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EXHIBIT 10.2
AMENDED AND RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
EQUISTAR CHEMICALS, LP
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ORGANIZED UNDER THE DELAWARE
REVISED UNIFORM LIMITED PARTNERSHIP ACT
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TABLE OF CONTENTS
PAGE
SECTION 1 ORGANIZATION MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Formation of Partnership; Amended and Restated Agreement . . . . . . . . . . . . . . . 2
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Business Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Purpose and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Acquisition of Units; Holdings of Initial Partners . . . . . . . . . . . . . . . . . . 4
2.2 Transaction Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Property Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Other Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 No Return of or on Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Partner Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Administration and Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Operating Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Liquidating Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4 BOOK AND TAX ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 General Book Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Change in Partner's Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Deficit Capital Account and Nonrecourse Debt Rules . . . . . . . . . . . . . . . . . . 9
4.4 Federal Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Other Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5 ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS . . . . . . . . . . . . . . . . . . . 12
5.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Method of Accounting for Financial Reporting Purposes . . . . . . . . . . . . . . . . 12
5.3 Books and Records; Right of Partners to Audit . . . . . . . . . . . . . . . . . . . . 12
5.4 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Method of Accounting for Book and Tax Purposes. . . . . . . . . . . . . . . . . . . . 13
5.6 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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SECTION 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Partnership Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Limitations on Authority of General Partners . . . . . . . . . . . . . . . . . . . . . 16
6.3 Lack of Authority of Persons Other Than General Partners and Officers . . . . . . . . 16
6.4 Composition of Partnership Governance Committee . . . . . . . . . . . . . . . . . . . 17
6.5 Partnership Governance Committee Meetings . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Partnership Governance Committee Quorum and General Voting
Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Partnership Governance Committee Unanimous Voting Requirements . . . . . . . . . . . . 19
6.8 Control of Interested Partner Issues . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Auxiliary Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Certain Limitations on Partner Representatives. . . . . . . . . . . . . . . . . . . . 23
SECTION 7 OFFICERS AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Partnership Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Selection and Term of Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Removal of Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.7 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.8 Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.9 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.10 Employee Hirings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.11 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8 STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Annual Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.3 Funding of Partnership Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 Implementation of Budgets and Discretionary Expenditures by CEO . . . . . . . . . . . 29
8.5 Strategic Plan Deadlock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.6 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 RIGHTS OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Delegation and Contracts with Related Parties . . . . . . . . . . . . . . . . . . . . 32
9.2 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Limitation on Fiduciary Duty; Non-Competition . . . . . . . . . . . . . . . . . . . . 33
9.4 Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 Partner Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Special Purpose Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 10 TRANSFERS AND PLEDGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Restrictions on Transfer and Prohibition on Pledge . . . . . . . . . . . . . . . . . . 36
10.2 Right of First Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Inclusion of General or Limited Partner Units . . . . . . . . . . . . . . . . . . . . 38
10.4 Rights of Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.5 Effective Date of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.6 Transfer to Wholly Owned Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.7 Invalid Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Remedies for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Purchase of Defaulting Partners' Units . . . . . . . . . . . . . . . . . . . . . . . . 41
11.4 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5 Certain Consequences of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 12 DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 42
12.1 Dissolution and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.2 Procedures Upon Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.3 Termination of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.4 Asset and Liability Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.1 Confidentiality and Use of Information . . . . . . . . . . . . . . . . . . . . . . . . 44
13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.3 Third Party Claim Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.4 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION,
ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.8 Benefits of Agreement Restricted to the Parties . . . . . . . . . . . . . . . . . . . 49
13.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.10 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.14 Waiver of Right to Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.16 Jurisdiction; Consent to Service of Process; Waiver . . . . . . . . . . . . . . . . . 51
13.17 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.19 Payment Terms and Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . 51
13.20 Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.21 Other Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.22 Special Joinder by Millennium America . . . . . . . . . . . . . . . . . . . . . . . . 52
13.23 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 14 LAKE XXXXXXX FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.1 Lease Not in Force and Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.2 LC Partnership Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.3 No Rebuilding Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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14.4 Other Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
APPENDICES
APPENDIX A - Defined Terms
APPENDIX B - Partnership Financial Statements and Reports
APPENDIX C - Executive Officers
APPENDIX D - Dispute Resolution Procedures
APPENDIX E - Division of Partnership Business
SCHEDULES
Schedule 2.3(d) - Capital Accounts
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AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
EQUISTAR CHEMICALS, LP
This Amended and Restated Limited Partnership Agreement of Equistar
Chemicals, LP dated May 15, 1998 is entered into by and among Lyondell
Petrochemical G.P. Inc., a Delaware corporation ("Lyondell GP"), Lyondell
Petrochemical L.P. Inc., a Delaware corporation ("Lyondell LP"), Millennium
Petrochemicals GP LLC, a Delaware limited liability company ("Millennium GP"),
Millennium Petrochemicals LP LLC, a Delaware limited liability company
("Millennium LP"), PDG Chemical Inc., a Delaware corporation ("Occidental
GP"), Occidental Petrochem Partner 1, Inc., a Delaware corporation_
("Occidental LP1"), and Occidental Petrochem Partner 2, Inc., a Delaware
corporation ("Occidental LP2," and together with Occidental LP1, "Occidental
LP").
The definitions of capitalized terms used in this Agreement, including
the appendices hereto, are set forth in Appendix A hereto.
WHEREAS, Lyondell GP, Lyondell LP, Millennium GP and Millennium LP
(together, the "Initial Partners") entered into the Limited Partnership
Agreement of Equistar Chemicals, LP dated October 10, 1997 (the "Initial
Agreement"), pursuant to the Initial Master Transaction Agreement between
Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"), the
ultimate parent entity of each of Lyondell GP and Lyondell LP, and Millennium
Chemicals Inc., a Delaware corporation ("Millennium"), the ultimate parent
entity of each of Millennium GP and Millennium LP;
WHEREAS, the Initial Partners contributed their Initial Assets to the
Partnership on the Initial Closing Date and the Initial Related Agreements
relating to the Partnership and their Contributed Businesses were entered into,
all as provided in the Initial Master Transaction Agreement;
WHEREAS, the Partnership, Occidental Petroleum Corporation , a
Delaware corporation ("Occidental"), the ultimate parent entity of each of
Occidental GP, Occidental LP1 and Occidental LP2 (together, the "Occidental
Partners"), Lyondell and Millennium have entered into the Master Transaction
Agreement dated May 15, 1998 (the "Second Master Transaction Agreement"), which
provides, among other things, for the admission of Occidental GP as a general
partner of the Partnership and of each of Occidental LP1 and Occidental LP2 as
a limited partner of the Partnership, subject to and upon the terms and
conditions set forth therein; and
WHEREAS, simultaneous with the execution and delivery of this
Agreement, (i) the Occidental Partners are contributing to the Partnership
their Initial Assets and Contributed Business in accordance with the Occidental
Contribution Agreement (which involves, in the case of Occidental LP2, the
merger of Oxy Petrochemicals and the Partnership, with the Partnership as the
surviving entity); (ii) Lyondell, Millennium, Occidental and certain Occidental
Affiliates are entering into the Amended and Restated Parent Agreement and
(iii) the Additional Related Agreements are being entered into;
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION 1
ORGANIZATION MATTERS
1.1 Formation of Partnership; Amended and Restated Agreement. The
Certificate of Limited Partnership was filed with the Secretary of State of the
State of Delaware on October 17, 1997. The Initial Agreement was entered into
October 10, 1997. The Partners desire to enter into this Agreement which
amends and restates the Initial Agreement and constitutes the limited
partnership agreement of the Partnership as of the date hereof. Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. Without the need for the consent of any other Person,
upon the execution of this Agreement by each of the parties hereto, (i)
Occidental GP is hereby admitted to the Partnership as a general partner of the
Partnership, (ii) Occidental LP1 is hereby admitted to the Partnership as a
limited partner of the Partnership and (iii) Occidental LP2 is hereby admitted
to the Partnership as a limited partner of the Partnership. Subject to the
restrictions set forth in this Agreement, the Partnership shall have the power
to exercise all the powers and privileges granted by this Agreement and by the
Act, together with any powers incidental thereto, so far as such powers and
privileges are necessary, appropriate, convenient or incidental for the
conduct, promotion or attainment of the purposes of the Partnership.
1.2 Name. The name of the Partnership is "Equistar Chemicals, LP"
The Partnership's business may be conducted under such name or any other name
or names deemed advisable by the Partnership Governance Committee. The General
Partners will comply or cause the Partnership to comply with all applicable
laws and other requirements relating to fictitious or assumed names.
1.3 Business Offices. The principal place of business of the
Partnership shall be 0000 XxXxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, or such other
place as the General Partners may from time to time determine. The registered
agent of the Partnership in the State of Delaware is The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
1.4 Purpose and Business. The business of the Partnership shall
be to, directly or indirectly, (i) engage in the Specified Petrochemicals
Businesses, in the United States and internationally, including research and
development, purchasing, processing and disposing of feedstocks, and
manufacturing, marketing and distributing products, (ii) acquire and dispose
of properties and assets used or useful in connection with the foregoing and
(iii) do all things necessary, appropriate, convenient or incidental in
connection with the ownership, operation or financing of such business and
activities, or otherwise in connection with the foregoing, as are permitted
under the Act, including the acquisition and operation of the Contributed
Businesses.
1.5 Filings. The General Partners shall, or shall cause the
Partnership to, execute, swear to, acknowledge, deliver, file or record in
public offices and publish all such certificates, notices, statements or other
instruments, and take all such other actions, as may be required by law for the
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formation, reformation, qualification, registration, operation or continuation
of the Partnership in any jurisdiction, to maintain the limited liability of
the Limited Partners, to preserve the Partnership's status as a partnership for
tax purposes or otherwise to comply with applicable law. Upon request of the
General Partners, the Limited Partners shall execute all such certificates and
other documents as may be necessary, in the sole judgment of the General
Partners, in order for the General Partners to accomplish all such executions,
swearings, acknowledgments, deliveries, filings, recordings in public offices,
publishings and other acts. Each General Partner hereby agrees and covenants
that it will execute any appropriate amendment to the Certificate of Limited
Partnership of the Partnership pursuant to Section 17- 204 of the Act to
reflect any admission of a Substitute General Partner and of Occidental GP in
accordance with this Agreement.
1.6 Power of Attorney. Each Limited Partner hereby irrevocably
makes, constitutes and appoints its Affiliated General Partner and any
successor thereto permitted as provided herein, with full power of substitution
and resubstitution, as the true and lawful agent and attorney-in-fact of such
Limited Partner, with full power and authority in the name, place and stead of
such Limited Partner to execute, swear, acknowledge, deliver, file or record in
public offices and publish: (i) all certificates and other instruments
(including counterparts thereof) which such General Partner deems appropriate
to reflect any amendment, change or modification of or supplement to this
Agreement in accordance with the terms of this Agreement; (ii) all certificates
and other instruments and all amendments thereto which such General Partner
deems appropriate or necessary to form, qualify or continue the Partnership in
any jurisdiction, to maintain the limited liability of such Limited Partner, to
preserve the Partnership's status as a partnership for tax purposes or
otherwise to comply with applicable law; and (iii) all conveyances and other
instruments or documents which such General Partner deems appropriate or
necessary to reflect the transfers or assignments of interests in, to or under,
this Agreement, including the Units, the dissolution, liquidation and
termination of the Partnership, and the distribution of assets of the
Partnership in connection therewith, pursuant to the terms of this Agreement.
Each Limited Partner hereby agrees to execute and deliver to its
Affiliated General Partner within five Business Days after receipt of a written
request therefor such other further statements of interest and holdings,
designations, powers of attorney and other instruments as such General Partner
deems necessary. The power of attorney granted herein is hereby declared
irrevocable and a power coupled with an interest, shall survive the bankruptcy,
dissolution or termination of such Limited Partner and shall extend to and be
binding upon such Limited Partner's successors and permitted assigns. Each
Limited Partner hereby (i) agrees to be bound by any representations made by
the agent and attorney-in-fact acting in good faith pursuant to such power of
attorney; and (ii) waives any and all defenses which may be available to
contest, negate, or disaffirm any action of the agent and attorney-in-fact
taken in accordance with such power of attorney.
1.7 Term. The term for which the Partnership is to exist as a
limited partnership is from the date the Partnership's Certificate of Limited
Partnership was filed with the office of the Secretary of State of the State of
Delaware through the dissolution of the Partnership in accordance with the
provisions of Section 12.
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SECTION 2
CAPITAL CONTRIBUTIONS
2.1 Acquisition of Units; Holdings of Initial Partners. In
exchange for the contributions provided for in Section 2.3, Occidental LP1,
Occidental LP2 and Occidental GP shall receive the Units set forth by their
names below, and effective on the date hereof, the Units shall be owned as
follows:
PARTNER UNITS
Lyondell GP 820
Millennium GP 590
Occidental GP 295
Lyondell LP 40,180
Millennium LP 28,910
Occidental LP1 6,623
Occidental LP2 22,582
TOTAL 100,000
The Units shall entitle the holder to the distributions set forth in Section 3
and to the allocation of Profits, Losses and other items as set forth in
Section 4. Units shall not be represented by certificates.
2.2 Transaction Costs. If the Partnership is entitled to
deductions with respect to costs described in either Section 6.10 of the
Initial Master Transaction Agreement or Section 6.10 of the Second Master
Transaction Agreement to which a Partner is not entitled to reimbursement, the
incurrence of such costs shall not increase the Capital Account of such a
Partner, and such Partner shall be entitled to any deductions attributable to
such costs.
2.3 Property Contributions.
(a) Pursuant to their Contribution Agreement, on the date hereof,
Occidental LP1, Occidental LP2 and Occidental GP have contributed or caused to
be contributed to the Partnership, the Initial Assets contemplated thereby
subject to the Assumed Liabilities contemplated thereby (which involves, in the
case of Occidental LP2, the merger of Oxy Petrochemicals and the Partnership,
with the Partnership as the surviving entity).
(b) The Partners intend that the contribution of assets subject to
liabilities heretofore made by the Partners to the Partnership and to be made
pursuant to Section 2.3(a) has qualified and will qualify as a tax-free
contribution under Section 721 of the Code in which no Partner has recognized
or will recognize gain or loss. The Partners agree that the Partnership will
so file its tax return, and
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each Partner agrees to file its tax return on the same basis and to maintain
such position consistently at all times thereafter.
(c) Immediately after the contributions by Occidental GP,
Occidental LP1, and Occidental LP2, the Capital Accounts of the Initial
Partners shall be adjusted so that each Partner's Capital Account would be the
same per Unit as that of every other Partner on the date hereof if on such date
the principal and accrued interest on the Lyondell Note were paid and the
special capital distributions accrued interest provided in Sections 3.1(e),
(f), and (g) were made.
(d) Schedule 2.3(d) sets forth the Capital Accounts of the
Partners as if the contributions and distributions referred to in Section
2.3(c) were made.
2.4 Other Contributions. From time to time and subject to the
limitations of Section 6.7, if applicable, the Partnership Governance Committee
(or the CEO acting pursuant to Section 8.3), on behalf of the Partnership, may
issue a written notice ("Funding Notice") to the Limited Partners calling for
an additional capital contribution to the Partnership. Any Funding Notice will
set forth:
(a) the use of funds therefor;
(b) the aggregate amount of the capital contribution required,
which amount shall be apportioned among the Limited Partners Pro Rata; and
(c) the date by which the capital contribution must be received by
the Partnership, which date will not be earlier than seven Business Days from
the date the Funding Notice is issued.
Each Limited Partner shall timely wire transfer its Pro Rata share of the
amount set forth in the Funding Notice to the Partnership's bank account.
Except as expressly set forth in this Agreement, no Partner shall be permitted
or required to make any additional capital contribution to the Partnership.
2.5 Capital Accounts. Each Partner's Capital Account shall be
determined and maintained in accordance with Regulation Section
1.704-1(b)(2)(iv) as reasonably interpreted by the Tax Matters Partner. The
Tax Matters Partner shall have the discretion, after consultation with the
other General Partners, to make those determinations, valuations, adjustments
and allocations with respect to each Partner's Capital Account as it deems
appropriate so that the allocations made pursuant to this Agreement will have
substantial economic effect as such term is used in Regulation Section
1.704-1(b). If any Partner transfers all or a portion of its Units in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent such Capital Account
relates to the transferred Units.
2.6 No Return of or on Capital. Except as provided in Sections 3
and 4, no Partner shall receive any interest or other return on its capital
contributions or on the balance in its Capital Account and no return of its
capital contributions.
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2.7 Partner Loans. A Partner or its Affiliates may loan funds to
the Partnership on such terms and conditions as may be approved by the
Partnership Governance Committee, and, subject to other applicable law, have
the same rights and obligations with respect thereto as a Person who is neither
a Partner nor an Affiliate of a Partner. The existence of such a relationship
and acting in such a capacity will not result in a Limited Partner being deemed
to be participating in the control of the business of the Partnership or
otherwise affect the limited liability of a Partner. If a Partner or any
Affiliate thereof is a lender, in exercising its rights as a lender, including
making its decision whether to foreclose on property of the Partnership, such
lender will have no duty to consider (i) its status as a Partner or an
Affiliate of a Partner, (ii) the interests of the Partnership, or (iii) any
duty it may have to any other Partner or the Partnership.
2.8 Administration and Investment of Funds. The administration
and investment of Partnership funds shall be in accordance with the procedures
and guidelines as shall be adopted by the Partnership Governance Committee.
The Partnership may delegate to a third party (which may be an Affiliate of one
of the Partners) the responsibility for administering and investing Partnership
funds pursuant to such guidelines.
SECTION 3
DISTRIBUTIONS
3.1 Operating Distributions. Subject to Section 17-607 of the Act
and other applicable law, Available Net Operating Cash shall be distributed as
soon as practicable following the end of each month to the Partners as follows:
(a) General. On a cumulative basis from the date of the admission
of Occidental GP, Occidental LP1 and Occidental LP2, (i) distributions are to
be made to the Partners Pro Rata to the extent of cumulative Profits, and (ii)
the remaining distributions are to be made to the Limited Partners Pro Rata.
For simplicity, however, in the absence of extraordinary transactions, the
Partnership may make monthly distributions to the Partners Pro Rata, subject to
subsequent adjustments as provided below in this Section 3.1.
(b) Return of Excess Distributions. Within 90 days after the end
of each year, each General Partner shall return to the Partnership any amount
it receives for such year that is in excess of its share of the sum of the
cumulative undistributed Profits as of the end of the preceding year and the
Profits for such year.
(c) Effect of Operating Losses. For any year in which a General
Partner's share of a Loss is sustained that exceeds its previously
undistributed Profits, no distributions shall be made to such General Partner
in any subsequent year until such excess Loss is recouped, and for subsequent
years only Profits in excess of such recoupment shall be treated as Profit for
purposes of this Section 3.1.
(d) Makeup Distributions. If for any reason the Partnership does
not make a monthly distribution to all Partners Pro Rata, each General Partner
shall be entitled at the end of the year to
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receive the amount necessary to make its aggregate distributions for the year
equal the amount it was entitled to receive and keep pursuant to the preceding
criteria.
(e) Lyondell Note Proceeds. All principal and interest received
on the Lyondell Note shall be distributed among the Initial Partners in the
ratio of the Units owned by them prior to the admission of the Occidental
Partners.
(f) 1998 Credit Facility Proceeds. At such time as the
Partnership enters into the 1998 Credit Facility, the Partnership shall make a
special distribution to Millennium LP of $75 million, plus interest on such
amounts from May 15, 1998, until such distribution at a per annum rate (based
on a year of 360 days and the number of days elapsed) equal to the LIBOR Rate
plus 60 basis points (.60%). The interest payments shall be treated as payment
for the use of capital to which section 707(c) of the Code applies.
(g) Bank Credit Agreement Proceeds. At such time as the
Partnership enters into the 1998 Credit Facility, the Partnership shall draw
down the Bank Credit Agreement Repayment Amount under the 1998 Credit Facility
and shall apply the Bank Credit Agreement Repayment Amount to the repayment of
the principal amount then outstanding under the Bank Credit Agreement. Two
Business Days after such repayment, the Partnership shall draw down
$419,700,000 under the Bank Credit Agreement and make a special distribution to
Occidental LP2 of the $419,700,000 proceeds of such drawdown plus interest on
such $419,700,000 from May 15, 1998 until the date of such distribution at a
per annum rate (based on a year of 360 days and the number of days elapsed)
equal to the LIBOR Rate plus 60 basis points (.60%), provided that Occidental
Chemical Corporation has executed the Amended and Restated Indemnity Agreement.
The interest payment shall be treated as payment for the use of capital to
which section 707(c) of the Code applies.
3.2 Liquidating Distributions. Distributions to the Partners of
cash or property arising from a liquidation of the Partnership shall be made in
accordance with the Capital Account balances of the Partners as provided in
Section 12.2(d).
3.3 Withholding. The Partnership is authorized to withhold from
distributions to a Partner and to pay over to a foreign, federal, state or
local government, any amounts required to be withheld pursuant to the Code or
any provisions of any other foreign, federal, state or local law. Any amounts
so withheld shall be treated as distributed to such Partner pursuant to this
Section 3 for all purposes of this Agreement, and shall be offset against any
amounts otherwise distributable to such Partner.
3.4 Offset. Any amount otherwise distributable to a Partner
pursuant to this Section 3 shall, unless otherwise agreed by two
Representatives of each of the Nonconflicted General Partners pursuant to
Section 6.8, be applied by the Partnership to satisfy any of the following
obligations that are owed by such Partner or its Affiliate to the Partnership
and that are not paid when due:
(a) Lyondell Note and Other Notes. In the case of Lyondell LP,
the failure to pay any interest or principal when due on the Lyondell Note or,
in the case of any Partner, the failure to pay any interest or principal when
due on any indebtedness for borrowed money of such Partner or any Affiliate of
such Partner to the Partnership.
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(b) Contribution Agreement. In the case of any Partner, the
failure of such Partner or any Affiliate of such Partner to make any payment
pursuant to Section 6 of its Contribution Agreement that has been Finally
Determined to be due.
(c) Contribution. In the case of any Partner, the failure to make
any capital contribution required pursuant to this Agreement (other than
pursuant to its Contribution Agreement).
SECTION 4
BOOK AND TAX ALLOCATIONS
4.1 General Book Allocations. This section controls partnership
allocations for book purposes. As used herein, "book" means the allocations
used to determine debits and credits to the Capital Accounts of the Partners
and to determine the amounts distributable to the Partners pursuant to Section
3 and Section 12.2(d). It does not refer to the method in which books are
maintained for financial reporting purposes pursuant to Section 5.2. Except as
otherwise provided in Sections 4.2 and 4.3, Profits or Losses for book purposes
shall be allocated each year among the Partners Pro Rata, subject to the
following:
(a) If the tax basis in Partnership assets is increased as a
result of the distribution of $75 million to Millennium LP as provided in
Section 3.1(f), book deductions equal to the tax deductions resulting from such
increase shall be allocated to Millennium LP until such time as gain or income
is allocable under (c) below.
(b) If the tax basis in Partnership assets is increased as a
result of the distribution of 43% of the proceeds of the Lyondell Note to
Millennium LP, book deductions equal to the tax deductions resulting from such
increase shall be allocated among the Initial Partners in the ratio of the
Units owned by each prior to the admission of the Occidental Partners until
gain or income is allocable under (c) below.
(c) If during any 12 month period the Partnership sells,
distributes to Partners, or otherwise disposes of more than 50% in value of the
assets it owned at the beginning of such period, gain or income recognized in
the taxable period of such sale, distribution or other disposition or
thereafter recognized from the sale, distribution, or other disposition of
property or from the operation of other property shall be allocated to the
Partners in the ratio in which the aggregate amount of deductions described in
(a) and (b) above were allocated to the Partners until the aggregate amount of
such gain and income so allocated equals the aggregate amount of such
deductions.
(d) Interest accruing on the Lyondell Note shall continue to be
allocated among the Initial Partners in the ratio of the Units owned by them
prior to the admission of the Occidental Partners.
(e) The initial agreed value of the Lease will be amortized
ratably over the term of the Lease, and the resulting deductions shall be
allocated to Occidental LP1. Any gain recognized on the disposition of the
Lease shall be allocated to Occidental LP1. If, prior to such disposition,
the Partnership has made capital improvements to such assets that have been
borne by the Partners Pro
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Rata, then upon the disposition of the Lease with such improvements, gain shall
be deemed to be attributable to such improvements to the extent of the excess
of its depreciated value for GAAP purposes at the time of the disposition over
its Book Value at such time, and such gain shall be allocated to the Partners
Pro Rata.
(f) Deductions attributable to the Book Value of the assets of the
Partnership as they exist immediately after the contributions described in
Section 2.3(a) other than the Lease will be allocated among the Partners other
than Occidental LP1 in the ratio of the Units owned by each, and any gain
recognized on the disposition of such contributed assets will be allocated to
the Partners other than Occidental LP1 in the ratio of the Units owned by each.
If, prior to disposition of such asset sale, the Partnership has made capital
improvements to such assets that have been borne by the Partners Pro Rata, then
upon the disposition of a contributed asset with such improvements, gain shall
be deemed to be attributable to such improvements to the extent of the excess
of its depreciated value for GAAP purposes at the time of disposition over its
Book Value at such time, and such gain shall be allocated to the Partners Pro
Rata.
4.2 Change in Partner's Units. If during a year Units are
transferred or new Units issued, allocations among the Partners shall be made
in accordance with their interests in the Partnership from time to time during
such year in accordance with Section 706 of the Code, using the
closing-of-the-books method, except that depreciation and other amortization
with respect to each Partnership asset shall be deemed to accrue ratably on a
daily basis over the entire period during such year that the asset is owned and
in service by the Partnership.
4.3 Deficit Capital Account and Nonrecourse Debt Rules. The
special rules in this Section 4.3 apply in the following order to take into
account the possibility of the Partners' having deficit Capital Account
balances for which they are not economically responsible and the effect of the
Partnership's incurring nonrecourse debt, directly or indirectly.
(a) Partnership Minimum Gain Chargeback. If there is a net
decrease in "partnership minimum gain" during any year, determined in
accordance with the tiered partnership rules of Regulation Section 1.704-2(k),
each Partner shall be allocated items of income and gain for such year equal to
such Partner's share of the net decrease in partnership minimum gain within the
meaning of Regulation Section 1.704-2(g)(2), except to the extent not required
by Regulation Section 1.704-2(f). To the extent that this subsection (a) is
inconsistent with Regulation Section 1.704-2(f) or Section 1.704-2(k) or
incomplete with respect to such regulations, the minimum gain chargeback
provided for herein shall be applied and interpreted in accordance with such
regulations.
(b) Partner Minimum Gain Chargeback. If there is a net decrease
in "partner nonrecourse debt minimum gain" during any year, within the meaning
of Regulation Section 1.704-2(i)(2), each Partner who has a share of such
gain, determined in accordance with Regulation Section 1.704-2(i)(5), shall be
allocated items of income and gain for such year (and, if necessary, subsequent
years) equal to such Partner's share of the net decrease in partner nonrecourse
debt minimum gain. To the extent that this subsection (b) is inconsistent with
Regulation Section 1.704-2(i) or 1.704-2(k) or incomplete with respect to such
regulations, the partner nonrecourse debt minimum gain chargeback provided for
herein shall be applied and interpreted in accordance with such regulations.
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(c) Deficit Account Chargeback and Qualified Income. If any
Partner has an Adjusted Capital Account Deficit at the end of any year,
including an Adjusted Capital Account Deficit for such Partner caused or
increased by an adjustment, allocation or distribution described in Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner shall be allocated
items of income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain) in an amount and manner
sufficient to eliminate such Adjusted Capital Account Deficit as quickly as
possible. This subsection (c) is intended to constitute a "qualified income
offset" pursuant to Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(d) Partner Nonrecourse Deductions. Any partner nonrecourse
deductions for any year or other period shall be allocated to the Partner who
bears the economic risk of loss with respect to the partner nonrecourse debt to
which such partner nonrecourse deductions are attributable in accordance with
Regulation Section 1.704-2(i) or Section 1.704-2(k).
(e) Curative Allocations. The Allocations provided by this
Section 4.3 may not be consistent with the manner in which the Partners intend
to divide Profits, Losses and similar items. Accordingly, Profits, Losses and
other items will be reallocated among the Partners (in the same year and to the
extent necessary, in subsequent years) in a manner consistent with Regulation
Section 1.704-1(b) and 1.704-2 so as to prevent such allocations from
distorting the manner in which Profits, Losses and other items are intended to
be allocated among the Partners pursuant to Sections 4.1 and 4.2.
(f) Nonrecourse Debt Sharing. For purposes of this Agreement,
nonrecourse deductions, within the meaning of Regulation Section 1.704-2(b),
shall be deemed to be allocated among the Partners Pro Rata. Solely for
purposes of determining a Partner's proportionate share of the "excess
nonrecourse liabilities" of the Partnership within the meaning of Regulation
Section 1.752-3(a)(3), Partnership Profits are allocated to the Partners Pro
Rata.
4.4 Federal Tax Allocations.
(a) General Rule. Except as otherwise provided in the following
paragraphs of this Section 4.4, allocations for federal income tax purposes of
items of income, gain, loss and deduction, and credits and basis therefor,
shall be made in the same manner as book allocations are made.
(b) Elimination of Book/Tax Disparities. Taxable income and tax
deductions shall be shared among the Partners so as to take into account the
variation between the Book Value and the adjusted tax basis of each property at
the time it is contributed to the Partnership and at each time it is revalued.
(i) To account for such variation, effective as of the
formation of the Partnership:
(A) the depreciation and other deductions
attributable to the basis that the contributing Partner had in
each property at the time of contribution shall be allocated
to such Partner, and
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(B) upon disposition of a contributed property,
the excess of its Book Value at such time over its tax basis
at such time shall be allocated to the Partner who contributed
the property.
(ii) If the Book Value of a Partnership property is
revalued as of a date subsequent to the date of its acquisition by the
Partnership, the portion of its Book Value at the time of its
disposition that is attributable to the increase resulting from such
revaluation:
(A) shall be disregarded in applying Section
4.4(b)(i)(B) to the partner who contributed such property, and
(B) shall be treated for purposes of this Section
4.4(b) as a separate property that was contributed on the
revaluation date by the persons who were partners immediately
prior to the revaluation date.
(iii) The Partners agree that the foregoing allocations
constitute a reasonable method for purposes of Reg. 1.704-3(a)(1) and
will be so reported and defended by the Partnership and all Partners
unless and until the Partners otherwise agree or a court otherwise
requires.
(c) Allocation of Items Among Partners. Each item of income, gain,
loss, deduction and credit and all other items governed by Section 702(a) of the
Code shall be allocated among the Partners in proportion to the allocation of
Profits, Losses and other items to such Partners hereunder, provided that any
gain treated as ordinary income because it is attributable to the recapture of
any depreciation or amortization shall be allocated among the Partners in
accordance with Prop. Treas. Reg. Sections 1.1245-1(e)(2) and 1.1250-1(f), or,
upon promulgation of final regulations with respect to the matters covered
therein, such final regulations.
(d) Section 754 Election Allocations. Income and deductions of
the Partnership that are attributable to the Section 754 election shall be
allocated to the Partners entitled thereto.
4.5 Other Tax Allocations. Items of income, gain, loss,
deduction, credit and tax preference for state, local and foreign income tax
purposes shall be allocated among the Partners in a manner consistent with the
allocation of such items for federal income tax purposes in accordance with the
foregoing provisions of this Section.
SECTION 5
ACCOUNTING, FINANCIAL REPORTING AND TAX MATTERS
5.1 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
5.2 Method of Accounting for Financial Reporting Purposes. For
financial reporting purposes, the Partnership shall adopt a standard set of
accounting policies and shall maintain separate books of account, all in
accordance with GAAP. The Partnership's financial reports shall comply
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with requirements of the SEC to the extent applicable to the Partnership and
any Partner or any controlling Person of such Partner, to the extent such
information is necessary, in conjunction with the financial reporting
obligations of such Person under applicable SEC requirements.
5.3 Books and Records; Right of Partners to Audit.
(a) Proper and complete records and books of account of the
Partnership's business, including all such transactions and other matters as
are usually entered into records and books of account maintained by businesses
of like character or as are required by law, shall be kept by the Partnership
at the Partnership's principal place of business. None of the Partnership's
funds shall be commingled with the funds of any Partner.
(b) Each Partner and its internal and independent auditors, at the
expense of such Partner, shall have full and complete access to the internal
and independent auditors of the Partnership and shall have the right to inspect
such books and records and the physical properties of the Partnership during
normal business hours and, at its own expense, to cause an independent audit
thereof. The Partnership shall make all books and records of the Partnership
available to such Partner and its internal and independent auditors in
connection with such audit and shall cooperate with such Partner and auditors
and to provide any assistance reasonably necessary in connection with such
audit.
5.4 Reports and Financial Statements. The Partnership shall
prepare and deliver to the Partners the Partnership financial statements and
reports described on Appendix B as soon as reasonably practicable and in any
event on or prior to the due date indicated on Appendix B.
5.5 Method of Accounting for Book and Tax Purposes. For purposes
of making allocations and distributions hereunder (including distributions in
liquidation of the Partnership in accordance with Capital Account balances as
required by Section 12.3), Capital Accounts and Profits, Losses and other items
described in Section 4.1 shall be determined in accordance with federal income
tax accounting principles utilizing the accrual method of accounting, with the
adjustments required by Regulation Section 1.704-1(b) to properly maintain
Capital Accounts.
5.6 Taxation.
(a) Status of the Partnership. The Partners acknowledge that the
Partnership is a partnership for federal, foreign and state income tax
purposes, and hereby agree not to elect to be excluded from the application of
Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state
statute.
(b) Tax Elections and Reporting.
(i) Generally. The Partnership has made or shall make
the following elections under the Code and the Regulations and any
similar state statutes:
(A) Adopt the calendar year as the annual
accounting period;
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(B) Adopt the accrual method of accounting;
(C) Elect to deduct organization costs ratably
over a 60-month period as provided in Section 709 of the Code;
(D) Adopt the LIFO method of accounting for
inventory; and
(E) Make any other elections available under the
Code that the Partnership Governance Committee determine are
appropriate, with the determination of whether an election is
appropriate to be made pursuant to the principle that each
Partner shall be treated equally (i.e., no Partner will
receive preferential tax treatment to the disadvantage of
another Partner).
(ii) Section 754 Election. The Partnership shall, upon
the written request of any Partner benefitted thereby, cause the
Partnership to file an election under Section 754 of the Code and the
Regulations thereunder to adjust the basis of the Partnership assets
under Section 734(b) or 743(b) of the Code, and a corresponding
election under the applicable sections of state and local law.
(c) Tax Returns. The Tax Matters Partner, on behalf of the
Partnership, shall prepare and file the necessary tax and information returns.
Each Partner shall timely provide such information, if any, as may be needed by
the Partnership for purposes of preparing such tax and information returns. At
least 75 days before the due date (as extended) for the Partnership's federal
income tax return, the Tax Matters Partner shall deliver a draft of such return
to each Partner. Each Partner shall have 15 Business Days after receipt of the
draft in which to furnish any objections or comments on the draft to the Tax
Matters Partner. The Tax Matters Partner shall make its best efforts to
finalize the Partnership's federal income tax return at least 30 days before
the due date for filing (as extended) of such return A Partner may not report
its share of any Partnership tax item in a manner inconsistent with the
Partnership's reporting of such item unless the Partner has timely furnished
its objection to the Tax Matters Partner as provided in the immediately
preceding sentence. If a Partner reports its share of any Partnership tax item
in a manner inconsistent with the Partnership's reporting of such item, such
Partner shall promptly notify the Partnership in writing at least 20 Business
Days prior to the filing of any statement with the IRS in which such
inconsistent position is reported. The Partnership shall promptly deliver to
each Partner a copy of the federal income tax return for the Partnership as
filed with the appropriate taxing authorities and a copy of any material state
and local income tax return as filed.
(d) Tax Audits.
(i) Federal Tax Matters. The Partnership is authorized
to make such filings with the IRS as may be required to designate
Lyondell GP as the Tax Matters Partner. The Tax Matters Partner, as
an authorized representative of the Partnership, shall direct the
defense of any claims made by the IRS to the extent that such claims
relate to the adjustment of Partnership items at the Partnership
level. The Tax Matters Partner shall promptly deliver to each Partner
a copy of all notices, communications, reports or writings of any kind
(including,
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without limitation, any notice of beginning of administrative
proceedings or any report explaining the reasons for a proposed
adjustment) received from the IRS relating to or potentially resulting
in an adjustment of Partnership items, as well as any other
information requested by a Partner that is commercially reasonable to
request. The Tax Matters Partner shall be diligent and act in good
faith in deciding whether to contest at the administrative and
judicial level any proposed adjustment of a Partnership item and
whether to appeal any adverse judicial decision. The Tax Matters
Partner shall keep each Partner advised of all material developments
with respect to any proposed adjustment that comes to its attention.
All costs incurred by the Tax Matters Partner in performing under this
subsection (d) shall be paid by the Partnership. The Tax Matters
Partner shall have sole authority to represent the Partnership in
connection with all tax audits, including the power to extend the
statute of limitations, to enter in any settlement, and to litigate
any proposed partnership adjustment, subject to the following: (A)
No settlement will be entered into with respect to an item that would
materially affect any Partner adversely unless each Partner is first
notified of the terms of the settlement; and no Partner will be bound
by any settlement unless it consents thereto; (B) If a Partner does
not consent to a settlement, the settlement will nevertheless be
binding on all partners who do consent; and the non-consenting Partner
may, at its sole cost, pursue such administrative or judicial remedies
as it deems appropriate; (C) If the Tax Matters Partner brings an
action in any court, each Partner, at its sole cost, shall have the
right to intervene in the preceding to the extent permitted by the
court; and (D) If a settlement or litigation causes Partners to be
treated differently for tax purposes with respect to certain tax
issues of the Partnership, the income and deductions of the
Partnership thereafter arising will be allocated among the Partners to
reflect the varying manner in which the issues were resolved.
(ii) State and Local Tax Matters. The Partnership shall
promptly deliver to each Partner a copy of all notices,
communications, reports or writings of any kind with respect to income
or similar taxes received from any state or local taxing authority
relating to the Partnership which might, in the judgment of the Tax
Matters Partner, materially and adversely affect any Partner, and
shall keep each Partner advised of all material developments with
respect to any proposed adjustment of Partnership items which come to
its attention.
(iii) Continuation of Rights. Each Partner shall continue
to have the rights described in this subsection (d) with respect to
tax matters relating to any period during which it was a Partner,
whether or not it is a Partner at the time of the tax audit or
contest.
(e) Tax Rulings. No Person other than the Tax Matters Partner
shall request an administrative ruling (or similar administrative procedures)
from any taxing authority with respect to any tax issue relating to the
Partnership or affecting the taxation of any other Partner unless such Person
shall have received written authorization from the Tax Matters Partner and any
such other Partner to make such request.
(f) Tax Information. At the request of any Partner, the Tax
Matters Partner shall timely furnish all reasonably obtainable information
required to prepare annual earnings and profits
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computations (as defined in Section 312 of the Code) with respect to that
Partner's share of Partnership income.
5.7 Delegation. The Partners agree that all of the tasks to be
performed under this Section (other than serving as Tax Matters Partner) may be
delegated to employees and consultants of the Partnership.
SECTION 6
MANAGEMENT
6.1 Partnership Governance Committee.
(a) The General Partners hereby establish a committee (the
"Partnership Governance Committee") to manage and control the business,
property and affairs of the Partnership, including the determination and
implementation of the Partnership's strategic direction. The Partnership
Governance Committee (on behalf of the Partners) shall have (i) the full
authority of the General Partners to exercise all of the powers of the
Partnership and (ii) full control over the business, property and affairs of
the Partnership. Except to the extent set forth in this Agreement, the
Partnership Governance Committee shall have full, exclusive and complete
discretion to manage and control the business, property and affairs of the
Partnership, to make all decisions affecting the business, property and affairs
of the Partnership and to take all such actions as it deems necessary,
appropriate, convenient or incidental to accomplish the purpose of the
Partnership as set forth in Section 1.4 (as such purpose may be expanded in
accordance with Section 6.7(i)).
(b) The Partnership Governance Committee shall act exclusively by
means of Partnership Governance Committee Action. As used in this Agreement,
"Partnership Governance Committee Action" means any action which the
Partnership Governance Committee is authorized and empowered to take in
accordance with this Agreement and the Act and which is taken by the
Partnership Governance Committee either (i) by action taken at a meeting of the
Partnership Governance Committee duly called and held in accordance with this
Agreement or (ii) by a formal written consent complying with the requirements
of Section 6.5(f). In no event shall the Partnership Governance Committee be
authorized to act other than by Partnership Governance Committee Action, and
any action or purported action by the Partnership Governance Committee
(including any authorization, consent, approval, waiver, decision or vote) not
constituting a Partnership Governance Committee Action shall be null and void
and of no force and effect. Each Partnership Governance Committee Action shall
be binding on the Partnership.
(c) The Partnership Governance Committee shall adopt policies and
procedures, not inconsistent with this Agreement (including Section 6.7) or
the Act, governing financial controls and legal compliance, including
delegations of authority (and limitations thereon) to the officers of the
Partnership as permitted hereby. Such policies and procedures may be revised
or revoked (in a manner consistent with this Agreement and the Act) from time
to time as determined by the Partnership Governance Committee. To the extent
any authority is not delegated to officers of the Partnership in this Agreement
or in accordance with Partnership Governance Committee Action, it shall remain
with the Partnership Governance Committee.
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6.2 Limitations on Authority of General Partners. Except as
expressly set forth in this Agreement, each General Partner agrees to exercise
its authority to manage and control the Partnership only through Partnership
Governance Committee Action. Each General Partner agrees not to exercise, or
purport or attempt to exercise any authority (i) to act for or incur, create or
assume any obligation, liability or responsibility on behalf of the Partnership
or any other Partner, (ii) to execute any documents on behalf of, or otherwise
bind, or purport or attempt to bind, the Partnership or (iii) to otherwise
transact any business in the Partnership's name, in each case except pursuant
to Partnership Governance Committee Action.
6.3 Lack of Authority of Persons Other Than General Partners and
Officers. Except as expressly set forth in this Agreement, no Person or
Persons other than (i) the General Partners, acting through the Partnership
Governance Committee, and (ii) the officers of the Partnership appointed in
accordance with this Agreement and acting as agents or employees, as
applicable, of the Partnership in conformity with this Agreement and any
applicable Partnership Governance Committee Action, shall be authorized (a) to
exercise the powers of the Partnership, (b) to manage the business, property
and affairs of the Partnership or (c) to contract for, or incur on behalf of,
the Partnership any debts, liabilities or other obligations.
6.4 Composition of Partnership Governance Committee.
(a) The Partnership Governance Committee shall consist of nine
Representatives and each General Partner shall designate three Representatives
(each a "Representative"). All the Representatives of all three General
Partners shall together constitute the Partnership Governance Committee.
(b) Each General Partner may designate one or more individuals
(each an "Alternate") who (i) shall be authorized, in the event a
Representative is absent from any meeting of the Partnership Governance
Committee (and in the order of succession designated by the General Partner so
designating the Alternates), to attend such meeting in the place of, and as
substitute for, such Representative and (ii) shall be vested with all the
powers to take action on behalf of such General Partner which the absent
Representative could have exercised at such meeting. The term
"Representative," when used herein with reference to any Representative who is
absent from a meeting of the Partnership Governance Committee, shall mean and
refer to any Alternate attending such meeting in place of such absent
Representative.
(c) On or before the date hereof, each General Partner shall have
delivered to the other General Partners a written notice (i) designating the
three persons to serve as such General Partner's initial Representatives and
(ii) designating the person or persons, if any, who are to serve as initial
Alternates and their order of succession.
(d) Each General Partner may, in its sole discretion and by
written notice delivered to the other General Partners and the Partnership at
any time or from time to time, remove or replace one or more of its
Representatives or change one or more of its Alternates. If a Representative
or Alternate dies, resigns or becomes disabled or incapacitated, the General
Partner that designated such Representative or Alternate, as the case may be,
shall promptly designate a replacement. Each
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Representative and each Alternate shall serve until replaced by the General
Partner that designated such Representative or Alternate, as the case may be.
(e) Copies of all written notices designating Representatives and
Alternates shall be delivered to the Secretary and shall be placed in the
Partnership minute books, but the failure to deliver a copy of any such notice
to the Secretary shall not affect the validity or effectiveness of such notice
or the designation described therein.
(f) Each Representative, in his capacity as such, shall be the
agent of the General Partner that designated such Representative. Accordingly,
(i) each Representative, as such, shall act (or refrain from acting) with
respect to the business, property and affairs of the Partnership solely in
accordance with the wishes of the General Partner that designated such
Representative and (ii) no Representative, as such, shall owe (or be deemed to
owe) any duty (fiduciary or otherwise) to the Partnership or to any General
Partner other than the General Partner that designated such Representative;
provided, however, that nothing in this Agreement is intended to or shall
relieve or discharge any Representative or General Partner from liability to
the Partnership or the Partners on account of any fraudulent or intentional
misconduct of such Representative. Nothing in this Section 6.4(f) shall limit
the duty owed to the Partnership by any person acting in his capacity as an
officer of the Partnership (including any such officer who is also a
Representative).
(g) Representatives shall not receive from the Partnership any
compensation for their service or any reimbursement of expenses for attendance
at meetings of the Partnership Governance Committee.
6.5 Partnership Governance Committee Meetings.
(a) Regular meetings of the Partnership Governance Committee shall
be held at such times and at such places as shall from time to time be
determined in advance and committed to a written schedule by the Partnership
Governance Committee. The first regular meeting of the Partnership Governance
Committee during January of each fiscal year shall be deemed to be the "Annual
Meeting." The Secretary shall deliver by commercial courier service or other
hand delivery or transmit by facsimile transmission (with proof of confirmation
from the transmitting machine), an agenda for each regular meeting to the
Representatives at least five Business Days prior to such meeting. Each agenda
for a regular meeting shall specify, to a reasonable degree, the business to be
transacted at such meeting. Subject to Section 6.6, at any regular meeting of
the Partnership Governance Committee at which a quorum is present, any and all
business of the Partnership may be transacted.
(b) Special meetings of the Partnership Governance Committee may
be called by any Representative by delivering by commercial courier service or
other hand delivery or transmitting by facsimile transmission (with proof of
confirmation from the transmitting machine), written notice of a special
meeting to each of the other Representatives at least two Business Days before
such meeting. Each notice of a special meeting shall specify, to a reasonable
degree, the business to be transacted at, or the purpose of, such meeting.
Notice of any special meeting may be waived before or after the meeting by a
written waiver of notice signed by the Representative entitled to notice. A
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Representative's attendance at a special meeting shall constitute a waiver of
notice unless the Representative states at the beginning of the meeting his
objection to the transaction of business because the meeting was not lawfully
called or convened. Special meetings of the Partnership Governance Committee
shall be held at the Partnership's offices (or at such other place or in such
other manner as the Representatives shall agree) at such time as may be stated
in the notice of such meeting.
(c) One Representative of each General Partner shall serve as a
co-chair of each meeting (regular and special) of the Partnership Governance
Committee. Any co-chair may instruct the Secretary to include one or more
items on a meeting agenda and none of the co-chairs nor the Secretary may
delete or exclude an agenda item proposed by any other co-chair.
(d) Following each meeting of the Partnership Governance
Committee, the Secretary shall promptly draft and distribute minutes of such
meeting to the Representatives for approval at the next meeting, and after such
approval shall retain the minutes in the Partnership minute books.
(e) Representatives, at their discretion, may participate in or
hold regular or special meetings of the Partnership Governance Committee by
means of a telephone conference or any comparable device or technology by which
all individuals participating in the meeting may hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting.
(f) Any action required or permitted to be taken at a meeting of
the Partnership Governance Committee may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by at
least two Representatives of each General Partner, and such consent shall have
the same force and effect as a duly conducted vote of the Partnership
Governance Committee. A counterpart of each such consent to action shall be
delivered promptly to each of the Representatives and to the Secretary for
placement in the minute books of the Partnership, but the failure to deliver a
counterpart of any such consent to action to the Secretary shall not affect the
validity or effectiveness of such consent to action.
6.6 Partnership Governance Committee Quorum and General Voting
Requirement.
(a) The presence of at least two Representatives (including any
duly present Alternates) of Lyondell GP shall constitute a quorum of the
Partnership Governance Committee for the transaction of business and the taking
of appropriate Partnership Governance Committee Actions at any meeting;
provided, however, that the presence at such meeting of at least two
Representatives (including any duly present Alternates) from each General
Partner shall be necessary for the taking of any action described in Section
6.7; and provided, further, that no Partnership Governance Committee Actions
can be taken at any meeting with respect to any matter that was not reflected,
with a reasonable level of specificity, on an agenda for such meeting that was
delivered in accordance with Section 6.5 unless at least one Representative of
each General Partner is present. No Partnership Governance Committee Action
may be taken at any meeting at which a quorum is not present.
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(b) Except as otherwise provided in Section 6.7 or elsewhere in
this Agreement, the approval of two or more Representatives acting for Lyondell
GP will be sufficient for the Partnership Governance Committee to take any
Partnership Governance Committee Action and in such case the Partnership shall
be authorized to take such action without the consent of any other Person.
6.7 Partnership Governance Committee Unanimous Voting
Requirements. Unless and until two or more Representatives of Lyondell GP, two
or more Representatives of Millennium GP and two or more Representatives of
Occidental GP have given their approval (in which event a Partnership
Governance Committee Action is hereby authorized without the need for the
consent of any other Person), no Partnership Governance Committee Action will
be deemed for any purpose to have been taken at any Partnership Governance
Committee meeting that would cause or permit the Partnership or any subsidiary
thereof (or any Person acting in the name or on behalf of any of them) directly
or indirectly to take (or commit to take), and neither the Partnership nor any
subsidiary thereof nor any person acting in the name or on behalf of any of
them directly or indirectly may take or commit to take, any of the actions
described below in this subsection (whether in a single transaction or series
of related transactions):
(i) to cause the Partnership, directly or indirectly, to
engage, participate or invest in any business outside the scope of its
business as described in Section 1.4;
(ii) to approve any Strategic Plan, as well as any
amendments or updates thereto (including the annual updates provided
for in Section 8.1);
(iii) to authorize any disposition of assets having a fair
market value exceeding $30 million in any one transaction or a series
of related transactions not contemplated in an approved Strategic
Plan;
(iv) to authorize any acquisition of assets or any capital
expenditure exceeding $30 million that is not contemplated in an
approved Strategic Plan;
(v) to require capital contributions to the Partnership
(other than contributions contemplated by the Contribution Agreements
or an approved Strategic Plan or to achieve or maintain compliance
with any HSE Law) within any fiscal year if the total of such
contributions required from the Partners within that year would exceed
$100 million or the total of such contributions required from the
Partners within that year and the immediately preceding four years
would exceed $300 million;
(vi) to authorize the incurrence of debt for borrowed
money unless (x) such debt is contemplated by clause (vii) (b) below,
(y) after giving effect to the incurrence of such debt (and any
related transactions) and the maximum amount of borrowings permitted
under clause (vii) below, the Partnership would be expected to have an
"investment grade" debt rating by Xxxxx'x Investor Services Inc. and
Standard & Poor's Corporation or (z) such debt is incurred to
refinance the public, bank or other debt assumed or incurred by the
Partnership as contemplated by the Initial Master Transaction
Agreement or the Second Master Transaction Agreement or to refinance
indebtedness under the 1998 Credit Facility or to refinance any such
debt, and in the case of each of (x), (y) and (z), the agreement
relating to
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such debt does not provide that the Transfer by a Partner of its Units
(or a change of control with respect to any Partner or any of its
Affiliates) would constitute a default thereunder, otherwise
accelerate the maturity thereof or give the lender or holder any "put
rights" or similar rights with respect thereto; provided, however,
that notwithstanding the foregoing, the provisions of Sections
6.7(xxi) and 6.7(xxii), if applicable, must be satisfied with respect
to any refinancing;
(vii) (a) to enter into the 1998 Credit Facility or (b) to
make borrowings under one or more of the Partnership's bank credit
facility or facilities, its uncommitted lines of credit or any credit
facility or debt instrument of the Partnership of any kind that
refinances all or any portion of the Partnership's credit facility or
facilities, at any time, if as a result of any such borrowing the
aggregate principal amount of all such borrowings outstanding at such
time would exceed the sum of $1.25 billion and the amount which
becomes available for borrowing under the 1998 Credit Facility.
(viii) to enter into interest rate protection or other
hedging agreements (other than hydrocarbon hedging agreements in the
ordinary course);
(ix) to enter into any capitalized lease or similar
off-balance sheet financing arrangements involving payments
(individually or in the aggregate) by it in excess of $30 million in
any fiscal year;
(x) to cause the Partnership or any subsidiary of the
Partnership to issue, sell, redeem or acquire any Units or other
equity securities (or any rights to acquire, or any securities
convertible into or exchangeable for, Units or other equity
securities);
(xi) to make Partnership cash distributions in excess of
Available Net Operating Cash or to make non-cash distributions (except
as contemplated by Section 12);
(xii) to appoint or discharge Executive Officers (other
than the CEO), based on the recommendation of the CEO;
(xiii) to approve material compensation and benefit plans
and policies, material employee policies and material collective
bargaining agreements for the Partnership's employees;
(xiv) to initiate or settle any litigation or governmental
proceedings if the effect thereof would be material to the financial
condition of the Partnership;
(xv) to change the independent accountants for the
Partnership;
(xvi) to change the Partnership's method of accounting as
adopted pursuant to Section 5.2 or to change the Partnership's method
of accounting as provided in Section 5.5 or to make the elections
referred to in Section 5.6(b)(i)(E);
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(xvii) to create or change the authority of any Auxiliary
Committee;
(xviii) to merge, consolidate or convert the Partnership or
any subsidiary thereof with or into any other entity (other than a
Wholly Owned Subsidiary of the Partnership);
(xix) to file a petition in bankruptcy or seeking any
reorganization, liquidation or similar relief on behalf of the
Partnership or any subsidiary; or to consent to the filing of a
petition in bankruptcy against the Partnership or any subsidiary; or
to consent to the appointment of a receiver, custodian, liquidator or
trustee for the Partnership or any subsidiary or for all or any
substantial portion of their property;
(xx) to exercise any power or right described in Section
6.8(a)(i) or (ii) with respect to a Conflict Circumstance involving
(a) LYONDELL-CITGO Refining Company Ltd., its successors or assigns,
(b) Lyondell Methanol Company, L.P., its successors or assigns or (c)
any other Affiliate of Lyondell GP, Millennium GP or Occidental GP if
such Affiliate's actions with respect to such Conflict Circumstance
are not controlled by Lyondell, Millennium or Occidental
respectively, other than a Conflict Circumstance involving the
exercise of any rights and remedies with respect to a default under
any agreement that is the subject of such Conflict Circumstance;
(xxi) (a) prior to the seventh anniversary of the Initial
Closing Date, to repay any Millennium America Guaranteed Debt, other
than through refinancing or (b) to refinance any Millennium America
Guaranteed Debt prior to the seventh anniversary of the Initial
Closing Date if any of the principal of the debt refinancing such
Millennium America Guaranteed Debt would be due and payable after the
seventh anniversary of the Initial Closing Date; provided, however,
that if the Millennium America Guaranteed Debt continues to be
guaranteed by Millennium America or its successors after the seventh
anniversary of the Initial Closing Date, then the term of such debt
shall not exceed 365 days; and
(xxii) (a) prior to 30 days after the seventh anniversary of
the date of this Agreement, to repay any Oxy Guaranteed Debt, other
than through refinancing or (b) to refinance any Oxy Guaranteed Debt
prior to 30 days after the seventh anniversary of the date of this
Agreement if any of the principal of the debt refinancing such Oxy
Guaranteed Debt would be due and payable after 30 days after the
seventh anniversary of the date of this Agreement; provided, however,
that if the Oxy Guaranteed Debt continues to be guaranteed by
Occidental Chemical Corporation or its successors after 30 days after
the seventh anniversary of the date of this Agreement, then the term
of such debt shall not exceed 365 days.
6.8 Control of Interested Partner Issues.
(a) Notwithstanding anything to the contrary contained in this
Agreement, with respect to any Conflict Circumstance (other than a Conflict
Circumstance described in Section 6.7(xx), which shall be governed by Section
6.7), the Nonconflicted General Partners acting jointly (through their
respective Representatives) shall, subject to Section 6.8(b), have the sole and
exclusive power and
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right for and on behalf, and at the sole expense, of the Partnership (i) to
control all decisions, elections, notifications, actions, exercises or
nonexercises and waivers of all rights, privileges and remedies provided to, or
possessed by, the Partnership with respect to a Conflict Circumstance and (ii)
in the event of any potential, threatened or asserted claim, dispute or action
with respect to a Conflict Circumstance, to retain and direct legal counsel and
to control, assert, enforce, defend, litigate, mediate, arbitrate, settle,
compromise or waive any and all such claims, disputes and actions.
Accordingly, Partnership Governance Committee Action with respect to a Conflict
Circumstance (other than a Conflict Circumstance described in Section 6.7(xx),
which shall be governed by Section 6.7) shall require the approval of two
Representatives of each of the Nonconflicted General Partners. Each General
Partner shall, and shall cause its Affiliates to, take all such actions,
execute all such documents and enter into all such agreements as may be
necessary or appropriate to facilitate or further assure the accomplishment of
this Section.
(b) Each Nonconflicted General Partner, in exercising its control,
power and rights pursuant to this Section, shall act in good faith and in a
manner it believes to be in the best interests of the Partnership; provided
that it shall never be deemed to be in the best interests of the Partnership
not to pay, perform and observe all of the obligations to be paid, performed or
observed by or on the part of the Partnership under the terms of any of the
Other Agreements (as defined in the Amended and Restated Parent Agreement).
Each Nonconflicted General Partner shall act through its Representatives, and
the approval of two Representatives acting for each of the Nonconflicted
General Partners will be sufficient for the Nonconflicted General Partners (and
therefore the Partnership Governance Committee on behalf of the Partnership) to
take any action in respect of the relevant Conflict Circumstance. The
Conflicted General Partner (or its Affiliates) shall have the right to deal
with the Partnership and with each Nonconflicted General Partner on an
arm's-length basis and in a manner it believes to be in its own best interests,
but in any event must deal with them in good faith.
6.9 Auxiliary Committees.
(a) From time to time, the Partnership Governance Committee may,
by Partnership Governance Committee Action, designate one or more committees
("Auxiliary Committees") or disband any Auxiliary Committee. Each Auxiliary
Committee shall (i) operate under the specific authority delegated to it by the
Partnership Governance Committee (consistent with Section 6.7) for the purpose
of assisting the Partnership Governance Committee in managing (on behalf of the
General Partners) the business, property and affairs of the Partnership and
(ii) report to the Partnership Governance Committee.
(b) Each General Partner shall have the right to appoint an equal
number of members on each Auxiliary Committee. Auxiliary Committee members may
(but need not) be members of the Partnership Governance Committee. No
Auxiliary Committee member shall be compensated or reimbursed by the
Partnership for service as a member of such Auxiliary Committee.
(c) Each Partnership Governance Committee Action designating an
Auxiliary Committee shall be in writing and shall set forth (i) the name of
such Auxiliary Committee, (ii) the number of members and (iii) in such detail
as the Partnership Governance Committee deems appropriate, the
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purposes, powers and authorities (consistent with Section 6.7) of such
Auxiliary Committee; provided, however, that in no event shall any Auxiliary
Committee have any powers or authority in reference to amending this Agreement,
adopting an agreement of merger, consolidation or conversion of the
Partnership, authorizing the sale, lease or exchange of all or substantially
all of the property and assets of the Partnership, authorizing a dissolution of
the Partnership or declaring a distribution. Each Auxiliary Committee shall
keep regular minutes of its meetings and promptly deliver the same to the
Partnership Governance Committee.
6.10 Certain Limitations on Partner Representatives. No
Representative or Alternate of a Partner who, as an officer, director or
employee of such Partner or any of its Affiliates, participates in material
operational decisions by such Partner or Affiliate regarding a business or
operation of such Partner or Affiliate that competes with a business or
operation of the Partnership or of the other Partner or its Affiliates, or that
competes with a Business Opportunity offered pursuant to Section 9.3(c) or (d),
shall receive or have access to any competitively sensitive information
regarding the competing business of the Partnership or of the other Partner or
its Affiliates or such Business Opportunity, nor shall such Representative or
Affiliate participate in any decision of the Partnership Governance Committee
relating to such business or operation of the Partnership or the other Partner
or its Affiliates or such Business Opportunity.
SECTION 7
OFFICERS AND EMPLOYEES
7.1 Partnership Officers.
(a) The Partnership Governance Committee may select natural
persons who are (or upon becoming an officer will be) agents or employees of
the Partnership to be designated as officers of the Partnership, with such
titles as the Partnership Governance Committee shall determine.
(b) The executive officers of the Partnership shall consist of a
Chief Executive Officer ("CEO"), and others as determined from time to time by
Partnership Governance Committee (collectively, the "Executive Officers").
(c) The Partnership Governance Committee also shall appoint a
Secretary and may appoint such other officers and assistant officers and agents
as may be deemed necessary or desirable and such persons shall perform such
duties in the management of the Partnership as may be provided in this
Agreement or as may be determined by Partnership Governance Committee Action.
(d) The Partnership Governance Committee may leave unfilled any
offices except those of CEO and Secretary. Two or more offices may be held by
the same person except that the same person may not hold the offices of CEO and
Secretary.
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7.2 Selection and Term of Executive Officers.
(a) The Executive Officers as of the date of this Agreement are
listed on Appendix C.
(b) The CEO shall hold office for a five-year term, subject to the
CEO's earlier death, resignation or removal. Upon the expiration of such term
or earlier vacancy, Lyondell GP shall designate the CEO, provided that such
person shall be reasonably acceptable to both of Millennium GP and Occidental
GP. The CEO shall not be required to be an employee of the Partnership.
(c) Each Executive Officer (other than the CEO) shall hold office
until his or her death, resignation or removal. Upon the death, resignation or
removal of an Executive Officer, or the creation of a new Executive Officer
position, the CEO may nominate a person to fill the vacancy, which shall be
subject to Partnership Governance Committee approval. Executive Officers shall
not be required to be employees of the Partnership. Any Executive Officer also
may serve as an officer or employee of any Partner or Affiliate of a Partner.
7.3 Removal of Executive Officers.
(a) The CEO may be removed, at any time, by Partnership Governance
Committee Action taken pursuant to Section 6.6, with or without cause, whenever
in the judgment of the Partnership Governance Committee the best interests of
the Partnership would be served thereby.
(b) Any Executive Officer (other than the CEO), or any other
officer or agent may be removed, at any time, by Partnership Governance
Committee Action taken pursuant to Section 6.7(xii), with or without cause,
upon the recommendation of the CEO, whenever in the judgment of the Partnership
Governance Committee the best interests of the Partnership would be served
thereby.
(c) Notwithstanding anything to the contrary in Sections 6.7(xii),
7.3(a) and 7.3(b), any General Partner may, by action of two or more of its
Representatives, remove from office any Executive Officer who takes or causes
the Partnership to take any action described in Section 6.7 that has not been
approved by two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP as contemplated by Section 6.7. Any such removal shall be effected by
delivery by such Representatives of written notice of such removal (i) to such
Executive Officer and (ii) to the Representatives of the other General
Partners; provided that such removal shall not be effective if such action is
rescinded or cured (to the reasonable satisfaction of the General Partner who
has delivered such notice) promptly after such notice is delivered.
7.4 Duties.
(a) Each officer or employee of the Partnership shall owe to the
Partnership, but not to any Partner, all such duties (fiduciary or otherwise)
as are imposed upon such an officer or employee of a Delaware corporation.
Without limitation of the foregoing, each officer and employee in any dealings
with a Partner shall have a duty to act in good faith and to deal fairly;
provided, that, no
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officer shall be liable to the Partnership or to any Partner for his or her
good faith reliance on the provisions of this Agreement. Notwithstanding the
foregoing, it is understood that any officer or employee of the Partnership who
is also a Representative of a General Partner shall, in his capacity as a
Representative, owe no duty (fiduciary or otherwise) to any Person other than
such General Partner.
(b) The policies and procedures of the Partnership adopted by the
Partnership Governance Committee may set forth the powers and duties of the
officers of the Partnership to the extent not set forth in or inconsistent with
this Agreement. The officers of the Partnership shall have such powers and
duties, except as modified by the Partnership Governance Committee, as
generally pertain to their respective offices in the case of a publicly held
Delaware corporation, as well as other such powers and duties as from time to
time may be conferred by the Partnership Governance Committee and by this
Agreement. The CEO and the other officers and employees of the Partnership
shall develop and implement management and other policies and procedures
consistent with this Agreement and the general policies and procedures
established by the Partnership Governance Committee.
(c) Notwithstanding any other provision of this Agreement, no
Partner, Representative, officer, employee or agent of the Partnership shall
have the power or authority, without specific authorization from the
Partnership Governance Committee, to undertake any of the following:
(i) to do any act which contravenes (or otherwise is
inconsistent with) this Agreement or which would make
it impracticable or impossible to carry on the
Partnership's business;
(ii) to confess a judgment against the Partnership;
(iii) to possess Partnership property other than in the
ordinary conduct of the Partnership's business; or
(iv) to take, or cause to be taken, any of the actions
described in Section 6.7.
7.5 CEO. Subject to the terms of this Agreement, the CEO shall
have general authority and discretion comparable to that of a chief executive
officer of a publicly held Delaware corporation of similar size to direct and
control the business and affairs of the Partnership, including without
limitation its day-to-day operations in a manner consistent with the Annual
Budget and the most recently approved Strategic Plan. The CEO shall take steps
to implement all orders and resolutions of the Partnership Governance Committee
or, as applicable, any Auxiliary Committee. The CEO shall be authorized to
execute and deliver, in the name and on behalf of the Partnership, (i)
contracts or other instruments authorized by Partnership Governance Committee
Action and (ii) contracts or instruments in the usual and regular course of
business (not otherwise requiring Partnership Governance Committee Action),
except in cases when the execution and delivery thereof shall be expressly
delegated by the Partnership Governance Committee to some other officer or
agent of the Partnership, and, in general, shall perform all duties incident to
the office of CEO as well as such other duties as from time to time may be
assigned to him or her by the Partnership Governance Committee or as are
prescribed by this Agreement.
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7.6 Other Officers. The President (if any) and the Vice
Presidents shall perform such duties as may, from time to time, be assigned to
them by the Partnership Governance Committee or by the CEO. In addition, at
the request of the CEO, or in the absence or disability of the CEO, the
President (if any) or any Vice President, in any order determined by the
Partnership Governance Committee, temporarily shall perform all (or if limited
through the scope of the delegation, some of) the duties of the CEO, and, when
so acting, shall have all the powers of, and be subject to all restrictions
upon, the CEO.
7.7 Secretary. The Secretary shall keep the minutes of all
meetings (and copies of written records of action taken without a meeting) of
the Partnership Governance Committee in minute books provided for such purpose
and shall see that all notices are duly given in accordance with the provisions
of this Agreement. The Secretary shall be the custodian of the records and of
the seal, if any. The Secretary shall have general charge of books and papers
of the Partnership as the Partnership Governance Committee may direct and, in
general, shall perform all duties and exercise all powers incident to the
office of Secretary and such other duties and powers as the Partnership
Governance Committee or the CEO from time to time may assign to or confer upon
the Secretary.
7.8 Salaries. Salaries or other compensation of the other
Executive Officers of the Partnership shall be established by the CEO
consistent with plans approved by the Partnership Governance Committee. Except
as approved by the Partnership Governance Committee, all fees and compensation
of the officers and employees of the Partnership other than the CEO with
respect to their services as such officers and employees shall be payable
solely by the Partnership and no Partner or its Affiliates shall pay (or offer
to pay) any such fees or compensation to any officer or employee, except to the
extent that the Partnership shall have agreed with a Partner or one of its
Affiliates pursuant to a separate agreement that a portion of the compensation
of such officer or employee shall be paid by such Partner or Affiliate.
7.9 Delegation. The Partnership Governance Committee may delegate
temporarily the powers and duties of any officer of the Partnership, in case of
absence or for any other reason, to any other officer of the Partnership, and
may authorize the delegation by any officer of the Partnership of any of such
officer's powers and duties to any other officer or employee of the
Partnership, subject to the general supervision of such officer.
7.10 Employee Hirings. Without the prior approval of the two other
General Partners, which approval shall not be unreasonably withheld, a General
Partner (or its Affiliates) shall not be entitled to hire employees of the
Partnership who at the time of such employment are eligible to participate in
the incentive compensation programs available to senior managers or executives
or to hire specific individuals who had been employed by the Partnership within
the previous year and who prior to the termination of their employment were
eligible to participate in the incentive compensation programs available to
senior managers or executives. Without the prior approval of the relevant
General Partner, which approval shall not be unreasonably withheld, the
Partnership shall not be entitled to hire employees of such General Partner (or
its Affiliates) who at the time of such employment are eligible to participate
in the incentive compensation programs available to senior managers or
executives or to hire specific individuals who had been employed by such
General Partner (or its Affiliates) within the previous year and who prior to
the termination of their
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employment were eligible to participate in the incentive compensation programs
available to senior managers or executives.
7.11 General Authority. Persons dealing with the Partnership are
entitled to rely conclusively on the power and authority of each of the
officers as set forth in this Agreement. In no event shall any Person dealing
with any officer with respect to any business or property of the Partnership be
obligated to ascertain that the terms of this Agreement have been complied
with, or be obligated to inquire into the necessity or expedience of any act or
action of the officer; and every contract, agreement, deed, mortgage, security
agreement, promissory note or other instrument or document executed by the
officer with respect to any business or property of the Partnership shall be
conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and/or delivery
thereof, this Agreement was in full force and effect, (ii) the instrument or
document was duly executed in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership, and (iii) the officer was duly
authorized and empowered to execute and deliver any and every such instrument
or document for and on behalf of the Partnership.
SECTION 8
STRATEGIC PLANS, ANNUAL BUDGETS AND LOANS
8.1 Strategic Plan.
(a) The Partnership shall be managed in accordance with a
five-year strategic business plan (the "Strategic Plan") which shall be updated
annually under the direction of the CEO and presented for approval by the
Partnership Governance Committee pursuant to Section 6.7 no later than 90 days
prior to the start of the first fiscal year covered by the updated plan.
(b) The Strategic Plan shall establish the strategic direction of
the Partnership, including plans relating to capital maintenance and
enhancement, geographic expansion, acquisitions and dispositions, new product
lines, technology, long-term supply and customer arrangements, internal and
external financing, environmental and legal compliance, and plans, programs and
policies relating to compensation and industrial relations. The Strategic Plan
shall include projected income statements, balance sheets and cash flow
statements, including the expected timing and amounts of capital contributions
and cash distributions. The format and level of detail of each Strategic Plan
shall be consistent with that of the initial Strategic Plan agreed to by the
Initial Partners on or prior to the Initial Closing Date or the Strategic Plan
most recently approved pursuant to Section 6.7.
8.2 Annual Budget.
(a) The Executive Officers of the Partnership shall prepare an
Annual Budget (each, an "Annual Budget") for each fiscal year, including an
Operating Budget and Capital Expenditure Budget; provided that each Annual
Budget shall be consistent with the information for such fiscal year included
in the Strategic Plan most recently approved pursuant to Section 6.7; and
provided, further, that unless provided otherwise in the most recently approved
Strategic Plan, the Annual
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Budget (including any Annual Budget prepared under Section 8.2(b)) shall
utilize a format and provide a level of detail consistent with the
Partnership's initial Annual Budget. The Annual Budget for each year shall be
submitted to the Partnership Governance Committee for approval at least 60 days
prior to the start of the fiscal year covered by such budget. Each Annual
Budget shall incorporate (i) a projected income statement, balance sheet and a
cash flow statement, (ii) the amount of any corresponding cash deficiency or
surplus and (iii) the estimated amount, if any, and expected timing for all
required capital contributions. Each proposed Annual Budget shall be prepared
on a basis consistent with the Partnership's financial statements.
(b) If for any fiscal year the Partnership Governance Committee
has failed to approve an updated Strategic Plan, then, subject to Section 8.5,
for such year and each subsequent year prior to approval of an updated
Strategic Plan, the Executive Officers of the Partnership shall prepare (and
promptly furnish to the Partnership Governance Committee) the Annual Budget
consistent with the projections and other information for that year included in
the Strategic Plan most recently approved pursuant to Section 6.7; provided,
however, that the CEO, acting in good faith, shall be entitled to modify any
such Annual Budget in order to satisfy current contractual and compliance
obligations and to account for other changes in circumstances resulting from
the passage of time or the occurrence of events beyond the control of the
Partnership; provided, further, that the CEO shall not be authorized to cause
the Partnership to proceed with capital expenditures to accomplish capital
enhancement projects except to the extent that such expenditures would enable
the Partnership to continue or complete any such capital project reflected in
the last Strategic Plan that was approved by the Partnership Governance
Committee pursuant to Section 6.7.
(c) Each "Operating Budget" shall constitute an estimate for each
applicable period of all operating income, which shall include expenses
required to maintain, repair and restore to good and usable condition the
Partnership's assets.
(d) Each "Capital Expenditure Budget" shall constitute an estimate
for the applicable period of the capital expenditures required to (i)
accomplish capital enhancement projects included in the most recently approved
Strategic Plan, (ii) maintain and preserve the Partnership's assets in good
operating condition and repair and (iii) achieve or maintain compliance with
any HSE Law.
8.3 Funding of Partnership Expenses. All Partnership expenses
(both operating and capital expenses), regardless of whether included in any
Strategic Plan or Annual Budget, shall be funded from operating cash flows or
authorized borrowings under available lines of credit, unless otherwise agreed
by the Partnership Governance Committee. Subject to the limitations of
Sections 2.4 and 6.7(v), if applicable, to the extent that the CEO determines
at any time that funds are needed to fund Partnership operations, the CEO may
issue a Funding Notice to the Limited Partners calling for an additional
capital contribution. The Limited Partners will take all steps necessary to
cause compliance with such Funding Notice.
8.4 Implementation of Budgets and Discretionary Expenditures by
CEO.
(a) After a Strategic Plan and an Annual Budget have been approved
by the Partnership Governance Committee (or an Annual Budget has been developed
in accordance with Section
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8.2(b)), the CEO will be authorized, without further action by the Partnership
Governance Committee, to cause the Partnership to make expenditures consistent
with such Strategic Plan and Annual Budget; provided, however, that all
internal control policies and procedures, including those regarding the
required authority for certain expenditures, shall have been followed.
(b) In any emergency, the CEO or the CEO's designee shall be
authorized to take such actions and to make such expenditures as may be
reasonably necessary to react to the emergency, regardless of whether such
expenditures have been included in an approved Strategic Plan or Annual Budget.
Promptly after learning of an emergency, the CEO or such designee shall notify
the Representatives of the nature of the emergency and the response that has
been made, or is committed or proposed to be made, with respect to the
emergency.
8.5 Strategic Plan Deadlock. If the Partnership Governance
Committee has not agreed upon and approved an updated Strategic Plan, as
contemplated by Sections 6.7 and 8.1, by such date as is 12 months after the
beginning of the first fiscal year that would have been covered by such plan,
then the General Partners shall submit their disagreements to non-binding
mediation by a Neutral. If the General Partners are unable to agree upon a
mutually acceptable Neutral within 30 days after a nomination of a Neutral is
made by one General Partner to the other General Partners, then such Neutral
shall upon the application of any General Partner be appointed within 70 days
of such nomination by the Center for Public Resources, or if such appointment
is not so made promptly then promptly thereafter by the American Arbitration
Association in Philadelphia, Pennsylvania, or if such appointment is not so
made promptly then promptly thereafter by the senior United States District
Court judge sitting in Wilmington, Delaware. The fees of the Neutral shall be
paid equally by the General Partners. Within 20 days of selection of the
Neutral, two persons having decision-making authority on behalf of each General
Partner shall meet with the Neutral and agree upon procedures and a schedule
for attempting to resolve the differences between the General Partners. They
shall continue to meet thereafter on a regular basis until (i) agreement is
reached by the General Partners (acting through their Representatives) on an
updated Strategic Plan or (ii) at least 24 months have elapsed since the
beginning of the first fiscal year that was to be covered by the first updated
plan for which agreement was not reached and one General Partner shall
determine and notify the other General Partners and the Neutral in writing (a
"Deadlock Notice") that no agreement resolving the dispute is likely to be
reached.
8.6 Loans.
(a) 1998 Credit Facility. Each General Partner agrees that it
will use its reasonable best efforts to cause the Partnership to enter into a
credit facility or facilities (whether one or more, the "1998 Credit
Facility") on or prior to December 15, 1998, which 1998 Credit Facility would
allow the Partnership to borrow at least $500 million aggregate principal
amount (inclusive of the Bank Credit Agreement Repayment Amount but exclusive
of any other portion of the 1998 Credit Facility which may be dedicated to the
satisfaction of working capital needs or used for refinancing any indebtedness
of the Partnership existing at such time) thereunder, notwithstanding the
amount ($1.25 billion) that may be borrowed by the Partnership under its bank
credit facility in existence as of the date of this Agreement. Each General
Partner further agrees to cause the Partnership to draw down the Bank Credit
Agreement Repayment Amount under the 1998 Credit Facility and to apply the Bank
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Credit Agreement Repayment Amount to the repayment of any principal amount
outstanding under the Bank Credit Agreement on or prior to December 15, 1998,
and two Business Days after such repayment to cause the Partnership to draw
down $419,700,000 under the Bank Credit Agreement for distribution to
Occidental LP2 as provided in Section 3.1(g).
(b) Other Loans. The Partnership Governance Committee may by
Partnership Governance Committee Action authorize the CEO to cause the
Partnership to borrow funds from third party lenders. No Partner shall be
required, and the Partnership Governance Committee shall not be authorized to
require any Partner, to guarantee or to provide other credit or financial
support for any loan. Any Partner may, at its sole discretion, guarantee or
provide other credit or financial support for all or any portion of any debt,
including any refinancing of the Bank Credit Agreement or any uncommitted lines
of credit of the Partnership, for such period of time and on such other terms
as the Partner shall determine.
(c) Millennium Guarantee. Millennium America, an Affiliate of
Millennium GP and Millennium LP, issued a full and unconditional guarantee (the
"Millennium America Guarantee") in respect of $750 million of principal owed by
the Partnership pursuant to the Bank Credit Agreement, together with interest
thereon, as set forth in the Bank Credit Agreement. Millennium America (or its
successors or assigns) shall maintain the Millennium America Guarantee in full
force and effect in respect of $750 million of principal, together with
interest thereon, under the Bank Credit Agreement or any refinancings thereof
(including, without limitation, any further refinancings of such refinancings)
indefinitely; provided, however, that Millennium America may terminate the
Millennium America Guarantee at any time on or after the seventh anniversary of
the Initial Closing Date if, and only if: (i) the Partnership's ratio of Total
Indebtedness to Total Capitalization is, as of the end of the most recently
completed fiscal quarter of the Partnership lower than such ratio as of
December 31, 1998, (ii) the Partnership's ratio of EBITDA to Net Interest for
the most recent 12 month period is at least 105% of such ratio for the 12 month
period ending December 31, 1998, (iii) the Partnership is not then in default
in the payment of principal of, or interest on, any indebtedness for borrowed
money in excess of $15 million and (iv) the Partnership is not then in default
in respect of any covenants relating to any indebtedness for borrowed money if
the effect of any such default shall be to accelerate, or to permit the holder
or obligee of such indebtedness (or any trustee on behalf of such holder or
obligee) to accelerate (with or without the giving of notice or lapse of time
or both), such indebtedness in an aggregate amount in excess of $50 million;
provided, further, that if Millennium GP and Millennium LP sell all of their
respective interests in the Partnership, or if Millennium Petrochemicals Inc.
sells all of its equity interests in both Millennium GP and Millennium LP, in
each case to an unaffiliated third party (or parties) at any time in accordance
with the terms of this Agreement, Millennium America may terminate the
Millennium America Guarantee if, at the time of such sale or at the time of
such termination, (A) the Partnership has an "investment grade" credit rating
issued by Xxxxx'x Investor Service Inc. or Standard & Poor's Corporation (or,
if the Partnership has no rated indebtedness outstanding at such time,
Millennium America demonstrates to the reasonable satisfaction of the
Partnership that the Partnership could obtain such an "investment grade" credit
rating), or (B) the fair market value of the Partnership's assets is at least
140% of the gross amount of its liabilities. For purposes of this paragraph
(c), "EBITDA" means, with respect to any period, operating income before
interest, taxes, depreciation and amortization, as determined in accordance
with GAAP; "Net Interest" means, with respect to any period, (i) the amount
which,
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in conformity with GAAP, would be set forth opposite the caption "interest
expense" (or any like caption) on a consolidated income statement of the
Partnership and all other Persons with which the Partnership's financial
statements are to be consolidated in accordance with GAAP for the relevant
period ended on such date less (ii) the amount which, in conformity with GAAP,
would be set forth opposite the caption "interest income" (or any like caption)
on such consolidated income statement; "Total Indebtedness" means at the time
of determination all indebtedness of the Partnership and its subsidiaries on a
consolidated basis, as determined in accordance with GAAP; "Total
Capitalization" means, at the time of determination, the sum of Total
Indebtedness plus the partner's equity reflected on a balance sheet of the
Partnership prepared in accordance with GAAP.
SECTION 9
RIGHTS OF PARTNERS
9.1 Delegation and Contracts with Related Parties.
(a) The Partners acknowledge that the General Partners (acting
through the Partnership Governance Committee) are permitted to delegate
responsibility for day-to-day operations of the Partnership to officers and
employees of the Partnership.
(b) Upon receipt of any required approval by the Partnership
Governance Committee (including, as applicable, any approval required by
Section 6.8), all contracts and transactions between the Partnership and a
Partner or its Affiliates shall be deemed to be entered into on an arm's-length
basis and to be subject to ordinary contract and commercial law, without any
other duties or rights being implied by reason of a Partner being a Partner or
by reason of any provision of this Agreement or the existence of the
Partnership.
9.2 General Authority. Persons dealing with the Partnership are
entitled to rely conclusively on the power and authority of each of the General
Partners as set forth in this Agreement. In no event shall any Person dealing
with any General Partner or such General Partner's representatives with respect
to any business or property of the Partnership be obligated to ascertain that
the terms of this Agreement have been complied with, or be obligated to inquire
into the necessity or expedience of any act or action of the General Partner or
the General Partner's representatives; and every contract, agreement, deed,
mortgage, security agreement, promissory note or other instrument or document
executed by the General Partner or the General Partner's representatives with
respect to any business or property of the Partnership shall be conclusive
evidence in favor of any and every Person relying thereon or claiming
thereunder that (i) at the time of the execution and/or delivery thereof, this
Agreement was in full force and effect, (ii) the instrument or document was
duly executed in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership, and (iii) the General Partner or the General
Partner's representative was duly authorized and empowered to execute and
deliver any and every such instrument or document for and on behalf of the
Partnership. Nothing in this Section 9.2 shall be deemed to be a waiver or
release of any General Partner's obligations to the other Partners as set forth
elsewhere in this Agreement.
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9.3 Limitation on Fiduciary Duty; Non-Competition; Right of First
Opportunity.
(a) Each Partner (directly or through its Affiliates) is a
sophisticated party possessing extensive knowledge of and experience relating
to, and is actively engaged in, significant businesses in addition to its
Contributed Businesses, has been represented by legal counsel, is capable of
evaluating and has thoroughly considered the merits, risks and consequences of
the provisions of this Section 9.3 and is agreeing to such provision knowingly
and advisedly. The liability of each of the General Partners (including any
liability of its Affiliates or its and their respective officers, directors,
agents and employees) or of any Limited Partner (including any liability of its
Affiliates or its and their respective officers, agents, directors and
employees), either to the Partnership or to any other Partner, for any act or
omission by such Partner in its capacity as a partner of the Partnership that
is imposed by such Partner's status as a "general partner" or "limited partner"
(as such terms are used in the Act) of a limited partnership is hereby
eliminated, waived and limited to the fullest extent permitted by law;
provided, however, that each General Partner shall at all times owe to the
other General Partners a fiduciary duty in observing the requirement described
in Section 6.7 that two or more Representatives of Lyondell GP, two or more
Representatives of Millennium GP and two or more Representatives of Occidental
GP shall be required to give their approval before the Partnership may
undertake any of the actions listed in Section 6.7. Nothing in this
subsection shall relieve any Partner from liability for any breach of this
Agreement and each General Partner shall at all times owe to the other General
Partners a duty to act in good faith with respect to all matters involving the
Partnership.
(b) Except as set forth in Section 9.3(c), each Partner's
Affiliates shall be free to engage in or possess an interest in any other
business of any type, including any business in direct competition with the
Partnership, and to avail itself of any business opportunity available to it
without having to offer the Partnership or any Partner the opportunity to
participate in such business. Except as set forth in Section 9.3(c), it is
expressly agreed that the legal doctrine of "corporate or business
opportunities" sometimes applied to a Person deemed to be subject to fiduciary
or other similar duties so as to prevent such Persons from engaging in or
enjoying the benefits of certain additional business opportunities shall not be
applied in the case of any investment, acquisition, business, activity or
operation of any Partner's Affiliates.
(c) (i) If a Partner's Affiliate desires to initiate or
pursue an opportunity to undertake, engage in, acquire or invest in a
Related Business by investing in or acquiring a Person whose business
is a Related Business, acquiring assets of a Related Business, or
otherwise engaging in or undertaking a Related Business (a "Business
Opportunity"), such Partner or its Affiliate (such Partner, together
with its Affiliates, being called the "Proposing Partner") shall offer
the Partnership the Business Opportunity on the terms set forth in
Section 9.3(c)(ii).
(ii) When a Proposing Partner offers a Business
Opportunity to the Partnership, the Partnership shall elect to do one
of the following within a reasonably prompt period:
(A) acquire or undertake the Business Opportunity for the
benefit of the Partnership as a whole, at the cost,
expense and benefit of the Partnership; provided,
however, that, if the Partnership ceases to actively
pursue such
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opportunity for any reason, then the Proposing
Partner will be entitled to proceed under clause
(B) below; or
(B) permit the Proposing Partner to acquire or undertake
the Business Opportunity for its own benefit and
account without any duty to the Partnership or the
other Partners with respect thereto; provided,
however, that if the Business Opportunity is in
direct competition with the then existing business of
the Partnership (a "Competing Opportunity"), then the
Proposing Partner and the Partnership shall, if
either so elects, seek to negotiate and implement an
arrangement whereby the Partnership would either (i)
acquire or undertake the Competing Opportunity at the
sole cost, expense and benefit of the Proposing
Partner under a mutually acceptable arrangement
whereby the Competing Opportunity is treated as a
separate business within the Partnership with the
costs, expenses and benefits related thereto being
borne and enjoyed solely by the Proposing Partner, or
(ii) enter into a management agreement with the
Proposing Partner to manage the Competing Opportunity
on behalf of the Proposing Partner on terms and
conditions mutually acceptable to the Proposing
Partner and the Partnership. If the Partnership and
the Proposing Partner do not reach agreement as to
such arrangement, the Proposing Partner may acquire
or undertake the Competing Opportunity for its own
benefit and account without any duty to the
Partnership or the other Partners with respect
thereto.
(d) Notwithstanding the provisions of Section 9.3(c)(ii), (i) if
the Business Opportunity constitutes less than 25% (based on annual revenues
for the most recently completed fiscal year) of an acquisition of or investment
in assets, activities, operations or businesses that is not otherwise a Related
Business, then a Proposing Partner may acquire or invest in such Business
Opportunity without first offering it to the Partnership; provided, that, after
completion of the acquisition or investment thereof, such Proposing Partner
must offer the Business Opportunity to the Partnership pursuant to the terms of
Section 9.3(c)(ii); and if the Partnership elects option (A) of Section
9.3(c)(ii) with respect thereto, the Business Opportunity shall be acquired by
the Partnership at its fair market value as of the date of such acquisition and
(ii) if the Business Opportunity is (A) part of an integrated project, a
substantial element of which is the development, exploration, production and/or
sale of oil or gas reserves and (B) located in a country other than the United
States, Canada or Mexico then such Partner or its Affiliate may acquire or
invest in such Business Opportunity without first offering it to the
Partnership; provided, that subject to any requisite consents and approvals
from third parties or governmental authorities, the Partner or its Affiliate
will use commercially reasonable efforts to include the Partnership to the
maximum extent practicable in such integrated project with respect to the
Business Opportunity portion of the project.
(e) Notwithstanding the provisions of Section 9.3(c), any direct
or indirect expansion by LYONDELL-CITGO Refining Company Ltd. of its aromatics
business shall not be deemed to constitute a Business Opportunity for purposes
of Section 9.3(c).
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(f) If (i) the Partnership is presented with an opportunity to
acquire or undertake a Business Opportunity (other than pursuant to Section
9.3(c)) that it determines not to acquire or undertake and (ii) the
Representatives of one or two General Partners, but not the other General
Partner(s), desire that the Partnership acquire or undertake such Business
Opportunity, then the Partnership shall permit such General Partner(s) and its
or their respective Affiliates to acquire or undertake such Business
Opportunity (or in the event two of the General Partners desire to so
undertake, then, as between those two General Partners and their respective
Affiliates, the Business Opportunity may be pursued or acquired either jointly
or independently and Section 9.3(c)(ii)(B) shall be deemed to be applicable
thereto to the same extent as if such General Partner(s) and its or their
respective Affiliates were a Proposing Partner with respect to such Business
Opportunity.
9.4 Limited Partners.
(a) No Limited Partner shall take part in the management or
control of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise to bind
the Partnership.
(b) Each Limited Partner shall have the rights with respect to the
Partnership's books and records as set forth in Section 5.3.
9.5 Partner Covenants. Each Partner covenants and agrees with the
Partnership and with the other Partners as follows:
(i) It shall not exercise, or purport or attempt to
exercise, its authority to withdraw, retire, resign, or assert that it
has been expelled from the Partnership;
(ii) It shall not do any act that would make it impossible
or impracticable to carry on the Partnership's business; and
(iii) It shall not act or purport or attempt to act in a
manner inconsistent with any act of a General Partner acting pursuant
to the Partnership Governance Committee or in a manner contrary to the
agreements of the Partners set forth in this Agreement;
provided, that, nothing in this Section 9.5 shall be deemed to waive its rights
under Sections 10, 11 or 12.
9.6 Special Purpose Entities. Each Partner covenants and agrees
that (i) its business shall be restricted solely to the holding of its Units
and the doing of things necessary or incidental in connection therewith
(including, without limitation, the exercise of its rights and powers under
this Agreement), and (ii) it shall not own any assets, incur any liabilities or
engage, participate or invest in any business outside the scope of such
business; provided, however, that this Section 9.6 shall not be binding upon
(a) Millennium Petrochemicals Inc., a Virginia corporation, or its successors
by operation of law to the extent that any Units shall be Transferred to it in
accordance with Section 10.6 or (b) at its option, any Wholly Owned Affiliate
of any Partner to whom Units shall be Transferred pursuant to Section 10.6 if,
at the date of such Transfer, such Wholly Owned Affiliate
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shall have a consolidated net worth, as determined in accordance with GAAP, of
at least $50 million. Notwithstanding the foregoing provisions of this Section
9.6, this Section 9.6 shall not prohibit any Partner from incurring debt
payable to its Parent or an Affiliate so long such debt is permitted under
Section 2.4 of the Parent Agreement.
SECTION 10
TRANSFERS AND PLEDGES
10.1 Restrictions on Transfer and Prohibition on Pledge. Except
pursuant to Section 11 or the procedures described below in this Section, a
Partner shall not, in any transaction or series of transactions, directly or
indirectly Transfer all or any part of its Units. A Partner shall not, in any
transaction or series of transactions, directly or indirectly Pledge all or any
part of its Units or its interest in the Partnership. Neither the term
"Transfer" nor the term "Pledge," however, shall include an assignment by a
Partner of such Partner's right to receive distributions from the Partnership
so long as such assignment does not purport to assign any right of such Partner
to participate in or manage the affairs of the Partnership, to receive any
information or accounting of the affairs of the Partnership, or to inspect the
books or records of the Partnership or any other right of a Partner pursuant to
this Agreement or the Act. Any attempt by a Partner to Transfer or Pledge all
or a portion of its Units in violation of this Agreement shall be void ab
initio and shall not be effective to Transfer or Pledge such Units or any
portion thereof. Subject to any applicable restrictions imposed by the
Amended and Restated Parent Agreement, nothing in this Agreement shall prevent
the Transfer or Pledge by the owner thereof of any capital stock, equity
ownership interests or other security of a Partner or any Affiliate of a
Partner.
10.2 Right of First Option.
(a) Except as set forth in Section 10.6, without the consent of
all of the General Partners, no Partner may Transfer less than all of its Units
and no Partner may Transfer its Units for consideration other than cash. Any
Limited Partner (or Limited Partners, if there are Affiliated Limited Partners)
and its (or their) Affiliated General Partner desiring to Transfer all of their
Units (together, the "Selling Partners") shall give written notice (the
"Initial Notice") to the Partnership and the other Partners (the "Offeree
Partners") stating that the Selling Partners desire to Transfer their Units and
stating the cash purchase price and all other terms on which they are willing
to sell (the "Offer Terms"). Delivery of an Initial Notice shall constitute
the irrevocable offer of the Selling Partners to sell their Units to the
Offeree Partners hereunder.
(b) The Offeree Partners shall have the option, exercisable by
delivering written notice (the "Acceptance Notice") of such exercise to the
Selling Partners within 45 days of the date of the Initial Notice, to elect to
purchase all of the Units of the Selling Partners on the Offer Terms described
in the Initial Notice. If all of the Offeree Partners deliver an Acceptance
Notice, then all of the Units shall be transferred to the Offeree Partners on a
pro rata basis (based on the ratio of the number of Units owned by each Offeree
Partner delivering an Acceptance Notice to the number of Units owned by all
Offeree Partners delivering an Acceptance Notice or on any other basis that
shall be mutually agreed upon between the Offeree Partners delivering an
Acceptance Notice). If less than
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all of the Offeree Partners deliver an Acceptance Notice, the Selling Partners
shall give written notice thereof (the "Additional Notice") to the Offeree
Partners electing to purchase, and such Offeree Partners shall have the option,
exercisable by delivery of an Acceptance Notice of such exercise to the Selling
Partners within 15 days of such Additional Notice, to purchase all of the
Units, including the Units it had not previously elected to purchase; provided,
however, that any election by an Offeree Partner not to purchase all such Units
shall be deemed a rescission of such Offeree Partner's original Acceptance
Notice and an election not to purchase any of the Units of the Selling
Partners. The Acceptance Notice shall set a date for closing the purchase,
such date to be not less than 30 nor more than 90 days after delivery of the
Acceptance Notice; provided that such time period shall be subject to extension
as reasonably necessary (up to a maximum of an additional 120 days after such
90 day period) in order to comply with any applicable filing and waiting period
requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act. The
closing shall be held at the Partnership's offices. The purchase price for the
Selling Partners' Units shall be paid in cash delivered at the closing. The
purchase shall be consummated by appropriate and customary documentation
(including the giving of representations and warranties substantially similar
to those set forth in Sections 2.1 through 2.3 of the Second Master Transaction
Agreement).
(c) If none of the Offeree Partners elect to purchase the Selling
Partners' Units within 45 days after the receipt of the Initial Notice, the
Selling Partners shall have a further 180 days during which they may, subject
to Sections 10.2(d) and (e), consummate the sale of their Units to a third
party purchaser at a purchase price and on such other terms that are no more
favorable to such purchaser than the Offer Terms. If the sale is not completed
within such further 180-day period, the Initial Notice shall be deemed to have
expired and a new notice and offer shall be required before the Selling
Partners may make any Transfer of their Units.
(d) Before the Selling Partners may consummate a Transfer of their
Units to a third party in accordance with this Agreement, the Selling Partners
shall demonstrate to the Offeree Partners that the Person willing to serve as
the proposed purchaser's guarantor under the agreement contemplated by Section
10.2(e)(vi) has outstanding indebtedness that is rated investment grade by
Xxxxx'x Investors Service, Inc. and Standard & Poor's Corporation, or if such
Person has no rated indebtedness outstanding, such Person shall provide an
opinion from a nationally recognized investment banking firm that such Person
could be reasonably expected to obtain such ratings.
(e) Notwithstanding the foregoing provisions of this Section 10.2,
a Partner may Transfer its Units (other than pursuant to Section 10.6) only if
all of the following occur:
(i) The Transfer is accomplished in a non-public offering
in compliance with, and exempt from, the registration and
qualification requirements of all federal and state securities laws
and regulations.
(ii) The Transfer does not cause a default under any
material contract to which the Partnership is a party or by which the
Partnership or any of its properties is bound.
(iii) The transferee executes an appropriate agreement to
be bound by this Agreement.
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(iv) The transferor and/or transferee bears all reasonable
costs incurred by the Partnership in connection with the Transfer.
(v) The business and activities of the transferee comply
with Section 9.6.
(vi) The guarantor of the transferee satisfies the
criteria set forth in Section 10.2(d) and delivers an agreement to the
ultimate parent entity of the Offeree Partners and to the Partnership,
substantially in the form of the Amended and Restated Parent
Agreement.
(vii) The proposed transferor is not in default in the
timely performance of any of its material obligations to the
Partnership.
(viii) The provisions of Section 10.3 are satisfied.
10.3 Inclusion of General or Limited Partner Units. No Limited
Partner may Transfer its Units to any Person (other than in accordance with
Section 10.6) unless the Units of its General Partner Affiliate and its Limited
Partner Affiliate or Affiliates (if any) are simultaneously transferred to such
Person or a Wholly Owned Affiliate of such Person. No General Partner may
transfer its Units to any Person (other than a Wholly Owned Affiliate of such
Partner) unless the Units of its Affiliated Limited Partner (or Limited
Partners, if more than one) are simultaneously transferred to such Person or a
Wholly Owned Subsidiary of such Person.
10.4 Rights of Transferee. Upon consummation of a Transfer in
accordance with Section 10.2, the transferee or transferees shall immediately,
and without any further action of any Person, become (i) a Substitute Limited
Partner if and to the extent Limited Partner Units are transferred and (ii) a
Substitute General Partner, if and to the extent General Partner Units are
transferred.
10.5 Effective Date of Transfer. Each Transfer shall become
effective as of the first day of the calendar month following the calendar
month during which the Partnership Governance Committee approves such Transfer
and receives a copy of the instrument of assignment and all such certificates
and documents of the character described in Section 10.2, which the Partnership
Governance Committee may reasonably request.
10.6 Transfer to Wholly Owned Affiliate. Without the need for the
consent of any Person (subject to the provisions contained in this Section
10.6):
(a) any Partner may Transfer its Units to any Wholly Owned
Affiliate of such Partner (other than the Partner that is its Affiliate),
provided the transferee executes an instrument reasonably satisfactory to all
of the General Partners accepting the terms and provisions of this Agreement
(except as may be provided in Section 9.6). Upon consummation of a Transfer in
accordance with this Section 10.6(a), the transferee shall immediately, and
without any further action of any Person, become (i) a Substitute Limited
Partner if and to the extent Limited Partner Units are transferred and (ii) a
Substitute General Partner, if and to the extent General Partner Units are
transferred; and
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(b) any Limited Partner may, at its option and at any time, (i)
Transfer up to 99% of its Limited Partner Units to its Affiliated General
Partner, whereupon such Limited Partner Units shall, without any further
action, become General Partner Units or (ii) Transfer all of the Limited
Partner Units held by such Limited Partner to its Affiliated Limited Partner.
Promptly following any Transfer of Limited Partner Units in accordance with
this Section 10.6(b), each Partner shall take such actions and execute such
instruments or documents (including, without limitation, amendments to this
Agreement or supplemental agreements hereto) as may be reasonably necessary to
ensure that each Affiliated Partner Group shall, taken as a whole and following
such Transfer, maintain all of its rights under this Agreement as in effect
immediately prior to such Transfer (including, without limitation, the portion
of Available Net Operating Cash distributable to such Affiliated Partner
Group).
10.7 Invalid Transfer. No Transfer of Units which is in violation
of this Section 10 shall be valid or effective, and the Partnership shall not
recognize the same for the purposes of making any allocation or distribution.
SECTION 11
DEFAULT
11.1 Default.
(a) Each of the following events shall constitute a "Default" and
create the rights provided for in this Section 11 in favor of the Partnership
and the Non-Defaulting Partners against the Defaulting Partners:
(i) the failure by a Partner to make any contribution to
the Partnership as required pursuant to this Agreement (other than
pursuant to the Contribution Agreement), which failure continues for
at least five Business Days from the date that the Partner is notified
such contribution is overdue;
(ii) in the case of each of Lyondell GP and Lyondell LP,
the failure to pay principal, when due, on the Lyondell Note, which
failure continues for at least five Business Days from the date such
payment is due; or
(iii) the withdrawal, retirement, resignation or
dissolution of a Partner (other than in connection with a Transfer of
all of a Partner's Units in accordance with this Agreement); or the
Bankruptcy of a Partner or its Guarantor.
(b) The day upon which the Default commences or occurs (or if the
Default is subject to a cure period and is not timely cured, then the day
following the end of the applicable cure period) shall be the "Default Date."
Without prejudice to a Partner's (or any of its Affiliates') rights to seek
temporary or preliminary judicial relief, prior to any such Default Date all
rights and obligations of the Partners under this Agreement shall remain in
full force and effect.
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11.2 Remedies for Default. Provided that there shall be no
duplication of remedies, without prejudice to any right to pursue independently
and at any time, including simultaneously, any other remedy it may have under
law, including the right to seek to recover Damages, or equity, each
Non-Defaulting Affiliated Partner Group in its sole discretion may elect to
pursue the following remedies:
(a) At any time prior to the expiration of 60 days from the
Default Date, each Non-Defaulting Affiliated Partner Group may elect to
purchase its pro rata share (based on the ratio of the number of Units owned by
such Partners to the number of Units owned by all Non-Defaulting Partners
electing to purchase) of the Units of the Defaulting Partners as described in
Section 11.3; provided, however, that within 10 days after the determination of
the Fair Market Value, either Non-Defaulting Affiliated Partner Group may
withdraw its election. If a Non-Defaulting Affiliated Partner Group withdraws
its election to purchase after the determination of Fair Market Value, and the
other Non- Defaulting Affiliated Partner Group has elected and not so
withdrawn, the withdrawing Affiliated Partner Group shall provide notice within
5 days of its withdrawal to such other Affiliated Partner Group. At any time
prior to the expiration of 10 days from receipt of such notice, the Affiliated
Partner Group receiving such notice may elect to purchase the Units as to which
the election to purchase has been withdrawn. If on the later to occur of (i) a
Non-Defaulting Affiliated Partner Group's withdrawal of its election to
purchase or (ii) the expiration of 10 days from receipt of the notice provided
for in the foregoing sentence, no election to purchase is in effect with
respect to all of the Units of the Defaulting Partners, then each
Non-Defaulting Partner Affiliated Partner Group shall have an additional 30
days from such time to elect an alternative remedy under Section 11.2(b) below;
and
(b) At any time prior to the expiration of 60 days from the
Default Date (or if any Non-Defaulting Affiliated Partner Group initially
elected to pursue its remedy under Section 11.2(a) above and no elections to
purchase all Units of the Defaulting Partners are made and not withdrawn, at
any time within the 30 days following the last applicable waiting period under
Section 11.2(a)), any Non-Defaulting Affiliated Partner Group may elect to
effect a liquidation of the Partnership under Section 11.4 and thereby cause
the Partnership to dissolve under Section 12.1(iv).
11.3 Purchase of Defaulting Partners' Units.
(a) Upon any election pursuant to Section 11.2(a), the purchase
price that such Non-Defaulting Partners shall pay, in the aggregate, to the
Defaulting Partners for their Units shall be an amount equal to (i) the amount
that the Defaulting Partners would receive in a liquidation (assuming that any
sale under Section 12.2 were for an amount equal to the Fair Market Value,
without giving effect to any Damages) reduced by (ii) the unrecovered Damages
attributable to the Default by the Defaulting Partners.
(b) If the Non-Defaulting Partners have a right to purchase the
Units of the Defaulting Partners, any Non-Defaulting Partner may first seek a
determination of Fair Market Value by delivering notice in writing to the
Defaulting Partners. Each such Non-Defaulting Affiliated Partner Group shall
have 10 days from the final determination of Fair Market Value (or if
purchasing pursuant to the withdrawal of election to purchase, 10 days from
receipt of notice as provided in
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Section 11.2(b)) to elect to purchase its share of the Defaulting Partner Units
by delivering notice of such election in writing, and the purchase shall be
consummated prior to the expiration of 60 days from the date such notice is
delivered; provided that, such time period shall be subject to extension as
reasonably necessary (up to a maximum of an additional 120 days after such 60
day period) in order to comply with any applicable filing and waiting period
requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act.
(c) The purchase price so determined shall be payable in cash at a
closing held at the Partnership's offices. The purchase shall be consummated
by appropriate and customary documentation (including the giving of
representations and warranties substantially similar to those set forth in
Sections 2.1 through 2.4 of the Second Master Transaction Agreement) as soon as
practicable and in any event within the applicable time period specified in
subsection (b).
(d) The Non-Defaulting Partners may assign, in whole or in part,
their right to purchase the Units of the Defaulting Partners to one or more
third parties without the consent of any Partner hereunder.
(e) If Units are transferred in accordance with this Section 11.3,
whether to the Non-Defaulting Partners or a third party (under subsection (d)
above), upon the consummation of such Transfer, each such transferee shall
immediately, and without any further action on the part of any Person, become
(i) a Substitute Limited Partner if and to the extent that Limited Partner
Units were transferred to such Person and (ii) a Substitute General Partner if
and to the extent that General Partner Units were transferred to such Person.
11.4 Liquidation. Upon any election pursuant to Section 11.2(b),
any Non-Defaulting Partner shall have the right to elect to dissolve and
liquidate the Partnership pursuant to the procedures in Section 12.1(iv) (such
procedures constituting a "Liquidation"); provided, however, that any amount
payable to the Defaulting Partners in such Liquidation pursuant to Section 12.2
shall be reduced by, without duplication, any unrecovered Damages incurred by
the Non-Defaulting Partners and the Non-Defaulting Partners' Percentage
Interest of any unrecovered Damages incurred by the Partnership in connection
with the Default. The Non-Defaulting Partner shall deliver notice of such
election to dissolve and liquidate in writing to the Partnership and the other
Partners.
11.5 Certain Consequences of Default. Notwithstanding any other
provision of this Agreement, commencing on the Default Date and (i) prior to
the Non-Defaulting Partners' collection of Damages through the exercise of its
legal remedies or otherwise, or (ii) while the Non-Defaulting Partners are
pursuing their remedies under Section 11.2(a) or (b), the Representatives of
the Defaulting General Partner shall not have any voting or decisional rights
with respect to matters requiring Partnership Governance Committee Action, and
such matters shall be determined solely by the Representatives of the
Non-Defaulting General Partners; provided, however, that the foregoing loss of
voting and decisional rights shall not occur as a result of a Default caused
solely by the Bankruptcy of a Partner or a Guarantor described in Section
11.1(a)(iii); and provided further, that in the case of a Default under Section
11.1(a)(i) or (ii), the foregoing loss of voting and decisional rights shall
not apply to those voting and decisional rights contained in Sections 6.7(i),
(x), (xvi) or (xviii) of this Agreement, which rights shall continue in full
force and effect at all times.
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SECTION 12
DISSOLUTION, LIQUIDATION AND TERMINATION
12.1 Dissolution and Termination. As long as there is at least one
other General Partner (who is hereby authorized in such event to conduct the
business of the Partnership without dissolution), the withdrawal, retirement,
resignation, dissolution or Bankruptcy of a General Partner shall not dissolve
the Partnership, but rather shall be a Default covered by Section 11. The
Partnership shall be dissolved upon the happening of any one of the following
events:
(i) the written determination of all General Partners to
dissolve the Partnership;
(ii) the entry of a judicial decree of dissolution;
(iii) any other act or event which results in the
dissolution of a limited partnership under the Act (except as provided
in the first sentence of this Section 12.1);
(iv) the election of a Non-Defaulting Affiliated Partner
Group to effect a dissolution of the Partnership under Section 11.4;
or
(v) after the delivery of a Deadlock Notice by a General
Partner pursuant to Section 8.5, the written determination by any
General Partner to dissolve the Partnership.
12.2 Procedures Upon Dissolution.
(a) General. If the Partnership dissolves, it shall commence
winding up pursuant to the appropriate provisions of the Act and the procedures
set forth in this Section 12. Notwithstanding the dissolution of the
Partnership, prior to the termination of the Partnership, the business of the
Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement.
(b) Control of Winding Up. The winding up of the Partnership
shall be conducted under the direction of the Partnership Governance Committee;
provided, however, that if the dissolution is caused by entry of a decree of
judicial dissolution, the winding up shall be carried out in accordance with
such decree.
(c) Manner of Winding Up. Unless the provisions of Section
12.2(e) apply, the Partnership shall attempt to sell all property and apply the
proceeds therefrom in accordance with this Section 12.2(c) and Section 12.2(d)
below. Upon dissolution of the Partnership, the Partnership Governance
Committee shall determine the time, manner and terms of any sale or sales of
Partnership property pursuant to such winding up, consistent with its duties
and having due regard to the activity and condition of the relevant market and
general financial and economic conditions. Except as otherwise agreed by the
Partners, no distributions will be made in kind to any Partner without the
consent of each Partner.
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(d) Application of Assets. In the case of a dissolution and
winding-up of the Partnership, the Partnership's assets shall be applied as
follows:
(i) First, to satisfaction of the liabilities of the
Partnership owing to creditors (including Partners and Affiliates of
Partners who are creditors), whether by payment or reasonable
provision for payment. Any reserves created to make any such
provision for payment may be paid over by the Partnership to an
independent escrow holder or trustee, to be held in escrow or trust
for the purpose of paying any such contingent, conditional or
unmatured liabilities or obligations, and, at the expiration of such
period as the Partnership Governance Committee may deem advisable,
such reserves shall be distributed to the Partners or their assigns in
the manner set forth in subsection (d)(ii) below.
(ii) Second, after all allocations of Profits or Losses
and other items pursuant to Section 4, to the Partners in accordance
with the balances in their Capital Accounts. Any Partner that then
has a deficit in its Capital Account shall contribute cash in the
amount necessary to eliminate such deficit. Such contributions shall
be made within 90 days after the date in which all undistributed
assets of the Partnership have been converted to cash.
(iii) Notwithstanding the foregoing, if any Partner shall
be indebted to the Partnership, then until payment in full of the
principal of and accrued but unpaid interest on such indebtedness,
regardless of the stated maturity or maturities thereof, the
Partnership shall retain such Partner's distributive share of
Partnership property and apply such sums to the liquidation of such
indebtedness and the cost of operation of such Partnership property
during the period of such liquidation.
(e) Division of Assets upon Deadlock. If dissolution occurs
pursuant to Section 12.1(v), then the provisions of this Section 12.2(e) shall,
if elected by any Partner, apply in lieu of the provisions of Section 12.2(c),
but subject to the provisions of Section 12.2(d)(ii). In such event, the
Partnership properties shall be divided and distributed in kind to the Partners
in accordance with the provisions of Appendix E.
12.3 Termination of the Partnership. Upon the completion of the
liquidation of the Partnership and the distribution of all Partnership assets,
the Partnership's affairs shall terminate and the Partnership shall cause to be
executed and filed a Certificate of Cancellation of the Partnership's
Certificate of Limited Partnership pursuant to the Act, as well as any and all
other documents required to effectuate the termination of the Partnership.
12.4 Asset and Liability Statement. Within a reasonable time
following the completion of the winding-up and liquidation of the Partnership's
business, the Partnership Governance Committee shall supply to each of the
Partners a statement (which may be unaudited) which shall set forth the assets
and the liabilities of the Partnership as of the date of complete liquidation,
and each Partner's pro rata portion of distributions pursuant to Section 12.2.
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SECTION 13
MISCELLANEOUS
13.1 Confidentiality and Use of Information.
(a) Except as provided in subsection (c) or (d) hereof, each
Partner shall, and shall cause each of its Affiliates and its and their
respective partners, shareholders, directors, officers, employees and agents
(collectively, "Related Persons") to, keep secret, retain in strictest
confidence, and not distribute, disseminate or disclose any and all
Confidential Information except to (i) the Partnership and its officers and
employees, (ii) any lender to the Partnership or (iii) any Partner or any of
their respective Affiliates or other Related Persons on a "need to know" basis
in connection with the transactions leading up to and contemplated by this
Agreement and the operation of the Partnership, and such Partner disclosing
Confidential Information pursuant to this Section 13.1(a) shall use, and shall
cause its Affiliates and other Related Persons to use, such Confidential
Information only for the benefit of the Partnership in conducting the
Partnership's business or for any other specific purposes for which it was
disclosed to such party; provided that the disclosure of financial statements
of, or other information relating to the Partnership shall not be deemed to be
the disclosure of Confidential Information (y) to the extent that any Partner
(or its ultimate parent entity) deems it necessary, appropriate or customary
pursuant to law, regulation or stock exchange rule (in the reasonable good
faith judgment of such parent entity) to disclose such information in or in
connection with filings with the SEC, press releases disseminated to the
financial community, presentations to lenders, presentations to ratings
agencies or information disclosed to similar audiences or (z) to the extent
that in order to sustain a position taken for tax purposes, any Partner deems
it necessary and appropriate to disclose such financial statements or other
information. All Confidential Information disclosed in connection with the
Partnership or pursuant to this Agreement shall remain the property of the
Person whose property it was prior to such disclosure unless such property has
been transferred to the Partnership pursuant to a Contribution Agreement.
(b) No Confidential Information regarding the plans or
operations of any Partner or any Affiliate thereof received or acquired by or
disclosed to any unaffiliated Partner or Affiliate thereof in the course of the
conduct of Partnership business, or otherwise as a result of the existence of
the Partnership, may be used by such unaffiliated Partner or Affiliate thereof
for any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas unrelated to
the business of the Partnership in which any other Partner and their respective
Affiliates compete.
(c) In the event that any Partner is legally required (by
interrogatories, discovery requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, it is agreed that such Partner prior to disclosure will provide
the Partnership Governance Committee (and, if such Confidential Information
concerns another Partner, such Partner) with prompt notice of such request(s)
so that the Partnership Governance Committee (or such other Partner) may seek
an appropriate protective order or other appropriate remedy and/or waive the
Partner's compliance with the provisions of this Section. In the event that
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such protective order or other remedy is not obtained, or that the Partnership
Governance Committee (and, if such Confidential Information concerns another
Partner, such Partner) grants a waiver hereunder, the Partner required to
furnish Confidential Information may furnish that portion (and only that
portion) of the Confidential Information which, in the opinion of such
Partner's counsel, such Partner is legally compelled to disclose, and such
Partner will exercise its commercially reasonable best efforts to obtain
reliable assurance that confidential treatment will be accorded any
Confidential Information so furnished.
(d) Any Partner may disclose Confidential Information to
a third party who requires such Confidential Information for the purpose of
evaluating a possible purchase of such Partner's Units in accordance with
Section 10; provided, however, that such third party shall be informed by such
Partner of the confidential nature of the information and the existence of this
Section 13.1 and prior to any disclosure shall execute a written
confidentiality agreement with such Partner substantially identical in scope to
this Section and providing that such confidentiality agreement is also made for
the benefit of the Partnership and each of the other Partners.
(e) The Partners and their Affiliates shall consult with
each other on an ongoing basis with respect to disclosures regarding the
Partnership and its business and affairs permitted under Section 13.1(a)(y).
13.2 Indemnification.
(a) Indemnification by Partnership. The Partnership agrees, to
the fullest extent permitted by applicable law, to indemnify, defend and hold
harmless each Partner, its Affiliates and their respective officers, directors
and employees from, against and in respect of any Liability which such
Indemnified Person may sustain, incur or assume as a result of, or relative to,
a Third Party Claim arising out of or in connection with the business, property
or affairs of the Partnership, except to the extent that it is Finally
Determined that such Third Party Claim arose out of or was related to actions
or omissions of the indemnified Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as
such) constituting a breach of this Agreement or any Related Agreement. The
Partnership shall periodically reimburse or advance to any Person entitled to
indemnity under this subsection (a) its legal and other expenses incurred in
connection with defending any claim with respect to such Liability if such
Person shall agree to reimburse promptly the Partnership for such amounts if it
is finally determined that such Person was not entitled to indemnity hereunder.
Nothing in this Section 13.2(a) is intended to, nor shall it, affect or take
precedence over the indemnity provisions contained in any Related Agreement.
(b) Partner's Right of Contribution. Each Partner hereby agrees,
to the fullest extent permitted by law, to indemnify, defend and hold harmless
the other Partners, their Affiliates and their respective officers, directors
and employees from and against the indemnifying Partner's Percentage Interest
(calculated at the time any such Liability was incurred) of any Liability that
such Indemnified Person may sustain, incur or assume as a result of or relating
to any Third Party Claim arising out of or in connection with the business,
property or affairs of the Partnership; provided, however, that such
indemnified Partner, its Affiliates and their respective officers, directors
and employees shall not be entitled to indemnity under this subsection (b) to
the extent that it is Finally Determined that such
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Third Party Claim arose out of or was related to actions or omissions of the
indemnified Partner, its Affiliates or any of their respective officers,
directors or employees (acting in their capacities as such) constituting a
breach of this Agreement or any Related Agreement; provided, further, that such
indemnified Partner, its Affiliates and their respective officers, directors
and employees shall not be entitled to indemnity under this subsection (b)
unless (x) the indemnified Partner shall first make a written demand for
indemnification from the Partnership in accordance with subsection (a) above
and subsection (c) below and the Partnership shall fail to satisfy such demand
in a manner reasonably satisfactory to the indemnified Partner within 60 days
of such notice or (y) the Partnership is insolvent or otherwise unable to
satisfy its obligations. The indemnifying Partner shall periodically reimburse
any Person entitled to indemnity under this subsection (b) for its legal and
other expenses incurred in connection with defending any claim with respect to
such Liability if such Person shall agree to reimburse promptly the
indemnifying Partner for such amounts if it is Finally Determined that such
Person was not entitled to indemnity hereunder.
(c) Procedures. Promptly after receipt by a Person entitled to
indemnification under subsection (a) or (b) (an "Indemnified Party") of notice
of any pending or threatened claim against it (a "Claim"), such Indemnified
Party shall give prompt written notice (including copies of all papers served
with respect to such claim) to the party to whom the Indemnified Party is
entitled to look for indemnification (the "Indemnifying Party") of the
commencement thereof, which notice shall describe in reasonable detail the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible and the basis of
the Indemnified Party's request for indemnification under this Agreement;
provided that the failure to so notify the Indemnifying Party shall not relieve
the Indemnifying Party of any liability that it may have to any Indemnified
Party except to the extent the Indemnifying Party demonstrates that it is
prejudiced thereby. In case any Claim that is subject to indemnification under
subsection (a) shall be brought against an Indemnified Party and it shall give
notice to the Indemnifying Party of the commencement thereof, the Indemnifying
Party may, and at the request of the Indemnified Party shall, participate in
and control the defense of the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party. The Indemnified Party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless (i) the employment thereof has been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party failed to assume the defense and employ counsel or failed to
diligently prosecute or settle the Third Party Claim or (iii) there shall exist
or develop a conflict that would ethically prohibit counsel to the Indemnifying
Party from representing the Indemnified Party. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, including, without limitation, by making
any counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person, in each case only if and to the extent that
any such counterclaim or cross-complaint arises from the same actions or facts
giving rise to the Third Party Claim. The Indemnifying Party shall be the sole
judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
provided that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with respect
to any Third Party Claim without the prior written consent of the
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Indemnified Party, which shall not be unreasonably withheld. The Indemnifying
Party (if the Indemnified Party is entitled to indemnification hereunder) shall
reimburse the Indemnified Party for its reasonable out of pocket costs incurred
with respect to such cooperation.
If the Indemnifying Party fails to assume the defense of a
Third Party Claim within a reasonable period after receipt of written notice
pursuant to the first sentence of this subparagraph (c), or if the Indemnifying
Party assumes the defense of the Indemnified Party pursuant to this
subparagraph (c) but fails diligently to prosecute or settle the Third Party
Claim, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (if the Indemnified Party is
entitled to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Party to a final conclusion or settled. The
Indemnified Party shall have full control of such defense and proceedings;
provided that the Indemnified Party shall not settle such Third Party Claim
without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this Section, and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
Notwithstanding the other provisions of this Section 13.2, if
the Indemnifying Party disputes its potential liability to the Indemnified
Party under this Section 13.2 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
13.2 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified Party, the Indemnifying Party shall reimburse the Indemnified Party
in full for all costs of the litigation concerning such dispute.
After it has been determined, by acknowledgment, agreement, or
ruling of court of Legal Requirements, that an Indemnifying Party is liable to
the Indemnified Party under this Section 13.2(c), the Indemnifying Party shall
pay or cause to be paid to the Indemnified Party the amount of the Liability
within ten business days of receipt by the Indemnifying Party of a notice
reasonably itemizing the amount of the Liability but only to the extent
actually paid or suffered by the Indemnified Party.
(d) Survival. The indemnities contained in this Section shall
survive the termination and liquidation of the Partnership.
(e) Subrogation. In the event of any payment by or on behalf of
an Indemnifying Party to an Indemnified Party in connection with any Liability,
the Indemnifying Party (or any guarantor who made such payment) shall be
subrogated to and shall stand in the place of the Indemnified Party as to any
events or circumstances in respect of which the Indemnified Party may have any
right or claim against any third party (not including the Partnership) relating
to such event or indemnification. The Indemnified Party shall cooperate with
the Indemnifying Party (or such guarantor) in any reasonable manner in
prosecuting any subrogated claim.
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(f) Nothing in this Agreement shall be deemed to limit the
Partnership's power to indemnify its officers, employees, agents or any other
person, to the fullest extent permitted by law.
13.3 Third Party Claim Reimbursement.
(a) In the case of a Liability relating to a Third Party Claim and
caused by the Fault of a General Partner, its Affiliates or any of their
respective officers, directors or employees (acting in their capacities as
such) against whom reimbursement is being sought, such General Partner hereby
agrees to reimburse the Partnership for such Liability to the extent that:
(i) the Liability relates to a Third Party Claim
that has been finally resolved and that the Partnership has actually paid (an
"Expense");
(ii) the Expense is not covered by insurance
carried by the Partnership (excluding any amounts relating to insured claims to
the extent that they fall within deductibles or self-insured retentions or are
above applicable coverage limits); and
(iii) the Expense is not offset by third party
indemnification or otherwise;
provided, however, that such General Partner shall reimburse the Partnership
for the Expense only to the extent and in proportion to its Fault.
(b) Any claim by the Partnership for reimbursement under
this Section may be initiated upon written notice from a Nonconflicted General
Partner to the General Partner to whom the Partnership is entitled to look for
indemnification, and the General Partners shall have a period of 60 days during
which to reach unanimous agreement as to the terms on which any reimbursement
shall be made. If the General Partners are unable to agree or there are any
disputes over Fault and reimbursement under this Section, such matters shall be
resolved pursuant to the Dispute Procedures.
13.4 Dispute Resolution. Except as otherwise provided for herein,
all controversies or disputes arising under this Agreement shall be resolved
pursuant to the provisions set forth on Appendix D (the "Dispute Procedures").
13.5 EXTENT OF LIMITATION OF LIABILITY, INDEMNIFICATION, ETC. TO
THE FULLEST EXTENT PERMITTED BY LAW AND WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE LIMITATION OF LIABILITY, INDEMNIFICATION, RELEASE AND ASSUMPTION
OBLIGATIONS SET FORTH HEREIN, A PARTY SHALL BE ENTITLED TO INDEMNIFICATION OR
RELEASE HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER
THE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION OR RELEASE IS THE RESULT OF
THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY SUCH PARTY. THE
PARTIES AGREE THAT THIS STATEMENT CONSTITUTES A CONSPICUOUS LEGEND.
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13.6 Further Assurances. From time to time, each Partner agrees to
execute and deliver such additional documents, and will provide such additional
information and assistance, as the Partnership may reasonably require to carry
out the terms of this Agreement and to accomplish the Partnership's business.
13.7 Successors and Assigns. Except as may be expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
successors of the Partners, but no Partner may assign or delegate any of its
rights or obligations under this Agreement. Except as expressly provided
herein, any purported assignment or delegation shall be void and ineffective.
13.8 Benefits of Agreement Restricted to the Parties. This
Agreement is made solely for the benefit of the Partnership and the Partners,
and no other Person, including any officer or employee of the Partnership or
any Partner, shall have any right, claim or cause of action under or by virtue
of this Agreement.
13.9 Notices. All notices, requests and other communications that
are required or may be given under this Agreement shall, unless otherwise
provided for elsewhere in this Agreement, be in writing and shall be deemed to
have been duly given if and when (i) transmitted by telecopier facsimile with
proof of confirmation from the transmitting machine or (ii) delivered by
commercial courier or other hand delivery, as follows:
Lyondell Petrochemical Company Millennium Chemicals Inc.
0000 XxXxxxxx Xxxxxx 00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000 Iselin, New Jersey 08830
Attention: Xxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxxx, III
Telecopy Number: (000) 000-0000 Telecopy Number: (000) 000-0000
Occidental Petroleum Corporation Equistar Chemicals, LP
00000 Xxxxxxxx Xxxx. X.X. Xxx 0000
Xxx Xxxxxxx, XX 00000 0000 XxXxxxxx Xxxxxx
Attention: President Xxxxxxx, Xxxxx 00000-0000
Telecopy Number: (000) 000-0000 Attention: Xxxxxx X. X'Xxxxx
Telecopy Number: (000) 000-0000
With a copy to:
Occidental Petroleum Corporation
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
13.10 [Reserved]
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13.11 Severability. In the event that any provisions of this
Agreement shall be Finally Determined to be unenforceable, such provision
shall, so long as the economic and legal substance of the transactions
contemplated hereby is not affected in any materially adverse manner as to any
Partner, be deemed severed from this Agreement and every other provision of
this Agreement shall remain in full force and effect.
13.12 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or
presumption that any Partner had a greater or lesser hand in drafting this
Agreement; (iii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iv) the word "includes" and its
syntactic variants mean "includes, but is not limited to" and corresponding
syntactic variant expressions; (v) the plural shall be deemed to include the
singular, and vice versa; (vi) each gender shall be deemed to include the other
gender; and (vii) each appendix, exhibit, attachment and schedule to this
Agreement is a part of this Agreement.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
13.14 Waiver of Right to Partition. Except as provided in Section
12.2(e), each Person who now or hereafter is a party hereto or who has any
right herein or hereunder irrevocably waives during the term of the Partnership
any right to maintain any action for partition with respect to Partnership
property.
13.15 Governing Law. The laws of the State of Delaware shall govern
the construction, interpretation and effect of this Agreement without giving
effect to any conflicts of law principles.
13.16 Jurisdiction; Consent to Service of Process; Waiver. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY TO THIS AGREEMENT OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS OF THE STATE OF
DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES
TO THIS AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES TO
THIS AGREEMENT SHALL APPOINT THE CORPORATION TRUST COMPANY, THE XXXXXXXX-XXXX
CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE
ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE
STATE OF DELAWARE. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF
AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO
SERVICE OF PROCESS IN THE STATE OF
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DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO
CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES HERETO.
13.17 Expenses. Except as otherwise provided herein or in the
Second Master Transaction Agreement, each party hereto shall be responsible for
its own expenses incurred in connection with this Agreement.
13.18 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
13.19 Payment Terms and Interest Calculations.
(a) If the payment due date for any payment hereunder (including
capital contributions and Damages) falls on a Saturday or a bank or federal
holiday, other than a Monday, the payment shall be due on the past preceding
business day. If the payment due date falls on a Sunday or Monday bank or
federal holiday, the payment shall be due on the following business day.
(b) Interest shall accrue on any unpaid and outstanding amount
from the time such amount is due and payable through the date upon which such
amount, together with accrued interest thereon, is paid in full. Interest
shall, subject to the provisions of Section 13.20, accrue at a per annum rate
equal to the lesser of (i) the Agreed Rate plus 2%, compounded quarterly, to
the extent permitted by law or (ii) the Highest Lawful Rate.
(c) A wire transfer or delivery of a check shall not operate to
discharge any payment under this Agreement and shall be accepted subject to
collection.
13.20 Usury Savings Clause. Notwithstanding any other provision of
this Agreement, it is the intention of the parties hereto to conform strictly
to Applicable Usury Laws, in each case to the extent they are applicable to
this Agreement. Accordingly, if any payment made pursuant to this Agreement
results in any Person having paid any interest in excess of the Maximum Amount,
or if any transaction contemplated hereby would otherwise be usurious under any
Applicable Usury Laws, then, in that event, it is agreed as follows: (i) the
provisions of this Section 13.20 shall govern and control; (ii) the aggregate
of all interest under Applicable Usury Laws that is contracted for, charged or
received under this Agreement shall under no circumstances exceed the Maximum
Amount, and any excess shall be promptly refunded to the payor by the recipient
hereof; (iii) no Person shall be obligated to pay the amount of such interest
to the extent that it is in excess of the Maximum Amount; and (iv) the
effective rate of any interest payable under this Agreement shall be ipso facto
reduced to the Highest Lawful Rate, as hereinafter defined, and the provisions
of this Agreement immediately shall be deemed reformed, without the necessity
of the execution of any new document or instrument, so as to comply with all
Applicable Usury Laws. All sums paid, or agreed to be paid, to any person
pursuant to this Agreement for the use, forbearance or detention of any
indebtedness arising hereunder shall, to the fullest extent permitted by the
Applicable Usury Laws, be amortized, pro rated, allocated and spread throughout
the full term of any such indebtedness so that the actual
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rate of interest does not exceed the Highest Lawful Rate in effect at any
particular time during the full term thereof.
13.21 Other Waivers. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON-CONVENIENS.
13.22 Special Joinder by Millennium America. Millennium America is
a party to this Agreement for the sole purpose of evidencing its agreement to
be bound by the provisions set forth in Section 8.6(c) and is not a partner of
the Partnership and shall not have any rights under this Agreement or any other
obligations under this Agreement.
13.23 Amendment. All waivers, modifications, amendments or
alterations of this Agreement shall require the written approval of each of the
General Partners and each of the Limited Partners.
SECTION 14
LAKE XXXXXXX FACILITY
14.1 Lease Not in Force and Effect. At any such time as the Lease
is terminated, expires or is otherwise not in force and effect (other than a No
Rebuilding Termination), the following shall occur:
(a) The number of Units held by Occidental LP1 shall be reduced
from 6,623 Units to 2,541 Units.
(b) The Partnership and Occidental LP1 shall form a general
partnership (the "LC Partnership") by entering into a partnership agreement
having the provisions described in Section 14.2 (the "GPA").
(c) The Partnership shall distribute to Occidental LP1 the balance
in its Capital Account.
(d) Occidental LP1 shall cause the Lake Xxxxxxx Facility to be
contributed to the LC Partnership and shall contribute to the LC Partnership
the amount received pursuant to Section 14.1(c), plus an amount equal to any
proceeds of a partial condemnation of the Lake Xxxxxxx Facility received by OCC
under the terms of the Lease, and the Partnership shall contribute to the LC
Partnership the amount received pursuant to Section 26(b) of the Lease in
connection with such termination of the Lease.
(e) Immediately after and as a result of the foregoing
transactions, the capital account of each of Occidental LP1 and the Partnership
in the LC Partnership shall be pro rata in accordance with the partners' equity
ownership interests, and Occidental LP1's Capital Account shall be the same per
Unit as the Capital Accounts of the other Partners (determined without regard
to the special allocations in Sections 4.1(a) through (c)).
(f) Sections 4.1(e) and (f) shall terminate.
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14.2 LC Partnership Provisions. The GPA shall include provisions
to the following effect, as well as other customary provisions:
(a) The LC Partnership shall be formed under the laws of Delaware.
The two partners shall be the Partnership and Occidental LP1. The Partnership
shall have an equity ownership interest of 49.9%, and Occidental LP1 shall have
an equity ownership interest of 50.1%
(b) The term of the GPA shall be the same as the term of this
Agreement.
(c) All issues relating to the LC Partnership must be decided by
mutual agreement of both partners, except that the LC Partnership shall enter
into an operating agreement with the Partnership (in its individual capacity),
as operator, that shall delegate to the operator the right and obligation to
make all day-to-day decisions of the LC Partnership, which day-to-day decisions
shall for this purpose be deemed to be all decisions of the LC Partnership
other than issues comparable to those issues set forth in Section 6.7 hereof
(which issues must be decided by the partners of the LC Partnership). Such
operating agreement shall provide for the LC Partnership to pay and reimburse
the operator for all costs whatsoever incurred or paid by the operator in
performing its obligations under the operating agreement. The term of such
operating agreement shall be the same as the term of the LC Partnership.
(d) All contributions and distributions will be made, and all book
income and deductions will be allocated, in accordance with the partners'
equity ownership interests. Tax items will be allocated between the partners
in a manner similar to that set forth in this Agreement.
(e) No partner in the LC Partnership may transfer (except a
transfer to a Wholly Owned Affiliate) or encumber its equity ownership without
the consent of the other partner.
14.3 No Rebuilding Termination. Upon a No Rebuilding Termination,
Occidental LP1 shall have the option to contribute to the Partnership within 30
days following the No Rebuilding Termination an amount (the "Payment Amount")
equal to the excess, if any, of (a) the Proceeds plus the book value
(determined in accordance with GAAP) as recorded on the books of OCC for that
portion and aspect of the Lake Xxxxxxx Facility that constitutes land, over
(b) the payment made pursuant to Section 26(b) of the Lease in connection with
such No Rebuilding Termination. If within such 30-day period Occidental LP1
contributes the Payment Amount to the Partnership, (i) Occidental LP1's 6,623
Units shall remain outstanding, (ii) its Capital Account shall be credited with
the Payment Amount, (iii) the assets of the Partnership shall be revalued so
that the Capital Account of each Partner is the same per Unit (determined
without regard to the special allocations in Sections 4.1(a) through (c)), and
(iv) Sections 4.1(e) and (f) shall terminate. If Occidental LP1 does not
contribute the Payment Amount to the Partnership within such 30-day period, (A)
Occidental LP1's 6,623 Units shall be redeemed and canceled and of no further
force and effect and (B) an amount equal to the balance in Occidental LP1's
Capital Account shall be distributed by the Partnership to Occidental LP1, or
if there is a deficit in Occidental LP1's Capital Account, Occidental LP1 shall
contribute to the Partnership an amount of cash necessary to eliminate such
deficit. Upon completion of the steps in clauses (A) and (B), Occidental LP1's
entire interest in the Partnership shall terminate.
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14.4 Other Redemption. If Occidental LP1 breaches any of its
obligations under Section 14.1, (a) Occidental LP1's 6,623 Units shall be
redeemed and canceled and of no further force and effect and (b) an amount equal
to the balance in Occidental LP1's Capital Account shall be distributed by the
Partnership to Occidental LP1, or if there is a deficit in Occidental LP1's
Capital Account, Occidental LP1 shall contribute to the Partnership an amount of
cash necessary to eliminate such deficit. Upon completion of the steps in
clauses (a) and (b), Occidental LP1's entire interest in the Partnership shall
terminate.
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IN WITNESS WHEREOF, this Agreement has been executed on behalf of each
of the parties hereto, by their respective officers thereunto duly authorized,
effective as of the date first written above.
GENERAL PARTNERS
LYONDELL PETROCHEMICAL G.P. INC.
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name: Xxx X. Xxxxx
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc.,
its Manager
By: /s/ Xxxxxx X. Xxxxxxxxx, III
-------------------------------------
Name Xxxxxx X. Xxxxxxxxx, III
-------------------------------
Title: Senior Vice President
-----------------------------
PDG CHEMICAL INC.
By: /s/ X.X. Xxxxx
-----------------------------------------
Name: X.X. Xxxxx
---------------------------------------
Title: President
--------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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LIMITED PARTNERS
LYONDELL PETROCHEMICAL L.P. INC.
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name: Xxx X. Xxxxx
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
MILLENNIUM PETROCHEMICALS GP LLC
By: Millennium Petrochemicals Inc.,
its Manager
By: /s/ Xxxxxx X. Xxxxxxxxx, III
-------------------------------------
Name Xxxxxx X. Xxxxxxxxx, III
-------------------------------
Title: Senior Vice President
-----------------------------
OCCIDENTAL PETROCHEM PARTNER 1, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
OCCIDENTAL PETROCHEM PARTNER 2, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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SPECIAL JOINDER PURSUANT TO
SECTION 13.22
MILLENNIUM AMERICA INC.
By: /s/ Xxxxxx X. Xxxxxxxxx, III
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx, III
---------------------------------------
Title: Senior Vice President
--------------------------------------
[Signature Page for Amended and Restated Limited Partnership Agreement]
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APPENDIX A
TO LIMITED PARTNERSHIP AGREEMENT
DEFINED TERMS
1998 Credit Facility. See Section 8.6(a).
AAA. See Appendix D.
Acceptance Notice. See Section 10.2(b).
Act. The Delaware Revised Uniform Limited Partnership Act, as amended
and in effect from time to time.
Additional Related Agreements. The agreements defined as "Related
Agreements" in the Second Master Transaction Agreement (other than this
Agreement), as such agreements may be amended from time to time after the date
hereof.
Adjusted Capital Account Deficit. With respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
(i) Such Capital Account shall be deemed to be increased
by any amounts which such Partner is obligated to restore to the
Partnership (pursuant to this Agreement or otherwise) or is deemed to
be obligated to restore pursuant to the second to last sentence of
Regulation Section 1.704-2(g)(1) and Section 1.704-2(i)(5) (relating
to allocations attributable to nonrecourse debt).
(ii) Such Capital Account shall be deemed to be decreased
by the items described in Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
The foregoing definition of Adjusted Capital Deficit is intended to comply with
the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted and applied consistently therewith.
Additional Notice. See Section 10.2(b).
Affiliate. As to any specified Person, any other Person that directly
or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with the specified Person; provided, however, that
for purposes of this Agreement such term shall not include (i) the Partnership
or any entities controlled by it, (ii) in the case of Millennium GP and
Millennium LP shall not include Suburban Propane Partners, L.P. and any
entities controlled by it and (iii) in the case of Occidental GP, Occidental
LP1 and Occidental LP2, shall not include Canadian Occidental Petroleum Ltd.
and any entities controlled by it. For purposes of this definition the term
"control" shall have the meaning set forth in 17 CFR 230.405, as in effect on
the date hereof.
Appendix A - 1
63
Affiliated General Partner. In the case of Lyondell LP, the
"Affiliated General Partner" shall mean Lyondell GP. In the case of Millennium
LP, the "Affiliated General Partner" shall mean Millennium GP. In the case of
each of Occidental LP1 and Occidental LP2, the "Affiliated General Partner"
shall mean Occidental GP.
Affiliated Limited Partner. In the case of Lyondell GP, the
"Affiliated Limited Partner" shall mean Lyondell LP. In the case of Millennium
GP, the "Affiliated Limited Partner" shall mean Millennium LP. In the case of
Occidental GP, each of Occidental LP1 and Occidental LP2 shall be "Affiliated
Limited Partner".
Affiliated Partner Group. A General Partner and its Affiliated
Limited Partner or Affiliated Limited Partners, if more than one.
Agreed Rate. The base commercial lending rate announced by Citibank,
N.A. (or its successor) at its principal office, in effect from time to time,
such interest rate to change automatically, effective as of the date of each
change in such base rate.
Agreement. This Amended and Restated Limited Partnership Agreement of
Equistar Chemicals, LP, as amended from time to time.
Alternate. See Section 6.4(b).
Amended and Restated Indemnity Agreement. The Amended and Restated
Indemnity Agreement dated as of the date of this Agreement among Lyondell GP,
Lyondell LP, Millennium GP, Millennium LP, Millennium America, Occidental GP,
Occidental LP1, Occidental LP2 and OCC.
Amended and Restated Parent Agreement. The Amended and Restated
Parent Agreement dated as of the date of this Agreement between the
Partnership, Lyondell, Millennium, Occidental, Occidental Chemical Corporation
and Oxy CH Corporation.
Annual Budget. See Section 8.2.
Applicable Usury Laws. Laws regarding the use, forbearance or
detention of any indebtedness arising under this Agreement whether such laws
are now or hereafter in effect, including the laws of the United States of
America or any other jurisdiction whose laws are applicable, and including any
subsequent revisions to or judicial interpretations of those laws.
Arbitrator. See Appendix D.
Asset Fair Market Value. With respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such as in an arm's-length negotiated transaction with
an unaffiliated third party without time constraints.
Assumed Liabilities. In the case of Lyondell LP and Lyondell GP,
Assumed Liabilities means the "Assumed Liabilities" as defined in the
Contribution Agreement of Lyondell. In the case of
Appendix A - 2
64
Millennium LP and Millennium GP, Assumed Liabilities shall mean the "Assumed
Liabilities" as defined in the Contribution Agreement of Millennium
Petrochemicals. In the case of Occidental LP1, Occidental LP2 and Occidental
GP, Assumed Liabilities means the "Assumed Liabilities" as defined in the
Contribution Agreement of Occidental.
Auxiliary Committee. See Section 6.9.
Available Net Operating Cash. At the time of determination, (a) all
cash and cash equivalents on hand in the Partnership as of the most recent
month end, plus the excess, if any, of the Partnership Target Debt over the
Partnership's actual indebtedness (as determined in accordance with GAAP) as of
such month end, less (b) the Projected Cash Requirements, if any, of the
Partnership as of such month end, as determined by the Executive Officers of
the Partnership. For purposes of this definition, "Projected Cash
Requirements" means, for the 12-month period following any such month end, the
excess, if any, of the sum of (a) forecast capital expenditures, plus (b)
forecast cash payments for Taxes, debt service including principal and interest
requirements and other non-cash credits to income, plus (c) forecast cash
reserves for future operations or other requirements, over the sum of (1)
forecast net income of the Partnership, plus (2) the sum of forecast
depreciation, amortization, other non-cash charges to income, interest
expenses, and Tax expenses, in each case to the extent deducted in determining
net income, plus or minus (3) forecast decreases or increases, respectively, in
working capital, plus (4) the forecast cash proceeds of dispositions of assets
(net of expenses) plus (5) an amount equal to the forecast net proceeds of debt
financings, contributions and payments of the Lyondell Note. For purposes of
this definition, "Partnership Target Debt" means for such month end, the level
of indebtedness (as determined in accordance with GAAP) projected for the
Partnership in the most recently approved Strategic Plan, except to the extent
the Executive Officers of the Partnership determine that changes in the
financial condition, results of operations, assets, business or prospects of
the Partnership make a change advisable, in which case the Partnership shall
advise the General Partners promptly regarding the basis for the change.
Projected Cash Requirements shall be calculated consistent with the most
recently approved Strategic Plan, except to the extent the Executive Officers
of the Partnership determine that changes in the financial condition, results
of operations, assets, business or prospects of the Partnership make a change
advisable, in which case the Partnership shall advise the General Partners
promptly regarding the basis for the change.
Bank Credit Agreement. The Credit Agreement dated as of November 25,
1997 among the Partnership, as Borrower, Millennium America, as Guarantor and
the lenders party thereto.
Bank Credit Agreement Repayment Amount. An amount equal to (i)
$419,700,000 less (ii) the Bank Credit Agreement Available Amount, but in no
event shall the Bank Credit Agreement Repayment Amount be less than zero. The
"Bank Credit Agreement Available Amount" shall equal (i) $1.25 billion less
(ii) the total principal amount outstanding under the Bank Credit Agreement at
the date of calculation.
Bankruptcy. The occurrence of any of the following: (i) a Partner or
its Guarantor shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer or
consent seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future applicable federal, state or other statute or law relating to
bankruptcy, insolvency, or other relief for debtors, or shall seek or
Appendix A - 3
65
consent to or acquiesce in the appointment of any trustee, receiver,
conservator or liquidator of such Partner or its Guarantor or of all or any
substantial part of its properties or its Units (the term "acquiesce," as used
in this definition, includes the failure to file a petition or motion to vacate
or discharge any order, judgment or decree within ten Business Days after entry
of such order, judgment or decree); (ii) a court of competent jurisdiction
shall enter an order, judgment or decree approving a petition filed against any
Partner or its Guarantor seeking a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the present or
any future federal bankruptcy act, or any other present or future applicable
federal, state or other statute or law relating to bankruptcy, insolvency, or
other relief for debtors, and such Partner or its Guarantor shall acquiesce in
the entry of such order, judgment or decree or such other order, judgment or
decree shall remain unvacated and unstayed for an aggregate of 60 days (whether
or not consecutive) from the date of entry thereof, or any trustee, receiver,
conservator or liquidator of such Partner or its Guarantor or of all or any
substantial part of its property or its Units shall be appointed without the
consent or acquiescence of such Partner or its Guarantor and such appointment
shall remain unvacated and unstayed for an aggregate of 60 days (whether or not
consecutive); (iii) a Partner or its Guarantor shall admit in writing its
inability to pay its debts as they mature; (iv) a Partner or its Guarantor
shall give notice to any governmental body of insolvency or pending insolvency,
or suspension or pending suspension of operations; or (v) a Partner or its
Guarantor shall make an assignment for the benefit of creditors or take any
other similar action for the protection or benefit of creditors.
Book Value. With respect to any asset of the Partnership, the asset's
adjusted basis as of the relevant date for federal income tax purposes, except
as follows:
(i) The initial aggregate Book Value of all of the assets
of the Partnership as of the Initial Closing Date shall be equal to
the sum of (A) the beginning aggregate Capital Accounts of the
Partners immediately after the Initial Closing Date, and (B) the
aggregate amount of all liabilities of the Partnership for federal
income tax purposes immediately after the Initial Closing Date.
(ii) The initial Book Value of any asset contributed by a
Partner to the Partnership after the Initial Closing Date shall be the
gross fair market value of such asset, which shall be equal to the
amount credited to such Partner's Capital Account for such
contribution (increased by the amount of any liabilities which the
Partnership assumes or takes subject to).
(iii) The Book Values of all Partnership assets (including
intangible assets such as goodwill) shall be adjusted (at the election
of the Partnership Governance Committee) to equal their respective
gross fair market values upon the occurrence of any of the events
described in Regulation Section 1.704-1(b)(2)(iv)(f)(5).
(iv) The Book Value of any asset distributed by the
Partnership to a Partner shall be equal to the gross fair market value
of such asset on the date of the distribution.
(v) The Book Value of any Partnership asset with respect
to which an adjustment to tax basis has occurred by reason of the
application of Section 734(b) or 754(b) of the Code
Appendix A - 4
66
shall be adjusted to the extent such adjustment to tax basis is taken
into account pursuant to Regulation Section 1.704-1(b)(2)(iv)(m).
(vi) If the Book Value of an asset is not equal to its
adjusted tax basis for federal income tax purposes, such Book Value
shall be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses and other
items allocated pursuant to Section 4.1.
The foregoing definition of Book Value is intended to comply with the
provisions of Regulation Section 1.704-1(b)(2)(iv) and shall be interpreted and
applied consistently therewith. Any determinations of "gross fair market
value" in this definition of Book Value shall be made by the Partnership
Governance Committee.
Business Day. Any day other than a Saturday, Sunday or other day on
which banks are closed in New York City, New York; provided, however, that for
purposes of the definitions of "Interest Period" and "LIBOR Rate," "Business
Day" shall mean a day of the year on which banks are not required or authorized
to close in Houston, Texas and on which commercial banks are open for
international business (including dealings for dollar deposits) in the London
interbank market.
Business Opportunity. See Section 9.3(c).
Capital Account. The separate capital account established and
maintained by the Partnership for each Partner, as contemplated by Section 2.
Capital Expenditure Budget. See Section 8.2(d).
CEO. See Section 7.1(b).
Claim. See Section 13.2(c).
Code. The Internal Revenue Code of 1986, as amended and in effect
from time to time and any successor thereto.
Competing Opportunity. See Section 9.3(c).
Confidential Information. All confidential documents and information
(including, without limitation, confidential commercial information and
information with respect to customers, trade secrets and proprietary
technologies or processes and the design and development of new products or
services) concerning the Partnership, the Partners or their Affiliates,
furnished to a Partner in connection with the transactions leading up to and
contemplated by this Agreement and the operation of the Partnership, except to
the extent that such information (i) is or becomes generally available to and
known by the public or the petrochemical industry (other than as a result of an
unpermitted disclosure directly or indirectly by the Partnership or a Partner),
(ii) is or becomes available to a Partner on a nonconfidential basis from a
source other than the Partnership or a Partner; provided, however, that such
source is not and was not bound by a confidentiality agreement with, or other
obligation of secrecy to, the Partnership or the other Partner, (iii) has
already been or is hereafter
Appendix A - 5
67
independently acquired or developed by a Partner without violating any
confidentiality agreement with or other obligation of secrecy to the
Partnership or another Partner or (iv) is otherwise generated by the
Partnership with the intention that it not be held as confidential.
Conflict Circumstance. Any transaction or dealing between the
Partnership (or any Wholly Owned Subsidiary) and a General Partner (the
"Conflicted General Partner") or any of its Affiliates pursuant to any
agreement (including this Agreement or any other Related Agreements) or
otherwise, including action to be taken by the Partnership pursuant to Section
9.3(c) or (d) or 13.3(b); provided, however, that a Conflict Circumstance shall
cease to exist if and when the third party with which the transaction or
dealing exists shall cease to be an Affiliate of a General Partner.
Conflicted General Partner. As defined in the definition of "Conflict
Circumstance."
Contributed Business. As defined in each of the Contribution
Agreements.
Contribution Agreement. In the case of Lyondell LP and Lyondell GP,
the Contribution Agreement shall mean the Asset Contribution Agreement dated
December 1, 1997, between the Partnership, Lyondell and Lyondell LP. In the
case of Millennium LP and Millennium GP, the Contribution Agreement shall mean
the Asset Contribution Agreement dated December 1, 1997, between the
Partnership, Millennium Petrochemicals and Millennium LP. In the case of
Occidental LP1, Occidental LP2 and Occidental GP, the Contribution Agreement
shall mean the Agreement and Plan of Merger and Asset Contribution dated as of
the date of this Agreement between the Partnership, Oxy Petrochemicals,
Occidental LP1, Occidental LP2 and Occidental GP.
Damages. With respect to a Person in connection with a Default, any
and all obligations (including all obligations to take an affirmative or
curative act), liabilities, damages (including damages arising out of any
breach of any representation or warranty, damages related to investigations,
proceedings, audits, the interruption of the Partnership's business,
restrictions upon the use of, or adverse impact on, the Assets or the
Partnership's business, or the interruption, breach or termination of any
Related Agreements or other agreements, including any lost profits attributable
thereto), fines, penalties, deficiencies, losses, judgments, settlements, costs
and expenses (including costs and expenses incurred in connection with
performing obligations, bonding and appellate costs and attorneys',
accountants', engineers', health, safety, environmental and other consultants'
and investigators' fees and disbursements, liquidating, selling or offering for
sale the Partnership's business and assets or winding up the Partnership's
business, or other payments in respect of such payments) suffered or incurred
by such Person that arise out of or relate to such Default, regardless of
whether any of the foregoing are foreseeable, unforeseeable, matured or
unmatured, existing or contingent as of the date of such Default. "Damages"
also shall include, if and to the extent interest is not already included
therein under applicable law or other provisions hereof and subject to Section
13.20, interest on amounts actually due until payment thereof is made at a rate
per annum equal to the rate set forth in Section 13.19(b). "Damages" shall not
include any punitive, exemplary, special or other similar damages.
Deadlock Notice. See Section 8.5.
Default. See Section 11.1.
Appendix A - 6
68
Default Date. See Section 11.1.
Defaulting Partners. Lyondell GP and Lyondell LP, in the case of a
Default by Lyondell GP, Lyondell LP or their Guarantor; Millennium GP and
Millennium LP, in the case of a Default by Millennium GP, Millennium LP or
their Guarantor; and Occidental GP, Occidental LP1 and Occidental LP2, in the
case of a Default by Occidental GP, Occidental LP1, Occidental LP2 or their
Guarantor.
Depreciation. For each fiscal year or part thereof, an amount equal
to the depreciation, amortization, or other cost recovery deduction allowable
for federal income tax purposes with respect to an asset for such year or other
period, except that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such year,
Depreciation shall be (i) an amount which bears the same ratio to such Book
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such adjusted tax basis, or, (ii) if
the federal income tax depreciation, amortization or other cost recovery
deduction for such year is equal to zero, an amount determined with reference
to such Book Value using a reasonable method selected by the Tax Matters
Partner.
Dispute Notice. See Appendix D.
Disputing Partner. See Appendix D.
Executive Officers. See Section 7.1(b).
Expense. See Section 13.3(a).
Fair Market Value. "Fair Market Value" with respect to the
Partnership shall mean the Asset Fair Market Value of all of the Partnership's
assets decreased by the fair value of all its liabilities, as of the most
recently ended fiscal quarter. "Fair Market Value" with respect to a Related
Business shall mean the Asset Fair Market Value of all the assets of such
Related Business decreased by the fair value of all its liabilities, as of the
most recently ended fiscal quarter. In either case, the following shall apply
to the determination of Fair Market Value:
(i) The General Partners shall first attempt to agree on
such value, which if agreed to shall be the Fair Market Value.
(ii) If the General Partners are unable to agree within 20
days of the first written notice from one General Partner to the
others proposing an amount to be the Fair Market Value (the "Notice"),
then if requested by any General Partner, each General Partner shall
(at its own cost) cause an independent, qualified appraiser to deliver
a written appraisal of its determination of the Fair Market Value
within 50 days of the Notice. If both of the two lowest appraised
values are greater than or equal to 90% of the highest appraised
value, then the middle of the three appraised values shall be the Fair
Market Value.
(iii) If either of the two lowest appraised values are
lower than 90% of the highest appraised value, then the General
Partners shall jointly appoint a Neutral within 20 days of
Appendix A - 7
69
the delivery of both such appraisals. If the General Partners have
been unable to agree upon such appointment within such 20 days, then
such Neutral shall upon the application of any General Partner be
appointed within 10 days of the filing of such application by the
Center for Public Resources, or if such appointment is not so made
promptly then promptly thereafter by the American Arbitration
Association in Philadelphia, Pennsylvania, or if such appointment is
not so made promptly then promptly thereafter by the senior United
States District Court judge sitting in Wilmington, Delaware. The fees
and expenses of the Neutral shall be paid equally by the Partners.
(iv) The Neutral shall, within 30 days of the appointment
of the Neutral, determine which of the three appraised values (without
in any way modifying or compromising between the three appraised
values) is closest to the fair market value of the enterprise's assets
as determined by the Neutral, and that appraised value shall be the
Fair Market Value.
Fault. Any act or omission of a Partner, its Affiliates or any of
their respective officers, directors or employees (acting in their capacities
as such) that constitutes or results from intentional misconduct, criminal
intent or gross negligence.
Finally Determined. Determined by any final, nonappealable judicial
order or pursuant to a binding alternative dispute resolution procedure.
Funding Notice. See Section 2.4.
GAAP. United States generally accepted accounting principles, as in
effect from time to time.
General Partners. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a general partner of the Partnership,
unless such General Partner ceases to be a General Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Units and is replaced by a
Substitute General Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute General Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a general partner
of the Partnership.
GPA. See Section 14.1(b).
Guarantor. Lyondell Petrochemical Company, with respect to Lyondell
GP and Lyondell LP; Millennium Chemicals Inc., with respect to Millennium GP
and Millennium LP; Occidental Chemical Corporation and Oxy CH Corporation, with
respect to Occidental GP, Occidental LP1 and Occidental LP2; and any successor
or additional guarantor party to an agreement substantially in the form of the
Amended and Restated Parent Agreement and entered into in accordance with
Section 10.
Highest Lawful Rate. The maximum rate of interest, if any, that may
be charged to any person under all Applicable Usury Laws on any principal
balance from time to time outstanding pursuant to this Agreement.
HSE Law. "HSE Law," as defined in Section 1 of the Contribution
Agreement.
Appendix A - 8
70
Indemnified Party. See Section 13.2(c).
Indemnifying Party. See Section 13.2(c).
Interest Period. The period commencing on the date of this Agreement
and ending one month thereafter and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending one month thereafter; provided, however, that whenever the last day of
any Interest Period would otherwise occur on a day other than a Business Day,
the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day.
Initial Agreement. See first WHEREAS clause.
Initial Assets. "Assets," as defined in Section 1 of the applicable
Contribution Agreement.
Initial Closing Date. December 1, 1997, the date the closing under
the Initial Master Transaction Agreement took place.
Initial Master Transaction Agreement. The Master Transaction
Agreement, dated July 25, 1997, as amended, between Lyondell and Millennium,
providing for the execution of various agreements concerning the Partnership
and the Initial Assets.
Initial Notice. See Section 10.2(a).
Initial Partners. See first WHEREAS clause.
Initial Related Agreements. The agreements defined as "Related
Agreements" in the Initial Master Transaction Agreement (other than the
Partnership Agreement), as such agreements may be amended from time to time
after the Initial Closing Date.
IRS. Internal Revenue Service.
Lake Xxxxxxx Facility. The property that is the subject of and leased
pursuant to the Lease.
LC Partnership. See Section 14.1(b).
Lease. The Lease Agreement, dated May 15, 1998, between OCC, as
lessor, and Occidental LP1, as lessee.
Liability. Any loss, claim, damages, fine, penalty, assessment by
public agencies, settlement, cost or expense (including costs of investigation,
defense and attorneys' fees) or other liability.
LIBOR Rate. For any Interest Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) published in the Wall
Street Journal as the London Interbank Offered Rate for a one month period as
of two Business Days prior to the first day of such Interest Period; provided
if no such rate appears the rate shall be as shown on page 3750 of the Dow
Xxxxx & Company Telerate screen or any successor page as the composite offered
rate for London interbank
Appendix A - 9
71
deposits with a period equal to one month, as shown under the heading "USD" as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period; provided that if no such rate appears, the rate shall be the
rate per annum equal to the arithmetic mean (which shall be rounded upward to
the nearest 1/16 of 1% per annum) of which U.S. dollar deposits with an
Interest Period equal to one month are displayed on page "LIBO" of the Reuters
Monitor Money Rates Service or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks at or about 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period.
Limited Partner. Each Person who executes this Agreement and who is
hereby admitted to the Partnership as a limited partner of the Partnership,
unless such Limited Partner ceases to be a Limited Partner hereunder or sells,
transfers, forfeits or otherwise disposes of its Units and is replaced by a
Substitute Limited Partner in accordance with this Agreement and the Act, and
each Person that becomes a Substitute Limited Partner, if any, of the
Partnership as provided herein, in such Person's capacity as a limited partner
of the Partnership.
Limited Partners Pro Rata. From or to the Limited Partners in the
ratio of the Units owned by each.
Liquidation. See Section 11.4.
Losses. See definition of "Profits and Losses."
Lyondell. See first WHEREAS clause.
Lyondell Assumed Debt. Debt issued by Lyondell having an aggregate
principal amount of $745 million, as specified in the Contribution Agreement
with respect to Lyondell.
Lyondell GP. See introductory paragraph to this Agreement.
Lyondell LP. See introductory paragraph to this Agreement.
Lyondell Note. The promissory note dated December 1, 1997, in the
amount of $345 million payable by Lyondell LP to the Partnership.
Maximum Amount. The maximum nonusurious amount of interest that may
be lawfully contracted for, charged or received by any person in connection
with any indebtedness arising under this Agreement under all Applicable Usury
Laws.
Millennium. See first WHEREAS clause.
Millennium America. Millennium America Inc., a Delaware corporation.
Millennium America Guarantee. See Section 8.6(c).
Appendix A - 10
72
Millennium America Guaranteed Debt. The portion, if any, of the debt
outstanding under the Bank Credit Agreement and the portion, if any, of any
debt that refinances the debt outstanding under the Bank Credit Agreement or
any subsequent refinancing thereof (in any case, not to exceed a guarantee of
$750 million principal amount), in each case to the extent such debt is
guaranteed by Millennium America, or an Affiliate thereof, as contemplated by
Section 8.6(c).
Millennium GP. See introductory paragraph to this Agreement.
Millennium LP. See introductory paragraph to this Agreement.
Neutral. A neutral Person acceptable to all of the appointing
Partners and not affiliated with any of the Partners, except where otherwise
specifically provided.
No Rebuilding Termination. A total termination of the Lease pursuant
to Section 12(b) or 13 thereof.
Nonconflicted General Partner. With respect to any Conflict
Circumstance, any General Partner that is not the Conflicted General Partner
with respect thereto.
Non-Defaulting Partners. The Partners other than the Defaulting
Partners.
OCC. Occidental Chemical Corporation, a New York corporation.
Occidental. See third WHEREAS clause.
Occidental GP. See introductory paragraph to this Agreement.
Occidental LP1. See introductory paragraph to this Agreement.
Occidental LP2. See introductory paragraph to this Agreement.
Occidental Partners. See third WHEREAS clause.
Offeree Partners. See Section 10.2(a).
Operating Budget. See Section 8.2(c).
Oxy Guaranteed Debt. The $419,700,000 drawdown under the Bank Credit
Agreement pursuant to Section 8.6(a) and the portion, if any, of any debt that
refinances the $419,700,000 drawdown under the Bank Credit Agreement or any
subsequent refinancing thereof (in any case, not to exceed a guarantee of
$419,700,000 principal amount), in each case to the extent such debt is
guaranteed by Occidental Chemical Corporation, a New York corporation, or an
Affiliate thereof and the proceeds thereof have been distributed to Occidental
LP2 pursuant to Section 3.1(g) and, until such amount has been so drawn and
distributed, "Oxy Guaranteed Debt" shall mean the Oxy Note to the extent the
obligations thereunder are indemnified by OCC pursuant to the Amended and
Restated Indemnity Agreement.
Appendix A - 11
73
Oxy Note. The Promissory Note dated May 15, 1998 in the principal
amount of $419,700,000 payable by the Partnership to Occidental LP2.
Oxy Petrochemicals. Oxy Petrochemicals Inc., a Delaware corporation.
Partners. The General Partners and the Limited Partners on the date
of this Agreement until such Person ceases to be a partner of the Partnership.
Partners Pro Rata. From or to all Partners in the ratio of the Units
owned by each.
Partnership. Equistar Chemicals, LP, a Delaware limited partnership,
the limited partnership formed and continued under the Act and this Agreement.
Partnership Governance Committee. See Section 6.1.
Partnership Governance Committee Action. See Section 6.1.
Payment Amount. See Section 14.3.
Proceeds. The Insurance Proceeds, the Self-Insurance Proceeds and the
Condemnation Proceeds (each as defined in the Lease), to the extent actually
received by the lessor under the Lease pursuant to the Lease.
Profits and Losses. For each applicable period, the Partnership's
taxable income or loss for such period determined in accordance with Section
703(a) of the Code (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss) with the following
adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken in account in computing
Profits or Losses pursuant to this definition shall be added to such
taxable income or loss.
(ii) Any expenditures of the Partnership described in
Section 705(a)(2)(B) of the Code or treated as such pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken in
account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss.
(iii) Depreciation for such period shall be taken into
account in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss.
(iv) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed with reference to
the Book Value of the property disposed of, rather than the adjusted
tax basis of such property.
Appendix A - 12
74
(v) If any property is distributed in kind to any
Partner, the difference between its fair market value and its Book
Value at the time of distribution shall be treated as Profit or Loss,
as the case may be, recognized by the Partnership.
(vi) The amount of any adjustment to the Book Value of any
Partnership asset pursuant to clause (iii) of the definition of Book
Value herein shall be taken into account as Profit or Loss from the
disposition of such asset.
Percentage Interest. The percentage determined by dividing the number
of Units owned by a Partner by the total number of outstanding Units.
Person. Any natural person or any corporation, limited liability
company, partnership, joint venture, association, trust or other entity.
Pledge. To mortgage, pledge, encumber or create or suffer to exist
any pledge, lien or encumbrance upon or security interest in. Such defined
term is used in this Agreement as both a noun and a verb.
Pro Rata. In the ratio of the Units owned by a Partner to the total
number of applicable Units.
Proposing Partner. See Section 9.3(c).
Reconstituted Basis. As to each Partnership property, the
Partnership's basis in such property immediately after it is contributed to the
Partnership reduced by any depreciation and other deductions allocated to a
Partner pursuant to Section 4.4(b)(i)(a).
Regulations. The income tax regulations promulgated by Department of
the Treasury and in effect from time to time.
Related Agreements. The Initial Related Agreements and the Occidental
Related Agreements.
Related Business. Any business related to (i) the manufacturing,
marketing and distribution of Specified Petrochemicals; (ii) the purchasing,
processing and disposing of feedstocks in connection with the manufacturing,
marketing and distributing of Specified Petrochemicals; and (iii) any research
and development in connection with the foregoing.
Related Persons. See Section 13.1.
Representative. See Section 6.4(a).
SEC. Securities and Exchange Commission.
Second Master Transaction Agreement. See third WHEREAS clause.
Selling Partners. See Section 10.2(a).
Appendix A - 13
75
Specified Petrochemicals.
(i) Olefins and olefins coproducts consisting of: ethylene,
propylene, butadiene, and mixed butylenes; aromatics and gasoline blending
components (benzene, toluene, MTBE, alkylate, pyrolysis gasolines); mixed C5
hydrocarbons; resin formers (dicyclopentadiene, isoprene, piperylenes, resin
oil); pyrolysis liquid fuel products (pyrolysis gas oil, pyrolysis fuel oil);
(ii) Polyolefins consisting of: low-density, linear low-density,
and high-density polyethylene; polypropylene; ethylene/propylene copolymers;
rotomolding and polymeric powders; wire and cable resins; adhesive tie layers;
hot melt adhesive resins; colors and concentrates; fuel additives;
(iii) Ethyl alcohol and ethyl ether; and
(iv) Ethylene oxide, ethylene glycol and derivatives thereof.
provided, however that the definition of Specified Petrochemicals shall in no
event include polyvinyl chloride or resins derived from phenol compounds or
dicyclopentadiene.
Specified Petrochemicals Businesses. The businesses related to
Specified Petrochemicals.
Strategic Plan. See Section 8.1.
Substitute General Partner. A Person who is admitted as a General
Partner to the Partnership in place of and with all the rights of a General
Partner.
Substitute Limited Partner. A Person who is admitted as a Limited
Partner to the Partnership in place of and with all the rights of a Limited
Partner.
Taxes. All taxes, charges, fees, levies or other assessments imposed
by any taxing authority, including, but not limited to, income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, severance and stamp taxes (including any
interest, fines, penalties or additions attributable to, or imposed on or with
respect to, any such taxes, charges, fees, levies or other assessments) and
"Tax Return" means any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
Tax Matters Partner. Lyondell GP.
Third Party Claim. Any allegation, claim, civil, criminal or other
action, proceeding, charge or prosecution brought by any Person other than the
Partnership, any Partner or any Affiliate of a Partner.
Transfer. To sell, assign or otherwise in any manner dispose of,
whether by act, deed, merger, consolidation, conversion or otherwise. Such
defined term is used in this Agreement as both a noun and a verb.
Appendix A - 14
76
Unit. A unit representing a partnership interest in the Partnership.
Wholly Owned Affiliate. As to any Person, an Affiliate of such Person
all of the equity interests of which are owned, directly or indirectly, by a
Partner, by another Wholly Owned Affiliate of such Person or by the ultimate
parent entity thereof.
Wholly Owned Subsidiary. As to any Person, a subsidiary of such
Person all of the equity interests of which are owned, directly or indirectly,
by such Person.
Appendix A - 15
77
APPENDIX B
TO LIMITED PARTNERSHIP AGREEMENT
PARTNERSHIP FINANCIAL STATEMENTS AND REPORTS
Item & Frequency Due Dates
---------------- ---------
Monthly:
-------
Income Statement - current period and year-to-date 10th work day following month-end
Balance Sheet - current period 10th work day following month-end
Cash Flow Statement - current period and year-to-date 10th work day following month-end
Schedule of Income Allocation - preliminary 5th work day following month-end
Schedule of Income Allocation - final 10th work day following month-end
Calculation of Distribution of Available Net Operating
Cash - final 15th work day following month-end
Results of Operations Analysis 10th work day following month-end
Quarterly:
---------
Analysis for Investor Relations and Form 10-Q
disclosures:
- Results of Operations 15th work day following quarter-end
- Cash Flow 15th work day following quarter-end
- Sales Variances 15th work day following quarter-end
- Capital Expenditures 15th work day following quarter-end
- Intercompany Transactions 15th work day following quarter-end
- Volumes 15th work day following quarter-end
- Prices 15th work day following quarter-end
- Unusual Items 15th work day following quarter-end
Income Statement - current quarter and year-to-date 10th work day following quarter-end
Balance Sheet - current period 10th work day following quarter-end
Cash Flow Statement - current quarter and year-to-date 10th work day following quarter-end
Estimate of Each Partner's Regular Taxable Income 10th work day following quarter-end
and Alternative Minimum Taxable Income
Appendix B - 1
78
Item & Frequency Due Dates
---------------- ---------
Annual:
------
Analysis for Investor Relations and Form 10-K 15th work day following year-end
disclosures
- Same as quarterly requirements
- Plant Capacities
Audited Financial Statements 60 days following year-end
Appendix B - 2
79
APPENDIX C
TO LIMITED PARTNERSHIP AGREEMENT
EXECUTIVE OFFICERS
Xxx X. Xxxxx Chief Executive Officer
Xxxxxx X. Xxxxxxxx President and Chief Operating Officer
Xxxxxx X. Xxxx Senior Vice President, Finance and
Administration
Xxxxx X. Xxxxxxx Senior Vice President, Polymers
Xxxx X. Xxxxx Vice President, Manufacturing
Xxxxxxx X. Xxxxxx, Xx. Vice President, Supply and Optimization
J. R. Xxxxxxxx Vice President, Engineering
Xxxxx X. Xxxxxxxx Vice President, Oxygenated Chemicals
Xxxx Xxxxxxx Vice President, Customer Supply Chain
Xxxxxx X. X'Xxxxx Vice President and Secretary
Xxxx X. Xxxxxxxxx Vice President, Human Resources
W. Xxxxxx Xxxxxxxx, Jr. Vice President, Petrochemicals
Xxxxx X. Xxxxxxxx Vice President, Research and Development
Xxxxxxx X. Xxxxxx Director, Business Process Improvement
Appendix C - 1
80
APPENDIX D
TO LIMITED PARTNERSHIP AGREEMENT
DISPUTE RESOLUTION PROCEDURES
(1) Binding and Exclusive Means. Except as otherwise provided in the
Partnership Agreement, the dispute resolution provisions set forth in this
Appendix shall be the binding and exclusive means to resolve all disputes
arising under the Agreement (each a "Dispute").
(2) Standards and Criteria. In resolving any Dispute, the standards and
criteria for resolving such Dispute shall, unless the Partners involved in the
Dispute in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix.
(3) ADR and Binding Arbitration Procedures. If a Dispute arises, the
following procedures shall be implemented (with references to "Partners"
meaning the Partners involved in the Dispute):
(a) Any Partner may at any time invoke the dispute resolution procedures
set forth in this Appendix as to any Dispute by providing written notice of
such action to the Secretary of the Partnership, who within five Business Days
after such notice shall schedule a meeting to be held in Houston, Texas between
the Partners. The Partners' meeting shall occur within 10 Business Days after
notice of the meeting is delivered to the Partners. The meeting shall be
attended by representatives of each Partner having decision-making authority
regarding the Dispute as well as the dispute resolution process and who shall
attempt in a commercially reasonable manner to negotiate a resolution of the
Dispute.
(b) The representatives of the Partners shall cooperate in a
commercially reasonable manner and shall explore whether techniques such as
mediation, minitrials, mock trials or other techniques of alternative dispute
resolution might be useful. In the event that a technique of alternative
dispute resolution is so agreed upon, a specific timetable and completion date
for its implementation shall also be agreed upon. The representatives will
continue to meet and discuss settlement until the date (the "Interim Decision
Date") that is the earliest to occur of the following events: (i) an agreement
shall be reached by the Partners resolving the Dispute; (ii) one of the
Partners shall determine and notify the other Partners in writing that no
agreement resolving the Dispute is likely to be reached; (iii) if a technique
of alternative dispute resolution is agreed upon, the completion date therefor
shall occur without the Partners having resolved the Dispute; or (iv) if
another technique of alternative dispute resolution is not agreed upon, two
full meeting days (or such other time period as may be agreed upon) shall
expire without the Partners having resolved the Dispute.
(c) If, as of the Interim Decision Date, the Partners have not succeeded
in negotiating a resolution of the Dispute pursuant to subsection (b), the
Partners shall proceed under subsections (d), (e) and (f).
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any Partner
involved in the Dispute (the "Disputing Partner").
Appendix D - 1
81
The arbitration shall be subject to the Federal Arbitration Act as supplemented
by the conditions set forth in this Appendix. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date the notice of arbitration is
served, other than as specifically modified herein. In the absence of an
agreement to the contrary, the arbitration shall be held in Houston, Texas.
The Arbitrator (as defined below) will allow reasonable discovery in the forms
permitted by the Federal Rules of Civil Procedure, to the extent consistent
with the purpose of the arbitration. During the pendency of the Dispute, each
Partner shall make available to the Arbitrator and the other Partners all
books, records and other information within its control requested by the other
Partners or the Arbitrator subject to the confidentiality provisions contained
herein, and provided that no such access shall waive or preclude any objection
to such production based on any privilege recognized by law. Recognizing the
express desire of the Partners for an expeditious means of dispute resolution,
the Arbitrator may limit the scope of discovery between the Partners as may be
reasonable under the circumstances. In deciding the substance of the Partners'
claims, the laws of the State of Delaware shall govern the construction,
interpretation and effect of this Agreement (including this Appendix) without
giving effect to any conflict of law principles. The arbitration hearing shall
be commenced promptly and conducted expeditiously, with each Partner involved
in the Dispute being allocated an equal amount of time for the presentation of
its case. Unless otherwise agreed to by the Partners, the arbitration hearing
shall be conducted on consecutive days. Time is of the essence in the
arbitration proceeding, and the Arbitrator shall have the right and authority
to issue monetary sanctions against any of the Partners if, upon a showing of
good cause, that Partner is unreasonably delaying the proceeding. To the
fullest extent permitted by law, the arbitration proceedings and award shall be
maintained in confidence by the Arbitrator and the Partners.
(e) The Disputing Partner shall notify the American Arbitration
Association ("AAA") and the other Partners in writing describing in reasonable
detail the nature of the Dispute (the "Dispute Notice"). The arbitrator (the
"Arbitrator") shall be selected within 15 days of the date of the Dispute
Notice by all of the Partners from the members of a panel of arbitrators of the
AAA or, if the AAA fails or refuses to provide a list of potential arbitrators,
of the Center for Public Resources and shall be experienced in commercial
arbitration. In the event that the Partners are unable to agree on the
selection of the Arbitrator, the AAA shall select the Arbitrator, using the
criteria set forth in this Appendix, within 30 days of the date of the Dispute
Notice. In the event that the Arbitrator is unable to serve, his or her
replacement will be selected in the same manner as the Arbitrator to be
replaced. The Arbitrator shall be neutral. The Arbitrator shall have the
authority to assess the costs and expenses of the arbitration proceeding
(including the arbitrators', and attorneys' fees and expenses) against any or
all Partners.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect or punitive damages or (ii) amend this
Agreement. The Arbitrator shall render the arbitration award, in writing,
within 20 days following the completion of the arbitration hearing, and shall
set forth the reasons for the award. In the event that the Arbitrator awards
monetary damages in favor of either party, the Arbitrator must certify in the
award that no indirect, consequential, incidental, indirect or punitive damages
are included in such award. If the Arbitrator's decision results in a
Appendix D - 2
82
monetary award, the interest to be granted on such award, if any, and the rate
of such interest shall be determined by the Arbitrator in his or her
discretion. The arbitration award shall be final and binding on the Partners,
and judgment thereon may be entered in any court of competent jurisdiction, and
may not be appealed except to the extent permitted by the Federal Arbitration
Act.
(4) Continuation of Business. Notwithstanding the existence of any
Dispute or the pendency of any procedures pursuant to this Appendix, the
Partners agree and undertake that all payments not in dispute shall continue to
be made and all obligations not in dispute shall continue to be performed.
Appendix D - 3
83
APPENDIX 1 TO APPENDIX D
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the Partners and their Affiliates as set forth in the Partnership Agreement.
(b) Second priority shall be given to resolution of the Dispute in a
manner which best achieves the objectives of the business activities and
arrangements under the Partnership Agreement and the Related Agreements and
permits the Partners to realize the benefits intended to be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
Partners or the Arbitrator shall determine to be appropriate under the
circumstances.
Appendix D - 4
84
APPENDIX E
TO LIMITED PARTNERSHIP AGREEMENT
DIVISION OF PARTNERSHIP BUSINESS
If the Partnership is dissolved and Section 12.2(e) applies to the
winding up of the affairs of the Partnership, the Partnership properties shall,
to the extent legally and contractually feasible and, after satisfaction of the
liabilities of the Partnership (whether by payment or reasonable provision for
payment), be distributed in kind to the Partners in accordance with a division
(the "Division") of the properties. The Division shall be implemented by
dividing the properties, to the extent feasible, in accordance with the
following priorities and principles:
A. First priority shall be given to maximizing the consistency of the
Division with a division of the Partnership properties that allocates to
each Partner (subject to such Partner's Percentage Interest of the
Partnership's liabilities) Partnership properties in proportion to the
value of such Partner's Percentage Interest in the Partnership's
business taking into account the aggregate Asset Fair Market Value of
the Partnership's properties and the value and benefits afforded to such
Partner under the Partnership Agreement and the other Related
Agreements.
B. Second priority shall be given to the allocation of the Partnership's
various assets and business units between the Partners so as to maximize
the aggregate going concern value of the respective assets and business
units allocated to each Partner, taking into account, without
limitation, the potential synergies and efficiencies that are reasonably
achievable in connection with the operation of such allocated assets and
business units as an independent business entity.
C. Third priority shall be given to maximizing the consistency of the
Division with the nature and quality of the Assets and Contributed
Business originally transferred to the Partnership by the respective
Partners or their Affiliates.
Absent an agreement by the Partners or direction by the Neutral as to
both (i) how the Partners should allocate Partnership debt and (ii) the process
for relieving each Partner of liability for that portion of Partnership debt
allocated to the other Partner, the Partners (A) shall be jointly and severally
liable to the holders of all Partnership debt and (B) as between the Partners,
each Partner shall be obligated to pay to holders of the debt its Percentage
Interest of all payments of principal and interest on Partnership Debt.
Notwithstanding the foregoing, the Neutral shall be entitled to direct, and any
Partner may propose, an alternative allocation of Partnership debt in any
circumstance where such alternative allocation is reasonably likely to result
in a Division that is more consistent with the priorities outlined above.
For purposes of this Appendix E, Lyondell GP and Lyondell LP shall be
treated as if they were a single Partner, Millennium GP and Millennium LP shall
be treated as if they were a single Partner and Occidental GP, Occidental LP1
and Occidental LP2 shall be treated as if they were a single Partner.
Appendix E - 1
85
The Partners shall attempt to agree on a plan for a mutually acceptable
Division. If they are unable to so agree after 60 days following the occurrence
of the dissolution, a Neutral shall be appointed in accordance with Appendix D
and each Partner shall submit to the Neutral a written proposal for a Division.
The Neutral shall decide which of the three proposals (without in any way
modifying or compromising between the three proposals) more closely follows the
priorities and principles set forth above, and the proposal so chosen shall
thereupon be binding upon all Partners and shall be promptly implemented under
the direction of the Neutral. The Neutral shall be entitled to employ (at the
expense of the Partnership) such financial and accounting advisors and legal
counsel as he or she shall select, provided that no such advisor or counsel
shall have any affiliation with any Partner.
Appendix E - 2
86
SCHEDULE 2.3(d)
Effective Date Capital Account Balances
Column I reflects Capital Accounts after the contributions of the Occidental
Partners on the Effective Date and the Effective Date adjustments to the
Capital Accounts of the Initial Partners, but before the other contributions
and distributions described in Section 2.3(c). Column II indicates the amount
of the contributions and distributions described in 2.3(c) other than accrued
interest. Column III reflects the Capital Accounts if such contributions and
distributions were made (and accrued interest was paid and distributed) on the
Effective Date. Column IV reflects the number of Units owned by each Partner.
PARTNER I II III IV
------- - -- --- --
Lyondell GP $ 42,451,400 $ 42,451,400 820
Lyondell GP 1,931,768,600 $ 148,350,000 2,080,118,600 40,180
------
41,000
Millennium GP 30,544,300 30,544,300 590
Millennium GP 1,720,020,000 (223,350,000) 1,496,670,000 28,910
------
29,500
Occidental GP 15,272,150 15,272,150 295
Occidental LP1 342,872,650 342,872,650 6,623
Occidental LP2 1,588,770,000 (419,700,000) 1,169,070,000 22,582
--------------- -------------- --------------- ------
29,500
$ 5,671,699,100 $ (494,700,000) $ 5,176,999,100
=============== ============== ===============
*The difference between Lyondell LP's contribution of $345 million to satisfy
the Lyondell Note and the distribution to it of $196,650,000 (57%) of the
proceeds from such note.
