Asset Contribution Agreement

EXHIBIT 10.11


ASSET CONTRIBUTION AGREEMENT


AMONG


LYONDELL PETROCHEMICAL COMPANY,


LYONDELL PETROCHEMICAL L.P. INC.


AND


EQUISTAR CHEMICALS, LP


DATED: DECEMBER 1, 1997


TABLE OF CONTENTS


Page
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SECTION 1 DEFINITIONS.................................................. 1


SECTION 2 CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES.................................................. 8
2.1 Transfer of Assets........................................... 8
2.2 Excluded Assets.............................................. 10
2.3 Instruments of Conveyance and Assignment..................... 11
2.4 Further Assurances........................................... 11
2.5 Assumption of Liabilities.................................... 12
2.6 Excluded Liabilities......................................... 13
2.7 Master Intellectual Property Agreement....................... 14
2.8 Employee Matters............................................. 14
2.9 Joint Contracts.............................................. 16


SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR............ 16
3.1 Due Organization; Good Standing and Power.................... 16
3.2 Authorization and Validity of Agreements..................... 16
3.3 No Consents Required; No Conflict with Instruments to which
the Contributor is a Party................................... 17
3.4 Employee Benefits............................................ 17
3.5 Title to Assets; Absence of Liens and Encumbrances; Leases... 18
3.6 Title Matters; Defects in Improvements....................... 19
3.7 Working Capital.............................................. 19
3.8 Technology and Similar Rights................................ 20
3.9 Government Licenses, Permits and Related Approvals........... 20
3.10 All Necessary Assets......................................... 20
3.11 Conduct of Business in Compliance with Regulatory and
Contractual Requirements..................................... 20
3.12 Legal Proceedings............................................ 20
3.13 Consents..................................................... 20
3.14 Tax Matters.................................................. 21
3.15 [Reserved]................................................... 21
3.16 HSE Matters.................................................. 21
3.17 Investigation to Acquire Knowledge........................... 22


SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP............ 22
4.1 Due Organization; Good Standing and Power.................... 22
4.2 Authorization and Validity of Agreement...................... 22
4.3 No Consents Required; No Conflict with Instruments to which the


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Partnership is a Party...................................... 22


SECTION 5 COVENANTS SUBSEQUENT TO CLOSING DATE........................ 23
5.1 Access to Information....................................... 23
5.2 Mail or Other Communications................................ 23
5.3 Use of Contributor's Trade Name............................. 23
5.4 Closing Date Balance Sheet.................................. 24
5.5 Payment of Retained Accounts Payable........................ 24
5.6 Collection of Accounts Receivable........................... 24
5.7 Reimbursement for Prepaid Expenses.......................... 24


SECTION 6 SURVIVAL AND INDEMNIFICATION................................. 24
6.1 Survival Limitations......................................... 24
6.2 Indemnification.............................................. 25
6.3 Procedures................................................... 28
6.4 Subrogation.................................................. 30
6.5 Claims for HSE Work.......................................... 30
6.6 EXTENT OF INDEMNIFICATION.................................... 30


SECTION 7 MISCELLANEOUS................................................ 30
7.1 Construction................................................. 30
7.2 Payment of Certain Expenses and Taxes........................ 31
7.3 Notices 32
7.4 [Reserved]................................................... 33
7.5 Binding Effect; Benefit...................................... 33
7.6 Occasional and Bulk Sales.................................... 33
7.7 Assignability................................................ 33
7.8 Amendment; Waiver............................................ 33
7.9 Dispute Resolution........................................... 33
7.10 Severability................................................. 33
7.11 Counterparts................................................. 34
7.12 APPLICABLE LAW............................................... 34
7.13 JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER.......... 34
7.14 WAIVER OF JURY TRIAL......................................... 34
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT


Schedules
---------


Schedule A - Contributed Business Schedule 2.1(a) - Fee Interests Schedule 2.1(b) - Leases Schedule 2.1(d) - Equipment Schedule 2.1(k) - Contributed Subsidiaries Schedule 2.2(c) - Excluded Tradenames and Logos Schedule 2.2(h) - Certain Excluded Assets Schedule 2.5(a)(vii) - Assumed Indebtedness Schedule 2.5(a)(x) - Assumed Long-Term Liabilities Schedule 3 - Disclosure Schedule


Appendices
----------


Appendix A - Dispute Resolution Procedures


Exhibits
--------


Exhibit A - Form of Deeds for Fee Interests Exhibit B - Form of Assignment of Lease for Leaseholds Exhibit C - Form of Bill of Sale and Assignment Exhibit D - Form of Trademark Assignment Exhibit E - Form of Patent Assignment Exhibit F - Form of Assumption Agreement Exhibit G - Form of Master Intellectual Property Agreement


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ASSET CONTRIBUTION AGREEMENT


ASSET CONTRIBUTION AGREEMENT (this "Agreement"), dated as of December 1, 1997, between Lyondell Petrochemical Company, a Delaware corporation (the "Contributor"), Lyondell Petrochemical L.P. Inc., a Delaware corporation (the "Contributing Partner") and Equistar Chemicals, LP, a Delaware limited partnership (the "Partnership").


WHEREAS, the Contributor owns all of the issued and outstanding shares of capital stock of Contributing Partner and the Contributing Partner is a partner in the Partnership;


WHEREAS, the Contributor wishes to contribute the assets subject to certain liabilities associated with the olefins, polyolefins and related petrochemicals businesses described in Schedule A (the "Contributed Business") to the Contributing Partner; and


WHEREAS, the Contributing Partner wishes to contribute such assets and liabilities to the Partnership, and the Partnership wishes to accept such assets and assume such liabilities, all upon the terms and conditions hereinafter set forth; and


WHEREAS, the Partnership will consummate certain transactions and enter into certain agreements as provided for in the Master Transaction Agreement, dated as of July 25, 1997, between Lyondell Petrochemical Company and Millennium Chemicals Inc., as amended (the "Master Transaction Agreement").


NOW THEREFORE, in consideration of the premises and of the mutual covenants of the parties hereto, it is hereby agreed as follows:


SECTION 1
DEFINITIONS


The terms used in this Agreement have the following definitions or are defined in the Sections referenced below:


"Accounts Receivable" constitute, as of the Closing Date, all uncollected accounts receivable that have been generated by, or are attributable to, the Contributor's operation prior to the Closing Date of the Contributed Business in the ordinary course and in all respects in a manner consistent with the provisions of Section 3.2 of the Master Transaction Agreement.


"Affiliate" means any Person that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified; provided,


however, that for purposes of this Agreement: (i) Atlantic Richfield Company and any Person controlled by it shall not be considered an Affiliate of Contributor; and (ii) neither the Partnership nor any Person controlled by it shall be considered an Affiliate of the Contributor. For purposes of this definition, the term "control" shall have the meaning set forth in 17 CFR 230.405 as in effect on the date hereof.


"Agreed Rate" means the base commercial lending rate announced by Citibank, N.A. (or its successor) at its principal office in effect from time to time, such interest rate to change automatically, effective as of the date of each change in such base rate.


"Agreement" is defined in the Preamble.


"Assets" means all of the assets, rights and properties being contributed, conveyed, assigned, transferred and delivered to the Partnership pursuant to Section 2.1.


"Assignment and Assumption Agreements" means the Deeds, the Assignments of Lease, the Bill of Sale and Assignment, the Trademark Assignment, the Patent Assignment and the Assumption Agreement.


"Assignments of Lease" is defined in Section 2.3(a).


"Associated Rights" is defined in Section 2.1(c).


"Assumed Liabilities" is defined in Section 2.5(a).


"Authority" means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal (or any commonwealth, territory or possession thereof), state, local or foreign, or any agency, department or instrumentality thereof, or any court or arbitrator (public or private).


"Basic Severance" is defined in Section 2.8(b).


"Capital Spares" means the inventory of spare parts used by the Contributor in the Contributed Business and owned by the Contributor as of the Closing Date.


"CERCLA" is defined in Section 3.16(b).


"Chemical Substance" means any (i) chemical substance, pollutant, contaminant, constituent, chemical, mixture, raw material, intermediate, product or byproduct that is regulated (including any requirement for the reporting of any Release thereof) under any HSE Law or defined or listed as an industrial, toxic, deleterious, harmful, radioactive, infectious, disease-causing or hazardous


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substance, material or waste under any HSE Law, and (ii) petroleum or any fraction thereof, asbestos or asbestos-containing material or polychlorinated biphenyls ("PCBs").


"Closing" means the closing of the transactions contemplated by the Master Transaction Agreement.


"Closing Date" means the date hereof.


"Closing Date Balance Sheet" is defined in Section 5.4.


"Code" means the Internal Revenue Code of 1986, as amended.


"Consent" means any consent, waiver, appraisal, authorization, exception, registration, license or declaration of or by any Person or any Authority, or any expiration or termination of any applicable waiting period under any Legal Requirement, required with respect to the Contributed Business or the Contributor or any Affiliate thereof in connection with (i) the execution and delivery of this Agreement or any of the Related Agreements or (ii) the consummation of the transactions contemplated hereby or thereby.


"Contracts" means contracts, maintenance and service agreements, purchase commitments for materials and other services, advertising and promotional agreements, leases, taxation agreements with any Authority, and other agreements.


"Contributed Contracts" is defined in Section 2.1(f).


"Contributed Business" is defined in the Preamble.


"Contributed Intellectual Property" is defined in Section 2.1(g).


"Contributed Subsidiaries" is defined in Section 2.1(k).


"Contributor" is defined in the Preamble.


"Deeds" is defined in Section 2.3(a).


"De Minimis Claim" means any Third Party Claim for which the Liability associated therewith is less than $25,000.


"Employee Plan" is defined in Section 3.4(a)(i).


"Encumbrance" means any lien, charge, encumbrance, security interest, title defect, option or any other restriction or third party right.


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"Environment" is defined in this Section 1 in the definition of "HSE Laws".


"Equipment" is defined in Section 2.1(d).


"Excluded Assets" is defined in Section 2.2.


"Excluded Liabilities" is defined in Section 2.6.


"Fee Interests" is defined in Section 2.1(a).


"GAAP" means United States generally accepted accounting principles, as in effect from time to time.


"Government Licenses" means all licenses, permits or franchises issued by any Authority relating to the operation, development, use, maintenance or occupancy of the Facilities or any other Asset or of the Contributed Business to extent that such licenses, permits or franchises relate principally to the normal operation and conduct of the Contributed Business.


"HSE Claim" means (i) any actions, events, circumstances or responsibilities (including compliance actions or requirements) that are necessary to comply with HSE Laws but only to the extent that any of the foregoing give rise to out of pocket costs or expenses or result in a Liability that is required by GAAP to be reflected on the balance sheet of the applicable party or (ii) any third party (including private parties, Authorities and employees acting on each such party's own behalf or on the behalf of other third parties) actions, lawsuits, claims, investigations or proceedings arising under HSE Laws.


"HSE Laws" means any Legal Requirements or rule of common law now in effect (including any amendments now in effect) and any current judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree, or judgment, relating to (i) any ambient air, surface water, drinking water, groundwater, land surface, subsurface strata, river sediment, natural resources or real property and the physical buildings, structures and fixtures thereon, including sewer, septic and waste treatment, storage or disposal systems (the "Environment"), including pollution, contamination, cleanup, preservation, protection and reclamation of the Environment; (ii) health or safety, including the exposure of employees and other Persons to any Chemical Substance; (iii) the Release or threatened Release of any Chemical Substance, noxious noise or odor, including investigation, study, assessment, testing, monitoring, containment, removal, remediation, response, cleanup and abatement of such Release or threatened Release; and (iv) the management of any Chemical Substance, including the manufacture, generation, formulation, processing, labeling, use, treatment, handling, storage, disposal, transportation, distribution, re-use, recycling or reclamation of any Chemical Substance.


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"HSE Proceeding" is defined in Section 3.16(d).


"Indemnified Party" is defined in Section 6.3(a).


"Indemnifying Party" is defined in Section 6.3(a).


"Intellectual Property" means research material, technical information, marketing information, patent rights, patent licenses, pending patent applications, trade secrets, technical information, know-how, management information systems, technology, quality control data, specifications, designs, drawings, software, sales promotion literature and advertising materials.


"Inventory" means materials used by the Contributor in the Contributed Business and owned by the Contributor as of the Closing Date including raw materials, feed stocks, supplies, additives, pigments, process chemicals, packaging materials (to the extent the Partnership's use thereof would be consistent with Section 5.3), catalysts, work-in-process and finished goods that relate principally to the normal operation and conduct of the Contributed Business.


"Inventory Tax" is defined in Section 7.2(d).


"Knowledge" with respect to the Contributor means the actual knowledge of (i) any plant manager, (ii) any officer of the Contributor having responsibilities with respect to the Contributed Business, and (iii) any employee reporting directly to an officer described in clause (ii), in each case employed by the Contributor in connection with the Contributed Business.


"Leased Premises" is defined in Section 2.1(b).


"Leaseholds" is defined in Section 2.1(b).


"Leases" is defined in Section 2.1(b).


"Legal Requirement" means any law, statute, rule, ordinance, decree, requirement, regulation, order or judgment of any Authority, including the terms of any Government License.


"Liability" is defined in Section 6.2(a).


"Licensed Technology" means the technology licensed to the Partnership pursuant to the Master Intellectual Property Agreement.


"Licensed Trademarks" means the trademarks licensed to the Partnership pursuant to the Master Intellectual Property Agreement.


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"Lowest Cost Response" means the response required or allowed under HSE Laws that addresses the Chemical Substances present at the lowest cost (considered as a whole taking into consideration any negative impact such response may have on the conduct of the Contributed Business and any potential additional costs or liabilities that may arise as a result of such response) as compared to any other response that is consistent with HSE Laws. Taking no action shall constitute the Lowest Cost Response if, after investigation, taking no action is determined to be consistent with HSE Laws. If taking no action is not consistent with HSE Laws, the least costly non-permanent remedy (such as mechanisms to contain or stabilize Chemical Substances, including caps, dikes, encapsulation, leachate collection systems, etc.) shall be the Lowest Cost Response, provided that such non-permanent remedy is consistent with HSE Laws and less costly than the least costly permanent remedy (such as the excavation and removal of soil).


"Master Intellectual Property Agreement" is defined in Section 2.7.


"Master Transaction Agreement" is defined in the fourth WHEREAS clause.


"Material Adverse Effect" means any adverse circumstance or consequence that, individually or in the aggregate, has an effect that is material to the financial condition, results of operations, assets or business of the Contributed Business or the Assets, taken as a whole.


"Neutral" means a neutral Person acceptable to each of the appointing parties and not affiliated with any of the parties or their Affiliates.


"Partnership" is defined in the Preamble.


"Partnership Employees" is defined in Section 2.8(a).


"Patent Assignment" is defined in Section 2.3(a).


"PCBs" is defined in this Section in the definition of "Chemical Substance".


"Person" means any natural person or any corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization.


"Pre-Closing Contingent Liabilities" means all Liabilities of every kind and nature arising out of, in connection with or related to the ownership, operation or use prior to the Closing Date of the Assets or the Contributed Business other than the Liabilities referred to in Sections 2.5(a)(i), (ii), (iii), (vii) and (ix).


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"Prepaid Expenses" means the balances in the prepaid accounts consistent with GAAP of the Contributor or its Affiliates, as of the Closing Date, that are associated with the Contributed Business and that will have value to the Partnership in owning and operating the Contributed Business after the Closing Date.


"Property Tax" is defined in Section 7.2(c).


"Related Agreements" means the Master Transaction Agreement, Tier 1 Related Agreements (other than this Agreement) and Tier 2 Related Agreements of the Contributor or its Affiliates, as such terms are defined in the Master Transaction Agreement.


"Release" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, dumping, discharge, dispersal, leaching, escaping, emanation or migration of any Chemical Substance in, into or onto the Environment of any kind whatsoever, including the movement of any Chemical Substance through or in the Environment, exposure of any type in any workplace, any release as defined under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any other HSE Law and any noxious noise or odor emission.


"Retained Accounts Payable" means, as of the Closing Date, all current trade accounts payable and current accrued expenses other than those related to employee vacation and lag-week accruals for employees that become Partnership Employees.


"SEC Reports" means the 1996 Annual Report on Form 10-K and the 10-Q for the first quarter of 1997 of the Contributor required to be filed with the Securities and Exchange Commission.


"Seven Year PCCL Claims" means Third Party Claims (other than any De Minimis Claim) related to Pre-Closing Contingent Liabilities that have been or are asserted within seven years after the Closing Date.


"Shared Services Agreements" means the agreements between the Contributor (or its Affiliates) and the Partnership set forth on Appendix B-2 of the Master Transaction Agreement.


"Stores Inventory" means the inventory of spare parts, excluding Capital Spares, that are used by the Contributor or any Affiliate thereof in the Contributed Business and owned by the Contributor or any Affiliate thereof as of the Closing Date and that consist of items that generally can be used for several processes or types of equipment, including, but not limited to, such items as pumps, motors, pipe fittings, electrical wiring, instruments, nuts and bolts, unfabricated metals, safety items, small hand tools and other miscellaneous repair parts or supplies.


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"Taxes" means all taxes, charges, fees, levies or other assessments imposed by any taxing Authority, including, but not limited to, income, gross receipts, excise, property, sales, use, transfer, payroll, license, ad valorem, value added, withholding, social security, national insurance (or other similar contributions or payments), franchise, severance and stamp taxes (including any interest, fines, penalties or additions attributable to, or imposed on or with respect to, any such taxes, charges, fees, levies or other assessments).


"Third Party Claim" means any allegation, claim, civil or criminal action, proceeding, charge or prosecution brought by a Person other than the Contributor, any Affiliate thereof, the Partnership, or any member of the Millennium Group (as defined in the Master Transaction Agreement).


"Trademarks" means trade names, trademarks, trademark registrations or trademark applications, copyrights, copyright applications or copyright registrations or any derivative thereof or design used in connection therewith.


"Trademark Assignment" is defined in Section 2.3(a).


"Unrecorded Assets" is defined in Section 2.1(e).


"WARN" is defined in Section 2.8(f).


SECTION 2
CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES


2.1 Transfer of Assets. On the terms and subject to the conditions set forth in this Agreement, on the date hereof, the Contributor contributes to the Contributing Partner and the Contributing Partner is contributing, conveying, assigning, transferring and delivering to the Partnership, or shall cause to be contributed, conveyed, assigned, transferred and delivered to the Partnership, and the Partnership shall accept, acquire and assume all of the assets, rights, and properties used or held for use in the contemplated operation and conduct of the Contributed Business of every kind, nature, character and description, tangible and intangible, real, personal or mixed, wherever located other than the Excluded Assets; and which conveyance, subject to Section 2.2, shall include, without limitation, the following:


(a) All right, title and interest of the Contributor and any Affiliate thereof in the parcels of land described as fee property on Schedule 2.1(a), together with all buildings, structures, fixtures and other improvements situated thereon and all right, title and interest of the Contributor and any Affiliate thereof under easements, privileges, rights-of-way, riparian and other water rights, lands underlying any adjacent streets or roads, appurtenances and licenses to the extent pertaining to or accruing to the benefit of the land (the "Fee Interests");


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(b) All right, title and interest of the Contributor and any Affiliate thereof under the leases and subleases, all amendments thereto and all agreements related thereto described on Schedule 2.1(b) (the "Leases"), for the use and occupancy of the premises described therein (the "Leased Premises"), together with all buildings, structures, fixtures and other improvements situated thereon and, all rights and interests of the Contributor and any Affiliate th ...