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Contribution Agreement: Chevron Phillips Chemical Phillips Petroleum
Contribution Agreement: Chevron Phillips Chemical Phillips Petroleum
by and among
CHEVRON CORPORATION
And
ii 3
SECTION 4.13. Intellectual Property................................................................... 22
iii 4
SECTION 5.16. Transactions with Affiliates............................................................ 32
SECTION 5.17. Personal Property....................................................................... 32
ARTICLE VI COVENANTS............................................................................................. 33
SECTION 6.17. Special Indemnities and Risk Allocation between the Company and the
Parties............. 46
iv 5
SECTION 6.19. K-Resin Contribution.................................................................... 50
ARTICLE IX SURVIVAL;
INDEMNIFICATION............................................................................. 55
SECTION 12.2. Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.............................
58
v6
SECTION 12.8. Amendments and Waivers.................................................................. 60
APPENDICES
EXHIBITS
ANNEXES
Annex A Employee Matters Annex Annex B Tax Matters Annex Annex C Continuing
Indemnification Annex
vi 7
CONTRIBUTION AGREEMENT (this "Agreement"), dated as of May 23, 2000, by and among
PHILLIPS PETROLEUM COMPANY, a Delaware corporation ("Phillips"), CHEVRON
CORPORATION, a Delaware corporation ("Chevron"), and CHEVRON PHILLIPS
CHEMICAL COMPANY LLC, a Delaware limited liability company (the "Company").
RECITALS:
WHEREAS, Phillips and Chevron (each, a "Party") desire to combine certain of their chemicals
businesses in order to realize synergies and increase the efficiency and profitability of such
businesses;
WHEREAS, each of Phillips and Chevron intends that the Company shall be the primary vehicle
by which each Party conducts its chemicals businesses;
WHEREAS, each of Phillips and Chevron envisions that the Company will be a competitive,
growing chemical venture meeting or exceeding the financial return expectations of the Parties
on their investment in petrochemicals, plastics, and selected specialties;
WHEREAS, Phillips and Chevron desire to create a structure pursuant to which each of Phillips
and Chevron shall, directly or through direct or indirect wholly-owned subsidiaries, own 50% of
the voting and economic interests of the Company, into which each of Phillips and/or Affiliates
(as defined herein) of Phillips and Chevron and/or Affiliates of Chevron shall contribute certain
assets and related liabilities, operations and subsidiaries engaged in the chemicals businesses, all
as more fully provided for herein;
WHEREAS, the Parties intend that the Company will be a self-financing entity with an
investment-grade credit rating; and
WHEREAS, the parties hereto, at the closing of the transactions contemplated by this Agreement
(the "Closing"), shall cause the limited liability company agreement of the Company to be
amended and restated in the form set forth as Appendix A (as amended, the "Amended LLC
Agreement");
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the respective meanings set forth
below:
"Actual Contributed Cash" shall have the meaning set forth in Section 3.3(c). 8
"Actual Net Working Capital" shall have the meaning set forth in Section 3.3(c).
"Affiliate" shall mean, with respect to any Person, a Person, directly or indirectly, Controlling,
Controlled by, or under common Control with, such Person.
"Amended LLC Agreement" shall have the meaning set forth in the Recitals.
"Basket" shall mean, with respect to either Party's obligation under Article IX, $300,000,000.
"Beneficially Own" shall mean, with respect to any security, having or sharing the power to
direct or control the voting or disposition of such security.
"Beneficial Owner" shall mean, with respect to any security, a Person who Beneficially Owns
such security, and "Beneficial Ownership" has a corresponding meaning.
"BI Insurance Policy" shall have the meaning set forth in Section 6.19(d).
"BI Insurance Proceeds" shall have the meaning set forth in Section 6.19(d).
"Business Day" shall mean any day on which banks are generally open to conduct business in the
State of New York.
"C Chem" shall mean, collectively, the businesses, operations and assets that comprise the
Chemicals segment separately reported in Chevron's September 30, 1999 Form 10-Q, including
the assets set forth in Part I of Exhibit A-2 (including, in the case of any real property assets
identified in Part I of Exhibit A-2, all right, title and interest of Chevron and its Subsidiaries in
and to all land, improvements, easements, rights of way, fixtures, equipment and personal
property associated with such real property assets, irrespective of whether such land,
improvements, easements, rights of way, fixtures, equipment and personal property are
specifically identified in Exhibit A-2 or in Schedule 5.11(a)(i) or Schedule 5.11(a)(ii) of the
Chevron Disclosure Schedule, but subject to any specific exclusions or limitations, if any, set
forth in Part I of Exhibit A-2), the entities set forth in Part II of Exhibit A-2 and C Chem
Liabilities, but excluding the Chevron Excluded Assets and the Chevron Excluded Liabilities.
"C Chem December 31 Balance Sheet" shall mean the consolidated balance sheet of C Chem as
of December 31, 1999, including the pro forma adjustments, attached as Schedule 5.6 the
Chevron Disclosure Schedule.
"C Chem Discontinued Business" shall mean the AgChem and Consumer Products businesses of
Chevron, the Specialty Polymers business of Chevron and any business which is materially
different in terms of both products and processes from the businesses conducted by C Chem as of
the date of this Agreement.
"C Chem Employee" shall have the meaning set forth in Annex A.
29
"C Chem Intellectual Property" shall have the meaning set forth in Section 5.13(a).
"C Chem Leases" shall have the meaning set forth in Section 5.11(c).
"C Chem Liabilities" shall mean all Liabilities of Chevron and its Subsidiaries and/or Affiliates
attributable to the businesses and operations of C Chem, including (i) all Liabilities arising from
the ownership or use of assets that are part of C Chem, (ii) all Liabilities attributable to products
produced by or with such assets, (iii) all Liabilities attributable to the production of such
products, including all claims for personal injury, defective products, and the like, (iv) all
Liabilities under contracts, leases or permits if and to the extent utilized in the business of C
Chem as conducted on or before the Closing Date, and (v) all Liabilities made the responsibility
of the Company pursuant to Annex A, Annex B or Annex C; but excluding the Chevron
Excluded Liabilities.
"C Chem Material Contracts" shall have the meaning set forth in Section 5.10(a).
"C Chem Patent Rights" shall mean all claims of letters patent and patent applications owned or
controlled by Chevron or its Patent Subsidiaries, in the sense of having the right to grant licenses
thereunder, all subject to the terms and conditions, including the obligation to account to third
parties, under which such rights are held, based upon inventions conceived prior to the later of (i)
December 31, 2000 or (ii) the six-month anniversary of the Closing Date, insofar and only
insofar as such claims cover in whole or in part technology or inventions that are primarily used
by or identified as relating primarily to the C Chem business, or which arose from research,
development or demonstration activities which relate primarily to the C Chem business,
including those patents and patent applications listed on Schedule 6.18 of the Chevron
Disclosure Schedule and foreign counterparts thereof. C Chem Patent Rights (i) shall specifically
exclude patent claims to the extent they cover Oronite technology for fuel and lubricant additives
or additive precursors and their manufacture and blending and products, packages, and
formulations containing such additives or additive precursors except where such products,
packages, and formulations are comprised of a major portion of normal alpha olefins and their
derivatives, and (ii) shall specifically exclude patent claims covering Fischer-Tropsch gas-to-
liquids technology and upgrading of products therefrom to chemical products other than normal
alpha olefins and their derivatives.
"C Chem Proprietary Technology" shall mean transferable rights in unpublished technical
information, knowhow and trade secrets owned or controlled by Chevron or its Patent
Subsidiaries prior to the later of (i) December 31, 2000 or (ii) the six-month anniversary of the
Closing Date, relating primarily to the C Chem business and research, development, and
demonstration activities relating primarily to the C Chem business, including information
relating to proprietary computer programs, data bases, computer models, engineering
correlations, process design, engineering and operating data, proprietary catalysts and other
materials, formulations, experimental data, performance testing information, pilot plant data, and
test methods, and including information licensed from third parties, all subject to the terms and
conditions, including the obligation to account to third parties, under which such rights are held.
C Chem Proprietary Technology (i) shall specifically exclude Oronite technology for fuel and
lubricant additives or additive precursors and their manufacture and blending and products,
packages, and formulations containing such additives or additive precursors except where such
products, packages, and
3 10 formulations are comprised of a major portion of normal alpha olefins and their derivatives,
and (ii) shall specifically exclude Fischer-Tropsch gas-to-liquids technology and upgrading of
products therefrom to chemical products other than normal alpha olefins and their derivatives.
"C Chem Real Property" shall have the meaning set forth in Section 5.11(b).
"C Chem Subsidiaries" shall mean, collectively, any Subsidiaries to be contributed by Chevron
or Chevron Member Affiliates to the Company.
"C Chem Working Capital Difference" shall mean (i) C Chem's Actual Net Working Capital,
plus (ii) $18.76 million, minus (iii) Net Working Capital set forth on the C Chem December 31
Balance Sheet.
"Cap" shall mean, with respect to either Party's obligation under Article IX, $800,000,000.
"Chevron Disclosure Schedule" shall mean the disclosure schedules delivered by Chevron
concurrently herewith.
"Chevron Excluded Assets" shall mean the assets set forth on Exhibit B-2.
"Chevron Excluded Liabilities" shall mean the liabilities set forth on Exhibit C-2.
"Chevron Indemnified Person" shall have the meaning set forth in Section 9.1.
"Chevron Member Affiliates" shall have the meaning set forth in Section 2.1(a).
"Chevron Plans" shall mean, collectively, all material employee benefit plans providing benefits
to any C Chem Employees that are sponsored or maintained by Chevron or any of its Affiliates
or to which Chevron or any of its Affiliates contributes or is obligated to contribute on behalf of
C Chem Employees, including any employee welfare benefit plan within the meaning of Section
3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of
ERISA, and any bonus, incentive, deferred compensation, stock purchase, stock option,
severance, change of control or fringe benefit plan.
"Chevron Pipe Line Contribution" shall have the meaning set forth in Exhibit A-2.
"Chevron Retained Affiliates" shall mean, collectively, all Affiliates of Chevron other than C
Chem Subsidiaries.
"Chevron Savings Plan" shall have the meaning set forth in Annex A.
4 11
"Class C Member" shall have the definition set forth in the Amended LLC Agreement.
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