EXHIBIT 4.5(d)
CONSENT AND FOURTH AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
dated as of December 31, 1998
LYONDELL-CITGO REFINING COMPANY LTD., a Texas limited liability
company (the "Borrower"), the LENDERS listed on the signature pages hereof and
any Lender hereafter becoming a party to the below-mentioned Agreement in
accordance with the provisions thereof, ABN AMRO BANK N.V., THE BANK OF NOVA
SCOTIA, CREDIT LYONNAIS, THE FIRST NATIONAL BANK OF CHICAGO and THE INDUSTRIAL
BANK OF JAPAN, LTD., as Co-Agents, and THE BANK OF NEW YORK, as Agent and as
Issuer, agree to this Consent and Fourth Amendment (this "Amendment"), dated as
of December 31, 1998, to the Revolving Credit Agreement, dated as of May 5,
1995, among the Borrower, the Lenders parties thereto, such Co-Agents and such
Agent and Issuer, as previously amended (the "Agreement"; capitalized terms used
but not otherwise defined herein having the meanings assigned to them in the
Agreement, and references herein to Sections being references to Sections of the
Agreement unless indicated otherwise), as follows:
Section 1. Consent. The Lenders hereby consent to the conversion of
the Borrower from a Texas limited liability company to a Delaware limited
partnership and the replacement of the Regulations with a Limited Partnership
Agreement substantially in the form attached hereto as Exhibit A, subject to the
Consent and Fourth Amendment to Credit Agreement of even date herewith, which
amends the Credit Agreement, being signed and delivered by the "Required
Lenders" thereunder. Pursuant to Section 6.01(d)(iv)(A), the Borrower will
furnish to the Agent a copy of all the Borrower's Charter Documents, including a
copy of the Limited Partnership Agreement of LYONDELL-CITGO Refining LP, within
5 Business Days after the Amendment Date (as such term is hereinafter defined).
Section 2. Amendments. Subject to the terms and provisions herein
set forth, effective as of the Amendment Date, the Agreement hereby is amended
in the following respects:
(a) The opening recital to the Agreement is hereby amended to reflect
the new name and business structure of the Borrower as follows:
LYONDELL-CITGO Refining LP, a Delaware limited partnership
(b) Certain definitions set forth in Section 1.01 are changed or
deleted in their entirety, and additional terms are defined, in Section 1.01, as
follows:
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(i) The last sentence of the definition of "Affiliate" is changed
to read in its entirety as follows:
For purposes of this Agreement, each of the Partners is
an Affiliate of the Borrower.
(ii) In the definition of "Applicable Margin" column "B" is
deleted in its entirety and clause (b) is changed to read in
its entirety as follows:
(b) for any subsequent period from and including any
Determination Date, beginning with the first
Determination Date after the date of this
Agreement, to the next Determination Date to
occur, if the Applicable Debt Percentage Ratio on
the first day of such period is within a range set
forth in column A below the per annum percentage
equal to the percentage set forth for that range
in column C below:
(iii) The definition of "Borrower" is changed to read in its
entirety as follows:
"Borrower" means LYONDELL-CITGO Refining LP, a Delaware
limited partnership.
(iv) The definition of "Change of Control" is changed to read in
its entirety as follows:
"Change of Control" means the failure of CITGO or
Lyondell, individually or collectively, to own, legally
and beneficially, directly or indirectly, at least 35%
of the outstanding ownership and voting interest in the
Borrower.
(v) Clause (a) of the definition of "Charter Documents" is
changed to read in its entirety as follows:
(a) the Borrower, (i) its Certificate of Limited
Partnership, (ii) the Partnership Agreement, (iii) its
Certificate of Conversion, and
(vi) The definition of "Custodian" is changed to read in its
entirety as follows:
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"Custodian" means any custodian, receiver,
sequestrator, trustee or similar official (a) under
Bankruptcy Law, (b) under any business corporation
statute in the case or assets of any corporation or (c)
under or pursuant to any limited liability company or
limited partnership statute in the case of assets of
any limited liability company or limited partnership.
(vii) The definition of "Distribution Debt" is changed to
read in its entirety as follows:
"Distribution Debt" means obligations of the Borrower
created under Section 7.3.(C) of the Partnership Agreement
in respect of distributions required to be made pursuant to
Section 7.4 of the Partnership Agreement.
(viii) The definition of "Lyondell" is changed to read in its
entirety as follows:
"Lyondell" means Lyondell Chemical Company, a Delaware
corporation formally known as Lyondell Petrochemical
Company.
(ix) The definition of "Owners" is deleted in its entirety and
the following definition is added to Section 1.01 in its
proper alphabetical order:
"Partners" means Lyondell LP, CRIC, LRC and CITGO GP
and any of their respective successors and assigns
under the Partnership Agreement.
All uses of the terms "Owners" and "Owner" elsewhere in the
Agreement are changed to the terms "Partners" and "Partner",
respectively.
(x) "Owners Committee" is deleted in its entirety and the
following definition is added to Section 1.01 in its proper
alphabetical order:
"Partnership Governance Committee" means the committee
of representatives of the General Partners through
which the General Partners manage the Borrower in
accordance with Article 3 of the Partnership Agreement.
All uses of the term "Owners Committee" elsewhere in the
Agreement are changed to the term "Partnership Governance
Committee".
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(xi) "Owners Committee Action" is deleted in its entirety and the
following definition is added to Section 1.01 in its proper
alphabetical order:
"Partnership Governance Committee Action" has the
meaning specified in Section 3.06.(A) of the
Partnership Agreement.
All uses of the term "Owners Committee Action" elsewhere in
Agreement are changed to the term "Partnership Governance
Committee Action".
(xii) In clause (c) of the definition of "Permitted Investments"
references to "Section 7.6" are changed to "Section 7.5".
(xiii) Clause (a)(i) of the definition of "Qualified Subordinated
Debt" is changed in its entirety to read as follows:
(a)(i) to any Partner or any Affiliate of any Partner
having, at the option of the Borrower, (A) subordination
terms substantially identical to those set forth in Exhibit
1.01-A to the Agreement or (B) such other terms of
subordination as are satisfactory to the Required Lenders or
Exhibit 1.01-A referred to above is attached to this
Amendment as Exhibit B.
(xiv) "Regulations" is deleted in its entirety and the following
definition is added to Section 1.01 in its proper
alphabetical order:
"Partnership Agreement" means the Limited Partnership
Agreement of the Borrower dated as of December 31,
1998, as amended, modified and supplemented from time
to time to the extent no Event of Default occurs under
Section 8.01(i)(iii) as a result of such amendment,
modification or supplement.
All uses of the term "Regulations" elsewhere in the
Agreement are changed to the term "Partnership Agreement".
(xv) The last sentence of the definition of "Restricted Payment"
is changed to read in its entirety as follows:
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Without limiting the generality of the foregoing, a
"Restricted Payment" by the Borrower or any Subsidiary
includes any distribution made by the Borrower, or any
Subsidiary for the account of the Borrower, to a
Partner pursuant to the Partnership Agreement,
including, without limitation, Sections 7.2, 7.4 and
7.5 thereof.
(xvi) The definition of "TLLCA" is deleted in its entirety and
the following definition is added to Section 1.01 in its
proper alphabetical order:
"DRULPA" means the Delaware Revised Uniform Limited
Partnership Act.
All uses of the term "TLLCA" elsewhere in the Agreement are
changed to the term "DRULPA".
(xvii) The definitions of "In-Service Date", "Mechanical
Completion", "Post-Completion Period", "Pre-Completion
Period", "Recommended Design", and "Refinery Expansion
Budget" are deleted in their entirety.
(xviii) The following definitions are added to Section 1.01 in
the proper alphabetical order:
"CITGO GP" means CITGO Gulf Coast Refining, Inc., a
Delaware corporation that is a Wholly Owned Subsidiary
of CITGO and a general partner in the Borrower.
"General Partners" means LRC and CITGO GP.
"Limited Partners" means Lyondell LP and CRIC.
"Lyondell LP" means "Lyondell Refining LP, LLC, a
Delaware limited liability company that is a Wholly-
Owned Subsidiary of Lyondell and a limited partner in
the Borrower.
(c) Section 4.01(l) is deleted in its entirety.
(d) The first three sentences of Section 5.01 are changed to read in
their entirety as follows:
The Borrower (a) is a limited partnership duly organized, validly
existing and in good standing under the DRULPA and (b) has all
the requisite power and
5
authority under the DRULPA and its Charter Documents to own or
lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. The Borrower is,
and each Subsidiary is, duly registered, qualified or licensed
and in good standing as a foreign limited liability company, a
foreign limited partnership or a foreign corporation, as the case
may be, in good standing, when applicable, in each jurisdiction
in which it owns or leases property or proposes to own or lease
property or in which the carrying on of its business as now
conducted or as proposed to be conducted so requires, except to
the extent that failures to be so registered, qualified or
licensed individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
(e) The first sentence of Section 5.13 is changed to read in its
entirety as follows:
The Borrower will use (a) the proceeds of the Loans for working
capital and general business purposes and (b) request the
issuance of Letters of Credit consistent with such purposes.
(f) In Section 6.01(b)(ii) "Coopers & Xxxxxxx" is changed to
"PriceWaterhouseCoopers".
(g) Section 6.01(c) is deleted in its entirety.
(h) The first sentence of Section 7.01(a) is changed to read in its
entirety as follows:
The Borrower shall remain a limited partnership. The Borrower
shall cause each Subsidiary that is a limited liability company
or a limited partnership when it becomes a Subsidiary to maintain
its existence as a limited liability company or limited
partnership, as the case may be, under the appropriate act under
which it was originally formed.
(i) Section 7.06 is changed as follows:
(i) The reference to Section 7.6 is deleted from the third line
of Section 7.06.
(ii) Clause (a) is changed in its entirety to read as follows:
(a) so long as no Event of Default exists or would exist
after giving effect thereto, the Borrower may make
distributions to the Partners pursuant to and in accordance
with Sections 7.2, 7.4 and 7.5 of the Partnership Agreement,
including, without limitation,
6
distributions in satisfaction of Distribution Debt and
advances pursuant to Section 7.5 of the Partnership
Agreement;
(iii) Clause (d) is changed in its entirety to read as
follows:
(d) with respect to Qualified Subordinated Debt that is not
Permitted Replacement Debt:
(i) if such Indebtedness is Affiliate Indebtedness of the
Borrower, the Borrower may make scheduled payments of
interest thereon when due in accordance with its terms
(including terms of subordination); and
(ii) if such Indebtedness is not Affiliate Indebtedness of
the Borrower, the Borrower may make scheduled payments
of principal, interest, fees and other charges to the
holders of such Qualified Subordinated Debt when due in
accordance with its terms (including terms of
subordination);
Notwithstanding the foregoing amendment to clause (d) of Section
7.06, so long as no Event of Default exists or would exist after
giving effect thereto, the Borrower may make scheduled payments of
interest on Affiliated Indebtedness incurred prior to the Amendment
Date pursuant to Section 6.4 (D) or 6.3 of the Regulations.
(iv) Clause (f) is deleted in its entirety.
(j) In Section 7.10 the reference to "Sections 5.3 and 5.4" is changed
to "Sections 5.6 and 5.7".
(k) In Section 7.17(b) the term "Articles of Organization" is changed
to "Certificate of Limited Partnership".
(l) In Section 8.01(e)(i)(C) the words "limited liability company" are
changed to "limited partnership".
(m) Clause (iii) of Section 8.01(e) is changed in its entirety to read
as follows:
(iii) any Partner applies to any court of competent jurisdiction
for the dissolution of the Borrower or an event of dissolution
(within the meaning of Section 11 of the Partnership Agreement or
the DRULPA) occurs and the business of the Borrower is not
continued pursuant to the vote of the requisite Partners within
90 days after such event of dissolution or the Borrower is not
7
otherwise reconstituted in accordance with Section 11.10 of the
Partnership Agreement within 90 days after such event of
dissolution.
(n) Section 8.01(i) is changed as follows:
(i) Clause (iii) is changed in its entirety to read as follows:
any of Sections 3.1.(B), 5.6, 5.7, 6.2, 6.5, 6.6, 6.7, 7.2,
7.3, 7.4 and 7.5 of the Partnership Agreement is amended,
modified or supplemented (directly or indirectly by means of
an amendment to the Borrower's Partnership Agreement or
Certificate of Limited Partnership) (it being understood
that if any term defined elsewhere in the Partnership
Agreement or the Exhibits to the Partnership Agreement and
used (directly or by inclusion in such a defined term) in
any of such enumerated Sections is amended, modified or
supplemented in a manner materially detrimental to the
Lenders with respect to any of such Sections, such
amendment, modification or supplement will be deemed an
amendment or modification of or supplement to each of the
enumerated Sections in which it is used) without the prior
written consent of the Required Lenders (which consent shall
not be unreasonably withheld) or (B) any other term or
condition of the Partnership Agreement is amended, modified
or supplemented (directly or indirectly as aforesaid) in
such a manner that the effect thereof, together with the
effect of all previous amendments and modifications of and
supplements to such other term or conditions, could
reasonably be expected to have a Material Adverse Effect;
(ii) The references in clauses (iv) and (v) to "CRIC or LRC" are
changed to "any Partner".
(iii) The reference in clause (v) to "Section 12.2(A)(2)" is
changed to Section "11.2".
(o) Section 8.01(l) is changed to read in its entirety as follows:
(i) Either LRC or Lyondell LP shall transfer its interest as a
Partner of the Borrower in accordance with the terms of the
Partnership Agreement to a Person other than an "Affiliate" (as
defined in the Crude Supply Agreement) of Lyondell or (ii)
neither CITGO nor any of its "Affiliates" (as defined in the
Crude Supply Agreement) is a Partner of the Borrower.
8
Section 3. Other Loan Documents. If any term defined in Section
1.10 of the Agreement is used in any other Loan Document and that term is
amended by this Amendment or is replaced by another term, that Loan Document is
also amended hereby to reflect the amendment or replacement, as the case may be,
of that term.
Section 4. Fees and Expenses. The Borrower agrees to pay to the
Agent for the account of counsel to the Agent all reasonable fees and expenses
of such counsel in connection with this Amendment.
Section 5. Effect of Consent and Amendments. Except for the
consent and amendments evidenced hereby, the Agreement and other Loan Documents
remain in full force and effect, and the Agreement and the other Loan Documents,
each as amended hereby, are hereby ratified and confirmed by the Borrower. The
consent evidenced hereby is limited to the matter specifically addressed herein
and is not effective for any other purpose. The execution and delivery of this
Amendment shall not, except as specifically set forth herein, operate as an
amendment or waiver of compliance by the Borrower with respect to any other
provision or condition of the Agreement or any other Loan Document, each as
amended hereby, or of any right, power or remedy of the Agent, any Co-Agent, any
Lender or the Issuer under the Agreement or any other Loan Document, each as
amended hereby, or prejudice any right or remedy that the Agent, any Co-Agent,
any Lender or the Issuer has under or in connection with the Agreement, or any
other Loan Document, each as amended hereby.
Section 6. Conditions to Effectiveness. This Amendment will be
effective December 31, 1998 (the "Amendment Date") subject to (a) its execution
by the Agent and the Agent's receipt of (i) counterparts of this Amendment
signed by the Borrower and the Required Lenders and (ii) each of the following,
in form and substance reasonably satisfactory to the Agent: (A) a copy,
certified by the Secretary of the Borrower dated the Amendment Date, of the
resolutions adopted by Owners Committee Action taken by the Owners Committee in
accordance with the applicable requirements of the Regulations to authorize the
execution and delivery of this Amendment; (B) a certificate of a Responsible
Officer, dated the Amendment Date, to the effect that on and as of the Amendment
Date, after giving effect to this Amendment, (1) the representations and
warranties set forth in Article V of the Agreement (other than in Section
5.06(a)(ii)) are true and correct in all material respects (unless made as of a
specific date as set forth in that Article) and (2) no Default exists; and (C)
an opinion of counsel to the Borrower, dated the Amendment Date, to the effect
that this Amendment has been duly authorized by Owners Committee Action and
validly executed and delivered by the Borrower and (b) the filing by the
Borrower of the Certificate of Limited Partnership and the Certificate of
Conversion with the Secretary of State of Delaware and the filing of the
Articles of Conversion with the Secretary of State of Texas.
Section 7. Miscellaneous. This Amendment is governed by the terms
and other provisions of Sections 1.02, 1.03, 10.05, 10.07, 10.10 (the first
sentence thereof) and 10.12 as if this Amendment were the Agreement.
9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their duly authorized officers all as of the
Amendment Date.
LYONDELL-CITGO REFINING COMPANY LTD.
a Texas limited liability company
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
THE BANK OF NEW YORK,
As Agent, as Issuer and as a Lender
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
10
OTHER LENDERS:
ABN AMRO BANK N.V. HOUSTON AGENCY
By: ABN AMRO North America, Inc., as agent
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Group Vice President
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Xxxxx
------------------------------
Name: F.C.H. Xxxxx
Title: Senior Manager Loan Operations
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ Xxxxxx Xxxx
------------------------------
Name: Xxxxxx Xxxx
Title: Assistant Vice President
11
CREDIT AGRICOLE INDOSUEZ
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: First Vice President
By: /s/ Xxxxx Xxxxx, F.V.P.
------------------------------
Name: Xxxxx Xxxxx, F.V.P.
Title: Head of Corporate Banking Chicago
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Phillippe Soustra
------------------------------
Name: Phillippe Soustra
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.
NEW YORK BRANCH
By: /s/ Xxxx Xxxxx
------------------------------
Name: Xxxx Xxxxx
Title: Senior Vice President, Houston Office
12
XXXXXX COMMERCIAL PAPER INC. & SYND. FUNDING TRUST
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Authorized Signatory
NATIONSBANK, N.A.
By: /s/ Xxxx Xxxxxx Xxxxx
------------------------------
Name: Xxxx Xxxxxx Xxxxx
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Way
------------------------------
Name: Xxxx X. Way
Title: Assistant Vice President
ROYAL BANK OF CANADA
By: /s/ X.X. Xxxxx
------------------------------
Name: X.X. Xxxxx
Title: Senior Manager
13
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: Director
THE TOYO TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By: /s/ X. Xxxxxxxx
------------------------------
Name: X. Xxxxxxxx
Title: Vice President
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK AND CAYMAN
ISLANDS BRANCHES
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
By: /s/ Xxxxxxx Xx Xxxxxx
------------------------------
Name: Xxxxxxx Xx Xxxxxx
Title: Vice President
14
EXHIBIT A
Draft: 12/19/98
CONFIDENTIAL
LIMITED PARTNERSHIP AGREEMENT OF
LYONDELL-CITGO REFINING LP
--------------------------------------------------------------------------------
UNDER THE DELAWARE
REVISED UNIFORM LIMITED PARTNERSHIP ACT
--------------------------------------------------------------------------------
DATED DECEMBER 31, 1998
TABLE OF CONTENTS
1. DEFINITIONS............................................................ 1
2. ORGANIZATION MATTERS................................................... 1
2.1. Name....................................................... 1
2.2. Conversion to Partnership and Partners..................... 1
2.3. Purpose and Business....................................... 2
2.4. Principal Office........................................... 3
2.5. Term....................................................... 3
2.6. Filings.................................................... 3
2.7. Power of Attorney.......................................... 3
3. MANAGEMENT............................................................. 4
3.1. Partnership Governance Committee.......................... 4
3.2. Partnership Governance Committee Composition.............. 4
3.3. Partnership Governance Committee: Duties, Powers and
Authority................................................. 6
3.4. Partnership Governance Committee: Meetings............... 6
3.5. Compensation of Representatives........................... 8
3.6. Partnership Governance Committee Action................... 8
3.7. Partnership Governance Committee: Quorum and Voting...... 8
3.8. Partnership Governance Committee Actions for Which
Unanimous Consent Necessary............................... 9
3.9. Majority Approval......................................... 11
3.10. Auxiliary Committees...................................... 11
4. OFFICERS AND EMPLOYEES................................................. 12
4.1. Partnership Officers...................................... 12
4.2. Selection; Term; Qualification............................ 12
4.3. Removal and Vacancies..................................... 12
4.4. Duties.................................................... 13
4.5. CEO....................................................... 14
4.6. Vice Presidents........................................... 14
4.7. Secretary................................................. 14
4.8. Assistant Officers........................................ 14
4.9. Other Officers............................................ 15
4.10. Salaries.................................................. 15
4.11. Bonds of Officers......................................... 15
4.12. Delegation................................................ 15
4.13. Loaned Employees.......................................... 15
4.14. Employee Transfers........................................ 16
5. RIGHTS, DUTIES AND COVENANTS OF PARTNERS............................... 16
5.1. Delegation................................................ 16
5.2. General Authority......................................... 16
(ii)
5.3. Nature of Partner Obligations.............................. 17
5.4. Limited Partners........................................... 17
5.5. Partner Not Agent of Other Partners........................ 17
5.6. Transactions with the Partnership.......................... 17
5.7. Control of Certain Claims and Certain Transactions......... 18
5.8. Partnership Interest....................................... 19
5.9. Access to and Copies of Records and Documents.............. 19
5.10. Partner Covenants.......................................... 19
5.11. Indemnification............................................ 20
6. CAPITAL CONTRIBUTIONS AND PARTICIPATION PERCENTAGE..................... 22
6.1. Prior Capital Contributions................................ 22
6.2. Capital Contributions...................................... 22
6.3. Partner Loans.............................................. 23
6.4. Participation Percentages.................................. 23
6.5. Capital Expenditure Funding................................ 24
6.6. CITGO Partners' Option to Increase Their Collective
Participation Percentage................................... 24
6.7. Return of Capital Contributions............................ 26
6.8. Administration and Investment of Funds..................... 26
7. ALLOCATIONS AND DISTRIBUTIONS.......................................... 26
7.1. Capital Accounts........................................... 26
7.2. Income and Distribution Determinations; Restriction on
Distributions and Advances................................ 27
7.3. Distributable Cash......................................... 28
7.4. Distributions.............................................. 29
7.5. Interim Loans.............................................. 29
7.6. Internal Revenue Code Section 704(b) Book Allocations
for Tax Purposes.......................................... 30
7.7. Tax Allocations............................................ 31
7.8. Transfers of Interest...................................... 33
8. BOOKS OF ACCOUNT AND TAX MATTERS....................................... 33
8.1. Books of Account........................................... 33
8.2. Tax Treatment.............................................. 34
8.3. Tax Returns................................................ 34
8.4. Tax Controversies.......................................... 35
8.5. Tax Rulings................................................ 36
9. ANNUAL BUDGETS, FIVE YEAR PLAN AND COMMERCIAL LOANS.................... 36
9.1. Fiscal Year................................................ 36
9.2. Annual Budgets............................................. 36
9.3. Approval of Budgets........................................ 37
9.4. Funding of Budgets......................................... 37
(iii)
9.5. Implementation of Budgets and Discretionary Expenditures
by CEO.................................................... 37
9.6. Five Year Plan............................................. 38
9.7. Commercial Loans........................................... 38
9.8. Insurance and Risk Management.............................. 38
10. TRANSFERS AND PLEDGES................................................. 38
10.1. Prohibition of Transfer.................................... 38
10.2. Transfers Prior to the Option Date......................... 39
10.3. Transfers After the Option Date............................ 39
10.4. Transferees................................................ 41
10.5. Pledge of Interest......................................... 41
11. REMEDIES AND DISSOLUTION.............................................. 42
11.1. Security for Performance.................................. 42
11.2. Default................................................... 43
11.3. Remedies for Default...................................... 45
11.4. Consequences of Default................................... 46
11.5. Purchase of Defaulting Partners' Interest................. 46
11.6. Liquidation............................................... 47
11.7. Closing of Purchase Rights................................ 47
11.8. Recision.................................................. 47
11.9. Dissolution............................................... 48
11.10. Reconstitution of Partnership............................. 48
11.11. Liquidation; Winding Up and Distributions upon
Dissolution.............................................. 48
11.12. Enforcement............................................... 49
12. MISCELLANEOUS......................................................... 49
12.1. Confidentiality and Use of Information.................... 49
12.2. Auditors.................................................. 50
12.3. Indemnification of Officers............................... 50
12.4. Waivers, Modifications and Amendments..................... 52
12.5. Further Assurances........................................ 52
12.6. Successors and Assigns.................................... 52
12.7. Benefits of Agreement Restricted to the Parties........... 52
12.8. Expenses.................................................. 52
12.9. Currency Conversions...................................... 52
12.10. Payment Terms and Interest Calculations................... 52
12.11. Usury Savings Clause...................................... 53
12.12. Notices................................................... 53
12.13. Waiver of Immunity........................................ 54
12.14. Governing Law............................................. 55
12.15. Jurisdiction; Consent to Service of Process; Waiver....... 55
12.16. Entire Agreement.......................................... 56
12.17. Severability.............................................. 56
12.18. Construction.............................................. 56
12.19. Counterparts.............................................. 57
(iv)
EXHIBITS.
Exhibit 1 Definition of Terms in Agreement
Exhibit 1A Related Agreements
Exhibit 6.1(B) Working Capital Valuation
Exhibit 6.4 Qualified Capital Contributions; Participation Percentages
Exhibit 6.6(E) Form of Note for Portion of Option Date Payment
(v)
LIMITED PARTNERSHIP AGREEMENT OF
LYONDELL-CITGO REFINING LP
(THE "PARTNERSHIP")
1. DEFINITIONS
The definitions of the capitalized defined terms used in this Limited
Partnership Agreement (the "Agreement"), including the Exhibits hereto other
than Exhibit 1, and not elsewhere defined herein or therein, as well as cross-
references to all capitalized defined terms, are set forth in Exhibit 1 to this
Agreement.
2. ORGANIZATION MATTERS
2.1. Name. The name of the limited partnership is "LYONDELL-CITGO
Refining LP" (the "Partnership"). The Partnership Business may be conducted
under such name or any other name or names deemed advisable by the Partnership
Governance Committee. The General Partners will comply or cause the Partnership
to comply with all applicable laws and other requirements relating to fictitious
or assumed names.
2.2. Conversion to Partnership and Partners. The Partnership converted
from LYONDELL-CITGO Refining Company Ltd., a limited liability company formed
under the laws of the State of Texas (the "Company"), effective as of the date
of this Agreement (the "Conversion Date"), pursuant to Articles of Conversion
filed pursuant to the Texas Limited Liability Company Act, and a Certificate of
Conversion and a Certificate of Limited Partnership, each filed pursuant to the
Delaware Revised Uniform Limited Partnership Act (the "Act"). In connection
with such conversion, the Amended and Restated Regulations of the Company dated
July 1, 1993 (the "Closing Date"), as amended (the "Regulations"), were
superseded by this Agreement. On the Conversion Date, the limited liability
company interests in the Company were converted into partnership interests in
the Partnership held by (i) Lyondell Refining LP, LLC, a Delaware limited
liability company ("Lyondell LP"), a Wholly Owned Subsidiary of Lyondell
Chemical Company (formerly known as Lyondell Petrochemical Company), a Delaware
corporation ("LParent"), (ii) CITGO Refining Investment Company, an Oklahoma
corporation ("CITGO LP"), a Wholly Owned Subsidiary of CITGO Petroleum
Corporation, a Delaware corporation ("CParent"), (iii) Lyondell Refining
Company, a Delaware corporation ("Lyondell GP"), a Wholly Owned Subsidiary of
LParent, and (iv) CITGO Gulf Coast Refining, Inc., a Delaware corporation
("CITGO GP"), a Wholly Owned Subsidiary of CParent.
Upon the Conversion Date, the percentage ownership of the Partnership was as
follows:
Lyondell GP 10.10%
CITGO GP 1.00%
Lyondell LP 48.65%
CITGO LP 40.25%
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Upon the Conversion Date, Lyondell GP's 10.10% interest consists of a 1.00%
general partnership interest and a 9.10% limited partnership interest; provided,
however, that for all other purposes under this Agreement, Lyondell GP shall be
considered only a General Partner (as defined herein) and not a Limited Partner
(as defined herein).
Except as expressly provided herein to the contrary, the rights and obligations
of the Partners and the administration and termination of the Partnership shall
be governed by the Act. Without the need for the consent of any other Person,
upon the execution of this Agreement: (i) each of Lyondell GP and CITGO GP is
hereby admitted to the Partnership as a general partner of the Partnership
(together, the "General Partners"), and (ii) each of Lyondell LP and CITGO LP is
hereby admitted to the Partnership as a limited partner of the Partnership
(together, the "Limited Partners"). Subject to the restrictions set forth in
this Agreement, the Partnership shall have the power to exercise all the powers
and privileges granted by this Agreement and by the Act, together with any
powers incidental thereto, so far as such powers and privileges are necessary,
appropriate, convenient or incidental for the conduct, promotion or attainment
of the purposes of the Partnership. As of the Conversion Date, the Regulations
(i) are superseded by this Agreement except to the extent of their ongoing
relevance in governing matters relating to the Company and (ii) shall no longer
have any force or effect except to the extent of their ongoing relevance in
governing matters relating to the Company, provided, however, that all prior
acts of Lyondell Refining Company, a Delaware corporation, and CITGO Refining
Investment Company, an Oklahoma corporation, as members, or acts of or on behalf
of the Company, under the Regulations shall remain in effect until modified or
rescinded by Partnership Governance Committee Action.
2.3. Purpose and Business. The business of the Partnership (the
"Partnership Business") shall be as follows: (i) to own and operate the Refinery
Business, (ii) to carry out any Capital Enhancement Projects, (iii) to purchase,
sell, exchange and refine crude oil and other feedstocks, (iv) to market the
products produced by the Partnership, (v) to engage in the refining business
generally, and (vi) to do all things necessary or incidental in connection with
the foregoing as are permitted under the Act, all such business being managed,
subject to then existing contractual obligations, with the objectives of (a)
operating the Refinery, as modified by any Capital Enhancement Projects, and any
other refinery or refining business owned or operated by the Partnership so as
to maximize long-term Partnership value as measured by cash flow and earnings
and (b) achieving the highest levels of efficiency, productivity and
profitability consistent with good safety and environmental practices and
performance. The Partnership shall be strictly limited to the Partnership
Business, and the Partnership Business shall not be extended by implication or
otherwise, except by express written amendment to this Agreement or by Unanimous
Partnership Governance Committee Action pursuant to Section 3.8.(A).
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2.4. Principal Office. The principal business office of the Partnership
shall be at 12000 Lawndale, Xxxxxxx, Xxxxx 00000 or such other place as may be
designated from time to time by the Partnership Governance Committee. The
registered agent of the Partnership in the State of Delaware is The Corporation
Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
2.5. Term. The Partnership shall continue until dissolved as described in
Section 11.9.
2.6. Filings. The General Partners shall, or shall cause the Partnership
to, execute, swear to, acknowledge, deliver, file or record in public offices
and publish all such certificates, notices, statements or other instruments, and
take all such other actions, as may be required by law for the formation,
reformation, qualification, registration, operation or continuation of the
Partnership in any jurisdiction, to maintain the limited liability of the
Limited Partners, to preserve the Partnership's status as a partnership for tax
purposes or otherwise to comply with applicable law. Upon request of the
General Partners, the Limited Partners shall execute all such certificates and
other documents as may be necessary, in the sole judgment of the General
Partners, in order for the General Partners to accomplish all such executions,
swearings, acknowledgments, deliveries, filings, recordings in public offices,
publishings and other acts. Each General Partner hereby agrees and covenants
that it will execute any appropriate amendment to the Certificate of Limited
Partnership of the Partnership pursuant to Section 17-204 of the Act to reflect
any admission of a Substitute General Partner in accordance with this Agreement.
2.7. Power of Attorney. Each Limited Partner hereby irrevocably makes,
constitutes and appoints its Affiliated General Partner and any successor
thereto permitted as provided herein, with full power of substitution and
resubstitution, as the true and lawful agent and attorney-in-fact of such
Limited Partner, with full power and authority in the name, place and stead of
such Limited Partner to execute, swear, acknowledge, deliver, file or record in
public offices and publish: (i) all certificates and other instruments
(including counterparts thereof) which such General Partner deems appropriate to
reflect any amendment, change or modification of or supplement to this Agreement
in accordance with and as permitted by the terms of this Agreement; (ii) all
certificates and other instruments and all amendments thereto which such General
Partner deems appropriate or necessary to form, qualify or continue the
Partnership in any jurisdiction, to maintain the limited liability of such
Limited Partner, to preserve the Partnership's status as a partnership for tax
purposes or otherwise to comply with applicable law; and (iii) all conveyances
and other instruments or documents which such General Partner deems appropriate
or necessary to reflect the transfers or assignments of interests in, to or
under this Agreement, including the Interests, the dissolution, liquidation and
termination of the Partnership, and the distribution of assets of the
Partnership in connection therewith, in accordance with and as permitted by the
terms of this Agreement.
Each Limited Partner hereby agrees to execute and deliver to its Affiliated
General Partner within five (5) Business Days after receipt of a written request
therefor such other further statements of interest and holdings, designations,
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powers of attorney and other instruments as such General Partner deems
necessary. The power of attorney granted herein is hereby declared irrevocable
and a power coupled with an interest, shall survive the bankruptcy, dissolution
or termination of such Limited Partner and shall extend to and be binding upon
such Limited Partner's successors and permitted assigns. Each Limited Partner
hereby (i) agrees to be bound by any representations made by the agent and
attorney-in-fact acting in good faith pursuant to such power of attorney; and
(ii) waives any and all defenses which may be available to contest, negate, or
disaffirm any action of the agent and attorney-in-fact taken in accordance with
such power of attorney.
3. MANAGEMENT.
3.1. Partnership Governance Committee.
(A) To facilitate the management of the Partnership by the General
Partners, the General Partners hereby establish a committee (the
"Partnership Governance Committee") to manage and control the
business, property and affairs of the Partnership, including the
determination and implementation of the Partnership's strategic
direction. Except to the extent expressly set forth in this
Agreement, each General Partner agrees to exercise its authority
to manage the affairs of the Partnership only through Partnership
Governance Committee Action. Further, each General Partner
agrees not to exercise, or purport or attempt to exercise, its
authority (notwithstanding that each General Partner may have
such authority pursuant to the Act) (i) to act for or incur,
create or assume any obligation, liability or responsibility on
behalf of the Partnership or any other General Partner, or (ii)
to execute any documents on behalf of, or otherwise bind, or
purport or attempt to bind, the Partnership, or (iii) to
otherwise transact any business in the Partnership's name, in
each case except pursuant to Partnership Governance Committee
Action or except as provided in Section 5.7.
(B) Except as expressly set forth in this Agreement, no Person or
Persons other than (i) the General Partners, acting through the
Partnership Governance Committee, and (ii) the officers of the
Partnership appointed in accordance with this Agreement and
acting as agents or employees, as applicable, of the Partnership
in conformity with this Agreement and any applicable Partnership
Governance Committee Action, shall be authorized (a) to exercise
the powers of the Partnership, (b) to manage the business,
property and affairs of the Partnership or (c) to contract for,
or incur on behalf of, the Partnership any debts, liabilities or
other obligations.
3.2. Partnership Governance Committee Composition.
(A) The Partnership Governance Committee shall consist of six
representatives (each a "Representative") and each General
Partner shall designate three Representatives. All the
Representatives of both
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General Partners shall together constitute the Partnership
Governance Committee. Representatives shall not be employees of
the Partnership or otherwise serve the Partnership in any
capacity except that, as provided in Section 3.10., a
Representative may also serve as a member of an Auxiliary
Committee.
(B) Each General Partner may designate one or more individuals (each
an "Alternate") who (i) shall be authorized, in the event a
Representative is absent from any meeting of the Partnership
Governance Committee (and in the order of succession designated
by the General Partner so designating the Alternates), to attend
such meeting in the place of, and as substitute for, such
Representative and (ii) shall be vested with all the powers to
cast votes on behalf of such General Partner which the absent
Representative could have exercised at such meeting. Alternates
shall not be employees of the Partnership or otherwise serve the
Partnership in any capacity except that, as provided in Section
3.10., an Alternate may also serve as a member of an Auxiliary
Committee. The term "Representative," when used herein with
reference to any Representative who is absent from a meeting of
the Partnership Governance Committee, shall mean and refer to any
Alternate attending such meeting in place of such absent
Representative.
(C) Each General Partner may, by written notice delivered to the
other General Partner and the CEO, at any time or from time to
time, remove or replace one or more of its Representatives or
Auxiliary Committee members or change one or more of its
Alternates. If a Representative, Auxiliary Committee member or
Alternate dies, resigns, or becomes disabled or incapacitated,
the General Partner that designated such Representative,
Auxiliary Committee member or Alternate, as the case may be,
shall promptly designate a replacement. Each Representative,
each Auxiliary Committee member and each Alternate shall serve
until replaced by the General Partner that designated such
Representative, Auxiliary Committee member or Alternate, as the
case may be. The Owners Committee Representatives, the Auxiliary
Committee members and the Alternates representing Lyondell GP and
CITGO LP, respectively (in their capacities as members of the
Company), who are serving in such capacities in respect of the
Company as of the Conversion Date will continue to hold such
positions representing Lyondell GP and CITGO GP, respectively (in
their capacities as General Partners), following the Conversion
Date until removed or replaced in accordance with the terms of
this Section 3.2.(C).
(D) Copies of all written notices designating Representatives,
Auxiliary Committee members and Alternates shall be delivered to
the Secretary and shall be placed in the Partnership minute
books, but the failure to deliver a copy of any such notice to
the Secretary shall not affect the validity or effectiveness of
such notice or the designation described therein.
5
(E) Each Representative, in his capacity as such, shall be the agent
of the General Partner that designated such Representative.
Accordingly, (i) each Representative, as such, shall act (or
refrain from acting) with respect to the business, property and
affairs of the Partnership solely in accordance with the wishes
of the General Partner that designated such Representative and
(ii) no Representative, as such, shall owe (or be deemed to owe)
any duty (fiduciary or otherwise) to the Partnership, to any
General Partner (other than the General Partner that designated
such Representative), or to any Limited Partner; provided,
however, that nothing in this Agreement is intended to or shall
relieve or discharge any Representative or General Partner from
liability to the Partnership or the Partners on account of any
fraudulent or intentional misconduct of such Representative; and
provided further, that each Representative shall not disclose any
material information regarding the business of the Partnership
and shall not use any such information, in either case, in any
manner not related to the Partnership Business.
3.3. Partnership Governance Committee: Duties, Powers and Authority.
(A) Except as otherwise provided by this Agreement, the Partnership
Governance Committee (on behalf of the General Partners) shall
have (i) the full authority of the General Partners to exercise
all of the powers of the Partnership and (ii) full control (on
behalf of the General Partners) over the business, property and
affairs of the Partnership.
(B) The Partnership Governance Committee shall adopt policies and
procedures, not inconsistent with this Agreement (including
Section 3.8.) or the Act, governing financial controls and legal
compliance, including delegations of authority (and limitations
thereon) to the officers of the Partnership as described in
Section 4. Such policies and procedures may be revised or revoked
(in a manner consistent with this Agreement and the Act) from
time to time as determined by the Partnership Governance
Committee. Without limiting the generality of the foregoing, the
General Partners intend that the Partnership's policies and
procedures will address such matters as conflicts of interest,
political contributions, illegal or unethical business practices,
antitrust compliance, anti-boycott compliance, Foreign Corrupt
Practices Act compliance, employee practices, agreements with
employees relating to inventions, contractual obligations,
purchasing and advertising. To the extent any authority is not
delegated to officers of the Partnership in this Agreement or in
accordance with Partnership Governance Committee Action, it shall
remain with the Partnership Governance Committee.
3.4. Partnership Governance Committee: Meetings.
(A) Regular meetings of the Partnership Governance Committee shall be
held at such times (no less frequently than quarterly) and at
such places (within the States of Texas or Oklahoma or any other
state designated
6
by the Partnership Governance Committee) as shall from time to
time be determined by the Partnership Governance Committee. The
first regular meeting of the Partnership Governance Committee
during each fiscal year of the Partnership shall be deemed to be
the "Annual Meeting." No notice need be given with respect to any
regular meeting of the Partnership Governance Committee; however,
the Secretary following receipt of comments thereto from each
General Partner shall deliver, by messenger or other hand
delivery or by facsimile transmission (with proof of confirmation
from the transmitting machine), an agenda for such meeting to
each of the Representatives at least five (5) Business Days prior
to such meeting. At any regular meeting of the Partnership
Governance Committee at which a quorum is present, any and all
business of the Partnership may be transacted.
(B) Special meetings of the Partnership Governance Committee may be
called by any Representative or the CEO by delivering, via
messenger or other hand delivery or by facsimile transmission
(with proof of confirmation from the transmitting machine),
written notice to each of the other Representatives, or, in the
case of a meeting called by the CEO, each of the Representatives,
at least three (3) Business Days before such meeting. Each
notice of a special meeting shall specify, to a reasonable
degree, the business to be transacted at, or the purpose of, such
meeting; provided, however, that additional business may be
transacted at any special meeting as agreed by all the
Representatives present at such meeting. Special meetings of the
Partnership Governance Committee shall be held at such times and
at such places within the State of Texas or Oklahoma as may be
stated in the notice of such meeting or in a duly executed waiver
of notice thereof. Any Representative may waive notice of any
special meeting (whether before or after the time of such
meeting) but only if the waiver is in writing. Attendance of any
Representative at any special meeting shall constitute a waiver
of notice of such meeting by such Representative, unless the
Representative states at the beginning of the meeting his
objection to the transaction of business because the meeting was
not lawfully called or convened.
(C) One Representative shall serve as chair of each meeting (regular
or special) of the Partnership Governance Committee. The right
to designate the chair of meetings of the Partnership Governance
Committee shall rotate between the respective General Partners
every calendar year. The Representative who on the Conversion
Date is serving as chair of the meetings shall continue to so
serve until December 31, 1998, which is the next rotation date.
(D) Following each meeting of the Partnership Governance Committee,
the Secretary shall promptly draft and distribute minutes of such
meeting to the Representatives for approval at the next meeting,
and after such approval shall retain the minutes in the
Partnership minute books.
7
(E) Representatives may participate in or hold regular or special
meetings of the Partnership Governance Committee by means of a
telephone conference or any comparable device or technology by
which all individuals participating in the meeting can hear each
other, and participation in such a meeting shall constitute
presence in person at such meeting.
(F) Any action required or permitted to be taken at a meeting of the
Partnership Governance Committee may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall
be signed by at least two (2) Representatives (or their
Alternates) of each General Partner, and such consent shall have
the same force and effect as a duly conducted vote of the
Partnership Governance Committee. A counterpart of each such
consent to action shall be delivered to the Secretary for
placement in the minute books of the Partnership, but the failure
to deliver a counterpart of any such consent to action to the
Secretary shall not affect the validity or effectiveness of such
consent to action.
3.5. Compensation of Representatives. Representatives shall not receive
from the Partnership any compensation for their service or any reimbursement for
attendance at meetings of the Partnership Governance Committee.
3.6. Partnership Governance Committee Action.
(A) The Partnership Governance Committee shall act exclusively by
means of Partnership Governance Committee Action. As used in
this Agreement, "Partnership Governance Committee Action" means
any action which the Partnership Governance Committee is
authorized and empowered to take in accordance with this
Agreement and the Act and which is taken by the Partnership
Governance Committee either (i) by votes cast at a meeting of the
Partnership Governance Committee duly called and held in
accordance with this Agreement or (ii) by a formal written
consent complying with the requirements of Section 3.4.(F). In no
event shall the Partnership Governance Committee be authorized to
act other than by Partnership Governance Committee Action, and
any action or purported action by the Partnership Governance
Committee (including any authorization, consent, approval,
waiver, decision or vote) not constituting a Partnership
Governance Committee Action shall be null and void and of no
force and effect.
(B) Each Partnership Governance Committee Action shall be binding on
the Partnership.
3.7. Partnership Governance Committee: Quorum and Voting.
(A) The presence of one Representative (including any duly present
Alternates) from each General Partner shall constitute a quorum
of the Partnership Governance Committee for the transaction of
business and
8
the taking of any Partnership Governance Committee Action at any
meeting, except that no quorum of the Partnership Governance
Committee will be deemed to exist (i) with respect to any regular
meeting of the Partnership Governance Committee unless an agenda
for such meeting is delivered in accordance with Section 3.4.(A)
or (ii) with respect to any special meeting of the Partnership
Governance Committee unless a notice of such meeting is given or
waived in accordance with Section 3.4.(B). No Partnership
Governance Committee Action may be taken at any meeting at which
a quorum is not present.
(B) All actions of the Partnership Governance Committee shall be
determined by vote of the Representatives. Collectively, the
Representatives shall have 100 votes. The Representatives of a
General Partner shall have, in the aggregate, such number of
votes as is equal to the product of 100 and the sum of the
Participation Percentages of such General Partner and its
Affiliated Limited Partner. The Representatives of each General
Partner present at the meeting shall together and by joint action
cast all of the votes held by all of the Representatives of such
General Partner.
3.8. Partnership Governance Committee Actions for Which Unanimous Consent
Necessary. Subject to Section 5.7., Section 11.4. and Section 11.11.(A), no
Partnership Governance Committee Action will be deemed for any purpose to have
been taken at any Partnership Governance Committee meeting unless and until 100
votes (constituting all the outstanding votes) are duly cast at such meeting in
favor of such Partnership Governance Committee Action which would cause or
permit the Partnership (or any Person acting in the name or on behalf of the
Partnership), directly or indirectly, to take (or commit to take) any of the
actions (each a "Unanimous Partnership Governance Committee Action") described
below in this Section 3.8. (whether in a single transaction or series of related
transactions):
(A) to engage, participate or invest in any business outside the
scope of the Partnership Business;
(B) to make any acquisition or divestiture of any other entity or of
any material line of business or business unit, or to merge or
consolidate the Partnership with any other entity;
(C) to amend or alter this Agreement or the Certificate of Limited
Partnership;
(D) to issue, redeem or acquire any Interests (or rights to acquire,
or any securities convertible into, Interests) in the
Partnership;
(E) to borrow money or to engage in other financing activities,
including the grant or use of credit and the pledge of any assets
or the granting of a security interest in any asset;
9
(F) to file a petition in bankruptcy or seeking any reorganization,
liquidation or similar relief on behalf of the Partnership; or to
consent to the filing of a petition in bankruptcy against the
Partnership; or to consent to the appointment of a receiver,
custodian, liquidator or trustee for the Partnership or for all
or any substantial portion of its property;
(G) to approve the entry into of, amendments to, or termination or
modification of, any material permit, government approval or
other right;
(H) to approve any Capital Enhancement Project or any expenditures
pursuant to a Capital Budget pursuant to Section 9.2.(B), or to
increase the amount below which a capital expenditure would not
require Partnership Governance Committee Action regarding an
"authority for commitment" as contemplated by Section 9.5.(A);
(I) to make distributions other than those expressly provided for in
Section 7.;
(J) to enter into, amend, terminate or modify any product sales
agreement or any raw materials purchase agreement pursuant to
which the Partnership's commitments can reasonably be expected to
exceed $50 million annually or that is for a term in excess of 18
months;
(K) to enter into, amend, terminate or modify any agreement other
than as described in Section 3.8.(J) pursuant to which the
Partnership's commitments can reasonably be expected to exceed
$25 million;
(L) to commence or settle any litigation or arbitration proceeding by
or on behalf of, or in the name or right of, the Partnership
involving any claims or payments in excess of $1 million;
(M) to make determinations with respect to the Partnership's
commercial insurance program in accordance with Section 9.8.;
(N) to designate or disband Auxiliary Committees and to establish the
purposes thereof in all cases as described in Section 3.10.;
(O) to delegate to any Auxiliary Committee powers or authority to
take any action that would otherwise require unanimous approval
by the Partnership Governance Committee, or to delegate to any
officer powers or authority to take any action that would
otherwise require approval by the Partnership Governance
Committee;
(P) to adopt or amend, as the Partnership Governance Committee, the
policies and procedures referred to in Section 3.3.(B);
(Q) to enter into, materially amend or terminate any employee benefit
plan;
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(R) to fix the salary and other compensation of Executive Officers in
accordance with Section 4.10.;
(S) to consent to the loan of an employee to the Partnership by a
Partner as provided in Section 4.13. or to consent to the hiring
of employees of the Partnership by a General Partner (or a
General Partner's Affiliate) as anticipated by Section 4.14.;
(T) to make any determinations concerning indemnification of officers
pursuant to Section 1.23.;
(U) to adopt or effect any change in the Partnership's accounting
policies or practices in regards to Maintenance Capital;
(V) to approve, amend or supplement either annual budget referred to
in Section 9.2., including any Financing Plan thereunder;
(W) to change at any time the Cash Balance Amount as provided for in
Section 7.5;
(X) to appoint the CEO or to designate an officer as an Executive
Officer; or
(Y) to change the Partnership's method of accounting for inventory as
provided in Section 8.2.(C).
3.9. Majority Approval. Except as otherwise expressly provided in this
Agreement, the approval of Representatives representing a majority of the total
100 votes will be sufficient for the Partnership Governance Committee to take
any Partnership Governance Committee Action.
3.10. Auxiliary Committees.
(A) The Partnership Governance Committee shall, by Partnership
Governance Committee Action, designate an (i) Operating
Committee, (ii) a Finance and Control Committee and (iii) a
Compensation Committee. Each such committee shall be a standing
committee.
(B) From time to time, the Partnership Governance Committee may, by
resolution adopted by the Partnership Governance Committee,
designate one or more additional committees or disband any
committee.
(C) Each committee designated by the Partnership Governance Committee
pursuant to this Section 3.10. (each an "Auxiliary Committee")
shall (i) operate under the auspices of the Partnership
Governance Committee for the purpose of assisting the Partnership
Governance Committee in managing (on behalf of the General
Partners) the
11
business and affairs of the Partnership and (ii) report to the
Partnership Governance Committee.
(D) Each Auxiliary Committee shall consist of two or more members and
each General Partner shall have the right to appoint one member.
The remaining members, if any, of each Auxiliary Committee shall
be appointed by the Partnership Governance Committee.
(E) Auxiliary Committee members may (but need not) be members of the
Partnership Governance Committee or employees of the Partnership.
No Auxiliary Committee member shall be compensated by the
Partnership for service as a member of such Auxiliary Committee.
(F) Each resolution adopted by the Partnership Governance Committee
for the purpose of designating an Auxiliary Committee shall set
forth (i) the size, name and rotation and designation of a
chairman of such Auxiliary Committee and (ii) in such detail as
the Partnership Governance Committee deems appropriate, the
purposes, powers and authorities of such Auxiliary Committee;
provided, however, that in no event shall any Auxiliary Committee
have any powers or authority not permitted by this Agreement or
the Act.
4. OFFICERS AND EMPLOYEES
4.1. Partnership Officers. The officers of the Partnership shall consist
of a President and Chief Executive Officer ("CEO"), one or more Vice Presidents,
a Secretary and such other officers and assistant officers and agents as may be
deemed necessary or desirable by the Partnership Governance Committee. Officers
shall be elected or appointed pursuant to Partnership Governance Committee
Action (subject to Section 3.8.(X)) and shall have such authority and shall
perform such duties in the management of the Partnership as may be provided in
this Agreement or as may be determined by resolution of the Partnership
Governance Committee (consistent with Section 3.8.(O)). In its discretion, the
Partnership Governance Committee may leave unfilled any office or offices,
except those of CEO and Secretary. Two or more offices may be held by the same
person. The officers of the Company on the Conversion Date shall remain in
office until such officers are changed by Partnership Governance Committee
Action.
4.2. Selection; Term; Qualification. All officers shall be chosen by the
Partnership Governance Committee annually at the Annual Meeting of the
Partnership Governance Committee. Prior to each Annual Meeting the CEO shall
present the Partnership Governance Committee with a list of nominees, but the
Partnership Governance Committee shall not be bound to select officers solely
from such list. The CEO and each other officer shall hold office until a
successor has been chosen and qualified, or until the officer's death,
resignation, or removal.
4.3. Removal and Vacancies. Any officer or agent may be removed by
Partnership Governance Committee Action, with or without cause, whenever in the
judgment of the Partnership Governance Committee the best interests of the
Partnership
12
would be served thereby. Any vacancy in any office may be filled by the
Partnership Governance Committee at any time. The CEO may, at any time,
recommend to the Partnership Governance Committee the appointment or removal of
any officer.
4.4. Duties.
(A) Each officer or employee of the Partnership shall owe to the
Partnership, but not to any Partner, all such duties (fiduciary
or otherwise) as are imposed upon such an officer or employee of
a Delaware corporation. Without limitation of the foregoing,
each officer and employee in any dealings with a Partner shall
have a duty to act in good faith and to deal fairly.
(B) The policies and procedures of the Partnership adopted by the
Partnership Governance Committee may set forth the powers and
duties of the officers of the Partnership to the extent not set
forth in or inconsistent with this Agreement. The officers of
the Partnership shall have such powers and duties, except as
modified by the Partnership Governance Committee, as generally
pertain to their respective offices in the case of a Delaware
corporation, as well as such powers and duties as from time to
time may be conferred by the Partnership Governance Committee and
by this Agreement. The CEO and the other officers and employees
of the Partnership shall develop and implement management and
other Partnership policies and procedures consistent with this
Agreement and the general policies and procedures established by
the Partnership Governance Committee. The duties of each officer
shall include the obligation to notify the Partnership Governance
Committee of any facts or circumstances of which such officer
becomes aware that indicate a Partner or any of its Affiliates
is or may be in breach of its obligations under this Agreement or
under any of the Related Agreements.
(C) Notwithstanding any other provision of this Agreement, no
Partner, Representative, officer, employee or agent of the
Partnership shall have the power or authority, without specific
authorization from the Partnership Governance Committee, to
undertake any of the following:
(i) to do any act which contravenes (or otherwise is
inconsistent with) this Agreement or which would make it
impossible to carry on the Partnership Business;
(ii) to confess a judgment against the Partnership;
(iii) to possess Partnership property other than in the
ordinary conduct of the Partnership Business; or
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(iv) to take, or cause to be taken, any of the actions
described in Section 3.8.
4.5. CEO. The CEO shall be the chief executive and chief operating
officer of the Partnership, shall have general authority for direction of the
business and affairs of the Partnership and general supervision over its several
officers, subject, however, to the control of the Partnership Governance
Committee and shall see that all orders and resolutions of the Partnership
Governance Committee or, as applicable, any Auxiliary Committee(s) are carried
into effect. The CEO shall be authorized to execute and deliver, in the name
and on behalf of the Partnership, (i) contracts or other instruments authorized
by Partnership Governance Committee Action and (ii) contracts or instruments in
the usual and regular course of business, except in cases when the execution and
delivery thereof shall be expressly delegated by the Partnership Governance
Committee to some other officer or agent of the Partnership, and, in general,
shall perform all duties incident to the office of CEO and such other duties as
from time to time may be assigned to him or her by the Partnership Governance
Committee (consistent with Section 3.8.(O)) or as are prescribed by this
Agreement. Unless otherwise requested by a Representative, the CEO shall attend
all meetings of the Partnership Governance Committee.
4.6. Vice Presidents. The Vice Presidents shall perform such duties as
may, from time to time, be assigned to them by the Partnership Governance
Committee (consistent with Section 3.8.(O)). In addition, at the request of the
CEO, or in the absence or disability of the CEO, the Vice Presidents, or any of
them, in the order of their election or in any other order determined by the
Partnership Governance Committee, temporarily shall perform all (or if limited
through the scope of the delegation, some of) the duties of the CEO, and, when
so acting, shall have all the powers of, and be subject to all restrictions
upon, the CEO.
4.7. Secretary. The Secretary shall keep the minutes of all meetings
(and copies of written records of action taken without a meeting) of the
Partnership Governance Committee and the Auxiliary Committees in minute books
provided for such purpose and shall see that all notices are duly given in
accordance with the provisions of this Agreement. The Secretary shall be the
custodian of the records. The Secretary shall have general charge of books and
papers of the Partnership as the Partnership Governance Committee may direct
and, in general, shall perform all duties and exercise all powers incident to
the office of Secretary and such other duties and powers as the Partnership
Governance Committee (consistent with Section 3.8.(O)) or the CEO from time to
time may assign to or confer upon the Secretary.
4.8. Assistant Officers. Any assistant officer appointed by the
Partnership Governance Committee shall have power to perform, and shall perform,
all duties incumbent upon the officer he or she is assisting, subject to the
general direction of such officer, and shall perform such other duties as this
Agreement may require or the Partnership Governance Committee (consistent with
Section 3.8.(O)) may prescribe.
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4.9. Other Officers. The Partnership Governance Committee may appoint
such other officers and delegate (consistent with Section 3.8.(O)) to them such
duties as it sees fit.
4.10. Salaries. The salaries or other compensation of the Executive
Officers of the Partnership shall be fixed from time to time by the Partnership
Governance Committee. Except for previously granted stock options, stock
appreciation rights, deferred compensation and other similar arrangements, the
benefits of which might be realized subsequent to the officer becoming an
employee of the Partnership, no officer or employee (other than an employee of a
Partner or an Affiliate of a Partner) of the Partnership shall receive any fees
or compensation from any Partner or any Affiliate of any Partner. Further, all
fees and compensation of the officers and employees of the Partnership with
respect to their services as such officers and employees shall be payable solely
by the Partnership and no Partner or its Affiliates shall pay (or offer to pay)
any such fees or compensation to any officer or employee, except to the extent
permitted by Section 4.13. in the case of loaned employees or that the
Partnership shall have agreed with a Partner or one of its Affiliates pursuant
to a separate agreement that a portion of the compensation of such officer or
employee shall be paid by such Partner or Affiliate.
4.11. Bonds of Officers. The Partnership Governance Committee may (but
shall have no obligation to) secure the fidelity of any officer of the
Partnership by bond or otherwise, on such terms and with such surety or
sureties, conditions, penalties or securities as shall be deemed proper by the
Partnership Governance Committee.
4.12. Delegation. The Partnership Governance Committee may delegate
temporarily the powers and duties of any officer of the Partnership, in case of
absence or for any other reason, to any other officer of the Partnership, and
may authorize the delegation by any officer of the Partnership of any of such
officer's powers and duties to any other officer or employee of the Partnership,
subject to the general supervision of such officer.
4.13. Loaned Employees. If there is a vacancy in a job position above a
certain grade (but below the level of the Executive Officers) in the Partnership
(such grade to be established by the Partnership Governance Committee), either
General Partner shall be entitled to nominate one of its (or its Affiliate's)
own employees to fill such vacancy for a fixed period of up to three years,
subject to renewal or extension by the CEO with the consent of each General
Partner. The selection of a nominating General Partner's (or its Affiliate's)
employee to fill a Partnership vacancy and all of the terms of such selection
and the nominated employee's service shall be subject to the approval and
control of the CEO; provided, however, that the selection and appointment of a
nominating General Partner's (or its Affiliate's) employee to fill a vacancy
shall be confirmed by Partnership Governance Committee Action. A nominating
General Partner's (or its Affiliate's) employee who fills a Partnership vacancy
shall in all respects perform as an employee of the Partnership and, as such,
shall have the duties to the Partnership and the General Partners set forth or
referred to in Section 4.4. (and each General Partner shall at all times cause
all of its (or its Affiliate's) employees
15
on loan to the Partnership to perform in a manner consistent with the
requirements of Section 4.4.); provided, however, that such employees shall
continue to participate in the compensation and benefit plans of the nominating
General Partner or its Affiliate. Each General Partner shall at any one time
have no more than 10 of its (or its Affiliate's) employees filling Partnership
vacancies. The Partnership shall compensate the nominating General Partner (or
its Affiliate) for the services of the employee in accordance with terms
determined by the nominating General Partner and the CEO prior to the employee's
commencing work for the Partnership.
4.14. Employee Transfers. With the prior approval of the Partnership
Governance Committee, which approval shall not be unreasonably withheld, either
General Partner (or its Affiliates) shall be entitled to hire specific employees
of the Partnership to fill vacancies with such General Partner or its Affiliate.
With the prior approval of the relevant General Partner, which approval shall
not be unreasonably withheld, the Partnership shall be entitled to hire specific
employees of either General Partner (or its Affiliates) to fill vacancies with
the Partnership. The granting of credit for past service with the prior employer
for purposes of the hired employee's compensation and benefit plans shall be
within the discretion of the General Partner who is hiring such employee, or in
the case of the Partnership, shall be determined in accordance with an
appropriate Partnership policy or procedure.
4.15. General Authority. Persons dealing with the Partnership are entitled
to rely conclusively on the power and authority of each of the officers as set
forth in this Agreement. No Person dealing with any officer with respect to any
business or property of the Partnership shall be obligated to ascertain that the
terms of this Agreement have been complied with. No Person dealing with the
Partnership shall be required to investigate or inquire as to the authority of
the officers of the Partnership to execute contracts, agreements, deeds,
mortgages, security agreements, promissory notes or other instruments or
documents with respect to any business or property of the Partnership or to take
actions on behalf of the Partnership.
5. RIGHTS, DUTIES AND COVENANTS OF PARTNERS
5.1. Delegation. The Partners acknowledge that the General Partners
(acting through the Partnership Governance Committee) are permitted to delegate
responsibility for day-to-day operations of the Partnership to officers and
employees of the Partnership.
5.2. General Authority. Persons dealing with the Partnership are
entitled to rely conclusively on the power and authority of each of the General
Partners as set forth in this Agreement or as specifically authorized by
Partnership Governance Committee Action. No Person dealing with either General
Partner or such General Partner's agents or representatives with respect to any
business or property of the Partnership shall be obligated to ascertain that the
terms of this Agreement have been complied with, or be obligated to inquire into
the necessity or expedience of any act or action of a General Partner or a
General Partner's
16
representatives. Nothing in this Section 5.2. shall be deemed to be a waiver or
release of any General Partner's obligations to the other Partners as set forth
elsewhere in this Agreement.
5.3. Nature of Partner Obligations. Each Partner (directly or through
its Affiliates) is a sophisticated party possessing extensive knowledge of and
experience relating to, and is actively engaged in, significant businesses, in
addition to the Refinery Business, has been represented by legal counsel, is
capable of evaluating and has thoroughly considered the merits, risks and
consequences of the provisions of this Section 5.3. and is agreeing to such
provisions knowingly and advisedly. The liability of each of the General
Partners (including any liability of its Affiliates or its and their respective
officers, directors, agents and employees), either to the Partnership or to any
other Partner, for any act or omission by such Partner in its capacity as a
partner of the Partnership that is imposed by such Partner's status as a
"general partner" or "limited partner" (as such terms are used in the Act) of a
limited partnership is hereby eliminated, waived and limited to the fullest
extent permitted by law. Nothing in this subsection shall relieve any Partner
from liability for any breach of this Agreement and each General Partner shall
at all times owe to the other General Partner a duty to act in good faith with
respect to all matters involving the Partnership; provided, however, that the
duty of a Nonconflicted General Partner in exercising the authority described in
Section 5.7. shall be as set forth in Section 5.7.(B).
5.4. Limited Partners.
(A) No Limited Partner shall take part in the management or control
of the Partnership Business, transact any business in the
Partnership's name or have the power to sign documents for or
otherwise to bind the Partnership.
(B) Each Limited Partner shall have the rights with respect to the
Partnership's books and records as set forth in Section 5.9.
5.5. Partner Not Agent of Other Partners. Except as expressly provided
in Section 2.7., Section 5.7., Section 10.5. or Section 11.1., nothing in this
Agreement shall be deemed to constitute a Partner as an agent or legal
representative of any other Partner.
5.6. Transactions with the Partnership. Subject to any required approval
of the Nonconflicted General Partner in accordance with Section 5.7., each
Partner and its Affiliates shall be entitled without restriction to enter into
contracts and transactions with the Partnership. Upon receipt of any required
approval by the Nonconflicted General Partner Representatives, all contracts and
transactions between the Partnership and a Partner or its Affiliates shall be
deemed to be entered into on an arm's-length basis and to be subject to ordinary
contract and commercial law.
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5.7. Control of Certain Claims and Certain Transactions.
(A) With respect to each Conflict Circumstance, the Nonconflicted
General Partner (through its Representatives) shall have the sole
and exclusive power and right for and on behalf, and at the sole
expense, of the Partnership (i) to control (including the right
from time to time, in its discretion, to make delegations to
officers or employees of the Partnership as to) all decisions,
elections, notifications, actions, exercises or nonexercises and
waivers of all rights, privileges and remedies provided to, or
possessed by, the Partnership with respect to a Conflict
Circumstance and (ii) in the event of any potential, threatened
or asserted claim, dispute or action with respect to such
Conflict Circumstance, to retain and direct legal counsel and to
control, assert, enforce, defend, litigate, mediate, arbitrate,
settle, compromise or waive any and all such claims, disputes and
actions. Accordingly, Partnership Governance Committee Action
with respect to a Conflict Circumstance shall require only the
approval of the Representatives of the Nonconflicted General
Partner. As used herein, the term "Conflict Circumstance" shall
mean any transaction, dealing or agreement between the
Partnership, on the one hand, and a General Partner (the
"Conflicted General Partner") or any of its Affiliates, on the
other hand, including each of the Related Agreements to which the
Partnership is a party and each transaction thereunder; provided,
however, that a Conflict Circumstance shall cease to exist (i)
upon the Conflicted General Partner ceasing to be a Partner or
(ii) upon the third party with which the transaction, dealing or
agreement exists, ceasing to be an Affiliate of a General
Partner. As used herein the term "Nonconflicted General Partner"
shall mean the General Partner that is not the Conflicted General
Partner. Each General Partner shall, and shall cause its
Affiliates to, take all such actions, execute all such documents
and enter into all such agreements as may be necessary or
appropriate to facilitate or further assure the accomplishment of
this Section 5.7.
(B) The Nonconflicted General Partner, in exercising its control,
power and rights pursuant to this Section 5.7., shall act in good
faith and in a manner it reasonably believes to be in the best
interests of the Partnership. The Conflicted General Partner (or
its Affiliate) that is the other party to such negotiation,
contract, transaction, claim, dispute or action shall have the
right to deal with the Partnership and with the Nonconflicted
General Partner on an arm's-length basis and in its own best
interests, but in any event in good faith.
(C) This Section 5.7. shall not apply to: (i) any sale by the
Partnership of a product or service that the Partnership also
sells to unrelated third parties; provided, however, that any
agreement for such sales by the Partnership to a Partner or one
of its Affiliates shall, to the extent not previously performed,
be terminable without penalty upon not more than sixty (60) days
notice and such sales shall be at market-based
18
prices that are not less than the prices the Partnership charges
third parties for such products or services; or (ii) any purchase
by the Partnership of a product or service that the Partnership
also purchases from unrelated third parties; provided, however,
that any agreement for such purchases by the Partnership from a
Partner or one of its Affiliates shall, to the extent not
previously performed, be terminable without penalty upon not more
than sixty (60) days notice and such purchases shall be at
market-based prices that are not more than the prices the
Partnership pays third parties for such products or services.
5.8. Partnership Interest. All assets contributed to or acquired by the
Partnership shall be owned by the Partnership. Each Partner shall have a right
only to its "partnership interest" (as such term is used in the Act) in the
Partnership (an "Interest"), and to the maximum extent permitted by applicable
law each Partner waives any right to partition of the Partnership's assets and
agrees that it will not seek or be entitled to partition any such assets,
whether by way of physical partition, judicial sale or otherwise, prior to the
termination of the Partnership.
5.9. Access to and Copies of Records and Documents.
(A) Except as otherwise required by law, any Partner may examine and
copy, in person or by representative, at any reasonable time, all
records and other information of the Partnership.
(B) Upon request by any Partner, the Partnership shall provide
without charge true copies of the Certificate of Limited
Partnership, this Agreement, all amendments or restatements
thereto, and copies of all federal, state, and local information
or income tax returns for each of the Partnership's six most
recent tax years.
5.10. Partner Covenants. Except to the extent it takes action pursuant to
its rights as a Nondefaulting Partner under Section 11., each Partner covenants
and agrees with the Partnership and with each other Partner as follows:
(A) It shall not exercise, or purport or attempt to exercise, its
authority (i) to withdraw, retire, resign, or assert that it has
been expelled from the Partnership, or (ii) to dissolve or enter
into any proceeding seeking any dissolution of such Partner, or
(iii) to make any application for judicial dissolution of the
Partnership;
(B) It shall not do any act that would make it impossible or
impracticable to carry on the Partnership Business;
(C) It shall not, directly or indirectly through any entity, conduct
or engage in any business other than the holding of its Interest
and the doing of things necessary or incidental in connection
therewith, the exercise of its authority as a Partner, the
exercise of its authority pursuant to Section 5.7., and the
performance and enforcement of its obligations and rights
pursuant to this Agreement; and
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(D) It shall not act or purport or attempt to act in a manner
inconsistent with any Partnership Governance Committee Action or
in a manner contrary to the agreements of the Partners set forth
in this Agreement.
5.11. Indemnification.
(A) (1) Indemnification by Partnership. The Partnership shall, to
the fullest extent permitted by applicable law, indemnify,
defend and hold harmless each Partner, its Affiliates and
their respective officers, directors and employees from,
against and in respect of any losses, claims, damages, costs
and expenses (including costs of investigation, defense and
attorneys' fees) and liabilities arising out of or in
connection with the business or affairs of the Partnership
(collectively, "Indemnified Losses"), except to the extent
that it is finally judicially determined that such
Indemnified Losses arose out of or were related to actions
or omissions of the indemnified Partner, its Affiliates or
any of their respective officers, directors or employees
(acting in their capacities as such) constituting (a) bad
faith, fraud, violation of law or intentional misconduct or
(b) a breach of this Agreement. The Partnership shall
periodically reimburse any Person entitled to indemnity
under this Section 5.11.(A)(1) for its legal and other
expenses incurred in connection with defending any claim
(other than a claim by the Partnership or a Partner) with
respect to such Indemnified Losses if such Person shall
agree to reimburse promptly the Partnership for such amounts
if it is finally judicially determined that such Person was
not entitled to indemnity hereunder.
(2) Partner's Right of Contribution. Each Affiliated Partner
Group hereby agrees to indemnify, defend and hold harmless
the other Affiliated Partner Group and their respective
officers, directors and employees from and against the
indemnifying Affiliated Partner Group's Participation
Percentage of any Indemnified Losses (calculated at the time
any such Indemnified Loss was incurred), except to the
extent that it is finally judicially determined that such
Indemnified Losses arose out of or were related to actions
or omissions of the indemnified Affiliated Partner Group or
any of their respective officers, directors or employees
(acting in their capacity as such) constituting (a) bad
faith, fraud, violation of law or intentional misconduct or
(b) a breach of this Agreement; provided, however, that such
indemnified Affiliated Partner Group, and their respective
officers, directors and employees shall not be entitled to
indemnity under this Section 5.11.(A)(2) unless (i) the
indemnified Affiliated Partner Group shall make a written
demand for indemnification from the Partnership in
accordance with Section 5.11.(D) and the Partnership shall
fail to satisfy
20
such demand in a manner reasonably satisfactory to the
indemnified Affiliated Partner Group within sixty (60) days
of such notice or (ii) the Partnership is Insolvent or
otherwise unable to satisfy its obligations.
(B) Indemnification by Partners. Each Partner hereby indemnifies and
shall hold harmless the Partnership and the other Partners, their
Affiliates and each director, officer and employee of such other
Partners, its Affiliates and the Partnership without duplication
from and against any and all Indemnified Losses arising out of
any act of, or any purported assumption of any obligation or
responsibility by, such indemnifying Partner or its Affiliates,
or any of the directors, officers or employees of such
indemnifying Partner or its Affiliates, in violation of this
Agreement.
(C) Indemnification Under Related Agreements. Notwithstanding any
other provision of this Agreement, no Partner or its Affiliates
or their respective officers, directors or employees shall be
entitled to indemnification under this Section 5.11. in respect
of any breach by such Partner or its Affiliates of the Related
Agreements or in respect of any matter for which such Partner or
its Affiliates is required to indemnify the Partnership under the
applicable terms of any of the Related Agreements.
(D) Procedures. Promptly after receipt by a person entitled to
indemnification under Section 5.11.(A) or Section 5.11.(B) (an
"Indemnified Party") of notice of any pending or threatened claim
against it (an "Action"), such Indemnified Party shall give
notice to the party to whom the Indemnified Party is entitled to
look for indemnification (the "Indemnifying Party") of the
commencement thereof, but the failure so to notify the
Indemnifying Party shall not relieve it of any liability that it
may have to any Indemnified Party except to the extent the
Indemnifying Party demonstrates that it is prejudiced thereby. In
case any Action that is subject to indemnification under Section
5.11.(A) or Section 5.11.(B) shall be brought against an
Indemnified Party and it shall give notice to the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall
be entitled to participate therein and, to the extent that it
shall wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party and, after notice from the
Indemnifying Party to the Indemnified Party of its election to
assume the defense thereof, the Indemnifying Party shall not be
liable to such Indemnified Party under this Section for any fees
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.
Notwithstanding an Indemnifying Party's election to assume the
defense of any such Action that is subject to indemnification
under Section 5.11.(A) or Section 5.11.(B), the Indemnified Party
shall have the right to employ separate counsel
21
and to participate in the defense of such Action, and the
Indemnifying Party shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel
chosen by the Indemnifying Party to represent the Indemnified
Party would present such counsel with a conflict of interest;
(ii) the actual or potential defendants in, or targets of, any
such Action include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party shall have
reasonably concluded that there may be legal defenses available
to it which are different from or additional to those available
to the Indemnifying Party (in which case the Indemnifying Party
shall not have the right to assume the defense of such Action on
the Indemnified Party's behalf); (iii) the Indemnifying Party
shall not have employed counsel satisfactory to the Indemnified
Party to represent the Indemnified Party within a reasonable time
after notice of the institution of such Action; or (iv) the
Indemnifying Party shall authorize the Indemnified Party to
employ separate counsel at the Indemnifying Party's expense. If
an Indemnifying Party assumes the defense of such Action, (a) no
compromise or settlement thereof may be effected by the
Indemnifying Party without the Indemnified Party's consent (which
shall not be unreasonably withheld) unless (I) there is no
finding or admission of any violation of law or any violation of
the rights of any person and no effect on any other claims that
may be made against the Indemnified Party and (II) the sole
relief provided is monetary damages that are paid in full by the
Indemnifying Party and (b) the Indemnified Party shall have no
liability with respect to any compromise or settlement thereof
effected without its consent (which shall not be unreasonably
withheld). The indemnities contained in this Section 5.11. shall
survive the termination and liquidation of the Partnership.
6.1. CAPITAL CONTRIBUTIONS AND PARTICIPATION PERCENTAGE
6.1. Prior Capital Contributions. Upon formation of the Company, LParent
on behalf of Lyondell GP and CParent on behalf of CITGO LP, contributed certain
Assets to and the Company assumed certain liabilities and obligations, as
provided for in the Regulations and the Contribution Agreement. From time to
time prior to the Conversion Date, Lyondell GP and CITGO LP, as the two members
of the Company, made Capital Contributions and loans to the Company as provided
for in the Regulations. Capital Contributions and proceeds of loans made prior
to the Conversion Date that were of a specific character or designated for a
specific purpose shall retain such character or designation and be subject to
the restrictions applicable thereto set forth in the Regulations.
6.2. Capital Contributions. Except as expressly provided in this Section
6., Section 7.1(D) or as determined by the Partnership Governance Committee, the
Partners (i) shall have no obligation to contribute any capital to the
Partnership for any purpose and (ii) shall not be entitled to contribute any
capital to the Partnership.
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6.3. Partner Loans. A Partner or its Affiliates may loan funds to the
Partnership on such terms and conditions as may be approved by the Partnership
Governance Committee pursuant to Section 3.8.(E), and, subject to other
applicable law, have the same rights and obligations with respect thereto as a
Person who is neither a Partner nor an Affiliate of a Partner. The existence of
such a relationship and acting in such a capacity will not result in a Limited
Partner being deemed to be participating in the control of the business of the
Partnership or otherwise affect the limited liability of a Limited Partner. If
a Partner or any Affiliate thereof is a lender, in exercising its rights as a
lender, including making its decision whether to foreclose on property of the
Partnership, such lender will have no duty to consider (i) its status as a
Partner or an Affiliate of a Partner, (ii) the interests of the Partnership, or
(iii) any duty it may have to any other Partner or the Partnership.
6.4. Participation Percentages.
(A) Capital Contributions and Participation Percentages.
(1) As of and following the Conversion Date, the Partners'
respective Capital Contributions shall be equal to the
respective amounts set forth in Exhibit 6.4 hereto plus any
adjustments thereto made following the Conversion Date in
accordance with the terms of this Section 6.4.
(2) Each Partner's respective Capital Contributions shall be
adjusted to reflect the Distributions (as hereinafter
defined), if any, from any financing by the Partnership from
the Conversion Date until the Option Date (the
"Refinancing"). As used herein, the term "Distributions"
shall mean the net proceeds of the Refinancing after the
Partnership (i) repays any existing indebtedness of the
Partnership (including any and all indebtedness owed to the
Partners) which the Partners have agreed to repay but
excluding any repayment of the Partnership's revolving
credit facility which may be refinanced subsequent to the
Refinancing and (ii) withholds any amount of such
Refinancing proceeds which the Partnership Governance
Committee determines should be maintained by the
Partnership.
(3) The Participation Percentage for each Partner shall equal
the sum of the Capital Contributions of such Partner divided
by the sum of the Capital Contributions of all Partners.
(4) For the Calendar Quarter in which the Conversion occurs, the
Participation Percentages through the end of that Calendar
Quarter shall be as set forth on Exhibit 6.4. For each
Calendar Quarter following such Calendar Quarter, the
Participation Percentages of the Partners shall be
calculated and in effect as of the first day of the Calendar
Quarter based on all events
23
which occurred or are deemed to have occurred through the
close of business on the last day of the preceding Calendar
Quarter. Except as otherwise provided, the Participation
Percentages in effect as of the first day of the Calendar
Quarter shall be operative for the entire Calendar Quarter
and shall not be changed for any reason until the first day
of the next succeeding Calendar Quarter.
(B) From the Option Date, if any: (i) each of the CITGO Partners'
Capital Contributions shall include the amount of the Option Date
Payment and shall be adjusted by the CITGO Partners Option Date
Amount; and (ii) each of the Lyondell Partners' Capital
Contributions shall be adjusted by their respective amounts of
the Lyondell Partners Option Date Amount.
6.5. Capital Expenditure Funding. To the extent that the Partnership
Governance Committee determines at any time after the Conversion Date that
certain capital expenditures will be required and that funds are needed by the
Partnership for such capital expenditures, the Partners shall fund the amount
needed by the Partnership for such purposes. With respect to the funding
required under this Section, the Partnership Governance Committee or the CEO
shall inform the Partners as to the aggregate amount required to be funded, the
intended use of the funds, and the due date or dates for each Partner's funding
obligation. The amount required to be funded by each Partner on any given date
shall equal the aggregate amount due on such date multiplied by the Partner's
Participation Percentage on such date. The amounts to be funded by the Partners
shall be funded with Capital Contributions, if such amounts are funded prorated
in accordance with the Partners' Participation Percentage, or may be funded with
loans (by unanimous consent of the Partnership Governance Committee). The
amounts funded hereunder shall be used solely for the purposes set forth herein
as determined by the Partnership Governance Committee.
6.6. CITGO Partners' Option to Increase Their Collective Participation
Percentage.
(A) CITGO Partners may elect (and in the event of such election shall
give the Partnership and Lyondell Partners written notice of
CITGO Partners' election), as provided herein, to increase CITGO
Partners' Participation Percentage to any Participation
Percentage up to fifty percent (50%), in the aggregate (the
"Intended Percentage"). The notice shall set forth (i) the
Intended Percentage, (ii) CITGO Partners' tentative calculation
of the amount it must contribute in order to achieve the Intended
Percentage and (iii) the date on which CITGO Partners will make
the Capital Contribution to achieve the Intended Percentage,
which date ("Option Date") shall be the last date of a calendar
quarter, subsequent to January 1, 2000 and not later than
September 30, 2000 and must not be less than thirty (30) days
following the date of the notice.
24
(B) CITGO Partners shall be permitted to elect to increase their
Participation Percentage only one time under the provisions of
this Section 6.6.
(C) On the Option Date, CITGO Partners shall contribute to the
Partnership cash in an amount equal to 50% of the Option Date
Payment and a promissory note equal to 50% of the Option Date
Payment given to the Partnership in accordance with the terms of
Section 6.6.(E). "Option Date Payment" shall mean the amount of a
Capital Contribution by CITGO Partners such that on the day
following the Option Date, and after giving effect to the CITGO
Partners Option Date Amount and the Lyondell Partners Option Date
Amount, CITGO Partners Participation Percentage would equal the
Intended Percentage.
(D) To the extent the exact amount of the Option Date Payment cannot
be determined on the Option Date, CITGO Partners shall contribute
on the Option Date an amount equal to CITGO Partners' good faith
estimate of the amount of cash due hereunder. At least ten (10)
Business Days prior to the Option Date, CITGO Partners shall
furnish the Partnership and Lyondell Partners with a written
determination of CITGO Partners' good faith estimate of the total
amount due under Section 6.6.(C). Promptly after the Option Date,
the Partnership Governance Committee shall determine such amounts
as are necessary to be contributed by CITGO Partners under this
Section 6.6. Within five (5) Business Days of the determination
by the Partnership Governance Committee of the amount of cash
required to be contributed by CITGO Partners under this Section
6.6., CITGO Partners shall contribute to the Partnership (i) the
difference between such amount and the amount of cash contributed
by CITGO Partners on the Option Date plus (ii) interest on the
amount contributed under clause (i) at the Agreed Rate (subject
to Section 12.11.) from the Option Date through the date CITGO
Partners makes the contribution required herein. If the amount
of cash contributed by CITGO Partners on the Option Date is
greater than the amount required to have been contributed by
CITGO Partners, then within five (5) Business Days of such
determination the Partnership shall pay such excess to CITGO
Partners with interest at the Agreed Rate (subject to Section
12.11.) from the Option Date through the date the Partnership
makes the required payment. For purposes of determining
Participation Percentages, only the final net amount of CITGO
Partners' contribution under this Section 6.6. shall be taken
into account and any interim contributions or distributions or
interest payments shall be disregarded.
(E) CITGO Partners shall deliver to the Partnership a promissory note
equal to 50% of the Option Date Payment. The promissory note
shall be delivered to the Partnership as soon as the exact amount
of the Option Date Payment is determined pursuant to the
procedures set forth in Section 6.6.(D). The promissory note
shall be in the form set forth in Exhibit 6.6(E) to this
Agreement. All scheduled payments of
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principal under the promissory note shall be used or deemed used
by the Partnership for capital expenditures incurred by the
Partnership subsequent to the Option Date and such payments shall
be treated as having been used to acquire property in accordance
with Section 7.7.(B)(2). The Partnership shall have the right to
withhold from distributions payable to CITGO Partners any amounts
then due under the promissory note and to apply such withheld
amounts to the amounts payable by CITGO Partners to the
Partnership under the promissory note.
(F) The amount contributed by CITGO Partners under Section 6.6.(C)
shall be applied, in order of priority, towards repayment of the
Initial Construction Loan, the Additional Construction Loan and,
to the extent funds are available, any loan from Lyondell
Partners. Any such amounts used to repay Lyondell Partners Loans
shall be applied in inverse order by reference to the date each
such loan was extended, that is the first repayment shall be of
the loans most recently made by Lyondell Partners. If no such
loans are outstanding on the Option Date, the amount contributed
by CITGO Partners under Section 6.6.(C) shall be used or deemed
used by the Partnership for capital expenditures incurred by the
Partnership subsequent to the Option Date and such payments shall
be treated as having been used to acquire property in accordance
with Section 7.7.(B)(2) and all depreciation, cost recovery, or
amortization deductions associated with said capital expenditures
shall be allocated to CITGO Partners in accordance with Section
7.7.(B)(2).
6.7. Return of Capital Contributions. Except as otherwise expressly
provided by this Agreement, no Partner shall be entitled to have all or any part
of its Capital Contribution returned and no Partner shall be paid interest or
any other return on any Capital Contribution or on the balance of its Capital
Account, as that term is hereafter defined.
6.8. Administration and Investment of Funds. The administration and
investment of Partnership funds shall be in accordance with the procedures and
guidelines as shall be adopted by the Partnership Governance Committee. The
Partnership may delegate to a third party (which may be a Partner or an
Affiliate of one of the Partners) the responsibility for administering and
investing Partnership funds pursuant to such guidelines.
7. ALLOCATIONS AND DISTRIBUTIONS
7.1. Capital Accounts. A separate capital account (each a "Capital
Account") will be maintained for each Partner. Each Partner's Capital Account
shall be credited and debited in accordance with the following provisions:
(A) To each Partner's Capital Account there shall be credited such
Partner's capital contributions (including the principal amount
of any promissory note contributed by a CITGO Partner pursuant to
Section
26
6.6.(E) but excluding the payment of principal on such promissory
note), such Partner's distributive share of Profits as determined
under Section 7.6(A), and the amount of any Partnership
liabilities secured by any Partnership properties distributed to
such Partner such that the Partner is considered to assume or
take subject to such liabilities under Section 752 of the Code;
(B) To each Partner's Capital Account there shall be debited the
amount of cash and the fair market value of any Partnership
properties distributed to such Partner pursuant to any provision
of this Agreement and such Partner's distributive share of Losses
as determined under Section 7.6(A);
(C) On the day following an Option Date Payment, if any, the Capital
Accounts of the Partners shall be adjusted pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) to reflect the Asset
Value on such date of (i) the Working Capital, (ii) the Assets
and (iii) any capital assets acquired with funds contributed to
the Partnership by a Partner so that the balances in such
accounts are in the Proper Ratio on the date of such adjustment;
provided, however, that for purposes of this Section 7.1.(C), the
Asset Value of such assets shall be adjusted to the extent
necessary to cause the balances in the Partners' Capital Accounts
to be in the Proper Ratio;
(D) Any payment made by LParent or the Lyondell Partners to the
Partnership pursuant to LParent's obligations to the Partnership
under the Contribution Agreement or any Related Agreement shall
be considered a Capital Contribution; provided, however, the
increase to Lyondell Partners' Capital Accounts as a result of
any such Capital Contribution shall occur simultaneously with the
corresponding reduction in Lyondell Partners' Capital Accounts
due to the reduction in Asset Value of the Assets because of the
receipt by the Partnership of any such payment. Subject to the
provisions of Section 7.4.(B), to the extent any such payment is
not expended by the Partnership to pay costs for which it is
being indemnified by LParent or Lyondell Partners, such amount
shall be deposited in the operating fund; and
(E) Any adjustment of Capital Accounts under this Section 7.1. shall
have no impact upon the determination of Participation
Percentages.
7.2. Income and Distribution Determinations; Restriction on Distributions
and Advances. Profits and Losses shall be allocated as of the close of business
on the last day of each Calendar Quarter. Distributions of Distributable Cash
shall be made on a monthly basis and, regardless of the date a distribution is
actually paid, distributions shall be treated as having been made on the last
day of the calendar month immediately preceding the date of the distribution.
Any other provisions of this Agreement to the contrary notwithstanding, however,
the Partnership shall not make any distribution of Distributable Cash or any
advances for so long as, under the terms of any agreement, contract or
instrument evidencing, governing
27
or securing any indebtedness for borrowed money (including loans or capital
leases), an event of default exists (or would exist upon the making of such
distribution or advance) and such agreement, contract or instrument prohibits
the making of such distribution or advance during the continuance of such event
of default.
7.3. Distributable Cash.
(A) Following the end of each calendar month the amount of
Distributable Cash for the immediately preceding calendar month
shall be determined, and, subject to the provisions set forth
herein, such Distributable Cash amount shall be distributed
promptly to the Partners as provided in Section 7.4.
Notwithstanding any other provision of this Agreement, the
Partnership shall not be required to make any distribution if
such distribution is prohibited by Section 17-607 of the Act.
(B) The amount of the Partnership's Distributable Cash for any
calendar month shall be the Partnership's net cash provided or
used by operating activities for such month (determined in
accordance with GAAP) less (i) cash used in financing activities
for repayment of long term debt (including but not limited to
bonds and Partner Loans) and (ii) any capitalized interest. If
the resulting Distributable Cash for any calendar month is
negative, no distribution of cash will be made to any Partner
until after such amount is reserved from future positive amounts.
A Partner's Distributable Cash for any calendar month shall be
equal to the product of (i) the Partnership's Distributable Cash
for such month and (ii) such Partner's Participation Percentage
for the Calendar Quarter in which such month occurs.
(C) To the extent that the Partnership does not have sufficient cash
or remaining capacity under its working capital credit facility
to make the distributions as provided in Section 7.4., then,
except as otherwise expressly provided, distributions shall be
made in proportion to the amounts distributable to each Partner.
Any amount which is required to be distributed pursuant to
Section 7.3.(A), but which is not distributed for any reason,
including, without limitation, by reason of insufficient cash or
by virtue of the last sentence of Section 7.2., shall constitute
a debt owed by the Partnership to the Partner entitled to such
distribution, which debt is to be paid, with interest at the
Agreed Rate (subject to Section 12.11.), as quickly as possible,
but in all events before any other distributions with respect to
subsequent months are paid to the Partners.
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7.4. Distributions.
(A) Except as otherwise expressly provided in this Agreement, each
Partner's Distributable Cash for each calendar month shall be
distributed to such Partner. If, following the end of a Calendar
Quarter, it is determined that the sum of the monthly
distributions to a Partner attributable to the Calendar Quarter
exceeds the Partner's Distributable Cash for the Calendar
Quarter, such Partner shall promptly contribute the excess to the
Partnership together with interest thereon at the Agreed Rate
(subject to Section 12.11.). Additional distributions shall be
made in such amounts as the Partnership Governance Committee
shall determine; provided, however, that such distributions shall
be made in proportion to the Partners' Participation Percentages
for the Calendar Quarter in which the distribution is made.
(B) After the earlier of the Option Date or the expiration of the
period during which CITGO Partners may exercise its option to
increase its Participation Percentage under Section 6.6., any
cash attributable to a payment described in Section 7.1.(D) but
which is not expended by the Partnership to pay costs for which
it is being indemnified by LParent or Lyondell Partners, shall be
distributed to the Partners in proportion to their Participation
Percentages.
7.5. Interim Loans. Distributions under this Section 7.5 may be made, as
provided herein, to both Partners of an Affiliated Partner Group at any time.
Each Affiliated Partner Group shall be entitled to receive distributions
hereunder not more than once during each calendar quarter provided additional
distributions can be made with the consent of the General Partner of the other
Affiliated Partner Group, which consent shall be granted or withheld in the sole
discretion of such other General Partner. Any time the Partnership's cash
(excluding cash in the capital fund and any other cash held for a specific
project) is greater than the Cash Balance Amount, by written notice to the
Partnership both Partners of an Affiliated Partner Group shall be entitled to
borrow from the Partnership and the Partnership shall promptly advance to such
Partners, their respective Participation Percentages of the Partnership's cash
in excess of the Cash Balance Amount. The "Cash Balance Amount" shall initially
be $20 million, which amount may be changed from time to time by Unanimous
Partnership Governance Committee Action. Any advance hereunder shall (subject
to Section 12.11) bear interest at the same rate payable by the Partnership on
its working capital facility or if the Partnership has no such facility then at
the Agreed Rate. Any advance hereunder shall be repaid by withholding from all
distributions otherwise payable to the Partner the amount of the advance plus
interest thereon. Amounts withheld shall first be applied to interest and
thereafter to principal. Each loan shall have a term of 90 days so that if the
amount of the loan plus interest thereon is not repaid from distributions
otherwise payable to the Partner within 90 days of the loan, then the Partner
shall be required to repay the loan with other funds.
29
7.6. Internal Revenue Code Section 704(b) Book Allocations for Tax
Purposes.
(A) General. For each Calendar Quarter or portion thereof, except as
provided in this Section 7.6., each item comprising Profits or
Losses shall be allocated to the Partners in proportion to their
Participation Percentages.
(B) Internal Revenue Code Section 704(b) Book Depreciation. For each
Calendar Quarter or portion thereof, Depreciation shall be
allocated to the Partners in proportion to their Participation
Percentages.
(C) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of Section 7., if there is a net decrease in
"partnership minimum gain" (as defined in Treasury Regulation
(S)1.704-2(b)(2)) during any Partnership taxable year, each
Partner shall be specifically allocated, before any other
allocation is made, items of income and gain for such year (and,
if necessary, subsequent years) equal to such Partner's share of
the net decrease in minimum gain (determined in accordance with
Treasury Regulation (S)1.704-2(g)). Allocations pursuant to the
previous sentence shall be made in proportion to the respective
amounts required to be allocated to Partners. This provision
shall be applied so that it will constitute a "minimum gain
chargeback" within the meaning of Treasury Regulation (S)1.704-
2(f).
(D) Partner Minimum Gain Chargeback. Notwithstanding any provision
of Section 7. except Section 7.6.(C), if there is a net decrease
in "partner nonrecourse debt minimum gain" (as defined in
Treasury Regulation (S)1.704-2(i)(2)) during any Partnership
taxable year, each Partner with a share of that partnership
nonrecourse debt minimum gain (determined under Treasury
Regulation (S)1.704-2(i)(5)) as of the beginning of the year
shall be specifically allocated, before any other allocation is
made, items of income and gain for such year (and if necessary,
subsequent years) equal to that Partner's share of the net
decrease in partner nonrecourse debt minimum gain. Allocations
pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to Partners.
This provision shall be applied so that it will constitute a
"chargeback of Partner nonrecourse debt minimum gain" as
prescribed by Treasury Regulation (S)1.704-2(i)(4).
(E) Distribution of Property to Partners. In the event that any
property (other than cash) is distributed by the Partnership to
a Partner, gain or loss will be allocated to the Partners as if
there were a taxable disposition of such property on the date of
distribution.
(F) Indemnity Payment Expenditure. All deductions attributable to
the expenditure of all amounts described in Section 7.1.(D) shall
be allocated to Lyondell LP.
30
(G) Qualified Income Offset. Notwithstanding any other provisions of
Section 7.6. or 7.7., if a Partner unexpectedly receives any
adjustments, allocations or distributions described in Treasury
Regulation (S)1.704-1(b)(2)(ii)(d)(4), (5) or (6) which would
create a deficit balance in its Capital Account (and reduced by
the amount described in Treasury Regulation (S)1.704-
1(b)(2)(ii)(d) and the outstanding principal amount of any
promissory note(s) contributed by the CITGO Partners to the
Partnership pursuant to Section 6.6.(E) such Partner(s) will be
allocated gross income and gain in an amount and manner
sufficient to eliminate such deficit as quickly as possible.
Allocations under this Section 7.6.(G) shall be comprised of a
pro rata share of each item of Partnership income and gain for
the period. This provision shall be applied so that it will
constitute a "qualified income offset" within the meaning of
Treasury Regulation (S)1.704-1(b)(2)(ii)(d).
(H) Curative Allocations. If items of income, gain, loss or
deduction are allocated under Section 7.6.(G), to the extent
possible the allocation of any remaining items of income, gain,
loss or deduction pursuant to Section 7.6. shall be allocated
such that the net amount allocated to each Partner will be the
same amount that would have been allocated if no items of income
gain, loss or deduction had been allocated under Section 7.6.(G).
(I) Gain or Loss in Liquidation. To the extent the Partners' Capital
Account balances are not in the Proper Ratio, gain or loss on the
sale or distribution of assets under Section 11.11. shall be
allocated, to the maximum extent possible, so as to cause the
Partners' Capital Account balances to be in the Proper Ratio.
7.7. Tax Allocations.
(A) General. Except as otherwise provided in this Section 7.7., for
income tax purposes, each item of income, gain, deduction, loss
and credit shall be allocated among the Partners in the same
manner as the corresponding items are otherwise allocated under
Section 7.6.
(B) 704(c) Depreciation Allocations. For income tax purposes,
pursuant to Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder, depreciation, cost recovery
and amortization deductions shall be allocated to the Partners as
set forth in this Section 7.7.(B) in order to take into account
any difference between (x) the Asset Value (as adjusted pursuant
to the proviso in Section 7.1.(C)) of the assets on the date the
assets are contributed to the Partnership or on any date on which
the Capital Accounts are adjusted pursuant to Section 7.1.(C) and
(y) the Partnership's adjusted tax basis in the assets on each
such date. The foregoing allocation shall be implemented through
the following provisions:
31
(1) If a Partner contributes property to the Partnership, all
depreciation, cost recovery or amortization deductions
attributable to the property shall be allocated to the
Partner contributing the property;
(2) Subject to Section 7.7.(B)(6) below, if a Partner
contributes cash (including the amounts described in Section
7.1.(D) and payments made with respect to the promissory
note, if any, delivered under Section 6.6.(E)) which is used
or deemed to be used to acquire property, all depreciation,
cost recovery or amortization deductions attributable to the
property acquired with the Partner's contribution shall be
allocated to the Partner contributing the cash;
(3) All depreciation, cost recovery or amortization deductions
attributable to the expenditure of any funds paid by LParent
or a Lyondell Partner to the Partnership pursuant to
LParent's indemnity obligation to the Partnership under the
Contribution Agreement or any Related Agreement shall be
allocated to Lyondell Partner LP;
(4) Subject to Section 7.7.(B)(5) and Section 7.7.(B)(6), all
depreciation, cost recovery or amortization deductions
attributable to property acquired with funds loaned to the
Partnership by a third party shall be allocated to the
Partners in accordance with their Participation Percentages;
(5) Subject to Section 7.7.(B)(6), all depreciation, cost
recovery or amortization deductions attributable to funds
loaned to the Partnership by a Partner shall be allocated to
the Partner loaning such funds; and
(6) If a Partner contributes cash to the Partnership which is
used to repay a debt of the Partnership, any remaining
deductions for depreciation, cost recovery or amortization
attributable to the property acquired with the borrowed
funds shall be allocated to the Partner contributing the
funds used to repay the debt. If the Partnership borrows
funds from a third party which are used to repay a debt of
the Partnership from a Partner, any remaining deductions
from depreciation, cost recovery or amortization
attributable to the property acquired with the funds so
borrowed from a Partner shall be allocated to the Partners
in accordance with their Participation Percentages.
(C) 704(c) Gain or Loss Allocations. Solely for income tax purposes,
gain or loss resulting from any sale, exchange or disposition of
an asset shall be allocated among the Partners, in accordance
with Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder, so as to take into account any difference
between (i) the Asset Value (as
32
adjusted pursuant to the proviso in Section 7.1.(C)) of such
asset, adjusted to reflect Depreciation and (ii) the
Partnership's adjusted tax basis in such asset.
(D) Recapture. Solely for income tax purposes, in the event that a
portion of the taxable gain recognized on the sale, exchange or
other disposition of a Partnership asset is characterized as
ordinary income under the recapture provisions of the Code, each
Partner's distributive share of taxable gain from the sale of
Partnership assets (to the extent possible) shall include a
proportionate share of the recapture income equal to that
Partner's share of prior depreciation deductions with respect to
the assets that gave rise to the recapture income.
(E) Imputed Interest Income. To the extent the Partnership
recognizes imputed interest income in connection with any
transaction involving a Partner, such interest income shall, for
tax purposes, be allocated to the Partner who is a party to the
transaction which generated the imputed interest income.
(F) Production Expenditures. All "production expenditures", as
defined for purposes of Section 263A of the Code, which result
from any construction that is financed with funds contributed by
a Partner, shall be allocated to the Partner which contributed
such funds.
(G) Payments. To the extent that the Partnership recognizes income
or gain as a result of any payment (other than any interest
payments) made by LParent or Lyondell LP to the Partnership
pursuant to LParent's obligations to the Partnership under the
Contribution Agreement or any Related Agreement, such income or
gain shall be allocated to Lyondell LP.
7.8. Transfers of Interest. Each item of income, gain, loss, deduction
and credit allocable to any Interest transferred during a quarter shall be
allocated between the transferor and transferee in proportion to the number of
days during the quarter for which each was the owner of the Interest, without
regard to the results of Partnership operations during the portions of the
quarter the transferor and transferee owned the Interest. Distributions
attributable to the ownership of a transferred Interest shall be paid to the
Person who owned the Interest on the last day of the calendar month preceding
the date of the distribution.
8. BOOKS OF ACCOUNT AND TAX MATTERS
8.1. Books of Account. The Partnership will maintain at its principal
office proper books of account on the accrual method of accounting in accordance
with GAAP. The Partnership shall also maintain proper books of account necessary
to enable the Partnership to file all required tax returns and reports and to
make all determinations required under this Agreement. Financial statements and
a list of commitments for expenditures will be delivered to the Partners
monthly. The books of account shall be reviewed quarterly and audited annually
and certified
33
financial statements in accordance with GAAP will be delivered to each Partner.
Further, the Partnership shall keep and maintain books and records at its
principal office as required by applicable law.
8.2. Tax Treatment.
(A) Amounts reimbursed pursuant to Section 6.6.(D) shall be treated
as distributions described in Treasury Regulation 1.707-4(d).
(B) The Partnership will be taxed as a partnership and no Partner
will elect to be excluded from the application of any of the
provisions of Subchapter K, Chapter 1 of Subtitle A of the Code
or any similar provision of any applicable state law.
(C) The Partnership will use the LIFO method of accounting for
inventory unless the Partnership Governance Committee unanimously
decides to use an alternative method.
(D) The Partnership will file an election under Section 754 of the
Code to cause the tax basis of Partnership property to be
adjusted for federal income tax purposes as provided in Sections
734, 743 and 754 of the Code.
8.3. Tax Returns.
(A) Lyondell GP shall be the Tax Matters Partner as defined in
Section 6231(a)(7) of the Code ("TMP") for all taxable years of
the Partnership through the earlier of the taxable year that
includes the Option Date or the expiration of the period during
which CITGO Partners may exercise its option to increase its
Participation Percentage under Section 6.6. Thereafter, at any
time during the first sixty (60) days of a taxable year, CITGO
GP, by written notice to Lyondell GP, may elect to be the TMP for
the current taxable year and the next two succeeding taxable
years; provided, however, that CITGO GP shall serve as TMP at no
cost to the Partnership. Thereafter, the Partnership Governance
Committee shall select one of the General Partners to serve as
TMP for a specified term. If the Partnership Governance
Committee cannot agree as to which General Partner shall be the
TMP, the General Partners shall alternate serving as TMP for a
term of three taxable years each, beginning with the General
Partner that has not served as TMP for the most recent taxable
year; provided, however, that any General Partner serving as TMP
shall serve at no cost to the Partnership. In the event of any
change of TMP, the General Partner serving as TMP for a given
taxable year shall (unless such General Partner ceases to be a
General Partner) continue as TMP with respect to all matters
concerning that year. The TMP shall use its best efforts to
cause the Partnership to file all tax returns and reports by the
due date thereof (after taking into account any extensions
thereof). At least twelve (12) weeks prior to the filing of the
Partnership's U.S.
34
Partnership Return of Income, a draft of such return shall be
circulated to the other Partners for their review. The TMP shall
circulate to the other Partners a draft of any state income tax
return promptly after it is available, and, in any event, at
least four (4) weeks prior to the filing of any such return.
Prior to the filing of any other federal, state or local tax
return, the TMP shall cause a draft of such tax return to be
circulated to the other Partners for their review promptly after
it is available.
(B) If a Partner objects to the tax treatment of an item on any
income tax return, such Partner shall promptly inform the TMP of
its objection and the grounds upon which the objection is based
and shall in any event use its best efforts to inform the TMP of
such objection and the grounds upon which such objection is based
at least two (2) weeks (eight (8) weeks as to any U.S.
Partnership Return of Income) prior to the date on which the tax
return is required to be filed. However, if the TMP, after due
consideration of a Partner's objection, is of the view that the
tax treatment of the item in question on the return as originally
submitted is reasonable, then the TMP shall cause the Partnership
to file the return reporting the item in question in the manner
originally submitted. A Partner may treat the item in question
(but no other item) in a manner different from that reported on
the return and file a statement of inconsistent treatment with
its tax return. If any Partner files a statement of inconsistent
treatment of a Partnership item, the Partner filing the statement
shall use its best efforts to inform the Partnership at least two
(2) weeks prior to filing the statement.
8.4. Tax Controversies. The Partners shall comply with the
responsibilities outlined in this Section 8.4. and in Sections 6222 through 6231
and 6050K of the Code (including any Treasury Regulations promulgated
thereunder) and in doing so shall incur no liability to any other Partner. The
TMP shall not agree to any extension of the statute of limitations for making
assessments of tax on behalf of any other Partner without first obtaining the
written consent of such other Partner. The TMP shall not bind any other Partner
to a settlement agreement in respect of taxes without obtaining the written
consent of such other Partner. If a notice or assessment for any tax (Federal
or State) is agreed to by the TMP, the TMP shall notify each other partner of
such agreement within 30 days from the date such notice or assessment is agreed
to. Any Partner who enters into a settlement agreement with the Secretary of
the Treasury with respect to any "partnership items", as defined by Section
6231(a)(3) of the Code, shall notify each other Partner of such settlement
agreement and its terms within ninety (90) days from the date of settlement. No
Partner shall file a request pursuant to Section 6227 of the Code for an
administrative adjustment of partnership items for any partnership taxable year
without first notifying each other Partner. If each of the other Partners
agrees with a requested adjustment, the TMP shall file the request for
administrative adjustment on behalf of the Partnership. If any other Partner
does not agree with the requested adjustment within thirty (30) days from such
notice, or, if shorter, within the period required to timely file the request
for administrative adjustment, then the requesting Partner may file a request
for
35
administrative adjustment on its own behalf. The TMP shall not, in its capacity
as TMP, file a petition under Code Sections 6226, 6228 or any other Code
Sections with respect to any Partnership item, or other tax matters involving
the Partnership, without the consent of each Partner. A Partner intending to
file a petition under Section 6226, 6228 or any other Code Sections with respect
to any Partnership item, or other tax matters involving the Partnership, will
notify each of the other Partners of that intention and the nature of the
contemplated proceeding. If any Partner intends to seek review of any court
decision rendered as a result of a proceeding instituted under the preceding
part of this Section 8.4., that Partner will notify the other Partners of that
intended action. The provisions of this Section 8.4. will survive the
termination of the Partnership and the transfer of any Partner's Interest and
will remain binding on the Partners for a period of time necessary to resolve
any and all matters regarding the federal and, if applicable, state income
taxation of the Partnership. The Partnership shall retain its records with
respect to each fiscal year until the expiration of ninety (90) days after the
period within which additional federal or state income tax may be assessed for
such year.
8.5. Tax Rulings. No Person other than the TMP shall request an
administrative ruling (or similar administrative procedures) from any taxing
authority with respect to any tax issue relating to the Partnership or affecting
the taxation of any other Partner. The TMP shall not request such a ruling (or
similar procedure) without the consent of each General Partner.
9. ANNUAL BUDGETS, FIVE YEAR PLAN AND COMMERCIAL LOANS
9.1. Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
9.2. Annual Budgets. The Partnership will operate on the basis of the
following annual budgets:
(A) "Operating Budget," which shall be an estimate for a fiscal year
of all of the Partnership's operating revenues and expenses,
including expenses required to maintain, repair and restore to
good and usable condition the Partnership's assets; and
(B) "Capital Budget", which shall be an estimate for a fiscal year of
the capital expenditures (i) necessary to maintain the
Partnership's assets; (ii) necessary to achieve or maintain
compliance with any Environmental Law; (iii) necessary to
accomplish capital enhancement projects approved by the
Partnership Governance Committee ("Capital Enhancement
Projects"); and (iv) permitted, pursuant to Partnership
Governance Committee Action, to be undertaken by the CEO in his
or her discretion (the funding and overrun provisions with
respect to such expenditures being set forth in such budget).
36
9.3. Approval of Budgets.
(A) Each budget shall be approved by Partnership Governance Committee
Action. Prior to November 15 of each fiscal year, the CEO shall
prepare and submit to the Partnership Governance Committee for
approval each of the budgets for the ensuing fiscal year (and, as
appropriate, for subsequent periods), and on or before December
1, the Partnership Governance Committee shall by Partnership
Governance Committee Action approve, with such modifications as
it considers appropriate, each such budget.
(B) If the Partnership Governance Committee does not approve the
Operating Budget for the next fiscal year by December 1, pending
approval of such budget by Partnership Governance Committee
Action, the preceding fiscal year's Operating Budget shall, to
the extent practicable, guide the operation of the Partnership.
The failure to approve an Operating Budget shall in no way limit
or restrain the authority of the Partnership or its officers to
conduct operations.
(C) The Partnership Governance Committee may, by Partnership
Governance Committee Action, amend or supplement any previously
approved budget at any time.
9.4. Funding of Budgets. The Operating Budget and all operating expenses
regardless of whether included in any such budget shall be funded from operating
cash flows. The Capital Budget shall be funded in accordance with Section 6.5.
and no other additional Capital Contributions by the Partners shall be required
with respect thereto unless otherwise agreed by the Partnership Governance
Committee.
9.5. Implementation of Budgets and Discretionary Expenditures by CEO.
(A) After the Capital Budget has been approved, the Partnership will
be authorized, without further action by the Partnership
Governance Committee, to make any expenditures specifically
identified within such budget; provided, however, that all
internal control policies and procedures, including those
regarding the required authority for certain expenditures, shall
have been followed and that with respect to each capital
expenditure above an amount established from time to time by
Unanimous Partnership Governance Committee Action there shall
have been a Partnership Governance Committee Action approval of
the "authority for commitment."
(B) In any emergency, the CEO or the CEO's designee shall be
authorized to take such actions and to make such expenditures as
may be reasonably necessary to react to the emergency, regardless
of whether such expenditures have been included in an approved
budget. As soon as practical after the commencement of an
emergency, the CEO or such designee shall notify the
Representatives of the response that has been
37
made, or is committed or proposed to be made, with respect to the
emergency.
9.6. Five Year Plan. The CEO of the Partnership shall prepare and
furnish annually to the Partnership Governance Committee a projected five year
business plan.
9.7. Commercial Loans.
(A) Other Loans. The Partnership Governance Committee may by
Partnership Governance Committee Action, authorize the CEO to
cause the Partnership to borrow funds from third party lenders.
No Partner shall be required, and the Partnership Governance
Committee shall not be authorized to require any Partner, to
guarantee or to provide other credit or financial support for any
loan.
(B) Partner Loans. The Partnership Governance Committee may by
unanimous Partnership Governance Committee Action, subject to
Section 3.8., authorize the CEO to cause the Partnership to
borrow money from a Partner.
9.8. Insurance and Risk Management. The Company is either an additional
named insured under LParent's insurance program or has its own policy of
insurance under LParent's insurance program and as of the Conversion Date,
LParent shall substitute the Partnership for the Company, making the Partnership
an additional named insured, if applicable, under LParent's insurance program.
As such coverages become subject to renewal or otherwise expire, the
Partnership, by Partnership Governance Committee Action, shall approve any
material change in the amount and scope of such coverages (including the extent
to which the Partnership will continue to be included as an additional named
insured under LParent's insurance program), or in the portion of the premium
charges for such coverages allocable to the Partnership.
10. TRANSFERS AND PLEDGES
10.1. Prohibition of Transfer. Except pursuant to Section 11. or as
described below in this Section 10., a Partner shall not, in any transaction or
series of transactions, directly or indirectly, (i) sell, assign or otherwise in
any manner dispose of all or any part of its Interest (such term, as used in
this Section 10.1., including any Profits Interest), whether by act, deed,
merger or otherwise (any of the foregoing, as referred to in this Section 10., a
"transfer"), or (ii) mortgage, pledge or create a lien or security interest upon
all or any part of its Interest; provided, however, that notwithstanding this
Section 10.1., a General Partner may transfer all or any portion of its Interest
to its Affiliated Limited Partner and a Limited Partner may transfer all or any
portion of its Interest to its Affiliated General Partner. Any attempt by a
Partner to transfer all or a portion of its Interest in violation of this
Agreement shall be void ab initio and shall not be effective to transfer such
Interest or any portion thereof.
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10.2. Transfers Prior to the Option Date. No Partner shall transfer all
or any part of its Interest or Profits Interest prior to the Option Date;
provided, however, that in any event this restriction shall cease upon the
expiration of the period during which the CITGO Partners may exercise their
option to increase their Participation Percentages under Section 6.6.
10.3. Transfers After the Option Date.
(A) After the earlier of the Option Date or the expiration of the
period during which the CITGO Partners may exercise their option
to increase their Participation Percentages under Section 6.6.,
an Affiliated Partner Group (the "transferring Partners") may
transfer all (but not less than all) of its Profits Interests;
provided, however, that it complies with all of the provisions of
Sections 10.3.(C), 10.3.(D), 10.3.(E) and 10.3.(F).
(B) After the earlier of the Option Date or the expiration of the
period during which the CITGO Partners may exercise their option
to increase their Participation Percentages under Section 6.6.,
any Affiliated Partner Group may transfer all (but not less than
all) of its Interests, collectively, but only if: (i) it obtains
the prior written consent of the other Affiliated Partner Group
(the "nontransferring Partners"), which consent may be withheld
in the sole discretion of such other Affiliated Partner Group;
(ii) it complies with the provisions of Sections 10.3.(C),
10.3.(D), 10.3.(E) and 10.3.(F); and (iii) the purchaser or
transferee of such Interests executes a written agreement to be
bound by this Agreement (including the encumbrance of such
Interest pursuant to this Agreement including Section 11.1.), to
assume and satisfy all the liabilities and pay and perform all
the obligations and duties of the transferring Partners and,
subject to the consent of the nontransferring Partners as
provided in Section 10.4., to become substituted Partners in
place of the transferring Partners.
(C) Any Affiliated Partner Group desiring to transfer its Interest
(such term, as used in Sections 10.3.(C), 10.3.(D), 10.3.(E) and
10.3.(F), meaning either its Interest or its Profits Interest, as
applicable) shall deliver a written notice to the other
Affiliated Partner Group, which notice shall specify the
Interests desired to be transferred and shall constitute an offer
to sell all (but not less than all) of the transferring Partners'
Interests (the "Purchase Offer"). The Purchase Offer shall
specify the price (which shall be cash payable in same-day funds
in Houston, Texas) and other terms (e.g., provisions for the
elimination of loans to or from the Partners, the release of any
guarantees, the procedure for closing the books on the effective
date of the sale and the treatment of Partnership distributions
payable to the transferring Partners) upon which the transferring
Partners are willing to sell all (but not less than all) of their
Interests to the nontransferring Partners. The nontransferring
Partners shall have sixty (60) days from the date of receipt of
the Purchase Offer within which to accept the Purchase Offer and
shall have the right to assign their rights with respect to the
39
Purchase Offer in whole or in part to an Affiliate or to any
other person or entity. If the nontransferring Partners or their
assignee accept the Purchase Offer, the closing shall take place
within sixty (60) days of such acceptance.
(D) If the nontransferring Partners do not accept a Purchase Offer
pursuant to Section 10.3.(C), the transferring Partners shall, as
provided herein, have one hundred eighty (180) days after
expiration of the first 60-day period described in Section
10.3.(C) (or after the earlier express written rejection of the
Purchase Offer by the nontransferring Partners) within which,
subject to the provisions of this Section 10.3.(D), Section
10.1., Section 10.3.(B) and Section 10.4., the transferring
Partners may attempt to sell all of their Interests, subject to
Section 10.3.(F), to a single (and only a single) third party at
a price and on terms and conditions that are identical to (or
more favorable in all respects to the transferring Partners than)
the cash price, terms and conditions contained in the Purchase
Offer. If during this 180-day period, the transferring Partners
identify a proposed purchaser (i) that is a single entity that is
organized under the laws of the United States, (ii) that is not
insolvent prior to or immediately upon consummation of the
proposed transfer, and (iii) that makes a bona fide offer (not
subject to due diligence, financing or any other similar
contingencies) to purchase the transferring Partners' Interests
at a cash price and on terms and conditions that are identical to
(or more favorable in all respects to the transferring Partners
than) the cash price, terms and conditions contained in the
Purchase Offer, the transferring Partners shall notify the
nontransferring Partners of the identity of the proposed
purchaser and the terms of the proposed sale (the "Second
Notice"). The nontransferring Partners or their assignee then
shall have thirty (30) days from the Second Notice within which
to elect to purchase the transferring Partner's Interests at the
cash price and on the terms and conditions contained in the
Second Notice. If the nontransferring Partners elect to make the
purchase, the closing shall take place within sixty (60) days of
its election to purchase.
(E) If the nontransferring Partners or their assignee do not elect to
purchase the transferring Partners' Interest after receiving the
Second Notice, then subject to Section 10.1., Section 10.3.(B)
and Section 10.4. the transferring Partners may then sell such
Interest to the third party at the cash price and on the terms
and conditions specified in the Second Notice; provided, however,
that if the transferring Partners do not dispose of their
Interest at the cash price and on the terms and conditions
specified in the Second Notice, and in all events within sixty
(60) days after expiration of the 30-day period described in the
penultimate sentence of Section 10.3.(D) (or after the earlier
express written rejection by the nontransferring Partners after
receiving the Second Notice), the transferring Partners' Interest
shall not be transferred and shall again be subject to the
restrictions contained in Section 10.3.
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(F) Inclusion of General or Limited Partner Interest. No Limited
Partner may transfer its Interest to any Person unless the
Interest of its Affiliated General Partner is simultaneously
transferred to such Person or a Wholly Owned Subsidiary of such
Person. No General Partner may transfer its Interest to any
Person unless the Interest of its Affiliated Limited Partner is
simultaneously transferred to such Person or a Wholly Owned
Subsidiary of such Person.
10.4. Transferees. The purchaser or transferee of a Partner's Interest
pursuant to Section 10.3. or Section 10.5. shall not become a Partner without
the consent of the nontransferring Partners as provided for in clause (i) of
Section 10.3.(B) A transferee who acquires an Interest pursuant to Section 10.3.
or Section 10.5. but who does not receive such consent shall be entitled only to
allocations of income and loss and distributions with respect to such Interest
in accordance with this Agreement and shall not be or become entitled to
exercise the rights or powers of a Partner. However, the nontransferring
Partners may, in the exercise of their sole discretion, at any time thereafter
consent to such purchaser or transferee becoming a Partner or withhold such
consent. A purchaser or transferee as to whom the nontransferring Partners at
any time grants such consent shall be deemed to become a substituted Partner in
place of the transferring Partners when and as provided in such consent.
10.5. Pledge of Interest.
(A) Except as contemplated by Section 10.5.(B) and Section 11.1., no
Partner shall mortgage, pledge, encumber or create or suffer to
exist any pledge, lien or encumbrance upon, or security interest
in ("pledge"), all or any part of its Interest (such term, as
used in this Section 10.5., including any Profits Interest). Any
attempt by a Partner to pledge all or a portion of its Interest
in violation of this Agreement shall be void ab initio and shall
not be effective to pledge such Interest.
(B) Any Affiliated Partner Group (the "pledging Partners") may pledge
its Interest; provided, however, that (i) any such pledge, shall
expressly be subject and fully subordinated, on terms reasonably
acceptable to the other Affiliated Partner Group (the
"nonpledging Partners"), to the encumbrance of the pledging
Partners' Interests pursuant to this Agreement including Section
11.1. and (ii) no such pledge shall give any right to the pledgee
as a Partner (as such term is used in the Act) with respect to
the Partnership or the nonpledging Partners or create any duty to
the pledgee on the part of the Partnership or the nonpledging
Partners other than the payment to the extent pledged of
distributions from the Partnership under Section 7.
(C) Prior to any pledge under Section 10.5.(B), (i) the pledging
Partners shall submit to the nonpledging Partners all
documentation relating to the proposed pledge for the approval of
the nonpledging Partners and shall not effect such pledge without
the prior written approval of the nonpledging Partners (such
approval not to be unreasonably withheld);
41
(ii) the proposed pledgee shall deliver a written agreement of
such pledgee (which shall be binding upon any of its successors
or assigns) to the Partnership and the nonpledging Partners,
providing that (a) the right to foreclose upon the pledging
Partners' Interests pursuant to the pledge shall be conditioned
upon delivery to the nonpledging Partners of an opinion of
counsel satisfactory to the nonpledging Partners that such
foreclosure would not cause the Partnership to be treated as an
association taxable as a corporation and that any "termination"
of the Partnership within the meaning of Section 708 of the Code
caused by such foreclosure would not create any adverse
consequences for the nonpledging Partners and (b) the pledgee's
right to receive any distributions that are pledged is subject to
being reduced pursuant to the provisions of this Agreement; and
(iii) the proposed pledgee and the pledging Partners shall
deliver to the nonpledging Partners a written agreement, in form
reasonably satisfactory to the nonpledging Partners, providing
that (a) the pledgee shall notify the nonpledging Partners in
writing at least one hundred twenty (120) days prior to
initiation of foreclosure proceedings, (b) the nonpledging
Partners shall have the right during such 120-day period to
purchase the debt owed by the pledging Partners to the pledgee,
together with all rights of the pledgee in, to and with respect
to the pledged Partners' Interests, for an amount equal to the
outstanding principal amount of such debt plus the interest due
and payable on and any cost of collection associated with such
debt, (c) immediately upon the purchase of the debt, together
with all rights of the pledgee in, to and with respect to the
pledged Partners' Interests, by the nonpledging Partners pursuant
to clause (iii)(b) of this Section 10.5.(C), the pledgee shall
(1) deliver to the nonpledging Partners a written acknowledgment
that its debt has been satisfied in full and (2) take any action
necessary to transfer to the nonpledging Partners possession of a
perfected first priority security interest in the pledging
Partners' Interest and (d) the pledging Partners appoint the
nonpledging Partners as its attorney-in-fact authorized to take
on the pledging Partners' behalf all actions required to effect
any purchase of the pledgee's debt and any transfer of the
pledging Partners' Interest pursuant to this clause (iii) of this
Section 10.5.(C).
11. REMEDIES AND DISSOLUTION
11.1. Security for Performance. Each Affiliated Partner Group (the
"Pledgor Group") shall and hereby does pledge and grant to the other Affiliated
Partner Group (the "Pledgee Group") a first priority lien on and security
interest in the Pledgor Group's Interests in the Partnership as security for the
satisfaction of all the Pledgor Group's liabilities and the payment and
performance of all the Pledgor Group's obligations and duties under this
Agreement. At any time and from time to time, the Pledgor Group also will
promptly execute and deliver all such further agreements, instruments and
documents and take all such further action that may be necessary or desirable or
that the Pledgee Group may reasonably request in order (i) to perfect and
protect the lien and security interest created hereby, including the execution
and filing of appropriate financing statements and
42
directing the Partnership to register, on the Partnership's books and records,
the pledge of the Pledgor Group's Interest to the Pledgee Group; (ii) to enable
the Pledgee Group to exercise and enforce its rights and remedies under this
Agreement in respect to the Pledgor Group's Interest; or (iii) otherwise to
effect the purposes of this Section 11.1. The Pledgor Group hereby authorizes
the Pledgee Group to file, without the signature of such Pledgor Group granting
the security interest provided for herein, where permitted by applicable law, at
any time the Pledgee Group acting as a secured party deems necessary or
appropriate to protect its lien and security interest under this Agreement, one
or more financing or continuation statements, and amendments thereto, relating
to such lien and security interest. If the Pledgor Group fails to perform any
agreement or obligation contained in this Section 11.1., the Pledgee Group may
perform, or cause performance of, such agreement or obligation, and the expenses
of the Pledgee Group so performing incurred in connection therewith shall be
payable to the Pledgee Group, on demand, by the Pledgor Group that has failed to
so perform. The Pledgee Group shall not, without the prior written consent of
the Pledgor Group, sell, assign, transfer, mortgage, pledge or otherwise
encumber any of its rights in the Pledgor Group's Interests as pledged to the
Pledgee Group under this Section 11.1. except with regard to a failure by the
Pledgor Group to satisfy the Pledgor Group's liabilities, and the payment and
performance of all its obligations and duties under this Agreement.
11.2. Default.
(A) Each of the following events shall, upon determination of the
existence thereof as provided in Section 11.2.(B), constitute a
"Default" and create the rights provided for in this Agreement in
favor of the Nondefaulting Partners against the Defaulting
Partners:
(1) the failure by a Partner to make any contribution,
including, without limitation, a Partner's failure to make
when due any contribution for capital expenditures as
determined by Partnership Governance Committee Action to be
due form the Partners, or loan to the Partnership as
required by this Agreement, which failure continues for at
least three (3) Business Days from the date such
contribution should have been received;
(2) other than as described in item (1) above, a material breach
or violation under this Agreement by a Partner, which breach
or violation continues unremedied for at least ninety (90)
days after the Nondefaulting Partners have given written
notice of such breach or violation to the Defaulting
Partners;
(3) as to Lyondell Partners, a material breach or default by
LParent under the terms of the Contribution Agreement, which
breach or default continues unremedied or uncured for at
least 90 days after the Partnership or the CITGO GP has
given written notice of such breach or default to LParent;
43
(4) as to CITGO Partners, a material breach or default by
CParent under the terms of the Product Purchase Agreement,
which breach or default continues unremedied or uncured for
at least ninety (90) days after the Partnership or Lyondell
GP has given written notice of such breach or default to
CParent; or
(5) the withdrawal, retirement, resignation or dissolution of a
Partner; or the bankruptcy of a Partner or its Parent
(including the filing against a Partner or its Parent of a
petition in bankruptcy or seeking any reorganization,
liquidation or similar relief, which petition shall remain
undismissed or unstayed for an aggregate of ninety (90)
days; the adjudication of a Partner or its Parent as
Insolvent, or the institution by a Partner or its Parent of
proceedings to be adjudicated as a voluntary bankrupt, or
the consent by a Partner or its Parent to the filing of a
bankruptcy proceeding against it, or the failure of a
Partner or its Parent to contest a bankruptcy proceeding
against it; or the appointment, or any consent by a Partner
or its Parent to the appointment, of a receiver, custodian,
liquidator or trustee for the Partner or its Parent or for
all or any substantial portion of its property, which
appointment remains undismissed or unstayed for a period of
ninety (90) days).
(B) The existence of a Default shall be determined either by written
agreement among the Partners or by resort to an appropriate
court. Once such Default has been determined to exist (including,
as appropriate, exhausting all appeals), then the Defaulting
Partners shall have thirty (30) days from the determination date
to cure such Default; provided, however, that there shall not be
a cure period for a Default described in Section 11.2.(A)(5) and
that the cure period for a Default described in Section
11.2.(A)(1) shall be limited to three (3) Business Days.
(C) The day upon which the Default is determined to exist (or if the
Default is subject to a cure period and is not timely cured, then
the day following the end of the applicable cure period) shall be
the "Default Date." Without prejudice to a Partner's (or any of
its Affiliates') rights to seek temporary or preliminary judicial
relief, prior to any such Default Date all rights and obligations
of the Partners under this Agreement shall remain in full force
and effect.
(D) With respect to any Default, the term "Damages" shall mean (in
each case to the extent reasonably and necessarily incurred) any
and all obligations (including all obligations to take an
affirmative or curative act), liabilities, damages (including,
damages arising out of any breach of any representation or
warranty, damages related to investigations, proceedings, audits,
the interruption of the Partnership's Business, restrictions upon
the use of, or adverse impact on, the assets or the Partnership's
Business, or the interruption, breach or termination of
44
any Related Agreements, including any lost profits attributable
thereto), fines, penalties, deficiencies, losses, judgments,
settlements, costs and expenses (including costs and expenses
incurred in connection with performing obligations, bonding and
appellate costs and attorneys', accountants', engineers', health,
safety, environmental and other consultants' and investigators'
fees and disbursements, liquidating, selling or offering for sale
the Partnership Business and assets or winding up the Partnership
Business, or other payments in respect of such payments) arising
out of or incurred in connection with such Default, regardless of
whether any of the foregoing are foreseeable, unforeseeable,
matured or unmatured, existing or contingent as of the date of
such Default. "Damages" also shall include, if and to the extent
interest is not already included therein under applicable law or
other provisions hereof and subject to Section 12.11., interest
on amounts actually due until payment thereof is made at a rate
per annum equal to the rate set forth in Section 12.10.(B).
11.3. Remedies for Default. Provided that there shall be no duplication
of remedies, without prejudice to the Nondefaulting Partners' right to foreclose
upon the Defaulting Partners' Interest pursuant to the lien and security
interest created in Section 11.1. or to pursue independently and at any time,
including simultaneously, any other remedy it may have under law, including the
right to seek to recover Damages, or equity, upon determination (either
judicially or otherwise) of a Default and the related Damages, and the failure
of the Defaulting Partners to cure such Default as provided in Section 11.2.(B),
the Nondefaulting Partners in their sole discretion may elect to pursue the
following remedies:
(A) At any time prior to the expiration of sixty (60) days from the
Default Date (or if later, from the judicial or other
determination of the Default Date and the related Damages), the
Nondefaulting Partners may elect to exercise their purchase right
for the Defaulting Partners' Interest as described in Section
11.5. and thereby cause the Partnership to dissolve under Section
11.9(D); provided, however, that within ten (10) days after the
determination of the Fair Market Value, the Nondefaulting
Partners may elect not to proceed with a purchase of the
Defaulting Partners' Interest, in which case the Nondefaulting
Partners shall have an additional thirty (30) days from its
determination not to proceed to elect as an alternative remedy
Section 11.3.(B) below; and
(B) At any time prior to the expiration of sixty (60) days from the
Default Date (or if later, from the judicial or other
determination of the Default Date and the related Damages) (or if
the Nondefaulting Partners initially elected to pursue its remedy
under Section 11.3.(A) above, then at any time prior to the
expiration of the 30-day extension period), the Nondefaulting
Partners may elect to effect a liquidation of the Partnership
under Section 11.6. and thereby cause the Partnership to dissolve
under Section 11.9.(E).
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11.4. Consequences of Default. Notwithstanding any other provision of
this Agreement, commencing on the Default Date and (i) prior to the
Nondefaulting Partners' collection of Damages through the exercise of its legal
remedies or otherwise, or (ii) while the Nondefaulting Partners are pursuing its
remedies under Section 11.5. or Section 11.6., the Defaulting Partners'
Representatives on the Partnership Governance Committee shall not have any
voting rights and all matters requiring Partnership Governance Committee Action
shall be determined solely by the Nondefaulting Partners' Representatives;
provided, however, that the foregoing loss of voting rights shall not occur as a
result of a Default caused solely by the insolvency, bankruptcy or similar
proceedings of a Partner or a Parent described in the second through final
clauses of Section 11.2.(A)(5); and provided further, that the foregoing loss of
voting rights shall not apply to those voting rights contained in Sections
3.8.(A), 3.8.(B), 3.8.(C), 3.8.(D), 3.8.(F), and 3.8.(Y), which voting rights
shall continue in full force and effect at all times.
11.5. Purchase of Defaulting Partners' Interest
(A) The Nondefaulting Partners shall have the right to elect to
purchase the Interest of the Defaulting Partners by delivering
notice of such election in writing to the Partnership Governance
Committee and the Defaulting Partners (the "Purchase Notice").
The purchase of such Interest shall be consummated prior to the
expiration of thirty (30) days from the determination of the
purchase price as provided herein.
(B) The purchase price that the Nondefaulting Partners shall pay to
the Defaulting Partners for the Defaulting Partners' Interest
shall be an amount equal to (i) the amount that the Defaulting
Partners would receive in a Liquidation (assuming that the sale
under Section 11.11.(B)(1) is for an amount equal to the Fair
Market Value) reduced by (ii) the Damages incurred by the
Partnership.
(C) "Fair Market Value" shall be the fair market value of all of the
Partnership Business and assets (including tangible and
intangible assets) as of the date of the Purchase Notice, without
giving effect to the Damages, determined as follows:
(1) The Defaulting Partners and the Nondefaulting Partners shall
first attempt to agree on such value, which if agreed to
shall be the Fair Market Value;
(2) If the Partners are unable to agree within twenty (20) days
of the Purchase Notice, then the Defaulting Partners, on the
one hand, and the Nondefaulting Partners, on the other
hand, shall (at their own cost) cause an independent,
qualified appraiser to deliver a written appraisal of such
value within fifty (50) days of the Purchase Notice. If the
lower appraised value is greater than or equal to ninety
percent (90%) of the higher appraised value, then the
average of the two appraised values shall be the Fair Market
Value; and
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(3) If the lower appraised value is less than ninety percent
(90%) of the higher appraised value, then the Partners shall
jointly appoint a mutually acceptable neutral person or
entity (the "Neutral") not affiliated with either of the
Partners within seventy (70) days of the Purchase Notice
(and if the Partners have been unable to agree upon such
appointment within sixty (60) days of the Purchase Notice,
then such Neutral shall upon the application of either the
Defaulting Partners or the Nondefaulting Partners be
appointed within seventy (70) days of the Purchase Notice by
the Center for Public Resources, or if such appointment is
not so made then promptly thereafter by the American
Arbitration Association in New York, New York, or if such
appointment is not so made then promptly thereafter by the
senior United States District Court judge sitting in the
Borough of Manhattan, in New York, New York), and the
Neutral shall within ninety (90) days of the Purchase Notice
or, if later, within twenty (20) days of the appointment of
the Neutral determine which of the two appraised values is
closest to the fair market value of the Partnership's assets
as determined by the Neutral, and that appraised value shall
be the Fair Market Value.
11.6. Liquidation. The Nondefaulting Partners shall have the right to
elect to dissolve and liquidate the Partnership pursuant to the procedures in
Section 11.11. (such procedures constituting a "Liquidation"); provided,
however, that any amount payable to the Defaulting Partners in such Liquidation
pursuant to Section 11.11.(B)(7) shall be reduced by the Nondefaulting Partners'
Participation Percentage of the Damages incurred by the Partnership. The
Nondefaulting Partners shall deliver notice of such election to dissolve and
liquidate in writing to the Partnership Governance Committee and the Defaulting
Partners.
11.7. Closing of Purchase Rights. In the event of the exercise of
purchase rights pursuant to Section 11.5. (any such event a "Purchase"), the
Purchase shall be consummated by appropriate and customary documentation
(including customary representations and warranties) as soon as practicable and
in any event within the applicable time period specified in Section 11.5 or
Section 11.8. The Partners entitled or obligated to Purchase shall have the
right to transfer or assign, in whole or in part, its right or obligation to
Purchase to an Affiliate or to a third party.
11.8. Recision. In the event that the Partnership is rendered Insolvent
by reason of a breach, default or failure of an agreement, covenant, indemnity,
representation or warranty made by LParent in the Contribution Agreement
(including the exhibits and schedules thereto) and such breach, default or
failure has not been cured as provided in the Contribution Agreement (a
"Recision Event"), then CITGO GP shall deliver a notice to Lyondell GP
specifying in reasonable detail the particulars of such Recision Event (a
"Recision Event Notice"). Within 60 days after the earlier to occur of
agreement between the Partners or final judicial determination that a Recision
Event has occurred, Lyondell Partners shall purchase CITGO Partners' Interest (a
"Recision Purchase") for an amount of cash
47
(the "Recision Purchase Price") equal to the sum, without duplication, of the
following amounts, each calculated or determined from the Closing Date to the
date of purchase: (i) CITGO Partners' capital contributions made pursuant to
Section 6., plus (ii) all Profits allocated to CITGO Partners, minus (iii) all
Losses allocated to CITGO Partners and minus (iv) the amount of all
distributions actually made to CITGO Partners pursuant to Section 7.4. In the
event of a Recision Purchase, CITGO Partners shall execute and deliver to
Lyondell Partners such documents as Lyondell Partners shall reasonably require
to evidence and effect the Recision Purchase against receipt by CITGO Partners
of the Recision Purchase Price. The amount of any debt to CITGO Partners under
Section 7.3.(C) shall be deemed to be paid upon payment of the Recision Purchase
Price.
11.9. Dissolution. The Partnership shall be dissolved within the meaning
of the Act upon the first to occur of the following:
(A) the written determination of all General Partners to dissolve the
Partnership;
(B) the bankruptcy (including the matters referred to in Section
11.2.(A)(5) of the Partnership;
(C) the withdrawal, retirement, resignation, dissolution or
bankruptcy (including the matters referred to in Section
11.2.(A)(5)) of a Partner;
(D) the closing of a Purchase as the result of a Default;
(E) the election of the Nondefaulting Partners to effect a
dissolution of the Partnership under Section 11.6.; or
(F) any other act or event which results in the dissolution of a
limited partnership under the Act.
11.10. Reconstitution of Partnership. If the Partnership dissolves
pursuant to Section 11.9.(C) or Section 11.9(D) (even if other dissolution
provisions also are invoked), it may be reconstituted and continued upon the
written consent of all remaining Partners other than the former Partner that
sold its Interest.
11.11. Liquidation; Winding Up and Distributions upon Dissolution.
(A) Upon a dissolution, absent a reconstitution and continuation of
the Partnership under Section 11.10., the Partnership shall
commence to wind up its affairs and the Partners shall file
appropriate documents of dissolution and proceed to effect the
Liquidation of the Partnership pursuant to the procedures set
forth in this Section 11.11.; provided, however, that in the
event of a dissolution resulting from an event described in
Section 11.9.(D), sufficient time shall be allowed prior to any
liquidation or winding up of the Partnership to give effect to
the remedies provided by Section 11.5. and Section 11.6.
Notwithstanding any other provision of this Agreement, during the
period of the
48
winding up, the Nondefaulting Partners (or the Partnership
Governance Committee if the Partners have agreed to terminate the
Partnership or there are otherwise not Nondefaulting Partners)
shall make all decisions relating to the conduct of any business
or operations, and the sale or disposition of the Partnership's
assets.
(B) Upon dissolution of the Partnership, the following shall occur
unless the Partners agree otherwise:
(1) The Partnership's assets shall be collected and sold to
unaffiliated third parties in arm's-length transactions;
provided, however, that any Partner or its Affiliates shall
have the right to participate in any public sale or auction
of the Partnership's property or any other reasonable
competitive bid process (such as a private sale pursuant to
a "data room" process conducted by an independent investment
banking firm);
(2) Gain or loss with respect to the Partnership's sale or
distribution of assets shall be allocated to the Partners'
Capital Accounts as provided in Section 7.6.;
(3) Any liabilities owed to third parties shall be paid in full;
(4) Appropriate reserves for contingencies shall be established;
(5) Any outstanding loans that have been made to the Partnership
by any Partner shall be repaid in full;
(6) CITGO Partners' Capital Accounts shall be reduced by the
amount of the outstanding principal of any promissory note
contributed to the Partnership pursuant to Section 6.6.; and
(7) Any remaining cash or non-cash assets that cannot be sold
for cash shall be distributed to the Partners in accordance
with their positive Capital Account balances.
No Partner shall have any obligation to contribute capital to restore
any negative balance in its Capital Account.
11.12. Enforcement. Only a General Partner shall have the ability to
enforce the provisions of this Section 11.
12. MISCELLANEOUS
12.1. Confidentiality and Use of Information. Each Partner will keep
confidential all information regarding the business of the Partnership and will
not use any such information in any manner not related to the business of the
Partnership; provided, however, that the term "information" as used in this
Section does not include any information that (i) is or becomes generally
available to and known by the public
49
or the petroleum refining industry (other than as a result of an unpermitted
disclosure directly or indirectly by the Partnership or a Partner), (ii) is or
becomes available to a Partner on a nonconfidential basis from a source other
than the Partnership or a Partner; provided, however, that such source is not
and was not bound by a confidentiality agreement with, or other obligation of
secrecy to, the Partnership or any other Partner, (iii) has already been or is
hereafter independently acquired or developed by a Partner without violating any
confidentiality agreement with or other obligation of secrecy to the Partnership
or another Partner or (iv) is generated by the Partnership with the intention
that it not be held as confidential.
12.2. Auditors. Selection of the Partnership's auditors will be delegated
to the Finance-Control Committee. The Partnership Governance Committee will
have final authority to select, appoint and establish the terms of the
engagement of the Partnership's auditors. The Partnership Governance Committee
shall, in consultation with the Finance and Control Committee, establish the
accounting policies for the Partnership, including the policy for determining
whether an expenditure should be capitalized or expensed.
12.3. Indemnification of Officers.
(A) The Partnership shall indemnify any person who was or is a named
defendant or respondent or is threatened to be made a named
defendant or respondent to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal to such
an action, suit or proceeding and any inquiry or investigation
that could lead to such an action, suit or proceeding
(collectively, such actions, suits, proceedings, appeals,
inquiries and investigations are referred to collectively as
"Proceedings" and individually as "Proceeding") by reason of the
fact that such person either is or was an officer of the
Partnership, or, while an officer of the Partnership, is or was
serving at the request of the Partnership as a director, manager,
officer, partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another domestic or foreign
corporation, limited partnership, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other
enterprise, against judgments, penalties (including excise and
similar taxes), fines, settlements and reasonable expenses
actually incurred by such person in connection with such
Proceeding if it is determined that such person conducted himself
in good faith, and if such conduct was in such person's official
capacity as an officer of the Partnership, in a manner he
reasonably believed to be in the best interests of the
Partnership and, in all other cases, in a manner he reasonably
believed was not opposed to the best interests of the
Partnership, and, in the case of any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful; provided,
however, that if a person is found liable to the Partnership or
is found liable on the basis that personal benefit was improperly
received by him, the indemnification shall not be available. The
Partnership may pay or reimburse expenses incurred by an officer
50
in connection with such person's appearance as a witness or other
participation in a Proceeding at a time when such person is not a
named defendant or respondent in such Proceeding.
(B) The determination to be made in the preceding subsection (A)
shall be made (i) by the Partnership Governance Committee; or
(ii) by special legal counsel selected by the Partnership
Governance Committee. A determination as to the reasonableness
of expenses (including court costs and attorneys' fees) shall be
made in the same manner as the determination that indemnification
is permissible.
(C) Reasonable expenses incurred by an officer in connection with a
Proceeding may be paid by the Partnership in advance of the final
disposition of such Proceeding and without any of the
determinations specified in the preceding subsection (B) upon
receipt by the Partnership of a written affirmation by the
officer of his good faith belief that he has met the standard of
conduct necessary for indemnification under this Section 12.3.
and a written undertaking by or on behalf of the officer to repay
such amount if it is ultimately determined that he is not
entitled to be indemnified by the Partnership as authorized in
this Section 12.3., which undertaking shall be an unlimited
general obligation of such officer and may be unsecured.
(D) The right to indemnification conferred in this Section 12.3.
shall be a contract right and shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under
any other law, agreement, Partnership Governance Committee
Action, or otherwise, both as to action in their official
capacities and as to action in another capacity while acting as
an officer and shall continue as to a person who has ceased to be
an officer and shall inure to the benefit of the heirs, executors
and administrators of such person. Any indemnification of or
advance of expenses to an officer in accordance with this Section
12.3. shall be reported in writing to the Partnership Governance
Committee.
(E) The Partnership may purchase and maintain insurance on behalf of
any person who is or was an officer or employee of the
Partnership, or who is or was serving at the request of the
Partnership as a manager, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another
foreign or domestic corporation, limited partnership,
partnership, joint venture, sole proprietorship, trust, other
enterprise, or employee benefit plan, against any liability
asserted against or incurred by that person in such a capacity or
arising out of his status as such a person, whether or not the
Partnership would have the power to indemnify such person against
such liability under this Section 12.3.
(F) Except as indicated in the proviso in Section 12.3.(A), the
Partnership intends that the indemnification provided hereunder
shall indemnify its
51
officers to the fullest extent possible under the Act; and if any
indemnification which would otherwise be granted by this Section
12.3. shall be disallowed by any competent court or
administrative body as illegal, then any officer with respect to
whom such adjudication was made, and any other officer, shall be
indemnified to the fullest extent permitted under the Act.
12.4. Waivers, Modifications and Amendments. All modifications or
amendments of this Agreement or the Certificate of Limited Partnership shall
require the approval of Representatives representing 100 percent of the total
votes as provided in Section 3.8.(C).
12.5. Further Assurances. From time to time, each Partner agrees to
execute and deliver such additional documents, and will provide such additional
information and assistance as the Partnership may reasonably require to carry
out the terms of this Agreement and to accomplish the Partnership's Business.
12.6. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors of the Partners, but, except as expressly
provided herein, no Limited Partner or its Affiliated General Partner may assign
or delegate any of their rights or obligations under this Agreement without the
prior written consent of the other Partners, which consent shall be in the sole
and absolute discretion of such other Partners. Any purported assignment or
delegation without such consent shall be void and ineffective.
12.7. Benefits of Agreement Restricted to the Parties. This Agreement is
made solely for the benefit of the Partnership and the Partners, and no other
person or entity shall have any right, claim or cause of action under or by
virtue of this Agreement.
12.8. Expenses. Except as otherwise provided herein, each party hereto
shall be responsible for its own expenses incurred in connection with this
Agreement.
12.9. Currency Conversions. All contributions, allocations, distributions
and other payments shall be made, and all calculations performed and books and
records kept, in United States currency, without any reference to foreign
currency exchange rates or other conversion calculations.
12.10. Payment Terms and Interest Calculations
(A) If the payment due date for any payment hereunder (including
Capital Contributions and Damages) falls on a Saturday or a bank
or federal holiday, other than a Monday, the payment shall be due
on the past preceding business day. If the payment due date
falls on a Sunday or Monday bank or federal holiday, the payment
shall be due on the following business day.
(B) Interest shall accrue on any unpaid and outstanding amount from
the time such amount is due and payable through the date upon
which such amount, together with accrued interest thereon, is
paid in full. Interest
52
shall, subject to the provisions of Section 12.11., accrue at a
per annum rate equal to the lesser of (i) 125 percent of the
Agreed Rate, compounded quarterly, to the extent permitted by law
or (ii) the Highest Lawful Rate.
(C) A wire transfer or delivery of a check shall not operate to
discharge any payment under this Agreement and shall be accepted
subject to collection.
12.11. Usury Savings Clause. Notwithstanding any other provision of this
Agreement, it is the intention of the parties hereto to conform strictly to
applicable usury laws regarding the use, forbearance or detention of any
indebtedness arising under this Agreement whether such laws are now or hereafter
in effect, including the laws of the United States of America or any other
jurisdiction whose laws are applicable, and including any subsequent revisions
to or judicial interpretations of those laws, in each case to the extent they
are applicable to this Agreement (the "Applicable Usury Laws"). Accordingly, if
any payments made pursuant to this Agreement result in any person having paid
any interest in excess of the Maximum Amount, as hereinafter defined, or if any
transaction contemplated hereby would otherwise be usurious under any Applicable
Usury Laws, then, in that event, it is agreed as follows: (i) the provisions of
this Section 12.11. shall govern and control; (ii) the aggregate of all interest
under Applicable Usury Laws that is contracted for, charged or received under
this Agreement shall under no circumstances exceed the Maximum Amount, and any
excess shall be promptly refunded to the payor by the recipient hereof; (iii) no
person shall be obligated to pay the amount of such interest to the extent that
it is in excess of the Maximum Amount; and (iv) the effective rate of any
interest payable under this Agreement shall be ipso facto reduced to the Highest
Lawful Rate, as hereinafter defined, and the provisions of this Agreement
immediately shall be deemed reformed, without the necessity of the execution of
any new document or instrument, so as to comply with all Applicable Usury Laws.
All sums paid, or agreed to be paid, to any person pursuant to this Agreement
for the use, forbearance or detention of any indebtedness arising hereunder
shall, to the fullest extent permitted by the Applicable Usury Laws, be
amortized, pro rated, allocated and spread throughout the full term of any such
indebtedness so that the actual rate of interest does not exceed the Highest
Lawful Rate in effect at any particular time during the full term thereof. As
used herein, the term "Maximum Amount" means the maximum nonusurious amount of
interest that may be lawfully contracted for, charged or received by any person
in connection with any indebtedness arising under this Agreement under all
Applicable Usury Laws, and the term "Highest Lawful Rate" means the maximum rate
of interest, if any, that may be charged to any person under all Applicable
Usury Laws on any principal balance from time to time outstanding pursuant to
this Agreement.
12.12. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall, unless otherwise
provided for elsewhere in this Agreement, be in writing and shall be deemed to
have been duly given if and when (i) transmitted by telecopier facsimile, (ii)
delivered
53
personally or (iii) mailed, first class mail, postage prepaid, return receipt
requested, as follows:
(a) if to CITGO LP, CITGO GP or its Representatives:
CITGO Refining Investment Company
P. O. Xxx 0000
Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telecopy: 000-000-0000
with a copy to:
Vice President and General Counsel
CITGO Petroleum Corporation
P. O. Xxx 0000
Xxxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
(b) if to Lyondell LP, Lyondell GP or its Representatives:
Lyondell Refining Company
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Vice President, General Counsel & Secretary
with a copy to:
Lyondell Refining LP, LLC
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Vice President, General Counsel & Secretary
Telecopy: 000-000-0000
(c) if to the Partnership:
LYONDELL-CITGO Refining LP
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: President & CEO
Telecopy: 713-321-6900
Any changes to the addresses set forth above shall be made by written
notice delivered to the Secretary of the Partnership who shall maintain
such addresses.
12.13. Waiver of Immunity. EACH OF THE CITGO PARTNERS HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM FOR ITSELF OR
54
WITH RESPECT TO ITS REVENUES, ASSETS OR PROPERTIES IMMUNITY FROM THE
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS. TO THE EXTENT ANY
JURISDICTION WOULD ATTRIBUTE SUCH IMMUNITY TO EITHER OR BOTH OF THE CITGO
PARTNERS, EACH OF THE CITGO PARTNERS HEREBY WAIVES ANY RIGHT TO CLAIM SUCH
IMMUNITY AND TO ANY DEFENSES AVAILABLE TO IT UNDER THE FOREIGN SOVEREIGN
IMMUNITIES ACT, AND ANY DEFENSE BASED ON IMMUNITY ARISING UNDER U.S. FEDERAL OR
STATE LAW, OR UNDER ANY INTERNATIONAL, FOREIGN OR OTHER APPLICABLE LAW.
12.14. Governing Law. THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAW.
12.15. Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY OF THE PARTNERS OR THE PARTNERSHIP OR ANY DISPUTE
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
RELATED HERETO SHALL BE BROUGHT IN THE FEDERAL OR XXXXX XXXXXX XX XXX XXXXX XX
XXX XXXX LOCATED IN THE BOROUGH OF MANHATTAN, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE PARTNERS AND THE PARTNERSHIP ACCEPTS THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
(AS FINALLY ADJUDICATED) RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
EACH OF THE PARTNERS AND THE PARTNERSHIP SHALL APPOINT C T CORPORATION SYSTEM,
THE XXXXXXXX-XXXX CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS
AGENT TO RECEIVE ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH
COURT IN THE STATE OF NEW YORK BY ENTERING INTO AN AGREEMENT WITH THE AGENT TO
SUCH EFFECT, AND EACH PARTNER AND THE PARTNERSHIP SHALL MAINTAIN SUCH AGREEMENT
(OR AN APPROPRIATE SUBSTITUTE TO THE SAME EFFECT WITH THE SAME OR A DIFFERENT
AGENT) FOR THE ENTIRE TERM OF EXISTENCE OF THE PARTNERSHIP. THE FOREGOING
CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE SERVICE OF PROCESS
SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF NEW
YORK FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO CONFER
RIGHTS ON ANY PERSON OTHER THAN THE PARTNERSHIP AND THE PARTNERS.
IN LIGHT OF THE EXPRESS INTENT OF THE PARTIES TO SUBMIT TO THE JURISDICTION
OF NEW YORK COURTS FOR THE
55
RESOLUTION OF ANY AND ALL DISPUTES ARISING UNDER THIS AGREEMENT, THE PARTIES
FURTHER HEREBY WAIVE ANY AND ALL AFFIRMATIVE DEFENSES THEY COULD OR MIGHT
OTHERWISE BE ABLE TO ASSERT BASED ON AN ALLEGED INCAPACITY OF THE PARTNERSHIP TO
ASSERT A CLAIM OR COUNTER-CLAIM IN EITHER THE FEDERAL OR XXXXX XXXXXX XX XXX
XXXXX XX XXX XXXX LOCATED IN THE BOROUGH OF MANHATTAN. THE AFFIRMATIVE DEFENSES
AND MOTIONS HEREBY WAIVED INCLUDE BUT ARE NOT LIMITED TO OBJECTIONS TO SUIT
PURSUANT TO N.Y. BUSINESS CORPORATION LAW (S) 1312, N.Y. PARTNERSHIP LAW
(S) 121-907, N.Y. CLS GENERAL BUSINESS LAW (S) 130 SUBD. 1(II)(A) AND N.Y.
GENERAL ASSOCIATIONS LAW (S) 18(4). THE PARTIES WAIVE ALL AFFIRMATIVE DEFENSES
AND DEFENSIVE MOTIONS PREDICATED ON, BUT NOT LIMITED TO, THE FOREGOING STATUTORY
PROVISIONS WITH FULL KNOWLEDGE OF THEIR RIGHTS, IF ANY, UNDER THOSE PROVISIONS.
IT IS THE EXPRESS AND KNOWING INTENTION OF THE PARTIES TO WAIVE THE RIGHT TO
ASSERT AS AN AFFIRMATIVE DEFENSE THE LEGAL INCAPACITY OF THE PARTNERSHIP TO
MAINTAIN A CLAIM OR COUNTER-CLAIM ON THE GROUNDS THAT THE PARTNERSHIP FAILED TO
COMPLY WITH ANY OR ALL REGISTRATION, CERTIFICATION, NOTIFICATION, FILING OR
DESIGNATION-OF-AGENT REQUIREMENTS SET FORTH AND ENFORCED BY THE FOREGOING OR ANY
SIMILAR STATUTORY PROVISIONS.
12.16. Entire Agreement. This Agreement, together with the Certificate of
Limited Partnership, the Master Transaction Agreement, the Confidentiality
Agreements (as defined in the Master Transaction Agreement) and the Related
Agreements constitute the entire agreement between the parties and supersedes
all prior agreements and understandings, oral and written, between the parties
with respect to the subject matter hereof, with the exception of those matters
which will continue to be governed under the Regulations.
12.17. Severability. In the event that any provision of this Agreement
shall finally be determined to be unlawful, such provision shall, so long as the
economic and legal substance of the transactions contemplated hereby is not
affected in any materially adverse manner as to any Partner, be deemed severed
from this Agreement and every other provision of this Agreement shall remain in
full force and effect.
12.18. Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or
presumptions that any Partner had a greater or lesser hand in drafting this
Agreement; (iii) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate; (iv) the word "includes" and its
syntactic variants mean "includes, but is not limited to" and corresponding
syntactic variant expressions; (v) the plural shall be deemed to
56
include the singular, and vice versa; (vi) each gender shall be deemed to
include the other genders; and (vii) each exhibit, attachment and schedule to
this Agreement is a part of this Agreement.
12.19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same original document.
[signature page follows]
57
IN WITNESS WHEREOF, this Limited Partnership Agreement has been executed on
behalf of each Partner, by their respective officers thereunto duly authorized,
effective as of the 31st day of December, 1998.
LYONDELL REFINING LP, LLC
a Delaware limited liability company (Lyondell LP)
By:
---------------------------------
Name:
Title:
CITGO GULF COAST REFINING, INC.
a Delaware corporation (CITGO GP)
By:
---------------------------------
Name:
Title:
LYONDELL REFINING COMPANY,
a Delaware corporation (Lyondell GP)
By:
---------------------------------
Name:
Title:
CITGO REFINING INVESTMENT COMPANY
an Oklahoma corporation (CITGO LP)
By:
---------------------------------
Name:
Title:
58
EXHIBIT 1
TO PARTNERSHIP AGREEMENT
DEFINITION OF TERMS IN PARTNERSHIP AGREEMENT
Act. The Delaware Revised Uniform Limited Partnership Act, as amended and
in effect from time to time. See Section 2.2.
Action. See Section 5.11.(D).
Additional Construction Loan. As defined in the Regulations.
Affiliate. As to any specified Person, any other Person that directly or
indirectly through one or more intermediaries controls or is controlled by or is
under common control with the specified Person; provided, however, that for
purposes of this Agreement and regardless of whether the specified Person would
otherwise be deemed an Affiliate for any other purpose or under any other
agreement, the Partnership or any entities controlled by the Partnership shall
not be deemed to be an Affiliate of LParent, Lyondell GP or Lyondell LP or any
entities controlled by LParent, Lyondell GP or Lyondell LP or of CParent, CITGO
GP or CITGO LP or any entities controlled by CParent, or CITGO GP or CITGO LP.
For purposes of this definition the term "control" shall have the meaning set
forth in 17 CFR 230.405.
Affiliated General Partner. In the case of Lyondell LP, the "Affiliated
General Partner" shall mean Lyondell GP. In the case of CITGO LP, the
"Affiliated General Partner" shall mean CITGO GP.
Affiliated Limited Partner. In the case of Lyondell GP, the "Affiliated
Limited Partner" shall mean Lyondell LP. In the case of CITGO GP, the
"Affiliated Limited Partner" shall mean CITGO LP.
Affiliated Partner Group. A General Partner and its Affiliated Limited
Partner.
Agent. See Section 12.15.
Agreed Rate. With respect to any period for which interest is to be
calculated, the Citibank, N.A. "base rate" from time to time in effect for each
day in such period, calculated by multiplying the Citibank, N.A. "base rate" by
the number of days such "base rate" is in effect, determining the sum of the
products obtained thereby and dividing such sum by the number of days in such
period.
Alternate. See Section 3.2.(B).
Annual Meeting. See Section 3.4.(A).
Applicable Usury Laws. See Section 12.11.
Assets. The assets defined as such in the Contribution Agreement together
with all assets provided to the Partnership pursuant to the Related Agreements.
Exhibit 1, Page 1
Asset Value. With respect to any asset, the asset's adjusted basis for
federal income tax purposes, except that the Asset Value of any asset
contributed by a Partner to the Partnership or acquired with funds contributed
by a Partner shall be the fair market value of such asset on the date of
contribution or on any date on which the asset is revalued pursuant to Section
7.1.(C) hereof; provided, however, that the fair market value of the Assets (net
of the Assumed Liabilities) on each such date shall be deemed to be $825
million, reduced, without duplication, (i) by the amount of any payment
described in Section 7.1.(D) and (ii) by the amount of any indemnification
forgone by the Partnership pursuant to the proviso of Section 5.2 of the
Contribution Agreement; and provided further (a) that the fair market value of
the Working Capital on each such date shall be the amount determined pursuant to
Exhibit 6.1(B) and (b) that the fair market value of the assets which are
acquired with funds contributed by a Partner in each such date shall be the
original cost of such assets. Any such adjustments shall be effective on a
prospective basis only.
Auxiliary Committee. See Section 3.10.
Average Participation Percentage. The mathematical average of a Partner's
Participation Percentages, by Calendar Quarter, for any applicable period.
Blended Rate. For any Calendar Quarter or portion thereof, a fraction (i)
the numerator of which is equal to the aggregate federal income tax
depreciation, amortization or other cost recovery deductions for such period
with respect to all assets and (ii) the denominator of which is equal to the
aggregate adjusted tax basis of the assets on the date such assets were
contributed to the Partnership or, if any adjustment to the Capital Accounts has
occurred pursuant to Section 7.1.(C), the date of the most recent such
adjustment.
Business Day. Any day other than a Saturday, Sunday or other day on which
banks are closed in New York City, New York.
Calendar Quarter. In each year, each calendar quarter.
Capital Account. See Section 7.1.
Capital Budget. See Section 9.2.(B).
Capital Contribution. See Section 6.4.
Capital Enhancement Projects. See Section 9.2.(B).
Cash Balance Amount. See Section 7.5.
CEO. The President and Chief Executive Officer of the Partnership. See
Section 4.5.
CERCLA shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
Chemical Substance shall mean (i) any chemical substance, pollutant,
contaminant, constituent, chemical, mixture, raw material, intermediate, product
or byproduct that is regulated (including any requirement for the reporting of
any Release thereof) under any Environmental Law, as now or hereafter in effect,
or defined or listed as an industrial, toxic, deleterious, harmful,
Exhibit 1, Page 2
radioactive, infectious, disease-causing or hazardous substance, material or
Waste under any Environmental Law, as now or hereafter in effect, and (ii)
petroleum or any fraction thereof, asbestos or asbestos-containing material or
polychlorinated biphenyls.
CITGO GP. CITGO Gulf Coast Refining, Inc., a Delaware corporation, the
General Partner that is an Affiliate of CParent. See Section 2.2.
CITGO LP. CITGO Refining Investment Company, an Oklahoma corporation, the
Limited Partner that is an Affiliate of CParent. See Section 2.2.
CITGO Partners. CITGO GP and CITGO LP.
CITGO Partners Option Date Amount. The product of (i) CITGO Partners
Average Participation Percentage for the period beginning on the day following
the In-Service Date and ending on the Option Date times (ii) the remainder of
Option Date Working Capital minus In-Service Date Working Capital.
Closing Date. See Section 2.2.
Code. The Internal Revenue Code of 1986, as amended and in effect from time
to time and any successor thereto.
Company. LYONDELL-CITGO Refining Company Ltd., a Texas limited liability
company, which was converted into the Partnership as of the date of this
Agreement.
Compensation Committee. See Section 3.10.(A).
Conflict Circumstance. See Section 5.7.
Conflicted General Partner. See Section 5.7.
Contribution Agreement. The agreement dated July 1, 1993 between the
Company and LParent pursuant to which the Refinery Business and certain other
Assets and Working Capital were contributed to the Company by LParent on behalf
of Lyondell Refining Company n/k/a Lyondell GP.
Conversion Date. See Section 2.2.
CParent. CITGO Petroleum Corporation, a Delaware corporation. See Section
2.2.
Damages. See Section 11.2.(D).
Default. See Section 11.2.(A).
Default Date. See Section 11.2.(C).
Defaulting Partners. Lyondell GP and Lyondell LP, in the case of a Default
by Lyondell GP or Lyondell LP; and CITGO GP and CITGO LP, in the case of a
Default by CITGO GP or CITGO LP.
Exhibit 1, Page 3
Depreciation. For each Calendar Quarter or portion thereof, an amount equal
to the federal income tax depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such period. Notwithstanding
the preceding sentence, if the Asset Value (after taking into account any
adjustment pursuant to the proviso of Section 7.1.(C)) of an asset differs from
its adjusted tax basis on the date such asset is contributed or, if applicable,
on the date of any adjustment to Capital Accounts which has taken place pursuant
to Section 7.1.(C), Depreciation for any period shall be an amount which bears
the same ratio to such Asset Value (as adjusted pursuant to the proviso of
Section 7.1.(C)) as the federal income tax depreciation, amortization or other
cost recovery deduction for such period bears to such adjusted tax basis, except
that in the case of any asset that has a zero adjusted tax basis on either the
date of its contribution to the Partnership or on the date of any adjustment
pursuant to Section 7.1.(C), Depreciation for any period shall be an amount
equal to the product of (i) the Asset Value (as adjusted pursuant to the proviso
of Section 7.1.(C)) of such asset on the date of contribution, or, if
applicable, the date of the most recent adjustment to Capital Accounts pursuant
to Section 7.1.(C) and (ii) the Blended Rate.
Distributable Cash. The amount of cash distributable to the Partners as
determined under Section 7.3., and in regard to each Partner.
Distributions. See 6.4.(A)(2).
Environment shall mean any ambient air, surface water, drinking water,
groundwater, land surface, subsurface strata, river sediment, natural resources
or real property and the physical buildings, structures and fixtures thereon,
including sewer, septic and waste treatment, storage or disposal systems.
Environmental Law shall mean any legal requirement or permit relating to (i)
the Environment, including pollution, contamination, cleanup, preservation,
protection and reclamation of the Environment; (ii) health or safety, including
the exposure of employees and other Persons to any Chemical Substance; (iii) the
Release or threatened Release of any Chemical Substance, noxious noise or odor,
including investigation, study, assessment, testing, monitoring, containment,
removal, remediation, response, cleanup and abatement of such Release or
threatened Release; and (iv) the management of any Chemical Substance, including
the manufacture, generation, formulation, processing, labeling, use, treatment,
handling, storage, disposal, transportation, distribution, re-use, recycling or
reclamation of any Chemical Substance.
Executive Officers. Those officers of the Partnership then designated as
Executive Officers by Partnership Governance Committee Action.
Fair Market Value. See Section 11.5(C).
Finance-Control Committee. See Section 3.10(A).
Financing Plan. Certain Partnership plans, as approved by unanimous actions
of the Partnership Governance Committee, setting forth the Partnership's funding
requirements for the Capital Budget and the sources of funds to finance such
requirements.
GAAP. Generally accepted accounting principles.
Exhibit 1, Page 4
General Partners. Each Person who executes this Agreement and who is hereby
admitted to the Partnership as a general partner of the Partnership, unless such
General Partner ceases to be a General Partner hereunder or sells, transfers,
forfeits or otherwise disposes of its Interest and is replaced by a Substitute
General Partner in accordance with this Agreement and the Act, and each Person
that becomes a Substitute General Partner, if any, of the Partnership as
provided herein, in such Person's capacity as a general partner of the
Partnership.
Highest Lawful Rate. See Section 12.11.
Indemnified Losses. See Section 5.11.(A)(1).
Indemnified Party. See Section 5.11.(D).
Indemnifying Party. See Section 5.11.(D).
Initial Construction Loan. As defined in the Regulations.
In-Service Date. February 28, 1997, except for the Working Capital
Valuation for which the In-Service Date is March 31, 1997.
In-Service Date Working Capital. The value of the Working Capital on the
In-Service Date determined pursuant to Exhibit 6.1(B).
Insolvent and Insolvency. The Partnership is insolvent if it has ceased to
pay its debts in the ordinary course of business or cannot pay its debts as they
become due or is insolvent within the meaning of the federal bankruptcy law.
Intended Percentage. See Section 6.6.(A).
Interest. At any point in time, the entire ownership interest of a Partner
in the Partnership at such time. See Section 5.8.
Limited Partner. Each Person who executes this Agreement and who is hereby
admitted to the Partnership as a limited partner of the Partnership, unless such
Limited Partner ceases to be a Limited Partner hereunder or sells, transfers,
forfeits or otherwise disposes of its Interest and is replaced by a Substitute
Limited Partner in accordance with this Agreement and the Act, and each Person
that becomes a Substitute Limited Partner, if any, of the Partnership as
provided herein, in such Person's capacity as a limited partner of the
Partnership.
Liquidation. See Section 11.6.
LParent. Lyondell Chemical Company, a Delaware corporation, formerly known
as Lyondell Petrochemical Company. See Section 2.2.
Lyondell GP. Lyondell Refining Company, a Delaware corporation, the General
Partner that is an Affiliate of LParent.
Lyondell LP. Lyondell Refining LP, LLC, a Delaware limited liability
company, the Limited Partner that is an Affiliate of LParent.
Exhibit 1, Page 5
Lyondell Partners. Lyondell GP and Lyondell LP.
Lyondell Partners Option Date Amount. The product of (i) Lyondell Partners
Average Participation Percentage for the period beginning on the first day
following the In-Service Date and ending on the Option Date times (ii) the
remainder of the Option Date Working Capital minus In-Service Date Working
Capital.
Maintenance Capital. Those capital expenditures reasonably required to fund
capital expenditures that are necessary to maintain the Refinery in
substantially the same condition existing on the Closing Date.
Master Transaction Agreement. The agreement so named, dated as of May 5,
1993, among LParent, CParent, Lyondell GP and CITGO LP.
Maximum Amount. See Section 12.11.
Neutral. See Section 11.5.(C)(3).
Nonconflicted General Partner. See Section 5.7.
Nondefaulting Partners. The Partners other than the Defaulting Partners.
See Section 11.2.
Operating Budget. See Section 9.2.(A).
Operating Committee. See Section 3.10.(A).
Option Date. See Section 6.6(A).
Option Date Payment. See Section 6.6(C).
Option Date Working Capital. The value of Working Capital on the Option
Date determined pursuant to Section 6.6.
Owners. Lyondell GP and CITGO LP in their capacity as members of the
Company.
Parents. LParent and CParent.
Partners. The General Partners and the Limited Partners on the date of this
Agreement until such Person ceases to be a partner of the Partnership.
Partnership Business. See Section 2.3.
Partnership Governance Committee. The committee of six Representatives
through which the General Partners manage the Partnership. See Section 3.1.(A).
Partnership Governance Committee Action. The formal actions taken by vote
of the Partnership Governance Committee, which is the exclusive method by which
the General Partners manage the Partnership. See Section 3.6(A).
Exhibit 1, Page 6
Participation Percentage. The percentage calculated for each Partner, from
time to time, pursuant to Section 6.4.
Person. Any natural person or any corporation, limited liability company,
partnership, group, joint venture, trust or other entity.
Pledgee Group. See Section 11.1.
Pledgor Group. See Section 11.1.
Product Sales Agreement. The Product Sales Agreement-Refined Products dated
July 1, 1993 between the Company and CITGO Petroleum Corporation, as amended
from time to time.
Profit and/or Losses. For each Calendar Quarterly period or other period,
an amount equal to the Partnership's taxable income or loss for such year or
period, determined for federal income tax purposes in accordance with Code
Section 703(a) (for this purpose, all items of income, gain, loss, deduction or
credit required to be stated separately pursuant to Code Section 703(a)(1) shall
be included in Profits or Losses), with the following adjustments:
(i) any income of the Partnership that is exempt form federal income
tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such Profits or subtracted
from such Losses;
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Profits or Losses pursuant to this definition,
shall be subtracted from such Profits or added to such Losses;
(iii) gain or loss resulting from any disposition of an asset with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Asset Value (as adjusted pursuant to
the proviso in Section 7.1.(C), adjusted to reflect Depreciation; and
(iv) in lieu of the depreciation, amortization, and other cost
recovery deductions otherwise required to be taken into account in computing
such Profits or Losses, there shall be taken into account Depreciation.
Profits Interest. The right of any Partner to receive Profits allocated or
cash distributed to such Partner pursuant to Section 7, but not including the
right to participate in or manage the affairs of the Partnership as a Partner,
the right to receive any information or accounting of the affairs of the
Partnership, the right to inspect the books or records of the Partnership or any
other right of a Partner pursuant to this Agreement.
Proper Ratio. With respect to the Capital Account balances of the Partners
at any time, the ratio of the Partners' Participation Percentages at such time.
Purchase. See Section 11.7.
Exhibit 1, Page 7
Purchase Notice. Notice given by the Nondefaulting Partners exercising
their purchase rights. See Section 11.5.(A).
Purchase Offer. See Section 10.3.(C).
Recision Event. See Section 11.8.
Recision Event Notice. See Section 11.8.
Refinery. The Refinery located at 12000 Lawndale in Houston, Texas.
Refinery Business. The Refinery and lube blending facility located in
Birmingport, Alabama and all related assets (of every kind, nature, character
and description, tangible and intangible, real, personal or mixed, wherever
located), businesses, contracts and permits, that are used solely in the
operations of such Refinery and lube blending facility, and all activities
reasonably related or incidental thereto.
Regulations. See Section 2.2.
Related Agreements. Those agreements defined as such in Exhibit 1A to this
Agreement.
Release shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching, escaping,
emanation or migration of any Chemical Substance in, into or onto the
Environment of any kind whatsoever, including the movement of any Chemical
Substance through or in the Environment, exposure of any type in any workplace,
any release as defined under CERCLA or any other Environmental Law and any
noxious noise or odor emission.
Representatives. Those persons designated by each General Partner to serve
as such General Partner's representatives on the Partnership Governance
Committee. See Section 3.2.(A).
Second Notice. See Section 10.3.(D).
Secretary. See Section 4.7.
Substitute General Partner. A Person who is admitted as a General Partner
to the Partnership in place of and with the rights of a General Partner.
Substitute Limited Partner. A Person who is admitted as a Limited Partner
to the Partnership in place of and with the rights of a Limited Partner.
TMP. The "tax matters partner" as defined in Section 6231(a)(7) of the
Code. See Section 8.3.(A).
Treasury Regulations. The income tax regulations promulgated by the
Department of Treasury, as amended from time to time. Treasury Regulations
include final and temporary regulations.
Unanimous Partnership Governance Committee Action. See Section 3.8.
Exhibit 1, Page 8
U.S. Partnership Return of Income. See Section 8.3.(A).
Vice President. See Section 4.6.
Wholly Owned Subsidiary. As to any Person, a subsidiary of such Person all
of the equity interests of which are owned, directly or indirectly, by such
Person.
Working Capital. The Partnership's current assets minus current
liabilities (excluding the current portion of long-term debt and capital
leases). Current assets and current liabilities will be determined in
accordance with current accounting principles under GAAP as in effect at the
Conversion Date, except (i) that any cash, cash equivalents and short-term
investments included in the capital fund will be excluded and (ii) that
inventory will be carried at its Fair Market Value. The inventory value on the
Conversion Date will be its actual Fair Market Value as determined by Exhibit
6.1.(B) and on other valuation dates will be valued in accordance with Exhibit
6.1.(B).
Exhibit 1, Page 9
EXHIBIT 1A
RELATED AGREEMENTS
TIER 1 RELATED AGREEMENTS
1. Amended and Restated Regulations
2. Performance Guaranty and Control Agreement
3. Contribution Agreement, including the following exhibits:
3.1 General Warranty Deed (relating to Houston Land) (Exhibit A-1)
3.2 General Warranty Deed (relating to Birmingport Land) (Exhibit A-2)
3.3 Assignment of Real Property Interests (relating to the "Ballpark")
(Exhibit A-3)
3.4 Pipeline Deed, Xxxx of Sale and Assignment of Easements (relating to
the Company Pipelines) (Exhibit A-4)
3.5 Assignment and Assumption Agreement (between Lyondell and the
Company relating to Assets other than real property) (Exhibit A-5)
3.6 Grants of Easements for Pipelines and Meter Sites (Exhibit B)
4. Crude Supply Agreement
5. Supplemental Supply Agreement
6. Product Sales Agreement Refined Products -- CITGO
7. Inter-Plant Agreements:
7.1 Company Feedstock Purchase Agreements:
(A) Heavy Pyrolysis Gasoline
(B) Light Pyrolysis Gasoline
(C) C5 Raffinate
(D) OP Hydrogen
(E) MeOH Hydrogen
(F) Pyrolysis Gas Oil
(G) Toluene
(H) Methanol
Exhibit 1A, Page 1
(I) RAFF II
(J) RAFF II Isomerate
(K) MTBE
(L) Isopentane/Heavy Py Mix
(M) Ethylene
7.2. Company Product Sales Agreement -- Lyondell:
(A) OP -- 400
(B) OP -- 700
(C) Mixed Propylene
(D) Refinery Normal Butane
(E) Refinery Propane
(F) Alkylation Normal Butane
(G) Alkylation Propane
(H) Benzene
(I) Toluene
7.3. Tolling Agreement
TIER 2 RELATED AGREEMENTS
1. Employee Transfer and Benefits Agreement
2. Intellectual Property Rights Agreement
3. Trademark Assignment Agreement
4. Trademark License Agreement
5. Tradename Licensing Agreement
6. Software Agreement
7. Terminal and Storage Agreement
8. Mont Belvieu Storage and Pipeline Agreement
9. Marketing Services Agreement -- Aromatics
10. Paraffinic Lubricants Base Oil Sales Agreement
11. Naphthenic Lubricants, White Mineral Oils and Specialty Oils Sales
Agreement
Exhibit 1A, Page 2
12. Lubricant Facility Operating Agreement
13. Manufacturing Services Agreement
14. Employee Services Agreement
15. Administrative Services Agreement
16. Product Sales Agreement MTBE -- Lyondell and CITGO
17. Refinery Office Lease
18. Exchange Agreement
19. Assignment and Assumption Agreement - CITGO and LCR (Lubricants)
EXHIBIT 6.4
CONVERSION
DATE
CAPITAL PARTICIPATION
CONTRIBUTION PERCENTAGES
Lyondell LP 784,315,812 48.65
Lyondell GP 162,828,154 10.10
$ 947,143,966 58.75%
-------------- ------
CITGO LP 648,866,453 40.25
CITGO GP 16,120,906 1.00
-------------- ------
$ 664,987,359 41.25%
-------------- ------
$1,612,131,325 100.00%
============== ======
EXHIBIT B
FORM OF QUALIFIED SUBORDINATED DEBT
THIS NOTE IS NOT TRANSFERABLE OR ASSIGNABLE
(EXCEPT AS PROVIDED UNDER "ASSIGNMENT")
PROMISSORY NOTE
$____________ (U.S.) ____________, ____
Houston, Texas
FOR VALUE RECEIVED, and intending to be legally bound, LYONDELL-CITGO
Refining LP, a Delaware limited partnership (the "Maker"), promises to pay to
________________ (the "Payee") at its offices located at ________, ___________,
in lawful money of the United States of America and in immediately available
funds, __________________________ AND NO/100 DOLLARS ($____________________), or
so much thereof as may be advanced and outstanding hereunder prior to maturity,
together with interest thereon at the annual rate specified below.
INTEREST RATE
The unpaid principal of this Note shall bear interest from the date of
advance to maturity during any Interest Period (as defined herein), at a rate
per annum that shall be equal to the lesser of (i) LIBOR (as defined herein)
plus the Basis Points (as defined herein) or (ii) the Highest Lawful Rate (as
defined herein).
"Basis Points", for the purposes of this Note, shall mean the percentage
points added to LIBOR for purposes of determining the rate of interest this Note
shall bear for any Interest Period.
"Interest Period", for the purposes of this Note, shall mean any period of
30 days, 180 days or 360 days beginning on the advancement date (in the case of
the initial Interest Period) or on the last day of the next preceding Interest
Period (in the case of any subsequent Interest Period).
For the purposes of this Note, "LIBOR", with respect to any Interest
Period, means the rate of interest (expressed as an annual rate), as it appears
on the display screen of the Dow Xxxxx Telerate Service or the Reuter Monitor
Money Rates Service, at which deposits in United States dollars are offered to
major banks in the London interbank market, at approximately __:__ _.m. (New
York time) on the second London Banking Day before the first day of that
Interest Period in an amount substantially equal to the amount of the unpaid
principal scheduled to be outstanding throughout that Interest Period.
Not later than two days before the commencement of each Interest Period
(including the initial Interest Period), the Payee shall provide the Maker with
three Basis Point options for the
succeeding Interest Period, with one option being based on interest being reset
at 30 days, another at 180 days and the third at 360 days. The Payee shall make
a good faith effort to set the Basis Point options that correspond to the
Interest Periods in accordance with current market conditions and as if the
Maker has a long-term debt rating issued by Standard & Poor's Corporation and
its successors of at least BBB+. On the day prior to the commencement of each
Interest Period (including the initial Interest Period), the Maker shall, in its
sole discretion, select the duration of each successive Interest Period (and
thus the Basis Points that correspond to such Interest Period) and shall notify
the Payee of its selection. If the Maker does not so notify the Payee, the
duration of the succeeding Interest Period shall be 30 days (and the Basis
Points shall be those that correspond to such 30 day Interest Period).
All past due principal and, to the fullest extent permitted by applicable
law, interest shall bear interest after the due date thereof at the rate per
annum equal to the lesser of (i) the rate of interest payable under this Note on
the date of default plus 3% or (ii) the Highest Lawful Rate.
Interest shall be calculated on the basis of a 365-day year for the actual
number of days elapsed.
TERMS OF REPAYMENT
Interest on the unpaid principal amount of this Note shall be due and
payable quarterly, commencing on ________________, 19__, and continuing
regularly and quarterly thereafter on the _____ day of each [March, June,
September, December] until maturity. On ______________, 19__ [the 10th
anniversary of Closing Date], the entire unpaid principal balance of this Note,
together with all accrued unpaid interest, shall be due and payable in full.
PREPAYMENT
The Maker reserves the right to prepay this Note, in whole or in part, at
any time, without penalty or notice. All prepayments hereunder, whether
designated as payments of principal or interest, shall be applied first to
accrued and unpaid interest, if any, and then to principal.
TERMS OF ISSUANCE; ADJUSTMENT OF PRINCIPAL
This Note is issued pursuant to the terms of the Maker's limited
partnership agreement, as now or hereafter in effect ("Partnership Agreement").
Reference is hereby made to the Partnership Agreement for the terms and
provisions thereof, to which this Note is in all respects subject, including,
without limitation, provisions for the reduction of the principal amount to be
repaid hereunder.
-2-
SUBORDINATION
Repayment of this Note by the Maker is fully subordinated to the prior
payment in full of any indebtedness of the Maker for borrowed money, whether now
outstanding or subsequently incurred ("Senior Indebtedness").
In the event that the Maker shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, or in the event that any event
of default with respect to Senior Indebtedness shall have occurred and be
continuing, or would occur as a result of the payment referred to herein, then,
upon written notices of such default or event of default to the Maker by the
holders of Senior Indebtedness or any trustee therefor, unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist, no direct or indirect payment (in cash, property, securities, by set-
off or otherwise) shall be made or agreed to be made on account of the principal
of or interest on this Note.
In the event of any insolvency, bankruptcy, receivership, conservatorship,
reorganization, readjustment of debt, marshalling of assets and liabilities or
similar proceedings or any liquidation, dissolution or winding-up of or relating
to the Maker as a whole, whether voluntary or involuntary, all obligations of
the Maker to holders of Senior Indebtedness (including any interest thereon
accruing after the commencement of any such proceedings) shall be entitled to be
paid in full before any payment shall be made on any account of the principal of
or interest on this Note. In the event of any such proceeding, after payment in
full of all sums owing with respect to Senior Indebtedness, the Payee, together
with the holders of any obligations of the Maker ranking on a parity with this
Note, shall be entitled to be paid from the remaining assets of the Maker the
amounts at the time due and owing on account of unpaid principal of and interest
on this Note before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Maker ranking junior to this Note.
DEFAULT
If any payment provided herein, either of principal or interest, is not
paid when due or within five days of delivery by Payee to Maker of written
notice of such failure to pay, or in the event of the insolvency or bankruptcy
of the Maker hereof or if any proceedings in bankruptcy or for the relief of
debtors or readjustment of debts is filed by or against the Maker hereof, then
the Payee may, at its option, declare this Note to be forthwith due and payable.
WAIVER; UNCONDITIONAL OBLIGATION
All signers and endorsers of this Note are to be regarded as principals as
to their respective joint and several liability to any legal holder hereof, and
the Maker and each of the guarantors, sureties and endorsers, to the fullest
extent permitted by applicable law, hereby expressly and severally waive grace,
and all notices, demands, presentments for payment, notice of nonpayment,
-3-
protest and notice of protest, notice of intent to accelerate, notice of
acceleration of the indebtedness due hereunder, and diligence in collecting this
Note or enforcing any security rights of the Payee under any document securing
this Note, and agree (i) that the Payee may, at any time, and from time to time,
extend the date of maturity of all or any part hereof, without notifying or
consulting with the Maker or principal hereof, who shall remain fully obligated
for the payment hereof; (ii) that it will not be necessary for the Payee, in
order to enforce payment of this Note, to first institute or exhaust its
remedies against the Maker or other party liable therefor or to enforce its
rights against any security for this Note; and (iii) to any substitution,
exchange or release of any security now or hereafter given for this Note, or the
release of any party primarily or secondarily liable hereon, or any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Maker or any guarantors, sureties and endorses in respect of
the obligations of any such party in respect of this Note.
REIMBURSEMENT OF COSTS AND EXPENSES
To the fullest extent permitted by applicable law, if this Note is
collected by suit or legal proceedings or through bankruptcy proceedings, the
Maker agrees to pay to the Payee the reasonable costs and reasonable attorney's
fees incurred in the collection hereof.
NO WAIVER; ELECTION OF REMEDIES
No failure by the Payee to exercise, and no delay in exercising, any right
or remedy hereunder or under any document, instruments or agreements executed in
connection herewith shall constitute a waiver thereof on the part of the Payee;
nor shall any single or partial exercise of any right or remedy under any
documents, instruments or agreements executed in connection herewith preclude
any other or further exercise thereof or the exercise of any other right or
remedy.
USURY SAVINGS CLAUSE
It is the intention of the parties hereto to conform strictly to applicable
usury laws regarding the use, forbearance or detention of the indebtedness
evidenced by this Note whether such laws are now or hereafter in effect,
including the laws of the United States of America or any other jurisdiction
whose laws are applicable, and including any subsequent revisions to or judicial
interpretations of those laws, in each case to the extent they are applicable to
this Note (the "Applicable Usury Laws"). Accordingly, if any acceleration of
the maturity of this Note or any payment by the Maker or any other person
results in the Maker or such other person having paid any interest in excess of
the Maximum Amount, as hereinafter defined, or if any transaction contemplated
hereby would otherwise be usurious under any Applicable Usury Laws, then, in
that event, it is agreed as follows: (i) the provisions of this paragraph shall
govern and control; (ii) the aggregate of all interest under Applicable Usury
Laws that is contracted for, charged or received under this Note shall under no
circumstances exceed the Maximum Amount, and any excess shall be promptly
refunded to the Maker by the Payee; (iii) neither the Maker nor any other person
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the Maximum
-4-
Amount; and (iv) the effective rate of interest on this Note shall be ipso facto
reduced to the Highest Lawful Rate, as hereinafter defined, and the provisions
of this Note immediately shall be deemed reformed, without the necessity of the
execution of any new document or instrument, so as to comply with all Applicable
Usury Laws. All sums paid, or agreed to be paid, to the Payee for the use,
forbearance or detention of the indebtedness of the Maker to the Payee evidenced
by this Note shall, to the fullest extent permitted by the Applicable Usury
Laws, be amortized, pro rated, allocated and spread throughout the full term of
the indebtedness evidenced by this Note so that the actual rate of interest does
not exceed the Highest Lawful Rate in effect at any particular time during the
full term hereof. As used herein, the term "Maximum Amount" means the maximum
nonusurious amount of interest which may be lawfully contracted for, charged or
received by the Payee in connection with the indebtedness evidenced by this Note
under all Applicable Usury Laws, and the term "Highest Lawful Rate" means the
maximum rate of interest, if any, that may be charged the Maker under all
Applicable Usury Laws on the principal balance of this Note from time to time
outstanding.
ASSIGNMENT
This Note may not be transferred or assigned by the Payee to any person;
provided, however, that the Payee may transfer or assign this Note to a bona
fide affiliate of the Payee (which affiliate shall also be referred to herein as
"Payee").
GOVERNING LAW
THIS NOTE SHALL BE SUBJECT TO AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY CONFLICTS
OF LAWS PRINCIPLES.
JURISDICTION; AGENT FOR SERVICE OF PROCESS; WAIVER
ANY JUDICIAL PROCEEDING BROUGHT AGAINST EITHER OF THE PARTIES TO THIS
AGREEMENT OR ANY DISPUTE UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER RELATED HERETO SHALL BE BROUGHT IN A STATE OR FEDERAL
COURT LOCATED IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES TO THIS
AGREEMENT ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURT AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES SHALL APPOINT C T
CORPORATION SYSTEM, THE XXXXXXXX-XXXX CORPORATION SYSTEM, INC. OR A SIMILAR
ENTITY (THE "AGENT"), AS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF PROCESS IN
ANY PROCEEDING IN A STATE OR FEDERAL COURT LOCATED IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK BY ENTERING INTO AN AGREEMENT AS OF THE DATE OF THIS
AGREEMENT WITH THE AGENT TO SUCH EFFECT, AND EACH PARTY SHALL MAINTAIN SUCH
AGREEMENT (OR AN APPROPRIATE SUBSTITUTE TO
-5-
THE SAME EFFECT WITH THE SAME OR A DIFFERENT AGENT) FOR THE ENTIRE TERM OF THIS
AGREEMENT. THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO
RECEIVE SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF
PROCESS IN THE STATE OF NEW YORK FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND
SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE RESPECTIVE
PARTIES TO THIS AGREEMENT. IN LIGHT OF THE EXPRESS INTENT OF THE PARTIES TO
SUBMIT TO THE JURISDICTION OF NEW YORK COURTS FOR THE RESOLUTION OF ANY AND ALL
DISPUTES ARISING UNDER THIS AGREEMENT, THE PARTIES FURTHER HEREBY WAIVE ANY AND
ALL AFFIRMATIVE DEFENSES THEY COULD OR MIGHT OTHERWISE BE ABLE TO ASSERT BASED
ON AN ALLEGED INCAPACITY OF THE MAKER TO ASSERT A CLAIM OR COUNTER-CLAIM IN
EITHER THE FEDERAL OR XXXXX XXXXXX XX XXX XXXXX XX XXX XXXX LOCATED IN THE
BOROUGH OF MANHATTAN. THE AFFIRMATIVE DEFENSES AND MOTIONS HEREBY WAIVED INCLUDE
BUT ARE NOT LIMITED TO OBJECTIONS TO SUIT PURSUANT TO N.Y. BUSINESS CORPORATION
LAW (S) 1312, N.Y. PARTNERSHIP LAW (S) 121-907, N.Y. CLS GENERAL BUSINESS LAW
(S) 130 SUBD. 1(ii)(a) AND N.Y. GENERAL ASSOCIATIONS LAW (S) 18(4). THE PARTIES
WAIVE ALL AFFIRMATIVE DEFENSES AND DEFENSIVE MOTIONS PREDICATED ON, BUT NOT
LIMITED TO, THE FOREGOING STATUTORY PROVISIONS WITH FULL KNOWLEDGE OF THEIR
RIGHTS, IF ANY, UNDER THOSE PROVISIONS. IT IS THE EXPRESS AND KNOWING INTENTION
OF THE PARTIES TO WAIVE THE RIGHT TO ASSERT AS AN AFFIRMATIVE DEFENSE THE LEGAL
INCAPACITY OF THE MAKER TO MAINTAIN A CLAIM OR COUNTER-CLAIM ON THE GROUNDS THAT
THE MAKER FAILED TO COMPLY WITH ANY OR ALL REGISTRATION, CERTIFICATION,
NOTIFICATION, FILING OR DESIGNATION-OF-AGENT REQUIREMENTS SET FORTH AND ENFORCED
BY THE FOREGOING OR ANY SIMILAR STATUTORY PROVISIONS.
-6-
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed at
the place and on the date first above appearing.
LYONDELL-CITGO REFINING LP
By:
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Name:
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Title:
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ATTEST
By:
--------------------------------
Secretary
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