1
EXECUTION COPY
RESTRUCTURING, TRANSFER AND SEPARATION AGREEMENT,
dated as of October 27, 1998
by and among
CONOCO INC.
(FORMERLY KNOWN AS CONOCO ENERGY COMPANY)
and
E.I. DU PONT DE NEMOURS AND COMPANY
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1 General..............................................................2
ARTICLE II RESTRUCTURING AND RELATED TRANSACTIONS
Section 2.1 The Restructuring...................................................24
Section 2.2 Transfers of Assets.................................................25
Section 2.3 Methods of Transfer and Assumption..................................26
Section 2.4 Organization of Registrant; Execution of Related
Agreements.........................................................28
Section 2.5 The Intercompany Notes..............................................29
Section 2.6 Registration of Conoco Shares.......................................32
ARTICLE III ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities.................................................34
Section 3.2 Retained Liabilities................................................34
Section 3.3 Construction of Agreements..........................................34
ARTICLE IV CERTAIN RESTRUCTURING DEFINITIONS
Section 4.1 Assumed Liabilities.................................................35
Section 4.2 Retained Liabilities................................................37
Section 4.3 Transferred Assets..................................................39
Section 4.4 Excluded Assets.....................................................39
Section 4.5 Shared Contracts....................................................39
ARTICLE V CORPORATE GOVERNANCE AND CERTAIN FINANCIAL REPORTING
AND OTHER MATTERS
Section 5.1 Rights Plan Amendments..............................................40
Section 5.2 Charter/bylaw Amendments............................................40
Section 5.3 Conoco Board Representation.........................................41
Section 5.4 Committees..........................................................43
Section 5.5 Accounting Principles...............................................44
Section 5.6 Tax Free Spin-Off...................................................45
Section 5.7 Survival of Rights..................................................46
ARTICLE VI SURVIVAL, INDEMNIFICATION, CLAIMS
AND OTHER MATTERS
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Page
Section 6.1 Survival of Agreements..............................................46
Section 6.2 Indemnification.....................................................47
Section 6.3 Procedure for Indemnification.......................................51
Section 6.4 Other Claims for Indemnification....................................55
Section 6.5 Contribution........................................................55
Section 6.6 No Beneficiaries....................................................56
Section 6.7 Indemnification of Directors and Officers...........................56
ARTICLE VII CERTAIN ADDITIONAL MATTERS
Section 7.0 Post-Closing Transactions...........................................56
Section 7.1 Non Assignment, Further Assurances..................................57
Section 7.2 Delayed Companies; Interim Period...................................61
Section 7.3 Notice of Separation................................................65
Section 7.4 Resignations........................................................65
Section 7.5 Other Agreements....................................................65
Section 7.6 Payment of Separation Expenses......................................65
Section 7.7 Signs; Use of Company Name..........................................66
Section 7.8 Products, Supplies and Documents....................................67
Section 7.9 Plant Closings and Layoffs..........................................67
Section 7.10 Litigation.........................................................67
Section 7.11 No Restrictions on Post-Closing Competitive Activities;
Corporate Opportunities...........................................68
Section 7.12 Intellectual Property..............................................70
ARTICLE VIII ACCESS TO INFORMATION AND SERVICES
Section 8.1 Provision of Corporate Records......................................71
Section 8.2 Access to Information...............................................72
Section 8.3 Production of Witnesses and Individuals.............................73
Section 8.4 Retention of Records................................................73
Section 8.5 Confidentiality.....................................................74
Section 8.6 Privileged Matters..................................................76
Section 8.7 Mail and Other Communications.......................................78
ARTICLE IX INTERCOMPANY BUSINESS RELATIONSHIPS
Section 9.1 Cash Management; Settlement of Intercompany Accounts................79
Section 9.2 Letters of Credit...................................................82
Section 9.3 Guarantee Obligations...............................................83
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Page
Section 9.4 Settlements for Cash Collections and Disbursements
After the Cash Settlement Date.....................................84
Section 9.5 Termination of Intercompany Agreements..............................85
Section 9.6 DuPont Hungary Loan. ..............................................86
ARTICLE X INSURANCE
Section 10.1 General............................................................86
Section 10.2 Excess Liability Policies..........................................86
Section 10.3 Transfer of Existing Policies......................................86
Section 10.4 Director's and Officer's Insurance.................................88
Section 10.5 Conoco Liability Policies..........................................88
Section 10.6 Insurance and Indemnities..........................................89
ARTICLE XI ENVIRONMENTAL MATTERS
Section 11.1 Certain Article XI Definitions.....................................89
Section 11.2 Conoco Environmental Liabilities...................................90
Section 11.3 DuPont Environmental Liabilities...................................91
Section 11.4 Other Environmental................................................92
Section 11.5 Damages, Awards, Etc...............................................92
Section 11.6 Remediation........................................................92
Section 11.7 Exclusive Remedy/Indemnification...................................93
ARTICLE XII CONDITION TO CONSUMMATION OF DISTRIBUTION; TERMINATION
Section 12.1 Condition..........................................................93
Section 12.2 Termination........................................................93
ARTICLE XIII DISPUTE RESOLUTION
Section 13.1 Mediation..........................................................94
Section 13.2 Initiation.........................................................94
Section 13.3 Submission to Mediation............................................94
Section 13.4 Provisional Remedies...............................................94
ARTICLE XIV MISCELLANEOUS
Section 14.1 Complete Agreement.................................................95
Section 14.2 Allocation of Costs and Expenses...................................95
Section 14.3 Governing Law......................................................95
Section 14.4 Jurisdiction; Forum................................................95
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Page
Section 14.5 Notices............................................................96
Section 14.6 Amendment and Modification.........................................97
Section 14.7 Successors and Assigns.............................................97
Section 14.8 No Third Party Beneficiaries.......................................97
Section 14.9 Counterparts.......................................................97
Section 14.10 Interpretation....................................................98
Section 14.11 Annexes, Etc......................................................98
Section 14.12 Legal Enforceability..............................................98
Section 14.13 Texas Deceptive Trade Practices Act...............................98
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EXHIBITS
Exhibit A Certificate of Incorporation
Exhibit B By-Laws
Exhibit C Shareholders Rights Plan
Exhibit D Note of Conoco Inc., dated July 20, 1998 and
Conoco Guarantee
Exhibit E Employee Matters Agreement
Exhibit F Transitional Services Agreement
Exhibit G Tax Sharing Agreement
Exhibit H Natural Gas Supply Agreement
Exhibit I Information Services Agreements
Exhibit J Motor Carrier Contract
Exhibit K Registration Rights Agreement
Exhibit L Form of Employee Benefits Note
Exhibit M Mont Belvieu Agreements
SCHEDULES
Schedule 1(a) Mixed-Use Subsidiaries
Schedule 1(b) Transferred Business Companies
Schedule 1(c) Construction Fleet
Schedule 4.4 Excluded Assets
Schedule 6.2 Registration Statement
Schedule 7.2 Delayed Companies
Schedule 7.10(a) Conoco Actions
Schedule 7.10(b) DuPont Actions
Schedule 9.3 DuPont Guarantees
Schedule 9.5 Intercompany Agreements
Schedule 10.5 Named Insured
Schedule 11.1(a) Transferred Environmental Assets
Schedule 11.1(b) Retained Environmental Assets
Schedule 11.2(d) Conoco Liabilities for Environmental Claims
Schedule 11.3(d) DuPont Liabilities for Environmental Claims
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RESTRUCTURING, TRANSFER AND SEPARATION AGREEMENT
RESTRUCTURING, TRANSFER AND SEPARATION AGREEMENT (this
"Agreement"), dated as of October 27, 1998, by and between E.I. du Pont de
Nemours and Company, a Delaware corporation ("DuPont") and Conoco Inc. (formerly
known as Conoco Energy Company), a Delaware corporation ("Conoco").
WHEREAS, in addition to its chemicals, life sciences, fibers,
polymers, and other materials businesses, DuPont has been engaged through
Conoco and its various predecessor companies and their various Subsidiaries (as
defined herein) and divisions in exploring for, developing, producing, refining,
transporting, marketing and distributing oil and gas and associated by-products
in connection with the Transferred Business (as defined herein);
WHEREAS, Conoco, Conoco Inc. (formerly known as Continental
Oil Company), a Delaware corporation ("CI") and their various predecessor
companies and their various Subsidiaries and divisions have been engaged in
various businesses, primarily exploring for, developing, producing, refining,
transporting, marketing and distributing oil and gas and associated by-products
and the manufacture, sale and distribution of chemicals;
WHEREAS, the Board of Directors of DuPont has determined that
it is in the best interests of DuPont and its stockholders for Conoco to offer
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock") of Conoco for sale to the public pursuant to an initial public offering
("IPO") and in connection therewith for DuPont and Conoco to separate their
respective businesses so that from and after the Effective Date the Transferred
Business will be held by Conoco and its Subsidiaries and divisions (the
"Separation");
WHEREAS, as set forth herein and subject to the terms and
conditions hereof, DuPont wishes to transfer and assign to Conoco, and to cause
its Subsidiaries to transfer and assign to Conoco, the assets of the various
divisions, and the stock and other equity securities representing Conoco's
ownership interest in various Subsidiaries and other entities in and through
which the Transferred Business is conducted, in exchange for the assumption by
Conoco or one or more of the Transferred Business Companies (as defined herein)
of the liabilities and obligations relating to the Conoco Business;
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WHEREAS, DuPont and Conoco have determined that it is
necessary and desirable to set forth the principal transactions required to
effect the Restructuring (as defined herein) and the Separation and to set forth
other agreements that will govern certain other matters in connection with the
Restructuring and the Separation.
NOW, THEREFORE, in consideration of the premises or promises
and the mutual covenants and agreements contained herein and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General. As used in this Agreement, capitalized
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
Action: shall mean any action, claim, suit, arbitration,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any Governmental Authority or arbitration tribunal.
AEP Proposed Joint Ventures: shall mean the proposed joint
ventures described in the letter of intent, dated October 2, 1997 among AEP
Resources, Inc., CI and DuPont.
Affiliate: shall mean, with respect to any specified Person, a
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such specified
Person. For purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: shall have the meaning set forth in the recitals.
Agrico Inc.: shall mean American Agricultural Chemical
Company, a Delaware corporation.
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Appropriate Conoco Subsidiary: shall have the meaning set
forth in Section 6.2(b).
Appropriate Retained Subsidiary: shall have the meaning set
forth in Section 6.2(a).
Asset: shall mean, with respect to any Person, any and all of
such Person's title and ownership interest in and to all properties, assets,
claims, Contracts and businesses of every kind, character and description,
whether real, personal or mixed, whether accrued, contingent or otherwise, and
wherever located, including, without limitation, the following: (i) all cash,
cash equivalents, notes and accounts receivable (whether current or
non-current); (ii) all certificates of deposit, banker's acceptances and other
investment securities; (iii) all real properties, including pipelines,
refineries, plants, buildings and other structures and improvements (including
construction in progress) located thereon, fixtures contained therein and
appurtenances thereto; (iv) all leasehold improvements and all machinery,
equipment (including all transportation and office equipment), fixtures, trade
fixtures and furniture; (v) all office supplies, production supplies, spare
parts, other miscellaneous supplies and other tangible property of any kind;
(vi) all capital stock, partnership interests and other equity or ownership
interests or rights, directly or indirectly, in any Subsidiary or other entity;
(vii) all raw materials, work-in-process, finished goods, consigned goods and
other inventories; (viii) all registered and unregistered trademarks, service
marks, service names, trade styles and trade names (including, without
limitation, trade dress and other names, marks and slogans) and all associated
goodwill; all statutory, common law and registered copyrights; all patents; all
applications for any of the foregoing together with all rights to use all of the
foregoing and all other rights in, to, and under the foregoing; all know-how,
inventions, discoveries, improvements, processes, formulae (secret or
otherwise), specifications, trade secrets, whether patentable or not, licenses
and other similar agreements, confidential information, and all drawings,
records, books or other indicia, however evidenced, of the foregoing; (ix) all
rights existing under all Contracts; (x) all rights (including ownership rights
or rights arising under Contracts) existing, relating to all computer hardware,
software, computer programs, systems and documentation relating thereto; all
databases and reference and resource materials; (xi) all prepayments, deposits,
performance bonds or prepaid expenses and deferred tax accounts to the extent
they constitute an asset and not a liability of such party; (xii) all claims,
causes of action, choses in action, rights of recovery and rights of set-off of
any kind; (xiii) all customer lists and records pertaining to customers and
accounts, personnel records, all lists and records pertaining to suppliers and
agents, and all books,
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ledgers, files and business records of every kind; (xiv) all advertising
materials and all other printed or written materials, including purchase orders,
forms, labels, shipping materials, catalogues, sales brochures, operating
manuals, and instructional documents; (xv) all permits, licenses, approvals and
authorizations, to the extent transferable, of Governmental Authorities or third
parties relating to the ownership, possession or operation of the Assets; (xvi)
all goodwill as a going concern and all other intangible properties; (xvii) all
employee contracts, including, without limitation, the right thereunder to
restrict an employee from competing in certain respects; and (xviii) all trucks,
automobiles, railcars and other vehicles, and all vessels, tankers and barges.
Assumed Liabilities: shall have the meaning set forth in
Section 4.1.
Audit: shall mean any audit, assessment of Taxes, other
examination by any Tax Authority, proceeding, or appeal of such a proceeding
relating to Taxes, whether administrative or judicial.
Xxxx Chemical: shall mean Xxxx Chemical Inc., a Delaware
corporation.
Cash Settlement Date: shall have the meaning set forth in
Section 9.1(a).
Charter Amendment: shall have the meaning set forth in Section
5.6(b).
Christiana: shall mean Christiana Insurance Limited, a Bermuda
corporation.
CI: shall have the meaning set forth in the recitals.
Class A Common Stock: shall have the meaning set forth in the
recitals.
Class B Common Stock: shall mean Class B Common Stock, par
value $.01 per share, of Conoco.
Code: shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute.
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Combined Limit Losses: shall have the meaning set forth in
Section 10.2.
Confidential Business Information: shall have the meaning set
forth in Section 8.5(a)(iii).
Confidential Information: shall have the meaning set forth in
Section 8.5(a)(i)
Confidential Operational Information: shall have the meaning
set forth in Section 8.5(a)(ii).
Conoco: shall have the meaning set forth in the recitals.
Conoco Action: shall have the meaning set forth in Section
7.10.
Conoco Board: shall mean the Board of Directors of Conoco.
Conoco Books and Records: shall mean the books and records of
DuPont and its Subsidiaries (or true and complete copies thereof), including all
computerized books and records owned by DuPont and its Subsidiaries, to the
extent they primarily relate to the Transferred Business or the Transferred
Assets, including, but not limited to, the minute books, corporate charters and
by-laws or comparable constitutive documents, records of share issuances, and
related corporate records of the Transferred Business Companies, all such books
and records primarily relating to Transferred Employees, the purchase of
materials, supplies and services, the manufacture and sale of products by the
Transferred Business or dealings with customers of the Transferred Business and
all files primarily relating to any Action the Liability with respect to which
is included in Assumed Liabilities, except that no portion of the books and
records of DuPont or the Retained Subsidiaries containing minutes of meetings of
any board of directors of any of them shall be included. Notwithstanding the
foregoing, "Conoco Books and Records" shall not include any Tax Returns or other
information, documents or materials relating to Taxes.
Conoco Business: shall mean the businesses in which, and the
activities as to which, the Conoco Group or any member thereof was formerly or
is currently engaged (including exploring for, producing, developing, refining,
transporting, marketing and distributing oil and gas and associated by-products
thereof, any chemical business or activities and any other business or
activities), and the
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business and activities which were formerly or are currently conducted by any of
such entities, businesses or divisions through use or ownership of the
Transferred Assets or any other Assets of the Conoco Group, including, but not
limited to, (i) the Transferred Business, (ii) the business and activities
formerly conducted by Conoco's chemicals division (including, but not limited
to, operations sold to Vista Chemical) and all activities conducted by DuPont or
any of its Subsidiaries in connection therewith or related thereto, (iii) the
operations of Agrico Inc., (iv) exploring for, producing, developing, refining,
transporting, marketing and distributing oil and gas and associated by-products
thereof by DuPont or any of its Subsidiaries for the benefit of the Conoco Group
or any member thereof, including the business and activities of DuPont France
and DuPont Italy (v) the business and activities conducted through, and
ownership of, CI's interest in the Pocahontas Partnership, (vi) the activities
and operations of DuPont, any of its Subsidiaries and any of their employees
(including, but not limited to, the activities and operations of Sentinel and
DERS) to the extent performed for or on behalf of the Conoco Business on or
before the Effective Date (as defined without giving effect to this clause (vi))
and (vii) the actions and activities of Conoco and the Transferred Business
Companies in connection with the AEP Proposed Joint Ventures. The "Conoco
Business" specifically excludes (i) the business and activities which were
formerly or are currently conducted by CONSOL Energy and its controlled
affiliates and joint ventures in which it is a participant and Pitt-Consol
(other than through CI's interest in the Pocahontas Partnership), (ii) the
businesses sold to Xxxx Chemical, including the operations at Matagorda and
Chocolate Bayou, Texas, (iii) the businesses and activities of DuPont
Netherlands and (iv) the businesses and activities of Sentinel except as
provided in clause (vi) above.
Conoco Environmental Liabilities: shall have the meaning set
forth in Section 11.2.
Conoco Group: shall mean collectively, Conoco, CI, and the
other Transferred Business Companies, any of their predecessor companies or
businesses or any of their Subsidiaries, business units or divisions.
Conoco Guarantee: shall mean the guarantee by Conoco, dated as
of July 24, 1998, of CI's obligations under the Note, dated July 20, 1998 and
attached hereto as part of Exhibit D.
Conoco Master Note: shall mean the promissory notes evidencing
indebtedness of CI to DuPont under the DuPont Master Note Agreement.
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Conoco Party: shall have the meaning set forth in Section
6.2(a).
Conoco Patents: shall mean (a) all U.S. and foreign patents,
patent applications and patent disclosures (including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions, or renewals of
any of the foregoing) owned by or under obligation of assignment to Conoco or
any Transferred Business Company or with respect to which Conoco or any
Transferred Business Company has the power to grant an immunity from suit for
infringement, (b) all U.S. and foreign patents, patent applications and patent
disclosures (including all reissues, divisions, continuations,
continuations-in-part, substitutions, extensions, or renewals of any of the
foregoing) granted after the Effective Date by the applicable Governmental
Authorities based on all applications owned by or under obligation of assignment
to Conoco or any Transferred Business Company or with respect to which Conoco or
any Transferred Business Company has the power to grant an immunity from suit
for infringement, (c) all U.S. and foreign patent, patent application, and
patent disclosure (including all reissues, divisions, continuations,
continuations-in-part, substitutions, extensions, or renewals of any of the
foregoing) rights which are owned by or under obligation of assignment to Conoco
or any Transferred Business Company resulting from Joint Invention Conceptions
documented in invention disclosures as of the Effective Date, and (d) the patent
for gas-to-liquids technology, to the extent not otherwise owned by Conoco or
one of the Transferred Business Companies at the Effective Date.
Conoco Payables: shall have the meaning set forth in Section
9.1(b).
Conoco Rights Plan: shall have the meaning set forth in
Section 2.4(a).
CONSOL Energy: shall mean CONSOL Energy Inc., a Delaware
corporation.
Construction Fleet: shall mean the vehicles, Equipment and
machinery utilized in construction which are owned by DuPont or a Retained
Subsidiary and which, in whole or in part, from time to time, are used in the
Transferred Business or operated by employees of Conoco or a Transferred
Business Company, including but not limited to the items set forth on Schedule
1(c).
Contract: shall mean any contract, agreement, lease, Equipment
lease, license, sales order, purchase order, instrument or other commitment or
arrangement
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that is binding on any Person or entity or any part of its property under
applicable Law.
Conveyancing and Assumption Instruments: shall mean
collectively, the various bills of sale, undertakings and other agreements,
instruments and other documents to be entered into in order to effect the
Restructuring, and the transfer of Assets and the assumption of Liabilities in
the manner contemplated by Section 2.3.
Danube: shall mean Danube Insurance Limited.
DCEO: shall mean Du Pont Chemical and Energy Operations, Inc.,
a Delaware corporation.
DEC: shall mean Du Pont Energy Company, a Delaware
corporation.
Delayed Company: shall have the meaning set forth in Section
7.2(a).
DERS: shall mean DuPont Environmental Remediation Services,
Inc., a Delaware corporation.
Dispute: shall have the meaning set forth in Section 13.1.
DuPont: shall have the meaning set forth in the recitals.
DuPont Action: shall have the meaning set forth in Section
7.10.
DuPont Board: shall mean the Board of Directors of DuPont.
DuPont Books and Records: shall mean the books and records (or
true and complete copies thereof), including all computerized books and records,
minute books, corporate charters and by-laws or comparable constitutive
documents, records of share issuances and related corporate records of or owned
by DuPont and its Subsidiaries (including Conoco and the Transferred Business
Companies) other than the Conoco Books and Records. Notwithstanding the
foregoing, "DuPont Books and Records" shall not include any Tax Returns or other
information, documents or materials relating to Taxes.
DuPont Business: shall mean the businesses in which, and the
activities as to which, DuPont and its Subsidiaries, including Conoco and the
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Transferred Business Companies, have been formerly or are currently engaged, but
excluding the Conoco Business.
DuPont Designees: shall have the meaning set forth in Section
5.3(b).
DuPont Environmental Liability: shall have the meaning set
forth in Section 11.3.
DuPont France: shall mean Du Pont de Nemours (France) X.X.
XxXxxx Guarantee Amount: shall mean as of the Effective Date
$1,610,390,718, and thereafter, such amount as adjusted from time to time in the
good faith judgment of the Chief Financial Officer or the Treasurer of DuPont,
after consultation with, and effective upon written notice to, Conoco, to
reflect any increase or decrease in financial exposure of DuPont under the
DuPont Guarantees, the termination of DuPont Guarantees or the removal or
replacement of DuPont's obligations under the DuPont Guarantees; provided that
the DuPont Guarantee Amount shall not be initially adjusted until the amount of
any such increase or decrease exceeds $50 million, and then adjusted to the full
extent of such amount, and thereafter, the DuPont Guarantee Amount shall only be
further adjusted when the amount of any additional increase or decrease is equal
to or greater than $50 million, or in the case of a decrease which reduces the
DuPont Guarantee Amount to zero.
DuPont Guarantee Fee: shall have the meaning set forth in
Section 9.3(b).
DuPont Guarantees: shall have the meaning set forth in Section
9.3(a).
DuPont Hungary: shall mean DuPont Conoco Hungary Kft., a
Hungarian corporation.
DuPont Hungary Loan: shall mean the amounts owed as of the
date hereof by DuPont Hungary to DuPont Engineering Products X.X.
XxXxxx Italy: shall mean, collectively, Du Pont de Nemours
Italiana S.p.A. and Du Pont Conid S.p.A.
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DuPont Master Note Agreement: shall mean the Note Agreement
between DuPont and CI, dated as of October 2, 1989, as the same may be amended
from time to time.
DuPont Master Note: shall mean promissory notes evidencing
indebtedness of DuPont under the DuPont Master Note Agreement.
DuPont Netherlands: shall mean DuPont de Nemours (Nederland)
B.V. and its Subsidiaries (other than Conoco CS Spol. s.r.o.)
DuPont Party: shall have the meaning set forth in Section
6.2(b).
DuPont Patents: shall mean (a) all U.S. and foreign patents,
patent applications and patent disclosures (including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions, or renewals of
any of the foregoing) owned by or under obligation of assignment to DuPont or
any Retained Subsidiary or with respect to which DuPont or any Retained
Subsidiary has the power to grant an immunity from suit for infringement, (b)
all U.S. and foreign patents, patent applications and patent disclosures
(including all reissues, divisions, continuations, continuations-in-part,
substitutions, extensions, or renewals of any of the foregoing) granted after
the Effective Date by the applicable Governmental Authorities based on all
applications owned by or under obligations of assignment to DuPont or any
Retained Subsidiary or with respect to which DuPont or any Retained Subsidiary
has the power to grant an immunity from suit for infringement, and (c) all U.S.
and foreign patent, patent application and patent disclosure (including all
reissues, divisions, continuations, continuations-in-part, substitutions,
extensions, or renewals of any of the foregoing) rights which are owned by or
under obligation of assignment to DuPont or any Retained Subsidiary resulting
from Joint Invention Conceptions documented in invention disclosures as of the
Effective Date.
DuPont Payables: shall have the meaning set forth in Section
9.1(b).
DuPont Transferred Assets: shall mean (i) any and all Assets
owned by a Mixed-Use Subsidiary that are not primarily used in the Transferred
Business and (ii) the stock of any Subsidiary owned by a Transferred Business
Company, which Subsidiary, after giving effect to the transfer, if any, of
Transferred Assets, would only be engaged in the Retained Business.
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DTPA: shall have the meaning set forth in Section 14.13.
Effective Date: shall mean the close of business on the date
on which the first closing of the IPO occurs.
Effective Time: shall mean the time on the Effective Date on
which the first closing of the IPO occurs.
Employee Benefits Adjustment Amount: shall have the meaning
set forth in Section 2.5(c)
Employee Benefits Note: shall have the meaning set forth in
Section 2.5(c).
Employee Matters Agreement: shall mean the Employee Matters
Agreement between DuPont and Conoco dated the date hereof, substantially in the
form of Exhibit E hereto.
Environment: shall mean any surface water, groundwater,
drinking water supply, land surface or subsurface strata, or ambient air.
Environmental Claim: shall mean any third party action,
lawsuit, claim or proceeding which seeks to impose Liability or injunctive
relief for (i) noise, (ii) pollution or protection of the air, surface water,
groundwater or land, (iii) solid, gaseous or liquid waste generation, treatment,
storage, disposal or transportation, or (iv) damages to persons, property or
natural resources resulting from a Release into the Environment of any Hazardous
Substances.
Environmental Permit: shall mean any permit, license, approval
or other authorization under any applicable Law, regulation and other
requirement of any Governmental Authority relating to pollution or protection of
the environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes.
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Equipment: shall mean all equipment, fixtures, physical
facilities, tank batteries, surface and subsurface machinery, inventory, spare
parts, supplies, tools and other tangible personal property, including, without
limitation, casing, tubing, tubular goods, rods, pumping units and engines,
derricks, platforms, separators, compressors, gathering lines, flow lines,
tanks, and communication systems and equipment.
Excess Director Number: shall have the meaning set forth in
Section 5.3(d).
Excess Proceeds: shall have the meaning set forth in Section
2.5(b).
Excluded Assets: shall have the meaning set forth in Section
4.4.
Final Determination: shall mean the final resolution of any
Tax (or other Tax matter) for a taxable period, including related interest or
penalties, that, under applicable law, is not subject to further appeal, review
or modification through proceedings or otherwise, including (1) by the
expiration of a statute of limitations or a period for the filing of claims for
refunds, amending Tax Returns, appealing from adverse determinations, or
recovering any refund (including by offset), (2) by a decision, judgment,
decree, or other order by a court of competent jurisdiction, which has become
final and unappealable, (3) by a closing agreement or an accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable agreements
under laws of other jurisdictions, (4) by execution of an Internal Revenue
Service Form 870 or 870AD, or by a comparable form under the laws of other
jurisdictions (excluding, however, with respect to a particular Tax Item for a
particular taxable period any such form that reserves (whether by its terms or
by operation of law) the right of the taxpayer to file a claim for refund and/or
the right of the Tax Authority to assert a further deficiency with respect to
such Tax Item for such period), or (5) by any allowance of a refund or credit,
but only after the expiration of all periods during which such refund or credit
may be recovered (including by way of offset).
GAAP: shall mean generally accepted accounting principles of
the United States as in effect from time to time.
Governmental Authority: shall mean any nation or government,
any state, municipality or other political subdivision thereof and any entity,
agency, commission or court, whether domestic or foreign or multinational,
exercising
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executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any executive official thereof.
Hazardous Substance: shall mean any substance, whether solid,
liquid or gaseous, which is listed, defined or regulated as a "hazardous
substance", "hazardous waste", "solid waste", "oils", "pollutants", or
"contaminants" or otherwise classified as hazardous or toxic, in or pursuant to
any Requirements of Environmental Law; or which is or contains asbestos, any
polychlorinated biphenyls, urea formaldehyde foam insulation, explosive or
radioactive material, or motor fuel or other petroleum hydrocarbons.
Income Tax: shall mean (a) any Tax based upon, measured by, or
calculated with respect to (1) net income or profits (including, without
limitation, any capital gains Tax, minimum Tax and any Tax on items of Tax
preference, but not including sales, use, real or personal property, gross or
net receipts, transfer or similar Taxes) or (2) multiple bases if one or more of
the bases upon which such Tax may be based, measured by, or calculated with
respect to, is described in clause (1) above, or (b) any United States state or
local franchise Tax.
Indebtedness: of any Person shall mean, (a) all obligations of
such Person for borrowed money, including any Indebtedness under the Note or
with respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage, lien, pledge, or other encumbrance on property
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all guarantees by such Person of Indebtedness of others
which in the aggregate exceed Two Billion Dollars ($2,000,000,000), (h) all
capital lease obligations of such Person, and (i) all securities or other
similar instruments convertible or exchangeable into any of the foregoing, but
excluding (1) industrial revenue bonds, (2) operating leases, (3) in the case of
CI, the Revolving Credit Facility and (4) daily cash overdrafts associated with
routine cash operations.
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Indemnifiable Loss Deduction: shall have the meaning set forth
in Section 6.2(e)(i).
Indemnifying Party: shall mean any party who is required to
pay any other person pursuant to this Agreement.
Indemnitee: shall mean any party who is entitled to receive
payment from an Indemnifying Party pursuant to this Agreement.
Indemnity Payment: shall mean the amount an Indemnifying Party
is required to pay to (or for the benefit of) an Indemnitee pursuant to this
Agreement.
Information: shall have the meaning set forth in Section 8.2.
Information Services Agreements: shall mean collectively, the
Information Systems and Telecommunications Carrier Transitional Services
Agreement, the Information Systems Transitional Services Agreement, the
Information Systems Side Letter Agreement, the Lease Agreement for office and
data center space located in Ponca City, Oklahoma and the Lease Agreement for
office and data center space located in Houston, Texas all of which are between
DuPont and Conoco, dated as of the date hereof substantially in the form of
Exhibit I hereto.
Intercompany Accounts: shall have the meaning set forth in
Section 9.1(d).
Intercompany Agreement: shall mean any Contract between any
entities included within the Retained Business (including, without limitation,
DuPont and the Retained Subsidiaries), on the one hand, and any entities
included within the Transferred Business (including, without limitation, Conoco
and the Transferred Business Companies), on the other hand, entered into prior
to the Effective Date.
Intercompany Loan: shall have the meaning set forth in Section
2.5(a).
Interim Period: shall have the meaning set forth in Section
7.2(a).
IPO: shall have the meaning set forth in the recitals.
IPO Excess: shall have the meaning set forth in Section
2.5(b).
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IRS: shall mean the Internal Revenue Service or any successor
agency or authority.
Joint Invention Conceptions: shall mean, with respect to
patents, invention conceptions jointly developed by (a) DuPont and/or any
Retained Subsidiary and (b) Conoco and/or any Transferred Business Company.
Law: shall mean any law, statute, ordinance, rule, regulation,
order, writ, judgment, injunction or decree of any Governmental Authority.
Liabilities: shall mean any and all Indebtedness, liabilities
and obligations, whether accrued, fixed or contingent, mature or inchoate, known
or unknown, reflected on a balance sheet or otherwise, including, but not
limited to, those arising under any law, rule, regulation, Action, order,
injunction or consent decree of any Governmental Authority or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Losses: shall mean any and all damages, losses, deficiencies,
Liabilities, obligations, penalties, judgments, settlements, claims, payments,
fines, interest, costs and expenses (including, without limitation, the costs
and expenses of any and all Actions and demands, assessments, judgments,
settlements and compromises relating thereto and the costs and expenses of
attorneys', accountants', consultants' and other professionals' fees and
expenses incurred in the investigation or defense thereof or the enforcement of
rights hereunder), including direct and consequential damages, but excluding
punitive damages (other than punitive damages awarded to any third party against
an Indemnified Party).
Mixed-Use Subsidiaries: shall mean those corporations,
partnerships, joint ventures, or other entities set forth on Schedule 1(a).
Mont Belvieu Agreements: shall mean the Pipeline Operation
Agreement, the Ethane Storage and Throughput Agreement, the Ethylene Storage and
Throughput Agreement, the Emergency Call Transportation Service Agreement and
the Purity Ethane Sales Agreement between DuPont and Conoco, dated the date
hereof, substantially in the forms included in Exhibit M hereto.
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Natural Gas Supply Agreement: shall mean the Natural Gas
Supply Agreement between DuPont and Conoco, dated the date hereof, substantially
in the form of Exhibit H hereto.
Net Proceeds: shall have the meaning set forth in Section
7.2(d).
New Notes: shall have the meaning set forth in Section 2.5(c).
Non-Permitted Names: shall have the meaning set forth in
Section 7.7.
Note: shall mean the Promissory Note issued by CI to DEC,
dated as of July 20, 1998, in the principal amount of $7.5 Billion, a copy of
which is attached hereto as part of Exhibit D.
Note Interest: shall have the meaning set forth in Section
2.5(b).
NYSE: shall mean The New York Stock Exchange, Inc.
Option Amount: shall mean the algebraic sum of (a) the Deemed
Future Appreciation, (b) the After Tax Adjustment and (c) 50% of an amount equal
to the result obtained by subtracting the Intrinsic Value of Elected Options
from the Intrinsic Value of Non-Elected Options. For purposes of this
definition:
"Active Conoco Employees" shall mean Conoco Employees eligible
to elect to cause the DuPont Stock Options and DuPont SARs held by such
employees to be cancelled and to be granted options to acquire Newly Granted
Options and Newly Granted SARs pursuant to Section 2.06 of the Employee Matters
Agreement;
"After Tax Adjustment" shall mean an amount equal to 50% of
29% of the Intrinsic Value of all DuPont Stock Options held by Active Conoco
Employees other than incentive stock options within the meaning Section 422 of
the Code;
"Deemed Future Appreciation" shall mean 32.25% of the average
price of common stock of DuPont over the five trading days ending on the date on
which the initial offering price to the public of a share of common Stock of
Conoco in the IPO is determined (calculated as the average of the mean of the
high and low prices on each of these five days as reported on the NYSE) (the
"DuPont Stock
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Price") multiplied by the total number of shares of common stock of DuPont
subject to Non-Elected Options;
"Intrinsic Value" of Elected Options or Non-Elected Options,
as applicable, shall mean for each such option as to which the DuPont Stock
Price exceeds the exercise price thereof, the product of (x) the number of
shares of common stock of DuPont subject to such option and (y) the DuPont Stock
Price less the exercise or base price of such option;
"Elected Options" shall mean DuPont Stock Options and DuPont
SARs (excluding Conoco Key Unit Options) outstanding as of the close of business
on October 19, 1998, determined pursuant to the records of the relevant plan
administrator, held by Active Conoco Employees as to which such employees have
elected to cause such DuPont Stock Options and DuPont SARs to be cancelled and
to be granted options to acquire Newly Granted Options and Newly Granted SARs
pursuant to Section 2.06 of the Employee Matters Agreement; and
"Non-Elected Options" shall mean DuPont Stock Options and
DuPont SARs outstanding as of the close of business on October 19, 1998,
determined pursuant to the records of the relevant plan administrator, held by
Active Conoco Employees as to which such employees have not elected to cause
such DuPont Stock Options and DuPont SARs to be cancelled and to be granted
options to acquire Newly Granted Options and Newly Granted SARs pursuant to
Section 2.06 of the Employee Matters Agreement.
All other capitalized terms used in this definition, but not
defined in this definition shall have the meanings ascribed to such terms in the
Employee Matters Agreement.
Outside Date: shall have the meaning set forth in Section
2.5(b).
Outstanding Check Amount: shall have the meaning set forth in
Section 9.1(c).
Person: shall mean any natural person, firm, individual,
corporation, partnership, limited liability company, limited liability
partnership, joint venture, business trust, association, trust, company or other
organization or entity, whether incorporated or unincorporated, or any
Governmental Authority.
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Petrozuata: shall mean Petrolera Zuata, Petrozuata C.A., a
Venezuelan compania anonima in which Conoco owns an indirect non-controlling
50.1 percent equity interest.
Pitt-Consol: shall mean Pitt-Consol Chemical Company, a New
Jersey corporation.
Pocahontas Partnership: shall mean the Pocahontas Gas
Partnership, a Virginia general partnership.
Principal Related Agreements: shall have the meaning set forth
in the definition of Related Agreements.
Privilege: shall have the meaning set forth in Section 8.6(a).
Privileged Information: shall have the meaning set forth in
Section 8.6(a).
Registration Rights Agreement: shall mean the Registration
Rights Agreement between DuPont and Conoco, dated the date hereof, substantially
in the form of Exhibit K hereto.
Registration Statement: shall have the meaning set forth in
Section 2.6(a).
Related Agreements: shall mean, collectively, the Employee
Matters Agreement, the several Transitional Services Agreements, the Tax Sharing
Agreement, the Natural Gas Supply Agreement, the Registration Rights Agreement,
the Motor Carrier Contract, the Note and the Conoco Guarantee, the Employee
Benefits Note and the associated guarantee by Conoco, the Revolving Credit
Facility and the related guarantee of CI's obligations thereunder by Conoco, the
Information Services Agreements, the Mont Belvieu Agreements, the Engineering
and SHE Standards and Guidelines License Agreement, the UPbase(TM) System
Software License Agreement and the DME Tolling Agreement (the foregoing
agreements, collectively, the "Principal Related Agreements"), and all other
agreements to be entered into between DuPont and the Retained Subsidiaries, on
the one hand, and Conoco and its Subsidiaries, on the other hand, in connection
with the Restructuring, the Separation and the consummation of the transactions
contemplated hereby or which relate to the
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ongoing relationship between Conoco and its Subsidiaries on the one hand, and
DuPont and the Retained Subsidiaries, on the other hand.
Release: shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor Environment or into or out of any
property.
Representative: shall mean, with respect to any Person, each
of such Person's directors, officers, employees, representatives, attorneys,
accountants, advisors and agents, and each of the heirs, executors and assigns
of any of the foregoing.
Requirements of Environmental Law: shall mean all requirements
of environmental or ecological laws or regulations, including all requirements
imposed by any law, rule or regulation of any Governmental Authority at any time
in effect which relate to (i) noise, (ii) pollution or protection of the air,
surface water, groundwater or land, (iii) solid, gaseous or liquid waste
generation, treatment, storage, disposal or transportation, or (iv) employee
health and safety.
Restated Tax Saving Amount: shall have the meaning set forth
in Section 6.2(e)(ii).
Restructured Notes: shall have the meaning set forth in
Section 2.5(b).
Restructuring: shall have the meaning set forth in Section
2.1.
Retained Business: shall mean the businesses in which, and the
activities as to which, DuPont and its Subsidiaries, including Conoco and its
Subsidiaries, are currently engaged, but excluding in any event the Transferred
Business. The "Retained Business" shall include (i) CONSOL Energy and its
controlled affiliates and joint ventures in which it is a participant (other
than through CI's interest in the Pocahontas Partnership), (ii) Pitt-Consol,
(iii) Sentinel and (iv) DuPont Netherlands.
Retained Environmental Assets: shall have the meaning set
forth in Section 11.1(b).
Retained Liabilities: shall have the meaning set forth in
Section 4.2.
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Retained Subsidiary: shall mean any Subsidiary of DuPont at
any time after the date of this Agreement, including DuPont Netherlands, but
excluding Conoco and the Transferred Business Companies.
Revolving Credit Facility: shall mean a revolving credit
facility provided to CI by DEC providing for borrowings in an aggregate
principal amount not to exceed $500 million at any one time outstanding.
Risk Manager: shall have the meaning set forth in Section
10.2.
Ruling: shall have the meaning set forth in Section 5.6(b)
SEC: shall mean the U.S. Securities and Exchange Commission.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Senior Executive: shall mean the Chief Executive Officer,
Chief Financial Officer or General Counsel of DuPont or Conoco, as applicable.
Sentinel: shall mean Sentinel Transportation Company, a
Delaware corporation.
Separation: shall have the meaning set forth in the recitals.
Separation Expenses: shall mean (a) those expenses to be paid
by DuPont pursuant to Section 6(f) of the underwriting agreement to be entered
into in connection with the IPO and (b) those expenses, incurred and paid
between May 11, 1998 and 24 months following the date on which DuPont's voting
power falls below 50% of the voting power of all of the outstanding shares of
Voting Stock of Conoco, incurred with third parties, on a non recurring basis
directly as result of the IPO, the Restructuring, the Separation or any
transaction subsequent to the IPO (including a series of related transactions)
resulting in a reduction in the number of shares of Voting Stock beneficially
owned by DuPont, provided that prior to any such subsequent transaction the
voting power of the shares of Voting Stock beneficially owned by DuPont is not
less than 50% of the voting power of all of the then outstanding shares of
Voting Stock. Notwithstanding anything to the contrary in this Agreement, (i)
expenses that benefit future operations of the Transferred Business will not be
Separation Expenses; (ii) Separation Expenses must be out-of-pocket expenditures
which meet accounting guidelines for both discontinued operations under APB 30
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and for gain/loss accounting treatment and shall specifically exclude accruals
(provided that expenses that would otherwise have qualified as Separation
Expenses but which have been accrued shall be deemed Separation Expenses once
such expenses have been paid and provided further that Separation Expenses shall
not include any costs and expenses associated with pension plans or severance
owed to employees which are exclusively provided for in the Employee Matters
Agreement); (iii) in the event that the parties disagree as to whether an
expense meets accounting guidelines for both discontinued operations under APB
30 and for gain/loss accounting treatment or otherwise qualifies generally as a
Separation Expense under this definition and therefore qualifies for
reimbursement by DuPont pursuant to this Agreement, DuPont's good faith decision
shall be final; (iv) any increased costs associated with a contract as to which
third party consent was obtained with respect to the Separation (other than
nonrecurring breakage and similar fees and incidental expenses paid in order to
obtain such consents) will not be Separation Expenses, (v) amounts paid pursuant
to the indemnification and contribution provisions of this Agreement and the
Related Agreements will not be Separation Expenses, (vi) expenses that are not
incurred and paid prior to or on the date which is twenty four months from the
date on which DuPont's voting power falls below 50% of the voting power of all
of the outstanding shares of Voting Stock of Conoco shall not be Separation
Expenses and (vii) Separation Expenses, shall not include costs and expenses
related to information technology which will be governed exclusively by the
Information Services Agreements.
Shared Contracts: shall mean Contracts with third parties
which directly benefit both DuPont or a Retained Subsidiary and Conoco or one of
its Subsidiaries.
Shared Contractual Liabilities: shall mean Liabilities in
respect of Shared Contracts.
Subsidiary: shall mean (a) a corporation, at least a majority
of the voting or capital stock of which is as of the time in question directly
or indirectly owned by such party and (b) any other partnership, joint venture,
association, joint stock company, trust, unincorporated organization or other
entity, in which such party, directly or indirectly, owns a majority of the
equity interest thereof or has the power to elect or direct the election of at
least a majority of the members of the governing body of such entity or
otherwise has control over such entity (e.g., as the managing partner of a
partnership).
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Target Cash Amount: shall mean $225 million of cash and cash
equivalents (in United States Dollars or an equivalent amount in foreign
currency, determined using the exchange rates quoted in the Financial Times two
business days prior to the Cash Settlement Date), excluding from the foregoing
$225 million amount (i) $70 million (which shall consist of (A) any certificates
of deposit held by Danube, valued at their face amounts, and (B) to the extent
in excess of the amount set forth in clause (A) above, other forms of cash and
cash equivalents held by Danube and its subsidiaries whether or not
characterized or classified as such by GAAP); and (ii) the amounts of unearned
premiums and loss reserves required by Section 10.3 to be ceded by Danube to
Christiana pursuant to Section 10.3 to the extent such amounts have not been
paid by Danube to Christiana as of the Cash Settlement Date.
Tax or Taxes: shall mean any charges, fees, levies, imposts,
duties, or other assessments of a similar nature, including income, alternative
or add-on minimum, gross receipts, profits, lease, service, service use, wage,
wage withholding, employment, workers compensation, business occupation,
occupation, premiums, environmental, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, estimated,
highway use, commercial rent, capital stock, paid up capital, recording,
registration, property, real property gains, value added, business license,
custom duties, or other tax or governmental fee of any kind whatsoever, imposed
or required to be withheld by any Tax Authority including any interest,
additions to tax, or penalties applicable or related thereto.
Tax Authority: shall mean a governmental authority or any
subdivision, agency, commission or authority thereof or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including, without limitation, the IRS).
Tax Item: shall mean any item of income, gain, loss, deduction
or credit, or other attribute that may have the effect of increasing or
decreasing any Tax.
Tax Returns: shall mean any return, report, certificate, form
or similar statement or document (including, any related or supporting
information or schedule attached thereto and any information return, amended tax
return, claim for refund or declaration of estimated tax) required to be
supplied to, or filed with, a Tax Authority in connection with the
determination, assessment or collection of any Tax
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or the administration of any laws, regulations or administrative requirements
relating to any Tax.
Tax Saving Amount: shall have the meaning set forth in Section
6.2(e)(i).
Tax Sharing Agreement: shall mean the Tax Sharing Agreement
between DuPont and Conoco, dated the date hereof, substantially in the form of
Exhibit G hereto.
Third Party Claim: shall have the meaning set forth in Section
6.3(a).
Third Party Sites: shall have the meaning set forth in Section
11.4.
Tie-In Limit Loss: shall have the meaning set forth in Section
10.4(b).
Transferred Assets: shall have the meaning set forth in
Section 4.3.
Transferred Business: shall mean the businesses and activities
currently conducted by Conoco, its Subsidiaries and other Transferred Business
Companies described in the narrative portion of the section entitled "Business"
in the Registration Statement, but excluding (i) by CONSOL Energy and its
controlled affiliates and joint ventures in which it is a participant (other
than through CI's interest in the Pocahontas Partnership) and Pitt-Consol, (ii)
by DuPont Netherlands, (iii) by Sentinel, (iv) in the United States by DuPont
and its Subsidiaries (other than Conoco and its Subsidiaries) and (v) outside of
the United States by DuPont and its Subsidiaries of the same general type and
nature as the businesses and activities referred to in clause (iv) above.
Transferred Business Companies: shall mean those corporations,
partnerships, joint ventures, or other entities each of which currently conducts
the Transferred Business which are set forth on Schedule 1(b).
Transferred Employees: shall mean (a) those persons who are
employed as officers or employees of the Transferred Business immediately prior
to or effective as of the Effective Date and (b) all former officers and
employees of the Transferred Business who, immediately prior to the termination
of their employment, were employed in the Transferred Business. In the event
that on the Effective Date
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(or if such person is no longer employed as of the Effective Date, then as of
the last date of such person's employment) any person was or shall be employed
in the Transferred Business, as well as in the Retained Business, such person
shall be considered a Transferred Employee if, but only if, on the Effective
Date (or if such person is no longer employed as of the Effective Date, then as
of the last date of such person's employment) such person's primary employment
was or shall be in the Transferred Business.
Transferred Environmental Asset: shall have the meaning set
forth in Section 11.1(a).
Transitional Services Agreements: shall mean the several
Transitional Services Agreements between DuPont and/or any of the Retained
Subsidiaries on the one hand, and Conoco, and/or any of its Subsidiaries, on the
other hand, dated the date hereof, substantially in the form of Exhibit F
hereto.
Vista Chemical: shall mean CONDEA Vista Company (formerly
named Vista Chemical Company), a Delaware corporation.
Voting Stock: shall mean the Class A Common Stock, the Class B
Common Stock and any other capital stock of Conoco entitled to vote generally in
the election of directors but excluding any class or series of capital stock
only entitled to vote in the event of dividend arrearages thereon, whether or
not at the time of determination there are any such dividend arrearages.
WARN Act: shall have the meaning set forth in Section 7.9.
Waste Site: shall mean any well, pit, pond, lagoon,
impoundment, ditch, landfill, waste storage container, site or area where waste
materials or Hazardous Substances have been Released, deposited, stored,
disposed of, placed or otherwise come to be located.
ARTICLE II
RESTRUCTURING AND RELATED TRANSACTIONS
Section 2.1 The Restructuring. Subject to the terms and
conditions of this Agreement, DuPont and Conoco shall use, and shall cause their
respective
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Subsidiaries to use, their respective reasonable commercial efforts to
consummate, on or prior to the Effective Date, the transactions heretofore
documented and agreed to by the parties hereto as constituting the restructuring
(the "Restructuring"). It is the intent of the parties that after consummation
of the Restructuring, subject to receipt of all approvals required of any
Governmental Authority or any third party as set forth more fully in Sections
7.1 and 7.2 hereof, (i) the Transferred Business Companies will all be owned,
directly or indirectly, by Conoco and the Transferred Business will be conducted
entirely by Conoco and its Subsidiaries, (ii) Conoco or one of the Transferred
Business Companies will own all of the Transferred Assets, (iii) Conoco or one
or more of the Transferred Business Companies will, to the extent not previously
liable therefor, have assumed and be liable for all of the Assumed Liabilities,
(iv) the Retained Business will be conducted entirely by DuPont and the Retained
Subsidiaries, (v) DuPont or one of the Retained Subsidiaries will own all of the
DuPont Transferred Assets and the Excluded Assets and (vi) DuPont or one of the
Retained Subsidiaries will, to the extent not previously liable therefor, have
assumed and be liable for all of the Retained Liabilities.
Section 2.2 Transfers of Assets.
(a) Prior to or for one year following the Effective
Date, if DuPont or Conoco, as the case may be, identifies any Asset, other than
Shared Contracts, owned by one of the Mixed-Use Subsidiaries which (i) at such
time and for the prior 12 month period was used primarily in the Transferred
Business and is then owned by DuPont or one of the Retained Subsidiaries or (ii)
at such time and for the prior 12 month period was used primarily in the
Retained Business or is an Excluded Asset and is then owned by Conoco or one of
the Transferred Business Companies, DuPont or Conoco, as the case may be, shall
or shall cause any such Asset to be conveyed, assigned, transferred and
delivered in accordance with Section 2.3 to the entity identified by DuPont or
Conoco, as the case may be, as the appropriate transferee.
(b) For one year following the Effective Date, if
DuPont or Conoco, as the case may be, identifies any Asset (other than any stock
or other equity interest in a Delayed Company) then owned by either DuPont or
any of the Retained Subsidiaries, on the one hand, or Conoco or any of the
Transferred Business Companies, on the other hand, that, both DuPont and Conoco
each agree in their good faith judgment more properly belongs to the other
party, or a Subsidiary of the other party, then DuPont or Conoco, as the case
may be, shall convey, assign, transfer and deliver or shall cause any such Asset
to be conveyed, assigned, transferred and delivered in
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accordance with Section 2.3 to the entity identified by Conoco or DuPont, as the
case may be, as the appropriate transferee; provided, however, that the
foregoing shall not apply to the sale or transfer of any stock of, equity
interests in, or Assets of DuPont Netherlands, which sales or transfers, if any,
shall be at fair market value (it being agreed that the parties have no
obligations or agreement as to any such sale or transfer).
(c) As soon as is reasonably practicable following
the Effective Date, DuPont shall, or shall cause the appropriate Retained
Subsidiary to convey, assign, transfer and deliver in accordance with Section
2.3 the Assets listed on Schedule 1(c) to the entity identified by Conoco as the
appropriate transferee.
(d) The parties hereto acknowledge and agree that
except for transfers pursuant to the Restructuring, any transfers occurring more
than one year following the Effective Date, and the transfer of the equity
interests in DuPont Netherlands, if any, the transfers of Assets provided for in
this Agreement are to be made without any additional consideration other than
the assumption of Liabilities by the transferee.
(e) All conveyances, assignments, transfers and
deliveries of Assets occurring after the Effective Date pursuant to this Section
2.2 shall be governed by the terms of this Agreement. In furtherance of the
foregoing, any Asset transferred pursuant to this Section 2.2 to Conoco or one
of the Transferred Business Companies shall be deemed a Transferred Asset and
any Asset transferred to DuPont or one of the Retained Subsidiaries shall be
deemed a DuPont Transferred Asset for all purposes of this Agreement and the
Related Agreements.
Section 2.3 Methods of Transfer and Assumption. The parties
hereto agree that (a) required transfers of Transferred Assets (other than, in
general, Assets owned by Transferred Business Companies which are not Mixed-Use
Subsidiaries) and DuPont Transferred Assets shall be effected by delivery by
DuPont or one of the Retained Subsidiaries to Conoco or to one of the
Transferred Business Companies, or by Conoco or one of the Transferred Business
Companies to DuPont or to one of the Retained Subsidiaries, as the case may be,
of (i) with respect to those Assets which are evidenced by capital stock
certificates or similar instruments, certificates duly endorsed in blank or
accompanied by stock powers or other instruments of assignment executed in
blank, (ii) with respect to any real property interest or any improvements
thereon owned by a Mixed-Use Subsidiary, a deed without any
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warranty as to title of the transferor (or any of its Affiliates) and without
any covenant covering transferor's (or any of its Affiliate's) acts or the
equivalent thereof in accordance with local practice, and (iii) with respect to
all other Assets owned by a Mixed-Use Subsidiary, such good and sufficient
instruments of contribution, conveyance, assignment and transfer, in form and
substance reasonably satisfactory to DuPont and Conoco, as shall be necessary to
vest in DuPont, Conoco or their respective Subsidiaries, as the case may be, all
of the title and ownership interest of DuPont, Conoco or their respective
Subsidiaries, as the case may be, in and to any such Asset, (b) to the extent
necessary, the assumption of the Retained Liabilities contemplated pursuant to
Section 3.2 hereof shall be effected by delivery by DuPont or the applicable
Retained Subsidiaries, as the case may be, to Conoco or the applicable
Transferred Business Companies of such good and sufficient instruments of
assumption, in form and substance reasonably satisfactory to DuPont and Conoco,
as shall be necessary for the assumption by DuPont or the Retained Subsidiaries
of the Retained Liabilities, and (c) to the extent necessary, the assumption of
the Assumed Liabilities contemplated pursuant to Section 3.1 hereof shall be
effected by delivery by Conoco or the Transferred Business Companies, as the
case may be, to DuPont or the applicable Retained Subsidiaries, as the case may
be, of such good and sufficient instruments of assumption, in form and substance
reasonably satisfactory to DuPont and Conoco, as shall be necessary for the
assumption by Conoco or the Transferred Business Companies of the Assumed
Liabilities. Each of the parties hereto also agrees to deliver to any other
party hereto such other documents, instruments and writings as may be reasonably
requested by such other parties hereto in connection with the transactions
contemplated hereby. Notwithstanding any other provisions of this Agreement to
the contrary, (x) THE TRANSFERS AND ASSUMPTIONS REFERRED TO IN THIS SECTION 2.3
AND THE SEPARATION OF THE TRANSFERRED BUSINESS FROM THE RETAINED BUSINESS ARE
BEING MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE (a) AS TO THE
VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS, (b) AS TO ANY WARRANTY OF
MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OF, OR ANY OTHER
MATTER CONCERNING, ANY ASSETS OR (c) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE
TO ANY ASSETS, and (y) the instruments of transfer or assumption referred to in
this Section 2.3 shall not include any separate representations and warranties.
DuPont and Conoco hereby acknowledge and agree that ALL ASSETS ARE BEING
TRANSFERRED "AS IS, WHERE IS." Conoco shall bear the economic and legal risks
that any conveyances of the Transferred Assets to Conoco or one of its
Subsidiaries by DuPont or one of the Retained Subsidiaries shall prove to be
insufficient or that Conoco's or any Transferred
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Business Company's title to any of the Transferred Assets which they currently
own (or, after giving effect to the Restructuring and the transfers contemplated
by this Agreement, will own) shall be other than good and marketable and free
from encumbrances, and DuPont shall bear the economic and legal risks that any
conveyances of DuPont Transferred Assets to DuPont or one of the Retained
Subsidiaries by Conoco or one of its Subsidiaries shall prove to be insufficient
or that DuPont's or any Retained Subsidiaries' title to any of the DuPont
Transferred Assets shall be other than good and marketable and free from
encumbrances. DuPont and Conoco hereby further acknowledge and agree that in the
event and to the extent that there is any conflict between the provisions of
this Agreement and the provisions of any of the instruments of transfer or
assumption referred to in this Section 2.3, the provisions of this Agreement
shall control except where a specific conveyancing instrument (i) specifically
(A) provides that such instrument shall control over this Section 2.3 and (B)
refers to this specific Section 2.3 by number and (ii) has been approved in
writing by the General Counsel or an Associate General Counsel of each of DuPont
and Conoco.
Section 2.4 Organization of Registrant; Execution of Related
Agreements.
(a) Prior to the Effective Time, Conoco shall take,
and DuPont shall take, and as the indirect sole stockholder of Conoco, approve
or ratify, or cause to be approved or ratified, any and all actions that are
reasonably necessary or desirable to be taken by DuPont or Conoco to effectuate
the transactions contemplated by this Section 2.4 and Section 2.5 in a manner
consistent with the terms of this Agreement, including, without limitation, the
following: (i) amending the Certificate of Incorporation of Conoco so that the
provisions thereof at the Effective Time shall be the provisions set forth on
Exhibit A attached hereto; (ii) amending the By-Laws of Conoco so that the
provisions thereof at the Effective Time shall be the provisions set forth on
Exhibit B attached hereto; (iii) entering into, as of the Effective Time, a
shareholder rights agreement between Conoco and the rights agent set forth
therein having substantially the same provisions, with such changes thereto as
DuPont and Conoco may approve, as those set forth on Exhibit C attached hereto
(the "Conoco Rights Plan"); (iv) adopting, preparing and implementing
appropriate plans, agreements and arrangements for employees of Conoco and
non-employee directors of Conoco (including, without limitation, the employee
benefit plans, agreements and arrangements to be established pursuant to the
Employee Matters Agreement (with such changes thereto as DuPont may approve in
its sole discretion)); and (v) electing or otherwise appointing those
individuals designated in the
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Registration Statement to be directors or officers of Conoco, effective as of or
prior to the Effective Date, except for those to be elected or appointed
thereafter.
(b) On or prior to the Effective Date, DuPont and
Conoco shall enter into the Principal Related Agreements, each of which shall be
effective as of the Effective Time, unless otherwise specified therein.
Section 2.5 The Intercompany Notes.
(a) Prior to the Effective Time, DuPont and Conoco
shall, and shall cause their respective Subsidiaries to take all actions
necessary or advisable to restructure the existing loans between DuPont and the
Retained Subsidiaries, on the one hand, and Conoco and its Subsidiaries, on the
other hand (the "Intercompany Loans") such that following such restructuring,
the only remaining Intercompany Loans shall be represented by the Note, the
DuPont Master Note, the Conoco Master Note, the Revolving Credit Agreement and
the Restructured Notes (as defined below).
(b) Immediately following the closing of the IPO,
Conoco shall lend or contribute out of the gross proceeds of the IPO received by
Conoco (net of underwriting discounts and commissions) an amount equal to the
accrued and unpaid interest on the Note as of the Effective Date (the "Note
Interest") plus $2.654 billion (or such lesser amount as constitutes all of the
gross proceeds net of the expenses set forth in the preceding parenthetical and
the Note Interest) to CI and Conoco shall immediately thereafter cause CI to
first, pay the Note Interest to DEC and second, to pay the remainder of such
$2.654 billion (or lesser) amount to DEC in partial satisfaction of its
obligations under the Note, to repay, in part, principal under the Note. To the
extent less than an amount equal to the Note Interest plus $2.654 billion has
been paid pursuant to the preceding sentence, upon the closing of the exercise
of the underwriters' over-allotment option of the IPO, the proceeds of such
exercise shall be applied in a like manner to the extent necessary to pay the
balance of such amount. To the extent the gross proceeds of the IPO (net of
underwriting discounts and commissions and other offering expenses not
theretofore paid) received by Conoco including upon exercise of the
underwriters' over-allotment option exceed an amount equal to the Note Interest
plus $2.654 billion (such excess, being referred to herein, as the "Excess
Proceeds"), Conoco shall (x) first purchase from the holder or holders thereof,
in whole or in part, at the face amount thereof plus accrued interest thereon,
the promissory notes of Norske Conoco A/S, payable to the order of DCEO, in the
aggregate principal amount of 3,403,000,000 Xxxxx-
00
00
xxxx Xxxxxx, (y) second (to the extent sufficient funds remain out of the Excess
Proceeds) repay to the holder or holders thereof, in whole or in part, the
promissory note, dated as of August 31, 1998, of Conoco, payable to the order of
DCEO, in the principal amount of $827,447,710.83 plus accrued interest thereon,
(such note, together with the notes for 3,403,000,000 Norwegian Kroner described
above, the "Restructured Notes") and (z) thereafter (to the extent sufficient
funds remain out of the Excess Proceeds and in no event prior to the Cash
Settlement Date) contribute funds to CI and cause CI to repay to the holder or
the holders thereof, in whole or in part, amounts outstanding under the Conoco
Master Note, plus accrued interest thereon; provided, however, the aggregate
cash used to repay or repurchase the Restructured Notes and the Conoco Master
Note pursuant to the foregoing shall equal the lesser of (1) the Excess Proceeds
and (2) the aggregate face amount of the Restructured Notes plus accrued
interest thereon and the Conoco Master Note plus accrued interest thereon.
Promptly following such repayment and/or purchase and following any cash payment
pursuant to Section 9.1 below, DuPont shall, or shall cause the Retained
Subsidiaries to contribute the Restructured Notes and the Conoco Master Note
(excluding any portion of the Restructured Notes or the Conoco Master Note that
DuPont determines to maintain outstanding in accordance with Section 2.5(c)) to
Conoco, to the extent not previously purchased by Conoco or repaid in full;
provided that DuPont may delay such contribution of all or part of the
Restructured Notes and the Conoco Master Note until the date (the "Outside
Date") that is 5 business days following the later of the Cash Settlement Date
and the date of receipt by Conoco of the proceeds of the sale of stock of Conoco
pursuant to the underwriters' over-allotment option in the IPO. In the event the
Excess Proceeds exceeds the amount set forth in clause (2) of the second
preceding sentence (such excess being called the "IPO Excess"), Conoco shall, if
and to the extent requested by DuPont (and DuPont shall have until the Outside
Date to so request) use all or a portion of the IPO Excess to pay accrued
interest and principal on the Note.
(c) If the sum of the Option Amount and $10.4 million
(such sum, the "Employee Benefits Adjustment Amount") is positive, Conoco shall,
if and at such time as requested by DuPont, but no later than the later of the
Outside Date and 30 days following the Effective Date, cause CI to deliver a
promissory note, substantially in the form attached hereto as Exhibit L, to DEC
in an amount equal to the Employee Benefits Adjustment Amount (the "Employee
Benefits Note", and, together with the Note, the "New Notes"). If the Employee
Benefits Adjustment Amount is negative, DuPont shall instead pay to Conoco an
amount in cash equal to the absolute value of the Employee Benefits Adjustment
Amount 30 days following the Effective Date. To the extent that any portion of
the Restructured Note of
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Conoco to DCEO in the principal amount of $827,447,710.83 or the Conoco Master
Note would otherwise be contributed to Conoco pursuant to Section 2.5(b), DuPont
may maintain outstanding, in lieu of receiving all or a portion of the Employee
Benefits Note in accordance with the first sentence of this Section 2.5(c), all
or a portion of such remaining principal balance of such Restructured Note or
the Conoco Master Note in an amount not to exceed 94% of the principal amount of
the Employee Benefits Note that would otherwise be delivered in accordance with
the first sentence of this Section 2.5(c) and being so replaced. To the extent
that only a portion of, but not the entire, Employee Benefits Note is to be
replaced by all or a portion of the aforesaid Restructured Note or the Conoco
Master Note (such portion being deemed to be a "New Note"), Conoco shall deliver
the Employee Benefits Note in accordance with the first sentence of this Section
2.5(c), but in a principal amount equal to the (A) Employee Benefits Adjustment
Amount minus (B) 100% (and not 94%) of the principal amount of the portion of
the Employee Benefits Note so replaced.
(d) Following the Effective Date and until all
principal and accrued interest due under the New Notes shall have been paid in
full, on the first business day after the date of the receipt thereof by Conoco
or any of its Subsidiaries, Conoco shall, or shall cause its relevant Subsidiary
to, lend or contribute to CI an amount equal to 100% of the cash proceeds of (i)
the incurrence of Indebtedness by Conoco or any of its Subsidiaries (other than
Petrozuata) (net of underwriting discounts and commissions and other reasonable
costs (other than Separation Expenses) associated therewith, such other
reasonable costs to be mutually agreed upon by Conoco and DuPont) except for the
incurrence of Indebtedness pursuant to the Revolving Credit Facility or (ii) the
issuance or sale of equity securities by Conoco or any of its Subsidiaries (net
of underwriting discounts and commissions and other reasonable costs (other than
Separation Expenses) associated therewith, such other reasonable costs to be
mutually agreed upon by Conoco and DuPont); provided, however, that to the
extent that amounts are to be paid pursuant to this subsection (d) in respect of
the Restructured Note, Conoco shall make such payments directly. Immediately
following any loan or contribution described above, Conoco shall cause CI to pay
the entire amount of such loan or contribution (which will be equal to 100% of
the cash proceeds received by Conoco or any of its Subsidiaries as described in
clauses (i) and (ii) above) to the holder or holders of the New Notes in partial
satisfaction of its obligations under the New Notes, except to the extent that
all or part of the amount of such loan or contribution is used to repay any
Indebtedness of Conoco, CI or any of their Subsidiaries to DuPont and any of its
Subsidiaries, other than Conoco, CI and their Subsidiaries, but only to the
extent DuPont consents
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to the repayment of such Indebtedness in lieu of payment under the New Notes.
Amounts applied to the prepayment of the New Notes as provided in this Section
2.5(d) shall be applied (a) first, to the accrued and unpaid interest on the
Note, (b) second, to the principal of the Note (c) third, to accrued and unpaid
interest on the portions, if any, of the Restructured Note and the Conoco Master
Note that remain outstanding in accordance with Section 2.5(c), (d) fourth, to
the principal of the Employee Benefits Note and (e) fifth, to the principal of
the notes referred to in clause (c) above. Notwithstanding the foregoing, the
provisions of Section 2.5(d)(ii) shall not apply to the net proceeds received
from the exercise of stock options granted to directors, officers and employees
of the relevant entity.
(e) In addition, on or before the Cash Settlement
Date, DuPont shall pay CI amounts owed under the DuPont Master Note, including
accrued interest thereon.
Section 2.6 Registration of Conoco Shares.
(a) Conoco has filed a registration statement on Form
S-1 (as the same may be amended from time to time, including all exhibits
thereto, the "Registration Statement") under the Securities Act covering the
number of shares of Class A Common Stock set forth therein (which sets forth
appropriate disclosure concerning Conoco, the Transferred Business, the
Transferred Assets, the IPO and certain other matters).
(b) As promptly as practicable following the date of
this Agreement (to the extent not theretofore accomplished):
(i) Conoco will use its best efforts to cause such
Registration Statement to be declared effective and
to effect the IPO in accordance with the terms of
this Agreement, including by (1) responding promptly
to any comments from the SEC with respect thereto,
after consultation with DuPont, and (2) taking such
other actions as shall be reasonably required in
order to have the Registration Statement declared
effective under the Securities Act as soon as
reasonably practicable following the date hereof.
(ii) Conoco shall file in a timely manner with the SEC and
cause to become effective any registration statements
or amendments
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thereto which are appropriate to reflect the
establishment of, or amendments to, any employee
benefit and other plans relating to the Transferred
Business contemplated by the Employee Matters
Agreement or described in the Registration Statement.
(iii) Conoco shall take all such action as may be necessary
or appropriate to register or qualify the Class A
Common Stock under state securities or "Blue Sky"
Laws or such other action under such laws as is
necessary or appropriate in connection with the
transactions contemplated by this Agreement.
(iv) Conoco shall enter into certain agreements (including
an underwriting agreement) necessary or appropriate
to facilitate the IPO.
(v) Conoco shall obtain "comfort" letters and updates
thereof from its independent accountants addressed to
the underwriters of the IPO, such letters to be in
customary form and covering matters of the type
customarily covered in "comfort" letters to
underwriters.
(vi) Conoco shall cooperate with the underwriters of the
IPO to facilitate timely preparation and delivery of
certificates representing the Class A Common Stock
and to enable the Class A Common Stock to be in such
denominations and registered in such names as the
underwriters may request.
(vii) Conoco shall participate and have senior management
of Conoco available to participate in any "roadshow"
marketing efforts reasonably requested by the lead
managing underwriter of the IPO.
(viii) Conoco shall prepare, and Conoco shall file and seek
to make effective, an application to permit listing
of the Class A Common Stock on the NYSE.
(c) DuPont and Conoco agree that DuPont shall have
the right, in its sole discretion, to determine whether to satisfy or cause to
be satisfied, the underwriter's over-allotment option in the IPO with shares of
Conoco sold by
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DuPont, Conoco or some combination of shares of Conoco sold by DuPont and
Conoco.
ARTICLE III
ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities. Upon the terms set forth in
this Agreement, Conoco hereby agrees with DuPont to, or to cause the appropriate
Transferred Business Company to, assume, and agree to pay, perform and discharge
promptly when due any and all Assumed Liabilities; provided however, that
notwithstanding the foregoing, nothing in this Section 3.1 shall require Conoco
to make a capital contribution to, or otherwise invest in, purchase assets or
services from, or lend, advance or otherwise supply or accelerate the payment of
funds to, any of the Transferred Business Companies in order to enable such
Transferred Business Company to satisfy an Assumed Liability.
Section 3.2 Retained Liabilities. Upon the terms set forth in
this Agreement, DuPont hereby agrees with Conoco to, or to cause a Retained
Subsidiary to, pay, perform and discharge promptly when due any and all Retained
Liabilities, including all Liabilities expressly assumed by DuPont and any
Retained Subsidiary under the terms of this Agreement or any of the Related
Agreements; provided however, that notwithstanding the foregoing, nothing in
this Section 3.2 shall require DuPont to make a capital contribution to, or
otherwise invest in, purchase assets or services from, or lend, advance or
otherwise supply or accelerate the payment of funds to, any of the Retained
Subsidiaries in order to enable such Retained Subsidiary to satisfy a Retained
Liability.
Section 3.3 Construction of Agreements. Notwithstanding any
other provision in this Agreement to the contrary, in the event and to the
extent that there shall be a conflict between the provisions of this Agreement
and the provisions of any Related Agreement or any other agreement entered into
by DuPont or the Retained Subsidiaries, on one hand, and Conoco or the
Transferred Business Companies on the other hand, pursuant to this Agreement or
the Related Agreements, the provisions of this Agreement shall control except
for conflicts between the provisions of this Agreement and any Principal Related
Agreement, in which case the provisions of such Principal Related Agreement
shall control; provided, however, notwithstanding the foregoing, in the case of
a conflict between the provisions of this
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Agreement and the provisions of one of the several Transitional Services
Agreements, the provisions of the particular Transitional Services Agreement
shall control only to the extent that (x) the provision in question is contained
in the form of Transitional Services Agreement attached hereto as Exhibit F or
(y) is approved by the General Counsel or an Associate General Counsel of both
DuPont and Conoco.
ARTICLE IV
CERTAIN RESTRUCTURING DEFINITIONS
Section 4.1 Assumed Liabilities. "Assumed Liabilities" shall
mean any and all Liabilities, whether arising before or after the Effective
Date, of DuPont or its Subsidiaries (including Conoco and the Transferred
Business Companies), or any of their predecessor companies or businesses, or any
of their Affiliates, Subsidiaries or divisions, relating to, resulting from or
arising out of the present, past or future operation or conduct of the Conoco
Business or ownership or use of Assets in the Conoco Business (including the
ownership or use of the Transferred Assets). "Assumed Liabilities" shall include
but not be limited to the following:
(a) all Liabilities which would properly be set
forth, reflected, disclosed or reserved for on a combined balance sheet of
Conoco and the Transferred Business Companies as of the Effective Date, prepared
in the same manner as the most recent audited combined balance sheet of Conoco
included in the Registration Statement (after giving effect to any pro forma
adjustments reflected in the Registration Statement), but excluding any such
Liabilities attributable to DuPont Netherlands;
(b) all Liabilities pursuant to, under or relating to
all Contracts relating exclusively to the Conoco Business or the Transferred
Assets, regardless of whether Conoco or a Transferred Business Company or DuPont
or a Retained Subsidiary is a party to such Contract;
(c) all warranty, performance and similar obligations
entered into or incurred in the course of business of the Conoco Business with
respect to its products;
(d) all Conoco Environmental Liabilities;
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(e) all Liabilities and obligations assumed by,
retained by or agreed to be performed by Conoco or any of its Subsidiaries
pursuant to this Agreement or any of the Related Agreements;
(f) all Liabilities relating to, arising out of or
resulting from the Conoco Actions and all Liabilities relating to, arising out
of or resulting from all other Actions which are related to, or arise out of the
operations or conduct of the Conoco Business or the ownership or use of the
Assets in the Conoco Business (including the ownership of the Transferred
Assets), whether arising before or after the Effective Date;
(g) all Liabilities relating to all Actions for
alleged or actual patent infringement relating to, resulting from or arising out
of the use by DuPont or any Retained Subsidiary of any Conoco Patents in
accordance with the immunity described in Section 7.12(a);
(h) all Liabilities relating to, resulting from or
arising out of the transfer of the Transferred Assets pursuant to this Agreement
or the Related Agreements other than Liabilities for Separation Expenses;
(i) Conoco's portion, determined pursuant to Section
4.5 hereof, of Shared Contractual Liabilities;
(j) all Liabilities relating to, resulting from or
arising out of the business and operations sold to Vista Chemical by DuPont and
Conoco;
(k) all Liabilities relating to, arising out of or
resulting from the ownership or use of Excluded Assets to the extent they arise
out of (1) the use of such Assets in, or for the benefit of, the Conoco Business
or (2) the operation or use of such Assets by Conoco or a Transferred Business
Company or an employee thereof;
(l) all Liabilities relating to, resulting from, or
arising out of options to purchase stock of Conoco, including options issued
pursuant to Section 2.06 of the Employee Matters Agreement;
(m) all Liabilities arising from any activities and
operations of DuPont, any of its Subsidiaries and any of their employees
(including, but not
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limited to, the activities and operations of Sentinel and DERS) to the extent
performed for or on behalf of the Conoco Business; and
(n) all Liabilities arising from the actions and
activities of Conoco and the Transferred Business Companies in connection with
the AEP Proposed Joint Ventures;
provided, however, that notwithstanding the foregoing, Assumed Liabilities shall
in no event include (i) any Liabilities with respect to any Environmental Claims
or Requirements of Environmental Law that are neither Conoco Environmental
Liabilities nor provided for in clause (j) above, (ii) Liabilities that relate
to Taxes other than pursuant to this Agreement or any of the Related Agreements,
including the Tax Sharing Agreement or (iii) any Liabilities for Separation
Expenses.
Section 4.2 Retained Liabilities. "Retained Liabilities" shall
mean any and all Liabilities, whether arising before or after the Effective
Date, of DuPont or its Subsidiaries or any of their predecessor companies or
businesses, or any of their Affiliates, Subsidiaries or divisions relating to,
resulting from or arising out of the present, past or future operations or
conduct of the DuPont Business, or ownership or use of the DuPont Transferred
Assets or any other Assets (other than the Transferred Assets) owned by DuPont
and the Retained Subsidiaries, other than any Assumed Liabilities. "Retained
Liabilities" shall include but not be limited to the following (other than any
which are Assumed Liabilities):
(a) all Liabilities arising out of, relating to or
resulting from the ownership or use of the Excluded Assets to the extent they
arise out of (1) the use of such Assets in, or for the benefit of, the DuPont
Business or (2) the operation or use of such Assets by DuPont or a Retained
subsidiary or an employee thereof;
(b) all Liabilities pursuant to, under or relating to
all Contracts relating exclusively to the DuPont Business or the DuPont
Transferred Assets or any other Assets (other than the Transferred Assets) owned
by DuPont and the Retained Subsidiaries, regardless of whether Conoco or a
Transferred Business Company or DuPont or a Retained Subsidiary is a party to
such Contract;
(c) all warranty, performance and similar obligations
entered into or incurred in the course of business of the DuPont Business with
respect to its products;
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(d) all DuPont Environmental Liabilities;
(e) all Liabilities and obligations assumed by,
retained by, or agreed to be performed by DuPont or any of the Retained
Subsidiaries pursuant to this Agreement or any of the Related Agreements;
(f) all Liabilities relating to Actions relating to,
resulting from or arising out of the DuPont Actions and all Liabilities relating
to, resulting from or arising out of all other Actions, which are related to or
arise out of the operations or conduct of the Retained Business or the ownership
or use of the Assets in the DuPont Business (including the DuPont Transferred
Assets and the Excluded Assets), whether arising before or after the Effective
Date (except in all cases the Actions described in Section 4.1(f) hereof);
(g) the Liabilities relating to all Actions for
alleged or actual patent infringement relating to, resulting from or arising out
of the use by Conoco or any Transferred Business Company of any DuPont Patents
in accordance with the immunity described in Section 7.12(b);
(h) All Liabilities for Separation Expenses;
(i) DuPont's portion, determined pursuant to Section
4.5 hereof, of Shared Contractual Liabilities;
(j) All Liabilities relating to, resulting from or
arising out of the businesses and operations sold to Xxxx Chemical, including
the operations at Matagorda and Chocolate Bayou, Texas;
(k) All Liabilities relating to, resulting from or
arising out of options to purchase stock of DuPont (including, without
limitation, options held by retired employees, but excluding Liabilities
relating to, resulting from or arising out of the cancellation of such options
upon the issuance of options to purchase stock of Conoco pursuant to Section
2.06 of the Employee Matters Agreement) other than the Employee Benefits Note;
(l) All Liabilities arising from any activities and
operations of Conoco, any of the Transferred Business Companies and any of their
employees to the extent performed for or on behalf of the DuPont Business; and
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(m) all Liabilities arising from the actions and
activities of DuPont and the Retained Subsidiaries in connection with the AEP
Proposed Joint Ventures;
provided, however, that notwithstanding the foregoing, Retained Liabilities
shall in no event include any (i) Liabilities with respect to any Environmental
Claims or Requirements of Environmental Law that are neither DuPont
Environmental Liabilities nor provided for in clause (j) above or (ii)
Liabilities that relate to Taxes other than pursuant to this Agreement or any of
the Related Agreements, including the Tax Sharing Agreement.
Section 4.3 Transferred Assets. "Transferred Assets" shall
mean collectively (i) any and all Assets of Conoco and the Transferred Business
Companies (other than any Mixed- Use Subsidiaries) following consummation of the
Restructuring, (ii) the Assets of the Mixed-Use Subsidiaries used primarily in
the Conoco Business and (iii) the Assets set forth on Schedule 1(c), but in any
event excluding the Excluded Assets.
Section 4.4 Excluded Assets. "Excluded Assets" shall mean:
(a) the Assets of the Construction Fleet except for
the Assets listed on Schedule 1(c); and
(b) the Assets listed on Schedule 4.4 as the same may
be supplemented from time to time prior to the Effective Date by DuPont, after
consultation with Conoco.
Section 4.5 Shared Contracts.
(a) With respect to Shared Contractual Liabilities
pursuant to, under or relating to a given Shared Contract, such Shared
Contractual Liabilities shall be allocated between the parties as follows:
(i) First, if a Liability is incurred exclusively in
respect of a benefit received by one party, the party
receiving such benefit shall be responsible for such
Liability.
(ii) Second, if a Liability cannot be so allocated under
clause (i), such Liability shall be allocated to the
parties based on the
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relative proportions of total benefit received (over
the term of the Shared Contract, measured as of the
date of the allocation) under the relevant Shared
Contract. Notwithstanding the foregoing, each party
shall be responsible for any or all Liabilities
arising out of or resulting from its breach of the
relevant Shared Contract.
(b) If DuPont or any Retained Subsidiary, on the one
hand, or Conoco or any Transferred Business Company, on the other hand, receives
any benefit or payment under any Shared Contract which was intended for other
party, DuPont and the Retained Subsidiaries, on the one hand, or Conoco and the
Transferred Business Companies, on the other hand, will use their respective
reasonable best efforts to deliver, transfer or otherwise afford such benefit or
payment (on an after-tax basis) to the other party.
ARTICLE V
CORPORATE GOVERNANCE AND CERTAIN FINANCIAL REPORTING
AND OTHER MATTERS
Section 5.1 Rights Plan Amendments. Following the Effective
Date and for so long as DuPont beneficially owns shares representing at least
30% of the voting power of all of the outstanding shares of Voting Stock,
without the prior written consent of DuPont, Conoco shall not amend or modify
the Conoco Rights Plan.
Section 5.2 Charter/bylaw Amendments. So long as DuPont owns
shares representing 30% of the voting power of all of the outstanding shares of
Voting Stock, Conoco will not, without the prior consent of DuPont, adopt any
amendments to its Restated Certificate of Incorporation or Bylaws or take or
recommend to its stockholders any action during the term of this Agreement which
would (i) impose limitations on the legal rights of DuPont or any of the
Retained Subsidiaries as Conoco stockholders other than those imposed pursuant
to the express terms of this Agreement or the form of Conoco's Restated
Certificate of Incorporation set forth as Exhibit A hereto, including, without
limitation, any action which would impose restrictions (A) based upon the size
of security holding, the business in which a security holder is engaged or other
considerations applicable to DuPont or any of the Retained Subsidiaries and not
to security holders generally, or (B) with reference
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to Class B Common Stock (or if no Shares of Class B Common Stock are then
outstanding, to Class A Common Stock) generally, by means of the issuance of or
proposal to issue any other class of securities having voting power
disproportionately greater than the equity investment in the Company
represented by such securities; (ii) involve the issuance or corporate action
providing for the issuance of any warrant, capital stock or other security (A)
which is, or under specified circumstances will become, convertible into or
represent the right to acquire any securities of DuPont or any of the Retained
Subsidiaries (other than pursuant to customary provisions for adjusting the
securities for which any such warrant is exercisable or into which any such
stock or security is convertible) or (B) any other rights which (including
rights of redemption) are dependent upon the amount of voting securities owned
by DuPont or any of the Retained Subsidiaries; (iii) deny any benefit to DuPont
or any of the Retained Subsidiaries proportionately as holders of any class of
voting securities that is made available to other holders of the same class of
voting securities generally; or (iv) alter voting or other rights of the holders
of any class of voting securities so that any such rights (or the vote required
with respect to any matter) are determined with reference to the amount of
voting securities held by DuPont or any of the Retained Subsidiaries; provided,
that this Section 5.2 shall not prohibit Conoco from adopting the Conoco Rights
Plan or taking any action otherwise prohibited hereby, so long as DuPont and the
Retained Subsidiaries are, either expressly or as part of a class of
stockholders which includes DuPont and the Retained Subsidiaries, exempted from
such action or the limitations on legal rights imposed thereby.
Section 5.3 Conoco Board Representation. (a) Beginning on the
Effective Date, and for so long as DuPont beneficially owns shares representing
50% or more of the voting power of all of the outstanding Voting Stock, DuPont
shall have the right to designate for nomination by the Conoco Board (or any
nominating committee thereof) to the Conoco Board a majority of the members of
the Conoco Board. For so long as DuPont beneficially owns shares representing
less than 50% but more than 10% of the voting power of all of the outstanding
Voting Stock, DuPont shall have the right to designate for nomination by the
Conoco Board (or any nominating committee thereof) to the Conoco Board a
proportionate number of members of the Conoco Board, as calculated in accordance
with Section 5.3(d). Notwithstanding anything to the contrary set forth herein,
Conoco's obligations with respect to the election or appointment of DuPont
designated members shall be limited to the obligations set forth under
subsections (b) and (c) below.
(b) Conoco shall exercise all authority under
applicable law and shall use its best efforts to cause five persons designated
by DuPont to be elected to the Conoco Board effective as of the Effective Date
(one such designee of DuPont
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in Class I and two such designees of DuPont in each of Class II and Class III
for terms ending on the first, second and third annual meetings thereafter,
respectively). Commencing with the annual meeting of stockholders of Conoco to
be held in 1999 and prior to each annual meeting of stockholders of Conoco
thereafter, DuPont shall be entitled to present to the Conoco Board or any
nominating committee thereof such number of designees of DuPont (each, a "DuPont
Designee") for election to the class of directors up for election to the Conoco
Board at such annual meeting as would result in DuPont having the appropriate
number of DuPont Designees on the Conoco Board as determined pursuant to
subsection (a) above. If the Conoco Board ceases to be a classified board,
DuPont shall be entitled to present to the Conoco Board or any nominating
committee thereof five (or such other number of DuPont Designees as would result
in DuPont having the appropriate number of DuPont Designees on the Board as
determined pursuant to subsection (a) above) DuPont Designees, or such other
number of designees, as determined pursuant to Section 5.3(d), for election to
the Conoco Board at each annual meeting of stockholders of Conoco.
(c) Conoco shall at all such times exercise all
authority under applicable law and use its best efforts to cause all such
designees to be nominated as Board members by the nominating committee of the
Conoco Board if there is such a committee. Conoco shall cause each DuPont
Designee for election to the Conoco Board to be included in the slate of
designees recommended by the Conoco Board to Conoco's stockholders for election
as directors at each annual meeting of the stockholders of Conoco (or at any
special meeting held for the election of directors) and shall use its best
efforts to cause the election of each such DuPont Designee, including soliciting
proxies in favor of the election of such persons. In the event that any DuPont
Designee elected to the Conoco Board shall cease to serve as a director for any
reason, the vacancy resulting therefrom shall be filled by the Conoco Board with
a substitute DuPont Designee, unless such vacancy was caused by action of
stockholders (in which case, in accordance with Conoco's Restated Certificate of
Incorporation, the stockholders shall fill such vacancy). In the event that as a
result of an increase in the size of the Conoco Board, DuPont is entitled to
have one or more additional DuPont Designees elected to the Conoco Board
pursuant to subsection (a) above, the Conoco Board shall appoint the appropriate
number of such additional DuPont Designees, unless such increase in size of the
Conoco Board was caused by the action of stockholders (in which case, in
accordance with Conoco's Restated Certificate of Incorporation, the stockholders
shall elect such additional director or directors). The parties hereto agree
that the directors of Conoco identified in the Registration Statement include
five DuPont Designees.
(d) If at any time that DuPont Designees are serving
on the Conoco Board, DuPont beneficially owns shares representing less than 50%
but
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more than 10% of the total voting power of all of the outstanding Voting Stock,
the number of persons DuPont shall be entitled to designate for nomination by
the Conoco Board (or any nominating committee thereof) for election to the
Conoco Board shall be equal to the number of directors computed using the
following formula (rounded to the nearest whole number): the product of (1) the
percentage of the voting power of all of the outstanding shares of common stock
of Conoco beneficially owned by DuPont and (2) the number of directors then on
the Conoco Board (assuming no vacancies exist). Notwithstanding the foregoing,
if DuPont beneficially owns shares of common stock of Conoco representing less
than 50% of the total voting power of all outstanding shares of common stock of
Conoco and the calculation of the formula set forth in the foregoing sentence
would result in DuPont being entitled to elect a majority of the members of the
Conoco Board, the formula will be recalculated with the product being rounded
down to the nearest whole number; provided, however, that if DuPont, at any
time, acquires additional common stock of Conoco so that DuPont beneficially
owns shares of common stock of Conoco representing 50% or more of the total
voting power of all of the outstanding shares of common stock of Conoco, then
the number of persons DuPont shall be entitled to designate for nomination by
the Conoco Board (or any nominating committee thereof) for election to the
Conoco Board shall be adjusted upward, if appropriate as a result of rounding,
in accordance with the provisions of this Section 5.3(d). If the number of
DuPont Designees serving on the Conoco Board exceeds the number determined
pursuant to the foregoing sentences of this Section 5.3(d) (such difference
being herein called the "Excess Director Number"), then DuPont shall use its
reasonable best efforts to cause DuPont Designees selected by DuPont in its sole
discretion (the number of which designees shall be equal to the Excess Director
Number) to promptly resign from the Conoco Board, and, to the extent such
persons do not so resign, DuPont shall assist Conoco in increasing the size of
the Conoco Board, so that after giving effect to such increase, the number of
DuPont Designees on the Conoco Board is in accordance with the provisions of
this Section 5.3(d).
Section 5.4 Committees. Effective as of the Effective Date and
for so long as DuPont beneficially owns shares of common stock of Conoco
representing 50% or more of the voting power of all of the outstanding shares of
common stock of Conoco, the Audit and Compliance Committee and the Compensation
Committee and any other committee of the Conoco Board which performs functions
analogous to those normally performed by the foregoing types of committees shall
be composed of directors at least a majority of which are DuPont Designees and
each other committee of the Conoco Board shall include at least one DuPont
Designee. Effective as of the Effective Date and for so long as DuPont
beneficially owns shares of common stock of Conoco representing less than 50%
but more than 10% of the
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voting power of all of the outstanding shares of common stock of Conoco, each
committee of the Conoco Board shall, unless DuPont consents otherwise, include
at least one DuPont Designee. The parties hereto agree that the members of
Conoco's Audit and Compliance Committee and Conoco's Compensation Committee
identified in the Registration Statement are composed of directors at least a
majority of which are DuPont Designees.
Section 5.5 Accounting Principles. (a) Effective as of the
Effective Date and for so long as DuPont beneficially owns shares of common
stock of Conoco representing 50% or more of the voting power of all of the
outstanding Voting Stock, Conoco may not change its accounting principles or
practices if a change in such accounting principle or practice would be required
to be disclosed in Conoco's financial statements as filed with the SEC or
otherwise publicly disclosed therein without the prior written consent of
DuPont, except for changes which are required by GAAP and as to which there is
no discretion on the part of Conoco, as concurred in by Conoco's auditors prior
to its implementation.
(b) For so long as DuPont beneficially owns shares
representing 20% or more of the voting power of the outstanding Voting Stock (i)
Conoco will furnish DuPont within nine (9) business days after the end of each
quarter and eleven (11) business days after the end of each fiscal year, the
unaudited balance sheet, income statement and statement of cash flows of Conoco
and its Subsidiaries as at the end of such period, (ii) Conoco shall furnish to
DuPont such financial information or documents in the possession of Conoco or
any of its Subsidiaries as DuPont may reasonably request, and (iii) Conoco shall
furnish to DuPont on a monthly basis such management and other periodic reports
related to financial information in the form and substance consistent with the
practice of Conoco as of the date of this Agreement. For so long as DuPont
beneficially owns shares representing 50% or more of the voting power of all of
the outstanding Voting Stock, Conoco will furnish DuPont the consolidated
balance sheet, consolidated income statement and consolidated statement of cash
flows, if any, of Conoco and its Subsidiaries as at the end of each such
quarterly and annual period in the form and substance consistent with the
practice of Conoco as of the date of this Agreement.
Section 5.6 Tax Free Spin-Off.
(a) At any time after the Effective Date, if DuPont
advises Conoco that it intends to pursue a Tax-Free Spin-Off (as defined in
Exhibit A hereto) or that it intends to otherwise distribute all or a portion of
the capital stock of Conoco beneficially owned by DuPont to its securityholders
by way of dividend, exchange or
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otherwise, Conoco agrees to take all action reasonably requested by DuPont to
facilitate such transaction and, subject to the following sentence, DuPont shall
reimburse Conoco for its reasonable out-of-pocket expenses incurred in
connection with such actions. In the event a registration statement is filed in
connection with such transaction, Conoco and DuPont will cooperate to take
actions analogous (to the extent applicable) to those set forth in the
Registration Rights Agreement with respect to a Demand Registration and in
particular the parties will indemnify and provide contribution to each other in
a manner analogous to that set forth in Section 8 of the Registration Rights
Agreement.
(b) Prior to a Tax-Free Spin-Off, (i) Conoco will
have the right to propose to DuPont an amendment to its certificate of
incorporation providing for the automatic conversion on a one-for-one basis of
the shares of Class B Common Stock into shares of Class A Common Stock upon the
occurrence of circumstances specified in such proposal so long as such amendment
(a) does not otherwise affect any of the rights of the holders of Class A Common
Stock or Class B Common Stock (including rights of transferability) or affect
the ability (except with respect to the tax-free nature of the spin-off) to
accomplish the Tax-Free Spin-Off and (b) is otherwise valid under the Delaware
General Corporation Law (the "Charter Amendment") and (ii) if DuPont seeks to
obtain from the IRS a ruling (the "Ruling") as to the tax-free nature of the
Tax-Free Spin-Off, then DuPont will diligently pursue obtaining such ruling on
the basis that such Charter Amendment is effective; provided, however, that
notwithstanding anything to the contrary DuPont shall not be required (x) to
propose or to raise with the IRS any Charter Amendment which, based on the
advice of its counsel, DuPont reasonably believes will, if effective, result in
a material delay in, or material reduction in the likelihood of, obtaining such
a favorable Ruling and (y) to file a ruling request with respect to, or continue
to pursue obtaining, the Ruling on the basis that the Charter Amendment is
effective if, after approaching the IRS, DuPont, in its sole discretion,
determines in good faith that pursuing such Ruling on such basis is having or
may have an adverse effect on the ability to obtain the Ruling or result in a
delay with respect thereto which DuPont in good faith believes may not be in its
best interests. If DuPont determines to effect a Tax-Free Spin-Off without
obtaining a Ruling, it shall have no obligation with respect to any proposed
Charter Amendment if it concludes, in good faith, after consultation with
counsel, that such Charter Amendment would result in an increased risk that the
intended Tax-Free Spin-Off would not qualify under section 355 of the Code (or
any successor provision) and be tax-free to DuPont, its shareholders or Conoco.
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Section 5.7 Survival of Rights. In the event Conoco ceases to
be a publicly traded company or becomes a Subsidiary of a publicly traded
Company (other than DuPont), all of the rights of DuPont set forth in this
Article V shall continue in full force and effect and shall apply to any
publicly traded company that, directly or indirectly, through one or more
intermediaries, controls Conoco. Conoco agrees that, without the consent of
DuPont, it will not enter into any Contract which will have the effect set forth
in the first clause of the preceding sentence, unless such publicly traded
company agrees to be bound by the foregoing provision. As used in this Section
5.7, "control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise.
ARTICLE VI
SURVIVAL, INDEMNIFICATION, CLAIMS
AND OTHER MATTERS
Section 6.1 Survival of Agreements.
(a) All covenants and agreements of the parties
contained in this Agreement shall survive the Effective Date in accordance with
their terms; provided, however, that the covenants and agreements of the parties
set forth in this Article VI shall survive the Effective Date in perpetuity.
(b) All of the obligations of DuPont and the Retained
Subsidiaries, on the one hand, and Conoco and its Subsidiaries, on the other
hand, pursuant to this Agreement shall survive and be unaffected by the sale or
other transfer by DuPont or any of the Retained Subsidiaries, on the one hand,
or Conoco or any of its Subsidiaries, on the other hand, of any their respective
Assets or businesses or the assignment by DuPont or any of the Retained
Subsidiaries, on the one hand, or Conoco or its Subsidiaries, on the other hand,
of any of their respective Liabilities.
Section 6.2 Indemnification.
(a) DuPont shall, and, in the case of clauses (i) and
(iii) below, shall in addition cause each of the Appropriate Retained
Subsidiaries to, indemnify, defend and hold harmless Conoco and its Subsidiaries
and each of their Affiliates engaged in the Conoco Business, and each of
Conoco's, such Subsidiaries' and such Affiliates' directors, officers, employees
and agents (each a "Conoco
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Party") from and against, and shall reimburse such Indemnitees with respect to,
any and all Losses relating to, resulting from or arising out of, (i) any of the
Retained Liabilities (whether arising prior to or after the Effective Date) and
all Liabilities arising out of the operation or conduct of the DuPont Business
or use or ownership of the DuPont Transferred Assets or any other Assets (other
than the Transferred Assets) owned by DuPont and the Retained Subsidiaries after
the Effective Date, (ii) any claim that the information included in the
Registration Statement under the captions set forth on Schedule 6.2 hereto is
false or misleading with respect to any material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (iii) all Liabilities relating to, resulting from or arising out
of the use by DuPont or any Retained Subsidiary of any Non-Permitted Names
pursuant to Sections 7.7 and 7.8, and (iv) any failure by a DuPont Party to
perform, or violation by a DuPont Party of, any provision of this Agreement or
the Related Agreements which is to be performed or complied with by DuPont or
the Retained Subsidiaries. As used in this subsection (a), the "Appropriate
Retained Subsidiary" shall mean the Retained Subsidiary, if any, whose
activities or conduct (or whose predecessors' activities or conduct) caused or
resulted in the Loss in question.
(b) Conoco shall, and, in the case of clauses (i) and
(iv) below, shall in addition cause the Appropriate Conoco Subsidiaries to,
indemnify, defend and hold harmless DuPont and the Retained Subsidiaries and
each of their Affiliates, and each of DuPont's, such Subsidiaries' and such
Affiliates' directors, officers, employees and agents (other than any Conoco
Party) (each a "DuPont Party") from and against, and shall reimburse such
Indemnitees with respect to, any and all Losses relating to, resulting from or
arising out of (i) any of the Assumed Liabilities (whether arising prior to or
after the Effective Date) and all Liabilities arising out of the operation or
conduct of the Conoco Business or the use or ownership of the Transferred Assets
after the Effective Date, (ii) any claim that the information included in the
Registration Statement other than under the captions set forth on Schedule 6.2
hereto is false or misleading with respect to any material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, (iii) any Liabilities of DuPont relating to, resulting
from or arising out of its status as a holder of shares, directly or indirectly,
of a Conoco Party, (iv) any Liabilities relating to, resulting from or arising
out of the use by Conoco or any of its Subsidiaries of any Non-Permitted Names
pursuant to Sections 7.7 and 7.8, (v) any failure by a Conoco Party to perform,
or violation by a Conoco Party of, any provision of this Agreement or any of the
Related Agreements which is to be
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performed or complied with by Conoco or any of its Subsidiaries. As used in this
subsection (b), the "Appropriate Conoco Subsidiary" shall mean the Subsidiary of
Conoco, if any, whose activities or conduct (or whose predecessors' activities
or conduct) caused or resulted in the Loss in question.
(c) Effective as of the Effective Time, Conoco for
itself and on behalf of its Subsidiaries hereby releases, remises and forever
discharges each DuPont Party, in their respective capacities as such, from any
Liability, obligation or responsibility for any and all past actions or failures
to take action, including any actions which may be deemed to have been negligent
or grossly negligent, relating to, resulting from or arising out of the
operation or conduct of any businesses, Assets (including activities performed
thereat) or operations managed or operated by, or operationally related to,
directly or indirectly, the Conoco Business and the DuPont Business, except for
any Liability, obligation or responsibility for any action or failure to take
action in accordance with the provisions of this Agreement or for any fraudulent
act or willful or intentional misconduct in the operation or conduct of Conoco
Business or the DuPont Business prior to the Effective Date. Effective as of the
Effective Time, DuPont for itself and on behalf of its Subsidiaries hereby
releases, remises and forever discharges each Conoco Party, in their respective
capacities as such, from any Liability, obligation or responsibility for any and
all past actions or failures to take action, including any actions which may be
deemed to have been negligent or grossly negligent, relating to, resulting from
or arising out of the operation or conduct of any businesses, Assets (including
activities performed thereat) or operations managed or operated by, or
operationally related to, directly or indirectly, the Conoco Business and the
DuPont Business, except for any Liability, obligation or responsibility for any
action or failure to take action in accordance with the provisions of this
Agreement or for any fraudulent act or willful or intentional misconduct in the
operation or conduct of Conoco Business or the DuPont Business prior to the
Effective Date. Nothing set forth in this subsection (c) shall limit or
otherwise affect any party's rights or obligations pursuant to, or contemplated
by, this Agreement and the Related Agreements, including any obligations
relating to indemnification and the assumption of Liabilities.
(d) The amount which any Indemnifying Party is
required to pay to any Indemnitee pursuant to Section 6.2(a) or Section 6.2(b)
shall be reduced (including, but not limited to, retroactively) by any recovery,
judgment, settlement or other amounts actually recovered, including insurance
proceeds except to the extent attributable to risks retained solely by Danube
and Christiana (provided that, in accordance with Section 10.6(a) hereof (except
as otherwise provided in Section 10.6(b)), no Indemnitee shall be obligated to
pursue insurance coverages under its
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excess liability insurance program for any Loss), by such Indemnitee in respect
of such Loss. If an Indemnitee shall have received an Indemnity Payment in
respect of a Loss and shall subsequently actually receive a recovery, judgment,
settlement or other amount in respect of such Loss, then such Indemnitee shall
promptly, but in no event later than five business days, pay to such
Indemnifying Party a sum equal to the lesser of the amount of such recovery,
judgment, settlement or other amount actually received, net of any taxes, or the
amount of Indemnity Payments actually received previously in respect of such
Loss.
(e) (i) An Indemnitee that has received an Indemnity
Payment in respect of a Loss from an Indemnifying Party shall pay to
such Indemnifying Party an amount equal to any Tax Saving Amount realized by
the Indemnitee promptly upon its receipt. For purposes of this Section 6.2(e),
the "Tax Saving Amount" shall equal the amount by which the Income Tax of the
Indemnitee or any of its Affiliates are reduced (including, without limitation,
through the receipt of a refund, credit or otherwise), plus any related interest
received from a Tax Authority, as a result of claiming as a deduction or offset
on any relevant Tax Return (including, without limitation, any claim for refund)
amounts attributable to a Loss (the "Indemnifiable Loss Deduction"). An
Indemnifying Party shall pay to an Indemnitee an amount equal to any increase in
the Income Taxes of the Indemnitee as a result of receiving an indemnity payment
from the Indemnifying Party (grossed up to take into account such payment, if
applicable).
(ii) In the event that an Indemnitee incurs a Loss, such
Indemnitee shall claim as a deduction or offset on
any relevant Tax Return (including, without
limitation, any claim for refund) such Loss to the
extent such position is supported by substantial
authority (as defined in Section 6.3(c) of the Tax
Sharing Agreement) with respect to U.S. federal,
state and local Tax Returns or has similar
appropriate authoritative support with respect to any
Tax Return other than U.S. federal, state and local
Tax Returns. The Indemnitee shall have primary
responsibility for the preparation of its Tax
Returns and reporting thereon such Indemnifiable Loss
Deduction; provided, that the Indemnitee shall
consult with, and provide the Indemnifying
Party with a reasonable opportunity to review and
comment on the portion of the Indemnitee's Tax Return
relating to the Loss. If a dispute arises between the
Indemnitee and the Indemnifying Party as to whether
there is "substantial authority" (with respect to
U.S. federal, state and local Tax Returns) or similar
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appropriate authoritative support (with respect to
any Tax Return other than U.S. federal, state and F
local Tax Returns) for the claiming of an
Indemnifiable Loss Deduction, such dispute shall be
resolved in accordance with the principles and
procedures set forth in Section 8 of the Tax Sharing
Agreement. Both DuPont and Conoco shall act in good
faith to coordinate their Tax Return filing positions
with respect to Indemnity Payments for the periods
that include an Indemnity Payment. There shall be an
adjustment to any Tax Saving Amount calculated under
Section 6.2(e)(i) hereof in the event of an Audit
which results in a Final Determination that increases
or decreases the amount of the Indemnifiable Loss
Deduction reported on any relevant Tax Return of the
Indemnitee. The Indemnitee shall promptly inform the
Indemnifying Party of any such Audit and shall
attempt in good faith to sustain the Indemnifiable
Loss Deduction at issue in the Audit. Upon receiving
a written notice of a Final Determination in respect
of an Indemnifiable Loss Deduction, the Indemnitee
shall redetermine the Tax Saving Amount attributable
to the Indemnifiable Loss Deduction under Section
6.2(e)(i) hereof, taking into account the Final
Determination (the "Restated Tax Saving Amount"). If
the Restated Tax Saving Amount is greater than the
Tax Saving Amount, the Indemnitee shall promptly pay
the Indemnifying Party a sum equal to the difference
between such amounts. If the Restated Tax Saving
Amount is less than the Tax Saving Amount, then the
Indemnifying Party shall promptly pay the Indemnitee,
an amount equal to the difference between such
amounts.
(iii) Notwithstanding any other provision of this
Agreement, to the extent permitted by applicable law,
the parties hereto agree that any Indemnity Payment
made hereunder shall be treated as a capital
contribution or dividend distribution, as the case
may be, immediately prior to the Effective Date, for
all Tax purposes, and accordingly, as not includible
in the taxable income of the recipient.
(f) THE PARTIES HERETO UNDERSTAND AND AGREE THAT THE
INDEMNIFICATION OF AN INDEMNITEE BY AN INDEMNIFYING PARTY PURSUANT TO THIS
ARTICLE VI MAY IN-
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CLUDE INDEMNIFICATION FOR LOSSES RESULTING FROM OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, AN INDEMNITEE'S OWN NEGLIGENCE.
(g) The indemnification provisions of this Article VI
(i) shall apply without regard to, and shall not be subject to, any limitation
by reason of set-off, limitation or otherwise and (ii) are intended to be
comprehensive and not to be limited by any requirements of Law concerning
prominence of language or waiver of any legal right under any Law (including,
without limitation, rights under any workers compensation statute or similar
statute conferring immunity from suit) and the parties hereto hereby waive all
such rights.
Section 6.3 Procedure for Indemnification.
(a) If any party shall receive notice of any Action
brought, asserted, commenced or pursued other than by a DuPont Party or a Conoco
Party (hereinafter a "Third Party Claim"), with respect to which a DuPont Party
or a Conoco Party is or may be entitled to an Indemnity Payment, it shall give
the potential Indemnifying Party prompt notice thereof (including any pleadings
relating thereto) after becoming aware of such Third Party Claim, specifying in
reasonable detail the nature of such Third Party Claim and the amount or
estimated amount thereof to the extent then feasible (which estimate shall not
be conclusive of the final amount of such claim); provided, however, that the
failure of a party to give notice as provided in this Section 6.3(a) shall not
relieve any Indemnifying Party of its indemnification obligations under this
Article VI, except to the extent that any Indemnifying Party is actually
prejudiced by such failure to give notice.
(b) For any Third Party Claim concerning which notice
is required to be given under subparagraph (a) of this Section 6.3, an
Indemnifying Party may elect to defend the Third Party Claim through counsel
appointed by the Indemnifying Party, which counsel shall be reasonably
satisfactory to the Indemnitee. An Indemnifying Party electing to defend a Third
Party Claim must (i) notify the Indemnitee of its election to defend within 30
days of receipt of notice of such claim pursuant to Section 6.3(a) or sooner if
the nature of the Third Party Claim so requires and (ii) acknowledge and agree
in writing that if such Third Party Claim is adversely determined, such
Indemnifying Party will have an obligation to pay Indemnity Payments to the
Indemnitee in respect of the Indemnifiable Losses relating to such Third Party
Claim and that such Indemnifying Party waives all defenses it may have to
contest such obligation. Notwithstanding the foregoing, DuPont, in its sole
discretion, upon written notice (which notice shall include
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DuPont's basis for electing to defend such Third Party Claim(s) and whether or
not DuPont acknowledges its liability for Indemnity Payments with respect to
such Third Party Claim(s) in accordance with the prior sentence), may elect to
defend (or assume the defense of) any Third Party Claim or series of related
Third Party Claims that:
(i) relate in any way to the Conoco Business,
Transferred Assets or the Assumed Liabilities if a DuPont Party is named a party
thereto and if (x) DuPont's or one of the Retained Subsidiaries' ability to
conduct its business could be impaired in any significantly adverse manner
as a result of any injunctive relief sought or (y) an adverse resolution of such
Third Party Claim (or series of related Third Party Claims) presents in the
good faith judgment of DuPont's General Counsel a reasonable risk of having an
adverse effect on the business, operations, financial condition, results of
operations or prospects of (1) DuPont and the Retained Subsidiaries, taken as
a whole, in an amount greater or equal to $300 million or (2) one of the
Retained Subsidiaries organized outside the United States in an amount
greater than or equal to $50 million, in which case (A) DuPont or one of the
Retained Subsidiaries shall pay all costs and expenses incurred in connection
with the defense of such Third Party Claim(s) if DuPont or one of the Retained
Subsidiaries is the Indemnifying Party with respect to such Third Party Claim(s)
or (B) such costs and expenses shall be included in DuPont's or one of the
Retained Subsidiary's Losses if Conoco or one of its Subsidiaries is the
Indemnifying Party with respect to such Third Party Claim(s); or
(ii) with respect to which both parties hereto, or
Conoco and a Retained Subsidiary, or DuPont and a Subsidiary of Conoco may be
Indemnifying Parties, and to which paragraph (i) above does not apply and as
to which, in the good faith judgement of the General Counsel of DuPont, the
portion of the aggregate Liability that is the responsibility of DuPont and any
Retained Subsidiaries (after taking into account indemnification obligations
hereunder) equals or exceeds the portion of such Liability that is the
responsibility of Conoco and any Subsidiaries of Conoco. In any case in which
both DuPont and Conoco may be Indemnifying Parties with respect to a Third-Party
Claim, regardless of whether DuPont has the right to defend pursuant to this
paragraph (b)(ii), all costs and expenses shall be paid by the party
obligated to make any Indemnification Payment to the other, if they are not both
required to do so, and if they are both so required, or neither is so required,
then all costs and expenses shall be paid by the parties pro rata based on
their respective proportionate liability for any settlement or judgment
reached or entered (after taking into account any Indemnification Payments
pursuant
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to this Agreement). If neither party has any liability to a third party, the
parties shall share the fees and expenses equally.
(c) The Indemnifying Party's right to defend any
Third Party Claim includes the right (after consultation with the Indemnitee
following at least five business days written notice thereof) to compromise,
settle or consent to the entry of any judgment or determination of liability
concerning such Third Party Claim; provided, however, that the Indemnifying
Party shall not compromise, settle or consent to the entry of judgment or
determination of liability concerning any Third Party Claim without prior
written approval by the Indemnitee if the terms or conditions of such
compromise, settlement or consent would, in the reasonable judgment of the
Indemnitee, have a significantly adverse financial impact or an adverse effect
upon the ongoing operations of the Indemnitee. Notwithstanding any other
provision of this Section 6.3, unless otherwise agreed to by the parties in
writing, no party shall enter into any compromise or settlement or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the third party of a release of both the Indemnitee and
the Indemnifying Party from all further liability concerning such Third Party
Claim.
(d) In the event that counsel for both the defending
party and the non-defending party is required and joint counsel cannot
adequately represent the interests of both the defending party and the
non-defending party due to a conflict of interest, the non-defending party
shall have the right to participate in the defense of any Third Party Claim by
employing separate counsel at the expense of such non-defending party without a
right of reimbursement from the defending party. In addition, in all cases, the
non-defending party may participate in the defending party's defense of any
Third Party Claim in which the non-defending party has any interest by employing
separate counsel; provided, however, that (i) the defending party shall control,
manage and direct the defense of such Third Party Claim and (ii) the
non-defending party's participation shall be at the non-defending party's cost
and expense without a right of reimbursement from the defending party.
(e) If the party having the right to elect to defend
a particular Third Party Claim pursuant to Section 6.3(b) elects not to defend,
or fails to respond regarding its election to defend in a timely manner, a
particular Third Party Claim, the other party shall defend such Third Party
Claim without any prejudice to its rights to indemnification from the
Indemnifying Party pursuant to this Article VI. In such case, (i) the Indemnitee
shall have the right to compromise, settle or consent to the entry of any
judgment with respect to such Third Party Claim as provided in Section 6.3(c),
(ii) the amount of such compromise, settlement or judgment shall be
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determinative of the amount of the Loss (but such compromise, settlement or
judgment shall not necessarily be determinative of which party hereunder is
entitled to indemnification) and (iii) the Indemnifying Party shall bear all
costs and expenses of defending such Third Party Claim; provided, however, that
if both parties may be Indemnifying Parties with respect to such Third Party
Claim, the non-defending party shall reimburse the defending party promptly upon
demand by the defending party for the non-defending party's proportionate share
of all out-of-pocket costs and expenses reasonably incurred in connection with
the defending party's defense of such Third Party Claim.
(f) The non-defending party shall make available to
the defending party and its counsel all employees, books and records,
communications, documents, items or matters within its knowledge, possession or
control that are necessary, appropriate or reasonably deemed relevant by the
defending party with respect to such defense; provided, however, that subject to
Section 8.6 hereof, nothing in this subparagraph (f) shall be deemed to require
a party to make available books and records, communications, documents or items
which (i) in such party's good faith judgment could result in a waiver of any
Privilege or (ii) such party is not permitted to make available because of any
Law or any confidentiality obligation to a third party, in which case such party
shall use its reasonable efforts to seek a waiver of or other relief from such
confidentiality restriction.
(g) Upon final judgment, determination, settlement or
compromise of any Third Party Claim, and unless otherwise agreed by the parties
in writing, the Indemnifying Party shall pay promptly on behalf of the
Indemnitee, or to the Indemnitee in reimbursement of any amount theretofore
required to be paid by it, the amount of any and all Losses suffered by such
Indemnitee (other than attorneys' fees incurred by such Indemnitee in the event
it participates in its own defense, except in the circumstance where the
Indemnifying Party has failed to assume the defense of any Third Party Claim)
with respect to such claim as determined by such final judgment, determination,
settlement or compromise. Upon the payment in full by the Indemnifying Party of
such amount, such Indemnifying Party shall be subrogated to and shall stand in
the place of such Indemnitee as to any events or circumstances in respect of
which such Indemnitee may have any right or claim relating to such Third Party
Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 6.4 Other Claims for Indemnification. Any claim on
account of a Loss which does not result from a Third Party Claim shall be
asserted
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by written notice from the Indemnitee to the Indemnifying Party stating the
specific provisions of this Agreement upon which such claim is based. Such
Indemnifying Party shall have a period of 30 days from actual receipt of the
notice (or such shorter time period as may be required by law as indicated by
the Indemnitee in the written notice) within which to respond thereto. If such
Indemnifying Party does not respond within such 30-day (or lesser) period, then
there shall be a rebuttable presumption that such Indemnifying Party has
accepted responsibility for such claim. If such Indemnifying Party does respond
within such 30-day (or lesser) period and rejects such claim in whole or in
part, such Indemnitee shall be free to pursue resolution as provided in Article
XIII hereof.
Section 6.5 Contribution. If the indemnification provided for
in Section 6.2 is unavailable to an Indemnitee in respect of any Loss arising
out of or related to information contained in the Registration Statement as
provided in clause (ii) of Section 6.2(a) and clause (ii) of Section 6.2(b),
then the Indemnifying Party, in lieu of indemnifying such Indemnitee, shall
contribute to the amount paid or payable by such Indemnitee as a result of such
Loss, in such proportion as is appropriate to reflect the relative fault of
Conoco and each other Conoco Party, on the one hand, and DuPont and each other
DuPont Party, on the other hand, in connection with the statements or omissions
which resulted in such Loss. The relative fault of a Conoco Party, on the one
hand, and of a DuPont Party, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by a Conoco Party or a DuPont Party.
Section 6.6 No Beneficiaries. Except to the extent expressly
provided otherwise in this Article VI, the indemnification provided for by this
Article VI shall not inure to the benefit of any third party or parties and
shall not relieve any insurer who would otherwise be obligated to pay any claim
of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, provide any subrogation rights with respect
thereto and each party agrees to waive (and, as applicable, cause its
Subsidiaries to waive) such rights against the other (and, as applicable, its
Subsidiaries) to the fullest extent permitted by law.
Section 6.7 Indemnification of Directors and Officers. For
purposes of this Article VI, and notwithstanding anything to the contrary
contained herein, (i) officers of DuPont shall not be Conoco Parties, but shall
be deemed DuPont Parties, whether or not such officers of DuPont serve on the
Conoco Board, (ii) officers of Conoco shall not be deemed DuPont Parties, but
shall be deemed Conoco Parties,
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whether or not such officers of Conoco serve on
the DuPont Board, and (iii) Persons who (A) serve on both the Conoco Board and
the DuPont Board and (B) are not officers of either DuPont or Conoco, shall be
deemed both DuPont Parties and Conoco Parties.
ARTICLE VII
CERTAIN ADDITIONAL MATTERS
Section 7.0 Post-Closing Transactions. As more fully set forth
in Sections 7.1 and 7.2 below, and subject to the limitations therein, the
parties hereto intend to effect the Separation, including all required transfers
of any Transferred Business Companies, Transferred Assets and DuPont Transferred
Assets on or prior to the Effective Date or, to the extent any approvals,
filings or consents are required with or from any Governmental Authorities or
third parties or otherwise contemplated by the parties in connection with the
Restructuring, as soon as practicable thereafter. In the case of any such
transfers not complete at the Effective Date, the parties further intend,
subject to the provisions of Sections 7.1 and 7.2 below, to treat the Person to
whom such Asset or company would otherwise have been transferred, insofar as is
reasonably possible, as being entitled to all of the benefits and burdens
relating thereto, including possession, use, risk of loss, potential for gain
and control, from and after the Effective Date.
Section 7.1 Non Assignment, Further Assurances. (a)
Notwithstanding anything else in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign, convey or transfer any Action,
Asset or Contract, including stock or other ownership interests in a Transferred
Business Company or any claim or right or any benefit arising thereunder or
resulting therefrom as to which consent or approval to assignment, conveyance or
transfer thereof or amendment thereof (including, but not limited to, consents
and approvals of Governmental Authorities) is required but has not been obtained
as of the Effective Date unless and until such consent is no longer required or
has been obtained.
(b) Subject to Section 7.2, DuPont and Conoco agree
that they will use their respective reasonable commercial efforts to obtain any
consent, approval or amendment (including, but not limited to, consents and
approvals of Governmental Authorities) required to (i) convey, assign, transfer
and deliver to Conoco or the applicable Transferred Business Companies all of
DuPont's or the applicable Retained Subsidiaries' title and ownership interest
in and to the Trans-
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ferred Assets and to convey, assign, transfer and deliver to DuPont or the
applicable Retained Subsidiaries all of Conoco's or its applicable Subsidiaries'
or any Delayed Company's title and ownership interest in and to any DuPont
Transferred Assets to be conveyed to DuPont or the Retained Subsidiaries
hereunder and (ii) have Conoco or its applicable Subsidiary assume, pay, perform
and discharge the Assumed Liabilities and to obtain the release of DuPont or the
applicable Retained Subsidiary therefrom, and, to the extent required, have
DuPont or its applicable Retained Subsidiary assume, pay, perform and discharge
the Retained Liabilities and to obtain the release of Conoco or its applicable
Subsidiary therefrom including with respect to (i) and (ii) any consent,
approval or amendment required for any necessary novation or assignment of all
Contracts, agreements, leases, licenses and other rights of any nature
whatsoever relating to any Assets (including, without limitation, all bids,
quotations and proposals which have been made by DuPont or any of the Retained
Subsidiaries on behalf of the Transferred Business or by Conoco or any
Transferred Business Company on behalf of the Retained Business which are
outstanding as of the Effective Date); provided, however, that neither DuPont
and the Retained Subsidiaries nor Conoco and its Subsidiaries shall be obligated
to pay any consideration in order to obtain any such consent, approval or
amendment (except that DuPont shall be required to pay filing fees, other
administrative charges and other reasonable out-of-pocket expenses to the extent
they are Separation Expenses); and provided, further, however, that neither
DuPont nor Conoco is, in this Agreement or in any Related Agreement,
representing or warranting in any way that the obtaining of the consents or
approvals, the execution and delivery of any amendatory agreements and the
making of the filings and applications contemplated by this Agreement shall
satisfy the provisions of all applicable agreements or the requirements of all
applicable laws or judgments; and provided, further, that Conoco and any
applicable Subsidiary shall bear the economic and legal risk that any required
consents, approvals or amendments are not obtained or that any requirements of
law or judgments are not complied with, with respect to the transfer of the
Transferred Assets and that DuPont and any applicable Retained Subsidiary shall
bear the economic and legal risk that any required consents, approvals or
amendments are not obtained or that any requirements of law or judgments are not
complied with, with respect to DuPont Transferred Assets.
(c) In the event and to the extent that DuPont is
unable to obtain any such required consent, approval or amendment required to
transfer, convey or assign the Transferred Assets (other than the stock of a
Delayed Company) to Conoco or one of its Subsidiaries, DuPont shall, and shall
cause the Retained Subsidiaries to, continue to hold and, to the extent required
by the terms applicable to such Asset, operate the Asset in the case of real or
personal property or to be bound
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thereby in the case of Contracts and unless not permitted by law, Conoco shall,
and shall cause its Subsidiaries to, pay, perform and discharge fully, promptly
when due all the obligations of DuPont or the Retained Subsidiaries thereunder
from and after the Effective Date, and Conoco shall, and shall cause its
Subsidiaries to, indemnify the DuPont Parties for all Losses arising out of such
performance by Conoco or any of its Subsidiaries. DuPont shall, and shall cause
the Retained Subsidiaries to, without further consideration therefor, pay and
remit to Conoco promptly all monies, rights and other considerations received in
respect of such performance. Conoco shall, and shall cause its Subsidiaries to,
indemnify the DuPont Parties for all Losses arising out of any actions (or
omissions to act) of DuPont or any Retained Subsidiary (i) taken at the
direction of Conoco (or if Conoco fails to provide such direction) or (ii)
absent gross negligence or willful misconduct, taken at the initiative of DuPont
or one of the Retained Subsidiaries with respect to any Contracts, agreements,
leases, licenses, or other rights or commitments.
(d) In the event and to the extent that Conoco is
unable to obtain any such required consent, approval or amendment required to
transfer, convey or assign any DuPont Transferred Asset (other than the stock of
a Delayed Company) to DuPont or one of the Retained Subsidiaries, Conoco shall,
and shall cause its Subsidiaries to, continue to hold and, to the extent
required by the terms applicable to such Asset, operate the Asset in the case of
real or personal property or to be bound thereby in the case of Contracts and
unless not permitted by law, DuPont shall, and shall cause the Retained
Subsidiaries to, pay, perform and discharge fully, promptly when due all the
obligations of Conoco or its Subsidiaries thereunder from and after the
Effective Date, and DuPont shall, and shall cause the Retained Subsidiaries to,
indemnify the Conoco Parties for all Losses arising out of such performance by
DuPont or any of the Retained Subsidiaries. Conoco shall, and shall cause its
Subsidiaries to, without further consideration therefor, pay and remit to DuPont
promptly all monies, rights and other considerations received in respect of such
performance. DuPont shall, and shall cause the Retained Subsidiaries to,
indemnify the Conoco Parties for all Losses arising out of any actions (or
omissions to act) of Conoco or any of its Subsidiaries (i) taken at the
direction of DuPont (or if DuPont fails to provide such direction) or (ii)
absent gross negligence or willful misconduct, taken at the initiative of Conoco
or one of its Subsidiaries with respect to any Contracts, agreements, leases,
licenses, or other rights or commitments.
(e) Subject to Section 7.2, to the extent that any
conveyances, assignments, transfers and deliveries of the Assets contemplated by
this Agreement or the Related Agreements shall not have been consummated on or
prior to the Effective Date (including, but not limited to, the failure or
inability to obtain a
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required approval, consent or amendment), DuPont and Conoco shall cooperate to
effect such consummation as promptly thereafter as shall be practicable. Without
limiting the generality of the foregoing, at any time and from time to time
after the Effective Date, at the request of DuPont or Conoco, as the case may
be, and without further consideration, DuPont or the Retained Subsidiaries, on
the one hand, and Conoco or its Subsidiaries, on the other hand, will execute
and deliver to DuPont or the Retained Subsidiaries, as the case may be, or to
Conoco or its Subsidiaries, as the case may be, such other instruments of
transfer, conveyance, assignment and confirmation and take such action as DuPont
or Conoco, as the case may be, may reasonably deem necessary or desirable in
order to more effectively transfer, convey and assign to the other and to
confirm in the other all title and ownership interest held by the transferor to
all of the Assets transferred hereunder, to put the transferee in actual
possession and operating control thereof and to permit the transferee to
exercise all ownership rights with respect thereto held by the transferor
(including, without limitation, rights under Contracts and other arrangements as
to which the consent of any third party to the transfer thereof shall not have
previously been obtained) and Conoco or its Subsidiaries and DuPont or the
Retained Subsidiaries will execute and deliver to DuPont or Conoco, as the case
may be, all instruments, undertakings or other documents and take such other
action as DuPont and Conoco may reasonably deem necessary or desirable in order
to have Conoco or one of the Transferred Business Companies fully assume and
discharge the Assumed Liabilities and relieve DuPont of any Liability with
respect thereto and to have DuPont or the Retained Subsidiaries, to the extent
necessary, to fully assume and discharge the Retained Liabilities and relieve
Conoco of any Liability with respect thereto; provided, that both DuPont and
Conoco understand and agree that, neither shall be liable in any manner to any
person who is not a party to this Agreement for any failure of any of the
transfers contemplated by this Agreement to be consummated on or subsequent to
the Effective Date. Notwithstanding the foregoing, DuPont and Conoco shall not
be obligated, in connection with the foregoing, to expend monies other than
filing fees, administrative charges, and other reasonable out-of-pocket
expenses, which shall be borne by DuPont to the extent they are Separation
Expenses.
(f) Whether or not all of the Transferred Assets or
the Assumed Liabilities shall have been legally transferred or transferred of
record to or assumed by Conoco or one of the Transferred Business Companies or
whether all of the Assets to be transferred to DuPont or one of the Retained
Subsidiaries or the Retained Liabilities shall have been legally transferred or
transferred of record to or assumed by DuPont or one of the Retained
Subsidiaries as of the Effective Date, DuPont and Conoco agree that as between
DuPont and Conoco and their respective
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Subsidiaries, as of the Effective Date, (i) Conoco or one of the Transferred
Business Companies shall have, and shall be deemed to have acquired, complete
and sole beneficial ownership over all of the Transferred Assets, except as
described in this Section 7.1 with respect to Assets which are non-assignable
and as described in Section 7.2 with respect to Delayed Companies, together with
all of DuPont's and the Retained Subsidiaries' rights, powers and privileges
(except as provided in Section 8.6 hereto) incident thereto, and shall be deemed
to have assumed in accordance with the terms of this Agreement all of the
Assumed Liabilities and all of DuPont's and the Retained Subsidiaries' duties,
obligations and responsibilities incident thereto and (ii) DuPont or one of the
Retained Subsidiaries shall have, and shall be deemed to have acquired, complete
and sole beneficial ownership over all of the DuPont Transferred Assets to be
transferred to DuPont and the Retained Subsidiaries hereunder, except as
described in this Section 7.1 with respect to Assets which are non-assignable
and except as described in Section 7.2 with respect to Delayed Companies,
together with all of Conoco's and its Subsidiaries' rights, powers and
privileges (except as provided in Section 8.6 hereto) incident thereto, and
shall be deemed to have assumed, to the extent required, in accordance with the
terms of this Agreement all of the Retained Liabilities and all of Conoco's and
its Subsidiaries' duties, obligations and responsibilities incident thereto.
Section 7.2 Delayed Companies; Interim Period.
(a) With respect to any Transferred Business Company
not owned directly or indirectly by Conoco as of the Effective Date, including,
but not limited to, the entities set forth on Schedule 7.2 (each a "Delayed
Company"), DuPont and Conoco agree that from the Effective Date until it is
conveyed to Conoco or any of its Subsidiaries (or until it is otherwise
transferred by DuPont pursuant to paragraph (e) hereof) (the "Interim Period"),
DuPont, or each Retained Subsidiary of DuPont that directly or indirectly owns a
Delayed Company, shall retain title to the Delayed Company; provided, that it
may transfer the Delayed Company to another Retained Subsidiary that is wholly
owned, directly or indirectly, by DuPont. For the period specified in clauses
(i) and (ii) of the first sentence of subsection (d) below and until the sale
process provided for therein has been completed or abandoned, DuPont shall cause
each Delayed Company not to declare or pay any dividends or other distributions,
except out of net cash flow generated by the Retained Business, to DuPont or any
Retained Subsidiary or any other Person and shall cause the Delayed Companies
not to redeem, repurchase or otherwise acquire any of its capital stock;
provided, however, that the provisions of this sentence shall terminate and be
of no further effect with respect to a particular Delayed Company at such time
as that particular Delayed Company is no longer a direct or indirect wholly
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owned Subsidiary of DuPont. Conoco, directly or indirectly, shall provide the
funding requirements (which shall include an allocable portion of corporate
overhead and non-allocated expenses) of the portion of the business and
operations of each Delayed Company conducting the Transferred Business not
covered by cash on hand at such Delayed Company in amounts and at times
determined by DuPont and shall repay and indemnify DuPont or any Retained
Subsidiary for any such funding advanced by it to fund the portion of the
business and operations of the Delayed Company conducting the Transferred
Business after the Effective Date; provided, that in the case of any Mixed-Use
Subsidiary which is a Delayed Company, the calculation of the funding required
to be provided by Conoco shall be adjusted to (i) reimburse DuPont or a Retained
Subsidiary for the funding provided by cash generated by the business and
operations of such Delayed Company through the conduct of the Retained Business
and for any funding of such Delayed Company provided by DuPont or any Retained
Subsidiary or otherwise generated by the Retained Business and (ii) reimburse
Conoco or any Subsidiary of Conoco for the funding, if any, of that portion of
the business and operations of the Delayed Company conducting the Retained
Business after the Effective Date which is provided by cash generated by the
business and operations of such Delayed Company conducting the Transferred
Business.
(b) Prior to the receipt of the approvals of all
Governmental Authorities required to transfer a Delayed Company to Conoco or any
of its Subsidiaries, if applicable, during the Interim Period, management of
such Delayed Company shall operate such Delayed Company without control by
Conoco or any of its Subsidiaries, and DuPont shall instruct the management of
such Delayed Company to operate such Delayed Company in the ordinary course of
business in accordance with existing plans and budgets of such Delayed Company.
If the exercise of managerial control by Conoco is not prohibited by law, Conoco
shall exercise managerial control over such portion of the business and
operations of each Delayed Company which conducts the Transferred Business and
neither DuPont nor any Retained Subsidiary shall have any duty or obligation
with respect thereto. DuPont and its Subsidiaries shall (i) not be liable in any
manner for the activities or operations of such portion of the business and
operations of each Delayed Company which conducts the Transferred Business or
the activities of the directors, officers and employees of any Delayed Company
during the Interim Period to the extent such activities relate to such portion
of the business and operations of the Delayed Company which conducts the
Transferred Business and (ii) shall be indemnified by Conoco and its
Subsidiaries from any and all Losses sustained by DuPont or any of the Retained
Subsidiaries in connection with the activities described under (i) above
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or otherwise attributable to DuPont or any Retained Subsidiary with respect to
its status as holder of the shares of such Delayed Company during the Interim
Period.
(c) DuPont shall, during the Interim Period, provide,
or cause to be provided, outsourcing services to a Delayed Company to the extent
such services are currently provided to such Delayed Company by DuPont or any
Retained Subsidiary. Such services shall be provided in accordance with the
terms and at the cost provided for in the relevant Transitional Services
Agreement. A Delayed Company or any Transferred Business Companies, as the case
may be, shall be deemed to have been granted licenses immediately prior to or on
the Effective Date by DuPont or any Retained Subsidiary, any Delayed Company and
Conoco or any of its Subsidiaries, as the case may be, to use all intellectual
property owned or licensed (in the case of licensed intellectual property,
subject to the terms thereof) by such grantor and previously used in connection
with the recipient's business and on the same terms and conditions that such
intellectual property was licensed or made available to the recipient prior to
the Effective Date.
(d) If all or part of the transfer of a Delayed
Company is prohibited by a Governmental Authority, DuPont shall, for a period
ending on the the later of (i) two years following the Effective Date or (ii)
one year following DuPont's good faith determination that such prohibition
exists and a waiver or other relief therefrom cannot be obtained on a
commercially reasonable basis, with the consent of Conoco (which consent shall
not be unreasonably withheld), use its reasonable commercial efforts to
transfer, or cause to be transferred, to a third party all of the Assets and
Liabilities of such Delayed Company relating to the operations and conduct of
the Transferred Business (if none of such Assets and Liabilities could be
transferred to or assumed by Conoco) or the portion of such Assets and
Liabilities that could not be transferred to Conoco on terms reasonably
acceptable to Conoco; provided, that DuPont shall be entitled to comply with and
to rely upon any advice, orders or instructions of a Governmental Authority with
respect to any such transfer or sale; and further, provided, that any such
transfer or sale shall be made without any undertakings on the part of DuPont or
any Retained Subsidiary, but that DuPont shall bear all costs, expenses and
taxes arising from the sale or transfer of such Assets and Liabilities; and
further, provided, that DuPont shall keep Conoco reasonably informed about its
efforts to cause such sale or transfer and DuPont shall consider, but have no
obligation to implement, any recommendations Conoco may have regarding such
process. Following the later to occur of (i) and (ii) above, DuPont shall have
no further obligation to effectuate or cause any sale or transfer pursuant to
this Section 7.2(d). Upon such sale or transfer, all duties and obligations
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of DuPont or any Retained Subsidiary with respect to such Delayed Company shall
thereupon cease except as otherwise provided in this Agreement. The proceeds to
DuPont, the relevant Retained Subsidiary or the relevant Delayed Company (net of
any costs, expenses and taxes, including any required repayments of debt, to the
extent they are not Separation Expenses, (the "Net Proceeds")), if any, of such
transfer or sale shall be remitted to Conoco upon receipt of such Net Proceeds
by DuPont, the relevant Retained Subsidiary or the relevant Delayed Company.
However, if DuPont or the relevant Retained Subsidiary is required to make an
expenditure in connection with such sale or transfer that is not a Separation
Expense, Conoco shall, promptly following the consummation of such transfer or
sale, reimburse DuPont or the relevant Retained Subsidiary for the full amount
of such expenditure. If, following the later to occur of clause (i) and (ii)
above (or earlier, with the consent of Conoco), DuPont or the relevant Retained
Subsidiary liquidates such Delayed Company, the Net Proceeds of such liquidation
shall, if permitted by Law, be remitted to Conoco upon receipt of such Net
Proceeds by DuPont or the relevant Retained Subsidiary. The payments provided
for in the previous two sentences shall be made subject to any currency, or
exchange or other regulation or requirement of Governmental Authorities.
Notwithstanding the foregoing, if a Delayed Company is a Mixed-Use Subsidiary,
DuPont may (i) transfer all Assets of the Delayed Company which constitute part
of the Retained Business to DuPont or one of the Retained Subsidiaries prior to
any sale of all or part of such Delayed Company to a third party or a
liquidation of the Delayed Company, (ii) sell only the Assets of the Delayed
Company which constitute part of the Transferred Business to a third party or
(iii) sell all of the Assets of the Delayed Company or all of the stock of the
Delayed Company, in which case, DuPont shall only remit to Conoco the Net
Proceeds which are allocable to the portion of the Delayed Company which
conducted the Transferred Business. In the case of clauses (i) and (ii) above,
the amount of Net Proceeds to be remitted by DuPont to Conoco shall be
calculated after giving effect to the transfer of the Assets of the Delayed
Company which constitute part of the Retained Business in the case of clause
(i), and only giving effect to the sale of the Assets of the Delayed Company
which constitute part of the Transferred Business in the case of Clause (ii).
(e) During the Interim Period, DuPont or one of the
Retained Subsidiaries will promptly provide Conoco and its Subsidiaries with
such financial and other information with respect to such portion of the
business and operations of each Delayed Company which conducts the Conoco
Business as may be reasonably requested by Conoco, unless the provision of such
information would be prohibited by applicable law or by contractual obligations
to third parties in the reasonable judgment of DuPont. During the Interim
Period, DuPont and Conoco will, and will
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cause their respective Subsidiaries to, cooperate and to use commercially
reasonable efforts to obtain all required approvals of any Governmental
Authorities for any sale or transfer of Assets and assumptions of Liabilities of
any Delayed Company relating to the operations and conduct of the Conoco
Business.
(f) In the event that any Delayed Company which is
also a Mixed-Use Subsidiary that is conveyed to Conoco or any of its
Subsidiaries owns any DuPont Transferred Assets after such conveyance, Conoco
and its Subsidiaries shall continue to operate such assets and conduct that
portion of the Retained Business attributable to those Assets in the ordinary
course of business. Conoco and its appropriate Subsidiaries shall take all
actions reasonably required to transfer such DuPont Transferred Assets to DuPont
or the appropriate Retained Subsidiary as soon as is practicable following
receipt of all required approvals of all Governmental Authorities. The
provisions of Section 7.2(a), (b), (c), and (e) shall apply to DuPont and the
Retained Subsidiaries, such DuPont Transferred Assets and the conduct of that
portion of the Retained Business conducted by such Delayed Company attributable
to those Assets to the same extent such provisions are applicable to Conoco and
its Subsidiaries, the Transferred Assets and the operation of the Conoco
Business pursuant to such subsections. No later than 30 days following receipt
by Conoco or any of its Subsidiaries of any cash proceeds in respect of the sale
or transfer of any DuPont Transferred Assets pursuant to this subsection 7.2(f),
Conoco shall remit to DEC an amount of cash equal to the gross proceeds received
by Conoco or any of its Subsidiaries pursuant to such sale or transfer.
Section 7.3 Notice of Separation. Following the Effective
Date, Conoco shall, and shall cause its Subsidiaries to use commercially
reasonable efforts to advise and put on notice all third parties with whom
Conoco or any of its Subsidiaries conducts business or maintains contractual
relationships that Conoco is an independent public company and no longer a
wholly owned Subsidiary of DuPont.
Section 7.4 Resignations. On or prior to the Effective Date,
DuPont shall cause all directors, officers and employees of DuPont who are
directors and officers of any Transferred Business Company (other than any named
in the Registration Statement as intended to be directors or officers of Conoco
or any other Transferred Business Company) to resign from such positions with
such Transferred Business Company, and Conoco shall cause all persons who are or
will be Transferred Employees and who are officers or employees of DuPont or
officers, employees, or directors of any Retained Subsidiary (other than
Sentinel) to resign from such positions with DuPont or with such Retained
Subsidiary; provided however, that no
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person who is named in the Registration Statement as being or intended to be or
remain a director of Conoco or DuPont shall be required to resign from such
Board.
Section 7.5 Other Agreements. On or prior to Effective Date,
DuPont and Conoco shall, and shall cause their respective Subsidiaries (as
appropriate) to, enter into and deliver the Related Agreements and the
Conveyancing and Assumption Instruments.
Section 7.6 Payment of Separation Expenses. DuPont shall be
responsible for reimbursing Conoco for Separation Expenses incurred by Conoco
and its Subsidiaries in accordance with the following provisions:
(a) Within 30 business days following the Effective
Date, Conoco shall prepare, and DuPont shall fully cooperate in preparing, an
invoice reflecting all Separation Expenses paid by Conoco or any of its
Subsidiaries for the period beginning May 11, 1998 through and including the
Effective Date. Not later than 30 business days following delivery of such
invoice, DuPont shall, or shall cause any of the Retained Subsidiaries to, pay
to Conoco or any of its Subsidiaries in cash the amount of Separation Expenses
reflected on such invoice.
(b) For each calendar month (or for such other time
period as the parties shall mutually agree following the Effective Date)
commencing with the month following the month in which the Effective Date occurs
and, unless sooner terminated by mutual agreement of the parties hereto,
continuing for two years from the date on which DuPont's voting power falls
below 50% of the voting power of all of the outstanding shares of common stock
of Conoco, within 30 business days of the end of the month (or such other
relevant period) in question, Conoco shall prepare, and DuPont shall fully
cooperate in preparing, an invoice which shall reflect the Separation Expenses
paid by Conoco and its Subsidiaries during the month (or such other relevant
period) in question; provided that, with respect to the first such period, such
invoice shall not reflect Separation Expenses paid prior to or on the Effective
Date (which expenses shall be reflected on the invoice provided for under
subsection (a) above). Not later than 30 business days following delivery of
each such periodic invoice, DuPont shall, or shall cause any of the Retained
Subsidiaries to pay in cash the amount reflected on such periodic invoice.
(c) As promptly as practicable following the date of
this Agreement, Conoco shall provide DuPont with an estimate of the total amount
of Separation Expenses for which reimbursement is to be provided pursuant to the
foregoing provisions.
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Section 7.7 Signs; Use of Company Name. Except as provided in
Section 7.8, as soon as practicable, and in any event within 60 days after the
Effective Date, DuPont and Conoco, at DuPont's expense, shall remove (or, if
necessary, on an interim basis cover up) any and all exterior and interior signs
and identifiers which refer or pertain to DuPont or the Retained Business on the
Transferred Assets, in the case of Conoco, or which refer to or pertain to
Conoco or the Transferred Business on the Assets of DuPont or the Retained
Subsidiaries, in the case of DuPont (in each case, other than on the Assets of
any Delayed Company for so long as such company remains a Delayed Company).
After such period, (i) Conoco shall not use or display the name "DuPont" or
variations thereof, or other trademarks, tradenames, logos or identifiers using
such name or otherwise owned by or licensed to DuPont which have not been
assigned or licensed to Conoco and (ii) DuPont shall not use or display the name
"Conoco" or variations thereof, or other trademarks, tradenames, logos or
identifiers using such name or otherwise owned by or licensed to Conoco which
have not been assigned or licensed to DuPont (collectively, in each case,
"Non-Permitted Names"), without the prior written consent of the other;
provided, however, notwithstanding the foregoing, that nothing contained in this
Agreement shall prevent DuPont or Conoco from using the other's name in public
filings with Governmental Authorities, materials intended for distribution to
either party's stockholders or any other communication in any medium which
describes the relationship between the parties.
Section 7.8 Products, Supplies and Documents. DuPont and
Conoco shall have the right to use existing products, supplies and documents
(including, but not limited to, purchase orders, forms, labels, shipping
materials, catalogues, sales brochures, operating manuals, instructional
documents and similar materials, and advertising material) being transferred to
it pursuant to this Agreement which have imprinted thereon or otherwise use a
Non-Permitted Name, for a period not to exceed 180 days following the Effective
Date (or for such longer period as necessary to fulfill existing contractual
relationships under contracts which have not been novated or in the business and
operations of any Delayed Company for so long as such company remains a Delayed
Company); provided, however, that DuPont and Conoco agree (i) to use only such
supplies and documents existing in inventory as of the Effective Date and (ii)
not to order or utilize in any manner any additional supplies and documents
which have imprinted thereon or otherwise use a Non-Permitted Name.
Section 7.9 Plant Closings and Layoffs. Conoco agrees that it
shall not, and shall not permit any of its Subsidiaries, at any time during the
120-day period following the Effective Date, effectuate (i) a "plant closing" as
defined in the
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Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act")
affecting any site of employment or operating units within any site of
employment of the Transferred Business or (ii) take any action to precipitate a
"mass layoff" as defined in the WARN Act affecting any site of employment of the
Transferred Business, except, in either case, after complying fully with the
notice and other requirements of the WARN Act. Conoco agrees to, and shall cause
its Subsidiaries to, indemnify DuPont and the Retained Subsidiaries and to
defend and hold DuPont and the Retained Subsidiaries harmless from and against
any and all Losses which DuPont and the Retained Subsidiaries may incur in
connection with any Action or claim of violation brought against DuPont and any
of the Retained Subsidiaries under the WARN Act or any state, local and foreign
plant closing and layoff law, which relate, in whole or in part, to actions
taken by Conoco or any of its Subsidiaries with regard to any site of employment
of Conoco or any of its Subsidiaries or operating units within any site of
employment of the Transferred Business.
Section 7.10 Litigation. Following the Effective Date, (a)
Conoco shall have exclusive authority and control over the investigation,
prosecution, defense and appeal of all pending Actions relating to or arising in
connection with the Conoco Business, the Transferred Assets or the Assumed
Liabilities, including Actions with respect to the matters set forth on Schedule
7.10(a) (each, a "Conoco Action"), and may settle or compromise, or consent to
the entry of any judgment with respect to any such Action, without the consent
of DuPont, and (b) DuPont shall have exclusive authority and control over the
investigation, prosecution, defense and appeal of all pending Actions relating
to or arising in connection with the DuPont Business, the Excluded Assets or the
Retained Liabilities, including Actions with respect to the matters set forth on
Schedule 7.10(b) (each, a "DuPont Action"), and may settle or compromise, or
consent to the entry of any judgment with respect to, any such Action without
the consent of Conoco; provided, that if both DuPont and Conoco are named as
parties to any Conoco Action or DuPont Action, to settle or compromise, or
consent to the entry of any judgment with respect to, any such Action, DuPont,
any of the Retained Subsidiaries, Conoco and any of its Subsidiaries must comply
with the provisions of Section 6.2. Conoco shall, and shall cause its
Subsidiaries to, indemnify, defend and hold harmless the DuPont Parties, and
DuPont shall, and shall cause the Retained Subsidiaries to, indemnify and hold
harmless each of the Conoco Parties, in the manner provided in Article VI, from
and against all Losses arising out of or resulting from each such Action over
which such Indemnifying Party has authority and control pursuant to this Section
7.10. Conoco shall, and shall cause its Subsidiaries, to use best efforts to
have DuPont and any DuPont Parties removed as parties to any Conoco Action in
which they are named parties as soon as is reasonably practicable, and DuPont
shall, and shall cause the
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Retained Subsidiaries to, use best efforts to have Conoco and any Conoco Parties
removed as parties to any DuPont Action in which they are named parties as soon
as is reasonably practicable.
Section 7.11 No Restrictions on Post-Closing Competitive
Activities; Corporate Opportunities.
(a) It is the explicit intent of each of the parties
hereto that the provisions of this Agreement shall not include any
non-competition or other similar restrictive arrangements with respect to the
range of business activities which may be conducted by the parties hereto.
Accordingly, each of the parties hereto acknowledges and agrees that nothing set
forth in this Agreement shall be construed to create any explicit or implied
restriction or other limitation on (i) the ability of any party hereto to engage
in any business or other activity which competes with the business of any other
party hereto, or (ii) the ability of any party to engage in any specific line of
business or engage in any business activity in any specific geographic area.
(b) Except as provided in the Principal Related
Agreements, DuPont and the Retained Subsidiaries shall have the right to, and
shall have no duty not to, (i) engage in the same or similar business activities
or lines of business as Conoco and its Subsidiaries, (ii) do business with any
client or customer of Conoco and its Subsidiaries and (iii) employ or otherwise
engage any officer or employee of Conoco and its Subsidiaries, and neither
DuPont nor any Retained Subsidiary nor any officer or director thereof shall be
liable to Conoco and its Subsidiaries or its stockholders for breach of any
fiduciary duty by reason of any such activities of DuPont or the Retained
Subsidiaries or of such person's participation therein. Except as would
otherwise result in a violation of law by DuPont or Conoco or any of their
respective Subsidiaries, Conoco and any of its Subsidiaries shall have the right
to, and shall have no duty not to, (i) engage in the same of similar business
activities or lines of business as DuPont and the Retained Subsidiaries (ii) do
business with any client or customer of DuPont and the Retained Subsidiaries and
(iii) employ or otherwise engage any officer or employee of DuPont and Retained
Subsidiaries and neither Conoco nor any of its Subsidiaries nor officer or
director thereof shall be liable to DuPont and the Retained Subsidiaries or
their shareholders for breach of any fiduciary duty by reason of any such
activities of Conoco or its Subsidiaries or of such persons participation
therein. In the event that DuPont or any of the Retained Subsidiaries acquires
knowledge of a potential transaction or matter which may be a corporate
opportunity for both DuPont or any of the Retained Subsidiaries and Conoco and
any of its Subsidiaries, neither DuPont nor the Retained Subsidiaries nor any
DuPont Designee shall have any duty to communicate or present such corporate
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opportunity to Conoco or its Subsidiaries and shall not be liable to Conoco and
its Subsidiaries or to Conoco's stockholders for breach of any fiduciary duty as
a stockholder of Conoco by reason of the fact that DuPont or any of the Retained
Subsidiaries pursues or acquires such corporate opportunity for itself, directs
such corporate opportunity to another person or entity, or does not present such
corporate opportunity to Conoco and its Subsidiaries. In the event that Conoco
or any of its Subsidiaries acquires knowledge of a potential transaction or
matter which may be a corporate opportunity for both DuPont or any of the
Retained Subsidiaries and Conoco or any of its Subsidiaries, neither Conoco nor
any of its Subsidiaries shall have any duty to communicate or present such
corporate opportunity to DuPont or any of the Retained Subsidiaries and shall
not be liable to DuPont or any of the Retained Subsidiaries or to DuPont's
stockholders for breach of any fiduciary duty by reason of the fact that Conoco
or any of its Subsidiaries pursues or acquires such corporate opportunity for
itself, directs such corporate opportunity to another person or entity, or does
not present such corporate opportunity to DuPont or any of the Retained
Subsidiaries. For the purposes of this Section 7.11, "corporate opportunities"
of Conoco and its Subsidiaries shall include, but not be limited to, business
opportunities which Conoco or its Subsidiaries are financially able to
undertake, which are, by their nature, in a line of business of Conoco or its
Subsidiaries, are of practical advantage to them and are ones in which Conoco or
its Subsidiaries have an interest or a reasonable expectancy, and in which, by
embracing the opportunities, the self-interest of DuPont or the Retained
Subsidiaries or any of their officers or directors will be brought into conflict
with that of Conoco and its Subsidiaries, and "corporate opportunities" of
DuPont and the Retained Subsidiaries shall include, but not be limited to,
business opportunities which DuPont or the Retained Subsidiaries are financially
able to undertake, which are, by their nature, in a line of business of DuPont
or the Retained Subsidiaries, are of practical advantage to them and are ones in
which DuPont or the Retained Subsidiaries have an interest or a reasonable
expectancy, and in which, by embracing the opportunities, the self-interest of
Conoco or its Subsidiaries or any of their officers or directors will be brought
into conflict with that of DuPont and the Retained Subsidiaries.
Section 7.12 Intellectual Property.
(a) Conoco hereby grants to DuPont and the Retained
Subsidiaries, effective as of the Effective Time, a world-wide, irrevocable
immunity from suit for infringement of all Conoco Patents used as of the
Effective Date by DuPont or any Retained Subsidiary in the operation of the
Retained Business; provided, however, that such immunity shall not extend to use
by DuPont or any Retained Subsidiary of any Conoco Patents for uses other than
uses for which such
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Conoco Patents are used by DuPont or any Retained Subsidiary as of the Effective
Date; and provided, further, that neither DuPont nor the Retained Subsidiaries
shall have the right to transfer or grant such immunity to a third party (other
than a third party purchaser of substantially all of the business and Assets to
which immunities pertain).
(b) DuPont hereby grants Conoco and the Transferred
Business Companies, effective as of the Effective Time, a world-wide,
irrevocable immunity from suit for infringement of all DuPont Patents used as of
the Effective Date by Conoco or any Transferred Business Company in the
operation of the Transferred Business; provided, however, that such immunity
shall not extend to use by Conoco or any Transferred Business Company of any
DuPont Patents for uses other than uses for which such DuPont Patents are used
by Conoco or any Transferred Business Company as of the Effective Date; and
further, provided, however, that neither Conoco nor the Transferred Business
Companies shall have the right to transfer or grant such immunity to a third
party (other than a third party purchaser of substantially all of the business
and Assets to which immunities pertain).
(c) The immunity from suit granted by this Section
7.12 shall extend for the period during which any DuPont Patents and Conoco
Patents respectively are in force and effect.
ARTICLE VIII
ACCESS TO INFORMATION AND SERVICES
Section 8.1 Provision of Corporate Records. As soon as
practicable after the Effective Date, DuPont shall, subject to the provisions of
this Section 8.1, use all reasonable commercial efforts to deliver or cause to
be delivered to Conoco all Conoco Books and Records in the possession of DuPont
or any Retained Subsidiary and Conoco shall use all reasonable commercial
efforts to deliver or cause to be delivered to DuPont all DuPont Books and
Records in the possession of Conoco or any Transferred Business Company. The
foregoing shall be limited by the following specific provisions:
(i) To the extent any document (including computer tape)
can be subdivided without unreasonable effort into
two portions, one of which constitutes a Conoco
Book and Record and the other of which constitutes
a DuPont Book and Record, such docu-
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ment (including computer tape) shall be so
sub-divided and the appropriate portions shall be
delivered to the parties.
(ii) Neither party shall be required to conduct any
general search or investigation of its files.
(iii) "Reasonable commercial efforts" shall require only
deliveries of (a) specific and discrete books and
records or a reasonably limited class of items
requested by the other party and (b) specific and
discrete books and records identified by either party
in the ordinary course of business in which it
determines to be material to the other's business.
(iv) Each party may retain copies of books and records
delivered to the other, subject to holding in
confidence in accordance with Section 8.5 hereof
information contained in such books and records.
(v) Each party may in good faith refuse to furnish any
Information if it believes in good faith that doing
so could adversely affect its ability to successfully
assert a claim of Privilege.
(vi) Neither Party shall be required to deliver to the
other books and records or portions thereof which are
subject to any Law or confidentiality agreements
which would by their terms prohibit such delivery;
provided, however, if requested by the other party,
such party shall use its reasonable commercial
efforts to seek a waiver of or other relief from such
confidentiality restriction.
Section 8.2 Access to Information. From and after the
Effective Date, DuPont and Conoco, subject to compliance by the other, its
Subsidiaries and all of their designated Representatives with the provisions of
Section 8.5, shall afford to each other and to each other's authorized
accountants, counsel and other designated Representatives reasonable access and
duplicating rights (with copying costs to be borne by the requesting party)
during normal business hours to all books and records and documents,
communications, items and matters (collectively, "Information") within the
knowledge, possession or control of the other party or any DuPont Party or
Conoco Party relating to the Transferred Assets, the Excluded Assets, the DuPont
Transferred Assets, the Conoco Business, the DuPont Business, the Xx-
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sumed Liabilities, the Retained Liabilities, the Delayed Companies and the
Transferred Employees, insofar as such access is reasonably required by DuPont
or Conoco or any of their Subsidiaries or Affiliates, as the case may be, for a
particular purpose and is permitted by Law (and shall use reasonable efforts to
cause persons or firms possessing relevant Information to give similar access).
Without limiting the generality of the foregoing, Information may be requested
under this Article VIII for audit, accounting and tax purposes and in connection
with Actions (other than Actions in which both DuPont or any Retained
Subsidiary, on the one hand, and Conoco or any of its Subsidiaries, on the other
hand, as the case may be, are parties and may be adverse to one another in such
Action), as well as for purposes of fulfilling disclosure and reporting
obligations. Notwithstanding anything to the contrary in this Agreement, neither
DuPont or any of the Retained Subsidiaries, on the one hand, nor Conoco or any
of its Subsidiaries, on the other hand, shall be required to disclose any
information to the other or their authorized Representatives if doing so could
violate any Contract or Law to which DuPont or any of the Retained Subsidiaries,
on the one hand, or Conoco or any of its Subsidiaries, on the other hand, is a
party or is subject or which any believes in good faith could result in a loss
of the ability to successfully assert a claim of Privilege.
Section 8.3 Production of Witnesses and Individuals. From and
after the Effective Date, DuPont and Conoco shall use reasonable efforts to make
available to each other, upon written request, its officers, directors,
employees and agents for fact finding, consultation and interviews and as
witnesses to the extent that any such person may reasonably be required in
connection with any Actions (other than Actions in which both DuPont or any
Retained Subsidiary, on the one hand, and Conoco or any of its Subsidiaries, on
the other hand, as the case may be, are parties and may be adverse to one
another in such Action) in which the requesting party may from time to time be
involved relating to the conduct of the Conoco Business or the Retained
Business. DuPont and Conoco agree to reimburse each other for reasonable
out-of-pocket expenses (other than officers' or employees' salaries) incurred by
the other in connection with providing individuals and witnesses pursuant to
this Section 8.3.
Section 8.4 Retention of Records. Except when a longer
retention period is otherwise required by law or agreed to in writing, including
as provided in the Tax Sharing Agreement, DuPont and Conoco shall retain, in
accordance with their respective records control schedule policy existing from
time to time, all material Information relating to the Conoco Business, the
Restructuring or the transactions contemplated hereby. The parties hereto agree
that upon written request from the other that certain Information relating to
the Conoco Business, the Xxxxxxx-
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turing or the transactions contemplated hereby be retained in connection with an
Action, the parties shall use reasonable efforts to preserve and not to destroy
or dispose of such Information without the consent of the requesting party. If a
party shall request in writing prior to the scheduled date for the destruction
or disposal of any Information that any of the Information proposed to be
destroyed or disposed of be delivered to such requesting party, the other party
shall promptly arrange for the delivery of the Information so requested, and the
requesting party shall pay the reasonable out-of-pocket costs of the delivering
party in connection therewith; provided, however, nothing in this Section 8.4
shall require the delivery of any Information which (i) in the party's good
faith judgment could result in a waiver of any Privilege or (ii) such party is
not permitted to deliver because of any Law or confidentiality obligation with a
third-party with respect to which such party shall use its reasonable commercial
efforts to obtain a waiver of or other relief from such confidentiality
restriction.
Section 8.5 Confidentiality.
(a) For a period (i) in the case of Confidential
Information that is Confidential Business Information, of ten years from the
Effective Date and (ii) in the case of Confidential Information that is
Confidential Operational Information, continuing into perpetuity, DuPont and
Conoco shall hold and shall respectively cause the Retained Subsidiaries and
Conoco's Subsidiaries to hold, and shall each cause their respective officers,
employees, agents, consultants and advisors to hold, in strict confidence and
not to disclose or release without the prior written consent of the other party,
any and all Confidential Information (as defined herein); provided, that the
parties may disclose, or may permit disclosure of, Confidential Information (i)
to their respective auditors, attorneys, financial advisors, bankers and other
appropriate consultants and advisors who have a need to know such information
and are informed of their obligation to hold such information confidential to
the same extent as is applicable to the parties hereto and in respect of whose
failure to comply with such obligations, Conoco or DuPont, as the case may be,
will be responsible or (ii) if the parties, the Retained Subsidiaries or
Conoco's Subsidiaries are compelled to disclose any such Confidential
Information by judicial or administrative process or, in the opinion of
independent legal counsel, by other requirements of law. Notwithstanding the
foregoing, in the event that any demand or request for disclosure of
Confidential Information is made pursuant to clause (ii) above, DuPont or
Conoco, as the case may be, shall promptly notify the other of the existence of
such request or demand and shall provide the other a reasonable opportunity to
seek an appropriate protective order or other remedy, which both parties will
cooperate in obtaining. In the event that such appropriate protective order or
other remedy is not obtained, the
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party whose Confidential Information is required to be disclosed shall or shall
cause the other party to furnish, or cause to be furnished, only that portion of
the Confidential Information that is legally required to be disclosed. As used
in this Section 8.5:
(i) "Confidential Information" shall mean Confidential
Business Information and Confidential Operational
Information of one party which, prior to or following
the Effective Date, has been disclosed by DuPont or
the Retained Subsidiaries, on the one hand, or Conoco
or its Subsidiaries, on the other hand, in written,
oral (including by recording), electronic, or
visual form to, or otherwise has come into the
possession of, the other, including pursuant to the
access provisions of Section 8.2 hereof or any other
provision of this Agreement (except to the extent
that such Information can be shown to have been (a)
in the public domain through no fault of such party
(or, in the case of DuPont, any of the Retained
Subsidiaries or, in the case of Conoco, any of its
Subsidiaries) or (b) later lawfully acquired from
other sources by the party (or, in the case of
DuPont, such Retained Subsidiary or, in the case of
Conoco, such Subsidiary) to which it was furnished;
provided, however, in the case of (b) that such
sources did not provide such Information in breach of
any confidentiality obligations).
(ii) "Confidential Operational Information" shall mean all
proprietary, technical or operational information,
data or material including, but not limited to, (a)
specifications, ideas and concepts for products,
equipment, processes and services; (b) manufacturing
and performance specifications and procedures; (c)
engineering drawings and graphs; (d) technical,
research and engineering data; (e) formulations,
mate- rials and material specifications; (f)
laboratory studies and bench- xxxx tests; (g) service
and operation manuals; (h) quality assurance
policies, procedures and specifications; (i)
evaluation and/or validation studies; (j) pending
patent applications; (k) all other know-how,
methodology, procedures, techniques and trade secrets
related to research, engineering, development and
manufacturing; (l) market development plans and
forecasts, research and development agreements, and
customer and vendor information; (m) computer
software and derivatives thereof, (n) train-
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ing materials and information; (o) decision and risk
analysis information; and (p) technical environmental
information.
(iii) "Confidential Business Information" shall mean all
proprietary information, data or material other
than Confidential Operational Information,
including, but not limited to (a) proprietary
company-level and divisional earnings reports and
forecasts, (b) proprietary macro- economic reports
and forecasts, (c) proprietary company-level and
divisional business plans, (d) proprietary general
market evaluations and surveys and (e) proprietary
financing and credit-related information.
Notwithstanding the first sentence of this Section 8.5(a), with respect to any
Confidential Business Information that is disclosed after the Effective Date
(which shall be deemed to be Confidential Information for the purposes of this
Section), the obligations of this subsection shall terminate ten years after the
date of the first disclosure of such Confidential Business Information to DuPont
or the Retained Subsidiaries, on the one hand, or Conoco or its Subsidiaries, on
the other hand.
(b) Notwithstanding anything to the contrary set
forth herein, (i) DuPont and the Retained Subsidiaries, on the one hand, and
Conoco and its Subsidiaries, on the other hand, shall be deemed to have
satisfied their obligations hereunder with respect to Confidential Information
if they exercise the same degree of care (but no less than a reasonable degree
of care) as they take to preserve confidentiality for their own similar
Information and (ii) confidentiality obligations provided for in any agreement
between DuPont or any of the Retained Subsidiaries, or Conoco or any of its
Subsidiaries, on the one hand, and any employee of DuPont or any of the Retained
Subsidiaries, or Conoco or any of its Subsidiaries, on the other hand shall
remain in full force and effect. Confidential Information of DuPont and the
Retained Subsidiaries, on the one hand, or Conoco and its Subsidiaries, on the
other hand, in the possession of and used by the other as of the Effective Date
may continue to be used by such Person in possession of the Confidential
Information in and only in the operation of the Retained Business or Transferred
Business, as the case may be, and may be used only so long as the Confidential
Information is maintained in confidence and not disclosed in violation of
Section 8.5(a). Such continued right to use may not be transferred to any third
party unless the third party purchases all or substantially all of the business
and Assets in one transaction or in a series of related transactions for which
or in which the relevant Confidential Information is used or employed. In the
event that such right to use is transferred in accor-
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dance with the preceding sentence, the transferring party shall not disclose the
source of the relevant Confidential Information.
Section 8.6 Privileged Matters.
(a) DuPont and Conoco agree that their respective
rights and obligations to maintain, preserve, assert or waive any or all
privileges belonging to either corporation with respect to the Conoco Business
or the DuPont Business, including but not limited to the attorney-client and
work product privileges (collectively, "Privileges"), shall be governed by the
provisions of this Section 8.6. With respect to matters relating to the DuPont
Business, DuPont shall have sole authority in perpetuity to determine whether to
assert or waive any or all Privileges, and Conoco shall take no action (nor
permit any of its Subsidiaries to take action) without the prior written consent
of DuPont that could result in any waiver of any Privilege that could be
asserted by DuPont or any Retained Subsidiary under applicable law and this
Agreement. With respect to matters relating to the Conoco Business, Conoco shall
have sole authority in perpetuity to determine whether to assert or waive any or
all Privileges, and DuPont shall take no action (nor permit any of the Retained
Subsidiaries to take action) without the prior written consent of Conoco that
could result in any waiver of any Privilege that could be asserted by Conoco or
any of its Subsidiaries under applicable law and this Agreement. The rights and
obligations created by this Section 8.6 shall apply to all Information as to
which DuPont or Conoco or their respective Subsidiaries would be entitled to
assert or has asserted a Privilege without regard to the effect, if any, of the
Separation ("Privileged Information"). Privileged Information of DuPont includes
but is not limited to (i) any and all Information existing prior to the
Separation regarding the DuPont Business but which after the Restructuring is in
the possession of Conoco or any of its Subsidiaries; (ii) all communications
subject to a Privilege occurring prior to the Separation between counsel for
DuPont or any of the Retained Subsidiaries (including in-house
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counsel and former in-house counsel who are Transferred Employees) and any
person who, at the time of the communication, was an employee of DuPont or any
of the Retained Subsidiaries, regardless of whether such employee is or becomes
an employee of Conoco or any of its Subsidiaries; and (iii) all Information
generated, received or arising after the Effective Date that refers or relates
to Privileged Information generated, received or arising prior to the Effective
Date. Privileged Information of Conoco includes but is not limited to (i) any
and all Information generated prior to the Separation regarding the Conoco
Business but which after the Restructuring is in the possession of DuPont or any
of the Retained Subsidiaries; (ii) all communications subject to a Privilege
occurring prior to the Separation between counsel for Conoco or any of its
Subsidiaries (including in-house counsel and former in-house counsel who are
employees of DuPont or the Retained Subsidiaries) and any person who, at the
time of the communication, was an employee of Conoco or any of its Subsidiaries,
regardless of whether such employee is or becomes an employee of DuPont or any
of the Retained Subsidiaries; and (iii) all Information generated, received or
arising after the Effective Date that refers or relates to Privileged
Information generated, received or arising prior to the Effective Date.
(b) Upon receipt by DuPont or Conoco, as the case may
be, of any subpoena, discovery or other request from any third party that
actually or arguably calls for the production or disclosure of Privileged
Information of the other or if DuPont or Conoco, as the case may be, obtains
knowledge that any current or former employee of DuPont or Conoco, as the case
may be, has received any subpoena, discovery or other request from any third
party that actually or arguably calls for the production or disclosure of
Privileged Information of the other, DuPont or Conoco, as the case may be, shall
promptly notify the other of the existence of the request and shall provide the
other a reasonable opportunity to review the Information and to assert any
rights it may have under this Section 8.6 or otherwise to prevent the production
or disclosure of Privileged Information. DuPont or Conoco, as the case may be,
will not produce or disclose to any third party any of the other's Information
covered by a Privilege under this Section 8.6 unless (a) the other has provided
its express written consent to such production or disclosure, or (b) a court of
competent jurisdiction has entered an order not subject to interlocutory appeal
or review finding that the Information is not entitled to protection from
disclosure under any applicable privilege, doctrine or rule.
(c) DuPont's transfer of Conoco Books and Records and
other Information to Conoco, DuPont's agreement to permit Conoco to obtain
Information existing prior to the Separation, Conoco's transfer of DuPont Books
and Records and other Information and Conoco's agreement to permit DuPont to
obtain Information existing prior to the Separation are made in reliance on
DuPont's and Conoco's respective agreements, as set forth in Section 8.5 and
this Section 8.6, to maintain the confidentiality of such Information and to
take the steps provided herein for the preservation of all Privileges that may
belong to or be asserted by DuPont or Conoco, as the case may be. The access to
Information being granted pursuant to Section 8.2 hereof, the agreement to
provide witnesses and individuals pursuant to Section 8.3 hereof and the
disclosure to Conoco and DuPont of Privileged Information relating to the Conoco
Business or DuPont Business pursuant to this Agreement in connection with the
Separation shall not be asserted by DuPont or Conoco to constitute, or otherwise
deemed, a waiver of any Privilege that has been or may be
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asserted under this Section 8.6 or otherwise. Nothing in this Agreement shall
operate to reduce, minimize or condition the rights granted to DuPont and Conoco
in, or the obligations imposed upon DuPont and Conoco by, this Section 8.6.
Section 8.7 Mail and Other Communications. After the Effective
Date, each of DuPont and Conoco may receive mail, telegrams, packages and other
communications properly belonging to the other. Accordingly, at all times after
the Effective Date, each of DuPont and Conoco authorizes the other to receive
and open all mail, telegrams, packages and other communications received by it
and not unambiguously intended for the other party or any of the other party's
officers or directors, and to retain the same to the extent that they relate to
the business of the receiving party or, to the extent that they do not relate to
the business of the receiving party, the receiving party shall promptly deliver
such mail, telegrams, packages or other communications (or, in case the same
relate to both businesses, copies thereof) to the other party as provided for in
Section 14.5 hereof. The provisions of this Section 8.7 are not intended to, and
shall not, be deemed to constitute an authorization by either DuPont or Conoco
to permit the other to accept service of process on its behalf and neither party
is or shall be deemed to be the agent of the other for service of process
purposes.
ARTICLE IX
INTERCOMPANY BUSINESS RELATIONSHIPS
Section 9.1 Cash Management; Settlement of Intercompany
Accounts.
(a) Conoco shall make or cause its Subsidiaries
(other than Petrozuata) to make, cash distributions or other payments to
DuPont or any Retained Subsidiary, at such time, in such form and in amounts to
be determined by DuPont in its sole discretion after consultation with Conoco,
including repayments or purchases of the Restructured Notes and the Conoco
Master Note, such that as of the close of business on October 30, 1998 (the
"Cash Settlement Date"), after giving effect to such payments and the following
transactions: (i) the receipt by Conoco of the net proceeds of the IPO,
including upon exercise of the underwriters' over-allotment option and any
payments made in respect of the DuPont Master Note and (ii) the required
repayments on or repurchases of the Note, the Restructured Notes and the Conoco
Master Note, as set forth in Section 2.5(b), Conoco and its Subsidiaries
(excluding Petrozuata) will have an aggregate amount of cash and cash
equivalents
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equal to the Target Cash Amount (with the distribution of such cash and cash
equivalents among Conoco and its Subsidiaries to be as mutually agreed by DuPont
and Conoco); provided that no portion of the IPO Excess or any other cash shall
be paid to DuPont or a Retained Subsidiary (other than in whole or in part in
payment or purchase of one or more of the Restructured Notes or the Conoco
Master Note or, as otherwise provided in this Section 9.1(a) or Section 2.5(b),
in whole or in partial payment of the Note), but may be used as all or a portion
of the Target Cash Amount. Notwithstanding the foregoing, any cash and cash
equivalents of Conoco and any of its Subsidiaries (other than Petrozuata) on or
prior to the Cash Settlement Date, and any IPO proceeds received after the Cash
Settlement Date upon the exercise of the underwriters' over-allotment option,
shall be used to make payments, first, in respect of any remaining portion of
the Restructured Notes and any accrued interest thereon and second, in respect
of any remaining portion of the Conoco Master Note and accrued interest thereon
(and, after such Restructured Notes and the Conoco Master Note have been paid in
full, to make payments in respect of the Note including accrued interest thereon
if and to the extent DuPont so requests) so long as, as of the Cash Settlement
Date and after giving effect to the foregoing payments as if they had occurred
on the Cash Settlement Date, Conoco and its Subsidiaries (excluding Petrozuata)
will have an aggregate amount of cash and cash equivalents equal to the Target
Cash Amount. Notwithstanding the foregoing, Conoco and DuPont agree that as of
the close of business on the Cash Settlement Date, Danube and its Subsidiaries
shall have at least $70 million in cash or cash equivalents, (including amounts
held in the form of certificates of deposit, valued at their face amounts)
whether or not such amounts are characterized or classified as such by GAAP,
plus such additional amounts as are required to be paid to Christiana as
provided in Section 10.3 to cover unearned premiums and loss reserves to the
extent such amounts have not already been paid. In the event that after giving
effect to the payments and purchases described in Section 2.5(b) and in this
Section 9.1(a) Conoco and its Subsidiaries (excluding Petrozuata) do not have an
aggregate amount of cash and cash equivalents equal to the Target Cash Amount on
the Cash Settlement Date, DuPont will promptly pay to Conoco the amount of cash
required to increase the cash and cash equivalents of Conoco and its
Subsidiaries (excluding Petrozuata) to the Target Cash Amount, unless and to the
extent that DuPont determines in good faith that such deficiency occurred by
reason of Conoco or its Subsidiaries not operating its business in the ordinary
course consistent with past practice.
(b) If, as of the close of business on the Cash Settlement
Date, (i) DuPont or any of the Retained Subsidiaries has any liability or
obligation to make cash payments to third parties for the benefit of Conoco or
any of the Transferred Business Companies which have not yet been paid (whether
or not invoices have
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been received or liabilities accrued) ("DuPont Payables"), or (ii) Conoco or any
of the Transferred Business Companies has any liability or obligation to make
cash payments to third parties for the benefit of DuPont or any of the Retained
Subsidiaries which have not been paid (whether or not invoices have been
received or liabilities accrued) ("Conoco Payables"), then on the 30th business
day following the Cash Settlement Date if (x) the DuPont Payables exceed the
Conoco Payables, then Conoco shall promptly pay to DuPont in immediately
available funds an amount equal to the difference between the DuPont Payables
and the Conoco Payables and (y) the Conoco Payables exceed the DuPont Payables,
then DuPont shall promptly pay to Conoco in immediately available funds an
amount equal to the difference between the Conoco Payables and the DuPont
Payables; provided, however, that to the extent DuPont and Conoco agree, the
accounting of, and the adjustment with respect to, the DuPont Payables and the
Conoco Payables may be done on a separate Subsidiary-by-Subsidiary basis.
(c) If, as of the close of business on the Cash
Settlement Date, there are checks or other drafts or withdrawals written on
disbursement bank accounts of Conoco or the Transferred Business Companies which
are utilized by the Transferred Business prior to the Cash Settlement Date which
have not been cashed and deducted from such accounts as of the close of business
on the Cash Settlement Date (the sum of all such checks, drafts or withdrawals,
the "Outstanding Check Amount"), DuPont shall promptly pay to Conoco in
immediately available funds an amount equal to the Outstanding Check Amount;
provided, however, that to the extent DuPont and Conoco agree, the adjustment
with respect to the Outstanding Check Amount may be done on a separate
Subsidiary-by-Subsidiary basis.
(d) Except as otherwise expressly provided in this
Agreement, all intercompany and interdivisional receivables, payables, cash
overdrafts and other accounts in existence between Conoco and the Transferred
Business Companies, on the one hand, and DuPont and the Retained Subsidiaries,
on the other hand (the "Intercompany Accounts"), under DuPont's cash management
program or otherwise (other than the Note, the Restructured Notes, the Employee
Benefit Note, amounts owed under the DuPont Hungary Loan, amounts owed pursuant
to the second sentence of Section 2.5(c), amounts owed to DuPont or a Retained
Subsidiary under the DuPont Master Note Agreement, if any, borrowings under the
Revolving Credit Facility and payments pursuant to Sections 7.1 and 7.2 hereof),
shall be cancelled immediately prior to the close of business on the Cash
Settlement Date or otherwise settled by mutual agreement of the parties. Except
as expressly provided in this Agreement, including Section 9.5 and Section 7.2,
following the Effective Date, no such intercompany transactions (other than
those arising from commercial dealings
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in the ordinary course of business) shall be entered into except pursuant to the
express terms and conditions of the Transitional Services Agreements or the
other Related Agreements.
(e) Thirty days following the Cash Settlement Date,
DuPont and Conoco shall reconcile all transfers, payments and calculations made
pursuant to this Section 9.1 as of the Cash Settlement Date, and to the extent
any such transfer, payment or calculation was made in error, including by reason
of subsequently dishonored third party checks or otherwise, an appropriate
payment shall be made by DuPont or Conoco, as the case may be, to the other
party.
(f) Following the Effective Date, each of DuPont and
Conoco shall give the other party and any independent auditors of such other
party full access at all reasonable times to the DuPont Books and Records and
the Conoco Books and Records, as the case may be, relating to periods prior to
the Cash Settlement Date for purposes of verifying the amounts to be paid
pursuant to Section 9.1(b) and 9.1(c) above and for resolving any disputes
related thereto. The amounts settled shall, to the extent applicable, be
calculated in accordance with GAAP.
(g) Promptly following the Effective Time, DuPont
shall make the Revolving Credit Facility available to Conoco, subject to the
terms and conditions thereof. No repayments may be made by Conoco or any of its
Subsidiaries in respect of borrowings outstanding under the Revolving Credit
Facility prior to the Outside Date. Neither Conoco nor any of its Subsidiaries
nor DuPont nor any of its Subsidiaries may borrow any amounts under the DuPont
Master Note Agreement after the Cash Settlement Date; provided that between the
Effective Time and the Cash Settlement Date Conoco and its Subsidiaries may
borrow amounts under the Conoco Master Note only if after giving effect to such
borrowings the aggregate principal amount outstanding under the Conoco Master
Note would not exceed $240 million.
(h) Notwithstanding anything to the contrary
contained herein any payments required to be made on the Cash Settlement Date
shall be made on November 13, 1998 or such other date as DuPont and Conoco
mutually agree upon; provided that the computations of such payments shall be
made as of the Cash Settlement Date.
Section 9.2 Letters of Credit. (a) After the Effective Date,
if letters of credit for the account of DuPont or any Retained Subsidiary issued
on behalf of or for the benefit of a Transferred Business Company remain
outstanding, Conoco
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shall, and shall cause its Subsidiaries to, use their respective best efforts to
replace such letters of credit as promptly as practicable with letters of credit
issued for the account of Conoco or any of its Subsidiaries (it being understood
that neither obtaining such replacement letters of credit by Conoco or one of
its Subsidiaries nor any drawings pursuant thereto shall be deemed to result in
the incurrence of Indebtedness for purposes of Section 6(c) of the Note).
Following the Effective Date, (i) Conoco shall indemnify and hold harmless the
DuPont Parties for any Losses arising from or relating to such unreplaced
letters of credit, including but not limited to, any fees in connection with the
issuance and maintenance thereof and (ii) Conoco shall not, and shall not permit
any of its Subsidiaries to, enter into, renew or extend the term of, increase
its obligations under, or transfer to a third party, any loan, lease, Contract
or other obligation in connection with which DuPont or any Retained Subsidiary
has issued any letters of credit which remain outstanding. The parties hereto
agree that neither DuPont nor any of the Retained Subsidiaries will have any
obligation to renew any letters of credit issued on behalf of the Transferred
Business after the expiration of any such letter of credit. Commencing on the
earlier to occur of (i) two years following the Effective Date and (ii) the
first date on which the voting power of shares of Voting Stock beneficially
owned by DuPont falls below 50% of the total voting power of all of the
outstanding shares of Voting Stock, Conoco shall pay to DuPont a fee payable at
the end of each calendar quarter calculated by applying a rate of .20% per annum
to the average outstanding balance during such quarter of any outstanding
letters of credit issued for the account of DuPont or any Retained Subsidiary on
behalf of or for the benefit of any Transferred Business Company.
Section 9.3 Guarantee Obligations.
(a) DuPont and Conoco shall cooperate and Conoco
shall use its best efforts to terminate, or to cause Conoco, one of its
Subsidiaries, or one of its Affiliates (other than DuPont and any of the
Retained Subsidiaries) to be substituted in all respects for DuPont and any of
Retained Subsidiaries in respect of, all obligations of DuPont or any of the
Retained Subsidiaries under any loan, financing, lease, Contract or other
obligation (other than letters of credit governed by Section 9.2) in existence
as of the Effective Date pertaining to the Transferred Business for which DuPont
or any of the Retained Subsidiaries is or may be liable, as guarantor, original
tenant, primary obligor or otherwise including, but not limited to (so long as
they are of the same type or nature), as those set forth on Schedule 9.3, but
excluding Shared Contracts ("DuPont Guarantees"). If such a termination or
substitution is not effected by the Effective Date, (i) Conoco shall indemnify
and hold harmless the DuPont Parties for any Losses arising from or relating to
DuPont Guarantees, and (ii)
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from and after the Effective Date, Conoco shall not, and shall not permit any of
its Subsidiaries to, enter into, renew or extend the term of, increase its
obligations under, or transfer to a third party, any loan, lease, Contract or
other obligation for which DuPont is or may be liable pursuant to a DuPont
Guarantee. DuPont agrees that it shall notify Conoco in a timely manner of any
changes to the DuPont Guarantee Amount. To the extent that DuPont or the
Retained Subsidiaries have performance obligations under any DuPont Guarantee,
Conoco will use best efforts to (i) perform such obligations on behalf of DuPont
and the Retained Subsidiaries or (ii) otherwise take such action as requested by
DuPont so as to put DuPont and the Retained Subsidiaries in the same position as
if Conoco, and not DuPont and the Retained Subsidiaries, had performed or were
performing such obligations, including, without limitation, concurrently
purchasing from DuPont and the Retained Subsidiaries such products that DuPont
and the Retained Subsidiaries are required to purchase pursuant to the relevant
DuPont Guarantee in lieu of performance by Conoco or any of its Subsidiaries. If
Conoco concurrently purchases products from DuPont and the Retained
Subsidiaries, the price to be paid by Conoco or any of its Subsidiaries shall be
an amount sufficient to fully indemnify DuPont and the Retained Subsidiaries for
all costs and expenses related to the purchase by DuPont and the Retained
Subsidiaries of such products.
(b) Commencing on the earlier to occur of (i) two
years following the Effective Date or (ii) the first date on which the voting
power of shares of common stock of Conoco beneficially owned by DuPont falls
below 50% of the total voting power of all of the outstanding shares of Voting
Stock, Conoco shall pay to DuPont a fee payable at the end of each calendar
quarter calculated by applying a rate of .20% per annum to the average
outstanding DuPont Guarantee Amount during such quarter (the "DuPont Guarantee
Fee").
(c) Conoco agrees that it will not, without the
express written consent of DuPont, which consent may be withheld in the sole
discretion of DuPont, enter into any agreement with respect to a merger,
consolidation or amalgamation with, or sale of all or substantially all the
assets, in one transaction or in a series of related transactions to, any third
party, unless such third party expressly agrees as a term of such agreement to
(i) terminate, or to cause such third party or one of its Affiliates to be
substituted in all respects for DuPont in respect of, all obligations of DuPont
or any of the Retained Subsidiaries under the DuPont Guarantees, (ii) indemnify
and hold harmless the DuPont Parties for any Losses arising from or relating to
DuPont Guarantees, (iii) assume or guarantee the payment to DuPont of any unpaid
DuPont Guarantee Fee by Conoco or any successor to Conoco in accordance with
Section 9.3(b) above and (iv) not, and to not permit Conoco or any
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of its Subsidiaries or Affiliates to, renew or extend the term of, increase its
obligations under, or transfer to another third party, any loan, lease, Contract
or other obligation for which DuPont is or may be liable pursuant to a DuPont
Guarantee prior to such termination or substitution.
Section 9.4 Settlements for Cash Collections and Disbursements
After the Cash Settlement Date.
(a) For each calendar month commencing with the month
in which the Cash Settlement Date occurs and, unless sooner terminated by
agreement of the parties, continuing for a period of two years thereafter, (i)
within 30 business days of the end of the month in question, DuPont shall
prepare, and Conoco shall fully cooperate in preparing, a statement of
transactions which shall reflect a complete analysis of any cash collections and
cash disbursements by DuPont and the Retained Subsidiaries on behalf of Conoco
and its Subsidiaries (including those relating to the Transferred Business)
during the relevant month and (ii) within 30 business days of the end of the
month in question, Conoco shall prepare, and DuPont shall fully cooperate in
preparing, a statement of transactions which shall reflect a complete analysis
of any cash collections and cash disbursements by Conoco and its Subsidiaries on
behalf of DuPont and the Retained Subsidiaries during the relevant month
(including those relating to the Retained Business and the Delayed Companies);
provided in each case that, with respect to the first such monthly period such
statement shall not reflect any cash collections or disbursements occurring
prior to the Effective Date.
(b) Not later than 30 business days following
delivery of each such monthly statement, Conoco shall, or shall cause one of it
Subsidiaries to pay to DuPont or one of the Retained Subsidiaries or DuPont
shall, or shall cause one of the Retained Subsidiaries pay to Conoco or one of
its Subsidiaries, as the case may be, in cash an amount necessary to eliminate
the account balance as reflected in each such statement unless DuPont and Conoco
otherwise agree in writing. Payments made pursuant to this Section 9.4 shall
not, for any purpose of this Agreement, constitute Losses or be set off against
any other payments to be made, Liabilities asserted or claims made pursuant to
this Agreement, including but not limited to Article VI hereof.
(c) Following the end of the two-year period referred
to in Section 9.4(a) above (or such earlier period as the parties hereto may
agree), (i) DuPont shall promptly turn over to Conoco all cash and other similar
amounts received by DuPont and the Retained Subsidiaries which properly
constitute Assets
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attributable to the Transferred Business and (ii) Conoco shall promptly turn
over to DuPont all cash and other similar amounts received by Conoco and its
Subsidiaries which properly constitute Assets attributable to the Retained
Business.
Section 9.5 Termination of Intercompany Agreements. Each of
the parties hereto agrees that, except as otherwise expressly provided in this
Agreement, the several Transitional Services Agreements, the Related Agreements
or the agreements set forth on Schedule 9.5, all Intercompany Agreements and all
other intercompany arrangements and course of dealings whether or not in writing
and whether or not binding in effect immediately prior to the Effective Date
shall continue in full force and effect; provided that either Conoco or any of
its Subsidiaries, on the one hand, or DuPont or any of the Retained
Subsidiaries, on the other hand, may terminate any Intercompany Agreements or
any such arrangements or course of dealings (other than any Related Agreement,
the Restructured Notes, the agreements set forth on Schedule 9.5 and the DuPont
Hungary Loan) on 60 days written notice to the other unless a different period
of notice of termination is specified therein (in which case, such different
period shall control), but in any event may be terminated one year after the
Effective Date.
Section 9.6 DuPont Hungary Loan. Conoco shall use its best
efforts to obtain the required approvals of all Governmental Authorities to
repay the DuPont Hungary Loan as promptly as practicable following the Effective
Date and Conoco shall cause the DuPont Hungary Loan to be repaid in full,
including accrued interest thereon, promptly following the receipt of all such
approvals. Promptly following receipt by DuPont or any Retained Subsidiary of
funds in repayment of the DuPont Hungary Loan, DuPont shall or shall cause a
Retained Subsidiary to remit all of such funds to Conoco, or any subsidiary of
Conoco, as Conoco may designate.
ARTICLE X
INSURANCE
Section 10.1 General. Except as otherwise specifically
provided for herein, Conoco and DuPont understand and agree that as of the
Effective Date all existing insurance policies providing coverage for the Assets
and Liabilities of Conoco and DuPont on a combined basis will have been modified
such that the Transferred Assets, the Conoco Business and the Assumed
Liabilities will be insured separately by Conoco.
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Section 10.2 Excess Liability Policies. In the event of a
Combined Limit Loss (as defined below), Conoco and DuPont agree that their
respective risk managers (each, a "Risk Manager") shall use best efforts to
agree on the allocation of insurance proceeds and, in the event of an agreement,
to issue joint instructions to Danube and Christiana and to cause Danube and
Christiana to likewise issue joint instructions to their respective reinsurers,
as appropriate. If the Risk Managers fail to agree on an allocation of insurance
proceeds, the allocation shall be resolved by the dispute resolution process set
forth in Article XIII hereof. As used in this Section 10.2, "Combined Limit
Losses" shall mean any Losses covered by certain excess liability policies under
both the Conoco and DuPont insurance programs (and the reinsurance policies
obtained by Danube and to be obtained by Christiana with third party reinsurers
for the same coverages) which contain "combined limit" endorsements which
require joint instructions from the "named entity" (as such term is defined in
such policies) be issued to determine the allocation of insurance proceeds.
Section 10.3 Transfer of Existing Policies.
(a) It is the intention of the parties that as of the
Effective Date insurance matters relating to the Retained Business and Retained
Liabilities shall be the responsibility of DuPont and Christiana, and insurance
matters relating to the Conoco Business shall be the responsibility of Conoco
and Danube. Prior to the Effective Date, DuPont and Conoco shall use their
respective reasonable commercial efforts to cause (i) Danube to reinsure with,
and cede to Christiana, and for Christiana to issue the reinsurance with respect
to the insurance policies (other than the excess liability policies issued by
Danube to DuPont which are provided for in clause (iii) below) and the
associated dollar amounts of unearned premiums (by reason of relating to the
remaining balance of the insured period) previously received by Danube to the
extent they relate to the Retained Business and Retained Liabilities; (ii)
Danube to (x) reinsure with Christiana, and for Christiana to assume all unpaid
claims, whether known or unknown, arising in connection with the Retained
Business and/or Retained Liabilities which had heretofore been insured against
by Danube, and (y) cede to Christiana a dollar amount in cash representing the
loss reserves carried by Danube with respect to such reinsured claims referred
to in clause (x) valued as of the Effective Date or such other date as the Risk
Managers of DuPont and Conoco may mutually establish, plus an amount in cash
equal to the market price of reinsurance for adverse developments on all unpaid
claims assumed by Christiana, whether known or unknown, as established by
DuPont's and Conoco's mutual broker, J&H Xxxxx & XxXxxxxx and agreed to by the
respective Risk Managers of DuPont and Conoco; and (iii) Danube to cancel the
excess liability policies theretofore issued by Danube to DuPont to the extent
they relate to the
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Retained Business, and to refund to DuPont the premiums on the current years
policy, which by reason of relating to the remaining term thereof have not been
earned.
(b) Prior to the Effective Date, DuPont and Conoco
shall cause Danube to instruct the insurers of the current excess liability
reinsurance program applicable to the DuPont Business to amend the policies
issued to Danube such that Christiana and not Danube shall be the "named entity"
under such policies. DuPont shall cause Christiana to pay the unearned premium
on such reinsurance policies to the extent they relate to the Retained Business
for the remaining term of each policy year to J&H Xxxxx & XxXxxxxx, the broker
administering such policies who shall thereafter issue a premium refund to
Danube in like amount. DuPont and Conoco, respectively, shall cause Danube and
Christiana, respectively, to issue a joint letter of instructions to each
reinsurer, allocating between their respective policy programs the existing
claims for which notice has been given to such reinsurer.
Section 10.4 Director's and Officer's Insurance.
(a) On or before the Effective Date, the directors
and officers of Conoco and its Subsidiaries shall become insureds under a
separate director's and officer's insurance program to be established by Conoco
at its expense.
(b) In the event of a Tie-In Limit Loss (as defined
below), Conoco and DuPont agree that their respective Risk Managers shall use
best efforts to agree on the allocation of insurance proceeds and, in the event
of an agreement, to issue joint instructions to their respective insurers, as
appropriate. If the Risk Managers fail to agree on an allocation of insurance
proceeds, the allocation shall be resolved by the dispute resolution process set
forth in Article XIII hereof. As used in this Section 10.4, "Tie-In Limit
Losses" shall mean any Losses covered by certain directors and officers policies
under both the Conoco and DuPont insurance programs which contain "tie-in limit"
endorsements which require joint instructions to be issued to determine the
allocation of insurance proceeds.
Section 10.5 Conoco Liability Policies. Conoco agrees that
immediately prior to the Effective Date and for as long as there is either a
DuPont Guarantee obligation outstanding or DuPont treats for financial
accounting purposes its equity holding in Conoco on a consolidated basis, Conoco
(i) will take all actions necessary consistent with Conoco's current insurance
practices, to continue to purchase and maintain insurance coverage of
substantially the same types and
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amounts as it has heretofore purchased and maintained and (ii) provide that
DuPont be a "named insured" under those liability policies of Conoco which are
solely controlled by Conoco, including, but not limited to, those set forth on
Schedule 10.5 hereto, at no premium cost to DuPont therefor, such that DuPont
has rights to coverage that are no less than the rights conferred on any other
insured under such policies with respect to liabilities that DuPont may incur
relating to, resulting from or arising out of the Conoco Business; provided
that, in the case of (ii), when DuPont no longer treats its equity holding in
Conoco on a consolidated basis for financial accounting purposes, such "named
insured" status will only be in respect to liabilities that DuPont may incur as
a result of a DuPont Guarantee obligation with respect to the Transferred
Business. During the applicable period set forth in the first sentence of this
Section 10.5, all of Conoco's liability policies to which clause (ii) of the
preceding sentence applies shall provide that DuPont will be given at least 60
days advance written notice by the insurer of any cancellation of such policies,
any reduction in coverage thereunder, or any deletion of DuPont as a "named
insured," and Conoco shall not cancel any such policy or reduce the coverage
available thereunder in any manner detrimental to DuPont, without DuPont's prior
written consent. DuPont agrees to promptly release Conoco from its obligations
under this Section 10.5 following the date on which (i) there are no DuPont
Guarantee obligations outstanding and (ii) DuPont no longer treats its equity
holding in Conoco for financial accounting purposes on a consolidated basis.
Section 10.6 Insurance and Indemnities.
(a) An Indemnitee shall not be obligated to pursue
insurance coverages under its excess liability insurance program for any Loss.
With respect to such excess liability insurance programs, an Indemnitee, in its
sole discretion, may elect to pursue its rights to indemnity hereunder to the
exclusion of, or in addition to, pursuing an insurance recovery for such Losses.
(b) Notwithstanding anything to the contrary set
forth herein, (i) with respect to the insurance policies where Conoco and DuPont
are each named insureds under the same policy, the parties shall together use
reasonable commercial efforts to maximize insurance recoveries prior to either
party seeking indemnification as provided under this Agreement with respect to
that portion of a Loss covered by insurance pursuant to any such policy, and
(ii) any insurance recovery by an Indemnitee made under any insurance program
(whether excess liability or otherwise) shall be credited against an
Indemnifying Party's obligation pursuant to Section 6.2(d), if applicable, only
after being reduced by any retroactive premium adjustment
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or co-insurance obligation of the Indemnitee, or the cost to the Indemnitee of
reinstating aggregate limits under its liability insurance program.
(c) Notwithstanding the provisions of Section 6.3(g)
to the contrary, an Indemnifying Party shall not have subrogation rights to
pursue an Indemnitee's insurance coverage for a Loss.
ARTICLE XI
ENVIRONMENTAL MATTERS
Section 11.1 Certain Article XI Definitions. For purposes of
this Article XI, (a) "Transferred Environmental Assets" shall mean (i) the
Transferred Assets, (ii) all other Assets, whether or not currently owned by
Conoco, DuPont, any of their respective Subsidiaries or Affiliates or any
predecessors thereof, formerly owned by the Conoco Group or used in the
operation or conduct of the Conoco Business, (iii) all Assets of Conoco and its
Subsidiaries acquired from and after the Effective Date or used in the operation
or conduct of the Transferred Business from and after the Effective Date, and
(iv) all Assets and businesses listed on Schedule 11.1(a); and (b) "Retained
Environmental Assets" shall mean (i) the Assets of DuPont and the Retained
Subsidiaries, other than the Transferred Assets, following the consummation of
the Restructuring and the transactions contemplated by Section 2.2 hereof, (ii)
all other Assets, not currently owned by DuPont, any of its Subsidiaries or
Affiliates or any predecessors thereof, formerly owned by DuPont or used in the
operation or conduct of the DuPont Business, (iii) all Assets of DuPont and the
Retained Subsidiaries acquired from and after the Effective Date or used in the
operation or conduct of the Retained Business from and after the Effective Date,
and (iv) the Assets and businesses listed on Schedule 11.1(b), but in the case
of (b)(i), (b)(ii) and (b)(iii) above, excluding all Transferred Environmental
Assets.
Section 11.2 Conoco Environmental Liabilities. On the terms
and subject to the conditions set forth in this Agreement, Conoco agrees to
assume, pay, perform and discharge promptly when due those Liabilities set forth
below (the "Conoco Environmental Liabilities"):
(a) Except for (i) Liabilities arising from or
related to the matters set forth on Schedule 11.1(b) and (ii) Liabilities for
the Environmental Claims or matters identified on Schedule 11.3(d), all
Liabilities with respect to all Environmental Claims and Requirements of
Environmental Law (whether or not
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under applicable law or regulations which DuPont or any Retained Subsidiary
would have a right of contribution against Conoco or any Transferred Business
Company therefor) relating in any manner to any of the Transferred Environmental
Assets, including, but not limited to, any act or omission of any employees or
agent thereof;
(b) All Liabilities, costs or expenses associated
with obtaining or maintaining compliance with Environmental Permits related to
the Conoco Business;
(c) All Liabilities with respect to any Waste Site
not located on any of the Transferred Environmental Assets into which waste
materials or Hazardous Substances from any of the Transferred Environmental
Assets have been placed prior to the date hereof, or are placed after the date
hereof, but into which no waste materials from any of the Retained Environmental
Assets have been placed prior to or after the date hereof;
(d) All Liabilities for the Environmental Claims or
matters identified on Schedule 11.2(d); and
(e) Liabilities arising from any activities and
operations of the DuPont Business and any of the employees thereof (including,
but not limited to the activities and operations of DERS) concerning the matters
referenced in Sections 11.2(a), 11.2(b), 11.2(c) and 11.2(d), to the extent
performed for or on behalf of the Conoco Business.
Section 11.3 DuPont Environmental Liabilities. On the terms
and subject to the conditions set forth in this Agreement, DuPont agrees to pay,
perform and discharge promptly when due those Liabilities set forth below, but
excluding in any event all Conoco Environmental Liabilities (the "DuPont
Environmental Liabilities"):
(a) Except for (i) Liabilities arising from or
related to the matters set forth on Schedule 11.1(a) and (ii) Liabilities for
Environmental Claims or matters identified on Schedule 11.2(d), all Liabilities
with respect to all Environmental Claims and Requirements of Environmental Law
(whether or not under applicable law or regulations Conoco or any Transferred
Business Company would have a right of contribution against DuPont or any
Retained Subsidiary therefor) relating in any manner to any of the Retained
Environmental Assets, including, but not limited, to any act or omission of any
employee or agent thereof;
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(b) All Liabilities, costs or expenses associated
with obtaining or maintaining compliance with Environmental Permits related to
the Retained Business;
(c) All Liabilities with respect to any Waste Site
not located on any of the Retained Environmental Assets into which waste
materials or a Hazardous Substance from any of the Retained Environmental Assets
have been placed prior to the date hereof, or are placed after the date hereof,
but into which no waste materials or a Hazardous Substance from any of the
Transferred Environmental Assets have been placed prior to or after the date
hereof; and
(d) All Liabilities for the Environmental Claims or
matters identified on Schedule 11.3(d).
(e) Liabilities arising from any activities and
operations of the Conoco Business and any employees thereof concerning the
matters referenced in Sections 11.3(a), 11.3(b), 11.3(c) and 11.3(d), to the
extent performed for or on behalf of the DuPont Business.
Section 11.4 Other Environmental. Notwithstanding anything to
the contrary contained herein, all Liabilities for Environmental Claims with
respect to any Waste Site not located on any of the Transferred Environmental
Assets and not located on any of the Retained Environmental Assets ("Third Party
Sites") into which (i) waste materials or a Hazardous Substance from the
Transferred Environmental Assets have been intentionally placed prior to the
date hereof or are placed on or after the date hereof, and (ii) waste materials
or a Hazardous Substance from the Retained Environmental Assets have been
intentionally placed prior to the date hereof or are placed on or after the date
hereof, shall be allocated as between the parties to this Agreement (a) to
Conoco in accordance with the ratio of the volume of waste materials or
Hazardous Substances from the Transferred Environmental Assets to the total
volume of wastes at the site and (b) to DuPont in accordance with the ratio of
the volume of waste materials or Hazardous Substances from the Retained
Environmental Assets to the total volume of wastes at the site; provided, that
Conoco, in the case of the Transferred Environmental Assets and DuPont, in the
case of the Retained Environmental Assets, shall bear all transporter
liabilities with respect to waste it generated and transported to such Third
Party Sites, in cases where transporter services with respect to such wastes
were provided by Sentinel, Inc. or its predecessors.
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Section 11.5 Damages, Awards, Etc. Notwithstanding anything to
the contrary contained in this Agreement, (a) Conoco shall be entitled to any
monies, damages or awards from third parties, including with respect to
insurance, contribution or cost recovery awards, recovered after the Effective
Date with respect to Conoco Environmental Liabilities, and (b) DuPont shall be
entitled to any monies, damages or awards from third parties, including with
respect to insurance, contribution or cost recovery awards, recovered after the
Effective Date with respect to DuPont Environmental Liabilities.
Section 11.6 Remediation. As between the parties to this
Agreement, (a) Conoco will have full authority to control, direct, manage and
implement remediation and to determine its scope, and conduct all negotiations,
meetings and settlements with Governmental Authorities with respect to Conoco
Environmental Liabilities; provided, however, that Conoco may contract with
DuPont on mutually agreeable terms for DuPont to perform any such activities
with respect to Conoco Environmental Liabilities on Conoco's behalf, and (b)
DuPont will have full authority to control, direct, manage and implement
remediation and to determine its scope, and conduct all negotiations, meetings
and settlements with Governmental Authorities with respect to DuPont
Environmental Liabilities; provided, however, that DuPont may contract with
Conoco on mutually agreeable terms for Conoco to perform any such activities
with respect to DuPont Environmental Liabilities on DuPont's behalf.
Section 11.7 Exclusive Remedy/Indemnification. (a)
Notwithstanding any Requirements of Environmental Law or the provisions or
principles of any other statutory or common law including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and state law analogues, and except with respect to Waste Sites
addressed in Section 11.4, the provisions of this Article XI and the
indemnification provisions in Article VI shall constitute the parties' exclusive
remedy with respect to each other for all Liabilities pursuant to the
Requirements of Environmental Law arising from the ownership of, or conduct of
business with respect to, the Transferred Environmental Assets or the Retained
Environmental Assets.
(b) Except as otherwise provided in this Article XI
or as would be inconsistent herewith the provisions of Sections 6.2(d), (e), (f)
and (g), 6.3, 6.4, and 6.6 shall apply to this Article XI and claims for
indemnification hereunder.
ARTICLE XII
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CONDITION TO CONSUMMATION OF DISTRIBUTION; TERMINATION
Section 12.1 Condition. Consummation of the transactions
provided for in this Agreement and the Related Agreements is conditioned upon,
and shall only be effected upon or after, (i) the final approval of the
Separation, the Restructuring and the IPO by the Board of Directors of DuPont
and (ii) the closing of the IPO.
Section 12.2 Termination. This Agreement may be terminated and
the Separation, the Restructuring and the IPO abandoned by the Board of
Directors of DuPont in its sole discretion, without the approval of Conoco at
any time prior to the Effective Time. In the event of any such termination, no
party shall have any liability of any kind to any other party.
ARTICLE XIII
DISPUTE RESOLUTION
Section 13.1 Mediation. Except with respect to disputes
relating to Section 8.6 hereof and as provided in Section 13.4 hereof, if a
dispute, claim or controversy arises out of or arises in connection with this
Agreement, the Related Agreements or any other agreement entered into in
accordance with this Agreement, including, but not limited to, the termination
or validity thereof or any matter involving a Loss ("Dispute"), DuPont and
Conoco agree to first use the following procedures, in lieu of either party
initially pursuing other available remedies, to resolve the Dispute.
Section 13.2 Initiation. A party seeking to initiate the
procedures shall give written notice to the other party, describing briefly the
nature of the Dispute. A meeting shall be held between the parties within 10
days of the receipt of such notice, attended by individuals with decision-making
authority regarding the Dispute, to attempt in good faith to negotiate a
resolution of such Dispute.
Section 13.3 Submission to Mediation. If, within 30 days after
such meeting, the parties have not succeeded in negotiating a resolution of the
Dispute, DuPont and Conoco agree to refer the matter to a panel consisting of
one (1) Senior Executive or the delegee thereof from DuPont and one (1) Senior
Executive or the delegee thereof from Conoco (which Senior Executives or
delegees shall not have been directly involved in the Dispute) for review and
resolution. Upon such referral, the Senior Executives or delegees shall review
the following
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materials provided by DuPont and Conoco: a copy of the terms of this Agreement
and a concise (less than 10 page) summary of the basis of each party's
contentions, including the relevant facts and areas of disagreement. If the
Dispute cannot be resolved by the Senior Executive panel pursuant to this
Section 13.3 within 25 days of the referral of such Dispute, DuPont and Conoco
may then pursue any and all remedies at law or in equity.
Section 13.4 Provisional Remedies. Notwithstanding the
provisions of this Article XIII, any party may seek from any court having
jurisdiction hereof any interim, provisional or injunctive relief that may be
necessary to protect the rights or property of any party or maintain the status
quo before, during or after the commencement of the mediation process set forth
in this Article XIII.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Complete Agreement. This Agreement, including the
Schedules, Annexes, Exhibits and the Related Agreements, shall constitute the
entire agreement between DuPont and Conoco with respect to the subject matter
hereof and shall supersede all previous negotiations, commitments and writings
with respect to such subject matter.
Section 14.2 Allocation of Costs and Expenses. DuPont or a
Retained Subsidiary shall pay (or, to the extent incurred by and paid for by
Conoco or any Transferred Business Company following the Effective Date, will
promptly reimburse Conoco or such Transferred Business Company for any and all
amounts so paid) for all Separation Expenses.
Section 14.3 Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of
Delaware (regardless of the laws that might otherwise govern under applicable
principles of conflicts law) as to all matters, including, without limitation,
matters of validity, construction, effect, performance and remedies.
Section 14.4 Jurisdiction; Forum. (a) By the execution and
delivery of this Agreement, DuPont and Conoco submit, and agree to cause their
respective Subsidiaries to submit, to the personal jurisdiction of any state or
federal
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court in the State of Delaware in any suit or proceeding arising out of or
relating to this Agreement or the Related Agreements.
(b) To the extent that DuPont or Conoco or any of
their respective Subsidiaries has or hereafter may acquire any immunity from
jurisdiction of any Delaware court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, DuPont or
Conoco, as the case may be, hereby irrevocably waives, and agrees to cause their
respective Subsidiaries to waive, such immunity in respect of its obligations
with respect to this Agreement.
(c) The parties hereto agree that an appropriate,
convenient and non- exclusive forum for any and all disputes between any of the
parties hereto or their respective Subsidiaries arising out of this Agreement,
the Related Agreements or the transactions contemplated hereby and thereby shall
be in any state or federal court in the State of Delaware.
(d) THE PARTIES HERETO AGREE THAT THEY HEREBY
IRREVOCABLY WAIVE AND AGREE TO CAUSE THEIR RESPECTIVE SUBSIDIARIES TO WAIVE, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE, OR INTERPRETING, THE PROVISIONS
OF THIS AGREEMENT OR ANY RELATED AGREEMENT.
Section 14.5 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and, unless otherwise
provided herein, shall be deemed to have been duly given (i) on the date of
service if served personally on the party to whom notice is given, (ii) on the
day of transmission if sent via facsimile transmission to the facsimile number
given below; provided, telephonic confirmation of receipt is obtained promptly
after completion of transmission, (iii) on the business day after delivery to an
overnight courier service or the Express mail service maintained by the United
States Postal Service; provided, receipt of delivery has been confirmed or (iv)
on the fifth day after mailing; provided, receipt of delivery is confirmed, if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, properly addressed and return-receipt
requested, to the party as follows:
If to DuPont, to:
E.I. du Pont de Nemours and Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
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(000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Associate General Counsel
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx Xxxxx, Esq.
If to Conoco:
Conoco Inc.
000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
(000) 000-0000
Attn: X. X. Xxxxxxxxxx
Senior Vice President, Legal, and General Counsel
With a copy to:
Xxxxx & Xxxxx, L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
(000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Either party may change its address or fax number by giving the other party
written notice of its new address in the manner set forth above.
Section 14.6 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the parties.
Section 14.7 Successors and Assigns. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.
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Section 14.8 No Third Party Beneficiaries. Except for the
provisions of Article VI which are intended to benefit any DuPont Party or
Conoco Party in accordance with the terms thereof, this Agreement is solely for
the benefit of the parties hereto and their respective Subsidiaries and is not
intended to confer upon any other Person except the parties hereto and their
respective Subsidiaries any rights or remedies hereunder.
Section 14.9 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 14.10 Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. Whenever any words are used herein in the
masculine gender, they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply.
Section 14.11 Annexes, Etc. The Annexes and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
Section 14.12 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 14.13 Texas Deceptive Trade Practices Act. Each of
Conoco and DuPont hereby agrees and acknowledges that it is a Business Consumer
(as defined in the Texas Deceptive Trade Practices Act-Consumer Protection Act,
TEX. BUS. & COM. CODE Section 17.41 et. seq. (the "DTPA")) with assets of more
than $25 million or is controlled by a corporation or entity with assets of more
than $25 million and therefore does not qualify as a Consumer (as defined in the
DTPA) under the DTPA and accordingly may not pursue a DTPA claim in connection
with the Separation and the transactions contemplated by this Agreement,
including the Schedules, Annexes, Exhibits and Related Agreements. Furthermore,
Conoco and DuPont agree not to assert the Consumer status of any of its
Subsidiaries, Affiliates, insurers, officers, directors, employees, agents
and/or any other Person for purposes
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of pursuing a DTPA claim in connection with the Separation and the transactions
contemplated by this Agreement, including the Schedules, Annexes, Exhibits and
Related Agreements. The parties further agree that to the extent the DTPA is
applicable or hereinafter becomes applicable to the Separation or this
Agreement, each of Conoco and DuPont hereby waives, to the fullest extent
permitted under the law, all provisions of the DTPA.
Section 14.14 Petrozuata. To the extent any provisions of this
Agreement require Conoco to cause or otherwise compel its Subsidiaries to act in
a particular fashion, these provisions shall not apply to Petrozuata, except to
the extent that Conoco or any of its other Subsidiaries has the contractual
power to cause Petrozuata to act in such fashion.
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IN WITNESS WHEREOF, the parties hereto have caused this
Restructuring, Transfer and Separation Agreement to be executed and delivered as
of the day and year first above written.
CONOCO INC.
(Formerly known as Conoco Energy Company)
By:/s/ X.X. Xxxxxxxxxx
---------------------
Name:X.X. Xxxxxxxxxx Title: Sr. Vice President
and General Counsel
E.I. DU PONT DE NEMOURS AND COMANY
By:/s/ X.X. Xxxxxxxxxx
---------------------
Name:X.X. Xxxxxxxxxx Title: Vice President and
Treasurer
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EXHIBIT D
PROMISSORY NOTE, dated as of July 20, 1998, by Conoco Inc., a
Delaware corporation (the "Issuer"), in favor of Du Pont Energy Company, a
Delaware corporation (the "Payee").
Section 1. Principal. Issuer, for value received, hereby
promises to pay to the order of Payee, the sum of Seven Billion Five Hundred
Million Dollars ($7,500,000,000) (the "Principal") and any and all interest
thereon as provided in Section 2 below in accordance with the terms hereof.
The Principal shall be repaid in full by the Issuer, without premium or
penalty, on January 2, 2000 (the "Final Maturity Date"), to the extent not
previously paid in accordance with Section 3.
Section 2. Interest. The Issuer agrees to pay interest in
respect of the unpaid Principal from the date hereof until paid in full at a
rate equal to 6.0125 percent per annum, such interest to be computed on the
basis of a 360-day year, and paid for the actual number of days elapsed. In
the event that, and for so long as, an Event of Default under Section 7 shall
have occurred and be continuing, the outstanding Principal and, to the extent
permitted by law, overdue interest in respect thereof, shall bear interest at a
rate per annum equal to the prime rate of X.X. Xxxxxx as in effect in New York
City on the date of the Event of Default (as defined below) plus three
percentage points, such interest to be computed on the basis of a 360-day year,
and paid for the actual number of days elapsed. Accrued interest on the
outstanding Principal amount (up through and including the day prior to any
payment other than a payment on the Final Maturity Date) shall be due and
payable on the
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Final Maturity Date and, if payments of Principal are made prior to the Final
Maturity Date, including pursuant to Section 3, on the date of any payment of
the Principal and on the date of any acceleration of the payment of the
Principal pursuant to Section 7.
Section 3. Payments.
(a) Mandatory Prepayments. On the first business day
after the date of the receipt thereof by the Issuer or any of its Subsidiaries,
an amount equal to 100% of the cash proceeds of (i) contributions received by
the Issuer of proceeds of the issuance of equity securities or the incurrence
of Indebtedness by a Parent Company, (ii) the issuance or sale of equity
securities by the Issuer or any of its Subsidiaries (net of underwriting
discounts and commissions and other reasonable costs associated therewith, such
other reasonable costs to be mutually agreed upon by the Issuer and Payee) and
(iii) the incurrence of Indebtedness by the Issuer or any of its Subsidiaries
(net of underwriting discounts and commissions and other reasonable costs
associated therewith, such other reasonable costs to be mutually agreed upon
by the Issuer and Payee), except for the incurrence of Indebtedness pursuant to
a revolving credit facility provided to the Issuer by DuPont Energy Company
(the "Revolving Credit Facility"), in each case, shall be applied as a
mandatory repayment of Principal and accrued interest on the amount of such
Principal, except to the extent such proceeds are used to repay any other
Indebtedness of the Issuer, Conoco Energy Company ("Conoco") and any of their
Subsidiaries (the "Conoco Entities") to E.I. du Pont de Nemours and Company
("DuPont") and any of its Subsidiaries (other
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than any Conoco Entities) to the extent that both Conoco and Payee consent to
the repayment of such Indebtedness in lieu of payment under this Note.
Notwithstanding the foregoing, the provisions of Sections 3(a)(i) and (ii)
shall not apply to the net proceeds received from the exercise of stock options
granted to directors, officers and employees of the relevant entity.
(b) Voluntary Prepayments. The Issuer shall have the
right to prepay the Principal and accrued interest on the amount of such
Principal in whole or in part from time to time, without premium or penalty.
(c) Method and Place of Payment. All payments under this
Note shall be made to the Payee not later than 12:00 noon, New York time, on
the date when due in U.S. dollars in immediately available funds to such
account as may be specified from time to time in writing by the Payee to the
Issuer, and any funds received after such time shall, for all purposes hereof,
be deemed to have been paid on the next succeeding business day. Whenever any
payment to be made hereunder shall be stated to be due on a day which is not a
business day, the due date thereof shall be extended to the next succeeding
business day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension. The Issuer shall not
have any right of setoff or counterclaim, and all payments made by the Issuer
hereunder shall be made irrespective of, and without any reduction for, any
setoff or counterclaims.
Section 4. Representations and Warranties. In order to induce
the Payee to accept the Note, the Issuer makes the following representations
and warranties,
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which shall survive the execution and delivery of this Note: the Issuer (a) is
a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its incorporation, (b) has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged or presently proposes to engage and (c) has the corporate power
and authority to execute, deliver and carry out the terms and provisions of
this Note and has taken all necessary corporate action to authorize the
execution, delivery and performance by it hereof. The Issuer has duly executed
and delivered this Note, and this Note constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms. Neither the execution,
delivery or performance by the Issuer of this Note nor compliance by it with
the terms and provisions hereof nor the consummation of the transactions
contemplated hereby, (a) will contravene any applicable provision of any law,
statute, rule, regulation (including Regulations U, T and X of the Board of
Governors of the Federal Reserve System), order, writ, injunction or decree of
any court or governmental instrumentality or (b) will conflict or be
inconsistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any lien upon
any of the property or assets of the Issuer pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to which the
Issuer is a party or by which it or any of its property or assets is bound or
to which it may be subject (other than this Note), or (c) will violate any
provision of the Issuer's Certificate of Incorporation or By-Laws. The Issuer
and its Subsidiaries
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have incurred no Indebtedness other than the obligations incurred hereunder and
the Indebtedness set forth on Schedules I and II hereto.
Section 5. Affirmative Covenants. The Issuer covenants and
agrees that until the Principal and all other obligations under this Note are
paid in full: (a) the Issuer will furnish the Payee within nine (9) business
days after the end of each quarter and eleven (11) business days after the end
of each fiscal year, the unaudited balance sheet and income statement, or
consolidated balance sheet and income statement, if any, of the Issuer and its
Subsidiaries as at the end of such period in the form and substance consistent
with the current practice of the Issuer; (b) (i) the Issuer shall furnish to
the Payee such financial information or documents in the possession of the
Issuer or any of its Subsidiaries as the Payee may reasonably request, (ii)
the Issuer shall furnish to the Payee on a monthly basis such management and
other periodic reports related to financial information in the form and
substance consistent with the current practice of the Issuer and (iii) will
provide the Payee reasonable access to the books and records of the Issuer and
any of its Subsidiaries as the Payee may from time to time reasonably request;
(c) the Issuer and its Subsidiaries shall keep proper books of record and
account in conformity with GAAP and all requirements of applicable law; and (d)
the Issuer shall, and shall cause each of its Subsidiaries to, comply in all
material respects with all applicable laws, rules, statutes, regulations,
decrees and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of their
business and the ownership of their property.
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Section 6. Negative Covenants.
(a) Restriction on Fundamental Changes. Without the
Payee's prior written consent, the Issuer will not, and will not permit its
Significant Subsidiaries to enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue its business or convey, lease, sell, transfer or otherwise dispose
of, in one transaction or series of transactions, all or substantially all of
its business or property, whether now or hereafter acquired.
(b) Limitation on Liens. Without the Payee's prior
written consent, the Issuer agrees that neither it nor any of its Subsidiaries
will issue, assume or guarantee any notes, bonds, debentures or other similar
evidences of Indebtedness for money borrowed secured by a mortgage, lien,
pledge or other encumbrance ("Mortgages") upon any Restricted Property without
effectively providing that concurrently with issuance, assumption or guaranty
of any such Indebtedness that the Note (together with, if the Issuer so
determines, any other Indebtedness or obligation then existing or thereafter
created ranking equally with the Note) shall be secured equally and ratably
with (or prior to) such Indebtedness so long as such Indebtedness shall be so
secured, except that this restriction will not apply to: (i) Mortgages
relating to pollution control or industrial revenue bonds; and (ii) Mortgages
required by any contract or statute in order to permit the Issuer or any of its
Subsidiaries to perform any contract or subcontract made by it with or at the
request of the United States of America, any state or any department, agency or
instrumentality or political subdivision of either.
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The Issuer agrees that if, upon any consolidation or merger of the
Issuer with or into any other corporation, or upon any sale or conveyance of
all or substantially all of its property to any other corporation, any of the
Restricted Property of the Issuer or of any of its Subsidiaries would thereupon
become subject to any Mortgage, the Issuer will first secure the Note equally
and ratably with any obligations of the Issuer or any of its Subsidiaries then
entitled thereto, by a direct lien on all such property prior to all liens
other than any theretofore existing thereon.
For the purposes of this Section, the following types of transactions
shall not be deemed to create Indebtedness secured by a Mortgage; the sale or
other transfer of (i) oil, gas, coal, uranium, copper or other minerals in
place for a period of time until, or in an amount such that, the purchaser will
realize therefrom a specified amount of money (however determined) or a
specified amount of such minerals, or (ii) any other interest in property of
the character commonly referred to as a "production payment".
(c) Limitation on Subsidiaries' Borrowing. Without the
prior written consent of the Payee, the Issuer will not permit any of its
Subsidiaries to, and the Subsidiaries of the Issuer will not, incur any
Indebtedness other than Indebtedness owed to the Issuer or to a wholly owned
Subsidiary of the Issuer.
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Section 7. Events of Default. Each of the following events,
acts, occurrences or conditions shall constitute an Event of Default under this
Note:
(a) The Issuer shall default in the payment when due
of any principal of or interest on the Indebtedness evidenced by this Note and
such default shall continue for five days.
(b) Any representation or warranty made by the
Issuer herein or in any certificate or statement delivered pursuant hereto
shall prove to be false or misleading in any material respect at any time.
(c) The Issuer shall fail to perform or observe any
other agreement, covenant or obligation arising hereunder; provided, that any
failure pursuant to Section 5 hereof shall be continuing fifteen days after
notice thereof to Issuer.
(d) The Issuer, any of its Subsidiaries or a Parent
Company shall default in the payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) of any amount owing in
respect of any Indebtedness for borrowed money in excess, in the aggregate, of
Fifty Million Dollars ($50,000,000) in principal outstanding Indebtedness and
such default continues after any applicable grace period; or the Issuer, any of
its Subsidiaries or a Parent Company shall default in the performance or
observance of any obligation or condition with respect to any such Indebtedness
or any other event shall occur or condition shall exist, if the effect of such
default, event or condition is to accelerate the maturity of any Indebtedness
having an aggregate principal amount in excess of
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Fifty Million Dollars ($50,000,000), or to permit the holder or holders
thereof, or any trustee or agent for such holders, to accelerate the maturity
of any Indebtedness having an aggregate principal amount in excess of Fifty
Million Dollars ($50,000,000), or any Indebtedness having an aggregate
principal amount in excess of Fifty Million Dollars ($50,000,000) shall become
or be declared to be due and payable prior to its stated maturity other than as
a result of a regularly scheduled payment.
(e) (i) The Issuer shall commence a voluntary case
concerning itself under the Bankruptcy Code; or (ii) an involuntary case is
commenced against the Issuer and the petition is not dismissed within 30 days
after commencement of the case; or (iii) a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of the Issuer or the Issuer commences any other proceedings
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Issuer or there is commenced
against the Issuer any such proceeding which remains undismissed for a period
of 30 days; or (iv) any order of relief or other order approving any such case
or proceeding is entered; or (v) the Issuer is adjudicated insolvent or
bankrupt; or (vi) the Issuer suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue undischarged or
unstayed for a period of 30 days; or (vii) the Issuer makes a general
assignment for the benefit of creditors; or (viii) the Issuer shall fail to
pay, or shall state that it is unable to pay, its
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debts generally as they become due; or (ix) the Issuer shall call a meeting of
its creditors with a view to arranging a composition or adjustment of its
debts; or (x) the Issuer shall by any act or failure to act consent to, approve
of or acquiesce in any of the foregoing; or (xi) any corporate action is taken
by the Issuer for the purpose of effecting any of the foregoing; or
(f) A Change of Control of a Parent Company.
Upon the occurrence and during the continuance of any Event of
Default, the Payee may in its sole discretion (except in the case of an Event
of Default occurring under clause (e) above, in which case the following will
occur automatically) declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Indebtedness evidenced by this Note and any
and all other obligations pursuant to this Note, and the same shall thereupon
be, immediately due and payable with all additional interest from time to time
accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Issuer.
Section 8. Payment of Expenses; Indemnity. Except for
out-of-pocket costs and expenses incurred by each party in connection with the
negotiation, preparation, execution and delivery of this Note, the Issuer shall
indemnify the Payee, its officers, directors, partners, stockholders,
employees, representatives and agents (each an "Indemnitee") from, and hold
each of them harmless against, any and all
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losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements of
counsel for such Indemnitee in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto) that may at any time
(including, without limitation, at any time following the payment of the
obligations) be imposed on, asserted against or incurred by any Indemnitee as a
result of, or arising out of, or in any way related to or by reason of, (i)
performance of this Note and (ii) the exercise by the Payee of its rights and
remedies hereunder (but excluding, as to any Indemnitee, any such losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements incurred solely by reason of the gross
negligence or willful misconduct of such Indemnitee as finally determined by a
court of competent jurisdiction). The Issuer's obligations under this
paragraph shall survive the termination of this Note and the payment of the
obligations.
Section 9. No Waiver; Remedies Cumulative. No failure or delay
on the part of the Payee in exercising any right, power or privilege hereunder
and no course of dealing between the parties hereto shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof of the
exercise of any other right, power or privilege hereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Payee would otherwise have. No
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notice to or demand on the Issuer in any case shall entitle the Issuer to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Payee to any other or further action
in any circumstances without notice or demand.
Section 10. Miscellaneous. This Note shall be binding upon and
inure to the benefit of the Payee and the Issuer and their respective
successors and assigns, except that the Issuer may not assign or transfer any
of its rights or obligations under this Note without the prior written consent
of the Payee. This Note may not be amended, supplemented, modified or waived
except in a writing executed by the Issuer and the Payee. The headings of the
several Sections and subsections of this Note are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Note. In case any provision in or obligation under this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 11. Notices. The Issuer agrees that all notices and
deliveries to be made to the Payee pursuant to this Note will be made to the
person and at the address as may be specified from time to time by the Payee to
the Issuer in writing. All notices and deliveries to be made to the Issuer
pursuant to this Note will be made to the person and at the address as may be
specified from time to time by the Issuer to the Payee in writing.
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Section 12. Certain Definitions.
As used in this Note, capitalized terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Change of Control" with respect to a Parent Company shall occur if
(A) the Permitted Holders (x) cease to be the beneficial owner, directly or
indirectly, of at least 50% of the aggregate total voting power of each Parent
Company, whether as a result of issuance of securities of a Parent Company, any
merger, consolidation, liquidation or dissolution of a Parent Company, any
direct or indirect transfer of securities by any Permitted Holders or
otherwise, or (y) do not have the ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of each Parent Company or (B) the Issuer ceases to be wholly owned,
directly or indirectly, by each Parent Company. "Permitted Holders" are
DuPont, DuPont Energy Company and any other Subsidiary of DuPont.
As used herein, "control" when used with respect to any specified
person means the power to direct the management and policies of such person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise.
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"Indebtedness" of any person shall mean, (a) all obligations of such
person for borrowed money, including Indebtedness under this Note or with
respect to deposits or advances of any kind, (b) all obligations of such person
evidenced by
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bonds, debentures, notes or similar instruments, (c) all obligations of such
person upon which interest charges are customarily paid, (d) all obligations of
such person under conditional sale or other title retention agreements relating
to property or assets purchased by such person, (e) all obligations of such
person issued or assumed as the deferred purchase price of property or
services, (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Mortgage on property owned or acquired by such person, whether or not
the obligations secured thereby have been assumed, (g) all guarantees by such
person of Indebtedness of others which in the aggregate exceed Two Billion
Dollars ($2,000,000,000) (provided that the Issuer will promptly notify the
Payee of the incurrence by the Payee or one of its Subsidiaries of any
guarantee of Indebtedness of others), (h) all capital lease obligations of such
person, and (i) all securities or other similar instruments convertible or
exchangeable into any of the foregoing, but excluding (1) industrial revenue
bonds, (2) operating leases, (3) in the case of the Issuer, the Revolving
Credit Facility and (4) daily cash overdrafts associated with routine cash
operations.
"Parent Company" means Conoco Energy Company or any other person that,
directly or indirectly, through one or more intermediaries, controls the
Issuer, other than DuPont, DuPont Energy Company, and other Subsidiaries of
DuPont. For purposes of this definition, Conoco Energy Company and its
Subsidiaries shall not be deemed to be Subsidiaries of DuPont.
"Restricted Property" means any shares of capital stock of a Subsidiary
of the
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Issuer and any manufacturing plant or facility or any mineral, oil or gas
producing property or any research facility owned by the Issuer or any of its
Subsidiaries except any such plant or facility or property or research facility
which, in the opinion of the Board of Directors of Conoco Energy Company is not
a material asset of the Issuer or its Subsidiaries within the meaning of GAAP.
"Significant Subsidiary" shall have the meaning given to such term
under Rule 1-02 of Regulation S-X.
"Subsidiary" means (a) any corporation at least a majority of the
outstanding securities of which having ordinary voting power to elect a
majority of the board of directors of such corporation is at the time owned or
controlled directly or indirectly by such party and (b) any partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or other entity, in which such party, directly or indirectly, has the power to
elect or direct the election of a majority of the members of the governing body
of such entity or otherwise has control over such entity (e.g., as the managing
partner of a partnership).
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING
TO CONFLICTS OF LAW).
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IN WITNESS WHEREOF, the Issuer has caused its duly authorized
officer to execute and deliver this Note as of the date first above written.
CONOCO INC.
By:/s/ X.X. Xxxxxxx
-------------------------
Name: X.X. Xxxxxxx
Title: Vice President
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Schedule I to the
Promissory Note
INDEBTEDNESS DOCUMENTATION
--------------------------
SCHEDULE OF EXISTING CONOCO INC. AND SUBSIDIARIES DEBT
AS OF JUNE 30, 1998
($ in millions) FYE 1997 2 QTR 1998
-------- ----------
SHORT-TERM OBLIGATIONS
CAPITAL LEASES-SHORT-TERM PORTION 2.0 2.0
CURRENT MATURITIES OF LT DEBT
K.C. Asphalt L.L.C. 1.0 1.1
Conoco Mineraloel GMBH 1.7 1.7
Conoco Development Company 22.5 22.5
---- ----
25.2 25.3
SUBTOTAL-SHORT-TERM DEBT 27.2 27.3
LONG-TERM OBLIGATIONS
KC Asphalt L.L.C. 12.9 11.8
Conoco Mineraloel GMBH 17.3 15.6
Conoco Development II Inc. 20.0 20.0
CAPITAL LEASES 32.5 32.5
SUBTOTAL-LONG-TERM DEBT 82.7 79.9
---- ----
TOTAL DEBT 109.9 107.2
Minority Interest 309.0 309.0
TOTAL DEBT W/ MINORITY INTEREST 418.9 416.2
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GUARANTY
Conoco Inc. (formerly Conoco Energy Company) (the
"Guarantor"), as primary obligor and not merely as surety, hereby
unconditionally guarantees (the "Guarantee") (i) the due and punctual payment
of the principal of and interest on that certain Promissory Note of Conoco Inc.
dated July 20, 1998 (the "Note"), subject to any applicable grace periods,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal and interest, if any, on the Note, to the
extent lawful, and the due and punctual performance of all other obligations of
the Issuer all in accordance with the terms set forth in the Note and (ii) in
case of any extension of time of payment or renewal of the Note or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise (all such obligations guaranteed
hereby by the Guarantor being the "Guaranteed Obligations").
This Guaranty is irrevocable, absolute, present and
unconditional. The Guarantor guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Note regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Payee with respect thereto.
The obligations of the Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may
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be brought and prosecuted against the Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Issuer or any other
guarantor or whether the Issuer or any other guarantor is joined in any such
action or actions. The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any lack of validity or
enforceability of the Note with respect to the Issuer or any agreement
or instrument relating thereto;
(ii) any change in the time, manner or
place of payment of, or in any other term of, all or any of the
Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Note;
(iii) the failure to give notice to the
Guarantor of the occurrence of an Event of Default under the
provisions of the Note;
(iv) any failure, omission, delay by or
inability on the part of the Payee to assert or exercise any right,
power or remedy conferred on the Payee in the Note;
(v) any change in the corporate
structure, or termination, dissolution, consolidation or merger of the
Issuer or any guarantor with or into any other entity, the voluntary
or involuntary liquidation, dissolution, sale or other disposition of
all or substantially
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all the assets of the Issuer or the Guarantor, the marshaling of the
assets and liabilities of the Issuer or any guarantor, the
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with creditors, or
readjustment of, or other similar proceedings affecting the Issuer or
any guarantor, or any of the assets of any of them;
(vi) the assignment of any right, title
or interest of the Payee in the Note to any other person; or
(vii) any other event or circumstance
(including any statute of limitations), whether foreseen or unforeseen
and whether similar or dissimilar to any of the foregoing, that might
otherwise constitute a defense available to, or a discharge of, the
Issuer or a guarantor, other than payment in full of the Guaranteed
Obligations; it being the intent of the Guarantor that its obligations
hereunder shall not be discharged except by payment of all amounts
owing pursuant to the Note.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment or performance with respect to
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
the Payee, upon the insolvency, bankruptcy or reorganization of the Issuer or
otherwise, all as though such payment or performance had not been made or
occurred. The obligations of the Guarantor under this Guaranty shall not be
subject to reduction, termina-
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tion or other impairment by any set-off, recoupment, counterclaim or defense or
for any other reason.
The Guarantor hereby irrevocably waives, to the extent
permitted by applicable law:
(i) promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty;
(ii) any requirement that the Payee or
any other person protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action
against the Issuer or any other person or any collateral, or obtain
any relief pursuant to the Note or pursue any other available remedy;
(iii) all right to trial by jury in any
action, proceeding or counterclaim arising out of or relating to the
Note;
(iv) any defense arising by reason of
any claim or defense based upon an election of remedies by the Payee
which in any manner impairs, reduces, releases or otherwise adversely
affects its subrogation, contribution or reimbursement rights or other
rights to proceed against the Issuer or any other person; and
(v) any duty on the part of the Payee
to disclose to the Guarantor any matter, fact or thing relating to the
business, operation or condition of the Issuer and its assets now
known or hereafter known by the Payee.
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IN WITNESS WHEREOF, the Guarantor has caused its duly
authorized officer to execute and deliver this Guarantee as of JULY 24, 1998.
CONOCO INC.
(FORMERLY CONOCO ENERGY COMPANY)
By:
-----------------------------
Name:
Title:
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EXHIBIT K
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of October 27, 1998,
among Conoco Inc., a Delaware corporation (the "Company"), and E. I. du Pont de
Nemours and Company, a Delaware corporation ("Du Pont").
W I T N E S S E T H
WHEREAS, pursuant to a Restructuring, Transfer and Separation
Agreement, dated as of , 1998 (the "Separation Agreement"), by and among the
Company, Du Pont and certain subsidiaries of Conoco and Du Pont, and the IPO
(as hereinafter defined), the Common Stock (as hereinafter defined) will become
publicly traded.
WHEREAS, the parties hereto desire to set forth the rights of
the Holders (as hereinafter defined) and the obligations of the Company with
respect to the registration of the Registrable Securities (as hereafter
defined) pursuant to the Securities Act (as hereafter defined); and
WHEREAS, the execution and delivery of this Agreement by the
parties hereto is a condition to the obligations of each of Du Pont and Conoco
under the Separation Agreement;
NOW, THEREFORE, in consideration of the covenants and
agreements of Du Pont and Conoco contained herein and in the Separation
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Separation
Agreement. For purposes of this Agreement the following terms shall have the
following meanings:
"Affiliate" has the meaning assigned to such term under Rule
405 of the Securities Act.
129
"Class B Common Stock" means the shares of Class B common
stock, par value $.01 per share, of the Company.
"Common Stock" means the shares of Class A common stock, par
value $0.01 per share, of the Company.
"Continuously Effective," with respect to a specified
Registration Statement, means that such Registration Statement shall not cease
to be effective and available for transfers of Registrable Securities in
accordance with the method of distribution set forth therein for longer than
five (5) Business Days during the period specified in the relevant provision of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder.
"Holders" means, collectively, Du Pont and its affiliates
(other than the Company and, after giving effect to Section 2.1 of the
Separation Agreement, subsidiaries of the Company) who from time to time own
Registrable Securities; each of such entities separately is sometimes referred
to herein as a "Holder."
"IPO" means the initial public offering of Shares
contemplated by the Separation Agreement.
"IPO Closing Date" means the date of the first closing of the
sale of shares of Common Stock to the underwriters by the Company pursuant to
the IPO.
"IPO Restricted Period" means the period, if any, during
which Du Pont agrees with the Underwriters' Representative in the IPO not to
sell shares of Common Stock or Class B Common Stock, as the same may be waived,
shortened or, with the consent of Du Pont, extended.
"Maximum Number" when used in connection with an underwritten
offering, shall mean the maximum number of shares of Common Stock (or amount of
other Registrable Securities) that the Underwriters' Representative has
informed the Company may be included as part of such offering without
materially and adversely affecting the success or pricing of such offering.
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"Person" shall mean any natural person, firm, individual,
corporation, partnership, limited liability company, joint venture, business
trust, association, trust, company or other organization or entity, whether
incorporated or unincorporated.
"Pre-Demand Period" means a period commencing on the IPO
Closing Date and ending on the earlier of (i) the first date as of which all
Registrable Securities cease to be Registrable Securities and (ii) the date
which is the second anniversary of the effectiveness of a Shelf Registration
Statement pursuant to Section 3(a) hereof.
"Prospectus" means the prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Registrable Securities" means, collectively, (i) the shares
of Common Stock into which shares of Class B Common Stock owned by Du Pont
immediately following the IPO Closing Date are convertible pursuant to the
Company's certificate of incorporation(the "Shares"), (ii) any stock or other
securities into which or for which the Shares may hereafter be changed,
converted or exchanged and (iii) any other securities issued or distributed in
respect of the Shares by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, reorganization, merger,
consolidation or otherwise, (iv) any other securities into which or for which
shares of Class B Common Stock are converted or exchanged or are convertible or
exchangeable, (v) any other successor securities received in respect of any of
the foregoing (i) through (iv); provided that in the event that any Registrable
Securities (as defined without giving effect to this proviso) are being
registered pursuant hereto, the Holder may include in such registration (subject
to the limitations of this Agreement otherwise applicable to the inclusion of
Registrable Securities) any shares of Common Stock or Class B Common Stock or
securities acquired in respect thereof thereafter acquired by such Holder, which
shall also be deemed to be "Shares", and accordingly Registrable Securities, for
purposes of such registration.
"Registration Expenses" means any and all out-of-pocket
expenses incident to performance of or compliance with this Agreement,
including, without limitation, (i) all SEC and securities exchange registration
and filing fees, (ii) all fees
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and expenses of complying with securities or blue sky laws (including fees and
disbursements of counsel for any underwriters in connection with blue sky
qualifications of the Registrable Securities) or relating to the National
Association of Securities Dealers, Inc. (the "NASD"), (iii) all printing,
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange pursuant to Section 7(h), (v) the fees and disbursements of counsel for
the Company and of its independent public accountants, (vi) all expenses in
connection with the preparation, printing and filing of the Registration
Statement, any preliminary Prospectus or final Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to any
Holders, underwriters and dealers and all expenses incidental to delivery of the
Registrable Securities, (vii) subject to the limitations set forth in Section 8,
the reasonable fees and disbursements of counsel, other than the Company's
counsel, selected by the Holders of the Registrable Securities being registered,
(viii) any fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, and the reasonable fees and expenses of any
special experts retained in connection with the requested registration, but
excluding underwriting discounts and commissions and transfer taxes, if any, and
(ix) the expenses incurred in connection with making "roadshow" presentations
and holding meetings with potential investors to facilitate the distribution and
sale of Registrable Securities.
"Registration Statement" means any registration statement of
the Company which covers Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statements including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
"Related Securities" means any securities of the Company
similar or identical to any of the Registrable Securities including, without
limitation, Common Stock, Class B Common Stock and all options, warrants,
rights and other securities convertible into, or exchangeable or exercisable
for Common Stock or Class B Common Stock (other than any of the foregoing to be
offered or sold to officers, directors or employees as compensation).
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder.
"SEC" means the Securities and Exchange Commission.
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"Shelf Registration Statement" means a Registration Statement
filed with the SEC for an offering to be made on a continuous basis pursuant to
Rule 415 under the Securities Act (or any similar rule that may be adopted by
the SEC) covering some or all of the Registrable Securities, as applicable.
"Underwritten Registration or Underwritten Offering" shall
mean a registration in which securities of the Company are sold to one or more
underwriters for reoffering to the public.
"Underwriters' Representative" when used in connection with
an Underwritten Offering, shall mean the managing underwriter of such offering,
or, in the case of a co-managed underwriting, the managing underwriter
designated as the Underwriters' Representative by the co-managers.
2. Securities Subject to This Agreement. The securities
entitled to the benefits of this Agreement are the Registrable Securities. For
the purposes of this Agreement, Registrable Securities will cease to be
Registrable Securities when (i) a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act and
they have been disposed of pursuant to such effective Registration Statement,
(ii) such Registrable Securities are distributed to the public pursuant to Rule
144 (or any similar provision then in force) under the Securities Act, (iii)
such Registrable Securities shall have been otherwise transferred to a person
who is not a Holder, or (iv) such Registrable Securities shall have ceased to
be outstanding.
3. Registration Under the Securities Act.
(a) Shelf Registration. Within 120 days after the IPO
Closing Date, the Company shall file and use its best efforts to cause to
become effective not later than the later of (i) the 150th day after the IPO
Closing Date and (ii) the end of the IPO Restricted Period, a Shelf
Registration Statement on any appropriate form for all the Registrable
Securities, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof, as specified by Du Pont (including pursuant to one or more
Underwritten Offerings); provided that at the request of the Holders, the
filing and effectiveness of the Shelf Registration Statement may be delayed for
such a period as the Holders request. The Company agrees to use its best
efforts, taking into account the unavailability of incorporation by reference
during the portion of the Pre-Demand Period prior to the Company's becoming
eligible to use Form S-3, to keep such
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Registration Statement Continuously Effective and usable for resale of
Registrable Securities, for a period of twenty-four (24) months from the date on
which the SEC declares such Registration Statement effective or such shorter
period which will terminate when all the Registrable Securities covered by such
Registration Statement cease to be Registrable Securities; provided, however,
that the Company may elect that such Registration Statement not be filed or
usable during any Blackout Period (as defined in Section 4). No incidental or
piggyback registration rights shall be available to any Person (including the
Company) with respect to the Shelf Registration Statement, and no Person
(including the Company) shall have the right to have any securities other than
the Registrable Securities included therein or registered thereon.
The registration rights granted pursuant to the provisions of
this Section 3(a) shall be in addition to the registration rights granted
pursuant to the other provisions of this Section 3 and the number of Demand
Registrations provided pursuant to Section 3(b) below shall not be reduced by
reason of any underwritten offerings effected pursuant to the Shelf
Registration.
(b) Required Registration.
(i) In addition to the registration permitted pursuant to
Section 3(a), the Holders shall have the right after the expiration of the
Pre-Demand Period to request in writing (a "Request") (which Request shall
specify the Registrable Securities intended to be disposed of by such Holders
and the intended method of distribution thereof) that the Company register such
portion of such Holders' Registrable Securities as shall be specified in the
Request (a "Demand Registration") by filing with the SEC, as soon as
practicable thereafter, but, not later than the 30th day (or the 45th day if
the applicable registration form is other than Form S-3) after the receipt of
such a Request by the Company, a registration statement (a "Demand Registration
Statement") covering such Registrable Securities, and the Company shall use its
best efforts to have such Demand Registration Statement declared effective by
the SEC as soon as practicable thereafter, but in no event later than the 75th
day (or the 90th day if the applicable registration form is other than Form
S-3) after the receipt of such a Request, and to keep such Demand Registration
Statement Continuously Effective for a period of at least 60 days following the
date on which such Demand Registration Statement is declared effective, as
extended by the length of any Suspension Period (as defined in Section 7) with
respect thereto (or for such shorter period which will terminate when all of
the Registrable Securities covered by such Demand Registration Statement shall
have been sold pursuant thereto), including,
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if necessary, by filing with the SEC a post-effective amendment or a supplement
to the Demand Registration Statement or the related prospectus or any document
incorporated therein by reference or by filing any other required document or
otherwise supplementing or amending the Demand Registration Statement, if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Demand Registration Statement or
by the Securities Act, the Exchange Act, any state securities or blue sky laws,
or any rules and regulations thereunder; provided that such period during which
the Demand Registration Statement shall remain Continuously Effective shall, in
the case of an Underwritten Offering, be extended for such period (if any) as
the underwriters shall reasonably require, including to satisfy, in the judgment
of counsel to the underwriters, any prospectus delivery requirements imposed by
applicable law.
The Company shall not be obligated to effect more than three
(3) Demand Registrations pursuant to Requests. For purposes of the preceding
sentence, a Demand Registration shall not be deemed to have been effected, (i)
unless a Demand Registration Statement with respect thereto has become
effective, (ii) if after such Demand Registration Statement has become
effective, the offer, sale or distribution of Registrable Securities thereunder
is prevented by any stop order, injunction or other order or requirement of the
SEC or other Governmental Entity for any reason not attributable to any Holder
and such effect is not thereafter eliminated, or (iii) if the conditions to
closing specified in the underwriting agreement entered into in connection with
such Registration are not satisfied or waived, other than by reason of a failure
on the part of any Holder. If the Company shall have complied with its
obligations under this Agreement, a right to a Demand Registration pursuant to
this Section 3 shall be deemed to have been satisfied upon the earlier of (x)
the date as of which all of the Registrable Securities included therein shall
have been sold to the underwriters or distributed pursuant to the Demand
Registration Statement, and (y) the date as of which such Demand Registration
shall have been Continuously Effective for a 60-day period or other period
specified in the preceding paragraph following the effectiveness of such Demand
Registration Statement.
Any Request made pursuant to this Section 3(b) shall be
addressed to the attention of the Secretary of the Company, and shall specify
(a) the number of Registrable Securities to be Registered (which shall be not
less than the lesser of (i) 5% of the total number of shares of Common Stock
and Class B Common Stock outstanding or (ii) the remaining balance of the
Registrable Securities then held by the Holders, provided that the aggregate
public offering price of the Registrable Securities to be registered (based on
the closing sale price of the Common Stock on
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the last trading day prior to the delivery of a Request) would not be less than
$500 million), (b) the intended method of distribution thereof and (c) that
the request is for a Demand Registration pursuant to this Section 3.1(b).
(ii) The Company may not include in a Demand Registration
pursuant to Section 3(b)(i)1 hereof shares of Common Stock for the account of
the Company or any subsidiary of the Company, but, if and to the extent
required by a contractual obligation, may, subject to compliance with Section
3.1(b)(iii), include shares of Common Stock for the account of any other Person
who holds shares of Common Stock entitled to be included therein; provided,
however, that if the Underwriters' Representative of any offering described in
this Section 3(b) shall have informed the Company in writing that in its
judgment there is a Maximum Number of shares of Common Stock that all Holders
and any other Persons desiring to participate in such Registration may include
in such offering, then the Company shall include in such Demand Registration
all Registrable Securities requested to be included in such Registration by the
Holders together with up to such additional number of shares of Common Stock
that any other Persons entitled to participate in such Registration desire to
include in such Registration up to the Maximum Number that the Underwriters'
Representative has informed the Company may be included in such Registration
without materially and adversely affecting the success or pricing of such
offering; provided that the number of shares of Common Stock to be offered for
the account of all such other Persons participating in such Registration shall
be reduced in a manner determined by the Company in its sole discretion.
(iii) No Holder may participate in any underwritten offering
under Section 3 hereof and no other Person shall be permitted to participate in
any such offering pursuant to Section 3(b) or Section 4 hereof unless it
completes and executes all customary questionnaires, powers of attorney, custody
agreements, underwriting agreements, and other customary documents required
under the customary terms of such underwriting arrangements. In connection with
any underwritten offering under Section 3 or Section 4 hereof, each
participating Holder and the Company and, except in the case of Section 3(a)
hereof, each other Person shall be a party to the underwriting agreement with
the underwriters and may be required to make certain customary representations
and warranties and provide certain customary indemnifications for the benefit of
the underwriters; provided that the Holders shall not be required to make
representations and warranties with respect to the Company and its subsidiaries
or their business and operations and shall not be required to agree to any
indemnity or contribution provisions less favorable to them than as are set
forth herein.
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(c) Incidental Registration.
(i) If at any time the Company proposes to register any
Related Securities under the Securities Act (other than in connection with any
acquisition or business combination transaction and other than in connection
with stock options and other stock-based employee benefit plans and
compensation) either in connection with a primary offering for cash for the
account of the Company, a secondary offering or a combined primary and secondary
offering, the Company will each time it intends to effect such a registration,
give written notice (a "Company Notice") to all Holders of Registrable
Securities at least 10 business days prior to the initial filing of a
registration statement with the SEC pertaining thereto, informing such Holders
of its intent to file such registration statement and of the Holders' right to
request the registration of the Registrable Securities held by the Holders. Upon
the written request of the Holders made within 7 business days after any such
Company Notice is given (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and, unless the applicable
registration is intended to effect a primary offering of Common Stock for cash
for the account of the Company, the intended method of distribution thereof),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Holders to the extent required to permit the
disposition (in accordance with the intended methods of distribution thereof or,
in the case of a registration which is intended to effect a primary offering for
cash for the account of the Company, in accordance with the Company's intended
method of distribution) of the Registrable Securities so requested to be
registered, including, if necessary, by filing with the SEC a post-effective
amendment or a supplement to the registration statement filed by the Company or
the related prospectus or any document incorporated therein by reference or by
filing any other required document or otherwise supplementing or amending the
registration statement filed by the Company, if required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such registration statement or by the Securities Act, any state
securities or blue sky laws, or any rules and regulations thereunder; provided,
however, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay such registration of the
securities, the Company shall give written notice of such determination to each
Holder of Registrable Securities and, thereupon, (A) in the case of a
determination not to register, the Company shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses
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incurred in connection therewith), and (B) in the case of a determination to
delay such registration, the Company shall be permitted to delay registration
of any Registrable Securities requested to be included in such registration
statement for the same period as the delay in registering such other
securities.
The registration rights granted pursuant to the provisions of
this Section 3(c) shall be in addition to the registration rights granted
pursuant to the other provisions of this Section 3.
(ii) If, in connection with a Registration Statement
pursuant to this Section 3(c), the Underwriters' Representative of the offering
registered thereon shall inform the Company in writing that in its opinion there
is a Maximum Number of shares of Common Stock that may be included therein; then
(a) in the event such Registration Statement relates to an offering initiated by
the Company of Common Stock being offered for the account of the Company, the
Company may include in such registration the number of shares it proposes to
offer and, if such number is less than the Maximum Number, then the number of
shares of Common Stock requested to be included by any Person other than the
Company may be reduced, pro rata in proportion to the respective number of
shares of Common Stock requested to be included by such Persons (other than any
Person in respect of whom such reduction would place the Company in breach of
any then existing contractual obligations that it might have), to the extent
necessary to reduce the respective total number of shares of Common Stock
requested to be included in such offering to the Maximum Number of shares of
Common Stock recommended by such Underwriters' Representative and (b) in the
event such a Registration Statement is initiated by any Person other than the
Company, such Person shall have the right, in its sole discretion, to include in
such registration the number of shares of Common Stock it proposes to offer and,
if such number is less than the Maximum Number, then the number of shares of
Common Stock requested to be included by any other Person may be reduced pro
rata in proportion to the respective number of shares of Common Stock requested
to be included by such other Persons (other than any Person in respect of whom
such reduction would place the Company in breach of any then existing
contractual obligations that it might have), to the extent necessary to reduce
the respective total number of shares of Common Stock requested to be included
in such offering to the Maximum Number.
4. Blackout Period. The Company shall be entitled to
elect that a Registration Statement not be usable, or that the filing thereof
be delayed beyond the time otherwise required, for a reasonable period of time,
but not in excess of 60 days
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(a "Blackout Period"), if the Company determines in good faith that the
registration and distribution of Registrable Securities (or the use or filing of
the Registration Statement or related Prospectus) would interfere with any
pending material financing, acquisition, corporate reorganization or any other
material corporate development involving the Company or any of its subsidiaries
or would require premature disclosure thereof and promptly gives the Holders of
Registrable Securities written notice of such determination, and if requested by
Holders, the Company will promptly deliver to it a general statement of the
reasons for such postponement or restriction on use and to the extent
practicable an approximation of the anticipated delay; provided, however, that
the aggregate number of days included in all Blackout Periods, when taken
together with any Suspension Periods (as defined in Section 7), during any
consecutive 12 months shall not exceed 90 days.
5. Selection of Underwriters.
If any offering pursuant to a Shelf Registration Statement or
a Demand Registration Statement is an underwritten offering, Du Pont will
select a managing underwriter or underwriters to administer the offering, which
managing underwriter or underwriters shall be reasonably satisfactory to the
Company (it being agreed that Xxxxxx Xxxxxxx & Co. Incorporated, Credit Suisse
First Boston Corporation and X.X. Xxxxxx Securities Inc. are satisfactory to
the Company).
6. Holdback Agreement.
(a) If so requested by the Underwriters' Representative in
connection with an offering of securities covered by a registration statement
filed by the Company, whether or not Registrable Securities of the Holders are
included therein, each Holder shall agree not to effect any sale or distribution
of the Shares, including a sale pursuant to Rule 144, without the prior written
consent of the Underwriters' Representative (except as part of such Underwritten
Registration), during the 7-day period prior to, and during the 90-day
period beginning on, the date such registration statement is declared effective
under the Securities Act by the SEC; provided that the Holders are timely
notified of such effective date in writing by the Company or the Underwriters'
Representative. The Holders shall not be subject to the restrictions set forth
in this Section 6(a) for longer than 97 days during any 12-month period and a
Holder shall no longer be subject to such restrictions at such time as such
Holder together with its affiliates shall own less than 5% of the then
outstanding shares of Common Stock on a fully-diluted basis.
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(b) If so requested by the Underwriters' Representative in
connection with an offering of any Registrable Securities, the Company shall
agree not to effect any sale or distribution of shares of Common Stock, without
the prior written consent of the Underwriters' Representative (other than as a
part of such offering or in connection with any acquisition or business
combination transaction and other than in connection with stock options and
employee benefit plans and compensation) during the 7-day period prior to, and
during the 90-day period beginning on, the date such registration statement is
declared effective under the Securities Act by the SEC and shall use its best
efforts to obtain and enforce similar agreements from any other Persons if
requested by the Underwriters' Representative; provided that the Company or such
Persons shall not be subject to the restrictions set forth in this Section 6(b)
for longer than 97 days during any 12-month period.
(d) Notwithstanding anything else in this Section 6 to the
contrary, no Holder shall be precluded from distributing to any or all of its
stockholders any or all of the Registrable Securities.
(e) As used in paragraphs (a) and (b) of this Section 6,
"sales" or "distributions" shall be deemed to include, to the extent requested
by the Underwriters' Representative, (1) contracts to sell, sales of options or
contracts to purchase, purchases of any option or contract to sell, grants of
options, rights or warrants to purchase or otherwise transfer or dispose of,
directly or indirectly, any of the Shares or any securities convertible into or
exercisable or exchangeable for the Shares and (2) swaps or other arrangements
that transfer to another, in whole or in part, any of the economic consequences
of ownership of the Shares, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of the Shares or such other
securities, in cash or otherwise.
7. Registration Procedures. If and whenever the Company
is required to or to use its best efforts to effect or cause the registration
of any Registrable Securities under the Securities Act as provided in this
Agreement, the Company will, as expeditiously as possible and without limiting
any time period or obligation set forth elsewhere in this Agreement:
(a) Prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities on a form for which the Company
then qualifies, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of distribution
thereof, and use its best efforts to cause such Registration Statement to
become and
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remain effective; provided that, a reasonable time before filing a Registration
Statement or Prospectus, or any amendments or supplements thereto (other than
reports required to be filed by it under the Exchange Act and the rules and
regulations adopted by the SEC thereunder), the Company will furnish to the
Holders and their counsel for review and comment, copies of all documents
proposed to be filed and provided further, that if Du Pont so requests (x) it
and its counsel and other representatives may participate in the drafting and
preparation of such Registration Statement and (y) such information as its
believes may be beneficial to be included in the Registration Statement for
marketing purposes shall be included therein so long as disclosure of such
information (1) is in compliance with applicable law and (2) does not
competitively harm the Company;
(b) prepare and file with the SEC amendments and
post-effective amendments to each such Registration Statement and such
amendments and supplements to the Prospectus used in connection therewith as
may be required by the Securities Act or the Exchange Act or otherwise
necessary to keep the Registration Statement effective for the applicable
period and cause the Prospectus as so supplemented to be filed pursuant to Rule
424 under the Securities Act, and to otherwise comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition set forth in
such Registration Statement and Prospectus or such earlier time as the Company's
obligations to maintain the effectiveness and availability for use of such
Registration Statement ceases;
(c) furnish to each Holder of such Registrable Securities
such number of copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all exhibits), the
Prospectus and Prospectus supplement, as applicable, and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities by such Holder (the Company hereby consenting to the use
(subject to the limitations set forth in the last paragraph of this Section 7)
of the Prospectus or any amendment or supplement thereto in connection with such
disposition);
(d) use its best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such other
securities or
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blue sky laws of such jurisdictions as each Holder shall reasonably request,
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder, except that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 7(d), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities
covered by such Registration Statement, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 7(b), of the Company's becoming aware
that the Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, then
existing, and at the request of any such Holder, prepare and furnish to such
Holder a reasonable number of copies of an amendment or supplement to the
Registration Statement or related Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(f) notify each Holder of Registrable Securities covered
by such Registration Statement at any time,
(1) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect
to the Registration Statement or any post-effective amendment,
when the same has become effective,
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus
or for additional information, and of any comments, oral or
written, by the SEC with respect thereto,
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(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose,
(4) if at any time the representations and warranties
of the Company made pursuant to agreements contemplated by
paragraph (i)(1) below cease to be true and correct, and
(5) of the receipt by the Company of any notification
with respect to the suspension of qualification or exemption
from qualification of the Registrable Securities for offering
or sale in any jurisdiction or the initiation or threatening
of any proceeding for such pur pose;
(g) otherwise use its best efforts to make available to
its security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the Registration Statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;
(h) cause all such Registrable Securities to be listed on
any securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and to provide a transfer agent,
CUSIP number and registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of such Registration
Statement;
(i) enter into agreements (including underwriting
agreements) and take all other appropriate actions in order to expedite or
facilitate the disposition of such Registrable Securities as is customarily made
or done by issuers of comparable standing in connection with comparable
offerings and in such connection (to the extent so customary):
(1) make such representations and warranties to the
Holders of such Registrable Securities and the underwriters,
if any, and agree to such indemnification and contribution
agreements, in form, substance and scope as are customarily
made by issuers to underwriters in comparable underwritten
offerings;
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(2) obtain opinions of counsel to the Company (which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the underwriters, if any, and the
Holders of the Registrable Securities being sold) addressed
to each Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in
comparable underwritten offerings and such other matters as
may be reasonably requested by such Holders and underwriters;
(3) obtain comfort letters and updates thereof from
the Company's independent accountants addressed to the
selling Holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with
comparable underwritten offerings;
(4) if requested, provide the indemnification in
accordance with the provisions and procedures of Section 9
hereof to all parties to be indemnified pursuant to said
Section; and
(5) deliver such documents and certificates as may be
reason ably requested by the Holders of a majority of the
Registrable Securities being sold and the underwriters, if
any, to evidence compliance with clause (f) above and with
any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
The matters set forth in this Section 7(i) shall be effected at each
closing under any underwriting or similar agreement as and to the
extent required thereunder.
(j) cooperate with the Holders of Registrable Securities
covered by such Registration Statement and the underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing the securities to be sold under
such Registration Statement, and enable such securities to be in such
denominations and registered in such names as the underwriter or underwriters,
if any, or such Holders may request, or take other appropriate action if the
Registrable Securities are to be uncertificated;
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(k) if requested by the underwriter or underwriters or a
Holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the underwriters and the Holders of the
Registrable Securities being sold agree should be included therein relating to
the plan of distribution with respect to such Registrable Securities, including,
without limitation, information with respect to the amount of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
underwritten offering of the Registrable Securities to be sold in such offering
and make all required filings of such Prospectus supplement or post-effective
amendment promptly upon being notified of the matters of be incorporated in such
Prospectus supplement or post-effective amendment;
(l) in the event of any Underwritten Offering,
participate, and have senior management available to participate, in any
"roadshow" marketing efforts reasonably requested by the underwriters; and
(m) make available for inspection by any Holder of
Registrable Securities included in such Registration Statement, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such Holder or under
writer in connection with such disposition, such financial and other records and
other information, pertinent corporate documents and properties of any of the
Company and its subsidiaries and affiliates, as shall be reasonably necessary to
enable them to exercise their due diligence responsibility.
The Company may require each Holder of Registrable Securities
as to which any registration is being effected to furnish the Company with such
information regarding such Holder and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to tine reasonably request.
Each Holder of Registrable Securities agrees that, upon
receipt of any notice (the "Suspension Notice") from the Company of the
happening of any event of the kind described in Section 7(e), such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
Prospectus or Registration Statement covering such Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(e), and, if so
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directed by the Company, such Holder will use its reasonable best efforts to
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period of time
during which the Registration Statement is required to be Continuously Effective
pursuant to Section 3 hereof shall be extended by the number of days during the
period (the "Suspension Period") from the date of the giving of such Suspension
Notice and through the date when the Holders of Registrable Securities covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 7(e).
8. Registration Expenses. The Company will pay all
Registration Expenses in connection with all registrations of Registrable
Securities, except to the extent such Registration Expenses constitute
Separation Expenses, and the Holders shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holders' Registrable Securities pursuant to a Registration Statement. To
the extent Registration Expenses constitute Separation Expenses, they will be
the responsibility of Du Pont.
9. Indemnification; Contribution. (a) Indemnification by
the Company. The Company agrees to indemnify each Holder of Registrable
Securities, its officers and directors and each Person who controls such Holder
(within the meaning of the Securities Act), and any agent and investment or
financial adviser thereof against all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and expenses of investigation)
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any untrue or
alleged untrue statement of material fact contained in a Registration
Statement, any Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of a Prospectus or a preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading, except in each case insofar as the same arise out of or are based
upon any such untrue statement or omission made in reliance on and in
conformity with information furnished in writing to the Company by any
indemnified party or its counsel expressly for use therein. In connection with
an Underwritten Offering, the Company will indemnify the underwriters thereof,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Holders of Registrable
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Securities (provided that as to each underwriter the exception to such
indemnification obligation shall instead be for information with respect to
such underwriter furnished in writing by such underwriter or its counsel).
Notwithstanding the foregoing provisions of this Section 9(a), in the case of
an offering that is not an Underwritten Offering, the Company will not be
liable to any Holder of Registrable Securities under the indemnity agreement in
this Section 9(a) for any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense that arises out of such Holder's
failure to send or give a copy of the final Prospectus (as it may then be
amended or supplemented) to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Registrable Securities to such Person if such
statement or omission was corrected in such final Prospectus (as it may then be
amended or supplemented) and the Company has previously furnished copies
thereof in accordance with this Agreement.
(b) Indemnification by Holders of Registrable Securities.
In connection with a Registration Statement, each Holder will furnish to the
Company in writing such information, including with respect to the name,
address and the amount of Registrable Securities held by such Holder, as the
Company reasonably requests for use in such Registration Statement or the
related Prospectus and agrees to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 9(a)) the Company, all
other prospective Holders or any underwriter, as the case may be, and any of
their respective affiliates, directors, officers and controlling Persons
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in such Registration Statement or Prospectus or any
amendment or supplement to either of them or necessary to make the statements
therein (in the case of a Prospectus, in the light of the circumstances then
existing) not misleading, but only to the extent that any such untrue statement
or omission is made in reliance on and in conformity with information with
respect to such Holder furnished in writing to the Company by such Holder or
its counsel specifically for inclusion therein.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt written notice to
the indemnifying party after the receipt by such indemnified party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such indemnified
party may claim indemnification or
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contribution pursuant to this Agreement (provided that failure to give such
notification shall not affect the obligations of the indemnifying person
pursuant to this Section 9 except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure). In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to the indemnified parties and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under these indemnification provisions for any
legal expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation, except as provided in the following
sentence. Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses could, in the good faith judgment of the indemnified party, create a
conflict of interest such that counsel employed by the indemnifying party could
not faithfully represent the indemnified party (in case of clauses (ii) and
(iii) , if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party (which counsel shall be reasonably satisfactory to the indemnifying
party), the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the good faith judgment of such indemnified party a conflict of interest may
exist between such indemnified party
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and any other of such indemnified parties with respect to such action, claim or
proceeding, in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels) . The indemnifying
party will not be subject to any liability for any settlement made without its
consent (which consent will not be unreasonably withheld).
(d) Contribution. To the extent the indemnification from
the indemnifying party provided for in this Section 9 is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages,
liabilities and expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 9(c), any legal and other fees and expenses
reasonably incurred by such indemnified party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9(d) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 9(d), no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission, and
no Holder of Registrable Securities shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of such Holder were offered to the public (net of all underwriting
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discounts and commissions) exceeds the amount of any damages which such Holder
has otherwise been required to pay by reason of such untrue statement or
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
To the extent indemnification is available under this Section
9, the indemnifying parties shall indemnify each indemnified party to the full
extent provided in Section 9(a) or (b), as the case may be, without regard to
the relative fault of said indemnifying parties or indemnified party or any
other equitable consideration provided for in this Section 9(d).
(e) The provisions of this Section 9 shall be applicable
in respect of each registration pursuant to this Agreement, shall be in
addition to any liability which any party may have to any other party and shall
survive any termination of this Agreement.
10. Rule 144. For a period of two years following the
Closing Date or, if at the end of such two year period, a Holder is an
affiliate of the Company, until such time as no Holder is an affiliate of the
Company, the Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Ex change Act (or, if the Company
is not required to file such reports, it will, upon the request of any Holder
of Registrable Securities, make publicly available other information so long as
necessary to satisfy the requirements of Rule 144 under the Securities Act
relating to the availability of public information), all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
11. Miscellaneous.
(a) Remedies. Each Holder of Registrable Securities in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement.
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(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of the Registrable Securities.
(c) Notices. All notices and other communications provided
for or permitted hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by telex or telecopier, registered
or certified mail (return receipt requested), postage prepaid, or courier
guaranteeing next day delivery to the parties at the following addresses (or at
such other address for any party an shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof). Notices delivered personally shall be effective upon receipt, notices
sent by mail shall be effective three days after mailing, notices sent by telex
shall be effective when answered back, notices sent by telecopier shall be
effective when receipt is acknowledged, and notices sent by courier
guaranteeing next day delivery shall be effective on the next business day
after timely delivery to the courier:
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(1) if Du Pont, to it at:
E.I. du Pont de Nemours & Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn. Xxxxx Xxxxxxxxx, Esq.
Tel.: 000-000-0000
Fax: 000-000-0000
(2) if the Company, to it at:
000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn. X.X. Xxxxxxxxxx, Esq.
Tel.: 000-000-0000
Fax: 000-000-0000
(d) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors of each of the parties and
transferees of Registrable Securities who come within the term Holder.
(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within that State.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all remaining provisions contained
herein shall not be in any way
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impaired thereby, it being intended that all of the rights and privileges of
the Stock holders shall be enforceable to the fullest extent permitted by law.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter hereof. There are no restrictions, promises, warranties or undertakings
with respect to the subject matter hereof, other than those set forth or
referred to herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
CONOCO INC.
by:/s/ X.X. Xxxxxxxxxx
---------------------
Name: X.X. Xxxxxxxxxx
Title: Sr. Vice President
and General Counsel
E.I. DU PONT DE NEMOURS AND COMPANY
by:/s/ X.X. Xxxxxxxxxx
--------------------
Name: X.X. Xxxxxxxxxx
Title: Vice President
and Treasurer
26
