1
EXHIBIT 10.3
AGREEMENT AND PLAN OF MERGER
AND
ASSET CONTRIBUTION
AMONG
OCCIDENTAL PETROCHEM PARTNER 1, INC.,
OCCIDENTAL PETROCHEM PARTNER 2, INC.,
OXY PETROCHEMICALS INC.,
PDG CHEMICAL INC.
AND
EQUISTAR CHEMICALS, LP
DATED: MAY 15, 1998
2
TABLE OF CONTENTS
PAGE
----
SECTION 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Limited Partnership; Partnership Agreement; Partnership
Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Conversion of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Transfer of Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Assumption of Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Transfer of Oxy Petrochemicals Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2 CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Instruments of Conveyance and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Master Intellectual Property Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Joint Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS . . . . . . . . . . . . . . . . . . . . 18
3.1 Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Authorization and Validity of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 No Consents Required; No Conflict with Instruments to which a
Contributor is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases . . . . . . . . . . . . . . . . 20
3.6 Title Matters; Defects in Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.7 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 Technology and Similar Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.9 Government Licenses, Permits and Related Approvals . . . . . . . . . . . . . . . . . . . . 22
3.10 All Necessary Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.11 Conduct of Business in Compliance with Regulatory and Contractual
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
- i -
3
3.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.15 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.16 HSE Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.17 Investigation to Acquire Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3A ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
OXY CH SUB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3A.1 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3A.2 Ownership of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3A.3 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . 24
4.1 Due Organization; Good Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.3 No Consents Required; No Conflict with Instruments to which the
Partnership is a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5 COVENANTS SUBSEQUENT TO CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Mail or Other Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Use of Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Closing Date Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Reimbursement for Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6 SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Survival Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Claims for HSE Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 EXTENT OF INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Payment of Certain Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.5 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.6 Occasional and Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.7 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.9 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
- ii -
4
7.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.12 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER . . . . . . . . . . . . . . . . . . . 36
7.14 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
- iii -
5
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
Schedules
Schedule A - Contributed Business
Schedule 2.1(a) - Fee Interests
Schedule 2.1(b) - Leases
Schedule 2.1(d) - Equipment
Schedule 2.1(k) - Contributed Subsidiaries
Schedule 2.2(c) - Excluded Tradenames and Logos
Schedule 2.2(h) - Certain Excluded Assets
Schedule 2.5(a)(vii) - Assumed Indebtedness
Schedule 2.5(a)(x) - Assumed Long-Term Liabilities
Schedule 2.8(b) - Basic Severance
Schedule 3 - Disclosure Schedule
Appendices
Appendix A - Dispute Resolution Procedures
Exhibits
Exhibit A - Form of Assignment of Lease and Act
of Exchange
Exhibit B - Form of Assignment of Leases
Exhibit C - Form of Bill of Sale and Assignment
Exhibit D - Form of Trademark License
Exhibit E - Form of Patent Assignment
Exhibit F - Form of Partnership Assumption Agreement
Exhibit G - Form of Master Intellectual Property
Agreement
Exhibit H - Form of Assignment of Partnership Interests
Exhibit I - Form of Assignment of Excluded Assets of Oxy
Petrochemicals
Exhibit J - Form of Oxy CH Sub Assumption Agreement
Exhibit K - Form of $419,700,000 Promissory Note
- iv -
6
AGREEMENT AND PLAN OF MERGER
AND
ASSET CONTRIBUTION
This AGREEMENT AND PLAN OF MERGER AND ASSET CONTRIBUTION (this
"Agreement"), dated as of May 15, 1998, is entered into among Occidental
Petrochem Partner 1, Inc., a Delaware corporation ("Occidental Chemical Sub"),
Occidental Petrochem Partner 2, Inc., a Delaware corporation ("Oxy CH Sub"),
Oxy Petrochemicals Inc., a Delaware corporation ("Oxy Petrochemicals"), PDG
Chemical Inc., a Delaware corporation ("PDG Chemical"), and Equistar Chemicals,
LP, a Delaware limited partnership (the "Partnership").
The definitions of capitalized terms used in this Agreement, including
the appendices hereto, are set forth in Section 8 hereof.
WHEREAS, Oxy Petrochemicals is a direct wholly owned subsidiary of
Oxy CH Sub, Oxy CH Sub is a direct wholly owned subsidiary of Oxy CH
Corporation, a California corporation ("Oxy CH") and Oxy CH is a wholly owned
indirect subsidiary of Occidental Petroleum Corporation, a Delaware corporation
("Occidental").
WHEREAS, the Partnership, Occidental, Lyondell Petrochemical Company
and Millennium Chemicals, Inc. are parties to that certain Master Transaction
Agreement of even date (the "Master Transaction Agreement").
WHEREAS, Occidental Chemical Sub, PDG Chemical and Oxy CH Sub will be
admitted as partners in the Partnership upon the Closing pursuant to an Amended
and Restated Agreement of Limited Partnership of the Partnership.
WHEREAS, Occidental Chemical Sub wishes to contribute certain assets
and a lease of certain other assets, in each case subject to certain
liabilities associated with the olefins, polyolefins and related petrochemicals
businesses to the Partnership, and the Partnership wishes to accept such assets
and lease and assume such liabilities, all upon the terms and conditions
hereinafter set forth.
WHEREAS, PDG Chemical wishes to contribute all of its right, title and
interest in and to PD Glycol, a Texas limited partnership ("PD Gylcol"), and
the Partnership wishes to accept such right, title and interest, all upon the
terms and conditions hereinafter set forth. Occidental Chemical Sub and PDG
Chemical, collectively or individually as the context may require, are referred
to herein as the "Asset Contributors."
WHEREAS, the respective Boards of Directors of Oxy Petrochemicals and
Oxy CH Sub and the Partnership Governance Committee of the Partnership deem it
advisable and in the best interest of their respective entities that Oxy
Petrochemicals merge with and into the Partnership (the "Merger"), upon the
terms and conditions of this Agreement, and the applicable provisions of the
7
laws of the State of Delaware. The Asset Contributors and Oxy Petrochemicals,
collectively or individually as the context may require, are referred to herein
as the "Contributors."
WHEREAS, upon the Closing, the Partnership will consummate certain
transactions and enter into certain agreements as provided for in the Master
Transaction Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the provisions of the DGCL, at the
Effective Time, Oxy Petrochemicals shall be merged with and into the
Partnership, and the separate corporate existence of Oxy Petrochemicals shall
cease and the Partnership shall continue as the surviving entity (hereinafter
sometimes referred to as the "Surviving Partnership") under the laws of the
State of Delaware under the name of "Equistar Chemicals, LP".
1.2 Effects of the Merger. The Merger shall have the effects
provided therefor by the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time:
(a) All of the assets, properties, rights, privileges, powers
and franchises of a public as well as a private nature of Oxy Petrochemicals of
every kind, nature, character and description, tangible and intangible, real,
personal or mixed, wherever located shall be taken and deemed to be transferred
to, and vested in, the Surviving Partnership without further act or deed; and
all such assets, properties, rights, privileges, powers and franchises and all
and every other interest shall be thereafter the property of the Surviving
Partnership, as such interests were the property of Oxy Petrochemicals.
(b) The Surviving Partnership shall be subject to all of the
restrictions, disabilities and duties of Oxy Petrochemicals and the debts,
liabilities and duties of Oxy Petrochemicals shall attach to the Surviving
Partnership and the Surviving Partnership agrees to pay, perform and discharge
all such debts, liabilities and duties when due.
1.3 Closing; Effective Time.
(a) The consummation of the transactions contemplated by Sections
1 and 2 hereof is referred to as the "Closing." Subject to the terms and
conditions hereof, the Closing shall take place at the office of Baker & Botts,
L.L.P., One Shell Plaza, 910 Louisiana, Houston Texas 77002-4995, at 10:00 a.m.
local time on the date hereof (the "Closing Date"), or (ii) such other place
or date as may be agreed to by the Partnership and Oxy CH Sub.
- 2 -
8
(b) Subject to the terms and provisions of this Agreement, there
shall be filed with the Secretary of State of the State of Delaware (the
"Secretary of State"), on the Closing Date, a certificate of merger with
respect to the Merger in such form as required by, and executed in accordance
with, the applicable provisions of the DGCL. Such certificate of merger shall
designate that the Merger shall become effective as of the time (the "Effective
Time") that such certificate of merger is so filed with the Secretary of State.
1.4 Certificate of Limited Partnership; Partnership Agreement;
Partnership Governance Committee. The certificate of limited partnership of the
Surviving Partnership from and after the Effective Time shall be the Amended
Certificate of Limited Partnership filed contemporaneously with the filing of
the certificate of merger referenced herein, continuing until thereafter
amended in accordance with the provisions provided by the DRULPA. The
partnership agreement of the Surviving Partnership from and after the Effective
Time shall be the Amended and Restated Agreement of Limited Partnership
executed and delivered on the Closing Date, continuing until thereafter amended
in accordance with the terms therein and as provided by the DRULPA. The
Partnership Governance Committee of the Partnership as of the Closing Date
shall be designated in accordance with such Amended and Restated Agreement of
Limited Partnership.
1.5 Conversion of Certificates. As of the Effective Time, by
virtue of the Merger and without any action on the part of any Party or the
holder of any of the following securities, the following shall occur:
(a) Oxy Petrochemicals Common Stock. The aggregate of
all of the common stock, par value $300.00, of Oxy Petrochemicals (the "Oxy
Petrochemicals Common Stock") shall be converted into the right to receive (i)
Oxy CH Sub's limited partnership interest in the Partnership as set forth in
the Amended and Restated Agreement of Limited Partnership of the Partnership
and (ii) a promissory note of the Partnership in the form of Exhibit K. All
such shares of Oxy Petrochemicals Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the limited
partnership interest and note to be issued pursuant to this Section 1.5(a) with
respect thereto upon the surrender of such certificate in accordance with
Section 1.6, without interest.
(b) Cancellation of Other Capital Stock of Oxy
Petrochemicals. All shares of capital stock of Oxy Petrochemicals that are
owned directly or indirectly by Oxy Petrochemicals shall be canceled and no
stock or other consideration shall be delivered in exchange therefor.
1.6 Exchange of Certificates.
(a) Oxy Petrochemicals Common Stock. At the Closing, Oxy CH Sub
shall deliver to the Partnership, subject to the terms of this Agreement, all
certificates representing each share of Oxy Petrochemicals Common Stock
together with duly executed stock powers endorsed to the Partnership or other
assignments or instruments of conveyance and transfer, in form and substance
satisfactory to the Partnership and its counsel, as shall be effective to vest
in the Partnership at the
- 3 -
9
Effective Time, all of Oxy CH Sub's right, title and interest in and to such
shares of Oxy Petrochemicals Common Stock. Until surrendered to the
Partnership pursuant to this Section 1.6, each such certificate shall, at and
after the Effective Time, represent for all purposes only the right to receive
the consideration provided for in Section 1.5(a). The certificates
representing shares of Oxy Petrochemicals Common Stock so surrendered shall be
canceled as of the Effective Time.
(b) No Further Ownership Rights in Capital Stock of Oxy
Petrochemicals. The limited partnership interest in the Partnership and the
note delivered upon the surrender for exchange of shares of Oxy Petrochemicals
in accordance with the terms hereof shall be deemed to have been delivered in
full satisfaction of all rights pertaining to such securities, and following
the Effective Time, no Person shall have any further rights to, or ownership
in, shares of capital stock of Oxy Petrochemicals. There shall be no further
registration of transfers on the stock transfer books of Oxy Petrochemicals of
the shares of capital stock of Oxy Petrochemicals which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
certificates for shares of the capital stock of Oxy Petrochemicals are
presented to the Surviving Partnership for any reason, such certificates shall
be canceled.
(c) No Liability. Notwithstanding anything to the contrary in
this Section 1, neither the Surviving Partnership nor any other party shall be
liable to a holder of shares of any of the capital stock of Oxy Petrochemicals
for any amount paid to a public official pursuant to and in compliance with any
applicable abandoned property, escheat or similar law.
1.7 Transfer of Excluded Assets. It is expressly understood that,
immediately prior to the Effective Time, any and all assets of Oxy
Petrochemicals included in the Excluded Assets pursuant to Section 2.2 shall
have been contributed, conveyed, assigned or transferred by Oxy Petrochemicals
to Oxy CH Sub pursuant to an assignment in the form attached as Exhibit I (the
"Excluded Asset Assignment") and shall not be part of the assets deemed
transferred to the Partnership pursuant to the Merger.
1.8 Assumption of Excluded Liabilities. It is expressly
understood that, immediately prior to the Effective Time, any and all
obligations and liabilities of Oxy Petrochemicals included in the Excluded
Liabilities pursuant to Section 2.6 shall be assumed by Oxy CH Sub pursuant to
an assumption agreement in the form attached as Exhibit J ("Oxy CH Sub
Assumption Agreement").
1.9 Transfer of Oxy Petrochemicals Assets. Notwithstanding that
pursuant to Section 1.2, title to the Assets of Oxy Petrochemicals shall be
deemed transferred from Oxy Petrochemicals to the Partnership as of the
Effective Time, as between the parties hereto, the benefits and burdens
associated with ownership of such Assets shall be deemed to have been
transferred effective as of the Asset Transfer Effective Time.
- 4 -
10
SECTION 2
CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES
2.1 Transfer of Assets. On the terms and subject to the
conditions set forth in this Agreement, on the date hereof and effective as of
the Asset Transfer Effective Time, each Asset Contributor is contributing,
conveying, assigning, transferring and delivering to the Partnership, or shall
cause to be contributed, conveyed, assigned, transferred and delivered to the
Partnership, and the Partnership shall accept, acquire and assume all of the
assets, rights, and properties used or held for use in the contemplated
operation and conduct of the Contributed Business of every kind, nature,
character and description, tangible and intangible, real, personal or mixed,
whether held by such Asset Contributor or an Affiliate thereof, wherever
located other than the Excluded Assets (provided that the assets of Oxy
Petrochemicals are being transferred to the Partnership pursuant to the
Merger); and which conveyance, subject to Section 2.2, shall include, without
limitation, the following:
(a) All right, title and interest of such Asset Contributor and
any Affiliate thereof in the Fee Interests;
(b) All right, title and interest of such Asset Contributor and
any Affiliate thereof under the Leaseholds;
(c) All right, title and interest of such Asset Contributor and
any Affiliate thereof, if any, in the Associated Rights, including, without
limitation, all contracts, easements, rights-of-way, permits, licenses and
leases and other similar rights for related equipment, power and communications
cables, and other related property and equipment used principally in the normal
operation and conduct of the Contributed Business;
(d) All of the right, title and interest of such Asset Contributor
and any Affiliate thereof in the Equipment and all warranties and guarantees,
if any, express or implied, existing for the benefit of such Asset Contributor
or any Affiliate thereof in connection with the Equipment to the extent
assignable;
(e) Subject, to the extent applicable, to Section 5.3, all of the
right, title and interest of such Asset Contributor and any Affiliate thereof
in the Unrecorded Assets;
(f) All of the right, title and interest of such Asset Contributor
and any Affiliate thereof in any Contributed Contracts;
(g) Any right, title and interest of such Asset Contributor in any
Trademarks to the extent used or contemplated to be used principally in the
normal operation and conduct of the Contributed Business;
(h) All Government Licenses that are transferable and as to which
Consents to transfer are obtained where required;
- 5 -
11
(i) The Inventory, Stores Inventory and Prepaid Expenses;
(j) Subject to Section 5.6, Accounts Receivable together with any
reserve or allowance for doubtful accounts, returned products or potential
price adjustment;
(k) All right, title and interest of such Asset Contributor and
any Affiliate thereof in the subsidiaries listed on Schedule 2.1(k) (the
"Contributed Subsidiaries");
(l) All claims and rights against third parties (including,
without limitation, insurance carriers, indemnitors, suppliers and service
providers) to the extent, but only to the extent that, they relate to the
Assumed Liabilities; provided, however, that to the extent that any claims or
rights of such Asset Contributor against any third parties are not assigned to
the Partnership, and the partnership incurs Liabilities that would create such
claims or rights on behalf of such Asset Contributor, such Asset Contributor
shall enforce such claims or rights for the benefit (and at the cost) of the
Partnership to the extent it may lawfully do so, except that the Asset
Contributor shall not be required to enforce insurance claims against fronting,
captive or retrospectively rated policies which would ultimately result in such
claims being ultimately borne, directly or indirectly, by the Asset
Contributor;
(m) A fifty percent (50%) interest in PD Glycol, a Texas limited
partnership;
(n) Any claims of the Contributors against Union Pacific for
service delays related to the Contributed Business; and
(o) Any other asset of such Asset Contributor or its Affiliate
contributed to the Partnership pursuant to the terms of this Agreement.
2.2 Excluded Assets. It is expressly understood and agreed that
the Assets shall not include the following (the "Excluded Assets"):
(a) Except as otherwise provided in Section 2.1(j), cash and cash
equivalents or similar type investments, such as certificates of deposit,
Treasury bills and other marketable securities;
(b) Except as may be agreed pursuant to Section 2.8(g), any
assets of any qualified or non-qualified pension or welfare plans or other
deferred compensation arrangements maintained by any Contributor or any
Affiliate thereof for employees of such Contributor or any Affiliate thereof
prior to the Closing Date;
(c) Any of the Contributors' or any Affiliates' right, title and
interest in and to (i) the names and logos set forth on Schedule 2.2(c) and any
other statutory names, trade names or trademarks, indications or descriptions
of which such names or any name similar thereto forms a part and (ii) any other
trade names, trademarks, trademark registrations or trademark applications,
copyrights, copyright applications or copyright registrations or any derivative
thereof or design used
- 6 -
12
in connection therewith that are not used principally in the normal operation
and conduct of and are not uniquely applicable to the Contributed Business;
(d) All claims and rights against third parties (including,
without limitation, insurance carriers, indemnitors, suppliers and service
providers), to the extent they do not relate to the Assumed Liabilities;
(e) Claims for refunds of Taxes for time periods ending on or
before the Closing Date, which Taxes remain the liability of the Contributor
under this Agreement;
(f) Subject to the Master Intellectual Property Agreement, any and
all of the Intellectual Property and Trademarks of a Contributor or any
Affiliate thereof to the extent not used principally in the normal operation
and conduct of or to the extent not applicable to the Contributed Business;
(g) All items sold in the ordinary course of business prior to the
Closing Date, none of which individually or in the aggregate are material to
the normal operation and conduct of the Contributed Business;
(h) The tangible assets, intangible assets, real properties,
contracts and rights, described in Schedule 2.2(h);
(i) All assets of Oxy Petrochemicals not used or held for use in
the contemplated operation and conduct of the Contributed Business;
(j) Any claims of the Contributors against Union Pacific for
service delays not related to the Contributed Business; and
(k) The Lake Charles Leased Assets.
2.3 Instruments of Conveyance and Assignment. On the Closing
Date:
(a) Occidental Chemical Sub shall deliver or cause to be delivered
to the Partnership, as needed, (i) an Assignment of Lease and Act of Exchange
for the Lake Charles Lease being assigned pursuant to this Section 2 in
substantially the form attached hereto as Exhibit A ("Assignment of Lake
Charles Lease"), (ii) an assignment of leases for such other Leases being
assigned pursuant to this Section 2 in substantially the form attached hereto
as Exhibit B (the "Assignment of Leases"), (iii) a bill of sale and assignment
in substantially the form attached hereto as Exhibit C (the "Bill of Sale and
Assignment") conveying title to the Assets (other than the Fee Interests,
Leaseholds and Lake Charles Leased Assets) being conveyed pursuant to this
Section 2 and assigning the Contracts of such Asset Contributor or its
Affiliates, (iv) a license of certain trademarks in substantially the form
attached hereto as Exhibit D (the "Trademark License") and (v) an assignment of
patent rights, licenses and applications included in the Assets conveyed
pursuant to this Section 2 in substantially the form attached hereto as Exhibit
E (the "Patent Assignment"); and
- 7 -
13
(b) Each Asset Contributor shall transfer to the Partnership the
originals (to the extent such Contributor or any Affiliate thereof possesses an
original and retained no rights thereunder after the Closing Date) or copies,
as appropriate, of the Contributed Contracts and the originals or copies, as
appropriate, of all current records, files and other data that relate to the
Assets and that are necessary for continuing the normal operation and conduct
of the Contributed Business by the Partnership.
(c) PDG Chemical shall deliver or cause to be delivered to the
Partnership an assignment of partnership interests in substantially the form
attached hereto as Exhibit H ("Assignment of Partnership Interests").
2.4 Further Assurances.
(a) On and from time to time after the Closing Date, each Asset
Contributor and Oxy CH Sub will execute and deliver, or cause to be executed
and delivered, such other instruments of conveyance, assignment, transfer and
delivery as the Partnership may reasonably request in order to fulfill and
implement the terms of this Agreement, to vest in the Partnership title to the
Assets, to confirm the assumption of Excluded Liabilities or to enable the
Partnership to continue the normal operation and conduct of the Contributed
Business and otherwise to realize the benefits intended to be afforded hereby.
(b) On and from time to time after the Closing Date, the
Partnership will execute and deliver, or cause to be executed and delivered,
such other instruments of assumption, conveyance, assignment, transfer, power
of attorney or assurance as the Asset Contributors and Oxy CH Sub may
reasonably request in order to fulfill and implement the terms of this
Agreement, to vest in the Partnership all of the Assumed Liabilities, to
confirm the transfer of Excluded Assets or to enable the Asset Contributors and
Oxy CH Sub to realize the benefits intended to be afforded hereby.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the Partnership and each Asset Contributor acknowledge and agree that
any Government Licenses, Contributed Contracts, warranties or other Assets
related to the Contributed Business and required to be conveyed pursuant to
this Agreement which by their terms require Consent from any other unaffiliated
contracting party thereto shall not be assigned to the Partnership unless any
such Consent has been obtained prior to the Closing Date. Following the
Closing, the Partnership and each Asset Contributor shall cooperate with each
other and use commercially reasonable efforts to obtain those Consents that
were not obtained prior to the Closing and (i) if such Consents are obtained
following the Closing, the Partnership and the Asset Contributors shall execute
and deliver any other and further instruments of assignment, assumption,
transfer and conveyance and take such other and further action as the
Partnership may reasonably request in order to vest in the Partnership any
Government Licenses, Contributed Contracts, warranties or other Assets to which
such Consents relate and (ii) pending such transfer or issuance to the
Partnership, shall provide, to the extent it may lawfully do so, the
Partnership with the benefits of any such Government Licenses, Contributed
Contracts, warranties or other Assets, in which case, the Partnership shall
promptly assume and discharge (or reimburse the Asset Contributors or their
Affiliates for) all obligations and liabilities associated with
- 8 -
14
the benefits of such Government Licenses, Contributed Contracts, warranties or
other Assets so made available to the Partnership. If an Asset Contributor
obtains a Consent to assign any Government Licenses, Contributed Contracts,
warranties or other Assets related to the Contributed Businesses and required
to be conveyed pursuant to this Agreement after the Closing, each such
Government License, Contributed Contract, warranty or other Asset shall be
deemed to be assigned to the Partnership promptly after such Consent is
obtained.
(d) Following the Closing, the Asset Contributors , Oxy CH Sub and
the Partnership shall cooperate in good faith and in a commercially reasonable
manner with respect to all matters pertinent to the carrying into effect of
this Agreement and the discharge by each party of its obligations and
liabilities hereunder and thereunder, and shall furnish to each other such
information, cooperation and assistance as reasonably may be requested in
connection with the foregoing, including any and all financial information
necessary for the Partnership's operation of the Contributed Business or
required for financial reporting or other purposes.
2.5 Assumption of Liabilities.
(a) On the terms and subject to the conditions, including
Sections 1.2, 2.8 and 6.2, set forth in this Agreement, on the Closing Date,
the debts, liabilities and obligations of each Contributor and its Contributed
Subsidiaries set forth in this Section 2.5 shall be assumed by the Partnership
in connection with the transfer of Assets to it, and the Partnership agrees to
pay, perform and discharge all such debts, liabilities and obligations when
due:
(i) All obligations arising on or after the Closing Date
under the Lake Charles Lease, the Contributed Contracts and Leases
that are assigned to the Partnership hereunder unless and to the
extent that such obligation arises out of a violation of such Lake
Charles Lease, Contributed Contract or Lease prior to the Closing
Date;
(ii) All obligations under purchase orders accepted by a
Contributor or its Contributed Subsidiaries in the ordinary course of
business of the Contributed Business prior to the Closing Date that
are not filled as of the Closing Date;
(iii) Trade Accounts Payable;
(iv) All obligations and liabilities, of every kind and
nature, without limitation, arising out of, in connection with or
related to the ownership, operation or use on or after the Closing
Date of the Assets or the Contributed Business;
(v) Seven Year PCCL Claims to the extent the aggregate
thereof borne by the Partnership does not exceed $7,000,000;
(vi) Third Party Claims that are related to Pre-Closing
Contingent Liabilities and that are first asserted seven years or more
after the Closing Date;
- 9 -
15
(vii) The obligations for indebtedness described on
Schedule 2.5(a)(vii);
(viii) [RESERVED];
(ix) All Liabilities associated with products sold after
the Closing Date regardless of when manufactured;
(x) The long-term liabilities set forth on Schedule
2.5(a)(x); and
(xi) Any other Liability specifically assumed by the
Partnership pursuant to the terms of this Agreement.
The liabilities and obligations assumed by the Partnership pursuant to this
Section are sometimes hereinafter referred to collectively as the "Assumed
Liabilities."
(b) On the Closing Date, the Partnership shall deliver to each
Asset Contributor an instrument of assumption of the Assumed Liabilities
substantially in the form attached hereto as Exhibit F (the "Partnership
Assumption Agreement").
2.6 Excluded Liabilities. Each Contributor or Affiliate thereof,
as applicable, shall remain liable for (or, in the case of Oxy Petrochemicals,
Oxy CH Sub shall assume in accordance with Section 1.8), and each Asset
Contributor and Oxy CH shall indemnify and hold harmless the Partnership in
accordance with Section 6.2 against, any liability or obligation of such
Contributor or Affiliate thereof, of whatever nature, whether presently in
existence or arising hereafter, whether known or unknown, or whether absolute
or contingent, that does not constitute an Assumed Liability (all such
liabilities and obligations being herein referred to as the "Excluded
Liabilities"), including the following:
(i) Any Pre-Closing Contingent Liability that is not an
Assumed Liability;
(ii) any obligation or liability relating to the Excluded
Assets;
(iii) any obligation (A) for the payment of severance
benefits to employees of a Contributor or any of its Affiliates except
as set forth in Sections 2.8(b) or (c), (B) attributable to a
Contributor's or any of its Affiliates' employment of any employee,
agent or independent contractor prior to the Expiration Date or (C)
any obligation or liability assumed by the Contributors pursuant to
Section 2.8; and
(iv) all Taxes imposed on Oxy Petrochemicals or any of its
Affiliates that would not be assumed by the Partnership if Oxy
Petrochemicals were contributing its Assets to the Partnership and
remaining in existence as a member of its current affiliated group.
- 10 -
16
2.7 Master Intellectual Property Agreement. On the Closing Date,
the Partnership and Occidental Chemical Corporation, a New York corporation
("OCC"), shall execute and deliver a master intellectual property agreement
(the "Master Intellectual Property Agreement") in substantially the form
attached hereto as Exhibit G providing, among other things, the following:
(a) Non-exclusive, royalty-free licenses to the Partnership of any
Intellectual Property used, contemplated for use or that could be used, in the
Contributed Business that is not conveyed to the Partnership pursuant to
Section 1.2 or 2.1.
(b) Non-exclusive, royalty-free licenses to OCC or its Affiliates
of any Contributed Intellectual Property acquired by the Partnership pursuant
to Section 1.2 or 2.1 of this Agreement used, contemplated for use or that
could be used in the business of OCC or its Affiliates.
(c) The assignment of the Contributed Intellectual Property to the
Partnership.
2.8 Employee Matters.
(a) "Employees" shall mean all employees of a Contributor or an
Affiliate whose work relates primarily to the Assets or the Contributed
Business and who are immediately prior to the Closing in the active employment
of a Contributor or an Affiliate. A true and complete list of names;
positions; salaries or hourly wage rates, as applicable; years of service, and
the last bonus of the Employees shall be provided by a Contributor or its
designee to the Partnership from time to time up to the Closing. In accordance
with and subject to Section 3.6 of the Master Transaction Agreement, as of the
Expiration Date, the Partnership shall offer employment to certain Employees
who are immediately prior to the Expiration Date in the active employment of a
Contributor or an Affiliate pursuant to a schedule prepared by the Contributors
prior to the Closing Date and agreed to by the Partnership. The Partnership
agrees that no Employee will fail to receive an offer of employment from the
Partnership unless the Contributor or Affiliate employing such Employee has
given its approval, which approval shall not be unreasonably withheld. Any
such Employee that accepts such offer is herein called a "Partnership
Employee." Partnership Employees shall be employed effective as of the
Expiration Date, except as otherwise provided in Section 2.8(e). The
Contributors agree that, from the Expiration Date until December 31, 1998, the
Contributors, Occidental or an Affiliate shall provide payroll services and
benefit plan administration for Partnership Employees, subject to the terms of
any agreement for transition services between the Partnership and OCC.
(b) Except with respect to employees of a Contributor or any
Affiliate thereof located in Occidental's Dallas, Texas facility ("Non-Plant
Employees"), if, within six months after the Expiration Date or in anticipation
of the Expiration Date, a Contributor or any Affiliate thereof terminates
(other than for cause) the employment of any Employee who does not become a
Partnership Employee, then the Partnership will pay to such Contributor an
amount, not to exceed the Basic Severance, to the extent such Contributor or
any Affiliate thereof pays severance to such employee under any plan or policy
of the Contributor or Affiliate. "Basic Severance" means a severance payment
according to the severance pay formula as set forth in Schedule 2.8(b). The
Contributors shall remain responsible for all severance and other compensation
or payment to Non-Plant Employees who do not become
- 11 -
17
Partnership Employees and for bonus or other executive compensation, if any, to
plant employees covered by Occidental's bonus or executive compensation
programs. The Contributors shall pay bonus or executive compensation payable
to Partnership Employees on a pro-rata basis determined based on the
Partnership Employee's months of employment with a Contributor prior to the
Expiration Date.
(c) Any Partnership Employee whose employment is terminated by the
Partnership (other than for cause) within six months after the Expiration Date
shall be entitled to receive a severance benefit from the Partnership equal to
the Basic Severance (which, for purposes of calculating service time, shall
include the employee's time of service with a Contributor, its predecessors or
Affiliates (to the extent service therefor would have been credited by a
Contributor) and the Partnership).
(d) Any employees of a Contributor that the Partnership and such
Contributor agree are necessary for the orderly transfer of the Contributed
Business to the Partnership but who will not become Partnership Employees
("Transition Employees") shall be compensated by such Contributor on terms and
conditions and for a duration to be agreed upon by the Partnership and such
Contributor. The Partnership shall reimburse such Contributor for any such
agreed upon compensation, including payroll taxes, benefit costs and workers
compensation premiums and claims, paid by such Contributor to or with respect
to any Transition Employee.
(e) If, as of the Expiration Date, any Employee is eligible for
and receiving short term disability benefits or sick pay, or is on leave of
absence, and the Partnership has offered such Employee employment by the
Partnership, that Employee shall become employed by the Partnership (and become
a Partnership Employee for purposes of this Section 2.8) upon eligibility to
return to active employment with such Contributor under the applicable
conditions of the short term disability benefits or sick pay plan of the
Contributor, or upon return from leave of absence. Partnership employment
shall not be effective until the employing Contributor verifies that the
Employee has satisfied the conditions (if any) to return to active employment.
Until such time as such Employee becomes a Partnership Employee such
Contributor shall continue to bear all costs and expenses associated with such
Employee.
(f) None of the Contributors nor any of their Affiliates shall, at
any time prior to 60 days after the Expiration Date, effect a "plant closing"
or "mass layoff", as those terms are defined in the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN"), affecting in whole or in part any
facility, site of employment, operating unit or employee of the Contributors or
any of their Affiliates without complying fully with the notice and all other
applicable requirements of WARN. With regard to the Contributed Business, the
Partnership shall not at any time prior to 60 days after the Expiration Date,
effectuate a "plant closing" or a "mass layoff", as those terms are defined in
WARN, affecting in whole or in part, any facility, site of employment or
operating unit, or any Employees without complying fully with the notice and
all other applicable requirements of that Act.
(g) In connection with the provision by the Partnership of benefit
plans and programs for Partnership Employees as provided in the Master
Transaction Agreement,
- 12 -
18
(i) The Partnership shall recognize all service credited
for the Partnership Employees or any other employee of Contributors or
their Affiliates directly transferred to the Partnership after the
Expiration Date on the records of a Contributor (or its Affiliate) for
purposes of eligibility for benefits and vesting under the
Partnership's benefit plans and programs and calculation of benefits
under the Partnership's benefit plans and programs, other than the
Partnership's defined benefit pension plan. For purposes of this
Section 2.8(g)(i), an employee shall be directly transferred if the
person is employed by the Contributors or their Affiliates immediately
prior to his or her employment with the Partnership and if such
employment with the Partnership is the result of an agreement between
the Partnership and the Contributors or their Affiliates. The
Partnership shall not recognize service credited on a Contributor's
records for benefit accrual under the Partnership's defined benefit
pension plan and only actual periods of service with the Partnership
shall be credited for such benefit accrual purposes;
(ii) As of the Expiration Date, to the extent a
Contributor (or its Affiliate) is not otherwise required to vest
Partnership Employees as plan participants, the Contributors shall
cause each Partnership Employee to become fully vested in his
interests in the Occidental Petroleum Corporation Savings Plan (the
"PSA"), the Occidental Chemical Corporation Savings and Investment
Plan (the "SIP") and the Occidental Petroleum Corporation Retirement
Plan (the "PRA") (hereinafter collectively referred to as
"Occidental's Qualified Plans");
(iii) As of the Expiration Date, the Partnership shall
provide each Partnership Employee who was not covered by a collective
bargaining agreement immediately prior to the Closing Date (a
"Non-Union Employee") with "Partnership Benefit Plans", which shall
mean the benefit plans and programs under (a) all employee plans
applicable to employees of the Partnership in similar jobs, other than
any employee plan that provides benefits under section 401(k) of the
Code ("Partnership 401(k) Plan"), and (b) a plan sponsored by the
Partnership that is substantially identical to the PSA (the "Mirror
Plan"); provided, however that the Mirror Plan will (w) provide for a
level of matching contributions and forms of distribution identical to
that provided by the Partnership 401(k) Plan (except as required by
law for benefits transferred from the PSA and SIP), (x) not offer
investment in guaranteed investment contracts, (y) not offer new
investments in Occidental common stock and (z) not offer investments
in Occidental common stock after September 30, 1998. From and after
the Expiration Date, each Non-Union Employee shall be eligible to
participate in such Partnership Benefit Plans in accordance with the
terms and conditions thereof; provided, however, that from and after
January 1, 1999 such Non-Union Employee shall commence participation
in the Partnership 401(k) Plan and shall no longer be entitled to
contributions under the Mirror Plan. Under such Partnership Benefit
Plans which are Employee Welfare Benefit Plans, Non-Union Employees
and their eligible dependents, if a participant in any health, long
term disability or life insurance plans, as applicable, of a
Contributor or its Affiliates immediately prior to the Expiration
Date, (a) shall participate in such Partnership Benefit Plans as of
the Expiration Date, and (b) shall be deemed to satisfy any
pre-existing condition limitations under group medical, dental, life
insurance or disability plans that shall be provided after the
- 13 -
19
Expiration Date. In addition, subject to the agreement of the
third-party administrator, amounts paid by such Non-Union Employees
towards deductibles and co-payment limitations under the health plans
of a Contributor or its Affiliates shall be counted toward meeting any
similar deductible and copayment limitations under the health plans
that shall be provided under the Partnership Benefit Plans.
(iv) The Contributors shall, or shall cause its
Affiliates, as appropriate to, and the Partnership shall take all
necessary and reasonable steps to prevent a loan default under the PSA
and the SIP (collectively the "Contributors' 401(k) Plans"), including
the following: (a) the Contributors shall, or shall cause its
Affiliates, as appropriate, to allow Partnership Employees to repay
their loans under the Contributors' 401(k) Plans during any period
during which the Contributors or its Affiliates provide payroll
services, and (b) the Contributors shall cause Occidental to agree and
the Partnership agrees to take the necessary and reasonable steps to
provide for a plan to plan transfer (as such transfer is defined in
Section 414(l) of the Code) of account balances (including outstanding
loans) of Partnership Employees from the Contributor's 401(k) Plans to
the appropriate Partnership's 401(k) Plan. Notwithstanding the
foregoing, any steps which in the sole discretion of the Contributors
or its Affiliates jeopardizes the tax- qualified status of any of its
Employee Plans shall be deemed unreasonable.
(v) From and after the Expiration Date, Non-Union
Employees shall be entitled to retain and take any paid vacation days
accrued but not taken under a Contributor's vacation policy for the
period from January 1, 1998 through the Expiration Date. Upon or
promptly after the Expiration Date, the Contributor shall pay any
Banked Vacation and Carryover Vacation. "Banked Vacation" shall mean
vacation time accrued on the Contributor's records as payable to any
Partnership Employee who is a Non-Union Employee for which vacation
time has not been taken for the period prior to January 1, 1982, 1986
or 1988, as appropriate for such Partnership Employee. "Carryover
Vacation" shall mean vacation time which (a) is not Banked Vacation;
(b) has been accrued on the Contributor's records as payable and
approved by designated personnel for any Partnership Employee who is a
Non-Union Employee; and (c) such vacation time has not been taken
prior to the Expiration Date and which was earned for any period prior
to January 1, 1998.
(h) Subject to the representations in Section 3.4 hereof, as soon
as possible after the Expiration Date the Contributor and the Partnership shall
take all actions necessary to cause (i) the Contributor to cease to be the plan
sponsor of the Cain Pension Plan ("Cain Plan") and the PDG Chemical Inc.
Pension Plan ("PDG Plan"), (ii) the Partnership to become the plan sponsor of
the Cain Plan and the PDG Plan and to assume all present and future obligations
and liabilities of the Contributor with respect to such plan, and (iii) the
Partnership shall recognize service with Occidental or its Affiliates for early
retirement eligibility purposes under the Cain Plan and the PDG Plan. From and
after the Expiration Date until the instruction to liquidate assets from the
Contributor's master trust for the purpose of transferring assets to the
Partnership's trust, assets relating to the Cain Plan and the PDG Plan shall be
invested at the discretion of the fiduciaries of such plans, in the normal
course, subject to all applicable laws and plan and trust provisions. Any
earnings or losses on such
- 14 -
20
assets after the Expiration Date shall be based on the return of the
Contributor's trust as determined by the Contributor's trustee. After
liquidation of assets until the date of transfer of the assets of the Cain Plan
and PDG Plan, earnings or losses on such assets shall be based on the Short
Term Investment Fund ("STIF") rate of The Northern Trust Company, the trustee
of such plans.
(i) As of the Expiration Date, the Partnership Employees shall
cease to accrue service credit, except as expressly provided in this Section
2.8, under any and all of the Employee Welfare Benefit Plans of the
Contributors or its Affiliates, under any and all of the Employee Pension
Benefit Plans of the Contributor or its Affiliates, and any and all non-ERISA
plans or programs of the Contributor or its Affiliates, in which participation
had been available to such Employees prior to the Expiration Date. The
Contributors agree that, with respect to any Partnership Employee directly
transferred from the Partnership to employment with the Contributors or their
Affiliates, they will recognize all service credited for such Partnership
Employee on the records of the Partnership for purposes of eligibility for
benefits and vesting under the benefit plans and programs of the Contributors
and their Affiliates and calculation of benefits under the benefit plans and
programs of the Contributors and their Affiliates, other than the defined
benefit pension plan of the Contributors and their Affiliates. For purposes of
this Section 2.8(i), an employee shall be directly transferred if the person is
employed by the Partnership immediately prior to his or her employment with the
Contributors or their Affiliates and if such employment with the Contributors
or their Affiliates is the result of an agreement between the Partnership and
the Contributors or their Affiliates.
(j) The Contributors or their Affiliates shall retain the sole
responsibility for, and shall continue to pay, all hospital, medical, and
health care continuation coverage benefits as described in section 4980B of the
Code, life insurance, disability, other welfare plan expenses and benefits
(including all benefits under the Employee Plans), and worker's compensation
for employees of the Contributors (including each Employee) and their covered
dependents, including "qualified beneficiaries" within the meaning of section
607(3) of ERISA, with respect to claims incurred prior to the Expiration Date.
In addition, the Contributors or their Affiliates shall retain sole
responsibility for the payment of any claim for medical benefits, health care
continuation coverage benefits as described in section 4980B of the Code, life
insurance or other welfare benefits by, or any other item of compensation or
benefits payable under any Contributor Employee Welfare Benefit Plan to (i) any
employee of the Contributor on and after the Expiration Date, (ii) any former
employee of the Contributor who retired, died, became long-term disabled or
otherwise terminated employment prior to the Expiration Date, and (iii) any
"qualified beneficiary" of a Partnership Employee with respect to whom a
"qualifying event" (as such terms are defined in sections 603 and 607 of ERISA)
has occurred prior to the Expiration Date. Except as set forth above, expenses
and benefits relating to such types of claims incurred by Partnership Employees
and their covered dependents on or after the Expiration Date shall be the sole
responsibility of the Partnership to the extent covered under the terms of its
benefit plans. For the purposes of this Section 2.8(j), a claim is deemed
incurred when the services giving rise to the claim were performed.
(k) The Contributors and the Partnership agree that they will
satisfy their respective obligations, if any, under the National Labor
Relations Act regarding union represented employees of the Contributor at the
Beaumont, Texas, PD Glycol Plant. Further, the Partnership will recognize
- 15 -
21
the Oil, Chemical and Atomic Workers International Union and its Local No.
4-243, Production and Maintenance Group, at the Beaumont, Texas, PD Glycol
Plant.
(l) Except as otherwise specified in this Section 2.8, in the
event that a Contributor or its Affiliates terminates any of its employees
other than the Employees at any time prior to the Expiration Date, the
Contributor shall be solely responsible for any liability with respect to such
termination, including liability for all severance benefit payments to such
employees pursuant to its severance plan and any costs associated with
violation of any applicable Authority. Notwithstanding the foregoing, the
Partnership hereby agrees to indemnify the Contributors and their Affiliates
and to defend and hold the Contributors and their Affiliates harmless from and
against any claims, losses, expenses, obligations, and liabilities (including
cost of defense and reasonable attorney's fees) asserted against and imposed on
the Contributors and their Affiliates and arising out of or otherwise in
respect of the following: (i) the Partnership's termination of any Partnership
Employee's employment with the Partnership; (ii) any failure by the Partnership
to comply with its obligations hereunder or otherwise with respect to any
Partnership Employee; (iii) any suit or claim of violation brought against the
Contributors or their Affiliates under WARN for any actions taken by the
Partnership after the Expiration Date with regard to the Partnership Employees
at any facility, site of employment or operating unit affected by this
Agreement; or (iv) all claims by any Partnership Employee after the Expiration
Date whom the Partnership or its Affiliates actually or constructively
terminates or by any spouse, dependent, estate or other beneficiary of such
Employee, and (v) from any claims or charges by or relating to Employee
concerning wrongful termination, discrimination, harassment, or violation of
(a) the Fair Labor Standards Act, (b) the Labor Management Relations Act, (c)
WARN, (d) the Americans With Disabilities Act, (e) ERISA, (f) the Consolidated
Omnibus Budget Reconciliation Act of 1985, (g) the National Labor Relations
Act, (h) the Family and Medical Leave Act, (i) the Health Insurance Portability
and Accountability Act, (j) Title VII of the Civil Rights Act of 1964, (k) the
Age Discrimination in Employment Act, or (l) any and all applicable state and
local laws relating to employees or labor relations, all as attributable to the
conduct of the Partnership or its Affiliates with respect to such Employee
relating to the period subsequent to the Expiration Date. The Partnership
hereby agrees to indemnify the Contributors and their Affiliates and to defend
and hold Contributors and their Affiliates harmless from and against fifty
percent of any claims, losses, expenses, obligations and liabilities (including
cost of defense and reasonable attorney's fees) asserted against and imposed on
the Contributors and their Affiliates and arising out of the Partnership's and
Contributor's joint selection of the Employees offered employment by the
Partnership.
(m) Nothing expressed or implied in this Agreement shall confer
upon any Employee, or any legal representative thereof, any rights or remedies,
including any right to employment, whether directly or as a third party
beneficiary, or continued employment for any specified period, of any nature or
kind whatsoever.
(n) Except as otherwise specified in this Section 2.8, the
Contributors agree to indemnify the Partnership and to defend and hold the
Partnership and its Affiliates harmless from and against claims, losses,
expenses, obligations, and liabilities (including costs of defense and
reasonable attorney's fees) arising out of or otherwise in respect of the
following (i) any Contributor employee
- 16 -
22
benefit plans, or claims of employees or former employees of the Contributor or
of any spouse, dependent, estate, or other beneficiary of such employees or
former employees that in any case arose prior to the Expiration Date,
including, without limitation, any such liability or obligation which may arise
under Section 2.8(j) and from (ii) any claims or charges relating to wrongful
termination, discrimination, harassment, or violation of (a) the Fair Labor
Standards Act, (b) the Labor Management Relations Act, (c) WARN, (d) the
Americans With Disabilities Act, (e) ERISA, (f) the Consolidated Omnibus Budget
Reconciliation Act of 1985, (g) the National Labor Relations Act, (h) the
Family and Medical Leave Act, (i) the Health Insurance Portability and
Accountability Act, (j) Title VII of the Civil Rights Act of 1964, (k) the Age
Discrimination in Employment Act, or (l) any and all applicable state and local
laws relating to employees or labor relations, all as attributable to the
conduct of the Contributor or its Affiliates with respect to (A) any employees
or former employees of the Contributor who do not become Partnership Employees
relating to the periods both before and after the Expiration Date, and (B) the
Employees, relating to the period prior to the Expiration Date.
(o) Representatives of the Partnership shall be entitled to meet
with the Employees at mutually agreeable times prior to the Expiration Date to
explain and answer questions about the conditions, policies and benefits of
employment by Partnership after the Expiration Date. The Contributors shall
cooperate with the Partnership until Expiration Date in communicating to such
Employees any additional information concerning employment after the Expiration
Date which such Employees may seek, or which the Partnership may desire to
provide, and during normal business hours shall allow additional meetings by
representatives of the Partnership with such Employees upon the reasonable
request of the Partnership. In addition, the Contributor and the Partnership
agree to furnish each other with appropriate records for each of the Employees
as may be necessary to assist in proper benefit administration.
(p) The indemnity provisions of this Section shall be subject to
the requirements of Section 6.3 of this Agreement.
2.9 Joint Contracts.
(a) Any Contributed Contracts contributed to the Partnership
pursuant to Section 1.2 or 2.1 that relate principally to the Contributed
Business but also relate to the business (other than the Contributed Business)
of an Asset Contributor or its Affiliates will be made available to the
appropriate Asset Contributor and its Affiliates by the Partnership pursuant to
arrangements by which such Asset Contributor and its Affiliates will enjoy the
benefits of such Contributed Contracts as they relate to their business (other
than the Contributed Business) on the same terms and conditions as the
Partnership.
(b) Any Contracts that relate principally to the business (other
than the Contributed Business) of an Asset Contributor or its Affiliates but
also relate to the Contributed Business will be made available to the
Partnership by such Asset Contributor or its Affiliates pursuant to other
arrangements by which the Partnership will enjoy the benefits of such Contracts
as they relate to the Contributed Business on the same terms and conditions as
such Asset Contributor or its Affiliates.
- 17 -
23
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Except as set forth on Schedule 3 or in the SEC Reports, each
Contributor and Oxy CH Sub represent and warrant to the Partnership as follows:
3.1 Due Organization; Good Standing and Power. Each Contributor
and Oxy CH Sub are corporations duly organized, validly existing and in good
standing under the laws of its state of organization and each Contributor has
the requisite power and authority to own, lease and operate the properties to
be contributed hereunder and to conduct the Contributed Business as now
conducted by it. Each Contributor and Oxy CH Sub has all requisite power and
authority to enter into this Agreement and the Assignment and Assumption
Agreements and to perform its obligations hereunder and thereunder. Each
Contributor is duly authorized, qualified or licensed to do business as a
foreign corporation and is in good standing, in the State of Texas and in each
of the other jurisdictions in which its right, title or interest in or to any
of the Assets held by it, or the conduct of the Contributed Business by it,
requires such authorization, qualification or licensing, except where the
failure to so qualify or to be in good standing would not reasonably be
expected to have a Material Adverse Effect.
3.2 Authorization and Validity of Agreements. The execution,
delivery and performance of this Agreement and the other Related Agreements by
each Contributor and Oxy CH Sub and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of such Person. Except to the extent heretofore obtained, no other
corporate action or action by stockholders is necessary for the authorization,
execution, delivery and performance by a Contributor and Oxy CH Sub of this
Agreement and the other Related Agreements and the consummation by any such
Person of the transactions contemplated hereby or thereby. This Agreement and
the other Related Agreements have been duly executed and delivered by each
Contributor and Oxy CH Sub and constitute legal, valid and binding obligations
of such Person, enforceable in accordance with their terms, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general equity
principles.
3.3 No Consents Required; No Conflict with Instruments to which a
Contributor is a Party. The execution, delivery and performance of this
Agreement and the other Related Agreements by the Contributors, Oxy CH Sub and
any of their Affiliates that is a party thereto and the consummation by each
such Person or any such Affiliate of the transactions contemplated thereby (i)
will not require any Consent except for such Consents the failure of which to
be obtained or made, would not in the aggregate reasonably be expected to have
a Material Adverse Effect; and (ii) will not violate (with or without the
giving of notice or the lapse of time or both), or conflict with, or result in
the breach or termination of any provision of, or constitute a default under,
or result in the acceleration of the performance of the obligations of such
Person, or result in the creation of an Encumbrance upon any Assets or a
portion of the Contributed Business pursuant to, the charter or by-laws of
such Person, or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which such Person is a
party or by which such Person or
- 18 -
24
any of the Assets held by such Person is bound, except for such violations,
conflicts, breaches, terminations, defaults, accelerations or Encumbrances
which would not in the aggregate reasonably be expected to have a Material
Adverse Effect.
3.4 Employee Benefits.
(a) (i) Each of the Contributor's Defined Benefit and Defined
Contribution Pension Plans covering employees ("Employee Plan") is in
substantial compliance with applicable requirements prescribed by any
and all Legal Requirements, including, but not limited to the Code,
except for violations the occurrence of which would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
Each Employee Plan that is intended to be qualified under Section
401(a) of the Code currently has a favorable determination letter from
the Internal Revenue Service as to that Plan's qualification under
Section 401(a) of the Code and nothing has occurred since the date of
such letter that could reasonably be expected to cause the loss of
such qualification.
(ii) Each Contributor has in all material respects
performed all obligations required to be performed by it under ERISA,
the Code and any other applicable Legal Requirements and under the
terms of each Employee Plan, except such failures to perform which
would not in the aggregate reasonably be expected to have a Material
Adverse Effect. No Contributor has received any written notice of the
existence of any material default or violation by any other party of
any of such Legal Requirements, terms or requirements applicable to
any of the Employee Plans.
(iii) Other than routine claims for benefits, no
Contributor has received any written notice of any pending material
claims or lawsuits which have been asserted or instituted against any
of the Employee Plans, the assets of the trust or funds under the
Employee Plans, the sponsor or administrator of any of the Employee
Plans, or against any fiduciary of any of the Employee Plans with
respect to the operation of such Plan.
(iv) No Contributor has received any written notice of any
pending investigation or pending enforcement action by the Pension
Benefit Guaranty Corporation, the Department of Labor, the Internal
Revenue Service or any other Authority with respect to any of the
Employee Plans.
(v) All contributions required to be made under the terms
of each Contributor's Employee Plans have been timely made. No
Employee Plan has an "accumulated funding deficiency" (within the
meaning of section 412 of the Code or Section 302 of ERISA).
(b) Each Contributor's "group health plans" (within the meaning of
Code Section 5000(b)(1)) have been operated in substantial compliance with the
group health plan continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA, Title XXII of the Public Health
Service Act and the provisions of the Social Security Act.
- 19 -
25
(c) There has been no act or omission by a Contributor that has
given rise to or may give rise to material fines, penalties, taxes, or related
charges under Section 502(c), (i) or (l) or Section 4071 of ERISA or Chapter 43
of the Code or the imposition of a lien pursuant to Sections 401(a)(29) or
412(n) of the Code or pursuant to ERISA.
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases.
(a) Each Contributor has good and marketable title to all of its
Fee Interests, free and clear of all Encumbrances, except (i) any prior
reservations, easements and other matters of record to the extent valid,
subsisting and affecting the Assets, (ii) any prior unrecorded easements for
which improvements have been constructed in such a manner as to be apparent to
the Partnership from inspection of the Assets to the extent valid, subsisting
and affecting the Assets, (iii) liens for current taxes not yet due and payable
and mechanics and similar statutory liens arising in the ordinary course of
business, (iv) liens of employees and laborers for current wages not yet due,
(v) building, zoning and health regulations of the jurisdictions in which the
Assets are located; and (vi) such imperfections of title, easements and
Encumbrances, if any, as do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets as they are currently
being used or as otherwise would not reasonably be expected to have a Material
Adverse Effect.
(b) Each Contributor is the sole lessee under its Leases and the
sole party entitled to its Leasehold interests in favor of the lessee
thereunder, and the sole owner or, in the case of OCC Sub, the sole lessee, of
the improvements (other than fixtures) situated on its Leased Premises, free and
clear of all Encumbrances affecting its Leaseholds except (i) any prior
reservations, easements and other matters of record to the extent valid,
subsisting and affecting the Assets, (ii) any prior unrecorded easements for
which improvements have been constructed in such a manner as to be apparent to
the Partnership from inspection of the Assets to the extent valid, subsisting
and affecting the Assets, (iii) liens for current taxes not yet due and payable
and mechanics and similar statutory liens arising in the ordinary course of
business, (iv) liens of employees and laborers for current wages not yet due,
(v) building, zoning and health regulations of the jurisdictions in which the
Assets are located; and (vi) such imperfections of title, easements and such
Encumbrances, if any, as do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets or as otherwise would
not reasonably be expected to have a Material Adverse Effect. No Contributor or
any Affiliate thereof has received from or delivered to the lessors under such
Leaseholds any written notice of termination or threat of termination of such
respective Leaseholds. True and complete copies of all written lease agreements
(including any written amendments or modifications thereof) constituting, or
evidencing the terms of, such Leaseholds have been delivered or made available
to the Partnership. No material default or event of default on the part of a
Contributor or any Affiliate thereof under the provisions of any of such
Leaseholds, and no event that with the giving of notice or passage of time or
both would constitute such default or event of default on the part of such
Contributor, has occurred (which default or event of default has not been
cured). No Contributor or any Affiliate thereof has received any written notice
from any lessor under any Leasehold, that any material default or event of
default on the part of such Contributor or such Affiliate as lessee under the
provisions of any Leaseholds, or that any event that with the giving of notice
or passage of time or both would constitute such a default or an event of
default on the part
- 20 -
26
of such Contributor or any such Affiliate, as lessee, has occurred (which
default or event of default has not been cured). No material default or event
of default on the part of the lessor under the provisions of any of such
Leaseholds, and no event that with the giving of notice or passage of time or
both would constitute such default or event of default on the part of any such
lessor, has occurred (which default or event of default has not been cured).
(c) Each Contributor or an Affiliate thereof has good title to all
of the personal property constituting Assets purported to be owned by it, free
and clear of all Encumbrances, except for liens for Taxes not yet due and
payable and such Encumbrances, if any, that do not in the aggregate materially
detract from the value or materially interfere with the use of the Assets (as
they are currently being used) or as otherwise would not reasonably be expected
to have a Material Adverse Effect.
3.6 Title Matters; Defects in Improvements. There are no
trespassers or other adverse parties in possession on or affecting the Fee
Interests or the Leased Premises of a Contributor or any Affiliate thereof
that would reasonably be expected to have a Material Adverse Effect. No
Contributor or any Affiliate thereof has granted and none of the foregoing is
party to any unrecorded options, rights of refusal, sales contracts or other
such contractual rights in favor of any third parties relating to its Fee
Interests or the Leased Premises. No written notice has been received by a
Contributor or any Affiliate thereof from any insurance company with respect to
its Fee Interests or the Leased Premises or by any board of fire underwriters
claiming any material defects or deficiencies or requiring the performance of
any repairs, replacement, alteration or other work relating to the improvements
situated thereon (in each case, which have not been cured).
3.7 Working Capital. Each Contributor has operated the
Contributed Business in the ordinary course of business from September 30, 1997
to the Closing Date such that its Inventory, Stores Inventory, Prepaid
Expenses, Accounts Receivable (and all reserves or allowances for doubtful
accounts, returned products or potential price adjustments) and Trade Accounts
Payable, as of the Closing Date, are at substantially the same level as would
have existed for such Contributor without regard to the transactions
contemplated by the Master Transaction Agreement. In connection with this
Section 3.7, it is understood among the parties that the Originator Receivables
Sale Agreement dated as of October 29, 1998, by and among Occidental
Receivables Inc., OCC and other parties, has been terminated with respect to
Oxy Petrochemicals.
3.8 Technology and Similar Rights. Each Contributor owns or is
licensed to use all of its Intellectual Property, Licensed Technology and
Licensed Trademarks, and such Intellectual Property, Licensed Technology and
Licensed Trademarks together with the rights assigned or licensed under the
Related Agreements constitute all relevant patents, pending patent
applications, invention disclosures, copyrights, software, trade secrets,
technical information, technology, know-how, processes, tradenames, trademarks,
trademark registrations or applications, copyrights, copyright applications or
registrations or any derivative thereof or design used in connection therewith
necessary for the normal operation and conduct of the Contributed Business as
it is currently operated and conducted, except where the failure to have such
ownership or licenses would not reasonably be expected to have a Material
Adverse Effect.
- 21 -
27
3.9 Government Licenses, Permits and Related Approvals. The
Government Licenses constitute all those necessary for the normal operation and
conduct of the Contributed Business as it is currently operated and conducted,
except where the failure to have such Government Licenses would not reasonably
be expected to have a Material Adverse Effect.
3.10 All Necessary Assets. The Assets together with the rights
under the Related Agreements constitute all property and other rights necessary
to enable the Partnership to operate and conduct the Contributed Business in
substantially the same manner as it is being operated and conducted on the date
of this Agreement, except in all cases where the failure of the Partnership to
acquire such property or other rights by conveyance or license would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
3.11 Conduct of Business in Compliance with Regulatory and
Contractual Requirements. Each Contributor, and any Affiliate thereof, is
operating and conducting the Contributed Business in compliance with all
applicable Legal Requirements, rights of concession, licenses, know-how or
other proprietary rights of others, the failure to comply with which would
reasonably be expected to have a Material Adverse Effect.
3.12 Legal Proceedings. There is no litigation, proceeding, claim,
grievance, arbitration, investigation or other action to which a Contributor or
any Affiliate thereof is a party (i) that is pending or, to the Knowledge of a
Contributor, threatened, (ii) that relates in any way to the Assets, to the
operation or conduct of the Contributed Business, or to the transactions
contemplated by this Agreement, and (iii) that upon resolution adverse to a
Contributor or any of its Affiliates, could reasonably be expected to have a
Material Adverse Effect.
3.13 [Reserved].
3.14 Tax Matters.
(a) There are no material liens for Taxes (other than for current
Taxes not yet due and payable) upon the Assets.
(b) None of the Assets directly or indirectly secures any
indebtedness for money borrowed the interest on which is tax-exempt.
3.15 [Reserved].
3.16 HSE Matters. Except as would not be reasonably likely to have
a Material Adverse Effect:
(a) (i) The Fee Interests, the Leased Premises and the
operations of each Contributor and any Affiliate thereof in connection with the
Contributed Business are in compliance with all HSE Laws and (ii) to the extent
arising out of a Contributor's or any Affiliate's ownership or use of the
Assets or operation of the Contributed Business, there are no Chemical
Substances held, located,
- 22 -
28
released, generated, treated, stored or disposed of, on, under or from such Fee
Interests or such Leased Premises or in, on or from any fixtures or improvement
thereon in excess of any standard prescribed or permitted by any HSE Laws or
which require corrective or other action pursuant to the provisions of any HSE
Laws.
(b) No Contributor or any Affiliate has received any notice from
any federal, state, or local agency naming such Contributor or such Affiliate
as a potentially responsible party ("PRP"), or otherwise notifying such
Contributor or such Affiliate of any potential liability under either the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA" or "Superfund"), the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA"), or any state statute, rule or local
regulation imposing liability similar to CERCLA or RCRA that relates in any way
to any Chemical Substances generated by or derived from the operations on the
Fee Interests, or the Leased Premises of such Contributor or any Affiliate; nor
has either Contributor or any of its Affiliates received any comparable claim
or notice from any private party.
(c) Each Contributor or an Affiliate thereof, as applicable, has
been and is, in compliance with, all permits, licenses, approvals, permission,
or authorizations necessary for its operations in connection with the
Contributed Business to comply in all respects with HSE Laws.
(d) (i) No Contributor or any Affiliate thereof has received
written notice of any actual, impending, or potential proceedings, allegations,
claims, losses, actions, investigations or inquiries of any kind in connection
with the Contributed Business and HSE Laws or Chemical Substances ("HSE
Proceedings") and (ii) no Contributor nor any Affiliate thereof has any
Knowledge of any facts, events or occurrences that would reasonably be expected
to result in any HSE Proceedings being brought.
(e) No Contributor or any Affiliate thereof is party to, or is
subject to the terms of, any consent order, consent judgment, consent decree,
court or administrative order or judgment, agreement, schedule, or decree
issued by any Authority with respect to the Contributed Business.
3.17 Investigation to Acquire Knowledge. Each of the persons
covered by clauses (i) and (ii) of the definition of "Knowledge" set forth in
Section 1 has reviewed, with counsel to such Contributor, the other
representations and warranties contained in, and the Schedules that relate to,
this Section 3 to the extent that they relate to such person's area of
responsibility or expertise and has made a reasonable inquiry as to the
accuracy and completeness of such representations, warranties and Schedules.
SECTION 3A
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF OXY CH SUB
Except as set forth on Schedule 3, Oxy CH Sub represents and warrants
to the Partnership as follows:
- 23 -
29
3A.1 Capitalization. At the Effective Time, the authorized capital
stock of Oxy Petrochemicals will consist of 1,100 shares of common stock, of
which 1,100 shares will be issued and outstanding. All shares of the capital
stock of Oxy Petrochemicals which will be outstanding as of the Effective Time
will be duly authorized, validly issued, fully paid and non-assessable, and
will not be subject to or have been issued in violation of any preemptive
rights. Except as contemplated by this Agreement, there are no other shares of
capital stock of Oxy Petrochemicals authorized or outstanding and there are no
subscriptions, options to purchase, rights of refusal, rights of first offer,
conversion or exchange rights, warrants, preemptive rights or other agreements,
claims or commitments of any kind obligating Oxy Petrochemicals or any
Affiliate thereof to issue, transfer, deliver or sell shares of the capital
stock or other securities of, or interests in, Oxy Petrochemicals or obligating
Oxy Petrochemicals or an Affiliate thereof to grant, extend or enter into any
such agreement or commitment. At the Effective Time, there will be no
shareholder agreements, voting trusts or other agreements or understandings to
which Oxy Petrochemicals or an Affiliate thereof is a party or by which Oxy
Petrochemicals or such Affiliate is bound, relating to the voting of any shares
of the capital stock of Oxy Petrochemicals.
3A.2 Ownership of Common Stock. Oxy CH Sub is the beneficial owner
of all of the issued and outstanding shares of Oxy Petrochemicals Common Stock,
in each case, free and clear of any Encumbrances or limitations on the voting
or transfer thereof.
3A.3 No Undisclosed Liabilities. As of the Effective Time, Oxy
Petrochemicals will have no debts, liabilities or obligations whether accrued,
absolute, contingent or otherwise and whether due or to become due, other than
(a) the Assumed Liabilities and (b) the Excluded Liabilities assumed by Oxy CH
Sub pursuant to Section 1.8.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to each Contributor as
follows:
4.1 Due Organization; Good Standing and Power. The Partnership is
a limited partnership duly formed and validly existing under the laws of the
State of Delaware. The Partnership has all partnership power and authority to
enter into this Agreement and the other Related Agreements and to perform its
obligations hereunder and thereunder. The Partnership is duly authorized,
qualified or licensed to do business as a foreign partnership, in each of the
jurisdictions in which its right, title or interest in or to any asset, or the
conduct of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify would not have a material
adverse effect on the ability of the Partnership to perform its obligations
hereunder or under the Assignment and Assumption Agreements.
4.2 Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement and the other Related Agreements by
the Partnership and the consummation by the Partnership of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
partnership action on the part of the Partnership. No other partnership action
is necessary
- 24 -
30
for the authorization, execution, delivery and performance by the Partnership
of this Agreement, the other Related Agreements and the consummation by the
Partnership of the transactions contemplated hereby or thereby. This Agreement
and the other Related Agreements have been duly executed and delivered by the
Partnership and constitute legal, valid and binding obligations of the
Partnership, enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equity
principles.
4.3 No Consents Required; No Conflict with Instruments to which
the Partnership is a Party. The execution, delivery and performance of this
Agreement and the other Related Agreements by the Partnership and the
consummation by it of the transactions contemplated thereby (i) will not
require any Consent except for such Consents the failure of which to be
obtained or made, would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Partnership's ability to perform its obligations
hereunder or thereunder, and (ii) will not violate (with or without the giving
of notice or the lapse of time or both), conflict with, or result in the breach
or termination of any provision of, or constitute a default under, or result in
the acceleration of the performance of the obligations of the Partnership
under, the partnership agreement of the Partnership, or any indenture,
mortgage, deed of trust, lease, licensing agreement, contract, instrument or
other agreement to which the Partnership is a party or by which the Partnership
or any of its assets or properties is bound, except for such violations,
conflicts, breaches, terminations, defaults, accelerations or liens which would
not in the aggregate reasonably be expected to have a material adverse effect
on the Partnership's ability to perform its obligations hereunder or
thereunder.
SECTION 5
COVENANTS SUBSEQUENT TO CLOSING DATE
5.1 Access to Information. Following the Closing Date, the
Partnership shall afford, and will cause its Affiliates to afford, to the Asset
Contributors, Oxy CH Sub, their counsel, accountants and other authorized
representatives, during normal business hours, reasonable access to the books,
records and other data of the Contributed Business with respect to the period
prior to the Closing Date (and any personnel familiar therewith) to the extent
that such access may be reasonably required by an Asset Contributor or Oxy CH
Sub to facilitate (i) the preparation by such Asset Contributor or Oxy CH Sub
of such tax returns as it may be required to file with respect to the
operations of the Assets and the Contributed Business or in connection with any
audit, amended return, claim for refund or any proceeding with respect thereto,
(ii) the investigation, litigation and final disposition of any claims which
may have been or may be made against such Asset Contributor or Oxy CH Sub in
connection with the Assets and the Contributed Business, (iii) the payment of
any amount in connection with any liabilities or obligations which have not
been assumed by the Partnership under this Agreement and (iv) for any other
reasonable business purpose. For a period of ten years after the date of this
Agreement, the Partnership will not dispose of, alter or destroy any such
books, records and other data without giving 90 days' prior notice to such
Asset Contributor or Oxy CH Sub to permit it, at its expense, to examine,
duplicate or repossess such records, files, documents and correspondence.
- 25 -
31
5.2 Mail or Other Communications. Each Asset Contributor or Oxy
CH Sub authorizes and empowers the Partnership on and after the Closing Date to
receive and open all mail received by the Partnership relating to the
Contributed Business or the Assets and to deal with the contents of such
communications in any proper manner. Each Asset Contributor and Oxy CH Sub
shall promptly deliver to the Partnership any mail or other communication
received by it on and after the Closing Date pertaining to the Contributed
Business or the Assets and any cash, checks or other instruments of payment to
which the Partnership is entitled. The Partnership shall promptly deliver to
the appropriate Asset Contributor or Oxy CH Sub any mail or other communication
received by it after the Closing Date pertaining to the Excluded Assets or
Excluded Liabilities, and any cash, checks or other instruments of payment in
respect of such.
5.3 Use of Trade Name. Pursuant to the Trademark License to be
granted to the Partnership by Occidental and OCC, after the Closing Date the
Partnership shall be permitted to use any items of Inventory or packaging
material, any sales or promotional materials, any forms or documents or any
other printed materials that bear the names set forth on Schedule 2.2(c) or
other trademarks or trade names of which such names or any name similar thereto
forms a part.
5.4 Closing Date Balance Sheet. Not later than 60 days after the
Closing Date, each Contributor shall cause Arthur Andersen LLP to prepare and
deliver to such Contributor and the Partnership an audited balance sheet of the
Contributed Business as of the Closing Date (the "Closing Date Balance Sheet").
In addition, each Contributor shall prepare and deliver to the Partnership such
other financial statements or information as the Partnership may reasonably
request in connection with any proposed Partnership financing; it is currently
anticipated that the Partnership will request the Contributors to provide the
Partnership with audited financial statements related to the operation of the
Contributed Business for the past three (3) fiscal years.
5.5 [Reserved]
5.6 Collection of Accounts Receivable. The Partnership shall take
all commercially reasonable efforts to collect any Accounts Receivable;
provided, however, to the extent any Accounts Receivable set forth on the
Closing Date Balance Sheet are not collected within 180 days after the Closing
Date by the Partnership, the appropriate Contributor (or, in the case of Oxy
Petrochemicals, Oxy CH Sub) will buy such uncollected Accounts Receivable from
the Partnership at the amount set forth on the Closing Date Balance Sheet;
provided, further, that the amount to be paid by the appropriate Contributor
(or, in the case of Oxy Petrochemicals, Oxy CH Sub) for such uncollected
Accounts Receivable shall be reduced by the amount of any reserve or allowance
for doubtful accounts, returned products or potential price adjustments,
transferred to the Partnership pursuant to Section 2.1(j); and provided,
further, that any payments or reimbursements that are made by the Partnership
as a result of volume or price rebates or adjustments and that are attributable
(in whole or in part) to transactions prior to the Closing Date shall be for
the account of the Contributor (or, in the case of Oxy Petrochemicals, Oxy CH
Sub), to the extent so attributable. Collections on Accounts Receivable shall
be applied on a specific identification basis. The Partnership will report
monthly in writing to each Contributor (or, in the case of Oxy Petrochemicals,
Oxy CH Sub) on the amounts collected during the preceding month, and shall
provide an aging summary of uncollected
- 26 -
32
accounts and a detailed description of each problem account (45 or more days
overdue). On reasonable notice to the Partnership, each Contributor (or, in
the case of Oxy Petrochemicals, Oxy CH Sub) shall have the right to take over
the collection process for any problem account.
5.7 Reimbursement for Prepaid Expenses. The Partnership and each
Contributor acknowledge that the Prepaid Expenses attributable to its
Contributed Business have been conveyed to the Partnership solely in order to
facilitate the timely and efficient transfer of the Contributed Business to the
Partnership. Consequently, the Partnership shall reimburse such Contributor
(or, in the case of Oxy Petrochemicals, Oxy CH Sub) for the Prepaid Expenses
associated with its Contributed Business (other than the prepaid expenses for
"turnaround" costs) within 10 days following the receipt of the Closing Date
Balance Sheet.
SECTION 6
SURVIVAL AND INDEMNIFICATION
6.1 Survival Limitations. The representations and warranties of
the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the date that is 60 months after the Closing Date, except (i)
Section 3.14, which shall survive until the expiration of the applicable
statute of limitations and (ii) Section 3.5, which shall survive without
limitation and shall not be merged with the Assignment and Assumption
Agreements. No action can be brought with respect to any breach of any
representation or warranty (except with respect to Section 3.5) pursuant to
this Agreement unless a written notice that complies with Section 6.3 has been
delivered pursuant to such Section 6.3 prior to the expiration of the survival
period applicable to such representation or warranty; provided that upon the
giving of such notice, notwithstanding any other provision of this Agreement
the representation and warranty that is the basis of such action shall continue
with respect to such action beyond the time at which the representation and
warranty would otherwise terminate.
6.2 Indemnification.
(a) Subject to the other provisions of this Section 6, each Asset
Contributor and Oxy CH Sub hereby agrees, to the fullest extent permitted by
applicable law, to indemnify, defend and hold harmless the Partnership, its
partners, their Affiliates and their respective officers, directors and
employees from, against and in respect of any losses, claims, damages, fines,
penalties, assessments by public agencies, settlement, cost or expenses
(including costs of defense and attorneys' fees) and other liabilities (any of
the foregoing being a "Liability") incurred or suffered by the Partnership or
any of its Affiliates, arising out of, in connection with or relating to:
(i) Any misrepresentation in or breach of the
representations and warranties of a Contributor, Oxy CH Sub or any of
its Affiliates in this Agreement, the Assignment and Assumption
Agreements, the Master Intellectual Property Agreement, or the Master
Transaction Agreement, provided that any Liability arising out of, in
connection with or relating to any breach of the warranties in any
Assignment and Assumption Agreement that
- 27 -
33
is not a breach of the warranties in this Agreement shall not be
indemnified against pursuant to this Section 6;
(ii) Any failure of a Contributor, Oxy CH Sub or any of
its Affiliates to perform any of its covenants or obligations
contained in this Agreement, the Assignment and Assumption Agreements,
the Master Intellectual Property Agreement, or the Master Transaction
Agreement;
(iii) Excluded Liabilities; or
(iv) Any Pre-Closing Contingent Liability that is not an
Assumed Liability.
provided, however, that the following limitations shall apply to the
indemnification obligations in clauses (i) and (iv) above:
(A) the Asset Contributors and Oxy CH Sub, in the
aggregate, shall not have any indemnification obligation under clause
(i) and (iv) above for any individual Liability unless the amount of
such Liability exceeds $25,000 (the "Individual Basket") (it being
understood that all Liabilities arising from the same event, condition
or set of circumstances shall be considered as an individual Liability
for purposes of such calculation), but if the amount of such Liability
exceeds the Individual Basket, the entire amount of such Liability,
including the first $25,000 of such Liability, may be the subject of
indemnification hereunder; provided, further, that the parties agree
that the amount of Liability for which indemnification may be sought
for breach of any representation or warranty under clause (i) above
shall be calculated taking into account the Individual Basket but
without regard to any qualification or exception regarding materiality
or Material Adverse Effect qualification contained in such
representation or warranty (it being understood that such materiality
or Material Adverse Effect qualifications shall apply for purposes of
determining whether there has been such a breach in the first place,
but once it has been established that there is such a breach, the
Partnership shall be entitled to indemnity relating back to the first
dollar); and
(B) to the extent any misrepresentation in or breach of
the representations and warranties of a Contributor or Oxy CH Sub
results in a Liability of the Partnership in excess of the Individual
Basket and such Liability would also constitute a Pre-Closing
Contingent Liability, such misrepresentation or breach shall be
treated as a Pre-Closing Contingent Liability.
(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, NO ASSET CONTRIBUTOR, OXY CH SUB OR ANY OF
THEIR AGENTS, EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
DIRECT CLAIMS BY AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY
THAT DOES NOT SEEK REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY
SUCH INDEMNIFIED PARTY) WITH RESPECT TO
- 28 -
34
THEIR INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT UNLESS ANY SUCH CLAIM
ARISES OUT OF THE FRAUDULENT ACTIONS OF AN ASSET CONTRIBUTOR OR OXY CH SUB. IN
DETERMINING THE AMOUNT OF ANY LOSS, LIABILITY, OR EXPENSE FOR WHICH AN
INDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT, THE
GROSS AMOUNT THEREOF WILL BE REDUCED (BUT NOT BELOW ZERO) BY THE NET PRESENT
VALUE OF ANY CORRELATIVE INSURANCE PROCEEDS ACTUALLY REALIZED BY SUCH
INDEMNIFIED PARTY UNDER POLICIES TO THE EXTENT THAT THE FUTURE PREMIUM RATE
WILL NOT BE INCREASED BY CLAIM EXPERIENCE RELATING TO SUCH LOSS, LIABILITY OR
EXPENSE.
(c) Notwithstanding the provisions of Sections 6.2(a)(i) and
6.2(a)(iv), it is expressly agreed that no Asset Contributor or Oxy CH Sub
shall be required to indemnify the Partnership for any Liability arising out
of, in connection with or related to any HSE Claim to the extent that the
condition, event, circumstance or other basis for the HSE Claim was exacerbated
or accelerated by the Partnership. The Partnership shall not be deemed to have
exacerbated a condition, event, circumstance or other basis for an HSE Claim by
reason of the continuance thereof after the Closing (i) under circumstances
where the Partnership does not know of its existence and has not breached any
legal duty to have conducted an investigation or inquiry that would have
uncovered the matter or (ii) under circumstances where the Partnership does
know of its existence but is taking commercially reasonable actions to cure the
matter or to otherwise achieve compliance in a commercially reasonable and
prudent manner.
(d) Subject to the other provisions of this Section 6, the
Partnership hereby indemnifies, to the fullest extent permitted by law each
Asset Contributor, Oxy CH Sub and their Affiliates and their respective
officers, directors and employees against and agrees to hold each of them
harmless from any and all Liability incurred or suffered by such Person arising
out of or relating to:
(i) Any misrepresentation in or breach of the
representations and warranties of the Partnership or the failure of
the Partnership to perform any of its covenants or obligations
contained in this Agreement, the Assignment and Assumption Agreements,
the Master Intellectual Property Agreement or the Master Transaction
Agreement;
(ii) Assumed Liabilities; or
(iii) Any HSE Claim to the extent arising out of the
Partnership's exacerbation or acceleration of such HSE Claim.
(e) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, NEITHER THE PARTNERSHIP NOR ANY OF ITS AGENTS,
EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH DIRECT CLAIMS BY AN
INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY THAT DOES NOT SEEK
REIMBURSEMENT FOR A THIRD
- 29 -
35
PARTY CLAIM PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY ) WITH RESPECT TO THEIR
INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT UNLESS ANY SUCH CLAIM ARISES
OUT OF THE FRAUDULENT ACTIONS OF THE PARTNERSHIP. IN DETERMINING THE AMOUNT OF
ANY LOSS, LIABILITY, OR EXPENSE FOR WHICH AN INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION UNDER THIS AGREEMENT, THE GROSS AMOUNT THEREOF WILL BE REDUCED
(BUT NOT BELOW ZERO) BY THE NET PRESENT VALUE OF ANY CORRELATIVE INSURANCE
PROCEEDS ACTUALLY REALIZED BY SUCH INDEMNIFIED PARTY UNDER POLICIES TO THE
EXTENT THE FUTURE PREMIUM RATE WILL NOT BE INCREASED BY CLAIM EXPERIENCE
RELATING TO SUCH LOSS, LIABILITY OR EXPENSE.
(f) The rights provided to each Indemnified Party pursuant to this
Section 6, as limited by and subject to the provisions of this Section 6, shall
be such Indemnified Party's sole remedy for breach of any representation or
warranty by or covenant or obligation of any Indemnifying Party under this
Agreement, the Assignment and Assumption Agreements, the Master Intellectual
Property Agreement and the Master Transaction Agreement.
6.3 Procedures.
(a) Any Person seeking indemnification under Section 6.2 (the
"Indemnified Party") agrees to give prompt written notice to the party against
whom indemnity is sought (the "Indemnifying Party") of the assertion of any
claim that does not involve a Third Party Claim, which notice shall describe in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim to the extent feasible and the basis of the
Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party disputes such claim and such dispute is not resolved by the
parties, such dispute shall be resolved in accordance with Section 7.9.
(b) If an Indemnified Party is notified of a Third Party Claim
which may give rise to a claim for indemnification against any Indemnifying
Party under this Section, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing (including copies of all papers served
with respect to such Third Party Claim), which notice shall describe in
reasonable detail the nature of the Third Party Claim, an estimate of the
amount of damages attributable to the Third Party Claim to the extent feasible
and the basis of the Indemnified Party's request for indemnification under this
Agreement; provided that any failure to timely give such notice shall not
relieve the Indemnifying Party of any of its obligations under this Section 6
except to the extent that such failure prejudices or impairs, in any material
respect, any of the rights or obligations of the Indemnifying Party.
(c) Any Indemnifying Party may, and at the request of the
Indemnified Party shall, participate in and control the defense of the Third
Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless (i) the employment thereof has been specifically
authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party
failed to
- 30 -
36
assume the defense and employ counsel or failed to diligently prosecute or
settle the Third Party Claim or (iii) there shall exist or develop a conflict
that would ethically prohibit counsel to the Indemnifying Party from
representing the Indemnified Party. If requested by the Indemnifying Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, by making any counterclaim against
the person or entity asserting the Third Party Claim or any cross-complaint
against any person or entity, in each case only if and to the extent that any
such counterclaim or cross-complaint arises from the same actions or facts
giving rise to the Third Party Claim. The Indemnifying Party shall be the sole
judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
provided that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the prior written consent of the Indemnified
Party, which shall not be unreasonably withheld. The Indemnifying Party (if
the Indemnified Party is entitled to indemnification hereunder) shall reimburse
the Indemnified Party for its reasonable out of pocket costs incurred with
respect to such cooperation.
(d) If the Indemnifying Party fails to assume the defense of a
Third Party Claim within a reasonable period after receipt of written notice
pursuant to the first sentence of subparagraph (c), or if the Indemnifying
Party assumes the defense of the Indemnified Party pursuant to subparagraph (c)
but fails diligently to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings; provided that the
Indemnified Party shall not settle such Third Party Claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section, and the Indemnifying Party shall bear its own costs and expenses with
respect to such participation.
(e) Notwithstanding the other provisions of this Section 6.3, if
the Indemnifying Party disputes its potential liability to the Indemnified
Party under this Section 6.3 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
6.3 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified Party, the Indemnifying Party shall reimburse the Indemnified Party
in full for all costs of the litigation concerning such dispute.
(f) After it has been determined, by acknowledgment, agreement, or
ruling of court of law, that an Indemnifying Party is liable to the Indemnified
Party under this Section 6, the
- 31 -
37
Indemnifying Party shall pay or cause to be paid to the Indemnified Party the
amount of the Liability within ten business days of receipt by the
Indemnifying Party of a notice reasonably itemizing the amount of the Liability
but only to the extent actually paid or suffered by the Indemnified Party.
(g) In the event a Third Party Claim is brought in which the
liability as between the Partnership and any or all Contributors is alleged to
be joint (it being agreed that any Third Party Claim related to a Pre-Closing
Contingent Liability shall be deemed joint) or in which the entitlement to
indemnification under this Section 6 has not been determined, the Partnership
and the appropriate Contributors shall cooperate in the joint defense of such
Third Party Claim and shall offer to each other such assistance as may
reasonably be requested in order to ensure the proper and adequate defense of
any such matter. Such joint defense shall be under the general management and
supervision of the party which is expected to bear the greater share of the
liability, unless otherwise agreed; provided, however, that neither party shall
settle or compromise any such joint defense matter without the consent of the
other, which consent shall not be unreasonably withheld or delayed. Any
uninsured costs of such joint defense shall be borne as the parties may agree,
provided, however, that in the absence of such agreement, the defense costs
shall be borne by the party incurring such costs; provided, further, that, if
it is determined that one party was entitled to indemnification under this
Section 6, the other party shall reimburse the party entitled to
indemnification for all of its costs incurred in connection with such defense.
6.4 Subrogation. In the event of any payment by an Indemnifying
Party to an Indemnified Party in connection with any Liability, the
Indemnifying Party shall be subrogated to and shall stand in the place of the
Indemnified Party as to any events or circumstances in respect of which the
Indemnified Party may have any right or claim against any third party relating
to such event or indemnification. The Indemnified Party shall cooperate with
the Indemnifying Party in any reasonable manner in prosecuting any subrogated
claim.
6.5 Claims for HSE Work. Notwithstanding the other provisions of
this Section 6, in the case of any assertion, claim or demand requiring the
performance of investigatory, removal or remedial work with respect to
environmental conditions, HSE Laws or Chemical Substances for which the
Partnership may seek indemnification, the Partnership shall have the right to
conduct and control such work provided (i) it uses its good faith, commercially
reasonable efforts to achieve the Lowest Cost Response and (ii) it provides the
Contributors with the opportunity to: (A) review and comment upon any work
plans for any remedial action prior to finalization and implementation; (B)
attend meetings with regulators concerning the remedial action; and (C) have a
representative present during the performance of any remedial action.
6.6 EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE
SCOPE OF THE INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS SET FORTH
HEREIN, TO THE FULLEST EXTENT PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE
ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF,
REGARDLESS OF WHETHER THE INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH
INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE,
CONCURRENT OR
- 32 -
38
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW
OF OR BY ANY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT
CONSTITUTES A CONSPICUOUS LEGEND.
SECTION 7
MISCELLANEOUS
7.1 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction: (ii) no consideration shall be given to the fact or
presumption that any of the parties had a greater or lesser hand in drafting
this Agreement; (iii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iv) the word "includes" and its
syntactic variants mean "includes, but is not limited to" and corresponding
syntactic variant expressions; (v) the plural shall be deemed to include the
singular, and vice versa; (vi) each gender shall be deemed to include the other
gender; and (vii) each exhibit, appendix, attachment and schedule to this
Agreement is a part of this Agreement.
7.2 Payment of Certain Expenses and Taxes.
(a) Subject to the further provisions of this Section 7.2, (i)
each Contributor shall be responsible for all Taxes attributable to such
Contributor's ownership or use of the Assets or operation of the Contributed
Business prior to the Closing, (ii) Oxy CH Sub shall be responsible for all
Taxes attributable to Oxy Petrochemical's ownership or use of the Assets or
operation of the Contributed Business prior to the Closing, and (iii) the
Partnership shall be responsible for all Taxes attributable to the
Partnership's ownership or use of the Assets or operation of the Contributed
Business after the Closing. Each Contributor and Oxy CH Sub shall be
responsible for any liability of the Partnership pursuant to Texas Tax Code
Section 111.020 (including interest, penalties and attorneys' fees in
connection therewith) with respect to any amounts owed or owing by such Person
under Title 2, Texas Tax Code.
(b) All sales, transfer, or other similar taxes incurred in
connection with the transfer of the Assets shall be borne by the Partnership.
The Partnership, each Contributor and Oxy CH Sub shall cooperate fully with
each other after the Closing in connection with (i) the preparation and filing
of any tax return, exemption certificate, or other filing in connection with
such taxes, and (ii) any audit examination by any taxing Authority of the tax
returns, exemption certificates, or other filings referred to above.
(c) All real property taxes, personal property taxes, ad valorem
taxes, and other similar taxes (or payments in lieu of such taxes) assessed on
any of the Assets (including Inventory) in the tax period in which the Closing
Date occurs ("Property Taxes") shall be prorated between the Partnership and
the Asset Contributors or Oxy CH Sub, as appropriate, as of the Closing.
(d) [RESERVED]
- 33 -
39
(e) The Partnership shall pay any title or recordation fees in
connection with the transfer of the Assets. The Partnership shall also pay for
any title insurance policies or surveys of the Fee Interests that are requested
or ordered by the Partnership.
(f) After the Closing, either a Contributor (or, in the case of
Oxy Petrochemicals, Oxy CH Sub) or the Partnership receiving each Property Tax
bill or notice applicable to the Assets for the period in which the Closing
Date occurred shall, if other than the Partnership, promptly notify the
Partnership and shall pay each such tax bill prior to the last day such taxes
may be paid without penalty or interest. If paid by a Contributor (or, in the
case of Oxy Petrochemicals, Oxy CH Sub) the Partnership shall promptly on
receipt of a written request (accompanied by appropriate supporting
documentation) reimburse the paying party with respect to the share of the
Partnership of such amount so paid as provided under this Agreement. If paid
by the Partnership, the Contributor (or, in the case of Oxy Petrochemicals, Oxy
CH Sub) shall promptly on receipt of a written request (accompanied by
appropriate supporting documentation) reimburse the Partnership with respect to
the share of the Contributor (or, in the case of Oxy Petrochemicals, Oxy CH
Sub) of such amount so paid as provided under this Agreement. The Contributors
and the Partnership shall cooperate fully with each other on and after Closing
with respect to any Property Tax assessment or valuation (or protest in
connection therewith) by any taxing Authority with respect to the tax period in
which the Closing Date occurs.
(g) If any party receives a refund of any Taxes for which the
other is liable or responsible under this Agreement, the party receiving such
refund shall, within 30 days after the receipt of such refund, remit it to the
party who is liable.
(h) Any Taxes, Property Taxes or other liabilities to be paid by a
Contributor pursuant to this Section 7.2 that relate to the Assets or
Contributed Business of Oxy Petrochemicals shall be paid by Oxy CH Sub.
(i) Notwithstanding any other provision of this Agreement, the
obligations of the parties set forth in this Section 7.2 shall be unconditional
and absolute and shall remain in effect until audit, assessment and collection
of any such taxes are barred by the applicable statute of limitations.
7.3 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall
unless otherwise provided for elsewhere in this Agreement, be in writing and
shall be deemed to have been duly given if and when (i) transmitted by
telecopier facsimile with proof of confirmation from the transmitting machine,
or (ii) delivered by courier or other hand delivery, as follows:
- 34 -
40
(a) If to a Contributor or Oxy CH Sub:
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90004
Attention: President
Telecopy Number: (310) 443-6977
with a copy to:
c/o Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90004
Attention: General Counsel
Telecopy Number: (310) 443-6333
(b) If to the Partnership:
Equistar Chemicals, LP
1221 McKinney Street
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: (713) 309-4718
or to such other address or telecopy number as either party shall have
specified by notice in writing to the other party. All such notices, requests,
demands and communications shall be deemed to be effective upon receipt.
7.4 [Reserved].
7.5 Binding Effect; Benefit. Subject to Section 7.7, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective permitted successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto and their Affiliates or their respective permitted
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
7.6 Occasional and Bulk Sales. To the extent applicable, the
Partnership and the Contributors each agree to waive, to the fullest extent
permitted by law, compliance by the other with the provisions of the Bulk Sales
Law of any jurisdiction.
7.7 Assignability. Neither this Agreement nor any of the rights
or obligations hereunder shall be assignable (by operation of law or otherwise)
by a Contributor without the prior written consent of the Partnership or shall
be assignable (by operation of law or otherwise) by the Partnership
- 35 -
41
(except to a wholly-owned subsidiary thereof) without the prior written consent
of each Contributor. Any assignment or purported assignment in violation of
this Section shall be null and void.
7.8 Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by the
parties hereto. No waiver by any party of any of the provisions hereof shall
be effective unless explicitly set forth in writing and executed by the party
so waiving. Subject to the agreements and obligations of the Partnership
hereunder or under applicable Legal Requirements, no investigations by the
Partnership heretofore or hereafter made shall affect the representations and
warranties of a Contributor, and, except as otherwise provided in Section 6.1,
such representations and warranties shall survive any such investigation. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
7.9 Dispute Resolution. All disputes under this Agreement shall
be resolved in accordance with the Dispute Resolution Procedures set forth in
Appendix A.
7.10 Severability. In the event that any provisions of this
Agreement shall finally be determined to be unlawful, such provision shall, so
long as the economic and legal substance of the transactions contemplated
hereby is not affected in any materially adverse manner as to the Contributors
or the Partnership, be deemed severed from this Agreement and every other
provision of this Agreement shall remain in full force and effect.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.12 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE EXCLUDING
CONFLICTS OF LAW PRINCIPLES OF SUCH JURISDICTION EXCEPT TO THE EXTENT SUCH
MATTERS ARE MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION PURSUANT TO
THE LAWS OF SUCH OTHER JURISDICTION.
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT EXCEPT TO THE EXTENT THIS
AGREEMENT RELATES TO THE CONVEYANCE OR ASSIGNMENT OF ANY INTEREST IN REAL
ESTATE OR THE CREATION, PERFECTION, PRIORITY OR FORECLOSURE OF ANY LIEN ON ANY
INTEREST IN REAL ESTATE IN WHICH CASE, SUCH COURTS
- 36 -
42
JURISDICTION SHALL BE NON-EXCLUSIVE. EACH OF THE PARTIES TO THIS AGREEMENT
SHALL APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION
SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS
BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF
DELAWARE BY ENTERING INTO AN AGREEMENT AS OF THE DATE OF THIS AGREEMENT WITH
THE AGENT TO SUCH EFFECT. THE FOREGOING CONSENTS TO JURISDICTION AND
APPOINTMENTS OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE
GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE
EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON
OTHER THAN THE PARTIES HERETO. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS.
7.14 WAIVER OF JURY TRIAL. THE PARTNERSHIP AND THE CONTRIBUTORS
HEREBY KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
SECTION 8
DEFINITIONS
The terms used in this Agreement have the following definitions or are
defined in the Sections referenced below:
"AAA" is defined in Appendix A.
"Accounts Receivable" constitute, as of the Closing Date and as
further defined below, all uncollected accounts receivable that have been
generated by, or are attributable to, the Contributors' operation prior to the
Closing Date of the Contributed Business in the ordinary course and in all
respects in a manner consistent with the provisions of Section 3.2 of the
Master Transaction Agreement. Accounts Receivable shall not include any
reserves or accruals.
"Affiliate" means any Person that directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified; provided, however, that for purposes of this
Agreement none of the Partnership, any Person controlled by it, Canadian
Occidental Petroleum Ltd. or any Person controlled by it shall be considered an
Affiliate of any Contributor. For purposes of this definition, the term
"control" shall have the meaning set forth in 17 CFR 230.405 as in effect on
the date hereof. With respect to the period from and after the date hereof,
Oxy Petrochemicals shall not be considered an Affiliate of the Asset
Contributors.
"Agreement" is defined in the first paragraph of this Agreement.
"Arbitrator" is defined in Appendix A.
- 37 -
43
"Asset Contributors" is defined in the fifth WHEREAS clause.
"Asset Transfer Effective Time" means 4:00 A.M., local time, where the
respective Assets are located, on the Closing Date.
"Assets" means all of the assets, rights and properties being
contributed, conveyed, assigned, transferred and delivered to the Partnership
pursuant to Sections 1.2(a) and 2.1.
"Assignment and Assumption Agreements" means the Assignment of Lake
Charles Lease, the Assignment of Leases, the Bill of Sale and Assignment, the
Trademark License, the Patent Assignment, the Assumption of Partnership
Interests, the Partnership Assumption Agreement, the Excluded Assets Assignment
and the Oxy CH Sub Assumption Agreement.
"Assignment of Lake Charles Lease" is defined in Section 2.3(a).
"Assignment of Leases" is defined in Section 2.3(a).
"Assignment of Partnership Interests" is defined in Section 2.3(c).
"Associated Rights" means all right, title and interest of a
Contributor and any Affiliate thereof, if any, in lands, or real property of
others, used principally in the normal operation and conduct of the Contributed
Business.
"Assumed Liabilities" is defined in Section 2.5(a).
"Authority" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal (or any
commonwealth, territory or possession thereof), state, local or foreign, or any
agency, department or instrumentality thereof, or any court or arbitrator
(public or private).
"Banked Vacation" is defined in Section 2.8(g).
"Basic Severance" is defined in Section 2.8(b).
"Cain Plan" is defined in Section 2.8(h).
"Capital Spares" means the inventory of spare parts used by a
Contributor in the Contributed Business and owned by a Contributor as of the
Closing Date.
"Carryover Vacation" is defined in Section 2.8(g).
"CERCLA" is defined in Section 3.16(b).
- 38 -
44
"Chemical Substance" means any (i) chemical substance, pollutant,
contaminant, constituent, chemical, mixture, raw material, intermediate,
product or byproduct that is regulated (including any requirement for the
reporting of any Release thereof) under any HSE Law or defined or listed as an
industrial, toxic, deleterious, harmful, radioactive, infectious,
disease-causing or hazardous substance, material or waste under any HSE Law,
and (ii) petroleum or any fraction thereof, asbestos or asbestos-containing
material or polychlorinated biphenyls ("PCBs").
"Closing" is defined in Section 1.3(a).
"Closing Date" is defined in Section 1.3(a).
"Closing Date Balance Sheet" is defined in Section 5.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent" means any consent, waiver, appraisal, authorization,
exception, registration, license or declaration of or by any Person or any
Authority, or any expiration or termination of any applicable waiting period
under any Legal Requirement, required with respect to the Contributed Business
or a Contributor or any Affiliate thereof in connection with (i) the execution
and delivery of this Agreement or any of the Related Agreements or (ii) the
consummation of the transactions contemplated hereby or thereby.
"Contracts" means contracts, maintenance and service agreements,
purchase commitments for materials and other services, advertising and
promotional agreements, leases, taxation agreements with any Authority, and
other agreements.
"Contributed Contracts" means, other than Government Licenses, (i) all
Contracts to which a Contributor or an Affiliate thereof is a party, whether or
not entered into in the ordinary course of business, that relate principally to
the normal operation and conduct of the Contributed Business, but in the case
of any Contracts under which either such Asset Contributor or any Affiliate
thereof retains rights with respect to its other businesses, only to the
extent any such Contract relates to the operation of the Contributed Business
and (ii) all agreements and instruments setting forth such Contributor's and
any of its Affiliates' rights with respect to rights-of-way, privileges,
riparian and other rights, appurtenances, licenses or franchises and in respect
of intellectual property rights, in each case that constitute Assets described
in clauses (a) through (e), of Section 2.1.
"Contributed Business" is defined in Schedule A.
"Contributed Intellectual Property" means all of the items referred to
in Section 2.1(g) to the extent such item is not an Excluded Asset, together
with the items referred to in clause (ii) of the definition of Unrecorded
Assets.
"Contributed Subsidiaries" is defined in Section 2.1(k).
- 39 -
45
"Contributor(s)" is defined in the sixth WHEREAS clause.
"Contributors' 401(k) Plans" is defined in Section 2.8(g).
"Deeds" is defined in Section 2.3(a).
"De Minimis Claim" means any Third Party Claim for which the Liability
associated therewith is less than $25,000.
"DGCL" is defined as the Delaware General Corporation Law, as amended.
"Dispute Notice" is defined in Appendix A.
"Disputing Party" is defined in Appendix A.
"DRULPA" is defined as the Delaware Revised Uniform Limited
Partnership Act, as amended.
"Effective Time" is defined in Section 1.3(b).
"Employee Pension Benefit Plan" is defined in ERISA Section 3(2).
"Employee Plan" is defined in Section 3.4(a)(i).
"Employee Welfare Benefit Plan" is defined in ERISA Section 3.1.
"Employees" is defined in Section 2.8(a).
"Encumbrance" means any lien, charge, encumbrance, security interest,
title defect, option or any other restriction or third party right.
"Environment" is defined in this Section 1 in the definition of "HSE
Laws".
"Equipment" means all of the right, title and interest of a
Contributor and any Affiliate thereof in and to the equipment, furniture,
furnishings, fixtures, machinery, Capital Spares, vehicles, tools, computers
and other tangible personal property used principally in the normal operation
and conduct of the Contributed Business including without limitation the items
listed on Schedule 2.1(d).
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.
"Excluded Assets" is defined in Section 2.2.
"Excluded Assets Assignment" is defined in Section 1.7.
- 40 -
46
"Excluded Liabilities" is defined in Section 2.6.
"Expiration Date" shall mean the date that the term of the Operating
Agreement shall expire or shall be terminated in accordance with the provisions
thereof.
"Fee Interests" means all right, title and interest of a Contributor
and any Affiliate thereof in the parcels of land described as fee property on
Schedule 2.1(a), together with all buildings, structures, fixtures and other
improvements situated thereon and all right, title and interest of such
Contributor and any Affiliate thereof under easements, privileges,
rights-of-way, riparian and other water rights, lands underlying any adjacent
streets or roads, appurtenances and licenses to the extent pertaining to or
accruing to the benefit of the land.
"GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
"Government Licenses" means all licenses, permits or franchises issued
by any Authority relating to the operation, development, use, maintenance or
occupancy of the Facilities or any other Asset or of the Contributed Business
to extent that such licenses, permits or franchises relate principally to the
normal operation and conduct of the Contributed Business.
"HSE Claim" means (i) any action, event, circumstance or
responsibility (including any compliance action or requirement) that is
necessary to comply with HSE Laws but only to the extent that any of the
foregoing gives rise to out of pocket costs or expenses or results in a
Liability that is required by GAAP to be reflected on the balance sheet of the
applicable party or (ii) any third party (including private parties,
Authorities and employees acting on each such party's own behalf or on the
behalf of other third parties) action, lawsuit, claim, investigation or
proceeding arising under HSE Laws.
"HSE Laws" means any Legal Requirements or rule of common law now in
effect (including any amendments now in effect) and any current judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree, or judgment, relating to (i) any ambient air, surface
water, drinking water, groundwater, land surface, subsurface strata, river
sediment, natural resources or real property and the physical buildings,
structures and fixtures thereon, including sewer, septic and waste treatment,
storage or disposal systems (the "Environment"), including pollution,
contamination, cleanup, preservation, protection and reclamation of the
Environment; (ii) health or safety, including the exposure of employees and
other Persons to any Chemical Substance; (iii) the Release or threatened
Release of any Chemical Substance, noxious noise or odor, including
investigation, study, assessment, testing, monitoring, containment, removal,
remediation, response, cleanup and abatement of such Release or threatened
Release; and (iv) the management of any Chemical Substance, including the
manufacture, generation, formulation, processing, labeling, use, treatment,
handling, storage, disposal, transportation, distribution, re-use, recycling or
reclamation of any Chemical Substance.
"HSE Proceeding" is defined in Section 3.16(d).
- 41 -
47
"Indemnified Party" is defined in Section 6.3(a).
"Indemnifying Party" is defined in Section 6.3(a).
"Intellectual Property" means research material, technical
information, marketing information, patent rights, patent licenses, pending
patent applications, trade secrets, technical information, know-how, management
information systems, technology, quality control data, specifications, designs,
drawings, software, sales promotion literature and advertising materials.
"Inventory" means materials used by a Contributor in the Contributed
Business and owned by a Contributor as of the Closing Date including raw
materials, feed stocks, supplies, additives, pigments, process chemicals,
packaging materials (to the extent the Partnership's use thereof would be
consistent with Section 5.3), catalysts, work-in-process and finished goods
that relate principally to the normal operation and conduct of the Contributed
Business. Inventory shall include any FIFO or LIFO reserves, as well as any
reserve for slow moving or obsolete items and for any volume or price
adjustments.
"Knowledge" with respect to a Contributor means the actual knowledge
of (i) any plant manager, (ii) any officer of such Contributor having
responsibilities with respect to the Contributed Business, and (iii) any
employee reporting directly to an officer described in clause (ii), in each
case employed, as of the Closing Date, by such Contributor in connection with
the Contributed Business.
"Lake Charles Facility" means the Plant Site, Plant and Pipeline (each
as defined in the Lake Charles Lease).
"Lake Charles Lease" means that certain Lease dated May 15, 1998
between OCC and Occidental Chemical Sub with respect to the Lake Charles
Leased Assets.
"Lake Charles Leased Assets" means all of the tangible assets and
properties, real, personal or mixed, used or held for use in the contemplated
operation and conduct of the Contributed Business at the Lake Charles Facility,
excluding the Lake Charles Transferred Assets and any Excluded Assets listed in
Schedule 2.2(h).
"Lake Charles Transferred Assets" means those Assets set forth in the
schedule to Exhibit C.
"Leased Premises" means, generally, the premises described in the
Leases and specifically, with respect to the Lake Charles Lease, the Lake
Charles Leased Assets.
"Leaseholds" means all right, title and interest of a Contributor
and any Affiliate thereof under the Leases, for the use and occupancy of the
Leased Premises, together with all buildings, structures, fixtures and other
improvements situated thereon and, all rights and interests of such Contributor
and any Affiliate thereof under all easements, privileges, rights-of-way,
riparian and other water rights, appurtenances and licenses pertaining to the
Leases or accruing to the benefit of the tenant under the Leases.
- 42 -
48
"Leases" means the Lake Charles Lease and the leases and subleases,
all amendments thereto and all agreements related thereto described on Schedule
2.1(b).
"Legal Requirement" means any law, statute, rule, ordinance, decree,
requirement, regulation, order or judgment of any Authority, including the
terms of any Government License.
"Liability" is defined in Section 6.2(a).
"Licensed Technology" means the technology licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Licensed Trademarks" means the trademarks licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Lowest Cost Response" means the response required or allowed under
HSE Laws that addresses the Chemical Substances present at the lowest cost
(considered as a whole taking into consideration any negative impact such
response may have on the conduct of the Contributed Business and any potential
additional costs or liabilities that may arise as a result of such response) as
compared to any other response that is consistent with HSE Laws. Taking no
action shall constitute the Lowest Cost Response if, after investigation,
taking no action is determined to be consistent with HSE Laws. If taking no
action is not consistent with HSE Laws, the least costly non-permanent remedy
(such as mechanisms to contain or stabilize Chemical Substances, including
caps, dikes, encapsulation, leachate collection systems, etc.) shall be the
Lowest Cost Response, provided that such non-permanent remedy is consistent
with HSE Laws and less costly than the least costly permanent remedy (such as
the excavation and removal of soil).
"Master Intellectual Property Agreement" is defined in Section 2.7.
"Master Transaction Agreement" is defined in the second WHEREAS
clause.
"Material Adverse Effect" means any adverse circumstance or
consequence that, individually or in the aggregate, has an effect that is
material to the financial condition, results of operations, assets or business
of the Contributed Business or the Assets, taken as a whole.
"Merger" is defined in the sixth WHEREAS clause.
"Mirror Plan" is defined in Section 2.8(g).
"Non-Plant Employees" is defined in Section 2.8(b).
"Non-Union Employee" is defined in Section 2.8(g).
"OCC" is defined in Section 2.7.
- 43 -
49
"Occidental" is defined in the first WHEREAS clause.
"Occidental Chemical Sub" is defined in the first paragraph of this
Agreement.
"Occidental's Qualified Plan" is defined in Section 2.8(g).
"Operating Agreement" means that certain Operating Agreement, dated
May 15, 1998, between OCC and the Partnership.
"Oxy CH" is defined in the first WHEREAS clause.
"Oxy CH Sub" is defined in the first paragraph of this Agreement.
"Oxy CH Sub Assumption Agreement" is defined in Section 1.8.
"Oxy Petrochemicals" is defined in the first paragraph of this
Agreement.
"Oxy Petrochemicals Common Stock" is defined in Section 1.5(a).
"Partnership" is defined in the first paragraph of this Agreement.
"Partnership Benefit Plans" is defined in Section 2.8(g).
"Partnership Employees" is defined in Section 2.8(a).
"Partnership 401(k) plan is defined in Section 2.8(g).
"Partnership Governance Committee" shall have the meaning assigned to
it in the Amended and Restated Agreement of Limited Partnership of the
Partnership.
"Patent Assignment" is defined in Section 2.3(a).
"PCBs" is defined in this Section in the definition of "Chemical
Substance".
"PDG Chemical" is defined in the first paragraph of this Agreement.
"PDG Plan" is defined in Section 2.8(h).
"PD Glycol" is defined in the fifth WHEREAS clause.
"Partnership Assumption Agreement" is defined in Section 2.5(b).
"Person" means any natural person or any corporation, partnership,
limited liability company, joint venture, association, trust or other entity or
organization.
- 44 -
50
"Pipeline" means pipe and related equipment used primarily for the
transportation of ethylene and propylene in connection with the Contributed
Business, but excluding pipe and related equipment located within the property
boundaries of facilities not part of the Contributed Business.
"Pre-Closing Contingent Liabilities" means all Liabilities of every
kind and nature arising out of, in connection with or related to the ownership,
operation or use prior to the Closing Date of the Assets or the Contributed
Business other than the Liabilities referred to in Sections 2.5(a)(i), (ii),
(iii), (vii) and (ix).
"Prepaid Expenses" means the balances in the prepaid accounts
consistent with GAAP of a Contributor or its Affiliates, as of the Closing
Date, that are associated with the Contributed Business and that will have
value to the Partnership in owning and operating the Contributed Business after
the Closing Date.
"PRA" is defined in Section 2.8(g).
"Property Tax" is defined in Section 7.2(c).
"PSA" is defined in Section 2.8(g).
"Related Agreements" means the Master Transaction Agreement, Tier 1
Related Agreements (other than this Agreement) and Tier 2 Related Agreements,
as such terms are defined in the Master Transaction Agreement.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching,
escaping, emanation or migration of any Chemical Substance in, into or onto the
Environment of any kind whatsoever, including the movement of any Chemical
Substance through or in the Environment, exposure of any type in any workplace,
any release as defined under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other HSE Law and
any noxious noise or odor emission.
"SEC Reports" means (i) the 1996 Annual Report on Form 10-K and the
Quarterly Reports on Form 10-Q for the first three quarters of 1997 of
Occidental required to be filed with the Securities and Exchange Commission or
(ii) if filed by Occidental on or prior to the date of this Agreement, its 1997
Annual Report on Form 10-K.
"Secretary of State" is defined in Section 1.3(b).
"Seven Year PCCL Claims" means Third Party Claims (other than any De
Minimis Claim) related to Pre-Closing Contingent Liabilities that have been or
are asserted within seven years after the Closing Date.
"SIP" is defined in Section 2.8(g).
- 45 -
51
"STIF" is defined in Section 2.8(h).
"Stores Inventory" means the inventory of spare parts, excluding
Capital Spares, that are used by a Contributor or any Affiliate thereof in the
Contributed Business and owned by such Contributor or any Affiliate thereof as
of the Closing Date and that consist of items that generally can be used for
several processes or types of equipment, including, but not limited to, such
items as pumps, motors, pipe fittings, electrical wiring, instruments, nuts and
bolts, unfabricated metals, safety items, small hand tools and other
miscellaneous repair parts or supplies. Stores Inventory shall include any
reserve for slow moving or obsolete materials and supplies, and for any
inventory volume or price adjustments.
"Surviving Partnership" is defined in Section 1.1.
"Taxes" means all taxes, charges, fees, levies or other assessments
imposed by any taxing Authority, including, but not limited to, income, gross
receipts, excise, property, sales, use, transfer, payroll, license, ad valorem,
value added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments).
"Third Party Claim" means any allegation, claim, civil or criminal
action, proceeding, charge or prosecution brought by a Person other than a
Contributor, any Affiliate thereof, the Partnership, any member of the
Millennium Group (as defined in the Master Transaction Agreement), any member
of the Lyondell Group (as defined in the Master Transaction Agreement) or any
member of the Occidental Group (as defined in the Master Transaction
Agreement).
"Trade Accounts Payable" means, as of the Closing Date, all current
trade accounts payable and current accrued expenses, including salaries and
wages due to Partnership Employees that are generated by and result from the
execution by the Contributors and their Affiliates of normal and customary
payment and month-end closing processes prior to the Closing Date. Trade
Accounts Payable includes unpaid invoices or accruals for services, materials,
supplies, feedstocks and products received in the ordinary course of business
prior to the Closing Date and which are attributable to the Contributed
Business. Trade Accounts Payable shall not include any payments due to an
Affiliate of the Contributors including any payments due for services, rent,
overhead or similar items.
"Trademarks" means trade names, trademarks, trademark registrations or
trademark applications, copyrights, copyright applications or copyright
registrations or any derivative thereof or design used in connection therewith.
"Trademark License" is defined in Section 2.3(a).
"Transition Employees" is defined in Section 2.8(d).
- 46 -
52
"Unrecorded Assets" means all (i) right, title and interest in
customer lists, customer credit information (to the extent neither a
Contributor nor any Affiliate thereof is bound to any confidentiality
obligation with respect thereto), customer payment histories and credit limits,
vendor lists, catalogs, and (ii) right, title and interest in Intellectual
Property to the extent used or contemplated for use principally in the normal
operation and conduct of (or to the extent under development for use
principally in the normal operation and conduct of) or the marketing or
promotion of, the Contributed Business.
"WARN" is defined in Section 2.8(f).
- 47 -
53
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
OCCIDENTAL PETROCHEM PARTNER 1, INC.,
a Delaware corporation
By: /s/ John W. Morgan
------------------------------------------
Name: John W. Morgan
Title: Vice President
OCCIDENTAL PETROCHEM PARTNER 2, INC.,
a Delaware corporation
By: /s/ John W. Morgan
------------------------------------------
Name: John W. Morgan
Title: Vice President
OXY PETROCHEMICALS INC.,
a Delaware corporation
By: /s/ R. J. Schuh
------------------------------------------
Name: R. J. Schuh
Title: Executive Vice President
PDG CHEMICAL INC.,
a Delaware corporation
By: /s/ R.J. Schuh
------------------------------------------
Name: R.J. Schuh
Title: President
[Signature Page of Agreement and Plan of Merger and Asset Contribution]
- 48 -
54
EQUISTAR CHEMICALS, LP,
a Delaware limited partnership
By: /s/ Eugene R. Allspach
------------------------------------------
Name: Eugene R. Allspach
Title: President and Chief Operating Officer
[Signature Page of Agreement and Plan of Merger and Asset Contribution]
- 49 -