. Each party indemnified under the provisions
of this Agreement (the "Indemnitee"), upon receipt of written notice of any
claim or the service of a summons or other initial legal process upon it in any
action instituted against it, in respect of the indemnities contained in this
Agreement, shall give reasonably prompt written notice of such claim, or the
commencement of such action, or threat thereof, to the party from whom indemnity
is provided hereunder (the "Indemnitor"). The Indemnitor shall be entitled to a
reasonable period of time (not to exceed ninety days without the consent of the
Indemnitee) within which, at is own expense, to avoid, cure or otherwise
mitigate the claim giving rise to the obligation of indemnity and the Indemnitee
shall cooperate reasonably with such efforts, provided, that in the case of the
Buyer as Indemnitee, Buyer shall not be required to undertake, nor to permit,
any modifications to the Facility which substantially reduce the efficiency,
economic productivity or product characteristics of the Facility. The
Indemnitor shall be entitled at its own expense to participate in the defense of
such claim or action, or, if it shall elect, to assume such defense; in which
event such defense shall be conducted by counsel chosen by the Indemnitor, which
counsel may be any counsel satisfactory to the Indemnitee. The Indemnitee shall
be entitled to continue to participate in any defense so assumed. Nothing
contained herein shall be construed to: (a) prevent the Indemnitee from
settling any claim or proceeding in its discretion, or (b) affect the
substantive rights of the parties under the indemnities contained herein,
including, without limitation, the obligation of the Indemnitee to reasonably
and prudently mitigate losses, costs, damages and expenses; provided that
(except in the case of a claim arising under Section 5.16 pursuant to which
preliminary equitable relief has been obtained which materially disrupts the
Indemnitee's operation of the Facility and where the Indemnitor has been given
the opportunity to avoid, cure or otherwise mitigate the claim as provided
above), if the Indemnitee settles a claim or proceeding over the written
objection of the Indemnitor, the Indemnitor shall not be required to reimburse
the Indemnitee for the amount of such settlement.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Inability to Obtain Certain Consents. To the extent that any
claim, contract, license, permit or other intangible for which transfer or
assignment to Buyer is provided herein is not transferable or assignable without
the consent of a third party, this Agreement shall not constitute a transfer or
assignment or an attempted transfer or assignment if such transfer or assignment
or attempted transfer or assignment would constitute a breach thereof. If so
requested by Buyer, Seller shall diligently seek to obtain such consents,
provided, however, that if any such consent is not obtained, Seller and Buyer
agree to cooperate in good faith to enter into any reasonable arrangements
30
mutually acceptable to them designed to provide Buyer with the benefits of and
to burden Buyer with the obligations under any such claim, contract, license,
permit or other intangible.
SECTION 14.2 Costs and Expenses; Brokerage. All cost and expenses, including
attorneys' fees, incident to this Agreement and the transactions contemplated
herein shall be paid by the party who incurred the same, whether the
transactions contemplated by this Agreement are consummated or not. The parties
respectively represent and warrant that they have not dealt in any manner with a
broker, agent or finder as regards the transaction set forth in this Agreement.
SECTION 14.3 Bulk Sales Laws. Buyer hereby waives compliance with the
provisions of the bulk sales laws of any jurisdiction which may be applicable to
the transactions contemplated hereby.
SECTION 14.4 Titles for Convenience. The titles of the Articles and Sections
of this Agreement are for convenience of reference only and are not be
considered in construing this Agreement.
SECTION 14.5 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and assigns; provided that except for the assignment by Buyer to another limited
partnership of which BCP Management, Inc. is the general partner, this Agreement
may not be assigned by any party without the express written consent of the
other party hereto.
SECTION 14.6 Entire Agreement; Amendment. This Agreement together with any
exhibits, schedules, annexes, the Confidentiality Agreement, and other
agreements or documents incorporated by reference herein, embodies the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. This Agreement may be
amended, and any provision hereof waived, but only in writing signed by the
party against whom such amendment or waiver is sought to be enforced.
SECTION 14.7 Governing Law. The transfer of the Addis Real Estate Interests
shall be governed by the laws of the State of Louisiana pertaining thereto. In
all other respects this Agreement shall be governed by the laws of the State of
New York, excluding conflict of laws principles that may direct the application
of the laws of another jurisdiction. The execution and delivery of this
Agreement shall be deemed to be the transaction of business within the State of
New York for purposes of conferring jurisdiction upon courts located within the
State of New York. The parties agree that any court proceedings arising out of
this Agreement shall be brought only in the federal or state courts in the State
of New York and both parties consent to the jurisdiction of such courts.
31
SECTION 14.8 Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person to the respective offices named below or two (2) business
days after having been mailed by registered or certified mail, postage prepaid,
return receipt requested:
If to Seller: Occidental Chemical Corporation
Occidental Tower
5005 LBJ Freeway
Dallas, Texas 75244
(214) 404-3840
(214) 404-4155 (facsimile)
Attention: Vice President and General Counsel
If to Buyer: Borden Chemicals and Plastics Operating Limited Partnership
Highway 73
Geismar, Louisiana 70734
(504) 387-5101
(504) 673-0672 (facsimile)
Attention: Vice President - Operations
with a copy to: BCP Management, Inc.
180 E. Broad Street
Columbus, Ohio 43215
Attention: President
SECTION 14.9 Public Statements. Prior to the Closing Date, neither Seller
nor Buyer will issue any press release or other statement to third parties
concerning this Agreement or the transactions contemplated hereby without the
other party's written consent which shall not be unreasonably withheld.
32
SECTION 14.10 Third Party Beneficiaries Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any person,
firm, or corporation other than the parties hereto, any rights or remedies under
or by reason of this Agreement or any transaction contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused their respective names to
be hereunto subscribed as of the date and year first above written.
OCCIDENTAL CHEMICAL CORPORATION
By: ________________________________
Title: _______________________________
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP BY ITS
GENERAL PARTNER, BCP MANAGEMENT, INC.
By: ________________________________
Title: _______________________________
33
ANNEX D
__________________________________________________________________
VCM SUPPLY AGREEMENT
BETWEEN
OCCIDENTAL CHEMICAL CORPORATION
SELLER,
AND
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
BUYER
DATED AS OF _______, 1994
________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions......................................... 2
ARTICLE II
COMMITMENTS OF PURCHASE AND SALE
SECTION 2.1 Purchase Commitment................................. 4
SECTION 2.2 Sales Commitment.................................... 4
ARTICLE III
QUANTITY
SECTION 3.1 Requirements........................................ 4
SECTION 3.2 Notification of Annual Requirements................. 4
SECTION 3.3 Excess Requirements................................. 5
ARTICLE IV
TERM
SECTION 4.1 Term of This Agreement.............................. 5
SECTION 4.2 Election to Continue This Agreement................. 6
SECTION 4.3 Notices and Elections Binding....................... 6
ARTICLE V
PRICE
SECTION 5.1 Price of VCM........................................ 6
SECTION 5.2 Seller's Price Estimate, Nomination and
Buyer's Payment.................................... 7
SECTION 5.3 Settlement of Market Price.......................... 7
SECTION 5.4 Default Market Pricing Mechanism.................... 7
ARTICLE VI
DELIVERY
SECTION 6.1 Shipping Instructions............................... 8
SECTION 6.2 Title and Risk of Loss.............................. 8
SECTION 6.3 Transportation Costs................................ 8
i
Page
SECTION 6.4 Change in Supply Source............................. 9
ARTICLE VII
MEASUREMENT
SECTION 7.1 Pipeline Delivery................................... 9
SECTION 7.2 Rail Car Delivery................................... 9
SECTION 7.3 Calibration of Measuring Devices.................... 9
ARTICLE VIII
WARRANTIES
SECTION 8.1 Seller's Warranty................................... 10
SECTION 8.2 VCM Not For Resale.................................. 10
SECTION 8.3 Patents............................................. 10
SECTION 8.4 Uses and Safe Handling.............................. 10
SECTION 8.5 Claims; Liability................................... 10
ARTICLE IX
TAXES
SECTION 9.1 Responsibility for Taxes............................ 10
SECTION 9.2 Duty Drawbacks...................................... 11
ARTICLE X
LIABILITY AND RESPONSIBILITY
SECTION 10.1 Allocation of Liability............................. 11
ARTICLE XI
EXCUSE OF PERFORMANCE
SECTION 11.1 Excuse of Performance............................... 11
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices............................................. 12
SECTION 12.2 Assignment.......................................... 12
SECTION 12.3 Jurisdiction........................................ 13
SECTION 12.4 Confidentiality..................................... 13
SECTION 12.5 Entirety of Agreement............................... 13
SECTION 12.6 Waiver.............................................. 13
SECTION 12.7 Headings............................................ 13
ii
Page
SECTION 12.8 Default............................................. 14
iii
ANNEX D
VCM SUPPLY AGREEMENT
THIS VCM SUPPLY AGREEMENT dated as of the _______ day of ________,
1994 is between OCCIDENTAL CHEMICAL CORPORATION, a New York corporation
(hereinafter "Seller") and BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter "Buyer"). Each of
Seller and Buyer is sometimes hereinafter referred to as a "party" and
collectively as the "parties". Capitalized terms not otherwise specifically
defined herein shall have the meanings assigned to them in the Asset Transfer
Agreement between Occidental Chemical Corporation and Borden Chemicals and
Plastics Operating Limited Partnership dated August 12, 1994.
WHEREAS, pursuant to the Asset Transfer Agreement, the parties have
provided for the sale by Seller and the purchase by Buyer of Seller's right,
title and interest in certain PVC production assets located at Addis, Louisiana
(the "Facility"); and
WHEREAS, VCM is the principal raw material utilized in the production
of PVC at the Facility; and
WHEREAS, Seller owns or operates VCM production facilities; and
WHEREAS, Buyer desires to purchase from Seller VCM required to
produce PVC at the Facility; and
WHEREAS, Seller desires to sell to Buyer VCM required to produce
PVC at the Facility; and
WHEREAS, the parties are entering into this Agreement in accordance
with the provisions of the Asset Transfer Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
1
ANNEX D
"Addis Plant" has the meaning assigned to it in the Asset Transfer Agreement.
"Agreement" means this VCM Supply Agreement.
"Asset Transfer Agreement" means that certain Asset Transfer Agreement between
Occidental Chemical Corporation and Borden Chemicals and Plastics Operating
Limited Partnership dated August 12, 1994.
"Delivery Month" has the meaning assigned to it in Section 5.2.
"Excess Requirements" has the meaning assigned to it in Section 3.3.
"Extended Term" has the meaning assigned to it in Section 4.1.
"Facility" means the Addis Plant.
"month" means a calendar month.
"Payment Month" has the meaning assigned to it in Section 5.2.
"Price" has the meaning assigned to it in Section 5.2.
"Primary Term" has the meaning assigned to it in Section 4.1.
"PVC" means polyvinyl chloride.
"PVC Tolling Agreement" means that certain PVC Tolling Agreement between
Occidental Chemical Corporation and Borden Chemicals and Plastics Operating
Limited Partnership dated _______, 1994.
"Superfund Tax" means the assessment on the production and sale of VCM imposed
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, as the same may be from time to time amended or reauthorized.
"Term" means the period of the Primary Term of this Agreement together with the
period of any Extended Term.
"VCM" means vinyl chloride monomer having the specifications set forth in
Appendix A to this Agreement.
2
ANNEX D
"year" or "yearly" means a calendar year, provided that if this Agreement is
dated as of a date other than January 1, the initial year of this Agreement
shall run from the effective date of this Agreement until the next succeeding
December 31.
ARTICLE II
COMMITMENTS OF PURCHASE AND SALE
SECTION 2.1 Purchase Commitment. Buyer agrees to purchase from
Seller, during the Term, the quantities of VCM as hereinafter described and at
the Price as hereinafter set forth. If the initial year of this Agreement is
other than a full calendar year, all such commitments shall be prorated during
such initial year based upon the duration of that year.
SECTION 2.2 Sales Commitment. Seller agrees to sell to Buyer, during
the Term, the quantities of VCM as hereinafter described and at the Price as
hereinafter set forth. If the initial year of this Agreement is other than a
full calendar year, all such commitments shall be prorated during such initial
year based upon the duration of that year.
ARTICLE III
QUANTITY
SECTION 3.1 Requirements.
(a) In each year during the Term Buyer shall purchase from Seller one
hundred percent (100%) of the requirement for VCM at the Facility up to a base
requirement of
of VCM per year is hereinafter referred to as
the "Base Requirement".
(c) The parties may from time to time mutually agree to increases or
decreases in the Base Requirement.
3
ANNEX D
(d) Any quantity of VCM provided by Seller pursuant to the provisions
of the PVC Tolling Agreement shall be included for the sole purpose of
determining whether Buyer has met the Base Requirement.
SECTION 3.2 Notification of Annual Requirements.
(a) Not less than one hundred eighty (180) days prior to the end of
each year Buyer shall submit to Seller in writing a forecast of Buyer's
requirements for VCM at the Facility for the following three (3) years. Such
forecast shall represent Buyer's best effort to accurately predict VCM
consumption at the Facility.
(b) The parties agree that the quantity of VCM to be supplied by
Seller during the initial year of this Agreement is estimated to be a pro rata
portion of the Base Requirement based upon the number of days remaining in the
initial year.
SECTION 3.3 Excess Requirements.
(a) Seller may, but shall not be required to, supply VCM in excess of
the Base Requirement.
(b) In the event that (i) Buyer shall from time to time change the
manner of operation or expand the capacity of the Facility such that the
requirement of VCM shall increase above the Base Requirement, or (ii) in the
event that for any other reason Buyer shall require during any year a quantity
of VCM in excess of Buyer's firm VCM quantity nomination for such year, then as
to any such additional requirement for VCM shall be collectively referred to as
"Excess Requirements".
(c) Buyer shall notify Seller of Excess Requirements within the
meaning of subsection b(i) not less than one hundred eighty (180) days prior to
the date upon which Buyer will need such additional VCM and Seller shall have
thirty (30) days from the date of such notification within which to notify Buyer
of Seller's willingness to supply all or any part of such Excess Requirements
upon the terms and conditions set forth in this Agreement but at a price for
such Excess Requirements which the parties shall negotiate in good faith. In
the event the parties are unable to reach agreement on the price for such Excess
Requirements within thirty (30) days after Seller has notified Buyer of its
willingness to supply, Buyer may obtain such quantity from other sources of
supply, provided however, that Buyer shall not pay any such competing source of
supply a delivered price higher than any firm price last offered by Seller for
such Excess Requirements.
(d) Buyer shall notify Seller of Excess Requirements within the
meaning of subsection (b)(ii) as soon as practicable and Seller shall have
thirty (30) days from the date of such notification within which to notify
Buyer of Seller's election to supply all or any part of such Excess Requirements
at the Price and upon the other terms and conditions set forth in this
Agreement.
(e) To the extent that Seller shall not elect to supply Excess
Requirements, then Buyer may obtain such quantity from other sources of supply,
provided however, that Buyer's obligation to purchase VCM from any third party
shall be subject to the priority of Buyer's obligation to purchase VCM first
from Seller pursuant to the provisions of Section 3.1 and that Buyer's
obligations to purchase VCM from Seller shall not be subject to allocation among
any other sources of supply.
4
ANNEX D
ARTICLE IV
TERM
SECTION 4.1 Term of This Agreement. The primary term of this
Agreement shall commence on the date hereof. If this Agreement is dated other
than on January 1, the initial year shall end on the next succeeding December 31
and the primary term of this Agreement shall continue thereafter for a period of
(the "Primary Term") and year to year thereafter (the
"Extended Term"), unless and until a notice of intent to cancel this Agreement
is submitted by either party effective as of the last day of the Primary Term or
the last day of any year during the Extended Term. Subject to the provisions of
Section 4.4, a notice of intent to cancel shall be void if issued less than
twelve months prior to its stated effective date.
SECTION 4.2 Election to Continue this Agreement. In the event that a
party to this Agreement has provided notice of intent to cancel pursuant to
Section 4.1, the other party shall nevertheless have the option to continue this
Agreement in effect in the following manner. Not more than ninety (90) days
after the submission of any notice of intent to cancel pursuant to Section 4.1,
the non-canceling party may provide notice of its election to continue this
Agreement in effect, notwithstanding such notice of intent to cancel, by
electing to reduce the quantity of VCM that must be purchased or supplied, as
the case may be, during the next following year of the Term by
of the Base Requirement in effect in the last year of this
Agreement prior to the effective date of the first notice of intent to cancel
submitted pursuant to Section 4.1 (less the quantity of VCM supplied by Seller
to Buyer during such year pursuant to the PVC Tolling Agreement). In the event
that a notice of election to continue this Agreement is not provided as set
forth in this paragraph, then this Agreement shall terminate in accordance with
the most recent notice of intent to cancel. At such time, if any, as a notice
of election to continue this Agreement has been submitted three times, then any
subsequent notice of intent to cancel this Agreement shall have the effect of
terminating this Agreement upon the effective date of such notice. Section 3.3
of this Agreement shall not apply during any period covered by an election to
continue.
SECTION 4.3 Notices and Elections Binding. Any such notices and
elections that either party shall submit or make from time to time in accordance
with the provisions of this Article shall be binding upon both Buyer and Seller.
Any elections that either party shall make from time to time in accordance with
the provisions of this section to reduce the quantity of VCM to be supplied to
Buyer shall be deemed to be a permanent reduction in the Buyer's requirements
for VCM at the Facility and shall be binding upon both Buyer and Seller until
the expiration or other termination of this Agreement.
5
ANNEX D
ARTICLE V
PRICE
SECTION 5.1 Price of VCM. Each calendar month during the Term, the
Price of VCM sold to Buyer hereunder, expressed in dollars per pound of VCM,
shall represent the
(hereinafter the "Market Price").
SECTION 5.2 Seller's Price Estimate, Nomination and Buyer's Payment.
Not later than the first day of each month during the Term, Seller shall provide
to Buyer a written good faith estimate of the Price applicable to VCM to be
delivered to Buyer during such month (the "Delivery Month"). Not later than the
day of the next succeeding month (the "Payment Month") Seller shall
invoice Buyer for VCM delivered during the Delivery Month at a price nominated
by Seller (the "Price") (which may or may not be the same as Seller's prior good
faith estimate) and which Seller believes fairly represents the Market Price.
Buyer shall pay such invoice, at the Price nominated therein by Seller, by the
day of such Payment Month by wire transfer of funds to a bank account
designated by Seller to receive such payment.
SECTION 5.3 Settlement of Market Price. Prior to the end of each
Payment Month, Buyer or Seller may provide written notice that the Price
nominated by Seller as applicable to the immediately preceding Delivery Month
does not accurately represent the Market Price. Such notice shall include
specification of the price which such party believes accurately represents the
Market Price during the relevant Delivery Month. Buyer and Seller shall
thereafter promptly enter into good faith discussions to resolve the Price of
VCM for such Delivery Month. In the event that good faith negotiations to
settle the Price of VCM are unsuccessful in resolving the parties' differences
within a period of thirty (30) days following written notice pursuant to this
Section and if the final disparity in the parties' good faith evaluation of the
Market Price for the relevant month is equal to or less than , the
parties shall settle the Market Price by splitting the difference between their
respective positions. If the parties settle the Price at an amount different
than Seller's previously nominated Price for such Delivery Month, then an
adjustment for any overpayment or underpayment made by Buyer shall be included
in Seller's invoice submitted during the next Payment Month following the
parties' agreement.
SECTION 5.4 Default Market Pricing Mechanism. In the event that good
faith negotiations to settle the Price of VCM are unsuccessful in resolving the
parties' differences within a period of thirty (30) days following written
notice pursuant to Section 5.3 and if the final disparity in the parties' good
faith evaluation of the Market Price for the relevant month is greater than
, the Price to be applied to VCM delivered during the relevant Delivery
Month shall default to the
6
ANNEX D
ARTICLE VI
DELIVERY
SECTION 6.1 Monthly Shipping Instructions. Fifteen (15) days prior
to the first day of each month, Buyer shall furnish to Seller in writing a good
faith estimate of the quantities of VCM to be delivered to the Facility during
each of the next three months and such instructions and estimates for the month
immediately following such notice shall be considered final and binding. The
parties shall cooperate to distribute deliveries of VCM in approximately equal
monthly quantities during each year.
7
ANNEX D
SECTION 6.2 Title and Risk of Loss. Title to and risk of loss of VCM
delivered hereunder shall pass to Buyer upon loading into rail tank cars for
delivery to Buyer or at the first flange on the pipeline entering the Facility
premises, as the case may be.
SECTION 6.3 Transportation Costs. For VCM sold to Buyer and shipped
by Seller to the Facility,
Seller and Buyer shall exercise reasonable commercial
efforts to reduce the net transportation costs.
SECTION 6.4 Change in Supply Source. If Seller desires to Supply VCM
to Buyer from a source other than the current source(s), for a period of more
than 45 days, Buyer and Seller shall exercise reasonable commercial efforts to
qualify such source(s) of supply.
ARTICLE VII
MEASUREMENT
SECTION 7.1 Pipeline Delivery. If VCM is delivered to the Facility
via the VCM pipeline owned by the Dow Chemical Company ("Dow"), the quantity of
VCM so delivered shall be determined by an industry standard flow measurement
device owned and operated by Dow at its VCM shipping location in Plaquemine,
Louisiana. Dow's weights and measures shall govern except in case of
demonstrated error.
SECTION 7.2 Rail Car Delivery.
(i) If VCM is delivered in rail tank cars loaded by Seller, the
quantity of VCM so delivered shall be determined by rail tank car weigh scales
or other mutually agreed measuring device which shall be operated, maintained
and regularly calibrated by Seller at Seller's shipping location in accordance
with accepted industry practice. Seller's weights and measures shall govern
except in case of demonstrated error.
(ii) If VCM is delivered in rail tank cars loaded by a third party,
the quantity of VCM so delivered shall be determined by rail tank car weigh
scales or other measuring device employed in connection with the loading of such
rail cars in accordance with accepted industry practice. Third party weights
and measures shall govern except in case of demonstrated error.
SECTION 7.3 Calibration of Measuring Devices.
(i) In respect of any VCM delivered hereunder the quantity of which
is measured by devices operated by Seller, Seller shall give Buyer at least
three (3) days' prior notice of any calibration test and Buyer may elect to have
a representative present at any such test. If a level of inaccuracy is
determined by such test at plus or minus one percent (1%) or more of full scale,
Seller shall restore the measuring device to a condition of accuracy and
billings shall be corrected for the period known
8
ANNEX D
to be affected by such inaccuracy or, if such period cannot be accurately
determined, billings shall be corrected for one-half the period of time elapsed
since the date of the most recent previous calibration.
(ii) In respect of any VCM delivered hereunder the quantity of which
is measured by devices operated by a third party, Seller shall exercise
reasonable commercial efforts to afford to Buyer (a) at least (3) days' prior
notice of any calibration test (of which Seller has such advance knowledge) to
be performed on any such device, and (b) an opportunity for Buyer to have a
representative present at any such test. If a level of inaccuracy is determined
by such test at plus or minus one percent (1%) or more of full scale, Seller's
billings to Buyer shall be corrected for the period known to be affected by such
inaccuracy or, if such period cannot be accurately determined, billings shall be
corrected as Buyer and Seller shall mutually agree.
ARTICLE VIII
WARRANTIES
SECTION 8.1 Seller's Warranty. Seller's sole and exclusive warranty
is that the VCM complies with the physical and chemical specifications set forth
in Appendix A to this Agreement. Seller makes no other warranties, either
express or implied, whether with respect to its recommendations, instructions,
product apparatus, process or otherwise and specifically disclaims any implied
warranties, whether of merchantability, suitability, fitness for a particular
purpose or otherwise.
SECTION 8.2 VCM Not for Resale. Buyer represents and warrants that
VCM purchased hereunder is solely for Buyer's internal consumption and shall not
be resold by Buyer or on Buyer's behalf.
SECTION 8.3 Patents. Seller's recommendations or instructions are
not intended to suggest operations which would infringe any patents and Seller
assumes no liability to Buyer of any kind or responsibility for any such
infringement.
SECTION 8.4 Uses and Safe Handling. Seller shall properly label VCM
for shipment to Buyer pursuant to applicable statutes, rules and regulations.
Buyer hereby acknowledges receipt of Seller's material safety data sheet with
respect to VCM. Buyer shall carefully inspect VCM upon receipt and will
maintain appropriate safe handling and use procedures. Buyer will apprise its
employees, contractors and customers of the hazards, proper use and handling
requirements of VCM and shall comply with all applicable statutes, rules and
regulations pertaining thereto.
SECTION 8.5 Claims; Liability. Buyer shall be deemed to have waived
all claims with respect to any VCM sold hereunder for which Buyer's notice of
insufficient quality has not been given to Seller in writing within seventy-five
(75) days of Buyer's receipt of such VCM. As to any claim of any nature,
whether in contract, tort, strict liability or otherwise, Seller's and its
affiliates liability shall
9
ANNEX D
not exceed the Price of the portion of the VCM in respect of which such claim is
made plus any transportation charges thereon paid by Buyer. In no event shall
Seller and its affiliates be liable for indirect, consequential, special,
incidental or contingent damages, costs of litigation or for loss of business or
business opportunities.
ARTICLE IX
TAXES
SECTION 9.1 Responsibility for Taxes. In addition to the Price and
any transportation costs Buyer is required to pay to Seller hereunder, Buyer
shall pay to Seller the amount of all federal, state and local governmental
taxes, excises, duties, and/or other charges (including, without limitation,
sales and use taxes, Superfund Taxes, and excepting taxes on or measured by net
income) that Seller may be required to pay with respect to the production, sale
or transportation of VCM sold and delivered hereunder. Such charges shall be
added to Seller's invoice as a separate line item and shall be paid by Buyer as
provided in Section 5.2. Seller and Buyer will cooperate so as to minimize any
sales and use taxes imposed by any state or local governmental authority
including, without limitation, the prompt execution and delivery of any
necessary exemption certificates required to reduce or claim complete exemption
from any tax.
SECTION 9.2 Duty Drawbacks and Other Tax Credits. Seller and Buyer
will cooperate so as to facilitate Seller's ability to promptly file for, claim
and collect duty drawbacks, Superfund and other tax credits. Seller will share
the net amount of such drawbacks equally with Buyer.
ARTICLE X
LIABILITY AND RESPONSIBILITY
SECTION 10.1 Allocation of Liability. Except to the extent that such
is solely and directly caused by any breach of Seller's obligations hereunder,
Buyer assumes full responsibility for any liability arising out of the shipment,
unloading, discharge, storage, handling, use and disposal of any VCM purchased
hereunder, including the use of such VCM alone or in combination with other
substances and compliance or non-compliance with any law or regulations relating
thereto. Buyer shall defend, indemnify and hold harmless Seller and its
affiliates and their respective representatives and employees from and against
all losses, liabilities, damages and expenses made against or incurred by
Seller, its affiliates and their respective representatives and employees
arising out of any claim, suit or proceeding by any governmental agency or any
third parties which claim, suit or proceeding alleges death, personal or
economic injury or damages to any private or public property or resources caused
or contributed to by VCM sold hereunder if such death, injury or damages
occurred subsequent to shipment of such VCM, except to the extent such is solely
and directly caused by any breach of Seller's obligations hereunder.
10
ANNEX D
ARTICLE XI
EXCUSE OF PERFORMANCE
SECTION 11.1 Excuse of Performance. Performance of any obligation
under this Agreement may be suspended by either party without liability, to the
extent that: an Act of God; war; riot; fire; explosion; accident; flood;
sabotage; mechanical breakdown; involuntary plant shutdown; governmental laws,
regulations or orders; or any other cause (except financial) beyond the
reasonable control of such party; or labor trouble, strike, walkout, lockout or
injunction (whether or not such labor event is within the reasonable control of
such party), delays, prevents, restricts, limits, or renders commercially
infeasible, the performance of this Agreement or the consumption, sale or use of
VCM, except as to VCM already in transit. The affected party may invoke this
provision by promptly notifying the other party in writing of the nature and
estimated duration of the suspension period. The affected party shall exercise
reasonable diligence in curing such condition, provided, however, that Seller
shall not be obligated to procure VCM or otherwise obtain any materials required
for its performance hereunder from other than its customary sources of supply.
If any of the above described contingencies occur, Seller shall, without further
liability to Buyer of any kind, allocate its available supply of any VCM among
its contract customers and Seller's own internal consumption upon such basis and
in such manner as Seller deems fair and reasonable.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices. Any notice required or permitted to be given
pursuant to this Agreement shall be in writing and shall be sufficiently given
when duly mailed, postage prepaid, and addressed as follows or personally
delivered or transmitted electronically.
If to Seller for matters concerning quantity, price, quality, or shipment:
Occidental Chemical
Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Business Manager - VCM
Telephone: 214-404-2818
Facsimile: 214-404-2883
If to Seller for all other matters:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Vice President and General Counsel
Facsimile: 214-404-3957
11
ANNEX D
with a copy to:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Business Manager - VCM
Facsimile: 214-404-2883
If to Buyer:
Borden Chemicals and Plastics Operating Limited Partnership
Highway 73
Geismar, Louisiana 70734
Attention: Vice President - Operations
Facsimile: (504) 673-0672
with a copy to: BCP Management, Inc.
180 E. Broad Street
Columbus, Ohio 43215
Attention: President
SECTION 12.2 Assignment. This Agreement shall bind the respective
successors and assigns of the parties hereto, provided however, that neither
party may assign or otherwise transfer its rights or obligations hereunder to a
third party without the prior written consent of the other party hereto,
provided further, however, that such consent shall not be required in the case
of an assignment of this Agreement to a subsidiary or affiliate of the assigning
party. In the event that a party hereto, or such party's subsidiary or
affiliate (if such party shall have previously assigned this Agreement to a
subsidiary or affiliate) shall have entered into a binding agreement for the
sale to a non-affiliate of all or substantially all of its business or assets
pertaining to the performance of this Agreement then such party shall assign
(and shall make it a condition of the binding agreement of sale that the
acquiring party shall accept assignment of) this Agreement; provided, however,
that in connection with such sale if the other party hereto shall not have
provided its consent to an assignment of this Agreement to the acquiring party,
then the assigning party may elect to terminate this Agreement by written notice
delivered not less than thirty days (30) prior to the effective date of such
sale. Any permitted assignment shall not relieve the assignor of its
obligations hereunder. Any attempted assignment without such consent as may be
required by this provision shall be void.
SECTION 12.3 Jurisdiction. The parties hereto agree that all of the
provisions of this Agreement and any questions concerning its interpretation and
enforcement shall be governed by the internal laws of the State of New York and
the execution and delivery of this Agreement shall be deemed to be the
transaction of business within the State of New York for purposes of conferring
jurisdiction upon courts located within the state. The parties agree that any
litigation arising out of this Agreement shall be brought only in the federal or
state courts in the State of New York and both parties consent to the
jurisdiction of said courts.
12
ANNEX D
SECTION 12.4 Confidentiality. The parties shall, and shall cause
their respective employees, agents and other representatives to, hold in strict
confidence and not utilize for any commercial or other purpose or disclose to
any other person, the terms and provisions of this Agreement; provided, however,
that the foregoing obligation of confidence shall not apply to (i) any
information that is or shall become generally available to the public other than
as a result of a disclosure by or on behalf of such party, (ii) any information
that was available to a party on a non-confidential basis prior to the date of
this Agreement, (iii) any information that comes into a party's possession after
the date of this Agreement from a third party not under any obligation of
confidentiality with respect to such information, or (iv) any information that
shall be required to be disclosed by or on behalf of a party as a result of any
applicable law rule or regulation of any governmental authority having competent
jurisdiction, provided, that such party shall give the other party thirty (30)
days' prior written notice before making any such disclosure in accordance with
the provisions of this clause (iv).
SECTION 12.5 Entirety of Agreement. The provisions of this Agreement
constitute the entire understanding between the parties relating to the subject
matter hereof. Neither party shall be bound by any change in, addition to or
waiver of any of the provisions hereof unless approved in writing by its
authorized representative.
SECTION 12.6 Waiver. Any waiver of any particular breach or default
of this Agreement shall be in writing and shall not constitute a continuing
waiver or a waiver of any other breach or default.
SECTION 12.7 Headings. Section headings or titles are included for
ease of reference and do not constitute any part of the text or affect its
meaning or interpretation.
SECTION 12.8 Default. Any failure of Buyer to make any payment
required hereunder without deduction, setoff or counterclaim within ten (10)
days after the same becomes due (excepting payments due but being contested in
good faith), or if Buyer defaults in the performance of any other obligation,
term or condition of this Agreement, or if Buyer shall make any assignment for
the benefit of creditors, or in the event of a commencement of proceedings by or
against Buyer involving bankruptcy, insolvency or reorganization, Seller,
without demand or notice of any kind and without prejudice to any other remedy
of Seller, may cancel this Agreement or Seller may defer further deliveries
until the default is remedied. The remedies provided for in this Section are in
addition to any other remedies that may be available to the Seller in the event
of a default by the Buyer.
13
ANNEX D
IN WITNESS WHEREOF, the parties have, by their duly authorized
representatives, signed this VCM Supply Agreement as of the day and year first
above written.
OCCIDENTAL CHEMICAL CORPORATION
By:
----------------------------
Title:
-------------------------
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
by its General Partner, BCP MANAGEMENT, INC.
By:
---------------------------
Title:
------------------------
14
ANNEX E
__________________________________________________________________
PVC TOLLING AGREEMENT
BETWEEN
OCCIDENTAL CHEMICAL CORPORATION
AND
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
DATED AS OF _______, 1994
________________________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.................................... 2
ARTICLE II
COMMITMENTS OF SUPPLY AND CONVERSION
SECTION 2.1 VCM Supply and PVC Receiving Commitment........ 3
SECTION 2.2 VCM Conversion and PVC Delivery Commitment..... 4
ARTICLE III
QUANTITY
SECTION 3.1 BCP's Base Quantity Obligation................. 4
SECTION 3.2 OxyChem's Base Quantity Obligation............. 4
SECTION 3.3 Excess Quantity of VCM......................... 5
ARTICLE IV
TERM
SECTION 4.1 Term of This Agreement......................... 5
SECTION 4.2 Election to Continue This Agreement............ 5
ARTICLE V
PRICE AND PAYMENT
SECTION 5.1 Fee for Conversion Services.................... 6
SECTION 5.2 Invoicing Procedure............................ 6
SECTION 5.3 Access to Records.............................. 7
ARTICLE VI
DELIVERY
SECTION 6.1 OxyChem's Shipping Instructions................ 7
SECTION 6.2 BCP's Shipping Instructions.................... 7
SECTION 6.3 Title to VCM................................... 7
SECTION 6.4 Title to PVC................................... 7
ARTICLE VII
MEASUREMENT
SECTION 7.1 Pipeline Delivery of VCM....................... 8
i
PAGE
SECTION 7.2 Rail Car Delivery of VCM....................... 8
SECTION 7.3 Rail Car Delivery of PVC....................... 8
SECTION 7.4 Calibration of Measuring Devices............... 8
ARTICLE VIII
WARRANTIES
SECTION 8.1 OxyChem's Warranty............................. 9
SECTION 8.2 BCP's Warranties............................... 9
SECTION 8.3 Patents........................................ 9
SECTION 8.4 Uses and Safe Handling......................... 9
SECTION 8.5 Claims; Liability.............................. 10
ARTICLE IX
TAXES
SECTION 9.1 Responsibility for Taxes....................... 10
ARTICLE X
LIABILITY AND RESPONSIBILITY
SECTION 10.1 Allocation of Liability........................ 10
ARTICLE XI
EXCUSE OF PERFORMANCE
SECTION 11.1 Excuse of Performance ......................... 11
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Imbalances..................................... 11
SECTION 12.2 Notices........................................ 12
SECTION 12.3 Assignment..................................... 13
SECTION 12.5 Jurisdiction................................... 13
SECTION 12.6 Entirety of Agreement.......................... 13
SECTION 12.7 Waiver......................................... 13
SECTION 12.8 Headings....................................... 13
SECTION 12.9 Default........................................ 13
SECTION 12.10 Confidentiality................................ 14
ii
ANNEX E
PVC TOLLING AGREEMENT
THIS PVC TOLLING AGREEMENT dated as of the _______ day of ________,
1994 is between OCCIDENTAL CHEMICAL CORPORATION, a New York corporation
(hereinafter "OxyChem") and BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter "BCP"). Each of
OxyChem and BCP is sometimes hereinafter referred to as a "party" and
collectively as the "parties". Capitalized terms not otherwise specifically
defined herein shall have the meanings assigned to them in the Asset Transfer
Agreement between Occidental Chemical Corporation and Borden Chemicals and
Plastics Operating Limited Partnership dated August 12, 1994.
WHEREAS, pursuant to the Asset Transfer Agreement, the parties have
provided for the sale by OxyChem and the purchase by BCP of OxyChem's right,
title and interest in certain PVC production assets located at Addis, Louisiana
(the "Facility"); and
WHEREAS, OxyChem owns or operates VCM production facilities; and
WHEREAS, OxyChem desires to provide VCM to BCP for conversion into
PVC at the Facility for the benefit of OxyChem; and
WHEREAS, BCP desires to receive VCM from OxyChem and convert such VCM
into PVC at the Facility for the benefit of OxyChem which will facilitate the
full and effective operation of the Facility; and
WHEREAS, the parties are entering into this Agreement in accordance
with the provisions of the Asset Transfer Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
"Addis Plant" has the meaning assigned to it in the Asset Transfer
Agreement.
"Agreement" means this PVC Tolling Agreement.
"Asset Transfer Agreement" means that certain Asset Transfer Agreement
between Occidental Chemical Corporation and Borden Chemicals and Plastics
Operating Limited Partnership dated August 12, 1994.
1
ANNEX E
"Base Quantity" has the meaning assigned to it in Section 3.1.
"Conversion Fee" has the meaning assigned to it in Article V of
this Agreement.
"Excess Quantity" has the meaning assigned to it in Section 3.3.
"Extended Term" has the meaning assigned to it in Section 4.1.
"Facility" means the Addis Plant.
"month" means a calendar month.
"Primary Term" has the meaning assigned to it in Section 4.1.
"PVC" means polyvinyl chloride in any of the various grades, or their
equivalents, as described in Appendix B to this Agreement.
"Superfund Tax" means the assessment on the production and sale of
VCM imposed pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as the same may be amended or re-authorized from time
to time.
"Term" means the period of the Primary Term of this Agreement together
with the period of any Extended Term.
"VCM" means vinyl chloride monomer supplied by OxyChem and having the
specifications set forth in Appendix A to this Agreement.
"VCM Supply Agreement" means that certain VCM Supply Agreement between
Occidental Chemical Corporation and Borden Chemicals and Plastics Operating
Limited Partnership dated _______, 1994.
"year" or "yearly" means a calendar year, provided that if this
Agreement is dated as of a date other than January 1, the initial year of this
Agreement shall run from the effective date of this Agreement until the next
succeeding December 31.
ARTICLE II
COMMITMENTS OF SUPPLY AND CONVERSION
SECTION 2.1 VCM Supply and PVC Receiving Commitment. OxyChem agrees
to supply to BCP, during the Term, the quantities of VCM as hereinafter
described and to
2
ANNEX E
receive from BCP the corresponding quantities of PVC and to pay BCP for such
conversion services the Conversion Fee as hereinafter set forth. If the initial
year of this Agreement is other than a full calendar year, all such commitments
shall be prorated during such initial year based upon the days remaining in that
year.
SECTION 2.2 VCM Conversion and PVC Delivery Commitment. BCP agrees
to receive from OxyChem, during the Term, the quantities of VCM as hereinafter
described and to deliver to OxyChem the corresponding quantities of PVC in the
grades specified in Section 6.1 and to accept as full payment for such
conversion services the Conversion Fee as hereinafter set forth. If the initial
year of this Agreement is other than a full calendar year, all such commitments
shall be prorated during such initial year based upon the days remaining in that
year.
ARTICLE III
QUANTITY
SECTION 3.1 BCP's Base Quantity Obligation. Subject to the
provisions of Sections 3.2 and 3.3, BCP shall receive delivery from OxyChem at
the Addis Plant each year during the Term not less than the quantity of VCM (the
"Base Quantity") which, at the Conversion Rate, is required to produce
pounds of PVC. Ten (10) days after the end
of each calendar quarter during the Term BCP shall provide to OxyChem written
notification of BCP's actual rate of VCM consumption (per pound of PVC produced)
at the Facility.
SECTION 3.2 OxyChem's Base Quantity Obligation.
(a) In consideration of BCP's reservation of a portion of its PVC
production capacity at the Addis Plant for the purpose of converting OxyChem's
VCM as provided in this Agreement, OxyChem agrees that each year during the Term
of this Agreement, it shall supply to BCP not less than the Base Quantity of VCM
and take delivery of the corresponding quantity of PVC and pay BCP the
Conversion Fee for such conversion services.
(b) The parties agree that the quantity of VCM to be supplied by
OxyChem during the initial year of this Agreement shall be a pro rata portion of
the Base Quantity based upon the number of days remaining in such year.
(c) The parties agree that the grades of PVC which BCP shall
manufacture for the benefit of OxyChem during the initial year of this Agreement
shall be as specified in Appendix B. Such grades and volume mix shall not vary
significantly in subsequent years during the Term without the mutual consent of
the parties; provided that, variations will not be deemed significant to the
extent they are not substantially different in terms of manufacturing economics
from the grades listed in Appendix B.
3
ANNEX E
SECTION 3.3 Excess Quantity of VCM. BCP may, but shall not be
required to convert into PVC for OxyChem a quantity of VCM in excess of the Base
Quantity. Not less than one hundred eighty (180) days prior to the end of each
year, BCP shall provide to OxyChem in writing a proposal for the quantity of VCM
it is willing to convert into PVC for OxyChem during the following year. Such
proposed quantity shall not be less than the Base Quantity. To the extent such
quantity is greater than the Base Quantity such excess shall be referred to as
the "Excess Quantity". Not more than ninety (90) days after OxyChem's receipt
of BCP's written proposal, OxyChem shall provide to BCP in writing OxyChem's
election of the quantity of VCM it desires for BCP to convert into PVC during
the following year. Such elected quantity shall not be less than the Base
Quantity nor more than the Base Quantity plus the Excess Quantity. OxyChem's
election shall be binding upon OxyChem and BCP.
ARTICLE IV
TERM
SECTION 4.1 Term of this Agreement. The primary term of this
Agreement shall commence on the date hereof. If this Agreement is dated other
than on January 1, the initial year shall end on the next succeeding December 31
and the primary term of this Agreement shall continue thereafter for a period of
five (5) full years (the "Primary Term") and year to year thereafter (the
"Extended Term"), unless and until a notice of intent to cancel this Agreement
is submitted by either party effective as of the last day of the Primary Term or
the last day of any year during the Extended Term. A notice of intent to cancel
shall be void if issued less than twelve months prior to its stated effective
date.
SECTION 4.2 Election to Continue this Agreement. In the event that a
party to this Agreement has provided notice of intent to cancel pursuant to
Section 4.1, the other party shall nevertheless have the option to continue this
Agreement in effect in the following manner. Not more than ninety (90) days
after the submission of any notice of intent to cancel pursuant to Section 4.1,
the non-canceling party may provide notice of its election to continue this
Agreement in effect, notwithstanding such notice of intent to cancel, by
electing to reduce the quantity of PVC that must be supplied or received, as the
case may be, during the next following year of the Term by
of the Base Quantity in effect in the last full calendar year prior to the
effective date of the first notice of intent to cancel submitted pursuant to
Section 4.1. In the event that a notice of election to continue this Agreement
is not provided as set forth in this paragraph, then this Agreement shall
terminate in accordance with the most recent notice of intent to cancel. At
such time, if any, as a notice of election to continue this Agreement has been
submitted three times, then any subsequent notice of intent to cancel this
Agreement shall have the effect of terminating this Agreement upon the effective
date of such notice.
4
ANNEX E
ARTICLE V
PRICE AND PAYMENT
SECTION 5.1 Fee for Conversion Services.
(a) Each calendar month during the Term the Conversion Fee shall be
separately determined for opaque and clear grade PVC resin manufactured by BCP
for OxyChem pursuant to this Agreement.
(b) The Conversion Fee shall be an amount, expressed in dollars per
pound of prime grade PVC, which shall be no higher than
(c) For purposes of determining as described in
paragraph (b) above, a major domestic buyer is one that consumes at least
(d) For purpose of determining the transportation cost of resin, as
described in paragraph (b)(i) above, such cost shall be per pound of
resin. Within sixty (60) days after the end of each year during the Term of
this Agreement, the parties shall review such cost and may revise it upon their
mutual agreement.
(e) The delivered price of VCM supplied by OxyChem, as described in
sub-paragraph (b)(ii) above, shall be the Market Price of VCM, as defined and
determined in accordance with the provisions of Section 5.1 of the VCM Supply
Agreement (irrespective of whether such agreement has been terminated) plus the
net freight cost of delivering such VCM to the Facility.
(f) The net freight cost of delivering VCM to the Facility, as
described in sub-paragraph (e) above, shall be such cost for the relevant month
determined in accordance with the provisions of the VCM Supply Agreement and
which shall be per pound of VCM until such time as OxyChem shall notify
BCP of a change in such cost; provided however, that in no event will such cost
exceed the cost of rail freight from OxyChem's Ingleside, Texas facility to the
Facility.
SECTION 5.2 Invoicing Procedure. Not later than days
after the last day of each month, BCP shall invoice OxyChem for PVC delivered
during such month. Provided that BCP's invoice is timely submitted, OxyChem
shall pay such invoice not later than days from the last day of
the delivery month. The payment terms set forth in this Section shall be
reviewed by the parties annually and shall be revised upon their mutual
agreement that such revision is required to conform with then current PVC
industry practice.
5
ANNEX E
SECTION 5.3 Access to Records. From time to time during the Term of
this Agreement and upon reasonable notice in advance to BCP, representatives of
any nationally recognized public accounting firm designated by OxyChem and
mutually satisfactory to BCP shall have access to such business and financial
books and records of BCP as such representatives deem necessary or appropriate
for the purpose of (a) determining the accuracy of BCP's calculations of the
Conversion Fee pursuant to this Agreement, and (b) reporting such determination,
but not the data underlying such determinations, to OxyChem. BCP may require
the accounting firm and/or its representatives to enter into such commitments of
confidentiality as reasonably facilitate the intent of this provision. In the
event such audit results in a determination that the Conversion Fee has been
overpaid or underpaid, then the parties shall promptly make such reimbursements
or issue such credits as may be required to correct such overpayments or
underpayments. The determination of such accounting firm shall be binding upon
the parties to this Agreement. If it is determined that OxyChem has overpaid
the Conversion Fee then the cost of such audit shall be borne by BCP. If it is
determined that OxyChem has not overpaid, or has underpaid, the Conversion Fee
then the cost of such audit shall be borne by OxyChem.
ARTICLE VI
DELIVERY
SECTION 6.1 OxyChem's Shipping Instructions. Fifteen (15) days prior
to the first day of each month, OxyChem shall furnish to BCP in writing a good
faith estimate of the quantities and grades of PVC which OxyChem wishes BCP to
produce from the VCM supplied by OxyChem during such month and during each of
the next two succeeding months and such instructions and estimates for the month
immediately following such notice shall be considered final and binding. The
parties shall cooperate to distribute deliveries of PVC in approximately equal
monthly quantities during each year.
SECTION 6.2 BCP's Shipping Instructions. Ten (10) days prior to the
first day of each month, BCP shall furnish to OxyChem in writing a good faith
estimate of the quantities of VCM to be converted into PVC at the Addis Plant
during such month and during each of the next two succeeding months and such
instructions and estimates for the month immediately following such notice shall
be considered final and binding. The parties shall cooperate to distribute
deliveries of VCM in approximately equal monthly quantities during each year.
SECTION 6.3 Title to VCM. Title to VCM delivered hereunder shall
pass to BCP upon unloading from rail tank cars at the Addis Plant or at the
first flange on the pipeline entering the Addis Plant premises, as the case may
be.
SECTION 6.4 Title to PVC. BCP shall deliver PVC to OxyChem FOB the
Addis Plant predominantly in bulk form in rail cars owned, leased or otherwise
provided by OxyChem, provided, that in the event OxyChem requires delivery of
PVC in other packaging, BCP will cooperate in order to accommodate such
packaging requirements.
6
ANNEX E
Title to PVC delivered hereunder shall pass to OxyChem upon loading into rail
cars at the Addis Plant.
ARTICLE VII
MEASUREMENT
SECTION 7.1 Pipeline Delivery of VCM. If VCM is delivered to the
Addis Plant via the VCM pipeline owned by the Dow Chemical Company ("Dow"), the
quantity of VCM so delivered shall be determined by an industry standard flow
measurement device owned and operated by Dow at its VCM shipping location in
Plaquemine, Louisiana. Dow's weights and measures shall govern except in case
of demonstrated error.
SECTION 7.2 Rail Car Delivery of VCM.
(a) If VCM is delivered in rail tank cars loaded by OxyChem, the
quantity of VCM so delivered shall be determined by rail tank car weigh scales
or other mutually agreed measuring device which shall be operated, maintained
and regularly calibrated by OxyChem at its shipping location in accordance with
accepted industry practice. OxyChem's weights and measures shall govern except
in case of demonstrated error.
(b) If VCM is delivered in rail tank cars loaded by a third party, the
quantity of VCM so delivered shall be determined by rail tank car weigh scales
or other measuring device employed in connection with the loading of such rail
cars in accordance with accepted industry practice. Third party weights and
measures shall govern except in case of demonstrated error.
SECTION 7.3 Rail Car Delivery of PVC.
Bulk PVC shall be delivered in rail hopper cars loaded by BCP. The
quantity of PVC so delivered shall be determined by rail car weigh scales or
other mutually agreed measuring device which shall be operated, maintained and
regularly calibrated by BCP at the Addis Plant in accordance with accepted
industry practice. BCP's weights and measures shall govern except in case of
demonstrated error.
SECTION 7.4 Calibration of Measuring Devices.
(a) In respect of any VCM delivered hereunder the quantity of which
is measured by devices operated by OxyChem, OxyChem shall give BCP at least
three (3) days' prior notice of any calibration test and BCP may elect to have a
representative present at any such test. If a level of inaccuracy is determined
by such test at plus or minus one percent (1%) or more of full scale, OxyChem
shall restore the measuring device to a condition of accuracy and billings shall
be corrected for the period known to be affected by such inaccuracy or if such
period cannot be accurately determined, billings shall be corrected for one-half
the period of time elapsed since the date of the most recent previous
calibration.
(b) In respect of any VCM delivered hereunder the quantity of which
is measured by devices operated by a third party, OxyChem shall exercise
reasonable commercial efforts to afford to BCP (a) at least (3) days' prior
notice of any calibration test (of which
7
ANNEX E
OxyChem has such advance knowledge) to be performed on any such device, and (b)
an opportunity for BCP to have a representative present at any such test. If a
level of inaccuracy is determined by such test at plus or minus one percent (1%)
or more of full scale, OxyChem's billings to BCP shall be corrected for the
period known to be affected by such inaccuracy or, if such period cannot be
accurately determined, billings shall be corrected as the parties shall mutually
agree.
(c) In respect of any PVC delivered hereunder the quantity of which
is measured by devices operated by BCP, BCP shall give OxyChem at least three
(3) days' prior notice of any calibration test and OxyChem may elect to have a
representative present at any such test. If a level of inaccuracy is determined
by such test at plus or minus one percent (1%) or more of full scale, BCP shall
restore the measuring device to a condition of accuracy and billings shall be
corrected for the period known to be affected by such inaccuracy or if such
period cannot be accurately determined, billings shall be corrected for one-half
the period of time elapsed since the date of the most recent previous
calibration.
ARTICLE VIII
WARRANTIES
SECTION 8.1 OxyChem's Warranty. OxyChem's sole and exclusive
warranty is that the VCM complies with the physical and chemical specifications
set forth in Appendix A to this Agreement. OxyChem makes no other warranties,
either express or implied, whether with respect to its recommendations,
instructions, product apparatus, process or otherwise and specifically disclaims
any implied warranties, whether of merchantability, suitability, fitness for a
particular purpose or otherwise.
SECTION 8.2 BCP's Warranties. BCP's sole and exclusive warranty is
that PVC delivered hereunder shall be of the grades and qualities set forth in
Appendix B to this Agreement. BCP makes no other warranties, either express or
implied, whether with respect to its recommendations, instructions, product
apparatus, process or otherwise and specifically disclaims any implied
warranties, whether of merchantability, suitability, fitness for a particular
purpose or otherwise.
SECTION 8.3 Patents. Neither party's recommendations or instructions
are intended to suggest operations which would infringe any patents and neither
OxyChem nor BCP assumes any liability to the other of any for any such
infringement.
SECTION 8.4 Uses and Safe Handling. OxyChem shall ship VCM to BCP in
compliance with applicable statutes, rules and regulations. BCP hereby
acknowledges receipt of OxyChem's material safety data sheet with respect to
VCM. BCP shall carefully inspect VCM upon receipt and will maintain appropriate
safe handling and use procedures for VCM used in its process as well as for the
handling and loading of PVC. BCP will apprise its employees and contractors of
the hazards, proper use and handling
8
ANNEX E
requirements of VCM and PVC and shall comply with all applicable statutes,
rules and regulations pertaining thereto.
SECTION 8.5 Claims; Liability. BCP and OxyChem shall each be deemed
to have waived all claims with respect to any VCM or PVC supplied hereunder for
which notice of insufficient quality has not been given to the supplying party
in writing within seventy-five (75) days of the receipt of such VCM or PVC. As
to any claim of any nature, whether in contract, tort, strict liability or
otherwise, BCP's liability shall not exceed the Conversion Fee attributable to
the portion of PVC in respect of which such claim is made plus the value of the
VCM attributable to the manufacture of such PVC. In no event shall either party
or its affiliates be liable to the other for indirect, consequential, special,
incidental or contingent damages, costs of litigation or for loss of business or
business opportunities.
ARTICLE IX
TAXES
SECTION 9.1 Responsibility for Taxes. OxyChem shall be responsible
to pay all federal, state and local governmental taxes, excises, duties, and/or
other charges (including, without limitation, sales and use taxes and Superfund
Tax, and excepting taxes on or measured by the net income of BCP) that may be
imposed with respect to the production, sale or transportation of VCM delivered
to BCP hereunder. BCP shall be responsible to pay all federal, state and local
governmental taxes, excises, duties, and/or other charges (including, without
limitation, sales and use taxes, and excepting taxes on or measured by the net
income of OxyChem) that may be imposed with respect to the production, sale or
transportation of PVC delivered to OxyChem hereunder. Responsibilities for the
payments set forth in this Section shall be reviewed by the parties from time to
time and shall be revised upon their mutual agreement that such revision is
required to conform with then current PVC industry practice.
ARTICLE X
LIABILITY AND RESPONSIBILITY
SECTION 10.1 Allocation of Liability. Except to the extent that such
is solely and directly caused by any breach of OxyChem's obligations hereunder,
BCP assumes full responsibility for any liability arising out of (a) unloading,
discharge, storage, handling, use and disposal of any VCM supplied by OxyChem
hereunder, including the use of such VCM alone or in combination with other
substances and compliance or non-compliance with any law or regulations relating
thereto, or (b) BCP's storage and handling of any PVC prior to delivery to
OxyChem. BCP shall defend, indemnify and hold harmless OxyChem and its
affiliates and their respective representatives and employees from and against
all losses, liabilities, damages and expenses made against or incurred by
OxyChem, its affiliates and their respective representatives and employees
arising out of any claim, suit or proceeding by any governmental agency or any
third parties which claim, suit or proceeding alleges death, personal or
economic injury or damages to any private or public
9
ANNEX E
property or resources caused or contributed to by PVC produced by BCP or VCM
supplied hereunder if such death, injury or damages occurred, with respect to
such PVC, prior to the delivery of such PVC to OxyChem or, with respect to such
VCM, subsequent to BCP's receipt of such VCM from OxyChem, except in each case
to the extent such is solely and directly caused by any breach of OxyChem's
obligations hereunder. OxyChem shall defend, indemnify and hold harmless BCP and
its affiliates and their respective representatives and employees from and
against all losses, liabilities, damages and expenses made against or incurred
by BCP, its affiliates and their respective representatives and employees
arising out of any claim, suit or proceeding by any governmental agency or any
third parties which claim, suit or proceeding alleges death, personal or
economic injury or damages to any private or public property or resources caused
or contributed to by PVC produced by BCP or VCM supplied by OxyChem hereunder if
such death, injury or damages occurred, with respect to such PVC, after the
delivery of such PVC to OxyChem or, with respect to such VCM, prior to BCP's
receipt of such VCM from OxyChem, except in each case to the extent such is
solely and directly caused by any breach of BCP's obligations hereunder.
ARTICLE XI
EXCUSE OF PERFORMANCE
SECTION 11.1 Excuse of Performance. Performance of any obligation
under this Agreement may be suspended by either party without liability, to the
extent that: an Act of God; war; riot; fire; explosion; accident; flood;
sabotage; mechanical breakdown; involuntary plant shutdown; governmental laws,
regulations or orders; or any other cause (except financial) beyond the
reasonable control of such party; or labor trouble, strike, walkout, lockout or
injunction (whether or not such labor event is within the reasonable control of
such party), delays, prevents, restricts, limits, or renders commercially
infeasible, the performance of this Agreement or the consumption, sale or use of
VCM, except as to VCM already in transit. The affected party may invoke this
provision by promptly notifying the other party in writing of the nature and
estimated duration of the suspension period and exercising all reasonable
diligence in curing such condition, provided, however, that neither party shall
be obligated to procure VCM or PVC or otherwise obtain any materials required
for its performance hereunder from other than its customary sources of supply.
If any of the above described contingencies occur, the affected party shall,
without further liability to the other party of any kind, allocate its available
supply of VCM or PVC as the case may be, among its contract customers and such
party's own internal consumption upon such basis and in such manner as such
party deems fair and reasonable.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Imbalances. Any VCM or PVC imbalance occurring in
connection with the operation of this Agreement whether as a result of an event
within the
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ANNEX E
meaning of Article XI or otherwise shall be settled between the parties in such
practical and equitable manner and at such intervals as they shall agree.
SECTION 12.2 Notices. Any notice required or permitted to be given
pursuant to this Agreement shall be in writing and shall be sufficiently given
when duly mailed, postage prepaid, and addressed as follows or personally
delivered or transmitted electronically.
If to OxyChem for matters concerning quantity, price, quality, or
shipment of VCM or PVC:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Director - Commodity Resins
Facsimile: (214)404-2883
Attention: Business Manager - VCM
Facsimile: (214)404-2883
If to OxyChem for all other matters:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Vice President and General Counsel
Facsimile: (214)404-3957
with a copy to:
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Director - Commodity Resins
Facsimile: (214)404-2883
If to BCP:
Borden Chemicals and Plastics Operating Limited
Partnership
Highway 73
Geismar, Louisiana 70734
Attention: Vice President - Sales and Marketing
Facsimile: (504)673-0672
with a copy to: BCP Management, Inc.
180 E. Broad Street
Columbus, Ohio 43215
Attention: President
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ANNEX E
SECTION 12.3 Assignment. This Agreement shall bind the respective
successors and assigns of the parties hereto, provided however, that neither
party may assign or otherwise transfer its rights or obligations hereunder to a
third party without the prior written consent of the other party hereto,
provided further, however, that such consent shall not be required in the case
of an assignment of this Agreement to a subsidiary or affiliate of the assigning
party. In the event that a party hereto, or such party's subsidiary or
affiliate (if such party shall have previously assigned this Agreement to a
subsidiary or affiliate) shall have entered into a binding agreement for the
sale to a non-affiliate of all or substantially all of its business or assets
pertaining to the performance of this Agreement then such party shall assign
(and shall make it a condition of the binding agreement of sale that the
acquiring party shall accept assignment of) this Agreement; provided, however,
that in connection with such sale if the other party hereto shall not have
provided its consent to an assignment of this Agreement to the acquiring party,
then the assigning party may elect to terminate this Agreement, by written
notice delivered not less than thirty days (30) prior to the effective date of
such sale. Any permitted assignment shall not relieve the assignor of its
obligations hereunder. Any attempted assignment without such consent as may be
required by this provision shall be void.
SECTION 12.5 Jurisdiction. The parties hereto agree that all of the
provisions of this Agreement and any questions concerning its interpretation and
enforcement shall be governed by the internal laws of the State of New York and
the execution and delivery of this Agreement shall be deemed to be the
transaction of business within the State of New York for purposes of conferring
jurisdiction upon courts located within the state. The parties agree that any
litigation arising out of this Agreement shall be brought only in the federal or
state courts in the State of New York and both parties consent to the
jurisdiction of said courts.
SECTION 12.6 Entirety of Agreement. The provisions of this Agreement
constitute the entire understanding between the parties relating to the subject
matter hereof. Neither party shall be bound by any change in, addition to or
waiver of any of the provisions hereof unless approved in writing by its
authorized representative.
SECTION 12.7 Waiver. Any waiver of any particular breach or default
of this Agreement shall be in writing and shall not constitute a continuing
waiver or a waiver of any other breach or default.
SECTION 12.8 Headings. Section headings or titles are included for
ease of reference and do not constitute any part of the text or affect its
meaning or interpretation.
SECTION 12.9 Default. Any failure of either party to make any
payment required hereunder without deduction, setoff or counterclaim within ten
(10) days after
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ANNEX E
the same becomes due (excepting payments due but being contested in good faith),
or if either party defaults in the performance of any other obligations, term or
condition of this Agreement, or if either party shall make any assignment for
the benefit of creditors, or in the event of a commencement of proceedings by or
against either party involving bankruptcy, insolvency or reorganization, the
other party, without demand or notice of any kind and without prejudice to any
other remedy of such party, may cancel this Agreement or such party may defer
further deliveries hereunder until the default is remedied. The remedies
provided for in this Section are in addition to any other remedies that may be
available to the parties in the event of a default.
SECTION 12.10 Confidentiality. The parties shall, and shall cause
their respective employees, agents and other representatives to, hold in strict
confidence and not utilize for any commercial or other purpose or disclose to
any other person, the terms and provisions of this Agreement; provided, however,
that the foregoing obligation of confidence shall not apply to (i) any
information that is or shall become generally available to the public other than
as a result of a disclosure by or on behalf of such party, (ii) any information
that was available to a party on a non-confidential basis prior to the date of
this Agreement, (iii) any information that comes into a party's possession after
the date of this Agreement from a third party not under any obligation of
confidentiality with respect to such information, or (iv) any information that
shall be required to be disclosed by or on behalf of a party as a result of any
applicable law rule or regulation of any governmental authority having competent
jurisdiction, provided, that such party shall give the other party thirty (30)
days' prior written notice before making any such disclosure in accordance with
the provisions of this clause (iv).
IN WITNESS WHEREOF, the parties have, by their duly authorized
representatives, signed this PVC Tolling Agreement as of the day and year first
above written.
OCCIDENTAL CHEMICAL CORPORATION
By:_____________________________________
Title:__________________________________
BORDEN CHEMICALS AND PLASTICS OPERATING
LIMITED PARTNERSHIP BY ITS GENERAL PARTNER,
BCP MANAGEMENT, INC.
By:______________________________________
Title:___________________________________
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