EXHIBIT 10.2
TABLE OF CONTENTS
PURCHASE AND SALE AGREEMENT
(PO/MTBE BUSINESS)
PART ONE:
SUBJECT MATTER OF THE AGREEMENT: DEFINITIONS
AND RULES OF CONSTRUCTION
Section 1.1 Subject Matter............................................ 1
Section 1.2 Definitions............................................... 1
Section 1.3 Rules of Construction..................................... 14
(a) General............................................... 14
(b) Parts and Sections.................................... 14
(c) Other Agreements...................................... 14
PART TWO:
PURCHASE OF PO/MTBE BUSINESS,
PURCHASE PRICE AND TRANSFER OF PO/MTBE BUSINESS
Section 2.1 Purchase and Sale of PO/MTBE Business..................... 14
Section 2.2 Purchase Price............................................ 15
Section 2.3 Transfer of the Assets, Etc............................... 15
(a) Transfer of Assets.................................... 16
(b) Assumed Liabilities................................... 16
(c) Adjusted Interim Cash Flow............................ 17
(d) Non-Assumed Liabilities............................... 17
Section 2.4 Working Capital........................................... 17
(a) Estimated Working Capital............................. 17
(b) Determination of Closing Working Capital.............. 17
(c) Adjustment Payment.................................... 18
(d) Uncollected Accounts Receivable....................... 18
Section 2.5 Payment................................................... 19
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PART THREE:
REPRESENTATIONS AND WARRANTIES
Section 3.1 Seller.................................................... 19
(a) Organization and Standing of Seller................... 19
(b) Authority............................................. 19
(c) Validity of Agreement................................. 19
(d) No Violation.......................................... 19
(e) No Consent Required................................... 20
(f) Financial Statements.................................. 20
(g) Changes............................................... 20
(h) Conduct of Business................................... 22
(i) Litigation............................................ 22
(j) No Undisclosed Liabilities............................ 22
(k) Intellectual Property Rights.......................... 23
(l) Working Capital....................................... 24
(m) Taxes................................................. 24
(n) Disclosure............................................ 25
(o) Revenues, Costs of Goods Sold and Expenses............ 25
Section 3.2 Company................................................... 26
(a) Organization and Standing of Company.................. 26
(b) Authority............................................. 26
(c) Validity of Agreement................................. 26
(d) No Violation.......................................... 26
(e) No Consent Required................................... 27
(f) Litigation............................................ 27
(g) Contracts............................................. 27
(h) Title to the Assets................................... 28
(i) Condition and Repair.................................. 29
(j) Compliance with Applicable Law........................ 29
(k) Employees............................................. 30
(l) Bank Accounts......................................... 30
(m) Inventories........................................... 30
(n) Manufacture of PO/MTBE................................ 30
(o) ERISA Plan Administration............................. 30
(p) ERISA; Qualified Plans................................ 31
(q) Supporting Assets..................................... 31
Section 3.3 Buyer..................................................... 31
(a) Organization and Standing of Buyer.................... 31
(b) Authority............................................. 31
(c) Validity of Agreement................................. 31
(d) No Violation.......................................... 31
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(e) No Consent Required................................... 32
(f) Litigation............................................ 32
(g) Corporate Documents................................... 32
(h) Subsidiaries.......................................... 32
(i) ownership of Common Stock............................. 33
(j) Buyer Capitalization.................................. 33
(k) options or Warrants................................... 33
(l) ERISA; Prohibited Transaction......................... 34
(m) Employment Offers..................................... 34
(n) Disclosure............................................ 34
Section 3.4 No Other Warranties....................................... 34
PART FOUR:
COVENANTS REGARDING PO/MTBE BUSINESS
Section 4.1 Covenants of Seller....................................... 35
(a) Conduct of Business................................... 35
(b) Access to Properties and Information.................. 37
(c) Intercompany Accounts................................. 37
(d) Seller's Non-Compete.................................. 37
(e) No Solicitation....................................... 37
(f) Title to the Properties............................... 38
(g) Citibank Lease........................................ 38
(h) Delivery of Additional Data........................... 38
(i) Merox................................................. 39
Section 4.2 Covenants of Buyer........................................ 39
(a) Performance Bonds, Guaranties, Etc.................... 39
(b) Use of Texaco ▇▇▇▇.................................... 39
(c) Accounts Receivable................................... 40
(d) Insurance Claims...................................... 40
(e) Buyer's Release of Insurance Policies................. 40
(f) Non-Assertion of Claims............................... 40
(g) Offset Rights......................................... 41
(h) Capital Structure..................................... 41
(i) Intellectual Property License......................... 41
(j) PO Sales.............................................. 41
Section 4.3 Covenants of Seller and Buyer............................. 42
(a) Compliance with Conditions Precedent.................. 42
(b) Brokers............................................... 42
(c) Certain Filings and Consents.......................... 42
(d) Press Release......................................... 43
(e) Post-Closing Access................................... 43
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(f) Further Assurances.................................... 43
(g) Transfer of Permits................................... 44
Section 4.4 Confidentiality........................................... 44
(a) Information........................................... 44
(b) Confidentiality....................................... 45
(c) Exceptions............................................ 45
(d) Legally Compelled..................................... 46
(e) Specific Information.................................. 46
(f) Expiration............................................ 47
Section 4.5 Huntsman Agreements, New Service Agreements, Etc.......... 47
(a) Huntsman Agreements................................... 47
(b) New Service Agreements................................ 47
(c) Quarterly Report...................................... 48
(d) Audit Rights.......................................... 49
PART FIVE:
COVENANTS REGARDING THE COMPANY
Section 5.1 Covenants of Seller and Buyer............................. 50
(a) Employees............................................. 50
(b) No Solicitation....................................... 50
(c) Compensation.......................................... 50
(d) No Termination........................................ 50
(e) Buyer Benefit Plans................................... 50
(f) Defined Benefit Plans................................. 51
(g) Separation............................................ 52
(h) Participant List, Etc................................. 53
(i) Defined Contribution Plans............................ 53
(j) Account Balances...................................... 53
(k) Welfare Benefit Plans................................. 54
(l) Disability............................................ 54
(m) Vacation.............................................. 54
(n) Retirees.............................................. 55
(o) Reimbursement, Etc.................................... 55
(p) Employment Claims..................................... 56
PART SIX:
ENVIRONMENTAL
Section 6.1 Definitions............................................... 56
Section 6.2 Seller's Responsibilities................................. 57
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(a) Seller's Indemnity.......................................... 57
(b) Limitations................................................. 57
Section 6.3 Buyer's Responsibilities........................................ 61
(a) Buyer's Indemnity........................................... 61
(b) Limitations................................................. 61
(c) Changes in Condition........................................ 62
Section 6.4 Covenant of Cooperation......................................... 63
Section 6.5 Performance of Remedies......................................... 64
(a) Performance of Work......................................... 64
(b) Performance of Remediation.................................. 65
(c) Seller's Satisfaction of Responsibilities................... 66
(d) Access...................................................... 67
Section 6.6 Environmental Assessments....................................... 67
(a) Phase I Environmental Assessment............................ 67
(b) Industry Practice........................................... 67
Section 6.7 Procedure for Claiming Reimbursement............................ 67
Section 6.8 Exclusive Remedies.............................................. 68
PART SEVEN:
INDEMNIFICATION
Section 7.1 Seller's Indemnification........................................ 68
Section 7.2 Buyer's Indemnification......................................... 68
Section 7.3 Defense of Action............................................... 69
Section 7.4 Payments........................................................ 70
(a) Indemnity Payments.......................................... 70
(b) Tax Benefit................................................. 70
(c) Additional Indemnity Tax.................................... 70
PART EIGHT:
TAXES
Section 8.1 Sales and Transfer Taxes........................................ 71
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Section 8.2 Tax Proceedings.................................................. 71
Section 8.3 Payment and Apportionment of Real and Personal Property Taxes.... 72
(a) Real and Personal Property Taxes............................. 72
(b) Liability and Right to Pursue Claims......................... 72
Section 8.4 Allocation of the Purchase Price................................. 72
Section 8.5 Cooperation...................................................... 73
(a) Real Property Tax Assessment................................. 73
(b) Access to Tax Documents...................................... 73
Section 8.6 Equity........................................................... 74
Section 8.7 FIRPTA Certificate............................................... 74
Section 8.8 Preservation of Records.......................................... 74
Section 8.9 Conflict......................................................... 75
PART NINE:
CONDITIONS PRECEDENT
Section 9.1 Conditions Precedent of Buyer.................................... 75
(a) Representations and Warranties True at Closing............... 75
(b) Compliance with Agreement.................................... 75
(c) Certified Resolutions and Officers' Certificate.............. 75
(d) Approval of Proceedings...................................... 76
(e) Opinion of Counsel........................................... 76
(f) Injunction................................................... 76
(g) Consents..................................................... 76
(h) Engineering Service Agreements............................... 76
Section 9.2 Conditions Precedent of Seller................................... 77
(a) Representations and Warranties True at Closing............... 77
(b) Compliance with Agreement.................................... 77
(c) Certified Resolutions and Officers' Certificate.............. 77
(d) Approval of Proceedings...................................... 77
(e) Opinion of Counsel of Buyer.................................. 78
(f) Injunction................................................... 78
(g) Consents..................................................... 78
(h) Engineering Service Agreement................................ 78
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(i) MTBE Supply Agreement....................................... 78
PART TEN:
MISCELLANEOUS
Section 10.1 Notices......................................................... 78
Section 10.2 Modification.................................................... 79
Section 10.3 Governing Law................................................... 79
Section 10.4 Assignment...................................................... 79
(a) No Assignment............................................... 79
(b) Assignment Rights........................................... 80
(c) Related Party Assignment.................................... 80
(d) Financing................................................... 81
(e) Structured Sale............................................. 81
Section 10.5 Counterparts.................................................... 81
Section 10.6 Invalidity...................................................... 82
Section 10.7 Entire Agreement and Construction............................... 82
Section 10.8 Expenses........................................................ 83
Section 10.9 Waivers and Amendments.......................................... 83
Section 10.10 Survival of Representations and Covenants....................... 83
Section 10.11 Section Headings................................................ 84
Section 10.12 Termination..................................................... 84
Section 10.13 Dispute Resolution.............................................. 85
(a) Generally................................................... 85
(b) Violations.................................................. 85
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PURCHASE AND SALE AGREEMENT
(PO/MTBE BUSINESS)
THE AGREEMENT, dated as of March 21 1997, entered into among Texaco Inc., a
Delaware corporation, having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Seller"), Texaco Chemical Inc., a Delaware corporation, having
an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Company") and
Huntsman Specialty Chemicals Corporation, a Delaware corporation having an
office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Buyer").
PART ONE
SUBJECT MATTER OF THE AGREEMENT: DEFINITIONS
AND RULES OF CONSTRUCTION
Section 1.1 Subject Matter. The subject matter of the Agreement is: (i)
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the sale to Buyer by Seller, the Company and TDC, as the case may be, of the
Assets; (ii) the purchase by Buyer of the Assets; (iii) the assumption of the
Assumed Liabilities by Buyer; and (iv) the terms and conditions upon which the
foregoing transactions shall take place.
Section 1.2 Definitions. For purposes of the Agreement, except as otherwise
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expressly provided herein, the terms defined in this Section 1.2 have the
meanings herein assigned to them, and the capitalized terms defined elsewhere in
the Agreement by inclusion in quotation marks and parentheses have the meanings
so ,ascribed to them.
"Adjusted Interim Cash Flow" means a positive or negative amount, as
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the case may be, equal to the sum of:
(a) The sum (expressed as a positive amount) of:
(i) collections received on notes and accounts receivable of the
PO/MTBE Business after the Effective Date and ending with the Closing
Date, whether collected by the Company or by Seller or its Affiliates,
excluding intercompany accounts other than Included Intercompany
Accounts;
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(ii) current liabilities of the PO/MTBE Business, other than Excluded
Liabilities and excluding intercompany accounts other than Included
Intercompany Accounts, which existed at the Effective Date but were not
included on the Final Statement,
(iii) the value of any claims or rights under Contracts relating to
the PO/MTBE Business which Seller or any Affiliate has disposed of,
waived or permitted to lapse on or after the Effective Date,
(iv) the value of any debts owed to the PO/MTBE Business which were
cancelled after the Effective Date and prior to the Closing Date
excluding intercompany accounts other than Included Intercompany
Accounts, and
(v) to the extent not included in clause (a) (i) above the value of
the proceeds from the transfer or other disposition of any Asset, other
than Excluded Assets, disposed of by Seller or any Affiliate on or
after the Effective Date, and
(b) the sum (expressed as a negative amount) of:
(i) the sum of payments made by the Company or by any Affiliate
after the Effective Date and ending with the Closing Date with respect
to:
(x) Assumed Liabilities; and
(Y) Other current liabilities of the PO/MTBE Business excluding:
the Citibank lease and the termination thereof; Taxes relating
to periods prior to and ending with the Effective Date and
Income Taxes after the Effective Date; all fees and expenses
relative to the Agreement and related transactions; and
intercompany accounts other than Included Intercompany Accounts;
(ii) current Assets of the PO/MTBE Business other than Excluded
Assets, cash, cash equivalents, deferred Income Taxes, and excluding
intercompany accounts other than Included Intercompany Accounts which
existed at
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the Effective Date but were not included on the Final Statement; and
(iii) to the extent not included in either (b)(i)above or in the Final
Statement, the prorated (by calendar days) expenses of the PO/MTBE
Business for the period after the Effective Date and ending on the
Closing Date for Employees' salaries and wages, employee plans and
benefits, payroll Taxes and redistributed expenses charged for service
department activity, but excluding salaries and wages expenses for
bonus payments, in all cases in the ordinary course of business.
"Affiliate" means, with respect to any specified Person, any other
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Person, directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of
this definition, "control" (including, with correlative meanings,
"controlling", "controlled by", and "under common control with") means the
power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and, it being understood and agreed
that with respect to a corporation or partnership, control shall mean direct
or indirect ownership of more than fifty percent (%50 of the voting stock or
general partnership interest or voting interest in any such corporation or
partnership.
"Agreement" means this Purchase and Sale Agreement (PO/MTBE Business),
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including the Schedules and Exhibits hereto.
"Assets" means the PO/MTBE Assets and the Intellectual Property.
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"Assumed Liabilities" means (i) current liabilities of the Company as
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of the Effective Date relating to the PO/MTBE Business which were both
incurred in the ordinary course of business and set forth on the Final
Statement, it being understood that, except for Included Intercompany
Accounts, all other intercompany accounts (representing amounts due from or
payable to Seller or Seller's Affiliates by the Company) for activity
occurring prior to and
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including the Effective Date, shall be excluded, (ii) obligations of the
Company arising and relating to periods after the Effective Date under the
Contracts relating to the PO/MTBE Business made prior to the Closing Date,
in the ordinary course of business consistent with past practices (other
than (x) the Contracts set forth on Schedule 3.2(g), (y) the Contracts set
forth on Schedule 2.3(c) and (z) any such other ordinary course Contracts
with Seller or any of its Affiliates), (iii) obligations of the Company
arising and relating to periods after the Effective Date under Contracts as
set forth on Schedule 3.2 (g) (other than the Contracts set forth on 2.3(c))
and (iv) capital expenditure obligations arising after the Effective Date
under contracts made prior to the Effective Date by or on behalf of the
Company pursuant to the asterisked Huntsman Agreements as set forth on
Schedule 4.1(b)in the ordinary course of business consistent with past
practice.
"Business Day" means a day on which banks are open for business in New
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York City.
"Capital Charge" means the product of Five Hundred Seventy Six Million
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Five Hundred Thousand Dollars ($576,500,000) multiplied by the one month
LIBOR rate as posted on Page 3750 of the Telerate as of the Effective Date
plus 3/8% for the number of days, if any, from but not including the
Effective Date to and including the Closing Date divided by Three Hundred
Sixty (360) days.
"Closing" means the closing of the transactions contemplated by the
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Agreement at 10:00 a.m. New York time, at Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ on the Closing Date, or at
such other time or place as the Parties may mutually agree upon in writing.
"Closing Date" means the third Business Day after the date on which all
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of the conditions to all Parties', obligations hereunder have been
satisfied, unless waived by the appropriate Party, or such later date as
shall be agreed upon in writing by the Parties, but in no event later than
March 31, 1997; provided, however, that such date shall be reasonably
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extended by Seller if requested by Buyer, due to delay in receiving material
governmental reviews and
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approvals; and provided, further, that unless Buyer shall have consented
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thereto in writing, such date shall not be prior to March 31, 1997.
"Code" means the United States Internal Revenue Code of 1986, as
----
amended.
"Confidentiality Agreements" means the agreements set forth in Schedule
--------------------------
1.2.
"Consolidated Return" means a return with respect to any Taxes that is
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filed on a consolidated, combined or unitary basis.
"Contractor" means a contract employee who primarily works in the
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Huntsman chemical operations and the PO/MTBE Business.
"Contracts" means contracts, commitments, understandings, binding
---------
arrangements and other agreements of any kind or nature, written or oral,
including leases of real and personal property.
"Corporate Documents" means the Certificate of Incorporation and By-
-------------------
Laws of a Delaware corporation or the equivalent documents of a corporation
organized under the Laws of another Governmental Body.
"Effective Date" means the (i) Closing Date, if the Closing occurs on
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the last day of any calendar month, or (ii) if the Closing does not occur on
the last day of a calendar month, the last day of the calendar month
immediately preceding the calendar month in which the Closing occurs.
"Employees" means the individuals who were employed by the Company,
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Seller or its Affiliates as set forth on Schedule 3.2(k)and engaged in the
PO/MTBE Business as of the date of the Agreement and as updated as of the
Closing Date to eliminate individuals whose employment terminated prior to
the Closing Date and to add individuals who were employed after the date of
the Agreement and remained employed to the Closing Date.
"Encumbrances" means liens, charges, mortgages, pledges, security
------------
interests, claims, defects of title, restrictions and any other rights of
third
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parties, including rights of set-off, voting trusts, transfers or receipt of
income or other exercise of any attributes of ownership.
"Excluded Assets" means the assets and intangible assets owned, leased
---------------
or otherwise controlled by the Company, as set forth on Schedule 2.3(c).
"Excluded Liabilities" means current liabilities as of the respective
--------------------
balance sheet date for: repairs and maintenance, all liabilities under the
Citibank Lease, including, without limitation, liabilities for excess cash
drawn but not used for construction expenditures, and accruals for Taxes.
"Financial Statements" means the balance sheets of the Company as at
--------------------
December 31, 1994, 1995 and 1996, the related statements of income and
retained earnings and statements of cash flows for the years then ended,
audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, as indicated in its report.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession of the United States of America, which are in
effect as of the Closing Date and when used in connection with all or part
of the PO/MTBE Business means as consistently applied by the Seller and the
Company, as the case may be.
"Governmental Body" means any domestic or foreign national, state,
-----------------
provincial, municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental or private body
exercising any regulatory or taxing authority thereunder.
"Huntsman" means Huntsman Petrochemical Corporation, a Delaware
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corporation having an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇.
"Huntsman Agreements" means the agreements as
-------------------
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set forth on Schedule 4.1(b).
"Huntsman's Interim Knowledge Matter" means any fact, circumstance or
-----------------------------------
condition arising or occurring after the time at which the Agreement is
executed and delivered by Buyer but on or before the Closing Date with
respect to the existing operations and condition of the PO/MTBE Business of
which, during such period any director, officer, employee or Contractor of
Huntsman or any of its Affiliates had actual knowledge in connection with
Huntsman's performance of the Huntsman Agreements; provided however, that no
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such fact, circumstance or condition shall constitute a Huntsman's Interim
Knowledge Matter unless, during such period, such Person knew or reasonably
should have known the effect of such fact, circumstance or condition on the
PO/MTBE Business.
"Huntsman's Knowledge Matter" means any fact, circumstance or condition
---------------------------
with respect to the existing operations and condition of the PO/MTBE
Business of which, prior to or as of the time at which the Agreement is
executed and delivered by Buyer, any director, officer, employee or
Contractor of Huntsman or any of its Affiliates had actual knowledge in
connection with Huntsman's performance of the Huntsman Agreements; provided
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however, that no such fact, circumstance or condition shall constitute a
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Huntsman's Knowledge Matter unless, prior to or as of such time, such Person
knew or reasonably should have known the effect of such fact, circumstance
or condition on the PO/MTBE Business.
"Included Intercompany Accounts" means amounts due from or payable to
------------------------------
Seller or Seller's Affiliates to or by the Company pursuant to the Contracts
set forth in Schedule 2.4(b) during the calendar month of the respective
balance sheet date.
"Income Tax" means any federal, alternative minimum, state, local or
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foreign income, franchise or similar Tax and in each instance any interest,
penalties or additions to Tax attributable to such Tax.
"Indefeasible" means, with respect to any real property owned or any
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other real property interest owned, that such real property or interest in
real property cannot be revoked, defeated or voided with
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the exception of minor imperfections such as shortages in areas or gaps in
parcels which, individually or in the aggregate, do not materially impair
the use of such real property or real property interest.
"Insurance Policy" means any commercial policies of insurance covering,
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prior to the Closing Date,(i) property damage to the PO/MTBE Assets
(including business interruption), and (ii) liability of the Seller or the
Company including any of their respective employees, directors, officers or
agents.
"Intellectual Property" means intellectual and similar property of
---------------------
every kind and nature, primarily relating to or presently used in the
operation of the PO/MTBE Business including, without limitation, (i) Patents
set forth on Schedule 3.1(k)(ii), (ii) trademarks associated solely with the
PO/MTBE Business excluding all marks containing "Texaco" or "Tex" as a
prefix or suffix or those marks containing the Star T design logo (but
including all Governmental Body trademarks, service marks, logos and
designs, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications
in the United States Patent and Trademark office, any state of the United
States or any other Governmental Body, all goodwill symbolized thereby or
associated therewith and all extensions or renewals thereof which are set
forth on Schedule 3.1(k)(ii)), (iii) copyrights associated solely with the
PO/MTBE Business (including all copyrights, United States and foreign
copyright registrations, and applications to register copyrights which are
set forth on Schedule 3.1(k)(ii)), (iv) inventions, formulae, processes,
engineering data, designs, know-how, show-how, confidential or proprietary
technical and business information and trade secrets or other data or
information, (v) Computer Software,(vi) technical manuals and documentation
made or used in connection with any of the foregoing, (vii) except for
Computer Software, licenses and similar agreements granting to any Person
rights with respect to any of the foregoing, and (viii) except for Computer
Software, all licenses and similar agreements with any Person granting to
Seller, TDC or the Company or its predecessors in interest any rights
relating to the design, development,
8
construction and utilization (including operation and maintenance) of the
PO/MTBE Assets.
"IRS" means the Internal Revenue Service of the United States.
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"Laws" means all applicable statutes, laws, rules, regulations, orders,
----
ordinances, judgments and decrees of any Governmental Body, including,
without limitation, the common or civil law of any Governmental Body, and
guidelines that are given the force of law pursuant to any statutes, laws,
rules, regulations, orders, ordinances, judgments and decrees of any
Governmental Body.
"Marketable" means, with respect to any real property owned or other
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real property interest owned, that such real property or other real property
interest is free from all Encumbrances, except Permitted Encumbrances.
"MTBE" means methyl tertiary butyl ether and other lower alkyl tertiary
----
butyl ethers.
"MTBE Supply Agreement" means the MTBE Supply Agreement, substantially
---------------------
in the form of Exhibit A to be entered into between Seller and Buyer or
their respective Affiliates as of the Closing Date.
"Party" means any of Buyer or Seller.
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"Patents" means all United States and foreign patents, patent
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applications and patent disclosures, including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions or renewals
of any of the foregoing.
"Patent Assignment Agreements" means the agreements conveying to the
----------------------------
Buyer the Patents related to the PO/MTBE Business, substantially in the
forms attached hereto as Exhibit B.
"Permitted Encumbrances" means (i) Encumbrances for Taxes, governmental
----------------------
charges or levies on property not yet due and delinquent and (ii) oil and
gas leases, mineral rights, royalty interests in minerals, easements, rights
of way, licenses, real property leases, encroachments and other minor
imperfections of title, which do not, individually or
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in the aggregate, materially impair the use of any real property or any
property interest or materially impair the use of any other PO/MTBE Asset,
or (iii) the Encumbrances set forth in Schedule 2.1. Permitted Encumbrances
shall not include any Encumbrance which evidences or secures payment for a
sum of borrowed money.
"Person" means any individual, partnership, firm, trust, association,
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corporation, joint venture, unincorporated organization, other business
entity or Governmental Body.
"PG" means propylene glycol.
--
"PO" means propylene oxide.
--
"PO/MTBE" means PO and MTBE individually or collectively, as the case
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may be, from time to time.
"PO/MTBE Assets" means, collectively, tangible and intangible assets
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and property, real, personal and mixed, owned, leased or otherwise
controlled by the Company or, if any, by Seller or any of Seller's other
Affiliates in the operation of the PO/MTBE Business, including, but not
limited to: (i) fixed assets, including land, land improvements, buildings,
fixtures, machinery and equipment, tools, furniture, furnishings, plant and
office equipment, process development area equipment at Austin, Texas,
leasehold improvements and vehicles; (ii) inventories, including supplies,
raw materials, work-in-process, finished goods and goods-in-transit from
suppliers or manufacturers; (iii) sales and sales promotional data,
advertising materials, customer lists, supplier lists and business plans and
other books and records; (iv) Contracts to the extent set forth in Clauses
(ii) and (iii) of the definition of Assumed Liabilities; (v) accounts and
notes receivable; (vi) prepaid Taxes (other than prepaid Income Taxes),
prepaid rent, prepaid supplies, advances and other prepaid expenses and
deposits; (vii) goodwill; and (viii) Supporting Assets; but specifically
excluding the Intellectual Property, the Excluded Assets and current assets
excluded from Closing Working Capital as set forth in Section 2.4(b).
"PO/MTBE Business" means the business and
----------------
10
operations conducted by or on behalf of the Company with respect to (i) the
manufacturing of PO or MTBE at the Company's Port Neches, Texas plant and
the marketing, sale and distribution of MTBE from the Company's Port Neches,
Texas plant or of PO and (ii) the rights of the Company to have PG
manufactured by Huntsman at Huntsman's Port Neches, Texas plant, and the
marketing, sale and distribution of such PG.
"Regulations" means the Income Tax regulations issued with respect to
-----------
the Code.
"Supporting Assets" means all of the Company's right, title and
-----------------
interest in the cogeneration plant and related land at Port Neches, Texas
and related Contracts and in the waste water treatment plant and related
land at Port Neches, Texas and related Contracts.
"Tax" means taxes of any kind, levies or other like assessments,
---
customs, duties, imposts, charges, or fees, including, without limitation,
income, minimum, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction,
capital, net worth and franchise taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains
taxes or other governmental taxes imposed by or payable to the United States
or any state, county, local or foreign government or subdivision or agency
thereof, and in each instance such term shall include any interest,
penalties or additions attributable thereto.
"TDC" means Texaco Development Corporation, a Delaware Corporation
---
having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Termination Date" means May 1, 1997; provided, however, that if any
---------------- -------- -------
Governmental Body approval required for the consummation of the transactions
contemplated hereby is not received then the Termination Date shall be
extended for each day that such Governmental Body approval has not occurred
after May 1, 1997, but in no event shall the Termination Date be extended
beyond June 1, 1997.
11
"Third Party Action" means any claim, demand, action, suit or
------------------
investigation made or instituted by a Person other than a member of the
Buyer Group or Seller Group for which an Indemnified Party may be entitled
to indemnification pursuant to the Agreement.
"Transfer Date" means (i) the Closing Date, if the Closing occurs on
-------------
the first day of any calendar month, or (ii) if the Closing does not occur
on the first day of a calendar month, the first day of the calendar month
immediately following the calendar month in which the Closing occurs.
"Working Capital" means current assets less current liabilities
---------------
determined in accordance with GAAP consistently applied, as adjusted in
accordance with Section 2.4(b).
"Other Definitions" The following terms have the meanings ascribed to
-----------------
them in the Sections noted:
"Acquisition"............................... 4.1(e)
"Additional Indemnity Taxes"................ 7.4
"Adjustment Date"........................... 2.4(c)
"Allocation Statement"...................... 8.4
"Assumption Agreement"...................... 2.3(b)
"Auditors".................................. 2.3(c)
"Audits".................................... 3.1(m) (iv)
"BSRP"...................................... 5.1(f)
"Buyer Benefit Plans"....................... 5.1(e)
"Buyer Group"............................... 7.1
"Buyer's Pre-Closing Indemnity"............. 6.3(a)(ii)
"CAD"....................................... 6.2(b) (ix)
"Cash Flow Statement"....................... 2.3(c)
"Cash Portion".............................. 2.2
"Change".................................... 6.3(c)
"Citibank Lease"............................ 4.1(g)
"Claim"..................................... 10.10
"Claim Termination Date".................... 10.10
"Closing Statement"......................... 2.4(b)
"Closing Working Capital"................... 2.4(b)
"Common Stock".............................. 3.3(i)
"Computer Software"......................... 2.3(a)
"DCA Plume"................................. 6.1
"Defined Benefit Plans...................... 5.1(f)
"Defined Contribution Plans"................ 5.1(i)
"Delivering Party".......................... 10.14
"Disclosing Party".......................... 4.4(a)
12
"Easements"................................. 3.2(h)(iii)
"Engineering Service Agreement"............. 9.1(h)
"Enhancements".............................. 6.5(b)
"Environmental Claims"...................... 6.1
"Environmental Condition"................... 6.1
"Environmental Law"......................... 6.1
"Environmental Losses"...................... 6.1
"ERISA"..................................... 3.2(o)
"Estimated Working Capital"................. 2.4(a)
"Excluded Marks"............................ 4.2(b)
"Final Statement"........................... 2.4(b)
"Financing Person".......................... 10.4(d)
"$40 Million Cap"........................... 6.2(a)
"HSR"....................................... 4.3(c)
"Huntsman Group"............................ 12.4
"Indemnified Member"........................ 7.4
"Indemnified Party"......................... 7.3
"Indemnifying Party"........................ 7.3
"Individual Deductible"..................... 6.1
"Information"............................... 4.4(a)
"Intellectual Property Licenses"............ 3.1(k) (iii)
"Intersecurity Documents"................... 2.2
"Leased Properties"......................... 3.2(h) (v)
"Liabilities"............................... 7.1
"New Defined Benefit Plans"................. 5.1(f)
"New Defined Contribution Plans"............ 5.1(i)
"New Welfare Benefit Plans"................. 5.1(k)
"Non-Assumed Liabilities"................... 2.3(d)
"Normal Retirement Benefits"................ 5.1(f)
"Offset".................................... 4.2(g)
"Off-Site Waste Disposal"................... 6.2(b)(ii)
"Other Party"............................... 10.14
"Phase I Environmental Assessment".......... 6.1
"PPI"....................................... 6.3(b)(iii)
"Preferred Stock"........................... 2.2
"Property".................................. 3.2(h)(i)
"Purchase Price"............................ 2.2
"Real and Personal Property Taxes".......... 8.3(a)
"Receiving Party"........................... 4.4(a)
"Remediation"............................... 6.1
"Remediation Plan........................... 6.1
"Representatives"........................... 4.4(a)
"Seller Group".............................. 7.2
"Seller's Indemnity Period"................. 6.3(b)(i)
"Structured Sale"........................... 10.4
"Tank Waste Disposal"....................... 6.2(b)(ii)
"Tax Benefit"............................... 7.4
"Transaction Deductible".................... 6.1
"Transferred Employees"..................... 5.1(a)
13
"Uncollected Receivables"................... 2.4(d)
"Welfare Benefit Plans"..................... 5.1(k)
Section 1.3 Rules of Construction. For purposes of the Agreement:
---------------------
(a) General. Unless the context otherwise requires: (i) "or" is not
-------
exclusive; (ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; (iii) words in the singular include
the plural, and words in the plural include the singular; (iv) words in the
masculine include the feminine and words in the feminine include the
masculine; (v) any date specified for any action that is not a Business Day
shall be deemed to mean the first Business Day after such date; and (vi)
reference to a corporation, a limited liability company or a partnership
includes such corporation's, limited liability company's or partnership's
successors and assigns.
(b) Parts and Sections. References to Parts and Sections are, unless
------------------
otherwise specified, to Parts and Sections of the Agreement. Neither the
captions to Parts or Sections thereof nor the Table of Contents shall be
deemed to be a part of the Agreement.
(c) Other Agreements. References herein to any agreement or other
----------------
instrument shall, unless the context otherwise requires (or the definition
thereof otherwise specifies), be deemed references to the same as it may
from time to time be changed, amended or extended. There is no incorporation
by reference herein unless expressly so stated. All Schedules and Exhibits
are deemed to be incorporated herein by reference.
PART TWO:
PURCHASE OF PO/MTBE BUSINESS,
PURCHASE PRICE AND TRANSFER OF PO/MTBE BUSINESS
Section 2.1 Purchase and Sale of PO/MTBE Business. At the Closing, Seller
-------------------------------------
shall sell, transfer, assign and deliver or cause to be sold, transferred,
assigned and delivered to Buyer the Assets, free and clear of all Encumbrances
except Permitted Encumbrances, and Buyer shall purchase, receive and accept the
Assets and assume the Assumed Liabilities.
14
Section 2.2 Purchase Price. The purchase price of the Assets shall be
--------------
Five Hundred Seventy-Seven Million Five Hundred Thousand Dollars ($577,500,000)
as adjusted in accordance with Section 2.4 (the "Purchase Price") . The Purchase
Price shall be payable as follows: (a) on December 24, 1996, One Million Dollars
($1, 000, 000) was paid by or on behalf of Buyer to Seller, (b) at the Closing
Buyer shall deliver (i) to Seller, Five Hundred Eleven Million Five Hundred
Thousand Dollars ($511,500,000) ("Cash Portion") and (ii) to the Company, Sixty
Five Thousand (65, 000) shares of nonvoting, cumulative preferred stock, par
value $1 per share, of Buyer, with an aggregate stated value of Sixty-Five
Million Dollars ($65,000,000) and with the rights and preferences set forth on
Schedule 2.2 (ii) (b) (ii) (the "Preferred Stock") and (c) after the Closing,
the adjustments contemplated by Sections 2.3 (c) and 2.4 shall be made. On or
prior to the Closing, the agreements, and documents and letters with lenders,
third party junior subordinated debt holders, Seller, the Company or other
Persons with terms and restrictions as set forth in Schedule 2.2(ii)(b)
(collectively "Intersecurity Documents") shall be executed and delivered. The
Cash Portion of the Purchase Price shall be payable by Buyer to Seller at the
Closing. The Preferred Stock and Intersecurity Documents shall be dated as of
the Closing Date. The Preferred Stock shall be delivered by the Buyer to the
Company at the Closing. The Purchase Price allocation is agreed to by the
Parties as set forth in Schedule 2.2.
Section 2.3 Transfer of the Assets, Etc. The transfer of the Assets and
---------------------------
assumption of Assumed Liabilities shall be effected as follows:
(a) Transfer of Assets. At the Closing, Seller shall execute and
------------------
deliver or cause to be executed and delivered such certificates, deeds of
trust, bills of sale, assignments or other deeds or documents, if any, as
are reasonably required to effect the transfer of the Assets, including
without limitation, the documents set forth on Schedule 2.3(a)(i). The
Assets to be transferred shall include computer software presently used in
the PO/MTBE Business and all licenses therefor, but excluding (i) Seller's
or its Affiliates, proprietary computer software presently used both in
Seller's or its Affiliates, business and in the PO/MTBE Business as set
forth on Schedule 2.3 (a) (ii) (provided that at Buyer's request, Seller
shall grant Buyer a royalty-free, irrevocable, nonexclusive license to use
any of such proprietary software in the PO/MTBE Business, excluding Seller's
or its Affiliates main frame software), (ii) the copyright in, but not
licenses to use, third party computer software licensed to the Company,
Seller, or Huntsman and presently used, or provided by Huntsman pursuant to
service agreements, in the PO/MTBE
15
Business, excluding Seller's or its Affiliates main frame software), (ii)
the copyright in, but not licenses to use, third party computer software
licensed to the Company, Seller, or Huntsman and presently used, or provided
by Huntsman pursuant to service agreements, in the PO/MTBE Business and
(iii) Huntsman's or its Affiliates' proprietary computer software used for
the benefit of the PO/MTBE Business (such software which is included in the
Assets is referred to herein as "Computer Software").
(b) Assumed Liabilities. At the Closing, Buyer and the Company shall
-------------------
enter into an assumption agreement to assume the Assumed Liabilities
substantially in the form of Exhibit C ("Assumption Agreement").
(c) Adjusted Interim Cash Flow. The following is applicable only if
--------------------------
the Closing Date does not occur on the last day of the calendar month.
Seller shall cause the Company to keep accurate records of the Adjusted
Interim Cash Flow as if the cash flow had been held separate as set forth in
this Section 2.3(c) and Buyer and its Affiliates shall reasonably cooperate
with the Company in keeping accurate records. Seller shall calculate the
amount of the Adjusted Interim Cash Flow (the "Cash Flow Statement") as
promptly as possible after the Closing Date, but in no event later than
thirty (30) days after the final determination of Closing Working Capital.
Buyer shall have forty-five (45) days after receipt to review the Cash Flow
Statement. Buyer and its representatives shall be entitled to review the
work papers, schedules, memoranda and other documents used by Seller in
preparation of the Cash Flow Statement. If Seller and Buyer agree on the
resolution of all matters relating to the Cash Flow Statement within such
forty-five (45) day period, the Cash Flow Statement shall be final and
binding. If Seller and Buyer shall fail to reach an agreement within such
forty-five (45) day period, then all disagreements shall be submitted for
resolution to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Deloitte & Touche (the "Auditors").
The Auditors shall have up to thirty (30) days after such submission to
resolve the dispute submitted to the Auditors which resolution shall be
final and binding on the Parties. In the event that the final determination
of the Adjusted Interim Cash Flow is a positive amount, Seller shall pay to
Buyer any remaining positive amount, after the deduction from such original
positive amount of the Capital Charge, within ten (10) Business Days. In the
16
event that the final determination of the Adjusted Interim Cash Flow is a
negative amount, Buyer shall pay such amount to Seller within ten (10)
Business Days. The fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall be paid by
Seller and the fees and expenses of Deloitte & Touche shall be paid by
Buyer.
(d) Non-Assumed Liabilities. Except as otherwise expressly provided
-----------------------
for in the Agreement and the transactions contemplated herein, the Parties
agree that Buyer has not agreed to pay, assume or be liable for any
liabilities or obligations of the PO/MTBE Business or of Seller or its
Affiliates related to the PO/MTBE Business ("Non-Assumed Liabilities").
Section 2.4 Working Capital. Buyer and Seller agree as follows:
---------------
(a) Estimated Working Capital. The estimated amount of the Closing
-------------------------
Working Capital ("Estimated Working Capital") shall be Forty Four Million
Three Hundred Three Thousand Nine Hundred Fifty Two Dollars ($44,303,952)
and Seller has provided to Buyer the basis for the calculation.
(b) Determination of Closing Working Capital. As promptly as
----------------------------------------
practicable after the Closing Date (but in no event later than ninety (90)
days after the Closing Date), Buyer shall prepare a statement of the Closing
Working Capital (the "Closing Statement"). The Closing Statement shall be
prepared on the same basis as the Estimated Working Capital, which in both
cases exclude all intercompany accounts other than Included Intercompany
Accounts, Excluded Assets, cash and cash equivalents, Excluded Liabilities
and deferred Income Taxes. Seller shall have forty five (45) days after
receipt to review the Closing Statement and to discuss resolution of the
Closing Statement. Seller and its representatives shall be entitled to
review the work papers, schedules, memoranda and other documents used by
Buyer in preparation of the Closing Statement. If Seller and Buyer agree on
the resolution of all matters relating to the Closing Statement within such
forty five (45) day period, the Closing Statement shall be final and binding
("Final Statement"), and shall set forth the Working Capital included in the
PO/MTBE Assets as of the Effective Date ("Closing Working Capital"). If
Seller and Buyer shall fail to reach an agreement with respect to all
matters relating to the Closing Statement within
17
such forty five (45) day period, then all disagreements shall be submitted
for resolution to the Auditors. The Auditors shall have up to thirty (30)
days after such submission to resolve the disputes submitted to the Auditors
and shall determine the Closing working Capital which determination shall be
final and binding on the Parties. The fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP shall be paid by Seller and the fees and expenses of Deloitte & Touche
shall be paid by Buyer and the Final Statement shall be adjusted
accordingly.
(c) Adjustment Payment. Within ten (10) Business Days after the final
------------------
determination of the Closing Working Capital ("Adjustment Date"): (i) in the
event that the Closing Working Capital exceeds the Estimated Working
Capital, the Buyer shall pay to Seller the amount of the excess; or (ii) in
the event that the Closing Working Capital is less than the Estimated
Working Capital, Seller shall pay to Buyer the amount of the shortfall. In
the event the amounts set forth in Section 5.1(o) as payable by Buyer to
Seller have not been paid, the adjustment payment shall include
reimbursement for amounts set forth in Section 5.1(o).
(d) Uncollected Accounts Receivable. The Seller shall promptly
-------------------------------
purchase all notes and accounts receivable of the PO/MTBE Business included
in the Closing Working Capital, which have not been collected by the
Ninetieth (90th) Day following the Closing Date and the Two Hundred Tenth
(210/th/) day for non-U.S. shipments which have payment terms more than
Ninety (90) days ("Uncollected Receivables"). The purchase price for the
Uncollected Receivables shall be the aggregate face amount thereof (net of
the aggregate reserves for bad debts relating to such receivables shown on
the Final Statement); provided however, that if Buyer shall have collected
notes and accounts receivable included in the Closing Working Capital which,
when added to the amount of the Uncollected Receivables, is greater than the
amount of the notes and accounts receivable included in the Closing Working
Capital (after deducting therefrom the reserve for bad debts relating to
such receivables shown on the Final Statement), the difference shall be
credited against the amount of the Uncollected Receivables to be purchased.
In the event that Buyer shall collect any Uncollected Receivables subsequent
to Seller's purchase of such Uncollected Receivables, Buyer shall pay all
amounts so collected to Seller no later than five (5) Business Days after
collection.
18
Section 2.5 Payment. Unless otherwise expressly provided herein,
-------
any amount payable under the Agreement shall be payable in immediately
available funds, by means of a wire transfer, if to Seller, to Seller's
account number ▇▇▇-▇▇▇▇▇▇-▇ at The Chase Manhattan Bank, N.A., New York, New
York (with immediate telephone notice to ▇▇▇▇▇ ▇▇▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇ or
to such other account and depository designated by Seller prior to the
Closing by notice to Buyer) or if to Buyer, to Buyer's account number
▇▇▇▇▇▇▇▇ at Bankers Trust Company, New York, New York (ABA #▇▇▇▇▇▇▇▇▇) (with
immediate telephone notice to ▇▇▇▇ ▇▇▇▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇ or to such
other account and depository designated by Buyer prior to the Closing by
notice to Seller).
PART THREE:
REPRESENTATIONS AND WARRANTIES
Section 3.1 Seller. Seller represents and warrants to Buyer that:
------
(a) Organization and Standing of Seller. Seller has been duly
-----------------------------------
organized and is validly existing in good standing under the Laws of
Delaware.
(b) Authority. Seller has the corporate power and authority to enter
---------
into and perform the Agreement and all agreements and transactions
contemplated hereby. The execution, delivery and performance by Seller of
the Agreement have been duly authorized by all requisite corporate action
and the Agreement has been duly executed and delivered by Seller.
(c) Validity of Agreement. The Agreement is a legal, valid and binding
---------------------
obligation of Seller and is enforceable against Seller in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar Laws affecting the enforcement of creditors' rights in
general. The enforceability of Seller's obligations under the Agreement is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
(d) No Violation. The execution and delivery of the Agreement by
------------
Seller, and the performance by Seller of the terms of the Agreement do not
(i) conflict with or result in a violation of the Corporate Documents of
Seller or TDC, (ii) conflict with, result in a violation
19
of or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to the express terms of any
Contract to which Seller or TDC is a party or is subject, except for such
violations, conflicts, defaults, terminations or accelerations which, either
individually or in the aggregate, would not have a material adverse effect
on the PO/MTBE Business, or (iii) violate any Law, except for such
violations which, either individually or in the aggregate, would not have a
material adverse effect on the PO/MTBE Business.
(e) No Consent Required. Except as set forth on Schedule 3.1(e), (i)
-------------------
no consent, waiver, approval, authorization or other action by, or filing
with, any Governmental Body, is required in connection with the execution,
delivery and performance by Seller of the Agreement or the agreements and
transactions contemplated hereby, and (ii) no consent, waiver, approval,
authorization or other action by any Person (other than Governmental Bodies)
is required in connection with the execution, delivery and performance by
Seller of the Agreement or the agreements and transactions contemplated
hereby, except for consents, waivers, approvals, authorizations or actions
which, if not obtained, made or taken, would not have a material adverse
effect on the PO/MTBE Business.
(f) Financial Statements. The Financial Statements are true and
--------------------
complete in all material respects and have been prepared in accordance with
GAAP and fairly present in all material respects, as of the dates thereof,
the financial position of the Company, and for the periods therein referred
to, the results of operations and cash flows of the Company.
(g) Changes. Except as set forth on Schedule 3. 1 (g), since December
-------
31, 1995: (i) or except for Huntsman's Knowledge Matters there has been no
material adverse change in the financial condition (not in the ordinary
course of business) of the PO/MTBE Business; (ii) or except for Huntsman's
Knowledge Matters neither Seller, TDC nor the Company has permitted or
allowed any of the PO/MTBE Assets to be subjected to any Encumbrances,
except for Permitted Encumbrances; (iii) neither Seller, TDC nor the Company
has disposed of,
20
waived or permitted to lapse claims and rights under Contracts, excluding
indebtedness, relating to the PO/MTBE Business with an aggregate value in
excess of Five Hundred Thousand Dollars ($500,000), other than in the
ordinary course of business consistent with past practice given the state of
the PO/MTBE Business; (iv) or except for Huntsman's Knowledge Matters
neither Seller nor any of Seller's Affiliates has transferred or otherwise
disposed of any PO/MTBE Asset except in the ordinary course of business and
except for the Excluded Assets; (v) neither Seller nor the Company has made
any announcement or proposal concerning or is under any legal obligation to
grant any general increase in the compensation of officers of the Company or
Employees (including, without limitation, any such increase pursuant to any
bonus, pension, profit sharing or other plan or commitment) or any
contractual changes to the benefits other than in the ordinary course of
business; (vi) neither Seller, TDC nor the Company has paid, discharged or
satisfied any claims, liabilities or obligations (absolute, accrued,
contingent or otherwise) relating to the PO/MTBE Business other than the
payment, discharge or satisfaction in the ordinary course of business of
liabilities and obligations reflected or reserved against in the 1995
Financial Statements or incurred in the ordinary course of business, since
the date of the 1995 Financial Statements; (vii) neither Seller, TDC nor the
Company has canceled any debts owed to the PO/MTBE Business in excess of One
Hundred Thousand Dollars ($100,000) individually, or Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate other than intercompany
accounts; (viii) neither Seller, TDC nor the Company had any single capital
expenditure or other commitment which had been contracted to but not
incurred relating to the PO/MTBE Business in excess of Two Million Dollars
($2,000,000) for additions to property, plant, equipment or intangible
capital assets or made aggregate capital expenditures and commitments
relating to the PO/MTBE Business in excess of Ten Million Dollars
($10,000,000) for additions to property, plant, equipment or intangible
capital assets; (ix) neither Seller, TDC nor the Company has made, in
connection with the PO/MTBE Business, (a) any material change in any
accounting methods, principles or practices (including, without limitation,
changes in depreciation or amortization policies or rates or relating to the
establishment or accrual of reserves) or (b) any material election with
respect to Taxes; (x) neither Seller, TDC nor the Company has disposed of or
21
permitted to terminate or lapse any rights to the use of any Intellectual
Property other than in the ordinary course of business, or disclosed to any
Person other than representatives of Buyer any trade secret, formula,
process or know-how not theretofore a matter of public knowledge, other than
in the ordinary course of business or pursuant to secrecy, confidentiality,
nondisclosure or similar agreements; and (xi) neither Seller, TDC nor the
Company has agreed, whether in writing or otherwise, to take any action
described in clauses (i) to (x) of this Section 3.1(g).
(h) Conduct of Business. Except as set forth on Schedule 3.1(h) or for
-------------------
Huntsman's Knowledge Matters, since December 31, 1995, the PO/MTBE Business
has not been conducted other than in the ordinary course.
(i) Litigation. Except as set forth on Schedule 3.1(i), there are no
----------
actions, suits, investigations or proceedings pending or, to the actual
knowledge of Seller, threatened against Seller or any of its Affiliates
before any court or arbitration tribunal or before or by any Governmental
Body relating to the execution, delivery or performance of the Agreement or
the agreements and transactions contemplated hereby.
(j) No Undisclosed Liabilities. Except as set forth in Schedule
--------------------------
3.1(j), neither Seller nor any of its Affiliates (other than the Company)
has any liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) related to the PO/MTBE Business which (x) would be
required by GAAP to be reflected on a theoretical balance sheet of the
PO/MTBE Business and (y) were not fully reflected or reserved against in the
December 31, 1996 balance sheet in the Financial Statements, except for
liabilities and obligations incurred since December 31, 1996 in the ordinary
course of business and consistent with past practice given the state of the
PO/MTBE Business. Except as set forth in Schedule 3.1(j), the Company does
not have any liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) related to the PO/MTBE Business which would be
required by GAAP to be reflected on a balance sheet of the Company and which
were not fully reflected or reserved against in the December 31, 1996
balance sheet in the Financial Statements, except for liabilities and
obligations incurred since December 31, 1996 in the ordinary course of
business and consistent with past practice given the state of the
22
PO/MTBE Business.
(k) Intellectual Property Rights. With respect to Intellectual
----------------------------
Property: (i) the Company, Seller or TDC is the owner of or has rights to
use or has rights for Huntsman to use on the Company's behalf, all
Intellectual Property; (ii) based on Seller's, TDC's and the Company's
actual knowledge, Schedule 3.1(k) (ii) sets forth a complete and accurate
list of all registered copyrights, Patents and trademarks owned by or under
obligation of assignment to Seller, TDC or the Company, primarily related to
or used in the conduct of the PO/MTBE Business excluding those marks
containing "Texaco", "Tex" as a prefix or suffix, or the Star T design logo;
(iii) each owner listed on Schedule 3.1(k) (ii) is listed on the records of
the appropriate Governmental Body as the sole owner of record except as
otherwise indicated in such Schedule 3.1 (k)(ii), and based on Seller, TDC,
and the Company's actual knowledge, Schedule 3.1(k)(iii) sets forth a
complete and accurate list of all agreements between Seller, TDC or the
Company or its predecessors in interest, on the one hand, and any Person, on
the other hand, granting any right to use or practice any rights under any
Intellectual Property (collectively "Intellectual Property Licenses"); (iv)
except as set forth on Schedule 3.1(k)(iv), there is no Encumbrance on the
right of the Seller or any of Seller's Affiliates including without
limitation the Company to transfer to Buyer any of the Intellectual
Property, as herein contemplated; (v) based on Seller's, TDC's and the
Company's actual knowledge, no trade secret, formula, process, invention,
design, know-how or other information considered material, proprietary and
confidential has been disclosed or authorized to be disclosed to any Person
who is not an Affiliate of Seller or the Company, except Buyer and Buyer's
Affiliates or except in the ordinary course of business or pursuant to an
obligation of confidentiality binding upon said Person; (vi) based on
Seller's, TDC's and the Company's actual knowledge or except as set forth on
Schedule 3.1(k)(vi), there are no pending proceedings by or before
Governmental Bodies, including oppositions, interferences, proceedings or
suits, relating to such Intellectual Property and based on Seller's, TDC's
and the Company's actual knowledge, no such proceedings are threatened;
(vii) based on Seller's, TDC's and the Company's actual knowledge, the
conduct of the PO/MTBE Business and the exercise of rights relating to
23
Intellectual Property does not infringe upon or otherwise violate,
intellectual property rights of any Person; (viii) based on Seller's, TDC's
and the Company's actual knowledge, no Person is infringing upon or
otherwise violating any Patents contained within Intellectual Property; (ix)
based on Seller's, TDC's and the Company's actual knowledge, none of Seller
or any of its Affiliates has received notice of any claims, and there are no
pending claims, of any Persons relating to the scope, ownership or use of
any of the Intellectual Property or alleging that the conduct of the PO/MTBE
Business infringes upon or otherwise violates the intellectual property
rights of any Person except as set forth in Schedule 3. 1 (k)(ix) ; and (x)
based on Seller's, TDC's and the Company's actual knowledge, each copyright
registration, Patent and registered trademark and application therefor
listed on Schedule 3.1(k) (ii) is in proper form, not disclaimed and has
been duly maintained, including the submission of all necessary filings in
accordance with the legal and administrative requirements of the appropriate
jurisdictions.
(l) Working Capital. Since September 30, 1996, (i) the Working Capital
---------------
(including each component thereof) of the PO/MTBE Business has been managed
in the ordinary course of business in a manner consistent with past practice
given the state of the PO/MTBE Business, (ii) except for Huntsman's
Knowledge Matters, receivables of the PO/MTBE Business have been collected
in the ordinary course of business consistent with past practice given the
state of the PO/MTBE Business, (iii) inventory levels of the PO/MTBE
Business have been maintained in the ordinary course of business consistent
with past practice given the state of the PO/MTBE Business and (iv) accounts
payable of the PO/MTBE Business have been paid in the ordinary course of
business consistent with past practice given the state of the PO/MTBE
Business.
(m) Taxes. With respect to Taxes:
-----
(i) Except in the case of United States federal Tax Returns and
United States federal Taxes, as applicable, the Company has (x) duly and
timely filed with the appropriate taxing authorities all Tax Returns
required to be filed by it, and all such Tax Returns are true, correct and
complete in all material respects, and (y) timely paid all material Taxes
due or claimed to be due from it by any taxing authority.
24
(ii) Except in the case of United States federal Tax Returns and
United States federal Taxes, as applicable, the Company has, within the time
and manner prescribed by Law, withheld and paid over to the proper
Governmental Authorities all amounts required to be withheld and paid over
under all applicable Laws.
(iii) Except as set forth in Schedule 3.1(m)(iii) and except in
the case of United States federal Tax Returns and United States federal
Taxes, as applicable, the Company has not requested any extension of time
within which to file any Tax Return in respect of any fiscal year which has
not since been filed and no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns have been given by the Company.
(iv) Except as set forth in Schedule 3.1 (m) (iv), no state or
local audits or other administrative proceedings or court proceedings
("Audits") exist or have been initiated or are presently pending with regard
to any Taxes or Tax Returns of the Company, and none of the Company or any
Affiliate has received any notice that such an Audit is pending or
threatened with respect to any Taxes due from or with respect to the Company
or with respect to any Tax Return filed by or with respect to the Company.
(v) Except in the case of United States federal Taxes, all tax
deficiencies which have been finally determined against the Company have
been fully paid or finally settled.
(n) Disclosure. No representations or warranties by Seller in the
----------
Agreement contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the representations or warranties
of Seller herein, in light of the circumstances under which they were made,
not misleading.
(o) Revenues, Costs of Goods Sold and Expenses. The revenues, costs of
------------------------------------------
goods sold and expenses of the Company for the year 1996 as set forth in the
Financial Statements fairly present, in all material respects, those amounts
for the PO/MTBE Business on the basis operated by the Company subject to the
Citibank Lease and subject to the Huntsman Agreements; provided
25
however, no representation is made by the Seller or the Company regarding
the pro forma effects had the PO/MTBE Business been owned by Huntsman or the
Buyer during the year 1996, including, but not limited to, the pro forma
effects of elimination of the Citibank Lease, the effects of changes in or
elimination of the Huntsman Agreements, and the effects of elimination of
interest income on intercompany accounts not to be acquired by the Buyer
under the Agreement.
Section 3.2 Company. Seller represents and warrants to Buyer that:
-------
(a) Organization and Standing of Company. The Company has been duly
------------------------------------
organized and is validly existing in good standing under the Laws of
Delaware and is in good standing as a foreign corporation in all
jurisdictions where the nature of its properties or business requires it.
(b) Authority. The Company has the corporate power and authority to
---------
own, lease or otherwise control the PO/MTBE Assets and to conduct its
business as presently conducted. The Company has the corporate power and
authority to enter into and perform the Agreement and the agreements and
transactions contemplated hereby. The execution, delivery and performance by
the Company of the Agreement and the agreements and transactions
contemplated hereby have been duly authorized by all requisite corporate and
shareholder action on the part of the Company, and the Agreement has been
duly executed and delivered by the Company.
(c) Validity of Agreement. The Agreement is a legal, valid and binding
---------------------
obligation of the Company and is enforceable against the Company in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar Laws affecting the enforcement of
creditors' rights in general. The enforceability of the Company's
obligations under the Agreement is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law).
(d) No Violation. The execution and delivery of the Agreement, the
------------
performance by the Company of the terms of the Agreement and the sale and
delivery of the Assets do not (i) conflict with or result in a violation of
the Corporate Documents of the Company, (ii) conflict with,
26
result in a violation of or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
cause the acceleration of the maturity of any debt or obligation pursuant to
the express terms of any Contract to which the Company is a party or is
subject, except for such violations, conflicts, defaults, terminations or
accelerations which, either individually or in the aggregate, would not have
a material adverse effect on the PO/MTBE Business, or (iii) violate any Law,
except for such violations which, either individually or in the aggregate,
would not have a material adverse effect on the PO/MTBE Business.
(e) No Consent Required. Except as set forth on Schedule 3.2(e), (i)
-------------------
no consent, waiver, approval, authorization or other action by, or filing
with, any Governmental Body, is required in connection with the execution,
delivery and performance by the Company of the Agreement or the agreements
and transactions contemplated hereby, and (ii) no consent, waiver, approval,
authorization or other action by any Person (other than Governmental Bodies)
is required in connection with the execution, delivery and performance by
the Company of the Agreement or the agreements and transactions contemplated
hereby except for consents, waivers, approvals, authorizations or actions
which, if not obtained, made or taken, would not have a material adverse
effect on the PO/MTBE Business.
(f) Litigation. Except as set forth in Schedule 3.2(f), there are no
----------
actions, suits, investigations or proceedings pending or, to the actual
knowledge of Seller or the Company, threatened against the Company or any of
its Affiliates before any court or arbitration tribunal or before or by any
Governmental Body relating to the PO/MTBE Business excluding Intellectual
Property. Neither Seller, the Company nor TDC is subject to any judgment,
order or decree entered in any lawsuit, or other proceeding before or by any
Governmental Body which, individually or in the aggregate, would have a
material adverse effect on the conduct of the PO/MTBE Business excluding
Intellectual Property.
(g) Contracts. Except as set forth on Schedule 3.2(g), neither Seller,
---------
the Company nor TDC is, in connection with the PO/MTBE Business, a party to
or subject to (i) any employment or consulting Contract
27
with any Employee or officer or director of the Company, (ii) any plan,
arrangement or Contract providing for bonuses, pensions, options, deferred
compensation, retirement payments or profit sharing for or with any
Employee, the Company's officers or directors, (iii) any collective
bargaining agreement with any labor union, (v) any instrument evidencing or
related to indebtedness for borrowed money, whether directly or indirectly,
not set forth on the December 31, 1996 balance sheet in the Financial
Statements, (v) any Contract limiting the freedom to conduct PO/MTBE
Business in any geographic area or to compete in any line of business or
with any Person, (vi) any partnership or 3oint venture contract, (vii) any
material Contract between the Company and with Seller or any of its
Affiliates, or (viii) any other Contract which is material to the operations
of the PO/MTBE Business. There exists no default or event of default by
Seller, the Company or TDC, or to Seller's, the Company's or TDC's actual
knowledge, by any other party, under any of the Contracts set forth on
Schedule 3.2(g) which, individually or in the aggregate, would have a
material adverse effect on the PO/MTBE Business.
(h) Title to the Assets. With respect to the Assets: (i) Schedule
-------------------
3.2(h)(i) sets forth a comprehensive description of all PO/MTBE Assets
constituting real property owned in fee, including land, buildings,
improvements and structures thereon and appurtenances thereto ("Property"),
and sets forth the names of the record title owners of the Property; (ii)
subject to the Citibank Lease, the Company has Marketable and Indefeasible
title to the Property; (iii) Schedule 3.2(h)(iii) sets forth a comprehensive
listing of all easements, real property licenses and rights-of-way where the
Company, or its predecessors, is the grantee ("Easements"); (iv) subject to
the Citibank Lease, the Company has Marketable and Indefeasible title to the
Easements subject to their terms and with respect to such Easements: (x) the
easements comprising the Easements are in full force and effect and
constitute the legal, valid and binding obligations of each party thereto,
(y) there exists no default or event of default under any such easements
which in the aggregate would have a material adverse effect on the PO/MTBE
Business, and (z) except as set forth on Schedule 3.2 (h)(iv)(z), no term
easement comprising an Easement which benefits any real property, any real
property interest or any PO/MTBE Asset requires the payment of a sum of
money, excluding rentals, to prevent such term easement from
28
terminating or to renew such term easement, and Schedule 3.2 (h)(iv)(z) sets
forth the term and the amount payable necessary to renew each easement or
prevent the termination of each easement; (v) Schedule 3.2(h)(v) sets forth
a comprehensive description of all PO/MTBE Assets constituting leasehold
interests in real property where Company is lessee, including buildings,
improvements and structures located thereon and appurtenances thereto
("Leased Properties") and with respect to such Leased Properties: (x) the
leases comprising the Leased Properties are in full force and effect and
constitute the legal, valid and binding obligations of each party thereto,
and (y) there exists no default or event of default under any of such leases
which in the aggregate would have a material adverse effect on the PO/MTBE
Business; (vi) the Company has good title to all other PO/MTBE Assets,
subject to the Permitted Encumbrances and the Citibank Lease, and other than
those that are leased, to which the Company has valid and enforceable
leases; (vii) with the exception of the rights arising under service or
supply agreements in effect between the Company, Seller or Seller's other
Affiliates and Huntsman, except as set forth on Schedule 3.2(h)(vii) and
except for the Supporting Assets, (x) the Intellectual Property and PO/MTBE
Assets constitute all of the material rights and assets which are used in
the conduct of the PO/MTBE Business as the PO/MTBE Business was conducted on
December 31, 1995 and is presently being conducted and (y) no other material
properties or rights whether or not owned by the Company, are required for
the operation of the PO/MTBE Business as the PO/MTBE Business was operated
on December 31, 1995 or is presently being operated.
(i) Condition and Repair. Except as set forth on Schedule 3.2(i) or
--------------------
for Huntsman's Knowledge Matters, the plant, structures and equipment of the
PO/MTBE Assets, excluding Supporting Assets, taken as a whole have been
operated, maintained and repaired in a reasonably prudent manner, in
accordance with industry standards and past practices and contain no known
undisclosed structural defects which in the aggregate would have a material
adverse effect on the PO/MTBE Business.
(j) Compliance with Applicable Law. Except as set forth on Schedule
------------------------------
3.2(j) or for Huntsman's Knowledge Matters, the PO/MTBE Business, excluding
the Supporting Assets, has been and is being conducted in compliance with
all Laws the failure to comply with which would
29
have a material adverse effect on the PO/MTBE Business, excluding the
Supporting Assets.
(k) Employees. Schedule 3.2(k) sets forth a list of the Employees,
---------
including and specifically identifying as such those Employees, if any, who
may go on long term disability.
(l) Bank Accounts. Schedule 3.2(l) sets forth a complete and accurate
-------------
list of all bank accounts of the Company and the signatories thereunder.
(m) Inventories. The inventories of the PO/MTBE Business (i) consist
-----------
of a quality and quantity usable in the ordinary course of business
consistent with past practice given the state of the PO/MTBE Business, (ii)
with respect to finished inventory, are of a quality to be salable in the
ordinary course of business consistent with past practice given the state of
the PO/MTBE Business, and (iii) are owned by the Company. Inventories of
feedstock, work in process, unfinished products and finished products of the
Company are valued in the December 31, 1996 balance sheet in the Financial
Statements at the lower of cost or market (determined on the average cost
basis except for MTBE valued at market when produced). With respect to
materials and supplies inventories, which are carried on an average cost
basis, the excess of cost over market after any reserves for obsolete or
below standard inventory, does not exceed Two Hundred Thousand Dollars
($200,000).
(n) Manufacture of PO/MTBE. Neither PO nor MTBE were manufactured on
----------------------
the Property prior to August 1, 1994. Except as otherwise set forth on
Schedule 3.2(n) or for Huntsman's Knowledge Matters, there have been no
spills or releases of PO or MTBE, including chemical substances or catalysts
used in the manufacture of PO or MTBE on or from the Property that were
reportable to a Governmental Body.
(o) ERISA Plan Administration. Each Defined Contribution Plan has been
-------------------------
operated and administered in substantial compliance with its terms and with
Law, including but not limited to the Employee Retirement Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA") and the Code.
30
(p) ERISA; Qualified Plans. Each Defined Contribution Plan that is
----------------------
intended to be "qualified" within the meaning of Section 401(a) of the Code
(or other Law) is so qualified.
(q) Supporting Assets. With respect to the Supporting Assets, except
-----------------
for Section 3.2(h), THERE ARE NO EXPRESS OR IMPLIED WARRANTIES THAT APPLY TO
THE SUPPORTING ASSETS AND THE SELLER AND THE COMPANY SPECIFICALLY DISCLAIM
ANY IMPLIED WARRANTY OF MERCHANTIBILITY AND ANY IMPLIED WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE.
Section 3.3 Buyer. Buyer represents and warrants to Seller as follows:
-----
(a) Organization and Standing of Buyer. Buyer has been duly organized
----------------------------------
and is validly existing in good standing under the Laws of Delaware.
(b) Authority. Buyer has the corporate power and authority to enter
---------
into and perform the Agreement and all agreements and transactions
contemplated hereby and to purchase the Assets and assume the Assumed
Liabilities. The execution, delivery and performance by Buyer of the
Agreement and the agreements and transactions contemplated hereby and the
purchase of the Assets have been duly authorized by all requisite corporate
action, and the Agreement has been duly executed and delivered by Buyer.
(c) Validity of Agreement. The Agreement is a legal, valid and binding
---------------------
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar Laws affecting the enforcement of creditors' rights in
general. The enforceability of Buyer's obligations under the Agreement is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
(d) No Violation. The execution and delivery of the Agreement by
------------
Buyer, the performance by Buyer of the terms of the Agreement and the
purchase of the Assets do not (i) conflict with or result in a violation of
the Corporate Documents of Buyer, (ii) conflict with, result in a violation
of or constitute a default (or an event which, with notice or lapse of time
or both, would
31
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or cause the acceleration of the maturity of
any debt or obligation pursuant to the express terms of any Contract to
which the Buyer is a party or is subject, except for such violations,
conflicts, defaults, terminations or accelerations which, either
individually or in the aggregate, would not have a material adverse effect
on the PO/MTBE Business, or (iii) violate any Law, except for such
violations which, either individually or in the aggregate, would not have a
material adverse effect on the PO/MTBE Business.
(e) No Consent Required. Except as set forth in Schedule 3.3(e), (i)
-------------------
no consent, waiver, approval, authorization or other action by, or filing
with, any Governmental Body, is required in connection with the execution,
delivery and performance by Buyer of the Agreement or the agreements and
transactions contemplated hereby, and (ii) no consent, waiver, approval,
authorization or other action by any Person (other than Governmental Bodies)
is required in connection with the execution, delivery and performance by
the Buyer of the Agreement or the agreements and transactions contemplated
hereby except for consents, waivers, approvals, authorizations or actions
which, if not obtained, made or taken, would not have a material adverse
effect on the PO/MTBE Business.
(f) Litigation. Except as set forth in Schedule 3.3(f), there are no
----------
actions, suits, investigations or proceedings pending or to the actual
knowledge of Buyer, threatened against Buyer or any of its Affiliates before
any court or arbitration tribunal or before or by any Governmental Body
relating to the execution, delivery or performance of the Agreement or the
agreements and transactions contemplated hereby.
(g) Corporate Documents. Copies of the Corporate Documents of the
-------------------
Buyer, which have been made available by the Buyer to Company, constitute
true, correct and complete copies of such Corporate Documents and reflect
all amendments thereto through and including the date of the Agreement.
(h) Subsidiaries. The Buyer has no subsidiaries and holds no interest
------------
in any partnership or other equity interest in any corporation, joint
venture, trust or other entity.
32
(i) Ownership of Common Stock. The Huntsman Corporation, directly or
-------------------------
through one or more Affiliates, and members of the Huntsman Group, has good
and marketable title to, and record and beneficial ownership of, all of the
outstanding shares of Common Stock, free and clear of any and all proxies or
proxy agreements, covenants, conditions, options and Encumbrances, other
than (i) Encumbrances associated with Buyer's financing arrangements in
connection with the transactions contemplated hereby, and (ii) agreements
and arrangements involving only Buyer's Affiliates or members of the
Huntsman Group.
(j) Buyer Capitalization. The Buyer's authorized capital stock
--------------------
consists of one thousand 1,000 shares of common stock, $0.01 par value, and
Sixty Five Thousand (65,000) shares of preferred stock, $1 par value. There
are One Thousand (1,000) shares of common stock of Buyer issued and
outstanding ("Common Stock"). The Common Stock has been duly authorized and
validly issued, is fully paid and nonassessable. The Common Stock and the
Preferred Stock constitute all of the issued and outstanding capital stock
of Buyer. The Common Stock was not issued in violation of the terms of any
Contract binding upon Buyer and was issued in compliance with all Corporate
Documents of Buyer and all applicable Laws. The Preferred Stock has been
duly authorized and validly issued and, at the Closing, the Preferred Stock
is fully paid, nonassessable and free of preemptive rights. The Preferred
Stock was not issued in violation of the terms of any Contract binding upon
Buyer and was issued in compliance with all Corporate Documents of Buyer and
all applicable Law.
(k) Options or Warrants. Except (i) for options, warrants or
-------------------
subscription rights to purchase Common Stock held by any of Buyer's
Affiliates or any member of the Huntsman Group, (ii) Encumbrances associated
with Buyer's financing arrangements in connection with the transactions
contemplated hereby and (iii) the agreements and transactions contemplated
hereby, there are no outstanding options, warrants or other rights to
purchase or subscribe for shares of capital stock of the Buyer, including,
without limitation, the Preferred Stock or Common Stock, or securities
convertible into or exchangeable for shares of the capital stock of the
Buyer nor are there outstanding any rights, privileges,
33
preemptive or contractual, to acquire the shares of capital stock of the
Buyer including without limitation the Common Stock or the Preferred Stock.
(l) ERISA; Prohibited Transaction. The consummation by Buyer of the
-----------------------------
transactions contemplated by the Agreement does not, to Buyer's actual
knowledge, result in any prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not available.
(m) Employment Offers. To Buyer's actual knowledge, the offers of
-----------------
employment and failure to offer employment with respect to employees or
former employees of Seller, Seller's Affiliates and Company made pursuant to
Section 5.1(a) have been made in accordance with all Laws including but not
limited to Title VII of the Civil Rights Act of 1964, as amended, Americans
with Disabilities Act, the Age Discrimination in Employment Act and the
Texas Commission of Human Rights.
(n) Disclosure. No representations or warranties by Buyer in the
----------
Agreement contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the representations or warranties
of Buyer herein, in light of the circumstances under which they were made,
not misleading.
Section 3.4 No Other Warranties. Except as otherwise provided herein,
-------------------
there are no express or implied warranties that apply to the transactions
contemplated herein.
34
PART FOUR:
COVENANTS REGARDING PO/MTBE BUSINESS
Section 4.1 Covenants of Seller. Seller covenants with Buyer that:
-------------------
(a) Conduct of Business. Unless otherwise expressly provided in the
-------------------
Agreement or expressly consented to by Buyer, or as set forth in Schedule
4.1(a), from the date of the Agreement up to and including the Closing Date,
Seller shall not, and shall not permit any of its Affiliates with respect to
the PO/MTBE Business, to (i) pledge or subject to any Encumbrance any of the
PO/MTBE Assets other than Permitted Encumbrances; (ii) amend or terminate
any material Contract which are within the definition of Assumed
Liabilities; (iii) increase the salaries or other compensation or benefits
of or make a loan to Employees other than in the ordinary course of business
consistent with past practices given the state of the PO/MTBE Business or as
required by Law; (iv) make any general change in the credit policies or
warranty terms extended to new or existing customers other than in the
ordinary course of business consistent with past practices given the state
of the PO/MTBE Business; (v) sell or dispose of any PO/MTBE Assets other
than in the ordinary course of business consistent with past practices given
the state of the PO/MTBE Business; (vi) enter into any lease of real or
personal property (whether as lessee or lessor) having a term in excess of
one year or involving annual rental payments of One Hundred Thousand Dollars
($100,000) or more, other than contracts with a term of one year or less
entered into in the ordinary course of business consistent with past
practices given the state of the PO/MTBE Business; (vii) enter into any
fixed price Contract for the purchase or sale of inventories other than
Contracts with a term of one year or less entered into in the ordinary
course of business consistent with past practices given the state of the
PO/MTBE Business; (viii) enter into any Contract for the purchase or sale,
or for the exchange or storage of inventory or supplies or for the lease (as
lessor) of any storage facilities owned by or under lease, as the case may
be, other than in the ordinary course of business consistent with past
practices given the state of the PO/MTBE Business or having a term of one
year or less; (ix) enter into any contract for capital expenditures
involving future payments in excess of Five
35
Hundred Thousand Dollars ($500,000); (x) pay, discharge or satisfy any
claim, liability or obligation (absolute, accrued, contingent or otherwise)
related to the PO/MTBE Business, other than the payment, discharge or
satisfaction of current liabilities in the ordinary course of business
consistent with past practices given the state of the PO/MTBE Business; (xi)
prepay any obligation related to the PO/MTBE Business other than in the
ordinary course of business consistent with past practices given the state
of the PO/MTBE Business; (xii) cancel any debts which are related to the
PO/MTBE Business, or waive any claims or rights which are related to the
PO/MTBE Business other than in the ordinary course of business consistent
with past practices given the state of the PO/MTBE Business; (xiii) in
connection with the PO/MTBE Business, incur or agree to incur any long-term
indebtedness or, other than in the ordinary course of business consistent
with past practices given the state of the PO/MTBE Business, incur, or
assume or become subject to, whether directly or by way of a guarantee or
otherwise, any obligation or liability (absolute or contingent); (xiv)
declare, set aside or pay any dividend or other distribution in respect of
the capital stock of the Company; (xv) redeem or otherwise acquire any
shares of the capital stock of the Company; (xvi) dispose of or permit to
terminate or lapse, other than through expiration by operation of Law, any
Intellectual Property or dispose of or disclose to any Person other than
Buyer any trade secret, formula, process or know-how owned or used by or
applicable to the PO/MTBE Business except in the ordinary course of business
consistent with past practices or pursuant to an obligation of
confidentiality binding on said Person and not theretofore a matter of
public knowledge; (xvii) permit to lapse any license or permit related to
the PO/MTBE Business; (xviii) dispose of any material records related to the
PO/MTBE Business; or (xix) agree, whether in writing or otherwise, to do any
of the acts prohibited by the foregoing provisions of this sentence. From
the date of the Agreement up to and including the Closing Date, Seller shall
cause the PO/MTBE Business to be conducted in the ordinary and normal course
of the PO/MTBE Business, consistent with past practices given the state of
the PO/MTBE Business and shall cause the Company to use reasonable endeavors
to retain the services of the Transferred Employees and preserve business
relationships of the PO/MTBE Business with labor unions, customers,
suppliers and others; provided
36
that Seller shall not be in breach of the covenant in this sentence to the
extent that such breach is caused by Huntsman's breach of the Huntsman
Agreements.
(b) Access to Properties and Information. Except as set forth in
------------------------------------
Section 6.6(a) and Part Eight, and subject to the Confidentiality
Agreements, from the date hereof to the Closing Date, Seller shall afford or
shall cause to be afforded to the officers, employees, accountants and other
representatives of Buyer full and reasonable access to the properties,
management and records pertaining to the PO/MTBE Business, wherever situated
(including Tax records and Tax reports and Tax litigation files as they
relate directly to the PO/MTBE Business), during normal working hours in
order that Buyer may have full opportunity to make such investigations as it
shall desire of the affairs and financial status of the PO/MTBE Business and
all aspects thereof.
(c) Intercompany Accounts. On or prior to the Closing Date, effective
---------------------
as of the Effective Date, Seller shall cause all intercompany accounts
existing and due to or from Seller or Seller's Affiliates related to the
PO/MTBE Business to be excluded from the Closing Working Capital except
Included Intercompany Accounts.
(d) Seller's Non-Compete. For a period of five (5) years after the
--------------------
Closing Date, Seller shall not and shall not permit any of Seller's
Affiliates to engage, directly or indirectly, in competition with Buyer or
any of Buyer's Affiliates in (i) the manufacture of PO or PG or (ii) the
sale of PO or PG to third parties except nothing herein shall preclude
Seller or Seller's Affiliates from selling PG or products containing PG as,
or as a component of, anti-freeze, de-icers, coolants or heat transfer
fluids.
(e) No Solicitation. Prior to the earlier of the Closing and
---------------
termination of the Agreement in accordance with its terms, Seller shall not,
shall cause its Affiliates not to, and shall cause Seller's and Seller's
Affiliates' respective directors, officers, Employees, representatives,
financial and legal advisors and agents not to (i) solicit, initiate,
encourage the initiation of or participate in, discussions or negotiations
with, or solicit or encourage inquiries or proposals from, any Person (other
than Buyer and Buyer's Affiliates and representatives) concerning any
merger, consolidation,
37
liquidation, sale of assets (other than in the ordinary course of business
consistent with past practice), sale of capital stock, change of control,
business combination or similar transaction principally involving the
Company or the PO/MTBE Business (any of the foregoing, an "Acquisition"),
(ii) enter into any Contract with respect to any Acquisition (other than
with Buyer and Buyer's Affiliates and representatives), or (iii) except as
required by Law (including the federal securities Laws), directly or
indirectly disclose to any Person (other than Buyer and Buyer's Affiliates
and representatives) any information not customarily disclosed concerning
the Company or the PO/MTBE Business. In the event that Seller, any of
Seller's Affiliates or any of their respective representatives receives an
offer or proposal relating to an Acquisition, Seller shall immediately
provide Buyer with notice thereof (such notice to include all material terms
of any such offer or proposal, including, in the case of a written offer or
proposal, a copy thereof, and to identify the party making such offer or
proposal); provided, that this restriction shall not apply to the Excluded
Assets or as set forth in Section 4.1(h)
(f) Title to the Properties. Seller binds itself and its successors
-----------------------
and assigns to warrant and forever defend against all and singular the
Property and Easements to Buyer and Buyer's successors and assigns against
any Person whomsoever lawfully claiming or to claim the same or any part
thereof, except as to the Permitted Encumbrances and subject to the terms of
the Easements.
(g) Citibank Lease. Simultaneously with the Closing, Seller shall (i)
--------------
enter into a written agreement providing for the termination of the
participation agreement and (ii) cause the termination of that certain lease
dated as of August 14, 1992 and all related agreements with Citibank, N.A.,
State Street Bank and Trust Company of Connecticut, National Association as
trustee under that certain unrecorded Declaration of Trust dated as of
August 14, 1992 and other financial institutions ("Citibank Lease") and
deliver releases which upon recordation in the proper office for recording
will release all Encumbrances related thereto.
(h) Delivery of Additional Data. At Buyer's request and expense,
---------------------------
Seller and Buyer shall reasonably cooperate
38
to provide financial or other data relating to the PO/MTBE Business that is
(i) reasonably required by Buyer's financing sources (including
underwriters) for the transactions contemplated by the Agreement or (ii)
required for Buyer to comply with applicable securities laws.
(i) Merox. On or prior to the Closing, Seller shall cause to be
-----
provided to Buyer a fully paid up license for practice of the UOP Merox
process used in the PO/MTBE Business and limited to the maximum demonstrated
capacity of the Merox unit as of the Closing Date at Seventeen Thousand Five
Hundred (17,500) barrels of fresh stock charge per stream day or Five
Million Seven Hundred Seventy Five Thousand (5,775,000) barrels per calendar
year.
Section 4.2 Covenants of Buyer. Buyer covenants with Seller that:
------------------
(a) Performance Bonds, Guaranties, Etc. With respect to any surety
----------------------------------
bonds, performance bonds, guaranties or financial assurances set forth on
Schedule 4.2(a) relating to the PO/MTBE Business on which Seller or Seller's
Affiliates, including without limitation the Company, is a principal or
guarantor, Buyer shall use its reasonable endeavors to cause such surety
bonds, performance bonds, guaranties or financial assurances to be replaced
or Seller, or its Affiliates to be otherwise released within ninety (90)
days after the Closing Date. Buyer shall reimburse Seller for any amounts
paid by Seller or its Affiliates with respect to such surety bonds,
performance bonds, guaranties or financial assurances to the extent that
such amounts paid by Seller or its Affiliates are related to activities of
the PO/MTBE Business on or after the Closing Date.
(b) Use of Texaco ▇▇▇▇. At the Closing, Buyer shall cease and shall
------------------
cause Buyer's Affiliates to cease using any trademarks, symbols or trade
names containing "Texaco", "Tex" as a prefix or suffix, or similar words, as
well as the Star T Design logo associated with Seller or Seller's Affiliates
("Excluded Marks"). Notwithstanding the preceding sentence, Buyer and
Buyer's Affiliates shall have the right for a reasonable period of time
based on quantity of containers or packages existing in inventory at
Closing, to use or dispose of any inventory in containers or packages
bearing any of the Excluded Marks, and to use or dispose
39
of previously prepared advertising and promotional materials and brochures,
shipping, packaging and similar materials bearing any of the Excluded Marks,
and to remove or replace identifications and signs; provided, that as soon
as practicable after the Closing Date, Buyer shall cause such containers,
packages or materials to identify Buyer or Buyer's Affiliates as the
distributor of the products bearing the Excluded Marks. Notwithstanding any
provision of this Section 4.2 (b), Buyer shall have the right to use
trademarks, symbols or trade names containing "Tex" or "Texas" (except as
used in the Company names "The Texas Company" and "Texas Chemical Company")
as a prefix, suffix, or individual or base word to the extent that such use
is not confusingly similar to any Texaco trade name or any of the Excluded
Marks such as would constitute a violation of trademark, unfair competition
or false advertising Laws.
(c) Accounts Receivable. Buyer shall use its reasonable endeavors to
-------------------
(i) collect or cause to be collected the accounts and notes receivable
included in the Closing Working Capital and (ii) after the repurchase of the
unpaid accounts and notes receivable pursuant to Section 2.4(d) assist
Seller in the collection of the Uncollected Receivables.
(d) Insurance Claims. Buyer shall not and shall cause Buyer's
----------------
Affiliates not to assert, by way of claim, action, litigation or otherwise,
any right to any Insurance Policy or benefit thereunder. Seller shall retain
all right, title and interest under the Insurance Policies.
(e) Buyer's Release of Insurance Policies. At the Closing, Buyer shall
-------------------------------------
release or cause to be released all rights to all Insurance Policies or
similar insurance which covered the Company prior to the Closing Date. All
Insurance Policies issued in the name of or to the Company, prior to the
Closing Date, shall remain with the Seller or Seller's Affiliates.
(f) Non-Assertion of Claims. Buyer shall not assert, and shall not
-----------------------
permit Buyer's Affiliates to assert, any claims for damages against Seller's
Affiliates in any way arising out of the sale and transfer of the PO/MTBE
Assets and assumption of Assumed Liabilities. Buyer shall assert any such
claims for damages only against Seller.
40
(g) Offset Rights. Buyer grants and will cause its subsidiaries, if
-------------
any, to grant Seller and Seller's Affiliates and Seller grants and will
cause its Affiliates to grant Buyer and its subsidiaries, if any, the right
of offset and equitable recoupment ("Offset") for amounts due under any
trade accounts or trade agreements between Buyer or its subsidiaries, if
any, on the one hand, and Seller or any of its Affiliates, on the other
hand. Such right shall only be exercisable by any such party upon the
material default by the other party, under the terms of such accounts or
agreements (and only for so long as such material default is continuing) and
without regard to the mutuality of the obligation between the party
asserting the Offset and the other party. Upon the exercise of the Offset
the offsetting party shall provide the other party prompt notice thereof and
reflect the Offset taken in any revised statement of account.
(h) Capital Structure. Prior to or simultaneously with Closing, Buyer
-----------------
shall issue the Common Stock for no less than Twenty Five Million Dollars
($25,000,000), (Twenty Four Million Dollars ($24,000,000) in cash to
Huntsman Corporation or its Affiliates and One Million Dollars ($1,000,000)
in respect of the portion of the Purchase Price previously paid by or on
behalf of Buyer), and shall issue for cash at least Seventy Five Million
Dollars ($75,000,000) of junior subordinated debt to third parties, as set
forth in the Intersecurity Documents.
(i) Intellectual Property License. On the Closing Date, Buyer shall
-----------------------------
grant to Seller and its Affiliates, and Star Enterprise, Caltex Corporation
and its Affiliates a paid up, irrevocable, nonexclusive, nontransferable
license, without the right to sublicense, to practice the Intellectual
Property identified on Schedule A of Exhibit D which license shall be in a
form substantially as set forth on Exhibit D.
(j) PO Sales. For so long as the Preferred Stock is outstanding, to the
--------
extent Buyer and Buyer's Affiliate sell PO to PO customers that individually
consume no more than twelve million (12,000,000) pounds of PO per year for
nonurethane polyol applications, Buyer agrees that the first twenty million
(20,000,000) pounds per year of such sales shall be made by or for the
account of Buyer.
41
Section 4.3 Covenants of Seller and Buyer. Seller and Buyer covenant to
-----------------------------
each other as follows:
(a) Compliance with Conditions Precedent. Seller and Buyer shall each
------------------------------------
use its reasonable endeavors to cause the conditions precedent set forth in
Part Nine, which are for the benefit of the other, to be fulfilled and
satisfied as soon as practicable.
(b) Brokers. The Parties represent to each other, that no broker,
-------
finder, financial advisor or similar person has been retained by a Party
except as set forth below. Seller represents that Seller has retained C.S.
First Boston as financial advisor in connection with the transactions
contemplated by the Agreement. Buyer represents that Buyer has not retained
any financial advisors in connection with the transactions contemplated by
the Agreement. Seller shall have sole responsibility for the fees and
expenses of C.S.First Boston and therefore Buyer and Buyer's Affiliates
shall have no responsibility for the fees and expenses of C.S.First Boston.
Buyer shall have sole responsibility for the fees and expenses of any
financial advisor retained by Buyer or its Affiliates and therefore Seller
and Seller's Affiliates shall have no responsibility for the fees and
expenses of any financial advisor of Buyer or its Affiliates.
(c) Certain Filings and Consents. The waiting periods under the ▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976 as amended ("HSR") and rules
promulgated thereunder have been satisfied. With respect to any other
filings and consents, the Parties agree that (i) Buyer and Seller shall
cooperate with one another in (x) determining whether any filings are
required to be made or consents, approvals, permits or authorizations are
required to be obtained under any Laws of the United States or any other
country in which a PO/MTBE Asset is located, and (y) making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such consents, permits, authorizations, approvals or
waivers, (ii) Buyer shall promptly endeavor to obtain, and Seller shall
reasonably cooperate in connection with such endeavors, each consent set
forth on Schedules 3.3(e) and 4.2(a), and (iii) Seller shall promptly
endeavor to obtain, and Buyer shall reasonably cooperate in connection with
such endeavors, each consent set forth on Schedules 3.1(e) and 3.2(e).
42
(d) Press Release. Prior to or on the Closing Date, no Party shall
-------------
make any press release or other announcement respecting the subject matter
of the Agreement without the consent of the other Party which consent shall
not be unreasonably withheld, unless a Party refuses to consent and the
Party desiring to make the release or other announcement is advised by its
counsel that the release or other announcement is required to comply with
any Law.
(e) Post-Closing Access. Except as otherwise expressly provided
-------------------
herein, from and after the Closing Date, Buyer and Seller shall reasonably
cooperate and afford each other or cause to be afforded to their respective
Affiliates and their officers, employees, accountants and other
representatives access, upon reasonable notice, during business hours with
respect to the facility to which access has been requested, to review and
copy the books, documents, databases, records or other information systems
of or relating to the PO/MTBE Business, including records preserved as set
forth in Section 8.8 (which books, documents, databases, records, employees
files or other information systems the Parties shall cooperate and assist
one another in identifying and locating), interview, depose or seek
testimony of employees, provide assistance in proceedings with employees as
witnesses or advisors, investigate the physical premises, take photographs
or videotapes, identify employees and contractors with knowledge of any
matter which is the subject of a claim for which a Party has responsibility
and make such employees available to such Party and provide reasonable
office space to do any of the foregoing in connection with any matter
affecting or alleged to affect the Party requesting such access. Access to
Tax records shall be governed by Part Eight.
(f) Further Assurances. Each Party shall, from time to time at the
------------------
request of the other, and without further consideration, execute and deliver
such other instruments of sale, transfer, conveyance, assignment,
clarification and termination and take such other action as the Party making
the request may require to effectuate the intentions of the Parties,
including to transfer, convey and assign to and vest in Buyer, and to place
Buyer in possession of the PO/MTBE Assets and the Intellectual Property and
to the extent transferable, the permits and licenses related to the PO/MTBE
Business and to transfer, assign or convey to and vest in Seller
43
or its Affiliates the Excluded Assets. Seller intends to convey or cause the
conveyance of the PO/MTBE Assets and the Intellectual Property at Closing
and continue to hold or retain the Excluded Assets on or before Closing,
however, in the event it is determined after Closing that: (i) any part of
the PO/MTBE Assets or the Intellectual Property was not in fact conveyed to
Buyer, and that the title to any part of the PO/MTBE Assets or the
Intellectual Property is incorrectly in the name of any of Seller or
Seller's Affiliates; or (ii) any Excluded Asset is conveyed to Buyer and
that the title to such Excluded Asset is incorrectly in the name of Buyer,
then, after the Closing Date, with respect to each Section 4.3(f)(i) through
(ii), each Party shall take all such action necessary to correctly convey
any part of the PO/MTBE Business, the PO/MTBE Assets or the Intellectual
Property to Buyer or convey any of Excluded Assets to Seller. Without
limiting the rights of Buyer under the Agreement, to the extent Seller, TDC
or the Company cannot transfer or cause to be transferred any Contracts
required to be transferred to Buyer pursuant to the Agreement, Seller, TDC
and the Company shall enter into arrangements reasonably sufficient to
provide equivalent benefits and burdens to Buyer.
(g) Transfer of Permits. Seller and Buyer agree that the transfer and
-------------------
operational control of all environmental permits relating to the PO/MTBE
Business, including, but not limited to, hazardous waste permits, air
permits, wastewater permits and wastewater discharge permits, shall take
place on the Closing Date.
Section 4.4. Confidentiality. From and after the Closing Date, the Parties
---------------
agree as follows:
(a) Information. In connection with each Parties' consideration of a
-----------
possible transaction and the negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, each
Party possesses and may hereafter obtain from the other Party information
that is either non-public, confidential or proprietary in nature, including
without limitation, business, commercial, financial, operational,
environmental and Intellectual Property information, in written form,
visually (such as by inspection) or orally. All information furnished by or
obtained from one Party, its Affiliates, directors, officers, employees,
agents, advisors or representatives ("Representatives" and from time to
time, individually
44
and collectively referred to as "Disclosing Party") to the other Party, its
Affiliates and Representatives (individually and collectively, "Receiving
Party"), and all analyses, compilations, data studies or other documents
prepared by a Receiving Party containing or based upon, in whole or in part,
any such furnished information, is hereinafter referred to as "Information".
After the Closing, Information relating to the PO/MTBE Business shall be
deemed to be Information of Buyer, as Disclosing Party, and Seller and its
Affiliates shall be deemed Receiving Parties with respect to such
Information.
(b) Confidentiality. From and after the Closing Date, without the
---------------
prior written consent of Disclosing Party, the Receiving Party shall not and
shall cause its Affiliates and their Representatives not to disclose
Disclosing Party Information to any Person or use Disclosing Party
Information, directly or indirectly, for any purpose, provided that, the
Receiving Party and its Affiliates and their Representatives may use
Disclosing Party Information to the extent required in order to perform and
comply with the Agreement and the agreements and transactions contemplated
hereby. Receiving Party shall transmit and shall permit its Affiliates and
their Representatives to transmit the Disclosing Party Information only to
those of Receiving Party's Affiliates and their Representatives who need to
know the Disclosing Party Information for the purposes set forth in this
Section 4.4. Receiving Party shall be responsible for any breach of this
Section 4.4 by its Affiliates and their Representatives. Receiving Party
shall make all reasonable, necessary and appropriate efforts to safeguard
the Disclosing Party Information from disclosure to anyone other than as
permitted by this Section 4.4. Notwithstanding anything to the contrary
contained herein, neither Receiving Party, its Affiliates nor their
Representatives shall be entitled to use any Disclosing Party Information if
the use thereof could reasonably be expected to result in a violation of any
Laws.
(c) Exceptions. This Section 4.4 shall be inoperative as to such
----------
portions of the Disclosing Party Information that: (i) are in the public
domain; (ii) are published or otherwise become part of the public domain
through no fault of Receiving Party, its Affiliates or their
Representatives; (iii) Receiving Party can demonstrate was in the possession
of Receiving Party,
45
its Affiliates or their Representatives; (iii) Receiving Party can
demonstrate was in the possession of Receiving Party, its Affiliates or
their Representatives at the time of such disclosure and to the actual
knowledge of such Person was not acquired by any such Person directly or
indirectly from the Disclosing Party, its Affiliates or their
Representatives on a confidential basis (provided that this Section 4.4(c)
(iii) shall not apply to Seller or any of its Affiliates or their
Representatives with respect to any Information relating to the PO/MTBE
Business) or; (iv) become available to Receiving Party, its Affiliates or
their Representatives on a non-confidential basis (whether directly or
indirectly) from a source that to the best of any such Person's knowledge
did not acquire the Disclosing Party Information on a confidential basis; or
(v) are independently developed by Receiving Party's Affiliates or such
Affiliates' Representatives who have not had access to the Disclosing Party
Information.
(d) Legally Compelled. The Receiving Party, its Affiliates or their
-----------------
Representatives may disclose Disclosing Party Information to the extent
required by Law, stock exchange rules or by any applicable judgment, order
or decree of any court or Governmental Body having jurisdiction in the
proceeding, or in connection with the preparation of Tax returns,
communications with Governmental Bodies with respect thereto or proceedings
relating to Taxes; provided that Receiving Party, to the extent practicable,
shall provide Disclosing Party with prompt notice thereof so that Disclosing
Party may seek a protective order or other appropriate remedy or waive
compliance with the provisions of this Section 4.4. In the event that such
protective order or other remedy is not obtained or Disclosing Party waives
compliance with the provisions of this Section 4.4, Receiving Party shall or
shall cause the Person required to disclose such Disclosing Party
Information to furnish only that portion of the Disclosing Party Information
that such Person is advised by an opinion of Receiving Party's counsel is
legally required, and, to the extent practicable, Receiving Party shall
exercise its reasonable best efforts to obtain reliable assurance that
confidential treatment is accorded the Disclosing Party Information so
furnished.
(e) Specific Information. Specific Information shall not be deemed to
--------------------
be within the exceptions of Section 4.4 (c) merely because it is embraced by
more general information within such exceptions, nor shall a combination of
features be deemed to be within these
46
exceptions merely because the individual features, but not the combination
itself, are within these exceptions.
(f) Expiration. With respect to unintentional use or disclosure,
----------
Section 4.4 shall expire Fifteen (15) years after the Closing Date.
Section 4.5 Huntsman Agreements, New Service Agreements, Etc. With
------------------------------------------------
respect to agreements among Buyer and its Affiliates, the Parties agree as
follows:
(a) Huntsman Agreements. On the Closing, the Parties agree the
-------------------
Huntsman Agreements appearing with an asterisk on Schedule 4.1(b) shall
terminate and Buyer shall cause Huntsman to terminate the asterisked
Huntsman Agreements. Upon termination the Parties and Huntsman shall have
no further obligations under the asterisked Huntsman Agreements, including
without limitation, any obligation caused by the termination of any of these
asterisked Huntsman Agreements, provided however, (i) the rights and
obligations relating to services performed or products supplied prior to the
Closing Date shall survive this termination and (ii) Buyer shall assume any
capital expenditure obligations arising after the Effective Date under the
contracts made prior to the Effective Date by or on behalf of the Company
pursuant to the asterisked Huntsman Agreements in the ordinary course of
business consistent with past practice.
(b) New Service Agreements. On the Closing Date, Buyer shall enter
----------------------
into service agreements with Huntsman, in the form reasonably satisfactory
to Buyer and Seller ("New Service Agreements") under the following terms and
conditions: (i) products and services provided to the Buyer and the terms
and fees of the New Service Agreements and nonasterisked Huntsman Agreements
with respect to the PO/MTBE Business shall be substantially similar to the
services and products, terms and fees under the Huntsman Agreements as of
the date of the Agreement; (ii) for each year that the Preferred Stock is
outstanding, Huntsman shall reduce the fees charged, and Buyer shall receive
a reduction against such fees under the New Service Agreements and non-
asterisked Huntsman Agreements in an aggregate amount of at least Twelve
Million Dollars ($12,000,000) per year (or a pro-rata portion of Twelve
Million Dollars ($12,000,000) for any partial year); (iii) for so long as
the Preferred Stock is outstanding, without the prior written consent
47
of Seller, which consent shall not be unreasonably withheld, Buyer shall not
agree to any amendment to New Service Agreements and nonasterisked Huntsman
Agreements or enter into any additional products and service agreements with
Buyer's Affiliates which would increase the total net cost to Buyer of the
products and services to an amount greater than the cost of services
provided under New Service Agreements and non-asterisked Huntsman
Agreements; (iv) for so long as the Preferred Stock is outstanding, Buyer
shall not request any additional products and services under the New Service
Agreements and non-asterisked Huntsman Agreements unless the prices to be
paid by Buyer for such additional products and services are commercially
reasonable and (A) such additional products and services are required by
Law, (B) such additional products and services are consistent with good
industry practice, (C) such additional products and services are reasonably
necessitated by changes in general economic conditions, (D) such additional
products and services are reasonably required in connection with changes in
plant operations or (E) such additional products and services are
economically justifiable; and (v) for so long as the Preferred Stock is
outstanding, Buyer shall have a right to seek a refund from Huntsman and
Huntsman shall pay such refund to Buyer for fees related to a violation of
the terms and conditions of the New Service Agreements and non-asterisked
Huntsman Agreements as set forth in Section 4.5(b)(ii), (iii) or (iv),
provided that such right is exercised within one year of the violation.
Seller acknowledges and agrees that any Employees hired by Huntsman pursuant
to Part Five shall provide services to Buyer pursuant to one or more of the
New Service Agreements and that such services shall not constitute
"additional services" for purpose of the preceding sentences.
(c) Quarterly Report. For so long as the Preferred Stock is
----------------
outstanding, promptly following the end of each calendar quarter, Buyer
shall provide Seller with a report explaining in reasonable detail (i) any
material increases or decreases from Buyer's actual costs from budget costs
under the New Service Agreements for such quarter, (ii) any material
increase or decrease from the 1996 budget expense under certain Huntsman
Agreements in the amounts set forth on Schedule 4.5(c) for such quarter and
(iii) other terms and conditions as set forth in Schedule 4.5(c). Buyer
shall provide Seller with additional documents and information related to
the
48
quarterly report, as reasonably requested by Seller. within thirty (30) days
after receipt of the quarterly report, Seller shall have the right to object
to any violation of Section 4.5(b)(ii), (iii) or (iv) and Buyer shall seek a
refund from Huntsman and Huntsman shall promptly pay such refund under the
New Service Agreements, unless Buyer and Huntsman deliver to Seller evidence
of reasonable compliance with Section 4.5(b)(ii), (iii) or (iv). In the
event the Parties and Huntsman are unable to resolve the dispute, the
disagreement shall be submitted to arbitration, which shall be binding on
the Parties and Huntsman.
(d) Audit Rights. For so long as the Preferred Stock is outstanding,
------------
Seller may, within ninety (90) days of receipt of the final quarterly report
for each calendar year give notice to Buyer of its election to have an audit
performed, at Seller's sole expense, of the accounts and records of Buyer
and its Affiliates related to the performance of the obligations of this
Section 4.5 of such calendar year. Any audit conducted pursuant to this
Section 4.5(d) shall be conducted by Seller's independent public accountants
or with Buyer's consent, in its sole discretion, Seller's internal auditors
during Buyer's ordinary business hours as promptly as possible and shall be
subject to appropriate provisions protecting confidentiality. In connection
with any such audit, Buyer shall reimburse Seller for Seller's independent
public accountants' reasonable out of-pocket expenses in an amount not to
exceed the amount of any refund from Huntsman to Buyer for fees related to a
violation of the terms and conditions of the New Service Agreement and non-
asterisked Huntsman Agreements as set forth in section 4.5 (b) (ii) (iii)
and (iv). In addition, Seller shall coordinate, to the extent practicable,
such audit with any other third party audit of such matters, if requested by
Buyer, to minimize the disruption of Buyer's business. If, in the reasonable
written opinion of the auditors, Buyer has not complied with its
obligations, Buyer and Seller shall meet to resolve the matter within thirty
(30) days after both Parties have received the final written audit report
from the auditors.
49
PART FIVE
COVENANTS REGARDING THE COMPANY
Section 5.1 Covenants of Seller and Buyer. Seller and Buyer covenant to
-----------------------------
each other regarding the Company as follows:
(a) Employees. Seller has delivered, or caused to be delivered,
---------
relevant information on Employees and Buyer or an Affiliate of Buyer has
provided written offers of continued employment with the PO/MTBE Business to
those Employees Buyer or such Affiliate desires to continue to employ from
and after the Closing Date. Those Employees who have accepted such offer of
employment and remain employees of the PO/MTBE Business up to the Closing
and continue employment with Buyer on and after the Closing shall be
"Transferred Employees".
(b) No Solicitation. Without the prior written consent of Seller,
---------------
which consent shall not be unreasonably withheld, for one (1) year after the
Transfer Date, Buyer agrees not to employ or otherwise secure the services
of, offer to or solicit to employ, any Employee who received a written offer
of employment from Buyer or an Affiliate of Buyer but elects to retire or
separate from the Company, Seller or its Affiliates on or before the
Transfer Date.
(c) Compensation. For a period of at least Twelve (12) months from the
------------
Closing Date all Transferred Employees shall be paid a base salary, straight
time hourly rate or other compensation as set forth on Schedule 5.1(c) no
less than what such Transferred Employee received from the Company, Seller
or its Affiliates immediately prior to the Closing Date.
(d) No Termination. No Employee shall be treated as having terminated
--------------
employment with the Company or any other Affiliate of Seller by reason of
the sale of the PO/MTBE Business to Buyer and the transactions contemplated
hereby, for the purpose of determining entitlement to severance or
separation pay or any similar payment.
(e) Buyer Benefit Plans. Buyer or an Affiliate of Buyer shall provide
-------------------
the nonrepresented Transferred Employees with benefit plans that, in the
aggregate, are no less favorable than the benefit plans provided as of
50
the Closing Date to employees of Buyer or such Affiliate, as set forth on
Schedule 5.1(e) ("Buyer Benefit Plans"). Except as otherwise provided in
Schedule 5.1(e), Buyer Benefit Plans shall credit all service of the
Transferred Employees with the Seller, the Company, Seller's Affiliates and
Star Enterprise and Caltex as of the Transfer Date, for all purposes under
the Buyer Benefit Plans.
(f) Defined Benefit Plans. As of the Transfer Date, any Transferred
---------------------
Employee who is a participant in the retirement plan of Seller ("Defined
Benefit Plans"), shall cease to accrue benefits under the Defined Benefit
Plans. As soon as practicable after the Closing Date and effective as of the
Transfer Date, the Buyer or an Affiliate of Buyer shall establish new
defined benefit plans and related trusts or amend existing plans and, if
applicable, related trusts ("New Defined Benefit Plans") to cover the
Transferred Employees. The New Defined Benefit Plans shall provide each
Transferred Employee, on the Transfer Date, with service for all purposes
and, but only to the extent described below, benefit accrual equal to the
service credited to such Transferred Employee as of the Transfer Date under
the Defined Benefit Plans and any defined benefit plan of Seller's
Affiliates, Star Enterprise and Caltex. The New Defined Benefit Plans shall
provide a pension benefit at Normal Retirement Date, as defined in the New
Defined Benefit Plans that will equal the greater of (i) or (ii), as
follows: (i) the "Normal Retirement Benefits" based on the formula defined
--------------------------
in, and accrued under, the New Defined Benefit Plans including any
applicable Social Security offset and early retirement reductions,
recognizing all benefit service recognized by the Seller, Seller's
Affiliates, Star Enterprise and Caltex as of the Transfer Date and within
two (2) years after the Transfer Date in accordance with the terms of the
Benefit Service Restoration Program ("BSRP") under the Defined Benefit Plans
and all recognized benefit service with Buyer or such Buyer's Affiliate on
or after the Transfer Date, less the Transferred Employee's employer
provided normal retirement benefit accrued under the Defined Benefit Plans
and any defined benefit plans of, or maintained for, Star Enterprise and
Caltex as of the Transfer Date and within two (2) years after the Transfer
Date in accordance with the terms of the BSRP, or (ii) the Normal Retirement
Benefit accrued under the New Defined Benefit Plans including any applicable
Social Security offset and early retirement reductions,
51
recognizing only benefit service with Buyer or such Buyer's Affiliate on and
after the Transfer Date. If a Transferred Employee commences the payment of
the Transferred Employee's benefits before Normal Retirement Date, as
defined in the New Defined Benefits Plan, and the amount of the Transferred
Employee's retirement benefit is determined under Section 5. 1 (f) (i) , the
early commencement discount factors under the New Defined Benefit Plans
shall be applied to the net amount of the early retirement benefit after the
offset of the normal retirement benefits accrued under the Defined Benefit
Plans. The benefits determined under the Defined Benefit Plans shall be
based on the base salary received while participating under the Defined
Benefit Plans prior to the Transfer Date. Benefits accrued under the Defined
Benefit Plans by Transferred Employees with respect to (x) benefit service
as of the Transfer Date and (y) benefit service restored within two (2)
years after the Transfer Date, in accordance with the terms of the BSRP,
shall be the sole responsibility of Seller; however, Buyer and Seller shall
cooperate in arranging for the collection of employee contributions, and the
transfer of those contributions to Seller, as required by the BSRP for a
period of two (2) years after the Transfer Date. A Transferred Employee's
service with Buyer or Buyer's Affiliate after the Transfer Date shall be
recognized as vesting service for vesting and eligibility to retire under
the Defined Benefit Plans in accordance with the terms of such plans.
(g) Separation. If a Transferred Employee separates from Buyer or
----------
Buyer's Affiliate after the Transfer Date and meets the age and service
requirements under the Defined Benefit Plans, Seller shall thereafter pay or
cause to be paid to the Transferred Employees the benefits accrued under the
Defined Benefit Plans when the same shall be payable pursuant to the terms
of such Defined Benefit Plans. The transfer of employment of a Transferred
Employee from Seller to Buyer or Buyer's Affiliate shall not be considered
to be a termination of employment for the purposes of the Defined Benefit
Plans. A Transferred Employee' who separates from Buyer or Buyer's Affiliate
after the Transfer Date shall not be eligible for nonpension retirement
benefits from the Seller's benefits plans. A Transferred Employee's benefits
under the Defined Benefit Plans shall not commence until the Transferred
Employee separates from Buyer's or Buyer's Affiliate's employment, unless
otherwise required by Section 401 (a) (9) of the Code.
52
(h) Participant List, Etc. At the Closing, Seller shall deliver to the Buyer a
---------------------
list of the Transferred Employees who were participants in the Defined Benefit
Plans as of the Closing Date, setting forth all employee benefit plan
information necessary for Buyer or Buyer's Affiliate to administer the Buyer
Benefit Plans in accordance with the Agreement. Buyer agrees to provide Seller,
when requested, any employee benefit information necessary for Seller to
administer Defined Benefit Plans in accordance with the Agreement. Seller agrees
to provide Buyer with any additional information, when requested, necessary for
Buyer or Buyer's Affiliate, to administer the New Defined Benefit Plans.
(i) Defined Contribution Plans. As of the Transfer Date, any
--------------------------
Transferred Employee who is a participant in the employees thrift plan of
Seller ("Defined Contribution Plans") shall cease to be eligible to make
employee contributions or receive employer contributions in each such plan
as of the Transfer Date and shall be entitled to participate in defined
contribution plans of Buyer or an Affiliate of Buyer ("New Defined
Contribution Plans"). The New Defined Contribution Plans shall provide each
Transferred Employee with (i) service for all purposes equal to the service
credited to such Transferred Employee as of the Transfer Date under the
Defined Contribution Plans and (ii) a rollover account that accepts direct
rollovers of taxable distributions from the Defined Contribution Plans.
(j) Account Balances. The account balances of the Transferred
----------------
Employees held under the Defined Contribution Plans on the Effective Date
shall remain in the Defined Contribution Plans, except in the case of those
Transferred Employees who elect to make a complete withdrawal (both employee
stock ownership account and employee account) and have the funds paid
directly to such Transferred Employee or elect to directly roll over the
taxable portion of their account balance into the New Defined Contribution
Plans or into an Individual Retirement Account. Buyer shall arrange for the
collection of loan payments from the Transferred Employees to the Defined
Contribution Plans and the transfer of those payments to Seller for a period
of up to two (2) years from the Transfer Date. The Parties agree that Buyer
or an Affiliate of Buyer shall function as a collection agent of such loan
payments due to Seller or Seller's employee benefit plan and neither Buyer
nor any of its Affiliates shall have any liability for nonpayment of such
amount.
53
(k) Welfare Benefit Plans. As of the Transfer Date, any Transferred
---------------------
Employee who is a participant in the welfare benefit plans set forth on
Schedule 5.1(k) (i) ("Welfare Benefit Plans") shall cease to be a
participant in each such plan as of the Transfer Date, and shall be entitled
to participate in the welfare benefit plans of Buyer or an Affiliate of
Buyer as set forth on Schedule 5.1(k) (ii) ("New Welfare Benefit Plans").
The New Welfare Benefit Plans shall provide each Transferred Employee with
service for all purposes equal to the service credited to such Transferred
Employee as of the Transfer Date under Welfare Benefit Plans. No waiting
period or exclusion from coverage of any preexisting medical condition shall
apply to the Transferred Employee's participation in the New Welfare Benefit
Plans and benefit accruals, on or after the Transfer Date. The Seller shall
pay or shall cause the applicable Welfare Benefit Plan to pay any benefits
or expenses covered by the Welfare Benefit Plans that (i) in the case of any
such medical or dental plans, are incurred with respect to services
performed for the Transferred Employees (or other employees) or their
dependents on or prior to the Transfer Date or (ii) in the case of any life
insurance plans, are payable to the beneficiaries of any Transferred
Employee (or other employee) who dies on or prior to the Transfer Date. The
Seller shall assume and retain all liabilities and obligations arising under
the continuation coverage requirements of Section 4980B of the Code and Part
Six of Title I of ERISA with respect to all Transferred Employees (or any
beneficiaries or dependents thereof) who on or before the Transfer Date have
exercised or are eligible to exercise their rights to such continuation
coverage.
(l) Disability. Payments received by a Transferred Employee from the
----------
short term disability plan of Seller shall cease on the Transfer Date and
such Transferred Employee shall be eligible for benefits under any similar
plan provided by Buyer or an Affiliate of Buyer. Any long term disability
plan benefits, permanent and total disability type benefits, or any similar
benefits provided by Buyer or an Affiliate of Buyer for which such
Transferred Employee may qualify on or after the Transfer Date shall be
Buyer's or such Affiliate's responsibility.
(m) Vacation. All vacation accrued by Transferred Employees under the
--------
Company's vacation plan, but not
54
taken by the Closing Date, shall be the Buyer's responsibility, and shall be
credited to the Transferred Employee's account under the Buyer's or an
Affiliate's vacation plan; provided, however, that the Final Statement shall
reflect, as a current liability determined in accordance with GAAP, an
accrual for all vacation accrued by any Transferred Employee (or any other
employee) prior to the Closing Date.
(n) Retirees. Seller shall be responsible for all non-pension
--------
retirement obligations related to any Employee who retires on or before the
Transfer Date. Neither Buyer nor any of its Affiliates shall have any
responsibility for any non-pension retirement obligations payable to any
employees of the Seller and Seller's Affiliates other than Transferred
Employees who retire after the Transfer Date. Buyer shall be responsible
for non-pension retirement obligations of any Transferred Employee who
retires after the Transfer Date. In no event shall Seller be responsible for
any non-pension retirement obligations under the Buyer Benefit Plans of any
Transferred Employee who separates from Buyer's and its Affiliate's
employment after the Transfer Date.
(o) Reimbursement, Etc. From the Effective Date through the Closing
------------------
Date, Seller shall pay wage expenses of the Transferred Employees from the
funds generated by the PO/MTBE Business. After the Closing Date, Transferred
Employees shall continue to participate in the Company Benefit Plans up to
but not including Transfer Date. Buyer shall arrange for the collection of
required employee contributions from the Transferred Employees for
participation in the Seller's benefit plans after the Closing Date and up to
but not including Transfer Date, and for the transfer of those employee
contributions to Seller within thirty (30) days after the Closing Date.
Employee contributions, collected by Seller in the month in which the
Closing occurs with respect to which benefits are provided in the month
immediately following, shall be promptly transferred to Buyer or an
Affiliate of Buyer to purchase similar benefits for such employees in the
month after Closing. Buyer shall pay to Seller as of the Closing Date an
amount representing the Seller's expense to provide the benefits under the
Company Benefit Plans to the Transferred Employees from the Closing Date to
the Transfer Date.
55
(p) Employment Claims. Buyer shall be responsible for all employment-
-----------------
type claims of Transferred Employees and the costs and expenses related
thereto (not previously provided for in Section 5.1(o)) relating to events
that occur on or after the Closing Date.
PART SIX
ENVIRONMENTAL
Section 6.1 Definitions. For the purposes of the Agreement, the terms
-----------
defined in Section 6.1 have the following meanings:
"DCA Plume" means the plume consisting of 1,2 Dichloroethane (DCA) and
---------
related constituents located in the shallow sand stratum beneath the
southeastern part of the Property, as set forth in Schedule 6.1.
"Environmental Claims" means legal actions, claims, or proceedings by
--------------------
third parties related to the Property regarding Environmental
Conditions.
"Environmental Condition" means an action, omission, event or
-----------------------
condition, including the disposal of wastes from the Property at a
site other than the Property, related to the Property or the operation
of the PO/MTBE Business, but not including the manufacture, handling,
or marketing of PG, that exists with respect to the air, land, soil,
surface, subsurface strata, or ground water which is not in compliance
with Environmental Law or which is subject to cleanup under
Environmental Law.
"Environmental Law" means any Law relating to pollution, the
-----------------
protection of the environment, or the release or disposal of waste
materials.
"Environmental Losses" means the actual costs incurred related to an
--------------------
Environmental Claim or Remediation of an Environmental Condition.
"Individual Deductible" means, with respect to Environmental Losses
---------------------
related to Environmental Conditions that were caused or arose prior to
the Closing Date, a deductible of Fifty Thousand Dollars ($50,000),
provided however, this
56
deductible shall not apply (i) to Environmental Losses related to the
DCA Plume or (ii) until the Transaction Deductible has been satisfied.
"Phase I Environmental Assessment" means an investigation and
--------------------------------
assessment of environmental status based upon available information
and data, including, but not limited to, interviews of Seller's
personnel and review of records maintained by Seller, but does not
include sampling and analysis of the air, land, soil, surface,
subsurface strata, or ground water.
"Remediation" means actions to bring an Environmental Condition into
-----------
compliance with Environmental Law (i) required to be taken pursuant to
Environmental Law or (ii) required by a Governmental Body. All
Remediation shall be performed pursuant to the terms of a Remediation
Plan.
"Remediation Plan" means a written plan that sets forth the actions,
----------------
formulated pursuant to Section 6.4, required to implement a
Remediation.
"Transaction Deductible" means, with respect to Environmental Losses
----------------------
related to Environmental Conditions that were caused or arose prior to
the Closing Date, a deductible in the amount of Three Million Dollars
($3,000,000), provided however, this deductible shall not apply to
Environmental Losses related to the DCA Plume or Tank Waste Disposal.
Section 6.2 Seller's Responsibilities. With respect to Seller's
-------------------------
responsibilities:
(a) Seller's Indemnity. Except as otherwise set forth in this Part
------------------
Six, Seller shall indemnify, defend, and hold harmless Buyer and Buyer's
Affiliates, and respective directors, officers, and employees, from any and
all Environmental Losses in excess of the Transaction Deductible and
Individual Deductible, as applicable, up to Forty Million Dollars
($40,000,000) ("$40 Million Cap") related to Environmental Conditions to the
extent that such Environmental Conditions were caused or arose prior to the
Closing Date.
(b) Limitations. Notwithstanding anything to the
-----------
57
contrary herein, Seller and Buyer covenant to each other that Part Six shall
be subject to the following limitations:
(i) Buyer shall pay the Transaction Deductible and the
Individual Deductible and shall provide Seller with the information
outlined in the Environmental Processing and Reimbursement Protocol,
set forth in Schedule 6.7, to evidence Buyer's satisfaction of the
Transaction Deductible and the Individual Deductible.
(ii) Seller shall be responsible only for Environmental Losses
incurred for a period of Eleven (11) Years following the Closing Date
and about which Seller has received notice as set forth in Section
6.4(i), except that Seller shall be responsible for Environmental
Losses, regardless of when incurred, related solely to (x) the DCA
Plume or (y) the disposal, prior to the Closing Date, of soil and
other materials removed from the earthen crude oil storage tanks,
located on the Property, during closure of the tanks, in landfills
adjacent to the Property ("Tank Waste Disposal"). Seller's
responsibility for Tank Waste Disposal shall include any Environmental
Losses resulting from (z) the leaching of contaminants from the
adjacent landfills to the Property or (aa) any portion, if any, of the
landfills that overlaps onto the Property. Environmental Losses
related to Tank Waste Disposal shall not be subject to the $40 Million
Cap.
(iii) Seller's responsibility under this Part Six shall be
limited to Environmental Law as it exists, is in effect, and is
enforceable as of the Closing Date.
(iv) If Environmental Losses relating to Environmental
Conditions that were caused prior to the Closing Date are increased
due to any act or omission by a Person other than Seller or Seller's
agents after the Closing Date, Seller shall not be responsible for any
such increase in Environmental Losses incurred.
(v) Seller shall not be responsible after the Closing Date for
any capital improvements, repairs, or modifications to the structures
or equipment of
58
the PO/MTBE Assets to correct any noncompliance or potential
noncompliance with Environmental Law which is a Huntsman's Knowledge
Matter.
(vi) Seller shall not be responsible for any capital
improvements and repairs and modifications to capital improvements
associated with the Property or the PO/MTBE Assets as a consequence of
any Remediation, except to the extent provided in this Section
6.2(b)(vi). If as a direct consequence of a Remediation for which
Seller is responsible pursuant to Section 6.2 structure or equipment
of the PO/MTBE Assets must be repaired, replaced, or rebuilt, Buyer
and Seller shall agree upon the value of such items in their condition
prior to the commencement of Remediation, but without considering any
diminution in value relating solely to such Remediation. In the event
that Buyer and Seller cannot agree, a mutually acceptable independent
appraiser shall determine such value and the fees and expenses of such
appraiser shall be shared equally by Buyer and Seller. In either case,
Seller's responsibility to Buyer for Environmental Losses associated
with such items shall be limited to the value of any such item as so
determined in an amount which is proportional to Seller's contribution
to such Environmental Losses. This Section 6.2(b)(vi) shall not be
construed to make Seller responsible for capital improvements,
repairs, or modifications addressed in Section 6.2(b)(v).
(vii) If Seller is undertaking the performance of its
obligations pursuant to Sections 6.5 or 7.3 of this Agreement, Seller
shall not be responsible under this Part Six for costs associated with
Buyer's oversight of Seller's performance, including the cost of
Buyer's legal counsel, consultants, or employees.
(viii) Seller shall not be responsible under this Part Six for
any Environmental Losses related to land, soil, surface, subsurface
strata, or groundwater contamination caused by or relating to releases
at the Property after April 1, 1994 of propylene oxide or methyl
tertiary butyl ether or any chemical substances or catalysts used by
the Company, Buyer, or any subsequent owner or operator in the
manufacture of propylene oxide or methyl
59
tertiary butyl ether at the Port Neches, Texas plant, or degradation
products of propylene oxide or methyl tertiary butyl ether or any
chemical substances or catalysts released at the Property after April
1, 1994 by the Company, Buyer, or any subsequent owner or operator in
the manufacture of propylene oxide or methyl tertiary butyl ether at
the Port Neches, Texas plant. If there is a dispute as to whether a
release occurred before or after April 1, 1994, it shall be Seller's
burden to prove that releases of crude oil or its degradation products
occurred after April 1, 1994, and it will be Buyer's burden to prove
that releases of all other substances described in Section
6.2(b)(viii) occurred prior to April 1, 1994.
(ix) Buyer shall cooperate and not in any way interfere with
efforts to comply with the Corrective Action Directive, issued by the
Texas Natural Resources and Conservation Commission on November 13,
1995 ("CAD"), or any Remediation Plan or remedy entered into by Seller
or any other Person regarding the DCA Plume. To the extent that
obligations under the CAD or any Remediation Plan or remedy entered
into by Seller or any other Person regarding the DCA Plume are
performed, Seller shall be deemed to have fulfilled its obligations to
Buyer under this Part Six with respect to Environmental Claims or
Environmental Conditions related to the DCA Plume. If Environmental
Losses relating to the (x) CAD, (y) any Remediation Plan or remedy
related to the DCA Plume or (z) any order entered by a court or other
Governmental Body are increased as a result of any act or omission of
Buyer occurring after the Closing Date, Buyer shall reimburse Seller
any and all amounts up to the amount of the increase for costs Seller
has actually incurred. Buyer agrees to use its reasonable best efforts
to ensure that the DCA Plume shall continue to be treated in the joint
waste water treatment plant at Port Neches, unless otherwise
prohibited by Environmental Law or the Governmental Body issuing the
permit, and that such treatment of the DCA Plume shall not be
considered an Environmental Loss. Future modifications or amendments
to the joint waste water treatment plant permit shall allow for the
treatment of the DCA Plume unless otherwise prohibited by
Environmental Law or the Governmental Body issuing the permit.
60
(x) Seller shall not be responsible under this Part Six for
Environmental Losses related to Supporting Assets, except that Seller
shall be responsible under this Part Six for Environmental Losses
relating to discharges from the PO/MTBE Business to the joint waste
water treatment plant into the Star Lake Outfall Canal prior to the
Closing Date.
(xi) Notwithstanding anything contrary herein, in the event that
the air quality permit for the PO/MTBE Unit, submitted to the Texas
Natural Resources and Conservation Commission on March 13, 1997 (permit
number 20160), is not approved by the Commission prior to the Closing
Date, Buyer shall be solely responsible for any Environmental Losses or
costs relating to such permit application incurred after the Closing
Date, including all costs relating to the preparation and resubmission
of a permit application; provided that, after the Closing Date, Seller
shall reasonably cooperate with Buyer in attempting to obtain the
permit based on the March 13, 1997 application.
Section 6.3 Buyer's Responsibilities. With respect to Buyer's
------------------------
responsibilities:
(a) Buyer's Indemnity.
-----------------
(i) Buyer shall indemnify, defend, and hold harmless Seller and
Seller's Affiliates, and their respective directors, officers, and
employees, from any and all Environmental Losses related to
Environmental Conditions to the extent that the Environmental
Conditions were caused or arose after the Closing Date.
(ii) Except to the extent as set forth in Section 6.2, Buyer
shall indemnify and hold harmless Seller and Seller's Affiliates and
their respective directors, officers, and employees, from any and all
Environmental Losses related to Environmental Conditions to the extent
that the Environmental Conditions were caused or arose prior to the
Closing Date ("Buyer's Pre-Closing Indemnity").
(b) Limitations. Notwithstanding anything to the contrary herein,
-----------
Seller and Buyer covenant to each other
61
that Buyer's Pre-Closing Indemnity shall be subject to the following
limitations (except that such limitations shall not apply to (x) any capital
improvements, repairs or modifications described in Section 6.2(b)(v), (y)
any Environmental Condition described in Section 6.2(b)(viii) or (z) any
Environmental Losses related to the Supporting Assets, other than
Environmental Losses arising from or relating to discharges from the PO/MTBE
Business to the joint waste water treatment plant into the Star Lake Outfall
Canal prior to the Closing Date):
(i) Buyer's Pre-Closing Indemnity for Environmental Losses
incurred after the period of Eleven (11) years following the Closing
Date or after the $40 Million Cap is achieved, whichever is earlier
("Seller's Indemnity Period"), shall not exceed Two Hundred Fifty
Thousand Dollars ($250,000) for each Environmental Condition that
causes an Environmental Loss.
(ii) Buyer's Pre-Closing Indemnity for Environmental Losses
incurred after the Seller's Indemnity Period shall not exceed Four
Million Dollars ($4,000,000) in the aggregate for all Environmental
Conditions that cause Environmental Losses.
(iii) on January 1, 1998, and effective January 1 each year
thereafter, the Two Hundred Fifty Thousand Dollar ($250,000) limit
described in Section 6.3(b)(i) shall be adjusted based on the
percentage change in the Producer Price Index , All Commodities
(1982=100), as published by the Bureau of Labor Statistics, U.S.
Department of Labor ("PPI") during each year from the PPI for the prior
year. On January 1, 1998, and effective January 1 each year thereafter,
the amount remaining under the Four Million Dollar ($4 million) cap
described in Section 6.3(b)(ii) shall be adjusted based on the
percentage change in the PPI during each year from the PPI for the
prior year.
(iv) Buyer's Pre-Closing Indemnity shall expire on the 30th
anniversary of the Closing Date.
(c) Changes in Condition. In the event that additional Environmental
--------------------
Losses are incurred in
62
fulfilling Seller's responsibilities under Section 6.2(a) due to any Change
related to the Property or the PO/MTBE Business after the Closing Date
caused by Buyer or a subsequent owner, operator, or tenant of the Property,
Buyer shall be responsible for such additional Environmental Losses.
"Change" shall mean the construction of new structures or equipment, a
modification to existing structures or equipment, the excavation or movement
of soil, the sale or closure of all or a portion the Property or the PO/MTBE
Business, or a change in use from the manufacture of PO/MTBE to some other
use.
Section 6.4 Covenant of Cooperation. Buyer and Seller shall cooperate
-----------------------
fully with each other and act in good faith in implementing this Part Six. Buyer
and Seller agree that the performance required by the covenant set forth in the
preceding sentence shall include, but not be limited to:
(i) providing the other Party with timely written notice of any potential
Environmental Claim, Environmental Condition, or Remediation that a Party
believes is covered under this Part Six about which that Party has notice;
(ii) sharing with the other Party in a timely manner all material non-
privileged correspondence received from any third party that is relevant to such
potential Environmental Claim, Environmental Condition, or Remediation;
(iii) affording the other Party with timely access to and an opportunity to
comment on both draft and final versions of any material non-privileged
correspondence to third parties, study protocols and results, drawings, charts,
Remediation Plans or reports, or other documentation relating to such potential
Environmental Claim, Environmental Condition, or Remediation;
(iv) providing the other Party with timely notice of and an opportunity to
attend and participate in any meetings or hearings with Governmental Bodies or
courts relating to any Environmental Claim, Environmental Condition, or
Remediation that a Party believes is covered under this Part Six;
(v) preparing all material strategies and plans in consultation with the
other Party, employing cost-effective technology and clean-up criteria
appropriate for use of property for industrial purposes and using risk-based
clean-up standards whenever permitted by applicable Laws or any involved or
potentially involved Governmental Body;
63
(vi) consulting with each other in selecting the most costeffective
Remediation Plan or methodology for resolving an Environmental Condition or
Environmental Claim and performing any work under this Part Six in a prompt,
efficient, workmanlike and cost-effective manner and in compliance with all
applicable Laws (including, but not limited to, applicable Environmental Laws
and safety and health Laws);
(vii) selecting contractors and consultants in consultation with the other
Party;
(viii) taking all reasonable steps in scheduling and performing all work so
as to minimize any costs, disruptions, interference, and inconvenience to each
other. Seller shall make a good faith effort to agree with Buyer on such
measures in advance of any work.
(ix) permitting the other Party upon reasonable advance notice (at the
expense of the inspecting Party and on reasonable terms that are mutually agreed
upon by the Parties) to inspect and test all equipment, monitoring devices,
transportation vehicles and facilities used or to be used or samples taken, and
to observe activities, related to any work under this Part Six; and
(x) following the procedures for "Defense of Action" in Section 7.3 and
"Payments" in Section 7.4 regarding any potential Environmental Claim,
Environmental Condition, or Remediation that a Party believes is covered under
this Part Six.
Section 6.5 Performance of Remedies. Buyer and Seller agree that:
-----------------------
(a) Performance of Work. Seller, at Seller's sole option, may elect
-------------------
to supervise and perform any Remediation or other work for which Seller is
responsible as set forth in Section 6.2. Buyer shall supervise and perform
any Remediation on any property of Buyer or on any property contiguous to a
property of Buyer, except such Remediation as Seller may elect to perform in
accordance with the previous sentence. If Seller elects that Seller shall
perform such Remediation or other work, Seller shall notify Buyer in a
timely manner in writing. If Seller elects to supervise and perform such
Remediation or other work, Seller shall select the means and methods of
effecting such Remediation or other work, so long as the means and
64
methods selected conform with applicable Environmental Law and Sections 6.4,
6.5(a) and (b), and 7.3, and, if appropriate, shall seek reimbursement from
Buyer in the manner set forth in Section 6.7. Buyer or Seller's preparation
and performance of a Remediation Plan shall conform with applicable
Environmental Law and Section 6.4 and 6.5. Each Party shall seek
reimbursement from the other as set forth in Section 6.7.
(b) Performance of Remediation. Seller's supervision and performance
--------------------------
of Remediation pursuant to Section 6.5(a) shall be subject to the following:
(i) Buyer shall approve and, at Buyer's option, oversee, supervise and
perform any portion of a Remediation which would be impracticable to perform
separately from other work already supervised and performed by Buyer; (ii)
Buyer shall approve and, at Buyer's option, oversee, supervise and perform
any repair, modification, replacement or rebuilding of any operations,
equipment, fixtures, or facilities of Buyer; (iii) Buyer, may request such
additions, alterations, changes or improvements to the work
("Enhancements"), and, except to the extent prohibited by a Governmental
Body, Seller shall accept and perform such Enhancements, provided that all
costs attributable to any Enhancements, including any additional costs
associated with any delays caused by such Enhancements, shall be paid for by
Buyer; (iv) Seller shall be responsible for any Environmental Losses arising
in connection with Seller's supervision or performance of any Remediation,
except to the extent attributed to negligence, willful misconduct or failure
to comply with Laws by Buyer or a third party (other than Seller's
employees, agents, contractors, subcontractors, representatives and
invitees); (v) during any Remediation on the Property or contiguous to the
Property, Seller shall be solely responsible for compliance by Seller's
employees, agents, contractors, subcontractors, representatives and invitees
with all Laws and professional standards applicable to its work; (vi) Seller
shall require all Seller's employees, agents, contractors, subcontractors,
representatives and invitees entering upon the Property to be bound by
Buyer's reasonable terms and conditions for such persons entering such
properties, notice of which shall be given by Buyer to Seller prior to the
commencement of the Remediation or Enhancements to be performed by Seller;
(vii) Seller shall protect Buyer from any claims for labor or materials
furnished to or for the Property for work to be performed by Seller under
Section 6.5(a),
65
which claims may be secured by any mechanic's or materialman's lien against
such property or an interest therein; (viii) except for the use of the joint
waste water treatment facility, as set forth in Section 6.2(b) (viii),
Seller, with the approval of Buyer (which shall not be unreasonably
withheld), may have access to and use of the storage facilities, loading
facilities, docks, rail sidings and other plant equipment or facilities and
waste water treatment plants and similar waste treatment and disposal
systems on the properties of the PO/MTBE Business (but only to the extent
permitted by Buyer's agreements with any co-owners or co-operators with
Buyer of such facilities and systems which agreements Buyer shall make a
good-faith effort to maintain as in effect as of the Closing Date) in
conjunction with any work performed by Seller under Section 6.5(a) for
purposes such as the disposal of well development water and treated ground
water, provided that (x) Seller shall reimburse Buyer for all incremental
out-of-pocket costs of Seller's use of such facilities and systems, (y)
Seller's use of such facilities and systems shall not interfere with or
disrupt Buyer's operation of the PO/MTBE Business or Buyer's use of such
facilities and systems (including by reducing the capacity needed for
Buyer's use) or use of the Property, (z) Seller's use of such facilities and
systems shall not violate any Environmental Laws by Buyer, (aa) Seller shall
be responsible for, and Buyer shall fully cooperate in, obtaining all
incremental approvals required by any Governmental Bodies for such use,
except that Buyer shall be responsible for obtaining all permits or
approvals related to Enhancements, and (bb) Seller shall promptly perform
any cleanup of spills or repair any malfunction or impairment of performance
of such facilities and systems to the extent caused by Seller's use of such
facilities and systems during work performed under this Section.
(c) Seller's Satisfaction of Responsibilities. Seller shall be
-----------------------------------------
responsible under this Part Six only if Buyer asserts a claim pursuant to
Section 6.7. To the extent that Seller performs the activities, incurs the
costs, or makes the reimbursement requested by Buyer and required under this
Part Six, Seller shall be deemed to be relieved of its responsibilities to
Buyer or to any other Person under this Part Six to perform such activities,
incur such costs, or make such reimbursement.
66
(d) Access. After the Closing Date, with the prior written consent of
------
Buyer (which consent shall not be unreasonably withheld), Seller and
Seller's agents and representatives shall have the right to enter onto the
Property during normal business hours for the purpose of conducting any
environmental inspection or testing in connection with any Remediation or
for any other purpose necessary for Seller to implement this Part Six.
Section 6.6 Environmental Assessments. With respect to environmental
-------------------------
assessment:
(a) Phase I Environmental Assessment. Prior to the Closing Date,
--------------------------------
subject to advance notice by Buyer to Seller, Buyer may conduct a Phase I
Environmental Assessment of the Property, provided that Buyer promptly
delivers to Seller a copy of all final reports of all Phase I Environmental
Assessments. From and after the Closing Date, Buyer may conduct additional
Phase I Environmental Assessments of the Property provided that Buyer shall
not conduct an assessment or investigation involving sampling of the
Property to determine the existence or scope of pollution, except as
required by Environmental Law, in which case Buyer shall notify Seller and
provide Seller a reasonable opportunity to observe such assessments or
investigations fully and to take split samples, when applicable, and shall
promptly deliver to Seller a copy of all final reports of all such
assessments.
(b) Industry Practice. Notwithstanding any provision in Section
-----------------
6.6(a), Buyer shall have the right to (i) take such emergency response
action with respect to the Property as is consistent with prudent chemical
industry practices, and in compliance with applicable Laws; or (ii) move or
disturb soil in the ordinary course of construction or modification on the
Property provided that prior to commencing such construction or
modification, Buyer has given prior written notice to Seller and has
considered Seller's written comments (which Seller shall promptly submit to
Buyer) regarding the location of placement of the construction or
modification.
Section 6.7 Procedure for Claiming Reimbursement. In the event that a Party
------------------------------------
believes that such Party should receive reimbursement from the other Party
pursuant to this Part Six, such Party shall promptly submit to the other Party a
notice of reimbursement claim, describing and documenting
67
the nature and basis of such claim and containing the types of information
outlined in the Environmental Processing and Reimbursement Protocol set forth in
Schedule 6.7. Buyer and Seller agree to follow the process for evaluation and
approval or denial and appeal of reimbursement claims set forth in the
Environmental Processing and Reimbursement Protocol.
Section 6.8 Exclusive Remedies. Except for the procedures in Section 7.3,
------------------
7.4, and Part Ten, which shall apply to matters under this Part Six, the rights
and remedies granted each Party in this Part Six are exclusive rights and
remedies against the other Party related to any matters contained herein
relating to pollution, the protection of the environment, or the release or
disposal of waste materials.
PART SEVEN
INDEMNIFICATION
Section 7.1 Seller's Indemnification. On and after the Closing Date,
------------------------
Seller shall fully and promptly defend, indemnify and hold harmless Buyer and
Buyer's Affiliates, and their respective directors, officers and employees
(collectively, "Buyer Group") from all liabilities, claims, demands, actions or
suits, losses, costs or damages and expenses (including reasonable attorney's
fees) (collectively "Liabilities") made against or incurred by any member of the
Buyer Group arising out of or with respect to (i) any breach of any
representation or warranty made herein by Seller or the Company; (ii) the breach
or nonfulfillment of any covenant, agreement, obligation or undertaking of
Seller or the Company herein; or (iii) the Non-Assumed Liabilities which arise
from or by a Third Party Action (which term for purposes of Section 7.1(iii)
shall not include any claim made by a member of the Buyer Group or Huntsman
Group) provided that Seller shall not be obligated to indemnify Buyer Group for
any Liability relating to breaches of representations and warranties herein
(except breaches of representations and warranties herein contained in Section
3.2(h)) unless the aggregate Liabilities relating to breaches of representations
and warranties herein exceeds One Million Five Hundred Thousand Dollars
($1,500,000), which shall be a deductible.
Section 7.2 Buyer's Indemnification. On and after the Closing Date, Buyer
-----------------------
shall fully and promptly defend, indemnify and hold harmless Seller and Seller's
Affiliates and their respective directors, officers and employees (collectively,
"Seller Group") from all Liabilities made
68
against or incurred by any member of the Seller Group arising out of or with
respect to (i) any breach of any representation or warranty made herein by
Buyer; (ii) the breach or non-fulfillment of any covenant, agreement,
obligation, or undertaking of Buyer herein; or (iii) any liability or obligation
of Buyer or its Affiliates to the extent arising out of the operation of Buyer's
PO/MTBE Business after the Closing Date, provided that Buyer shall not be
obligated to indemnify Seller Group for any Liability relating to breaches of
Buyer's representations and warranties unless the aggregate Liabilities relating
to breaches of Buyer's representations and warranties exceeds One Million Five
Hundred Thousand Dollars ($1,500,000), which shall be a deductible.
Section 7.3 Defense of Action. Promptly after receipt by a Party entitled
-----------------
to indemnification pursuant to the Agreement ("Indemnified Party") of notice of
any pending or threatened Third Party Action, such Indemnified Party shall, if a
claim in respect thereof is to be made against a Party providing indemnification
pursuant to the Agreement ("Indemnifying Party") , give notice thereof to the
Indemnifying Party. The Indemnifying Party, at its own expense, may elect to
assume the defense of any such Third Party Action through its own counsel on
behalf of the Indemnified Party (with full right of subrogation to the
Indemnified Party's rights and defenses). The Indemnified Party may employ
separate counsel at its expense in any such Third Party Action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party and the Indemnifying Party shall at all
times control such defense. All fees and expenses shall be paid periodically as
incurred. The Indemnifying Party shall not be liable for any settlement of any
such Third Party Action effected without its consent unless the Indemnifying
Party shall elect in writing not to assume the defense thereof or fails to
prosecute diligently such defense and fails after written notice from the
Indemnified Party to promptly remedy the same, in which case, the Indemnified
Party without waiving any rights to indemnification hereunder may defend such
Third Party Action and enter into any good faith settlement thereof without the
prior written consent from the Indemnifying Party. The Indemnifying Party shall
not without the prior written consent of the Indemnified Party, effect any
settlement of any such Third Party Action unless such settlement (i)includes an
unconditional release of the Indemnified Party from all liabilities that are the
subject of such Third Party Action and (ii) does not impose any future
obligations on the
69
Indemnified Party. The Parties agree to cooperate in any defense or settlement
of any such Third Party Action and to give each other reasonable access to all
information relevant thereto. The Parties will similarly cooperate in the
prosecution of any claim or lawsuit against any third party. If, after the
Indemnifying Party elects to assume the defense of a Third Party Action, it is
determined by arbitration in accordance with Schedule 10.13 that the Indemnified
Party is not entitled to indemnification with respect thereto, the Indemnifying
Party shall discontinue the defense thereof. Seller hereby elects to assume the
defense of all Third Party Actions pending as of the Closing Date, against the
Company or the PO/MTBE Business, which defense shall be governed by the terms of
this Section.
Section 7.4 Payments. With respect to payments, Buyer and Seller agree as
--------
follows:
(a) Indemnity Payments. All indemnity payments made by Buyer or
------------------
Seller under this Part Seven will be treated as adjustments to the Purchase
Price of the Assets. Neither Buyer nor Seller shall at any time file any Tax
Return or other document with any taxing or other regulatory authority or
take any other action (or refrain from taking any action) in a manner that
is inconsistent with the treatment of such payments as Purchase Price
adjustments.
(b) Tax Benefit. If any member of the Buyer Group or Seller Group
-----------
entitled to an indemnity payment in accordance with this Part Seven
("Indemnified Member") receives the benefit of a Tax deduction, Tax credit
or other Tax attribute ("Tax Benefit") by virtue of having paid or accrued
an amount for which an indemnity payment is provided, the amount of such Tax
Benefit will be refunded to the Party making such indemnity payment when, as
and if such Indemnified member realizes a cash Tax savings from such Tax
Benefit.
(c) Additional Indemnity Tax. If, notwithstanding Section 7.4(a), it
------------------------
is finally determined (through a settlement or closing or similar agreement
with the IRS or other taxing authority or a final, non-appealable judgment
of a court of competent jurisdiction) that the Indemnified Member receiving
a payment from the Indemnifying Party pursuant to this Part Seven will be
required to include an amount in gross income other than as a Purchase Price
adjustment, then the Indemnifying Party shall pay to the Indemnified Member
an additional
70
amount ("Additional Indemnity Taxes") equal to (x) the Taxes imposed on such
Indemnified Member as a result of the receipt of such payment plus (y) any
Taxes imposed on the Indemnified Member as a result of amounts paid pursuant
to Section 7.4(c)(x) or (y).
PART EIGHT
TAXES
Section 8.1 Sales and Transfer Taxes. The Purchase Price shall not include
------------------------
any sales taxes or other transfer taxes imposed in connection with the sale of
the Assets. Buyer shall pay any sales tax or other transfer taxes, as well as
any applicable conveyance, transfer and recording fees, and real estate transfer
stamps or taxes imposed on the transfer of the Assets pursuant to the Agreement.
Notwithstanding the foregoing, it is the mutual intent and understanding of
Seller and Buyer that the sale of the Assets comprises, in part, a sale of all
of the operating assets of an identifiable business of the Company and that such
sale is exempt from Texas state and local sales taxes pursuant to section
151.304(b) of the Texas Tax Code. Further, in connection with that part of the
sale of the Assets concerning inventory, Buyer shall provide Seller a completed
Texas Resale Certificate in lieu of the payment of Texas state and local taxes
and Seller shall in good faith accept such certificate.
Section 8.2 Tax Proceedings. In the event Buyer or any of Buyer's
---------------
Affiliates receives notice of any examination, claim, adjustment or other
proceeding relating to the liability for Taxes of or with respect to Seller for
any period Seller or its Affiliates is or may be liable, Buyer shall notify
Seller in writing within twenty (20) days of receiving notice thereof. As to any
such Taxes for which Seller or its Affiliates is or may be liable, Seller shall
at Seller's expense control or settle the contest of such examination, claim,
adjustment or other proceeding, and shall indemnify Buyer against all losses in
connection therewith, provided, however, that if any such examination, claim,
adjustment or other proceeding could affect Buyer's liability for Taxes, Seller
shall consult with Buyer, and shall not enter into any settlement without
Buyer's consent, which shall not be unreasonably withheld. The Parties shall
cooperate with each other and with their respective Affiliates in the
negotiations and settlement of any proceeding described in this Section 8.2.
Buyer shall provide, or cause to be provided, to Seller necessary
71
authorizations, including powers of attorney, to control any proceeding which
Seller is entitled to control.
Section 8.3 Payment and Apportionment of Real and Personal Property Taxes.
-------------------------------------------------------------
With respect to the payment and apportionment of Real and Personal Property
Taxes:
(a) Real and Personal Property Taxes. All ad valorem taxes, real
--------------------------------
property taxes and personal property taxes ("Real and Personal Property
Taxes") for the year in which the Effective Date occurs shall be apportioned
as of the Effective Date between Seller and Buyer. Seller shall be liable
for the portion of such Real and Personal Property Taxes based upon the
number of days in the year occurring prior to the Effective Date, and Buyer
shall be liable for the portion of the Real and Personal Property Taxes
based upon the number of days in the year occurring on and after the
Effective Date. For any year in which an apportionment is required, Seller
shall file all required reports and returns incident to the Real and
Personal Property Taxes and shall remit to the appropriate taxing
authorities all such Taxes assessed for the year in which the Effective Date
occurs. Subject to Section 8.5(a), Buyer shall pay to Seller, at the time of
Seller's remittance, Buyer's share of the Real and Personal Property Taxes.
(b) Liability and Right to Pursue Claims. Seller shall retain
------------------------------------
liability for all adjustments, examinations or claims relating to Real and
Personal Property Taxes that are paid by Seller and that are allocated to
Seller as set forth in Section 8.3. Seller shall also administer and defend
any examination, claim or adjustments arising in connection with Real and
Personal Property Taxes that are to be paid by Buyer and which are allocated
to Buyer as set forth in Section 8.3, provided, however, that if any such
examination, claim, adjustment or other proceeding could affect Buyer's
liability for Real and Personal Property Taxes, Seller shall consult with
Buyer, and shall not enter into any settlement without Buyer's consent,
which shall not be unreasonably withheld. If and to the extent that any
refund is obtained for any taxable period that includes the Effective Date,
Buyer shall be entitled to its allocable share of such refund, determined in
accordance with the principles of Section 8.3(b).
Section 8.4 Allocation of the Purchase Price. As soon as practicable,
--------------------------------
Buyer shall deliver to Seller an
72
allocation statement (the "Allocation Statement") setting forth the allocation
of the Purchase Price payable by Buyer to Seller pursuant to Section 2.2 hereof,
plus any Assumed Liabilities, to the Assets in accordance with their relative
fair market value and in accordance with the requirements of Section 1060 of the
Code; provided, however, that the Parties hereby acknowledge and agree that (i)
One Hundred Fifty Million Dollars ($150,000,000) of the Purchase Price shall be
allocated to technology, (ii) Forty Million Dollars ($40,000,000) shall be
allocated to other intangible assets, (iii) the Closing Working Capital shall be
allocated at book value and the remainder of the Purchase Price shall be
allocated to plant, property and equipment and other tangible personal property
estimated to be Three Hundred Forty Three Million One Hundred Ninety Six
Thousand Forty Eight Dollars ($343,196,048) as at the Closing Date. Each of
Buyer and Seller shall report for federal and state income and all other Tax
purposes (including, without limitation, for purposes of Section 1060 of the
Code) the purchase of the Assets in a manner consistent with the Allocation
Statement and in a manner consistent with all applicable rules and regulations.
Each of Buyer and Seller shall timely file a Form 8594, prepared jointly, in
accordance with the requirements of Section 1060 of the Code and this Section
8.4. Each Party agrees not to assert, in connection with any Return, Tax audit
or similar proceedings, any allocation of the Purchase Price that differs from
that agreed to herein. Each Party shall notify the other Party in the event such
Party believes that any taxing authority is taking or proposing to take a
position inconsistent with such allocation.
Section 8.5 Cooperation. Buyer and Seller agree:
-----------
(a) Real Property Tax Assessment. Seller shall permit Buyer to
----------------------------
participate with Seller in the real property tax assessment proceedings in
respect of the valuation of the Property for 1997, as well as to ensure that
existing real estate tax abatements in respect of the Property remain in
place. Seller shall consult with Buyer in connection therewith and shall not
agree to any valuation or diminution of real estate tax abatements without
the consent of Buyer, which consent shall not be unreasonably withheld.
(b) Access to Tax Documents. Each of Buyer and Seller shall provide
-----------------------
the other with such assistance and documents, without charge, as may be
reasonably requested by either of them in connection with the preparation of
73
any Tax return, the conduct of any audit, and any other Tax related matter
that is a subject of the Agreement. Such cooperation and assistance shall be
provided to the requesting Party promptly upon its request.
Section 8.6 Equity. In conformance with the principles of Section 385 (c)
------
and Section 1504 (a) (4) of the Code, each Party acknowledges and agrees that
the Preferred Stock is (i) stock and not indebtedness as interpreted by the Code
and (ii) "Certain Preferred Stock" as defined in Section 1504 (a) (4) of the
Code. Each Party agrees not to assert, in connection with any Return, Tax audit,
or similar proceedings, any different treatment of the Preferred Stock.
Section 8.7 FIRPTA Certificate. At the Closing, Seller shall deliver to
------------------
the Buyer an affidavit of Seller, signed by an officer of Seller, in the form
attached hereto as Exhibit E. Notwithstanding anything to the contrary set forth
in the Agreement, Buyer shall be entitled to withhold the requisite amounts from
the Purchase Price if Seller fails to fulfill all of its obligations under this
Section 8.7.
Section 8.8 Preservation of Tax and Other Records. For a period of ten (10)
-------------------------------------
years after the Closing Date, the party holding such records on the Closing Date
shall (i) preserve and retain the corporate accounting, legal, auditing, Tax,
environmental, operating, maintenance and inspection and other books and records
that relate to the conduct of the PO/MTBE Business prior to the Effective Date
and (ii) make such books and records available (at the then current
administrative headquarters of the PO/MTBE Business or at any other place as
reasonably agreed to by Buyer and Seller) to the other party upon reasonable
notice and at reasonable times it being understood that the other party shall be
entitled to make and retain copies of any such books and records as it shall
deem necessary at the other party's expense. In the event the other party
desires to extend the period referred to in the first sentence of this Section
8.8 beyond ten (10) years, it may do so if (x) the applicable statute of
limitations for the years with respect to which the books and records relate has
not expired and (y) such extension is requested in writing and with a statement
that the statute of limitations has not yet expired. Each such extension shall
not be for more than twelve (12) months. In the event the holding party fails to
maintain such records and as a result of such failure the other party's Tax
liabilities are increased, then such holding party shall indemnify and hold
harmless the other party for any such increase in Taxes or other liabilities.
This Section 8.8
74
shall apply to Buyer and its Affiliates with respect to records transferred to
or held by Buyer or its Affiliates hereunder and to Seller and the Company with
respect to records retained by Seller or the Company prior to or after the
Closing Date.
Section 8.9 Conflict. In the event of a conflict relating to Taxes between
--------
the provisions of Part Eight and any other provisions of the Agreement, the
provisions of Part Eight shall control.
PART NINE
CONDITIONS PRECEDENT
Section 9.1 Conditions Precedent of Buyer. The obligations of Buyer to
-----------------------------
consummate the transactions contemplated by the Agreement are subject to the
following conditions:
(a) Representations and Warranties True at Closing. The
----------------------------------------------
representations and warranties of Seller contained in the Agreement or in
any certificate or document delivered pursuant to the provisions hereof, or
in connection with the transactions contemplated hereby were true and
complete when made, and shall be true and complete on and as of the Closing
Date as though such representations and warranties were made at and as of
such date except as otherwise expressly provided herein.
(b) Compliance with Agreement. On and as of the Closing Date, Seller
-------------------------
shall have performed and complied with all, and shall have caused the
Company to perform and comply with all, agreements and conditions required
by the Agreement to be performed and complied with prior to or on the
Closing Date.
(c) Certified Resolutions and Officers' Certificate. Seller shall
-----------------------------------------------
have delivered to Buyer (i) a certificate dated the Closing Date signed by
the Secretary or an Assistant secretary of Seller with respect to the action
of the Seller's Board of Directors authorizing the transactions contemplated
by the Agreement, and (ii) a certificate, dated the Closing Date and signed
by the Chairman, Vice Chairman or a Vice President of Seller certifying in
such detail as Buyer may reasonably request to the fulfillment of the
conditions specified in subparagraphs (a) and (b) of this Section 9.1;
provided
75
however, that the certificate required by Section 9.1(c)(ii) shall contain
the following qualification: except for Huntsman's Interim Knowledge Matters
with respect to the representations and warranties of Seller contained in
Sections 3.1 (g)(i), (ii) and (iv), (h) and (1)(ii), Sections 3.2(i) and (j)
and the second sentence of Section 3.2(n).
(d) Approval of Proceedings. All actions, proceedings, instruments
-----------------------
and documents required of Seller and the Company to carry out the Agreement,
or incidental thereto, and all other related legal matters shall have been
approved by Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, which approval shall
not be unreasonably withheld.
(e) Opinion of Counsel. There shall have been delivered to Buyer the
------------------
opinion of ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq. or such other counsel designated by
Seller as Buyer may approve, which approval shall not be unreasonably
withheld, all dated the Closing Date as set forth on Exhibit F, which shall
be to substantially the same effect as the opinion of such counsel delivered
to Buyer's financing sources.
(f) Injunction. On the Closing Date, there shall be no injunction,
----------
writ, or preliminary restraining order or any order of any nature issued by
a court or other Governmental Body of competent jurisdiction directing that
the transactions provided for herein or any of them not be consummated as
herein provided or imposing any conditions on the consummation of the
transactions contemplated hereby and no material proceeding or lawsuit shall
have been commenced or threatened by any Governmental Body or other Person
with respect to any of the transactions contemplated by the Agreement.
(g) Consents. All consents, approvals, clearances and authorizations
--------
referred to in or contemplated by Section 4.3(c) (excluding any consents
contemplated by Section 4.2(a)) or in Schedules 3.1(e) and 3.2(e) shall have
been obtained.
(h) Engineering Service Agreements. Seller and Buyer shall have
------------------------------
entered into the engineering service agreement substantially in the form of
Exhibit H ("Engineering Service Agreement").
(i) MTBE Supply Agreement. Seller or TRMI (or any other Affiliate of
---------------------
Seller acceptable to Buyer) and Buyer
76
or any of its Affiliates shall have entered into the MTBE Supply Agreement.
Section 9.2 Conditions Precedent of Seller. The obligations of Seller to
------------------------------
consummate the transactions contemplated by the Agreement are subject to the
following conditions:
(a) Representations and Warranties True at Closing. The
----------------------------------------------
representations and warranties of Buyer contained in the Agreement or in
any certificate or document delivered pursuant to the provisions hereof, or
in connection with the transactions contemplated hereby, were true and
complete when made, and shall be true and complete on and as of the Closing
Date as though such representations and warranties were made at and as of
such date except as otherwise expressly provided herein.
(b) Compliance with Agreement. On and as of the Closing Date, Buyer
-------------------------
shall have performed and complied with, and shall have caused Buyer's
Affiliates to perform and comply with, all agreements and conditions
required by the Agreement to be performed and complied with prior to or on
the Closing Date.
(c) Certified Resolutions and Officers' Certificate. Buyer shall have
-----------------------------------------------
delivered to Seller (i) a certificate dated the Closing Date signed by the
Secretary or an Assistant Secretary of Buyer with respect to the action of
Buyer's Board of Directors authorizing the transactions contemplated by the
Agreement, and (ii) a certificate dated the Closing Date and signed by the
President or a Vice President of Buyer certifying in such detail as Seller
and the Company may reasonably request to the fulfillment of the conditions
specified in subparagraphs (a) and (b) of this Section 9.2.
(d) Approval of Proceedings. All actions, proceedings, instruments and
-----------------------
documents required for Buyer to carry out the Agreement, or incidental
thereto, and all other related legal matters shall have been approved by
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq. as counsel for Seller and the Company or such
other counsel designated by Seller which approval shall not be unreasonably
withheld.
(e) Opinion of Counsel of Buyer. There shall have been delivered to
---------------------------
Seller an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, or such
other counsel designated by Buyer as Seller may approve, which approval
77
shall not be unreasonably withheld, dated the Closing Date, as set forth on
Exhibit G.
(f) Injunction. On the Closing Date, there shall be no injunction,
----------
writ, or preliminary restraining order or any order of any nature issued by
a court or other Governmental Body of competent jurisdiction directing that
the transactions provided for herein or any of them not be consummated as
herein provided, or imposing any conditions on the consummation of the
transactions contemplated hereby and no material proceeding or lawsuit shall
have been commenced or threatened by any Governmental Body or other Person
with respect to any of the transactions contemplated by the Agreement.
(g) Consents. All consents, approvals, clearances and authorizations
--------
referred to in or contemplated by Section 4.3(c) (excluding any consents
contemplated by Section 4.2(a)) or in Schedule 3.3(e) shall have been
obtained.
(h) Engineering Service Agreement. Buyer and Seller shall have
-----------------------------
entered into the Engineering Service Agreement.
(i) MTBE Supply Agreement. Seller and Buyer or their respective
---------------------
Affiliates shall have entered into the MTBE Supply Agreement.
PART TEN:
MISCELLANEOUS
Section 10.1 Notices. All notices, consents, requests, demands, and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given or delivered if W delivered by hand, (ii) delivered by a recognized
overnight commercial courier (receipt requested), or (iii) sent by telecopier
(with receipt confirmed), provided that a copy is promptly thereafter mailed in
the United States by first-class postage prepaid mail, to the party as follows
(or to such other address as any party shall have last designated by fifteen
(15) days, notice to the other Parties).
If to Seller:
Texaco Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Secretary
If to Buyer:
Huntsman Specialty Chemicals Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.2 Modification. The Agreement, including this Section 10.2 and
------------
the Schedules, shall not be modified except by an instrument in writing signed
by or on behalf of all of the Parties.
Section 10.2 Governing Law. The Agreement shall be governed by and
-------------
construed and enforced in accordance with the internal Laws of the State of New
York without regard to the conflict of laws principles thereof, except that for
purposes of determining whether there has been a breach of any obligation
hereunder as a result of a non-compliance with Laws involving matters of real
property or employment (including employee benefit matters) , reference shall be
made to the relevant local, state, provincial or national Law.
Section 10.4 Assignment. Seller and Buyer covenant with each other with
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respect to assignment as follows:
(a) No Assignment. The Agreement shall not be assigned by any Party
-------------
directly or indirectly to any other Person (whether by the sale of stock or
other transfer of ownership interest in a Party, or the sale or transfer by
a Person that has an indirect stock or ownership interest in a Party or
otherwise).
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(b) Assignment Rights. Notwithstanding anything to the contrary
-----------------
herein, Buyer (and, in the case of Section 10.4(b)(i), the holder or
holders, directly or indirectly, of Buyer's capital stock) shall have the
right, subject to Seller's consent which shall not be unreasonably withheld,
(i) to sell the PO/MTBE Business as a whole by means of a sale of the
Buyer's capital stock or its direct or indirect parent corporation's capital
stock, to a Person; or (ii) to sell the PO/MTBE Business as a whole by means
of a sale of all or substantially all of the assets of the Buyer to a
Person, and in connection with such sale to assign to such Person all of
Buyer's rights under the Agreement and to cause such Person to assume all of
Buyer's obligations under the Agreement; or (iii) to sell all or any of the
Assets constituting a facility or a parcel of land no less than Fifty (50)
acres to one or more Persons, and in connection with such sale to assign to
such Person or Persons, Buyer's rights under the Agreement that relate to
the Assets so sold and to cause such Person or Persons to assume Buyer's
obligations under the Agreement that relate to the Assets so sold; provided,
however, that if Buyer assigns any or all of its rights and obligations
under the Agreement in accordance with Section 10.4(b)(i),(ii) or (iii),
then there shall be no right of assignment of the rights and obligations
under the Agreement so assigned thereafter (it being understood and agreed
that if, with the consent of Seller, any of Buyer's rights under the
Agreement are assigned in accordance with any of the foregoing Section
10.4(b)(i),(ii) or (iii), Seller shall continue to perform Seller's
obligations under the Agreement that relate to the rights so assigned).
(c) Related Party Assignment. Notwithstanding anything to the
------------------------
contrary herein, each Party shall have the right to assign all or any part
of its rights and obligations hereunder to one or more wholly owned
subsidiaries of such Party, or in the case of Buyer, to any other entity
controlled directly or indirectly by the Huntsman Group, provided that such
assignment shall not relieve such Party from its obligations under the
Agreement. Notwithstanding anything to the contrary herein, neither the
pledge of all or any part of the capital stock of any Person that has a
direct or indirect stock or ownership interest in Buyer to any lender
providing financing to Huntsman Corporation or any member of the Huntsman
Group nor the transfer of such capital stock by any such Person or any
assignee of such Person shall
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constitute an assignment under the Agreement for any purpose.
(d) Financing. Notwithstanding anything to the contrary herein,
---------
without the prior consent of Seller, Buyer shall have the right to (x) grant
a security interest in or collaterally assign the Agreement, (y) create a
lien, pledge or mortgage on all or any part of the PO/MTBE Business and (z)
pledge all or any part of the capital stock of Buyer in favor of, in each
case, to any Person, providing financing to Buyer for use in the purchase of
the PO/MTBE Business which financing is secured by, or entered into in
connection with, such purchase ("Financing Person"). In the event a
Financing Person sells or transfers, directly or indirectly, all or any part
of the capital stock of Buyer or the PO/MTBE Business, such Financing Person
shall have the assignment rights as set forth in Section 10.4(a), (b) and
(c), provided however, that if a Financing Person assigns any or all of its
rights and obligations under the Agreement in accordance with Section 10.4
(b) (i) , (ii) or (iii) , then there shall be no right of assignment
thereafter unless the PO/MTBE Business as a whole is transferred or sold,
and in such case, there shall be a one time right of assignment by the owner
of the entire PO/MTBE Business without Seller's consent. Assignments by a
Financing Person as set forth in Section 10.4(b)(i) and (ii) and any grants,
pledges or assignments as set forth in Section 10.4(d) shall not be subject
to Seller's consent but, so long as the Preferred Stock is outstanding,
shall be subject to the Intersecurity Agreements and the Series A Preferred
Stockholder Agreement, as applicable. So long as the Preferred Stock is
outstanding, a Financing Person, as a permitted assignee shall enter into,
assume and be made a party to the Intersecurity Agreement by and among BASF
Capital Corporation, the Company, Bankers Trust Co., in its capacity as
agent for the Lenders under Buyer's Senior Credit Agreement and the Agent
for the Lenders under Buyer's Ten Year Term Loan Agreement and any other
similar or related documents.
(e) Structured Sale. Notwithstanding anything in the Agreement to the
---------------
contrary, (i) a public offering or other disposition of the capital stock of
Buyer or any direct or indirect parent corporation of Buyer effected
pursuant to the Securities Act of 1933 (including, without limitation,
broker's transactions as defined under Rule 144 promulgated thereunder) (any
such offering or other disposition, a "Structured Sale") shall under no
circumstances be deemed an assignment of Buyer's rights
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or obligations under the Agreement, provided, however, that immediately
following any such Structured Sale, the Huntsman Group collectively owns or
controls, directly or indirectly, capital stock of Buyer representing at
least thirty (30%) percent of the voting power of all outstanding shares of
capital stock of Buyer; and (ii) subject to the Series A Preferred
Stockholder Agreement between Buyer and the Company, a transfer of direct or
indirect ownership of Buyer's capital stock (other than pursuant to a
Structured Sale) shall not be deemed an assignment of Buyer's rights or
obligations under the Agreement provided that immediately following any such
transfer, the Huntsman Group collectively owns or controls, directly or
indirectly, capital stock of Buyer representing at least a majority of the
voting power of all outstanding shares of capital stock of Buyer. In the
event of a Structured Sale or transfer as contemplated by the immediately
preceding sentence, Seller shall continue to perform Seller's obligations
under the Agreement. The "Huntsman Group" shall mean, collectively, ▇▇▇ ▇.
▇▇▇▇▇▇▇▇, his spouse, sibling and direct descendents, and their respective
spouses so long as they remain spouses and any trust for the benefit of any
of the foregoing.
Section 10.5 Counterparts. The Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 10.6 Invalidity. If any of the provisions of the Agreement
----------
including the Schedules is held invalid or unenforceable, such invalidity or
unenforceability shall not affect in any way the validity or enforceability of
any other provision of the Agreement. In the event any provision is held invalid
or unenforceable, the Parties shall attempt to agree on a valid or enforceable
provision which shall be a reasonable substitute for such invalid or
unenforceable provision in light of the tenor of the Agreement and, on so
agreeing, shall incorporate such substitute provision in the Agreement.
Section 10.7 Entire Agreement and Construction. Except for the
---------------------------------
Confidentiality Agreements, the Agreement contains the entire agreement between
the Parties hereto with respect to the agreements and transactions contemplated
herein and all prior understandings and agreements shall merge herein. There are
no additional terms, whether consistent or inconsistent, oral or written, which
are intended to be part of the Parties, understandings which have
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not been incorporated into the Agreement and the Schedules. The Parties agree
that they have jointly participated in the drafting and preparation of the
Agreement and that the language of the Agreement shall be construed as a whole
according to its fair meaning and not strictly for or against any of the Parties
hereto.
Section 10.8 Expenses. Except as otherwise expressly provided herein, each
--------
Party shall bear its fees, costs and expenses in connection with the
transactions contemplated herein, including, without limitation, all legal and
accounting fees and disbursements and fees and expenses of other advisors
retained by such Party.
Section 10.9 Waivers and Amendments. All amendments and other modifications
----------------------
hereof shall be in writing and signed by each of the Parties. Any Party may by
written instrument (i) waive any inaccuracies in any of the representations or
warranties made to it by any other Party contained in the Agreement or in any
instruments and documents delivered to it pursuant to the Agreement, or (ii)
waive compliance or performance by any other Party with or of any of the
covenants or agreements made to it by any other Party contained in the
Agreement. The delay or failure on the part of any Party hereto to insist, in
any one instance or more, upon strict performance of any of the terms or
conditions of the Agreement, or to exercise any right or privilege herein
conferred shall not be construed as a waiver of any such terms, conditions,
rights or privileges but the same shall continue and remain in full force and
effect. All rights and remedies are cumulative.
Section 10.10 Survival of Representations and Covenants. All representations
-----------------------------------------
and warranties contained in the Agreement shall survive the Closing and continue
for a period of Fifteen (15) months following the Closing Date; provided, that
(i) the representations and warranties of Seller contained in Section 3.2(h)
shall continue indefinitely and in Section 3.2(m) shall survive for Sixty (60)
days after the expiration of the applicable statute of limitations and (ii) the
representations and warranties of Buyer contained in Sections 3.3 (h) , (i) and
(j) shall survive for the period of time the Preferred Stock remains
outstanding. The covenants and agreements contained in the Agreement shall
survive the Closing and continue in accordance with their respective terms. In
the event Buyer or Buyer's Affiliates transfer, sell, assign or use all or any
part of the PO/MTBE Business for any purpose other than industrial,
manufacturing, chemical or laboratory use, all of
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Seller's representations, warranties, covenants, agreements, indemnities and
obligations under Part Six of the Agreement shall expire and terminate with
respect to such part of the PO/MTBE Business. Any right of indemnification
pursuant to Part Seven with respect to a claimed breach of a representation or
warranty shall expire at the date of termination of the representation or
warranty claimed to be breached ("Claim Termination Date"), unless on or prior
to the Claim Termination Date a Claim has been made to an Indemnifying Party. If
a Claim is timely made, it may continue to be asserted beyond the Claim
Termination Date of the representation and warranty to which such Claim relates.
A "Claim" means a written notice asserting a breach of a representation or
warranty specified in the Agreement, which shall reasonably set forth, in light
of the information then known to the Party giving such notice, a description of
and estimate (if then reasonable to make) of the amount involved in such breach.
Section 10.11 Section Headings. The section headings in the Agreement are
----------------
for convenience of reference only and shall not be deemed to alter or affect the
interpretation of any provision thereof.
Section 10.12 Termination. The Agreement may be terminated (i) by mutual
-----------
written consent of the Parties at any time prior to the Closing; (ii) by Buyer
by notice to Seller given on or before the Closing Date, if Buyer shall discover
any material fact or condition existing on the date of such termination which is
at variance with any of the representations and warranties of Seller contained
in the Agreement; (iii) by and at the option of the Seller if the Closing shall
not have occurred on or before the Termination Date; or (iv) by and at the
option of the Buyer if the Closing shall not have occurred on or before the
Termination Date. Upon any termination the Parties shall have no further
obligations under the Agreement; provided, however, Buyer shall hold all
information which it has obtained during the transaction contemplated hereby,
subject to the Confidentiality Agreement, and the provisions of Sections 1.2,
4.3(b), 10.3, 10.8, 10.12 and 10.13 shall remain in full force and effect. The
Parties understand and agree that, from and after the Closing Date, the
Confidentiality Agreements shall be of no further force or effect.
Section 10.13 Dispute Resolution. Seller and Buyer covenant with each other
------------------
as follows:
(a) Generally. Any claim, controversy or dispute
---------
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arising out of, relating to, or in connection with the Agreement or the
agreements and transactions contemplated hereby, by Buyer, Buyer's
Affiliates, Seller or Seller's Affiliates, including the interpretation,
validity, termination or breach thereof, shall be resolved solely in
accordance with the dispute resolution procedures set forth in Schedule
10.13. The Parties covenant that they shall not resort to court remedies
except as provided for in Schedule 10.13, or for preliminary relief in aid
of arbitration.
(b) Violations. A Party who violates the covenants in Section 10.13
----------
(a) shall pay all the legal costs incurred by the other Parties in
connection with the enforcement thereof. Suits, actions or proceedings in
connection with violations of the covenants in Section 10.13(a) and Schedule
10.13 shall be instituted in the United States District Court for the
Southern District of New York, and pursuant to Title IX of the United States
Code. Each Party waives any option or objection which it may now or
thereafter have to the laying of the venue in any such suit, action or
proceeding and irrevocably submits to the jurisdiction of such court in any
such suit, action or proceeding.
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IN WITNESS WHEREOF, the Parties hereto have entered into the Agreement as of
the date first herein above written.
TEXACO INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
TEXACO CHEMICAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
HUNTSMAN SPECIALTY CHEMICALS
CORPORATION
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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IN WITNESS WHEREOF, the Parties hereto have entered into the Agreement as of
the date first herein above written.
TEXACO INC.
By:_____________________________
TEXACO CHEMICAL INC.
By:_____________________________
HUNTSMAN SPECIALTY CHEMICALS
CORPORATION
By:_____________________________
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