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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 22, 2002
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Item 5. Other Events and Regulation FD Disclosure
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On August 22, 2002, Occidental completed the sale of the entities that own
its 29.5-percent interest in Equistar Chemicals, LP ("Equistar") to Lyondell
Chemical Company ("Lyondell") and its purchase of 34 million shares of
Lyondell's newly issued Series B common stock, $1.00 par value per share, which
constitute approximately 21 percent of Lyondell's common stock. These
transactions are expected to reduce the volatility of Occidental's earnings in
the future and provide Occidental an exit from the bulk petrochemicals business
(see the description below of the restrictions on transferability of the Series
B common stock). Following the closing of these transactions, Occidental's
indemnity in favor of Equistar, which related to approximately $420 million of
Equistar's debt, terminated. Bondholders of Equistar and other third party
creditors were not direct beneficiaries of Occidental's indemnity. Occidental
will account for its Lyondell holdings as an equity investment.
In the fourth quarter of 2001, Occidental recorded an after-tax charge of
$240 million to write down its investment in the Equistar partnership. This
reduced the after-tax carrying value of the investment to approximately $375
million, representing the approximate fair value of Lyondell's Series B Common
Stock to Occidental had these transactions closed at that time.
In the first quarter of 2002, Equistar wrote off goodwill on its balance
sheet, resulting in a charge to its earnings of $1.1 billion. This write-down by
Equistar did not affect Occidental's investment in Equistar because there was no
significant difference between Occidental's book basis in the Equistar
investment and the underlying equity in net assets of Equistar subsequent to
Occidental's write-down discussed above.
Occidental will have an after-tax gain of at least $100 million in the
third quarter of 2002 as a result of closing these transactions. The gain
results from: Occidental's share of Equistar losses in 2002, which reduced the
carrying value of the investment prior to the closing of these transactions; an
increase in the fair value of Lyondell's Series B Common Stock received in
exchange for the partnership interests since December 31, 2001; and additional
tax benefits accruing to Occidental due to a change in the tax regulations
relating to the disposition of members of tax consolidations announced by the
Internal Revenue Service in March 2002 and effective for transactions closing
after March 7, 2002.
To effect these transactions, Occidental has entered into several
agreements with Lyondell, including:
o a Securities Purchase Agreement, effective July 8, 2002;
o a Stockholders Agreement, effective August 22, 2002;
o a Warrant, effective August 22, 2002;
o a Registration Rights Agreement, effective August 22, 2002; and
o an Occidental Partner Sub Purchase Agreement, effective July 8, 2002.
These agreements are briefly described below. The descriptions below do not
attempt to completely describe these agreements. Please refer to the copies of
these agreements enclosed as exhibits to this report.
1
SECURITIES PURCHASE AGREEMENT
-----------------------------
o Occidental paid Lyondell $440 million for 34 million shares of Series B
common stock, a warrant (described below), and a right to receive from
Lyondell 7.38 percent of any distributions (excluding distributions from
asset or equity sales) that Lyondell receives from Equistar before May 1,
2004.
o Lyondell Series B common stock is basically identical to Lyondell regular
common stock except that Lyondell may elect to pay dividends on the Series
B common stock "in-kind," meaning in shares of Series B common stock,
rather than in cash.
STOCKHOLDERS AGREEMENT
----------------------
o The agreement will be effective as long as Occidental owns 17 million or
more shares of Lyondell common stock.
o Occidental may not sell its Series B common stock or Warrant without
Lyondell's consent.
o Occidental may convert its Series B common stock into Lyondell regular
common stock only after 3 years, or after 2 years if Lyondell's credit
agreements do not prohibit Lyondell from paying dividends on the shares
Occidental proposes to convert, as is currently the case. Occidental may
convert and sell its Series B common stock at any time with Lyondell's
consent.
o Occidental generally must vote its shares in favor of the slate of
directors proposed by Lyondell's management.
o Two of Occidental's executive officers have been elected to Lyondell's
board of directors.
o Occidental may not engage in certain activities to attempt to control
Lyondell's management.
WARRANT
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o Occidental may purchase up to 5 million shares of Lyondell's regular common
stock for $25 per share, subject to adjustment if Lyondell's regular common
stock is trading below $11 per share during the 15 business days before
December 31, 2002. This Warrant expires on the close of business on August
22, 2007.
o Lyondell may elect to pay Occidental, in cash or regular or Series B common
stock, the difference between (x) the value of the Lyondell shares
Occidental elects to purchase under this Warrant and (y) the purchase price
for those shares.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
o Occidental has specific rights requiring Lyondell to register Lyondell
regular common stock that Occidental owns. Occidental has a number of
demand and piggyback registration rights, subject to certain restrictions.
2
OCCIDENTAL PARTNER SUB PURCHASE AGREEMENT
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o Occidental sold its three indirect subsidiaries that own a total of 29.5
percent of Equistar for $440.01 million in cash.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
10.1 Securities Purchase Agreement, dated as of July 8, 2002, by
and between Lyondell Chemical Company and Occidental
Chemical Holding Corporation
10.2 Stockholders Agreement, dated as of August 22, 2002, by and
among Lyondell Chemical Company and the Stockholders as
defined therein
10.3 Warrant for the Purchase of Shares of Common Stock, issued
August 22, 2002
10.4 Registration Rights Agreement, dated as of August 22, 2002,
by and between Occidental Chemical Holding Corporation and
Lyondell Chemical Company
10.5 Occidental Partner Sub Purchase Agreement, dated July 8,
2002, by and among Lyondell Chemical Company, Occidental
Chemical Holding Corporation, Oxy CH Corporation and
Occidental Chemical Corporation
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: September 6, 2002 /s/ STEPHEN I. CHAZEN
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Stephen I. Chazen
Executive Vice President- Corporate Development
and Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Securities Purchase Agreement, dated as of July 8, 2002, by and
between Lyondell Chemical Company and Occidental Chemical
Holding Corporation
10.2 Stockholders Agreement, dated as of August 22, 2002, by and
among Lyondell Chemical Company and the Stockholders as defined
therein
10.3 Warrant for the Purchase of Shares of Common Stock, issued
August 22, 2002
10.4 Registration Rights Agreement, dated as of August 22, 2002, by
and between Occidental Chemical Holding Corporation and Lyondell
Chemical Company
10.5 Occidental Partner Sub Purchase Agreement, dated July 8, 2002,
by and among Lyondell Chemical Company, Occidental Chemical
Holding Corporation, Oxy CH Corporation and Occidental Chemical
Corporation
EXHIBIT 10.1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
BETWEEN
LYONDELL CHEMICAL COMPANY
AND
OCCIDENTAL CHEMICAL HOLDING CORPORATION
JULY 8, 2002
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TABLE OF CONTENTS
Page
SECTION 1 SALE OF SECURITIES; PURCHASE PRICE...................................1
1.1 Sale of Securities on Closing Date..............................1
1.2 Purchase Price..................................................2
1.3 Contingent Payment Amount.......................................2
SECTION 2 CLOSING DATE, PAYMENT AND DELIVERY...................................2
2.1 Closing Date....................................................2
2.2 Payment and Delivery............................................2
2.3 Agreements to be Entered Into at Closing........................3
2.4 Payments of Cash and Delivery of Certificates...................3
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................3
3.1 Organization, Good Standing and Power...........................3
3.2 Authorization and Validity of Agreements........................3
3.3 Lack of Conflicts...............................................4
3.4 Certain Fees....................................................4
3.5 SEC Reports; Financial Statements...............................4
3.6 Absence of Certain Changes......................................5
3.7 Capitalization..................................................5
3.8 Issuance of the Company Securities..............................6
3.9 Undisclosed Liabilities.........................................6
3.10 No Defaults.....................................................6
3.11 Use of Proceeds.................................................6
3.12 Exemption from Section 203......................................6
3.13 Financial Condition.............................................7
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................7
4.1 Organization, Good Standing and Power...........................7
4.2 Authorization and Validity of Agreements........................7
4.3 Lack of Conflicts...............................................8
4.4 Certain Fees....................................................8
4.5 Information Supplied for Proxy Statement........................8
4.6 Investment......................................................8
4.7 Investigation; No General Solicitation..........................9
4.8 Sophistication and Financial Condition of Stockholder...........9
4.9 Status of the Company Securities................................9
4.10 No Ownership of the Company Securities..........................9
4.11 Governmental Consents..........................................10
SECTION 5 ADDITIONAL AGREEMENTS...............................................10
5.1 Conduct of the Company Business Pending the Closing Date.......10
5.2 Further Actions................................................11
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5.3 Notifications..................................................12
5.4 The Company Proxy Statement; Stockholders' Meeting;
Effectiveness of Amendment.....................................12
5.5 No Inconsistent Action.........................................12
5.6 Listing of Shares of Original Common Stock.....................12
5.7 Reservation of Shares..........................................13
5.8 Alternate Cash Consideration...................................13
SECTION 6 CONDITIONS TO CLOSING...............................................14
6.1 Conditions Precedent to Obligations of the Parties.............14
6.2 Conditions Precedent to Obligations of the Company.............14
6.3 Conditions Precedent to Obligations of the Purchaser...........15
SECTION 7 TERMINATION AND WAIVER..............................................16
7.1 General........................................................16
7.2 Effect of Termination..........................................17
SECTION 8 SURVIVAL AND INDEMNIFICATION........................................17
8.1 Survival.......................................................17
8.2 Indemnification by the Purchaser...............................18
8.3 Indemnification by the Company.................................18
8.4 Mitigation; Limitation on Consequential, Punitive and
Exemplary Damages..............................................19
8.5 Procedures.....................................................19
8.6 Termination of Indemnification.................................19
SECTION 9 MISCELLANEOUS.......................................................20
9.1 Successors and Assigns.........................................20
9.2 Benefits of Agreement Restricted to Parties....................20
9.3 Notices........................................................20
9.4 Severability...................................................21
9.5 Press Releases.................................................21
9.6 Confidentiality Agreement......................................21
9.7 Entire Agreement...............................................22
9.8 Construction...................................................22
9.9 Counterparts...................................................22
9.10 Governing Law..................................................22
9.11 Transaction Costs..............................................23
9.12 Amendment......................................................23
9.13 Jurisdiction; Consent to Service of Process; Waiver............23
9.14 Waiver of Jury Trial...........................................23
9.15 Further Assurances.............................................23
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APPENDIX
xxx
Appendix A Definitions
SCHEDULES
Schedule 3 Exceptions to Representations and Warranties of the Company
Schedule 4 Exceptions to Representations and Warranties of Occidental
Schedule 6.2(e) Company Consents
Schedule 6.3(d) Occidental Consents
EXHIBITS
Exhibit A Form of Warrant
Exhibit B Form of Stockholders Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Amendment to Restated Certificate of Incorporation
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
July 8, 2002, is entered into by and between Lyondell Chemical Company, a
Delaware corporation (the "Company"), and Occidental Chemical Holding
Corporation, a California corporation (the "Purchaser").
Definitions of capitalized terms used in this Agreement are set forth
in Appendix A.
RECITALS
WHEREAS, the Purchaser desires to purchase from the Company, and the
Company desires to issue and deliver to the Purchaser, upon the terms and
conditions set forth herein, the Company Securities;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the Parties set forth herein, it is hereby agreed as follows:
SECTION 1
SALE OF SECURITIES; PURCHASE PRICE
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1.1 Sale of Securities on Closing Date.
(a) At Closing, the Company shall issue and sell, assign, transfer
and deliver to the Purchaser, and the Purchaser shall purchase from the
Company, (i) such number of shares of Series B Common Stock as shall be
determined in accordance with Section 1.1(b) and (ii) 5,000,000 Warrants
substantially in the form of Warrant set forth in Exhibit A. Each such
Warrant shall entitle the holder to purchase one share of Original Common
Stock (subject to the Company's Net Payment Right set forth therein) at an
exercise price of $25.00 per share.
(b) The number of shares of Series B Common Stock shall be determined
as follows (rounded to the nearest whole share); if the 20-Day Average
Price of Original Common Stock at the time of Closing:
(i) is greater than or equal to $17.10, the number of shares
shall be 30 million.
(ii) is less than $17.10 and greater than $15.10, the number of
shares shall be
32 million - (2 million x (20-Day Average Price - $15.10)
-------------------------------);
($17.10 - $15.10)
(iii) is less than or equal to $15.10 and greater than or equal
to $14.10, the number of shares shall be 32 million;
(iv) is less than $14.10 and greater than $13.10, the number of
shares shall be
34 million - (2 million x (20-Day Average Price - $13.10)
------------------------------- );or
($14.10 - $13.10)
(v) is less than or equal to $13.10, the number of shares shall
be 34 million.
1.2 Purchase Price. In consideration for the Company Securities to be
issued and sold on the Closing Date pursuant to Section 1.1 and the right to
receive a Contingent Payment Amount as described in Section 1.3, the Purchaser
shall pay to the Company on the Closing Date $440,000,000.
1.3 Contingent Payment Amount. The Company shall pay to the Purchaser a
contingent payment amount (a "Contingent Payment Amount") with respect to each
distribution, excluding distributions of the proceeds from asset sales and sales
of equity in the Partnership, by the Partnership to its partners that (i)
relates to the period from January 1, 2002 to December 31, 2003 and (ii) is made
by the Partnership after the Closing Date but prior to May 1, 2004 (a
"Partnership Distribution") in an amount of cash equal to the amount of each
such Partnership Distribution paid with respect to 7,375 Units; provided,
however, that the Company may, at its sole discretion, instead pay all or any
part of such amount by the issuance, assignment, transfer and delivery of such
number of shares of its Original Common Stock or Series B Common Stock, at its
option, as is equal in value to the portion of the Contingent Payment Amount to
be so satisfied with Contingent Shares. Each such share so issued, assigned,
transferred and delivered shall be valued for this purpose at the average of the
Daily Prices (calculated to the nearest thousandth) for the 20 Business Day
period beginning 10 Business Days before the date on which the related
Partnership Distribution is made and ending 9 Business Days thereafter. Each
Contingent Payment Amount shall be paid 15 Business Days after the Company
receives the related Partnership Distribution. Notwithstanding anything above to
the contrary, the aggregate value of all Contingent Payment Amounts shall not
exceed $35 million; for this purpose, payments made in stock shall be valued as
set forth above.
SECTION 2
CLOSING DATE, PAYMENT AND DELIVERY
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2.1 Closing Date. The Closing shall take place at the offices of Baker
Botts L.L.P., Houston, Texas 77002, at 10:00 a.m. on (i) August 30, 2002, or
(ii) if all conditions set forth in Sections 6.1, 6.2 and 6.3, other than
conditions to be satisfied at Closing, have not been satisfied or waived by that
date, on the third Business Day after the first day that all of such conditions
have been satisfied or waived or (iii) on such other date as may be agreed to in
writing by the Parties (the "Closing Date").
2.2 Payment and Delivery. At the Closing, the Purchaser shall transmit the
aggregate purchase price set forth in Section 1.2, and the Company shall issue
and deliver to the Purchaser certificates representing the Company Securities to
be issued on the Closing Date.
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2.3 Agreements to be Entered Into at Closing. At Closing, (a) the Company,
Occidental and the Purchaser shall enter into a stockholders agreement in
substantially the form set forth in Exhibit B (as executed and delivered
pursuant hereto, the "Stockholder Agreement") and (b) the Company and the
Purchaser shall enter into a registration rights agreement in substantially the
form set forth in Exhibit C (as executed and delivered pursuant hereto, the
"Registration Rights Agreement").
2.4 Payments of Cash and Delivery of Certificates. Any funds required to be
paid hereunder shall be made by wire transfer of immediately available funds to
an account designated by the intended recipient of such funds in writing. Any
stock certificate required to be delivered hereunder shall be duly registered in
the name of the Purchaser and shall bear the appropriate legends as set forth in
Section 4.5 of the Stockholder Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Except as set forth on Schedule 3, the Company represents and
warrants to the Purchaser that:
3.1 Organization, Good Standing and Power. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware and has the corporate power and authority to own, lease and
operate its assets and to conduct its business as such is now being conducted,
(ii) is duly authorized, qualified or licensed to do business as a foreign
corporation in, and is in good standing in, each of the jurisdictions in which
its right, title or interest in or to any of the assets held by it or the
business conducted by it, requires such authorization, qualification or
licensing, except where the failure to be so authorized, qualified, licensed or
in good standing would not be reasonably likely to have a Company Material
Adverse Effect and (iii) has, and in the case of the Related Securities
Agreements to be executed by it at the Closing, will have, all requisite
corporate power and authority to enter into this Agreement and, as applicable,
the Related Securities Agreements to which it is or will be a party and to
perform its obligations hereunder and thereunder.
3.2 Authorization and Validity of Agreements. Assuming the approval of the
Company's stockholders referred to in Section 6.2(f):
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized and approved by all necessary corporate
action on its part. This Agreement has been duly and validly executed and
delivered by the Company and is its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws related to or affecting creditors' rights generally and by
general equity principles.
(b) The execution, delivery and performance by the Company of the
Related Securities Agreements to which it will be a party and the
consummation by it of the transactions contemplated thereby will be, as of
the Closing, duly authorized and
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approved by all necessary corporate action on its part. At the Closing,
each of the Related Securities Agreements to which the Company will be a
party will be duly and validly executed and delivered by it and will be
upon execution and delivery its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws related to or affecting creditors' rights generally and by
general equity principles.
3.3 Lack of Conflicts. The execution, delivery and, assuming (i) the
effectiveness of the Amendment, (ii) satisfaction of the condition in Section
6.2(f) and (iii) receipt of the approval contemplated by Section 5.6 and of the
Consents contemplated by Schedule 6.2(d), performance by the Company of this
Agreement and the Related Securities Agreements to which it is or will be a
party and the consummation by it of the transactions contemplated hereby and
thereby does not and, as of the Closing, will not (w) violate (with or without
the giving of notice or the lapse of time or both) any Legal Requirement
applicable to it or any of its Subsidiaries, other than those that would not be
reasonably likely to have a Company Material Adverse Effect, (x) conflict with,
or result in the breach of, any provision of the charter or by-laws or similar
governing or organizational documents of it or any of its Subsidiaries, (y)
result in the creation of any Encumbrance upon any of its assets, other than
those arising under this Agreement or any of the Related Securities Agreements,
or those that would not be reasonably likely to have a Company Material Adverse
Effect or (z) violate, conflict with or result in the breach or termination of
or otherwise give any other Person the right to terminate, or constitute a
default, event of default or an event which with notice, lapse of time or both,
would constitute a default or event of default under the terms of, any contract,
indenture, lease, mortgage, Government License or other agreement or instrument
to which it or any of its Subsidiaries is a party or by which the properties or
businesses of it or any of its Subsidiaries are bound, except for violations,
conflicts, breaches, terminations and defaults that would not be reasonably
likely to have a Company Material Adverse Effect.
3.4 Certain Fees. Neither the Company nor any of its Affiliates nor any of
its officers, directors or employees, on behalf of it or such Affiliates, has
employed any broker or finder or incurred any other liability for any financial
advisory fees, brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby.
3.5 SEC Reports; Financial Statements.
(a) The Company has filed all forms, reports and documents required
to be filed by it with the SEC since December 31, 2001 (the "Company SEC
Reports"). The Company SEC Reports were prepared in all material respects
in accordance with the requirements of the Securities Act, or the Exchange
Act, as the case may be, and the rules and regulations thereunder, and none
of the Company SEC Reports, as of the date it was filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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(b) The financial statements (including any notes thereto) contained
in the Company SEC Reports were prepared in accordance with GAAP throughout
the periods indicated (except as may be indicated in the notes thereto and
except that financial statements included with quarterly reports on Form
10-Q do not contain all GAAP notes to such financial statements) and each
fairly presents in all material respects the consolidated (or combined, as
applicable) financial position, results of operations and changes in
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries as at the respective dates thereof and for the respective
periods indicated therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments).
3.6 Absence of Certain Changes. Except as described in the Company SEC
Reports filed prior to the date of this Agreement, since December 31, 2001,
(i) the Company and its Affiliates (including, for this purpose, the
Partnership) have not incurred any material liabilities or obligations,
fixed, contingent, accrued or otherwise, that have had or are reasonably
likely to have a Company Material Adverse Effect and (ii) no event,
occurrence or other matter has occurred that has or is reasonably likely to
have a Company Material Adverse Effect.
3.7 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 250,000,000 shares of Original Common Stock, of
which 125,844,920 were issued and outstanding as of July 1, 2002, and
80,000,000 shares of preferred stock, $.01 par value per share, no shares
of which are issued and outstanding as of the date hereof. As of July 2,
the Company had 9,631,767 shares reserved for issuance upon exercise of
outstanding options to purchase shares of Original Common Stock and
2,447,922 performance shares have been granted and were outstanding under
its benefit plans. Except as described in this Agreement, as of the date of
this Agreement, there are no other options, warrants, conversion privileges
or other contractual rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of the Company's capital stock.
The Company has no outstanding agreements granting registration rights to
any Person.
(b) The Board of Directors at a meeting duly called and held on May
2, 2002, has adopted resolutions that take all necessary action to provide
that, under the Company Rights Agreement, (i) Occidental shall not be an
"Acquiring Person" so long as Occidental's "Beneficial Ownership" of the
Company's "common stock" does not exceed the Occidental Rights Trigger
Amount, (ii) no "Stock Acquisition Date" shall occur as a result of the
execution, delivery and performance of this Agreement, the Warrant or the
Stockholder Agreement in accordance with their terms and (iii) no
"Distribution Date" shall occur as a result of the announcement of or the
execution of this Agreement, the Warrant or the Stockholder Agreement. As
used in this Section 3.7(b), the terms "Acquiring Person," "Beneficial
Ownership," "Distribution Date" and "Stock Acquisition Date" shall have the
meaning ascribed to such terms in the Company Rights Agreement and the
Company's "common stock" shall include shares of Original Common Stock and
Series B Common Stock.
-5-
3.8 Issuance of the Company Securities. Subject to (i) obtaining the
approval of its stockholders as contemplated by Section 6.2(f) and (ii) the
effectiveness of the Amendment, all corporate action on the part of the Company,
its directors and stockholders necessary for the issuance and delivery of the
Subject Securities has been taken. Upon the issuance and delivery of the Initial
Shares as contemplated by this Agreement, the Initial Shares will be validly
issued, fully paid and nonassessable. Upon the issuance and delivery of any
Warrant Shares or any Net Payment Shares issued upon exercise of a Warrant in
accordance with the terms of the Warrant, such Warrant Shares or Net Payment
Shares, as the case may be, will be validly issued, fully paid and
nonassessable. Upon the issuance and delivery of the PIK Shares in accordance
with the terms of the Series B Common Stock, the PIK Shares will be validly
issued, fully paid and nonassessable. Upon the issuance and delivery of
Conversion Shares pursuant to the conversion of shares of Series B Common Stock
in accordance with the terms of the Series B Common Stock, such Conversion
Shares will be validly issued, fully paid and nonassessable. Upon the issuance
and delivery of Contingent Shares, such Contingent Shares shall be validly
issued, fully paid and nonassessable. Neither the issuance and sale or the
issuance and delivery, as applicable, of any of the Subject Securities will give
rise to any preemptive rights or rights of first refusal on behalf of any
Person. Subject to effectiveness of the Amendment, (i) 42,000,000 shares of
Series B Common Stock have been reserved for issuance as Initial Shares, PIK
Shares, Contingent Shares or Net Payment Shares and (ii) 42,000,000 shares of
Original Common Stock have been reserved for issuance as Warrant Shares,
Conversion Shares, Contingent Shares or Net Payment Shares.
3.9 Undisclosed Liabilities. To the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature, whether or not fixed, accrued, contingent or otherwise, except
liabilities and obligations that (i) are disclosed in the Company SEC Reports or
(ii) do not or are not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
3.10 No Defaults. Neither the Company nor any of its Subsidiaries is, or
with the giving of notice or lapse of time or both would be, in violation of or
in default under its charter or by-laws or similar governing or organizational
documents or any contract, indenture, lease, mortgage, Government License or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which it or any of them or any of their respective properties is
bound, except for violations and defaults that, individually or in the
aggregate, would not be reasonably likely to have a Company Material Adverse
Effect.
3.11 Use of Proceeds. The Company will use the proceeds received hereunder
to satisfy its obligations under the Partner Sub Purchase Agreement.
3.12 Exemption from Section 203. The Board of Directors, at a meeting duly
called and held on May 2, 2002, has adopted resolutions that are still in full
force and effect as of the date hereof, exempting this Agreement and the
transactions contemplated hereby, from the restrictions on "business
combinations" of Section 203 of the Delaware General Corporation Law.
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3.13 Financial Condition. (i) The Company is not in default under Sections
5.11, 5.12, 5.13 and 6.1(g) of its Credit Agreement dated as of July 23, 1998,
(ii) the Company has not defaulted on any obligation to pay principal or
interest under its Debt Documents and (iii) the Company is not insolvent nor the
subject of a Bankruptcy Proceeding.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
Except as set forth on Schedule 4, the Purchaser represents and
warrants to the Company that:
4.1 Organization, Good Standing and Power. The Purchaser (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to own, lease and operate its assets and to conduct its business as
such is now being conducted, (ii) is duly authorized, qualified or licensed to
do business as a foreign corporation in, and is in good standing in, each of the
jurisdictions in which its right, title or interest in or to any of the assets
held by it or the business conducted by it, requires such authorization,
qualification or licensing, except where the failure to be so authorized,
qualified, licensed or in good standing would not be reasonably likely to have
an Occidental Material Adverse Effect and (iii) has, and in the case of the
Related Securities Agreements to be executed by it at the Closing, will have,
all requisite corporate power and authority to enter into this Agreement and, as
applicable, the Related Securities Agreements to which it is or will be a party
and to perform its obligations hereunder and thereunder.
4.2 Authorization and Validity of Agreements.
(a) The execution, delivery and performance by the Purchaser of this
Agreement and the consummation by each Occidental Party of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate or similar action on their part. This Agreement has been duly and
validly executed and delivered by the Purchaser and is its legal, valid and
binding obligation, enforceable against the Purchaser in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws related to or
affecting creditors' rights generally and by general equity principles.
(b) The execution, delivery and performance by each Occidental Party
of the Related Securities Agreements to which it will be a party and the
consummation by it of the transactions contemplated thereby will be, as of
the Closing, duly authorized and approved by all necessary corporate action
on its part. At the Closing, each of the Related Securities Agreements to
which an Occidental Party will be a party will be duly and validly executed
and delivered by each Occidental Party and will be upon execution and
delivery its legal, valid and binding obligation, enforceable against each
Occidental Party in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws related to or affecting creditors' rights generally and by
general equity principles.
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4.3 Lack of Conflicts. The execution, delivery and, assuming receipt of the
Consents contemplated by Schedule 6.3(d), performance by the Purchaser of this
Agreement and by each Occidental Party of the Related Securities Agreements to
which it is or will be a party and the consummation by each such Occidental
Party of the transactions contemplated hereby and thereby does not (i) violate
(with or without the giving of notice or the lapse of time or both) any Legal
Requirement applicable to it or any of its Subsidiaries, other than those that
would not be reasonably likely to have an Occidental Material Adverse Effect,
(ii) conflict with, or result in the breach of, any provision of the charter or
by-laws or similar governing or organizational documents of such Occidental
Party or any of its Subsidiaries, (iii) result in the creation of any
Encumbrance upon any of its assets, other than those arising under this
Agreement or any of the Related Securities Agreements, or those that would not
be reasonably likely to have an Occidental Material Adverse Effect or (iv)
violate, conflict with or result in the breach or termination of or otherwise
give any other Person the right to terminate, or constitute a default, event of
default or an event which with notice, lapse of time or both, would constitute a
default or event of default under the terms of, any contract, indenture, lease,
mortgage, Government License or other agreement or instrument to which it or any
of its Subsidiaries is a party or by which the properties or businesses of it or
any of its Subsidiaries are bound, except for violations, conflicts, breaches,
terminations and defaults that would not be reasonably likely to have an
Occidental Material Adverse Effect.
4.4 Certain Fees. No Occidental Party nor any Affiliates of any Occidental
Party nor any of its officers, directors or employees, on behalf of any
Occidental Party or such Affiliates, has employed any broker or finder or
incurred any other liability for any financial advisory fees, brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
hereby.
4.5 Information Supplied for Proxy Statement. None of the information
supplied or to be supplied by Occidental or its Affiliates in writing
specifically for inclusion in the Proxy Statement to be filed with the SEC by
the Company in connection with the Company stockholder meeting to be held in
connection with this Agreement will, at the date mailed to the Company's
stockholders, or (except to the extent amended or supplemented as described in
the next sentence) at the time of such meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior to
the time of such meeting, any event with respect to Occidental, or with respect
to other information supplied by Occidental in writing specifically for
inclusion in the Proxy Statement, shall occur which is required to be described
in an amendment of, or a supplement to, the Proxy Statement, Occidental will
promptly notify the Company of such event.
4.6 Investment. The Purchaser acknowledges and agrees that the Subject
Securities will be subject to the Stockholder Agreement and, among other things,
will bear the legends specified therein. The Purchaser is acquiring the Subject
Securities for investment for its own account, not as a nominee or agent, and
not with a view to, or for resale in connection with, any distribution thereof
in violation of applicable law, and has not offered or sold any portion of the
Subject Securities to be acquired by it. The Purchaser acknowledges and
understands that investment in the Subject Securities is subject to a high
degree of risk and that it must bear the economic risk of its investment for an
indefinite period of time because the Subject Securities must be held
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indefinitely (i) until subsequently registered under the Securities Act and
applicable state and other securities laws or (ii) unless an exemption from
registration is available which depends upon, among other things, the bona fide
nature of the Purchaser's investment intent and the accuracy of the Purchaser's
representations as expressed herein. The Purchaser understands that any transfer
agent of the Company will be issued stop transfer instructions with respect to
the Subject Securities unless such transfer is subsequently registered under the
Securities Act and applicable state and other securities laws or unless an
exemption from such registration is available. The Purchaser was not organized
for the purpose of acquiring the Subject Securities.
4.7 Investigation; No General Solicitation. The Purchaser has received a
copy of the Company SEC Reports. The Purchaser has had a reasonable opportunity
to ask questions relating to and otherwise discuss the terms and conditions of
the offering and the other information set forth in the Company SEC Reports and
this Agreement and the Company's business, management and financial affairs with
the Company's management and other parties, and the Purchaser has received
satisfactory responses to its inquiries. To the extent necessary, the Purchaser
has retained, at the expense of the Purchaser, and relied upon appropriate
professional advice regarding the investment, tax and legal merits and
consequences of this Agreement and its purchase of the Subject Securities
hereunder. The Purchaser has relied only on its own independent investigation
and on the Company's representations and warranties in this Agreement and the
Related Securities Agreements before deciding to acquire the Subject Securities.
4.8 Sophistication and Financial Condition of Stockholder. The Purchaser is
an experienced and sophisticated investor and has such knowledge and experience
in financial and business matters or its professional advisors have such
knowledge and experience in financial and business matters as are necessary to
evaluate the merits and risks of an investment in the Subject Securities and to
evaluate the merits and risks of its investment and protect its own interest in
connection with the acquisition of a Subject Security. The Purchaser is able to
bear the economic risk of this investment regarding the Company, is able to hold
the Subject Securities indefinitely and has a sufficient net worth to sustain a
loss of its entire investment in the Company in the event such loss should
occur.
4.9 Status of the Company Securities. The Purchaser has been informed by
the Company that the Subject Securities have not been and will not be registered
under the Securities Act or under any state securities laws, including Section
25102(f) of the California Corporations Code, except as specifically provided in
the Registration Rights Agreement, and are being offered and sold in reliance
upon federal and state exemptions for transactions not involving any public
offering. The Purchaser acknowledges that any certificate representing Subject
Securities will bear the legend or legends specified by Section 4.5 of the
Stockholder Agreement.
4.10 No Ownership of the Company Securities. Neither Occidental nor any of
its Affiliates beneficially owns any shares of capital stock of the Company nor
any securities convertible into or otherwise exercisable to acquire capital
stock of the Company, except insofar as this Agreement shall be deemed to confer
any such ownership.
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4.11 Governmental Consents. Except as may be required under the HSR Act and
such filings as may be required to be made with the SEC, or under state
securities or blue sky laws, no consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Purchaser is required in connection with the valid execution and delivery
of this Agreement, the acquisition of the Restricted Securities, or the
consummation of any other transaction contemplated hereby.
SECTION 5
ADDITIONAL AGREEMENTS
---------------------
5.1 Conduct of the Company Business Pending the Closing Date. The Company
agrees that, except as required or specifically contemplated by this Agreement
or otherwise consented to or approved in writing by the Purchaser, during the
period commencing on the date hereof and ending on the Closing Date, it shall
and shall cause its Affiliates to:
(a) use commercially reasonable efforts to conduct its or their
operations in all material respects only in the usual, regular and ordinary
manner consistent with past practice, except for such matters, that
individually and in the aggregate, do not, and are not reasonably likely
to, have a Company Material Adverse Effect;
(b) not (i) issue any shares of capital stock of the Company, except
(A) pursuant to the exercise of options, warrants, conversion rights and
other contractual rights existing on the date of this Agreement, (B)
pursuant to the exercise of awards granted after the date of this Agreement
pursuant to Section 5.1(b)(ii) or (C) pursuant to any acquisition that is
permitted under Section 5.1(d) below or (ii) grant, confer or award any
option, warrant, conversion right or other right to acquire any shares of
capital stock of the Company, except for grants and awards to directors,
officers and employees of the Company;
(c) not sell, lease or otherwise dispose of any of its or their
assets (including capital stock of Subsidiaries), with a value,
individually or in the aggregate, in excess of $500 million, except for (i)
sales of surplus or obsolete equipment, (ii) sales of other assets in the
ordinary course of business, (iii) sales, leases or other transfers between
the Company and its Subsidiaries or between those Subsidiaries or (iv) the
sale or other disposition of accounts receivable pursuant to one or more
accounts receivable securitization facilities or other arrangements to a
similar effect;
(d) not acquire or agree to acquire by merging or consolidating with
or, by purchasing an equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any Person, with a
value, individually or in the aggregate, in excess of $500 million;
(e) with respect to the Company, except for the payment of regular
quarterly dividends on the Original Common Stock not to exceed $.225 per
share with customary record and payment dates, not declare, set aside or
pay any dividend or make any other distribution or payment with respect to
any shares of its capital stock;
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(f) with respect to the Company, not split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for, shares
of its capital stock;
(g) after obtaining Knowledge thereof, give notice to the Purchaser
of any claim or litigation (threatened or instituted) or any other event or
occurrence which could reasonably be expected to have a Company Material
Adverse Effect;
(h) not take any action that is reasonably likely to result in its
representations and warranties in Section 3 hereof, or in any of the
Related Securities Agreements, not being true in all material respects as
of the Closing Date; and
(i) not agree, whether in writing or otherwise, to take any action it
has agreed pursuant to this Section 5.1 not to take.
5.2 Further Actions.
(a) Each Party shall use its commercially reasonable efforts to take,
or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to resolve the objections, if
any, as may be asserted by any Authority with respect to the transactions
contemplated hereby under any antitrust laws or regulations.
(b) Each Party shall act in good faith and use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement and
under the Related Securities Agreements to be entered into by such Party at
Closing, and to confirm that such transactions have been accomplished,
including using all commercially reasonable efforts to obtain and effect
prior to the Closing Date all Consents and Filings necessary to consummate
the transactions contemplated hereby and by the Related Securities
Agreements. Each Party shall furnish to the other Parties and their
Affiliates such necessary information and assistance as the other may
reasonably request in connection with its preparation of any such Filings
or other materials required in connection with the foregoing.
(c) Each Party shall keep the other Parties fully informed from time
to time as any such other Party shall reasonably request as to the status
of all Consents being sought by such Party pursuant to Section 5.2(b).
(d) Each Party shall furnish to the other Parties such information,
cooperation and assistance as reasonably may be requested in connection
with the foregoing.
(e) Each Party shall negotiate and otherwise act in good faith to
complete, execute and deliver the Related Securities Agreements at the
Closing and to effect the Closing at the earliest practicable date.
-11-
(f) None of the provisions of this Section 5.2 shall under any
circumstances require the Parties or their respective Affiliates to (i) pay
any consideration other than legal fees and other customary expenses, (ii)
surrender, modify or amend in any respect any contract, lease, mortgage or
other agreement or instrument (including this Agreement), (iii) hold
separately (in trust or otherwise), divest itself of, or otherwise
rearrange the composition of, any of its assets, (iv) agree to any
limitations on its freedom of action with respect to future acquisitions of
assets or securities or with respect to any existing or future business or
activities or on the enjoyment of the full rights of ownership, possession
and use of any asset or security it now owns or hereafter acquires or (v)
agree to any of the foregoing or any other conditions or requirements of
any Governmental Authority or other Person, in each case to the extent that
doing so would be adverse or burdensome to such Person in any material
respect.
5.3 Notifications. Each Party shall notify the other Parties and keep each
of them advised as to (i) any litigation or administrative proceeding that is
either pending or, to its Knowledge, threatened against such Party which
challenges the transactions contemplated hereby; and (ii) any fact or
circumstance of which such Party has Knowledge that indicates that any condition
to Closing is reasonably likely not to be satisfied in a timely fashion.
5.4 The Company Proxy Statement; Stockholders' Meeting; Effectiveness of
Amendment. The Company prepared and filed with the SEC the Proxy Statement in
preliminary form on June 11, 2002. The Company shall prepare, file with the SEC
and mail to its stockholders the definitive Proxy Statement as promptly as
practicable. The Company shall (a) cause to be considered at a special meeting
of stockholders that shall be held as promptly as practicable after the date
hereof and shall be called for the purpose of voting upon an amendment of its
Restated Certificate of Incorporation, as heretofore amended, in substantially
the form set forth in Exhibit D (as effected, the "Amendment"), and the issuance
of the Company Securities as contemplated hereby, (b) subject to the fiduciary
obligations of the Board of Directors under applicable law, through its Board of
Directors, recommend to its stockholders approval of such matters and not
rescind such recommendation, (c) use commercially reasonable efforts to cause
the Proxy Statement to be mailed to its stockholders at the earliest practicable
date, (d) use commercially reasonable efforts to obtain approval of such matters
by its stockholders and (e) upon that approval, take all steps necessary to
ensure the effectiveness of the Amendment and return a certified copy thereof
from the office of the Secretary of State of Delaware as soon thereafter as
practicable.
5.5 No Inconsistent Action. Neither Party shall take any material action
inconsistent with its obligations under this Agreement or which could materially
hinder or delay the consummation of the Closing; provided, however, that any
action that may be taken in accordance with Section 5.1 shall not be deemed to
violate this Section 5.5.
5.6 Listing of Shares of Original Common Stock. The Company shall promptly
prepare and submit to the New York Stock Exchange, Inc. a listing application
covering the shares of Original Common Stock issuable in connection with the
transactions contemplated hereby and shall use reasonable best efforts to
obtain, prior to Closing, approval for the listing of such shares, subject to
official notice of issuance.
-12-
5.7 Reservation of Shares. After the Closing, the Company shall, from time
to time, reserve such additional shares of Series B Common Stock, Original
Common Stock or both, as it deems reasonably necessary to accommodate the
issuance of Subject Securities as contemplated by this Agreement or the Related
Securities Agreements.
5.8 Alternate Cash Consideration.
(a) In the event the Purchaser or its Affiliates become obligated to
pay the Alternate Cash Consideration pursuant to Section 6.9(e) of the
Partner Sub Purchase Agreement (and the Alternate Cash Consideration is to
be based on the value of 5.4 million shares of Original Common Stock), then
the Purchaser may, provided that it notifies the Company of its election to
do so promptly after such payment obligation arises, pay to the Company
(i) if the Purchaser or its Affiliates beneficially own,
directly or indirectly, 5.4 million or more shares of Common Stock on
the date such payment obligation arises, an amount equal to the Sale
Proceeds of the first 5.4 million shares of Common Stock sold by the
Purchaser or its Affiliates after such date; or
(ii) if the Purchaser or its Affiliates beneficially own,
directly or indirectly, fewer than 5.4 million shares of Common Stock
on such date, an amount equal to (x) the Sale Proceeds of all such
shares so owned on such date, plus (y) the Sale Proceeds received by
the Purchaser or its Affiliates from having sold that number of shares
most recently sold by them that is equal to (a) 5.4 million shares,
minus (b) the number of shares held by them on such date.
(b) In lieu of receiving the Sale Proceeds as described in Section
5.8(a), the Company may, by written notice delivered promptly after the
obligation to pay the Alternate Cash Consideration arises, elect to receive
from the Purchaser,
(i) if the Purchaser or its Affiliates beneficially own,
directly or indirectly, 5.4 million or more shares of Common Stock on
the date such cash-payment obligation arises, up to 5.4 million shares
of Common Stock, it being understood that if the Company elects to
receive less than 5.4 million shares of Common Stock, then the
Purchaser shall deliver to the Company (x) such number of shares as
the Company elects to receive, plus (y) an amount equal to the Sale
Proceeds of the first shares sold by the Purchaser or its Affiliates
after such date that is equal in number to (a) 5.4 million, minus (b)
the number of shares received by the Company; or
(ii) if the Purchaser or its Affiliates beneficially own,
directly or indirectly, fewer than 5.4 million shares of Common Stock
on such date, up to all such shares owned on such date, it being
understood that the Purchaser shall deliver to the Company (x) such
number of shares as the Company elects to receive, plus (y) an amount
equal to the Sale Proceeds of all such shares beneficially owned,
directly or indirectly, by the Purchaser on such date after
subtracting the number of shares received by the Company, plus (z) the
Sale
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Proceeds received by the Purchaser or its Affiliates from having sold
that number of shares most recently sold by them that is equal to (a)
5.4 million shares, minus (b) the number of shares held by them on
such date.
(c) The Purchaser shall make any cash payment described in Section
5.8(a) reasonably promptly after receipt of the Sale Proceeds, or, if the
Company has elected to receive all or part of the Make Whole Payment in
shares as described in Section 5.8(b), the Purchaser shall deliver those
shares (and Sale Proceeds if applicable) reasonably promptly after the
Company notifies the Purchaser of the Company's election to receive those
shares (and Sale Proceeds if applicable).
(d) To the extent that this Section 5.8 contemplates that the
Purchaser will satisfy its obligation to pay the Company the Make Whole
Amount with Sale Proceeds of shares owned, directly or indirectly, on the
date of such event, Purchaser or its Affiliates shall sell such shares as
promptly as practicable. Any such sales of shares made after the date of
such event shall be made in such manner as may be directed by the Company,
and the Purchaser and its Affiliates shall cooperate with the Company
regarding any such sales in an effort to maximize the Sale Proceeds. The
Purchaser or its Affiliates shall provide such documentation as is
reasonably required by the Company to support that they have complied with
their obligations under this Section 5.8(d).
SECTION 6
CONDITIONS TO CLOSING
---------------------
6.1 Conditions Precedent to Obligations of the Parties. The respective
obligations of the Parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of each of the following conditions:
(a) No Injunction, etc. No Legal Requirement of any Authority shall
be in effect which materially restrains, enjoins or otherwise prohibits (i)
the transactions contemplated hereby; or (ii) the ownership by the
Purchaser (including enjoyment of any rights relating thereto) of the
Company Securities at and after the Closing; and no Proceeding seeking any
such Legal Requirement shall be pending; provided, that before any
determination is made to the effect that this condition has not been
satisfied, each Party shall use commercially reasonable efforts to have
such Legal Requirement lifted, vacated or dismissed.
(b) HSR Act. The waiting period applicable to the Closing under the
HSR Act shall have expired or been terminated without the imposition of any
condition or restriction on such expiration or termination.
6.2 Conditions Precedent to Obligations of the Company. The obligations of
the Company under this Agreement are subject to the satisfaction (or written
waiver by the Company) on or prior to the Closing Date of each of the following
conditions:
(a) Accuracy of Representations and Warranties. Notwithstanding any
investigation, inspection or evaluation conducted or notice or Knowledge
obtained by the Company, all representations and warranties of the
Purchaser contained in this
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Agreement and the Related Securities Agreements that contain qualifications
and exceptions relating to materiality or to an Occidental Material Adverse
Effect shall be true and correct on and as of the Closing Date, and all
other representations and warranties of the Purchaser contained in such
agreements shall be true and correct in all material respects as of the
Closing Date, in each case with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
(b) Performance of Agreements. The Purchaser shall in all material
respects have performed and complied with all obligations and agreements
contained in this Agreement and each of its Affiliates shall have executed
all agreements and documents (including the Related Securities Agreements)
to be performed, complied with or executed by it or them on or prior to the
Closing Date.
(c) No Material Adverse Change. After the date of this Agreement, no
event, occurrence or other matter shall have occurred that is reasonably
likely to have an Occidental Material Adverse Change.
(d) Third Party Consents. All Consents of any third party listed on
Schedule 6.2(d) shall have been obtained.
(e) Officer's Certificate. The Company shall have received a
certificate, dated the Closing Date, signed by the President or a Vice
President of the Purchaser, to the effect that, to the knowledge of such
officer, the conditions specified in the above paragraphs have been
fulfilled.
(f) Stockholder Approval. The stockholders of the Company shall have
duly approved the Amendment and the issuance of the Subject Securities.
(g) Partner Sub Purchase Agreement. The Company is in a position to
use the proceeds of the sale of its securities hereunder as contemplated by
Section 3.11 and all conditions to closing the Partner Sub Purchase
Agreement shall have been satisfied or waived or shall be capable of
satisfaction not later than two Business Days after the Closing Date.
6.3 Conditions Precedent to Obligations of the Purchaser. The obligations
of the Purchaser under this Agreement are subject to the satisfaction (or
written waiver by the Purchaser) on or prior to the Closing Date of each of the
following conditions:
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(a) Accuracy of Representations and Warranties. Notwithstanding any
investigation, inspection or evaluation conducted or notice or Knowledge
obtained by the Purchaser, all representations and warranties of the
Company contained in this Agreement and the Related Securities Agreements
that contain qualifications and exceptions relating to materiality or a
Company Material Adverse Effect shall be true and correct on and as of the
Closing Date, and all other representations and warranties of the Company
contained in such agreements shall be true and correct in all material
respects as of the Closing Date, in each case with the same force and
effect as though such representations and warranties had been made on and
as of the Closing Date.
(b) Performance of Agreements. The Company shall in all material
respects have performed and complied with all obligations and agreements
contained in this Agreement, and executed all agreements and documents
(including the Related Securities Agreements) to be performed, complied
with or executed by it on or prior to the Closing Date.
(c) No Material Adverse Change. After the date of this Agreement, no
event, occurrence or other matter shall have occurred that is reasonably
likely to have a Company Material Adverse Change.
(d) Third Party Consents. All Consents of any third party listed on
Schedule 6.3(d) shall have been obtained.
(e) Amended Certificate of Incorporation. The Amendment shall have
been filed with the Secretary of State of the State of Delaware.
(f) Officer's Certificate. The Purchaser shall have received a
certificate, dated the Closing Date, signed by the President or a Vice
President of the Company, to the effect that, to the knowledge of such
officer, the conditions specified in the above paragraphs have been
fulfilled.
SECTION 7
TERMINATION AND WAIVER
----------------------
7.1 General. This Agreement may be terminated and the transactions
contemplated herein and in the Related Securities Agreements may be abandoned at
any time prior to the Closing:
(a) by the written consent of the Parties;
(b) by the Company if there has been a material misrepresentation or
a breach of an agreement by the Purchaser in this Agreement that (i) if
such misrepresentation or breach existed on the Closing Date, would
constitute a failure to satisfy any condition to Closing set forth in
Section 6.2(a) or 6.2(b) and (ii) has not been cured and cannot reasonably
be cured by the earlier of (x) 30 days after all other conditions to
Closing have been satisfied and (y) the Termination Date;
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(c) by the Purchaser if there has been a material misrepresentation
or a breach of an agreement by the Company in this Agreement that (i) if
such misrepresentation or breach existed on the Closing Date, would
constitute a failure to satisfy any condition to Closing set forth in
Section 6.3(a) or 6.3(b) and (ii) has not been cured and cannot reasonably
be cured by the earlier of (x) 30 days after all other conditions to
Closing have been satisfied and (y) the Termination Date;
(d) by the Company or the Purchaser in the event that the Closing
does not occur for any reason on or before 90 days after the date hereof,
as such 90-day period may be extended for up to an additional 120 days upon
request of any Party (the "Termination Date"). The right to terminate this
Agreement pursuant to this Section 7.1(d) shall not be available to any
Party whose breach of this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur by the Termination Date unless the
failure to Close by such date is due to a breach by both of the Parties (in
which case the Company or the Purchaser may terminate this Agreement as
provided in Sections 7.1(b) or 7.1(c) respectively); or
(e) by any Party if it becomes impossible to satisfy any condition to
that Party's performance set forth in Sections 6.2 or 6.3.
Any right of termination set forth above shall be exercised by written notice
from the terminating Party to the other Party.
7.2 Effect of Termination. In the event of any termination of this
Agreement as provided above, this Agreement shall forthwith become wholly void
and of no further force and effect and there shall be no liability on the part
of any Party, its Subsidiaries or their respective officers or directors;
provided, however, that upon any such termination the obligations of the Parties
with respect to this Section 7 and Sections 9.6, 9.10, 9.11, 9.13 and 9.14 shall
remain in full force and effect; and provided, further, that nothing herein will
relieve any Party from liability for damages for any breach of this Agreement.
SECTION 8
SURVIVAL AND INDEMNIFICATION
----------------------------
8.1 Survival.
(a) The representations and warranties of the Parties contained in
this Agreement or in any Related Securities Agreement shall not survive the
Closing, except that (i) the representations and warranties contained in
Section 3.8 shall survive indefinitely, together with any associated right
of indemnification pursuant to Section 8.3 and (ii) the representations and
warranties contained in Sections 3.1, 3.2, 3.3, 3.4, 4.1, 4.2, 4.3, 4.4,
4.6, 4.7, 4.8 and 4.10 shall survive two years after the Closing, and shall
thereafter terminate, together with any associated right of indemnification
pursuant to Section 8.2 or 8.3.
(b) Except as expressly provided in this Agreement, the covenants and
agreements of the Parties contained in this Agreement or in any Related
Securities
-17-
Agreement shall not be limited or affected by any investigation undertaken
by any Party, and shall survive indefinitely, together with any associated
right of indemnification.
8.2 Indemnification by the Purchaser.
(a) From and after the Closing, the Purchaser shall indemnify, defend
and hold harmless the Company Indemnified Parties from, against and in
respect of any losses, claims, damages, fines, penalties, assessments by
public agencies, settlement, cost or expenses (including reasonable
attorneys' fees) and other liabilities (any of the foregoing being a
"Loss"), as incurred (payable promptly upon written request), arising from,
in connection with or otherwise with respect to:
(i) any breach of any representation or warranty of the
Purchaser in this Agreement that survives the Closing; and
(ii) any breach of any covenant or agreement of the Purchaser in
this Agreement.
(b) Notwithstanding the foregoing, the Purchaser shall not have any
liability with respect to breaches of representations and warranties in
this Agreement (i) of which the Company has Knowledge as of the Closing
Date or (ii) under Section 8.2(a)(i) unless the aggregate of all Losses for
which the Purchaser would, but for this Section 8.2(b)(i), be liable
exceeds on a cumulative basis an amount equal to 1% of the purchase price
paid pursuant to Section 1.2, as adjusted pursuant to the terms thereof, if
applicable; provided, however, that after such amount is reached the
Purchaser shall be responsible for the full amount of such Loss.
8.3 Indemnification by the Company.
(a) From and after the Closing, the Company shall indemnify, defend
and hold harmless the Purchaser Indemnified Parties from, against and in
respect of any Loss, as incurred (payable promptly upon written request),
arising from, in connection with or otherwise with respect to:
(i) any breach of any representation or warranty of the Company
in this Agreement that survives the Closing; and
(ii) any breach of any covenant or agreement of the Company in
this Agreement.
(b) Notwithstanding the foregoing, the Company shall not have any
liability with respect to breaches of representations and warranties in
this Agreement (i) of which the Purchaser has Knowledge as of the Closing
Date or (ii) under Section 8.3(a)(i) unless the aggregate of all Losses for
which the Company would, but for this Section 8.3(b)(i), be liable exceeds
on a cumulative basis an amount equal to 1% of the purchase price paid
pursuant to Section 1.2, as adjusted pursuant to the terms thereof, if
applicable; provided, however, that after such amount is reached the
Company shall be responsible for the full amount of such Loss.
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8.4 Mitigation; Limitation on Consequential, Punitive and Exemplary
Damages.
(a) Each of the Parties shall mitigate, and shall cause each of its
Affiliates to mitigate, any Loss that such Party or its Affiliates may
suffer as a consequence of any matter giving rise to a right to
indemnification against any other Party or its Affiliates under Section 8
by taking all actions which a reasonable person would undertake to minimize
or alleviate the amount of such Loss and the consequences thereof, as if
such Person would be required to suffer the entire amount of such Loss and
the consequences thereof by itself, without recourse to any remedy against
another Person, including pursuant to any right of indemnification
hereunder.
(b) Notwithstanding any other provision of this Agreement, no
Indemnifying Party nor its Affiliates nor their respective agents,
employees or representatives shall be liable under Section 8 for
consequential, incidental, indirect or punitive damages or lost profits in
connection with direct claims by an Indemnified Party (i.e., a claim by an
Indemnified Party that does not seek reimbursement for a Third Party Claim
paid or payable by the Indemnified Party) with respect to the
indemnification obligations under this Agreement unless any such claim
arises out of the fraudulent actions of an Indemnifying Party or its
Affiliates.
(c) The rights provided to each Indemnified Party pursuant to this
Section 8, as limited by and subject to the provisions of this Section 8,
shall be such Indemnified Party's sole remedy for breach of any
representation or warranty by or covenant or obligation of any Indemnifying
Party under this Agreement or any Related Securities Agreement.
8.5 Procedures. In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement, such Indemnified Party shall
deliver written notice of a claim for indemnification with reasonable promptness
to the Indemnifying Party, which notice shall describe in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to such
claim to the extent feasible and the basis of the Indemnified Party's request
for indemnification hereunder; provided that any failure to timely give such
notice shall not relieve the Indemnifying Party of any of its obligations under
this Section 8.5 except to the extent that such failure prejudices or impairs,
in any material respect, any of the rights or obligations of the Indemnifying
Party. If the Indemnifying Party disputes its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute and, if not resolved through
negotiations, the Indemnified Party may initiate a judicial proceeding in
accordance with the conditions set forth in Sections 9.10, 9.13 and 9.14.
8.6 Termination of Indemnification. The obligations to indemnify and hold
harmless any Party shall terminate when the applicable representation or
warranty terminates pursuant to the terms of this Agreement; provided, however,
that such obligations to indemnify and hold harmless shall not terminate with
respect to any item as to which the Person to be indemnified shall have, before
the expiration of the applicable period, previously made a claim by delivering a
notice of such claim pursuant to Section 8.5 to the Party to be providing the
indemnification (which notice shall identify the representation or warranty
claimed to have been inaccurate, or
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the covenant claimed to have been breached, and shall state with reasonable
particularity the nature of the asserted inaccuracy or breach).
SECTION 9
MISCELLANEOUS
-------------
9.1 Successors and Assigns. No Party may assign or delegate any of its
rights or obligations under this Agreement without the prior written consent of
all of the other Parties, which consent shall be in the sole and absolute
discretion of each such Party. Any purported assignment or delegation without
such consent shall be void and ineffective. This Agreement shall be binding upon
and inure to the benefit of the successors of each of the Parties.
9.2 Benefits of Agreement Restricted to Parties. This Agreement is made
solely for the benefit of the Parties, and no other Person (including each
Party's employees or stockholders) shall have any right, claim or cause of
action under or by virtue of this Agreement.
9.3 Notices. All notices, requests and other communications (collectively,
the "Notices") made pursuant to this Agreement shall be in writing and signed
and correctly dated by the Party sending such Notice. All Notices shall be
delivered personally (by courier or otherwise) or by facsimile to the receiving
Party at the applicable address or facsimile number set forth below:
If to the Company:
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: 713-309-7312
with a copy to:
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
Attention: Stephen A. Massad
Telecopy Number: 713-229-1522
and
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Telecopy Number: 713-652-4538
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If to the Purchaser:
Occidental Chemical Holding Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: General Counsel
Telecopy Number: 972-404-4155
Any Notice delivered personally shall be deemed to have been given on the date
it is so delivered, or upon attempted delivery if acceptance of delivery is
refused, and any Notice delivered by facsimile shall be deemed to have been
given on the first Business Day it is received by the addressee (or, if such
Notice is not received during regular business hours of a Business Day, at the
beginning of the next such Business Day). The address and facsimile numbers set
forth above may be changed by a Party by giving Notice of such change of address
or facsimile number in the manner set forth in this Section 9.3.
9.4 Severability. In the event that any provision of this Agreement shall
finally be determined to be unlawful, such provision shall be deemed severed
from this Agreement and every other provision of this Agreement shall remain in
full force and effect. If the economic and legal substance of the transaction
contemplated hereby is affected in any materially adverse manner as to any of
the Parties and the Parties cannot agree on a lawful substitute provision, the
adversely affected Party shall have the right to terminate this Agreement
immediately upon notice to the other Parties.
9.5 Press Releases. Unless otherwise mutually agreed, no Party shall make
or authorize any public release of information regarding the Partnership or any
other matters contemplated by, or any provisions or terms of, this Agreement or
the Related Securities Agreements except that (a) a press release or press
releases in mutually agreed upon form or forms shall be issued by the Parties as
promptly as is practicable following the execution of this Agreement, (b) the
Parties may, after consultation with each other, communicate with employees,
customers, suppliers, stockholders, lenders, lessors, and other particular
groups as may be necessary or appropriate and not inconsistent with the prompt
consummation of the transactions contemplated by this Agreement and (c) after
consultation with the other Parties, any Party may make any release that is
required by any Legal Requirement or stock exchange rule or as necessary for the
assertion or enforcement of contractual rights.
9.6 Confidentiality Agreement.
(a) The Company and Occidental have previously entered into the
Confidentiality Agreement relating to the exchange between the Company and
Occidental and its Affiliates of certain confidential information related
or otherwise pertinent to the transactions contemplated by this Agreement.
Nothing in this Agreement shall be construed as impairing or otherwise
limiting the obligations assumed pursuant to the Confidentiality Agreement
by the parties thereto, except that the choice of law and consent to
jurisdiction provisions in the Confidentiality Agreement shall be deemed to
be superseded for all purposes by the choice of law and consent to
jurisdiction provisions set forth in Sections 9.10, 9.13 and 9.14.
-21-
(b) In addition to the obligations of each Party set forth in Section
9.6(a), the Purchaser, from and after the Closing, with respect to itself
and to its Affiliates, agrees and covenants with the Company that it will
keep confidential, and cause its and its Affiliates' respective officers,
directors, employees and advisors to keep confidential, all information
provided after the Closing Date relating to the Company and all information
relating to the operations and business of the Company, except, in each
case, as required by applicable law or administrative process (to the
extent so required) (in which case the Purchaser shall promptly notify the
Company and give the Company an opportunity to oppose such disclosure) and
except for information that is available to the public on the Closing Date,
or thereafter becomes available to the public other than as a result of a
breach of this Section 9.6(b). The covenants set forth in this Section
9.6(b) shall be effective as of Closing Date and shall terminate ten years
after the Closing Date.
9.7 Entire Agreement. This Agreement together with the Related Securities
Agreements sets forth the entire agreement and understanding among the Parties
as to the subject matter hereof and merges with and supercedes all prior
discussions, agreements and understandings of every kind and nature among them.
9.8 Construction. In construing this Agreement, the following principles
shall be followed: (i) no consideration shall be given to the captions of the
articles, sections, subsections or clauses, which are inserted for convenience
in locating the provisions of this Agreement and not as an aid in construction;
(ii) no consideration shall be given to the fact or presumption that any of the
Parties had a greater or lesser hand in drafting this Agreement; (iii) examples
shall not be construed to limit, expressly or by implication, the matter they
illustrate; (iv) the word "includes" and its syntactic variants mean "includes,
but is not limited to" and corresponding syntactic variant expressions; (v) the
plural shall be deemed to include the singular, and vice versa; (vi) references
in this Agreement to Sections, Appendices, Schedules and Exhibits shall be
deemed to be references to Sections of, and Appendices, Schedules and Exhibits
to, this Agreement unless the context shall otherwise require; (vii) all
Appendices, Schedules and Exhibits attached to this Agreement shall be deemed
incorporated herein as if set forth in full herein; (viii) the words "hereof",
"herein" and "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; (ix)
references to a Person are also to its permitted successors and permitted
assigns; and (x) unless otherwise expressly provided, any agreement, instrument
or statute defined or referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein.
9.9 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.
9.10 Governing Law. The laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement without giving effect
to any conflicts of law principles.
-22-
9.11 Transaction Costs. Each Party shall be solely responsible for and bear
all of its own respective costs, fees and expenses.
9.12 Amendment. All waivers, modifications, amendments or alterations of
this Agreement shall require the written approval of each of the Parties. Except
as provided in the preceding sentence, no action taken pursuant to this
Agreement, including any investigation by or on behalf of any Party, shall be
deemed to constitute a waiver by the Party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein and in
any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing. The waiver by any Party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
9.13 Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY OR ANY DISPUTE UNDER, ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS
OF THE STATE OF DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OF THE PARTIES ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED) RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES SHALL APPOINT THE
CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM, INC. OR A
SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF
PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE, AND EACH
OF THE PARTIES SHALL MAINTAIN THE APPOINTMENT OF SUCH AGENT (OR A SUBSTITUTE
AGENT) FROM THE DATE HEREOF UNTIL THE EARLIER OF THE CLOSING DATE OR THE
TERMINATION OF THIS AGREEMENT AND SATISFACTION OF ALL OBLIGATIONS HEREUNDER. THE
FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE SERVICE
OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE
STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE
DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES. EACH PARTY HEREBY
WAIVES ANY OBJECTION IT MAY HAVE BASED ON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON-CONVENIENS.
9.14 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND INTENTIONALLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
9.15 Further Assurances. From time to time, at the request of any other
Party, each Party shall execute and deliver or cause to be executed and
delivered such additional documents and instruments and take all such further
action as may be necessary or desirable to consummate the transactions
contemplated by this Agreement. When and if applicable, each Party shall
cooperate with the Company and timely comply with requests for information by
the Company which the Company may be required to seek pursuant to Temporary
Treasury Regulation Section 1.382-2T(k)(3).
-23-
IN WITNESS WHEREOF, this Securities Purchase Agreement has been
executed on behalf of each of the Parties by their respective officers thereunto
duly authorized, effective as of the date first written above.
LYONDELL CHEMICAL COMPANY
By: /s/ T. KEVIN DENICOLA
-------------------------------------
Name: T. Kevin DeNicola
Title: Senior Vice President, Chief
Financial Officer
OCCIDENTAL CHEMICAL HOLDING CORPORATION
By: /s/ J.R. HAVERT
-------------------------------------
Name: James R. Havert
Title: Vice President and Treasurer
APPENDIX A
TO
SECURITIES PURCHASE AGREEMENT
DEFINITIONS
-----------
"20-Day Average Price" shall mean, at any date, the average of the Daily
Prices for the 20 consecutive Business Days ending two Business Days before such
date.
"Affiliate" shall mean any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified; provided, however, that for purposes of this
Agreement neither the Partnership nor any entity controlled by it shall be
considered an Affiliate of the Company nor of the Purchaser. For purposes of
this definition, the term "control" shall have the meaning set forth in 17 CFR
230.405, as in effect on the date hereof.
"Agent" shall have the meaning set forth in Section 9.13.
"Agreement" shall mean this Securities Purchase Agreement entered into
between the Parties as of the date hereof.
"Alternate Cash Consideration" shall have the meaning set forth in the
Partner Sub Purchase Agreement.
"Amendment" shall have the meaning set forth in Section 5.4.
"Authority" shall mean any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, department or instrumentality thereof, or any court or
arbitrator (public or private).
"Bankruptcy Proceeding" shall mean (i) commencement by the Company's
creditors of an action regarding the Company under the Federal bankruptcy laws,
as now or hereafter constituted, or any other applicable Federal or State
bankruptcy, insolvency or other similar law of the United States or any foreign
jurisdiction, (ii) commencement by the Company of a proceeding to be adjudicated
a voluntary bankrupt, (iii) consent by the Company to the filing of a bankruptcy
proceeding initiated against the Company, (iv) failure of the Company to contest
a bankruptcy proceeding against it or (v) consent by the Company to the
appointment of a receiver, custodian, liquidator or trustee for the Company or
for all or any substantial portion of its assets.
"Board of Directors" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day on which the New York Stock Exchange,
Inc. is open for trading.
"Calendar Quarter" shall mean any of the following periods or any portion
thereof: (i) January 1 through March 31; (ii) April 1 through June 31; (iii)
July 1 through September 30; or (iv) October 1 through December 31.
A-1
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.1.
"Common Stock" shall mean Original Common Stock and Series B Common Stock.
"Company" shall mean Lyondell Chemical Company, a Delaware corporation.
"Company Indemnified Parties" shall mean the Company and its Affiliates and
each of their respective officers, directors, employees, stockholders, agents
and representatives.
"Company Material Adverse Change" shall mean a material adverse change in
the financial condition, results of operations, assets or business of the
Company and its Subsidiaries taken as a whole, excluding changes resulting from
(i) economic or political conditions that affect the world or any regional
economy generally, (ii) any change in raw materials prices, product prices or
industry capacity or (iii) any other matter of industry-wide application that
affects the Company and its Subsidiaries taken as a whole and industry
participants whose businesses are comparable thereto in a substantially similar
way.
"Company Material Adverse Effect" shall mean any adverse circumstance or
consequence that, individually or in the aggregate, has an effect that is
material to (i) the financial condition, results of operations, assets or
business of the Company and its Subsidiaries taken as a whole or (ii) the
ability of the Company to perform its obligations under this Agreement or the
Related Securities Agreements.
"Company Rights Agreement" shall mean the Rights Agreement dated December
8, 1995 between the Company (formerly known as Lyondell Petrochemical Company)
and The Bank of New York, as rights agent.
"Company SEC Reports" shall have the meaning set forth in Section 3.5.
"Company Securities" shall mean the Initial Shares and the Warrants.
"Confidentiality Agreement" shall mean that Confidentiality Agreement
entered into as of January 7, 2002 between the Company and Occidental and
binding upon such Parties and their Affiliates as set forth therein.
"Consent" shall mean any consent, waiver, approval, authorization,
exemption, registration, license or declaration of or by any other Person or any
Authority, or any expiration or termination of any applicable waiting period
under any Legal Requirement, required with respect to any Party or any party to
the Related Securities Agreements in connection with (i) the execution and
delivery of this Agreement or any of the Related Securities Agreements or (ii)
the consummation of any of the transactions provided for hereby or thereby.
"Contingent Payment Amount" shall have the meaning set forth in Section
1.3.
A-2
"Contingent Shares" shall mean shares of Original Common Stock or Series B
Common Stock that are issued and delivered to the Purchaser as satisfaction for
a Contingent Payment Amount obligation in accordance with Section 1.3.
"Conversion Share" shall mean any share of Original Common Stock issued
upon the conversion of a share of Series B Common Stock in accordance with the
terms of the Series B Common Stock.
"Daily Price" shall mean, on any day, the average (calculated to the
nearest thousandth) of the high and low per share sales prices of Original
Common Stock on such day for sales conducted regular way, as such high and low
per share sales prices are reported on www.nysenet.com or, if not reported
thereby, another authoritative source.
"Debt Documents" shall mean the Company's Credit Agreement dated as of July
23, 1998, as amended heretofore, and the Indentures, dated as of May 17, 1999
and December 4, 2001, among the Company, the guarantors party thereto and The
Bank of New York, as trustee.
"Encumbrance" shall mean any preferential right, lien, charge, encumbrance,
security interest, title defect, option or any other restriction or third-party
right.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Exercise Price" shall mean the exercise price of a Warrant, which is $25
for each Warrant exercised, subject to adjustment as provided in the Warrant.
"Filing" shall mean any filing with any Person or any Authority required
with respect to any Party in connection with (i) the execution and delivery of
this Agreement or any of the Related Securities Agreements or (ii) the
consummation of any of the transactions provided for hereby or thereby.
"GAAP" shall mean United States generally accepted accounting principles
applied on a consistent basis.
"Government License" shall mean, with respect to any Person, all licenses,
permits or franchises issued by any Authority relating to the operation,
development, use, maintenance or occupancy of facilities or any other assets of
such Person's business to the extent that such licenses, permits or franchises
relate principally to the normal operation and conduct of such Person's
business.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" shall mean the Purchaser Indemnified Parties and the
Company Indemnified Parties.
"Indemnifying Parties" shall mean the Party against whom indemnity is
sought.
A-3
"Initial Shares" shall mean the shares of Series B Common Stock to be
issued pursuant to Section 1.1.
"Knowledge" shall mean with respect to any Party, the actual knowledge of
any of its corporate officers.
"Legal Requirement" shall mean any law, statute, rule, ordinance, decree,
regulation, requirement, order, temporary or permanent injunction or judgment of
any Authority including the terms of any Government License.
"Loss" shall have the meaning set forth in Section 8.2(a).
"Net Payment Right" shall mean the right of the Company, upon exercise of a
Warrant, to pay the difference between the Daily Price of the Original Common
Stock on the date of such exercise and the Exercise Price in lieu of issuing one
share of Original Common Stock for each Warrant exercised, such payment to be in
the form of cash, Original Common Stock or Series B Common Stock.
"Net Payment Shares" shall mean shares of Original Common Stock or Series B
Common Stock that are issued by the Company upon exercise of a Warrant in
accordance with section 2(b) of the Warrant.
"Notice" shall have the meaning set forth in Section 9.3.
"OCC" shall mean Occidental Chemical Corporation, a New York corporation.
"Occidental" shall mean Occidental Petroleum Corporation, a Delaware
corporation.
"Occidental Material Adverse Change" shall mean a material adverse change
in the financial condition, results of operations, assets or business of the
Purchaser, excluding changes resulting from (x) economic or political conditions
that affect the world or any regional economy generally, (y) any change in raw
materials prices, product prices or industry capacity or (z) any other matter of
industry-wide application that affects the Purchaser and industry participants
whose businesses are comparable thereto in a substantially similar way.
"Occidental Material Adverse Effect" shall mean any circumstance or
consequence that, individually or in the aggregate, has an effect that is
material to (i) the financial condition, results of operations, assets or
business of the Purchaser or (ii) on the ability of the Purchaser to perform its
obligations under this Agreement or of any Occidental Party to perform its
obligations under any Related Securities Agreement.
"Occidental Parent" shall mean OCC and Oxy CH.
"Occidental Parties" shall mean Occidental and the Purchaser.
A-4
"Occidental Rights Trigger Amount" shall mean the sum without duplication
of the following acquired by Occidental or its Affiliates: (i) up to 34 million
shares of Series B Common Stock acquired pursuant to Section 1.1(b) and any
Conversion Shares, plus (ii) the number of shares of Original Common Stock
acquired by Occidental or any of its Affiliates as a result of the exercise of
the Warrant or the number of shares of Original Common Stock or Series B Common
Stock received by Occidental from the Company in satisfaction of the Company's
obligations under the Warrant, plus (iii) the number of shares of Original
Common Stock or Series B Common Stock received by Occidental or any of its
Affiliates under the terms of Section 1.3 as a result of the Company's
satisfaction of its obligations hereunder to pay the Contingent Payment Amount,
plus (iv) the number of shares of Series B Common Stock received by Occidental
or any of its Affiliates as a result of a dividend declared and paid on the
Series B Common Stock that is satisfied by delivering additional shares of
Series B Common Stock, plus (v) an aggregate of not more than 320,000 shares of
Original Common Stock acquired in the open market in any Calendar Quarter in
accordance with Section 2.2(b) of the Stockholder Agreement; provided that such
sum will not exceed a number of shares of Original Common Stock and Series B
Common Stock in the aggregate that is equal to 40% of all outstanding shares of
Original Common Stock and Series B Common Stock in the aggregate at any time.
"Original Common Stock" shall mean any shares of common stock, par value
$1.00 per share, of the Company that are not Series B Common Stock, whether as
provided for in the Restated Certificate of Incorporation of the Company, as
amended, in effect as of the date of this Agreement or in the Amendment.
"Oxy CH" shall mean Oxy CH Corporation, a California corporation.
"Parties" shall mean the Company and the Purchaser.
"Partnership" shall mean Equistar Chemicals, LP, a Delaware limited
partnership.
"Partnership Agreement" shall mean the partnership agreement of the
Partnership.
"Partnership Distribution" shall have the meaning set forth in Section 1.3.
"Partner Sub Purchase Agreement" shall mean that certain agreement dated
July 8, 2002 by and among the Company, the Purchaser, Oxy CH and OCC.
"Person" shall mean any natural person, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization.
"PIK Shares" shall mean any shares of Series B Common Stock issued at the
option of the Company, in lieu of a cash dividend otherwise required to be paid,
under the terms of the Series B Common Stock.
"Proceeding" shall mean any action, suit, claim or legal, administrative or
arbitration proceeding or governmental investigation to which any Party or an
Affiliate is a party.
A-5
"Proxy Statement" shall mean the Proxy Statement of the Company to be filed
with the SEC under the Exchange Act, pursuant to which the Company will seek its
stockholders' approval of the Amendment and the issuance of the Company
Securities as contemplated hereby.
"Purchaser" shall mean Occidental Chemical Holding Corporation, a
California corporation.
"Purchaser Indemnified Parties" shall mean the Purchaser and its Affiliates
and each of their respective officers, directors, employees, stockholders,
agents and representatives.
"Registration Rights Agreement" shall have the meaning set forth in Section
2.3.
"Related Securities Agreements" shall mean the Stockholder Agreement, the
Registration Rights Agreement and the Warrant.
"Sale Proceeds" shall mean the proceeds received from the sale of Common
Stock pursuant to Section 5.8, minus all costs, fees and expenses of Occidental
or its Affiliates in connection with such sale, including underwriting discounts
and commissions and fees and expenses of counsel, but excluding any taxes
payable as a result of such sale.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series B Common Stock" shall mean the shares of Series B common stock, par
value $1.00 per share, of the Company to be authorized by the Amendment.
"Stockholder Agreement" shall mean have the meaning set forth in Section
2.3.
"Subject Securities" shall mean the Initial Shares, Net Payment Shares,
Warrant Shares, PIK Shares, Contingent Shares, Conversion Shares and the
Warrants.
"Subsidiary" shall mean, with respect to any Party, any Person of which
such Party, either directly or indirectly, owns 50% or more of the equity or
voting interests.
"Termination Date" shall have the meaning set forth in Section 7.1(d).
"Units" shall mean units representing interests in the Partnership as
defined in the Partnership Agreement.
"Warrant" shall mean a warrant for the purchase of a share of Original
Common Stock.
"Warrant Shares" shall mean shares of Original Common Stock issued pursuant
to the exercise of a Warrant.
A-6
EXHIBIT 10.2
EXECUTION COPY
- --------------------------------------------------------------------------------
STOCKHOLDERS AGREEMENT
AMONG
LYONDELL CHEMICAL COMPANY,
AND
THE STOCKHOLDERS
AS DEFINED HEREIN
AUGUST 22, 2002
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TABLE OF CONTENTS
Page
SECTION 1 TERM.................................................................1
1.1 Term.............................................................1
1.2 Effect of Termination............................................1
SECTION 2 STANDSTILL...........................................................2
2.1 Standstill.......................................................2
2.2 Exceptions.......................................................3
SECTION 3 VOTING PROVISIONS; BOARD APPOINTMENTS; GOVERNANCE MATTERS............4
3.1 Voting Agreement.................................................4
3.2 Proxies and Voting Agreements....................................4
3.3 Board Appointments...............................................4
3.4 Conversion of Shares of Series B Common Stock into Shares of
Original Common Stock............................................5
3.5 Number of Authorized Shares of Series B Common Stock.............6
SECTION 4 TRANSFERS............................................................7
4.1 Transfers........................................................7
4.2 Compliance Certificate; Adoption Agreement.......................8
4.3 Invalid Transfers................................................8
4.4 Compliance with Securities Laws..................................8
4.5 Restrictive Legends..............................................8
SECTION 5 REGISTRATION RIGHTS; ADJUSTMENTS....................................11
5.1 Registration Rights.............................................11
5.2 Adjustments.....................................................11
SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS..................11
6.1 Organization....................................................11
6.2 Corporate Power and Authority...................................11
6.3 Binding Effect..................................................12
6.4 Ownership.......................................................12
6.5 Total Shares....................................................12
6.6 Finder's Fees...................................................12
6.7 Investment......................................................12
6.8 Investigation; No General Solicitation..........................13
6.9 Sophistication and Financial Condition of Stockholder...........13
6.10 Status of Subject Securities....................................14
6.11 Government Consent..............................................14
SECTION 7 MISCELLANEOUS.......................................................14
7.1 Successors and Assigns..........................................14
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7.2 Certain Events..................................................14
7.3 Benefits of Agreement Restricted to Parties.....................14
7.4 Notices.........................................................14
7.5 Severability....................................................16
7.6 Construction....................................................16
7.7 Entire Agreement................................................16
7.8 Counterparts....................................................16
7.9 Governing Law...................................................16
7.10 Transaction Costs...............................................17
7.11 Amendment.......................................................17
7.12 Specific Performance............................................17
7.13 Jurisdiction; Consent to Service of Process; Waiver.............17
7.14 Waiver of Jury Trial............................................18
7.15 Further Assurances..............................................18
7.16 Powers of Attorney..............................................18
APPENDIX
Appendix A Definitions
EXHIBITS:
Exhibit A Compliance Certificate
Exhibit B Form of Adoption Agreement
Exhibit C Form of Adoption Agreement - Wholly Owned Subsidiaries
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of August
22, 2002, is entered into by and among Lyondell Chemical Company, a Delaware
corporation, and the Stockholders.
The definitions of capitalized terms used in this Agreement are
set forth in Appendix A.
RECITALS
WHEREAS, Lyondell Chemical Company and Occidental Chemical Holding
Corporation, a California corporation ("OCHC"), entered into a Securities
Purchase Agreement dated as of July 8, 2002 (the "Securities Purchase
Agreement"), governing the sale by the Company to OCHC of Series B Common Stock,
Warrants and contingent consideration;
WHEREAS, as required by the terms of the Securities Purchase
Agreement, each Stockholder agrees for the benefit of the Company as set forth
in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained in this
Agreement, the Parties hereby agree as follows:
SECTION 1
TERM
1.1 Term. This Agreement is effective as of the date hereof
until the Termination Date. "Termination Date" means, (i) as to Occidental and
its Wholly Owned Affiliates, the date Occidental and its Wholly Owned Affiliates
beneficially own in the aggregate, directly or indirectly, less than 17 million
shares of Common Stock (excluding for purposes of this Section 1.1, shares to be
issued to OCHC or its Subsidiaries upon exercise of a Warrant) and (ii) as to a
transferee that is not a Wholly Owned Affiliate of OCHC, the date such
transferee and its Affiliates beneficially own in the aggregate, directly or
indirectly, less than 5 million shares of Common Stock.
1.2 Effect of Termination. From and after the Termination Date
for a Stockholder, this Agreement shall become null and void and of no further
force and effect except for the provisions of Sections 1.2, 4.4, 4.5 and 7
(except Sections 7.15 and 7.16), which shall survive the Termination Date for
such Stockholder. Nothing in this Section 1.2 shall be deemed to release any
Party from any liability for its breach of the terms, conditions and
restrictions of this Agreement before the Termination Date for such Stockholder.
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SECTION 2
STANDSTILL
2.1 Standstill. Occidental agrees that neither it nor any of
its Wholly Owned Affiliates, and each Stockholder (other than Occidental and its
Wholly Owned Affiliates) agrees that neither it nor any of its Affiliates,
shall:
(a) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities of the
Company, whether such agreement or proposal is made with or to the
Company or a third party;
(b) make any unsolicited inquiry, proposal or offer to enter
into, directly or indirectly, any sale of all or substantially all assets
or property of the Company, merger or other similar business combination
involving the Company;
(c) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" (as such terms are used in the proxy
rules of the SEC) to vote, or seek to advise or influence any Person with
respect to the voting of, any Voting Securities of the Company;
(d) except, in the case of Occidental and its Wholly Owned
Affiliates, for (i) participation by Dr. Ray Irani and/or Stephen I.
Chazen on the Board of Directors and (ii) subject to Section 3.1, voting
in matters presented by the Company for a stockholder vote, form, join or
in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any Voting Securities of
the Company;
(e) except, in the case of Occidental and its Wholly Owned
Affiliates, for (i) participation by Dr. Ray Irani and/or Stephen I.
Chazen on the Board of Directors and (ii) subject to Section 3.1, voting
in matters presented by the Company for a stockholder vote, otherwise]
act, alone or in concert with others, seek to control or influence the
management, Board of Directors or policies of the Company;
(f) except, in the case of Occidental and its Wholly Owned
Affiliates, for (i) participation by Dr. Ray Irani and/or Stephen I.
Chazen on the Board of Directors and (ii) subject to Section 3.1, voting
in matters presented by the Company for a stockholder vote, take any\
action which might reasonably be expected to require the Company to make
a public announcement regarding the possibility of a merger or other
similar business combination of the Company;
(g) except as expressly provided in Section 3.3, seek election
to or seek to place a representative on the Board of Directors of the
Company or any of its Affiliates or seek the removal of any member of the
Board of Directors of the Company or any of its Subsidiaries;
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(h) initiate, solicit (or participate in a solicitation) or
propose the approval of one or more stockholder proposals with respect to
the Company or any of its Subsidiaries or induce or encourage or attempt
to induce or encourage any other Person to initiate any such stockholder
proposal;
(i) request the Company to, or seek to cause the Company (or
its Board of Directors) to, call any meeting of the stockholders of the
Company or any of its Subsidiaries;
(j) initiate any written consent of the stockholders of the
Company or sign any written consent of the stockholders of the Company or
otherwise take any action by any such written consent unless requested to
do so by the Board of Directors;
(k) grant or agree to grant any proxy or other voting power to
any Person other than the Company or other Persons designated by the
Company to vote at any meeting of the stockholders of the Company, or
deposit any Voting Securities of the Company in a voting trust or, except
as specifically contemplated by this Agreement, subject them to a voting
agreement or other agreement or arrangement with respect to the voting of
such Voting Securities;
(l) disclose any intention, plan or arrangement inconsistent
with the foregoing;
(m) except, in the case of Occidental and its Wholly Owned
Affiliates, for (i) participation by Dr. Ray Irani and/or Stephen I.
Chazen on the Board of Directors and (ii) subject to Section 3.1, voting
in matters presented by the Company for a stockholder vote, advise,
facilitate, encourage, provide assistance (including financial
assistance) to or hold discussions with any other Persons in connection
with any of the foregoing; or
(n) request a waiver, modification or amendment by the Board of
Directors of any of the foregoing restrictions.
2.2 Exceptions. Notwithstanding Section 2.1:
(a) Occidental and its Wholly Owned Affiliates may, by notice
to the Company, suspend the provisions of Section 2.1 at any time within
30 calendar days after the commencement of a bona fide tender offer or
exchange offer for outstanding shares of Common Stock of the Company that
(i) is made by a Person other than the Company or a controlled Affiliate
of the Company, (ii) is not made pursuant to an agreement between the
offeror and the Company and (iii) to the extent the consideration offered
is cash, contains commitments for or evidence of financing sufficient to
pay the entire cash purchase price; provided, however, that any such
suspension shall apply only with respect to actions commenced by
Occidental and its Wholly Owned Affiliates prior to the time the tender
or exchange offer of such other Person is abandoned or terminated or
fails to satisfy clause (i), (ii) or (iii) above.
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(b) Section 2.1 shall not be applicable to the purchase,
directly or indirectly, by Occidental and its Wholly Owned Affiliates of
up to 320,000 shares of Original Common Stock in the open market during
any Calendar Quarter ending after the date hereof so long as after giving
effect to such purchase, Occidental and its Wholly Owned Affiliates will
beneficially own in the aggregate, directly or indirectly, a lower
ownership percentage in the Company than the Occidental Rights Trigger
Amount (as defined in the Securities Purchase Agreement). Occidental
hereby agrees, and shall cause its Wholly Owned Affiliates, to promptly
notify the Company of the purchase of any such shares.
(c) Section 2.1 shall not be applicable to the exercise of the
Warrant or the issuance and delivery by the Company to a Stockholder of
(i) PIK Shares, (ii) Conversion Shares, (iii) Contingent Shares, (iv)
Warrant Shares, (v) Net Payment Shares or (vi) the Initial Shares.
SECTION 3
VOTING PROVISIONS; BOARD APPOINTMENTS; GOVERNANCE MATTERS
3.1 Voting Agreement. Occidental agrees, and shall cause its
Wholly Owned Affiliates to agree, and each Stockholder (other than Occidental
and its Wholly Owned Affiliates) agrees, and shall cause its Affiliates to
agree, that until the Termination Date for such Stockholder, each share of each
class of Voting Securities of the Company beneficially owned, directly or
indirectly, by such Stockholder and its Affiliates shall be "present" for the
taking of any Stockholder action and voted "for" the nominees to the Board of
Directors proposed by the Continuing Directors. The provisions of this Section
3.1 shall apply to both the casting of votes at a general or special meeting of
stockholders of the Company and any execution of stockholder action by written
consent. Each Stockholder agrees and shall, and shall cause its Affiliates to
(i) execute and deliver to the Secretary of the Company not later than 20
calendar days prior to the date of any general meeting of stockholders of the
Company a proxy (in such form as provided by and on behalf of the Board of
Directors) representing all Voting Securities of the Company beneficially owned,
directly or indirectly, by such Stockholder and its Affiliates voted in
accordance with the provisions of this Section 3.1 and (ii) take similar or
analogous action with respect to a request for written consents from
Stockholders of the Company.
3.2 Proxies and Voting Agreements. Each Stockholder hereby
revokes any and all previous proxies granted with respect to matters set forth
in Section 3.1. Except as contemplated hereby, no Stockholder shall, directly or
indirectly, grant any proxies or powers of attorney, deposit, or enter into a
voting agreement with respect to, any Voting Securities of the Company with
respect to matters set forth in Section 3.1.
3.3 Board Appointments.
(a) The Company shall exercise all authority under applicable
law to cause Dr. Ray Irani and Stephen I. Chazen to be appointed as
directors of the Company effective as of the date hereof. The Parties
agree that if either such individual is at any time unable, unwilling or
not qualified to serve as a director of the Company, neither Occidental,
its Subsidiaries nor any other Person shall have the right to name a
substitute or to require that a different individual be appointed to the
Board of Directors.
(b) The Company shall exercise all authority under applicable
law to cause any slate of directors presented to the stockholders of the
Company for election to the Board of Directors to include both Dr. Ray
Irani and Stephen I. Chazen, so long as they are qualified to serve,
until Occidental and its Subsidiaries beneficially own in the aggregate,
directly or indirectly, less than 17 million shares of Common Stock
(excluding for purposes of this Section 3.3(b), shares to be issued to
OCHC or its Wholly Owned Affiliates upon exercise of a Warrant), from
which time until the Termination Date for Occidental and its Wholly Owned
Affiliates only one of such individuals (to be determined in the sole
discretion of the Company) shall be entitled to a seat on the Board of
Directors.
3.4 Conversion of Shares of Series B Common Stock into Shares
of Original Common Stock.
(a) Occidental agrees, and shall cause its Wholly Owned
Affiliates to agree, and each Stockholder (other than Occidental and its
Wholly Owned Affiliates) agrees, and shall cause its Affiliates to agree,
that, notwithstanding the terms of conversion set forth in Article IV,
Section II(6)(a) of the Amended and Restated Certificate, any shares of
Series B Common Stock beneficially owned by a Stockholder that are
Initial Shares, Net Payment Shares, Contingent Shares or PIK Shares may
be converted into shares of Original Common Stock at the option of a
Stockholder only at any time:
(i) after August 21, 2005;
(ii) after August 21, 2004, but only if the Company would
be entitled, without breach or violation of any of
the covenants in the indentures and other agreements
governing its indebtedness outstanding at such time
(and without reliance on Section 4.07(b)(xv) of the
Indenture dated as of May 17, 1999 between the
Company and The Bank of New York, as Trustee,
relating to the Company's Senior Secured Notes 2007
or any like provision of any other indenture to
which the Company is a party), to pay, immediately
after conversion of the outstanding shares of Series
B Common Stock proposed to be converted, cash
dividends on the shares of Series B Common Stock to
be converted at the same rate per share as the
Company paid on its outstanding shares of Original
Common Stock on the last dividend payment date
immediately preceding such time, all as reasonably
determined in good faith by the Company;
(iii) with the prior written consent of the Company,
pursuant to action by the Board of Directors; or
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(iv) following an acquisition by any person of a majority
of the outstanding Voting Securities of the Company
in a transaction not approved by the Board of
Directors.
(b) If the timing of the conversion so requires, then, in
addition to the items set forth in Article IV, Section 6(c)(i) of the
Amended and Restated Certificate, each share of Series B Common Stock
submitted to the Company for conversion shall also be accompanied by a
certified copy of the resolutions of the Board of Directors consenting to
the conversion or stating that the conditions for conversion set forth in
this Section 3.4 have been satisfied. If OCHC or its Wholly Owned
Affiliate request conversion of one or more shares of Series B Common
Stock and the timing of such conversion requires a certified copy of
resolutions of the Board of Directors consenting to such conversion or
stating that the conditions for conversion set forth in this Section 3.4
have been satisfied, the Board of Directors shall promptly consider such
conversion and provide OCHC or its Wholly Owned Affiliate, as applicable,
with certified resolutions reflecting the results of such consideration.
(c) From the date hereof until the date OCHC and its Wholly
Owned Affiliates cease to beneficially own in the aggregate, directly or
indirectly, shares of Series B Common Stock eligible for conversion
pursuant to this Section 3.4 and Article IV, Section 6 of the Amended and
Restated Certificate, the Company shall cause the time period commencing
with the date a dividend is declared on shares of the Series B Common
Stock and the related record date to not exceed sixty calendar days
unless otherwise required by applicable law.
3.5 Number of Authorized Shares of Series B Common Stock. (a)
From the date hereof until the Termination Date for OCHC and its Wholly Owned
Affiliates, the Company shall not effect an amendment to the Amended and
Restated Certificate (whether by merger, consolidation or otherwise) that
increases the number of authorized shares of Series B Common Stock without the
prior written consent of OCHC.
SECTION 4
TRANSFERS
4.1 Transfers.
(a) No Stockholder may Transfer a Subject Security except as
permitted by and in accordance with Sections 4.1(b) or 4.1(c).
(b) A Stockholder may Transfer, subject to applicable laws,
Warrant Shares, Conversion Shares, Net Payment Shares (Original) and
Contingent Shares (Original) as follows:
(i) pursuant to a registered public offering in
accordance with the terms and conditions of the
Registration Rights Agreement (a "Registered Public
Offering");
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(ii) pursuant to Rule 144 of the Securities Act in an
unsolicited "broker's transaction" (as defined in
Rule 144 of the Securities Act) on a securities
exchange in compliance with the volume limitations
set forth in Rule 144(e) of the Securities Act
(regardless of whether such volume limitations are
applicable by law to the transferor Stockholder); or
(iii) in connection with a sale of not more than 15
million shares in a single transaction or series of
related transactions.
(c) OCHC may Transfer any Subject Security to any Wholly Owned
Affiliate.
(d) Notwithstanding the restrictions on Transfer set forth in
this Section 4.1, a Stockholder may mortgage, pledge, encumber or create
or suffer to exist any pledge, lien or encumbrance upon or security
interest in ("Pledge") all or part of its Subject Securities to any one
or more Approved Lenders; provided that the Pledge shall be evidenced by
an instrument, the form of which shall be reasonably satisfactory to the
Company, wherein the Approved Lender receiving such Pledge shall agree
that in the event it obtains a right of foreclosure on a Stockholder's
Subject Securities, such Approved Lender shall (i) assume all of the
obligations of such Stockholder hereunder and (ii) be bound by the terms,
conditions and restrictions set forth in this Agreement. The term
"Pledge" is used herein both as a noun and as a verb. The term "Approved
Lender" is used herein to mean any bank, insurance company, investment
bank or other financial institution that is regularly engaged in the
business of making loans.
4.2 Compliance Certificate; Adoption Agreement.
(a) As a condition to the Company's obligation to effect a
Transfer permitted under Section 4.1(b), the transferor Stockholder shall
execute and deliver a certificate of compliance with Section 4.1(b) in
the form of Exhibit A attached hereto or in such other form that is
reasonably satisfactory to the Company. In addition, any transferee
(other than a QIB) who acquires five million or more Subject Shares
pursuant to a Transfer in accordance with Section 4.1(b) and such
transferee's ultimate parent entity shall execute an Adoption Agreement
in the form of Exhibit B attached hereto or in such other form that is
reasonably satisfactory to the Company.
(b) As a condition to the Company's obligation to effect a
Transfer permitted under Section 4.1(c), any transferee of Subject
Securities shall execute an Adoption Agreement in the form of Exhibit C
attached hereto or in such other form that is reasonably satisfactory to
the Company.
4.3 Invalid Transfers. Any Transfer of Subject Securities
contrary to the provisions of this Section 4 shall be null and void, and the
transferee shall not be recognized by the Company as the holder or owner of such
Subject Security Transferred for any purpose (including voting or dividend
rights), unless and until the requirements of Sections 4.1, 4.2, 4.4 and 4.5
have been satisfied. No Subject Security shall be transferred on the books of
the Company until each of such provisions have been satisfied.
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4.4 Compliance with Securities Laws. No Stockholder shall
Transfer its interest in a Subject Security at any time if such action would
constitute a violation of any federal or state securities or blue sky laws or a
breach of the conditions to any exemption from registration of such Subject
Security under any such laws or a breach of any undertaking or agreement of a
Stockholder entered into pursuant to such laws or in connection with obtaining
an exemption thereunder, and, except in the case of a Registered Public
Offering, the Company shall not be required to transfer upon its books such
Subject Security unless prior thereto the Company shall have received an opinion
of counsel in form and substance reasonably satisfactory to the Company that
such transaction is in compliance with this Section 4.4. This Section 4.4 shall
survive termination of this Agreement for the maximum period permitted by
applicable law.
4.5 Restrictive Legends.
(a) A copy of this Agreement will be filed with the Secretary
of the Company and kept with the records of the Company.
(b) All certificates representing shares of Subject Shares
shall bear the following legend noted conspicuously on such certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AS TO THE AVAILABILITY
OF AN EXEMPTION FROM REGISTRATION AND THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS
AGREEMENT. NO TRANSFER OF THESE SHARES WILL BE EFFECTIVE
UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SUCH
STOCKHOLDERS AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND
NO PERSON MAY REQUEST THE COMPANY TO RECORD THE TRANSFER OF
ANY SHARES IF SUCH TRANSFER IS IN VIOLATION OF SUCH
STOCKHOLDERS AGREEMENT. A COPY OF SUCH STOCKHOLDERS
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE COMPANY. THE SHARES EVIDENCED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS
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ON VOTING PROVIDED FOR IN SUCH STOCKHOLDERS AGREEMENT AND
NO VOTE OF SUCH SHARES THAT CONTRAVENES SUCH STOCKHOLDERS
AGREEMENT SHALL BE EFFECTIVE.
(c) All certificates representing Warrants will bear the
following legend noted conspicuously on such certificates:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY
TO THE COMPANY AS TO THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION AND THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS
AGREEMENT. NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE EFFECTIVE UNLESS AND UNTIL THE
TERMS AND CONDITIONS OF SUCH STOCKHOLDERS AGREEMENT HAVE
BEEN COMPLIED WITH IN FULL AND NO PERSON MAY REQUEST THE
COMPANY TO RECORD THE TRANSFER OF ANY SUCH SECURITIES IF
SUCH TRANSFER IS IN VIOLATION OF SUCH STOCKHOLDERS
AGREEMENT. THE SHARES TO BE ISSUED UPON EXERCISE OF THIS
WARRANT ARE SUBJECT TO RESTRICTIONS ON VOTING PROVIDED FOR
IN SUCH STOCKHOLDERS AGREEMENT AND NO VOTE OF SUCH SHARES
THAT CONTRAVENES SUCH STOCKHOLDERS AGREEMENT SHALL BE
EFFECTIVE. A COPY OF SUCH STOCKHOLDERS AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
(d) All certificates representing shares of Original Common
Stock acquired by a Stockholder in the open market will bear the
following legend noted conspicuously on such certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON VOTING PROVIDED FOR IN A STOCKHOLDERS
AGREEMENT AND NO VOTE OF SUCH SHARES THAT CONTRAVENES SUCH
STOCKHOLDERS AGREEMENT SHALL BE EFFECTIVE. A COPY OF SUCH
STOCKHOLDERS AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST OF THE RECORD HOLDER OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE COMPANY.
(e) Until such time as a Subject Security held by a Stockholder
has been registered pursuant to a registration statement under the
Securities Act in accordance with the terms and provisions of the
Registration Rights Agreement, the certificates representing such Subject
Security (including all certificates issued upon Transfer or in exchange
thereof or substitution therefor) will also bear any legend required
under any other applicable laws, including state securities or blue sky
laws.
(f) In the event a Stockholder and/or its Affiliates acquire
beneficial ownership, directly or indirectly, of any other or additional
securities of the Company, such Stockholder shall, and shall cause its
Affiliate, if applicable, to, submit all certificates representing such
securities to the Company so that the legend or legends required by this
Section 4.5 may be placed thereon.
(g) The Company may make a notation on its records or give
stop-transfer instructions to any transfer agents or registrars for the
Subject Securities in order to implement the restrictions set forth in
this Section 4.
SECTION 5
REGISTRATION RIGHTS; ADJUSTMENTS
5.1 Registration Rights. The Stockholders shall have such
registration rights as are set forth in the Registration Rights Agreement.
5.2 Adjustments. If the Company at any time during the term of
this Agreement subdivides its outstanding Original Common Stock or issues a
stock dividend in Original Common Stock, the share amounts referred to in this
Agreement shall be proportionately increased. If the Company at any time during
the term of this Agreement combines its outstanding Original Common Stock, the
share numbers referred to in this Agreement shall be proportionately decreased.
Any adjustment made pursuant to this Section 5.2 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents and warrants to the Company that as of
the date hereof:
6.1 Organization. Such Stockholder is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which such
Stockholder was incorporated or formed.
6.2 Corporate Power and Authority. Such Stockholder has all
requisite corporate power and authority, or power under its constituent
documents, to enter into this Agreement and to perform its obligations
hereunder. The execution, delivery and performance by such Stockholder of this
Agreement have been duly authorized by all necessary corporate or similar action
on the part of such Stockholder.
6.3 Binding Effect. This Agreement has been duly executed and
delivered by such Stockholder and is a valid and binding agreement of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and by
equitable principles to which the remedies of specific performance and
injunctive and similar forms of relief are subject.
6.4 Ownership. Such Stockholder beneficially owns in the
aggregate, directly or indirectly, the amount of securities of the Company set
forth next to its name on the signature page hereto, the Stockholder has the
sole right to vote such securities, as applicable, and, other than this
Agreement, there are no restrictions on rights of disposition or Pledge, charge
or other encumbrance or restriction pertaining to such securities. Except as
provided herein, none of such securities is subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of such
securities, and no proxy, power of attorney or other authorization has been
granted with respect to any of such securities. Such Stockholder is not a party
to any option, warrant, purchase right, or other contract or commitment that
could require such Stockholder to Transfer or otherwise dispose of any capital
stock of the Company (other than this Agreement). Such Stockholder is not a
party to any voting trust, proxy or other agreement or understanding with
respect to Voting Securities of the Company (other than this Agreement).
6.5 Total Shares. The securities of the Company listed next to
such Stockholder's name on the signature page hereto are the only securities of
the Company beneficially owned in the aggregate, directly or indirectly, by such
Stockholder, and, other than the Warrant, such Stockholder does not have any
option to purchase or right to subscribe for or otherwise acquire any additional
securities of the Company and has no other interest in or voting rights with
respect to any other securities of the Company. No Wholly Owned Affiliate of
such Stockholder beneficially owns any securities of the Company (other than a
Wholly Owned Affiliate who is also a Party).
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6.6 Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from such Stockholder in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise provided in the Securities Purchase Agreement,
if a party thereto.
6.7 Investment. Such Stockholder is acquiring the Subject
Securities for investment for its own account, not as a nominee or agent, and
not with a view to, or for resale in connection with, any distribution thereof
in violation of applicable law, and has not offered or sold any portion of the
Subject Securities to be acquired by it. Such Stockholder acknowledges and
understands that investment in the Subject Securities is subject to a high
degree of risk and that it must bear the economic risk of its investment for an
indefinite period of time because the Subject Securities must be held
indefinitely (i) until subsequently registered under the Securities Act and
applicable state and other securities laws or (ii) unless an exemption from
registration is available which depends upon, among other things, the bona fide
nature of such Stockholder's investment intent and the accuracy of such
Stockholder's representations as expressed herein. Such Stockholder understands
that any transfer agent of the Company will issue stop transfer instructions
with respect to the Subject Securities unless such Transfer is subsequently
registered under the Securities Act and applicable state and other securities
laws or unless an exemption from such registration is available. Such
Stockholder was not organized for the purpose of acquiring the Subject
Securities.
6.8 Investigation; No General Solicitation. Such Stockholder
has received a copy of the Company SEC Reports. Such Stockholder has had a
reasonable opportunity to ask questions relating to and otherwise discuss with
the Company's management and other parties (i) the terms and conditions of the
offering, (ii) the other information set forth in the Company SEC Reports and
the Securities Purchase Agreement, if a party thereto, and (iii) this Agreement
and the Company's business, management and financial affairs, and such
Stockholder has received satisfactory responses to such Stockholder's inquiries.
To the extent necessary, such Stockholder has retained, at the expense of such
Stockholder, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement, the
Securities Purchase Agreement, if a party thereto, and its acquisition of
Subject Securities. Such Stockholder has relied only on its own independent
investigation and on the representations and warranties of the Company contained
herein and in the Securities Purchase Agreement, if a party thereto, before
deciding to acquire such Subject Securities.
6.9 Sophistication and Financial Condition of Stockholder. Such
Stockholder is an experienced and sophisticated investor and has such knowledge
and experience in financial and business matters or its professional advisors
have such knowledge and experience in financial and business matters as are
necessary to evaluate the merits and risks of an investment in the Subject
Securities and to evaluate the merits and risks of its investment and protect
its own interest in connection with the acquisition of a Subject Security. Such
Stockholder is able to bear the economic risk of this investment regarding the
Company, is able to hold the Subject Securities indefinitely and has a
sufficient net worth to sustain a loss of its entire investment in the Company
in the event such loss should occur.
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6.10 Status of Subject Securities. Such Stockholder has been
informed by the Company that the Subject Securities have not been and will not
be registered under the Securities Act or under any state securities laws,
including Section 25102(f) of the California Corporations Code, except as
specifically provided in the Registration Rights Agreement, and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering. Such Stockholder acknowledges that any
certificate representing Subject Securities will bear the legend or legends
specified in Section 4.5.
6.11 Government Consent. Except as may be required under the HSR
Act and such filings as may be required to be made with the SEC, or under state
securities or blue sky laws, no consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Purchaser is required in connection with the valid execution and delivery
of this Agreement or the acquisition of the Subject Securities.
SECTION 7
MISCELLANEOUS
7.1 Successors and Assigns. Except as may be expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
successors of each of the Parties hereto. No Party may otherwise assign or
delegate any of its rights or obligations under this Agreement by operation of
law or otherwise (other than as a result of any merger or consolidation) without
the prior written consent of the other Parties, which consent shall be in the
sole and absolute discretion of such other Parties. Any purported assignment or
delegation without such consent shall be void and ineffective.
7.2 Certain Events. Such Stockholder agrees that this Agreement
and the obligations hereunder shall attach to the Subject Securities and shall
be binding upon any person to which beneficial ownership, directly or
indirectly, of such Subject Securities shall pass, whether by operation of law
or otherwise.
7.3 Benefits of Agreement Restricted to Parties. This Agreement
is made solely for the benefit of the Parties, and no other Person (including
each Party's employees or stockholders) shall have any right, claim or cause of
action under or by virtue of this Agreement.
7.4 Notices. All notices, requests and other communications
(collectively, the "Notices") made pursuant to this Agreement shall be in
writing and signed and correctly dated by the Party sending such Notice. All
Notices shall be delivered personally (by courier or otherwise) or by facsimile
to the receiving Party at the applicable address or facsimile number set forth
below:
If to the Company:
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: 713-309-7312
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with a copy to:
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
Attention: Stephen A. Massad
Telecopy Number: 713-229-1522
and
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Telecopy Number: 713-652-4538
If to a Person who is a Stockholder on the date hereof:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Telecopy Number: 310-443-6195
Occidental Chemical Holding Corporation
505 LBJ Freeway
Dallas, Texas 75244
Attention: General Counsel
Telecopy Number: 972-404-4155
Any Notice delivered personally shall be deemed to have been given on the date
it is so delivered, or upon attempted delivery if acceptance of delivery is
refused, and any Notice delivered by facsimile shall be deemed to have been
given on the first Business Day it is received by the addressee (or, if such
Notice is not received during regular business hours of a Business Day, at the
beginning of the next such Business Day). The address and facsimile numbers set
forth above may be changed by a Party by giving Notice of such change of address
or facsimile number in the manner set forth in this Section 7.4.
7.5 Severability. In the event that any provision of this
Agreement shall finally be determined to be unlawful, such provision shall be
deemed severed from this Agreement and every other provision of this Agreement
shall remain in full force and effect. If the economic and legal substance of
the rights and obligations of the Parties are affected in any materially adverse
manner as to any of the Parties and the Parties cannot agree on a lawful
substitute provision, the adversely affected Party shall have the right to
terminate this Agreement immediately upon notice to the other Parties.
7.6 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or presumption
that any of the Parties had a greater or lesser hand in drafting this Agreement;
(iii) the word "includes" and its syntactic variants mean "includes, but is not
limited to" and corresponding syntactic variant expressions; (iv) the plural
shall be deemed to include the singular, and vice versa; (v) references in this
Agreement to Articles, Sections, Appendices and Exhibits shall be deemed to be
references to Articles and Sections of, and Appendices and Exhibits to, this
Agreement unless the context shall otherwise require; (vi) all Exhibits and
Appendices attached to this Agreement shall be deemed incorporated herein as if
set forth in full herein; (vii) the words "hereof", "herein" and "hereunder" and
words of similar import shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; (viii) references to a Person are also
to its permitted successors and permitted assigns; and (ix) unless otherwise
expressly provided, any agreement, instrument or statute defined or referred to
herein means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein.
7.7 Entire Agreement. This Agreement together with the Related
Securities Agreements sets forth the entire agreement and understanding among
the Parties as to the subject matter hereof and merges with and supercedes all
prior discussions, agreements and understandings of every kind and nature among
them.
7.8 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.
7.9 Governing Law. The laws of the State of Delaware shall
govern the construction, interpretation and effect of this Agreement without
giving effect to any conflicts of law principles.
7.10 Transaction Costs. Each Party shall be solely responsible
for and bear all of its own respective costs, fees and expenses.
7.11 Amendment. All waivers, modifications, amendments or
alterations of this Agreement shall require the written approval of each of the
Parties. Except as provided in the preceding sentence, no action taken pursuant
to this Agreement, including any investigation by or on behalf of any Party,
shall be deemed to constitute a waiver by the Party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. The waiver by any Party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
-15-
7.12 Specific Performance. Each Party agrees that the other
Parties would be irreparably damaged if for any reason such Party fails to
perform any of such Party's obligations under this Agreement, and that the other
Parties would not have an adequate remedy at law for money damages in such
event. Accordingly, the other Parties shall be entitled to seek specific
performance and injunctive and other equitable relief to enforce the performance
of this Agreement by such Party. This provision is without prejudice to any
other rights that the Parties may have against any other Party for any failure
to perform its obligations under this Agreement.
7.13 Jurisdiction; Consent to Service of Process; Waiver. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST ANY PARTY OR ANY DISPUTE UNDER, ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN THE FEDERAL OR STATE
COURTS OF THE STATE OF DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE, AND
EACH OF THE PARTIES SHALL MAINTAIN THE APPOINTMENT OF SUCH AGENT (OR A
SUBSTITUTE AGENT) FROM THE DATE HEREOF UNTIL THE TERMINATION OF THIS AGREEMENT
AND SATISFACTION OF ALL OBLIGATIONS HEREUNDER. THE FOREGOING CONSENTS TO
JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT
CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR
ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON
ANY PERSON OTHER THAN THE PARTIES. EACH PARTY HEREBY WAIVES ANY OBJECTION IT MAY
HAVE BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON-CONVENIENS.
7.14 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
AND FOR ANY COUNTERCLAIM THEREIN.
7.15 Further Assurances. From time to time, at the request of
any other Party, each Party shall execute and deliver or cause to be executed
and delivered such additional documents and instruments and take all such
further action as may be necessary or desirable to consummate the transactions
contemplated by this Agreement. When and if applicable, each Stockholder shall
cooperate with the Company and timely comply with requests for information by
the Company which the Company may be required to seek pursuant to Temporary
Treasury Regulation Section 1.382-2T(k)(3).
-16-
7.16 Powers of Attorney. For the purpose of executing an
Adoption Agreement, each Stockholder hereby appoints the Company as agent and
attorney of such Stockholder to execute such Adoption Agreement on their behalf
and expressly bind themselves to the Adoption Agreement by the Company's
execution of that Adoption Agreement without further action on their part. On
the execution of an Adoption Agreement by the Company and any Person, such
Person shall be bound by, and shall have the benefit of, all the terms and
conditions set out in this Agreement to the same extent as if such Person were a
"Stockholder" as defined in this Agreement.
-17-
IN WITNESS WHEREOF, this Stockholders Agreement has been executed
on behalf of each of the Parties by their respective officers thereunto duly
authorized, effective as of the date first written above.
LYONDELL CHEMICAL COMPANY
By: /s/ T. KEVIN DENICOLA
----------------------------------
Name: T. Kevin DeNicola
Title: Senior Vice President and
Chief Financial Officer
STOCKHOLDERS
------------
Shares and Warrants Beneficially Owned
at Time of Execution
----------------------------------------------------------------------------
ORIGINAL SERIES B
STOCKHOLDER COMMON STOCK COMMON STOCK WARRANTS
- ----------- ---------------------- ---------------------- ----------------------
(Includes Subject
Shares and shares
acquired in the open
market)
Occidental Chemical Holding Corporation
By: /s/ J. R. HAVERT -- 34 million 5 million
----------------------------------- ---------------------- ---------------------- ----------------------
Name: J. R. Havert
Title: Vice President and Treasurer
Occidental Petroleum Corporation*
By: /s/ J. R. HAVERT -- -- --
----------------------------------- ---------------------- ---------------------- ----------------------
Name: J. R. Havert
Title: Vice President and Treasurer
*Note: Amounts listed do not include those shares and warrants beneficially
owned by OCHC.
APPENDIX A
TO
STOCKHOLDERS AGREEMENT
DEFINITIONS
"Affiliate" shall mean any Person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified; provided, however, that for purposes
of this Agreement neither the Partnership nor any entity controlled by it shall
be considered an Affiliate of the Company or of the Purchaser. For purposes of
this definition, the term "control" shall have the meaning set forth in 17 CFR
230.405 as in effect on the date hereof.
"Agreement" shall mean this Stockholders Agreement entered into
among the Parties as of the date hereof.
"Amended and Restated Certificate" shall mean the Amended and
Restated Certificate of Incorporation of Lyondell Chemical Company that was
filed with the Secretary of State of the State of Delaware on August 21, 2002.
"Approved Lender" shall have the meaning set forth in Section
4.1(d).
A Person shall be deemed to "beneficially own," or to have
"beneficial ownership" of, any securities of the Company (which securities shall
also be deemed "beneficially owned" by such Person) that such Person is deemed
to "beneficially own" within the meaning of Rule l3d-3 under the Exchange Act.
"Board of Directors" shall mean the Board of Directors of the
Company and any duly authorized committee thereof.
"Business Day" shall mean any day on which the New York Stock
Exchange, Inc. is open for trading.
"Calendar Quarter" shall mean any of the following periods or any
portion thereof: (i) January 1 through March 31; (ii) April 1 through June 31;
(iii) July 1 through September 30; or (iv) October 1 through December 31.
"Change of Control" shall mean, as to any Party, the occurrence of
any of the following events: (a) there shall be consummated any consolidation,
merger or share exchange of such Party; (b) substantially all of such Party's
properties or assets are sold or otherwise disposed of to any Person or group of
Persons in any one transaction or a series of related transactions; or (c) any
Transfer of the Voting Securities of such Party.
"Common Stock" shall mean the Original Common Stock and the Series
B Common Stock.
Appendix A - Page 1
"Combined Voting Power" shall mean the aggregate votes entitled to
be cast generally in the election of the board of directors, or similar managing
group, of a corporation or other entity by holders of then outstanding Voting
Securities of such corporation or other entity.
"Company" shall mean Lyondell Chemical Company, a Delaware
corporation, or any Surviving Entity.
"Company SEC Reports" shall mean the forms, reports and documents
required to be filed by the Company with the SEC since December 31, 2001.
"Contingent Shares" shall mean the shares of Original Common Stock
or Series B Common Stock that are issued to satisfy the Company's obligation to
pay a Contingent Payment Amount (as defined in the Securities Purchase
Agreement).
"Contingent Shares (Original)" shall mean the Contingent Shares
that are shares of Original Common Stock.
"Continuing Directors" shall mean, as of any date of
determination, any member of the Board of Directors who (i) was a member of the
Board of Directors on the date of this Agreement or (ii) was nominated for
election to the Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board of Directors at the time
of such nomination, or was elected or appointed by the affirmative vote of a
majority of such Continuing Directors.
"Conversion Shares" shall mean any share of Original Common Stock
issued upon conversion of a share of Series B Common Stock in accordance with
the terms of the Series B Common Stock.
"Exchange Act" shall mean the Securities and Exchange Act of 1934.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Initial Shares" shall mean the shares of Series B Common Stock
issued pursuant to Section 1.1 of the Securities Purchase Agreement.
"Net Payment Shares" shall mean the shares of Original Common
Stock or Series B Common Stock that are issued by the Company upon exercise of a
Warrant in accordance with Section 2(b) of the Warrant.
"Net Payment Shares (Original)" shall mean the Net Payment Shares
that are shares of Original Common Stock.
"Notice" has the meaning set forth in Section 7.4.
"Occidental" shall mean Occidental Petroleum Corporation, a
Delaware corporation.
Appendix A - Page 2
"OCHC" shall mean Occidental Chemical Holding Corporation, a
California corporation.
"Original Common Stock" shall mean all common stock, par value
$1.00 per share, of the Company that is not Series B Common Stock.
"Partner Sub Purchase Agreement" shall mean that certain
Occidental Partner Sub Purchase Agreement dated July 8, 2002 among the Company,
OCHC, Occidental Chemical Corporation and Oxy CH Corporation.
"Party" shall mean the Company and the Stockholders.
"Person" shall mean any individual, group, corporation, firm,
partnership, joint venture, trust, business association, organization,
governmental entity or other entity.
"PIK Shares" shall mean any shares of Series B Common Stock issued
at the option of the Company, in lieu of a cash dividend otherwise required to
be paid, under the terms of the Series B Common Stock.
"Pledge" has the meaning set forth in Section 4.1(d).
"QIB" shall mean a "Qualified Institutional Buyer" as defined in
Rule 144A of the Securities Act.
"Registered Public Offering" has the meaning set forth in Section
4.1(b)(i).
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated the date hereof among the Company and OCHC.
"Related Securities Agreements" shall mean the Securities Purchase
Agreement, the Registration Rights Agreement and the Warrant.
"Restructuring Transaction" shall mean any merger, consolidation
or recapitalization of the Company (or, if the capital stock of the Company is
affected, any Subsidiary of the Company), or any sale, lease, or other transfer
(in one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"Securities Purchase Agreement" has the meaning set forth in the
Recitals to this Agreement.
"Series B Common Stock" shall mean the shares of Series B Common
Stock, par value $1.00 per share, of the Company.
Appendix A - Page 3
"Stockholder" shall mean (i) Occidental and OCHC, (ii) all Persons
to whom Subject Securities are Transferred that are required by the terms of
this Agreement to execute an adoption agreement and (iii) all Persons to whom
Subject Securities are Pledged that are required by the terms of this Agreement
to become a party to this Agreement, and, in each case, their respective
successors, permitted assigns, heirs, executors, trustees and administrators.
"Subject Shares" shall mean the Initial Shares, Net Payment
Shares, Warrant Shares, PIK Shares, Contingent Shares and Conversion Shares,
each until sold pursuant to an effective registration statement or under Rule
144 of the Securities Act.
"Subject Securities" shall mean the Subject Shares and the
Warrants.
"Subsidiary" shall mean, with respect to any Party, any Person of
which such Party, either directly or indirectly, owns 50% or more of the equity
or voting interests.
"Surviving Entity" shall mean an ultimate parent corporation or
other entity with a class of equity securities registered under Section 12 of
the Exchange Act and resulting from any Restructuring Transaction of the Company
where (x) the stockholders of the Company immediately prior to such
Restructuring Transaction beneficially own, immediately after such Restructuring
Transaction, directly or indirectly, shares or other ownership interests
representing in the aggregate more than 50% of (a) the then outstanding common
stock or other equity interests of the such Surviving Entity and (b) the
Combined Voting Power of the then outstanding Voting Securities of the Surviving
Entity or (y) the Continuing Directors at the time of the initial approval of
such Restructuring Transaction by the board of directors would immediately after
such Restructuring Transaction constitute a majority of the Board of Directors,
or similar managing group, of the Surviving Entity.
"Termination Date" has the meaning set forth in Section 1.1.
"Transfer" shall mean, with respect to any Subject Security, to
directly or indirectly (whether or not through an underwriter), offer, sell,
convey, distribute, transfer (by merger or otherwise), assign, devise, exchange,
encumber, gift, pledge, grant any option with respect to, hypothecate or
otherwise dispose of such Subject Security, or enter into any agreement,
arrangement or understanding with respect to the foregoing. Notwithstanding the
foregoing, as used herein, a "Transfer" shall not include any Transfer that
occurs by virtue of a Change of Control of Occidental.
"Voting Securities" shall mean all securities of a corporation or
other entity having the right to vote in an election of the board of directors,
or similar managing group, of such corporation or other entity, whether at all
times or only so long as no senior class of securities of such corporation or
other entity has such voting power by reason of any contingency.
"Warrant" shall mean the Warrants to purchase Original Common
Stock of the Company issued pursuant to the Securities Purchase Agreement.
"Warrant Shares" shall mean the shares of Original Common Stock of
the Company issued upon exercise of the Warrant.
Appendix A - Page 4
"Wholly Owned Affiliate," with respect to any Party, shall mean
any Affiliate of such Party that is wholly owned, directly or indirectly, by
such Party's ultimate parent entity.
Appendix A - Page 5
EXHIBIT 10.3
WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL FOR THE
HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS
ON TRANSFER SET FORTH IN A STOCKHOLDERS AGREEMENT. NO TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS
AND CONDITIONS OF SUCH STOCKHOLDERS AGREEMENT HAVE BEEN COMPLIED WITH IN FULL
AND NO PERSON MAY REQUEST THE COMPANY TO RECORD THE TRANSFER OF ANY SUCH
SECURITIES IF SUCH TRANSFER IS IN VIOLATION OF SUCH STOCKHOLDERS AGREEMENT. A
COPY OF SUCH STOCKHOLDERS AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
LYONDELL CHEMICAL COMPANY
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK,
PAR VALUE $1.00 PER SHARE
Issued August 22, 2002
(Subject to Adjustment)
NO. 1 5,000,000 SHARES
THIS CERTIFIES THAT, for value received, Occidental Chemical Holding
Corporation, a California corporation, the registered holder hereof (the
"Holder"), is entitled to subscribe for and purchase from LYONDELL CHEMICAL
COMPANY, a Delaware corporation (the "Company"), upon the terms and conditions
set forth herein, at any time or from time to time, during the Exercise Period,
5 million fully paid and nonassessable shares of Original Common Stock (each
share, a "Warrant Share") of the Company, at the Exercise Price, as such number
of shares and Exercise Price may be adjusted pursuant to Section 4. This Warrant
is the warrant issued pursuant to the Securities Purchase Agreement.
This Warrant is being executed contemporaneously with the Stockholder
Agreement. Neither this Warrant, the Warrant Shares nor the Net Payment Shares
may be sold or transferred except in accordance with the legend above and the
terms and provisions of the Stockholder Agreement.
1. CERTAIN DEFINITIONS.
As used in this Warrant, the following terms shall have the following
respective meanings:
"15-Day Price" shall have the meaning set forth in Section 4(a).
"Agent" shall have the meaning set forth in Section 12(m).
"Aggregate Exercise Price" shall mean (i) if the Company does not elect
to exercise its Net Payment Right, an amount equal to the Exercise Price
multiplied by the number of Warrant Shares for which this Warrant is being
exercised or (ii) if the Company elects to exercise its Net Payment Right as to
a portion of the Warrant exercised, an amount equal to (x) the Exercise Price
multiplied by (y) the number of Warrant Shares for which this Warrant is being
exercised minus the number of Warrant Shares for which the Company exercises its
Net Payment Right.
"Business Day" shall mean any day on which the NYSE is open for trading.
"Company" shall mean Lyondell Chemical Company, a Delaware corporation,
or any Surviving Entity (as defined in the Stockholder Agreement).
"Company Election Notice" shall have the meaning set forth in Section
2(a).
"Corporate Change" shall have the meaning set forth in Section 4(d).
"Daily Price" shall mean, on any day, the average (calculated to the
nearest thousandth) of the high and low per share sales prices of Original
Common Stock on such day for sales conducted regular way on the NYSE (as
reported on www.nysenet.com or, if not reported thereby, another authoritative
source).
"Exercise Date" shall mean any date on which the Holder delivers an
Exercise Notice to the Company.
"Exercise Notice" shall mean an exercise notice substantially in the
form attached hereto as Exhibit A.
"Exercise Period" shall mean the period commencing the Issue Date and
ending at 5:00 p.m., Houston, Texas time, on the fifth anniversary thereof.
"Exercise Price" shall mean $25 per Warrant Share, as adjusted pursuant
to Section 4.
"Holder" shall mean Occidental Chemical Holding Corporation, a
California corporation, and shall include its permitted successors and assigns.
"Issue Date" shall mean August 22, 2002.
"Net Payment" shall mean an amount equal to (x) the excess, if any, of
the Daily Price on the Exercise Date to which the Net Payment relates over the
Exercise Price as of such Exercise
-2-
Date, multiplied by (y) the number of Warrant Shares for which the Company
exercises its Net Payment Right.
"Net Payment Right" shall have the meaning set forth in Section 2(b).
"Net Payment Shares" shall have the meaning set forth in Section 2(b).
"Notice" shall have the meaning set forth in Section 12(d).
"NYSE" shall mean the New York Stock Exchange, Inc.
"Occidental" shall mean Occidental Petroleum Corporation, a Delaware
corporation.
"Original Common Stock" shall mean shares of the series of common stock,
$1.00 par value per share, of the Company in existence on the date hereof that
is not Series B Common Stock.
"Person" shall mean any natural person, corporation, partnership,
limited liability company, joint venture, association, trust or other entity or
organization.
"PIK Dividend," with respect to the Series B Common Stock, shall have
the meaning set forth in the Amended and Restated Certificate of Incorporation
of Lyondell Chemical Company that was filed with the Secretary of State of the
State of Delaware on August 21, 2002.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of the Issue Date among the Company and the Holder.
"Related Securities Agreements" shall mean the Stockholder Agreement,
the Securities Purchase Agreement and the Registration Rights Agreement.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated July 8, 2002, by and between the Company and
Occidental Chemical Holding Corporation.
"Series B Common Stock" shall mean shares of Series B Common Stock,
$1.00 par value per share, of the Company.
"Stockholder Agreement" shall mean that certain Stockholders Agreement
dated as of the Issue Date by and among the Company and the Stockholders (as
defined therein).
"Subsidiary" shall mean, with respect to a Holder, any Person of which
such Holder, either directly or indirectly, owns 50% or more of the equity or
voting interests.
"Transfer" shall have the meaning set forth in the Stockholder
Agreement.
"Transfer Notice and Adoption Agreement" shall mean a transfer notice
and adoption agreement substantially in the form attached hereto as Exhibit B.
"Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of exercise or Transfer of this
Warrant in whole or in part.
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"Warrant Share" shall have the meaning set forth in the first paragraph
hereof.
"Wholly Owned Affiliate," with respect to any party, shall mean any
Affiliate of such party that is wholly owned, directly or indirectly, by such
party's ultimate parent entity.
2. METHOD OF EXERCISE; COMPANY'S NET PAYMENT OPTION; CERTIFICATES
AND NEW WARRANT.
(a) EXERCISE. Subject to compliance with applicable
securities laws, this Warrant may be exercised during the Exercise Period, in
whole or in part, by delivering a signed and completed Exercise Notice. Within
two Business Days after receiving a signed and completed Exercise Notice, the
Company shall notify the Holder of whether it will issue Warrant Shares or make
a Net Payment in lieu of issuing Warrant Shares for all or any portion of the
Warrant exercised (the "Company Election Notice"); provided, however, that if
the Company does not deliver a Company Election Notice within such two Business
Day period, the Company shall be required to (i) exercise its Net Payment Right
with respect to all of the Warrant Shares covered by the applicable Exercise
Notice and (ii) satisfy such Net Payment with cash. If the Company elects to
exercise its Net Payment Right, the Company Election Notice shall state the
number of Warrant Shares to which such Net Payment Right will apply and the form
of such Net Payment. Within three Business Days after delivery of a Company
Election Notice (or, if the Company does not deliver a Company Election Notice,
within five Business Days after delivery of an Exercise Notice), the Holder
shall complete its exercise of this Warrant by surrender of this Warrant to the
Company at its principal office, or at such other place designated by the
Company, together with the Aggregate Exercise Price, if applicable, paid by wire
transfer of immediately available funds to an account designated by the Company.
(b) COMPANY'S NET PAYMENT RIGHT. In lieu of delivering to
the Holder upon exercise of this Warrant all or any portion of the Warrant
Shares, the Company shall have the right in its sole discretion to make a Net
Payment to the Holder in the form of (i) cash, (ii) shares of Original Common
Stock, (iii) shares of Series B Common Stock (but only until the later of (x)
the third anniversary of the Issue Date or (y) the date the Holder or its Wholly
Owned Affiliate no longer beneficially owns shares of Series B Common Stock) or
(iv) a combination of (i), (ii) and (iii) (the "Net Payment Right"). If the
Company elects in its Company Election Notice to exercise its Net Payment Right
by delivering to the Holder the amount of all or any portion of the Net Payment
in shares of Original Common Stock or Series B Common Stock (each such share a
"Net Payment Share"), each such share shall be valued at the Daily Price on the
Exercise Date to which the Net Payment relates.
(c) STOCK CERTIFICATES, CASH PAYMENTS AND NEW WARRANT.
Within five Business Days after the Holder completes its exercise of this
Warrant in accordance with Section 2(a), the Company shall issue and cause to be
delivered to or upon the written order of the exercising Holder and in the name
of the exercising Holder, (i) a certificate or certificates for the Warrant
Shares purchased and/or (ii) if the Company elected in the applicable Company
Election Notice to exercise its Net Payment Right as to all or any portion of
the Warrant Shares by issuance and delivery of Net Payment Shares, a certificate
or certificates representing such Net Payment Shares. If the Company (x) did not
deliver a Company Election Notice or (y) elected in a Company Election Notice to
exercise its Net Payment Right as to all or any portion of the
-4-
Warrant Shares in the form of cash, then the Company shall deliver the
applicable cash payment within three Business Days after the Holder completes
its exercise of this Warrant in accordance with Section 2(a) by wire transfer of
immediately available funds to an account designated by the Holder. If this
Warrant should be exercised in part only, the Company shall, within five
Business Days after completion of the exercise as set forth in Section 2(a),
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
3. STOCK FULLY PAID; RESERVATION OF SHARES. Each Warrant Share
issuable upon exercise of this Warrant, upon receipt by the Company of the
Exercise Price therefore, and each Net Payment Share issuable upon exercise of
this Warrant in lieu of Warrant Shares, shall be validly issued, fully paid and
nonassessable, and free from all taxes, liens, and charges with respect to its
issuance. So long as this Warrant remains outstanding, the Company shall at all
times reserve and keep available out of its authorized and unissued Original
Common Stock solely for the purpose of providing for the exercise of the rights
to purchase all Warrant Shares granted pursuant to this Warrant such number of
shares of Original Common Stock as shall, from time to time, be sufficient
therefor.
4. ADJUSTMENTS. The number and kind of securities purchasable upon
the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) DAILY PRICE SHORTFALL. If the average (rounded to the
nearest thousandth) of the Daily Prices for the 15 consecutive Business Days
ending December 31, 2002 (the "15-Day Price") is:
(i) less than or equal to $7.00 per share, then (A)
the number of Warrant Shares purchasable upon this Warrant's exercise
shall be increased to 6 million shares and (B) the Exercise Price shall
be decreased to $22.30 per share;
(ii) greater than $7.00 per share and less than
$11.00 per share, then (A) the number of Warrant Shares purchasable upon
this Warrant's exercise shall be
5 million + (($11.00 - 15-Day Price) x 250,000);
and (B) the Exercise Price shall be
$25 - (($11.00 - 15-Day Price) x $.675).
(b) RECLASSIFICATION. If there is any reclassification or
change in the Company's Original Common Stock, the Company shall execute a new
Warrant providing that the Holder has the right to exercise such new Warrant and
receive upon such exercise (and payment of the same Exercise Price), in lieu of
the Warrant Shares previously issuable upon exercise of this Warrant, the kind
and amount of shares of stock, other securities, money, and property that a
Holder of an equivalent number of Warrant Shares would receive upon such
reclassification or change. Any such new Warrant shall provide for adjustments
that are as nearly equivalent as practicable to the adjustments provided for in
this Section 4, which shall apply similarly to successive reclassifications or
changes and to the Net Payment Right.
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(c) STOCK SPLITS, DIVIDENDS AND COMBINATIONS. If the Company
at any time subdivides its outstanding Original Common Stock or issues a stock
dividend on shares of Original Common Stock, the number of Warrant Shares
purchasable upon this Warrant's exercise immediately before such subdivision or
stock dividend shall be proportionately increased, and the Exercise Price shall
be proportionately decreased. If the Company at any time combines its
outstanding Original Common Stock, the number of Warrant Shares issuable upon
this Warrant's exercise immediately before such combination shall be
proportionately decreased, and the Exercise Price shall be proportionately
increased. Any adjustment made pursuant to this Section 4(c) shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(d) CONSOLIDATION, MERGER, OR SALE. If the Company
consolidates or merges with another entity (other than a consolidation or merger
in which the Company is the surviving or continuing entity and that does not
result in any change in the Original Common Stock), or Transfers or disposes of
all or substantially all of its assets to another entity (collectively, a
"Corporate Change"), then the Holder shall, upon exercising this Warrant, have
the right to receive the number of Warrant Shares, other Company securities or
property, or successor entity's securities or property, as the case may be, that
the Holder would have received upon such Corporate Change if the Holder had
exercised this Warrant immediately before such Corporate Change. If there is a
Corporate Change, the Company or its successor following such Corporate Change
shall make appropriate adjustments to the provisions of this Warrant (including
those relating to adjusting the Exercise Price, the number of Warrant Shares
issuable upon exercising this Warrant and the Company's Net Payment Right) so
that this Warrant will apply, as nearly as possible, to any shares or other
property deliverable upon exercise of this Warrant as if the Holder had
exercised this Warrant immediately before such Corporate Change and the Holder
had carried out the terms of the exchange such Corporate Change provided for
effective as of the consummation of such Corporate Change. The Company shall not
effect any Corporate Change unless, upon or before it is consummated, the
Company's successor following such Corporate Change has assumed in writing (x)
the obligation to deliver to the Holder the shares of stock or other securities,
cash or property that the Holder has the right to purchase in accordance with
this Section 4(d) and (y) the Company's other obligations under this Warrant.
(e) LIMITATION ON ADJUSTMENTS. No adjustment in the number
of Warrant Shares purchasable upon exercise of this Warrant shall be required
unless such adjustment would require an increase or decrease of at least three
percent in the number of Warrant Shares then purchasable upon the exercise of
this Warrant or, if this Warrant is not then exercisable, the number of Warrant
Shares purchasable upon the exercise of this Warrant on the first date
thereafter that this Warrant become exercisable. No adjustment in the Exercise
Price shall be required if such adjustment is less than $.01. Any adjustments
which by reason of this Section 4(e) are not required to be made immediately
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4(e) shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.
5. NOTICE OF ADJUSTMENTS AND CORPORATE CHANGE. Whenever the number
of Warrant Shares purchasable under this Warrant or the Exercise Price are
adjusted pursuant to Section 4, the Company shall promptly notify the Holder
describing, in reasonable detail, the event requiring the adjustment, the amount
of the adjustment, the method by which the
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adjustment was calculated, the number and class of Warrant Shares that the
Holder has the right to purchase, and the Exercise Price for each Warrant Share
after effecting the adjustment. Failure to mail the notice or any defect therein
shall not affect the validity of the transaction requiring the mailing of such
notice.
6. FRACTIONAL SHARES. The Holder does not have the right to
exercise this Warrant for fractional shares. In lieu of fractional shares, the
Company shall make a cash payment equal to the value of such fractional shares
based on the Exercise Price then in effect.
7. SECURITIES LAWS. In order to exercise this Warrant, the
exercising Holder shall, as a condition to such exercise, be required to make
the representations and warranties set forth in the Exercise Notice as of the
date of each such Exercise Notice. Each Holder agrees that all the provisions of
the Stockholder Agreement, if applicable and still in effect pursuant to the
terms thereof, shall apply to Warrant Shares and/or Net Payment Shares.
8. MUTILATED OR MISSING WARRANTS. In case a certificate or
certificates evidencing this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of a Holder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated certificate
or certificates, or in lieu of and substitution for the certificate or
certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount at the Holder's cost. The Holder shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe in connection with the issuance and
delivery of a new Warrant certificate or certificates.
9. NO RIGHT AS STOCKHOLDER. No Holder shall be entitled, in its
capacity as a Holder, to vote or receive dividends or be deemed the holder of
the Warrant Shares or Net Payment Shares, as applicable, or any other Company
securities that may at any time be issuable on this Warrant's exercise for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, in its capacity as a Holder, any of the rights of a Company
stockholder, including any right (i) to vote for the election of directors or
upon any matter submitted to stockholders at any stockholder meeting, (ii) to
give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or (iii) to receive
notice of meetings, to receive dividends or subscription rights, or otherwise,
until the Holder exercises this Warrant and the Warrant Shares or Net Payment
Shares, as applicable, issuable upon this Warrant's exercise have become
deliverable, as provided in this Warrant.
10. TRANSFER OF WARRANT. Transfer of this Warrant and any Warrant
Shares and/or Net Payment Shares issued upon exercise of this Warrant is
restricted by Section 4 of the Stockholder Agreement. As a condition to the
Company's obligation to effect a Transfer permitted under Section 4 of the
Stockholder Agreement, any proposed transferee of this Warrant shall (i) be
required to demonstrate compliance with such article and (ii) agree in writing
with the Company to be bound by the terms of the Stockholder Agreement as if an
original signatory thereto by executing a Transfer Notice and Adoption
Agreement.
-7-
11. TERMINATION OF WARRANT. This Warrant, other than the rights and
obligations specified in this Section 11 and Sections 12(d), 12(m) and 12(n),
which survive termination of this Warrant, shall terminate and expire at 5:00
p.m., Houston, Texas time, on the last day of the Exercise Period.
12. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. Except as may be expressly
provided herein, this Warrant shall be binding upon and inure to the benefit of
the successors of the Company and the Holder. Neither the Company nor the Holder
may otherwise assign or delegate any of its rights or obligations under this
Warrant without the prior written consent of the other, which consent shall be
in the sole and absolute discretion of the Company or the Holder, as applicable.
Any purported assignment or delegation without such consent shall be void and
ineffective.
(b) CERTAIN EVENTS. The Holder agrees that this Warrant and
the obligations hereunder shall attach to this Warrant and the shares issued
upon exercise of this Warrant and shall be binding upon any Person to which
legal or beneficial ownership of such shares shall pass, whether by operation of
law or otherwise.
(c) BENEFITS OF AGREEMENT RESTRICTED TO PARTIES. This
Warrant is made solely for the benefit of the Company and the Holder and no
other Person (including employees or shareholders of the Holder) shall have any
right, claim or cause of action under or by virtue of this Warrant.
(d) NOTICES. All notices, requests and other communications
(collectively, the "Notices") made pursuant to this Warrant shall be in writing
and signed and correctly dated by the party sending such Notice. All Notices
shall be delivered personally (by courier or otherwise) or by facsimile to the
receiving party at the applicable address or facsimile number set forth below:
If to the Company:
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Gerald A. O'Brien
Facsimile: 713-309-7312
with a copy to:
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
Attention: Stephen A. Massad
Facsimile: 713-229-1522
-8-
and
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Facsimile: 713-309-2143
If to a Holder:
Occidental Chemical Holding Corporation
5005 LBJ Freeway
Dallas, Texas 75244
Attention: General Counsel
Facsimile: 972-404-4155
Any Notice delivered personally shall be deemed to have been given on the date
it is so delivered, or upon attempted delivery if acceptance of delivery is
refused, and any Notice delivered by facsimile shall be deemed to have been
given on the first Business Day it is received by the addressee (or, if such
Notice is not received during regular business hours of a Business Day, at the
beginning of the next such Business Day). The address and facsimile numbers set
forth above may be changed by the Company or a Holder by giving Notice of such
change of address or facsimile number in the manner set forth in this Section
12(d).
(e) SEVERABILITY. In the event that any provision of this
Warrant shall finally be determined to be unlawful, such provision shall be
deemed severed from this Warrant and every other provision of this Warrant shall
remain in full force and effect.
(f) CONSTRUCTION. In construing this Warrant, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the sections, subsections or clauses, which are inserted for
convenience in locating the provisions of this Warrant and not as an aid in
construction; (ii) no consideration shall be given to the fact or presumption
that any of the Company or the Holder had a greater or lesser hand in drafting
this Warrant; (iii) the word "includes" and its syntactic variants mean
"includes, but is not limited to" and corresponding syntactic variant
expressions; (iv) the plural shall be deemed to include the singular, and vice
versa; (v) references in this Warrant to Sections and Exhibits shall be deemed
to be references to Sections of, and Exhibits to, this Warrant unless the
context shall otherwise require; (vi) all Exhibits attached to this Warrant
shall be deemed incorporated herein as if set forth in full herein; (vii) the
words "hereof", "herein" and "hereunder" and words of similar import shall refer
to this Warrant as a whole and not to any particular provision of this Warrant;
and (viii) unless otherwise expressly provided, any agreement, instrument or
statute defined or referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein.
-9-
(g) ENTIRE AGREEMENT. This Agreement together with the
Related Securities Agreements set forth the entire agreement and understanding
among the Company and the Holder as to the subject matter hereof and merges and
supercedes all prior discussions, agreements and understandings of every kind
and nature among them.
(h) COUNTERPARTS. This Warrant 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.
(i) GOVERNING LAW. The laws of the State of Delaware shall
govern the construction, interpretation and effect of this Warrant without
giving effect to any conflicts of law principles.
(j) TRANSACTION COSTS. The Company and the Holder shall each
be solely responsible for and bear all of its own respective costs, fees and
expenses.
(k) AMENDMENT. All waivers, modifications, amendments or
alterations of this Warrant shall require the written approval of the Company
and all Holders. Except as provided in the preceding sentence, no action taken
pursuant to this Warrant, including any investigation by or on behalf of the
Company or a Holder, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants or
agreements contained herein and/or in any documents delivered or to be delivered
pursuant to this Warrant. The waiver by the Company or a Holder of a breach of
any provision of this Warrant shall not operate or be construed as a waiver of
any subsequent breach.
(l) SPECIFIC PERFORMANCE. Each Holder and the Company agree
that each would be irreparably damaged if for any reason a party fails to
perform any of its obligations under this Warrant, and that a party would not
have an adequate remedy at law for money damages in such event. Accordingly,
each other party shall be entitled to seek specific performance and injunctive
and other equitable relief to enforce the performance of this Warrant by any
other party. This provision is without prejudice to any other rights that a
party may have against another party for any failure to perform its obligations
under this Warrant.
(m) JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER. ANY
JUDICIAL PROCEEDING BROUGHT AGAINST THE COMPANY OR THE HOLDER UNDER OR ARISING
OUT OF OR IN CONNECTION WITH THIS WARRANT SHALL BE BROUGHT IN THE FEDERAL OR
STATE COURTS OF THE STATE OF DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS
WARRANT, EACH OF THE COMPANY AND THE HOLDER 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 WARRANT. EACH OF THE
COMPANY AND THE HOLDER SHALL APPOINT THE CORPORATION TRUST COMPANY, THE
PRENTICE-HALL CORPORATION SYSTEM, INC. OR A SIMILAR ENTITY (THE "AGENT") AS
AGENT TO RECEIVE ON ITS BEHALF SERVICE OF PROCESS IN ANY PROCEEDING IN ANY SUCH
COURT IN THE STATE OF DELAWARE, AND EACH OF THE COMPANY AND THE HOLDER SHALL
MAINTAIN THE APPOINTMENT OF SUCH AGENT (OR A SUBSTITUTE AGENT) FROM THE DATE
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HEREOF UNTIL THE EARLIER OF THE CLOSING DATE OR THE TERMINATION OF THIS WARRANT
AND SATISFACTION OF ALL OBLIGATIONS HEREUNDER. THE FOREGOING CONSENTS TO
JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE SERVICE OF PROCESS SHALL NOT
CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR
ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON
ANY PERSON OTHER THAN THE COMPANY AND THE HOLDER. EACH OF THE COMPANY AND THE
HOLDER HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED ON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS.
(n) WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE HOLDER
HEREBY KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THIS WARRANT AND FOR ANY COUNTERCLAIM THEREIN.
(o) FURTHER ASSURANCES. From time to time, at the request of
the Company or a Holder, the parties shall execute and deliver or cause to be
executed and delivered such additional documents and instruments and take all
such further action as may be necessary or desirable to consummate the
transactions contemplated by this Warrant.
-11-
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by a duly authorized officer on the day and year first written below.
Dated: August 22, 2002.
LYONDELL CHEMICAL COMPANY
By: /s/ T. KEVIN DENICOLA
------------------------------------
Name: T. Kevin DeNicola
Title: Senior Vice President and
Chief Financial Officer
Holder:
OCCIDENTAL CHEMICAL HOLDING CORPORATION
By: /s/ J. R. Havert
--------------------------------------
Name: J. R. Havert
Title: Vice President and Treasurer
EXHIBIT 10.4
EXECUTION COPY
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
BETWEEN
OCCIDENTAL CHEMICAL HOLDING CORPORATION
AND
LYONDELL CHEMICAL COMPANY
AUGUST 22, 2002
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
SECTION 1 DEMAND REGISTRATION..................................................1
1.1 Registration Rights..............................................1
1.2 Underwriting Requirements........................................2
1.3 Limitations......................................................2
SECTION 2 COMPANY "PIGGYBACK" REGISTRATION.....................................4
2.1 Registration Rights..............................................4
2.2 Underwriting Requirements........................................4
2.3 Rightsholder Right to Withdraw...................................4
2.4 Company Right to Withdraw........................................4
SECTION 3 ADDITIONAL COMPANY OBLIGATIONS.......................................5
SECTION 4 ADDITIONAL OBLIGATIONS OF RIGHTSHOLDERS..............................8
4.1 General..........................................................8
4.2 Participation in Underwritten Registrations......................8
4.3 Discontinuation of Sales Upon Certain Events.....................9
4.4 Holdback.........................................................9
SECTION 5 EXPENSES OF REGISTRATION.............................................9
SECTION 6 INDEMNIFICATION......................................................9
6.1 Company's Indemnification........................................9
6.2 Rightsholders' Indemnification..................................10
6.3 Additional Procedures...........................................10
6.4 Unavailability..................................................11
6.5 Conflict With Underwriting Agreement............................11
6.6 Survival........................................................11
SECTION 7 RULE 144............................................................12
SECTION 8 ASSIGNMENT OF REGISTRATION RIGHTS...................................12
SECTION 9 TERMINATION OF REGISTRATION RIGHTS..................................12
SECTION 10 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS......................12
SECTION 11 MISCELLANEOUS......................................................13
11.1 Successors and Assigns..........................................13
11.2 Benefits of Agreement Restricted to Parties.....................13
11.3 Notices.........................................................13
11.4 Severability....................................................14
11.5 Entire Agreement................................................14
11.6 Construction....................................................14
11.7 Counterparts....................................................15
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11.8 Governing Law...................................................15
11.9 Amendment.......................................................15
11.10 Recapitalizations, Exchanges, etc...............................15
11.11 Jurisdiction; Consent to Service of Process; Waiver.............15
11.12 Waiver of Jury Trial............................................16
APPENDIX
Appendix A Definitions
-ii-
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
August 22, 2002, is entered into by Occidental Chemical Holding Corporation, a
California corporation ("OCHC"), and Lyondell Chemical Company, a Delaware
corporation (the "Company").
The definitions of capitalized terms used in this Agreement are
set forth in Appendix A.
WHEREAS, the Company and OCHC entered into a Securities Purchase
Agreement dated July 8, 2002 (the "Securities Purchase Agreement"), governing
the sale by the Company of shares of Series B Common Stock on the Closing Date
(as defined in the Securities Purchase Agreement), certain additional shares of
Series B Common Stock that may be issuable in the future upon and subject to the
terms and conditions of the Securities Purchase Agreement, and warrants for the
purchase of 5,000,000 shares of Original Common Stock (the "Warrant"), as
adjusted pursuant to the terms thereof, to OCHC;
WHEREAS, the terms of the Securities Purchase Agreement provide
for the execution and delivery of this Agreement; and
WHEREAS, pursuant to the terms of the Securities Purchase
Agreement, the Company, Occidental Petroleum Corporation, a Delaware corporation
("Occidental"), and OCHC are entering into a Stockholders Agreement dated as of
the date of this Agreement (the "Stockholder Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the Parties set forth herein, it is hereby agreed as follows:
SECTION 1
DEMAND REGISTRATION
-------------------
1.1 Registration Rights. Subject to Sections 1.2 and 1.3, if one or
more Rightsholders provide the Company at any time a written request that the
Company file a registration statement under the Securities Act covering the
registration of Registrable Securities owned by such Rightsholder (that request
being referred to as an "Initial Demand Request" and such registration being
referred to as a "Demand Registration"), the Company shall:
(a) within 10 days after receiving the Initial Demand Request,
notify all other Rightsholders of such request (the "Company Notice");
(b) from the date the Company delivers the Company Notice, give
all other Rightsholders 15 days to notify the Company of the number of
Registrable Securities such other Rightsholders desire the Company to
include in the registration statement relating to such Demand
Registration; and
(c) within 45 days after receiving the Initial Demand Request,
file a registration statement under the Securities Act covering all
Registrable Securities that the Rightsholders requested to be registered
and, after such filing, use commercially reasonable efforts to cause such
registration statement to be declared effective.
The Initial Demand Request shall specify the number of shares of Registrable
Securities proposed to be sold and the manner of distribution.
1.2 Underwriting Requirements. If an Initial Demand Request provides
for the sale of Registrable Securities in an underwritten offering and an OCHC
Party is participating in the related registration, then OCHC shall have the
right to select the lead managing underwriter for such underwriting in its sole
discretion and to select the other underwriters for such underwriting, subject
to the consent of the Company which shall not be unreasonably withheld. In such
event, the participating OCHC Party shall specify the proposed underwriters in
the Initial Demand Request or the notice delivered pursuant to Section 1.1(b).
If the Initial Demand Request or the notice delivered pursuant to Section 1.1(b)
provides for the sale of Registrable Securities in an underwritten offering and
no OCHC Party is participating, the Company shall have the right to select all
underwriters. In the case of an underwritten offering, any Rightsholder or other
holder of Securities that has the right to include Securities in that Demand
Registration and elects to do so shall participate, and include those
Securities, in the underwriting as provided in this Agreement. Notwithstanding
any other provision of Section 1, if the lead managing underwriter advises the
Company in writing that the total amount of Securities proposed to be included
in the offering, including by the Company and the Rightsholders, exceeds the
amount of Securities that is compatible with the offering's success, then the
Company shall:
(a) so advise all Rightsholders and other holders of Securities
that would otherwise have Securities registered under such registration
statement;
(b) to the extent necessary, entirely exclude from such
registration statement all Securities (including Securities the Company
owns or proposes to issue) other than Rightsholders' Registrable
Securities and Securities subject to pari passu registration rights; and
(c) to the extent necessary after effecting such exclusion,
allocate the number of Securities the registration will cover on a
pro-rata basis among the Rightsholders and all other holders of
Securities subject to pari passu registration rights according to the
total number of Securities each of them owns subject to registration
rights to reduce the total amount of Securities to be included in such
offering to the amount recommended by the lead managing underwriter. To
facilitate allocating shares in accordance with this Section 1.2(c), the
Company may round the number of shares allocated to any Rightsholder to
the nearest 100 shares.
1.3 Limitations.
(a) The Company will not be obligated to initiate any Demand
Registration at any time if (i) doing so would breach any provision of
any applicable Rightsholders'
-2-
agreement entered into pursuant to Section 4.4 or (ii) the Company
determines in good faith that the registration and distribution of
Registrable Securities in a Demand Registration would materially impede,
delay or interfere with any firm-commitment underwritten offering of
Securities by the Company (including an offering involving sales of
Securities to initial purchasers who intend to resell the Securities
under Rule 144A of the Securities Act, Regulation S or to accredited
investors (as defined in the Securities Act)) on which the Company has
commenced work prior to receiving an Initial Demand Request, in which
event the Company will have the right to defer the filing of such Demand
Registration until such offering is completed or such time as the Company
is no longer proceeding diligently to effect such offering (but in no
event more than 45 days (excluding the time needed to respond to SEC
comments, conduct a roadshow, price and close such offering (provided
such closing is within a reasonable period of time after the roadshow));
provided, however, that the Company may not use the right set forth in
this clause (ii) more than once in any 12-month period.
(b) The Company will only be obligated to initiate a Demand
Registration if the amount of Registrable Securities proposed to be
registered pursuant to Section 1.1 in the aggregate (i) exceeds 8,000,000
shares of Original Common Stock in the case of a Traditional Underwriting
or 3,000,000 shares of Original Common Stock in the case of any Demand
Registration that is not a Traditional Underwriting and (ii) in the case
of a Traditional Underwriting, has a good faith estimated public offering
price (as determined in the reasonable discretion of the Company) of at
least $100 million ((i) and (ii) together, to the extent applicable, the
"Minimum Amount").
(c) The Company will not be required to effect more than three
Demand Registrations in any 12-month period, only one of which may be a
Traditional Underwriting. A Demand Registration will be deemed effected
upon the initial filing of the registration statement related thereto
unless (i) the Rightsholder elects to terminate it following the
Company's exercise of any deferral right pursuant to Sections 1.3(a)(ii)
or 1.3(d) or (ii) the Company fails to comply with its obligations under
this Agreement with respect to such Demand Registration and a
Rightsholder reasonably determines, and notifies the Company, that such
failure has a material adverse effect on such Rightsholder.
(d) If the Company determines in good faith that the
registration and distribution of Registrable Securities in a Demand
Registration would (i) materially impede, delay or interfere with any
acquisition, corporate reorganization or other significant transaction
involving the Company or (ii) require disclosure of material non-public
information, the disclosure of which at that time would materially and
adversely affect the Company, the Company shall have the right to defer
the filing or effectiveness of the registration statement relating to
such Demand Registration for a period of not more than 30 days after
receipt of the Initial Demand Request; provided, however, that the
Company may not use this right more than once in any 12-month period.
(e) The Company shall give notice to the Rightsholders (i) at
the beginning of any deferral period under this Section 1.3 promptly
following its receipt of the Initial Demand Notice and (ii) promptly
following the end of any such deferral period.
-3-
SECTION 2
COMPANY "PIGGYBACK" REGISTRATION
--------------------------------
2.1 Registration Rights. If the Company proposes to register
(including for this purpose a registration to be effected by the Company for
stockholders other than the Rightsholders) any shares of Original Common Stock
under the Securities Act in connection with the underwritten public offering of
such Securities solely for cash (other than a registration on Form S-4 or such
other forms as are then prescribed under the Securities Act for the same
purposes as such form, a registration relating solely to the sale of Securities
to participants in a Company compensation, benefit or stock plan or a
registration in which the only Original Common Stock being registered is
Original Common Stock issuable upon conversion of debt or equity Securities that
are also being registered), the Company shall, at that time, promptly give each
Rightsholder written notice of such registration. Upon the written request of
each Rightsholder (to the extent the Company receives such request within 15
days after the Company delivered its notice of registration under this Section
2), the Company shall, subject to the provisions of Sections 2.2, 2.3 and 2.4,
cause to be registered under the Securities Act all of the Registrable
Securities that each such Rightsholder has requested to be registered.
2.2 Underwriting Requirements. If the lead managing underwriter for an
offering advises the Company that the total amount of Securities proposed to be
included in such offering, including by the Company and the Rightsholders,
exceeds the amount of Securities that the lead managing underwriter determines
in its sole discretion is compatible with such offering's success, then the
Company shall have the right to reduce the number of Securities, including
Registrable Securities, included in the offering to a number that the lead
managing underwriter determines in its sole discretion is so compatible. In the
event that a reduction occurs, the amount of Original Common Stock to be
included in the offering will be allocated first, to the Company; second, to the
Rightsholders and all other holders of Securities subject to pari passu
registration rights by reducing the number of Securities each may sell on a
pro-rata basis, based upon the number of shares of Original Common Stock that
each of such Rightsholders and other holders own at such time subject to
registration rights; and third to any other holders of Securities.
2.3 Rightsholder Right to Withdraw. Each Rightsholder has the right to
withdraw all or any portion of its Registrable Securities from a registration
under Section 2 at any time before the effective date of the applicable
registration statement.
2.4 Company Right to Withdraw. The Company has the right to withdraw
any registration statement and abandon any proposed offering, subject to Section
2, without the consent of any Rightsholder, notwithstanding the request of any
such Rightsholder to participate therein in accordance with Section 2, if the
Company determines to do so in its sole discretion.
-4-
SECTION 3
ADDITIONAL COMPANY OBLIGATIONS
------------------------------
3.1 Whenever required under this Agreement to effect the registration
of any Registrable Securities, the Company shall, as expeditiously as is
commercially reasonably possible (or within any more-specific time period this
Agreement requires):
(a) at least five Business Days before filing a registration
statement, prospectus or any amendments or supplements thereto, furnish
to the Rightsholders who are participating in such registration
statement, the underwriters, and a single counsel to all Rightsholders
requesting to include shares of Registrable Securities in such
registration statement (which counsel will be selected by the
Rightsholder requesting the largest number of shares of Registrable
Securities to be included in such registration statement and be
reasonably satisfactory to the Company), copies of the registration
statement, prospectus or any amendments or supplements thereto proposed
to be filed. These documents will be subject to the review of such
Rightsholders, underwriters and counsel, and the Company shall use
commercially reasonable efforts to take into account, and, if
appropriate, reflect such comments as such Rightsholders, underwriters
and counsel reasonably may propose;
(b) prepare and file with the SEC a registration statement with
respect to those Registrable Securities and use its commercially
reasonable efforts to cause such registration statement to become
effective, and keep such registration statement effective for a period of
at least 45 days (or such shorter period during which the distribution
contemplated in the registration statement is completed);
(c) prepare and file with the SEC any amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all Securities such registration statement covers and make generally
available an earnings statement satisfying the provisions of Section
11(a) of the Securities Act (except that the Company will be deemed to
have complied with this clause if it has complied with Rule 158 under the
Securities Act);
(d) notify the Rightsholders participating in such registration
statement promptly and (if requested) confirm such notice in writing,
(i) when any registration statement, prospectus, prospectus
supplement or post-effective amendment relating to such
registration has been filed, and, with respect to such
registration statement or any post-effective amendment,
when the same has become effective,
(ii) of any SEC request for amendments or supplements to such
registration statement or the related prospectus or for
additional information regarding Rightsholders,
-5-
(iii) of the SEC's issuance of any stop order suspending the
effectiveness of such registration statement or the
initiation of any proceedings for such purpose,
(iv) of the Company's receipt of any notification with respect
to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose,
(v) of any determination by the Company that any event has
occurred that requires making any changes in such
registration statement, prospectus, or documents
incorporated (or deemed to be incorporated) by reference in
any of such documents so that they will not contain any
untrue statement of a material fact or omit to state any
material fact that they are required to state or that is
necessary to make the statements in such documents not
misleading and
(vi) of any determination by the Company that any event has
occurred that would cause such registration statement or
the prospectus contained therein not to be usable for
resale of the Registrable Securities;
(e) use reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement, or the
lifting of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction
in the United States;
(f) furnish to each Rightsholder participating in such
registration statement, the designated counsel for those Rightsholders,
and each managing underwriter, if any, without charge, one conformed copy
of such registration statement, as declared effective by the SEC, and of
each post-effective amendment to such registration statement, in each
case including financial statements and schedules, and deliver, without
charge, the number of copies of the preliminary prospectus, any amended
preliminary prospectus, each final prospectus and any post-effective
amendment or supplement to any of such documents, as each Rightsholder
may reasonably request in order to facilitate its disposition of the
Registrable Securities included in such registration statement in
conformity with the Securities Act's requirements;
(g) use its reasonable best efforts to register and qualify the
Securities such registration statement covers under all securities laws
or Blue Sky laws of United States and Canadian jurisdictions that the
Rightsholders reasonably request; provided that the Company will not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to
general service of process or taxation in any such jurisdiction where it
is not then so subject;
(h) upon the occurrence of any event contemplated by Section
3.1(d)(v) or 3.1(d)(vi), prepare a supplement or post-effective amendment
to such registration statement or the related prospectus or any document
incorporated (or deemed to be
-6-
incorporated) by reference in such documents and file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold under such documents, such documents
will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated in such documents or necessary to
make the statements in such documents, in light of the circumstances
under which they were made, not misleading;
(i) use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, any applicable securities
exchange and the requirements of the Securities Act;
(j) on or before the registration statement's effective date,
provide the Company's transfer agent for the Registrable Securities with
printed certificates for the Registrable Securities that such
registration statement covers in a form eligible for deposit with The
Depository Trust Company;
(k) cause all Registrable Securities registered under this
Agreement to be listed on each securities exchange that similar
Securities are then listed on;
(l) if an offering is an underwritten offering, make available
for inspection by any Rightsholder participating in such registration
statement, any underwriter participating in any offering pursuant to such
registration statement, the designated counsel for the Rightsholders, any
counsel to the underwriters, and any accountant or other agent retained
by any of those Rightsholders or underwriters (collectively, the
"Inspectors"), financial and other records and information, pertinent
corporate documents and properties of any of the Company and its
Affiliates (collectively, the "Records"), as are reasonably necessary to
enable them to exercise their due diligence responsibilities; provided,
however, that if the Company determines in good faith that certain
Records are confidential and so notifies the Inspectors in writing, the
Company need not disclose such confidential Records to any Inspector
unless the Inspector signs a confidentiality agreement reasonably
satisfactory to the Company, which agreement shall permit the release of
such confidential Records if disclosing such Records is necessary to
avoid or correct a misstatement or omission in such registration
statement or so ordered pursuant to a subpoena or other order from a
court of competent jurisdiction; and
(m) if an offering is an underwritten offering, enter into any
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings, including customary
lock-up provisions) and take all other customary, appropriate and
reasonable actions (including in the case of a Traditional Underwriting,
assisting with the roadshow) that the managing underwriters or
Rightsholders holding a majority of Registrable Securities included in
the offering request in connection with such agreements in order to
expedite or facilitate the disposition of the Registrable Securities
included in the offering, and in that connection,
(i) use its commercially reasonable efforts to obtain opinions
(in form, scope and substance reasonably satisfactory to
the managing underwriters' counsel) of the Company's
counsel and updates of such opinions,
-7-
addressed to each of the underwriters, as to the matters
customarily covered in opinions requested in underwritten
offerings and any other matters those counsel and
underwriters reasonably request,
(ii) use its commercially reasonable efforts to obtain
"cold-comfort" letters and updates of such letters from the
Company's independent certified public accountants (and, if
necessary, any other independent certified public
accountants of any Company Affiliate or of any business the
Company owns for which financial statements and financial
data are, or are required to be, included in the
registration statement), addressed to each of the
underwriters, such letters to be in customary form and
covering matters of the type customarily covered in
"cold-comfort" letters in connection with underwritten
offerings and
(iii) if requested and if an underwriting agreement is entered
into, provide indemnification provisions and procedures
substantially to the effect included in Section 6 with
respect to all Persons to be indemnified pursuant to such
Section.
The Company shall perform its obligations under this Section 3.1(m) at
each closing under the applicable underwriting or similar agreement, or
as and to the extent such agreements require.
SECTION 4
ADDITIONAL OBLIGATIONS OF RIGHTSHOLDERS
---------------------------------------
4.1 General. The Company's obligation to take any action pursuant to
this Agreement with respect to the Registrable Securities of any selling
Rightsholder is conditioned on such Rightsholder (i) furnishing the Company
information regarding itself, its Registrable Securities, and its intended
method of disposing of those Registrable Securities as the Company reasonably
requests in writing to allow the Company to effect the registration of such
Rightsholders' Registrable Securities and (ii) taking all such action as may be
reasonably required in order not to delay the registration and offering of the
Securities by the Company.
4.2 Participation in Underwritten Registrations. No Rightsholder may
participate in any underwritten registered offering contemplated hereunder
unless such Rightsholder (i) agrees to sell its Registrable Securities on the
basis provided in any underwriting arrangements, which shall be of a customary
nature, and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and this Agreement.
4.3 Discontinuation of Sales Upon Certain Events. Upon receipt of any
notice from the Company pursuant to Section 3.1(d)(v) or 3.1(d)(vi), each
Rightsholder will forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until receipt by such Rightsholder and the underwriters of copies of
the supplemented or amended prospectus contemplated by Section 3(h), or until it
is advised in writing by the Company that the use of the prospectus may be
resumed, and, if so
-9-
directed by the Company, each Rightsholder will, and will request the
underwriters to, deliver to the Company all copies, other than permanent file
copies, then in its or their possession of the most recent prospectus covering
such Registrable Securities at the time of receipt of such notice.
4.4 Holdback. Each Rightsholder agrees not to effect any sale
(including a sale pursuant to Rule 144 of the Securities Act) of any Securities,
before or after the effective date of a registration statement filed by the
Company with the SEC for an underwritten offering of equity Securities (except
for Registrable Securities that are included in such registration statement
pursuant to this Agreement) but only if and to the extent the managing
underwriter for such offering requests. However, any limits on Rightsholders'
sales (i) shall not be greater in any way than the limits on the Company's
directors, executive officers and any other significant stockholders who have
purchased securities of the Company directly from the Company and (ii) shall
expire within 90 days after the offering's effective date. Each Rightsholder
shall execute and deliver to the managing underwriter any letter or agreement,
which shall be in substantially the same form as to be delivered by the
Company's directors, executive officers and any applicable significant
stockholders of the Company, that the underwriter may reasonably request to the
foregoing effect. Promptly upon any Rightsholders' request, the Company shall
request a waiver of the Rightsholders' agreement pursuant to this Section 4.4.
SECTION 5
EXPENSES OF REGISTRATION
------------------------
5.1 The Company shall bear all costs, fees and expenses (excluding
underwriting discounts and commissions and fees and expenses of separate counsel
for the Rightsholders, fees and expenses of any other expert or advisor retained
by or at the request of a Rightsholder, any underwriter or any underwriter's
counsel and out-of-pocket expenses associated with any roadshow) incident to its
performance of or compliance with this Agreement, including all registration,
filing and qualification fees (including qualification with state blue sky laws,
the New York Stock Exchange or any other exchange the Company's Securities are
then listed on), printers' fees and fees and expenses of the Company's
accountants (including the costs of any "cold-comfort" letters) and fees and
expenses of the Company's counsel.
SECTION 6
INDEMNIFICATION
----------------
6.1 Company's Indemnification. To the fullest extent permitted by law,
the Company shall indemnify and hold harmless each Rightsholder, each
underwriter (as defined in the Securities Act) for the Rightsholders, each
Person, if any, who controls each Rightsholder or each underwriter within the
meaning of the Securities Act, and each of their respective constituent
partners, members, employees, agents, contractors, officers and directors
against any losses, claims, damages, fines, penalties, assessments by public
agencies, settlement, costs and expenses (including costs of preparation and
reasonable attorneys' fees) and other liabilities (any of the foregoing being a
"Loss") that relate in any way to any Violation. The Company shall pay to each
Person entitled to indemnification under this Section 6.1 the amount of Losses
they incur as they incur such Losses. However, the Company will not need to pay
any indemnified Person the amount of (i) Losses that are settlement payments if
such indemnified Person makes the settlement without the Company's consent (so
long as the Company did not unreasonably
-9-
withhold its consent), or (ii) Losses to the extent such Losses arise out of a
Violation that occurs because the Company relied on written information about
the indemnified Person that the indemnified Person furnished to the Company
expressly for the Company to use in connection with the applicable registration
or (iii) Losses, in the case of any Person who participates as an underwriter in
the offering or sale of Registrable Shares or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, or any
constituent partner, member, employee, agent, contractor, officer or director of
any such underwriter, in any such case to the extent such Losses arise out of
such underwriter's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Shares to such
Person if such statement or omission was corrected in such final prospectus.
6.2 Rightsholders' Indemnification. To the fullest extent permitted by
law, each selling Rightsholder (severally but not jointly) shall indemnify and
hold harmless the Company, each underwriter (as defined in the Securities Act),
each other Rightsholder participating in a registration statement, each Person,
if any, who controls the Company, underwriter, or other participating
Rightsholder within the meaning of the Securities Act and each of their
respective constituent partners, members, employees, agents, contractors,
officers and directors against any Losses to the extent such Losses arise out of
a Violation that occurs because the Company relied on written information about
the indemnifying Rightsholder that the indemnifying Rightsholder furnished to
the Company expressly for the Company to use in connection with the applicable
registration. Each indemnifying Rightsholder shall pay each Person entitled to
indemnification under this Section 6.2 the amount of Losses they incur as they
incur a Loss. However, the indemnifying Rightsholder will not need to pay (i)
any indemnified Person the amount of Losses that are settlement payments if such
indemnified Person makes the settlement without the indemnifying Rightsholders'
consent (so long as the indemnifying Rightsholder did not unreasonably withhold
its consent) and (ii) any amount of Losses under this Section 6.2, Section 6.4,
or under such sections together, that exceeds the net proceeds such indemnifying
Rightsholder received from the offering that the Violation arises out of.
6.3 Additional Procedures. Promptly after a Person entitled to
indemnification under this Section 6 receives notice that it might be subject to
Losses, such indemnified Person shall notify the indemnifying Person in writing
regarding such potential Losses. The indemnifying Person will have the right to
participate in, and, jointly with any other indemnifying Person, to assume the
defense against such Losses with one counsel selected by the indemnifying
Person, subject to the consent of the indemnified Person (which shall not be
unreasonably withheld). If a conflict of interest exists or develops that would
prohibit one counsel from representing both the indemnifying Person and the
indemnified Person, then the indemnified Person (together with all other
indemnified Persons that one counsel can represent without a conflict of
interest) will have the right to retain one separate counsel of their own
choosing, with the indemnifying Person paying all the fees and expenses. Except
in the event of a conflict of interest, if the indemnifying Person notifies the
indemnified Person that it has elected, and then promptly begins, to defend the
indemnified Person against Losses, the indemnifying Person will not be liable to
such indemnified Person for any legal expenses such indemnified Person
subsequently incurs in connection with such defense. If the indemnifying Person
elects to assume the defense against any Losses, the indemnifying Person shall
allow the indemnified Person to continue to
-10-
participate in defending against such Losses (at the expense of the indemnified
Person) if the indemnified Person so chooses. The indemnified Person's failure
to notify the indemnifying Person within a reasonable time regarding Losses will
not relieve the indemnifying Person of any liability to the indemnified Person
under this Section 6 except to the extent such failure to notify materially
prejudices the indemnifying Person's ability to defend against such Losses. In
defending against Losses, an indemnifying Person shall not consent to entry of
any judgment regarding, or otherwise settle, any claim involving Losses unless
(x) the indemnified Person has approved in writing the judgment or other
settlement or (y) the judgment or other settlement includes the claimant's
unconditional release of the indemnified Person from all liability related to
that claim.
6.4 Unavailability. If a court of competent jurisdiction holds that
the indemnification under this Section 6 is unavailable to an indemnified Person
with respect to any Losses, then the indemnifying Person, in lieu of
indemnifying such indemnified Person, shall contribute to the amount the
indemnified Person must pay in connection with such Losses the appropriate
proportion to reflect the indemnifying Person's relative fault in connection
with such Losses. The indemnifying and indemnified Persons shall determine the
indemnifying Person's and indemnified Person's relative fault based on, among
other things, which Person supplied information relating to the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact and the Person's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
6.5 Conflict With Underwriting Agreement. Notwithstanding anything to
the contrary in Section 6, to the extent (but only to the extent) that the
underwriting agreement's provisions on indemnification and contribution conflict
with the provisions of Section 6, the underwriting agreement's provisions will
control.
6.6 Survival. The Company's and Rightsholders' obligations under
Section 6 will survive (i) the completion of any offering of Registrable
Securities in a registration statement under this Agreement and (ii) this
Agreement's termination.
SECTION 7
RULE 144
--------
7.1 The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any Rightsholder, make publicly
available other non-confidential information so long as necessary to permit
sales under Rule 144 under the Securities Act), and it will take such other
action as any Rightsholder may reasonably request, all to the extent required
from time to time to enable such Rightsholder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act or (b) any similar
rule or regulation hereafter adopted by the SEC. Upon the request of any
Rightsholder, the Company will deliver to such Rightsholder a written statement
as to whether it has complied with such requirements.
-11-
SECTION 8
ASSIGNMENT OF REGISTRATION RIGHTS
---------------------------------
8.1 A Rightsholder may assign its rights under this Agreement only in
connection with a Permitted Transfer pursuant to which the assignee executes a
written agreement reasonably satisfactory to the Company whereby the assignee
agrees to assume all of the obligations of such Rightsholder hereunder and to be
bound by all of the terms, conditions and restrictions set forth in this
Agreement. A Rightsholder's assignment of any rights under this Section 8 will
pertain only to the Registrable Securities and Derivative Securities that such
Rightsholder transfers so that such Rightsholder will retain any rights it held
prior to such transfer under this Agreement with respect to any Registrable
Securities and Derivative Securities that such Rightsholder continues to own.
SECTION 9
TERMINATION OF REGISTRATION RIGHTS
----------------------------------
9.1 The right of any specific Rightsholder to request registration or
to include Registrable Securities in any registration pursuant to this Agreement
will terminate when such Rightsholder ceases to hold Registrable Securities or
Derivative Securities convertible or exercisable for Registrable Securities.
Notwithstanding the termination as to any specific Rightsholder, this Agreement
shall remain in effect for all other Rightsholders holding Registrable
Securities or Derivative Securities convertible or exercisable for Registrable
Securities.
SECTION 10
LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS
---------------------------------------------
10.1 From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Rightsholders holding at least a
majority of the Registrable Securities then outstanding (but giving effect, for
the purposes of such calculation and consent, to the issuance of Registrable
Securities pursuant to the exercise or conversion of then exercisable or
convertible Derivative Securities), enter into any agreement with any holder or
prospective holder of any Securities granting registration rights with respect
to such Securities that would be superior to those granted under this Agreement.
SECTION 11
MISCELLANEOUS
-------------
11.1 Successors and Assigns. Except as provided in Section 8.1, no
Rightsholder may otherwise assign or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Company, which
consent shall be in the sole and absolute discretion of the Company. Any
purported assignment or delegation without such consent and any purported
assignment by a Rightsholder that does not comply with the terms of Section 8.1
shall be void and ineffective. Except as may be expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the successors of
each of the Parties.
-12-
11.2 Benefits of Agreement Restricted to Parties. This Agreement is
made solely for the benefit of the Parties, and no other Person (including each
Party's employees or stockholders) shall have any right, claim or cause of
action under or by virtue of this Agreement.
11.3 Notices. All notices, requests and other communications
(collectively, the "Notices") made pursuant to this Agreement shall be in
writing and signed and correctly dated by the Party sending such Notice. All
Notices shall be delivered personally (by courier or otherwise) or by facsimile
to the receiving Party at the applicable address or facsimile number set forth
below:
If to the Company:
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: 713-309-7312
with a copy to:
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
Attention: Stephen A. Massad
Telecopy Number: 713-229-1522
and
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Telecopy Number: 713-652-4538
If to an OCHC Party:
such party
c/o Occidental Chemical Holding Corporation
5005 LBJ Freeway
Dallas, TX 75244
Attention: General Counsel
Telecopy Number: 972-404-4155
Any Notice delivered personally shall be deemed to have been given on the date
it is so delivered, or upon attempted delivery if acceptance of delivery is
refused, and any Notice delivered by facsimile shall be deemed to have been
given on the first Business Day it is received by the addressee (or, if such
Notice is not received during regular business hours of a
-13-
Business Day, at the beginning of the next such Business Day). The address and
facsimile numbers set forth above may be changed by a Party by giving Notice of
such change of address or facsimile number in the manner set forth in this
Section 11.3.
11.4 Severability. In the event that any provision of this Agreement
shall finally be determined to be unlawful, such provision shall be deemed
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
11.5 Entire Agreement. This Agreement together with the Related
Securities Agreements sets forth the entire agreement and understanding among
the Parties as to the subject matter hereof and merges with and supercedes all
prior discussions, agreements and understandings of every kind and nature among
them.
11.6 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the sections or clauses, which are inserted for convenience in
locating the provisions of this Agreement and not as an aid in construction;
(ii) no consideration shall be given to the fact or presumption that any of the
Parties had a greater or lesser hand in drafting this Agreement; (iii) the word
"includes" and its syntactic variants mean "includes, but is not limited to" and
corresponding syntactic variant expressions; (iv) the plural shall be deemed to
include the singular, and vice versa; (v) references in this Agreement to
Sections and Appendix shall be deemed to be references to Sections of, and the
Appendix to, this Agreement unless the context shall otherwise require; (vi) the
words "hereof", "herein" and "hereunder" and words of similar import shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; (vii) references to a Person are also to its permitted successors and
permitted assigns; (viii) the Appendix attached to this Agreement shall be
deemed incorporated herein as if set forth in full herein; and (ix) unless
otherwise expressly provided, any agreement, instrument or statute defined or
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein.
11.7 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.
11.8 Governing Law. The laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement without giving effect
to any conflicts of law principles.
11.9 Amendment. This Agreement may be amended, and the provisions
hereof may be waived, only by a written instrument signed by (i) the
Rightsholders of a majority of the Registrable Securities outstanding as of the
date of such determination and (ii) the Company; provided, however, that no
amendment to this Agreement may be made that materially and adversely affects
the rights of any Rightsholder under this Agreement without the express written
consent of such Rightsholder. The waiver by any Party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
-14-
11.10 Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Registrable Securities, to any and all shares of equity capital of the Company
or any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) that may be issued in respect of, in exchange for,
or in substitution of the Registrable Securities, in each case as the amounts of
such securities outstanding are appropriately adjusted for any equity dividends,
stock splits, reverse stock splits, combinations, recapitalizations and the like
occurring after the date of this Agreement.
11.11 Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY OR ANY DISPUTE UNDER OR ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN THE FEDERAL OR STATE
COURTS OF THE STATE OF DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE, AND
EACH OF THE PARTIES SHALL MAINTAIN THE APPOINTMENT OF SUCH AGENT (OR A
SUBSTITUTE AGENT) FROM THE DATE HEREOF UNTIL THE EARLIER OF THE CLOSING DATE OR
THE TERMINATION OF THIS AGREEMENT AND SATISFACTION OF ALL OBLIGATIONS HEREUNDER.
THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE
SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS
IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT
BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES. EACH PARTY
HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED ON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON-CONVENIENS.
11.12 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
-15-
IN WITNESS WHEREOF, this Registration Rights Agreement has been
executed on behalf of each of the Parties by their respective officers thereunto
duly authorized and was effective as of the date first written above.
LYONDELL CHEMICAL COMPANY
By: /s/ T. KEVIN DENICOLA
------------------------------------
Name: T. Kevin DeNicola
Title: Senior Vice President and
Chief Financial Officer
OCCIDENTAL CHEMICAL HOLDING CORPORATION
By: /s/ J. R. HAVERT
------------------------------------
Name: J. R. Havert
Title: Vice President and Treasurer
APPENDIX "A"
------------
GLOSSARY OF DEFINED TERMS
"Affiliate" shall mean any Person that, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with the Person specified. For purposes of this definition, the term
"control" shall have the meaning set forth in 17 CFR 230.405, as in effect on
the date hereof.
"Agent" shall have the meaning set forth in Section 11.11.
"Agreement" shall have the meaning set forth in the Preamble.
"Business Day" shall mean any day on which the New York Stock Exchange,
Inc. is open for trading.
"Company" shall have the meaning set forth in the Preamble.
"Company Notice" shall have the meaning set forth in Section 1.1(a).
"Contingent Payment Amount" shall have the meaning set forth in the
Securities Purchase Agreement.
"Demand Registration" shall have the meaning set forth in Section 1.1.
"Derivative Securities" shall mean the Warrant and shares of the Series B
Common Stock.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the SEC's rules and regulations promulgated thereunder.
"Initial Demand Request" shall have the meaning set forth in Section 1.1.
"Inspectors" shall have the meaning set forth in Section 3.1(l).
"Loss" shall have the meaning set forth in Section 6.1.
"Minimum Amount" shall have the meaning set forth in Section 1.3(b).
"Notice" shall have the meaning set forth in Section 11.3.
"Occidental" shall have the meaning set forth in the Recitals.
"Original Common Stock" shall mean each share of common stock, par value
$1.00 per share, of the Company (excluding any share of Series B Common Stock).
"OCHC" shall have the meaning set forth in the Preamble.
"OCHC Party" shall mean OCHC or any of its Affiliates.
A-1
"Party" shall mean the Company and, at the time of determination, any
Rightsholder.
"Permitted Transfer" shall mean a transfer of Registrable Securities or
Derivative Securities (which continue to be, or continue to be convertible into
or exercisable for, Registrable Securities immediately following that transfer)
permitted by and made in accordance with the Stockholder Agreement that either
(i) is to the applicable Rightsholder's Wholly Owned Affiliate or (ii) relates
to, in the aggregate, not less than 5,000,000 shares of Original Common Stock.
"Person" shall mean any natural person, corporation, partnership, limited
liability company, joint venture, association or other entity or organization.
"Securities Purchase Agreement" shall have the meaning set forth in the
Recitals.
"Records" shall have the meaning set forth in Section 3.1(l).
"register", "registered", and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the SEC's declaration or ordering of
effectiveness of that registration statement or document.
"Registrable Securities" shall mean all shares of Original Common Stock
issued (i) upon exercise of a Warrant, (ii) as payment of a Contingent Payment
Amount or (iii) as a dividend or other distribution with respect to, in exchange
for, upon the conversion of or in replacement of any share of Series B Common
Stock, excluding in each case (A) any Registrable Securities a Rightsholder
sells, or Registrable Securities issued upon the conversion or exercise of
Derivative Securities a Rightsholder sells, in either case in a transaction in
which the rights of that Rightsholder under Section 8 are not permitted to be
assigned as provided in Section 8, (B) any Registrable Securities after those
Securities have been sold to the public pursuant to a registration statement
covering such Securities that has been declared effective under the Securities
Act, (C) any Registrable Securities that have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act and
(D) any Registrable Securities that have been otherwise transferred, new
certificates for which not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of which shall not
require registration under the Securities Act.
"Related Securities Agreements" shall mean the Securities Purchase
Agreement, the Stockholder Agreement and the Warrant.
"Rightsholder" shall mean OCHC or any Person that, at the time of
determination, has signed an agreement assuming OCHC's, or a permitted
transferee's, rights and obligations pursuant to Section 8, but only if OCHC or
that Person (as applicable) then owns Registrable Securities or Derivative
Securities convertible into or exercisable for Registrable Securities.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall mean all of the Company's capital stock and other
authorized or outstanding options, offers, warrants, calls, subscriptions,
rights, convertible notes or other securities (whether debt, equity, or a
combination of debt and equity) as defined in the Securities Act.
A-2
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the SEC's rules and regulations promulgated thereunder.
"Series B Common Stock" shall mean shares of Series B Common Stock,
$1.00 par value, of the Company.
"Stockholder Agreement" shall have the meaning set forth in the
Recitals.
"Subsidiary" shall mean, with respect to any Party, any Person of which
such Party, either directly or indirectly, owns 50% or more of the equity or
voting interests.
"Traditional Underwriting" shall mean an underwritten offering of shares
of Original Common Stock pursuant to an underwriting agreement and involving
marketing efforts on the part of officers of the Company in the form of a
roadshow.
"Violation" shall mean (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement that
includes Registrable Securities, including any preliminary prospectus or final
prospectus contained in that registration statement or any amendments or
supplements to that registration statement or prospectus or (ii) the omission or
alleged omission to state in that registration statement a material fact (A)
required to be stated in it or (B) necessary to make the statements in that
registration statement in light of the circumstances in which they were made not
misleading.
"Warrant" shall have the meaning set forth in the Recitals.
"Warrant Shares" shall mean any share of Original Common Stock issued
upon the exercise in whole or in part of a Warrant (including any share of
Original Common Stock issued as Net Payment Shares (as defined in the Warrant)).
A-3
EXHIBIT 10.5
EXECUTION COPY
- --------------------------------------------------------------------------------
OCCIDENTAL PARTNER SUB PURCHASE AGREEMENT
AMONG
LYONDELL CHEMICAL COMPANY,
OCCIDENTAL CHEMICAL HOLDING CORPORATION,
OXY CH CORPORATION
AND
OCCIDENTAL CHEMICAL CORPORATION
JULY 8, 2002
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SECTION 1 COVENANTS REGARDING PRE-CLOSING RESTRUCTURING........................2
1.1 Pre-Closing Restructuring........................................2
1.2 Organization, Capitalization, Title..............................2
SECTION 2 PURCHASE AND SALE OF THE OCCIDENTAL PARTNER SUBS.....................2
2.1 Sale of the Occidental Partner Subs..............................2
2.2 Purchase Price...................................................3
SECTION 3 CLOSING DATE, PAYMENT AND DELIVERY...................................3
3.1 Closing Date.....................................................3
3.2 Payment and Delivery.............................................3
3.3 Payments of Cash; Delivery of Certificates.......................3
SECTION 4 REPRESENTATIONS AND WARRANTIES OF OCCIDENTAL PARTIES.................4
4.1 Organization, Good Standing and Power............................4
4.2 Authorization and Validity of Agreements.........................4
4.3 Lack of Conflicts................................................4
4.4 Certain Fees.....................................................5
4.5 Occidental Partner Subs..........................................5
4.6 Partnership Units................................................6
4.7 Tax Matters......................................................7
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................8
5.1 Organization, Good Standing and Power............................8
5.2 Authorization and Validity of Agreement..........................9
5.3 Lack of Conflicts................................................9
5.4 Certain Fees.....................................................9
5.5 Financing.......................................................10
5.6 Investment......................................................10
5.7 Investigation; No General Solicitation..........................10
5.8 Sophistication and Financial Condition of Purchaser.............10
SECTION 6 ADDITIONAL AGREEMENTS...............................................10
6.1 Conduct of Occidental Business Pending the Closing Date.........10
6.2 Further Actions.................................................11
6.3 Notifications...................................................12
6.4 No Inconsistent Action..........................................12
6.5 Preservation of Corporate Existence of Oxy LP2..................13
6.6 Release.........................................................13
6.7 [Intentionally Omitted].........................................13
6.8 Agreement Regarding OCC Indemnity...............................13
6.9 Indemnity and Other Agreements Regarding Potential Loss of
Units Under Section 14 of the Partnership Agreement.............13
SECTION 7 ADDITIONAL AGREEMENTS REGARDING CERTAIN TAX MATTERS.................16
7.1 Absence of Section 338(h)(10) Election..........................16
7.2 Absence of Tax Election As to Oxy LP1...........................16
7.3 Tax Indemnification.............................................16
7.4 Tax Indemnification Duration....................................16
-i-
7.5 Straddle Periods................................................16
7.6 Responsibility for Filing Tax Returns for Periods through
Closing Date....................................................17
7.7 Cooperation on Tax Matters......................................17
7.8 Tax Sharing Agreements..........................................18
7.9 Certain Taxes and Fees..........................................18
7.10 Audits..........................................................18
7.11 Carrybacks......................................................18
7.12 Post Closing Elections..........................................18
7.13 Consistent Tax Treatment........................................19
7.14 Refunds.........................................................19
SECTION 8 CONDITIONS TO CLOSING...............................................19
8.1 Conditions Precedent to Obligations of Both Parties.............19
8.2 Conditions Precedent to Obligations of Occidental Parties.......19
8.3 Conditions Precedent to Obligations of the Purchaser............20
SECTION 9 TERMINATION.........................................................21
9.1 General.........................................................21
9.2 Effect of Termination...........................................22
SECTION 10 SURVIVAL AND INDEMNIFICATION.......................................22
10.1 Survival........................................................22
10.2 Indemnification by the Purchaser................................23
10.3 Indemnification by the Occidental Parties.......................23
10.4 Mutual Indemnity................................................24
10.5 Mitigation; Limitation on Consequential, Punitive and
Exemplary Damages; Exclusive Remedy.............................24
10.6 EXTENT OF INDEMNIFICATION.......................................25
10.7 Procedures......................................................25
10.8 Termination of Indemnification..................................27
SECTION 11 MISCELLANEOUS......................................................28
11.1 Successors and Assigns..........................................28
11.2 Benefits of Agreement Restricted to Parties.....................28
11.3 Notices.........................................................28
11.4 Severability....................................................29
11.5 Press Releases..................................................29
11.6 Confidentiality Agreement.......................................30
11.7 Entire Agreement................................................30
11.8 Construction....................................................30
11.9 Counterparts....................................................31
11.10 Governing Law...................................................31
11.11 Transaction Costs...............................................31
11.12 Amendment.......................................................31
11.13 Jurisdiction; Consent to Service of Process; Waiver.............31
11.14 Waiver of Jury Trial............................................32
11.15 Special Joinder by Oxy LP2......................................32
11.16 Special Joinder by Occidental...................................32
11.17 Further Assurances..............................................32
-ii-
APPENDIX
Appendix A Definitions
SCHEDULES
Schedule 1.2 Organization, Capitalization, Title
Schedule 2.2 Allocation of Purchase Price
Schedule 4 Exceptions to Representations and Warranties of Occidental
Parties
Schedule 4.5 Organization, Capitalization, Title
Schedule 4.6 Partnership Units
Schedule 4.7(e) Tax Basis
Schedule 5 Exceptions to Representations and Warranties of the
Purchaser
Schedule 5.5 Financing
Schedule 8.2(d) Occidental Consents
Schedule 8.3(e) Purchaser Consents
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Option to Sell Petrochemical Plant Agreement
Exhibit C Form of $75 Million Note
-iii-
OCCIDENTAL PARTNER SUB PURCHASE AGREEMENT
This OCCIDENTAL PARTNER SUB PURCHASE AGREEMENT (this "Agreement"),
dated July 8, 2002, is entered into by and among Lyondell Chemical Company, a
Delaware corporation (the "Purchaser"), Occidental Chemical Holding Corporation,
a California corporation ("OCHC"), Oxy CH Corporation, a California corporation
("Oxy CH"), and Occidental Chemical Corporation, a New York corporation ("OCC").
The definitions of capitalized terms used in this Agreement are
set forth in Appendix A.
RECITALS
WHEREAS, Oxy CH and OCC are each indirect wholly owned
subsidiaries of OCHC;
WHEREAS, OCC owns all of the outstanding capital stock of
Occidental Petrochem Partner 1, Inc., a Delaware corporation ("Oxy LP1");
WHEREAS, Oxy CH owns all of the outstanding capital stock of each
of Occidental Petrochem Partner 2, Inc., a Delaware corporation ("Oxy LP2"), and
Occidental Petrochem Partner GP, Inc., a Delaware corporation ("Oxy GP" and
together with Oxy LP1 and Oxy LP2, the "Occidental Partner Subs");
WHEREAS, the Occidental Partner Subs hold, in the aggregate, a
29.5% partnership interest in Equistar Chemicals, LP, a Delaware limited
partnership (the "Partnership");
WHEREAS, Oxy CH and OCC are the Occidental Parent referred to in
the Parent Agreement for purposes of Section 2 of the Parent Agreement (the
"Occidental Parent");
WHEREAS, Lyondell and Millennium are each a "Parent" for purposes
of the Parent Agreement;
WHEREAS, Section 2.2 of the Parent Agreement provides a right of
first option for Lyondell and Millennium to purchase a pro-rata portion of the
Partner Sub Stock;
WHEREAS, Millennium did not elect to purchase its pro-rata portion
of the Partner Sub Stock and Lyondell elected to purchase all of the Partner Sub
Stock; and
WHEREAS, the Occidental Parent desires to Transfer all of the
Partner Sub Stock to the Purchaser upon the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the Parties set forth herein, it is hereby agreed as follows:
SECTION 1
COVENANTS REGARDING PRE-CLOSING RESTRUCTURING
---------------------------------------------
1.1 Pre-Closing Restructuring. Prior to Closing, OCC shall cause Oxy
LP1 to convert into a Delaware limited liability company.
1.2 Organization, Capitalization, Title. The Occidental Parties
covenant that as of Closing:
(a) The name, form of entity and jurisdiction of incorporation
or organization of Oxy LP1 will be as set forth on Schedule 1.2. True,
correct and complete copies of the limited liability company
organizational documents for Oxy LP1 will be delivered to the Purchaser
prior to Closing.
(b) The capitalization of Oxy LP1 will be as set forth on
Schedule 1.2. The respective limited liability company interests set
forth thereon will constitute all the outstanding ownership interests of
Oxy LP1. The Oxy LP1 Interests, Oxy LP2 Shares and Oxy GP Shares
collectively will represent 100% of Occidental's ownership interest in
the Partnership.
(c) All of the Oxy LP1 Interests will be owned beneficially and
of record by OCC. All Oxy LP1 Interests will be duly authorized and
validly issued in accordance with its governing or organizational
documents, and will be fully paid and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Limited
Liability Company Act of the State of Delaware) and none of the Oxy LP1
Interests will have been issued in violation of any preemptive rights.
(d) OCC will own all of the limited liability company interests
set forth in Schedule 1.2 free and clear of all Encumbrances, and such
interests will not be subject to any agreements or understandings with
respect to the voting, ownership or Transfer thereof. There will not be
outstanding subscriptions, options, convertible securities, warrants or
calls of any kind issued or granted by, or binding upon, any Occidental
Party or its Affiliates to purchase or otherwise acquire or to sell or
otherwise dispose of any security or equity interest of Oxy LP1.
(e) OCC will have full legal right to Transfer the Oxy LP1
Interests to the Purchaser or one or more of its Affiliates.
SECTION 2
PURCHASE AND SALE OF THE OCCIDENTAL PARTNER SUBS
------------------------------------------------
2.1 Sale of the Occidental Partner Subs. At Closing:
(a) OCC shall Transfer and deliver to the Purchaser, or to one
or more Affiliates of the Purchaser designated in writing by the
Purchaser, all of the Oxy LP1 Interests and the Purchaser (or such
Affiliate or Affiliates) shall purchase and acquire all of the Oxy LP1
Interests from OCC; and
2
(b) Oxy CH shall Transfer and deliver to the Purchaser, or to
one or more Affiliates of the Purchaser designated in writing by the
Purchaser, all of the Oxy LP2 Shares and the Oxy GP Shares and the
Purchaser (or such Affiliate or Affiliates) shall purchase and acquire
all of the Oxy LP2 Shares and the Oxy GP Shares from Oxy CH.
2.2 Purchase Price. The aggregate purchase price payable to OCC and
Oxy CH by the Purchaser for the Partner Sub Stock shall be $440,010,000. Such
aggregate purchase price shall be allocated between OCC and Oxy CH as set forth
on Schedule 2.2.
SECTION 3
CLOSING DATE, PAYMENT AND DELIVERY
----------------------------------
3.1 Closing Date. The Closing shall be held at the offices of Baker
Botts L.L.P. in Houston, Texas at 10:00 a.m. on (i) August 30, 2002, or (ii) if
all conditions set forth in Sections 8.1, 8.2 and 8.3, other than conditions to
be satisfied at Closing, have not been satisfied or waived by that date, on the
third Business Day after the first day all such conditions have been satisfied
or waived or (iii) on such other date as may be agreed to in writing by the
Parties (the "Closing Date").
3.2 Payment and Delivery. At Closing:
(a) the Purchaser shall, or shall cause its Affiliates to,
transmit the portion of the aggregate purchase price allocated to OCC and
Oxy CH in Schedule 2.2 to OCC and Oxy CH, respectively,
(b) OCC shall deliver to the Purchaser a certificate
representing the Oxy LP1 Interests purchased hereunder (together with a
stock power executed in blank and any other appropriate documentation to
a similar effect as reasonably requested by the Purchaser) and
(c) Oxy CH shall deliver to the Purchaser certificates
representing the Oxy GP Shares and the Oxy LP2 Shares purchased hereunder
(together in each case with stock powers executed in blank and any other
appropriate documentation to a similar effect as reasonably requested by
the Purchaser).
3.3 Payments of Cash; Delivery of Certificates. Any funds required to
be paid hereunder shall be made by wire transfer of immediately available funds
to an account designated by the intended recipient of such funds in writing. Any
Partner Sub Stock certificates delivered hereunder shall be duly registered in
the name of the intended recipient and shall bear the legend set forth in
Section 2.1(b) of the Parent Agreement.
3
SECTION 4
REPRESENTATIONS AND WARRANTIES OF OCCIDENTAL PARTIES
----------------------------------------------------
Except as set forth on Schedule 4, the Occidental Parties jointly
and severally represent and warrant to the Purchaser as follows:
4.1 Organization, Good Standing and Power. Each Occidental Party (i)
is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the corporate power
and authority to own, lease and operate its assets and to conduct its business
as now being conducted by it, (ii) is duly authorized, qualified or licensed to
do business as a foreign corporation in, and is in good standing in, each of the
jurisdictions in which its right, title or interest in or to any of the assets
held by it or the business conducted by it, requires such authorization,
qualification or licensing, except where the failure to be so authorized,
qualified, licensed or in good standing would not be reasonably likely to have
an Occidental Material Adverse Effect and (iii) has all requisite corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder.
4.2 Authorization and Validity of Agreements.
(a) The execution, delivery and performance by each Occidental
Party of this Agreement and the consummation by each such Party of the
transactions contemplated hereby have been duly authorized and approved
by all necessary corporate or similar action on its part. This Agreement
has been duly and validly executed and delivered by each Occidental Party
and is its legal, valid and binding obligation, enforceable against each
such Party in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws related to or affecting creditors' rights generally and by
general equity principles.
(b) The execution, delivery and performance by each Occidental
Party of the Related Purchase Agreements to which it will be a party and
the consummation by each such Occidental Party of the transactions
contemplated thereby will be, as of the Closing, duly authorized and
approved by all necessary corporate action on its part. At the Closing,
each of the Related Purchase Agreements to which an Occidental Party will
be a party will be duly and validly executed and delivered by it and will
be upon execution and delivery its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws related to or affecting creditors' rights
generally and by general equity principles.
4.3 Lack of Conflicts. Execution, delivery and, assuming receipt of
the Consents contemplated by Schedule 8.2(d), performance by each Occidental
Party of this Agreement and the Related Purchase Agreements to which it is or
will be a party and the consummation by each such party of the transactions
contemplated hereby and thereby does not and, as of the Closing, will not (i)
violate (with or without the giving of notice or the lapse of time or both) any
Legal Requirement applicable to any of them or any of their Subsidiaries or to
Occidental, other than those that would not be reasonably likely to have an
Occidental Material Adverse Effect, (ii)
4
conflict with, or result in the breach of, any provision of the charter or
by-laws or similar governing or organizational documents of any of them or any
of their Subsidiaries, (iii) result in the creation of any Encumbrance upon any
of their assets, other than those arising under this Agreement or those that
would not be reasonably likely to have an Occidental Material Adverse Effect or
(iv) violate, conflict with or result in the breach or termination of or
otherwise give any other Person the right to terminate, or constitute a default,
event of default or an event that with notice, lapse of time or both, would
constitute a default or event of default under the terms of, any contract,
indenture, lease, mortgage, Government License or other agreement or instrument
to which any of them or any of their Subsidiaries or Occidental is a party or by
which the properties or businesses of any of them or any of their Subsidiaries
are bound, except for violations, conflicts, breaches, terminations and defaults
that would not be reasonably likely to have an Occidental Material Adverse
Effect.
4.4 Certain Fees. No Occidental Party nor any of its Affiliates nor
any of its officers, directors or employees, on behalf of it or such Affiliates,
has employed any broker or finder or incurred any other liability for any
financial advisory fees, brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
4.5 Occidental Partner Subs.
(a) The name, form of entity and jurisdiction of incorporation
or organization of each Occidental Partner Sub as of the date of this
Agreement are set forth on Schedule 4.5. True, correct and complete
copies of the charter and bylaws or comparable organizational documents
for each Occidental Partner Sub have been delivered to the Purchaser.
(b) The capitalization of each Occidental Partner Sub as of the
date of this Agreement is as set forth on Schedule 4.5. The respective
shares set forth thereon constitute all the outstanding capital stock of
each such Occidental Partner Sub, as of the dates indicated thereon. The
Oxy LP1 Shares, Oxy LP2 Shares and Oxy GP Shares collectively represent
100% of Occidental's ownership interest in the Partnership.
(c) As of the date of this Agreement, (i) Oxy LP1 Shares are
owned beneficially and of record by OCC and (ii) the Oxy LP2 Shares and
Oxy GP Shares are owned beneficially and of record by Oxy CH. All Partner
Sub Stock is duly authorized, validly issued, fully paid and
nonassessable and none of the Partner Sub Stock was issued in violation
of any preemptive rights.
(d) OCC and Oxy CH own all of the shares of Partner Sub Stock
as set forth in Section 4.5(c) free and clear of all Encumbrances, and
such shares are not subject to any agreements or understandings with
respect to the voting, ownership or Transfer thereof. There are no
outstanding subscriptions, options, convertible securities, warrants or
calls of any kind issued or granted by, or binding upon, any Occidental
Party or any of its Affiliates to purchase or otherwise acquire or to
sell or otherwise dispose of any security or equity interest in any of
the Occidental Partner Subs.
5
(e) OCC and Oxy CH have full legal right, respectively, to
Transfer the Oxy LP1 Shares, Oxy LP2 Shares and Oxy GP Shares to the
Purchaser (or one or more of its Affiliates).
(f) Except for any liability of Oxy GP arising under Delaware
law because it is a general partner of the Partnership, in the case of
each Occidental Partner Sub, (A) its business is and, since its
incorporation, has been restricted solely to the holding of its Units and
the doing of things necessary or incidental in connection therewith
(including the exercise of its rights and powers under the Partnership
Agreement), (B) it does not and, since its incorporation, has not, owned
any assets, incurred any liabilities or engaged, participated or invested
in any business outside the scope of the business set forth in (A), (C)
it does not and, since its incorporation, has not, had any employees,
(D) it does not have any outstanding debt obligations, including any
permitted under Section 2.4 of the Parent Agreement, (E) it is not a
party to any contracts or agreements and (F) except as provided in
Section 6.8, it has not incurred any other liabilities that remain
outstanding.
(g) In the case of the Occidental Partner Subs, taken together,
(A) to the Knowledge of each Occidental Party, no Occidental Partner Sub
has any liabilities or obligations of any nature, whether or not fixed,
accrued, contingent or otherwise, except liabilities and obligations that
do not or are not reasonably likely to have, individually or in the
aggregate, an Occidental Material Adverse Effect and (B) there are no
Proceedings pending or to any Occidental Party's Knowledge, threatened,
involving any Occidental Partner Sub that could reasonably be expected to
have an Occidental Material Adverse Effect and no Occidental Party has
Knowledge of any judgment, order writ, injunction or decree of any
Authority against or involving any Occidental Partner Sub. No Occidental
Partner Sub is, or with the giving of notice or lapse of time or both
would be, in violation of or in default under its charter or by-laws or
similar governing or organizational documents or any contract, indenture,
lease, mortgage, Government License or other agreement or instrument to
which such Occidental Partner Sub is a party or by which it or any of its
properties is bound, except for violations and defaults that individually
and in the aggregate would not be reasonably likely to have an Occidental
Material Adverse Effect.
4.6 Partnership Units. Each Occidental Partner Sub owns beneficially
and of record the Units set forth opposite its name on Schedule 4.6 and the
partnership interests that relate thereto free and clear of all Encumbrances,
and such Units and related partnership interests are not subject to any
agreements or understandings with respect to the voting, ownership or Transfer
thereof or with respect to any other rights of a partner of the Partnership
holding such Units under the Partnership Agreement. There are no outstanding
subscriptions, options, convertible securities, warrants or calls of any kind
issued or granted by, or binding upon, any Occidental Party or any of its
Affiliates to purchase or otherwise acquire or to sell or otherwise dispose of
the Units or the related partnership interests.
6
4.7 Tax Matters.
(a) Each Occidental Partner Sub has filed all Tax Returns that
it was required to file under applicable laws and regulations. All such
Tax Returns were correct and complete in all respects and have been
prepared in substantial compliance with all applicable laws and
regulations. All Taxes due and owing by any Occidental Partner Sub
(whether or not shown on any Tax Return) have been paid. There are no
liens for Taxes (other than Taxes not yet due and payable) upon any of
the assets of any Occidental Partner Sub.
(b) Each Occidental Partner Sub has withheld and paid all Taxes
required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(c) No Occidental Partner Sub has reason to expect that any
Authority will assess an Occidental Partner Sub for additional Taxes
(other than Taxes attributable to its interest in the Partnership) for
any period for which Tax Returns have been filed. No Occidental Partner
Sub has received from any foreign, federal, state or local taxing
Authority (including jurisdictions where any Occidental Partner Sub has
not filed Tax Returns) any notice of deficiency or proposed adjustment
for any amount of Tax proposed, asserted, or assessed by any taxing
Authority against any Occidental Partner Sub (other than Tax attributable
to its interest in the Partnership). The Occidental Parties or their
Affiliates have delivered to the Purchaser correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any Occidental Partner Sub
filed or received since its formation.
(d) No Occidental Partner Sub has filed a consent under Section
341(f) of the Code concerning collapsible corporations.
(e) To the Knowledge of the Occidental Parties, the correct
aggregate tax basis (as determined solely for federal income tax
purposes) of the properties that have been contributed to the Partnership
by Oxy GP and Oxy LP2 (or their predecessors in interest) is at least 95%
of the aggregate tax basis amount reported to the Partnership. Schedule
4.7(e) sets forth the following information (as determined solely for
federal income tax purposes) with respect to each Occidental Partner Sub
as of the most recent practicable date: (i) the basis of each Occidental
Partner Sub in each of its assets other than its interest in the
Partnership; (ii) the amount of any net operating loss, net capital loss,
unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to any Occidental Partner Sub; and
(iii) the amount of any deferred gain or loss allocable to any Occidental
Partner Sub arising out of any intercompany transaction, other than such
deferred gains or losses included in the income of an Occidental Partner
Sub in a tax year ending on or before the Closing Date.
(f) Each Occidental Partner Sub has amended or will amend its
federal income Tax Returns corresponding exactly to the information
provided to such Occidental Partner Sub by the Partnership.
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(g) Other than because of such items being reported by the
Partnership, Oxy LP2 will not be required to include any item of income
in taxable income for any taxable period (or portion thereof) ending
after the Closing Date as a result of any: (i) change in method of
accounting for a taxable period ending on or prior to the Closing Date;
(ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; (iii) intercompany
transactions or any excess loss account described in Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law); (iv) installment sale or open
transaction disposition made on or prior to the Closing Date; or (v)
prepaid amount received on or prior to the Closing Date.
(h) Each Affiliated Group of which any Occidental Partner Sub
is or was a member (each an "Occidental Affiliated Group") has filed all
income Tax Returns that it was required to file for each taxable period
during which any Occidental Partner Sub was a member of such group. Any
tax shown as due on such returns as owing has been paid. With respect to
the items on such Occidental Affiliated Group Tax Returns specifically
concerning any Occidental Partner Sub, other than items for which such
Tax Returns are filed or amended in accordance with information provided
by the Partnership, there is no dispute or claim either (i) claimed or
raised by any authority in writing or (ii) as to which any Occidental
Party or its Affiliate has Knowledge based upon personal contact with any
agent of such authority.
(i) None of the Occidental Partner Subs has any liability for
the Taxes of any other Person under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law).
SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
Except as set forth on Schedule 5, the Purchaser represents and
warrants to the Occidental Parties that:
5.1 Organization, Good Standing and Power. The Purchaser (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware and has the corporate power and authority to own, lease
and operate its assets and to conduct its business as now being conducted by it,
(ii) is duly authorized, qualified or licensed to do business as a foreign
corporation in, and is in good standing in, each of the jurisdictions in which
its right, title or interest in or to any of the assets held by it or the
business conducted by it, requires such authorization, qualification or
licensing, except where the failure to be so authorized, qualified, licensed or
in good standing would not be reasonably likely to have a Purchaser Material
Adverse Effect and (iii) has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder.
8
5.2 Authorization and Validity of Agreement.
(a) The execution, delivery and performance by the Purchaser of
this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized and approved by all
necessary corporate action on its part. This Agreement has been duly and
validly executed and delivered by the Purchaser and is its legal, valid
and binding obligation, enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws related to or
affecting creditors' rights generally and by general equity principles.
(b) The execution, delivery and performance by the Purchaser of
the Related Purchase Agreements to which it will be a party and the
consummation by the Purchaser of the transactions contemplated thereby
will be, as of the Closing, duly authorized and approved by all necessary
corporate action on its part. At the Closing, each of the Related
Purchase Agreements to which the Purchaser will be a party will be duly
and validly executed and delivered by it and will be upon execution and
delivery its legal, valid and binding obligation, enforceable against it
in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws related to or affecting creditors' rights generally and by general
equity principles.
5.3 Lack of Conflicts. The execution, delivery and, assuming receipt
of the Consents contemplated by Schedule 8.3(e), performance by the Purchaser of
this Agreement and the Related Purchase Agreements to which it is or will be a
party and the consummation by it of the transactions contemplated hereby and
thereby does not and, as of the Closing, will not (i) violate (with or without
the giving of notice or the lapse of time or both) any Legal Requirement
applicable to it or any of its Subsidiaries, other than those that would not be
reasonably likely to have a Purchaser Material Adverse Effect, (ii) conflict
with, or result in the breach of, any provision of the charter or by-laws or
similar governing or organizational documents of it or any of its Subsidiaries,
(iii) result in the creation of any Encumbrance upon any of its assets, other
than those arising under this Agreement or those that would not be reasonably
likely to have a Purchaser Material Adverse Effect or (iv) violate, conflict
with or result in the breach or termination of or otherwise give any other
Person the right to terminate, or constitute a default, event of default or an
event that with notice, lapse of time or both, would constitute a default or
event of default under the terms of, any contract, indenture, lease, mortgage,
Government License or other agreement or instrument to which it or any of its
Subsidiaries is a party or by which the properties or businesses of it or any of
its Subsidiaries are bound, except for violations, conflicts, breaches,
terminations and defaults that would not be reasonably likely to have a
Purchaser Material Adverse Effect.
5.4 Certain Fees. Neither the Purchaser nor any of its Affiliates nor
any of their officers, directors or employees, on behalf of the Purchaser or
such Affiliates, has employed any broker or finder or incurred any other
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
9
5.5 Financing. The Purchaser either (i) has sufficient cash resources
to pay the purchase price set forth in Section 2.2 and to pay all of its
associated fees and expenses or (ii) has entered into definitive agreements as
described in Schedule 5.5 providing for sufficient funds to pay the purchase
price set forth in Section 2.2 and to pay all of its associated fees and
expenses.
5.6 Investment. The Purchaser is acquiring the Partner Sub Stock for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof in violation of
applicable law and has not offered or sold any portion of the Partner Sub Stock
to be acquired by it. The Purchaser acknowledges that any certificate
representing Partner Sub Stock will bear the legend set forth in Section 2.1(b)
of the Parent Agreement.
5.7 Investigation; No General Solicitation. The Purchaser has had a
reasonable opportunity to ask questions relating to and otherwise discuss the
Partnership's business, management and financial affairs with the Occidental
Parties' management and other Persons, and the Purchaser has received
satisfactory responses to its inquiries. To the extent necessary, the Purchaser
has retained, at the expense of the Purchaser, and relied upon appropriate
professional advice regarding the investment, tax and legal merits and
consequences of this Agreement and its purchase of the Partner Sub Stock
hereunder. The Purchaser has relied only on its own independent investigation
and on the Occidental Parties' representations and warranties in this Agreement
before deciding to acquire the Partner Sub Stock.
5.8 Sophistication and Financial Condition of Purchaser. The Purchaser
is an experienced and sophisticated investor and has such knowledge and
experience in financial and business matters or its professional advisors have
such knowledge and experience in financial and business matters as are necessary
to evaluate the merits and risks of an investment in the Partner Sub Stock and
to protect its own interest in connection with its acquisition of the Partner
Sub Stock. The Purchaser is able to bear the economic risk of this investment,
is able to hold the Partner Sub Stock indefinitely and has a sufficient net
worth to sustain a loss of its entire investment in the Partner Sub Stock in the
event such loss should occur.
SECTION 6
ADDITIONAL AGREEMENTS
---------------------
6.1 Conduct of Occidental Business Pending the Closing Date. Each
Occidental Party agrees that, except as required or specifically contemplated by
this Agreement or otherwise consented to or approved in writing by the
Purchaser, during the period commencing on the date hereof and ending on the
Closing Date, it shall and shall cause its Affiliates to:
(a) not amend the organizational documents of any of the
Occidental Partner Subs or permit the merger or consolidation of any of
the Occidental Partner Subs;
(b) not cause or permit any of the Occidental Partner Subs to
(i) enter into any agreement of any nature, (ii) lease, assign or dispose
of any assets, (iii) purchase or otherwise acquire any assets, (iv) incur
or assume any liabilities, (v) except as set forth in the OCC Indemnity
and as contemplated by Section 6.8, assume, guarantee, endorse or
10
otherwise become liable with respect to any indebtedness or (vi) waive
any material claims or rights;
(c) not cause or permit any of the Occidental Partner Subs to
(i) issue any shares of capital stock or limited liability interests or
other equity or debt securities or options, warrants, conversion rights
or other rights to acquire equity or debt securities or (ii) split,
combine or reclassify any of their capital stock or limited liability
interests or issue or authorize or propose the issuance of any other
securities in respect of, in lieu or in substitution for, shares of their
capital stock or limited liability interests;
(d) not purchase or otherwise acquire any shares of capital
stock of the Purchaser;
(e) maintain its or their books, accounts and records of and
relating to the Occidental Partner Subs in the usual, regular and
ordinary manner, on a basis consistent with past practice and in
accordance with GAAP, comply in all material respects with all Legal
Requirements and contractual obligations applicable to the Occidental
Partner Subs and perform all of its or their material obligations
relating to the Occidental Partner Subs;
(f) after obtaining Knowledge thereof, give notice to the
Purchaser of any claim or litigation (threatened or instituted) or any
other event or occurrence that could reasonably be expected to have an
Occidental Material Adverse Effect;
(g) not take any action that is reasonably likely to result in
its representations and warranties in Section 4 not being true in all
material respects as of the Closing Date;
(h) not make or change any election, change an annual
accounting period, adopt or change any accounting method, file any
amended Tax Return, or take any other similar action relating to the
filing of any Tax Return or the payment of any Tax, if such election,
adoption, change, or amendment would have the effect of increasing the
Tax liability of Oxy LP2 or Oxy GP for any period ending after the
Closing Date;
(i) not create or suffer to exist any Encumbrance (i) on the
Oxy LP1 Shares, Oxy LP2 Shares and Oxy GP Shares or (ii) following the
conversion of Oxy LP1 into a limited liability company as contemplated by
Section 1.1, on the Oxy LP1 Interests; and
(j) not agree, whether in writing or otherwise, to take any
action it has agreed pursuant to this Section 6.1 not to take.
6.2 Further Actions.
(a) Each Party shall use its commercially reasonable efforts to
take, or cause to be taken, all other action and do, or cause to be done,
all other things necessary, proper or appropriate to resolve the
objections, if any, as may be asserted by any Authority with respect to
the transactions contemplated hereby under any antitrust laws or
regulations.
11
(b) Each Party shall act in good faith and use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement and to confirm that such transactions have been accomplished,
including using its commercially reasonable efforts to obtain and effect
prior to the Closing Date all Consents and Filings necessary to
consummate the transactions contemplated hereby. Each Party shall furnish
to the other Parties and their Affiliates such necessary information and
assistance as the other may reasonably request in connection with its
preparation of any such Filings or other materials required in connection
with the foregoing.
(c) Each Party shall keep the other Parties fully informed from
time to time as any such other Party shall reasonably request as to the
status of all Consents being sought by such Party pursuant to Section
6.2(b).
(d) Each Party shall furnish to the other Parties such
information, cooperation and assistance as reasonably may be requested in
connection with the foregoing.
(e) Each Party shall act in good faith to effect the Closing at
the earliest practicable date.
(f) None of the provisions of this Section 6.2 shall under any
circumstances require the Parties or their respective Affiliates to (i)
pay any consideration other than legal fees and other customary expenses,
(ii) surrender, modify or amend in any respect any contract, lease,
mortgage or other agreement or instrument (including this Agreement),
(iii) hold separately (in trust or otherwise), divest itself of, or
otherwise rearrange the composition of, any of its assets, (iv) agree to
any limitations on its freedom of action with respect to future
acquisitions of assets or securities or with respect to any existing or
future business or activities or on the enjoyment of the full rights of
ownership, possession and use of any asset or security it now owns or
hereafter acquires or (v) agree to any of the foregoing or any other
conditions or requirements of any Governmental Authority or other Person,
in each case to the extent that doing so would be adverse or burdensome
to such Person in any material respect.
6.3 Notifications. Each Party shall notify the other Parties and keep
each of them advised as to (i) any Proceeding that is either pending or, to its
Knowledge, threatened against such Party that challenges the transactions
contemplated hereby; and (ii) any fact or circumstance of which such Party has
Knowledge that indicates that any condition to Closing is reasonably likely not
to be satisfied in a timely fashion.
6.4 No Inconsistent Action. No Party shall take any material action
inconsistent with its obligations under this Agreement or that could materially
hinder or delay the consummation of the Closing; provided, however, that any
action that may be taken in accordance with Section 6.1 shall not be deemed to
violate this Section 6.4.
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6.5 Preservation of Corporate Existence of Oxy LP2. After the Closing
and prior to the first anniversary of the Closing Date, the Purchaser shall not,
and shall not cause or permit any of its Affiliates to, (i) cause Oxy LP2 to be
changed from a corporation to another form of entity or (ii) take any action to
effect the merger, consolidation or liquidation or the Transfer of more than 50%
of the assets of Oxy LP2.
6.6 Release. Except for the agreement regarding the OCC Indemnity set
forth in Section 6.8, effective upon Closing, Occidental, OCHC, OCC and Oxy CH
hereby unconditionally and irrevocably release and forever discharge, to the
full extent permitted by applicable law, on behalf of themselves and each of
their Affiliates, Oxy LP1, Oxy LP2 and Oxy GP and their successors and assigns,
from any and all rights of setoff or contribution for any liability of
Occidental, OCHC, OCC or Oxy CH.
6.7 [Intentionally Omitted].
6.8 Agreement Regarding OCC Indemnity. Effective as of the Closing,
Oxy LP2 shall indemnify OCC for any amount OCC is required to pay pursuant to
the OCC Indemnity.
6.9 Indemnity and Other Agreements Regarding Potential Loss of Units
Under Section 14 of the Partnership Agreement.
(a) The Parties hereby acknowledge and agree that:
(i) OCC owns the Lake Charles Facility subject to the LC
Lease, a Petrochemical Plant Site Right of First Refusal Agreement
dated August 31, 1983 ("Plant ROFR") in favor of CITGO Petroleum
Corporation, a Delaware corporation ("CITGO"), and the Orange-Lake
Charles Pipeline Right of First Refusal Agreement dated August 23,
1983 in favor of CITGO (together with the Plant ROFR, the
"ROFRs");
(ii) This Agreement does not constitute (A) the entering
into of any contract, agreement, Lease (as defined in each of the
ROFRs) or other arrangement to make any Disposition (as defined in
each of the ROFRs) or (B) the granting of an option or other right
to acquire or Lease (as defined in each of the ROFRs) the Lake
Charles Facility or any part thereof or any interest therein;
(iii) This Agreement (A) shall not grant any rights
whatsoever to Purchaser with respect to the Lake Charles Facility
other than indirect rights in the LC Lease and (B) is subject to,
and not superior to, CITGO's rights under the ROFRs; and
(iv) An independent third party appraiser has determined
that, as of the date of the Appraisal, the Lake Charles Facility's
fair market value is $75 million, and the Parties have reflected
this valuation in the Plant Put Option Agreement.
13
(b) If at any time prior to a Lease Termination Event the
Purchaser believes in good faith it would be in the best interests of the
Partnership, then OCC may make the Plant Transfer to the Partnership if
OCC's board of directors, in its sole discretion, elects to do so. In
such event, the Purchaser shall take all actions necessary to cause the
Partnership to accept the Plant Transfer that are within its control and
shall use commercially reasonable efforts to obtain from the Partnership
and any other partners of the Partnership all such actions by them as are
necessary for the Partnership to accept the Plant Transfer.
(c) (i) If there is a Lease Termination Event and (A) OCC or
one of its Affiliates owns the Lake Charles Facility and (B) no
Person other than OCC, its Affiliates, the Partnership or the
Purchaser is entitled to use and operate the Lake Charles
Facility, then the Parties shall use their commercially reasonable
efforts to agree, and to cause the Partnership to consent, to an
arrangement that provides for the use and operation of the Lake
Charles Facility by the Purchaser or its designee on terms
reasonably acceptable to OCC and the Purchaser or its designee
(which may include formation of the LC Partnership (as defined in
the Partnership Agreement)).
(ii) If the Parties are unable to reach agreement as to
the arrangement described in Section 6.9(c)(i), then, upon the
Purchaser's request, OCC or one of its Affiliates shall operate or
hold the Lake Charles Facility at the Purchaser's direction and
for the Purchaser's benefit and account. If the Purchaser does not
make such request, OCC or one of its Affiliates may operate the
Lake Charles Facility for its own or its Affiliates' benefit and
account.
(d) At the Closing, the Parties shall execute and deliver the
Plant Put Option Agreement. The Plant Put Option Agreement shall provide,
among other things, that: (i) OCC shall have the right in its sole
discretion to consummate a Plant Transfer to the Purchaser or, at the
Purchaser's option, its designee (the "Put Right"); (ii) the Put Right
shall be exercisable for a period commencing on May 16, 2003 and
terminating on the earlier of the date that is (A) 60 days after the date
a Lease Termination Event occurs (unless one of the events described in
Section 6.9(e)(ii) or (iii) has occurred and is continuing, in which case
the 60-day time period shall be tolled while the events described in
Section 6.9(e)(ii) or (iii) are continuing), (B) the date of a No
Rebuilding Termination or (C) July 1, 2009; and (iii) the purchase price
to be paid by the Purchaser for the Plant Transfer shall be $75,000,000.
Upon consummation of the Plant Transfer as contemplated by this Section
6.9(d), the Parties acknowledge and agree that Section 14 of the
Partnership Agreement shall not be applicable.
(e) If there has been a Lease Termination Event and none of the
following has occurred and, in the case of clauses (ii) or (iii) below,
is continuing:
(i) the Plant Transfer as described under Section
6.9(b);
14
(ii) an arrangement providing for the use and operation
of the Lake Charles Facility by the Purchaser or its designee as
described under Section 6.9(c)(i) and such arrangement continues
to be in effect;
(iii) OCC or one of its Affiliates is operating or holding
the Lake Charles Facility at the Purchaser's direction and for the
Purchaser's benefit and account as described under Section
6.9(c)(ii) and continues to do so (the event described in this
clause shall be deemed to have occurred and be continuing so long
as either (A) the Purchaser did not request such operation or
holding or (B) such operation or holding ceases because the
Purchaser or its designee so requests); or
(iv) the Put Right has been exercised and the closing has
occurred under the Plant Sale Agreement as described under Section
6.9(d);
then, on the date that none of Section 6.9(e)(i), (ii), (iii) or (iv) has
occurred and, in the case of clauses (ii) or (iii) above, is continuing,
the Occidental Parties shall promptly pay (and shall be jointly and
severally liable to promptly pay) to the Purchaser or its designee an
amount (the "Make Whole Amount") equal to the greater of (x) $75 million
in cash or (y) the Alternate Cash Consideration.
(f) The provisions of Sections 6.9(b), 6.9(c), 6.9(d), 6.9(e)
and 6.9(h) shall be the Purchaser's sole and exclusive remedy for any
loss of Units it or its Affiliates might incur as a result of the
operation of Section 14 of the Partnership Agreement or as a result of
the loss of the use and operation of the Lake Charles Facility; provided,
however, that the exclusivity of these provisions with regard to first
party claims of the Purchaser shall not in any manner preempt or limit
any rights that the Purchaser and its Affiliates may have with respect to
Third Party Claims (as defined in the Parent Agreement) under Section 3.4
of the Parent Agreement or Third Party Claims under any analogous
provisions contained in this Agreement.
(g) Each of the Purchaser and the Occidental Parties shall
mitigate, and shall cause each of its respective Affiliates to mitigate,
any damages resulting from a loss of Units as a result of the operation
of Section 14 of the Partnership Agreement or from the loss of the use
and operation of the Lake Charles Facility, by taking all actions which a
reasonable person would undertake to minimize or alleviate the amount of
such losses and the consequences thereof, as if such Person would be
required to suffer the entire amount of such losses and the consequences
thereof by itself, without recourse or any remedy against another Person,
including pursuant to the right of the Purchaser to receive the Make
Whole Amount hereunder.
(h) If there is a No Rebuilding Termination and as a result
thereof the Purchaser or any of its Affiliates suffers a loss of Units
pursuant to Section 14.3 of the Partnership Agreement, then, provided
that the Partnership has complied with its obligation to deliver the
related Proceeds to OCC under Section 12 or 13 of the LC Lease, as
applicable, the Occidental Parties shall pay the Purchaser the Make Whole
Amount.
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(i) As security for the Occidental Parties' obligations
pursuant to Sections 6.9(e) and 6.9(h), OCHC shall establish and fund the
Section 14 Escrow.
(j) The Parties and their respective Affiliates (including, for
these purposes, the Partnership to the extent any of such Persons have
the power to control the Partnership's actions) agree that in connection
with or otherwise in relation to any Lease Termination Event, they shall
not directly or indirectly take any action that is contrary to or
inconsistent with the provisions of this Section 6.9.
SECTION 7
ADDITIONAL AGREEMENTS REGARDING CERTAIN TAX MATTERS
---------------------------------------------------
7.1 Absence of Section 338(h)(10) Election. The Parties and Occidental
agree that, with respect to the purchase of the Oxy LP2 Shares and the Oxy GP
Shares, the Parties and Occidental shall not make an election or cause or permit
any of its Affiliates or its or their successors to make an election with
respect to Section 338(h)(10) of the Code or any comparable provision of
applicable law.
7.2 Absence of Tax Election As to Oxy LP1. The Occidental Parties
shall not, and shall not cause or permit any of their Affiliates to, make any
affirmative election for Oxy LP1 with respect to the conversion of Oxy LP1 to a
Delaware limited liability company to be treated as an association subject to
taxation as a corporation for purposes of the Code.
7.3 Tax Indemnification. Each Occidental Party shall jointly and
severally indemnify each Occidental Partner Sub, the Purchaser and the
Purchaser's Affiliates and hold them harmless from and against without
duplication, any Loss attributable to (i) all Taxes (or the non-payment thereof)
of any Occidental Partner Sub for all taxable periods ending on or before the
Closing Date and the portion through the end of the Closing Date for any taxable
period that includes (but does not end on) the Closing Date ("Pre-Closing Tax
Period"), (ii) all Taxes of any member (other than on Occidental Partner Sub) of
an affiliated, consolidated, combined or unitary group of which any Occidental
Partner Sub (or any predecessor of any of the foregoing) is or was a member on
or prior to the Closing Date, including pursuant to Treasury Regulation Section
1.1502-6 or any analogous or similar state, local or foreign law or regulation,
(iii) any and all Taxes of any Person (other than an Occidental Partner Sub)
imposed on any Occidental Partner Sub as a transferee or successor, by contract
or pursuant to any law, rule or regulation, which Taxes relate to an event or
transaction occurring before the Closing and (iv) arising by reason of any
breach by an Occidental Party of the representations contained in Section 4.7.
7.4 Tax Indemnification Duration. The obligations of the Occidental
Parties pursuant to Section 7.3 are unconditional and absolute and shall remain
in effect until audit, assessment and collection of any such Taxes are barred by
the applicable statute of limitations plus sixty days.
7.5 Straddle Periods. Occidental shall include the taxable income or
loss of Oxy LP1, Oxy LP2 and Oxy GP (including any deferred income triggered
into income under Treasury Regulation Sections 1.1502-13 and 1.1502-14 and any
excess loss accounts taken into income under Treasury Regulation Section
1.1502-1) on Occidental's consolidated federal income Tax
16
Returns for all periods through the Closing Date and pay any federal income
taxes attributable to such income. The income of Oxy LP1, Oxy LP2 and Oxy GP
will be apportioned through the period up to and including the Closing Date and
the period after the Closing Date by closing the books of Oxy LP1, Oxy LP2 and
Oxy GP as of the Closing Date. Notwithstanding the foregoing, however,
Occidental and the Purchaser agree that all transactions not in the ordinary
course of business occurring on the Closing Date after the Purchaser's purchase
of the Occidental Partner Subs shall be reported on the Purchaser's consolidated
federal income tax return to the extent permitted by Treasury Regulation Section
1.1502-76(b)(1)(ii)(B).
7.6 Responsibility for Filing Tax Returns for Periods through Closing
Date. For all taxable periods ending on or before the Closing Date, Occidental
shall cause the Occidental Partner Subs to join in Occidental's consolidated
federal income tax return, to join in any applicable combined or unitary state
Tax Return filed by Occidental (or an Affiliate) and, in jurisdictions requiring
separate reporting from Occidental, to file separate company state and local Tax
Returns. All such Tax Returns shall be prepared and filed in a manner consistent
with prior practice of the Partnership, except as required by a change in
applicable law or except as required for closing the books of Oxy LP1, Oxy LP2
and Oxy GP as of the Closing Date. The Purchaser shall cause the Partnership and
the Occidental Partner Subs to furnish information to Occidental as reasonably
requested by Occidental to allow Occidental to satisfy its obligations under
this Section 7.6 in accordance with past custom and practice, except that in no
event shall such requested information be furnished to Occidental any later than
the later of, (i) six months following the Closing Date or (ii) one month
following the date such information was requested. Except for items reported by
the Partnership, the Occidental Parties and their Affiliates shall not file any
Tax Return that departs from past practice that would have a material adverse
impact on the Tax attributes or liabilities of Oxy LP2 after the Closing Date.
The Purchaser shall include the Occidental Partner Subs in its combined or
consolidated income tax returns, for all periods other than periods ending on or
before the Closing Date. The Purchaser shall not cause any Occidental Partner
Sub to file any Tax Return for a Pre-Closing Tax Period.
7.7 Cooperation on Tax Matters.
(a) The Purchaser, Occidental Partner Subs and the Occidental
Parties shall cooperate fully, as and to the extent reasonably requested
by any other Party, in connection with the filing of Tax Returns pursuant
to this Section 7.7 and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon
any other Party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided pursuant
to this Section 7.7. The Occidental Parties agree, and shall cause their
Affiliates (including the Occidental Partner Subs), to retain all books
and records with respect to Tax matters pertinent to the Occidental
Partner Subs relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the
extent notified by the Purchaser any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing Authority.
17
(b) The Purchaser and the Occidental Parties further agree,
upon request, to use their best efforts to obtain any certificate or
other document from any governmental Authority or any other Person as may
be necessary to mitigate, reduce or eliminate any Taxes that could be
imposed (including with respect to the transactions contemplated hereby).
(c) The Purchaser and the Occidental Parties further agree,
upon request, to provide the other with all information that such Party
may be required to report pursuant to Section 6043 of the Code and all
Treasury Regulations promulgated thereunder.
7.8 Tax Sharing Agreements. All Tax sharing agreements or similar
agreements with respect to or involving the Occidental Partner Subs shall be
terminated as of the Closing Date and, after the Closing Date, the Occidental
Partner Subs shall not be bound thereby or have any liability thereunder.
7.9 Certain Taxes and Fees. All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other fees and charges (including any penalties and interest)
incurred in connection with consummation of the transactions contemplated by
this Agreement shall be paid 50% by the Occidental Parties or their Affiliate
and 50% by the Purchaser when due, and the Occidental Parties will, and will
cause their Affiliates to, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such Taxes, fees and charges, and,
if required by applicable law, the Purchaser will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
7.10 Audits. Occidental shall fully inform Oxy LP2 regarding issues
raised during any audit of Occidental's consolidated federal income Tax Returns
to the extent that such returns and such issues relate to the Occidental Partner
Subs. Occidental shall not settle any such audit in a manner which would cause
Oxy LP2 to include a material item of income in its taxable income in a taxable
year ending after the Closing Date without: (i) paying to the Company an amount
equal to the present value (calculated using a discount rate equal to LIBOR plus
150 basis points) of the Tax attributable to such increase in taxable income; or
(ii) obtaining the prior written consent of the Company, which consent shall not
unreasonably be withheld.
7.11 Carrybacks. The Purchaser and its Affiliates agree to make a
proper and binding irrevocable election under Treasury Regulation Section
1.1502-21(b)(3)(ii)(B) on the Purchaser's consolidated federal income tax return
to waive the carryback of net operating losses of Oxy LP2 and Oxy GP to taxable
years in which Oxy LP2 and Oxy GP were members of Occidental's consolidated
federal income tax return.
7.12 Post Closing Elections. At the request of Occidental, the
Purchaser shall cause Oxy LP2 and Oxy GP to make or join with Occidental in
making any election if the making of such election does not have an adverse
impact on the Purchaser or any Occidental Partner Sub for any post-acquisition
Tax period.
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7.13 Consistent Tax Treatment. For all federal and state tax reporting
purposes, the Occidental Parties and the Purchaser shall maintain the following
positions (except to the extent that such Party receives an opinion from
nationally recognized tax counsel that, as a result of a change in applicable
law after the date hereof, there is no reasonable basis for maintaining such
position):
(a) The purchase and sale of the Oxy LP1 Interests, the Oxy LP2
Shares and the Oxy GP Shares are all taxable sales and none of such
transactions qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Code; and
(b) For all purposes of Subchapter K of the Code, the past
practices used to allocate the recourse and nonrecourse liabilities of
the Partnership among its partners are proper.
7.14 Refunds. If the Purchaser or its Affiliate receives a Tax refund
with respect to Tax of an Occidental Partner Sub arising in a Pre-Closing Tax
Period, the Purchaser shall pay (or cause its Affiliate to pay), within the 30
calendar days following the receipt of such Tax refund, the amount of such Tax
refund to OCHC. If Occidental or its Affiliate receives a Tax refund with
respect to Tax of an Occidental Partner Sub arising in any Tax period other than
a Pre-Closing Tax Period, within 30 days following the receipt of such Tax
refund, Occidental or its Affiliate shall pay the amount of such Tax refund to
the Purchaser.
SECTION 8
CONDITIONS TO CLOSING
---------------------
8.1 Conditions Precedent to Obligations of Both Parties. The
respective obligations of the Parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the Closing Date of each of the following conditions:
(a) No Injunction, etc. No Legal Requirement of any Authority
shall be in effect that materially restrains, enjoins or otherwise
prohibits: (i) the transactions contemplated hereby; or (ii) the
ownership by the Purchaser (including enjoyment of any rights relating
thereto) of the Partner Sub Stock; and no Proceeding seeking any such
Legal Requirement shall be pending; provided that before any
determination is made to the effect that this condition has not been
satisfied, each Party shall each use commercially reasonable efforts to
have such Legal Requirement lifted, vacated or dismissed.
(b) HSR Act. The waiting period applicable to the Closing under
the HSR Act shall have expired or been terminated without the imposition
of any condition or restriction on such expiration or termination.
8.2 Conditions Precedent to Obligations of Occidental Parties. The
obligations of the Occidental Parties under this Agreement are subject to the
satisfaction (or written waiver by the Occidental Parties) on or prior to the
Closing Date of each of the following conditions:
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(a) Accuracy of Representations and Warranties. Notwithstanding
any investigation, inspection or evaluation conducted or notice or
Knowledge obtained by any Occidental Party, all representations and
warranties of the Purchaser contained in this Agreement that contain
qualifications and exceptions relating to materiality or a Purchaser
Material Adverse Effect shall be true and correct on and as of the
Closing Date, and all other representations and warranties of the
Purchaser contained in this Agreement shall be true and correct in all
material respects as of the Closing Date, in each case with the same
force and effect as though such representations and warranties had been
made on and as of the Closing Date.
(b) Performance of Agreements. The Purchaser shall in all
material respects have performed and complied with all obligations and
agreements contained in this Agreement, and executed all agreements and
documents (including the Related Purchase Agreements) to be performed,
complied with or executed by it on or prior to the Closing Date.
(c) No Material Adverse Change. After the date of this
Agreement, no event, occurrence or other matter shall have occurred that
is reasonably likely to have a Purchaser Material Adverse Change.
(d) Third Party Consents. All Consents of any third party
listed on Schedule 8.2(d) shall have been obtained.
(e) Officer's Certificate. Occidental shall have received a
certificate, dated the Closing Date, signed by the President or a Vice
President of the Purchaser, to the effect that, to the knowledge of such
officer, the conditions specified in the above paragraphs have been
fulfilled.
(f) Execution of Parent Agreement. The Purchaser shall have
executed a copy of the Parent Agreement pursuant to Section 2.2(e) of the
Parent Agreement and shall have complied with all other applicable
requirements of Section 2.2(e) of the Parent Agreement.
8.3 Conditions Precedent to Obligations of the Purchaser. The
obligations of the Purchaser under this Agreement are subject to the
satisfaction (or written waiver by the Purchaser) on or prior to the Closing
Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. Notwithstanding
any investigation, inspection or evaluation conducted or notice or
Knowledge obtained by the Purchaser, all representations and warranties
of the Occidental Parties contained in this Agreement that contain
qualifications and exceptions relating to materiality or to an Occidental
Material Adverse Effect shall be true and correct on and as of the
Closing Date, and all other representations and warranties of the
Occidental Parties contained in this Agreement shall be true and correct
in all material respects as of the Closing Date, in each case with the
same force and effect as though such representations and warranties had
been made on and as of the Closing Date; except that the representations
in Sections
20
4.5(a) through (e) as they relate to Oxy LP1 need not be true and correct
as of the Closing Date.
(b) Performance of Agreements. Each Occidental Party, Oxy LP2
and Occidental shall in all material respects have performed and complied
with all obligations and agreements contained in this Agreement and
executed all agreements and documents (including the Related Purchase
Agreements) to be performed, complied with or executed by it or them on
or prior to the Closing Date, including the covenants set forth in
Section 1.2.
(c) No Material Adverse Change. After the date of this
Agreement, no event, occurrence or other matter shall have occurred
that is reasonably likely to have an Occidental Material Adverse Change.
(d) FIRPTA Affidavit. Each Occidental Party shall have
delivered to the Purchaser a non-foreign affidavit dated as of the
Closing Date, sworn under penalty of perjury and in form and substance
required under the Treasury Regulations issued pursuant to Section 1445
of the Code stating that such seller is not a "foreign person" as defined
in Section 1445 of the Code.
(e) Third Party Consents. All Consents of any third party
listed on Schedule 8.3(e) shall have been obtained.
(f) Officer's Certificate. The Purchaser shall have received a
certificate, dated the Closing Date from each Occidental Party, signed by
the President or a Vice President of the applicable Occidental Party, to
the effect that, to the knowledge of such officer, the conditions
specified in the above paragraphs have been fulfilled.
(g) Financing. The Purchaser shall have consummated the
transactions described in any definitive agreement referred to in Section
5.5 and the Purchaser shall have received the funds as provided therein.
SECTION 9
TERMINATION
-----------
9.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing:
(a) by the written consent of the Parties;
(b) by the Purchaser if there has been a material
misrepresentation or a breach of an agreement by any Occidental Party in
this Agreement that (i) if such misrepresentation or breach existed on
the Closing Date, would constitute a failure to satisfy any condition to
Closing set forth in Section 8.3(a) or (b) and (ii) has not been cured
and cannot reasonably be cured by the earlier of (x) 30 days after all
other conditions to Closing have been satisfied and (y) the Termination
Date;
21
(c) by any Occidental Party if there has been a material
misrepresentation or a breach of an agreement by the Purchaser in this
Agreement that (i) if such misrepresentation or breach existed on the
Closing Date, would constitute a failure to satisfy any condition to
Closing set forth in Section 8.2(a) or (b) and (ii) has not been cured
and cannot reasonably be cured by the earlier of (x) 30 days after all
other conditions to Closing have been satisfied and (y) the Termination
Date;
(d) by the Purchaser or any Occidental Party in the event that
the Closing does not occur for any reason on or before 90 days after the
date hereof, as such 90-day period may be extended for up to an
additional 120 days upon request of any Party (the "Termination Date").
The right to terminate this Agreement pursuant to this Section 9.1(d)
shall not be available to any Party whose breach of this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur by
the Termination Date unless the failure to Close by such date is due to a
breach by both of the Parties (in which case the Purchaser or any
Occidental Party may terminate this Agreement as provided by Sections
9.1(b) or 9.1(c), respectively); or
(e) by any Party if it becomes impossible to satisfy any
condition to that party's performance set forth in Sections 8.2 or 8.3.
Any right of termination set forth above shall be exercised by written notice
from the terminating Party to each other Party.
9.2 Effect of Termination. In the event of any termination of this
Agreement as provided above, this Agreement shall forthwith become wholly void
and of no further force and effect and there shall be no liability on the part
of any Party, its Affiliates or their respective officers or directors;
provided, however, that upon any such termination, the obligations of the
Parties with respect to this Section 9.2 and Sections 11.6, 11.10, 11.11, 11.13
and 11.14 shall remain in full force and effect; and provided, further, that
nothing herein will relieve any Party from liability for damages for any breach
of this Agreement.
SECTION 10
SURVIVAL AND INDEMNIFICATION
----------------------------
10.1 Survival.
(a) The representations and warranties of the Parties contained
in this Agreement or in any Related Purchase Agreement shall not survive
the Closing, except that (i) the representations and warranties contained
in Sections 4.5 and 4.6 shall survive indefinitely, together with any
associated right of indemnification pursuant to Section 10.3, (ii) the
representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.4,
5.1, 5.2, 5.3, 5.4, 5.6, 5.7 and 5.8 shall survive two years after the
Closing, and shall thereafter terminate, together with any associated
right of indemnification pursuant to Sections 10.2 or 10.3 and (iii) the
representations and warranties relating to Taxes or contained in Section
4.7 shall survive until expiration of the applicable statutory period of
limitations (giving effect to any waiver, mitigation or extension
thereof), and shall thereafter
22
terminate, and the associated right of indemnification pursuant to
Section 10.3 shall terminate at the end of the period set forth in
Section 7.4.
(b) Except as expressly provided in this Agreement, the
covenants and agreements of the Parties contained in this Agreement or in
any Related Purchase Agreement shall not be limited or affected by any
investigation undertaken by a Party, and shall survive indefinitely,
together with any associated right of indemnification.
10.2 Indemnification by the Purchaser.
(a) From and after the Closing, the Purchaser shall indemnify,
defend and hold harmless the Occidental Indemnified Parties from, against
and in respect of any losses, claims, damages, fines, penalties,
assessments by public agencies, settlement, cost or expenses (including
reasonable attorneys' fees) and other liabilities (any of the foregoing
being a "Loss"), as incurred (payable promptly upon written request),
arising from, in connection with or otherwise with respect to:
(i) any breach of any representation or warranty of the
Purchaser in this Agreement that survives the Closing; and
(ii) any breach of any covenant or agreement of the
Purchaser in this Agreement.
(b) Notwithstanding the foregoing, the Purchaser shall not have
any liability with respect to breaches of representations and warranties
in this Agreement (i) of which the Occidental Parties have Knowledge as
of the Closing Date or (ii) under Section 10.2(a)(i) unless the aggregate
of all Losses for which the Purchaser would, but for this Section
10.2(b)(i), be liable exceeds on a cumulative basis an amount equal to 1%
of the purchase price paid pursuant to Section 2.2; provided, however,
that after such amount is reached the Purchaser shall be responsible for
the full amount of such Loss.
10.3 Indemnification by the Occidental Parties.
(a) From and after the Closing, the Occidental Parties shall
indemnify, defend and hold harmless the Purchaser Indemnified Parties
from, against and in respect of any Loss, as incurred (payable promptly
upon written request), arising from, in connection with or otherwise with
respect to:
(i) any breach of any representation or warranty of the
Occidental Parties in this Agreement that survives the Closing;
and
(ii) any breach of any covenant or agreement of the
Occidental Parties in this Agreement.
(b) Notwithstanding the foregoing, the Occidental Parties shall
not have any liability with respect to breaches of representations and
warranties in this Agreement (i) of which the Purchaser has Knowledge as
of the Closing Date or (ii) under Section 10.3(a)(i) unless the aggregate
of all Losses for which the Occidental Parties
23
would, but for this Section 10.3(b)(i), be liable exceeds on a cumulative
basis an amount equal to 1% of the purchase price paid pursuant to
Section 2.2; provided, however, that after such amount is reached the
Occidental Parties shall be responsible for the full amount of such Loss.
10.4 Mutual Indemnity. From the date hereof through the twenty-first
anniversary hereof:
(a) The Purchaser hereby agrees to the fullest extent permitted
by applicable law, to indemnify, defend and hold harmless the Occidental
Indemnified Parties from, against and in respect of any Loss incurred by
any of the Occidental Indemnified Parties arising out of, in connection
with, or relating to, any Third Party Claim (whether in contract, tort,
statute or otherwise) arising out of, in connection with, or relating to
the failure of the Purchaser or any of its Affiliates to give notice to,
obtain any consent of, or obtain any waiver by, or any breach by the
Purchaser or any of its Affiliates of any obligation owing to, any
Person, in each case with respect to the Purchaser or its Affiliates'
entering into this Agreement or performing their respective obligations
hereunder.
(b) Each of the Occidental Parties agrees, and Occidental
agrees, to the fullest extent permitted by applicable law, to indemnify,
defend and hold harmless the Purchaser Indemnified Parties from, against
and in respect of any Loss incurred by any of the Purchaser Indemnified
Parties arising out of, in connection with, or relating to, any Third
Party Claim (whether in contract, tort, statute or otherwise) arising out
of, in connection with, or relating to the failure of an Occidental Party
or any of its Affiliates to give notice to, obtain any consent of, or
obtain any waiver by, or any breach by an Occidental Party or any of its
Affiliates of any obligation owing to, any Person, in each case with
respect to such Occidental Party's or its Affiliates' entering into this
Agreement or performing their respective obligations hereunder.
10.5 Mitigation; Limitation on Consequential, Punitive and Exemplary
Damages; Exclusive Remedy.
(a) Each of the Parties shall mitigate, and shall cause each of
its Affiliates to mitigate, any Loss that such Party or its Affiliates
may suffer as a consequence of any matter giving rise to a right to
indemnification against any other Party or its Affiliates under Section
10 by taking all actions which a reasonable person would undertake to
minimize or alleviate the amount of such Loss and the consequences
thereof, as if such Person would be required to suffer the entire amount
of such Loss and the consequences thereof by itself, without recourse to
any remedy against another Person, including pursuant to any right of
indemnification hereunder.
(b) Notwithstanding any other provision of this Agreement, no
Indemnifying Party nor its Affiliates nor their respective agents,
employees or representatives shall be liable under Section 10 for
consequential, incidental, indirect or punitive damages or lost profits
in connection with direct claims by an Indemnified Party (i.e., a claim
by an Indemnified Party that does not seek reimbursement for a Third
Party Claim paid or
24
payable by the Indemnified Party) with respect to the indemnification
obligations under this Agreement unless any such claim arises out of the
fraudulent actions of an Indemnifying Party or its Affiliates.
(c) The rights provided to each Indemnified Party pursuant to
this Section 10, as limited by and subject to the provisions of this
Section 10, shall be such Indemnified Party's sole remedy for breach of
any representation or warranty by or covenant or obligation of any
Indemnifying Party under this Agreement or any Related Purchase
Agreement.
10.6 EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE INDEMNIFICATION OBLIGATIONS SET FORTH HEREIN, TO THE FULLEST EXTENT
PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION
UNDER SECTION 10.4 IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER
THE INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION OBLIGATION IS THE
RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY
SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT CONSTITUTES A
CONSPICUOUS LEGEND.
10.7 Procedures.
(a) In order for an Indemnified Party to be entitled to any
indemnification provided for under Sections 7.3, 10.2 and 10.3, such
Indemnified Party shall deliver written notice of a claim for
indemnification with reasonable promptness to the Indemnifying Party,
which notice shall describe in reasonable detail the nature of the claim,
an estimate of the amount of damages attributable to such claim to the
extent feasible and the basis of the Indemnified Party's request for
indemnification hereunder; provided that any failure to timely give such
notice shall not relieve the Indemnifying Party of any of its obligations
under this Section 10.7(a) except to the extent that such failure
prejudices or impairs, in any material respect, any of the rights or
obligations of the Indemnifying Party. If the Indemnifying Party disputes
its liability with respect to such claim, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a resolution
of such dispute and, if not resolved through negotiations, the
Indemnified Party may initiate a judicial proceeding in accordance with
the conditions set forth in Sections 11.10, 11.13 and 11.14.
(b) If an Indemnified Party is notified of a Third Party Claim
which may give rise to a claim for indemnification against any
Indemnifying Party under Section 10.4, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing (including
copies of all papers served with respect to such Third Party Claim),
which notice shall describe in reasonable detail the nature of the Third
Party Claim, an estimate of the amount of damages attributable to such
Third Party Claim to the extent feasible and the basis of the Indemnified
Party's request for indemnification hereunder; provided that any failure
to timely give such notice shall not relieve the Indemnifying Party of
any of its obligations under this Section 10.6(b) except to the extent
that such
25
failure prejudices or impairs, in any material respect, any of the rights
or obligations of the Indemnifying Party.
(c) Any Indemnifying Party may, and at the request of the
Indemnified Party shall, participate in and control the defense of the
Third Party Claim with counsel of its choice reasonably satisfactory to
the Indemnified Party. The Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless (i) the employment thereof
has been specifically authorized in writing by the Indemnifying Party,
(ii) the Indemnifying Party failed to assume the defense and employ
counsel or failed to diligently prosecute or settle the Third Party Claim
or (iii) there shall exist or develop a conflict that would ethically
prohibit counsel to the Indemnifying Party from representing the
Indemnified Party. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party
elects to contest, including, without limitation, by making any
counterclaim against the person or entity asserting the Third Party Claim
or any cross-complaint against any person or entity, in each case only if
and to the extent that any such counterclaim or cross-complaint arises
from the same actions or facts giving rise to the Third Party Claim. The
Indemnifying Party shall be the sole judge of the acceptability of any
compromise or settlement of any claim, litigation or proceeding in
respect of which indemnity may be sought hereunder, provided that the
Indemnifying Party shall give the Indemnified Party reasonable prior
written notice of any such proposed settlement or compromise and will not
consent to the entry of any judgment or enter into any settlement with
respect to any Third Party Claim without the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld. The
Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder) shall reimburse the Indemnified Party for its
reasonable out of pocket costs incurred with respect to such cooperation.
(d) If the Indemnifying Party fails to assume the defense of a
Third Party Claim within a reasonable period after receipt of written
notice pursuant to the first sentence of subparagraph (c), or if the
Indemnifying Party assumes the defense of the Indemnified Party pursuant
to subparagraph (c) but fails to diligently prosecute or settle the Third
Party Claim, then the Indemnified Party shall have the right to defend,
at the sole cost and expense of the Indemnifying Party (if the
Indemnified Party is entitled to indemnification hereunder), the Third
Party Claim by all appropriate proceedings, which proceedings shall be
promptly and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full control of
such defense and proceedings; provided that the Indemnified Party shall
not settle such Third Party Claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section,
and the Indemnifying Party shall bear its own costs and expenses with
respect to such participation.
26
(e) Notwithstanding the other provisions of this Section 10.7,
if the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Section 10.7 and if such dispute is resolved
in favor of the Indemnifying Party, the Indemnifying Party shall not be
required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this Section 10.7 or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all
costs and expenses of the litigation concerning such dispute. If a
dispute over potential liability is resolved in favor of the Indemnified
Party, the Indemnifying Party shall reimburse the Indemnified Party in
full for all costs of the litigation concerning such dispute.
(f) After it has been determined, by acknowledgment, agreement,
or ruling of court of law, that an Indemnifying Party is liable to the
Indemnified Party under this Section 10, the Indemnifying Party shall pay
or cause to be paid to the Indemnified Party the amount of the Loss
within ten Business Days of receipt by the Indemnifying Party of a notice
reasonably itemizing the amount of the Loss but only to the extent
actually paid or suffered by the Indemnified Party.
(g) In the event a Third Party Claim is brought in which the
liability as between the Purchaser and an Occidental Party or its
Affiliates is alleged to be joint or in which the entitlement to
indemnification under this Section 10 has not been determined, the
Purchaser and the appropriate Occidental entity shall cooperate in the
joint defense of such Third Party Claim and shall offer to each other
such assistance as may reasonably be requested in order to ensure the
proper and adequate defense of any such matter. Such joint defense shall
be under the general management and supervision of the Party which is
expected to bear the greater share of the liability, unless otherwise
agreed; provided, however, that no Party shall settle or compromise any
such joint defense matter without the consent of the other Parties, which
consent shall not be unreasonably withheld or delayed. Any uninsured
costs of such joint defense shall be borne as the Parties may agree,
provided, however, that in the absence of such agreement, the defense
costs shall be borne by the Party incurring such costs; provided,
further, that, if it is determined that one Party was entitled to
indemnification under this Section 10, the other Parties shall reimburse
the Party entitled to indemnification for all of its costs incurred in
connection with such defense.
10.8 Termination of Indemnification. The obligations to indemnify and
hold harmless any Party pursuant to Section 10.2 and 10.3 shall terminate when
the applicable representation, warranty or covenant terminates pursuant to the
terms of this Agreement; provided, however, that such obligations to indemnify
and hold harmless shall not terminate with respect to any item as to which the
Person to be indemnified shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim pursuant to
Section 10.7 to the Indemnifying Party (which notice shall identify the
representation or warranty claimed to have been inaccurate, or the covenant
claimed to have been breached, and shall state with reasonable particularity the
nature of the asserted inaccuracy or breach).
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SECTION 11
MISCELLANEOUS
-------------
11.1 Successors and Assigns. No Party may assign or delegate any of its
rights or obligations under this Agreement without the prior written consent of
all of the other Parties, which consent shall be in the sole and absolute
discretion of each such Party. Any purported assignment or delegation without
such consent shall be void and ineffective. This Agreement shall be binding upon
and inure to the benefit of the successors of each of the Parties.
11.2 Benefits of Agreement Restricted to Parties. This Agreement is
made solely for the benefit of the Parties, and no other Person (including each
Party's employees and stockholders) shall have any right, claim or cause of
action under or by virtue of this Agreement.
11.3 Notices. All notices, requests and other communications
(collectively, the "Notices") made pursuant to this Agreement shall be in
writing and signed and correctly dated by the Party sending such Notice. All
Notices shall be delivered personally (by courier or otherwise) or by facsimile
to the receiving Party at the applicable address or facsimile number set forth
below:
If to the Purchaser:
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Gerald A. O'Brien
Telecopy Number: 713-309-7312
with a copy to:
Lyondell Chemical Company
1221 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Telecopy Number: 713-652-4538
and:
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
Attention: Stephen A. Massad
Telecopy Number: 713-229-1522
28
If to an Occidental Party:
such Occidental Party
c/o Occidental Chemical Holding Corporation
5005 LBJ Freeway
Dallas, TX 75244
Attention: General Counsel
Telecopy Number: 972-404-4155
If to Occidental:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, CA 90024
Attention: General Counsel
Telecopy Number: 972-404-4155
Any Notice delivered personally shall be deemed to have been given on the date
it is so delivered, or upon attempted delivery if acceptance of delivery is
refused, and any Notice delivered by facsimile shall be deemed to have been
given on the first Business Day it is received by the addressee (or, if such
Notice is not received during regular business hours of a Business Day, at the
beginning of the next such Business Day). The address and facsimile numbers set
forth above may be changed by a Party by giving Notice of such change of address
or facsimile number in the manner set forth in this Section 11.3.
11.4 Severability. In the event that any provision of this Agreement
shall finally be determined to be unlawful, such provision shall be deemed
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect. If the economic and legal substance of the
transaction contemplated hereby is affected in any materially adverse manner as
to any of the Parties, and the Parties cannot agree on a lawful substitute
provision, the adversely affected Party shall have the right to terminate this
Agreement immediately upon notice to the other Parties.
11.5 Press Releases. Unless otherwise mutually agreed, no Party shall
make or authorize any public release of information regarding the Partnership or
any other matters contemplated by, or any provisions or terms of, this Agreement
except that (a) a press release or press releases in mutually agreed upon form
or forms shall be issued by the Parties as promptly as is practicable following
the execution of this Agreement, (b) the Parties may, after consultation with
each other, communicate with employees, customers, suppliers, stockholders,
lenders, lessors, and other particular groups as may be necessary or appropriate
and not inconsistent with the prompt consummation of the transactions
contemplated by this Agreement and (c) after consultation with the other
Parties, any Party may make any release that is required by any Legal
Requirement or stock exchange rule or as necessary for the assertion or
enforcement of contractual rights.
29
11.6 Confidentiality Agreement.
(a) Nothing in this Agreement shall be construed as impairing
or otherwise limiting the obligations assumed pursuant to any
confidentiality agreement between the parties hereto.
(b) In addition to the obligations of each Party set forth in
Section 11.6(a), each Occidental Party, from and after the Closing, with
respect to itself and to its Affiliates, agrees and covenants with the
Purchaser that it will keep confidential, and cause its and its
Affiliates' respective officers, directors, employees and advisors to
keep confidential, all information provided after the Closing Date
relating to the Occidental Partner Subs and all information relating to
the operations and business of the Partnership, except, in each case, as
required by applicable law or administrative process (to the extent so
required) (in which case the legally obligated Occidental Party shall
promptly notify the Purchaser and give the Purchaser an opportunity to
oppose such disclosure) and except for information that is available to
the public on the Closing Date, or thereafter becomes available to the
public other than as a result of a breach of this Section 11.6(b). The
covenants set forth in this Section 11.6(b) shall be effective as of
Closing Date and shall terminate ten years after the Closing Date.
11.7 Entire Agreement. This Agreement sets forth the entire agreement
and understanding among the Parties as to the subject matter hereof and merges
and supercedes all their prior discussions, agreements and understandings
related to this subject matter.
11.8 Construction. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction; (ii) no consideration shall be given to the fact or presumption
that any of the Parties had a greater or lesser hand in drafting this Agreement;
(iii) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate; (iv) the word "includes" and its syntactic variants mean
"includes, but is not limited to" and corresponding syntactic variant
expressions; (v) the plural shall be deemed to include the singular, and vice
versa; (vi) references in this Agreement to Sections, Appendices and Schedules
shall be deemed to be references to Sections of, and Appendices and Schedules
to, this Agreement unless the context shall otherwise require; (vii) all
Appendices and Schedules attached to this Agreement shall be deemed incorporated
herein as if set forth in full herein; (viii) the words "hereof", "herein" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; (ix) references to a
Person are also to its permitted successors and permitted assigns; and (x)
unless otherwise expressly provided, any agreement, instrument or statute
defined or referred to herein means such agreement, instrument or statute as
from time to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein.
30
11.9 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.
11.10 Governing Law. The laws of the State of Delaware shall govern the
construction, interpretation and effect of this Agreement without giving effect
to any conflicts of law principles.
11.11 Transaction Costs. Each Party shall be solely responsible for and
bear all of its own respective costs, fees and expenses.
11.12 Amendment. All waivers, modifications, amendments or alterations
of this Agreement shall require the written approval of each of the Parties.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including any investigation by or on behalf of any Party, shall be
deemed to constitute a waiver by the Party taking such action or compliance with
any representations, warranties, covenants or agreements contained herein and in
any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing. The waiver by any Party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
11.13 Jurisdiction; Consent to Service of Process; Waiver. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST ANY PARTY OR ANY DISPUTE UNDER OR ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN THE FEDERAL OR STATE
COURTS OF THE STATE OF DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT (AS FINALLY ADJUDICATED)
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES SHALL
APPOINT THE CORPORATION TRUST COMPANY, THE PRENTICE-HALL CORPORATION SYSTEM,
INC. OR A SIMILAR ENTITY (THE "AGENT") AS AGENT TO RECEIVE ON ITS BEHALF SERVICE
OF PROCESS IN ANY PROCEEDING IN ANY SUCH COURT IN THE STATE OF DELAWARE, AND
EACH OF THE PARTIES SHALL MAINTAIN THE APPOINTMENT OF SUCH AGENT (OR A
SUBSTITUTE AGENT) FROM THE DATE HEREOF UNTIL THE EARLIER OF THE CLOSING DATE OR
THE TERMINATION OF THIS AGREEMENT AND SATISFACTION OF ALL OBLIGATIONS HEREUNDER.
THE FOREGOING CONSENTS TO JURISDICTION AND APPOINTMENTS OF AGENT TO RECEIVE
SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS
IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE AND SHALL NOT
BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES. EACH PARTY
HEREBY WAIVES ANY OBJECTION IT MAY HAVE BASED ON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON-CONVENIENS.
31
11.14 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY AND
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 Special Joinder by Oxy LP2. Oxy LP2 is a party to this Agreement
for the sole purpose of evidencing its agreement to be bound by the provisions
set forth in Section 6.8 and shall not have any rights under this Agreement or
any other obligations under this Agreement.
11.16 Special Joinder by Occidental. Occidental is a party to this
Agreement for the sole purpose of evidencing its agreement to be bound by the
provisions set forth in Sections 6.6, 6.8, 7, 10.4 and 10.7 and shall not have
any rights under this Agreement or any other obligations under this Agreement.
11.17 Further Assurances. From time to time, at the request of any other
Party, each Party shall execute and deliver or cause to be executed and
delivered such additional documents and instruments and take all such further
action as may be necessary or desirable to consummate the transactions
contemplated by this Agreement.
32
IN WITNESS WHEREOF, this Occidental Partner Sub Purchase Agreement
has been executed on behalf of each of the Parties, by their respective officers
thereunto duly authorized, effective as of the date first written above.
LYONDELL CHEMICAL COMPANY
By: /s/ T. KEVIN DENICOLA
------------------------------------------
Name: T. Kevin DeNicola
Title: Senior Vice President, Chief
Financial Officer
OCCIDENTAL CHEMICAL HOLDING CORPORATION
By: /s/ J. R. HAVERT
------------------------------------------
Name: James R. Havert
Title: Vice President and Treasurer
OXY CH CORPORATION
By: /s/ J. R. HAVERT
------------------------------------------
Name: James R. Havert
Title: Vice President and Treasurer
OCCIDENTAL CHEMICAL CORPORATION
By: /s/ J. R. HAVERT
------------------------------------------
Name: James R. Havert
Title: Vice President and Treasurer
SPECIAL JOINDER PURSUANT TO SECTION 11.15
OCCIDENTAL PETROCHEM PARTNER 2, INC.
By: /s/ J. R. HAVERT
------------------------------------------
Name: James R. Havert
Title: Vice President and Treasurer
SPECIAL JOINDER PURSUANT TO SECTION 11.16
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ J. R. HAVERT
------------------------------------------
Name: James R. Havert
Title: Vice President and Treasurer
APPENDIX A
TO
OCCIDENTAL PARTNER SUB PURCHASE AGREEMENT
DEFINITIONS
-----------
"$75 Million Note" shall mean that certain Unsecured Promissory Note
dated as of the Closing Date by OCHC in the amount of $75 million.
"1999 Indemnity Letter Agreement" shall mean the Letter Agreement dated
as of February 16, 1999 between the Partnership and OCC providing for the OCC
Indemnity.
"1999 OCC Indemnity" shall have the meaning set forth in the 1999
Indemnity Letter Agreement.
"Affiliate" shall mean any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified; provided, however, that for purposes of this
Agreement neither the Partnership nor any entity controlled by it shall be
considered an Affiliate of the Purchaser or of an Occidental Party. For purposes
of this definition, the term "control" shall have the meaning set forth in 17
CFR 230.405, as in effect on the date hereof.
"Affiliated Group" shall mean any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"Agent" shall have the meaning set forth in Section 11.13.
"Agreement" shall mean this Occidental Partner Sub Purchase Agreement
entered into between the Parties as of the date hereof.
"Alternate Cash Consideration" shall mean the greatest of: (a) a cash
payment equal to 5.4 million shares of Lyondell Common Stock multiplied by the
Applicable Price of such shares on the effective date of the Lease Termination
Event; provided, however, that such cash payment obligation may be satisfied in
accordance with the terms of Section 5.8 of the Securities Purchase Agreement;
or (b) if there is a No Rebuilding Termination, the Proceeds.
"Applicable Price" shall mean, for any shares at any date, the average of
the Daily Prices for such shares for the 10 consecutive Business Days
immediately preceding such date.
"Appraisal" shall mean the American Appraisal Associates appraisal of the
Lake Charles Facility prepared for Occidental dated February 21, 2002.
"Authority" shall mean any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, department or instrumentality thereof, or any court or
arbitrator (public or private).
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"Business Day" shall mean any day the New York Stock Exchange, Inc. is
open for business.
"CITGO" shall have the meaning set forth in Section 6.9(a)(ii).
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Consent" shall mean any consent, waiver, approval, authorization,
exemption, registration, license or declaration of or by any other Person or any
Authority, or any expiration or termination of any applicable waiting period
under any Legal Requirement, required with respect to any Party in connection
with (i) the execution and delivery of this Agreement or (ii) the consummation
of any of the transactions provided for hereby.
"Daily Price" shall mean, on any day, the average (calculated to the
nearest thousandth) of the high and low per share sales prices of Lyondell
Common Stock for such day for sales conducted regular way on the New York Stock
Exchange, Inc., as such prices are reported on www.nysenet.com or, if not
reported thereby, another authoritative source.
"Encumbrance" shall mean any preferential right, lien, charge,
encumbrance, security interest, title defect, option or any other restriction or
third-party right.
"Escrow Agent" shall mean The Bank of New York.
"Escrow Agreement" shall mean that certain Escrow Agreement substantially
in the form of Exhibit A to be entered into as of the Closing Date between the
Escrow Agent, OCHC and the Purchaser.
"Filing" shall mean any filing with any Person or any Authority required
with respect to any Party in connection with (i) the execution and delivery of
this Agreement or (ii) the consummation of any of the transactions provided for
hereby.
"First OCC Interim Indemnity" shall have the meaning set forth in the
1999 Indemnity Letter Agreement.
"GAAP" shall mean United States generally accepted accounting principles.
"Government License" shall mean, with respect to any Person, all
licenses, permits or franchises issued by any Authority relating to the
operation, development, use, maintenance or occupancy of the facilities or any
other asset of such Person's business to the extent that such licenses, permits
or franchises relate principally to the normal operation and conduct of such
Person's business.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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"Indemnified Parties" shall mean the Purchaser Indemnified Parties and
the Occidental Indemnified Parties.
"Indemnifying Parties" shall mean the Party against whom indemnity is
sought.
"Knowledge" shall mean with respect to any Party, the actual knowledge
of any of its corporate officers.
"Lake Charles Facility" means the Plant Site, Plant, Pipeline and the
Other Assets (each as defined in the LC Lease).
"LC Lease" shall mean that certain Lease Agreement dated May 15, 1998
between OCC, as lessor, and Oxy LP1, as lessee.
"Lease Termination Event" shall mean any time that the LC Lease is
terminated, expires or is otherwise not in force and effect (other than a No
Rebuilding Termination), as such is interpreted in the Partnership Agreement.
"Legal Requirement" shall mean any law, statute, rule, ordinance,
decree, regulation, requirement, temporary or permanent injunction order or
judgment of any Authority including the terms of any Government License.
"Loss" shall have the meaning set forth in Section 10.2(a).
"Lyondell" shall mean Lyondell Chemical Company, a Delaware corporation.
"Lyondell Common Stock" shall mean the shares of common stock of Lyondell
that are traded on the New York Stock Exchange, Inc.
"Make Whole Amount" shall have the meaning set forth in Section 6.9(e).
"Millennium" shall mean Millennium Chemicals, Inc., a Delaware
corporation.
"No Rebuilding Termination" shall have the meaning set forth in the
Partnership Agreement.
"Notice" shall have the meaning set forth in Section 11.3.
"OCC" shall have the meaning set forth in the preamble to this Agreement.
"OCC Indemnity" shall mean at any time whichever, if any, is then
outstanding of the 1999 OCC Indemnity, the First OCC Interim Indemnity and the
Second OCC Interim Indemnity.
"Occidental" shall mean Occidental Petroleum Corporation, a Delaware
corporation.
"Occidental Affiliated Group" shall have the meaning set forth in Section
4.7(h).
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"Occidental Indemnified Parties" shall mean the Occidental Parties and
their Affiliates and each of their respective officers, directors, employees,
stockholders, agents and representatives.
"Occidental Material Adverse Change" shall mean a material adverse change
in the financial condition, results of operations, assets or business of the
Partnership or the Occidental Partner Subs (including their interest in the
Partnership), taken as a whole, excluding changes resulting from (i) economic or
political conditions that affect the world or any regional economy generally,
(ii) any change in raw materials prices, product prices or industry capacity or
(iii) any other matter of industry-wide application that affects the Partnership
and industry participants whose businesses are comparable thereto in a
substantially similar way.
"Occidental Material Adverse Effect" shall mean any adverse circumstance
or consequence that, individually or in the aggregate, has an effect that is
material to (i) the financial condition, results of operations, assets or
business of the Occidental Partner Subs (including their interest in the
Partnership), taken as a whole or (ii) the ability of Occidental or any
Occidental Party to perform its obligations under this Agreement.
"Occidental Parent" shall have the meaning set forth in the recitals to
this Agreement.
"Occidental Parties" shall mean OCHC, Oxy CH and OCC and, for purposes of
Sections 6.6, 6.9, 7, 10.4 and 10.7, Occidental and, for purposes of Section
6.8, Oxy LP2.
"Occidental Partner Subs" shall have the meaning set forth in the
recitals to this Agreement.
"OCHC" shall have the meaning set forth in the preamble to this
Agreement.
"Oxy CH" shall have the meaning set forth in the preamble to this
Agreement.
"Oxy GP" shall have the meaning set forth in the recitals to this
Agreement.
"Oxy GP Shares" shall mean all of the issued and outstanding shares of
common stock, par value $1.00 per share, of Oxy GP as of the date hereof.
"Oxy LP1" shall have the meaning set forth in the recitals to this
Agreement.
"Oxy LP1 Interests" shall mean all of the issued and outstanding limited
liability company interests of Oxy LP1 as of Closing.
"Oxy LP1 Shares" shall mean all of the issued and outstanding shares of
common stock, par value $1.00 per share, of Oxy LP1 as of the date hereof.
"Oxy LP2" shall have the meaning set forth in the recitals to this
Agreement.
"Oxy LP2 Shares" shall mean all of the issued and outstanding shares of
common stock, par value $1.00 per share, of Oxy LP2 as of Closing.
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"Parent" shall have the meaning set forth in the recitals to this
Agreement.
"Parent Agreement" shall mean the Amended and Restated Parent Agreement
dated May 15, 1998 among OCC, Oxy CH, Occidental, Lyondell, Millennium and the
Partnership, as amended by a First Amendment to Amended and Restated Parent
Agreement dated June 30, 1998 and modified by an Assignment and Assumption
Agreement dated June 19, 1998 among OCC, Oxy CH and OCHC.
"Parties" shall mean the Purchaser and the Occidental Parties.
"Partner Sub Stock" shall mean (i) for purposes of the date hereof, the
Oxy LP1 shares, Oxy LP2 Shares and Oxy GP Shares and (ii) for purposes of the
Closing Date, the Oxy LP1 Interests, Oxy LP2 Shares and Oxy GP Interests.
"Partnership" shall have the meaning set forth in the recitals to this
Agreement.
"Partnership Agreement" shall mean the Amended and Restated Partnership
Agreement of the Partnership dated as of August 24, 2001.
"Person" shall mean any natural person, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization.
"Plant Put Option Agreement" shall mean that certain Option to Sell
Petrochemical Plant Agreement substantially in the form of Exhibit B to be
entered into as of the Closing Date between OCC and the Purchaser.
"Plant ROFR" shall have the meaning set forth in Section 6.9(a)(i).
"Plant Sale Agreement" shall mean that certain Purchase and Sale
Agreement for the Lake Charles Facility the form of which is attached to the
Plant Put Option Agreement.
"Plant Transfer" shall mean the conveyance of the Lake Charles Facility
under and pursuant to the Plant Sale Agreement.
"Pre-Closing Tax Period" shall have the meaning set forth in Section 7.3.
"Proceeding" shall mean any action, suit, claim or legal, administrative
or arbitration proceeding or governmental investigation to which any Party or an
Affiliate is a party.
"Proceeds" shall have the meaning set forth in the Partnership Agreement.
"Purchaser" shall have the meaning set forth in the preamble to this
Agreement.
"Purchaser Indemnified Parties" shall mean the Purchaser and its
Affiliates and each of their respective officers, directors, employees,
stockholders, agents and representatives.
"Purchaser Material Adverse Change" shall mean a material adverse change
in the financial condition, results of operations, assets or business of the
Purchaser and its Subsidiaries taken as a whole, excluding changes resulting
from (i) economic or political conditions that
A-5
affect the world or any regional economy generally, (ii) any change in raw
materials prices, product prices or industry capacity or (iii) any other matter
of industry-wide application that affects the Purchaser and its Subsidiaries
taken as a whole and industry participants whose businesses are comparable
thereto in a substantially similar way.
"Purchaser Material Adverse Effect" shall mean any adverse circumstance
or consequence that, individually or in the aggregate, has an effect that is
material to (i) the financial condition, results of operations, assets or
business of the Purchaser and its Subsidiaries taken as a whole or (ii) the
ability of the Purchaser to perform its obligations under this Agreement.
"Put Right" shall have the meaning set forth in Section 6.9(d).
"Related Purchase Agreements" shall mean the Escrow Agreement, the Plant
Put Option Agreement and the $75 Million Note.
"ROFRs" shall have the meaning set forth in Section 6.9(a)(i).
"Second OCC Interim Indemnity" shall have the meaning set forth in the
1999 Indemnity Letter Agreement.
"Section 14 Escrow" shall mean the escrow account established pursuant to
the Escrow Agreement attached hereto as Exhibit A and containing the $75 Million
Note.
"Subsidiary" shall mean, with respect to any Party, any Person of which
such Party, either directly or indirectly, owns 50% or more of the equity or
voting interests.
"Tax" shall mean all taxes, charges, fees, levies or other assessment
imposed by any tax Authority, including, but not limited to, income, surtax,
remittance taxes, gross receipts, excise, profits, premium, property, sales,
use, transfer, occupation, employment, unemployment, disability, payroll,
license, ad valorem, value added, withholding, social security, registration,
national insurance (or other similar contributions or payments), stamp taxes,
customs duty, environmental taxes (including taxes under Section 59A of the
Code), capital stock, franchise, severance, alternative or add-on minimum tax,
estimated taxes, and any similar taxes (including any interest, fines, penalties
or additions attributable to, or imposed on or with respect to, any such taxes,
charges, fees, levies or other assessments).
"Tax Return" shall mean any return, form, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Termination Date" shall have the meaning set forth in Section 9.1(d).
"Third Party Claim" shall mean any allegation, claim, civil or criminal
action, proceeding, charge or prosecution brought by a person other than the
Partnership, any of its partners or their respective Affiliates.
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"Transfer" shall mean to sell, assign or otherwise in any manner dispose
of, whether by act, deed, merger or otherwise. The defined term "Transfer" is
used herein both as a noun and as a verb.
"Units" shall mean units representing interests in the Partnership as
provided for in the Partnership Agreement.
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