-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N5LycT17H9NaKVhGzm1z7Jh0teSz0c0AMTrp8g/2ll8udtt4Ce46B3KP4ITUeCLR Ga2a4O+01Ad5/W3ExfEldw== 0001341004-07-001572.txt : 20070511 0001341004-07-001572.hdr.sgml : 20070511 20070511092217 ACCESSION NUMBER: 0001341004-07-001572 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070511 DATE AS OF CHANGE: 20070511 GROUP MEMBERS: LEONARD BLAVATNIK SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LYONDELL CHEMICAL CO CENTRAL INDEX KEY: 0000842635 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 954160558 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-40216 FILM NUMBER: 07840268 BUSINESS ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 700 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 713-652-7200 MAIL ADDRESS: STREET 1: 1221 MCKINNEY ST STREET 2: SUITE 700 CITY: HOUSTON STATE: TX ZIP: 77010 FORMER COMPANY: FORMER CONFORMED NAME: LYONDELL PETROCHEMICAL CO DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AI Chemical Investments LLC CENTRAL INDEX KEY: 0001398077 IRS NUMBER: 770683153 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2711 CENTERVILLE ROAD STREET 2: SUITE 400 CITY: WILMINGTON STATE: DE ZIP: 19808 BUSINESS PHONE: 212 247 6400 MAIL ADDRESS: STREET 1: 730 FIFTH AVENUE STREET 2: 20TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D 1 ai_sc-13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Lyondell Chemical Company (Name of Issuer) Common Stock (Title of Class of Securities) 552078 (Cusip Number) Alejandro Moreno AI Chemical Investments LLC c/o Access Industries, Inc. 730 Fifth Avenue, 20th Floor New York, New York 10019 Tel. No.: (212) 247-6400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) N/A (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) AI Chemical Investments LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (SEE INSTRUCTIONS) (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC, BK 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ] ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 SOLE VOTING POWER -0- 8 SHARED VOTING POWER NUMBER OF SHARES BENEFICIALLY 20,990,070* OWNED BY EACH REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER 20,990,070* 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 20,990,070* 12 CHECK IF THE AGGREATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] (SEE INSTRUCTIONS) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.3% 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) OO * Until the right to acquire Shares arises pursuant to the Forward Contract (as defined herein), the Reporting Person, pursuant to Rule 13d-4 of the Securities Exchange Act of 1934 (the "Act"), disclaims beneficial ownership of the 20,990,070 Shares, and this Statement on Schedule 13D (this "Statement") shall not be construed as an admission that the Reporting Person is the beneficial owner of any securities covered by this Statement. 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Leonard Blavatnik 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (SEE INSTRUCTIONS) (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) Not Applicable 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ] ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 SOLE VOTING POWER -0- 8 SHARED VOTING POWER NUMBER OF SHARES BENEFICIALLY 20,990,070* OWNED BY EACH REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER 20,990,070* 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 20,990,070* 12 CHECK IF THE AGGREATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] (SEE INSTRUCTIONS) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.3% 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN * Until the right to acquire Shares arises pursuant to the Forward Contract (as defined herein), the Reporting Person, pursuant to Rule 13d-4 of the Securities Exchange Act of 1934 (the "Act"), disclaims beneficial ownership of the 20,990,070 Shares, and this Statement on Schedule 13D (this "Statement") shall not be construed as an admission that the Reporting Person is the beneficial owner of any securities covered by this Statement. Item 1. Security and Issuer The class of equity securities to which this statement relates is the common stock, par value $1.00 per share (the "Shares"), of Lyondell Chemical Company, a corporation organized under the laws of Delaware (the "Issuer"). The principal executive offices of the Issuer are located at 1221 McKinney Street, Suite 700, Houston, Texas 77010. Item 2. Identity and Background This statement is filed by: (i) AI Chemical Investments LLC, a limited liability company organized under the laws of Delaware ("Newco"). The address of the principal office of Newco is 730 Fifth Avenue, 20th Floor, New York, New York 10019. The principal business of Newco is holding the Forward Contract (as defined below) to acquire Shares, as more fully described in Item 6 hereof; and (ii) Leonard Blavatnik, an individual whose principal occupation is Chairman of Access Industries, Inc. ("Access") with a business address at 730 Fifth Avenue, 20th Floor, New York, New York 10019 ("Mr. Blavatnik" and, together with Newco, the "Reporting Persons"). The principal business of Access is holding strategic investments in a variety of industries worldwide. Mr Blavatnik is the sole member of Newco. Mr. Blavatnik is a United States citizen. See Annex A attached hereto, which sets forth the name, business address, citizenship, title and present principal occupation or employment of each of the managers of Newco. During the last five years, none of the Reporting Persons or, to the best of the Reporting Persons' knowledge, any of the persons listed in Annex A hereto: (a) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (b) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration On May 4, 2007, Newco entered into a postpaid share forward agreement (the "Forward Contract") with Merrill Lynch International ("Merrill Lynch") with an effective date of May 9, 2007. If Newco elects to settle the Forward Contract through physical settlement, Merrill Lynch will be obligated to deliver to Newco 20,990,070 Shares against payment by Newco of the price of $32.1130 per Share. Any such physical settlement will be subject to the condition that Newco has made all filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and the waiting period under the HSR Act has expired or been terminated. During the term of the Forward Contract Newco will make quarterly payments to Merrill Lynch relating to the notional value of the Forward Contract and will receive quarterly payments from Merrill Lynch in amounts equal to any cash dividends paid on the reference number of Shares. The terms of the Forward Contract are more fully described in Item 6 hereof. If Newco elects to physically settle the Forward Contract, the source of funds for this purchase is expected to be capital contributions from Newco's sole member and/or loans from financial institutions. Item 4. Purpose of Transaction Newco has entered into the Forward Contract as a strategic investment. Newco currently intends to elect physical settlement under the Forward Contract, subject to the satisfaction of the conditions to physical settlement therein and further subject to market conditions, the trading prices of Shares, alternative investment opportunities, the availability of funds, and the outlook for the petrochemicals industry and the Issuer. The Reporting Persons may, depending on market conditions, the trading prices of Shares, alternative investment opportunities, the availability of funds and the outlook for the petrochemicals industry and the Issuer, acquire additional Shares in the open market, block trades, negotiated transactions, or otherwise. The Reporting Persons may also consider a sale of all or part of any Shares acquired by Newco, in the open market, subject to limitations under applicable law, or in privately negotiated transactions. Upon acquiring the Shares pursuant to the Forward Contract, Newco intends to assess its ownership and voting position in the Issuer. The Reporting Persons may seek to engage in discussions with the Issuer concerning, among other possible scenarios, the merits of an offer to acquire all of the Shares of the Issuer and the merits of a merger, combination or similar transaction between the Issuer and affiliates of Newco, including Access or Basell Holdings B.V. The Reporting Persons have not yet determined which, if any, of the above courses of action they may ultimately take. The Reporting Persons' future actions with regard to the Issuer are dependent on their evaluation of the factors listed above, circumstances affecting the Issuer in the future, including prospects of the Issuer, general market and economic conditions and other factors deemed relevant. The Reporting Persons reserve the right to determine in the future whether to change the purpose or purposes described above or whether to adopt plans or proposals of the type specified above or otherwise. Except as set forth above, the Reporting Persons have no plans or proposals with respect to the Issuer. Item 5. Interest in Securities of the Issuer (a)-(b) Until the right to acquire Shares arises pursuant to the Forward Contract, the Reporting Persons, pursuant to Rule 13d-4 of the Act, disclaim beneficial ownership of the 20,990,070 Shares, and this Statement shall not be construed as an admission that the Reporting Persons are the beneficial owners of any securities covered by this Statement. In the aggregate, 20,990,070 Shares constitute, based on the number of Shares outstanding on March 31, 2007, as represented by the Issuer in the Form 10-Q filed with the SEC on May 8, 2007, 8.3% of the Issuer's outstanding share capital. Number of Shares as to which Newco has: o sole power to vote or to direct the vote: -0- o shared power to vote or to direct the vote: 20,990,070* o sole power to dispose or to direct the disposition of: -0- o shared power to dispose or to direct the disposition of: 20,990,070* * Until the right to acquire of Shares arises pursuant to the Forward Contract, Newco, pursuant to Rule 13d-4 arises of the Act, disclaims beneficial ownership of the 20,990,070 Shares, and this Statement shall not be construed as an admission that Newco is the beneficial owner of any securities covered by this Statement. Number of Shares as to which Mr. Blavatnik, in his capacity as sole member of Newco, has: o sole power to vote or to direct the vote: -0- o shared power to vote or to direct the vote: 20,990,070* o sole power to dispose or to direct the disposition of: -0- o shared power to dispose or to direct the disposition of: 20,990,070* * Until the right to acquire Shares arises pursuant to the Forward Contract, Mr. Blavatnik, pursuant to Rule 13d-4 of the Act, disclaims beneficial ownership of the 20,990,070 Shares, and this Statement shall not be construed as an admission that Mr. Blavatnik is the beneficial owner of any securities covered by this Statement. (c) Except as set forth in Item 6, to the best of the Reporting Persons' knowledge as of the date hereof (1) none of the Reporting Persons nor any of the persons listed in Annex A hereto, beneficially owns any Shares or options to acquire Shares and (2) there have been no transactions in the Shares effected during the past 60 days by any of the Reporting Persons, nor any of the persons listed in Annex A hereto. (d) Except as otherwise described in Item 6, no person is known by any of the Reporting Persons to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Shares. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer On May 4, 2007, Newco entered into the Forward Contract with Merrill Lynch with respect to 20,990,070 Shares. The effective date of the Forward Contract was May 9, 2007. During the term of the Forward Contract Newco will make quarterly payments to Merrill Lynch relating to the notional value of the Forward Contract and will receive quarterly payments from Merrill Lynch in amounts equal to any cash dividends paid on the reference number of Shares. The Forward Contract will allow Newco to elect either to physically settle the Forward Contract (i.e., to take delivery of the underlying Shares), or to cash or net share settle the transaction, (i.e., to receive or pay the change in the value of the underlying Shares, or to receive or deliver Shares with a value equal to such change in value of the underlying Shares), on a specified date or at an earlier date elected by Newco. If physical settlement is elected, Merrill Lynch will be obligated to deliver to Newco the specified number of Shares against payment by Newco of $32.1130 per Share. Any such physical settlement or net physical settlement will be subject to the condition that Newco has made all filings required under the HSR Act, and the waiting period under the HSR Act has expired or been terminated. If the waiting period under the HSR Act has not expired or been terminated by April 4, 2008, Newco will be required to cash settle the Forward Contract. If the waiting period under the HSR Act has expired or been terminated, Newco, in addition to having the right to elect physical settlement, may also elect cash or net share settlement. In the case of cash settlement, if the price of the Shares has increased, Merrill Lynch will pay Newco the amount of the increase; and if the price of the Shares has decreased, Newco will pay Merrill Lynch the amount of the decrease. In the case of net share settlement, Newco will receive or deliver Shares with a value equal to such increase or decrease. If cash or net share settlement occurs, an objective current market price will be used to determine the amount to be paid or delivered. Any Shares that Merrill Lynch may own or acquire as a hedge to its exposure under the Forward Contract will be held for the sole benefit of Merrill Lynch and will not be held on behalf of the Reporting Persons. Any such Shares will not be pledged to Newco or any Reporting Person to secure the performance of Merrill Lynch under the Forward Contract, and the Reporting Persons will have no direct claim on any Shares held by Merrill Lynch as a hedge in the case of a default or bankruptcy of Merrill Lynch. Newco will have no rights to any Shares held by Merrill Lynch as a hedge unless and until those Shares are delivered to Newco. The Reporting Persons will have no right to direct the voting or disposition of any such Shares and Merrill Lynch will not accept any instruction as to the voting or disposition of such Shares from any of the Reporting Persons. Merrill Lynch will have no rights to direct or affect the acquisition, holding, voting or disposition of any Shares held by the Reporting Persons. The preceding summary of the Forward Contract is not intended to be complete and is qualified in its entirety by reference to the full text of the Forward Contract, a copy of which is attached as Exhibit 1 hereto, and which is incorporated by reference herein. To the best of each Reporting Persons' knowledge, except as described above in this Item 6, there are at present no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 above and between any such persons and any person with respect to any securities of the Issuer. Item 7. Material to be Filed as Exhibits Exhibit 1: Forward Contract, dated as of May 4, 2007, by and between Newco and Merrill Lynch. Exhibit 2: Joint Filing Agreement, dated as of May 11, 2007, by and between Newco and Mr. Blavatnik. SIGNATURES After reasonable inquiry and to the best knowledge and belief of each of the undersigned, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Date: May 11, 2007 AI CHEMICAL INVESTMENTS LLC By: /s/ Lincoln Benet --------------------------- Name: Lincoln Benet Title: Manager LEONARD BLAVATNIK /s/ Leonard Blavatnik --------------------------------- Leonard Blavatnik Annex A The name, business address, citizenship, title and present principal occupation or employment of each of the managers of AI Chemical Investments LLC are set forth below.
Name and Business Present Principal Occupation Address or Employment Citizenship - ------------------------------ --------------------------------------------- ---------- Lincoln Benet Chief Executive Officer of Access Industries, United States Cope House Inc. and United Kingdom 15b Kensington Palace Gardens London W8 4QC Peter Thoren Executive Vice President of Access Industries, United States 730 Fifth Avenue, 20th Floor Inc. New York, New York 10019
EX-99 2 ai_exh01.txt EXHIBIT 1 Exhibit 1 [MERRILL LYNCH GRAPHIC] Confirmation of OTC Postpaid Share Forward Dated: May 4, 2007 ML Ref: To: AI Chemical Investments LLC ("COUNTERPARTY") c/o Access Industries, Inc. 730 Fifth Avenue New York, New York 10019 Attention: Lincoln Benet tel: (212) 247-6400 fax: (212) 977-8112 From: Merrill Lynch International ("ML" and "MLI") tel: (212) 449-8675 fax: (646) 805-2780 - ------------------------------------------------------------------------------- Dear Counterparty: The purpose of this letter agreement (this "Confirmation") is to confirm the terms and conditions of the above referenced transaction entered into between Counterparty and MLI, on the Trade Date specified below (the "Transaction"). This Confirmation constitutes a "Confirmation" as referred to in the Master Agreement specified below. The definitions and provisions contained in the 2000 ISDA Definitions (the "Swap Definitions") and the 2002 ISDA Equity Derivatives Definitions (the "Equity Definitions" and together with the Swap Definitions, the "Definitions") in each case as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will govern and in the event of any inconsistency between the Definitions and this Confirmation, this Confirmation will govern. This Confirmation evidences a complete binding agreement between you and us as to the terms of the Transaction to which this Confirmation relates. This Confirmation (notwithstanding anything to the contrary herein), shall be subject to an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency Cross Border) (the "Master Agreement" or "Agreement") as if we had executed an agreement in such form (but without any Schedule and with elections specified in the "ISDA Master Agreement" Section of this Confirmation) on the Trade Date. In the event of any inconsistency between the provisions of that agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction. The parties hereby agree that the Transaction evidenced by this Confirmation shall be the only Transaction subject to and governed by the Agreement. The terms of the particular Transaction to which this Confirmation relates are as follows: General Terms: Trade Date: May 4, 2007 Effective Date: May 9, 2007; provided, however, that in the event that certain purchases of Shares by MLI as a hedge in an amount equal to the Number of Shares that are scheduled to settle on the Effective Date are not settled as a result of the presence on such Shares of restrictive legends, other than a legend providing for restrictions on transfer based under the Securities Act of 1933, as amended (the "Securities Act"), then this Transaction may be cancelled at the option of MLI. In the event of any such cancellation, each party hereto will bear such party's own expenses in connection with this Confirmation, and no party hereto or any third party will have any claim for damages of any kind against any of the other parties as a result of such cancellation. Notwithstanding the foregoing, in the event that MLI is able to replace or retain all or a portion of the hedge position for the Number of Shares on terms acceptable to MLI, MLI agrees to negotiate in good faith with Counterparty to amend or replace the terms of this Transaction in light of MLI's new hedge position, with the intention of providing to Counterparty a transaction with terms similar to those specified in this Transaction for any hedge position MLI is able to replace or retain, subject to the mutual agreement of MLI and Counterparty and payment by the Counterparty of any expenses incurred by MLI in any such negotiations. Seller: ML Buyer: Counterparty Shares: The common stock of Lyondell Chemical Company (the "Issuer") Number of Shares: 20,990,070 (of which 6,990,070 will be considered "Restricted Shares", as described herein) Initial Equity Level: $32.1130 VWAP Price: Volume weighted average price per Share on the NYSE for a Scheduled Trading Day as reported on Bloomberg Page "LYO.N AQR" (or any successor thereto selected by the Calculation Agent) Forward Price: Initial Equity Level Prepayment: Not Applicable Variable Obligation: Not Applicable Exchange: NYSE Related Exchange(s): All Exchanges Market Disruption Event: The definition of "Market Disruption Event" in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words "at any time during the one-hour period that ends at the relevant Valuation Time" in the third line thereof with the words "at any time on any Scheduled Trading Day during the Settlement Execution Period or the period during which the Initial Equity Level is determined or" after the word "material". Valuation: Settlement Price: If Physical Settlement is applicable, the Forward Price. If Cash Settlement or Net Physical Settlement is applicable, the average of the VWAP Prices for each Eligible Trading Day during the Settlement Execution Period, reduced (i) by the product of $0.05 and the Number of Shares (reduced, in the case of Net Physical Settlement resulting in Share delivery to Counterparty, by the Number of Shares to be Delivered) and (ii) to reflect a market discount applied to that portion of the Shares held by the Seller as a hedge in this Transaction (the "Hedge Shares") that consist of Restricted Shares. In determining the market discount applicable to the Hedge Shares described in (ii) above, the Calculation Agent will consider the status of such Hedge Shares as "restricted securities" within the meaning of Rule 144 under the Securities Act, as well as the expected remaining period during which such Shares would remain "restricted securities", based on a holding period commencing on the Effective Date. Eligible Trading Day: Each Scheduled Trading Day in the Settlement Execution Period that is not a Disrupted Day; provided, however, that the Calculation Agent may determine that, based on the time of day when the event or events causing such Scheduled Trading Day to become a Disrupted Day occurred, a Disrupted Day should only be partially excluded from the definition of Eligible Trading Day, in which case the VWAP Price for such partially Eligible Trading Day shall be determined by the Calculation Agent based on market transactions in the Shares on such day effected during the portion of the Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Settlement Execution Period shall be adjusted by the Calculation Agent for purposes of determining the Settlement Price. Settlement Execution Period: The 25 Scheduled Trading Days beginning on April 7, 2008 (the "Scheduled Initiation Date"), in the event that there is no Early Settlement Election; otherwise, the 25 Scheduled Trading Days beginning on the Scheduled Trading Day immediately succeeding the Early Settlement Election Day; provided, however, that in each case, in the event that any such Scheduled Trading Day is a Disrupted Day, then the Settlement Execution Period shall be extended by a number of Scheduled Trading Days equal to the number of Disrupted Days in the Settlement Execution Period; provided, further, however, that if the number of Disrupted Days equals or exceeds eight, then the Calculation Agent, in its discretion, may either (i) declare any Scheduled Trading Day beginning with the eighth Scheduled Trading Day following the date that would have been the Valuation Date but for the Disrupted Days to be the final Scheduled Trading Day of the Settlement Execution Period, determine the VWAP Price for such Scheduled Trading Day and adjust the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Settlement Execution Period as it deems appropriate for purposes of determining the Settlement Price based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares or (ii) disregard such day for purposes of determining the Settlement Price and further postpone the Valuation Date, in either case, as it deems appropriate to determine the Settlement Price. Notwithstanding the foregoing, if either party determines, based on its assessment of market conditions, that 25 Scheduled Trading Days is not a sufficient period of time for the scheduled Settlement Execution Period, then such party may propose in writing that the other party agree to increase such number of days, and such other party shall consider such proposal in good faith. Valuation Date: If Physical Settlement is applicable, the earlier to occur of May 9, 2008 (the "Scheduled Valuation Date") and any Accelerated Valuation Date. If Cash Settlement or Net Physical Settlement is applicable, the last Scheduled Trading Day of the Settlement Execution Period. Accelerated Valuation Date: If Physical Settlement is applicable, the Early Settlement Election Day. If Cash Settlement or Net Physical Settlement is applicable, then the applicable Valuation Date. Early Settlement Election Day: Any Exchange Business Day during the Early Settlement Election Period on which the Buyer delivers to Seller an Early Settlement Notice prior to 5:00 p.m. New York City time; provided, however, that no Early Settlement Day may occur in the first 30 days after the Effective Date unless Physical Settlement is elected. Early Settlement Election Period: The period from and including the Effective Date to but excluding Deadline Date, unless Physical Settlement becomes the default settlement method on the Deadline Date, in which case such period shall extend to but excluding the Scheduled Valuation Date. Deadline Date: The Scheduled Trading Day immediately preceding the Scheduled Initiation Date Early Settlement Notice: Written notice from Buyer to Seller indicating that the notice is an "Early Settlement Notice" for the purposes of election of early settlement under this Confirmation ("Early Settlement Election") and specifying the method of settlement - i.e., Cash, Physical or Net Physical Settlement. Such notice shall be irrevocable on the part of Counterparty. Settlement Terms: Settlement Method Election: Applicable Electing Party: Buyer Settlement Method Election Date: (i) The Deadline Date or (ii) the Early Settlement Election Day, as the case may be. Default Settlement Method: Physical Settlement, if Condition to Physical Settlement and Net Physical Settlement is satisfied; otherwise, Cash Settlement. Cash Settlement Provisions: Forward Cash Settlement Amount: An amount determined by the Calculation Agent equal to the product of: a) the Number of Shares, multiplied by b) the result of: x) the Settlement Price, minus y) the Forward Price. On the Cash Settlement Payment Date, the Seller will pay Buyer the Forward Cash Settlement Amount if such amount is positive, and Buyer shall pay Seller the absolute value of the Forward Cash Settlement Amount if such amount is negative. Cash Settlement Payment Date: Three (3) Exchange Business Days following the Valuation Date. Settlement Currency: USD Net Physical Settlement Provisions: Number of Shares to be Delivered: Forward Cash Settlement Amount divided by the Settlement Price. Delivery Obligation: On the Net Physical Settlement Date, the Seller will deliver to the Buyer the Number of Shares to be Delivered if such amount is positive, and the Buyer shall deliver to the Seller the absolute value of the Number of Shares to be Delivered if such amount is negative. Net Physical Settlement Date: Three (3) Exchange Business Days following the Valuation Date or, with respect to delivery of Restricted Shares by ML to Counterparty, as soon as reasonably practicable after the Valuation Date. Physical Settlement Provisions: Settlement Date: Three (3) Exchange Business Days following the Valuation Date or, with respect to delivery of Restricted Shares by ML to Counterparty, as soon as reasonably practicable after the Valuation Date. Additional Payment: Additional Payment: On each Quarterly Payment Date, the Buyer shall pay to the Seller an amount equal to: the sum of the daily accruals over the Rate Period of the following: [(Fed Funds + Spread) X (Number of Shares X Initial Equity Level - Collateral Value) + (Fed Funds X Non-Cash Collateral Value)] / 365; provided, however, that in the event that such Rate Period overlaps with all or a part of the Settlement Execution Period (if Cash Settlement or Net Physical Settlement is applicable), the Calculation Agent shall reduce the daily accruals over the Settlement Execution Period based on, among other factors, the number of remaining days in the Settlement Execution Period, the VWAP Prices during the Settlement Execution Period, the Number of Shares to be Delivered, if any, and the party delivering any such Shares Fed Funds: Fed Funds Target Rate as determined by the Calculation Agent in respect of each daily reset date by reference to Bloomberg Screen: FDTR (or any successor thereto) Spread: 250 bps Rate Period: Actual number of days from and including the prior Quarterly Payment Date, or Effective Date, as applicable, to but excluding the relevant Quarterly Payment Date. Quarterly Payment Dates: Each three-month anniversary date, if any, from the Effective Date, until the Settlement Date, the Cash Settlement Payment Date or the Net Physical Settlement Date, as the case may be (the "Final Settlement Date"), as well as the Final Settlement Date; provided, however, that in the event that any such anniversary date is not an Exchange Business Day, then the relevant Quarterly Payment Date shall be the immediately succeeding Exchange Business Day. Dividends: The Seller shall pay to the Buyer on each Quarterly Payment Date an amount equal to the product of: (x) the Number of Shares and (y) the Dividend Amount for the just expired Dividend Period; provided, however, that with respect to such payment in respect of any Quarterly Payment Date immediately following a Dividend Period that overlaps with all or a part of the Settlement Execution Period (if Cash Settlement or Net Physical Settlement is applicable), the Calculation Agent shall reduce such amount in the event and to the extent that any ex-dividend date occurs during the Settlement Execution Period, also taking to account, among other factors, the number of remaining days in the Settlement Execution Period, the VWAP Prices during the Settlement Execution Period, the Number of Shares to be Delivered, if any, and the party delivering any such Shares. Dividend Amount: Ex Amount Dividend Period: The period from and including a Quarterly Payment Date or, in the case of the first Dividend Period, the third Exchange Business Day following the Effective Date, to but excluding the next succeeding Quarterly Payment Date. Share Adjustments: Method of Adjustment: Calculation Agent Adjustment Extraordinary Events: Consequences of Merger Events: Share-for-Share: Calculation Agent Adjustment Share-for-Other: Cancellation and Payment Share-for-Combined: Component Adjustment Determining Party: MLI Tender Offer: Applicable Consequences of Tender Offers: Share-for-Share: Calculation Agent Adjustment Share-for-Other: Cancellation and Payment Share-for-Combined: Component Adjustment Determining Party: MLI Nationalization, Insolvency or Delisting: Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange or NASDAQ (or their respective successors). Determining Party: MLI Calculation Agent: MLI Determining Party: MLI Non-Reliance: Applicable Agreements and Acknowledgments Regarding Hedging Activities: Applicable Additional Acknowledgements: Applicable Eligible Contract Participant: Each party represents to the other party that it is an "eligible contract participant" as defined in the U.S. Commodity Exchange Act (as amended). Governing Law: The laws of the State of New York (without reference to choice of law doctrine). Collateral: The ISDA form of Credit Support Annex (Subject to New York Law) (the "Incorporated CSA") is incorporated into this Confirmation by reference. This Confirmation, together with the Incorporated CSA, provide for security for Buyer's payment and performance obligations to Seller under this Transaction and shall constitute a "Credit Support Document" under the Agreement. For purposes of the Incorporated CSA, Exposure shall be zero, and Posted Collateral shall mean the "Eligible Collateral" transferred to Seller to satisfy Buyer's "Independent Amount" and any "Additional Independent Amount" determined as described below. Paragraph 7(i) of the Incorporated CSA is hereby amended to remove the phrase "and that failure continues for two Local Business Days". Independent Amount: $168,513,529.48, to be transferred by Buyer to Seller on the Effective Date Eligible Collateral: Cash or Non-Cash Collateral, with the Valuation Percentage for Cash as 100% and the Valuation Percentages for Non-Cash Collateral as set forth in Exhibit B hereto Non-Cash Collateral: The debt obligations described in Exhibit B Leverage Factor: (Equity Notional Amount - Collateral Value)/ (Market Value X Number of Shares) Market Value: Closing price per Share, as determined by the Calculation Agent Maximum Leverage Factor: 75% Additional Independent Amount: If the Leverage Factor on any Scheduled Trading Day is greater than the Maximum Leverage Factor, an amount equal to the greater of US$20 million or the amount required to reduce the Leverage Factor to below 75%. Notification Time: 12:00 p.m., New York City time Return Amount: In lieu of Paragraph 3(b) of the CSA, the following provision shall apply: With respect to each Scheduled Trading Day on which the Leverage Factor is less than 70%, MLI shall, if requested in writing by Counterparty no later than 1:00 p.m. New York City time on such Scheduled Trading Day, return to Counterparty, no later than 5:00 pm New York City time on the following Exchange Business Day, the Additional Independent Amounts that are then part of the Posted Collateral, but only up to the sum of (i) an amount required to increase the Leverage Factor to 70% and (ii) an additional amount valued at USD20 million. For the purposes of valuation of any Non-Cash Collateral that is to be returned, the Calculation Agent shall base such value on the Non-Cash Collateral Value at that time. Collateral Value: With respect to a given day, the sum of the face value of the Cash portion of the Posted Collateral and the Non-Cash Collateral Value Non-Cash Collateral Value: With respect to a given day, the value, as determined by the Calculation Agent based on the Valuation Percentages set forth in Exhibit B, of the portion of Posted Collateral consisting of Non-Cash Collateral Condition to Physical and Net Physical Settlement: Regulatory Approval: Prior to the election by the Buyer of either Physical or Net Physical Settlement, (i) the Buyer shall have filed a Premerger Notification Report pursuant to the Hart-Scott-Rodino Act within the time limits required and the waiting period specified by the Act shall have expired or otherwise been terminated by the Federal Trade Commission or (ii) Buyer shall deliver to Seller an opinion of nationally recognized counsel expert in U.S. antitrust law to the effect that (i) is not required prior to Physical or Net Physical Settlement, as the case may be. If the Buyer is required to file a Premerger Notification Report, then prior to any delivery of Shares pursuant to Physical or Net Physical Settlement pursuant to this Transaction the Buyer will provide the Seller with evidence in a form acceptable to the Seller of the filing of a Premerger Notification Report with the Federal Trade Commission and, if applicable, the early termination of the waiting period specified by the Hart-Scott Rodino Act. Status: If Cash or Net Physical Settlement is applicable, then Buyer represents and agrees that from the Trade Date to the Final Settlement Date (i) it has not been, is not and will not be an "affiliate" of the Issuer, as such term is defined in Rule 144 under the Securities Act, and (ii) it has not been and will not be subject to the reporting requirements and substantive provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Buyer will advise MLI one Scheduled Trading Day prior to becoming unable to elect Cash or Net Physical Settlement. Representations of Buyer: In addition to the acknowledgments and agreements contained in Article 13 of the Equity Definitions, Counterparty represents that it (a) has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of entering into the Transaction; (b) has consulted with its own legal, financial, accounting and tax advisors in connection with the Transaction; and (c) is entering into the Transaction for a bona fide business purpose. The Buyer has no knowledge of any non-public material information regarding the Issuer or the Shares. The Buyer has complied and will comply with all applicable disclosure or reporting requirements in respect of the Transaction, including, without limitation, any requirement imposed by Section 13 or Section 16 of the Exchange Act, if any. The Buyer is not and, after giving effect to the transactions contemplated hereby, will not be, required to register as an "investment company", as such term is defined in the Investment Company Act of 1940. The Buyer and the Seller each agree and acknowledge that any and all decisions with respect to acquiring, holding, voting or disposing of any Shares (including Shares held by the Seller as a hedge position) that may be owned by each of them shall be at the sole discretion of such owner without collaboration, cooperation or consultation with the other party. Representations of each of Buyer and Seller: It is an "accredited investor (as defined in Regulation D under the Securities Act) and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Transaction, and is able to bear the economic risk of the Transaction. It is entering into the Transaction for its own account and not with a view to the distribution or resale of the Transaction or its rights thereunder except pursuant to a registration statement declared effective under, or an exemption from the registration requirements of, the Securities Act. Agreements: Notwithstanding Section 9.11 of the Equity Definitions, the Buyer acknowledges and agrees that in connection with Physical or Net Physical Settlement the Seller may deliver Restricted Shares that are "restricted securities" as defined in Rule 144 under the Securities Act. Additional Termination Event: An Additional Termination Event shall occur where Buyer is the sole Affected Party if the VWAP Price of the Shares on any Scheduled Trading Day prior to the applicable settlement date is less than 50% of the Initial Equity Level; provided, however, that in the event that Buyer so notifies Seller in writing within one Exchange Business Day of Seller's designation of an Early Termination Date in respect of such Additional Termination Event, Buyer may elect to settle the Transaction as if the date of Buyer's written notice to Seller were the Valuation Date and Physical Settlement were applicable. Transfer: Neither party may transfer its rights or obligations under this Transaction except in accordance with Section 7 of the Master Agreement; provided however that ML may assign its rights and delegate its obligations hereunder, in whole or in part, to any affiliate (an "Assignee") of Merrill Lynch & Co., Inc. ("ML&Co."), effective (the "Transfer Effective Date") upon delivery to Counterparty of (a) an executed acceptance and assumption by the Assignee (an "Assumption") of the transferred obligations of ML under this Transaction (the "Transferred Obligations"); (b) and an executed guarantee (the "Guarantee") of ML&Co. of the Transferred Obligations. On the Transfer Effective Date, (a) ML shall be released from all obligations and liabilities arising under the Transferred Obligations; and (b) the Transferred Obligations shall cease to be a Transaction(s) under the Agreement and shall be deemed to be a Transaction(s) under the ISDA Master Agreement between Assignee and Counterparty, provided that, if at such time Assignee and Counterparty have not entered into a ISDA Master Agreement, Assignee and Counterparty shall be deemed to have entered into an ISDA form of Master Agreement (Multicurrency-Cross Border) without any Schedule attached thereto, provided such transfer will not create an Event of Default or Termination Event. Indemnification: Counterparty agrees to indemnify MLI, its Affiliates and their respective directors, officers, agents and controlling parties (MLI and each such person being an "Indemnified Party") from and against any and all losses, claims, damages and liabilities, joint and several, to which such Indemnified Party may become subject because of the untruth of any representation by Counterparty or a breach by Counterparty of any agreement or covenant under this Confirmation, in the Agreement and will reimburse any Indemnified Party for all reasonable expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of, any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. ISDA Master Agreement: - ---------------------- With respect to the Agreement, ML and Counterparty each agree as follows: "Specified Entity" means in relation to ML and in relation to Counterparty for purposes of this Transaction: Not applicable. "Specified Transaction" will have the meaning specified in Section 14 of the Agreement. The "Cross Default" provisions of Section 5(a)(vi) of the Agreement will not apply to ML and will not apply to Counterparty. The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of the Agreement will not apply to ML and Counterparty. The "Automatic Early Termination" provision of Section 6(a) of the Agreement will not apply to ML or to Counterparty. Payments on Early Termination. For the purpose of Section 6(e) of the Agreement: (i) Loss shall apply; and (ii) the Second Method shall apply. "Termination Currency" means USD. Tax Representations. (a) Payer Representations. For the purpose of Section 3(e) of the Agreement, each party represents to the other party that it is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other party under the Agreement. In making this representation, each party may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Agreement; provided that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) of the Agreement by reason of material prejudice to its legal or commercial position. (b) Payee Representations. For the purpose of Section 3(f) of the Agreement, each party makes the following representations to the other party: (i) ML represents that it is a corporation organized under the laws of England and Wales. (ii) Counterparty represents that it is a limited liability company organized in the State of Delaware. Delivery Requirements. For the purpose of Sections 4(a)(i) and (ii) of the Agreement, each party agrees to deliver the following documents: (a) Tax forms, documents or certificates to be delivered are: Each party agrees to complete (accurately and in a manner reasonably satisfactory to the other party), execute, and deliver to the other party, United States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by the other party; and (iii) promptly upon learning that any such form(s) previously provided by the other party has become obsolete or incorrect. (b) Other documents to be delivered:
- --------------------------------------------------------------------------------------------------------------------------------- Party Required to Document Required to be Delivered When Required Covered by Deliver Document Section 3(d) Representation - --------------------------------------------------------------------------------------------------------------------------------- Counterparty Evidence of the authority and true signatures of each Upon or before execution and Yes official or representative signing this Confirmation delivery of this Confirmation - --------------------------------------------------------------------------------------------------------------------------------- Counterparty Certified copy of the resolution of the Board of Upon or before execution and Yes Directors or equivalent document authorizing the delivery of this Confirmation execution and delivery of this Confirmation and such other certificates as ML shall reasonably request - --------------------------------------------------------------------------------------------------------------------------------- ML Guarantee of its Credit Support Provider, Upon or before execution and Yes substantially in the form of Exhibit A attached delivery of this Confirmation hereto, together with evidence of the authority and true signatures of the signatories, if applicable - ---------------------------------------------------------------------------------------------------------------------------------
Addresses for Notices. For the purpose of Section 12(a) of the Agreement: Address for notices or communications to ML for all purposes: Address: Merrill Lynch International Merrill Lynch Financial Centre 2 King Edward Street London EC1A 1HQ Attention: Manager, Fixed Income Settlements Facsimile No.: 44 207 995 2004 Telephone No.: 44 207 995 3769 Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as any changes to Counterparty's address, telephone number or facsimile number should be sent to: Address: GMI Counsel Merrill Lynch World Headquarters 4 World Financial Center New York, New York 10080 Attention: Global Equity Derivatives Facsimile No.: (212) 449-6576 Telephone No.: (212) 449-6309 Address for notices or communications to Counterparty for all purposes: Address: AI Chemical Investments LLC c/o Access Industries, Inc. 730 Fifth Avenue New York, New York 10019 Attention: Lincoln Benet Telephone No.: (212) 247-6400 Facsimile No.: (212) 977-8112 with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, New York 10036 Attention: John W. Osborn, Esq. Notices or communications to Counterparty relating to Collateral: If any notice relates to Collateral, by fax and email to: Rich Storey E-mail: rstorey@accind.com Fax: 212 977 8112 212 245 1798 Alejandro Moreno e-mail: Amoreno@accind.com Fax: 212 977 8112 Kaylin Cavanaugh e-mail: kcavanaugh@accind.com Fax: 212 977 8112 Paul Kessler E-mail: PKessler@accind.com Fax: 212 977 8112 Lincoln Benet E-mail: Lbenet@accind.com Fax: +44 20 7908 9969 Process Agent. For the purpose of Section 13(c) of the Agreement, ML appoints as its Process Agent: Address: Merrill Lynch, Pierce, Fenner & Smith Incorporated 222 Broadway, 16th Floor New York, New York 10038 Attention: Litigation Department Counterparty does not appoint a Process Agent. Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither ML nor Counterparty is a Multibranch Party. Calculation Agent. The Calculation Agent is ML, whose judgments, determinations and calculations in this Transaction and any related hedging transaction between the parties shall be made in good faith and in a commercially reasonable manner. Credit Support Document. Counterparty: None ML: Guarantee of ML & Co. in the form attached hereto as Exhibit A. Credit Support Provider. With respect to ML: ML & Co. With respect to Counterparty: N/A. Governing Law. This Confirmation will be governed by, and construed in accordance with, the laws of the State of New York. Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Transaction. Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into this Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein. Basic Representations. Section 3(a) of the Agreement is hereby amended by the deletion of "and" at the end of Section 3(a)(iv); the substitution of a semicolon for the period at the end of Section 3(a)(v) and the addition of Sections 3(a)(vi), as follows: Eligible Contract Participant; Line of Business. Each party agrees and represents that it is an "eligible contract participant" as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended ("CEA"), this Agreement and the Transaction thereunder are subject to individual negotiation by the parties and have not been executed or traded on a "trading facility" as defined in Section 1a(33) of the CEA, and it has entered into this Confirmation and this Transaction in connection with its business or a line of business (including financial intermediation), or the financing of its business. Acknowledgements: (a) The parties acknowledge and agree that there are no other representations, agreements or other undertakings of the parties in relation to this Transaction, except as set forth in this Confirmation. (b) The parties hereto intend for: (i) this Transaction to be a "securities contract" as defined in Section 741(7) of Title 11 of the United States Code (the "Bankruptcy Code"), qualifying for the protections under Section 555 of the Bankruptcy Code; (ii) a party's right to liquidate this Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a "contractual right" as defined in the Bankruptcy Code; (iii) all payments for, under or in connection with this Transaction, all payments for the Shares and the transfer of such Shares to constitute "settlement payments" as defined in the Bankruptcy Code. Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by deleting the words "on the day" in the second line thereof and substituting therefore "on the day that is three Local Business Days after the day." Section 6(d)(ii) is further modified by deleting the words "two Local Business Days" in the fourth line thereof and substituting therefore "three Local Business Days." Amendment of Definition of Reference Market-Makers. The definition of "Reference Market-Makers" in Section 14 is hereby amended by adding in clause (a) after the word "credit" and before the word "and" the words "or to enter into transactions similar in nature to Transactions." Consent to Recording. Each party consents to the recording of the telephone conversations of trading and marketing personnel of the parties and their Affiliates in connection with this Confirmation. To the extent that one party records telephone conversations (the "Recording Party") and the other party does not (the "Non-Recording Party"), the Recording Party shall in the event of any dispute, make a complete and unedited copy of such party's tape of the entire day's conversations with the Non-Recording Party's personnel available to the Non-Recording Party. The Recording Party's tapes may be used by either party in any forum in which a dispute is sought to be resolved and the Recording Party will retain tapes for a consistent period of time in accordance with the Recording Party's policy unless one party notifies the other that a particular transaction is under review and warrants further retention. Severability. If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to this Agreement; provided, however, that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable. Affected Parties. For purposes of Section 6(e) of the Agreement, each party shall be deemed to be an Affected Party in connection with Illegality and any Tax Event. MLI is regulated by the Financial Services Authority and is a member of the London Stock Exchange, the Irish Stock Exchange, Virt-x and ISMA. MLI has entered into this transaction as principal. The time of this Transaction shall be notified to the Counterparty upon request. [Signatures follow on separate page] Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us. Very truly yours, MERRILL LYNCH INTERNATIONAL By: /s/ William Morley ------------------------------- Name: William Morley Title: Authorized Signatory Accepted and confirmed as of the date first above written, AI CHEMICAL INVESTMENTS LLC By: /s/ Peter L. Thoren ------------------------------- Name: Peter L. Thoren Title: Manager EXHIBIT A --------- GUARANTEE OF MERRILL LYNCH & CO., INC. FOR VALUE RECEIVED, receipt of which is hereby acknowledged, MERRILL LYNCH & CO., INC., a corporation duly organized and existing under the laws of the State of Delaware ("ML & Co."), hereby unconditionally guarantees to AI Chemical Investments LLC (the "Company"), the due and punctual payment of any and all amounts payable by Merrill Lynch International, a company organized under the laws of England and Wales ("MLI"), under the terms of the Confirmation of OTC Postpaid Forward between the Company and MLI, dated as of May 4, 2007 (the "Agreement"), including, in case of default, interest on any amount due, when and as the same shall become due and payable, whether on the scheduled payment dates, at maturity, upon declaration of termination or otherwise, according to the terms thereof. In case of the failure of MLI punctually to make any such payment, ML & Co. hereby agrees to make such payment, or cause such payment to be made, promptly upon demand made by the Company to ML & Co.; provided, however that delay by the Company in giving such demand shall in no event affect ML & Co.'s obligations under this Guarantee. This Guarantee shall remain in full force and effect or shall be reinstated (as the case may be) if at any time any payment guaranteed hereunder, in whole or in part, is rescinded or must otherwise be returned by the Company upon the insolvency, bankruptcy or reorganization of MLI or otherwise, all as though such payment had not been made. This is a guarantee of payment in full, not collection. ML & Co. hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Agreement; the absence of any action to enforce the same; any waiver or consent by the Company concerning any provisions thereof; the rendering of any judgment against MLI or any action to enforce the same; or any other circumstances that might otherwise constitute a legal or equitable discharge of a guarantor or a defense of a guarantor. ML & Co. covenants that this guarantee will not be discharged except by complete payment of the amounts payable under the Agreement. This Guarantee shall continue to be effective if MLI merges or consolidates with or into another entity, loses its separate legal identity or ceases to exist. ML & Co. hereby waives diligence; presentment; protest; notice of protest, acceleration, and dishonor; filing of claims with a court in the event of insolvency or bankruptcy of MLI; all demands whatsoever, except as noted in the first paragraph hereof; and any right to require a proceeding first against MLI. ML & Co. hereby certifies and warrants that this Guarantee constitutes the valid obligation of ML & Co. and complies with all applicable laws. This Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York. This Guarantee becomes effective concurrent with the effectiveness of the Agreement, according to its terms. IN WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in its corporate name by its duly authorized representative. MERRILL LYNCH & CO., INC. By: -------------------------------- Name: Title: Date: EXHIBIT B --------- VALUATION PERCENTAGES OF NON-CASH COLLATERAL (A) Negotiable debt obligations issued by the U.S. Treasury Department having a remaining maturity of not more than one year: 100% (B) Negotiable debt obligations issued by the U.S. Treasury Department having a remaining maturity of more than one year but not more than ten years: 99% (C) Negotiable debt obligations issued by the U.S. Treasury Department having a remaining maturity of more than ten years: 98% EX-99 3 lon584158.txt EXHIBIT 2 - JOINT FILING AGREEMENT Exhibit 2 JOINT FILING AGREEMENT ---------------------- In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of them of a statement on Schedule 13D (including amendment thereto) with respect to securities of Lyondell Chemical Company; and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filing. In witness whereof, the undersigned hereby execute this Agreement this 11th day of May, 2007. AI CHEMICAL INVESTMENTS LLC By: /s/ Lincoln Benet ------------------------------ Name: Lincoln Benet Title: Manager LEONARD BLAVATNIK /s/ Leonard Blavatnik ----------------------------------- Leonard Blavatnik -----END PRIVACY-ENHANCED MESSAGE-----