<PAGE> 1
EXECUTION COPY
RESTRUCTURING, TRANSFER AND SEPARATION AGREEMENT,
dated as of October 27, 1998
by and among
CONOCO INC.
(FORMERLY KNOWN AS CONOCO ENERGY COMPANY)
and
E.I. DU PONT DE NEMOURS AND COMPANY
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
Section 1.1 General..............................................................2
ARTICLE II RESTRUCTURING AND RELATED TRANSACTIONS
Section 2.1 The Restructuring...................................................24
Section 2.2 Transfers of Assets.................................................25
Section 2.3 Methods of Transfer and Assumption..................................26
Section 2.4 Organization of Registrant; Execution of Related
Agreements.........................................................28
Section 2.5 The Intercompany Notes..............................................29
Section 2.6 Registration of Conoco Shares.......................................32
ARTICLE III ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities.................................................34
Section 3.2 Retained Liabilities................................................34
Section 3.3 Construction of Agreements..........................................34
ARTICLE IV CERTAIN RESTRUCTURING DEFINITIONS
Section 4.1 Assumed Liabilities.................................................35
Section 4.2 Retained Liabilities................................................37
Section 4.3 Transferred Assets..................................................39
Section 4.4 Excluded Assets.....................................................39
Section 4.5 Shared Contracts....................................................39
ARTICLE V CORPORATE GOVERNANCE AND CERTAIN FINANCIAL REPORTING
AND OTHER MATTERS
Section 5.1 Rights Plan Amendments..............................................40
Section 5.2 Charter/bylaw Amendments............................................40
Section 5.3 Conoco Board Representation.........................................41
Section 5.4 Committees..........................................................43
Section 5.5 Accounting Principles...............................................44
Section 5.6 Tax Free Spin-Off...................................................45
Section 5.7 Survival of Rights..................................................46
ARTICLE VI SURVIVAL, INDEMNIFICATION, CLAIMS
AND OTHER MATTERS
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Section 6.1 Survival of Agreements..............................................46
Section 6.2 Indemnification.....................................................47
Section 6.3 Procedure for Indemnification.......................................51
Section 6.4 Other Claims for Indemnification....................................55
Section 6.5 Contribution........................................................55
Section 6.6 No Beneficiaries....................................................56
Section 6.7 Indemnification of Directors and Officers...........................56
ARTICLE VII CERTAIN ADDITIONAL MATTERS
Section 7.0 Post-Closing Transactions...........................................56
Section 7.1 Non Assignment, Further Assurances..................................57
Section 7.2 Delayed Companies; Interim Period...................................61
Section 7.3 Notice of Separation................................................65
Section 7.4 Resignations........................................................65
Section 7.5 Other Agreements....................................................65
Section 7.6 Payment of Separation Expenses......................................65
Section 7.7 Signs; Use of Company Name..........................................66
Section 7.8 Products, Supplies and Documents....................................67
Section 7.9 Plant Closings and Layoffs..........................................67
Section 7.10 Litigation.........................................................67
Section 7.11 No Restrictions on Post-Closing Competitive Activities;
Corporate Opportunities...........................................68
Section 7.12 Intellectual Property..............................................70
ARTICLE VIII ACCESS TO INFORMATION AND SERVICES
Section 8.1 Provision of Corporate Records......................................71
Section 8.2 Access to Information...............................................72
Section 8.3 Production of Witnesses and Individuals.............................73
Section 8.4 Retention of Records................................................73
Section 8.5 Confidentiality.....................................................74
Section 8.6 Privileged Matters..................................................76
Section 8.7 Mail and Other Communications.......................................78
ARTICLE IX INTERCOMPANY BUSINESS RELATIONSHIPS
Section 9.1 Cash Management; Settlement of Intercompany Accounts................79
Section 9.2 Letters of Credit...................................................82
Section 9.3 Guarantee Obligations...............................................83
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Section 9.4 Settlements for Cash Collections and Disbursements
After the Cash Settlement Date.....................................84
Section 9.5 Termination of Intercompany Agreements..............................85
Section 9.6 DuPont Hungary Loan. ..............................................86
ARTICLE X INSURANCE
Section 10.1 General............................................................86
Section 10.2 Excess Liability Policies..........................................86
Section 10.3 Transfer of Existing Policies......................................86
Section 10.4 Director's and Officer's Insurance.................................88
Section 10.5 Conoco Liability Policies..........................................88
Section 10.6 Insurance and Indemnities..........................................89
ARTICLE XI ENVIRONMENTAL MATTERS
Section 11.1 Certain Article XI Definitions.....................................89
Section 11.2 Conoco Environmental Liabilities...................................90
Section 11.3 DuPont Environmental Liabilities...................................91
Section 11.4 Other Environmental................................................92
Section 11.5 Damages, Awards, Etc...............................................92
Section 11.6 Remediation........................................................92
Section 11.7 Exclusive Remedy/Indemnification...................................93
ARTICLE XII CONDITION TO CONSUMMATION OF DISTRIBUTION; TERMINATION
Section 12.1 Condition..........................................................93
Section 12.2 Termination........................................................93
ARTICLE XIII DISPUTE RESOLUTION
Section 13.1 Mediation..........................................................94
Section 13.2 Initiation.........................................................94
Section 13.3 Submission to Mediation............................................94
Section 13.4 Provisional Remedies...............................................94
ARTICLE XIV MISCELLANEOUS
Section 14.1 Complete Agreement.................................................95
Section 14.2 Allocation of Costs and Expenses...................................95
Section 14.3 Governing Law......................................................95
Section 14.4 Jurisdiction; Forum................................................95
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Section 14.5 Notices............................................................96
Section 14.6 Amendment and Modification.........................................97
Section 14.7 Successors and Assigns.............................................97
Section 14.8 No Third Party Beneficiaries.......................................97
Section 14.9 Counterparts.......................................................97
Section 14.10 Interpretation....................................................98
Section 14.11 Annexes, Etc......................................................98
Section 14.12 Legal Enforceability..............................................98
Section 14.13 Texas Deceptive Trade Practices Act...............................98
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EXHIBITS
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Exhibit A Certificate of Incorporation
Exhibit B By-Laws
Exhibit C Shareholders Rights Plan
Exhibit D Note of Conoco Inc., dated July 20, 1998 and
Conoco Guarantee
Exhibit E Employee Matters Agreement
Exhibit F Transitional Services Agreement
Exhibit G Tax Sharing Agreement
Exhibit H Natural Gas Supply Agreement
Exhibit I Information Services Agreements
Exhibit J Motor Carrier Contract
Exhibit K Registration Rights Agreement
Exhibit L Form of Employee Benefits Note
Exhibit M Mont Belvieu Agreements
SCHEDULES
Schedule 1(a) Mixed-Use Subsidiaries
Schedule 1(b) Transferred Business Companies
Schedule 1(c) Construction Fleet
Schedule 4.4 Excluded Assets
Schedule 6.2 Registration Statement
Schedule 7.2 Delayed Companies
Schedule 7.10(a) Conoco Actions
Schedule 7.10(b) DuPont Actions
Schedule 9.3 DuPont Guarantees
Schedule 9.5 Intercompany Agreements
Schedule 10.5 Named Insured
Schedule 11.1(a) Transferred Environmental Assets
Schedule 11.1(b) Retained Environmental Assets
Schedule 11.2(d) Conoco Liabilities for Environmental Claims
Schedule 11.3(d) DuPont Liabilities for Environmental Claims
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<PAGE> 7
RESTRUCTURING, TRANSFER AND SEPARATION AGREEMENT
RESTRUCTURING, TRANSFER AND SEPARATION AGREEMENT (this
"Agreement"), dated as of October 27, 1998, by and between E.I. du Pont de
Nemours and Company, a Delaware corporation ("DuPont") and Conoco Inc. (formerly
known as Conoco Energy Company), a Delaware corporation ("Conoco").
WHEREAS, in addition to its chemicals, life sciences, fibers,
polymers, and other materials businesses, DuPont has been engaged through
Conoco and its various predecessor companies and their various Subsidiaries (as
defined herein) and divisions in exploring for, developing, producing, refining,
transporting, marketing and distributing oil and gas and associated by-products
in connection with the Transferred Business (as defined herein);
WHEREAS, Conoco, Conoco Inc. (formerly known as Continental
Oil Company), a Delaware corporation ("CI") and their various predecessor
companies and their various Subsidiaries and divisions have been engaged in
various businesses, primarily exploring for, developing, producing, refining,
transporting, marketing and distributing oil and gas and associated by-products
and the manufacture, sale and distribution of chemicals;
WHEREAS, the Board of Directors of DuPont has determined that
it is in the best interests of DuPont and its stockholders for Conoco to offer
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock") of Conoco for sale to the public pursuant to an initial public offering
("IPO") and in connection therewith for DuPont and Conoco to separate their
respective businesses so that from and after the Effective Date the Transferred
Business will be held by Conoco and its Subsidiaries and divisions (the
"Separation");
WHEREAS, as set forth herein and subject to the terms and
conditions hereof, DuPont wishes to transfer and assign to Conoco, and to cause
its Subsidiaries to transfer and assign to Conoco, the assets of the various
divisions, and the stock and other equity securities representing Conoco's
ownership interest in various Subsidiaries and other entities in and through
which the Transferred Business is conducted, in exchange for the assumption by
Conoco or one or more of the Transferred Business Companies (as defined herein)
of the liabilities and obligations relating to the Conoco Business;
<PAGE> 8
WHEREAS, DuPont and Conoco have determined that it is
necessary and desirable to set forth the principal transactions required to
effect the Restructuring (as defined herein) and the Separation and to set forth
other agreements that will govern certain other matters in connection with the
Restructuring and the Separation.
NOW, THEREFORE, in consideration of the premises or promises
and the mutual covenants and agreements contained herein and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General. As used in this Agreement, capitalized
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
Action: shall mean any action, claim, suit, arbitration,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any Governmental Authority or arbitration tribunal.
AEP Proposed Joint Ventures: shall mean the proposed joint
ventures described in the letter of intent, dated October 2, 1997 among AEP
Resources, Inc., CI and DuPont.
Affiliate: shall mean, with respect to any specified Person, a
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such specified
Person. For purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: shall have the meaning set forth in the recitals.
Agrico Inc.: shall mean American Agricultural Chemical
Company, a Delaware corporation.
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<PAGE> 9
Appropriate Conoco Subsidiary: shall have the meaning set
forth in Section 6.2(b).
Appropriate Retained Subsidiary: shall have the meaning set
forth in Section 6.2(a).
Asset: shall mean, with respect to any Person, any and all of
such Person's title and ownership interest in and to all properties, assets,
claims, Contracts and businesses of every kind, character and description,
whether real, personal or mixed, whether accrued, contingent or otherwise, and
wherever located, including, without limitation, the following: (i) all cash,
cash equivalents, notes and accounts receivable (whether current or
non-current); (ii) all certificates of deposit, banker's acceptances and other
investment securities; (iii) all real properties, including pipelines,
refineries, plants, buildings and other structures and improvements (including
construction in progress) located thereon, fixtures contained therein and
appurtenances thereto; (iv) all leasehold improvements and all machinery,
equipment (including all transportation and office equipment), fixtures, trade
fixtures and furniture; (v) all office supplies, production supplies, spare
parts, other miscellaneous supplies and other tangible property of any kind;
(vi) all capital stock, partnership interests and other equity or ownership
interests or rights, directly or indirectly, in any Subsidiary or other entity;
(vii) all raw materials, work-in-process, finished goods, consigned goods and
other inventories; (viii) all registered and unregistered trademarks, service
marks, service names, trade styles and trade names (including, without
limitation, trade dress and other names, marks and slogans) and all associated
goodwill; all statutory, common law and registered copyrights; all patents; all
applications for any of the foregoing together with all rights to use all of the
foregoing and all other rights in, to, and under the foregoing; all know-how,
inventions, discoveries, improvements, processes, formulae (secret or
otherwise), specifications, trade secrets, whether patentable or not, licenses
and other similar agreements, confidential information, and all drawings,
records, books or other indicia, however evidenced, of the foregoing; (ix) all
rights existing under all Contracts; (x) all rights (including ownership rights
or rights arising under Contracts) existing, relating to all computer hardware,
software, computer programs, systems and documentation relating thereto; all
databases and reference and resource materials; (xi) all prepayments, deposits,
performance bonds or prepaid expenses and deferred tax accounts to the extent
they constitute an asset and not a liability of such party; (xii) all claims,
causes of action, choses in action, rights of recovery and rights of set-off of
any kind; (xiii) all customer lists and records pertaining to customers and
accounts, personnel records, all lists and records pertaining to suppliers and
agents, and all books,
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ledgers, files and business records of every kind; (xiv) all advertising
materials and all other printed or written materials, including purchase orders,
forms, labels, shipping materials, catalogues, sales brochures, operating
manuals, and instructional documents; (xv) all permits, licenses, approvals and
authorizations, to the extent transferable, of Governmental Authorities or third
parties relating to the ownership, possession or operation of the Assets; (xvi)
all goodwill as a going concern and all other intangible properties; (xvii) all
employee contracts, including, without limitation, the right thereunder to
restrict an employee from competing in certain respects; and (xviii) all trucks,
automobiles, railcars and other vehicles, and all vessels, tankers and barges.
Assumed Liabilities: shall have the meaning set forth in
Section 4.1.
Audit: shall mean any audit, assessment of Taxes, other
examination by any Tax Authority, proceeding, or appeal of such a proceeding
relating to Taxes, whether administrative or judicial.
Cain Chemical: shall mean Cain Chemical Inc., a Delaware
corporation.
Cash Settlement Date: shall have the meaning set forth in
Section 9.1(a).
Charter Amendment: shall have the meaning set forth in Section
5.6(b).
Christiana: shall mean Christiana Insurance Limited, a Bermuda
corporation.
CI: shall have the meaning set forth in the recitals.
Class A Common Stock: shall have the meaning set forth in the
recitals.
Class B Common Stock: shall mean Class B Common Stock, par
value $.01 per share, of Conoco.
Code: shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute.
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Combined Limit Losses: shall have the meaning set forth in
Section 10.2.
Confidential Business Information: shall have the meaning set
forth in Section 8.5(a)(iii).
Confidential Information: shall have the meaning set forth in
Section 8.5(a)(i)
Confidential Operational Information: shall have the meaning
set forth in Section 8.5(a)(ii).
Conoco: shall have the meaning set forth in the recitals.
Conoco Action: shall have the meaning set forth in Section
7.10.
Conoco Board: shall mean the Board of Directors of Conoco.
Conoco Books and Records: shall mean the books and records of
DuPont and its Subsidiaries (or true and complete copies thereof), including all
computerized books and records owned by DuPont and its Subsidiaries, to the
extent they primarily relate to the Transferred Business or the Transferred
Assets, including, but not limited to, the minute books, corporate charters and
by-laws or comparable constitutive documents, records of share issuances, and
related corporate records of the Transferred Business Companies, all such books
and records primarily relating to Transferred Employees, the purchase of
materials, supplies and services, the manufacture and sale of products by the
Transferred Business or dealings with customers of the Transferred Business and
all files primarily relating to any Action the Liability with respect to which
is included in Assumed Liabilities, except that no portion of the books and
records of DuPont or the Retained Subsidiaries containing minutes of meetings of
any board of directors of any of them shall be included. Notwithstanding the
foregoing, "Conoco Books and Records" shall not include any Tax Returns or other
information, documents or materials relating to Taxes.
Conoco Business: shall mean the businesses in which, and the
activities as to which, the Conoco Group or any member thereof was formerly or
is currently engaged (including exploring for, producing, developing, refining,
transporting, marketing and distributing oil and gas and associated by-products
thereof, any chemical business or activities and any other business or
activities), and the
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business and activities which were formerly or are currently conducted by any of
such entities, businesses or divisions through use or ownership of the
Transferred Assets or any other Assets of the Conoco Group, including, but not
limited to, (i) the Transferred Business, (ii) the business and activities
formerly conducted by Conoco's chemicals division (including, but not limited
to, operations sold to Vista Chemical) and all activities conducted by DuPont or
any of its Subsidiaries in connection therewith or related thereto, (iii) the
operations of Agrico Inc., (iv) exploring for, producing, developing, refining,
transporting, marketing and distributing oil and gas and associated by-products
thereof by DuPont or any of its Subsidiaries for the benefit of the Conoco Group
or any member thereof, including the business and activities of DuPont France
and DuPont Italy (v) the business and activities conducted through, and
ownership of, CI's interest in the Pocahontas Partnership, (vi) the activities
and operations of DuPont, any of its Subsidiaries and any of their employees
(including, but not limited to, the activities and operations of Sentinel and
DERS) to the extent performed for or on behalf of the Conoco Business on or
before the Effective Date (as defined without giving effect to this clause (vi))
and (vii) the actions and activities of Conoco and the Transferred Business
Companies in connection with the AEP Proposed Joint Ventures. The "Conoco
Business" specifically excludes (i) the business and activities which were
formerly or are currently conducted by CONSOL Energy and its controlled
affiliates and joint ventures in which it is a participant and Pitt-Consol
(other than through CI's interest in the Pocahontas Partnership), (ii) the
businesses sold to Cain Chemical, including the operations at Matagorda and
Chocolate Bayou, Texas, (iii) the businesses and activities of DuPont
Netherlands and (iv) the businesses and activities of Sentinel except as
provided in clause (vi) above.
Conoco Environmental Liabilities: shall have the meaning set
forth in Section 11.2.
Conoco Group: shall mean collectively, Conoco, CI, and the
other Transferred Business Companies, any of their predecessor companies or
businesses or any of their Subsidiaries, business units or divisions.
Conoco Guarantee: shall mean the guarantee by Conoco, dated as
of July 24, 1998, of CI's obligations under the Note, dated July 20, 1998 and
attached hereto as part of Exhibit D.
Conoco Master Note: shall mean the promissory notes evidencing
indebtedness of CI to DuPont under the DuPont Master Note Agreement.
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Conoco Party: shall have the meaning set forth in Section
6.2(a).
Conoco Patents: shall mean (a) all U.S. and foreign patents,
patent applications and patent disclosures (including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions, or renewals of
any of the foregoing) owned by or under obligation of assignment to Conoco or
any Transferred Business Company or with respect to which Conoco or any
Transferred Business Company has the power to grant an immunity from suit for
infringement, (b) all U.S. and foreign patents, patent applications and patent
disclosures (including all reissues, divisions, continuations,
continuations-in-part, substitutions, extensions, or renewals of any of the
foregoing) granted after the Effective Date by the applicable Governmental
Authorities based on all applications owned by or under obligation of assignment
to Conoco or any Transferred Business Company or with respect to which Conoco or
any Transferred Business Company has the power to grant an immunity from suit
for infringement, (c) all U.S. and foreign patent, patent application, and
patent disclosure (including all reissues, divisions, continuations,
continuations-in-part, substitutions, extensions, or renewals of any of the
foregoing) rights which are owned by or under obligation of assignment to Conoco
or any Transferred Business Company resulting from Joint Invention Conceptions
documented in invention disclosures as of the Effective Date, and (d) the patent
for gas-to-liquids technology, to the extent not otherwise owned by Conoco or
one of the Transferred Business Companies at the Effective Date.
Conoco Payables: shall have the meaning set forth in Section
9.1(b).
Conoco Rights Plan: shall have the meaning set forth in
Section 2.4(a).
CONSOL Energy: shall mean CONSOL Energy Inc., a Delaware
corporation.
Construction Fleet: shall mean the vehicles, Equipment and
machinery utilized in construction which are owned by DuPont or a Retained
Subsidiary and which, in whole or in part, from time to time, are used in the
Transferred Business or operated by employees of Conoco or a Transferred
Business Company, including but not limited to the items set forth on Schedule
1(c).
Contract: shall mean any contract, agreement, lease, Equipment
lease, license, sales order, purchase order, instrument or other commitment or
arrangement
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that is binding on any Person or entity or any part of its property under
applicable Law.
Conveyancing and Assumption Instruments: shall mean
collectively, the various bills of sale, undertakings and other agreements,
instruments and other documents to be entered into in order to effect the
Restructuring, and the transfer of Assets and the assumption of Liabilities in
the manner contemplated by Section 2.3.
Danube: shall mean Danube Insurance Limited.
DCEO: shall mean Du Pont Chemical and Energy Operations, Inc.,
a Delaware corporation.
DEC: shall mean Du Pont Energy Company, a Delaware
corporation.
Delayed Company: shall have the meaning set forth in Section
7.2(a).
DERS: shall mean DuPont Environmental Remediation Services,
Inc., a Delaware corporation.
Dispute: shall have the meaning set forth in Section 13.1.
DuPont: shall have the meaning set forth in the recitals.
DuPont Action: shall have the meaning set forth in Section
7.10.
DuPont Board: shall mean the Board of Directors of DuPont.
DuPont Books and Records: shall mean the books and records (or
true and complete copies thereof), including all computerized books and records,
minute books, corporate charters and by-laws or comparable constitutive
documents, records of share issuances and related corporate records of or owned
by DuPont and its Subsidiaries (including Conoco and the Transferred Business
Companies) other than the Conoco Books and Records. Notwithstanding the
foregoing, "DuPont Books and Records" shall not include any Tax Returns or other
information, documents or materials relating to Taxes.
DuPont Business: shall mean the businesses in which, and the
activities as to which, DuPont and its Subsidiaries, including Conoco and the
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Transferred Business Companies, have been formerly or are currently engaged, but
excluding the Conoco Business.
DuPont Designees: shall have the meaning set forth in Section
5.3(b).
DuPont Environmental Liability: shall have the meaning set
forth in Section 11.3.
DuPont France: shall mean Du Pont de Nemours (France) S.A.
DuPont Guarantee Amount: shall mean as of the Effective Date
$1,610,390,718, and thereafter, such amount as adjusted from time to time in the
good faith judgment of the Chief Financial Officer or the Treasurer of DuPont,
after consultation with, and effective upon written notice to, Conoco, to
reflect any increase or decrease in financial exposure of DuPont under the
DuPont Guarantees, the termination of DuPont Guarantees or the removal or
replacement of DuPont's obligations under the DuPont Guarantees; provided that
the DuPont Guarantee Amount shall not be initially adjusted until the amount of
any such increase or decrease exceeds $50 million, and then adjusted to the full
extent of such amount, and thereafter, the DuPont Guarantee Amount shall only be
further adjusted when the amount of any additional increase or decrease is equal
to or greater than $50 million, or in the case of a decrease which reduces the
DuPont Guarantee Amount to zero.
DuPont Guarantee Fee: shall have the meaning set forth in
Section 9.3(b).
DuPont Guarantees: shall have the meaning set forth in Section
9.3(a).
DuPont Hungary: shall mean DuPont Conoco Hungary Kft., a
Hungarian corporation.
DuPont Hungary Loan: shall mean the amounts owed as of the
date hereof by DuPont Hungary to DuPont Engineering Products S.A.
DuPont Italy: shall mean, collectively, Du Pont de Nemours
Italiana S.p.A. and Du Pont Conid S.p.A.
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DuPont Master Note Agreement: shall mean the Note Agreement
between DuPont and CI, dated as of October 2, 1989, as the same may be amended
from time to time.
DuPont Master Note: shall mean promissory notes evidencing
indebtedness of DuPont under the DuPont Master Note Agreement.
DuPont Netherlands: shall mean DuPont de Nemours (Nederland)
B.V. and its Subsidiaries (other than Conoco CS Spol. s.r.o.)
DuPont Party: shall have the meaning set forth in Section
6.2(b).
DuPont Patents: shall mean (a) all U.S. and foreign patents,
patent applications and patent disclosures (including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions, or renewals of
any of the foregoing) owned by or under obligation of assignment to DuPont or
any Retained Subsidiary or with respect to which DuPont or any Retained
Subsidiary has the power to grant an immunity from suit for infringement, (b)
all U.S. and foreign patents, patent applications and patent disclosures
(including all reissues, divisions, continuations, continuations-in-part,
substitutions, extensions, or renewals of any of the foregoing) granted after
the Effective Date by the applicable Governmental Authorities based on all
applications owned by or under obligations of assignment to DuPont or any
Retained Subsidiary or with respect to which DuPont or any Retained Subsidiary
has the power to grant an immunity from suit for infringement, and (c) all U.S.
and foreign patent, patent application and patent disclosure (including all
reissues, divisions, continuations, continuations-in-part, substitutions,
extensions, or renewals of any of the foregoing) rights which are owned by or
under obligation of assignment to DuPont or any Retained Subsidiary resulting
from Joint Invention Conceptions documented in invention disclosures as of the
Effective Date.
DuPont Payables: shall have the meaning set forth in Section
9.1(b).
DuPont Transferred Assets: shall mean (i) any and all Assets
owned by a Mixed-Use Subsidiary that are not primarily used in the Transferred
Business and (ii) the stock of any Subsidiary owned by a Transferred Business
Company, which Subsidiary, after giving effect to the transfer, if any, of
Transferred Assets, would only be engaged in the Retained Business.
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DTPA: shall have the meaning set forth in Section 14.13.
Effective Date: shall mean the close of business on the date
on which the first closing of the IPO occurs.
Effective Time: shall mean the time on the Effective Date on
which the first closing of the IPO occurs.
Employee Benefits Adjustment Amount: shall have the meaning
set forth in Section 2.5(c)
Employee Benefits Note: shall have the meaning set forth in
Section 2.5(c).
Employee Matters Agreement: shall mean the Employee Matters
Agreement between DuPont and Conoco dated the date hereof, substantially in the
form of Exhibit E hereto.
Environment: shall mean any surface water, groundwater,
drinking water supply, land surface or subsurface strata, or ambient air.
Environmental Claim: shall mean any third party action,
lawsuit, claim or proceeding which seeks to impose Liability or injunctive
relief for (i) noise, (ii) pollution or protection of the air, surface water,
groundwater or land, (iii) solid, gaseous or liquid waste generation, treatment,
storage, disposal or transportation, or (iv) damages to persons, property or
natural resources resulting from a Release into the Environment of any Hazardous
Substances.
Environmental Permit: shall mean any permit, license, approval
or other authorization under any applicable Law, regulation and other
requirement of any Governmental Authority relating to pollution or protection of
the environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes.
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Equipment: shall mean all equipment, fixtures, physical
facilities, tank batteries, surface and subsurface machinery, inventory, spare
parts, supplies, tools and other tangible personal property, including, without
limitation, casing, tubing, tubular goods, rods, pumping units and engines,
derricks, platforms, separators, compressors, gathering lines, flow lines,
tanks, and communication systems and equipment.
Excess Director Number: shall have the meaning set forth in
Section 5.3(d).
Excess Proceeds: shall have the meaning set forth in Section
2.5(b).
Excluded Assets: shall have the meaning set forth in Section
4.4.
Final Determination: shall mean the final resolution of any
Tax (or other Tax matter) for a taxable period, including related interest or
penalties, that, under applicable law, is not subject to further appeal, review
or modification through proceedings or otherwise, including (1) by the
expiration of a statute of limitations or a period for the filing of claims for
refunds, amending Tax Returns, appealing from adverse determinations, or
recovering any refund (including by offset), (2) by a decision, judgment,
decree, or other order by a court of competent jurisdiction, which has become
final and unappealable, (3) by a closing agreement or an accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable agreements
under laws of other jurisdictions, (4) by execution of an Internal Revenue
Service Form 870 or 870AD, or by a comparable form under the laws of other
jurisdictions (excluding, however, with respect to a particular Tax Item for a
particular taxable period any such form that reserves (whether by its terms or
by operation of law) the right of the taxpayer to file a claim for refund and/or
the right of the Tax Authority to assert a further deficiency with respect to
such Tax Item for such period), or (5) by any allowance of a refund or credit,
but only after the expiration of all periods during which such refund or credit
may be recovered (including by way of offset).
GAAP: shall mean generally accepted accounting principles of
the United States as in effect from time to time.
Governmental Authority: shall mean any nation or government,
any state, municipality or other political subdivision thereof and any entity,
agency, commission or court, whether domestic or foreign or multinational,
exercising
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executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any executive official thereof.
Hazardous Substance: shall mean any substance, whether solid,
liquid or gaseous, which is listed, defined or regulated as a "hazardous
substance", "hazardous waste", "solid waste", "oils", "pollutants", or
"contaminants" or otherwise classified as hazardous or toxic, in or pursuant to
any Requirements of Environmental Law; or which is or contains asbestos, any
polychlorinated biphenyls, urea formaldehyde foam insulation, explosive or
radioactive material, or motor fuel or other petroleum hydrocarbons.
Income Tax: shall mean (a) any Tax based upon, measured by, or
calculated with respect to (1) net income or profits (including, without
limitation, any capital gains Tax, minimum Tax and any Tax on items of Tax
preference, but not including sales, use, real or personal property, gross or
net receipts, transfer or similar Taxes) or (2) multiple bases if one or more of
the bases upon which such Tax may be based, measured by, or calculated with
respect to, is described in clause (1) above, or (b) any United States state or
local franchise Tax.
Indebtedness: of any Person shall mean, (a) all obligations of
such Person for borrowed money, including any Indebtedness under the Note or
with respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage, lien, pledge, or other encumbrance on property
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all guarantees by such Person of Indebtedness of others
which in the aggregate exceed Two Billion Dollars ($2,000,000,000), (h) all
capital lease obligations of such Person, and (i) all securities or other
similar instruments convertible or exchangeable into any of the foregoing, but
excluding (1) industrial revenue bonds, (2) operating leases, (3) in the case of
CI, the Revolving Credit Facility and (4) daily cash overdrafts associated with
routine cash operations.
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Indemnifiable Loss Deduction: shall have the meaning set forth
in Section 6.2(e)(i).
Indemnifying Party: shall mean any party who is required to
pay any other person pursuant to this Agreement.
Indemnitee: shall mean any party who is entitled to receive
payment from an Indemnifying Party pursuant to this Agreement.
Indemnity Payment: shall mean the amount an Indemnifying Party
is required to pay to (or for the benefit of) an Indemnitee pursuant to this
Agreement.
Information: shall have the meaning set forth in Section 8.2.
Information Services Agreements: shall mean collectively, the
Information Systems and Telecommunications Carrier Transitional Services
Agreement, the Information Systems Transitional Services Agreement, the
Information Systems Side Letter Agreement, the Lease Agreement for office and
data center space located in Ponca City, Oklahoma and the Lease Agreement for
office and data center space located in Houston, Texas all of which are between
DuPont and Conoco, dated as of the date hereof substantially in the form of
Exhibit I hereto.
Intercompany Accounts: shall have the meaning set forth in
Section 9.1(d).
Intercompany Agreement: shall mean any Contract between any
entities included within the Retained Business (including, without limitation,
DuPont and the Retained Subsidiaries), on the one hand, and any entities
included within the Transferred Business (including, without limitation, Conoco
and the Transferred Business Companies), on the other hand, entered into prior
to the Effective Date.
Intercompany Loan: shall have the meaning set forth in Section
2.5(a).
Interim Period: shall have the meaning set forth in Section
7.2(a).
IPO: shall have the meaning set forth in the recitals.
IPO Excess: shall have the meaning set forth in Section
2.5(b).
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IRS: shall mean the Internal Revenue Service or any successor
agency or authority.
Joint Invention Conceptions: shall mean, with respect to
patents, invention conceptions jointly developed by (a) DuPont and/or any
Retained Subsidiary and (b) Conoco and/or any Transferred Business Company.
Law: shall mean any law, statute, ordinance, rule, regulation,
order, writ, judgment, injunction or decree of any Governmental Authority.
Liabilities: shall mean any and all Indebtedness, liabilities
and obligations, whether accrued, fixed or contingent, mature or inchoate, known
or unknown, reflected on a balance sheet or otherwise, including, but not
limited to, those arising under any law, rule, regulation, Action, order,
injunction or consent decree of any Governmental Authority or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Losses: shall mean any and all damages, losses, deficiencies,
Liabilities, obligations, penalties, judgments, settlements, claims, payments,
fines, interest, costs and expenses (including, without limitation, the costs
and expenses of any and all Actions and demands, assessments, judgments,
settlements and compromises relating thereto and the costs and expenses of
attorneys', accountants', consultants' and other professionals' fees and
expenses incurred in the investigation or defense thereof or the enforcement of
rights hereunder), including direct and consequential damages, but excluding
punitive damages (other than punitive damages awarded to any third party against
an Indemnified Party).
Mixed-Use Subsidiaries: shall mean those corporations,
partnerships, joint ventures, or other entities set forth on Schedule 1(a).
Mont Belvieu Agreements: shall mean the Pipeline Operation
Agreement, the Ethane Storage and Throughput Agreement, the Ethylene Storage and
Throughput Agreement, the Emergency Call Transportation Service Agreement and
the Purity Ethane Sales Agreement between DuPont and Conoco, dated the date
hereof, substantially in the forms included in Exhibit M hereto.
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Natural Gas Supply Agreement: shall mean the Natural Gas
Supply Agreement between DuPont and Conoco, dated the date hereof, substantially
in the form of Exhibit H hereto.
Net Proceeds: shall have the meaning set forth in Section
7.2(d).
New Notes: shall have the meaning set forth in Section 2.5(c).
Non-Permitted Names: shall have the meaning set forth in
Section 7.7.
Note: shall mean the Promissory Note issued by CI to DEC,
dated as of July 20, 1998, in the principal amount of $7.5 Billion, a copy of
which is attached hereto as part of Exhibit D.
Note Interest: shall have the meaning set forth in Section
2.5(b).
NYSE: shall mean The New York Stock Exchange, Inc.
Option Amount: shall mean the algebraic sum of (a) the Deemed
Future Appreciation, (b) the After Tax Adjustment and (c) 50% of an amount equal
to the result obtained by subtracting the Intrinsic Value of Elected Options
from the Intrinsic Value of Non-Elected Options. For purposes of this
definition:
"Active Conoco Employees" shall mean Conoco Employees eligible
to elect to cause the DuPont Stock Options and DuPont SARs held by such
employees to be cancelled and to be granted options to acquire Newly Granted
Options and Newly Granted SARs pursuant to Section 2.06 of the Employee Matters
Agreement;
"After Tax Adjustment" shall mean an amount equal to 50% of
29% of the Intrinsic Value of all DuPont Stock Options held by Active Conoco
Employees other than incentive stock options within the meaning Section 422 of
the Code;
"Deemed Future Appreciation" shall mean 32.25% of the average
price of common stock of DuPont over the five trading days ending on the date on
which the initial offering price to the public of a share of common Stock of
Conoco in the IPO is determined (calculated as the average of the mean of the
high and low prices on each of these five days as reported on the NYSE) (the
"DuPont Stock
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Price") multiplied by the total number of shares of common stock of DuPont
subject to Non-Elected Options;
"Intrinsic Value" of Elected Options or Non-Elected Options,
as applicable, shall mean for each such option as to which the DuPont Stock
Price exceeds the exercise price thereof, the product of (x) the number of
shares of common stock of DuPont subject to such option and (y) the DuPont Stock
Price less the exercise or base price of such option;
"Elected Options" shall mean DuPont Stock Options and DuPont
SARs (excluding Conoco Key Unit Options) outstanding as of the close of business
on October 19, 1998, determined pursuant to the records of the relevant plan
administrator, held by Active Conoco Employees as to which such employees have
elected to cause such DuPont Stock Options and DuPont SARs to be cancelled and
to be granted options to acquire Newly Granted Options and Newly Granted SARs
pursuant to Section 2.06 of the Employee Matters Agreement; and
"Non-Elected Options" shall mean DuPont Stock Options and
DuPont SARs outstanding as of the close of business on October 19, 1998,
determined pursuant to the records of the relevant plan administrator, held by
Active Conoco Employees as to which such employees have not elected to cause
such DuPont Stock Options and DuPont SARs to be cancelled and to be granted
options to acquire Newly Granted Options and Newly Granted SARs pursuant to
Section 2.06 of the Employee Matters Agreement.
All other capitalized terms used in this definition, but not
defined in this definition shall have the meanings ascribed to such terms in the
Employee Matters Agreement.
Outside Date: shall have the meaning set forth in Section
2.5(b).
Outstanding Check Amount: shall have the meaning set forth in
Section 9.1(c).
Person: shall mean any natural person, firm, individual,
corporation, partnership, limited liability company, limited liability
partnership, joint venture, business trust, association, trust, company or other
organization or entity, whether incorporated or unincorporated, or any
Governmental Authority.
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Petrozuata: shall mean Petrolera Zuata, Petrozuata C.A., a
Venezuelan compania anonima in which Conoco owns an indirect non-controlling
50.1 percent equity interest.
Pitt-Consol: shall mean Pitt-Consol Chemical Company, a New
Jersey corporation.
Pocahontas Partnership: shall mean the Pocahontas Gas
Partnership, a Virginia general partnership.
Principal Related Agreements: shall have the meaning set forth
in the definition of Related Agreements.
Privilege: shall have the meaning set forth in Section 8.6(a).
Privileged Information: shall have the meaning set forth in
Section 8.6(a).
Registration Rights Agreement: shall mean the Registration
Rights Agreement between DuPont and Conoco, dated the date hereof, substantially
in the form of Exhibit K hereto.
Registration Statement: shall have the meaning set forth in
Section 2.6(a).
Related Agreements: shall mean, collectively, the Employee
Matters Agreement, the several Transitional Services Agreements, the Tax Sharing
Agreement, the Natural Gas Supply Agreement, the Registration Rights Agreement,
the Motor Carrier Contract, the Note and the Conoco Guarantee, the Employee
Benefits Note and the associated guarantee by Conoco, the Revolving Credit
Facility and the related guarantee of CI's obligations thereunder by Conoco, the
Information Services Agreements, the Mont Belvieu Agreements, the Engineering
and SHE Standards and Guidelines License Agreement, the UPbase(TM) System
Software License Agreement and the DME Tolling Agreement (the foregoing
agreements, collectively, the "Principal Related Agreements"), and all other
agreements to be entered into between DuPont and the Retained Subsidiaries, on
the one hand, and Conoco and its Subsidiaries, on the other hand, in connection
with the Restructuring, the Separation and the consummation of the transactions
contemplated hereby or which relate to the
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ongoing relationship between Conoco and its Subsidiaries on the one hand, and
DuPont and the Retained Subsidiaries, on the other hand.
Release: shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor Environment or into or out of any
property.
Representative: shall mean, with respect to any Person, each
of such Person's directors, officers, employees, representatives, attorneys,
accountants, advisors and agents, and each of the heirs, executors and assigns
of any of the foregoing.
Requirements of Environmental Law: shall mean all requirements
of environmental or ecological laws or regulations, including all requirements
imposed by any law, rule or regulation of any Governmental Authority at any time
in effect which relate to (i) noise, (ii) pollution or protection of the air,
surface water, groundwater or land, (iii) solid, gaseous or liquid waste
generation, treatment, storage, disposal or transportation, or (iv) employee
health and safety.
Restated Tax Saving Amount: shall have the meaning set forth
in Section 6.2(e)(ii).
Restructured Notes: shall have the meaning set forth in
Section 2.5(b).
Restructuring: shall have the meaning set forth in Section
2.1.
Retained Business: shall mean the businesses in which, and the
activities as to which, DuPont and its Subsidiaries, including Conoco and its
Subsidiaries, are currently engaged, but excluding in any event the Transferred
Business. The "Retained Business" shall include (i) CONSOL Energy and its
controlled affiliates and joint ventures in which it is a participant (other
than through CI's interest in the Pocahontas Partnership), (ii) Pitt-Consol,
(iii) Sentinel and (iv) DuPont Netherlands.
Retained Environmental Assets: shall have the meaning set
forth in Section 11.1(b).
Retained Liabilities: shall have the meaning set forth in
Section 4.2.
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Retained Subsidiary: shall mean any Subsidiary of DuPont at
any time after the date of this Agreement, including DuPont Netherlands, but
excluding Conoco and the Transferred Business Companies.
Revolving Credit Facility: shall mean a revolving credit
facility provided to CI by DEC providing for borrowings in an aggregate
principal amount not to exceed $500 million at any one time outstanding.
Risk Manager: shall have the meaning set forth in Section
10.2.
Ruling: shall have the meaning set forth in Section 5.6(b)
SEC: shall mean the U.S. Securities and Exchange Commission.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Senior Executive: shall mean the Chief Executive Officer,
Chief Financial Officer or General Counsel of DuPont or Conoco, as applicable.
Sentinel: shall mean Sentinel Transportation Company, a
Delaware corporation.
Separation: shall have the meaning set forth in the recitals.
Separation Expenses: shall mean (a) those expenses to be paid
by DuPont pursuant to Section 6(f) of the underwriting agreement to be entered
into in connection with the IPO and (b) those expenses, incurred and paid
between May 11, 1998 and 24 months following the date on which DuPont's voting
power falls below 50% of the voting power of all of the outstanding shares of
Voting Stock of Conoco, incurred with third parties, on a non recurring basis
directly as result of the IPO, the Restructuring, the Separation or any
transaction subsequent to the IPO (including a series of related transactions)
resulting in a reduction in the number of shares of Voting Stock beneficially
owned by DuPont, provided that prior to any such subsequent transaction the
voting power of the shares of Voting Stock beneficially owned by DuPont is not
less than 50% of the voting power of all of the then outstanding shares of
Voting Stock. Notwithstanding anything to the contrary in this Agreement, (i)
expenses that benefit future operations of the Transferred Business will not be
Separation Expenses; (ii) Separation Expenses must be out-of-pocket expenditures
which meet accounting guidelines for both discontinued operations under APB 30
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and for gain/loss accounting treatment and shall specifically exclude accruals
(provided that expenses that would otherwise have qualified as Separation
Expenses but which have been accrued shall be deemed Separation Expenses once
such expenses have been paid and provided further that Separation Expenses shall
not include any costs and expenses associated with pension plans or severance
owed to employees which are exclusively provided for in the Employee Matters
Agreement); (iii) in the event that the parties disagree as to whether an
expense meets accounting guidelines for both discontinued operations under APB
30 and for gain/loss accounting treatment or otherwise qualifies generally as a
Separation Expense under this definition and therefore qualifies for
reimbursement by DuPont pursuant to this Agreement, DuPont's good faith decision
shall be final; (iv) any increased costs associated with a contract as to which
third party consent was obtained with respect to the Separation (other than
nonrecurring breakage and similar fees and incidental expenses paid in order to
obtain such consents) will not be Separation Expenses, (v) amounts paid pursuant
to the indemnification and contribution provisions of this Agreement and the
Related Agreements will not be Separation Expenses, (vi) expenses that are not
incurred and paid prior to or on the date which is twenty four months from the
date on which DuPont's voting power falls below 50% of the voting power of all
of the outstanding shares of Voting Stock of Conoco shall not be Separation
Expenses and (vii) Separation Expenses, shall not include costs and expenses
related to information technology which will be governed exclusively by the
Information Services Agreements.
Shared Contracts: shall mean Contracts with third parties
which directly benefit both DuPont or a Retained Subsidiary and Conoco or one of
its Subsidiaries.
Shared Contractual Liabilities: shall mean Liabilities in
respect of Shared Contracts.
Subsidiary: shall mean (a) a corporation, at least a majority
of the voting or capital stock of which is as of the time in question directly
or indirectly owned by such party and (b) any other partnership, joint venture,
association, joint stock company, trust, unincorporated organization or other
entity, in which such party, directly or indirectly, owns a majority of the
equity interest thereof or has the power to elect or direct the election of at
least a majority of the members of the governing body of such entity or
otherwise has control over such entity (e.g., as the managing partner of a
partnership).
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Target Cash Amount: shall mean $225 million of cash and cash
equivalents (in United States Dollars or an equivalent amount in foreign
currency, determined using the exchange rates quoted in the Financial Times two
business days prior to the Cash Settlement Date), excluding from the foregoing
$225 million amount (i) $70 million (which shall consist of (A) any certificates
of deposit held by Danube, valued at their face amounts, and (B) to the extent
in excess of the amount set forth in clause (A) above, other forms of cash and
cash equivalents held by Danube and its subsidiaries whether or not
characterized or classified as such by GAAP); and (ii) the amounts of unearned
premiums and loss reserves required by Section 10.3 to be ceded by Danube to
Christiana pursuant to Section 10.3 to the extent such amounts have not been
paid by Danube to Christiana as of the Cash Settlement Date.
Tax or Taxes: shall mean any charges, fees, levies, imposts,
duties, or other assessments of a similar nature, including income, alternative
or add-on minimum, gross receipts, profits, lease, service, service use, wage,
wage withholding, employment, workers compensation, business occupation,
occupation, premiums, environmental, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, estimated,
highway use, commercial rent, capital stock, paid up capital, recording,
registration, property, real property gains, value added, business license,
custom duties, or other tax or governmental fee of any kind whatsoever, imposed
or required to be withheld by any Tax Authority including any interest,
additions to tax, or penalties applicable or related thereto.
Tax Authority: shall mean a governmental authority or any
subdivision, agency, commission or authority thereof or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including, without limitation, the IRS).
Tax Item: shall mean any item of income, gain, loss, deduction
or credit, or other attribute that may have the effect of increasing or
decreasing any Tax.
Tax Returns: shall mean any return, report, certificate, form
or similar statement or document (including, any related or supporting
information or schedule attached thereto and any information return, amended tax
return, claim for refund or declaration of estimated tax) required to be
supplied to, or filed with, a Tax Authority in connection with the
determination, assessment or collection of any Tax
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or the administration of any laws, regulations or administrative requirements
relating to any Tax.
Tax Saving Amount: shall have the meaning set forth in Section
6.2(e)(i).
Tax Sharing Agreement: shall mean the Tax Sharing Agreement
between DuPont and Conoco, dated the date hereof, substantially in the form of
Exhibit G hereto.
Third Party Claim: shall have the meaning set forth in Section
6.3(a).
Third Party Sites: shall have the meaning set forth in Section
11.4.
Tie-In Limit Loss: shall have the meaning set forth in Section
10.4(b).
Transferred Assets: shall have the meaning set forth in
Section 4.3.
Transferred Business: shall mean the businesses and activities
currently conducted by Conoco, its Subsidiaries and other Transferred Business
Companies described in the narrative portion of the section entitled "Business"
in the Registration Statement, but excluding (i) by CONSOL Energy and its
controlled affiliates and joint ventures in which it is a participant (other
than through CI's interest in the Pocahontas Partnership) and Pitt-Consol, (ii)
by DuPont Netherlands, (iii) by Sentinel, (iv) in the United States by DuPont
and its Subsidiaries (other than Conoco and its Subsidiaries) and (v) outside of
the United States by DuPont and its Subsidiaries of the same general type and
nature as the businesses and activities referred to in clause (iv) above.
Transferred Business Companies: shall mean those corporations,
partnerships, joint ventures, or other entities each of which currently conducts
the Transferred Business which are set forth on Schedule 1(b).
Transferred Employees: shall mean (a) those persons who are
employed as officers or employees of the Transferred Business immediately prior
to or effective as of the Effective Date and (b) all former officers and
employees of the Transferred Business who, immediately prior to the termination
of their employment, were employed in the Transferred Business. In the event
that on the Effective Date
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(or if such person is no longer employed as of the Effective Date, then as of
the last date of such person's employment) any person was or shall be employed
in the Transferred Business, as well as in the Retained Business, such person
shall be considered a Transferred Employee if, but only if, on the Effective
Date (or if such person is no longer employed as of the Effective Date, then as
of the last date of such person's employment) such person's primary employment
was or shall be in the Transferred Business.
Transferred Environmental Asset: shall have the meaning set
forth in Section 11.1(a).
Transitional Services Agreements: shall mean the several
Transitional Services Agreements between DuPont and/or any of the Retained
Subsidiaries on the one hand, and Conoco, and/or any of its Subsidiaries, on the
other hand, dated the date hereof, substantially in the form of Exhibit F
hereto.
Vista Chemical: shall mean CONDEA Vista Company (formerly
named Vista Chemical Company), a Delaware corporation.
Voting Stock: shall mean the Class A Common Stock, the Class B
Common Stock and any other capital stock of Conoco entitled to vote generally in
the election of directors but excluding any class or series of capital stock
only entitled to vote in the event of dividend arrearages thereon, whether or
not at the time of determination there are any such dividend arrearages.
WARN Act: shall have the meaning set forth in Section 7.9.
Waste Site: shall mean any well, pit, pond, lagoon,
impoundment, ditch, landfill, waste storage container, site or area where waste
materials or Hazardous Substances have been Released, deposited, stored,
disposed of, placed or otherwise come to be located.
ARTICLE II
RESTRUCTURING AND RELATED TRANSACTIONS
Section 2.1 The Restructuring. Subject to the terms and
conditions of this Agreement, DuPont and Conoco shall use, and shall cause their
respective
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Subsidiaries to use, their respective reasonable commercial efforts to
consummate, on or prior to the Effective Date, the transactions heretofore
documented and agreed to by the parties hereto as constituting the restructuring
(the "Restructuring"). It is the intent of the parties that after consummation
of the Restructuring, subject to receipt of all approvals required of any
Governmental Authority or any third party as set forth more fully in Sections
7.1 and 7.2 hereof, (i) the Transferred Business Companies will all be owned,
directly or indirectly, by Conoco and the Transferred Business will be conducted
entirely by Conoco and its Subsidiaries, (ii) Conoco or one of the Transferred
Business Companies will own all of the Transferred Assets, (iii) Conoco or one
or more of the Transferred Business Companies will, to the extent not previously
liable therefor, have assumed and be liable for all of the Assumed Liabilities,
(iv) the Retained Business will be conducted entirely by DuPont and the Retained
Subsidiaries, (v) DuPont or one of the Retained Subsidiaries will own all of the
DuPont Transferred Assets and the Excluded Assets and (vi) DuPont or one of the
Retained Subsidiaries will, to the extent not previously liable therefor, have
assumed and be liable for all of the Retained Liabilities.
Section 2.2 Transfers of Assets.
(a) Prior to or for one year following the Effective
Date, if DuPont or Conoco, as the case may be, identifies any Asset, other than
Shared Contracts, owned by one of the Mixed-Use Subsidiaries which (i) at such
time and for the prior 12 month period was used primarily in the Transferred
Business and is then owned by DuPont or one of the Retained Subsidiaries or (ii)
at such time and for the prior 12 month period was used primarily in the
Retained Business or is an Excluded Asset and is then owned by Conoco or one of
the Transferred Business Companies, DuPont or Conoco, as the case may be, shall
or shall cause any such Asset to be conveyed, assigned, transferred and
delivered in accordance with Section 2.3 to the entity identified by DuPont or
Conoco, as the case may be, as the appropriate transferee.
(b) For one year following the Effective Date, if
DuPont or Conoco, as the case may be, identifies any Asset (other than any stock
or other equity interest in a Delayed Company) then owned by either DuPont or
any of the Retained Subsidiaries, on the one hand, or Conoco or any of the
Transferred Business Companies, on the other hand, that, both DuPont and Conoco
each agree in their good faith judgment more properly belongs to the other
party, or a Subsidiary of the other party, then DuPont or Conoco, as the case
may be, shall convey, assign, transfer and deliver or shall cause any such Asset
to be conveyed, assigned, transferred and delivered in
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accordance with Section 2.3 to the entity identified by Conoco or DuPont, as the
case may be, as the appropriate transferee; provided, however, that the
foregoing shall not apply to the sale or transfer of any stock of, equity
interests in, or Assets of DuPont Netherlands, which sales or transfers, if any,
shall be at fair market value (it being agreed that the parties have no
obligations or agreement as to any such sale or transfer).
(c) As soon as is reasonably practicable following
the Effective Date, DuPont shall, or shall cause the appropriate Retained
Subsidiary to convey, assign, transfer and deliver in accordance with Section
2.3 the Assets listed on Schedule 1(c) to the entity identified by Conoco as the
appropriate transferee.
(d) The parties hereto acknowledge and agree that
except for transfers pursuant to the Restructuring, any transfers occurring more
than one year following the Effective Date, and the transfer of the equity
interests in DuPont Netherlands, if any, the transfers of Assets provided for in
this Agreement are to be made without any additional consideration other than
the assumption of Liabilities by the transferee.
(e) All conveyances, assignments, transfers and
deliveries of Assets occurring after the Effective Date pursuant to this Section
2.2 shall be governed by the terms of this Agreement. In furtherance of the
foregoing, any Asset transferred pursuant to this Section 2.2 to Conoco or one
of the Transferred Business Companies shall be deemed a Transferred Asset and
any Asset transferred to DuPont or one of the Retained Subsidiaries shall be
deemed a DuPont Transferred Asset for all purposes of this Agreement and the
Related Agreements.
Section 2.3 Methods of Transfer and Assumption. The parties
hereto agree that (a) required transfers of Transferred Assets (other than, in
general, Assets owned by Transferred Business Companies which are not Mixed-Use
Subsidiaries) and DuPont Transferred Assets shall be effected by delivery by
DuPont or one of the Retained Subsidiaries to Conoco or to one of the
Transferred Business Companies, or by Conoco or one of the Transferred Business
Companies to DuPont or to one of the Retained Subsidiaries, as the case may be,
of (i) with respect to those Assets which are evidenced by capital stock
certificates or similar instruments, certificates duly endorsed in blank or
accompanied by stock powers or other instruments of assignment executed in
blank, (ii) with respect to any real property interest or any improvements
thereon owned by a Mixed-Use Subsidiary, a deed without any
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warranty as to title of the transferor (or any of its Affiliates) and without
any covenant covering transferor's (or any of its Affiliate's) acts or the
equivalent thereof in accordance with local practice, and (iii) with respect to
all other Assets owned by a Mixed-Use Subsidiary, such good and sufficient
instruments of contribution, conveyance, assignment and transfer, in form and
substance reasonably satisfactory to DuPont and Conoco, as shall be necessary to
vest in DuPont, Conoco or their respective Subsidiaries, as the case may be, all
of the title and ownership interest of DuPont, Conoco or their respective
Subsidiaries, as the case may be, in and to any such Asset, (b) to the extent
necessary, the assumption of the Retained Liabilities contemplated pursuant to
Section 3.2 hereof shall be effected by delivery by DuPont or the applicable
Retained Subsidiaries, as the case may be, to Conoco or the applicable
Transferred Business Companies of such good and sufficient instruments of
assumption, in form and substance reasonably satisfactory to DuPont and Conoco,
as shall be necessary for the assumption by DuPont or the Retained Subsidiaries
of the Retained Liabilities, and (c) to the extent necessary, the assumption of
the Assumed Liabilities contemplated pursuant to Section 3.1 hereof shall be
effected by delivery by Conoco or the Transferred Business Companies, as the
case may be, to DuPont or the applicable Retained Subsidiaries, as the case may
be, of such good and sufficient instruments of assumption, in form and substance
reasonably satisfactory to DuPont and Conoco, as shall be necessary for the
assumption by Conoco or the Transferred Business Companies of the Assumed
Liabilities. Each of the parties hereto also agrees to deliver to any other
party hereto such other documents, instruments and writings as may be reasonably
requested by such other parties hereto in connection with the transactions
contemplated hereby. Notwithstanding any other provisions of this Agreement to
the contrary, (x) THE TRANSFERS AND ASSUMPTIONS REFERRED TO IN THIS SECTION 2.3
AND THE SEPARATION OF THE TRANSFERRED BUSINESS FROM THE RETAINED BUSINESS ARE
BEING MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE (a) AS TO THE
VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS, (b) AS TO ANY WARRANTY OF
MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OF, OR ANY OTHER
MATTER CONCERNING, ANY ASSETS OR (c) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE
TO ANY ASSETS, and (y) the instruments of transfer or assumption referred to in
this Section 2.3 shall not include any separate representations and warranties.
DuPont and Conoco hereby acknowledge and agree that ALL ASSETS ARE BEING
TRANSFERRED "AS IS, WHERE IS." Conoco shall bear the economic and legal risks
that any conveyances of the Transferred Assets to Conoco or one of its
Subsidiaries by DuPont or one of the Retained Subsidiaries shall prove to be
insufficient or that Conoco's or any Transferred
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Business Company's title to any of the Transferred Assets which they currently
own (or, after giving effect to the Restructuring and the transfers contemplated
by this Agreement, will own) shall be other than good and marketable and free
from encumbrances, and DuPont shall bear the economic and legal risks that any
conveyances of DuPont Transferred Assets to DuPont or one of the Retained
Subsidiaries by Conoco or one of its Subsidiaries shall prove to be insufficient
or that DuPont's or any Retained Subsidiaries' title to any of the DuPont
Transferred Assets shall be other than good and marketable and free from
encumbrances. DuPont and Conoco hereby further acknowledge and agree that in the
event and to the extent that there is any conflict between the provisions of
this Agreement and the provisions of any of the instruments of transfer or
assumption referred to in this Section 2.3, the provisions of this Agreement
shall control except where a specific conveyancing instrument (i) specifically
(A) provides that such instrument shall control over this Section 2.3 and (B)
refers to this specific Section 2.3 by number and (ii) has been approved in
writing by the General Counsel or an Associate General Counsel of each of DuPont
and Conoco.
Section 2.4 Organization of Registrant; Execution of Related
Agreements.
(a) Prior to the Effective Time, Conoco shall take,
and DuPont shall take, and as the indirect sole stockholder of Conoco, approve
or ratify, or cause to be approved or ratified, any and all actions that are
reasonably necessary or desirable to be taken by DuPont or Conoco to effectuate
the transactions contemplated by this Section 2.4 and Section 2.5 in a manner
consistent with the terms of this Agreement, including, without limitation, the
following: (i) amending the Certificate of Incorporation of Conoco so that the
provisions thereof at the Effective Time shall be the provisions set forth on
Exhibit A attached hereto; (ii) amending the By-Laws of Conoco so that the
provisions thereof at the Effective Time shall be the provisions set forth on
Exhibit B attached hereto; (iii) entering into, as of the Effective Time, a
shareholder rights agreement between Conoco and the rights agent set forth
therein having substantially the same provisions, with such changes thereto as
DuPont and Conoco may approve, as those set forth on Exhibit C attached hereto
(the "Conoco Rights Plan"); (iv) adopting, preparing and implementing
appropriate plans, agreements and arrangements for employees of Conoco and
non-employee directors of Conoco (including, without limitation, the employee
benefit plans, agreements and arrangements to be established pursuant to the
Employee Matters Agreement (with such changes thereto as DuPont may approve in
its sole discretion)); and (v) electing or otherwise appointing those
individuals designated in the
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Registration Statement to be directors or officers of Conoco, effective as of or
prior to the Effective Date, except for those to be elected or appointed
thereafter.
(b) On or prior to the Effective Date, DuPont and
Conoco shall enter into the Principal Related Agreements, each of which shall be
effective as of the Effective Time, unless otherwise specified therein.
Section 2.5 The Intercompany Notes.
(a) Prior to the Effective Time, DuPont and Conoco
shall, and shall cause their respective Subsidiaries to take all actions
necessary or advisable to restructure the existing loans between DuPont and the
Retained Subsidiaries, on the one hand, and Conoco and its Subsidiaries, on the
other hand (the "Intercompany Loans") such that following such restructuring,
the only remaining Intercompany Loans shall be represented by the Note, the
DuPont Master Note, the Conoco Master Note, the Revolving Credit Agreement and
the Restructured Notes (as defined below).
(b) Immediately following the closing of the IPO,
Conoco shall lend or contribute out of the gross proceeds of the IPO received by
Conoco (net of underwriting discounts and commissions) an amount equal to the
accrued and unpaid interest on the Note as of the Effective Date (the "Note
Interest") plus $2.654 billion (or such lesser amount as constitutes all of the
gross proceeds net of the expenses set forth in the preceding parenthetical and
the Note Interest) to CI and Conoco shall immediately thereafter cause CI to
first, pay the Note Interest to DEC and second, to pay the remainder of such
$2.654 billion (or lesser) amount to DEC in partial satisfaction of its
obligations under the Note, to repay, in part, principal under the Note. To the
extent less than an amount equal to the Note Interest plus $2.654 billion has
been paid pursuant to the preceding sentence, upon the closing of the exercise
of the underwriters' over-allotment option of the IPO, the proceeds of such
exercise shall be applied in a like manner to the extent necessary to pay the
balance of such amount. To the extent the gross proceeds of the IPO (net of
underwriting discounts and commissions and other offering expenses not
theretofore paid) received by Conoco including upon exercise of the
underwriters' over-allotment option exceed an amount equal to the Note Interest
plus $2.654 billion (such excess, being referred to herein, as the "Excess
Proceeds"), Conoco shall (x) first purchase from the holder or holders thereof,
in whole or in part, at the face amount thereof plus accrued interest thereon,
the promissory notes of Norske Conoco A/S, payable to the order of DCEO, in the
aggregate principal amount of 3,403,000,000 Norwe-
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gian Kroner, (y) second (to the extent sufficient funds remain out of the Excess
Proceeds) repay to the holder or holders thereof, in whole or in part, the
promissory note, dated as of August 31, 1998, of Conoco, payable to the order of
DCEO, in the principal amount of $827,447,710.83 plus accrued interest thereon,
(such note, together with the notes for 3,403,000,000 Norwegian Kroner described
above, the "Restructured Notes") and (z) thereafter (to the extent sufficient
funds remain out of the Excess Proceeds and in no event prior to the Cash
Settlement Date) contribute funds to CI and cause CI to repay to the holder or
the holders thereof, in whole or in part, amounts outstanding under the Conoco
Master Note, plus accrued interest thereon; provided, however, the aggregate
cash used to repay or repurchase the Restructured Notes and the Conoco Master
Note pursuant to the foregoing shall equal the lesser of (1) the Excess Proceeds
and (2) the aggregate face amount of the Restructured Notes plus accrued
interest thereon and the Conoco Master Note plus accrued interest thereon.
Promptly following such repayment and/or purchase and following any cash payment
pursuant to Section 9.1 below, DuPont shall, or shall cause the Retained
Subsidiaries to contribute the Restructured Notes and the Conoco Master Note
(excluding any portion of the Restructured Notes or the Conoco Master Note that
DuPont determines to maintain outstanding in accordance with Section 2.5(c)) to
Conoco, to the extent not previously purchased by Conoco or repaid in full;
provided that DuPont may delay such contribution of all or part of the
Restructured Notes and the Conoco Master Note until the date (the "Outside
Date") that is 5 business days following the later of the Cash Settlement Date
and the date of receipt by Conoco of the proceeds of the sale of stock of Conoco
pursuant to the underwriters' over-allotment option in the IPO. In the event the
Excess Proceeds exceeds the amount set forth in clause (2) of the second
preceding sentence (such excess being called the "IPO Excess"), Conoco shall, if
and to the extent requested by DuPont (and DuPont shall have until the Outside
Date to so request) use all or a portion of the IPO Excess to pay accrued
interest and principal on the Note.
(c) If the sum of the Option Amount and $10.4 million
(such sum, the "Employee Benefits Adjustment Amount") is positive, Conoco shall,
if and at such time as requested by DuPont, but no later than the later of the
Outside Date and 30 days following the Effective Date, cause CI to deliver a
promissory note, substantially in the form attached hereto as Exhibit L, to DEC
in an amount equal to the Employee Benefits Adjustment Amount (the "Employee
Benefits Note", and, together with the Note, the "New Notes"). If the Employee
Benefits Adjustment Amount is negative, DuPont shall instead pay to Conoco an
amount in cash equal to the absolute value of the Employee Benefits Adjustment
Amount 30 days following the Effective Date. To the extent that any portion of
the Restructured Note of
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Conoco to DCEO in the principal amount of $827,447,710.83 or the Conoco Master
Note would otherwise be contributed to Conoco pursuant to Section 2.5(b), DuPont
may maintain outstanding, in lieu of receiving all or a portion of the Employee
Benefits Note in accordance with the first sentence of this Section 2.5(c), all
or a portion of such remaining principal balance of such Restructured Note or
the Conoco Master Note in an amount not to exceed 94% of the principal amount of
the Employee Benefits Note that would otherwise be delivered in accordance with
the first sentence of this Section 2.5(c) and being so replaced. To the extent
that only a portion of, but not the entire, Employee Benefits Note is to be
replaced by all or a portion of the aforesaid Restructured Note or the Conoco
Master Note (such portion being deemed to be a "New Note"), Conoco shall deliver
the Employee Benefits Note in accordance with the first sentence of this Section
2.5(c), but in a principal amount equal to the (A) Employee Benefits Adjustment
Amount minus (B) 100% (and not 94%) of the principal amount of the portion of
the Employee Benefits Note so replaced.
(d) Following the Effective Date and until all
principal and accrued interest due under the New Notes shall have been paid in
full, on the first business day after the date of the receipt thereof by Conoco
or any of its Subsidiaries, Conoco shall, or shall cause its relevant Subsidiary
to, lend or contribute to CI an amount equal to 100% of the cash proceeds of (i)
the incurrence of Indebtedness by Conoco or any of its Subsidiaries (other than
Petrozuata) (net of underwriting discounts and commissions and other reasonable
costs (other than Separation Expenses) associated therewith, such other
reasonable costs to be mutually agreed upon by Conoco and DuPont) except for the
incurrence of Indebtedness pursuant to the Revolving Credit Facility or (ii) the
issuance or sale of equity securities by Conoco or any of its Subsidiaries (net
of underwriting discounts and commissions and other reasonable costs (other than
Separation Expenses) associated therewith, such other reasonable costs to be
mutually agreed upon by Conoco and DuPont); provided, however, that to the
extent that amounts are to be paid pursuant to this subsection (d) in respect of
the Restructured Note, Conoco shall make such payments directly. Immediately
following any loan or contribution described above, Conoco shall cause CI to pay
the entire amount of such loan or contribution (which will be equal to 100% of
the cash proceeds received by Conoco or any of its Subsidiaries as described in
clauses (i) and (ii) above) to the holder or holders of the New Notes in partial
satisfaction of its obligations under the New Notes, except to the extent that
all or part of the amount of such loan or contribution is used to repay any
Indebtedness of Conoco, CI or any of their Subsidiaries to DuPont and any of its
Subsidiaries, other than Conoco, CI and their Subsidiaries, but only to the
extent DuPont consents
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to the repayment of such Indebtedness in lieu of payment under the New Notes.
Amounts applied to the prepayment of the New Notes as provided in this Section
2.5(d) shall be applied (a) first, to the accrued and unpaid interest on the
Note, (b) second, to the principal of the Note (c) third, to accrued and unpaid
interest on the portions, if any, of the Restructured Note and the Conoco Master
Note that remain outstanding in accordance with Section 2.5(c), (d) fourth, to
the principal of the Employee Benefits Note and (e) fifth, to the principal of
the notes referred to in clause (c) above. Notwithstanding the foregoing, the
provisions of Section 2.5(d)(ii) shall not apply to the net proceeds received
from the exercise of stock options granted to directors, officers and employees
of the relevant entity.
(e) In addition, on or before the Cash Settlement
Date, DuPont shall pay CI amounts owed under the DuPont Master Note, including
accrued interest thereon.
Section 2.6 Registration of Conoco Shares.
(a) Conoco has filed a registration statement on Form
S-1 (as the same may be amended from time to time, including all exhibits
thereto, the "Registration Statement") under the Securities Act covering the
number of shares of Class A Common Stock set forth therein (which sets forth
appropriate disclosure concerning Conoco, the Transferred Business, the
Transferred Assets, the IPO and certain other matters).
(b) As promptly as practicable following the date of
this Agreement (to the extent not theretofore accomplished):
(i) Conoco will use its best efforts to cause such
Registration Statement to be declared effective and
to effect the IPO in accordance with the terms of
this Agreement, including by (1) responding promptly
to any comments from the SEC with respect thereto,
after consultation with DuPont, and (2) taking such
other actions as shall be reasonably required in
order to have the Registration Statement declared
effective under the Securities Act as soon as
reasonably practicable following the date hereof.
(ii) Conoco shall file in a timely manner with the SEC and
cause to become effective any registration statements
or amendments
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thereto which are appropriate to reflect the
establishment of, or amendments to, any employee
benefit and other plans relating to the Transferred
Business contemplated by the Employee Matters
Agreement or described in the Registration Statement.
(iii) Conoco shall take all such action as may be necessary
or appropriate to register or qualify the Class A
Common Stock under state securities or "Blue Sky"
Laws or such other action under such laws as is
necessary or appropriate in connection with the
transactions contemplated by this Agreement.
(iv) Conoco shall enter into certain agreements (including
an underwriting agreement) necessary or appropriate
to facilitate the IPO.
(v) Conoco shall obtain "comfort" letters and updates
thereof from its independent accountants addressed to
the underwriters of the IPO, such letters to be in
customary form and covering matters of the type
customarily covered in "comfort" letters to
underwriters.
(vi) Conoco shall cooperate with the underwriters of the
IPO to facilitate timely preparation and delivery of
certificates representing the Class A Common Stock
and to enable the Class A Common Stock to be in such
denominations and registered in such names as the
underwriters may request.
(vii) Conoco shall participate and have senior management
of Conoco available to participate in any "roadshow"
marketing efforts reasonably requested by the lead
managing underwriter of the IPO.
(viii) Conoco shall prepare, and Conoco shall file and seek
to make effective, an application to permit listing
of the Class A Common Stock on the NYSE.
(c) DuPont and Conoco agree that DuPont shall have
the right, in its sole discretion, to determine whether to satisfy or cause to
be satisfied, the underwriter's over-allotment option in the IPO with shares of
Conoco sold by
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DuPont, Conoco or some combination of shares of Conoco sold by DuPont and
Conoco.
ARTICLE III
ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities. Upon the terms set forth in
this Agreement, Conoco hereby agrees with DuPont to, or to cause the appropriate
Transferred Business Company to, assume, and agree to pay, perform and discharge
promptly when due any and all Assumed Liabilities; provided however, that
notwithstanding the foregoing, nothing in this Section 3.1 shall require Conoco
to make a capital contribution to, or otherwise invest in, purchase assets or
services from, or lend, advance or otherwise supply or accelerate the payment of
funds to, any of the Transferred Business Companies in order to enable such
Transferred Business Company to satisfy an Assumed Liability.
Section 3.2 Retained Liabilities. Upon the terms set forth in
this Agreement, DuPont hereby agrees with Conoco to, or to cause a Retained
Subsidiary to, pay, perform and discharge promptly when due any and all Retained
Liabilities, including all Liabilities expressly assumed by DuPont and any
Retained Subsidiary under the terms of this Agreement or any of the Related
Agreements; provided however, that notwithstanding the foregoing, nothing in
this Section 3.2 shall require DuPont to make a capital contribution to, or
otherwise invest in, purchase assets or services from, or lend, advance or
otherwise supply or accelerate the payment of funds to, any of the Retained
Subsidiaries in order to enable such Retained Subsidiary to satisfy a Retained
Liability.
Section 3.3 Construction of Agreements. Notwithstanding any
other provision in this Agreement to the contrary, in the event and to the
extent that there shall be a conflict between the provisions of this Agreement
and the provisions of any Related Agreement or any other agreement entered into
by DuPont or the Retained Subsidiaries, on one hand, and Conoco or the
Transferred Business Companies on the other hand, pursuant to this Agreement or
the Related Agreements, the provisions of this Agreement shall control except
for conflicts between the provisions of this Agreement and any Principal Related
Agreement, in which case the provisions of such Principal Related Agreement
shall control; provided, however, notwithstanding the foregoing, in the case of
a conflict between the provisions of this
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Agreement and the provisions of one of the several Transitional Services
Agreements, the provisions of the particular Transitional Services Agreement
shall control only to the extent that (x) the provision in question is contained
in the form of Transitional Services Agreement attached hereto as Exhibit F or
(y) is approved by the General Counsel or an Associate General Counsel of both
DuPont and Conoco.
ARTICLE IV
CERTAIN RESTRUCTURING DEFINITIONS
Section 4.1 Assumed Liabilities. "Assumed Liabilities" shall
mean any and all Liabilities, whether arising before or after the Effective
Date, of DuPont or its Subsidiaries (including Conoco and the Transferred
Business Companies), or any of their predecessor companies or businesses, or any
of their Affiliates, Subsidiaries or divisions, relating to, resulting from or
arising out of the present, past or future operation or conduct of the Conoco
Business or ownership or use of Assets in the Conoco Business (including the
ownership or use of the Transferred Assets). "Assumed Liabilities" shall include
but not be limited to the following:
(a) all Liabilities which would properly be set
forth, reflected, disclosed or reserved for on a combined balance sheet of
Conoco and the Transferred Business Companies as of the Effective Date, prepared
in the same manner as the most recent audited combined balance sheet of Conoco
included in the Registration Statement (after giving effect to any pro forma
adjustments reflected in the Registration Statement), but excluding any such
Liabilities attributable to DuPont Netherlands;
(b) all Liabilities pursuant to, under or relating to
all Contracts relating exclusively to the Conoco Business or the Transferred
Assets, regardless of whether Conoco or a Transferred Business Company or DuPont
or a Retained Subsidiary is a party to such Contract;
(c) all warranty, performance and similar obligations
entered into or incurred in the course of business of the Conoco Business with
respect to its products;
(d) all Conoco Environmental Liabilities;
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(e) all Liabilities and obligations assumed by,
retained by or agreed to be performed by Conoco or any of its Subsidiaries
pursuant to this Agreement or any of the Related Agreements;
(f) all Liabilities relating to, arising out of or
resulting from the Conoco Actions and all Liabilities relating to, arising out
of or resulting from all other Actions which are related to, or arise out of the
operations or conduct of the Conoco Business or the ownership or use of the
Assets in the Conoco Business (including the ownership of the Transferred
Assets), whether arising before or after the Effective Date;
(g) all Liabilities relating to all Actions for
alleged or actual patent infringement relating to, resulting from or arising out
of the use by DuPont or any Retained Subsidiary of any Conoco Patents in
accordance with the immunity described in Section 7.12(a);
(h) all Liabilities relating to, resulting from or
arising out of the transfer of the Transferred Assets pursuant to this Agreement
or the Related Agreements other than Liabilities for Separation Expenses;
(i) Conoco's portion, determined pursuant to Section
4.5 hereof, of Shared Contractual Liabilities;
(j) all Liabilities relating to, resulting from or
arising out of the business and operations sold to Vista Chemical by DuPont and
Conoco;
(k) all Liabilities relating to, arising out of or
resulting from the ownership or use of Excluded Assets to the extent they arise
out of (1) the use of such Assets in, or for the benefit of, the Conoco Business
or (2) the operation or use of such Assets by Conoco or a Transferred Business
Company or an employee thereof;
(l) all Liabilities relating to, resulting from, or
arising out of options to purchase stock of Conoco, including options issued
pursuant to Section 2.06 of the Employee Matters Agreement;
(m) all Liabilities arising from any activities and
operations of DuPont, any of its Subsidiaries and any of their employees
(including, but not
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limited to, the activities and operations of Sentinel and DERS) to the extent
performed for or on behalf of the Conoco Business; and
(n) all Liabilities arising from the actions and
activities of Conoco and the Transferred Business Companies in connection with
the AEP Proposed Joint Ventures;
provided, however, that notwithstanding the foregoing, Assumed Liabilities shall
in no event include (i) any Liabilities with respect to any Environmental Claims
or Requirements of Environmental Law that are neither Conoco Environmental
Liabilities nor provided for in clause (j) above, (ii) Liabilities that relate
to Taxes other than pursuant to this Agreement or any of the Related Agreements,
including the Tax Sharing Agreement or (iii) any Liabilities for Separation
Expenses.
Section 4.2 Retained Liabilities. "Retained Liabilities" shall
mean any and all Liabilities, whether arising before or after the Effective
Date, of DuPont or its Subsidiaries or any of their predecessor companies or
businesses, or any of their Affiliates, Subsidiaries or divisions relating to,
resulting from or arising out of the present, past or future operations or
conduct of the DuPont Business, or ownership or use of the DuPont Transferred
Assets or any other Assets (other than the Transferred Assets) owned by DuPont
and the Retained Subsidiaries, other than any Assumed Liabilities. "Retained
Liabilities" shall include but not be limited to the following (other than any
which are Assumed Liabilities):
(a) all Liabilities arising out of, relating to or
resulting from the ownership or use of the Excluded Assets to the extent they
arise out of (1) the use of such Assets in, or for the benefit of, the DuPont
Business or (2) the operation or use of such Assets by DuPont or a Retained
subsidiary or an employee thereof;
(b) all Liabilities pursuant to, under or relating to
all Contracts relating exclusively to the DuPont Business or the DuPont
Transferred Assets or any other Assets (other than the Transferred Assets) owned
by DuPont and the Retained Subsidiaries, regardless of whether Conoco or a
Transferred Business Company or DuPont or a Retained Subsidiary is a party to
such Contract;
(c) all warranty, performance and similar obligations
entered into or incurred in the course of business of the DuPont Business with
respect to its products;
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(d) all DuPont Environmental Liabilities;
(e) all Liabilities and obligations assumed by,
retained by, or agreed to be performed by DuPont or any of the Retained
Subsidiaries pursuant to this Agreement or any of the Related Agreements;
(f) all Liabilities relating to Actions relating to,
resulting from or arising out of the DuPont Actions and all Liabilities relating
to, resulting from or arising out of all other Actions, which are related to or
arise out of the operations or conduct of the Retained Business or the ownership
or use of the Assets in the DuPont Business (including the DuPont Transferred
Assets and the Excluded Assets), whether arising before or after the Effective
Date (except in all cases the Actions described in Section 4.1(f) hereof);
(g) the Liabilities relating to all Actions for
alleged or actual patent infringement relating to, resulting from or arising out
of the use by Conoco or any Transferred Business Company of any DuPont Patents
in accordance with the immunity described in Section 7.12(b);
(h) All Liabilities for Separation Expenses;
(i) DuPont's portion, determined pursuant to Section
4.5 hereof, of Shared Contractual Liabilities;
(j) All Liabilities relating to, resulting from or
arising out of the businesses and operations sold to Cain Chemical, including
the operations at Matagorda and Chocolate Bayou, Texas;
(k) All Liabilities relating to, resulting from or
arising out of options to purchase stock of DuPont (including, without
limitation, options held by retired employees, but excluding Liabilities
relating to, resulting from or arising out of the cancellation of such options
upon the issuance of options to purchase stock of Conoco pursuant to Section
2.06 of the Employee Matters Agreement) other than the Employee Benefits Note;
(l) All Liabilities arising from any activities and
operations of Conoco, any of the Transferred Business Companies and any of their
employees to the extent performed for or on behalf of the DuPont Business; and
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(m) all Liabilities arising from the actions and
activities of DuPont and the Retained Subsidiaries in connection with the AEP
Proposed Joint Ventures;
provided, however, that notwithstanding the foregoing, Retained Liabilities
shall in no event include any (i) Liabilities with respect to any Environmental
Claims or Requirements of Environmental Law that are neither DuPont
Environmental Liabilities nor provided for in clause (j) above or (ii)
Liabilities that relate to Taxes other than pursuant to this Agreement or any of
the Related Agreements, including the Tax Sharing Agreement.
Section 4.3 Transferred Assets. "Transferred Assets" shall
mean collectively (i) any and all Assets of Conoco and the Transferred Business
Companies (other than any Mixed- Use Subsidiaries) following consummation of the
Restructuring, (ii) the Assets of the Mixed-Use Subsidiaries used primarily in
the Conoco Business and (iii) the Assets set forth on Schedule 1(c), but in any
event excluding the Excluded Assets.
Section 4.4 Excluded Assets. "Excluded Assets" shall mean:
(a) the Assets of the Construction Fleet except for
the Assets listed on Schedule 1(c); and
(b) the Assets listed on Schedule 4.4 as the same may
be supplemented from time to time prior to the Effective Date by DuPont, after
consultation with Conoco.
Section 4.5 Shared Contracts.
(a) With respect to Shared Contractual Liabilities
pursuant to, under or relating to a given Shared Contract, such Shared
Contractual Liabilities shall be allocated between the parties as follows:
(i) First, if a Liability is incurred exclusively in
respect of a benefit received by one party, the party
receiving such benefit shall be responsible for such
Liability.
(ii) Second, if a Liability cannot be so allocated under
clause (i), such Liability shall be allocated to the
parties based on the
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relative proportions of total benefit received (over
the term of the Shared Contract, measured as of the
date of the allocation) under the relevant Shared
Contract. Notwithstanding the foregoing, each party
shall be responsible for any or all Liabilities
arising out of or resulting from its breach of the
relevant Shared Contract.
(b) If DuPont or any Retained Subsidiary, on the one
hand, or Conoco or any Transferred Business Company, on the other hand, receives
any benefit or payment under any Shared Contract which was intended for other
party, DuPont and the Retained Subsidiaries, on the one hand, or Conoco and the
Transferred Business Companies, on the other hand, will use their respective
reasonable best efforts to deliver, transfer or otherwise afford such benefit or
payment (on an after-tax basis) to the other party.
ARTICLE V
CORPORATE GOVERNANCE AND CERTAIN FINANCIAL REPORTING
AND OTHER MATTERS
Section 5.1 Rights Plan Amendments. Following the Effective
Date and for so long as DuPont beneficially owns shares representing at least
30% of the voting power of all of the outstanding shares of Voting Stock,
without the prior written consent of DuPont, Conoco shall not amend or modify
the Conoco Rights Plan.
Section 5.2 Charter/bylaw Amendments. So long as DuPont owns
shares representing 30% of the voting power of all of the outstanding shares of
Voting Stock, Conoco will not, without the prior consent of DuPont, adopt any
amendments to its Restated Certificate of Incorporation or Bylaws or take or
recommend to its stockholders any action during the term of this Agreement which
would (i) impose limitations on the legal rights of DuPont or any of the
Retained Subsidiaries as Conoco stockholders other than those imposed pursuant
to the express terms of this Agreement or the form of Conoco's Restated
Certificate of Incorporation set forth as Exhibit A hereto, including, without
limitation, any action which would impose restrictions (A) based upon the size
of security holding, the business in which a security holder is engaged or other
considerations applicable to DuPont or any of the Retained Subsidiaries and not
to security holders generally, or (B) with reference
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to Class B Common Stock (or if no Shares of Class B Common Stock are then
outstanding, to Class A Common Stock) generally, by means of the issuance of or
proposal to issue any other class of securities having voting power
disproportionately greater than the equity investment in the Company
represented by such securities; (ii) involve the issuance or corporate action
providing for the issuance of any warrant, capital stock or other security (A)
which is, or under specified circumstances will become, convertible into or
represent the right to acquire any securities of DuPont or any of the Retained
Subsidiaries (other than pursuant to customary provisions for adjusting the
securities for which any such warrant is exercisable or into which any such
stock or security is convertible) or (B) any other rights which (including
rights of redemption) are dependent upon the amount of voting securities owned
by DuPont or any of the Retained Subsidiaries; (iii) deny any benefit to DuPont
or any of the Retained Subsidiaries proportionately as holders of any class of
voting securities that is made available to other holders of the same class of
voting securities generally; or (iv) alter voting or other rights of the holders
of any class of voting securities so that any such rights (or the vote required
with respect to any matter) are determined with reference to the amount of
voting securities held by DuPont or any of the Retained Subsidiaries; provided,
that this Section 5.2 shall not prohibit Conoco from adopting the Conoco Rights
Plan or taking any action otherwise prohibited hereby, so long as DuPont and the
Retained Subsidiaries are, either expressly or as part of a class of
stockholders which includes DuPont and the Retained Subsidiaries, exempted from
such action or the limitations on legal rights imposed thereby.
Section 5.3 Conoco Board Representation. (a) Beginning on the
Effective Date, and for so long as DuPont beneficially owns shares representing
50% or more of the voting power of all of the outstanding Voting Stock, DuPont
shall have the right to designate for nomination by the Conoco Board (or any
nominating committee thereof) to the Conoco Board a majority of the members of
the Conoco Board. For so long as DuPont beneficially owns shares representing
less than 50% but more than 10% of the voting power of all of the outstanding
Voting Stock, DuPont shall have the right to designate for nomination by the
Conoco Board (or any nominating committee thereof) to the Conoco Board a
proportionate number of members of the Conoco Board, as calculated in accordance
with Section 5.3(d). Notwithstanding anything to the contrary set forth herein,
Conoco's obligations with respect to the election or appointment of DuPont
designated members shall be limited to the obligations set forth under
subsections (b) and (c) below.
(b) Conoco shall exercise all authority under
applicable law and shall use its best efforts to cause five persons designated
by DuPont to be elected to the Conoco Board effective as of the Effective Date
(one such designee of DuPont
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in Class I and two such designees of DuPont in each of Class II and Class III
for terms ending on the first, second and third annual meetings thereafter,
respectively). Commencing with the annual meeting of stockholders of Conoco to
be held in 1999 and prior to each annual meeting of stockholders of Conoco
thereafter, DuPont shall be entitled to present to the Conoco Board or any
nominating committee thereof such number of designees of DuPont (each, a "DuPont
Designee") for election to the class of directors up for election to the Conoco
Board at such annual meeting as would result in DuPont having the appropriate
number of DuPont Designees on the Conoco Board as determined pursuant to
subsection (a) above. If the Conoco Board ceases to be a classified board,
DuPont shall be entitled to present to the Conoco Board or any nominating
committee thereof five (or such other number of DuPont Designees as would result
in DuPont having the appropriate number of DuPont Designees on the Board as
determined pursuant to subsection (a) above) DuPont Designees, or such other
number of designees, as determined pursuant to Section 5.3(d), for election to
the Conoco Board at each annual meeting of stockholders of Conoco.
(c) Conoco shall at all such times exercise all
authority under applicable law and use its best efforts to cause all such
designees to be nominated as Board members by the nominating committee of the
Conoco Board if there is such a committee. Conoco shall cause each DuPont
Designee for election to the Conoco Board to be included in the slate of
designees recommended by the Conoco Board to Conoco's stockholders for election
as directors at each annual meeting of the stockholders of Conoco (or at any
special meeting held for the election of directors) and shall use its best
efforts to cause the election of each such DuPont Designee, including soliciting
proxies in favor of the election of such persons. In the event that any DuPont
Designee elected to the Conoco Board shall cease to serve as a director for any
reason, the vacancy resulting therefrom shall be filled by the Conoco Board with
a substitute DuPont Designee, unless such vacancy was caused by action of
stockholders (in which case, in accordance with Conoco's Restated Certificate of
Incorporation, the stockholders shall fill such vacancy). In the event that as a
result of an increase in the size of the Conoco Board, DuPont is entitled to
have one or more additional DuPont Designees elected to the Conoco Board
pursuant to subsection (a) above, the Conoco Board shall appoint the appropriate
number of such additional DuPont Designees, unless such increase in size of the
Conoco Board was caused by the action of stockholders (in which case, in
accordance with Conoco's Restated Certificate of Incorporation, the stockholders
shall elect such additional director or directors). The parties hereto agree
that the directors of Conoco identified in the Registration Statement include
five DuPont Designees.
(d) If at any time that DuPont Designees are serving
on the Conoco Board, DuPont beneficially owns shares representing less than 50%
but
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more than 10% of the total voting power of all of the outstanding Voting Stock,
the number of persons DuPont shall be entitled to designate for nomination by
the Conoco Board (or any nominating committee thereof) for election to the
Conoco Board shall be equal to the number of directors computed using the
following formula (rounded to the nearest whole number): the product of (1) the
percentage of the voting power of all of the outstanding shares of common stock
of Conoco beneficially owned by DuPont and (2) the number of directors then on
the Conoco Board (assuming no vacancies exist). Notwithstanding the foregoing,
if DuPont beneficially owns shares of common stock of Conoco representing less
than 50% of the total voting power of all outstanding shares of common stock of
Conoco and the calculation of the formula set forth in the foregoing sentence
would result in DuPont being entitled to elect a majority of the members of the
Conoco Board, the formula will be recalculated with the product being rounded
down to the nearest whole number; provided, however, that if DuPont, at any
time, acquires additional common stock of Conoco so that DuPont beneficially
owns shares of common stock of Conoco representing 50% or more of the total
voting power of all of the outstanding shares of common stock of Conoco, then
the number of persons DuPont shall be entitled to designate for nomination by
the Conoco Board (or any nominating committee thereof) for election to the
Conoco Board shall be adjusted upward, if appropriate as a result of rounding,
in accordance with the provisions of this Section 5.3(d). If the number of
DuPont Designees serving on the Conoco Board exceeds the number determined
pursuant to the foregoing sentences of this Section 5.3(d) (such difference
being herein called the "Excess Director Number"), then DuPont shall use its
reasonable best efforts to cause DuPont Designees selected by DuPont in its sole
discretion (the number of which designees shall be equal to the Excess Director
Number) to promptly resign from the Conoco Board, and, to the extent such
persons do not so resign, DuPont shall assist Conoco in increasing the size of
the Conoco Board, so that after giving effect to such increase, the number of
DuPont Designees on the Conoco Board is in accordance with the