WARRANT EXERCISE AND SHARE EXCHANGE AGREEMENT, dated as of April __,
2002 (this "Agreement"), by and among Occidental Petroleum Corporation, a
Delaware Corporation, ("Oxy Corp.") Occidental C.O.B. Partners, a Delaware
general partnership ("Oxy Partnership" (together with Oxy Corp., "Oxy"),
Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited
partnership ("BCP III"), Blackstone Offshore Capital Partners III L.P., a
Delaware limited partnership ("BOCP III"), Blackstone Family Investment
Partnership III L.P., a Delaware limited partnership ("BFIP III"; together with
BCP III and BOCP III, "Blackstone"), Premcor Inc., a Delaware corporation
("Premcor"), and Sabine River Holding Corp., a Delaware corporation ("Sabine").
WITNESSETH:
-----------
WHEREAS, Premcor's authorized capital stock includes 7,000,000 shares
of Class F Common Stock of Premcor, par value $0.01 per share (the "Premcor
Class F Common Stock"), of which 6,101,010 such shares are currently held by Oxy
Partnership (the "Existing Oxy F Shares");
WHEREAS, (a) Oxy Corp. is also the holder of a warrant, dated as of
August 4, 1999 (the "Oxy Warrant"), to purchase 30,000 shares of common stock of
Sabine, par value $0.01 per share ("Oxy Warrant Shares"), at a per share price
equal to $0.09, (b) upon the exercise of the Oxy Warrant, Oxy has the option to
exchange all of such Oxy Warrant Shares for a total of 270,000 shares of Premcor
Class F Common Stock ("Oxy Exchange F Shares") pursuant to the Share Exchange
Agreement, dated as of August 4, 1999 (the "Share Exchange Agreement"), among
Oxy Corp, Sabine and Premcor and (c) Oxy Corp. owns 681,818 shares ("Oxy Sabine
Shares") of common stock of Sabine, par value $0.01 per share;
WHEREAS, each of BCP III, BOCP III and BFIP III holds warrants, dated
as of August 4, 1999 (collectively, the "Blackstone Warrants"), to purchase an
aggregate of 2,430,000 shares (the "Blackstone Warrant Shares") of common stock
of Premcor, par value $0.01 per share ("Premcor Common Stock"), at a per share
price equal to $0.01;
WHEREAS, Premcor is willing to issue to Oxy 1,363,636 shares of
Premcor's Common Stock, par value $0.01 per share in exchange for the Oxy Sabine
Shares, and Oxy is willing to surrender the Oxy Sabine Shares in exchange for
such shares of Premcor Common Stock;
WHEREAS, Premcor is willing to issue to Oxy 270,000 of the Oxy
Exchange F Shares in exchange for the Oxy Warrant Shares; such shares to be then
exchanged for 270,000 shares of Premcor Common Stock;
WHEREAS, for United States federal income tax purposes, the parties
intend (a) that the exchange by Oxy of the Oxy Sabine Shares and the Oxy Warrant
Shares for Premcor Class F Common Stock or Premcor Common Stock, as the case may
be, will qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as
2
amended (the "Code"), and (b) by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Code and the treasury
regulations promulgated thereunder; and
WHEREAS, in connection with a proposed initial public offering of
Premcor Common Stock (the "IPO"), the parties hereto have determined that it is
in their respective best interests for Premcor to have only one class of common
stock and for Oxy's direct share ownership in Sabine to be converted to Premcor
Common Stock and for such outcome to be effected by the following actions: (a)
Oxy to exchange the Existing Oxy F Shares for shares of Premcor Common Stock,
(b) Oxy to exercise the Oxy Warrant and to exchange the Oxy Warrant Shares for
the Oxy Exchange F Shares, (c) Oxy to exchange the Oxy Exchange F Shares for
shares of Premcor Common Stock (d) Blackstone to exercise the Blackstone
Warrants for shares of Premcor Common Stock, and (e) after the IPO, and at such
time as the restrictions to such ownership are removed, either through the
successful solicitation of the holders of the 12.50% Senior Secured Notes due
2009 of Port Xxxxxx Finance Corp., an indirect subsidiary of Sabine, and the
completion of certain other conditions precedent or another restructuring that
would eliminate such ownership restrictions (the "PACC Restructuring"), Oxy to
exchange the Oxy Sabine Shares for the Premcor Common Stock.
WHEREAS, the board of directors of Premcor has determined that it is
in the best interests of the stockholders of Premcor to enter into this
Agreement, and has approved on September 26, 2001 an agreement in a form
substantially similar to this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
1. Exercise of Oxy Warrant and Exchange of Oxy Warrant Shares.
Notwithstanding the terms and conditions of the Oxy Warrant and the Share
Exchange Agreement, Oxy and Sabine hereby agree that Oxy will exercise the Oxy
Warrant for 30,000 Oxy Warrant Shares pursuant to the terms and conditions of
the Oxy Warrant and surrender such 30,000 Oxy Warrant Shares to Premcor, whereby
Premcor shall (A) issue to Oxy 270,000 shares of Premcor Class F Common Stock in
exchange for the 30,000 Oxy Warrant Shares and (B) issue to Oxy 270,000 shares
of Premcor Common Stock in exchange for the 270,000 shares of Premcor Class F
Common Stock. Such shares will be registered in the same names as set forth in
Section 2 below. Such exercise and exchange shall occur immediately at the
written request of either Premcor or Oxy to the other party on the effective
date of the registration statement filed by Premcor in connection with the
proposed IPO.
2. Exchange of Oxy's Existing F Shares. On the effective date of
the registration statement filed by Premcor in connection with the proposed IPO,
Oxy shall surrender all of the 6,101,010 Existing Oxy F Shares, in exchange for
6,101,010 shares of Premcor Common Stock to be registered in the same names as
the surrendered shares are registered (with any legends required by Section 3.02
of the Second Amended and Restated Stockholders' Agreement, dated as of November
3, 1997 (as modified, supplemented and amended from time to time, the
"Stockholders' Agreement"), between Xxxxx USA, Inc. and Occidental C.O.B.
Partners).
3
3. Exercise of the Blackstone Warrants. Notwithstanding the terms
and conditions of the Blackstone Warrants to the contrary, Blackstone and
Premcor hereby agree that Blackstone will exercise all of the Blackstone
Warrants for 2,430,000 Blackstone Warrant Shares pursuant to the terms and
conditions of the Blackstone Warrants. Such exercise shall occur immediately at
the written request of either Premcor or Blackstone to the other party on the
effective date of the registration statement filed by Premcor in connection with
the proposed IPO.
4. PACC Restructuring Exchange. Subsequent to the proposed IPO, but
immediately prior to the PACC Restructuring, Oxy will surrender to Premcor its
681,818 Oxy Sabine Shares in exchange for 1,363,636 shares of Premcor Common
Stock. Premcor will issue to Oxy the 1,363,636 shares of Premcor Common Stock in
exchange for the 681,818 Oxy Sabine Shares.
5. Termination of the Share Exchange Agreement. Upon exercise of
the Oxy Warrant and exchange of the Oxy Warrant Shares as set forth in Section
1, the Share Exchange Agreement shall automatically terminate and thereafter be
of no further force or effect.
6. Adoption of the Stockholders' Agreement. From and after the
earliest Exchange Date, the parties hereto agree that the terms and conditions
of the Stockholders' Agreement shall apply to the all the shares of Premcor
Common Stock issued to Oxy pursuant to this Agreement.
7. Representations of Premcor. (a) Premcor represents and warrants
to Oxy that each of the shares of Oxy Warrant Shares, Premcor Class F Common
Stock and Premcor Common Stock, when issued in accordance with any Section of
this Agreement, shall be duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
(b) Premcor represents and warrants to Blackstone that the Blackstone
Warrant Shares shall be, upon exercise of the Blackstone Warrants, duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights.
8. Covenants. (a) Each of the parties hereto covenants and agrees
that it shall not avoid or seek to avoid the observance or performance of any of
the terms of this Agreement, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
reasonably necessary or appropriate to protect the rights of the parties hereto
against impairment of their respective rights hereunder.
(b) Premcor shall at all times have authorized a sufficient number of
shares of Premcor Common Stock and Premcor Class F Common Stock so that Premcor
will be able to deliver the Premcor Common Stock and Premcor Class F Common
Stock, as the case may be, to Oxy and Blackstone in accordance with the terms of
this Agreement.
(c) Premcor covenants that any stock split, combination or
reclassification will result in appropriate adjustments, if needed, in the
number of shares of authorized Premcor Class F Common Stock.
4
(d) Oxy covenants and agrees that, if there is a reasonable
likelihood that the PACC Restructuring will occur prior to the IPO, that it
shall in good faith promptly amend this agreement such that Premcor and Oxy can
accomplish the exchange pursuant to the PACC Restructuring at the ratio set
forth in Section 4 of this agreement; provided that no such exchange shall be
made until either (a) Oxy receives reasonable assurance that such exchange will
qualify as a reorganization under the provisions of Section 368(a) of the Code
or (b) Oxy receives reasonable indemnification from Premcor to compensate it for
any loss related to a failure of such exchange to qualify as a reorganization
under the provisions of Section 368(a) of the Code.
9. Term. Unless otherwise agreed to in writing by the parties
hereto, the term of this Agreement shall commence on the date hereof and end on
the date, if any, on which Premcor shall have advised Oxy and Blackstone that it
has abandoned its plans to consummate the IPO or the PACC Restructuring.
10. Successors. All the provisions of this Agreement by or for the
benefit of the parties hereto shall bind and inure to the benefit of their
respective successors and assigns.
11. No Assignment. No party hereto may assign its rights and
obligations hereunder without the prior consent of the other parties hereto.
12. Headings. The headings of sections of this Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
13. Remedies; Amendment. The rights and remedies of the parties
hereto are cumulative and not exclusive of any rights or remedies which it would
otherwise have. This Agreement may only be amended or modified by a written
instrument signed by each of the parties hereto.
14. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
15. Governing Law. All questions concerning the construction,
interpretation and validity of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York.
16. Notices. All notices, demands and requests of any kind to be
delivered to any party hereto in connection with this Agreement shall be in
writing, (a) delivered personally, (b) sent by internationally-recognized
overnight courier, (c) sent by first class, registered or
5
certified mail, return receipt requested or (d) by telecopy with confirmed
receipt (with hard copy to follow). Any notice, demand or request so delivered
shall constitute valid notice under this Agreement and shall be deemed to have
been received (i) on the day of actual delivery in the case of personal
delivery, (ii) on the next Business Day after the date when sent, in the case of
delivery by internationally-recognized overnight courier, (iii) on the fifth
Business Day after the date of deposit in the U.S. mail in the case of mailing
or (iv) one business day after being sent by telecopy with confirmed receipt
(with hard copy to follow). The mailing address of Premcor and Sabine is 0000
Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000. The mailing address of Blackstone is
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The mailing address of
Oxy is 00000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000. Any party hereto
may, from time to time by notice in writing served upon the other as aforesaid,
designate a different mailing address or a different person to which all such
notices, demands or requests thereafter are to be addressed.
17. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PREMCOR INC.
By:
----------------------------------------------------
Name:
Title:
SABINE RIVER HOLDING CORP.
By:
----------------------------------------------------
Name:
Title:
OCCIDENTAL PETROLEUM CORPORATION
By:
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President -- Corporate
Development and Chief Financial Officer
OCCIDENTAL C.O.B. PARTNERS
By: OXY USA Inc.
Its Managing Partner
By:
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
7
BLACKSTONE CAPITAL PARTNERS
III MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates III
L.L.C., its general partner
By:
----------------------------------------------------
Name:
Title:
BLACKSTONE OFFSHORE CAPITAL
PARTNERS III L.P.
By: Blackstone Management Associates III
L.L.C., its general partner
By:
----------------------------------------------------
Name:
Title:
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP III L.P.
By: Blackstone Management Associates III
L.L.C., its general partner
By:
----------------------------------------------------
Name:
Title:
