UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 18, 2004
ASHLAND INC.
(Exact name of registrant as specified in its charter)
Kentucky
(State or other jurisdiction of incorporation)
1-2918 61-0122250
(Commission File Number) (I.R.S. Employer Identification No.)
50 E. RiverCenter Boulevard, Covington, Kentucky 41012-0391
(Address of principal executive offices) (Zip Code)
P.O. Box 391, Covington, Kentucky 41012-0391
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (859) 815-3333
Item 5. Other Events
On March 19, 2004 Ashland Inc. ("Ashland") announced that it signed an
agreement under which Ashland will transfer its 38 percent interest in
Marathon Ashland Petroleum LLC ("MAP") and two other businesses to Marathon
Oil Corporation in a transaction structured to be tax free and valued at
approximately $3.0 billion. The two other businesses are Ashland's maleic
anhydride business and 61 Valvoline Instant Oil Change ("VIOC") centers in
Michigan and northwest Ohio, which are valued at $94 million.
Under the terms of the agreement, Ashland's shareholders would receive
Marathon common stock with a value of $315 million (or approximately $4.50 per
Ashland share based on the number of shares currently outstanding). Ashland
would receive cash and MAP accounts receivable totaling $2.7 billion. MAP will
not make quarterly cash distributions to Ashland and Marathon between now and
the closing of the transaction. As a result, the final amount received by
Ashland would be increased by an amount equal to 38 percent of the cash
accumulated from operations during the period prior to closing. Ashland would
use a substantial portion of the transaction proceeds to retire all or most of
the company's outstanding debt and certain other financial obligations. After
payment of these obligations, Ashland would have a material net cash position.
The transaction is subject to, among other things, approval by Ashland's
shareholders, customary antitrust review, consent from public debt holders and
receipt of a favorable private letter ruling from the Internal Revenue Service
with respect to the tax treatment of the transaction. There is meaningful risk
that the transaction will not receive the favorable ruling from the IRS, in
which case the transaction would not proceed. However, Ashland believes it is
more likely than not that this transaction will receive a favorable ruling. If
these conditions are met, the transaction is expected to close by the end of
the 2004 calendar year.
The foregoing description of the transaction is qualified in its entirety
by reference to the terms of the agreements which are filed as Exhibits to
this Form 8-K and are incorporated by reference herein.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include those that refer to Ashland's
operating performance and expectations about this transaction, including those
statements that refer to the expected benefits of the transaction to Ashland's
shareholders. Although Ashland believes its expectations are based on
reasonable assumptions, it cannot assure the expectations reflected herein
will be achieved. These forward-looking statements are based upon internal
forecasts and analyses of current and future market conditions and trends,
management plans and strategies, weather, operating efficiencies and economic
conditions, such as prices, supply and demand, cost of raw materials and legal
proceedings and claims (including environmental and asbestos matters) and are
subject to a number of risks, uncertainties and assumptions that could cause
actual results to differ materially from those we describe in the
forward-looking statements. The risks, uncertainties and assumptions include
the possibility that Ashland will be unable to fully realize the benefits
anticipated from the transaction; the possibility of failing to receive a
favorable ruling from the Internal Revenue Service; the possibility that
2
Ashland fails to obtain the approval of its shareholders; the possibility that
the transaction may not close or that Ashland may be required to modify some
aspect of the transaction to obtain regulatory approvals; and other risks that
are described from time to time in the Securities and Exchange Commission
reports of Ashland. Other factors and risks affecting Ashland are contained in
Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30, 2003,
filed with the Securities and Exchange Commission ("SEC") and available in
Ashland's Investor Relations website at www.Ashland.com/investors or the SEC's
website at www.sec.gov. Ashland undertakes no obligation to subsequently
update or revise the forward-looking statements made in this report to reflect
events or circumstances after the date of this report.
ADDITIONAL INFORMATION ABOUT THE TRANSACTION
Investors and security holders are urged to read the proxy
statement/prospectus regarding the proposed transaction when it becomes
available because it will contain important information. The proxy
statement/prospectus will be filed with the SEC by Ashland, and security
holders may obtain a free copy of the proxy statement/prospectus when it
becomes available, and other documents filed with the SEC by Ashland, at the
SEC's website at www.sec.gov. The proxy statement/prospectus, and other
documents filed with the SEC by Ashland, may also be obtained for free in the
SEC filings section on Ashland's Investor Relations website at
www.Ashland.com/investors, or by directing a request to Ashland at 50 E.
RiverCenter Blvd., Covington, KY 41012. The respective directors and executive
officers of Ashland and other persons may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction. Information
regarding Ashland's directors and executive officers is available in its proxy
statement filed with the SEC by Ashland on December 8, 2003. Investors may
obtain information regarding the interests of participants in the solicitation
of proxies in connection with the transaction referenced in the foregoing
information by reading the proxy statement/prospectus when it becomes
available.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
None.
(b) Pro Forma Financial Information
None.
(c) Exhibits
2.1 Master Agreement dated as of March 18, 2004, among Ashland Inc., ATB
Holdings Inc., EXM LLC, New EXM Inc., Marathon Oil Corporation, Marathon
Oil Company, Marathon Domestic LLC and Marathon Ashland Petroleum LLC
(the "Master Agreement").
10.1 Tax Matters Agreement dated as of March 18, 2004, among Ashland Inc., ATB
Holdings Inc., EXM LLC, New EXM Inc., Marathon Oil
Corporation, Marathon Oil Company, Marathon Domestic LLC and Marathon
Ashland Petroleum LLC.
10.2 Assignment and Assumption Agreement (VIOC Centers) dated as of March 18,
2004, between Ashland Inc. and ATB Holdings Inc.
10.3 Assignment and Assumption Agreement (Maleic Business) dated as of March
18, 2004, between Ashland Inc. and ATB Holdings Inc.
10.4 Amendment No. 2 dated as of March 18, 2004 to the Amended and Restated
Limited Liability Company Agreement dated as of December 31, 1998 of
Marathon Ashland Petroleum LLC, by and between Ashland Inc. and Marathon
Oil Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASHLAND INC.
-------------------------
(Registrant)
Date: March 22, 2004
/s/ J. Marvin Quin
-------------------------
Name: J. Marvin Quin
Title: Senior Vice President
and Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Master Agreement dated as of March 18, 2004, among Ashland Inc., ATB
Holdings Inc., EXM LLC, New EXM Inc., Marathon Oil Corporation, Marathon
Oil Company, Marathon Domestic LLC and Marathon Ashland Petroleum LLC
(the "Master Agreement").
10.1 Tax Matters Agreement dated as of March 18, 2004, among Ashland Inc., ATB
Holdings Inc., EXM LLC, New EXM Inc., Marathon Oil Corporation, Marathon
Oil Company, Marathon Domestic LLC and Marathon Ashland Petroleum LLC.
10.2 Assignment and Assumption Agreement (VIOC Centers) dated as of March 18,
2004, between Ashland Inc. and ATB Holdings Inc.
10.3 Assignment and Assumption Agreement (Maleic Business) dated as of March
18, 2004, between Ashland Inc. and ATB Holdings Inc.
10.4 Amendment No. 2 dated as of March 18, 2004 to the Amended and Restated
Limited Liability Company Agreement dated as of December 31, 1998 of
Marathon Ashland Petroleum LLC, by and between Ashland Inc. and Marathon
Oil Company.
EXHIBIT 2.1
==============================================================================
MASTER AGREEMENT
Dated as of March 18, 2004,
Among
ASHLAND INC.,
ATB HOLDINGS INC.,
EXM LLC,
NEW EXM INC.,
MARATHON OIL CORPORATION,
MARATHON OIL COMPANY,
MARATHON DOMESTIC LLC
And
MARATHON ASHLAND PETROLEUM LLC
==============================================================================
i
TABLE OF CONTENTS
PAGE
ARTICLE I
TRANSACTIONS AND CLOSING
SECTION 1.01. MAP Parital Redemption......................................4
SECTION 1.02. Maleic/VIOC Contribution; MAP/LOOP/LOCAP Contribution;
Reorganization Merger.....................................5
SECTION 1.03. HoldCo Borrowing; Capital Contribution; Conversion
Merger....................................................6
SECTION 1.04. Acquisition Merger; Distribution............................7
SECTION 1.05. Closing.....................................................8
SECTION 1.06. Post-Closing True-Up........................................8
ARTICLE II
THE REORGANIZATION MERGER
SECTION 2.01. Parties to the Reorganization Merger........................9
SECTION 2.02. Reorganization Merger Effective Time........................9
SECTION 2.03. Effects....................................................10
SECTION 2.04. Conversion of Ashland Securities...........................10
SECTION 2.05. Dissenters' Rights.........................................11
SECTION 2.06. Limited Liability..........................................12
SECTION 2.07. Articles of Organization...................................12
SECTION 2.08. Operating Agreement........................................12
SECTION 2.09. Reorganization Plan of Merger..............................12
ARTICLE III
THE CONVERSION MERGER
SECTION 3.01. Parties to the Conversion Merger...........................12
SECTION 3.02. Conversion Merger Effective Time...........................13
SECTION 3.03. Effects....................................................13
SECTION 3.04. Conversion of New Ashland Securities.......................13
SECTION 3.05. Limited Liability..........................................14
SECTION 3.06. Articles of Incorporation and By-laws......................14
SECTION 3.07. Directors..................................................14
SECTION 3.08. Officers...................................................14
SECTION 3.09. Conversion Plan of Merger..................................14
ii
ARTICLE IV
THE ACQUISITION MERGER
SECTION 4.01. Acquisition Merger; Acquisition Merger Effective Time......15
SECTION 4.02. Effects....................................................15
SECTION 4.03. Effect on Capital Stock....................................16
SECTION 4.04. Limited Liability Company Agreement........................18
SECTION 4.05. Tax Treatment..............................................18
ARTICLE V
EXCHANGE OF HOLDCO CERTIFICATES
SECTION 5.01. Exchange of Certificates...................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ASHLAND PARTIES
SECTION 6.01. Organization, Standing and Power...........................26
SECTION 6.02. Ashland Subsidiaries; Equity Interests.....................27
SECTION 6.03. Capital Structure..........................................27
SECTION 6.04. Authority; Execution and Delivery; Enforceability..........30
SECTION 6.05. No Conflicts; Consents.....................................32
SECTION 6.06. SEC Documents; Undisclosed Liabilities.....................34
SECTION 6.07. Absence of Certain Changes or Events.......................35
SECTION 6.08. Information Supplied.......................................36
SECTION 6.09. Brokers....................................................36
SECTION 6.10. Opinion of Financial Advisor...............................37
SECTION 6.11. Solvency Matters...........................................37
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE MARATHON PARTIES
SECTION 7.01. Organization, Standing and Power...........................40
SECTION 7.02. Marathon Subsidiaries; Equity Interests....................41
SECTION 7.03. Capital Structure..........................................41
SECTION 7.04. Authority; Execution and Delivery; Enforceability..........42
SECTION 7.05. No Conflicts; Consents.....................................43
SECTION 7.06. SEC Documents; Undisclosed Liabilities.....................45
SECTION 7.07. Absence of Certain Changes or Events.......................46
iii
SECTION 7.08. Information Supplied.......................................47
SECTION 7.09. Brokers....................................................47
SECTION 7.10. Opinion of Financial Advisor...............................47
SECTION 7.11. Solvency Opinions..........................................48
SECTION 7.12. MAP Accounts Receivable....................................48
SECTION 7.13. Employee Benefits..........................................48
ARTICLE VIII
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 8.01. Conduct of Business........................................48
SECTION 8.02. No Solicitation............................................52
SECTION 8.03. Post-Closing Dividends, Distributions and Share
Repurchases..............................................55
SECTION 8.04. Offerings of Marathon Common Stock.........................55
ARTICLE IX
ADDITIONAL AGREEMENTS
SECTION 9.01. Preparation of the Forms S-4 and the Proxy Statement;
Shareholders Meeting; Form 8-A or Form 10................56
SECTION 9.02. Access to Information; Confidentiality.....................59
SECTION 9.03. Reasonable Best Efforts; Notification......................60
SECTION 9.04. Fees and Expenses..........................................67
SECTION 9.05. Public Announcements.......................................70
SECTION 9.06. Affiliates.................................................70
SECTION 9.07. Stock Exchange Listings....................................70
SECTION 9.08. Rights Agreements; Consequences if Rights Triggered........71
SECTION 9.09. St. Paul Park Judgment and Plea Agreement; Plains
Settlement...............................................72
SECTION 9.10. Consequences of Inability To Transfer the Ashland
LOOP/LOCAP Interest on the Closing Date..................73
SECTION 9.11. Consents Under Assigned Contracts..........................73
SECTION 9.12. Administrative Proceedings.................................74
SECTION 9.13. Replacement of Distributed Receivables.....................74
SECTION 9.14. Transition Services........................................75
SECTION 9.15. MAP Partial Redemption Amount..............................75
SECTION 9.16. Ashland Debt Obligation Amount.............................77
iv
ARTICLE X
CONDITIONS PRECEDENT
SECTION 10.01. Conditions to the Ashland Parties' and the Marathon
Parties' Obligations to Effect the Transactions..........78
SECTION 10.02. Conditions to Obligations of the Ashland Parties..........80
SECTION 10.03. Conditions to Obligations of the Marathon Parties.........81
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
SECTION 11.01. Termination...............................................83
SECTION 11.02. Effect of Termination.....................................86
SECTION 11.03. Amendment.................................................86
SECTION 11.04. Extension; Waiver.........................................87
SECTION 11.05. Procedure for Termination, Amendment, Extension or
Waiver...................................................87
ARTICLE XII
AMENDMENT OF EXISTING MAP AGREEMENTS
SECTION 12.01. Asset Transfer and Contribution Agreement.................88
SECTION 12.02. Designated Subleases......................................95
SECTION 12.03. The MAP LLC Agreement....................................100
SECTION 12.04. The Put/Call Agreement...................................100
SECTION 12.05. Ancillary Agreements.....................................101
SECTION 12.06. Other Provisions of the MAP Governing Documents..........101
SECTION 12.07. Post-Closing Access......................................102
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnification by New Ashland Inc.......................102
SECTION 13.02. Indemnification by Marathon..............................108
SECTION 13.03. Calculation of Losses....................................113
SECTION 13.04. Procedures...............................................115
v
ARTICLE XIV
GENERAL PROVISIONS
SECTION 14.01. Notices..................................................119
SECTION 14.02. Definitions..............................................120
SECTION 14.03. Interpretation; Disclosure Letters.......................126
SECTION 14.04. Severability.............................................126
SECTION 14.05. Counterparts.............................................126
SECTION 14.06. Entire Agreement; No Third-Party Beneficiaries...........127
SECTION 14.07. Exercise of Rights and Remedies..........................127
SECTION 14.08. Governing Law............................................128
SECTION 14.09. Assignment...............................................128
SECTION 14.10. Enforcement..............................................128
Exhibit A Accounts Receivable Selection Protocol
Exhibit B Form of Amendments to New Ashland Inc. Articles of
Incorporation
Exhibit C Form of Affiliate Letter
Exhibit D Tax Matters
Exhibit E Form of LOCAP T&D Assumption Agreement
Exhibit F Form of LOOP T&D Assumption Agreement
Exhibit G Form of MAP Contribution Agreement
Exhibit H Form of LOOP Contribution Agreement
Exhibit I Form of LOCAP Contribution Agreement
vi
INDEX OF DEFINED TERMS
TERM SECTION
- ---- -------
AAA.....................................................................6.11(a)
Acquisition Certificate of Merger..........................................4.01
Acquisition Merger......................................................1.04(a)
Acquisition Merger Consideration........................................4.03(b)
Acquisition Merger Effective Time..........................................4.01
Administrative Proceeding..................................................9.12
affiliate.................................................................14.02
Ancillary Agreements....................................................6.04(a)
AR Amount..................................................................1.01
AR Fraction...............................................................14.02
Ashland................................................................Preamble
Ashland Board..............................................................2.09
Ashland By-laws............................................................6.01
Ashland Capital Stock...................................................6.03(a)
Ashland Charter............................................................6.01
Ashland Common Stock...................................................Recitals
Ashland Debt Obligation Amount............................................14.02
Ashland Disclosure Letter............................................ARTICLE VI
Ashland Employee Stock Option.............................................14.02
Ashland Form S-4........................................................6.05(b)
Ashland LESOP.....................................................12.01(d)(iii)
Ashland LOOP/LOCAP Interest...............................................14.02
Ashland Material Adverse Effect.........................................6.05(a)
Ashland Parties...........................................................14.02
Ashland Pension Plan..............................................12.01(d)(iii)
Ashland Preferred Stock.................................................6.03(a)
Ashland Public Debt.....................................................9.03(b)
Ashland Rights..........................................................6.03(a)
Ashland Rights Agreement................................................6.03(a)
Ashland SAR...............................................................14.02
Ashland SEC Documents...................................................6.06(a)
Ashland Series A Preferred Stock........................................6.03(a)
Ashland Shareholder Approval............................................6.04(b)
Ashland Shareholders Meeting............................................9.01(e)
Ashland Stock Plan........................................................14.02
Ashland Subsidiary......................................................6.02(a)
ATCA...................................................................12.01(a)
Averaging Period........................................................4.03(b)
Bankruptcy Code.........................................................6.11(d)
Bring-Down AAA Opinions................................................10.01(g)
Bring-Down HLHZ Opinion................................................10.01(g)
Bring-Down Opinions....................................................10.01(g)
Capital Contribution....................................................1.03(b)
Cash Amount................................................................1.01
vii
Certificates............................................................5.01(b)
Closing....................................................................1.05
Closing Date...............................................................1.05
Code....................................................................1.04(b)
Competing Ashland Proposal..............................................8.02(e)
Confidentiality Agreement..................................................9.02
Consent.................................................................6.05(b)
Contract................................................................6.05(a)
Conversion Articles of Merger..............................................3.02
Conversion Merger.......................................................1.03(c)
Conversion Merger Effective Time...........................................3.02
Conversion Plan of Merger..................................................3.09
Cutoff Date.............................................................8.02(a)
Debt Consent Measurement Date...........................................9.03(b)
Designated Sublease....................................................12.02(a)
DGCL....................................................................1.04(a)
Dissenters' Shares.........................................................2.05
Distributed Receivables....................................................1.01
DLLCA...................................................................1.04(a)
DOD....................................................................12.01(c)
DOD Claims.............................................................12.01(c)
D&T........................................................................9.15
Estimated MAP Partial Redemption Amount...................................14.02
Exchange Act............................................................6.05(b)
Exchange Act Registration Statement.....................................9.01(h)
Exchange Agent.......................................................5.01(a)(i)
Exchange Fund.......................................................5.01(a)(ii)
Exchange Ratio..........................................................4.03(b)
Excess Shares.......................................................5.01(e)(ii)
Ex-Date.................................................................4.03(b)
Fair Market Value.......................................................4.03(b)
Forms S-4...............................................................6.05(b)
GAAP....................................................................6.06(b)
Governmental Entity.....................................................6.05(b)
HLHZ.......................................................................6.09
HoldCo.................................................................Preamble
HoldCo Borrowing..........................................................14.02
HoldCo Common Stock..................................................2.04(a)(i)
HoldCo Share Issuance...................................................6.05(b)
HSR Act.................................................................6.05(b)
Indentures..............................................................9.03(b)
Initial AAA Opinions....................................................6.11(a)
Initial HLHZ Opinion....................................................6.11(a)
Initial Opinions........................................................6.11(a)
IRS........................................................................9.16
Judgment................................................................6.05(a)
KBCA....................................................................1.02(c)
viii
KLLCA...................................................................1.02(c)
Law.....................................................................6.05(a)
Leased Property........................................................12.02(a)
Liens...................................................................6.02(a)
LOCAP T&D Agreement.......................................................14.02
LOCAP T&D Assumption Agreement............................................14.02
LOOP T&D Agreement........................................................14.02
LOOP T&D Assumption Agreement.............................................14.02
Losses.................................................................13.01(a)
Maleic Agreement.......................................................Recitals
Maleic Business........................................................Recitals
Maleic/VIOC Contribution................................................1.02(a)
MAP....................................................................Preamble
MAP Adjustment Amount.....................................................14.02
MAP Governing Documents...................................................14.02
MAP LLC Agreement.........................................................14.02
MAP LLC Agreement Amendment............................................Recitals
MAP/LOOP/LOCAP Contribution ............................................1.02(b)
MAP/LOOP/LOCAP Contribution Agreements....................................14.02
MAP Partial Redemption.....................................................1.01
MAP Partial Redemption Amount.............................................14.02
MAP Qualified Pension Plan.............................................12.01(d)
Marathon...............................................................Preamble
Marathon Board..........................................................4.03(b)
Marathon By-laws...........................................................7.01
Marathon Capital Stock..................................................7.03(a)
Marathon Charter...........................................................7.01
Marathon Common Stock..................................................Recitals
Marathon Company.......................................................Preamble
Marathon Company Board..................................................7.04(c)
Marathon Disclosure Letter..........................................ARTICLE VII
Marathon Employee Stock Option............................................14.02
Marathon Form S-4.......................................................6.05(b)
Marathon Material Adverse Effect........................................7.05(a)
Marathon Parties..........................................................14.02
Marathon Preferred Stock................................................7.03(a)
Marathon Rights Agreement...............................................7.05(c)
Marathon SAR..............................................................14.02
Marathon SEC Documents..................................................7.06(a)
Marathon Share Issuance.................................................6.05(b)
Marathon Stock Plan.......................................................14.02
Marathon Subsidiary.....................................................7.02(a)
Market MAC Condition......................................................14.02
Market MAC Event..........................................................14.02
Maximum Annual Permitted Payment.......................................12.01(d)
Membership Interest.......................................................14.02
Merger Sub.............................................................Preamble
ix
NASDAQ..................................................................9.07(b)
New Ashland Board..........................................................3.09
New Ashland Inc. ......................................................Preamble
New Ashland Inc. Common Stock.............................................14.02
New Ashland Inc. Share Issuance.........................................6.05(b)
New Ashland LLC........................................................Preamble
New Ashland LLC Interests...............................................2.04(a)
NYSE....................................................................4.03(b)
Outside Date........................................................11.01(b)(i)
PBGC...................................................................12.01(d)
Pension Funding Relief.................................................12.01(d)
Permitted Payments.....................................................12.01(d)
person....................................................................14.02
Pitney Bowes Transaction Documents.....................................12.02(d)
Plains Settlement.........................................................14.02
Prior Payments..........................................................9.09(b)
Private Letter Rulings.................................................10.01(f)
Proxy Statement.........................................................6.05(b)
Put/Call Agreement........................................................12.04
Reimbursement Agreement.................................................1.03(a)
Reorganization Articles of Merger..........................................2.02
Reorganization Merger...................................................1.02(c)
Reorganization Merger Consideration..................................2.04(a)(i)
Reorganization Merger Effective Time.......................................2.02
Reorganization Plan of Merger..............................................2.09
Representatives.........................................................8.02(a)
Rule 145 Affiliate......................................................5.01(d)
SEC.....................................................................6.05(b)
Securities Act..........................................................5.01(d)
Significant Ashland Subsidiary.............................................6.01
Significant Marathon Subsidiary............................................7.01
St. Paul Park Judgment and Plea Agreement.................................14.02
St. Paul Park QQQ Project...............................................9.09(a)
St. Paul Park QQQ Project Payment Amount................................9.09(b)
subsidiary................................................................14.02
Subtitle 13................................................................2.05
SuperAmerica Transaction Documents.....................................12.02(d)
Superior Proposal.......................................................8.02(e)
Tax.......................................................................14.02
Tax Authority.............................................................14.02
Tax Matter................................................................14.02
Tax Matters Agreement..................................................Recitals
Tax Opinions...........................................................10.01(f)
Termination Fee.........................................................9.04(c)
Third Party Claim......................................................13.04(a)
Third Party Lenders.....................................................1.03(a)
Third Party Provisions....................................................14.06
x
Transaction Agreements.................................................Recitals
Transactions...........................................................Recitals
Transferred MAP Employees...........................................12.01(d)(i)
UFCA....................................................................6.11(d)
UFTA....................................................................6.11(d)
Value.....................................................................14.02
VIOC Agreement.........................................................Recitals
VIOC Centers...........................................................Recitals
Voting Ashland Debt.....................................................6.03(a)
Voting Marathon Debt....................................................7.03(a)
Working Papers............................................................14.02
MASTER AGREEMENT dated as of March 18, 2004, among
Ashland Inc., a Kentucky corporation ("Ashland"), ATB
Holdings Inc., a Delaware corporation and wholly owned
subsidiary of Ashland ("HoldCo"), EXM LLC, a Kentucky
limited liability company and wholly owned subsidiary of
HoldCo ("New Ashland LLC"), New EXM Inc., a Kentucky
corporation and wholly owned subsidiary of HoldCo ("New
Ashland Inc."), Marathon Oil Corporation, a Delaware
corporation ("Marathon"), Marathon Oil Company, an Ohio
corporation and wholly owned subsidiary of Marathon
("Marathon Company"), Marathon Domestic LLC, a Delaware
limited liability company and wholly owned subsidiary of
Marathon ("Merger Sub"), and Marathon Ashland Petroleum
LLC, a Delaware limited liability company owned by Marathon
Company and Ashland as set forth below ("MAP").
WHEREAS the Marathon Parties (as defined in Section 14.02) wish to
acquire from Ashland, and Ashland wishes to transfer to the Marathon Parties,
Ashland's maleic anhydride business and associated plant in Neal, West
Virginia (the "Maleic Business") and a number of Valvoline Instant Oil Change
centers owned by Ashland (the "VIOC Centers") located in the states of Ohio
and Michigan;
WHEREAS, on January 1, 1998, Ashland and Marathon Company
contributed certain petroleum supply, refining, marketing and transportation
businesses to MAP and entered into a limited liability company agreement to
set forth their rights and responsibilities with respect to the governance,
financing and operation of MAP;
WHEREAS Ashland owns a 38% interest in MAP and Marathon Company owns
a 62% interest in MAP;
WHEREAS Ashland holds a 4% interest in LOOP LLC and an 8.62%
interest in LOCAP LLC;
2
WHEREAS the parties hereto have structured the transfers described
above as a series of transactions, as a result of which:
(i) Ashland will transfer to HoldCo the Maleic Business, the VIOC
Centers and Ashland's interests in MAP, LOOP LLC and LOCAP LLC, and
HoldCo will assume certain related liabilities of Ashland;
(ii) the Marathon Parties will acquire HoldCo;
(iii) New Ashland Inc. will succeed to all the assets and
liabilities of Ashland (other than those transferred to or assumed by
HoldCo or any Marathon Party under this Agreement or any of the other
Transaction Agreements (as defined below)), including the proceeds of a
partial redemption of Ashland's interest in MAP; and
(iv) the issued and outstanding shares of Ashland common stock, par
value $1.00 per share, including the associated Ashland Rights (as
defined in Section 6.03(a)) (the "Ashland Common Stock"), will be
canceled and Ashland's shareholders will receive, with respect to each
share of Ashland Common Stock, one share of New Ashland Inc. Common Stock
(as defined in Section 14.02), to be issued by New Ashland Inc. in
consideration of the assets acquired by it in the Conversion Merger and
the benefits to be derived therefrom, and a number of shares of Marathon
common stock, par value $1.00 per share (the "Marathon Common Stock"), to
be determined as set forth in this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, certain of the parties hereto are entering into:
(i) an Assignment and Assumption Agreement providing for the
transfer of the Maleic Business to HoldCo and the assumption by HoldCo of
certain related liabilities (the "Maleic Agreement");
(ii) an Assignment and Assumption Agreement providing for the
transfer of the VIOC Centers to HoldCo and the assumption by HoldCo of
certain related liabilities (the "VIOC Agreement");
3
(iii) a Tax Matters Agreement (the "Tax Matters Agreement"); and
(iv) Amendment No. 2 to the MAP LLC Agreement (as defined in Section
14.02) (the "MAP LLC Agreement Amendment" and, together with this
Agreement, the Maleic Agreement, the VIOC Agreement and the Tax Matters
Agreement, the "Transaction Agreements");
WHEREAS the Board of Directors of Ashland has unanimously: (i)
adopted and approved the Transaction Agreements, the Ancillary Agreements (as
defined in Section 6.04(a)) and the transactions contemplated thereby (the
"Transactions") and (ii) recommended that Ashland's shareholders approve the
Transaction Agreements and the Transactions;
WHEREAS the Board of Directors of Marathon has unanimously adopted
and approved the Transaction Agreements and the Ancillary Agreements and
approved the Transactions;
WHEREAS it is intended that the Transactions to be consummated on
the Closing Date will generally be Tax-free to the parties and their
respective shareholders for Federal income Tax purposes (as Tax is defined in
Section 14.02); and
WHEREAS the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Transactions and
also to prescribe various conditions to the Transactions.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Transactions and Closing
-------------------------
Upon the terms and subject to the conditions set forth herein, at
the Closing (as defined in Section 1.05), the parties shall consummate the MAP
Partial Redemption and each of the other Transactions set forth in Sections
1.02, 1.03 and 1.04 as follows. Subject to Section 9.10, the parties hereto
intend that none of the Transactions that this Article I contemplates will be
effected on the Closing
4
Date (as defined in Section 1.05) shall be effective
unless all of such Transactions are effected on the Closing Date.
SECTION 1.01. MAP PARTIAL REDEMPTION. As part of the Transactions,
but prior to consummating the other Transactions set forth in Sections 1.02,
1.03 and 1.04, MAP shall redeem a portion of the 38% Membership Interest (as
defined in Section 14.02) owned by Ashland for a redemption price payable as
follows: (i) accounts receivable of MAP, each with a Federal income Tax basis
no less than its face amount, selected in accordance with the protocol set
forth in Exhibit A, with a total Value (as defined in Section 14.02) equal to
the product of (x) the Estimated MAP Partial Redemption Amount (as defined in
Section 14.02) and (y) the AR Fraction (as defined in Section 14.02) (such
product, the "AR Amount") (the "Distributed Receivables") and (ii) cash in an
amount equal to the Estimated MAP Partial Redemption Amount minus the AR
Amount (such difference, the "Cash Amount"), by wire transfer of immediately
available funds to an Ashland bank account which shall be designated in
writing by Ashland at least two business days prior to the Closing Date (the
"MAP Partial Redemption"). MAP shall increase the MAP Partial Redemption
Amount (as defined in Section 14.02) payable in the MAP Partial Redemption as
directed by Marathon if Marathon determines, in its sole judgment after giving
due consideration to the requirements of any potentially applicable fraudulent
transfer or conveyance Law, that the aggregate amount of the MAP Partial
Redemption Amount (before giving effect to such increase) and the Capital
Contribution (as defined in Section 1.03(b)) is not reasonably equivalent to
the aggregate value immediately prior to the consummation of the Transactions,
as determined by Marathon in its sole discretion, of (i) Ashland's Membership
Interest, (ii) the Maleic Business and (iii) the VIOC Centers. In the event
that Marathon makes the determination contemplated by the immediately
preceding sentence, any resulting increase in the MAP Partial Redemption
Amount shall be payable in any combination of cash and accounts receivable of
MAP as determined by Marathon. If at any time Marathon determines that it is
reasonably likely to direct MAP to increase the MAP Partial Redemption Amount
pursuant to the second sentence of this Section 1.01, Marathon shall provide
prompt notice of such determination to Ashland, including a good faith
estimate of any such increase.
5
SECTION 1.02. MALEIC/VIOC CONTRIBUTION; MAP/LOOP/LOCAP CONTRIBUTION;
REORGANIZATION MERGER. Promptly following the consummation of the MAP Partial
Redemption pursuant to Section 1.01, and prior to consummating the
Transactions set forth in Sections 1.03 and 1.04, the parties shall consummate
each of the following Transactions:
(a) MALEIC/VIOC CONTRIBUTION. Ashland shall cause the transactions
contemplated by the Maleic Agreement and the VIOC Agreement, including the
contribution by Ashland to HoldCo of the Maleic Business and the VIOC Centers
and the assumption by HoldCo of certain related liabilities, to be consummated
in accordance with the Maleic Agreement and the VIOC Agreement (the
"Maleic/VIOC Contribution").
(b) MAP/LOOP/LOCAP CONTRIBUTION. Promptly following the consummation
of the Maleic/VIOC Contribution pursuant to Section 1.02(a), (i) Ashland shall
cause the MAP/LOOP/LOCAP Contribution Agreements (as defined in Section 14.02)
to be executed and delivered by the parties specified therein to be parties
thereto, and Ashland shall contribute to HoldCo Ashland's remaining Membership
Interest and, subject to Section 9.10, the Ashland LOOP/LOCAP Interest (as
defined in Section 14.02), and HoldCo shall assume certain related liabilities
and obligations, in accordance with the MAP/LOOP/LOCAP Contribution
Agreements, (ii) if Ashland has not been released from all liabilities,
obligations and commitments under the LOCAP T&D Agreement in accordance with
Section 9.03(g), Ashland shall cause the LOCAP T&D Assumption Agreement (as
defined in Section 14.02) to be executed and delivered by the parties
specified therein to be parties thereto and (iii) if Ashland has not been
released from all liabilities, obligations and commitments under the LOOP T&D
Agreement in accordance with Section 9.03(g), Ashland shall cause the LOOP T&D
Assumption Agreement (as defined in Section 14.02) to be executed and
delivered by the parties specified therein to be parties thereto
(collectively, the "MAP/LOOP/LOCAP Contribution").
(c) THE REORGANIZATION MERGER. Promptly following the consummation
of the MAP/LOOP/LOCAP Contribution pursuant to Section 1.02(b), Ashland shall,
pursuant to Article II and in accordance with the Kentucky
6
Business Corporation Act (the "KBCA") and the Kentucky Limited Liability
Company Act (the "KLLCA"), be merged with and into New Ashland LLC (the
"Reorganization Merger") at the Reorganization Merger Effective Time (as
defined in Section 2.02), which, if not the time of filing of the
Reorganization Articles of Merger (as defined in Section 2.02) in accordance
with Section 2.02, shall be a time mutually agreed upon by Ashland and
Marathon.
SECTION 1.03. HOLDCO BORROWING; CAPITAL CONTRIBUTION; CONVERSION
MERGER. Promptly following the consummation of the Maleic/VIOC Contribution,
the MAP/LOOP/LOCAP Contribution and the Reorganization Merger pursuant to
Section 1.02, the parties shall consummate each of the following Transactions:
(a) HOLDCO BORROWING. Promptly following the Reorganization Merger
Effective Time, the Marathon Parties shall cause the HoldCo Borrowing (as
defined in Section 14.02) to be advanced to HoldCo by one or more lenders that
are not affiliates of MAP, any Marathon Party or any Ashland Party ("Third
Party Lenders") and HoldCo shall accept the HoldCo Borrowing. If Marathon
guarantees or otherwise provides credit support for the HoldCo Borrowing,
Marathon and HoldCo shall enter into a reimbursement agreement (the
"Reimbursement Agreement"), pursuant to which HoldCo shall commit to pay a
guarantee fee to Marathon after the Closing and, if requested by Marathon
prior to the Closing Date, shall grant to Marathon on the Closing Date a
security interest in all the property and other assets (including the
Membership Interest) that HoldCo owns to secure its reimbursement obligations
to Marathon, to the fullest extent permitted by Contracts (as defined in
Section 6.05(a)) to which Ashland or any Ashland Subsidiary is a party or by
which any of their respective properties or assets is bound. Such security
interest shall be released (other than with respect to assets of the surviving
entity of the Acquisition Merger (as defined in Section 1.04(a)) at the
Acquisition Merger Effective Time (or, if earlier, upon the New Ashland Inc.
Share Issuance). The Reimbursement Agreement shall provide that: (i) the
guarantee fee shall be payable after Closing; and (ii) the reimbursement
obligations to Marathon shall not exceed the net amount of the HoldCo
Borrowing actually received by HoldCo.
7
(b) CAPITAL CONTRIBUTION. Promptly following the consummation of the
HoldCo Borrowing pursuant to Section 1.03(a), HoldCo shall contribute to New
Ashland LLC cash in the amount equal to the total amount of the HoldCo
Borrowing, by wire transfer of immediately available funds to a New Ashland
LLC bank account designated in writing by Ashland at least two business days
prior to the Closing Date (the "Capital Contribution").
(c) CONVERSION MERGER. Promptly following the consummation of the
Capital Contribution pursuant to Section 1.03(b), pursuant to Article III and
in accordance with the KLLCA and the KBCA, New Ashland LLC shall be merged
with and into New Ashland Inc. (the "Conversion Merger") at the Conversion
Merger Effective Time (as defined in Section 3.02), which, if not the time of
filing of the Conversion Articles of Merger (as defined in Section 3.02) in
accordance with Section 3.02, shall be a time mutually agreed upon by Ashland
and Marathon.
SECTION 1.04. ACQUISITION MERGER; DISTRIBUTION. (a) Promptly
following the Conversion Merger Effective Time, pursuant to Article IV and in
accordance with the Delaware General Corporation Law (the "DGCL") and the
Delaware Limited Liability Company Act (the "DLLCA"), HoldCo shall be merged
with and into Merger Sub (the "Acquisition Merger") at the Acquisition Merger
Effective Time.
(b) In the event that the Private Letter Rulings (as defined in
Section 10.01(f)) do not provide that the Acquisition Merger will be treated
as a distribution by HoldCo of all the stock of New Ashland Inc. under Section
355 of the Internal Revenue Code of 1986, as amended (the "Code"), followed by
a merger of HoldCo into Merger Sub, then the parties hereto shall execute an
appropriate amendment to this Agreement to provide that the New Ashland Inc.
Share Issuance (as defined in Section 6.05(b)) shall not be effected as part
of the Acquisition Merger but instead the shares of New Ashland Inc. to be
issued thereunder shall be issued to HoldCo as part of the Conversion Merger,
followed by the distribution thereof by HoldCo to the holders of HoldCo Common
Stock (as defined in Section 2.04(a)(i)), on the basis of one share of New
Ashland Inc. Common Stock for each outstanding share of HoldCo Common Stock,
immediately prior to the Acquisition Merger.
8
SECTION 1.05. CLOSING. The closing of the Transactions (the
"Closing") shall take place at the offices of MAP, 539 South Main Street,
Findlay, Ohio 45840 at 10:00 a.m. (Eastern time) on the last business day of
the calendar month in which the last to be satisfied (or, to the extent
permitted by Law (as defined in Section 6.05(a)), waived by the parties
entitled to the benefits thereof) of the conditions set forth in Article X
(other than those conditions that by their nature are to be satisfied on the
Closing Date, but subject to the satisfaction or waiver of those conditions)
has been so satisfied or waived, or, if the last such condition is satisfied
or waived on one of the last two business days of a calendar month, on the
last business day of the following calendar month, or at such other place,
time and date as shall be agreed in writing between Ashland and Marathon. The
date on which the Closing occurs is referred to in this Agreement as the
"Closing Date". If Ashland and Marathon agree that the Closing is expected to
occur on December 31, 2004, the parties shall use their reasonable best
efforts to agree on closing mechanics to effect the Transactions on such date,
which may include: (i) the filing of the Reorganization Articles of Merger,
the Conversion Articles of Merger and the Acquisition Certificate of Merger
prior to December 31, 2004, in each case specifying an effective time on
December 31, 2004 and (ii) advancement of the HoldCo Borrowing to an escrow
account for the benefit of HoldCo at a pre-closing prior to December 31, 2004
to ensure that the proceeds of the Capital Contribution will be available to
New Ashland Inc. on the Closing Date for consummation of the tender offer
and/or consent solicitation contemplated by Section 9.03(b).
SECTION 1.06. POST-CLOSING TRUE-UP. Within 90 days after the Closing
Date (subject to extension with the prior written consent of New Ashland Inc.,
such consent not to be unreasonably withheld), MAP shall prepare and deliver
to Ashland a statement setting forth the MAP Partial Redemption Amount. If the
MAP Partial Redemption Amount exceeds the Estimated MAP Partial Redemption
Amount, MAP shall, and if the Estimated MAP Partial Redemption Amount exceeds
the MAP Partial Redemption Amount, New Ashland Inc. shall, make payment to the
other party of the amount of such excess, together with interest thereon at a
rate equal to the rate of interest from time to time
9
announced publicly by Citibank, N.A., as its prime rate, calculated on the
basis of the actual number of days elapsed divided by 365, from the Closing
Date to the date of payment. Payment by MAP to New Ashland Inc. under this
Section 1.06 shall be in an amount of cash and accounts receivable of MAP
(such accounts receivable to be selected in accordance with the protocol set
forth in Exhibit A) within 30 days of the determination by MAP of the MAP
Partial Redemption Amount. The total Value of the accounts receivable payable
by MAP under this Section 1.06 shall equal the product of (i) the total amount
of the payment owed by MAP to New Ashland Inc. under this Section 1.06 and
(ii) the AR Fraction. Payment made by New Ashland Inc. to MAP under this
Section 1.06 shall be made in cash within 30 days after receipt by New Ashland
Inc. of the statement setting forth the MAP Partial Redemption Amount. All
cash payments under this Section 1.06 shall be made by wire transfer in
immediately available funds to an Ashland bank account or a MAP bank account,
as applicable, which shall be designated in writing by Ashland or MAP, as
applicable, at least two business days prior to the date for such payment.
ARTICLE II
THE REORGANIZATION MERGER
-------------------------
SECTION 2.01. PARTIES TO THE REORGANIZATION MERGER. The names of the
constituent business entities that are parties to the Reorganization Merger
are Ashland Inc. (referred to herein as "Ashland") and EXM LLC (referred to
herein as "New Ashland LLC"). Upon the terms and subject to the conditions set
forth herein, at the Reorganization Merger Effective Time, Ashland shall merge
with and into New Ashland LLC, the separate corporate existence of Ashland
shall cease and New Ashland LLC shall be the surviving business entity of the
Reorganization Merger. The name of the surviving business entity of the
Reorganization Merger shall be EXM LLC.
SECTION 2.02 REORGANIZATION MERGER EFFECTIVE TIME. Prior to the
Closing, Ashland shall prepare, and on the Closing Date, New Ashland LLC shall
file with the Secretary of State of the Commonwealth of Kentucky, articles of
merger or other appropriate documents (in any
10
such case, the "Reorganization Articles of Merger") executed in accordance
with the relevant provisions of the KBCA and the KLLCA and shall make all
other filings or recordings required under the KBCA and the KLLCA. The
Reorganization Merger shall become effective at such time as the
Reorganization Articles of Merger are duly filed with such Secretary of State,
or at such later time on the Closing Date as specified in the Reorganization
Articles of Merger (the time the Reorganization Merger becomes effective being
the "Reorganization Merger Effective Time").
SECTION 2.03. EFFECTS. The Reorganization Merger shall have the
effects set forth in KRS 271B.11-060 of the KBCA and KRS 275.365 of the KLLCA.
Without limiting the generality of the foregoing, and subject thereto, at the
Reorganization Merger Effective Time, all the properties, rights, privileges
and powers of Ashland immediately prior to the Reorganization Merger Effective
Time shall rest in New Ashland LLC, and all debts, liabilities, obligations
and duties of Ashland immediately prior to the Reorganization Merger Effective
Time shall become the debts, liabilities, obligations and duties of New
Ashland LLC.
SECTION 2.04. CONVERSION OF ASHLAND SECURITIES. (a) At the
Reorganization Merger Effective Time, by virtue of the Reorganization Merger
and without any action on the part of any holder of any shares of Ashland
Common Stock or any limited liability company interests in New Ashland LLC
("New Ashland LLC Interests"):
(i) subject to Section 2.05, each share of Ashland Common Stock
issued and outstanding immediately prior to the Reorganization Merger
Effective Time shall be converted into and thereafter represent one duly
issued, fully paid and nonassessable share of common stock, par value
$1.00 per share, of HoldCo (the "HoldCo Common Stock") (the
"Reorganization Merger Consideration"); and
(ii) all New Ashland LLC Interests shall remain outstanding without
change.
(b) As of the Reorganization Merger Effective Time, all shares of
Ashland Common Stock shall no longer be
11
outstanding, shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate formerly evidencing shares of Ashland
Common Stock shall, subject to Section 2.05, cease to have any rights with
respect thereto except the right to receive the number of shares of HoldCo
Common Stock into which such shares of Ashland Common Stock were converted
pursuant to the provisions of Section 2.04(a) hereof.
(c) The Reorganization Merger Consideration issued (and paid) upon
conversion of any shares of Ashland Common Stock in accordance with the terms
of this Article II shall be deemed to have been issued (and paid) at the
Reorganization Merger Effective Time in full satisfaction of all rights
pertaining to such shares of Ashland Common Stock, and after the
Reorganization Merger Effective Time there shall be no further registration of
transfers on the stock transfer books of the business entity surviving the
Reorganization Merger, New Ashland LLC, of shares of Ashland Common Stock that
were outstanding immediately prior to the Reorganization Merger Effective
Time.
SECTION 2.05. DISSENTERS' RIGHTS. Notwithstanding anything in this
Agreement to the contrary, shares of Ashland Common Stock that are outstanding
immediately prior to the Reorganization Merger Effective Time and that are
held by any person who is entitled to demand and properly demands payment of
the fair value of such shares ("Dissenters' Shares") pursuant to, and who
complies in all respects with, Subtitle 13 of the KBCA ("Subtitle 13") shall
not be converted into Reorganization Merger Consideration as provided in
Section 2.04(a), but rather the holders of Dissenters' Shares shall be
entitled to payment of the fair value of such Dissenters' Shares in accordance
with Subtitle 13; provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to receive
payment of fair value under Subtitle 13, then the right of such holder to be
paid the fair value of such holder's Dissenters' Shares shall cease and such
Dissenters' Shares shall be deemed to have been converted as of the
Reorganization Merger Effective Time into, and to have become exchangeable
solely for, Reorganization Merger Consideration as provided in Section
2.04(a).
12
SECTION 2.06. LIMITED LIABILITY. Limited liability shall be retained
with respect to the business entity surviving the Reorganization Merger, New
Ashland LLC.
SECTION 2.07. ARTICLES OF ORGANIZATION. No changes to the Articles
of Organization of New Ashland LLC shall be effected by the Reorganization
Merger.
SECTION 2.08. OPERATING AGREEMENT. The operating agreement of New
Ashland LLC as in effect immediately prior to the Reorganization Merger
Effective Time shall be the operating agreement of the business entity
surviving the Reorganization Merger, New Ashland LLC, until thereafter changed
or amended as provided therein or by applicable Law.
SECTION 2.09. REORGANIZATION PLAN OF MERGER. The provisions
contained in Sections 2.01 through 2.08 constitute the "plan of merger", as
that term is used in KRS 271B.11-010 and KRS 271B.11-080 of the KBCA and KRS
275.355 of the KLLCA, for the Reorganization Merger (the "Reorganization Plan
of Merger"). The adoption of this Agreement by the Board of Directors of
Ashland (the "Ashland Board") constitutes the adoption, and the approval of
this Agreement by the shareholders of Ashland will constitute the approval, of
the Reorganization Plan of Merger by Ashland as required by KRS 271B.11-030.
The approval of this Agreement by HoldCo, as the sole member of New Ashland
LLC, constitutes the approval of the Reorganization Plan of Merger by New
Ashland LLC as required by KRS 275.350.
ARTICLE III
THE CONVERSION MERGER
---------------------
SECTION 3.01. PARTIES TO THE CONVERSION MERGER. The names of the
constituent business entities that are parties to the Conversion Merger are EXM
LLC (referred to herein as "New Ashland LLC") and New EXM Inc. (referred to
herein as "New Ashland Inc."). Upon the terms and subject to the conditions
set forth herein, at the Conversion Merger Effective Time, New Ashland LLC
shall merge with and into New Ashland Inc., the separate existence of New
13
Ashland LLC shall cease and New Ashland Inc. will be the surviving business
entity of the Conversion Merger. Pursuant to the amendment referred to in
Section 3.06(a), the name of the surviving business entity of the Conversion
Merger shall be changed to Ashland Inc.
SECTION 3.02. CONVERSION MERGER EFFECTIVE TIME. Prior to the
Closing, Ashland shall prepare, and on the Closing Date, New Ashland Inc.
shall file with the Secretary of State of the Commonwealth of Kentucky,
articles of merger or other appropriate documents (in any such case, the
"Conversion Articles of Merger") executed in accordance with the relevant
provisions of the KLLCA and the KBCA and shall make all other filings or
recordings required under the KLLCA and the KBCA. The Conversion Merger shall
become effective at such time as the Conversion Articles of Merger are duly
filed with such Secretary of State, or at such later time on the Closing Date
as specified in the Conversion Articles of Merger (the time the Conversion
Merger becomes effective being the "Conversion Merger Effective Time").
SECTION 3.03. EFFECTS. The Conversion Merger shall have the effects
set forth in KRS 271B.11-060 of the KBCA and KRS 275.365 of the KLLCA. Without
limiting the generality of the foregoing, and subject thereto, at the
Conversion Merger Effective Time, all the properties, rights, privileges and
powers of New Ashland LLC immediately prior to the Conversion Merger Effective
Time shall rest in New Ashland Inc., and all debts, liabilities, obligations
and duties of New Ashland LLC immediately prior to the Conversion Merger
Effective Time shall become the debts, liabilities, obligations and duties of
New Ashland Inc.
SECTION 3.04. CONVERSION OF NEW ASHLAND SECURITIES. At the
Conversion Merger Effective Time, by virtue of the Conversion Merger and
without any action on the part of HoldCo:
(i) all New Ashland LLC Interests issued and outstanding immediately
prior to the Conversion Merger Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor; and
14
(ii) each share of New Ashland Inc. Common Stock issued and
outstanding immediately prior to the Conversion Merger Effective Time
shall remain outstanding without change.
SECTION 3.05. LIMITED LIABILITY. Limited liability shall be retained
with respect to the business entity surviving the Conversion Merger, New
Ashland Inc.
SECTION 3.06. ARTICLES OF INCORPORATION AND BY-LAWS. (a) At the
Conversion Merger Effective Time, the articles of incorporation of New Ashland
Inc. shall be amended as set out in Exhibit B, and, as so amended, such
articles of incorporation shall be the articles of incorporation of the
business entity surviving the Conversion Merger, New Ashland Inc., until
thereafter changed or amended as provided therein or by applicable Law.
(b) The by-laws of New Ashland Inc. as in effect immediately prior
to the Conversion Merger Effective Time shall be the by-laws of the
business entity surviving the Conversion Merger, New Ashland Inc., until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 3.07. DIRECTORS. The directors of New Ashland Inc.
immediately prior to the Conversion Merger Effective Time shall be the
directors of the business entity surviving the Conversion Merger, New Ashland
Inc., until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 3.08. OFFICERS. The officers of New Ashland Inc. immediately
prior to the Conversion Merger Effective Time shall be the officers of the
business entity surviving the Conversion Merger, New Ashland Inc., until the
earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
SECTION 3.09. CONVERSION PLAN OF MERGER. The provisions contained in
Sections 3.01 through 3.08 constitute the "plan of merger", as that term is
used in KRS 271B.11-010 and KRS 271B.11-080 of the KBCA and KRS 275.355 of the
KLLCA, for the Conversion Merger (the
15
"Conversion Plan of Merger"). The adoption of this Agreement by the Board of
Directors of New Ashland Inc. (the "New Ashland Board") constitutes the
adoption, and the approval of this Agreement by HoldCo, as the sole
shareholder of New Ashland Inc., constitutes the approval, of the Conversion
Plan of Merger by New Ashland Inc. as required by KRS 271B.11-030 of the KBCA.
The approval of this Agreement by HoldCo, as the sole member of New Ashland
LLC, constitutes the approval of the Conversion Plan of Merger by New Ashland
LLC as required by KRS 275.350 of the KLLCA.
ARTICLE IV
THE ACQUISITION MERGER
----------------------
SECTION 4.01. ACQUISITION MERGER; ACQUISITION MERGER EFFECTIVE TIME.
Upon the terms and subject to the conditions set forth herein, at the
Acquisition Merger Effective Time, HoldCo shall be merged with and into Merger
Sub, the separate corporate existence of HoldCo shall cease and Merger Sub
shall be the surviving business entity of the Acquisition Merger. Prior to the
Closing, Ashland and Marathon shall jointly prepare, and on the Closing Date,
Merger Sub shall file with the Secretary of State of the State of Delaware, a
certificate of merger or other appropriate documents (in any such case, the
"Acquisition Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and the DLLCA and shall make all other filings or
recordings required under the DGCL and the DLLCA. The Acquisition Merger shall
become effective at such time as the Acquisition Certificate of Merger is duly
filed with such Secretary of State, or at such later time on the Closing Date
as Ashland and Marathon shall agree and specify in the Acquisition Certificate
of Merger (the time the Acquisition Merger becomes effective being the
"Acquisition Merger Effective Time").
SECTION 4.02. EFFECTS. The Acquisition Merger shall have the effects
set forth in Section 18-209(g) of the DLLCA. Without limiting the generality
of the foregoing, and subject thereto, at the Acquisition Merger Effective
Time, all the properties, rights, privileges and powers of HoldCo immediately
prior to the Acquisition Merger Effective Time shall vest in Merger Sub, and
all
16
debts, liabilities, obligations and duties of HoldCo immediately prior to the
Acquisition Merger Effective Time shall become the debts, liabilities,
obligations and duties of Merger Sub.
SECTION 4.03. EFFECT ON CAPITAL STOCK. (a) At the Acquisition Merger
Effective Time, by virtue of the Acquisition Merger and without any action on
the part of the holder of any shares of HoldCo Common Stock or any membership
interests in Merger Sub:
(i) subject to Section 5.01(e), each issued and outstanding share of
HoldCo Common Stock shall be converted into the right to receive (x) one
duly issued, fully paid and nonassessable share of New Ashland Inc.
Common Stock and (y) a number of duly issued, fully paid and
nonassessable shares of Marathon Common Stock equal to the Exchange Ratio
(as defined in Section 4.03(b));
(ii) all of the limited liability company interests in Merger Sub
issued and outstanding immediately prior to the Acquisition Merger
Effective Time shall remain outstanding without change; and
(iii) each share of New Ashland Inc. Common Stock held by HoldCo
immediately prior to the Acquisition Merger Effective Time shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(b) The shares of New Ashland Inc. Common Stock and Marathon Common
Stock to be issued upon the conversion of shares of HoldCo Common Stock
pursuant to Section 4.03(a)(i) and cash in lieu of fractional shares of
Marathon Common Stock as contemplated by Section 5.01(e) are referred to
collectively as "Acquisition Merger Consideration". As of the Acquisition
Merger Effective Time, all such shares of HoldCo Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate formerly representing the right to
receive any such shares of HoldCo Common Stock pursuant to Section 2.04(b)
shall cease to have any rights with respect
17
thereto, except the right to receive, upon surrender of such certificate in
accordance with Section 5.01, the Acquisition Merger Consideration, without
interest. "Exchange Ratio" means $315,000,000 divided by the product of (x)
the Fair Market Value and (y) the total number of shares of Ashland Common
Stock issued and outstanding immediately prior to the Reorganization Merger
Effective Time. "Fair Market Value" means an amount equal to the average of
the closing sale prices per share for the Marathon Common Stock on the New
York Stock Exchange (the "NYSE"), as reported in The Wall Street Journal,
Northeastern edition, for each of the twenty consecutive trading days ending
with the third complete trading day prior to the Closing Date (not counting
the Closing Date) (the "Averaging Period"). Notwithstanding the foregoing, if
the Board of Directors of Marathon (the "Marathon Board") declares a dividend
on the outstanding shares of Marathon Common Stock having a record date before
the Closing Date but an ex- dividend date (based on "regular way" trading on
the NYSE of shares of Marathon Common Stock) (the "Ex-Date") that occurs after
the first trading day of the Averaging Period, then for purposes of computing
the Fair Market Value, the closing price on any trading day before the Ex-Date
will be adjusted by subtracting therefrom the amount of such dividend. For
purposes of the immediately preceding sentence, the amount of any noncash
dividend will be the fair market value thereof on the payment date for such
dividend as determined in good faith by mutual agreement of Ashland and
Marathon.
(c) If, prior to the Acquisition Merger Effective Time, the
outstanding shares of Marathon Common Stock shall have been reclassified or
changed into, or exchanged for, securities other than Marathon Common Stock
(including as a result of a merger), then, notwithstanding Section 4.03(a)(i)
but subject to Section 5.01(e), each issued and outstanding share of HoldCo
Common Stock shall be converted into the right to receive such other
securities with the exchange ratio determined in accordance with Section
4.03(b), subject to such appropriate adjustments as shall be determined in
good faith by mutual agreement of Ashland and Marathon.
(d) If, after the first trading day of the Averaging Period and
prior to the Acquisition Merger Effective Time, the outstanding shares of
Marathon Common
18
Stock shall have been increased, decreased, changed into or exchanged for a
different number of shares of Marathon Common Stock in any case as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, combination or exchange of shares or other similar
change in capitalization, then an appropriate and proportionate adjustment
shall be made to the Exchange Ratio.
SECTION 4.04. LIMITED LIABILITY COMPANY AGREEMENT. The limited
liability company agreement of Merger Sub as in effect immediately prior to
the Acquisition Merger Effective Time shall be the limited liability company
agreement of the business entity surviving the Acquisition Merger, Merger Sub,
until thereafter changed or amended as provided therein or by applicable Law.
SECTION 4.05. TAX TREATMENT. The parties intend that (a) the
Acquisition Merger will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and the rules and regulations promulgated
thereunder, (b) HoldCo and Marathon will each be a "party" to such
reorganization within the meaning of Section 368(b) of the Code and (c) this
Agreement is intended to constitute a "plan of reorganization" for U.S.
Federal income Tax purposes.
ARTICLE V
EXCHANGE OF HOLDCO CERTIFICATES
-------------------------------
SECTION 5.01. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. (i)
Promptly following the Acquisition Merger, New Ashland Inc. shall issue and
deposit with an exchange agent designated by Ashland and reasonably acceptable
to Marathon (the "Exchange Agent"), for the benefit of the holders of shares
of HoldCo Common Stock, for exchange in accordance with this Article V,
through the Exchange Agent, certificates representing the shares of New
Ashland Inc. Common Stock issuable pursuant to Section 4.03 in exchange for
outstanding shares of HoldCo Common Stock. New Ashland Inc. shall provide to
the Exchange Agent following the Acquisition Merger Effective Time all the
cash necessary to pay any dividends or other
19
distributions with respect to New Ashland Inc. Common Stock in accordance with
Section 5.01(c)(i).
(ii) Promptly following the Acquisition Merger Effective Time,
Marathon shall issue and deposit with the Exchange Agent, for the benefit
of the holders of shares of HoldCo Common Stock, for exchange in
accordance with this Article V, through the Exchange Agent, certificates
representing a number of shares of Marathon Common Stock equal to the
product of (x) the total number of shares of Ashland Common Stock issued
and outstanding immediately prior to the Reorganization Merger Effective
Time and (y) the Exchange Ratio, rounded up to the nearest whole share.
Marathon shall provide to the Exchange Agent (or, following the
termination of the Exchange Fund pursuant to Section 5.01(f), to New
Ashland Inc. so long as it is the record holder on the applicable record
date of shares of Marathon Common Stock delivered to New Ashland Inc.
upon such termination) following the Acquisition Merger Effective Time
all the cash necessary to pay any dividends or other distributions in
accordance with Section 5.01(c)(ii) (the shares of New Ashland Inc.
Common Stock, together with the cash provided to pay any dividends or
distributions with respect thereto, and the shares of Marathon Common
Stock, together with the cash provided to pay any dividends or
distributions with respect thereto, deposited with the Exchange Agent
being hereinafter referred to as the "Exchange Fund"). For the purposes
of such deposit, Marathon shall assume that there will not be any
fractional shares of Marathon Common Stock.
(iii) The Exchange Agent shall, pursuant to irrevocable instructions
delivered by New Ashland Inc. and Marathon, deliver the New Ashland Inc.
Common Stock and the Marathon Common Stock contemplated to be issued
pursuant to Section 4.03 and this Article V out of the Exchange Fund. The
Exchange Fund shall not be used for any other purpose.
20
(b) EXCHANGE PROCEDURES. As promptly as reasonably practicable after
the Acquisition Merger Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates (each, a "Certificate") that
immediately prior to the Reorganization Merger Effective Time represented
outstanding shares of Ashland Common Stock (other than holders of Dissenters'
Shares), (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificate or Certificates
shall pass, only upon delivery of the Certificate or Certificates to the
Exchange Agent and shall be in such form and have such other provisions as New
Ashland Inc. and Marathon may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificate or Certificates in exchange
for Acquisition Merger Consideration. Upon surrender of a Certificate or
Certificates for cancelation to the Exchange Agent or, following termination
of the Exchange Fund pursuant to Section 5.01(f), New Ashland Inc., together
with such letter of transmittal, duly executed and completed in accordance
with the instructions thereto, and such other documents as may reasonably be
required by the Exchange Agent or New Ashland Inc., as applicable, the holder
of such Certificate or Certificates shall be entitled to receive in exchange
therefor (i) a certificate or certificates representing the number of shares
of New Ashland Inc. Common Stock that such holder has the right to receive
pursuant to the provisions of Section 4.03 and this Article V, (ii) a
certificate or certificates representing that number of whole shares of
Marathon Common Stock that such holder has the right to receive pursuant to
the provisions of Section 4.03 and this Article V, (iii) cash in lieu of
fractional shares of Marathon Common Stock that such holder has the right to
receive pursuant to Section 5.01(e) and (iv) any dividends or other
distributions such holder has the right to receive pursuant to Section
5.01(c), and the Certificate or Certificates so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Ashland Common Stock or
HoldCo Common Stock that is not registered in the transfer records of Ashland
or HoldCo, (i) a certificate or certificates representing the appropriate
number of shares of New Ashland Inc. Common Stock and (ii) a certificate or
certificates representing the appropriate number of shares of Marathon Common
Stock, together with a check for cash to be paid in lieu of fractional shares,
may be issued and
21
paid to a person other than the person in whose name the Certificate or
Certificates so surrendered is registered, if such Certificate or Certificates
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance and payment shall pay any transfer or other
Taxes required by reason of the issuance of shares of New Ashland Inc. Common
Stock and Marathon Common Stock to a person other than the registered holder
of such Certificate or Certificates or establish to the satisfaction of New
Ashland Inc. that such Tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 5.01, each Certificate shall be
deemed at any time after the Acquisition Merger Effective Time to represent
only the right to receive upon such surrender Acquisition Merger Consideration
as contemplated by this Section 5.01. No interest shall be paid or accrue on
any cash in lieu of fractional shares or accrued and unpaid dividends or
distributions, if any, payable upon surrender of any Certificate.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. (i) No
dividends or other distributions with respect to shares of New Ashland Inc.
Common Stock with a record date on or after the Closing Date shall be paid to
the holder of any Certificate with respect to the shares of New Ashland Inc.
Common Stock issuable upon surrender of such Certificate until the surrender
of such Certificate in accordance with this Article V. Subject to applicable
Law, following surrender of any such Certificate, there shall be paid to the
holder of the certificate representing shares of New Ashland Inc. Common Stock
issued in exchange therefor, without interest, (A) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Closing Date theretofore paid with respect to such shares of New
Ashland Inc. Common Stock, and (B) at the appropriate payment date, the amount
of dividends or other distributions with a record date on or after the Closing
Date but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of New Ashland Inc. Common
Stock.
(ii) No dividends or other distributions with respect to shares of
Marathon Common Stock with a record date on or after the Closing Date
shall be paid to the holder of any Certificate with respect to the shares
of Marathon Common
22
Stock issuable upon surrender thereof, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
5.01(e), until the surrender of such Certificate in accordance with this
Article V. Subject to applicable Law, following surrender of any such
Certificate, there shall be paid to the holder of the certificate representing
whole shares of Marathon Common Stock issued in exchange therefor, without
interest, (A) at the time of such surrender, the amount of any cash payable in
lieu of a fractional share of Marathon Common Stock to which such holder is
entitled pursuant to Section 5.01(e) and the amount of dividends or other
distributions with a record date on or after the Closing Date theretofore paid
with respect to such whole shares of Marathon Common Stock and (B) at the
appropriate payment date, the amount of dividends or other distributions with
a record date on or after the Closing Date but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such whole
shares of Marathon Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN HOLDCO COMMON STOCK. The
Acquisition Merger Consideration issued (and paid) upon conversion of any
shares of HoldCo Common Stock in accordance with the terms of this Article V
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to such shares of HoldCo Common Stock, and after the
Acquisition Merger Effective Time there shall be no further registration of
transfers on the stock transfer books of the business entity surviving the
Acquisition Merger, Merger Sub, of shares of HoldCo Common Stock that were
outstanding immediately prior to the Acquisition Merger Effective Time. If,
after the Acquisition Merger Effective Time, any Certificates are presented to
New Ashland Inc. or the Exchange Agent for any reason, they shall be canceled
and exchanged as provided in this Article V except as otherwise provided by
applicable Law. Unless Marathon otherwise consents, the Acquisition Merger
Consideration shall not be issued to any person who is an "affiliate" of
Ashland for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), on the date of the Ashland Shareholders Meeting, as
23
determined from representations contained in the letters of transmittal to be
delivered by former holders of shares of Ashland Common Stock pursuant to the
provisions of Section 5.01(b) (a "Rule 145 Affiliate"), until Marathon has
received a written agreement from such Rule 145 Affiliate substantially in the
form attached hereto as Exhibit C; provided, however, that Marathon shall be
solely responsible for any Losses (as defined in Section 13.01(a)) of any of
the Ashland Parties and their respective affiliates and Representatives (in
each case other than such Rule 145 Affiliate) to the extent resulting from,
arising out of, or relating to, directly or indirectly, any refusal by
Marathon to consent to the issuance of Acquisition Merger Consideration to any
such Rule 145 Affiliate pursuant to this sentence.
(e) NO FRACTIONAL SHARES. (i) No certificates or scrip representing
fractional shares of Marathon Common Stock shall be issued upon the conversion
of HoldCo Common Stock pursuant to Section 4.03, and such fractional share
interests shall not entitle the owner thereof to vote or to any rights of a
holder of Marathon Common Stock. For purposes of this Section 5.01(e), all
fractional shares to which a single record holder would be entitled shall be
aggregated and calculations shall be rounded to three decimal places.
Notwithstanding any other provision of this Agreement, each holder of
Certificates who otherwise would be entitled to receive a fraction of a share
of Marathon Common Stock (determined after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to the product of such fractional part
of a share of Marathon Common Stock multiplied by the Fair Market Value.
(ii) As promptly as practicable following the Acquisition Merger
Effective Time, the Exchange Agent shall determine the excess of (A) the
number of shares of Marathon Common Stock delivered to the Exchange Agent
by Marathon pursuant to Section 5.01(a) over (B) the aggregate number of
whole shares of Marathon Common Stock to be issued to holders of HoldCo
Common Stock pursuant to Section 5.01(b) (such excess being herein called
the "Excess Shares"). As promptly as practicable after such
determination, Marathon shall deposit an amount
24
into the Exchange Fund equal to the product of the number of Excess Shares
multiplied by the Fair Market Value, and the Exchange Agent shall return
certificates representing such Excess Shares to Marathon.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to the holders of Certificates for six months after
the Acquisition Merger Effective Time shall be delivered to or in accordance
with the instructions of New Ashland Inc., upon demand, and any holder of a
Certificate who has not theretofore complied with this Article V shall
thereafter look only to New Ashland Inc. for payment of its claim for
Acquisition Merger Consideration and any dividends or distributions with
respect to New Ashland Inc. Common Stock or Marathon Common Stock, as
applicable, as contemplated by Section 5.01(c).
(g) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by New Ashland Inc., the execution of an indemnity reasonably
satisfactory to New Ashland Inc. (and, if required by New Ashland Inc., the
posting by such person of a bond in such reasonable amount as New Ashland Inc.
may direct, as indemnity) against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will deliver in exchange for
such lost, stolen or destroyed Certificate the applicable Acquisition Merger
Consideration with respect to the shares of HoldCo Common Stock formerly
represented thereby, and any dividends or other distributions such holder has
the right to receive in respect thereof, pursuant to this Agreement.
(h) WITHHOLDING RIGHTS. Each of New Ashland Inc. and Marathon shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates and any holder of
Dissenters' Shares such amounts as may be required to be deducted and withheld
by New Ashland Inc. or Marathon, as applicable, with respect to the making of
such payment under the Code or under any provision of state, local or foreign
Tax Law. To the extent that amounts are so withheld and paid over to the
appropriate Tax Authority (as defined in Section 14.02), New Ashland Inc. or
Marathon, as
25
applicable, will be treated as though it withheld an appropriate amount of the
type of consideration otherwise payable pursuant to this Agreement to any
holder of Certificates or Dissenters' Shares, sold such consideration for an
amount of cash equal to the fair market value of such consideration at the
time of such deemed sale and paid such cash proceeds to the appropriate Tax
Authority. Such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares represented by the
Certificates or Dissenters' Shares, as the case may be, in respect of which
such deduction and withholding was made.
(i) NO LIABILITY. None of the Ashland Parties, the Marathon Parties
or the Exchange Agent shall be liable to any person in respect of any shares
of New Ashland Inc. Common Stock (or dividends or distributions with respect
thereto), Marathon Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law. If any
Certificate has not been surrendered prior to five years after the Acquisition
Merger Effective Time (or immediately prior to such earlier date on which
Acquisition Merger Consideration or any dividends or distributions with
respect to New Ashland Inc. Common Stock or Marathon Common Stock as
contemplated by Section 5.01(c) in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 6.05(b))), any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable Law,
become the property of New Ashland Inc., free and clear of all claims or
interest of any person previously entitled thereto.
(j) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by New Ashland Inc., on a
daily basis. Any interest and other income resulting from such investments
shall be paid to New Ashland Inc.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE ASHLAND PARTIES
------------------------------
Ashland and New Ashland Inc., jointly and severally, represent and
warrant to the Marathon Parties that, as of the date of this Agreement and as
of the Closing Date as if made on the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date), except as set forth in the disclosure letter,
dated as of the date of this Agreement, from Ashland to Marathon (the "Ashland
Disclosure Letter"); provided, however, that no item contained in any section
of the Ashland Disclosure Letter shall be deemed to qualify, or disclose any
exception to, any representation or warranty made in the last sentence of
Section 6.03(e) or in Sections 6.04 or 6.11:
SECTION 6.01. ORGANIZATION, STANDING AND POWER. Ashland is duly
organized, validly existing and in good standing under the Laws of the
Commonwealth of Kentucky and has full corporate power and authority to own,
lease and otherwise hold its properties and to conduct its businesses as
presently conducted. Each Significant Ashland Subsidiary (as defined in this
Section 6.01) is duly organized, validly existing and, to the extent such
concept or a similar concept exists in the relevant jurisdiction, in good
standing under the Laws of the jurisdiction in which it is organized and has
full corporate or other entity power and authority to own, lease or otherwise
hold its properties and to conduct its businesses as presently conducted. Each
of Ashland and each Significant Ashland Subsidiary is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction where
the nature of its business or its ownership or leasing of its properties makes
such qualification necessary, except in such jurisdictions where the failure
to be so qualified or in good standing has not had and would not reasonably be
expected to have an Ashland Material Adverse Effect (as defined in Section
6.05(a)). Ashland has provided to Marathon true and complete copies of the
articles of incorporation of Ashland, as amended to the date of this Agreement
(as so amended, the "Ashland Charter"), and the by-laws of Ashland, as amended
to the date of this
27
Agreement (as so amended, the "Ashland By- laws"), and the comparable charter
and organizational documents of each Significant Ashland Subsidiary, in each
case as amended to the date of this Agreement. For purposes of this Agreement,
a "Significant Ashland Subsidiary" means New Ashland LLC, New Ashland Inc.,
any subsidiary of Ashland that constitutes a significant subsidiary within the
meaning of Rule 1-02 of Regulation S-X of the SEC and, prior to the
Acquisition Merger Effective Time, HoldCo.
SECTION 6.02. ASHLAND SUBSIDIARIES; EQUITY INTERESTS. (a) All the
outstanding shares of capital stock of, or other equity interests in, each
Significant Ashland Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable and are as of the date of this Agreement
owned by Ashland, by another subsidiary of Ashland (an "Ashland Subsidiary")
or by Ashland and another Ashland Subsidiary, free and clear of all pledges,
liens, charges, mortgages, security interests, encumbrances and adverse claims
of any kind or nature whatsoever (collectively, "Liens").
(b) Each of HoldCo, New Ashland LLC and New Ashland Inc., since the
date of its formation, has not carried on any business or conducted any
operations other than the execution of this Agreement, the other Transaction
Agreements and the Ancillary Agreements to which it is a party, the
performance of its obligations hereunder and thereunder and matters ancillary
thereto. Except for any indebtedness for borrowed money and other liabilities
assumed by HoldCo pursuant to the Transaction Agreements or the Ancillary
Agreements, and except as otherwise expressly contemplated by the Transaction
Agreements or the Ancillary Agreements, immediately prior to the Acquisition
Merger, HoldCo will not have any indebtedness for borrowed money or any other
liabilities (whether accrued, absolute, liquidated, unliquidated, fixed,
contingent, disputed, undisputed, legal or equitable).
SECTION 6.03. CAPITAL STRUCTURE. (a) The authorized capital stock of
Ashland consists of 300,000,000 shares of Common Stock and 30,000,000 shares
of Cumulative Preferred Stock ("Ashland Preferred Stock" and, together with
the Ashland Common Stock, the "Ashland Capital Stock"). At the close of
business on February 29, 2004, (i) 69,599,791 shares of Ashland Common Stock
were issued and outstanding, (ii) 9,926,276 shares of
28
Ashland Common Stock were reserved for issuance pursuant to Ashland Stock
Plans (as defined in Section 14.02) and (iii) 500,000 shares of Series A
Participating Cumulative Preferred Stock ("Ashland Series A Preferred Stock")
were reserved for issuance in connection with the rights (the "Ashland
Rights") issued pursuant to the Rights Agreement dated as of May 16, 1996 (as
amended from time to time, the "Ashland Rights Agreement"), between Ashland
and National City Bank, as Rights Agent. Except as set forth above, at the
close of business on February 29, 2004, no shares of capital stock or other
voting securities of Ashland were issued, reserved for issuance or
outstanding. There are no outstanding Ashland SARs (as defined in Section
14.02) that were not granted in tandem with a related Ashland Employee Stock
Option. No shares of Ashland Capital Stock are held by Ashland as treasury
stock. All outstanding shares of Ashland Capital Stock are, and all such
shares that may be issued prior to the Closing will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the KBCA, the Ashland Charter, the Ashland By-laws or any
Contract (as defined in Section 6.05(a)) to which Ashland is a party or
otherwise bound. As of the date of this Agreement, there are not any bonds,
debentures, notes or other indebtedness of Ashland having the right to vote
(or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which holders of Ashland Common Stock may vote
("Voting Ashland Debt"). None of HoldCo, New Ashland Inc. or New Ashland LLC
owns or holds any shares of Ashland Capital Stock or any Voting Ashland Debt.
Except as set forth above, as of the date of this Agreement, there are not any
options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which
Ashland or any Ashland Subsidiary is a party or by which any of them is bound
(i) obligating Ashland or any Ashland Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, Ashland or
any Ashland Subsidiary or any Voting Ashland Debt or
29
(ii) obligating Ashland or any Ashland Subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations or commitments of Ashland or
any Ashland Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Ashland or any Ashland Subsidiary.
(b) The authorized capital stock of HoldCo consists of 300,000,000
shares of HoldCo Common Stock, 100 shares of which have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by Ashland
free and clear of any Lien. No shares of capital stock of HoldCo are held by
HoldCo as treasury stock.
(c) As of the date of this Agreement, the authorized capital stock
of New Ashland Inc. consists of 1,000 shares of Common Stock, of which 100
shares of Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by HoldCo free and clear of any Lien.
Immediately prior to the Acquisition Merger Effective Time, the authorized
capital stock of New Ashland Inc. will consist of 300,000,000 shares of Common
Stock and 30,000,000 shares of preferred stock, of which 100 shares of Common
Stock will have been duly authorized and validly issued, fully paid and
nonassessable and owned by HoldCo free and clear of any Lien, other than any
Lien (i) pursuant to the HoldCo Borrowing arrangements or (ii) in favor of any
Marathon Party or any of their respective subsidiaries or affiliates.
(d) All of the membership interests in New Ashland LLC are owned by
HoldCo free and clear of any Lien, other than any Lien (i) pursuant to the
HoldCo Borrowing arrangements or (ii) in favor of any Marathon Party or any of
their respective subsidiaries or affiliates.
(e) Immediately prior to the MAP Partial Redemption, all of
Ashland's Membership Interest will be owned by Ashland free and clear of any
Lien. Immediately prior to the Acquisition Merger, all of Ashland's Membership
Interest that has not been redeemed pursuant to the MAP Partial Redemption
will be owned by HoldCo free and clear of any Lien, other than any Lien (i)
pursuant to the HoldCo Borrowing arrangements or (ii) in favor of any
30
Marathon Party or any of their respective subsidiaries or affiliates. Upon
consummation of the Transactions, all of Ashland's Membership Interest shall
be vested in one or more of the Marathon Parties and shall thereafter be the
property of one or more of the Marathon Parties (assuming such Marathon
Parties have the requisite power and authority to be the lawful owners of
Ashland's Membership Interest), free and clear of any Lien, other than any
Lien (i) pursuant to the HoldCo Borrowing arrangements, (ii) in favor of any
Marathon Party or any of their respective subsidiaries or affiliates or (iii)
arising from actions or inactions of any of the Marathon Parties or their
affiliates (and not of any of the Ashland Parties or their affiliates).
SECTION 6.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a)
Each Ashland Party has all requisite corporate or limited liability company
power and authority to execute and deliver the Transaction Agreements, and the
other agreements and instruments to be executed and delivered in connection
with the Transaction Agreements (the "Ancillary Agreements"), to which it is,
or is specified to be, a party and to consummate the Transactions. The
execution and delivery by each Ashland Party of each Transaction Agreement and
Ancillary Agreement to which it is, or is specified to be, a party and the
consummation by each Ashland Party of the Transactions to be consummated by it
under the Transaction Agreements and the Ancillary Agreements have been duly
authorized by all necessary corporate or limited liability company action on
the part of each Ashland Party subject to receipt of the Ashland Shareholder
Approval (as defined in Section 6.04(b)). Each Ashland Party has duly executed
and delivered each Transaction Agreement to which it is a party, and each
Transaction Agreement to which it is a party constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms. As of
the Closing Date, each Ashland Party will have duly executed and delivered
each Ancillary Agreement to which it is a party, and each Ancillary Agreement
to which it is a party will constitute its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
(b) The Ashland Board, at a meeting duly called and held, duly and
unanimously adopted resolutions:
31
(i) adopting and approving the Transaction Agreements, the Ancillary
Agreements and the Transactions; (ii) determining that the terms of the
Transactions are fair to and in the best interests of Ashland and its
shareholders; and (iii) recommending that Ashland's shareholders approve the
Transaction Agreements and the Transactions (including the plan of merger for
the Reorganization Merger and the proposed transfer of Ashland's interests in
MAP, LOOP LLC and LOCAP LLC, as well as the Maleic Business and the VIOC
Centers, provided for in the Transaction Agreements). The only vote of holders
of any class or series of Ashland Capital Stock necessary to approve and adopt
the Transaction Agreements and the Transactions is the approval of the
Transaction Agreements and the Transactions (including the plan of merger for
the Reorganization Merger and the proposed transfer of Ashland's interests in
MAP, LOOP LLC and LOCAP LLC, as well as the Maleic Business and the VIOC
Centers, provided for in the Transaction Agreements) by the holders of a
majority of the outstanding Ashland Common Stock (the "Ashland Shareholder
Approval").
(c) The Board of Directors of HoldCo has duly and unanimously
adopted resolutions: (i) approving and declaring advisable the Transaction
Agreements and the Ancillary Agreements to which HoldCo is a party, and
approving the Transactions; (ii) determining that the terms of the
Transactions to which HoldCo is a party are fair to and in the best interests
of HoldCo and Ashland, its sole shareholder; and (iii) recommending that
Ashland, HoldCo's sole shareholder, adopt the Transaction Agreements to which
HoldCo is a party. Ashland, as the sole shareholder of HoldCo, has duly
approved and adopted the Transaction Agreements to which HoldCo is a party.
(d) The New Ashland Board has duly and unanimously adopted
resolutions: (i) adopting and approving the Transaction Agreements and the
Ancillary Agreements to which New Ashland Inc. is a party, and adopting and
approving the Transactions; (ii) determining that the terms of the
Transactions to which New Ashland Inc. is a party are fair to and in the best
interests of New Ashland Inc. and HoldCo, its sole shareholder; and (iii)
recommending that HoldCo, New Ashland Inc.'s sole shareholder, approve the
Transaction Agreements to which New Ashland Inc. is a party. HoldCo, as the
sole shareholder of New Ashland Inc., has duly approved the
32
Transaction Agreements to which New Ashland Inc. is a party.
(e) HoldCo, as the sole member of New Ashland LLC, has approved the
Transaction Agreements to which New Ashland LLC is a party.
SECTION 6.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by each Ashland Party of each Transaction Agreement to which it is a party do
not, the execution and delivery of each Ancillary Agreement to which it is
specified to be a party will not, and the consummation of the Transactions to
be consummated by it under the Transaction Agreements and the Ancillary
Agreements and compliance with the terms of the Transaction Agreements and the
Ancillary Agreements will not, conflict with, or result in any breach or
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Ashland or any
Ashland Subsidiary under, any provision of (i) the Ashland Charter, the
Ashland By-laws or the comparable charter or organizational documents of any
Ashland Subsidiary, (ii) any contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a "Contract") to
which Ashland or any Ashland Subsidiary is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 6.05(b), any judgment, order or decree
("Judgment") or statute, law, ordinance, rule or regulation ("Law") applicable
to Ashland or any Ashland Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on the ability of any Ashland Party
to perform its obligations under the Transaction Agreements and the Ancillary
Agreements or on the ability of any Ashland Party to consummate the
Transactions (an "Ashland Material Adverse Effect").
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from,
any Federal, state, local or foreign government or any court of
33
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (each, a
"Governmental Entity"), is required to be obtained or made by or with respect
to Ashland or any Ashland Subsidiary in connection with the execution,
delivery and performance of any Transaction Agreement or Ancillary Agreement
or the consummation of the Transactions, other than (i) compliance with and
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a joint registration statement on Form S-4 (the
"Ashland Form S- 4") in connection with the issuance by HoldCo of HoldCo
Common Stock in connection with the Reorganization Merger (the "HoldCo Share
Issuance") and the issuance by New Ashland Inc. of New Ashland Inc. Common
Stock in the Acquisition Merger (the "New Ashland Inc. Share Issuance"), (B) a
registration statement on Form S-4 (the "Marathon Form S-4" and, together with
the Ashland Form S-4, the "Forms S-4") in connection with the issuance by
Marathon of Marathon Common Stock in connection with the Acquisition Merger
(the "Marathon Share Issuance"), (C) a proxy or information statement relating
to the approval of the Transaction Agreements and the Transactions by
Ashland's shareholders (the "Proxy Statement") and (D) such reports under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with the Transaction
Agreements, the Ancillary Agreements or the Transactions, (iii) (A) the filing
of the Reorganization Articles of Merger with the Secretary of State of the
Commonwealth of Kentucky, (B) the filing of the Conversion Articles of Merger
with the Secretary of State of the Commonwealth of Kentucky, (C) the filing of
the Acquisition Certificate of Merger with the Secretary of State of the State
of Delaware and (D) appropriate documents with the relevant authorities of the
other jurisdictions in which Ashland is qualified to do business, (iv) such
filings as may be required in connection with Taxes and (v) such other
Consents, registrations, declarations, filings and permits (A) required solely
by reason of the participation of any Marathon Party (as opposed to any third
party) in the Transactions or (B) the failure of which to obtain or make that,
individually or in the aggregate, have not had and would not reasonably be
expected to have an Ashland Material Adverse Effect.
34
(c) Ashland and the Ashland Board have taken all action necessary to
(i) render the Ashland Rights inapplicable to the Transaction Agreements, the
Ancillary Agreements and the Transactions; and (ii) ensure that (A) none of
the Marathon Parties, nor any of their affiliates or associates, is or will
become an "Acquiring Person" (as defined in the Ashland Rights Agreement) by
reason of the Transaction Agreements, the Ancillary Agreements or the
Transactions and (B) a "Distribution Date" (as defined in the Ashland Rights
Agreement) shall not occur by reason of the Transaction Agreements, the
Ancillary Agreements or the Transactions.
SECTION 6.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) Ashland
has filed all reports, schedules, forms, statements and other documents
(including exhibits and amendments thereto) required to be filed by Ashland
with the SEC since October 1, 2003, pursuant to Sections 13(a), 14(a) and
15(d) of the Exchange Act (the "Ashland SEC Documents").
(b) As of its respective date, each Ashland SEC Document complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to such Ashland
SEC Document, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Except to the extent that information
contained in any Ashland SEC Document has been revised or superseded by a
later filed Ashland SEC Document, none of the Ashland SEC Documents contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Ashland included in the
Ashland SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved
35
(except as may be indicated in the notes thereto) and on that basis fairly
present in all material respects the consolidated financial position of
Ashland and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited interim financial statements, to normal
year-end audit adjustments).
(c) Except as disclosed in the Ashland SEC Documents, as of the date
of this Agreement neither Ashland nor any Ashland Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
liquidated, unliquidated, fixed, contingent, disputed, undisputed, legal or
equitable) required by GAAP to be set forth on a consolidated balance sheet of
Ashland and its consolidated subsidiaries or disclosed in the notes thereto
and that, individually or in the aggregate, would reasonably be expected to
have an Ashland Material Adverse Effect.
(d) Notwithstanding anything to the contrary contained in this
Section 6.06, the Ashland Parties do not make any representation or warranty
as to the financial statements, financial position, results of operations or
cash flows of MAP, as to any other statement, omission or information relating
to MAP included or incorporated by reference in the Ashland SEC Documents, or
as to the business, assets, liabilities, condition (financial or otherwise),
operations or prospects of MAP.
SECTION 6.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent financial statements included in the Ashland SEC Documents
filed and publicly available prior to the date of this Agreement, to the date
of this Agreement, there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have an
Ashland Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividends on,
or any other distributions in respect of, any Ashland Capital Stock,
other than regular quarterly cash dividends with respect to the Ashland
Common Stock, not in excess of 27.5 cents per
36
share, with usual declaration, record and payment dates and in accordance with
Ashland's past dividend policy; or
(iii) any repurchase, redemption or other acquisition for value by
Ashland of any Ashland Capital Stock.
SECTION 6.08. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by or on behalf of any Ashland Party for inclusion or
incorporation by reference in (i) the Forms S-4 will, at the time the Forms
S-4 are filed with the SEC, at any time the Forms S-4 are amended or
supplemented or at the time the same become effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to Ashland's shareholders or at the time of the
Ashland Shareholders Meeting (as defined in Section 9.01(e), contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Ashland Form S-4 will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder, and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, in each case except that no representation is made by
any Ashland Party with respect to statements made or incorporated by reference
therein based on information supplied by or on behalf of any Marathon Party
for inclusion or incorporation by reference therein.
SECTION 6.09. BROKERS. No broker, investment banker, financial
advisor or other person, other than Credit Suisse First Boston LLC and
Houlihan Lokey Howard & Zukin ("HLHZ"), the fees and expenses of which will be
paid by Ashland (except as otherwise contemplated by Section 9.03(d)(i)), and
Morgan Joseph & Co., Inc., the fees and expenses of which will be paid in
accordance with Section 9.04(b), is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of any Ashland
Party.
37
SECTION 6.10. OPINION OF FINANCIAL ADVISOR. Ashland has received the
opinion of Credit Suisse First Boston LLC, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received in the
Acquisition Merger by the holders of Ashland Common Stock (other than Marathon
and its affiliates) is fair to such holders from a financial point of view.
SECTION 6.11. SOLVENCY MATTERS. (a) Ashland has received two
solvency opinions of American Appraisal Associates, Inc. ("AAA"), copies of
which are included in Section 7.11 of the Marathon Disclosure Letter (the
"Initial AAA Opinions"), and the solvency opinion of HLHZ, a copy of which is
included in Section 6.11 of the Ashland Disclosure Letter (the "Initial HLHZ
Opinion" and, together with the Initial AAA Opinions, the "Initial Opinions").
(b) As of the date of this Agreement, Ashland does not, and as of
the Closing Date New Ashland Inc. will not, have any intention to declare a
dividend or distribution or to complete a share repurchase using, directly or
indirectly, proceeds received from the MAP Partial Redemption or the Capital
Contribution; provided, however, that it is understood that New Ashland Inc.
may pay cash dividends after the Closing consistent with historical cash
dividends paid by Ashland prior to the Closing.
(c) As of the date of this Agreement, Ashland intends, and as of the
Closing Date New Ashland Inc. will intend, to use the cash proceeds of the
Capital Contribution pursuant to Section 1.03(b) only (i) for the uses
described in the definition of Ashland Debt Obligation Amount or (ii) to pay
other obligations owed to any of their respective creditors, and to use the
cash proceeds of the MAP Partial Redemption pursuant to Section 1.01 only for
the purposes described in clauses (i) and (ii) of this Section 6.11(c) and for
general corporate purposes (including, potentially, business acquisitions) not
inconsistent with Section 6.11(b).
(d) As of the Closing Date, Ashland, before consummation of the
Transactions, and New Ashland Inc., after giving effect to the Transactions,
will not be insolvent, as insolvency is defined under any of the Uniform
Fraudulent Transfer Act, as approved by the National Conference of
Commissioners on Uniform State Laws
38
in 1984, as amended (the "UFTA"), the Uniform Fraudulent Conveyance Act, as
approved by the National Conference of Commissioners on Uniform State Laws in
1918, as amended (the "UFCA"), and the U.S. Bankruptcy Code, Title 11 of the
U.S.C., as amended (the "Bankruptcy Code"). Without limiting the generality of
the foregoing, as of the Closing Date, with respect to each of Ashland, before
consummation of the Transactions, and New Ashland Inc., after giving effect to
the Transactions: (i) the sum of such entity's debts will not be greater than
all of such entity's assets at a fair valuation (as such terms are defined in
the UFTA), and the sum of such entity's debts will not be greater than all of
such entity's property, at a fair valuation (as such terms are defined in the
Bankruptcy Code); (ii) the present fair saleable value of such entity's assets
will not be less than the amount that will be required to pay such entity's
probable liability on its existing debts as they become absolute and matured
(as such terms are defined in the UFCA); (iii) such entity will not intend to
incur, or believe or reasonably should believe that it would incur, debts
beyond its ability to pay as they become due (as such terms are defined in the
UFTA), such entity will not intend or believe that it will incur debts beyond
its ability to pay as they mature (as such terms are defined in the UFCA), and
such entity will not intend to incur, or believe that it would incur, debts
that would be beyond its ability to pay as such debts mature (as such terms
are defined in the Bankruptcy Code); and (iv) such entity will not be engaged
and will not be about to engage in a business or transaction for which the
remaining assets of such entity are unreasonably small in relation to such
business or transaction (as such terms are defined in the UFTA), such entity
will not be engaged and will not be about to engage in a business or
transaction for which the property remaining in such entity's hands is an
unreasonably small capital (as such terms are defined in the UFCA), and such
entity will not be engaged in business or a transaction, and will not be about
to engage in business or a transaction, for which any property remaining with
such entity is an unreasonably small capital (as such terms are defined in the
Bankruptcy Code).
(e) To Ashland's knowledge, the information provided orally or in
writing to AAA by or on behalf of any Ashland Party relating to the Ashland
Parties in connection with the delivery by AAA to Ashland and Marathon of the
39
Initial AAA Opinions and the Bring-Down AAA Opinions (as defined in Section
10.01(g)) (including the information contained in the data rooms identified in
the Initial AAA Opinions and any similar data rooms made available to AAA
after the date of this Agreement), together with the information in the
Ashland SEC Documents (as such information has been revised or superseded by a
later filed Ashland SEC Document or other information that has been provided
to AAA), taken as a whole, does not and will not contain any untrue statement
of material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, in any case in which AAA would be led to deliver
the Bring-Down AAA Opinions when AAA would not do so in the absence of such
untrue statement or omission. Notwithstanding the foregoing, while Ashland and
New Ashland Inc. represent and warrant that the projections, forecasts and
other forward-looking materials relating to the Ashland Parties and so
provided to AAA have been prepared and furnished to AAA in good faith and were
based on facts and assumptions believed by Ashland and New Ashland Inc. to be
reasonable, the parties acknowledge that: (i) there may be differences between
actual results and the results indicated in such projections, forecasts and
other forward-looking materials; (ii) those differences may be material; and
(iii) Ashland and New Ashland Inc. do not represent or warrant that there will
be no such differences. Notwithstanding anything to the contrary contained in
this Section 6.11(e), the Ashland Parties do not make any representation or
warranty as to the financial statements, financial position, results of
operations or cash flows of MAP, as to any other statement, omission or
information relating to MAP, or as to the business, assets, liabilities,
condition (financial or otherwise), operations or prospects of MAP.
(f) All Working Papers (as defined in Section 14.02) of HLHZ,
relating to its engagement by Ashland have been made available to Marathon and
its Representatives.
40
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF THE MARATHON PARTIES
------------------------------
Marathon represents and warrants to the Ashland Parties that, as of
the date of this Agreement and as of the Closing Date as if made on the
Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such earlier date),
except as set forth in the disclosure letter, dated as of the date of this
Agreement, from Marathon to Ashland (the "Marathon Disclosure Letter");
provided, however, that no item contained in any section of the Marathon
Disclosure Letter shall be deemed to qualify, or disclose any exception to,
any representation or warranty made in Sections 7.04 or 7.11:
SECTION 7.01. ORGANIZATION, STANDING AND POWER. Marathon is duly
organized, validly existing and in good standing under the Laws of the State
of Delaware and has full corporate power and authority to own, lease and
otherwise hold its properties and to conduct its businesses as presently
conducted. Each Significant Marathon Subsidiary (as defined in this Section
7.01) is duly organized, validly existing and, to the extent such concept or a
similar concept exists in the relevant jurisdiction, in good standing under
the Laws of the jurisdiction in which it is organized and has full corporate
or other entity power and authority to own, lease or otherwise hold its
properties and to conduct its businesses as presently conducted. Each of
Marathon and each Significant Marathon Subsidiary is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction where
the nature of its business or its ownership or leasing of its properties makes
such qualification necessary, except in such jurisdictions where the failure
to be so qualified or in good standing has not had and would not reasonably be
expected to have a Marathon Material Adverse Effect (as defined in Section
7.05(a)). Marathon has provided to Ashland true and complete copies of the
certificate of incorporation of Marathon, as amended to the date of this
Agreement (as so amended, the "Marathon Charter"), and the by-laws of
Marathon, as amended to the date of this Agreement (as so amended, the
"Marathon By-laws"), and the comparable charter and organizational documents
of each
41
Significant Marathon Subsidiary, in each case as amended to the date of this
Agreement. For purposes of this Agreement, a "Significant Marathon Subsidiary"
means Marathon Company, Merger Sub, MAP and any subsidiary of Marathon that
constitutes a significant subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
SECTION 7.02. MARATHON SUBSIDIARIES; EQUITY INTERESTS. (a) All the
outstanding shares of capital stock of, or other equity interests in, each
Significant Marathon Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable and are as of the date of this Agreement
owned by Marathon, by another subsidiary of Marathon (a "Marathon Subsidiary")
or by Marathon and another Marathon Subsidiary, free and clear of all Liens.
(b) Merger Sub, since the date of its formation, has not carried on
any business or conducted any operations other than the execution of this
Agreement, the other Transaction Agreements and the Ancillary Agreements to
which it is a party, the performance of its obligations hereunder and
thereunder and matters ancillary thereto.
SECTION 7.03. CAPITAL STRUCTURE. (a) The authorized capital stock of
Marathon consists of 550,000,000 shares of Marathon Common Stock and
26,000,000 shares of preferred stock, without par value ("Marathon Preferred
Stock" and, together with the Marathon Common Stock, the "Marathon Capital
Stock"). At the close of business on February 29, 2004, (i) 310,740,454 shares
of Marathon Common Stock were issued and outstanding, (ii) 1,425,524 shares of
Marathon Common Stock were held by Marathon in its treasury and (iii)
37,788,193 shares of Marathon Common Stock were reserved for issuance pursuant
to Marathon Stock Plans (as defined in Section 14.02). Except as set forth
above, at the close of business on February 29, 2004, no shares of capital
stock or other voting securities of Marathon were issued, reserved for
issuance or outstanding. There are no outstanding Marathon SARs (as defined in
Section 14.02) that were not granted in tandem with a related Marathon
Employee Stock Option. All outstanding shares of Marathon Capital Stock are,
and all such shares that may be issued prior to the Acquisition Merger
Effective Time will be when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any
purchase option,
42
call option, right of first refusal, preemptive right, subscription right or
any similar right under any provision of the DGCL, the Marathon Charter, the
Marathon By-laws or any Contract to which Marathon is a party or otherwise
bound. As of the date of this Agreement, there are not any bonds, debentures,
notes or other indebtedness of Marathon having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which holders of Marathon Common Stock may vote ("Voting
Marathon Debt"). Except as set forth above, as of the date of this Agreement,
there are not any options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of any
kind to which Marathon or any Marathon Subsidiary is a party or by which any
of them is bound (i) obligating Marathon or any Marathon Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, Marathon or any Marathon Subsidiary or any Voting Marathon Debt
or (ii) obligating Marathon or any Marathon Subsidiary to issue, grant, extend
or enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations or commitments of Marathon or
any Marathon Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Marathon or any Marathon Subsidiary.
(b) All of the membership interests in Merger Sub are owned by
Marathon free and clear of any Lien.
SECTION 7.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a)
Each Marathon Party has all requisite corporate or limited liability company
power and authority to execute and deliver the Transaction Agreements and the
Ancillary Agreements to which it is, or is specified to be, a party and to
consummate the Transactions. For all purposes of the Put/Call Agreement (as
defined in Section 12.04) and the Insurance Indemnity Agreement referred to in
Section 12.05, including for purposes of amending the Put/Call Agreement as
provided in Section 12.04 of this
43
Agreement and terminating the Insurance Indemnity Agreement as provided in
Section 12.05, Marathon is a party to the Put/Call Agreement and the Insurance
Indemnity Agreement as the successor and assign of USX (as defined in the
Put/Call Agreement). The execution and delivery by each Marathon Party of each
Transaction Agreement and Ancillary Agreement to which it is, or is specified
to be, a party and the consummation by each Marathon Party of the Transactions
to be consummated by it under the Transaction Agreements and the Ancillary
Agreements have been duly authorized by all necessary corporate or limited
liability company action on the part of each Marathon Party. Each Marathon
Party has duly executed and delivered each Transaction Agreement to which it
is a party, and each Transaction Agreement to which it is a party constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms. As of the Closing Date, each Marathon Party will have duly
executed and delivered each Ancillary Agreement to which it is a party, and
each Ancillary Agreement to which it is a party will constitute its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
(b) The Marathon Board duly and unanimously adopted resolutions: (i)
approving the Transaction Agreements, the Ancillary Agreements and the
Transactions; and (ii) determining that the terms of the Transactions are fair
to and in the best interests of Marathon and its shareholders.
(c) The Board of Directors of Marathon Company (the "Marathon
Company Board"), at a meeting duly called and held or by written consent, duly
and unanimously adopted resolutions: (i) approving the Transaction Agreements,
the Ancillary Agreements and the Transactions; and (ii) determining that the
terms of the Transactions are fair to and in the best interests of Marathon
Company and Marathon, its sole shareholder.
(d) Marathon, as the sole member of Merger Sub, has approved the
Transaction Agreements, the Ancillary Agreements and the Transactions to which
Merger Sub is, or is specified to be, a party.
SECTION 7.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by each Marathon Party of each Transaction Agreement to which it is a party do
not,
44
the execution and delivery of each Ancillary Agreement to which it is
specified to be a party will not, and the consummation of the Transactions to
be consummated by it under the Transaction Agreements and the Ancillary
Agreements and compliance with the terms of the Transaction Agreements and the
Ancillary Agreements will not, conflict with, or result in any breach or
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Marathon or any
Marathon Subsidiary under, any provision of (i) the Marathon Charter, the
Marathon By-laws or the comparable charter or organizational documents of any
Marathon Subsidiary, (ii) any Contract to which Marathon or any Marathon
Subsidiary is a party or by which any of their respective properties or assets
is bound or (iii) subject to the filings and other matters referred to in
Section 7.05(b), any Judgment or Law applicable to Marathon or any Marathon
Subsidiary or their respective properties or assets, other than, in the case
of clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
material adverse effect on the ability of any Marathon Party to perform its
obligations under the Transaction Agreements and the Ancillary Agreements or
on the ability of any Marathon Party to consummate the Transactions (a
"Marathon Material Adverse Effect").
(b) No Consent of, or registration, declaration or filing with, or
permit from, any Governmental Entity is required to be obtained or made by or
with respect to Marathon or any Marathon Subsidiary in connection with the
execution, delivery and performance of any Transaction Agreement or Ancillary
Agreement or the consummation of the Transactions, other than (i) compliance
with and filings under the HSR Act, (ii) the filing with the SEC of (A) the
Forms S-4 and (B) such reports under Sections 13 and 16 of the Exchange Act as
may be required in connection with the Transaction Agreements, the Ancillary
Agreements or the Transactions, (iii) the filing of the Acquisition
Certificate of Merger with the Secretary of State of the State of Delaware,
(iv) such filings as may be required in connection with Taxes and (v) such
other Consents, registrations, declarations, filings and permits
45
(A) required solely by reason of the participation of any Ashland Party (as
opposed to any third party) in the Transactions or (B) the failure of which to
obtain or make that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Marathon Material Adverse Effect.
(c) The Rights Agreement between Marathon and National City Bank, as
Rights Agent, dated as of September 28, 1998, as amended on July 2, 2001 and
January 29, 2003 (the "Marathon Rights Agreement"), expired on January 31,
2003, and Marathon has not, as of the date of this Agreement, entered into or
adopted any other rights agreement.
SECTION 7.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) Marathon
has filed all reports, schedules, forms, statements and other documents
(including exhibits and amendments thereto) required to be filed by Marathon
with the SEC since January 1, 2004 pursuant to Sections 13(a), 14(a) and 15(d)
of the Exchange Act (the "Marathon SEC Documents").
(b) As of its respective date, each Marathon SEC Document complied
in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to such
Marathon SEC Document, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Marathon SEC Document has been revised or
superseded by a later filed Marathon SEC Document, none of the Marathon SEC
Documents contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Marathon
included in the Marathon SEC Documents comply as to form in all material
respects with applicable accounting requirements, and the published rules and
regulations of the SEC, with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
46
(except as may be indicated in the notes thereto) and on that basis fairly
present in all material respects the consolidated financial position of
Marathon and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited interim financial statements, to normal
year-end audit adjustments).
(c) Except as disclosed in the Marathon SEC Documents, as of the
date of this Agreement neither Marathon nor any Marathon Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
liquidated, unliquidated, fixed, contingent, disputed, undisputed, legal or
equitable) required by GAAP to be set forth on a consolidated balance sheet of
Marathon and its consolidated subsidiaries or disclosed in the notes thereto
and that, individually or in the aggregate, would reasonably be expected to
have a Marathon Material Adverse Effect.
(d) Notwithstanding anything to the contrary contained in this
Section 7.06, the Marathon Parties do not make any representation or warranty
as to the financial statements, financial position, results of operations or
cash flows of MAP, as to any other statement, omission or information relating
to MAP included or incorporated by reference in the Marathon SEC Documents, or
as to the business, assets, liabilities, condition (financial or otherwise),
operations or prospects of MAP.
SECTION 7.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent financial statements included in the Marathon SEC Documents
filed and publicly available prior to the date of this Agreement, to the date
of this Agreement, there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have a
Marathon Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividends on,
or any other distributions in respect of, any Marathon Capital Stock,
other than regular quarterly cash dividends with respect to the Marathon
Common Stock, not in excess of 25 cents per
47
share, with usual declaration, record and payment dates and in accordance
with Marathon's past dividend policy; or
(iii) any repurchase, redemption or other acquisition for value by
Marathon of any Marathon Capital Stock.
SECTION 7.08. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by or on behalf of any Marathon Party for inclusion
or incorporation by reference in (i) the Forms S-4 will, at the time the
Forms S-4 are filed with the SEC, at any time the Forms S-4 are amended or
supplemented or at the time the same become effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Proxy Statement will, at the date it is first
mailed to Ashland's shareholders or at the time of the Ashland Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. The Marathon Form S-4 will comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations thereunder, except that no representation is made by any Marathon
Party with respect to statements made or incorporated by reference therein
based on information supplied by or on behalf of any Ashland Party for
inclusion or incorporation by reference therein.
SECTION 7.09. BROKERS. No broker, investment banker, financial
advisor or other person, other than Citigroup Global Markets Inc. and AAA, the
fees and expenses of which will be paid by Marathon (except as otherwise
contemplated by Section 9.03(d)(i)), and Morgan Joseph & Co., Inc., the fees
and expenses of which will be paid in accordance with Section 9.04(b), is
entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of any Marathon Party.
SECTION 7.10. OPINION OF FINANCIAL ADVISOR. Marathon has received
the opinion of Citigroup Global
48
Markets Inc., dated the date of this Agreement, to the effect that, as of
such date, the consideration to be provided by the Marathon Parties in
the Transactions is fair to Marathon from a financial point of view.
SECTION 7.11. SOLVENCY OPINIONS. Marathon has received the Initial
Opinions. All Working Papers of AAA relating to the Initial AAA Opinions have
been made available to Ashland.
SECTION 7.12. MAP ACCOUNTS RECEIVABLE. To the knowledge of Marathon
and MAP, the information provided orally or in writing to Ashland and its
Representatives by or on behalf of MAP relating to MAP accounts receivable in
connection with Ashland's evaluation of the Distributed Receivables, taken as
a whole, does not and will not contain any untrue statement of material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. At the Closing, MAP will transfer to Ashland all of MAP's rights,
title and interests in and to the Distributed Receivables.
SECTION 7.13. EMPLOYEE BENEFITS. Marathon intends to, or to cause
one or more of its subsidiaries to, provide to the Transferred Maleic Business
Employees (as defined in the Maleic Agreement) compensation and benefits in
accordance with Section 4.03(j) of the Maleic Agreement and to the Transferred
VIOC Centers Employees (as defined in the VIOC Agreement) retirement benefits
in accordance with Section 4.03(g) of the VIOC Agreement.
ARTICLE VIII
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
SECTION 8.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
ASHLAND. Except for matters set forth in the Ashland Disclosure Letter or
otherwise expressly contemplated or permitted by the Transaction Agreements or
the Ancillary Agreements, from the date of this Agreement to the Acquisition
Merger Effective Time, Ashland shall not, and shall not permit any Ashland
Subsidiary to, without the prior written consent of Marathon, take any action
(including amending its
49
certificate of incorporation, by-laws or other comparable charter or
organizational documents, or authorizing, or committing or agreeing to make,
any such amendment) that would reasonably be expected to have an Ashland
Material Adverse Effect. In addition, and without limiting the generality of
the foregoing, from the date of this Agreement to the Closing Date, Ashland
shall not, and shall not permit any Ashland Subsidiary to, do any of the
following without the prior written consent of Marathon:
(i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock, property or otherwise)
in respect of, any Ashland Capital Stock, other than regular
quarterly cash dividends with respect to the Ashland Common Stock,
not in excess of 27.5 cents per share, with usual declaration,
record and payment dates and in accordance with Ashland's past
dividend policy, in each case other than pursuant to the Ashland
Rights Agreement;
(ii) repurchase, redeem or otherwise acquire for value any
Ashland Capital Stock;
(iii) reclassify any Ashland Capital Stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Ashland Capital Stock, in
any such case that would (A) have an Ashland Material Adverse Effect
or (B) require an amendment to this Agreement, other than, in the
case of clause (B), pursuant to the Ashland Rights Agreement;
(iv) issue, grant, deliver, sell, pledge or dispose of any
Voting Ashland Debt or any securities convertible or exchangeable
into or exercisable for, or any rights, warrants, calls or options
to acquire, any shares of Ashland Common Stock or Voting Ashland
Debt, in any such case that would (A) have an Ashland Material
Adverse Effect or (B) require an amendment to this Agreement; or
(v) authorize, or commit or agree to take, any of the foregoing
actions.
50
(b) Conduct of Business by Marathon. Except for matters set forth in
the Marathon Disclosure Letter or otherwise expressly contemplated or
permitted by the Transaction Agreements or the Ancillary Agreements, from the
date of this Agreement to the Acquisition Merger Effective Time, Marathon
shall not, and shall not permit any Marathon Subsidiary to, without the prior
written consent of Ashland, take any action (including amending its
certificate of incorporation, by-laws or other comparable charter or
organizational documents, or authorizing, or committing or agreeing to make,
any such amendment) that would reasonably be expected to have a Marathon
Material Adverse Effect.
(c) Conduct of Business by MAP. Except as otherwise expressly
contemplated or permitted by the Transaction Agreements or the Ancillary
Agreements, from the date of this Agreement to the Closing Date, the Ashland
Parties and the Marathon Parties shall cause MAP and its subsidiaries to, and
MAP and its subsidiaries shall, conduct their business in the ordinary course,
in substantially the same manner as previously conducted (including with
respect to cash distributions, capital expenditures, inventory levels, terms
and conditions of receivables and payables, collection of receivables and
payment of payables), and in accordance with the MAP Governing Documents (as
defined in Section 14.02). In addition, and without limiting the generality of
the foregoing, from the date of this Agreement to the Closing Date, the
Ashland Parties and the Marathon Parties shall cause MAP and its subsidiaries
not to, and MAP and its subsidiaries shall not, do any of the following
without the prior written consent of Ashland:
(i) incur or assume any liabilities, obligations or
indebtedness for borrowed money, or guarantee any such liabilities,
obligations or indebtedness, other than in the ordinary course of
business consistent with past practice;
(ii) buy out any lease, license or similar payment obligation
or change any existing practices with respect to leasing, licensing
or similar arrangements; or
(iii) authorize, or commit or agree to take, any of the
foregoing actions.
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The parties hereto acknowledge that the approval of Acquisition Expenditures,
Capital Expenditures and such other expenditures of the type to be included in
the Annual Capital Budget for any Fiscal Year that when taken together with
(x) the other expenditures already approved as part of the Annual Capital
Budget for such Fiscal Year and (y) all other expenditures already made in
such Fiscal Year, would reasonably be expected to exceed the Normal Annual
Capital Budget Amount for such Fiscal Year, constitutes a "Super Majority
Decision" which requires the approval of the Board of Managers (as such terms
are defined in the MAP LLC Agreement) pursuant to Section 8.07(b) of the MAP
LLC Agreement (subject to certain exceptions set forth in the MAP LLC
Agreement). Accordingly, from the date of this Agreement to the Closing Date,
the approval of any such expenditures shall require the approval of the Board
of Managers pursuant to Section 8.07(b) of the MAP LLC Agreement.
(d) POST-CLOSING EXAMINATION AND DISPUTE RESOLUTION. After the
Closing, Ashland shall continue to have all the rights of a Member under
Section 7.01 of the MAP LLC Agreement, as amended through the date of this
Agreement (including pursuant to the MAP LLC Agreement Amendment), for
purposes of auditing compliance with Sections 1.06 (Post-Closing True-Up),
8.01(c) (Conduct of Business by MAP), 9.09 (St. Paul Park Judgment and Plea
Agreement; Plains Settlement) and 9.15 (MAP Partial Redemption Amount) of this
Agreement and (ii) the provisions of the MAP LLC Agreement relating to
distributions and loans to Ashland and Marathon Company. Any dispute regarding
such compliance shall be resolved in accordance with the provisions of Article
XIII of the MAP LLC Agreement, as in effect on the date of this Agreement. Any
payment required as a result of such resolution shall not be subject to the
limitations set forth in Sections 13.01(b) or 13.02(b) of this Agreement.
(e) OTHER ACTIONS.
(i) Prior to the Closing, Ashland shall not, and shall not
permit any of its subsidiaries to, take any action that would, or
that is reasonably expected to, result in (A) the representations
and warranties of the Ashland Parties set forth in this Agreement or
any other Transaction Agreement becoming untrue or
52
incorrect, other than such failures to be true and correct that, in
the aggregate, have not had and would not reasonably be expected to
have an Ashland Material Adverse Effect or (B) except as otherwise
permitted by Section 8.02, any condition set forth in Article X not
being satisfied.
(ii) Prior to the Closing, Marathon shall not, and shall not
permit any of its subsidiaries to, take any action that would, or
that is reasonably expected to, result in (A) the representations
and warranties of the Marathon Parties set forth in this Agreement
or any other Transaction Agreement becoming untrue or incorrect,
other than such failures to be true and correct that, in the
aggregate, have not had and would not reasonably be expected to have
a Marathon Material Adverse Effect or (B) any condition set forth in
Article X not being satisfied.
(f) ADVICE OF CHANGES. Prior to the Closing, Ashland shall promptly
advise Marathon in writing of any change or event that has had or would
reasonably be expected to have an Ashland Material Adverse Effect and Marathon
shall promptly advise Ashland in writing of any change or event that has had
or would reasonably be expected to have a Marathon Material Adverse Effect.
SECTION 8.02. NO SOLICITATION. (a) Ashland shall not, nor shall it
authorize or permit any Ashland Subsidiary to, nor shall it authorize or
permit any officer, director or employee of, or any investment banker,
attorney, auditor or other advisor, agent or representative (collectively,
"Representatives") of, Ashland or any Ashland Subsidiary to, and on becoming
aware of it will use its reasonable best efforts to stop such Ashland
Subsidiary or Representative from continuing to, directly or indirectly, (i)
solicit, initiate or encourage the submission of any Competing Ashland
Proposal (as defined in Section 8.02(e)), (ii) enter into any agreement with
respect to any Competing Ashland Proposal or (iii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or cooperate with or take any
other action knowingly to facilitate any inquiries or the
53
making of any proposal that constitutes, or would reasonably be expected to
lead to, any Competing Ashland Proposal; provided, however, that, prior to
receipt of the Ashland Shareholder Approval (the "Cutoff Date"), Ashland and
its Representatives may, in response to a bona fide written Competing Ashland
Proposal that the Ashland Board determines, in good faith (after consultation
with its financial advisor, inside counsel and outside counsel), constitutes
or is reasonably likely to result in a Superior Proposal (as defined in
Section 8.02(e)) that was not solicited by Ashland and that did not otherwise
result from a breach or a deemed breach of this Section 8.02(a), and subject
to compliance with Section 8.02(c), (x) furnish to the person making such
Competing Ashland Proposal and its Representatives information with respect to
Ashland, pursuant to a customary confidentiality agreement that does not
contain terms that prevent Ashland from complying with its obligations under
this Section 8.02, and information with respect to MAP in accordance with the
MAP Governing Documents and (y) participate in discussions or negotiations
with such person and its Representatives regarding any Competing Ashland
Proposal.
(b) Neither the Ashland Board nor any committee thereof shall (i)
withdraw or modify in a manner adverse to the Marathon Parties, or propose
publicly to withdraw or modify in a manner adverse to the Marathon Parties,
the adoption, approval or recommendation by the Ashland Board or any such
committee of the Transaction Agreements or the Transactions or (ii) adopt,
approve or recommend, or propose publicly to adopt, approve or recommend, any
Competing Ashland Proposal. Notwithstanding the foregoing, if, prior to the
Cutoff Date, the Ashland Board determines in good faith, after consultation
with inside and outside counsel, that the failure to take such action would be
reasonably likely to result in a breach of its fiduciary obligations under
applicable Law, the Ashland Board may withdraw its adoption, approval or
recommendation of the Transaction Agreements and the Transactions.
(c) Ashland promptly shall advise Marathon in writing of any
Competing Ashland Proposal or any inquiry with respect to or that would
reasonably be expected to lead to any Competing Ashland Proposal and the
identity of the person making any such Competing Ashland Proposal or inquiry
and, in the case of a Competing Ashland Proposal
54
referred to in clause (i) or (ii) of the definition of "Competing Ashland
Proposal", the material terms and conditions of such Competing Ashland
Proposal or inquiry, if any, that would reasonably be expected to prevent or
materially delay the Transactions or, in the case of a Competing Ashland
Proposal referred to in clause (iii) of the definition of "Competing Ashland
Proposal", all material terms and conditions of such Competing Ashland
Proposal or inquiry, if any. Ashland shall keep Marathon reasonably informed
on a timely basis of the status and, in the case of a Competing Ashland
Proposal referred to in clause (i) or (ii) of the definition of "Competing
Ashland Proposal", the details of such Competing Ashland Proposal or inquiry,
if any, that would reasonably be expected to prevent or materially delay the
Transactions or, in the case of a Competing Ashland Proposal referred to
clause (iii) of the definition of "Competing Ashland Proposal", all the
details of any such Competing Ashland Proposal or inquiry, if any. After the
Cutoff Date, Ashland shall not be required to comply with this Section 8.02(c)
in any instance to the extent that the Ashland Board determines in good faith,
after consultation with inside and outside counsel, that such compliance would
in such instance be reasonably likely to result in a breach of its fiduciary
obligations under applicable Law.
(d) Nothing contained in this Agreement shall prohibit Ashland from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act (other than a position
recommending acceptance under Rule 14e-2(a)(1) of a tender offer constituting
a Competing Ashland Proposal) if, in the good faith judgment of the Ashland
Board, after consultation with inside and outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable Law.
(e) For purposes of this Agreement:
"COMPETING ASHLAND PROPOSAL" means (i) any proposal or offer for a
merger, consolidation, share exchange, dissolution, recapitalization or
other business combination involving Ashland, (ii) any proposal or offer
to acquire in any manner, directly or indirectly, a majority of the
equity securities or consolidated total assets of Ashland or (iii) any
other proposal or offer to acquire any of Ashland's
55
Membership Interest, in any such case other than the Transactions and, in
the case of clause (i) or (ii), that would reasonably be expected to
prevent or materially delay the consummation of the Transactions.
"SUPERIOR PROPOSAL" means any bona fide written Competing Ashland
Proposal (other than a Competing Ashland Proposal referred to in clause
(iii) of the definition thereof) which (i) the Ashland Board determines
in good faith to be superior from a financial point of view to the
holders of Ashland Common Stock than the Transactions (after consultation
with Ashland's financial advisor), taking into account all the terms and
conditions of such Competing Ashland Proposal and the Transaction
Agreements (including any proposal by Marathon to amend the terms of the
Transaction Agreements) and (ii) that is reasonably capable of being
completed, taking into account all legal, financial, regulatory, timing
and other aspects of such Competing Ashland Proposal.
SECTION 8.03. POST-CLOSING DIVIDENDS, DISTRIBUTIONS AND SHARE
REPURCHASES. From the Closing through the sixth anniversary of the Closing
Date, New Ashland Inc. shall not authorize, pay or make any payment of a
dividend or other distribution to its stockholders or repurchases of shares
using, directly or indirectly, proceeds received from any aspect of the
Transactions without the prior written consent of Marathon if, at the time of
declaration or payment, New Ashland Inc. is or would be (after giving effect
thereto) insolvent under any applicable fraudulent conveyance or transfer Law,
as determined in good faith by the New Ashland Board in accordance with the
fiduciary duties applicable to the New Ashland Board under any applicable Law,
including KRS 271B.8-300 of the KBCA.
SECTION 8.04. OFFERINGS OF MARATHON COMMON STOCK. During the period
beginning five business days prior to the first trading day of the Averaging
Period and ending 30 days after the Closing Date, without the prior written
consent of Ashland: (a) Marathon will not offer or sell any shares of Marathon
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of Marathon Common Stock; (b) file with the SEC any registration
statement under the Securities Act relating to any such offer or sale (other
than a registration statement
56
on Form S-8); or (c) publicly disclose, except as required by applicable Law,
the intention to make any such offer, sale or filing; provided, however, that
the provisions of this Section 8.04 shall not restrict or limit (i) issuances
of Marathon Common Stock pursuant to the conversion or exchange of convertible
or exchangeable securities or the exercise of warrants or options, in each
case outstanding on the fifth business day prior to the first trading day of
the Averaging Period, (ii) grants of stock options to directors, officers,
employees or consultants or (iii) issuances of Marathon Common Stock pursuant
to the exercise of such options or otherwise pursuant to the Marathon Stock
Plans. To the extent practicable, Marathon shall promptly notify Ashland if
Marathon intends to make a public disclosure required by applicable Law as
permitted by clause (c) of this Section 8.04.
ARTICLE IX
ADDITIONAL AGREEMENTS
---------------------
SECTION 9.01. PREPARATION OF THE FORMS S-4 AND THE PROXY STATEMENT;
SHAREHOLDERS MEETING; FORM 8-A OR FORM 10. (a) As promptly as practicable
following the date of this Agreement, Ashland and Marathon shall jointly
prepare, and Ashland shall file with the SEC, the Proxy Statement in
preliminary form, and New Ashland Inc. and HoldCo shall prepare and file with
the SEC the Ashland Form S-4 and Marathon shall prepare and file with the SEC
the Marathon Form S-4, in each of which the Proxy Statement will be included
as a prospectus. Each of Ashland and Marathon shall use its reasonable best
efforts to respond as promptly as practicable to any comments of the SEC with
respect to the Proxy Statement and the Forms S-4.
(b) Each of Ashland and Marathon shall use its reasonable best
efforts to have the Forms S-4 declared effective under the Securities Act as
promptly as practicable and on the same date. Ashland shall use its reasonable
best efforts to cause the Proxy Statement to be mailed to Ashland's
shareholders as promptly as practicable
57
after the Forms S-4 are declared effective under the Securities Act. The
parties shall also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified) required to be taken
under any applicable state securities Laws in connection with the Marathon
Share Issuance, the HoldCo Share Issuance and the New Ashland Inc. Share
Issuance, and Ashland shall furnish all information concerning Ashland and the
holders of Ashland Common Stock and rights to acquire Ashland Common Stock
pursuant to the Ashland Stock Plans as may be reasonably requested in
connection with any such action. The parties shall notify each other promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or
the Forms S-4, or for additional information and shall promptly supply each
other with copies of all written correspondence and written or oral summaries
of all material oral comments between such party or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement, the Forms S-4 and the Transactions. Each
of Ashland, Marathon, New Ashland Inc. and HoldCo shall cooperate and provide
the other parties with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement and the Forms S-4 prior to
filing such with the SEC, and each will provide the other parties with a copy
of all such filings made with the SEC. Notwithstanding any other provision
herein to the contrary, no amendment or supplement (including by incorporation
by reference) to the Proxy Statement or the Forms S-4 shall be made without
the approval of both Ashland and Marathon, which approval shall not be
unreasonably withheld or delayed; provided that, with respect to documents
filed by a party hereto that are incorporated by reference therein, this right
of approval shall apply only with respect to information relating to (i) the
other party or its business, financial condition or results of operations or
(ii) the Transactions. Each of the parties shall promptly provide each other
party with drafts of all written correspondence intended to be sent to the SEC
in connection with the Transactions and, to the extent practicable, allow each
such party the opportunity to comment thereon prior to delivery to the SEC.
(c) If prior to the Closing, any event occurs with respect to
Ashland or any Ashland Subsidiary, or any
58
change occurs with respect to other information supplied by or on behalf of
Ashland for inclusion in the Proxy Statement or the Forms S-4 which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the Forms S-4, Ashland shall promptly notify Marathon of such
event, and Ashland and Marathon shall cooperate in the prompt filing with the
SEC of any necessary amendment or supplement to the Proxy Statement or the
Forms S-4 and, as required by Law, in disseminating the information contained
in such amendment or supplement to Ashland's shareholders.
(d) If prior to the Closing, any event occurs with respect to
Marathon or any Marathon Subsidiary, or any change occurs with respect to
other information supplied by or on behalf of Marathon for inclusion in the
Proxy Statement or the Forms S-4 which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the Forms S-4,
Marathon shall promptly notify Ashland of such event, and Marathon and Ashland
shall cooperate in the prompt filing with the SEC of any necessary amendment
or supplement to the Proxy Statement or the Forms S-4, as required by Law, in
disseminating the information contained in such amendment or supplement to
Ashland's Shareholders.
(e) Ashland shall, as promptly as practicable following the
effectiveness of the Forms S-4, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Ashland Shareholders Meeting") for the
purpose of seeking the Ashland Shareholder Approval. Without limiting the
generality of the foregoing, Ashland agrees that, to the fullest extent
permitted by applicable Law, its obligations pursuant to the first sentence of
this Section 9.01(e) shall not be affected by (i) the commencement, public
proposal, public disclosure or other communication to Ashland of any Competing
Ashland Proposal or (ii) the withdrawal of the Ashland Board's adoption,
approval or recommendation of the Transaction Agreements and the Transactions.
(f) Ashland shall use its reasonable best efforts to cause to be
delivered to Marathon a letter of Ernst & Young LLP, Ashland's independent
public accountants, dated as of the date on which the Ashland Form S-4 shall
become effective and addressed to Marathon, in form and substance reasonably
satisfactory to Marathon
59
and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Ashland Form S-4.
(g) Marathon shall use its reasonable best efforts to cause to be
delivered to Ashland a letter of PricewaterhouseCoopers LLP, Marathon's
independent public accountants, dated as of the date on which the Marathon
Form S-4 shall become effective and addressed to Ashland, in form and
substance reasonably satisfactory to Ashland and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Marathon Form S-4.
(h) Ashland shall use its reasonable best efforts promptly to
prepare and file with the SEC a registration statement on Form 8-A or Form 10,
as applicable, under the Exchange Act in connection with the New Ashland Inc.
Common Stock, including the associated Ashland Rights (the "Exchange Act
Registration Statement").
SECTION 9.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Prior to the
Closing, each of Ashland and Marathon shall furnish promptly to the other
party such information concerning its business, properties, assets,
liabilities and personnel, and shall provide such other party and such other
party's officers, employees, agents and representatives, including personnel
of MAP, access, at all reasonable times upon reasonable notice, to its and its
subsidiaries' facilities, records and personnel, as such other party may
reasonably request; provided, however, that either party may withhold (i) any
document or information that is subject to the terms of a confidentiality
agreement with a third party, (ii) such portions of documents or information
relating to pricing or other matters that are highly sensitive if the exchange
of such documents (or portions thereof) or information, as determined by such
party's counsel, might reasonably result in antitrust difficulties for such
party (or any of its affiliates) and/or (iii) any document or information that
it reasonably believes constitutes information protected by attorney/client
privilege if such privilege would be adversely affected by reason of being so
provided. If any material is withheld by such party pursuant to the proviso to
the preceding sentence, such party shall inform the
60
other party as to the general nature of what is being withheld and otherwise
make reasonable and appropriate substitute disclosure arrangements under the
circumstances. All information exchanged pursuant to this Section 9.02 shall
be subject to the confidentiality agreement dated March 28, 2003, between
Ashland and Marathon (the "Confidentiality Agreement").
SECTION 9.03. REASONABLE BEST EFFORTS; NOTIFICATION. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties shall use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents, orders, authorizations and approvals from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including filings with Governmental Entities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or any other Transaction Agreement or the consummation of the
Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed
and (iv) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of the
Transaction Agreements. In connection with and without limiting the foregoing,
the Ashland Parties and the Marathon Parties shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to any Transaction Agreement, any
Ancillary Agreement or any Transaction and (ii) if any state takeover statute
or similar statute or regulation becomes applicable to any Transaction
Agreement, any Ancillary Agreement or any Transaction, take all action
necessary to ensure that the Transactions may be consummated as promptly as
practicable on the terms contemplated by the Transaction Agreements.
61
Notwithstanding the foregoing, Ashland and its Representatives shall not be
prohibited under this Section 9.03(a) from taking any action permitted by
Section 8.02. Nothing in this Section 9.03(a) shall be deemed to require
Marathon to waive any rights or agree to any limitation on the operations of
Marathon or any of its subsidiaries or to dispose of any asset or collection
of assets of any Marathon Party or any of their respective subsidiaries or
affiliates, in each case that would have a material adverse effect on the
business, condition (financial or other) or results of operations of (i) MAP,
the Maleic Business and the VIOC Centers, taken as a whole, or (ii) Marathon
and its subsidiaries, taken as a whole.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, Ashland shall use its reasonable best efforts to cause the
condition set forth in Section 10.02(c) (Specified Consents) to be satisfied.
The parties, together with their financial advisors, shall consult
periodically regarding the scope of "reasonable best efforts," which will not
require Ashland to incur commercially unreasonable costs to satisfy such
condition. With respect to the Ashland Public Debt (as defined in this Section
9.03(b)), the parties acknowledge that Ashland may obtain consents through a
tender offer or consent solicitation (or combination thereof), to be
consummated on the Closing Date and to be commenced on a date mutually agreed
by Ashland and Marathon but in any event no later than five business days
after the satisfaction of the last to be satisfied of the conditions set forth
in Sections 10.01(a) (Ashland Shareholder Approval), 10.01(c) (Antitrust) and
10.01(f) (Receipt of Private Letter Rulings; Tax Opinions) to expressly permit
the Transactions and eliminate indenture covenants, certain events of default
and other relevant provisions, all as reasonably deemed by Ashland necessary
to consummate the Transactions (or, in the case of a combined tender offer and
consent solicitation, otherwise desirable). "Ashland Public Debt" means
securities outstanding as of the last day of the month immediately preceding
the month in which the tender offer and/or consent solicitation is commenced
(the "Debt Consent Measurement Date"), issued under the Indenture dated as of
August 15, 1989, between Ashland and Citibank, N.A. and the Amendment and
Restatement thereof dated as of August 15, 1990 (the "Indentures"), other than
any such securities issued after the date of this Agreement. For
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purposes of this Section 9.03(b) and Section 10.02(c), receipt of consents
from the holders of not less than 66-2/3% in principal amount of the
Outstanding Securities (as defined in the Indentures) of any series
constitutes a consent with respect to the entire principal amount as of the
Debt Consent Measurement Date, of such series. For the avoidance of doubt,
receipt of consents from the holders of less than 66-2/3% in principal amount
of the Outstanding Securities of any series shall not constitute a consent
with respect to any portion of such series.
(c) The Marathon Parties shall use their reasonable best efforts
(not including the payment of any consideration) to obtain, prior to the
Closing, the written consent of Pilot Corporation, as contemplated by the
Global Obligations Agreement among MAP, Speedway SuperAmerica LLC, USX
Corporation, Pilot Corporation, Ashland, James A. Haslam II, James A. Haslam
III, William E. Haslam and Pilot Travel Centers LLC, dated as of September 1,
2001, to the release of Ashland from its obligations contained in Article XIV
of the Put/Call Agreement in accordance with Section 12.04 or, if such consent
has not been obtained prior to the Closing, as promptly as possible
thereafter.
(d) (i) The Ashland Parties and the Marathon Parties shall use their
reasonable best efforts to cause AAA to deliver to Ashland and Marathon the
Bring-Down AAA Opinions (as defined in Section 10.01(g)) and to cause HLHZ to
deliver to Ashland and Marathon the Bring-Down HLHZ Opinion (as defined in
Section 10.01(g)). It is understood that (A) the Ashland Board may rely upon
the Initial AAA Opinions and the Bring-Down AAA Opinions if the Ashland Board
determines that such reliance is appropriate (subject to the indemnification
and expense reimbursement arrangements previously agreed between Ashland and
AAA) and (B) the Marathon Board may rely upon the Initial HLHZ Opinion and the
Bring-Down HLHZ Opinion if the Marathon Board determines that such reliance is
appropriate (subject to indemnification and expense reimbursement arrangements
agreed between Marathon and HLHZ).
(ii) The Ashland Parties and the Marathon Parties acknowledge that
the sole purpose of the Bring-Down Opinions is to update the Initial
Opinions based on events occurring or facts being disclosed to AAA or
HLHZ, as applicable, after the date of this Agreement and prior to the
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Closing. Therefore, the parties intend that (A) each Bring-Down Opinion
shall be based on the same valuation methodologies as the corresponding
Initial Opinion, except for changes in methodology required as a result
of events occurring or facts being disclosed to AAA or HLHZ, as
applicable, after the date of this Agreement and prior to the Closing,
and (B) events that are contemplated by AAA or HLHZ, as applicable, in
the assumptions identified in its Initial Opinion should not be
considered to have occurred after the date of this Agreement in
determining whether to deliver the corresponding Bring-Down Opinion.
(iii) Prior to the Closing, the Ashland Parties and MAP shall meet
periodically with personnel of AAA and HLHZ and shall provide AAA and
HLHZ access at all reasonable times upon reasonable prior request to
their respective personnel, properties, books and records to the extent
reasonably required for the purpose of delivering the Bring-Down
Opinions.
(iv) At any time prior to the Closing, either Ashland or Marathon
may request that AAA or HLHZ (A) update its Working Papers and analysis
based on events occurring or facts disclosed to it after the date of this
Agreement and prior to the date of such request and (B) based on such
update, advise Ashland and Marathon of any facts or circumstances that
are expected to result in it being unable to deliver its Bring-Down
Opinion as of such date. The Ashland Parties and the Marathon Parties
shall be deemed to have jointly requested AAA or HLHZ to comply with any
such request as promptly as practicable.
(v) In the event that AAA or HLHZ shall notify Ashland and Marathon
of any facts or circumstances that are expected to result in it being
unable to deliver its Bring-Down Opinion, Ashland or MAP, as applicable,
shall have the right for a period of three months, or such shorter period
as Ashland or MAP, as applicable, may elect, to meet and confer with, and
provide
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additional information to, AAA or HLHZ, as applicable, for purposes of
resolving any concerns relating to such facts and circumstances. The
Ashland Parties and the Marathon Parties shall use their reasonable best
efforts to cause AAA or HLHZ, as applicable (based on such information
and any efforts by Ashland or MAP, as applicable, to cure or otherwise
address such facts and circumstances), to advise Ashland and Marathon as
promptly as practicable after the expiration of such period whether it
would be able to deliver its Bring-Down Opinion as of such date.
(vi) The Working Papers of AAA and HLHZ relating to the Bring-Down
Opinions, and any other Working Papers of AAA and HLHZ prepared pursuant
to this Section 9.03(d) or otherwise relating to the Transactions, shall
be made available to the Ashland Parties and the Marathon Parties upon
request at any time prior to or after the Closing. The Ashland Parties
and the Marathon Parties shall use their reasonable best efforts to cause
AAA and HLHZ to provide the Ashland Parties and the Marathon Parties
reasonable access to the personnel of AAA and HLHZ involved in the
Bring-Down Opinions, during normal business hours upon reasonable prior
request, at any time prior to the Closing to discuss matters relating to
such Working Papers.
(vii) At any time after August 1, 2004, or such earlier date as
Ashland and Marathon may agree, and prior to the Closing, either Ashland
or Marathon may request that AAA prepare a draft of the Bring-Down AAA
Opinions or that HLHZ prepare a draft of the Bring-Down HLHZ Opinion, in
each case marked to show any proposed changes from the applicable form
included in Section 10.01(g) of the Marathon Disclosure Letter or in
Section 10.01(g) of the Ashland Disclosure Letter, respectively, based on
events occurring or facts disclosed to AAA or HLHZ after the date of this
Agreement. The Ashland Parties and the Marathon Parties shall be deemed
to have jointly requested AAA or HLHZ to comply with any such
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request as promptly as practicable. Ashland and Marathon may review and
comment on any such proposed changes and may meet and confer with AAA and
HLHZ for purposes of resolving any such comments prior to the Closing.
(e) Prior to the Closing, Ashland shall give prompt notice to
Marathon of: (i) any representation or warranty made by the Ashland Parties
contained in the Transaction Agreements becoming untrue or incorrect, other
than such failures to be true and correct that, in the aggregate, have not had
and would not reasonably be expected to have an Ashland Material Adverse
Effect; provided that, for purposes of determining whether notice is required
under this clause (i), the representations and warranties of the Ashland
Parties shall be deemed not qualified by any references therein to (A)
materiality generally or (B) whether or not any breach, circumstance or other
item has resulted or would reasonably be expected to result in an Ashland
Material Adverse Effect; (ii) the failure by any of the Ashland Parties to
perform in all material respects their respective obligations under the
Transaction Agreements; (iii) any notice or other communication any Ashland
Party receives from any Governmental Entity or other person alleging, to the
knowledge of Ashland, with reasonable specificity, that a Consent of, or
registration, declaration or filing with, or permit from, such Governmental
Entity or other person is or may be required in connection with the execution
and delivery of or performance under any Transaction Agreement or the
consummation of the Transactions, or that any such action would violate any
applicable Law or breach or otherwise conflict with any material agreement to
which any of the Ashland Parties are parties or are otherwise bound; or (iv)
any action, suit, claim, investigation or proceeding commenced or, to its
knowledge, threatened, in each case seeking to restrain or prohibit or
otherwise materially affecting the Transactions; provided, however, that no
such notification shall affect the representations, warranties or obligations
of the Ashland Parties or the conditions to the obligations of the Ashland
Parties or the Marathon Parties under the Transaction Agreements.
(f) Prior to the Closing, Marathon shall give prompt notice to
Ashland of: (i) any representation or warranty made by the Marathon Parties
contained in
66
the Transaction Agreements becoming untrue or incorrect, other than such
failures to be true and correct that, in the aggregate, have not had and would
not reasonably be expected to have a Marathon Material Adverse Effect;
provided that, for purposes of determining whether notice is required under
this clause (i), the representations and warranties of the Marathon Parties
shall be deemed not qualified by any references therein to (A) materiality
generally or (B) whether or not any breach, circumstance or other item has
resulted or would reasonably be expected to result in a Marathon Material
Adverse Effect; (ii) the failure by any of the Marathon Parties to perform in
all material respects their respective obligations under the Transaction
Agreements; (iii) any notice or other communication any Marathon Party
receives from any Governmental Entity or other person alleging, to the
knowledge of Marathon, with reasonable specificity, that a Consent of, or
registration, declaration or filing with, or permit from, such Governmental
Entity or other person is or may be required in connection with the execution
and delivery of or performance under any Transaction Agreement or the
consummation of the Transactions, or that any such action would violate any
applicable Law or breach or otherwise conflict with any material agreement to
which any of the Marathon Parties are parties or are otherwise bound; or (iv)
any action, suit, claim, investigation or proceeding commenced or, to its
knowledge, threatened, in each case seeking to restrain or prohibit or
otherwise materially affecting the Transactions; provided, however, that no
such notification shall affect the representations, warranties or obligations
of the Marathon Parties or the conditions to the obligations of the Ashland
Parties or the Marathon Parties under the Transaction Agreements. Marathon
shall give prompt notice to Ashland of: (i) any commitment referred to in the
definition of Market MAC Event contained in Section 14.02 ceasing to be in
full force and effect or (ii) any assertion by one or more Third Party Lenders
who have provided such commitment with respect to the HoldCo Borrowing that a
market disruption or other similar event has occurred that would result in the
non-satisfaction of the Market MAC Condition to the HoldCo Borrowing.
(g) The Ashland Parties and the Marathon Parties shall comply with
the obligations set forth in Sections 11.03(a) and 11.03(b) of the Put/Call
Agreement
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with respect to the transfer of the Ashland LOOP/LOCAP Interest as if Marathon
Company had exercised the Marathon Call Right (as defined in the Put/Call
Agreement) thereunder on the date of this Agreement. The Ashland Parties and
the Marathon Parties shall use their reasonable best efforts (not including
the payment of any consideration) to obtain (i) any consents or approvals (in
addition to those contemplated by Sections 11.03(a) and 11.03(b) of the
Put/Call Agreement) required for the transfer of the Ashland LOOP/LOCAP
Interest to HoldCo and the acquisition of the Ashland LOOP/LOCAP Interest by
Merger Sub in the Acquisition Merger as contemplated by this Agreement and
(ii) express releases of Ashland, executed and delivered by all parties to the
LOOP T&D Agreement or the LOCAP T&D Agreement, as applicable, effective as of
the Closing, from all liabilities, obligations and commitments under the LOOP
T&D Agreement and the LOCAP T&D Agreement, regardless of whether such
liabilities, obligations or commitments arose before or after the Closing.
Merger Sub shall execute such further instruments of assumption as may be
required as a result of the acquisition of the Ashland LOOP/LOCAP Interest by
Merger Sub in the Acquisition Merger as contemplated by this Agreement. If
Ashland is not released from all liabilities, obligations and commitments
under the LOCAP T&D Agreement in accordance with clause (ii) of the second
immediately preceding sentence, Ashland shall cause the LOCAP T&D Assumption
Agreement (as defined in Section 14.02) to be executed and delivered by the
parties specified therein to be parties thereto, and if Ashland has not been
released from all liabilities, obligations and commitments under the LOOP T&D
Agreement in accordance with this Section 9.03(g), Ashland shall cause the
LOOP T&D Assumption Agreement (as defined in Section 14.02) to be executed and
delivered by the parties specified therein to be parties thereto, in each case
as contemplated by Section 1.02(b).
SECTION 9.04. FEES AND EXPENSES. (a) Except as provided below, all
fees and expenses (including any broker's or finder's fees and the expenses of
representatives and counsel) incurred in connection with the Transactions
shall be paid by the party incurring such fees or expenses, whether or not the
Transactions are consummated.
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(b) Ashland and Marathon shall share equally (i) fees and expenses
of Morgan Joseph & Co., Inc. in connection with its appraisal of the Maleic
Business and the VIOC Centers, (ii) fees and expenses of D&T for purposes of
allocating the value of MAP to its assets in anticipation of the MAP Partial
Redemption and for use by Marathon for GAAP reporting purposes, (iii) fees and
expenses of Patton Boggs LLP in connection with obtaining the consent from the
Department of Transportation with respect to the transfer of Ashland's
interest in LOOP LLC, as required by the permit issued by the Department of
Transportation relating to LOOP LLC, (iv) fees and expenses incurred in
connection with filing, printing and mailing of the Proxy Statement and the
Forms S-4, including the SEC filing fees associated with the Proxy Statement,
the Marathon Form S-4 and the Ashland Form S-4; provided, however, that each
of Ashland and Marathon shall pay the fees and expenses of their respective
counsel and independent auditors in connection with the preparation and filing
of such documents and (v) fees and expenses of one firm engaged by Ashland,
and reasonably acceptable to Marathon, with respect to the solicitation of
proxies in connection with the Ashland Shareholders Meeting. Except as set
forth in Section 9.03(d)(i), Marathon shall pay the fees and expenses of AAA
in connection with the Initial AAA Opinions and the Bring-Down AAA Opinions
and Ashland shall pay the fees and expenses of HLHZ in connection with the
Initial HLHZ Opinion and the Bring-Down HLHZ Opinion. Marathon shall pay the
fees (other than any guarantee fee payable after Closing pursuant to the
Reimbursement Agreement) and expenses relating to the HoldCo Borrowing. Merger
Sub shall pay any guarantee fee payable after Closing pursuant to the
Reimbursement Agreement. Ashland shall pay the fees and expenses relating to
obtaining the consents referred to in Section 10.02(c) (Specified Consents).
Costs and expenses incurred in connection with the arrangements described in
Section 9.02(e) of the Put/Call Agreement, if applicable, shall be allocated
in accordance with such section.
(c) Ashland shall pay to Marathon a fee of $30,000,000 (the
"Termination Fee") if: (i) Marathon terminates this Agreement pursuant to
Section 11.01(d); (ii) Ashland terminates this Agreement pursuant to Section
11.01(f); or (iii) any person makes a Competing Ashland Proposal that was
publicly disclosed prior to the
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Ashland Shareholders Meeting and not withdrawn by the date of the Ashland
Shareholders Meeting and thereafter this Agreement is terminated pursuant to
Section 11.01(b)(iii) and within 15 months of such termination Ashland enters
into a definitive agreement to consummate, or consummates, any transaction
(other than a transaction involving Marathon or any of its affiliates, or any
successor thereto under the Put/Call Agreement, as a party thereto) of a kind
described in clause (i), (ii) or (iii) of the definition of "Competing Ashland
Proposal" (solely for purposes of this Section 9.04(c), the term "Competing
Ashland Proposal" shall have the meaning set forth in the definition of
Competing Ashland Proposal contained in Section 8.02(e) except that the
reference to "any of Ashland's Membership Interest" in clause (iii) thereof
shall be deemed a reference to "a majority of Ashland's Membership Interest").
Any fee due under this Section 9.04(c) shall be paid by wire transfer of
same-day funds (A) in the case of clause (i) or (ii) of the preceding
sentence, on the date of termination of this Agreement, and (B) in the case of
clause (iii) of the preceding sentence, on the date of execution of such
definitive agreement or, if earlier, consummation of such transactions.
(d) Ashland shall pay to Marathon $10,000,000 (which shall be in
addition to any Termination Fee payable pursuant to Section 9.04(c)), which
Ashland and Marathon agree is a reasonable estimate of Marathon's expenses
incurred in connection with this Agreement, if (i) this Agreement is
terminated pursuant to Section 11.01(c) or (ii) Ashland is obligated to pay
the Termination Fee under Section 9.04(c). Any fee due under Section
9.04(d)(i) shall be payable upon demand following such termination. Any fee
due under Section 9.04(d)(ii) shall be paid by wire transfer of same-day funds
on the date of payment of the Termination Fee. The payment by Ashland to
Marathon under this Section 9.04(d) following termination of this Agreement
pursuant to Section 11.01(c) shall not impair any claim for damages or any
other right or remedy available to Marathon (other than for expenses incurred
in connection with this Agreement), at law or in equity, arising out of or
resulting from any breach or failure to perform which gave rise to Marathon's
right to terminate this Agreement pursuant to Section 11.01(c).
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(e) Marathon shall pay to Ashland $10,000,000, which Ashland and
Marathon agree is a reasonable estimate of Ashland's expenses incurred in
connection with this Agreement, if this Agreement is terminated pursuant to
Section 11.01(e), payable upon demand following such termination. The payment
by Marathon to Ashland under this Section 9.04(e) following termination of
this Agreement pursuant to Section 11.01(e) shall not impair any claim for
damages or any other right or remedy available to Ashland (other than for
expenses incurred in connection with this Agreement), at law or in equity,
arising out of or resulting from any breach or failure to perform which gave
rise to Ashland's right to terminate this Agreement pursuant to Section
11.01(e).
SECTION 9.05. PUBLIC ANNOUNCEMENTS. The Ashland Parties, on the one
hand, and the Marathon Parties, on the other hand, shall consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other similar written or scripted public
statements (including communications to employees generally of MAP, the Maleic
Business or the VIOC Centers) with respect to the Transactions and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange.
SECTION 9.06. AFFILIATES. Prior to the date of the Ashland
Shareholders Meeting, Ashland shall deliver to Marathon a letter identifying
all persons who are expected by Ashland to be, at the date of the Ashland
Shareholders Meeting, "affiliates" of Ashland for purposes of Rule 145 under
the Securities Act, and Ashland shall update such list if necessary prior to
the Closing to identify all persons Ashland reasonably believes may have been
"affiliates" of Ashland for purposes of Rule 145 under the Securities Act on
the date of the Ashland Shareholders Meeting. Ashland shall use its reasonable
best efforts (not including the payment of any consideration) to cause each
such person to deliver to Marathon on or prior to the Closing Date a written
agreement substantially in the form attached hereto as Exhibit C.
SECTION 9.07. STOCK EXCHANGE LISTINGS. (a) Marathon shall prepare
and submit to the NYSE an
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application (or amendment thereto) for listing on the NYSE of the Marathon
Common Stock to be issued in the Acquisition Merger, and shall use its
reasonable best efforts to obtain, prior to the Ashland Shareholders Meeting,
approval for the listing of such shares, subject to official notice of
issuance.
(b) Ashland and New Ashland Inc. shall prepare and submit to the
NYSE or The Nasdaq Stock Market ("NASDAQ") an application (or amendment
thereto) for listing on the NYSE or NASDAQ of the New Ashland Inc. Common
Stock to be issued to holders of Ashland Common Stock in the Acquisition
Merger, and shall use their reasonable best efforts to obtain, prior to the
Ashland Shareholders Meeting, approval for the listing of such shares, subject
to official notice of issuance.
SECTION 9.08. RIGHTS AGREEMENTS; CONSEQUENCES IF RIGHTS TRIGGERED.
(a) If any Distribution Date occurs under the Ashland Rights Agreement at any
time during the period from the date of this Agreement to the Acquisition
Merger Effective Time, Ashland and Marathon shall make such adjustment to
Articles II, III and IV as Ashland and Marathon shall mutually agree so as to
preserve the economic benefits that Ashland and Marathon each reasonably
expected on the date of this Agreement to receive as a result of the
consummation of the Transactions.
(b) In the event that Marathon enters into or adopts a rights
agreement and, at any time from the date of this Agreement to the Closing
Date, a "distribution date", "share acquisition date", "triggering event" or
similar event occurs thereunder, the Marathon Board shall take such actions as
are necessary under such rights agreement to provide that rights certificates
representing an appropriate number of Marathon rights are issued to former
Ashland shareholders who receive Marathon Common Stock pursuant to the
Acquisition Merger. If Marathon is not permitted under such rights agreement
to provide rights certificates to such former Ashland shareholders, Ashland
and Marathon shall make such adjustment to Article IV as Ashland and Marathon
shall mutually agree so as to preserve the economic benefits that Ashland and
Marathon each reasonably expected on the date of this Agreement to receive as
a result of the consummation of the Transactions.
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SECTION 9.09. ST. PAUL PARK JUDGMENT AND PLEA AGREEMENT; PLAINS
SETTLEMENT. (a) After the Closing, (i) MAP shall complete the St. Paul Park
QQQ Project (as defined in this Section 9.09(a))(if it has not been completed
prior to the Closing) and (ii) the Marathon Parties shall allow New Ashland
Inc., the United States Probation Office and their respective consultants and
advisors appropriate access to the St. Paul Park refinery to allow them to
monitor and ascertain completion of the St. Paul Park QQQ Project and assure
compliance of the "systems" (as defined in the St. Paul Park Judgment and Plea
Agreement (as defined in Section 14.02)) with the St. Paul Park Judgment and
Plea Agreement. The "St. Paul Park QQQ Project" means the upgrade of all
process sewers, junction boxes and drains at the St. Paul Park refinery to
comply with Subpart QQQ of the New Source Performance Standards of the Clean
Air Act, 42 U.S.C. {section} 7413(c)(1), in accordance with the St. Paul Park
Judgment and Plea Agreement.
(b) Ashland or New Ashland Inc. shall bear the cost of the St. Paul
Park QQQ Project incurred after January 1, 2003 not to exceed $9,670,000 (if
the Closing occurs on or before December 31, 2004) or the amount of the Price
Reduction (as defined in Amendment No. 1 to the Put/Call Agreement) (if the
Closing occurs after December 31, 2004) (the "St. Paul Park QQQ Project
Payment Amount"). The following amounts shall be credited against the St. Paul
Park QQQ Project Payment Amount: (i) 38% of (A) all out-of-pocket costs
incurred after January 1, 2003 by MAP and (B) internal engineering costs of
MAP incurred after January 1, 2003, in each case for which MAP has not been
reimbursed by Ashland, prior to the Closing, in each case arising out of or
relating to the St. Paul Park QQQ Project, (ii) all out-of-pocket costs
incurred after January 1, 2003 by MAP and internal engineering costs of MAP
incurred after January 1, 2003, for which MAP has been reimbursed by Ashland,
prior to the Closing, in each case arising out of or relating to the St. Paul
Park QQQ Project, and (iii) $1,569,400, which amount represents 38% of the
$4,130,000 paid by MAP as part of the Plains Settlement (the sum of the amount
referred to in clauses (i), (ii) and (iii) being the "Prior Payments"). MAP
shall provide to Ashland, at least two business days prior to the Closing
Date, a written statement setting forth in reasonable detail its calculation
of the amounts referred
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to in clauses (i) and (ii) of the preceding sentence. Promptly following the
Closing, if the St. Paul Park QQQ Project Payment Amount exceeds the Prior
Payments, New Ashland Inc. shall, and if the Prior Payments exceed the St.
Paul Park QQQ Project Payment Amount, MAP shall, make payment to the other
party of the amount of such excess, by wire transfer of immediately available
funds to a bank account designated in writing by MAP or New Ashland Inc., as
applicable, at least two business days prior to the Closing Date.
SECTION 9.10. CONSEQUENCES OF INABILITY TO TRANSFER THE ASHLAND
LOOP/LOCAP INTEREST ON THE CLOSING DATE. The parties acknowledge that,
pursuant to the MAP Governing Documents, Ashland is obligated to pay to MAP an
amount equal to any dividends or distributions that Ashland receives in
respect of the Ashland LOOP/LOCAP Interest net of certain Taxes imposed on
Ashland or withheld from such dividends or distributions, and accordingly, the
economic benefits of the foregoing have already been effectively transferred
to MAP. Accordingly, notwithstanding anything to the contrary contained
herein, it shall not be a condition to the Closing or the effectiveness of any
of the Transactions that Ashland shall have contributed the Ashland LOOP/LOCAP
Interest to HoldCo in accordance with Section 1.02(b) and the MAP/LOOP/LOCAP
Contribution Agreements. In the event that any consents or approvals required
for the transfer of the Ashland LOOP/LOCAP Interest are not obtained prior to
the Closing, and as a consequence Ashland is not able to contribute the
Ashland LOOP/LOCAP Interest to HoldCo on the Closing Date, the provisions set
forth in Sections 9.02(e), 13.03 and 13.04 of the Put/Call Agreement shall
apply; provided, however, that, from and after the Closing, any payments
described in the first sentence of this Section 9.10 shall be made by New
Ashland Inc. to Merger Sub for the benefit of MAP.
SECTION 9.11. CONSENTS UNDER ASSIGNED CONTRACTS. Ashland and
Marathon shall use their reasonable best efforts (not including the payment of
any consideration) to obtain any Consents of third parties necessary to effect
the assignment to and assumption by HoldCo of, and the release of Ashland
from, the Assigned Contracts (as defined in each of the Maleic Agreement and
the VIOC Agreement), including in the case of the Marathon Parties by
providing such assurances regarding performance by Merger Sub (as
74
successor to HoldCo) after the Closing as may be reasonably required to obtain
such Consents.
SECTION 9.12. ADMINISTRATIVE PROCEEDINGS. After the Closing, if the
Marathon Parties receive notice or become aware of any consent decree or
order, notice of violation, administrative enforcement action or similar
administrative action (each, an "Administrative Proceeding") relating to MAP
and naming Ashland as a responsible party, the Marathon Parties shall promptly
notify Ashland of such Administrative Proceeding. Ashland may take, and MAP
shall provide Ashland with such cooperation as Ashland may reasonably request
in connection with, any reasonable action to remove Ashland's name from such
Administrative Proceeding, so long as such removal is appropriate under the
circumstances (taking into consideration the applicable provisions of the
Transaction Agreements, the Ancillary Agreements, the MAP Governing Documents
and applicable Law). Nothing in this Section 9.12 is intended to affect MAP's
right to control its defense of such Administrative Proceedings.
SECTION 9.13. REPLACEMENT OF DISTRIBUTED RECEIVABLES. To the extent
any Distributed Receivable is reduced or canceled (other than as a result of a
breach by the obligor thereof of its payment obligation), or to the extent
Ashland makes any payment in respect of proceeds of any Distributed Receivable
to the holder of any Lien referred to in clause (iv) below after the
collection of such Distributed Receivable in order to satisfy such Lien,
including as a result of (i) defective or rejected goods or services, any cash
discount or governmental or regulatory action, (ii) a setoff in respect of any
claim by the obligor thereof, (iii) an obligation of MAP to pay the obligor
thereof any rebate or refund or (iv) any Lien with respect to such Distributed
Receivable, other than any Lien arising from actions or inactions of any of
the Ashland Parties or their affiliates (and not any of the Marathon Parties
or their affiliates), then MAP shall promptly assign to Ashland accounts
receivable of MAP, selected in accordance with the protocol set forth in
Exhibit A, with a total Value equal to, in the case of a reduction, the Value
of such reduction, in the case of a payment, the amount of such payment, or,
in the case of a cancelation, the Value of such Distributed Receivable.
Ashland shall assign back
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to MAP any Distributed Receivables that have been replaced pursuant to this
Section 9.13.
SECTION 9.14. TRANSITION SERVICES. Within 120 days after the date of
this Agreement, Marathon shall provide written notice to Ashland specifying
which of the services currently being performed by Ashland for the Maleic
Business that Marathon requests New Ashland Inc. to continue to perform during
the transition period after the Closing specified in, and in accordance with
the terms of, the Transition Services Agreement (as defined in the Maleic
Agreement). Prior to the Closing, Ashland and Marathon shall agree on the
scope of such transition services and shall prepare appropriate schedules to
the Transition Services Agreement to reflect such transition services. Unless
otherwise agreed by Ashland and Marathon, the fees for such transition
services shall be as specified in Section 2.1 (without regard to clause (i) of
the first sentence thereof) of the form of Transition Services Agreement
attached as an exhibit to the Maleic Agreement. Such transition services shall
be provided during the term specified in Section 2.2 of such form of
Transition Services Agreement, subject to the termination and notice
provisions specified therein.
SECTION 9.15. MAP PARTIAL REDEMPTION AMOUNT. (a) Ashland shall use its
reasonable best efforts to cause Deloitte & Touche LLP ("D&T") to provide
Ashland and Marathon, on or prior to August 15, 2004, (i) a preliminary report
prepared by D&T setting forth D&T's good faith estimate as to the respective
amounts of accounts receivable and cash to be distributed by MAP in the MAP
Partial Redemption and (ii) any supporting schedules and other information
prepared by D&T in connection with such report as Marathon may reasonably
request. Ashland shall use its reasonable best efforts to cause D&T to provide
Ashland and Marathon any updates to such report, schedules and other
information from time to time as Marathon may reasonably request.
(b) The Marathon Parties shall cause MAP to have available for
distribution at Closing in the MAP Partial Redemption cash in an amount, and
accounts receivable with a Value, which in the aggregate equal the Estimated
MAP Partial Redemption Amount. The Ashland Parties and the Marathon Parties
shall use their reasonable best efforts to cause MAP to have available for
distribution at Closing in
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the MAP Partial Redemption cash in an amount equal to the Cash Amount and
accounts receivable with a total Value equal to the AR Amount. Notwithstanding
the provisions of Section 8.01(c) or any provision of the MAP LLC Agreement
(as amended by the MAP LLC Agreement Amendment or otherwise amended
hereafter), and without requiring a vote pursuant to Section 8.07(b) of the
MAP LLC Agreement (as amended by the MAP LLC Agreement Amendment or otherwise
amended hereafter), in the event Marathon reasonably expects that MAP will not
have sufficient cash and accounts receivable available for distribution to
Ashland to fund the payment of the Estimated MAP Partial Redemption Amount
(after taking into account MAP's reasonably anticipated working capital
requirements) on the expected Closing Date, MAP shall be permitted to sell or
otherwise dispose of assets, or enter into sale/leaseback arrangements, in
each case in arm's-length transactions with unaffiliated third parties, that
are treated for Federal income Tax purposes as dispositions, not borrowings,
in order to raise funds to satisfy such funding requirement.
(c) If the Closing occurs, all Tax Items (as defined in the Tax
Matters Agreement) from any sale, disposition or sale/leaseback arrangement
effected pursuant to Section 9.15(b) that is not effected in the ordinary
course of MAP's business and is not reflected in MAP's "Business/Tactical Plan
& Budget 2004-2006" dated December 16, 2003 shall be allocated to Marathon
Company. The Marathon Parties shall (i) promptly notify Ashland of any written
proposal made or received by any of the Marathon Parties relating to such a
sale, disposition or sale/leaseback arrangement, and in any event shall notify
Ashland of any such proposed sale, disposition or sale/leaseback arrangement
not less than five days prior to entering into an agreement to effect any such
sale, disposition or sale/leaseback arrangement; (ii) in connection with any
such proposal, advise Ashland in writing of the assets to be transferred, the
identity of the proposed transferee and the material terms and conditions of
the proposed sale, disposition or sale/leaseback arrangement; (iii) keep
Ashland reasonably informed on a timely basis of the status and details of
such proposed sale, disposition or sale/leaseback arrangement, prior to and
after entering into an agreement to effect any such sale, disposition or
sale/leaseback arrangement, including any details that may affect the
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timing of the Transactions, and provide Ashland with copies of all material
documents related to such proposed sale, disposition or sale/leaseback
arrangement; and (iv) use its reasonable best efforts to effect the closing of
any such sale, disposition or sale/leaseback arrangement substantially
concurrently with the Closing.
(d) Ashland shall provide Marathon not less than 90 days notice if
Ashland intends to waive the condition set forth in Section 10.02(f), in which
case the Marathon Parties shall cause MAP to have available for distribution
at Closing in the MAP Partial Redemption such additional cash as may be
required to comply with the first sentence of Section 9.15(b).
SECTION 9.16. ASHLAND DEBT OBLIGATION AMOUNT. No later than August
1, 2004, Ashland shall provide to Marathon a schedule setting forth estimates,
prepared in good faith by Ashland in light of any communications with the
Internal Revenue Service (the "IRS"), written or otherwise, of the Ashland
Debt Obligation Amounts based on assumed Closing Dates occurring on the last
day of each month from August of 2004 through June of 2005. Ashland shall
update such schedule promptly following any communication with the IRS,
written or otherwise, that would materially affect the Ashland Debt Obligation
Amount for any assumed Closing Date. Within five business days of Ashland's
receipt of the Private Letter Rulings, Ashland shall provide to Marathon a
schedule setting forth the Ashland Debt Obligation Amount for each such
assumed Closing Date after the date of such schedule. Ashland shall not,
without the prior written consent of Marathon, effect any repurchase,
repayment or defeasance prior to the Closing Date of any debt outstanding as
of the date of this Agreement (and any refinancings of such debt by Ashland or
any of its affiliates) that would reduce the Ashland Debt Obligation Amount
(taking into consideration any refinancing of such debt by Ashland or any of
its affiliates), except to the extent required by the terms of such debt
(including, with respect to obligations other than (i) the Ashland Public
Debt, (ii) any other debt issued after the date of this Agreement to refinance
any portion of the Ashland Debt Obligation Amount and (iii) Ashland's
industrial revenue bonds, as a result of any notice of Ashland's intent to
repurchase, repay or
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defease such obligations on an expected Closing Date; provided, that such
notice is delivered by Ashland after the satisfaction of the last to be
satisfied of the conditions set forth in Sections 10.01(a) (Ashland
Shareholder Approval), 10.01(c) (Antitrust) and 10.01(f) (Receipt of Private
Letter Rulings; Tax Opinions)).
ARTICLE X
CONDITIONS PRECEDENT
SECTION 10.01. CONDITIONS TO THE ASHLAND PARTIES' AND THE MARATHON
PARTIES' OBLIGATIONS TO EFFECT THE TRANSACTIONS. The respective obligation of
the Ashland Parties and the Marathon Parties to effect the Transactions is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) ASHLAND SHAREHOLDER APPROVAL. Ashland shall have obtained the
Ashland Shareholder Approval.
(b) LISTING. The shares of Marathon Common Stock issuable in the
Marathon Share Issuance shall have been approved for listing on the NYSE,
subject to official notice of issuance, and the shares of New Ashland Inc.
Common Stock issuable in the New Ashland Inc. Share Issuance shall have been
approved for listing on the NYSE or NASDAQ, subject to official notice of
issuance.
(c) ANTITRUST. Any waiting period (and any extension thereof)
applicable to the Transactions under the HSR Act shall have been terminated or
shall have expired. Any consents, approvals and filings under any foreign
antitrust Law, the absence of which would prohibit the consummation of the
Transactions, shall have been obtained or made.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Governmental Entity or other legal restraint
or prohibition preventing or making unlawful the consummation of the
Transactions shall be in effect; provided, however, that prior to asserting
this condition, subject to Section 9.03, each of the parties shall have used
its reasonable best efforts to prevent the entry of any such
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injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered or otherwise have any such
injunction or other order lifted or vacated.
(e) FORMS S-4 AND EXCHANGE ACT REGISTRATION STATEMENT. The Forms S-4
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order, and Marathon
shall have received any state securities or "blue sky" authorizations
necessary to effect the Marathon Share Issuance. Ashland shall have received
any state securities or "blue sky" authorizations necessary to effect the
HoldCo Share Issuance and the New Ashland Inc. Share Issuance. The Exchange
Act Registration Statement shall have become effective under the Exchange Act
and shall not be the subject of any stop order or proceedings seeking a stop
order.
(f) RECEIPT OF PRIVATE LETTER RULINGS; TAX OPINIONS. Ashland and
Marathon shall have received the private letter rulings from the Internal
Revenue Service, in form and substance reasonably satisfactory to the Ashland
Board and the Marathon Board, and the Tax opinions, dated as of the Closing
Date, set forth in Exhibit D (such private letter rulings, the "Private Letter
Rulings", and such Tax opinions, the "Tax Opinions") with respect to the
Transactions, and the Private Letter Rulings shall be in effect as of the
Closing Date.
(g) SOLVENCY OPINIONS. Ashland and Marathon shall have received two
"bring-down" solvency opinions of AAA dated as of the Closing Date and in
substantially the form included in Section 10.01(g) of the Marathon Disclosure
Letter (the "Bring-Down AAA Opinions") and a "bring-down" solvency opinion of
HLHZ dated as of the Closing Date and in substantially the form included in
Section 10.01(g) of the Ashland Disclosure Letter (the "Bring-Down HLHZ
Opinion" and, together with the Bring-Down AAA Opinion, the "Bring-Down
Opinions").
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SECTION 10.02. CONDITIONS TO OBLIGATIONS OF THE ASHLAND PARTIES. The
obligations of the Ashland Parties to effect the Transactions are further
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Marathon Parties in the Transaction Agreements shall be true
and correct as of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct as of such earlier date), other than such failures to be true and
correct that, individually and in the aggregate, have not had and would not
reasonably be expected to have a Marathon Material Adverse Effect. Ashland
shall have received a certificate signed on behalf of Marathon by the chief
executive officer or the chief financial officer of Marathon to such effect.
For purposes of determining the satisfaction of this condition only, the
representations and warranties of the Marathon Parties shall be deemed not
qualified by any references therein to (A) materiality generally or (B)
whether or not any breach, circumstance or other item has resulted or would
reasonably be expected to result in a Marathon Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE MARATHON PARTIES. The Marathon
Parties shall have performed in all material respects the obligations required
to be performed by them under the Transaction Agreements at or prior to the
Closing Date, and Ashland shall have received a certificate signed on behalf
of Marathon by the chief executive officer or the chief financial officer of
Marathon to such effect.
(c) SPECIFIED CONSENTS. Ashland shall have received irrevocable
consents (which shall be in full force and effect) to the Transactions with
respect to series of Ashland Public Debt with an aggregate principal amount as
of the Debt Consent Measurement Date representing at least 90% of the
aggregate principal amount of all series of Ashland Public Debt as of such
date.
(d) DISTRIBUTIONS TO FORMER ASHLAND SHAREHOLDERS. If the New Ashland
Inc. Share Issuance is to be effected through a distribution in accordance
with Section 1.04(b), the Ashland Board and the Board of Directors of HoldCo
shall have determined in good faith
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that such distribution will be in compliance with all applicable Law relating
to such distribution.
(e) ABSENCE OF UNDISCLOSED MATERIAL ADVERSE EFFECT. Except as
disclosed in documents filed by Marathon with the SEC and publicly available
on or before the date that is five business days prior to the first trading
day of the Averaging Period, and except for such events, changes, effects or
developments relating to the economy of the United States or foreign economies
in general or generally affecting any industry in which Marathon or any of its
subsidiaries operate, from the date of this Agreement to the Closing Date,
there shall not have been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a material adverse effect on the business, properties, assets, condition
(financial or otherwise), operations or results of operation of Marathon and
its subsidiaries, taken as a whole, and Ashland shall have received a
certificate signed on behalf of Marathon by the chief executive officer or the
chief financial officer of Marathon to such effect. Failure to deliver such
certificate, or the occurrence of any such event, change, effect or
development, shall not give rise to a right to terminate this Agreement under
Section 11.01(e).
(f) MAP ACCOUNTS RECEIVABLE. In order to effect the MAP Partial
Redemption, MAP shall have available for distribution at Closing accounts
receivable, each with a Federal income Tax basis no less than its face amount,
of MAP with a total Value equal to the AR Amount (calculated without giving
effect to any increase in the MAP Partial Redemption Amount pursuant to the
second sentence of Section 1.01).
(g) RECEIVABLES SALES FACILITY. Ashland shall have received a
certificate dated the Closing Date and signed on behalf of Marathon by the
chief executive officer or the chief financial officer of Marathon to the
effect (A) that Marathon has not delivered the notice referred to in Section
7.03(b)(vi) of the Tax Matters Agreement or (B) that MAP will not make any
sales of receivables during the two-year period beginning on the Closing Date.
SECTION 10.03. CONDITIONS TO OBLIGATIONS OF THE MARATHON PARTIES.
The obligations of the Marathon Parties
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to effect the Transactions are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Ashland Parties in the Transaction Agreements shall be true
and correct as of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct as of such earlier date), other than such failures to be true and
correct that, individually and in the aggregate, have not had and would not
reasonably be expected to have an Ashland Material Adverse Effect. Marathon
shall have received a certificate signed on behalf of Ashland by the chief
executive officer or the chief financial officer of Ashland to such effect.
For purposes of determining the satisfaction of this condition only: (i) the
representations and warranties of the Ashland Parties shall be deemed not
qualified by any references therein to (A) materiality generally or (B)
whether or not any breach, circumstance or other item has resulted or would
reasonably be expected to result in an Ashland Material Adverse Effect; and
(ii) the representations and warranties set forth in Section 6.11(d) shall be
deemed to be true and correct if the condition set forth in Section 10.01(g)
is satisfied.
(b) PERFORMANCE OF OBLIGATIONS OF THE ASHLAND PARTIES. The Ashland
Parties shall have performed in all material respects the obligations required
to be performed by them under the Transaction Agreements at or prior to the
Closing Date, and Marathon shall have received a certificate signed on behalf
of Ashland by the chief executive officer or the chief financial officer of
Ashland to such effect.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
SECTION 11.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing, whether before or after receipt of the Ashland
Shareholder Approval:
(a) by mutual written consent of Ashland and Marathon;
(b) by either Ashland or Marathon:
(i) if the Transactions are not consummated during the period
ending on June 30, 2005 (such date, as extended in accordance with
this Section 11.01(b)(i), the "Outside Date"), unless the failure to
consummate the Transactions is the result of a material breach of
the Transaction Agreements by the party seeking to terminate this
Agreement; provided, however, that the passage of such period shall
be tolled for any period (not to exceed three months):
(A) during which any party shall be subject to a nonfinal
order, decree, ruling or action of any court of competent
jurisdiction or other Governmental Entity restraining,
enjoining or otherwise prohibiting the consummation of the
Transactions;
(B) referred to in Section 9.03(d)(v); and
(C) referred to in the final proviso to Section 11.01(e);
and
(D) beginning on June 30, 2005 if, on such date, all
conditions set forth in Article X have been satisfied (or, to
the extent permitted by Law, waived by the parties entitled to
the benefit thereof) other than the condition set forth in
Section 10.02(f) (and other than those
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conditions that by their nature are to be satisfied on the
Closing Date) unless, at any time during the three month period
from June 30, 2005 through September 30, 2005, Ashland
determines, after consultation with Marathon, that the
condition set forth in Section 10.02(f) is not reasonably
expected to be satisfied during such three month period;
provided further however, that in no event will the Outside Date be
extended beyond September 30, 2005;
(ii) if any Governmental Entity issues an order, decree, ruling
or judgment or takes any other action permanently enjoining,
restraining or otherwise prohibiting any of the Transactions and
such order, decree, ruling, judgment or other action becomes final
and nonappealable;
(iii) if, upon a vote at the Ashland Shareholder Meeting (or
any adjournment or postponement thereof), the Ashland Shareholder
Approval is not obtained; or
(iv) if the party seeking to terminate this Agreement
reasonably determines that the condition set forth in Section
10.01(f) has become incapable of satisfaction based on either: (A)
amendments or modifications to Federal income Tax Law effective
after the date of this Agreement, (B) a private letter ruling
received by Ashland and Marathon from the IRS or (C) an official,
written communication from the IRS regarding the matters set forth
in Exhibit D;
(c) by Marathon, if any one or more of the Ashland Parties breach or
fail to perform their representations, warranties or covenants contained in
the Transaction Agreements, which breach or breaches or failure or failures to
perform (i) would, individually or in the aggregate, give rise to the failure
of a condition set forth in Section 10.03(a) or 10.03(b) and (ii) cannot be
cured or, if curable, is not or are not cured within 60 days after written
notice from Marathon (provided that the Marathon Parties are not then in
breach of their
85
representations, warranties or covenants contained in the Transaction
Agreements, which breaches would give rise to the failure of a condition set
forth in Section 10.02(a) or 10.02(b));
(d) by Marathon, prior to the Cutoff Date, if:
(i) the Ashland Board withdraws or modifies, in a manner
adverse to Marathon, or proposes publicly to withdraw or modify, in
a manner adverse to Marathon, its approval or recommendation of the
Transaction Agreements or the Transactions, fails to recommend to
Ashland's shareholders that they give the Ashland Shareholder
Approval or adopts, approves or recommends, or proposes publicly to
adopt, approve or recommend, any Competing Ashland Proposal; or
(ii) the Ashland Board fails to reaffirm its recommendation to
Ashland's shareholders that they give the Ashland Shareholder
Approval within 10 business days of Marathon's written request to do
so (which request may be made at any time prior to the Ashland
Shareholders Meeting if a Competing Ashland Proposal has been
publicly disclosed and not withdrawn);
(e) by Ashland, if any one or more of the Marathon Parties breach or
fail to perform their representations, warranties or covenants contained in
the Transaction Agreements which breach or breaches or failure or failures to
perform (i) would, individually or in the aggregate, give rise to the failure
of a condition set forth in Section 10.02(a) or 10.02(b) and (ii) cannot be
cured or, if curable, is not or are not cured within 60 days after written
notice from Ashland (provided that the Ashland Parties are not then in breach
of their representations, warranties or covenants contained in the Transaction
Agreements, which breaches would give rise to the failure of a condition set
forth in Section 10.03(a) or 10.03(b)); provided, however, for purposes of
this Section 11.01(e), the Marathon Parties shall be deemed not to have
breached or failed to perform their covenant to cause the HoldCo Borrowing to
be advanced to HoldCo in accordance with Section 1.03(a) for up to three
months following the day on which the Closing Date would otherwise
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occur but for the failure of the Marathon Parties to cause the HoldCo
Borrowing to be advanced to HoldCo if (A) such failure results from a Market
MAC Event and (B) the Marathon Parties use their reasonable best efforts to
cause the HoldCo Borrowing to be advanced to HoldCo as soon as practicable
thereafter, including, to the extent necessary, by providing guarantees or
other credit support from the Marathon Parties (to the extent they have not
otherwise agreed to do so), agreeing to modifications in the pricing, terms or
structure of the HoldCo Borrowing (reasonably acceptable to Ashland) or
arranging alternative Third Party Lenders; or
(f) by Ashland in accordance with Section 11.05(b); provided,
however, that Ashland shall have complied with all provisions thereof,
including the notice provisions therein.
SECTION 11.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Ashland or Marathon as provided in Section 11.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of any party hereto, other than Section
6.09 (Brokers), Section 7.09 (Brokers), the last sentence of Section 9.02
(Access to Information; Confidentiality), Section 9.04 (Fees and Expenses),
this Section 11.02 and Article XIV (General Provisions), which provisions
shall survive such termination, and except to the extent that such termination
results from the material breach by a party of its representations, warranties
or covenants set forth in the Transaction Agreements. Without limiting the
generality of the foregoing, in the event of termination of this Agreement by
either Ashland or Marathon as provided in Section 11.01, none of the MAP
Governing Documents shall be terminated, amended or modified as specified in
the Transaction Agreements.
SECTION 11.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after receipt of the Ashland Shareholder
Approval; provided, however, that after receipt of the Ashland Shareholder
Approval, there shall be made no amendment that by Law requires further
approval by the shareholders of Ashland without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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SECTION 11.04. EXTENSION; WAIVER. At any time prior to the Closing,
Ashland or Marathon may, to the extent permitted by Law, (a) extend the time
for the performance of any of the obligations or other acts of the Marathon
Parties (in the case of an extension granted by Ashland) or the Ashland
Parties (in the case of an extension granted by Marathon), (b) waive any
inaccuracies in the representations and warranties contained in the
Transaction Agreements or in any document delivered pursuant to the
Transaction Agreements, (c) waive compliance with any of the agreements of the
Marathon Parties (in the case of a waiver granted by Ashland) or the Ashland
Parties (in the case of a waiver granted by Marathon) or (d) waive any
condition to the obligations of the Ashland Parties (in the case of a waiver
granted by Ashland) or the Marathon Parties (in the case of a waiver granted
by Marathon); provided, however, that after receipt of the Ashland Shareholder
Approval, there shall be made no extension or waiver that by Law requires
further approval by the shareholders of Ashland without the further approval
of such shareholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
SECTION 11.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. (a) A termination of this Agreement pursuant to Section 11.01, an
amendment pursuant to Section 11.03 or an extension or waiver pursuant to
Section 11.04 shall, in order to be effective, require action by the Ashland
Board or the Marathon Board, as applicable, or the duly authorized designee of
the Ashland Board or the Marathon Board, as applicable.
(b) Ashland may terminate this Agreement pursuant to Section
11.01(f) only if, prior to the Cutoff Date, (i) the Ashland Board (or, if
applicable, a majority of the disinterested members thereof) has received a
Superior Proposal, (ii) in light of such Superior Proposal the Ashland Board
shall have determined in good faith, after consultation with inside and
outside counsel, that the failure to take such action would be reasonably
likely to result in a breach of its fiduciary obligations under applicable
Law, (iii) Ashland has notified Marathon in writing of the determination
described in clause (ii) above, (iv) at least five business days have elapsed
88
following receipt by Marathon of the notice referred to in clause (iii) above,
(v) Ashland is in compliance in all material respects with Section 8.02 (No
Solicitation) and (vi) Marathon is not at such time entitled to terminate this
Agreement pursuant to Section 11.01(c). Written confirmation by an executive
officer of Marathon that expressly states that Marathon accepts the fees due
and paid by Ashland under Section 9.04 shall constitute acceptance by Marathon
of the validity of any termination of this Agreement under Section 11.01(f)
and this Section 11.05(b); provided that, if such written confirmation is not
provided within five business days after Marathon's receipt of payment of such
fees, Marathon shall promptly refund such payment to Ashland without setoff.
It is understood and agreed that a valid termination of this Agreement in
compliance with the provisions of this Section 11.05(b) shall not constitute a
breach of any provision of this Agreement.
ARTICLE XII
AMENDMENT OF EXISTING MAP AGREEMENTS
SECTION 12.01. ASSET TRANSFER AND CONTRIBUTION AGREEMENT. (a)
ENVIRONMENTAL INDEMNITY. After the Closing, subject to and in accordance with
all terms, conditions, restrictions and limitations contained in Section 9.8
of the Asset Transfer and Contribution Agreement among Marathon Company,
Ashland and MAP dated as of December 12, 1997, as amended (the "ATCA"), MAP
shall direct and control all Remediation Activities (as defined in the ATCA)
undertaken in connection with any Ashland Environmental Loss associated with
the Ashland Transferred Assets (as such terms are defined in the ATCA). The
Ashland Parties and the Marathon Parties shall cooperate in transferring the
direction and control of such Remediation Activities to MAP. In addition,
notwithstanding anything to the contrary contained in the ATCA, if the Closing
occurs, New Ashland Inc. shall not have any liabilities or obligations:
(i) in excess of $50,000,000 in the aggregate for Ashland
Environmental Losses under Section 9.2(c) of the ATCA incurred on or
after January 1, 2004, except as otherwise provided in
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the last sentence of this Section 12.01(a);
(ii) arising out of the St. Paul Park QQQ Project to the extent
incurred on or after January 1, 2003 other than the amounts to be
paid pursuant to Section 9.09(b);
(iii) arising out of the Plains Settlement (as defined in
Section 14.02) regardless of when incurred; or
(iv) under Section 9.8(f) of the ATCA.
From and after the Closing, MAP shall continue to treat and process any and
all impacted groundwater associated with Remediation Activities undertaken in
connection with any Ashland Environmental Loss (as defined in the ATCA)
relating to the Catlettsburg, Canton and St. Paul Park refineries.
Notwithstanding anything to the contrary contained in this Section 12.01(a),
such treatment and processing shall be at MAP's sole cost and expense. MAP
shall have title to any and all hydrocarbons recovered during the treatment
and processing of such impacted groundwater. Ashland shall retain all Ashland
Excluded Liabilities (as defined in the ATCA) as well as all liabilities and
obligations associated with the Scharbauer and Holt Ranch S-P project and the
S-P projects described on Schedule 9.2(c) to the Ashland Asset Transfer and
Contribution Agreement Disclosure Letter (as defined in the ATCA).
(b) OTHER INDEMNIFICATION. After the Closing, the Ashland Parties
shall not have any liabilities or obligations for breaches of representations
or warranties under Section 9.2(a) of the ATCA, including the Claims (as
defined in the ATCA) identified in Section 12.01(b) of the Ashland Disclosure
Letter, regardless of whether any Claim thereunder has been asserted on or
prior to the Closing Date.
(c) DEPARTMENT OF DEFENSE CLAIM. Notwithstanding anything to the
contrary contained in the ATCA or the other MAP Governing Documents, (i) MAP
shall pursue the claims that MAP has asserted against the U.S. Department of
Defense (the "DOD") relating to alleged illegal price adjustments for jet fuel
and other aviation fuel sold to the DOD by Ashland Petroleum Company from 1980
90
through 1990 (the "DOD Claims") and (ii) New Ashland Inc. shall have the right
to participate in the pursuit of the DOD Claims and to employ counsel, at its
own expense, separate from the counsel employed by MAP, it being understood
that MAP shall control, in consultation with New Ashland Inc., the pursuit of
the DOD Claims. MAP shall use its reasonable best efforts to prosecute the DOD
Claims in accordance with this Section 12.01(c) until the DOD Claims are
finally determined pursuant to one or more final and nonappealable orders,
decrees or judgments by a court of competent jurisdiction or by one or more
settlement agreements approved by New Ashland Inc. (such approval not to be
unreasonably withheld or delayed). If MAP shall receive any recovery under the
DOD Claims, whether by judgment, settlement or otherwise, Marathon or Merger
Sub shall promptly pay to New Ashland Inc. an amount equal to (A) 38% of such
recovery minus (B) 38% of MAP's reasonable out-of-pocket costs and expenses in
pursuing the DOD Claims. If and to the extent MAP's reasonable out-of-pocket
costs and expenses incurred in the pursuit of the DOD Claims exceeds the
ultimate recovery under the DOD Claims, New Ashland Inc. shall pay to Marathon
an amount equal to 38% of such excess.
(d) EMPLOYEE BENEFIT MATTERS. (i) As of the Closing, except as
expressly modified herein, the terms and conditions of Article X of the ATCA
shall continue to apply with respect to all employees and former employees of
MAP and its subsidiaries who were Ashland Transferred Employees (as defined in
the ATCA) (the "Transferred MAP Employees").
(ii) Without limiting the generality of Section 12.01(d)(i),
from and after the Closing, MAP and its successors shall be solely
responsible for all liabilities, obligations and commitments
(including any costs and expenses) in connection with the provision
of retiree medical and retiree life insurance benefits to the
Transferred MAP Employees. Such benefits shall be determined taking
into account the combined service of each Transferred MAP Employee
with Ashland and its subsidiaries and MAP and its subsidiaries. For
the avoidance of doubt, Ashland shall not have any liability,
obligation or commitment in respect of retiree medical or retiree
life insurance benefits for MAP
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employees, including Transferred MAP Employees, from and after the
Closing.
(iii) Ashland shall remain solely responsible for any benefits
under the Ashland & Affiliates Pension Plan (the "Ashland Pension
Plan") and for any benefits under the Ashland Leveraged Employee
Stock Ownership Plan (the "Ashland LESOP") accrued by each
Transferred MAP Employee as of immediately prior to such employee's
Employment Transfer Date (as defined in the ATCA). Solely for
purposes of qualifying for distributions and early retirement
benefits pursuant to the Ashland Pension Plan and the Ashland LESOP,
Ashland will continue to treat the Transferred MAP Employees as
employed by an affiliated employer for so long as they remain
actively employed by MAP or its successors or their affiliates.
(iv) In accordance with the terms of the Ashland Employee
Savings Plan, as of the Closing, Ashland agrees to facilitate the
ability of each Transferred MAP Employee who is currently employed
by MAP and its subsidiaries immediately prior to the Closing to
effect a "direct rollover" (within the meaning of Section 401(a)(31)
of the Code) of his or her account balances under the Ashland
Employee Savings Plan if such rollover is elected in accordance with
applicable Law by such Transferred MAP Employee. Marathon agrees to
cause the Marathon Thrift Plan to accept a "direct rollover" to the
Marathon Thrift Plan of such Transferred MAP Employees' account
balances (including promissory notes evidencing all outstanding
loans) under the Ashland Employee Savings Plan.
(v) Except as provided in this Section 12.01(d), Ashland shall
remain solely responsible for any individual contractual obligations
with any Transferred MAP Employees (including any obligations to
such employees pursuant to the Ashland Stock Plans, the Ashland
Salary Continuation Plan and any other severance, change in control
or incentive compensation plan or arrangement) to the extent that
Ashland was
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liable for such obligations immediately prior to the Closing.
(vi) Subject to applicable Law, Ashland shall reasonably
cooperate in providing MAP with complete data for any Transferred
MAP Employees.
(vii) The parties agree that, in the event that MAP and its
subsidiaries make any contributions to, or payments in respect of,
any pension plans, post-retirement health and life insurance plans
or any other post-employment benefit arrangements, other than the
Permitted Payments (as defined below), then MAP shall make a special
non-pro rata distribution to Ashland in an amount equal to 38% of
the amount by which any such contributions or payments exceed the
Permitted Payments. Any such distribution to Ashland pursuant to
this Section 12.01(d)(vii) shall be effected through an increase in
the MAP Partial Redemption Amount or through such other means as
Ashland and MAP may mutually agree. For purposes of this Section
12.01(d)(vii), "Permitted Payments" means:
(A) any benefit payments made in the ordinary course of
business consistent with past practice to beneficiaries of such
pension plans, post-retirement health and life insurance plans
or post-employment benefit arrangements;
(B) contributions to the MAP Retirement Plan (the "MAP
Qualified Pension Plan") in an amount not in excess of the
minimum amount necessary to avoid the required filing of
information with the Pension Benefit Guaranty Corporation
("PBGC") pursuant to Section 4010 of ERISA with respect to the
2003 information year, which filing would otherwise be due on
April 15, 2004 (which amounts shall be contributed at the
latest possible time to avoid such required filing);
(C) in the case of the MAP Qualified Pension Plan (1) if
the pension funding
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relief (including relief related to the determination of the
PBGC variable-rate premium (within the meaning of 29 C.F.R.
4006.3)) contemplated by H.R. 3108 (or any substantially
similar legislation) (the "Pension Funding Relief") is enacted
into law on or prior to September 15, 2004, contributions in
calendar year 2004 in an amount not in excess of the minimum
amount necessary to avoid payment of the variable-rate premium
for such plan for the 2004 plan year (taking into account any
amounts previously contributed to the MAP Qualified Pension
Plan, including pursuant to the immediately preceding clause
(B) and clause (C)(3) below), provided that such contributions
shall not be made before the latest possible time that such
contributions may be made and still be taken into account in
determining whether any variable-rate premium is due for the
2004 plan year, using the method that produces the lowest
variable-rate premium and reflects any exemptions and special
rules under 29 C.F.R. 4006.5 and the highest discount rate
permitted for the calculation of such variable-rate premium and
such other actuarial assumptions as set forth in 29 C.F.R. 4006
or otherwise required under PBGC regulations and (2) if the
Pension Funding Relief is enacted into law on or prior to
September 15, 2005, contributions in calendar year 2005 in an
amount not in excess of the minimum amount necessary to avoid
payment of the variable-rate premium for such plan for the 2005
plan year (taking into account any amounts previously
contributed to the MAP Qualified Pension Plan, including
pursuant to the immediately preceding clauses (B) and (C)(1)
and clause (C)(3) below), provided that such contributions
shall not be made before the latest possible time that such
contributions may be made and still be taken into account in
determining whether any variable-rate premium is due for the
2005 plan year, using
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the method that produces the lowest variable-rate premium and
reflects any exemptions and special rules under 29 C.F.R.
4006.5 and the highest discount rate permitted for the
calculation of such variable-rate premium and such other
actuarial assumptions as set forth in 29 C.F.R. 4006 or
otherwise required under PBGC regulations and (3) until the
Pension Funding Relief is enacted into law, contributions (made
in amounts and at such times consistent with past practice) not
in excess of $120,000,000 in each of calendar year 2004 and
2005; and
(D) in the case of the MAP Qualified Pension Plan,
contributions not in excess of the minimum additional amounts
required (which amounts shall be contributed at the latest
possible time) for such plan to satisfy the minimum funding
requirements of Section 412 of the Code;
it being understood that any amounts previously contributed to the
MAP Qualified Pension Plan (including under the immediately
preceding clause (B), (C) (1)-(3) or (D)) shall be taken into
account in determining any subsequent amounts permitted to be
contributed under the immediately preceding clause (B), (C)(1)-(3)
or (D) so as to avoid duplication of contributions. Notwithstanding
the foregoing, in no event may Permitted Payments under the
immediately preceding clauses (B), (C)(1)-(3) and (D) in the
aggregate exceed, for each of calendar years 2004 and 2005, an
amount (the "Maximum Annual Permitted Payment") equal to the greater
of (x) the minimum contributions required to be paid in such year to
satisfy the minimum funding requirements of Section 412 of the Code
(based on the required due dates for such contributions) and (y)
$120,000,000. With respect to the 2005 calendar year, the Maximum
Annual Permitted Payment shall be pro-rated by multiplying the
Maximum Annual Permitted Payment by a fraction, the numerator of
which is the number of months
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elapsed in such year through and including the Closing Date, and the
denominator of which is 12. At least 30 days in advance of any
Permitted Payment described under clauses (B), (C)(1)-(3) or (D) of
the definition thereof to be contributed by MAP or its subsidiaries
to the MAP Qualified Pension Plan, MAP and/or its actuary shall
provide Ashland with a good-faith estimate of such Permitted
Payment, and with all information reasonably requested by Ashland
(and any actuary designated by Ashland) to review and independently
verify such Permitted Payment.
(e) OTHER PROVISIONS. After the Closing, the Ashland Parties and
their affiliates shall not have any liabilities or obligations under Section
7.2(h) (Guarantees) or 7.2(l) (Marine Preservation Association) of the ATCA.
For the avoidance of doubt, the other liabilities and obligations of the
Ashland Parties and their affiliates, and the liabilities and obligations of
Marathon Company, MAP and MAP's subsidiaries, under the ATCA, including those
under Article IX thereof, shall continue in full force and effect after the
Closing, except as provided in the Transaction Agreements. After the Closing,
Ashland shall not have any liabilities or obligations under the Parent Company
Guarantee dated May 28, 2003 relating to a Crude Oil Sales Agreement with
Saudi Arabian Oil Company effective June 1, 2003, as amended; provided,
however, that nothing in the Transaction Agreements or the Ancillary
Agreements shall prohibit Marathon from continuing to be a guarantor
thereunder.
SECTION 12.02. DESIGNATED SUBLEASES. (a) With respect to the Goldman
Sachs Master Sublease Agreement dated as of January 1, 1998, between Ashland
Oil, Inc. and Speedway SuperAmerica LLC and the Pitney Bowes Credit
Corporation Master Subcharter Agreement, dated as of January 1, 1998, between
Ashland and MAP (each, a "Designated Sublease"), Ashland shall use its
reasonable best efforts to (i) purchase or otherwise acquire the property then
leased under the Original Lease (as defined in the MAP LLC Agreement) and
subleased to MAP pursuant to each Designated Sublease (the "Leased Property")
on or prior to the Closing and (ii) upon such purchase or other acquisition,
contribute its interest in such Leased Property to MAP or one of its
subsidiaries at no cost to
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MAP or such subsidiary on or prior to the Closing; provided, however, that (A)
with respect to any such Original Lease, Ashland shall not be obligated to pay
more than a reasonable amount as consideration to, or make more than a
reasonable financial accommodation in favor of, or commence litigation
against, any person (including in order to obtain any agreement, consent or
cooperation of or from such person) in order to purchase or otherwise acquire
the related Leased Property as contemplated by, and in accordance with, this
Section 12.02(a) and (B) any additional cost associated with exercising an
option under any such Original Lease to purchase the related Leased Property
as described above shall be deemed not to constitute an obligation to pay more
than a reasonable amount.
(b) In the event that Ashland is unable to purchase or otherwise
acquire the Leased Property related to a Designated Sublease in accordance
with Section 12.02(a), then the Ashland Parties and the Marathon Parties shall
use their reasonable best efforts (including entering into customary
documentation reasonably acceptable in form and substance to the Ashland
Parties and the Marathon Parties) to cause (i) all Ashland's existing rights
under such Original Lease and, as applicable, either the SuperAmerica
Transaction Documents (as defined below) or Pitney Bowes Transaction Documents
(as defined below), to be assigned to MAP, effective as of the Closing Date,
(ii) MAP to assume, effective as of the Closing Date, all liabilities and
obligations required to be performed or discharged after the Closing under
such Original Lease (including the obligation to pay rent and any additional
cost associated with exercising an option under such Original Lease to
purchase the related Leased Property) and, as applicable, either the
SuperAmerica Transaction Documents or Pitney Bowes Transaction Documents and
(iii) the Ashland Parties and their affiliates to be released, effective as of
the Closing Date, from all liabilities and obligations required to be
performed or discharged after the Closing under such Original Lease and, as
applicable, either the SuperAmerica Transaction Documents or Pitney Bowes
Transaction Documents. If the Ashland Parties and the Marathon Parties are
able to effect the assignment, assumption and release in accordance with this
Section 12.02(b) in connection with an Original Lease related to a Designated
Sublease, on the Closing Date, New
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Ashland Inc. shall pay to MAP cash, by wire transfer of immediately available
funds to a MAP bank account designated in writing by MAP at least two business
days prior to the Closing Date, in an amount equal to the present value,
discounted at a rate equal to the yield to average life of Marathon public
debt having an average life similar to the remaining average life of such
Original Lease, and based on such other assumptions as the parties shall
reasonably agree upon, of the lowest cost alternative of (x) the payment of
all rent required to be paid thereafter under such Original Lease (including
for all renewal periods available under the terms of such Original Lease) or
(y) the payment of all rent required to be paid thereafter under such Original
Lease until the date of any available option under such Original Lease to
purchase the related Leased Property and the cost associated with exercising
any such option. Ashland shall reimburse Marathon for any reasonable
out-of-pocket expenses incurred by Marathon relating to such assignment,
assumption and release; provided, however, that, with respect to any Original
Lease, Ashland shall not be obligated to pay more than a reasonable amount as
consideration to, or make more than a reasonable financial accommodation in
favor of, or commence litigation against, any person (including in order to
obtain any agreement, consent or cooperation of or from such person) in order
to effect the assignment, assumption, and release contemplated by, and in
accordance with, this Section 12.02(b) with respect to such Original Lease
and, as applicable, either the SuperAmerica Transaction Documents or Pitney
Bowes Transaction Documents. If the Ashland Parties and the Marathon Parties
are able to effect the assignment, assumption and release in accordance with
this Section 12.02(b) with respect to any Original Lease related to a
Designated Sublease, such Designated Sublease shall thereupon terminate and
none of the Ashland Parties or the Marathon Parties shall have any liabilities
or obligations thereunder other than liabilities and obligations required to
be performed or discharged before the Closing.
(c) In the event that, on or prior to the Closing, (x) Ashland is
unable to purchase and contribute the Leased Property related to a Designated
Sublease as contemplated by, and in accordance with, Section 12.02(a), and (y)
the Ashland Parties and the Marathon Parties are unable to effect the
assignment, assumption and release as
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contemplated by, and in accordance with, Section 12.02(b) with respect to such
Original Lease and, as applicable, either the SuperAmerica Transaction
Documents or Pitney Bowes Transaction Documents, then (i) MAP shall be
entitled to continue to sublease the Leased Property pursuant to such
Designated Sublease until the term of such Original Lease expires, (ii)
Ashland shall use its reasonable best efforts to purchase or otherwise acquire
the related Leased Property under such Original Lease and convey title to such
Leased Property to MAP or one of its subsidiaries; provided, however, that (A)
with respect to any such Original Lease, Ashland shall not be obligated to pay
more than a reasonable amount as consideration therefor to, or make more than
a reasonable financial accommodation in favor of, or commence litigation
against, any person (including in order to obtain any agreement, consent or
cooperation of or from such person) in order to purchase or otherwise acquire
the related Leased Property and (B) any additional cost associated with
exercising an option under any Original Lease to purchase related Leased
Property shall be deemed not to constitute an obligation to pay more than a
reasonable amount and (iii) if Ashland subsequently acquires such Leased
Property, Ashland shall convey title to such Leased Property to MAP or one of
its subsidiaries at no cost (including transfer Tax expense) to MAP or such
subsidiary at such time.
(d) For purposes of this Agreement:
"SUPERAMERICA TRANSACTION DOCUMENTS" means the following documents:
(i) Participation Agreement, dated as of December 31, 1990, among Ford Motor
Credit Company, as owner participant; State Street Bank and Trust Company of
Connecticut, National Association, as trust company and as owner trustee;
Ashland Oil, Inc. (now known as "Ashland Inc."), as lessee; SuperAmerica
Group, Inc., as seller; First Colony Life Insurance Company, as initial
lender; and SuperAsh Remainderman Limited Partnership, as remainderman; (ii)
Three Party Agreement, dated as of December 31, 1990, among SuperAsh
Remainderman Limited Partnership, as remainderman; Ashland Oil, Inc., as
lessee; and State Street Bank and Trust Company of Connecticut, National
Association, as lessor; (iii) Tax Indemnification Agreement, dated December
31, 1990, among Ford Motor Credit Company, State Street Bank and Trust Company
of Connecticut, National Association and Ashland Oil, Inc.;
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(iv) Guarantee, dated as of December 31, 1990, by State Street Bank and Trust
Company to Ford Motor Credit Company, Ashland Oil, Inc., SuperAmerica Group,
Inc., First Colony Life Insurance Company and SuperAsh Remainderman Limited
Partnership; (v) Guaranty of Ford Motor Credit Company, dated as of September
21, 1996, given by Ford Motor Credit Company to State Street Bank and Trust
Company of Connecticut, National Association, Ashland Oil, Inc., SuperAmerica
Group, Inc., First Colony Life Insurance Company, and SuperAsh Remainderman
Limited Partnership; and (vi) Consent to the First Amendment of SuperAsh
Remainderman Limited Partnership Agreement of Limited Partnership.
"PITNEY BOWES TRANSACTION DOCUMENTS" means the following documents:
(i) Financing Agreement, among Pitney Bowes Credit Corporation, PNC Leasing
Corp., Ashland, and PNC Bank, Kentucky, Inc., dated as of January 19, 1996;
(ii) Assignment of Builder Contracts between Ashland, Pitney Bowes Credit
Corporation and PNC Leasing Corp., Kentucky, dated January 19, 1996; (iii)
Letter Agreement, dated December 31, 1996, among Pitney Bowes Credit
Corporation, Ashland, First Security Bank, National Association, and
Prudential Securities Incorporated acknowledging the Assignment of Builder
Contracts; (iv) Letter Agreement, dated January 16, 1997, between Pitney Bowes
Credit Corporation and Ashland acknowledging the understanding of certain
definitions in connection with Schedule A attached thereto; (v) Letter
Agreement, dated January 21, 1997, among Pitney Bowes Credit Corporation,
Ashland, First Security Bank, National Association, and Prudential Securities
Incorporated acknowledging the Charter Assignment; (vi) Letter Agreement,
dated June 19, 1997, among Pitney Bowes Credit Corporation, Ashland, First
Security Bank, National Association, and Prudential Securities Incorporated
acknowledging the Assignment of Builder Contracts; (vii) Letter Agreement,
dated June 19, 1997, between Pitney Bowes Credit Corporation and Ashland
acknowledging the understanding of certain definitions in connection with
Schedule A attached thereto; (viii) Letter Agreement, dated June 19, 1997,
among Pitney Bowes Credit Corporation, Ashland, First Security Bank, National
Association, and Prudential Securities Incorporated acknowledging the Charter
Assignment; (ix) Amendment to Charter Supplement, dated as of June 19, 1997,
between Pitney Bowes Credit Corporation and Ashland; (x) First
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Amendment to Charter Agreement dated as of October 28, 1997, between Pitney
Bowes Credit Corporation and Ashland; (xi) First Amendment to Charter
Supplements Nos. 1-16, dated as of October 28, 1997, between Pitney Bowes
Credit Corporation and Ashland; (xii) Letter Agreement, dated November 24,
1997, between Pitney Bowes Credit Corporation and Ashland, regarding ownership
of specified barges; (xiii) Termination of Charter Supplements Nos. 16-21,
dated as of December 2, 1997, between Pitney Bowes Credit Corporation and
Ashland; (xiv) Letter, dated December 2, 1997, from Ashland to Pitney Bowes
Credit Corporation acknowledging the sale of specified vessels from Pitney
Bowes Credit Corporation to Ashland; (xv) Letter, dated December 9, 1997, from
Ashland to Pitney Bowes Credit Corporation notifying Pitney Bowes of the
intention to form a joint venture and subcharter barges and requesting Pitney
Bowes's consent to the subcharter; (xvi) Consent Letter, dated December 31,
1997, among Pitney Bowes Credit Corporation, Ashland, and MAP, regarding
Pitney Bowes Credit Corporation's consent to the Master Subcharter Agreement.
SECTION 12.03. THE MAP LLC AGREEMENT. After the Closing, (i) except
as contemplated by the Tax Matters Agreement, New Ashland Inc. shall not have
any liabilities or obligations to any of the Marathon Parties or any of their
affiliates under the MAP LLC Agreement other than with respect to any breach
or default under the MAP LLC Agreement by Ashland that occurred prior to the
Closing and (ii) except as contemplated by Section 12.06(b) or the Tax Matters
Agreement, neither Marathon Company nor MAP shall have any liabilities or
obligations to any of the Ashland Parties or any of their affiliates under the
MAP LLC Agreement other than with respect to any breach or default thereunder
by Marathon Company or any of its affiliates that occurred prior to the
Closing.
SECTION 12.04. THE PUT/CALL AGREEMENT. Unless and until this
Agreement is terminated in accordance with the provisions of Article XI,
notwithstanding anything to the contrary contained in the Put/Call,
Registration Rights and Standstill Agreement dated as of January 1, 1998 among
Marathon Company, Marathon (as successor and assign of USX Corporation),
Ashland and MAP, as amended (the "Put/Call Agreement"), Ashland shall not have
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the right to exercise the Ashland Put Right and Marathon Company shall not
have the right to exercise the Marathon Call Right (as such terms are defined
in the Put/Call Agreement). After the Closing, except as expressly
contemplated by this Agreement or any of the other Transaction Agreements, (i)
New Ashland Inc. shall not have any liabilities or obligations under the
Put/Call Agreement other than (A) with respect to any breach or default
thereunder by Ashland that occurred prior to the Closing and (B) Ashland's
obligations under Section 12.02 thereof (which shall survive for six months
after the Closing Date); and (ii) none of the Marathon Parties shall have any
liabilities or obligations under the Put/Call Agreement other than (A) with
respect to any breach or default thereunder by Marathon, Marathon Company or
MAP that occurred prior to the Closing, (B) the obligations of Marathon and
Marathon Company under Section 12.01 thereof (which shall survive for six
months after the Closing Date) and (iii) the obligations of Marathon, Marathon
Company and MAP under Section 13.03 thereof (which shall survive pursuant to
the terms of the Put/Call Agreement). For the avoidance of doubt, the Ashland
Parties and the Marathon Parties shall not have any obligations under Article
XIV of the Put/Call Agreement after the Closing Date. The parties hereto agree
that the Price Reduction (as defined in Amendment No. 1 to the Put/Call
Agreement) shall not apply to the Transactions.
SECTION 12.05. ANCILLARY AGREEMENTS. After the Closing, the
Insurance Indemnity Agreement among Marathon Company, Ashland, Marathon (as
successor and assign of USX Corporation) and MAP, dated as of January 1, 1998,
shall terminate and no party to any such agreement shall have any rights or
obligations thereunder, other than those rights or obligations arising prior
to the Closing.
SECTION 12.06. OTHER PROVISIONS OF THE MAP GOVERNING DOCUMENTS. (a)
Except as the same may have been amended prior to the date of this Agreement
and except as expressly amended or assigned pursuant to the Transaction
Agreements or the Ancillary Agreements, the MAP Governing Documents, to the
extent the same are in existence as of the date of this Agreement, shall
continue in full force and effect. For the avoidance of doubt, after the
Closing, New Ashland Inc. shall be deemed to be a successor of Ashland for
purposes of the ATCA and the Transaction Documents (as defined in the ATCA).
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(b) The obligations of MAP under Article XI (Liability, Exculpation
and Indemnification) of the MAP LLC Agreement as in effect on the date of this
Agreement shall continue in effect and shall not be amended, repealed or
otherwise modified after the Closing in any manner that would adversely affect
the rights thereunder of any Covered Person (as defined in the MAP LLC
Agreement) in respect of acts or omissions occurring at or prior to the
Closing and, in the case of such obligations to all Representatives (as
defined in the MAP LLC Agreement) who have been designated from time to time
prior to the Closing Date by Ashland to the Board of Managers (as defined in
the MAP LLC Agreement) of MAP, shall be guaranteed by Marathon. This Section
12.06(b) shall survive the Closing, is intended to benefit each Covered Person
and shall be enforceable by the Covered Persons and their successors.
SECTION 12.07. POST-CLOSING ACCESS. After the Closing, upon
reasonable written notice, the Marathon Parties shall furnish or cause to be
furnished to the Ashland Parties and their Representatives, during normal
business hours, reasonable access to the personnel, properties, books,
contracts, commitments, records and other information and assistance relating
to MAP for the purpose of auditing compliance by MAP with Section 12.01(a) and
for such other purposes as the Ashland Parties may reasonably request.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY NEW ASHLAND INC. (a) Subject to
the limitations set forth in this Article XIII, from and after the Closing,
New Ashland Inc. shall defend and indemnify each of the Marathon Parties and
their respective affiliates and each of their respective Representatives
against, and hold them harmless from, any and all claims, demands, suits,
actions, causes of action, investigations, losses, damages, liabilities,
obligations, penalties, fines, costs and expenses (including costs of
litigation and reasonable attorneys' and experts' fees and expenses, but
excluding a party's indirect corporate and administrative overhead costs)
("Losses") to the extent
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resulting from, arising out of or relating to, directly or indirectly:
(i) any breach of any representation or warranty of any of the
Ashland Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement (other than the
representations and warranties contained in: the first sentence of
Section 6.01 of this Agreement; Sections 6.03, 6.04, 6.05, 6.08 and
6.11 of this Agreement; Sections 3.03(b), 3.09, 3.11(b) and 3.12 of
the Maleic Agreement; and Sections 3.03(b), 3.09, 3.11(b) and 3.12
of the VIOC Agreement);
(ii) any breach or nonfulfillment of any covenant of any of the
Ashland Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance prior to the Closing;
(iii) any breach of any representation or warranty of any of
the Ashland Parties contained in (A) Section 6.08 of this Agreement
or (B) Section 3.11(b) of the Maleic Agreement or Section 3.11(b) of
the VIOC Agreement;
(iv) any breach of any representation or warranty of any of the
Ashland Parties contained in (A) Section 6.03 (except the last
sentence of 6.03(e)) of this Agreement, (B) Section 3.09 or 3.12 of
the Maleic Agreement or Section 3.09 or 3.12 of the VIOC Agreement
or (C) Section 6.05 of this Agreement;
(v) any breach of any representation or warranty of any of the
Ashland Parties contained in (A) the first sentence of Section 6.01
of this Agreement, Section 3.03(b) of the Maleic Agreement or
Section 3.03(b) of the VIOC Agreement or (B) Section 6.04 or 6.11 of
this Agreement;
(vi) (A) any breach of any representation or warranty of any of
the Ashland Parties contained in the last sentence of Section
6.03(e) of this
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Agreement, (B) any breach or nonfulfillment of any covenant of any
of the Ashland Parties (other than HoldCo) contained in this
Agreement (other than Section 8.03 of this Agreement), the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement, in each
case to the extent it relates to performance after the Closing
(including New Ashland's obligations to pay Reorganization Merger
Consideration or amounts in respect of Dissenters' Shares) or (C)
any breach or nonfulfillment of any covenant of any of the Ashland
Parties contained in Section 8.03 of this Agreement;
(vii) any liabilities or obligations (contingent or otherwise)
of any of the Ashland Parties (or any of their respective
subsidiaries) that are not expressly assumed by one or more of the
Marathon Parties pursuant to this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement (including any
asbestos-related liabilities or obligations of the Ashland Parties,
or any of their respective subsidiaries, associated with the
operations of Riley Stoker Corporation);
(viii) any liabilities or obligations of any of the Ashland
Parties to Transferred MAP Employees, Transferred Maleic Business
Employees (as defined in the Maleic Agreement) or Transferred VIOC
Centers Employees (as defined in the VIOC Agreement) under any
pension, retirement or other employee benefit plan or arrangement
established or participated in by any Ashland Party or any of its
subsidiaries that is not expressly assumed by one or more Marathon
Parties pursuant to this Agreement, the Maleic Agreement, the VIOC
Agreement or any Ancillary Agreement;
(ix) any failure by any of the Ashland Parties to comply with
the St. Paul Park Judgment and Plea Agreement, other than the
obligations expressly assumed by the Marathon Parties in Section
9.09 of this Agreement; or
(x) any liabilities and obligations (contingent or otherwise)
of any of the Marathon
105
Parties (or any of their respective subsidiaries) that are expressly
assumed by one or more Ashland Parties pursuant to this Agreement,
the Maleic Agreement, the VIOC Agreement or any Ancillary Agreement.
(b) New Ashland Inc. shall not be required to indemnify any person,
and shall not have any liability:
(i) under clauses (i) and (ii) of Section 13.01(a), unless a
claim therefor is asserted in writing within three years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(ii) under clause (iii) of Section 13.01(a), unless a claim
therefor is asserted in writing within five years after the Closing
Date, failing which such claim shall be waived and extinguished;
(iii) under clause (iv) of Section 13.01(a), unless a claim
therefor is asserted in writing within six years after the Closing
Date, failing which such claim shall be waived and extinguished;
(iv) under clause (v) of Section 13.01(a), unless a claim
therefor is asserted in writing within ten years after the Closing
Date, failing which such claim shall be waived and extinguished;
(v) under clause (i), (ii), (iii), (iv), (v) or (vi) of Section
13.01(a) for any punitive or exemplary damages (other than punitive
or exemplary damages asserted by any person who is not a Marathon
Party, or an affiliate or a Representative of a Marathon Party, in a
Third Party Claim (as defined in Section 13.04));
(vi) under clause (i), (ii), (iii), (iv), (v)(A) or (vi)(B) of
Section 13.01(a) for any indirect consequential or special damages
(other than indirect consequential or special damages asserted by
any person who is not a Marathon
106
Party, or an affiliate or a Representative of a Marathon Party, in a
Third Party Claim);
(vii) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.01(a) unless the aggregate of all Losses for which the Ashland
Parties would, but for this clause (vii), be liable exceeds on a
cumulative basis an amount equal to $2,000,000, and then only to the
extent of any such excess;
(viii) under clauses (i), (ii), (iii), (iv), (v) and (vi)(A) of
Section 13.01(a) for any individual items where the Loss or alleged
Loss relating thereto is less than $100,000 and such items shall not
be aggregated for purposes of clause (vii) of this Section 13.01(b);
(ix) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.01(a) with respect to breaches of representations, warranties or
covenants referred to therein that are contained in (A) the Maleic
Agreement to the extent they result in indemnification payments
hereunder in excess of $59,785,000 in the aggregate or (B) the VIOC
Agreement to the extent they result in indemnification payments
hereunder in excess of $39,385,000 in the aggregate;
(x) under clauses (i), (ii), (iii), (iv), (v) and (vi)(A) of
Section 13.01(a) in the aggregate in excess of the amount equal to
the sum of (A) the MAP Partial Redemption Amount, (B) the Capital
Contribution, (C) $315,000,000 and (D) all post- Closing recoveries
by Ashland of distributions or profits from MAP with respect to any
period after the Closing Date; and
(xi) under clauses (i), (ii), (iii) and (iv)(A) of Section
13.01(a) for breaches of representations, warranties or covenants
referred to therein that are contained in this Agreement to the
extent they result in indemnification payments hereunder in excess
of $400,000,000 in the aggregate;
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provided, however, that in determining the scope of New Ashland Inc.'s
indemnification obligations under this Section 13.01(a), any qualification as
to materiality or references to Ashland Material Adverse Effect, Maleic
Business Material Adverse Effect (as defined in the Maleic Agreement) or VIOC
Centers Material Adverse Effect (as defined in the VIOC Agreement) in any of
the representations or warranties referred to in Section 13.01(a) shall be
disregarded (it being understood that such qualifications as to materiality or
Ashland Material Adverse Effect, Maleic Business Material Adverse Effect or
VIOC Centers Material Adverse Effect shall apply for purposes of determining
whether there has been a breach in the first place). Solely for purposes of
this Article XIII, any Loss to the extent arising out of any event or
occurrence on or prior to, or circumstance existing on or prior to, the
Closing Date (and not to the extent arising out of any event, occurrence or
circumstance existing after the Closing Date, other than the discovery of a
pre-closing condition or the making or commencement of any claim, demand,
suit, action, proceeding or investigation after the Closing Date to the extent
relating to any event, occurrence or circumstance existing on or prior to the
Closing Date) shall be considered in determining whether there shall have
occurred (or there was reasonably expected to occur) an Ashland Material
Adverse Effect, a Maleic Business Material Adverse Effect or a VIOC Centers
Material Adverse Effect, as applicable, as of the Closing Date. The parties
acknowledge that (x) the indemnification obligations referred to in clauses
(vi) through (x) of Section 13.01(a) shall not be subject to any time
limitations and (y) none of the indemnification obligations referred to in
clauses (vi)(B), (vi)(C), or any of clauses (vii) through (x) of Section
13.01(a) shall be subject to any dollar limitations. The preceding sentence is
not intended to eliminate or amend any limitations on the indemnification
obligations of any Ashland Party under the ATCA or any other agreement that is
not a Transaction Agreement or an Ancillary Agreement.
(c) Except as otherwise expressly contemplated or provided in the
Transaction Agreements and the Ancillary Agreements, the Ashland Parties make
no representations or warranties of any kind, either express or implied.
Except as otherwise contemplated or provided in the Tax Matters Agreement, any
of the other Transaction Agreements or any
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of the Ancillary Agreements, the Marathon Parties acknowledge that their sole
and exclusive remedy after the Closing with respect to any and all claims
(other than (i) claims arising from covenants to the extent such covenants are
to be performed after the Closing and (ii) claims of fraud) relating to the
Transaction Agreements, the Ancillary Agreements and the Transactions shall be
pursuant to the indemnification provisions set forth in this Article XIII. In
furtherance of the foregoing, except as otherwise contemplated or provided in
the Tax Matters Agreement, any of the other Transaction Agreements or any of
the Ancillary Agreements, the Marathon Parties hereby waive, from and after
the Closing, any and all rights, claims and causes of action under any
applicable Law (other than claims of, or causes of action arising from, (i)
covenants to the extent such covenants are to be performed after the Closing
and (ii) fraud) they may have against the Ashland Parties arising under or
based upon the Transaction Agreements, the Ancillary Agreements and the
Transactions (except pursuant to the indemnification provisions set forth in
this Section 13.01). The Marathon Parties shall take reasonable actions to
mitigate Losses for which indemnification may be sought under this Section
13.01, as and to the extent a party is required to mitigate damages for breach
of contract under the Laws of the State of New York.
SECTION 13.02. INDEMNIFICATION BY MARATHON. (a) Subject to the
limitations set forth in this Article XIII, from and after the Closing,
Marathon shall defend and indemnify each of the Ashland Parties and their
respective affiliates and each of their respective Representatives against,
and hold them harmless from, any Losses to the extent resulting from, arising
out of or relating to, directly or indirectly:
(i) any breach of any representation or warranty of any of the
Marathon Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement (other than the
representations and warranties contained in the first sentence of
Section 7.01 of this Agreement and in Sections 7.03, 7.04, 7.05,
7.08 and 7.11 of this Agreement);
(ii) any breach or nonfulfillment of any covenant of any of the
Marathon Parties contained
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in this Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance prior to the Closing;
(iii) any breach of any representation or warranty of any of
the Marathon Parties contained in Section 7.08 of this Agreement;
(iv) any breach of any representation or warranty of any of the
Marathon Parties contained in (A) Section 7.03 of this Agreement or
(B) Section 7.05 of this Agreement;
(v) any breach of any representation or warranty of any of the
Marathon Parties contained in (A) the first sentence of Section 7.01
of this Agreement or (B) Section 7.04 or 7.11 of this Agreement;
(vi) any breach or nonfulfillment of any covenant of any of the
Marathon Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance after the Closing (including
Marathon's obligations to issue and deposit with the Exchange Agent
the number of shares of Marathon Common Stock specified in Section
5.01(a)(ii) and to provide the cash necessary to pay any dividends
or distributions in accordance with Section 5.01(c)(ii));
(vii) any liabilities or obligations (contingent or otherwise)
of any of the Ashland Parties (or any of their respective
subsidiaries) that are expressly assumed by one or more of the
Marathon Parties pursuant to this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement, including any such
liabilities and obligations for which Ashland would otherwise have
been liable under the ATCA but for the application of Section 12.01
(Asset Transfer and Contribution Agreement);
(viii) any liabilities or obligations of any of the Ashland
Parties to Transferred MAP Employees, Transferred Maleic Business
Employees
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or Transferred VIOC Centers Employees under any pension, retirement
or other employee benefit plan or arrangement established or
participated in by any Ashland Party or any of its subsidiaries that
is expressly assumed by one or more Marathon Parties pursuant to
this Agreement, the Maleic Agreement, the VIOC Agreement or any
Ancillary Agreement, including any such liabilities and obligations
for which Ashland would otherwise have been liable under the ATCA
but for the application of Section 12.01 (Asset Transfer and
Contribution Agreement);
(ix) any failure by any of the Marathon Parties to comply with
Section 9.09 of this Agreement; or
(x) any liabilities and obligations (contingent or otherwise)
of any of the Marathon Parties (or any of their respective
subsidiaries) that are not expressly assumed by one or more Ashland
Parties pursuant to this Agreement, the Maleic Agreement, the VIOC
Agreement or any Ancillary Agreement.
(b) Marathon shall not be required to indemnify any person, and
shall not have any liability:
(i) under clauses (i) and (ii) of Section 13.02(a), unless a
claim therefor is asserted in writing within three years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(ii) under clause (iii) of Section 13.02(a), unless a claim
therefor is asserted in writing within five years after the Closing
Date, failing which such claim shall be waived and extinguished;
(iii) under clause (iv) of Section 13.02(a), unless a claim
therefor is asserted in writing within six years after the Closing
Date, failing which such claim shall be waived and extinguished;
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(iv) under clause (v) of Section 13.02(a), unless a claim
therefor is asserted in writing within ten years after the Closing
Date, failing which such claim shall be waived and extinguished;
(v) under clause (i), (ii), (iii), (iv), (v) or (vi) of Section
13.02(a) for any punitive or exemplary damages (other than punitive
or exemplary damages asserted by any person who is not an Ashland
Party, or an affiliate or a Representative of an Ashland Party, in a
Third Party Claim);
(vi) under clause (i), (ii), (iii), (iv), (v)(A) or (vi) of
Section 13.02(a) for any indirect consequential or special damages
(other than indirect consequential or special damages asserted by
any person who is not an Ashland Party, or an affiliate or a
Representative of an Ashland Party, in a Third Party Claim);
(vii) under clauses (i), (ii), (iii), (iv) or (v) of Section
13.02(a) unless the aggregate of all Losses for which the Marathon
Parties would, but for this clause (vi), be liable exceeds on a
cumulative basis an amount equal to $2,000,000, and then only to the
extent of any such excess;
(viii) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.02(a) for any individual items where the Loss or alleged Loss
relating thereto is less than $100,000 and such items shall not be
aggregated for purposes of clause (vii) of this Section 13.02(b);
(ix) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.02(a) in the aggregate in excess of the amount equal to the sum
of (A) the MAP Partial Redemption Amount, (B) the Capital
Contribution and (C) $315,000,000; and
(x) under clauses (i), (ii), (iii) and (iv)(A) of Section
13.02(a) for breaches of representations, warranties or covenants
referred to therein that are contained in this Agreement to the
extent they result in indemnification
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payments hereunder in excess of $400,000,000 in the aggregate;
provided, however, that in determining the scope of Marathon's indemnification
obligations under this Section 13.02(a), any qualification as to materiality
or references to Marathon Material Adverse Effect in any of the
representations or warranties referred to in Section 13.02(a) shall be
disregarded (it being understood that such qualifications as to materiality or
Marathon Material Adverse Effect shall apply for purposes of determining
whether there has been a breach in the first place). Solely for purposes of
this Article XIII, any Loss to the extent arising out of any event or
occurrence on or prior to, or circumstance existing on or prior to, the
Closing Date (and not to the extent arising out of any event, occurrence or
circumstance existing after the Closing Date, other than the discovery of a
pre-closing condition or the making or commencement of any claim, demand,
suit, action, proceeding or investigation after the Closing Date to the extent
relating to any event, occurrence or circumstance existing on or prior to the
Closing Date) shall be considered in determining whether there shall have
occurred (or there was reasonably expected to occur) a Marathon Material
Adverse Effect as of the Closing Date. The parties acknowledge that (x) the
indemnification obligations referred to in clauses (vi) through (x) of Section
13.02(a) shall not be subject to any time limitations and (y) none of the
indemnification obligations referred to in clauses (vi) through (x) of Section
13.02(a) shall be subject to any dollar limitations. The preceding sentence is
not intended to eliminate or amend any limitations on the indemnification
obligations of any Marathon Party under the ATCA or any other agreement that
is not a Transaction Agreement or an Ancillary Agreement.
(c) Except as otherwise expressly contemplated or provided in the
Transaction Agreements and the Ancillary Agreements, the Marathon Parties make
no representations or warranties of any kind, either express or implied.
Except as otherwise contemplated or provided in the Tax Matters Agreement, any
of the other Transaction Agreements or any of the Ancillary Agreements, the
Ashland Parties acknowledge that their sole and exclusive remedy after the
Closing with respect to any and all claims (other than
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(i) claims arising from covenants to the extent such covenants are to be
performed after the Closing and (ii) claims of fraud) relating to the
Transaction Agreements, the Ancillary Agreements and the Transactions shall be
pursuant to the indemnification provisions set forth in this Article XIII. In
furtherance of the foregoing, except as otherwise contemplated or provided in
the Tax Matters Agreement, any of the other Transaction Agreements or any of
the Ancillary Agreements, the Ashland Parties hereby waive, from and after the
Closing, any and all rights, claims and causes of action under any applicable
Law (other than claims of, or causes of action arising from, (i) covenants to
the extent such covenants are to be performed after the Closing and (ii)
fraud) they may have against the Marathon Parties arising under or based upon
the Transaction Agreements, the Ancillary Agreements and the Transactions
(except pursuant to the indemnification provisions set forth in this Section
13.02). The Ashland Parties shall take reasonable actions to mitigate Losses
for which indemnification may be sought under this Section 13.02, as and to
the extent a party is required to mitigate damages for breach of contract
under the Laws of the State of New York.
SECTION 13.03. CALCULATION OF LOSSES. (a) The amount of any Loss for
which indemnification is provided in clause (i), (ii), (iii), (iv) or (v)(A)
of Section 13.01(a) of this Agreement or clause (i), (ii), (iii), (iv) or
(v)(A) of Section 13.02(a) of this Agreement shall be net of any amounts
actually recovered by the indemnified party under the True Insurance Policies
(as such term is defined in the ATCA) with respect to such Loss; provided,
however, that the indemnified party shall not have any obligation to seek any
such recovery under any True Insurance Policy. The amount of any Loss for
which indemnification is provided pursuant to Section 13.01(a) or Section
13.02(a) of this Agreement shall be (i) increased to take account of any net
Tax cost incurred by the indemnified party arising from the receipt or accrual
of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax Benefit (as defined in the ATCA)
realized by the indemnified party arising from the deductibility of any such
Loss. In computing the amount of any such Tax cost or Tax Benefit, the
indemnified party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit
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before recognizing any item arising from the receipt or accrual of any
indemnity payment hereunder or the deductibility of any indemnified Loss. Any
indemnification payment hereunder shall initially be made without regard to
clauses (i) and (ii) in the second sentence of this Section 13.03, and shall
be increased or reduced to reflect any such net Tax cost (including gross-up)
or net Tax Benefit only after the indemnified party has actually realized such
cost or benefit. For purposes of this Agreement, an indemnified party shall be
deemed to have "actually realized" a net Tax cost or a net Tax Benefit to the
extent that, and at such time as, the amount of Taxes payable by such
indemnified party is increased above or reduced below, as the case may be, the
amount of Taxes, that such indemnified party would be required to pay but for
the receipt or accrual of the indemnity payment or the deductibility of such
Loss, as the case may be. The amount of any increase or reduction hereunder
shall be adjusted to reflect any final determination (which shall include the
execution of Form 870 AD or successor form) with respect to the indemnified
party's liability for Taxes, and payments between the indemnified party and
the indemnifying party to reflect such adjustment shall be made if necessary.
(b) No indemnified party shall be entitled to indemnification
pursuant to Section 13.01(a) with respect to any Loss that has been taken
account of in any adjustment pursuant to Section 1.05 of the Maleic Agreement.
If the amount of any Loss, at any time subsequent to the making of any payment
for indemnification pursuant to Section 13.01(a) or 13.02(a), is reduced by
recovery, settlement or otherwise under or pursuant to any claim, recovery,
settlement or payment by or against any other person that is not an affiliate
of the indemnified party, the amount of such reduction, less any costs,
expenses, premiums or other offsets incurred in connection therewith, shall
promptly be repaid by the indemnified party to the indemnifying party. Upon
making any payment for indemnification pursuant to Section 13.01(a) or
13.02(a), the indemnifying party shall, to the extent of such payment, be
subrogated to all rights of the indemnified party (other than any rights of
such indemnified party under any insurance policies) against any third party
that is not an affiliate of the indemnified party in respect of the
indemnifiable Loss to which such payment relates. Each such indemnified party
shall duly
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execute upon request all instruments reasonably necessary to evidence and
perfect the above described subrogation rights.
SECTION 13.04. PROCEDURES. (a) NOTICE OF THIRD PARTY CLAIMS. If any
claim is asserted by any person not a party, or an affiliate or a
Representative of a party, to this Agreement against an indemnified party
under this Agreement (any such claim being a "Third Party Claim") and such
indemnified party intends to seek indemnification hereunder from a party to
this Agreement, then, such indemnified party shall give notice of the Third
Party Claim to the indemnifying party as soon as practicable after the
indemnified party has reason to believe that the indemnifying party will have
an indemnification obligation with respect to such Third Party Claim,
accompanied by copies of all papers that have been served on the indemnified
party with respect to such Third Party Claim. Such notice shall describe in
reasonable detail the nature of the Third Party Claim, an estimate of the
amount of damages attributable to the Third Party Claim (if reasonably
attainable) and the basis of the indemnified party's request for
indemnification under this Agreement. The failure of the indemnified party to
so notify the indemnifying party of the Third Party Claim shall not relieve
the indemnifying party from any duty to indemnify hereunder unless and only to
the extent that the indemnifying party demonstrates that the failure of the
indemnified party to promptly notify it of such Third Party Claim prejudiced
its ability to defend such Third Party Claim; provided, that the failure of
the indemnified party to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to the indemnified
party otherwise than under this Agreement. Thereafter, the indemnified party
shall deliver to the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all written notices and
documents (including court papers but excluding any materials that are subject
to any applicable privilege or that constitute attorney work product) received
by the indemnified party relating to the Third Party Claim.
(b) RIGHT OF INDEMNIFYING PARTY TO CONTROL DEFENSE OF THIRD PARTY
CLAIMS. The indemnifying party shall have the right to participate in, or
assume control of, the defense of the Third Party Claim at its own expense
116
using counsel of its choice reasonably acceptable to the indemnified party, by
giving prompt written notice to the indemnified party. If it elects to assume
control of the defense of such Third Party Claim, the indemnifying party shall
defend such Third Party Claim by promptly and vigorously prosecuting all
appropriate proceedings to a final conclusion or settlement. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such Third Party Claim, the indemnified party shall have the right
to participate in the defense of the Third Party Claim using counsel of its
choice, but the indemnifying party shall not be liable to the indemnified
party hereunder for any legal or other expenses subsequently incurred by the
indemnified party in connection with its participation in the defense thereof
unless (i) the employment thereof has been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party fails to assume the
defense in accordance with the first sentence of this Section 13.04(b) or
diligently prosecute the defense of the Third Party Claim or (iii) there shall
exist or develop a conflict that would ethically prohibit counsel to the
indemnifying party from representing the indemnified party. The indemnified
party agrees to provide such reasonable cooperation to the indemnifying party
and its counsel as the indemnifying party may reasonably request in contesting
any Third Party Claim that the indemnifying party elects to contest, including
the making of any related counterclaim against the Third Party asserting the
Third Party Claim or any cross-complaint against any person who is not an
affiliate or Representative of the indemnified party, in each case only if and
to the extent that any such counterclaim or cross-complaint arises from the
same actions or facts giving rise to the Third Party Claim. The indemnifying
party shall have the right, acting in good faith and with due regard to the
interests of the indemnified party, to control all decisions regarding the
handling of the defense without the consent of the indemnified party, but
shall not have the right to admit liability with respect to, or compromise,
settle or discharge any Third Party Claim or consent to the entry of any
judgment with respect to such Third Party Claim without the consent of the
indemnified party, which consent shall not be unreasonably withheld, unless
such settlement, compromise or consent includes an unconditional release of
the indemnified party from all liability and obligations arising out of such
Third Party
117
Claim and would not otherwise adversely affect the indemnified party.
(c) CONTROL OF THIRD PARTY CLAIM BY THE INDEMNIFIED PARTY. If the
indemnifying party fails to assume the defense of a Third Party Claim within
thirty (30) days after receipt of written notice of the Third Party Claim in
accordance with the provisions of Section 13.04(b), then the indemnified party
shall have the right to defend the Third Party Claim by promptly and
vigorously prosecuting all appropriate proceedings to a final conclusion or
settlement. The indemnifying party shall have the right to participate in the
defense of the Third Party Claim using counsel of its choice, but the
indemnified party shall not be liable to the indemnifying party hereunder for
any legal or other expenses incurred by the indemnifying party in connection
with its participation in the defense thereof. If requested by the indemnified
party, the indemnifying party agrees to provide such reasonable cooperation to
the indemnified party and its counsel as the indemnified party may reasonably
request in contesting any Third Party Claim that the indemnified party elects
to contest, including the making of any related counterclaim against the third
party asserting the Third Party Claim or any cross-complaint against any
person who is not an affiliate or Representative of the indemnifying party, in
each case only if and to the extent that any such counterclaim or
cross-complaint arises from the same actions or facts giving rise to the Third
Party Claim. The indemnified party shall have the right, acting in good faith
and with due regard to the interests of the indemnifying party, to control all
decisions regarding the handling of the defense without the consent of the
indemnifying party, but shall not have the right to compromise or settle any
Third Party Claim or consent to the entry of any judgment with respect to such
Third Party Claim without the consent of the indemnifying party, which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the indemnifying party from all
liability and obligations arising out of such Third Party Claim.
(d) OTHER CLAIMS. In the event any indemnified party should have a
claim against any indemnifying party under Section 13.01 or 13.02 that does
not involve a Third Party Claim being asserted against or sought to be
118
collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party.
Subject to Sections 13.01(b) and 13.02(b), the failure by any indemnified
party so to notify the indemnifying party shall not relieve the indemnifying
party from any liability that it may have to such indemnified party under
Section 13.01 or 13.02, except to the extent that the indemnifying party
demonstrates that it has been prejudiced by such failure. The indemnifying
party shall have 60 calendar days following its receipt of such notice to
dispute its liability to the indemnified party under Section 13.01 or 13.02.
The indemnified party shall reasonably cooperate with and assist the
indemnifying party in determining the validity of any claim for indemnity by
the indemnified party and in otherwise resolving such matters. Such
cooperation and assistance shall include retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records that are
reasonably relevant to such matters, making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder, and providing such reasonable cooperation and
assistance in the investigation and resolution of such matters as the
indemnifying party may reasonably request. If the indemnifying party does not
notify the indemnified party within 60 days from its receipt of a notice
pursuant to the first sentence of this Section 13.04(d) that the indemnifying
party disputes the claim specified by the indemnified party in such notice,
that claim shall be deemed a liability of the indemnifying party hereunder. If
the indemnifying party has timely disputed that claim, as provided above, that
dispute may be resolved by proceedings in an appropriate court of competent
jurisdiction in accordance with Section 14.10 if the parties do not reach a
settlement of that dispute within 30 days after notice of that dispute is
given. Payment of the amount set forth in a notice of a claim pursuant to the
first sentence of this Section 13.04(d) that has not been disputed shall be
made within 30 days after the expiration of the applicable 60 day notice
period. If the payment obligation has been disputed, payment shall be made 30
days after the expiration of the period for appeal of a final adjudication of
the indemnifying party's liability under this Agreement to the indemnified
party with respect to such payment obligation.
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(e) The foregoing provisions of this Article XIII shall not be
applicable to any Tax Matters, it being understood that the indemnification
obligations of New Ashland Inc. and Marathon with respect to all Tax Matters
are set forth in the Tax Matters Agreement.
(f) The foregoing provisions of this Article XIII shall not be
applicable to any Losses to the extent indemnification for such Losses is
provided under the Franchise Agreements (as defined in the VIOC Agreement).
ARTICLE XIV
GENERAL PROVISIONS
SECTION 14.01. NOTICES. All notices, requests, claims, demands and
other communications under the Transaction Agreements shall be in writing and
shall be deemed to be delivered and received if personally delivered or if
delivered by facsimile or courier service, when actually received by the party
to whom notice is sent at the address of such party or parties set forth below
(or at such other address as such party may designate by written notice to all
other parties in accordance herewith):
(a) if to the Ashland Parties, to
Ashland Inc.
50 E. RiverCenter Boulevard
Covington, KY 41012-0391
Attention: J. Marvin Quin
David L. Hausrath, Esq.
Facsimile: (859) 815-5053
with a copy (which will not constitute notice for purposes of
this Agreement) to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7474
Attention: Susan Webster, Esq.
James C. Woolery, Esq.
Facsimile: (212) 474-3700
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(b) if to the Marathon Parties, to
Marathon Oil Corporation
5555 San Felipe Road
Houston, TX 77056
Attention: Raja Sahni
Richard L. Horstman, Esq.
Facsimile: (713) 513-4172
with a copy (which will not constitute notice for purposes of
this Agreement) to:
Baker Botts L.L.P.
One Shell Plaza
Houston, TX 77002-4995
Attention: Ted W. Paris, Esq.
Tull R. Florey, Esq.
Facsimile: (713) 229-1522
SECTION 14.02. DEFINITIONS. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person. As used in this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a person (whether
through ownership of capital stock of that person, by contract or otherwise).
For the avoidance of doubt, MAP shall be deemed to be an affiliate of Marathon
Company and not Ashland at all times, whether prior to or after the Closing.
"AR Fraction" means the fraction of the MAP Partial Redemption
Amount to be distributed in the form of accounts receivable of MAP such that,
in the opinions of Cravath, Swaine & Moore LLP and Miller & Chevalier
Chartered, the MAP Partial Redemption will not result in any gain recognition
under Section 751(b) of the Code. Such fraction shall be determined based upon
the final allocation report prepared by D&T and delivered to Ashland and
Marathon on or within 10 days prior to the Closing Date.
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"Ashland Debt Obligation Amount" means an amount, determined in good
faith by Ashland, in light of the Private Letter Rulings and any
communications with the IRS, written or otherwise, that is sufficient to (i)
pay the outstanding principal amount of debt that is shown on Ashland's
balance sheet; (ii) pay repurchase premium and other costs to repay,
repurchase or defease debt that is shown on Ashland's balance sheet or
obligations referred to in clause (iii) below; (iii) repay and terminate
obligations that are treated as debt for tax purposes but not for financial
statement purposes; and (iv) terminate or renegotiate Ashland's obligations as
lessee under real estate leases that are treated as true leases for tax
purposes, in each case to the extent that such amounts, if paid by New Ashland
Inc. with the proceeds of the HoldCo Borrowing, would result in no gain
recognition to HoldCo under Section 357 of the Code.
"Ashland Employee Stock Option" means any option to purchase Ashland
Common Stock granted under any Ashland Stock Plan.
"Ashland LOOP/LOCAP Interest" shall have the meaning assigned
thereto in the Put/Call Agreement.
"Ashland Parties" means Ashland, New Ashland LLC, New Ashland Inc.
and, prior to the Acquisition Merger Effective Time, HoldCo.
"Ashland SAR" means any stock appreciation right linked to the price
of Ashland Common Stock and granted under any Ashland Stock Plan.
"Ashland Stock Plan" means the Amended Stock Incentive Plan for Key
Employees of Ashland and its subsidiaries, Ashland 1993 Stock Incentive Plan,
Ashland Deferred Compensation Plan for Non-Employee Directors, Ashland 1997
Stock Incentive Plan, Ashland Deferred Compensation Plan, Ashland Stock Option
Plan for Employees of Joint Ventures, Ashland Employee Savings Plan, Amended
and Restated Ashland Incentive Plan, and any other stock option, stock
purchase or other plan or agreement pursuant to which shares of Ashland Common
Stock may be acquired as compensation by employees, consultants or any other
person.
"Estimated MAP Partial Redemption Amount" means a good faith
estimate, prepared jointly by MAP, Marathon and
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Ashland at least two business days prior to the Closing Date, of the MAP
Partial Redemption Amount, which estimate shall include Marathon's good faith
estimate of any increase pursuant to the second sentence of Section 1.01.
"Holdco Borrowing" means a new unsecured borrowing or borrowings by
HoldCo with total proceeds in an amount equal to the Ashland Debt Obligation
Amount. The HoldCo Borrowing shall be expressly non-recourse to Ashland and
its affiliates (other than HoldCo) and shall otherwise be made on terms and
conditions reasonably acceptable to Ashland.
"LOCAP T&D Agreement" means the Initial Facility Throughput and
Deficiency Agreement among Ashland, Marathon, Shell Oil Company, Texaco Inc.
and LOCAP LLC (as successor to LOCAP Inc.), dated March 1, 1979, as amended.
"LOCAP T&D Assumption Agreement" means an assumption agreement,
substantially in the form attached hereto as Exhibit E, pursuant to Section
7.2 of the LOCAP T&D Agreement.
"LOOP T&D Agreement" means the First Stage Throughput and Deficiency
Agreement among Ashland, Marathon, Murphy Oil Corporation, Shell Oil Company,
Texaco Inc. and LOOP LLC (as successor to LOOP Inc.), dated as of December 1,
1977, as amended.
"LOOP T&D Assumption Agreement" means an assumption agreement,
substantially in the form attached hereto as Exhibit F, pursuant to Section
7.2 of the LOOP T&D Agreement.
"MAP Adjustment Amount" means 38% of the Distributable Cash of MAP
(as such term is defined in the MAP LLC Agreement) as of the close of business
on the Closing Date.
"MAP Governing Documents" means the Transaction Documents, as
amended, as defined in the ATCA.
"MAP LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of MAP dated as of December 31, 1998, as amended.
123
"MAP/LOOP/LOCAP Contribution Agreements" means assignment and
assumption agreements in the form of Exhibits G, H and I hereto.
"MAP Partial Redemption Amount" means $2,699,170,000 minus the
Ashland Debt Obligation Amount plus the MAP Adjustment Amount, plus any
increases effected pursuant to the second sentence of Section 1.01 or clause
(vii) of Section 12.01(d).
"Marathon Employee Stock Option" means any option to purchase
Marathon Common Stock granted under any Marathon Stock Plan.
"Marathon Parties" means Marathon, Marathon Company, Merger Sub and,
after the Acquisition Merger Effective Time, MAP.
"Marathon SAR" means any stock appreciation right linked to the
price of Marathon Common Stock and granted under any Marathon Stock Plan.
"Marathon Stock Plan" means the Marathon Oil Corporation 2003
Incentive Compensation Plan, 1990 Marathon Oil Company Stock Plan, The
Marathon Oil Company Thrift Plan, the Marathon Oil Company Deferred
Compensation Plan, the Marathon Oil Corporation Non-Officer Restricted Stock
Plan, the Marathon Ashland Petroleum LLC Deferred Compensation Plan and any
other stock option, stock purchase or other plan or agreement pursuant to
which shares of Marathon Common Stock may be acquired as compensation by
employees, consultants or any other person.
"Market MAC Condition" means a condition for the benefit of Third
Party Lenders to the effect that their obligation to lend shall not be
enforceable due to market disruption or other similar event.
"Market MAC Event" means (i) Marathon shall have obtained a firm
commitment (subject to customary conditions) to provide the HoldCo Borrowing
from Third Party Lenders that are nationally recognized commercial banks, (ii)
such commitment shall be in full force and effect prior to the date on which
the Closing would otherwise occur pursuant to Section 1.05 but for the failure
of the Marathon Parties to cause the HoldCo Borrowing to be advanced to HoldCo
and (iii) as of such
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date such Third Party Lenders shall have declined to make the HoldCo Borrowing
available to HoldCo solely based upon the non- satisfaction of a Market MAC
Condition.
"Membership Interest" shall have the meaning assigned thereto in
Appendix A to the MAP LLC Agreement.
"New Ashland Inc. Common Stock" means New Ashland Inc. common stock,
par value $0.01 per share, and, with respect to such shares issued at and
after the Acquisition Merger Effective Time, includes the associated Ashland
Rights.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
"Plains Settlement" means the Mutual Release and Settlement
Agreement between MAP and Plains Marketing, L.P. dated as of May 16, 2003.
"St. Paul Park Judgment and Plea Agreement" means (i) the amended
judgment in the matter of United States of America v. Ashland Inc., No. 02-CR-
152(01)(JMR) (D. Minn. Dec. 23, 2002), as such judgment may be further
amended, supplemented, modified or replaced, and (ii) the plea agreement and
sentencing stipulations in the matter of United States of America v. Ashland
Inc., No. 02- CR-152(JEL) (D. Minn. May 13, 2002).
A "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person.
"Tax" or "Taxes" means all forms of taxation imposed by any federal,
state, local or foreign jurisdiction (including any subdivision and any
revenue agency of such a jurisdiction), including net income, gross income,
alternative minimum, sales, use, ad valorem, gross receipts, value added,
franchise, license, transfer, withholding, payroll, employment, excise,
severance, stamp,
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property, custom duty, Taxes or governmental charges, together with any
related interest, penalties or other additional amounts imposed by a
Governmental Entity, and including all liability for or in respect of any of
the foregoing as a result of being a member of a consolidated or similar group
or a partner in an entity treated as a partnership or other pass- through
entity for Tax purposes or as a result of any Tax sharing or similar
contractual agreement.
"Tax Authority" means any federal, state, local or foreign
jurisdiction (including any subdivision and any revenue agency of such a
jurisdiction) imposing Taxes.
"Tax Matter" means any matter relating to Taxes.
"Value" means, with respect to any account receivable of MAP, the
product of (A) the outstanding balance of such account receivable on the
Closing Date, multiplied by (B) one minus the applicable discount factor set
forth in Exhibit A.
"Working Papers" means, with respect to AAA or HLHZ: (i) documents
prepared or assembled by such firm setting forth the valuation assumptions
used in connection with the Transactions to determine the fair value or
present fair saleable value of the subject assets or businesses, including, as
applicable, (A) representative financial statement data, (B) any adjustments
made or considered by such firm to historical and projected financial data of
Ashland or New Ashland Inc., (C) lists of comparable companies selected by
such firm for valuation purposes and their relevant operating statistics and
trading multiples, (D) lists of comparable transactions considered by such
firm and (E) valuation multiples, discount rates and capitalization rates
selected by such firm; (ii) lists of stated and contingent liabilities
utilized by such firm, including any adjustments made or considered by such
firm to information provided by Ashland or its Representatives; (iii)
projected income statement, balance sheet and cash flow statements used or
considered by such firm to assess the projected cash flows, debt capacity
levels, summary of covenants tests and other factors impacting liquidity and
(iv) analyses performed to determine if the subject company has or would have
adequate capital remaining after giving effect to the Transaction,
126
including similar calculations done for the selected comparable companies.
SECTION 14.03. INTERPRETATION; DISCLOSURE LETTERS. When a reference
is made in this Agreement to a Section or Article, such reference shall be to
a Section or Article of this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No item contained in any section of either the Ashland
Disclosure Letter or the Marathon Disclosure Letter shall be deemed adequate
to disclose an exception to a representation or warranty made in this
Agreement, unless (i) such item is included (or expressly incorporated by
reference) in a section of the applicable disclosure letter that is numbered
to correspond to the section number assigned to such representation or
warranty in this Agreement or (ii) it is readily apparent from a reading of
such item that it discloses an exception to such representation or warranty.
SECTION 14.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties hereto as closely
as possible to the end that the transactions contemplated hereby are fulfilled
to the greatest extent possible.
SECTION 14.05. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
127
SECTION 14.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. The
Transaction Agreements, taken together with the exhibits hereto and thereto,
the Ashland Disclosure Letter and the Marathon Disclosure Letter, the
Confidentiality Agreement, and the other agreements and instruments of the
parties hereto delivered in connection herewith, (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the Transactions and (b) except
for the provisions of Section 2.05, Article V, Section 12.06(b) and Article
XIII (the "Third Party Provisions"), are not intended to confer upon any
person other than the parties hereto any rights or remedies. The Third Party
Provisions may be enforced by the beneficiaries thereof; provided, however,
that the shareholders of Ashland in their capacities as such shall not have
any rights or remedies under this Agreement, and shall not be entitled to
enforce the Third Party Provisions or make any Claims with respect thereto,
unless and until the Closing shall have occurred. For avoidance of doubt, (i)
the shareholders of Marathon in their capacities as such shall not have any
rights or remedies under this Agreement, (ii) after the Closing, holders of
Dissenters' Shares shall have the rights and remedies specified in Section
2.05 only and (iii) after the Closing, the holders entitled to receive HoldCo
Common Stock in the Reorganization Merger shall have the rights and remedies
specified in Article V only. Notwithstanding the foregoing, the
Confidentiality Agreement shall remain in effect in accordance with its terms
and, except as expressly amended hereby, the MAP Governing Documents are
ratified and affirmed and shall remain in full force and effect.
SECTION 14.07. EXERCISE OF RIGHTS AND REMEDIES. Except as this
Agreement otherwise provides, no delay or omission in the exercise of, or
failure to assert, any right, power or remedy accruing to any party hereto as
a result of any breach or default hereunder by any other party hereto will
impair any such right, power or remedy, nor will it be construed, deemed or
interpreted as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor will any waiver of any
single breach or default be construed, deemed or interpreted as a waiver of
any other breach or default hereunder occurring before or after that waiver.
The
128
failure of any party to this Agreement to assert any of its rights under the
Transaction Agreements or otherwise shall not constitute a waiver of such
rights.
SECTION 14.08. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York,
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of Laws thereof, except to the extent the Laws of Kentucky are
mandatorily applicable to the Reorganization Merger and the Conversion Merger
and to the extent the Laws of Delaware are mandatorily applicable to the
Acquisition Merger.
SECTION 14.09. ASSIGNMENT. Neither the Transaction Agreements nor
any of the rights, interests or obligations under the Transaction Agreements
shall be assigned, in whole or in part, by any of the parties without the
prior written consent of the other parties, except that the rights, interests
and obligations of any party under this Agreement or any of the other
Transaction Agreements may be assigned by operation of law pursuant to a
merger, consolidation or other business combination involving such party that
would not reasonably expected to prevent or materially delay the consummation
of the Transactions; provided, however, that any assignment pursuant to the
exception set forth in this sentence shall not operate to release any party
from its obligations under this Agreement or any of the other Transaction
Agreements. Subject to the preceding sentences, the Transaction Agreements
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 14.10. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of the Transaction
Agreements were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that, subject to Sections
13.01(c) and 13.02(c), the parties shall be entitled to an injunction or
injunctions to prevent breaches of the Transaction Agreements and to enforce
specifically the terms and provisions of the Transaction Agreements in any New
York state court or any Federal court located in the Borough of Manhattan, The
City of New York in the State of New York, this being in addition to any other
remedy to which they are entitled at law or in
129
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any New York state court or any Federal court
located in the Borough of Manhattan, The City of New York in the State of New
York in the event any dispute arises out of the Transaction Agreements or any
Transaction, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, (c) agrees that it will not bring any action relating to any
Transaction Agreement or any Transaction in any court other than any New York
state court or any Federal court sitting in the Borough of Manhattan, The City
of New York in the State of New York (provided, however, that this clause (c)
shall not limit the ability of any party hereto to (i) file a proof of claim
or bring any action in any court in which a bankruptcy or reorganization
proceeding involving another party hereto is pending, (ii) file a
counter-claim or cross-claim against another party hereto in any court in
which a proceeding involving both such parties is pending or (iii) implead
another party hereto in respect of a Third Party Claim in any court in which a
proceeding relating to such Third Party Claim is then pending) and (d) waives
any right to trial by jury with respect to any action related to or arising
out of any Transaction Agreement or any Transaction.
130
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ James J. O'Brien
--------------------------------
Name:
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: President
EXM LLC,
by
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: President
NEW EXM INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: President
131
MARATHON OIL CORPORATION,
by /s/ Clarence P. Cazalot, Jr.
--------------------------------
Name: Clarence P. Cazalot, Jr.
Title: President & Chief
Executive Officer
MARATHON OIL COMPANY,
by /s/ Clarence P. Cazalot, Jr.
--------------------------------
Name: Clarence P. Cazalot, Jr.
Title: President
MARATHON DOMESTIC LLC,
by
MARATHON OIL CORPORATION,
by /s/ Clarence P. Cazalot, Jr.
--------------------------------
Name: Clarence P. Cazalot, Jr.
Title: President & Chief
Executive Officer
MARATHON ASHLAND PETROLEUM LLC,
by /s/ Gary R. Heminger
--------------------------------
Name: Gary R. Heminger
Title: President
EXHIBIT D
TAX RULING/OPINION CLOSING CONDITIONS
Structure
1. The IRS issues a private letter ruling (a "Ruling") holding that the
Maleic/VIOC Contribution described in Section 1.02(a), the MAP/LOOP/LOCAP
Contribution described in Section 1.02(b) and the Reorganization Merger
described in Section 1.02(c), taken together, qualify as a reorganization
under Section 368(a)(1)(F) of the Code.
2. The IRS issues a Ruling holding that the Capital Contribution
described in Section 1.03(b) and the Conversion Merger described in Section
1.03(c), taken together with the Acquisition Merger described in Section
1.04(a) or the distribution by HoldCo of shares of New Ashland Inc. Common
Stock described in Section 1.04(b), as the case may be, qualify as a
reorganization under Section 368(a)(1)(D) of the Code.
3. The IRS issues a Ruling holding that the Acquisition Merger described
in Section 1.04(a) or the distribution by HoldCo of shares of New Ashland Inc.
Common Stock described in Section 1.04(b), as the case may be, qualifies as a
distribution described in Section 355(a) of the Code and, accordingly, no gain
or loss will be recognized by (and no amount will otherwise be included in the
income of) the shareholders of HoldCo upon the receipt of such New Ashland
Inc. Common Stock.
4. Either:
(a) The IRS issues a Ruling holding that the Acquisition Merger
described in Section 1.04(a) will qualify as a reorganization under Section
368(a)(1)(A) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
4(a) above, Cravath, Swaine & Moore LLP delivers a written opinion to Ashland,
in form and substance reasonably satisfactory to the Ashland Board, concluding
that the Acquisition Merger described in Section 1.04(a) will qualify as a
reorganization under Section 368(a)(1)(A) of the Code; and Miller & Chevalier
Chartered delivers a written opinion to Marathon, in form and substance
reasonably satisfactory to the Marathon Board,
2
that such Acquisition Merger qualifies as a reorganization under Section
368(a)(1)(A) of the Code.
5. The IRS issues a Ruling holding that the shares of New Ashland Inc.
Common Stock distributed to shareholders of HoldCo in the Acquisition Merger
described in Section 1.04(a) or the distribution described in Section 1.04(b),
as the case may be, will not be treated as "other property", within the
meaning of Section 356(a) of the Code, received in exchange for HoldCo stock
in the Acquisition Merger.
Section 357
6. The IRS issues a Ruling holding that the assumption by Marathon and/or
Merger Sub of liabilities of HoldCo in the Acquisition Merger will not be
treated as money or other property under Section 357 of the Code.
Contingent Liabilities
7. Either:
(a) The IRS issues a Ruling holding that New Ashland Inc. is
entitled to deduct the Specified Liability Deductions (as defined in the Tax
Matters Agreement); or
(b) The IRS issues a Ruling holding that (i) HoldCo, and Marathon or
an affiliate of Marathon that is the "acquiring corporation" of HoldCo in the
Acquisition Merger within the meaning of Section 381(a) of the Code, is
entitled to deduct the Specified Liability Deductions, (ii) such deduction
will not be limited under Section 382 or Section 384 of the Code or Treasury
Regulation section 1.1502-15; (iii) such deduction is determined on the Net
Deduction Method (as defined in the Tax Matters Agreement); (iv) the accrual
or receipt of insurance reimbursements in respect of Specified Liability
Deductions will not result in recognition of income or gain to any member of
the New Ashland Group (as defined in the Tax Matters Agreement) (other than
recognition of such income or gain by a member of the New Ashland Group in
respect of Specified Liability Deductions claimed before the Closing Date by a
member of the Ashland Group (as defined in the Tax Matters Agreement) or the
New Ashland Group); and (v) any payment of Specified Liability Deductions by
any member of the New Ashland Group
3
will not result in recognition of income or gain to any member of the Marathon
Group (as defined in the Tax Matters Agreement).
8. Either:
(a) The IRS issues a Ruling holding that the effect of the
assumption by New Ashland, Inc. of the Ashland Residual Operations Liabilities
(as defined in the Tax Matters Agreement) on the basis of the New Ashland Inc.
Common Stock in the hands of HoldCo will be determined under Section 358(h)(1)
of the Code, or will be excluded from such application solely by reason of
Section 358(h)(2) of the Code; or
(b) (i) The IRS issues a Ruling holding that the effect of such
assumption on such basis will be determined under Section 358(d)(1) of the
Code; (ii) such Ruling sets forth with specificity a method of determining the
amount of the resulting reduction to basis under Section 358(d)(1) of the
Code; and (iii) based on such method, on representations as to the basis of
the New Ashland Inc. Common Stock before such reduction, and on
representations as to the value of the New Ashland Inc. Common Stock to be
distributed by HoldCo as of the date of such distribution (and on any other
date that might be relevant), Cravath, Swaine & Moore LLP delivers a written
opinion to Ashland, in form and substance reasonably satisfactory to the
Ashland Board, that the distribution of the New Ashland Inc. Common Stock by
HoldCo will not result in the recognition of gain by HoldCo under Section
355(e) of the Code in an amount greater than would be so recognized if the
effect on such basis had been determined under Section 358(h)(1) of the Code
rather than Section 358(d)(1) of the Code; and Miller & Chevalier Chartered
delivers a written opinion to Marathon, in form and substance reasonably
satisfactory to the Marathon Board, concluding that the distribution of the
New Ashland Inc. Common Stock by HoldCo does not result in the recognition of
gain by HoldCo under Section 355(e) of the Code in an amount greater than
would be so recognized if the effect on such basis had been determined under
Section 358(h)(1) of the Code rather than Section 358(d)(1) of the Code.
4
Partnership
9. Either:
(a) The IRS issues a Ruling that the MAP Partial Redemption does not
constitute a disguised sale of a partnership interest under Section
707(a)(2)(B) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
9(a) above, Cravath, Swaine & Moore LLP delivers a written opinion to Ashland,
in form and substance reasonably satisfactory to the Ashland Board, concluding
that the MAP Partial Redemption will not constitute a disguised sale of a
partnership interest under Section 707(a)(2)(B) of the Code; and Miller &
Chevalier Chartered delivers a written opinion to Marathon, in form and
substance reasonably satisfactory to the Marathon Board, concluding that the
MAP Partial Redemption does not constitute a disguised sale of a partnership
interest under Section 707(a)(2)(B) of the Code.
10. Either:
(a) The IRS issues a Ruling that the MAP Partial Redemption will not
be treated as a sale or exchange of property between Ashland and MAP under
Section 751(b) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
10(a) above, Cravath, Swaine & Moore LLP delivers a written opinion to
Ashland, in form and substance reasonably satisfactory to the Ashland Board,
concluding that the MAP Partial Redemption will not constitute a sale or
exchange of property between Ashland and MAP under Section 751(b) of the Code;
and Miller & Chevalier Chartered delivers a written opinion to Marathon, in
form and substance reasonably satisfactory to the Marathon Board, concluding
that the MAP Partial Redemption does not constitute a sale or exchange of
property between Ashland and MAP under Section 751(b) of the Code.
EXHIBIT 10.1
TAX MATTERS AGREEMENT dated as of March 18, 2004 (the
"TMA" or "Agreement") among Ashland Inc., a Kentucky
corporation ("Ashland"), ATB Holdings, Inc., a Delaware
corporation ("HoldCo"), EXM LLC, a Kentucky limited liability
company ("New Ashland LLC"), New EXM Inc., a Kentucky
corporation ("New Ashland Inc."), Marathon Oil Company, an Ohio
Company ("Marathon Company"), Marathon Oil Corporation, a
Delaware corporation ("Marathon"), Marathon Domestic LLC, a
Delaware limited liability company ("Merger Sub") and Marathon
Ashland Petroleum LLC, a Delaware limited liability company
owned by Marathon Company and Ashland ("MAP").
WHEREAS, Ashland is the common parent of an affiliated group of
domestic corporations that has elected to file consolidated Federal income tax
returns.
WHEREAS, Marathon is the common parent of an affiliated group of
domestic corporations that has elected to file consolidated Federal income tax
returns (the "Marathon Affiliated Group").
WHEREAS, Ashland and Marathon Company, a wholly-owned subsidiary of
Marathon, own all the limited liability company interests in MAP, which is
treated for Federal income tax purposes as a partnership.
WHEREAS, Ashland and Marathon and certain of their respective
related parties have entered into the Master Agreement pursuant to which they
have agreed to engage in the transactions contemplated by the Transaction
Agreements and the Ancillary Agreements, as those terms are defined in the
Master Agreement (collectively, the "Transactions").
WHEREAS, as part of the Transactions, HoldCo will become the common
parent of the Ashland Affiliated Group in a series of steps which are intended
to qualify as a reorganization described in Code Section 368(a)(1)(F) (the "F
Reorganization").
WHEREAS, as part of the F Reorganization, Ashland will contribute
its Membership Interest and the Acquired Businesses to HoldCo and will merge
with and into New Ashland LLC, which will assume all obligations of Ashland,
including the obligations of Ashland under this TMA (the "F Reorganization
Merger").
WHEREAS, as part of the Transactions, MAP will redeem a portion of
Ashland's interest in MAP in exchange for a distribution of cash and MAP
accounts receivable, as set forth in the Master Agreement (the "MAP Partial
Redemption").
WHEREAS, as part of the Transactions, New Ashland LLC will merge
with and into New Ashland Inc., which will assume all obligations of New
Ashland LLC, including the obligations that New Ashland LLC assumed from
Ashland (the "Conversion Merger").
2
WHEREAS, as part of the Transactions, (i) HoldCo will distribute, to
the former holders of the stock of Ashland, all the stock of New Ashland Inc.
in a transaction intended to qualify as a distribution described in Code
Section 355 (the "Spinoff"), and (ii) HoldCo will merge with and into Merger
Sub in a transaction intended to qualify as a reorganization described in Code
Section 368(a)(1)(A) (the "Acquisition Merger") and as a result of such
merger, HoldCo will cease to exist.
WHEREAS after the Acquisition Merger, Marathon may cause Merger Sub
to contribute all or a portion of the assets and liabilities that it acquired
in the Acquisition Merger to a newly formed corporation that is a
wholly-owned, direct subsidiary of Merger Sub.
WHEREAS, immediately after the Spinoff, New Ashland Inc. will be the
common parent of an affiliated group of domestic corporations that elects to
file consolidated Federal income tax returns, which will not include HoldCo
(the "New Ashland Inc. Affiliated Group").
WHEREAS the parties to this TMA wish to allocate and assign certain
Tax responsibilities, liabilities and benefits among themselves and to provide
for certain other Tax matters.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this TMA, the parties agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the
following meaning:
"Acquired Businesses" means the "Maleic Business" and the "VIOC
Centers", as each such term is defined in the Master Agreement.
"Acquisition Merger" has the meaning set forth in the ninth WHEREAS
clause of this TMA.
"affiliate" has the meaning ascribed to such term in the Master
Agreement.
"affiliated group" means an affiliated group of corporations within
the meaning of Code Section 1504(a) for the taxable period in question.
"Alternative Ruling" has the meaning set forth in Section 5.01(b) of
this TMA.
3
"Ashland Affiliated Group" means the affiliated group of domestic
corporations that has elected to file consolidated Federal income tax returns
of which Ashland (and immediately after the F Reorganization, HoldCo) is the
common parent.
"Ashland Group" means (i) the corporations that are members of the
Ashland Affiliated Group and (ii) the corporations that would be members of
the Ashland Affiliated Group but for the fact that they are not includible
corporations under Code Section 1504(b).
"Ashland Asbestos Liabilities" means any obligation of Ashland or
any of its present or former subsidiaries (including but not limited to Riley
Stoker Inc.) relating to claims made at any time that are attributable to
allegations of exposure to asbestos on or before the Closing Date with respect
to Residual Business Operations, to the extent that New Ashland Inc. or any
member of the New Ashland Inc. Group is liable for such obligation after the
Closing Date.
"Ashland Residual Operations Liabilities" means any obligation of
Ashland or any of its present or former subsidiaries that is attributable to
Residual Business Operations or to the HoldCo Businesses, including but not
limited to Ashland Asbestos Liabilities, Ashland Employee Liabilities and
Ashland Environmental Liabilities.
"Ashland Employee Liabilities" means (i) any obligation of Ashland
or any of its present or former subsidiaries for any Employee Benefit
Obligation to be provided to or on behalf of present or former employees of
Ashland or any such subsidiaries for services that are attributable to
Residual Business Operations or to the HoldCo Businesses, in each case that
are performed on or before the Closing Date, to the extent that New Ashland
Inc. or any member of the New Ashland Inc. Group is liable for such obligation
after the Closing Date and (ii) any obligation pursuant to the exercise of any
Option by any current or former employees of HoldCo Businesses or Residual
Business Operations with respect to the capital stock of Ashland, HoldCo or
New Ashland Inc.
"Ashland Environmental Liabilities" means any obligation of Ashland
or any of its present or former subsidiaries relating to claims made at any
time for environmental damages or remediation or similar expenses arising from
acts, omissions or conditions occurring or existing on or before the Closing
Date that are attributable to Residual Business Operations or to the HoldCo
Businesses, to the extent that New Ashland Inc. or any member of the New
Ashland Inc. Group is liable for such obligation after the Closing Date.
"Bankruptcy Event" means, with respect to any Person, the occurrence
or existence of any of the following events or conditions: such Person (1) is
dissolved (other than the dissolution of a transferor in connection with a
transfer to a successor as contemplated by Section 10.14); (2) admits in
writing its inability generally to pay its debts; (3) makes a general
assignment for the benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or bankruptcy or any
4
similar relief under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its winding up or
liquidation and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for similar relief or the
making of an order for its winding up or liquidation or (B) is not dismissed
or discharged within 60 days of the institution or filing thereof; (5) has a
resolution passed by its Board of Directors for its winding up or liquidation
(other than the winding up or liquidation of a transferor in connection with a
transfer to a successor as contemplated by Section 10.14); (6) consents to, or
becomes subject to an order or judgment providing for, the appointment of an
administrator, receiver, trustee, custodian or other similar official for it
or for all or substantially all its assets and, in the case of an order or
judgment, such judgment or order is not dismissed, discharged, stayed or
restrained in each case within sixty (60) days of the entry or making thereof;
or (7) takes any action in furtherance of, or expressly indicates its consent
to, approval of, or acquiescence in, any of the foregoing.
"Bankruptcy Party" has the meaning set forth in Section 8.02(c) of
this TMA.
"Bankruptcy Tax Claims" has the meaning set forth in Section 8.02(c)
of this TMA.
"Basket One Amount" has the meaning set forth in Section 5.02(b)(i)
of this TMA.
"Basket One Cap" has the meaning set forth in Section 5.02(b)(ii)(C)
of this TMA.
"Basket One Cap Base Amount" has the meaning set forth in Section
5.02(b)(ii)(C).
"Basket One Cap Carryforward" has the meaning set forth in Section
5.02(b)(ii)(C) of this TMA.
"Basket One Deductions" has the meaning set forth in Section
5.02(b)(ii)(B) of this TMA.
"Basket One Tax Rate" has the meaning set forth in Section
5.02(b)(ii)(A) of this TMA.
"Basket Two Amount" has the meaning set forth in Section 5.02(c)(i)
of this TMA.
"Basket Two Carryovers" has the meaning set forth in Section
5.02(c)(ii)(B) of this TMA.
"Basket Two Deductions" has the meaning set forth in Section
5.02(c)(ii)(A) of this TMA.
5
"Closing" and Closing Date" have the meanings set forth in the
Master Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Conversion Merger" has the meaning set forth in the eighth WHEREAS
clause of this TMA.
"Employee Benefit Obligation" means any obligation (whether current
or deferred) for any compensation, pension, severance payment, medical,
retirement or disability benefit, life insurance or any similar employee
benefit.
"Escrow" means the escrow created under the Escrow Agreement.
"Escrow Agreement" has the meaning set forth in Section 6.02(a) of
this TMA.
"Escrow Threshold" has the meaning set forth in Section
6.02(c)(i)(B) of this TMA.
"Extraordinary Events" means (i) unforeseen funding requirements
resulting from damage to MAP properties by storm, fire, or similar
catastrophic events, or (ii) unforeseen expenditures that are mandated by law,
regulation or administrative ruling, in each case that are promulgated after
the Closing Date.
"F Reorganization Merger" has the meaning set forth in the sixth
WHEREAS clause of this TMA.
"Federal Tax Benefit Payments" has the meaning set forth in Section
5.02(a)(i) of this TMA.
"Final Determination" means the final resolution of liability for
any Tax for any taxable period by or as a result of: (i) a final and
unappealable decision, judgment, decree or other order by any court of
competent jurisdiction; (ii) a final closing agreement or accepted offer in
compromise under Code Sections 7121 or 7122, or a comparable agreement under
the laws of any other jurisdiction, which resolves the entire Tax liability
for the entire taxable period; (iii) a duly executed IRS Form 870 or 870-AD
(or any successor forms thereto), on the date such form is effective, or by a
comparable form under the laws of other jurisdictions; except that a Form 870
or 870-AD or comparable 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 shall not
constitute a Final Determination with respect to the right so reserved; (iv)
any allowance of a Refund or credit in respect of an overpayment of such Tax,
but only after the expiration of all periods during which such Refund may be
recovered (including by way of offset) by the jurisdiction imposing such Tax;
(v) the execution of a closing agreement with respect to a pre-filing
agreement described in Rev. Proc. 2001-22, or (vi) any other final disposition
by reason of the expiration of the applicable statute of limitations or by
mutual agreement of the parties hereto.
6
"Fully Funded" has the meaning set forth in Section 6.02(c)(i)(A) of
this TMA.
"HoldCo Businesses" means the Acquired Businesses and the JV
Interests.
"Income Taxes" means any Taxes imposed on or determined by reference
to gross or net income or profits or any other measure of income or profits.
"Independent Entity" has the meaning set forth in Section 9.01 of
this TMA.
"Inflation Factor" means the U.S. GDP Implicit Price Deflator, which
shall be applied annually to adjust prices to constant dollar amounts
beginning with the calendar year following the year of the Closing Date.
"IRS" means the U.S. Internal Revenue Service.
"JV Interests" means the "Membership Interest" and the "LOOP/LOCAP
Interests", as each such term is defined in the Master Agreement.
"JV Entities" means the entities wholly or partially owned, directly
or indirectly, through the ownership of the JV Interests.
"Master Agreement" means the Master Agreement dated as of the date
of this Agreement, among Ashland, HoldCo, New Ashland LLC, New Ashland Inc.,
Marathon, Marathon Company, Merger Sub and MAP.
"Marathon Affiliated Group" has the meaning set forth in the second
WHEREAS clause of this TMA.
"Marathon Group" means (i) the corporations that are members of the
Marathon Affiliated Group and (ii) the corporations that would be members of
the Marathon Affiliated Group but for the fact that they are not includible
corporations under Code Section 1504(b), including in both cases, beginning on
the day after the Closing Date, former members of the Ashland Group that
become members of the Marathon Group by reason of the Acquisition Merger.
"Marathon Tax Matter" means any Tax Item arising from or related to
the ownership or operation of HoldCo or the HoldCo Businesses attributable to
a Post-Closing Period.
"MAP LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of MAP, dated as of December 31, 1998, as amended to the
date of this TMA.
"Net Deduction Method" means, with respect to Specified Liability
Deductions, the deduction of such amounts as they are accrued and recognized
under the accrual method of accounting, net of actual and anticipated
insurance recoveries
7
determined under the accrual method of accounting, in each case applied
consistently from year to year.
"New Ashland Inc. Affiliated Group" has the meaning set forth in the
eleventh WHEREAS clause of this TMA.
"New Ashland Inc. Group" means (i) the corporations that are members
of the New Ashland Inc. Affiliated Group and (ii) the corporations that would
be members of the New Ashland Inc. Affiliated Group but for the fact that they
are not includible corporations under Code Section 1504(b).
"New Ashland Inc. Tax Matter" means any Tax Item (i) arising during
a Pre-Closing Period or (ii) from or related to a Post-Closing Period that is
not a Marathon Tax Matter.
"Non-Bankruptcy Party" has the meaning set forth in Section 8.02(c)
of this TMA.
"Non-Federal Tax Benefit Payment" has the meaning set forth in
Section 5.02(a)(i) of this TMA.
"Option" means any compensatory stock option, stock appreciation
right, restricted stock or similar instrument.
"Other Taxes" means any Taxes other than Income Taxes.
"Pass-Though Items" mean any Tax Items that are passed through to,
and reportable on the Tax Returns of, one or more of the owners of MAP or any
other JV Entity and that could result in an increase or decrease in any such
owner's liability for Taxes.
"Post-Closing Period" means any taxable period, and in the case of a
Straddle Period the portion of any such period, beginning after the Closing
Date.
"Pre-Closing Period" means the Pre-Closing Taxable Periods, and the
portion of any Straddle Period ending on the Closing Date.
"Pre-Closing Taxable Period" means any taxable period ending on or
before the Closing Date.
"Refund" means any refund of Taxes, including any reductions of
Taxes paid or payable by means of credits, offsets or otherwise.
"Residual Business Operations" means former business operations of
Ashland or any current or former member of the Ashland Group, in each case
determined as of the date of this Agreement, that will not be transferred or
deemed to be transferred to New Ashland Inc. pursuant to the Conversion
Merger.
8
"Section 355(e) Taxes" means any Taxes, arising in any taxable
period, resulting from the application of Code Section 355(e) to the Spinoff.
"Specified Liability Deductions" means the amount, in any taxable
period, allowable as deductible expenses for Federal income tax purposes in
respect of Ashland Residual Operations Liabilities (after applying the
applicable limitations, if any, under Code Sections 382 and 384 and Treasury
Regulation Section 1.1502-15).
"Spinoff" has the meaning set forth in the ninth WHEREAS clause of
this TMA.
"Straddle Period" means any taxable period that includes, but does
not end on, the Closing Date.
"subsidiary" has the meaning ascribed to such term in the Master
Agreement.
"Tax" or "Taxes" means all forms of taxation imposed by any federal,
state, local or foreign jurisdiction (including any subdivision and any
revenue agency of such a jurisdiction), including without limitation net
income, gross income, alternative minimum, sales, use, ad valorem, gross
receipts, value added, franchise, license, transfer, withholding, payroll,
employment, excise, severance, stamp, property, custom duty, taxes or
governmental charges, together with any related interest, penalties or other
additional amounts imposed by any federal, state, local or foreign
jurisdiction (including any subdivision and any revenue agency of such a
jurisdiction), and including all liability for or in respect of any of the
foregoing as a result of being a member of a consolidated or similar group or
a partner in an entity treated as a partnership or other pass-through entity
for Tax purposes or as a result of any tax sharing or similar contractual
agreement.
"Tax Authority" means any federal, state, local or foreign
jurisdiction (including any subdivision and any revenue agency of such a
jurisdiction) imposing Taxes and the agency, if any, charged with the
collection of such Taxes for such authority.
"Tax Benefit" means any item of loss, deduction, credit, or any
other Tax Item that decreases Taxes paid or payable.
"Tax Benefit Payments" has the meaning set forth in Section
5.02(a)(i) of this TMA.
"Tax Certificate" means any letter or certificate that is referred
to in, and forms a basis for, a Tax Opinion.
"Tax Claim" has the meaning set forth in Section 8.02(a)(i) of this
TMA.
"Tax Detriment" means any item of income, gain, recapture of credit
or any other Tax Item that increases Taxes paid or payable, or any reduction
in or limitation
9
of, any Tax Item due to the application of Code Sections 382, 384 or Treasury
Regulation Section 1.1502-15.
"Tax Item" means any item of income, gain, loss, deduction, credit,
recapture of credit, or other similar item, that may have the effect of
increasing or decreasing any Tax paid or payable, including any adjustment to
tax basis or any adjustment under Code Section 481.
"Tax Loss" means the increase in Tax paid or payable to the relevant
Tax Authority (or, without duplication, the reduction in any Refund)
attributable to a Tax Detriment.
"Tax Opinion" means the opinions of Cravath, Swaine & Moore LLP and
Miller & Chevalier Chartered concerning certain Federal income tax issues
related to the Transactions to be delivered to Ashland and Marathon,
respectively, pursuant to Section 10.01(f) of the Master Agreement.
"Tax Return" means any return, filing, questionnaire, information
statement, or other document required to be filed, including amended returns
that may be filed for any period or portion thereof with any Tax Authority in
connection with any Tax (whether or not a payment is required to be made with
respect to such filing).
"Tax Ruling" means the IRS private letter ruling received in
response to the Tax Ruling Request.
"Tax Ruling Request" means the private letter ruling request that
will be filed with the IRS by Ashland and Marathon with respect to the
Transactions, together with all exhibits, appendices, and supplements to that
filing.
"Tax Savings" means the decrease in Tax paid or payable to the
relevant Tax Authority (or, without duplication, the increase in any Refund)
attributable to a Tax Benefit.
"Tax Structure" means the manner, order or form in which the
Transactions (currently as contemplated or as amended prior to the Closing)
are effected pursuant to the Master Agreement or any Transaction Agreement.
"Transactions" has the meaning set forth in the fourth WHEREAS
clause of this TMA.
"Transaction Taxes" means Taxes, other than Transfer Taxes, of any
member of the Ashland Group for any Pre-Closing Period or the New Ashland Inc.
Group or the Marathon Group for any taxable period resulting from, or arising
in connection with any portion of the Transactions; for the avoidance of
doubt, Transaction Taxes includes Section 355(e) Taxes.
"Transfer Taxes" has the meaning set forth in Section 2.03 of this
TMA.
10
"Valvoline" means the active trade or business conducted by the
business division of Ashland (and immediately following the Transactions, of
New Ashland Inc.) of the same name.
All capitalized terms used but not defined in this TMA shall have
the meanings ascribed to such terms in the Master Agreement.
ARTICLE II
Indemnification for Taxes
SECTION 2.01. General. (a) Indemnification by New Ashland Inc.
Except as otherwise provided in Sections 2.03, 2.04, 2.05 and Articles V and
VI of this TMA, New Ashland Inc. and each member of the New Ashland Inc. Group
shall be liable for, shall indemnify each member of the Marathon Group
against, and shall be entitled to all Refunds of, less reasonable
out-of-pocket costs and expenses incurred in connection with such Refund, (i)
all Taxes for all Pre-Closing Periods of each member of the Ashland Group and
the Acquired Businesses; (ii) all Taxes for all Post-Closing Periods that are
imposed on or collected from any member of the Marathon Affiliated Group as a
transferee of or successor to HoldCo, pursuant to any law, rule or regulation,
imposed on taxable income or gain that is attributable, in whole or in part,
to events or transactions that occur on or before the Closing Date but that is
recognized for tax purposes in a Post-Closing Period as a result of the
installment method of accounting, completed contract method of accounting, the
long-term contract method of accounting, the recapture of a dual consolidated
loss, Section 481 of the Code (other than any such Taxes imposed by reason of
a change in accounting method by HoldCo or a successor to HoldCo made or
applied for by Marathon or a Member of the Marathon Group after the Closing
Date, unless such change was contemplated by this TMA, or made or applied for
by New Ashland Inc. or a member of the New Ashland Inc. Group, or made by
Marathon with New Ashland Inc.'s consent, or required as a condition of the
Transactions by the Tax Ruling or otherwise), or other provisions of Federal,
state, local or foreign tax law that have a similar effect and all Taxes
attributable to the adoption by HoldCo of the Net Deduction Method with
respect to Specified Liability Deductions; (iii) all Taxes for all taxable
periods of each member of the New Ashland Inc. Group; (iv) all Taxes imposed
on any member of the Marathon Group with respect to insurance recoveries
received by any member of the New Ashland Inc. Group that are attributable to
Residual Business Operations; (v) all Taxes for which any current or former
member of the Ashland Group or the New Ashland Inc. Group is liable under
Treasury Regulation Section 1.1502-6 (or any analogous provision of state,
local or foreign law); (vi) all Taxes payable by Ashland or HoldCo that are
attributable to Pass-Through Items of MAP or any other JV Entity with respect
to any Pre-Closing Period; (vii) all Transaction Taxes; and (viii) all Tax
Losses of any member of the Marathon Group resulting from the failure by any
member of the Ashland Group or the New Ashland Inc. Group, as the case may be,
to use a consistent position as described in the last sentence of Section 3.04
of this TMA.
11
(b) Indemnification by Marathon. Except as otherwise provided in
Sections 2.03, 2.04, 2.05 and Articles V and VI of this TMA, Marathon and each
member of the Marathon Group shall be liable for, and shall indemnify each
member of the New Ashland Inc. Group against, and shall be entitled to all
Refunds of, less reasonable out-of-pocket costs and expenses incurred in
connection with such Refund, (i) all Taxes for all taxable periods of each
member of the Marathon Group, other than as a successor to or transferee of a
former member of the Ashland Affiliated Group by reason of the Acquisition
Merger, and (ii) all Taxes for all taxable periods that are imposed on and
payable by MAP or any JV Entities.
SECTION 2.02. Apportionment of Items for Straddle Periods. (a)
Taxes. Taxes and Refunds of any entity or with respect to the Acquired
Businesses for any Straddle Period shall be apportioned between the
Pre-Closing Period and the Post-Closing Period on the basis of a "closing of
the books" as of the end of the Closing Date, provided that Other Taxes that
are not based on revenues, sales or a similar measure shall be apportioned
between the Pre-Closing Period and the Post-Closing Period based on the number
of days of the relevant taxable period that are in the Pre-Closing Period and
the Post-Closing Period respectively.
(b) Apportionment of Pass-Through Items of MAP and certain other JV
Entities. For purposes of determining the Taxes payable by the owner of a JV
Interest in MAP or any other JV Entity that is treated for purposes of the
relevant Tax as a pass-through entity, the Pass-Through Items for any Straddle
Period of such JV Entity shall be apportioned between the Pre-Closing Period
and the Post-Closing Period on the basis of a "closing of the books" as of the
end of the Closing Date in accordance with Code Section 706(c)(2)(A) and
Treasury Regulation Section 1.706-1(c)(2)(i) (or corresponding principles of
state, local or foreign laws, rules or regulations); provided that Other Taxes
of MAP or such JV Entity that are not based on revenues, sales or a similar
measure shall be apportioned between the Pre-Closing and the Post-Closing
Period based on the number of days of the relevant taxable period that are in
the Pre-Closing Period and the Post-Closing Period respectively.
SECTION 2.03. Transfer Taxes. New Ashland Inc. shall be liable for,
shall indemnify each member of the Marathon Group against, and shall be
entitled to retain all Refunds of, less reasonable out-of-pocket costs and
expenses incurred in connection with such Refund, all transfer, documentary,
sales, use, registration and similar Taxes and related fees incurred in
connection with the Transactions (collectively "Transfer Taxes"). New Ashland
Inc., with Marathon's cooperation, shall timely prepare and file all Tax
Returns relating to Transfer Taxes as may be required to comply with the
provisions of such Tax laws.
SECTION 2.04. Certain Transaction Taxes. Marathon shall be liable
for, shall indemnify each member of the New Ashland Inc. Group against, and
shall be entitled to retain all Refunds of, less reasonable out-of-pocket
costs and expenses incurred in connection with such Refund, any Transaction
Taxes to the extent that such Taxes are primarily attributable to:
12
(a) any inaccurate, written representation or warranty of fact or
intent specifically made by, or specifically attributed to, any member of
the Marathon Group (other than HoldCo) in the Tax Ruling Request, the Tax
Ruling or a Tax Certificate and that is specified on Schedule 2.04
attached hereto (as amended from time to time by the unanimous agreement
of Marathon and Ashland).
(b) any breach by any member of the Marathon Group of a covenant in
Section 7.03(b) of this TMA,
unless such Transaction Taxes would have been imposed without regard to such
inaccuracy or breach.
SECTION 2.05. Gain Recognition Agreement Taxes. Each member of the
New Ashland Inc. Group shall comply with the terms of any Section 367 "gain
recognition agreement" executed by a member of the Ashland Group during a
Pre-Closing Period, including, without limitation, by including the gain, if
any, required to be recognized pursuant to the terms of any such agreement (or
by virtue of the application of any provision of Treasury Regulation Section
1.367(a)-8) and the payment of any Tax that is required to be paid pursuant to
Treasury Regulation Section 1.367(a)-8(b)(3). If a Tax Authority determines
that any member of the Ashland Group or the New Ashland Inc. Group has failed
to comply with the terms of any such agreement or any provision of Treasury
Regulation Section 1.367(a)-8, the New Ashland Inc. Group shall be liable for
any resulting liability for Taxes and each member of the New Ashland Inc.
Group shall indemnify each member of the Marathon Group against any such Tax
liability.
ARTICLE III
Preparation and Filing of Tax Returns
SECTION 3.01. Preparation and Filing of Original Tax Returns. (a)
Ashland (before the F Reorganization Merger), and New Ashland Inc. LLC and New
Ashland Inc. (after the F Reorganization Merger), shall prepare and file, or
cause to be prepared and filed, all Tax Returns (i) of each member of the
Ashland Group (including any Tax Returns related to the Acquired Businesses)
for all Pre-Closing Periods, (ii) of each member of the New Ashland Inc. Group
for all taxable periods and (iii) that it is required to file pursuant to
Section 3.02. Ashland and New Ashland Inc., as the case may be, shall timely
pay all Taxes with respect to such Tax Returns.
(b) On or before the first date following the Closing Date on which
the Ashland Group or the New Ashland Inc. Group is required to make a payment
of actual or estimated Federal income tax for the taxable year in which the
Closing Date occurs or the succeeding taxable year, New Ashland Inc. shall
make, or cause to be made, a payment of actual or estimated Federal income tax
that includes an amount equal to the estimated liability for Section 355(e)
Taxes. At least 20 days prior to making such payment, New Ashland Inc. shall
prepare and deliver to Marathon a schedule setting forth New Ashland Inc.'s
calculation of the estimated amount of the Section 355(e)
13
Taxes. If Marathon, within 10 business days after delivery of any such
schedule, notifies New Ashland Inc. in writing that it objects to the
calculations, which notice shall specify in reasonable detail the basis for
the dispute, both parties shall attempt in good faith to resolve the dispute
and, if they are unable to do so, the disputed items shall be resolved within
a reasonable time by a mutually acceptable certified public accounting firm.
New Ashland Inc.'s calculation of its actual or estimated Federal income tax
payment under this Section 3.01(b) shall take into account the resolution of
the disputed items.
(c) Marathon shall prepare and file, or cause to be prepared and
filed, all Tax Returns (i) of former members of the Ashland Group and
successors thereof that become members of the Marathon Group by reason of the
Acquisition Merger for all Post-Closing Periods, (ii) of each other member of
the Marathon Group for all taxable periods, and (iii) that it is required to
prepare and file pursuant to Section 3.02. Marathon shall timely pay all Taxes
with respect to such Tax Returns.
(d) MAP shall prepare and file, or cause to be prepared and filed,
all Tax Returns of MAP and its subsidiaries for any Pre-Closing Period and any
Straddle Period, and such Tax Returns shall be prepared and filed in a manner
consistent with past practice and in accordance with the MAP LLC Agreement as
in effect immediately prior to the Closing.
SECTION 3.02. Straddle Period Tax Returns. (a) Following the Closing
Date, Marathon and New Ashland Inc. shall meet and prepare a written schedule
that allocates the responsibility for preparing and filing Straddle Period Tax
Returns in each jurisdiction of former members of the Ashland Group and
successors thereof that become members of the Marathon Group by reason of the
Acquisition Merger. If the parties are unable to agree, the party with the
most substantial presence in the jurisdiction, taking into account their
respective assets or businesses, shall have preparation and filing
responsibility. If Marathon and New Ashland Inc. are not able to agree upon
the party with the most substantial presence in a jurisdiction within 60 days
after the Closing Date, the preparation and filing responsibility for the
disputed jurisdictions shall be determined by a mutually acceptable certified
public accounting firm. The filing party shall timely pay all Taxes with
respect to such Straddle Period Tax Returns.
(b) For each Straddle Period Tax Return described in Section 3.01(a)
of this TMA that includes any Marathon Tax Matter, Marathon shall promptly
prepare and provide to New Ashland Inc. any information or documentation
reasonably requested by New Ashland Inc. to facilitate the preparation and
filing of such Tax Return. For each Straddle Period Tax Return described in
Section 3.01(c) of this TMA that includes any New Ashland Inc. Tax Matter, New
Ashland Inc. shall promptly prepare and provide to Marathon any information or
documentation reasonably requested by Marathon to facilitate the preparation
and filing of such Tax Return.
(c) All Straddle Period Tax Returns shall be submitted to the other
party not later than 30 days prior to the due date, including extensions, for
the filing of such Tax Returns (or if such due date is within 45 days
following the Closing Date, as promptly as practicable following the Closing
Date). Such other party shall have
14
the right to review such Tax Returns and to review all workpapers and
procedures used to prepare any such Tax Return. If the nonfiling party, within
10 business days after delivery of any such Tax Return, notifies the filing
party in writing that it objects to any of the Tax Items in such Tax Return,
both parties shall attempt in good faith to resolve the dispute and, if they
are unable to do so, the disputed items shall be resolved within a reasonable
time, taking into account the deadline for filing such Tax Return, by a
mutually acceptable certified public accounting firm. Upon resolution of all
such Tax Items, the filing party shall file the relevant Straddle Period Tax
Return on that basis. The accounting firm shall treat all Tax Returns of the
parties as confidential, and shall not reveal any information contained in, or
any part of, the Tax Returns of one party to the other without prior written
consent. The costs, fees, and expenses of such certified public accounting
firm shall be borne equally by Marathon and New Ashland Inc.
(d) Marathon and New Ashland Inc., as the case may be, shall provide
the other party with a calculation and determination of the amount of the
Straddle Period Taxes that are included in any returns filed by the other
party under Sections 3.01(a) and 3.01(c) of this TMA. In the absence of a
Final Determination, all such determinations shall be prepared in a manner
consistent with past practice. If either party disputes such a determination,
it may make a written request that the other party obtain written confirmation
from a mutually acceptable certified public accounting firm that the
determination is consistent with the preceding sentence. If the accounting
firm issues a confirmation, then such determination shall be binding upon the
parties. If the accounting firm does not issue a confirmation, then the
determination in the returns shall be amended to permit a confirmation to be
issued by the accounting firm in respect of the amended determination. If a
dispute is not resolved prior to the due date of a Tax Return, the Tax Return
shall be filed in accordance with the determination made by the filing party,
and both parties hereby agree to file or cause to be filed an amended Tax
Return, if necessary, reflecting the resolution of the issue by the accounting
firm. The accounting firm shall treat all Tax Returns of the parties as
confidential, and shall not reveal any information contained in, or any part
of, the Tax Returns of one party to the other without prior written consent.
The costs, fees, and expenses of such certified public accounting firm shall
be borne equally by Marathon and New Ashland Inc.
SECTION 3.03. Amended Tax Returns. (a) New Ashland Inc. shall be
entitled to amend any Tax Return described in Section 3.01(a) of this TMA;
provided that, to the extent that such an amendment with respect to a Straddle
Period Tax Return adversely affects any Marathon Tax Matter or would result in
a Tax Detriment to Marathon, such amendment may not be made without the prior
written consent of Marathon, which may not be unreasonably withheld or
delayed. New Ashland Inc. may request that Marathon amend any Straddle Period
Tax Return described in Section 3.01(c) of this TMA that Marathon is obligated
to file, but only to the extent that such amendment affects a New Ashland Inc.
Tax Matter; provided that such an amendment shall be filed only with the prior
written consent of Marathon, which may not be unreasonably withheld or
delayed.
(b) Marathon shall be entitled to amend any Tax Return described in
Section 3.01(c) of this TMA; provided that, to the extent that such an
amendment with
15
respect to a Straddle Period Tax Return adversely affects any New Ashland Inc.
Tax Matter or would result in a Tax Detriment to New Ashland Inc., such
amendment may not be made without the prior written consent of New Ashland
Inc., which may not be unreasonably withheld or delayed. Marathon may request
that New Ashland Inc. amend any Straddle Period Tax Return described in
Section 3.01(a) of this TMA, but only to the extent that such amendment
affects a Marathon Tax Matter or a Tax Item that could result in a Tax
Detriment to Marathon; provided that such an amendment shall be filed only
with the prior written consent of New Ashland Inc., which may not be
unreasonably withheld or delayed.
(c) MAP shall not, and Marathon shall not permit MAP to, amend any
Tax Return of MAP or any of its subsidiaries for any Pre-Closing Period or any
Straddle Period if such amendment would result in a Tax Detriment to New
Ashland Inc. without the prior written consent of New Ashland Inc., which may
not be unreasonably withheld or delayed.
(d) In the event that a party refuses to consent to an amendment to
a Tax Return to which such consent is required pursuant to this Section 3.03
and the parties are unable to resolve their disagreements after good faith
attempts to do so, the parties shall engage a mutually acceptable certified
public accounting firm to estimate the present value of the realizable Tax
Savings of the amendment to the party proposing such amendment and the present
value of the realizable Tax Loss of the amendment to the party withholding its
consent to such amendment. If the accounting firm determines that the present
value of such estimated Tax Savings exceeds the present value of such
estimated Tax Loss, the party proposing such amendment shall be entitled to so
amend the applicable Tax Return, provided that such party agrees to pay to the
party withholding its consent an amount equal to the present value of any such
Tax Loss. The accounting firm shall treat all Tax Returns of the parties as
confidential, and shall not reveal any information contained in, or any part
of, the Tax Returns of one party to the other without prior written consent.
The fees and expenses of the accounting firm shall be borne by the party
proposing such amendment.
SECTION 3.04. Manner of Preparation and Filing. All Tax Returns, and
amendments thereto, described in this Article III shall be filed on a timely
basis by the party responsible for filing such Tax Returns under this
Agreement. Except as provided in this Section 3.04, Section 5.01(b) and
Section 7.03, and except as otherwise required by a Final Determination, all
Tax Returns, and amendments thereto, shall be prepared and filed in a manner
consistent with the provisions of this TMA, the Tax Ruling Request, the Tax
Ruling, and the Tax Opinion. If any Tax Return of a member of the Ashland
Group or the New Ashland Inc. Group (including any Tax Return related to the
Acquired Businesses) for any Pre-Closing Period or any Straddle Period is
prepared and filed in a manner inconsistent with the elections (other than
elections relating to carrybacks and carryforwards described in Section 4.01),
accounting methods, conventions and principles of taxation used for the most
recent taxable period of members of the Ashland Group or New Ashland Inc.
Group, as the case may be, for which Tax Returns involving similar Tax Items
have been filed, New Ashland Inc. and each member of the New Ashland Inc.
Group shall indemnify each member of the Marathon Group against all Tax
16
Detriments and reductions in Tax Benefits that result from the failure to use
a consistent position as provided in Section 2.01(a) of this TMA and shall pay
to Marathon the amount of any resulting Tax Loss within 30 days of the date of
that such Tax Loss is considered to arise under the principles of Section
4.01(c) below.
SECTION 3.05. Agent for Filing Tax Returns. (a) Subject to Section
8.02(c), Marathon, Ashland and HoldCo each hereby designates New Ashland Inc.
as its agent to take any and all actions necessary or incidental to the
preparation and filing by New Ashland Inc. of any Tax Return described in
Section 3.01(a). In addition, Ashland and HoldCo agree that they shall
designate 565 Corporation as the "substitute agent" (as such term is used in
Treasury Regulation Section 1.1502-77(d)) for the Ashland Affiliated Group.
Marathon shall take any and all actions necessary or incidental to obtain the
approval of such designation by the IRS.
(b) Marathon shall be the "Tax Matters Partner" (as defined under
Code Section 6231(a)(7)) of MAP for all Pre-Closing Periods and all
Post-Closing Periods and shall manage the audits of MAP conducted by the IRS
or any other Tax Authority.
SECTION 3.06. Payments And Refunds. (a) To the extent that Marathon
is responsible for filing Straddle Period or other Tax Returns that include
Taxes for which New Ashland Inc. has indemnified Marathon, New Ashland Inc.
shall pay to Marathon the amount of any such Taxes two days prior to the due
date of the Tax Return. To the extent that New Ashland Inc. is responsible for
filing Straddle Period or other Tax Returns that include Taxes for which
Marathon has indemnified New Ashland Inc., Marathon shall pay to New Ashland
Inc. the amount of any such Taxes two days prior to the due date of such Tax
Return.
(b) At any time, either party in its sole discretion may make a
payment to a Tax Authority with respect to Straddle Period Tax Return to stop
the running of interest in whole or in part. The paying party shall provide
the other party with a calculation and determination of the amount of
non-paying party's share of such payment and the non-paying party shall pay
such amount to the paying party within two days after receipt of such notice.
(c) To the extent that Marathon receives a Refund of Taxes for which
New Ashland Inc. has indemnified Marathon, Marathon shall pay to New Ashland
Inc. the amount of such Refund (including any interest received by Marathon)
within ten days. To the extent that New Ashland Inc. receives a Refund of
Taxes for which Marathon has indemnified New Ashland Inc., New Ashland Inc.
shall pay to Marathon the amount of such Refund (including any interest
received by New Ashland Inc.) within ten days.
ARTICLE IV
Certain Tax Items and Tax Positions
SECTION 4.01. Carrybacks and Carryforwards. (a) To the extent
permissible by the applicable Tax law, Marathon shall cause each member of the
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Marathon Group (including former members of the Ashland Group) not to
carryback any Tax Item attributable to a Post-Closing Tax Period to a
Pre-Closing Tax Period of a member of the Ashland Group or of the New Ashland
Inc. Group. To the extent that Marathon is not permitted by applicable law to
forgo such carryback and requests that New Ashland Inc. obtain a Refund of Tax
with respect to such carryback, then New Ashland Inc. shall take all
reasonable measures to obtain a Refund with respect to the carryback
(including by filing an amended return) and shall pay to Marathon the Tax
Savings realized by any member of the New Ashland Inc. Group by reason of such
carryback, including any interest received thereon (provided, further, that
the out-of-pocket costs associated with claiming any such carryback shall be
borne by Marathon). To the extent that a carryback of a Tax Item attributable
to a Post-Closing Tax Period to a Pre-Closing Tax Period of a member of the
New Ashland Inc. Group (including a former member of the Ashland Group)
results in a Tax Detriment to any member of the New Ashland Inc. Group (or
former member of the Ashland Group), Marathon shall pay to New Ashland Inc.
the Tax Loss realized by the New Ashland Inc. Group by reason of such
carryback.
(b) To the extent permissible by the applicable Tax law, with
respect to any Tax Item attributable to a Pre-Closing Tax Period that may be
carried forward to a Post-Closing Tax Period of a member of the Marathon Group
(including a former member of the Ashland Group), New Ashland Inc. shall cause
each member of the New Ashland Inc. Group or of the Ashland Group to carry
back any such Tax Item and not to carry forward any such Tax Item to such a
Post-Closing Tax Period of a member of the Marathon Group (including a former
member of the Ashland Group). To the extent that New Ashland Inc. is not
permitted by applicable law to carry back such Tax Item or to forgo such carry
forward of such Tax Item and requests that Marathon obtain a Refund, reduction
or offset of Tax with respect to such carry forward, then Marathon shall take
all reasonable measures to obtain such a Refund, reduction or offset with
respect to the carry forward (including by filing an amended return) and shall
pay to New Ashland Inc. the Tax Savings realized by any member of the Marathon
Group by reason of such carry forward, including any interest received thereon
(provided, further, that the out-of-pocket costs associated with claiming any
such carryforward shall be borne by New Ashland Inc.). To the extent that a
carry forward of a Tax Item, including without limitation, a foreign oil
extraction loss as defined in Code Section 907(c), attributable to a
Pre-Closing Tax Period to a Post-Closing Tax Period of a member of the
Marathon Group (including a former member of the Ashland Group) results in a
Tax Detriment to any member of the Marathon Group, New Ashland Inc. shall pay
to Marathon the Tax Loss realized by the Marathon Group by reason of such
carry forward.
(c) A party shall be considered to realize a Tax Savings with
respect to a Tax Benefit, or a Tax Loss with respect to a Tax Detriment, to
the extent, and only to the extent, that the amount of Taxes it is actually
required to pay to the applicable Tax Authority for a taxable period is
- -decreased or increased (respectively) from the amount of Taxes it would have
actually been required to pay to such Tax Authority for such taxable period in
the absence of such Tax Benefit or Tax Detriment. Such Tax Savings or Tax Loss
shall be considered to arise at the time that such party's decreased or
increased payment (respectively) for such taxable period is first due or
otherwise actually realized
18
as a change in the amount of Tax or Refund, reductions or credit of Tax then
due and payable. If any party is considered under subsection (a) or (b) of
this Section 4.01 to realize a Tax Savings for which it is required to make a
payment, or Tax Loss with respect to which the other party is required to make
a payment, the party required to make such payment shall make such payment
within 30 days of the date such Tax Savings or Tax Loss is considered to
arise.
(d) For purposes of this Section 4.01, a Tax Item is deemed to be
attributable to the taxable period in which it first accrued or was otherwise
taken into account for Tax purposes. For the avoidance of doubt, a net
operating loss, foreign tax credit or similar Tax Item is deemed to be
attributable to the taxable period in which the loss, foreign tax or
equivalent event giving rise to such Tax Item first accrued or was otherwise
taken into account for Tax purposes.
SECTION 4.02. Special Allocation of Certain Deductions. Ashland and
Marathon Company shall execute and deliver an amendment to the MAP LLC
Agreement, in the form attached hereto as Exhibit A, that shall specially
allocate to Marathon Company any Pass-Through Items that would be allocable to
New Ashland Inc. in the absence of such amendment and that are attributable to
a payment that is (1) described in Section 12.01(d)(vii) of the Master
Agreement, which results in a special non-pro rata distribution to Ashland, or
(2) made with respect to the St. Paul Park QQQ Project or the Plains
Settlement (as both are described in Section 9.09 of the Master Agreement). If
any such payment produces a Tax Benefit for any member of the New Ashland Inc.
Group, then New Ashland Inc. shall pay to Marathon the amount of any resulting
Tax Savings actually realized by such member of the New Ashland Inc. Group
within 30 days of the date that such Tax Savings is realized. Such Tax Savings
shall be considered to be realized by a member of the New Ashland Inc. Group
or the Marathon Group, as the case may be, pursuant to the principles of
Section 4.01(c) above.
SECTION 4.03. Increase in Tax Basis of Certain MAP Deductions for
Post-Closing Payments. If as a result of a Final Determination with respect to
whether certain refinery assets contributed by Ashland to MAP are considered
to be asset class 13.3 (Petroleum Refining) or 28.0 (Manufacture of Chemicals
and Allied Products), New Ashland Inc. pays any additional Tax with respect to
a Pre-Closing Tax Period, and such Final Determination results in the increase
in the adjusted Tax basis as of the date of such contribution of any asset or
property of MAP that was contributed by Ashland to MAP, Marathon shall cause
MAP to take depreciation deductions with respect to such additional Tax basis
to the maximum extent allowed, and as promptly as permitted, by applicable
law, which shall include Marathon causing MAP to amend any relevant Tax Return
of MAP. Marathon shall pay to New Ashland Inc. the amount of any Tax Savings
realized by a member of the Marathon Group as a result of the use of such
additional Tax basis within 30 days of the date that such Tax Savings is
realized under the principles of Section 4.01(c) above.
19
ARTICLE V
Specified Liability Deductions
SECTION 5.01. Deduction of Specified Liability Deductions. (a)
Request for Tax Ruling. The parties will request the IRS to issue a private
letter ruling holding that New Ashland Inc. is entitled to claim the Specified
Liability Deductions. If the IRS issues such a private letter ruling, the
Specified Liability Deductions shall be claimed by New Ashland Inc. on the New
Ashland Inc. Affiliated Group's consolidated Federal income tax return and not
by Marathon or any member of the Marathon Group.
(b) Request for Alternative IRS Ruling. If the IRS is unwilling to
issue the ruling described in Section 5.01(a) above, the parties will request
the IRS to issue a private letter ruling holding that HoldCo (which shall
include for purposes of this Article V Marathon or any member of the Marathon
Affiliated Group that is the "acquiring corporation" of HoldCo in the
Acquisition Merger within the meaning of Code Section 381(a)) is entitled to
claim the Specified Liability Deductions under the Net Deduction Method and
that the use of the Specified Liability Deductions by HoldCo is not limited
under Code Sections 382, 384 or Treasury Regulation Section 1.1502-15 (the
"Alternative Ruling"). If the IRS issues the Alternative Ruling, the Specified
Liability Deductions shall be claimed by HoldCo on the Marathon Affiliated
Group's consolidated Federal income tax return for each taxable period in
which the Alternative Ruling is in effect and not by New Ashland Inc. or any
member of the New Ashland Inc. Group, except as otherwise provided in Section
5.01(c) below. The amount of the Specified Liability Deductions claimed by
Marathon shall be determined under the Net Deduction Method unless the parties
agree in writing that a different method should be used or unless there is a
Final Determination requiring a different method. Unless explicitly provided
to the contrary in this Article V, Marathon shall retain full control over all
Tax Items on its Tax Returns.
(c) Litigation in the Event of Alternative IRS Ruling. (i) If the
IRS issues the Alternative Ruling, the parties will use their commercially
reasonable best efforts to initiate a judicial proceeding (and any necessary
administrative proceedings) to obtain a Final Determination that New Ashland
Inc. is entitled to claim the Specified Liability Deductions; provided,
however, that the parties shall not initiate such a judicial proceeding unless
and until they have entered into the agreement described in Section
5.01(c)(ii) below; and provided further that the parties shall not initiate
such a judicial proceeding if either New Ashland Inc. or Marathon determines,
in its good faith judgment, that it is reasonably possible that such a
proceeding may result in adverse consequences to New Ashland Inc. or Marathon,
respectively. Possible adverse consequences include but are not limited to
causing the Tax Ruling not to be binding on the IRS; credit risk; possible
impairment of the reputation of either party; and possible impairment of the
relationship between either party and the IRS. The parties expect that any
such proceeding shall be initiated by an amended return filed by New Ashland
Inc. claiming the Specified Liability Deductions and requesting a Refund of
Tax based on that claim and, if the IRS does not timely grant that Refund, a
lawsuit filed by New Ashland Inc.
20
in the appropriate Federal court (as determined by New Ashland Inc. in its
sole reasonable discretion) seeking such Refund.
(ii) Before initiating such a proceeding, the parties shall
negotiate in good faith to attempt to reach and enter into an agreement
specifying the appropriate actions, if any, to be taken by the Marathon
Affiliated Group with respect to its claim of such Specified Liability
Deductions for such taxable years, and the recomputation and possible reversal
of any Tax Benefit Payments made by Marathon with respect to such taxable
years. The goals of such negotiation shall be to preserve the Tax Benefits of
the Specified Liability Deductions for all relevant taxable years in a manner
that is consistent with such Final Determination, the Tax Ruling and the
economic arrangements described in this Article V, and that keeps Marathon
whole for any assessments of Tax resulting from such Final Determination
without subjecting Marathon to any significant incremental credit risk. If
agreement is reached, the parties shall execute an agreement binding on both
parties.
(iii) If such a proceeding results in a Final Determination that New
Ashland Inc. is entitled to claim the Specified Liability Deductions, then New
Ashland Inc. shall claim the Specified Liability Deductions on the New Ashland
Inc. Affiliated Group's consolidated Federal income tax returns that are due
on or after the date of such Final Determination and neither Marathon nor any
member of the Marathon Group shall claim such deductions on returns filed
after such date. New Ashland Inc. shall be entitled to claim Specified
Liability Deductions for prior years only to the extent provided in the
agreement described in Section 5.01(c)(ii) above.
SECTION 5.02 Tax Benefit Payments from Marathon to New Ashland Inc.
(a) (i) If the IRS issues the Alternative Ruling, then for each taxable year
for which HoldCo claims the Specified Liability Deductions it shall make a
payment to New Ashland Inc. in respect of the Federal Tax Benefits
attributable to such Specified Liability Deductions (the "Federal Tax Benefit
Payment") and one or more payments to New Ashland Inc. in respect of the
state, local or foreign Tax Benefits attributable to such Specified Liability
Deductions (the "Non-Federal Tax Benefit Payment" and, together with the
Federal Tax Benefit Payment, the "Tax Benefit Payments").
(ii) The Federal Tax Benefit Payment for a taxable year shall equal
the sum of the Basket One Amount and the Basket Two Amount for such taxable
year. The Non-Federal Tax Benefit Payment for a taxable year shall be
determined with respect to the entire amount of Specified Liability Deductions
for such taxable year on a "with and without" basis under the methodology and
principles applicable solely to the Basket Two Amount, with appropriate
adjustments to reflect the differences between the Code and the applicable Tax
law for such purpose, and there shall be no Basket One Amount or Basket One
Deductions for such purpose. For purposes of calculating the Tax Benefit
Payments, the amount of the Specified Liability Deductions shall be determined
using the Net Deduction Method unless the parties agree in writing that a
different method should be used or unless there is a Final Determination
requiring a different method.
21
(iii) The Tax Benefit Payments shall be paid directly to New Ashland
Inc. or placed in escrow as provided in Article VI below.
(b) (i) Basket One Amount. For each taxable year of HoldCo ending on
or before January 1, 2025, the Basket One Amount shall equal the Basket One
Tax Rate multiplied by the Basket One Deductions for such taxable year. For
each taxable year ending on or after January 1, 2025, the Basket One Amount,
and the Basket One Deductions, shall be $0.00.
(ii) Definitions.
(A) The Basket One Tax Rate for a taxable year shall equal the
highest marginal Federal income tax rate applicable to corporations for
such taxable year minus 3 percentage points. As of the date of this TMA,
the Basket One Tax Rate is 32% (35% -- currently the highest marginal
Federal income tax rate applicable to corporations (Section 11 of the
Code) -- minus 3 percentage points).
(B) The Basket One Deductions for a taxable year shall equal the
lesser of (I) the Specified Liability Deductions for such taxable year
and (II) the Basket One Cap for such taxable year.
(C) The Basket One Cap for a taxable year shall equal (I) $30
million adjusted by the Inflation Factor, but in no event more than $60
million (the "Basket One Cap Base Amount"), plus (II) the unused Basket
One Cap Carryforward, if any, from each of the two preceding taxable
years. The Basket One Cap Carryforward originating in a taxable year
shall equal the excess, if any, of the Basket One Cap Base Amount for
such taxable year over the Specified Liability Deductions for such
taxable year. Specified Liability Deductions for a taxable year shall be
considered to be used first against, and to the extent of, the Basket One
Cap Base Amount for such taxable year. For purposes of determining the
amount of the Basket One Cap Carryforward "used" in a particular taxable
year, the excess, if any, of the Specified Liability Deductions for that
taxable year over the Basket One Cap Base Amount for such taxable year
shall be considered to be used first against, and the extent of, the
Basket One Cap Carryforward originating in the second preceding taxable
year; and next against, and to the extent of, the Basket One Cap
Carryforward originating in the immediately preceding taxable year.
(c) (i) Basket Two Amount. The Basket Two Amount for a taxable year
shall be determined on a "with and without" basis to measure the actual Tax
savings realized by the Marathon Affiliated Group from its use of Basket Two
Deductions and Basket Two Carryovers, and shall equal the excess (if any) of
(A) the amount of Federal income tax that the Marathon Affiliated Group would
have been required to pay with respect to such taxable year if there were no
Basket Two Deductions for, and no Basket Two Carryovers to, such taxable year
over (B) the amount of Federal income tax that the Marathon Affiliated Group
was actually required to pay with respect to such taxable year.
22
(ii) Definitions.
(A) The Basket Two Deductions for a taxable year shall equal the
excess, if any, of (I) the total Specified Liability Deductions for such
taxable year over (II) the Basket One Deductions for such taxable year.
(B) The Basket Two Carryovers to a taxable year shall equal the
amount of Basket Two Carryovers originating in other taxable years and
carried forward or carried back to such taxable year. The Basket Two
Carryovers originating in a taxable year are the carryovers of net
operating losses, excess foreign tax credits, minimum tax credits or
other Tax Items of the Marathon Affiliated Group, if any, that originate
in such year under the principles of the Code, but only to the extent
such carryovers are greater than the amount of such carryovers that would
have originated in such taxable year if the Marathon Affiliated Group had
no Basket Two Deductions for such taxable year and no Basket Two
Carryovers to such taxable year. Carryovers of all Tax Items shall be
considered to be subject to the rules of the Internal Revenue Code and
the Treasury Regulations governing the carry forward, carryback, use,
limitation and expiration of carryovers of the relevant type of Tax Item.
If the carryover of a Tax Item originating in a taxable year includes a
portion that is a Basket Two Carryover and another portion that is not a
Basket Two Carryover, such portions shall be considered to be used on a
"with and without basis" as described in Section 5.02(c)(i) above.
(d) Redeterminations. The Basket One Amount for a taxable year, once
determined, shall not be redetermined for any reason other than an adjustment
in the amount of the Specified Liability Deductions for such taxable year
resulting from a Tax Claim with respect to the New Ashland Inc. Affiliated
Group or the Marathon Affiliated Group by a Tax Authority. The Basket Two
Amount for a taxable year shall be redetermined at appropriate times (e.g.,
payment, refund, or Final Determination), taking into account actual
adjustments with respect to Tax Claims and subsequent events that affect the
calculation of the Basket Two Amount, including carry forwards and carrybacks.
Payments of the increased or decreased amount of any Tax Benefit Payments for
any taxable year shall be made as provided in Article VI below.
(e) Verification by Accounting Firm. For each taxable year, unless
Marathon and New Ashland Inc. otherwise agree, New Ashland Inc. at its own
expense will cause a nationally recognized accounting firm to prepare and
deliver to Marathon a certificate, in a form acceptable to Marathon, verifying
the amount and deductibility of the Specified Liability Deductions for such
taxable year (taking into account any issues raised by the IRS from time to
time). New Ashland Inc. will at its own expense provide to Marathon a written
opinion of Cravath, Swaine & Moore LLP or any other law firm acceptable to
Marathon, which opinion shall be addressed to New Ashland Inc. and may rely on
the Alternative Ruling, to the effect that Marathon will be entitled to deduct
the Specified Liability Deductions on its Tax Return. Such opinion shall be
updated or amended, from time to time, as Marathon may reasonably request to
take into account material changes in facts or in law. For each taxable year,
unless Marathon and New Ashland Inc. otherwise agree, Marathon at its own
expense will cause a nationally
23
recognized accounting firm to prepare and deliver to New Ashland Inc. a
certificate verifying the amount of Tax Benefit Payments for such taxable
year, provided that no such verification shall be required with respect to
Non-Federal Tax Benefit Payments with respect to any jurisdiction in which the
Tax liability of Marathon and the other members of the Marathon Group for such
taxable year is less than $500,000 unless New Ashland Inc. agrees to bear the
cost of such verification.
(f) (i) Principles and Examples. The parties have set forth the
examples in Exhibit B attached hereto to illustrate the application of this
Article V and of Article VI below. The parties have also agreed that Tax
Benefit Payments in respect of the Basket One Amount shall be payable without
regard to whether Marathon or any member of the Marathon Group realizes an
actual Tax savings from the use of the Basket One Deductions; that Tax Benefit
Payments in respect of the Basket Two Amount shall be payable only to the
extent that the Marathon Affiliated Group realizes an actual Tax savings from
the use of the Basket Two Deductions on a "with and without" basis; and that
any Specified Liability Deduction shall potentially give rise to a single
Basket One Amount or Basket Two Amount and shall not be double-counted. Any
uncertainties or ambiguities in the computation of the Tax Benefit Payments
for any taxable year shall be resolved in a manner that is consistent with the
examples in Exhibit B and with such principles.
(ii) Short Taxable Years. The provisions of Article V and Article VI
are based on taxable years of twelve full months. The application of such
provisions shall be appropriately adjusted in the event of one or more taxable
years of less than 12 months to effectuate the goals and principles of Article
V and Article VI.
(iii) Successors. In the event that there is a successor to the New
Ashland Inc. Affiliated Group or the Marathon Affiliated Group, the provisions
of this Article V shall be applied to such successors as if they were the New
Ashland Inc. Affiliated Group or the Marathon Affiliated Group, respectively.
ARTICLE VI
Payments of Tax Benefit Amounts; Escrow
SECTION 6.01 Time of Tax Benefit Payments. (a) Original Payments.
Subject to Section 6.02 below, Marathon shall pay to New Ashland Inc. or place
in Escrow, as the case may be, the amount of the Tax Benefit Payment as
follows:
(i) Federal Tax Benefit Payments. If New Ashland Inc. provides to
Marathon a good faith estimate of the amount of the Specified Liability
Deductions for a calendar year by November 30th of such year, and verification
of the Specified Liability Deductions as required in Section 5.02(e) for such
calendar year by February 28th of the following year, then Marathon shall pay
to New Ashland Inc. or Escrow, as the case may be, the amount of the Federal
Tax Benefit Payment for the taxable year corresponding to
24
such calendar year either (A) within 10 days after the due date of the
Marathon corporate income Tax Return without extensions for such taxable year
(generally March 15th), or (B) within 10 days after the due date of the
corporate income Tax Return for the Marathon Affiliated Group, with extensions
for such calendar year (generally September 15th), with interest from the due
date of such Tax Return without extension to the date of payment at the
Marathon short-term borrowing rate for the applicable period. If New Ashland
Inc. does not provide to Marathon the estimate and the actual determination of
the Specified Liability Deductions within the time requirements of the
preceding sentence, then Marathon shall pay to New Ashland Inc. or Escrow, as
the case may be, the amount of the Federal Tax Benefit Payment for such
taxable year within 10 days of the later of (A) the date on which New Ashland
Inc. provides such determination to Marathon and (B) the due date of the
Federal corporate income Tax Return for the Marathon Affiliated Group, with
extensions for such taxable year (generally September 15th), in each case
without interest.
(ii) Non-Federal Tax Benefit Payments. Marathon shall pay to New
Ashland Inc. or Escrow, as the case may be, in each case without interest, the
amount of the Non-Federal Tax Benefit Payments for a taxable year within 30
days after the due date of the relevant HoldCo separate or combined, as the
case may be, state, local or foreign Tax Returns, with extensions.
(b) Redeterminations. If an event giving rise to the redetermination
of a Tax Benefit Payment for any taxable year occurs as provided in Section
5.02(d) above, the party becoming aware of such event shall promptly notify
the other party.
(i) If such redetermination increases the amount of such Tax Benefit
Payment, then within 30 days after the receipt by Marathon of a Refund
corresponding to such Tax Benefit Payment, or, if there is no such Refund,
then within 30 days after such redetermination, Marathon shall pay to New
Ashland Inc. or Escrow, as the case may be, the amount of such increase,
together with the corresponding amount of interest (if any) payable by the
relevant Tax Authority with respect to such redetermination.
(ii) If such redetermination decreases the amount of such Tax
Benefit Payment, then, within 30 days after the payment by Marathon of the Tax
corresponding to such redetermination, or, if there is no such Tax payment,
then within 30 days after such redetermination, the amount of such decrease
(including any interest, penalty or addition to Tax resulting from such
redetermination) shall be paid to Marathon as provided in this Section
6.01(b)(ii). Such decrease shall be paid first by paying to Marathon amounts
in Escrow up to the amount of such decrease (and all future payments to New
Ashland Inc. under this TMA for the current taxable year and subsequent
taxable years shall be escrowed until the Escrow is Fully Funded, as provided
in Section 6.02(c) below). If such decrease exceeds the amount so paid to
Marathon from the Escrow, New Ashland Inc. shall pay such excess to Marathon;
provided that if the total amount that New Ashland Inc. would be required to
pay to Marathon in a particular calendar year under this Section 6.01(b)(ii)
as a result of any and all redeterminations exceeds $25 million, then New
Ashland Inc. may pay such excess over $25 million in eight equal semi-annual
payments, with the first payment due six months from the date of such
25
redetermination, with interest computed at an interest rate as reasonably
determined by Marathon to be the market rate for four-year amortizing loans
available to companies with credit ratings similar to that of New Ashland
Inc.; provided further that if New Ashland Inc. undergoes a Bankruptcy Event,
all such amounts shall be immediately due and payable to Marathon.
SECTION 6.02 Escrow. (a) Escrow Agreement. In the event that any Tax
Benefit Payments are required under this Agreement to be placed in Escrow, the
parties will execute an Escrow Agreement in the form as to be agreed to by the
parties and attached hereto as Exhibit C to this TMA. Unless otherwise agreed
by the parties, The Bank of New York shall serve as escrow agent under the
Escrow Agreement. The out-of-pocket costs and expenses of creating and
maintaining the Escrow, including the fees of the escrow agent, shall be
shared equally by Marathon and New Ashland Inc.
(b) Basket One Benefits. Except as otherwise provided in this
Section 6.02(b), all Tax Benefit Payments in respect of Basket One Amounts
shall be paid by Marathon directly to New Ashland Inc. and shall not be placed
in Escrow. Notwithstanding the foregoing, Tax Benefit Payments in respect of
Basket One Amounts shall be placed in Escrow in the following circumstances:
(i) If New Ashland Inc. has undergone a Bankruptcy Event, all Tax
Benefit Payments in respect of Basket One Amounts otherwise payable by
Marathon to New Ashland Inc. on or after the date of such Bankruptcy Event
shall be placed in Escrow as if they were in respect of Basket Two Amounts
until such time that any judgment, order, proceeding or petition that
constitutes a Bankruptcy Event has been dismissed or discharged.
(ii) In the circumstances described in Section 6.02(d) below.
(c) Basket Two Benefits. Except as otherwise provided in this
Section 6.02(c) all Tax Benefit Payments in respect of Basket Two Amounts
shall be paid by Marathon directly to New Ashland Inc. and shall not be placed
in Escrow. Notwithstanding the foregoing, Tax Benefit Payments in respect of
Basket Two Amounts shall be placed in Escrow in the following circumstances:
(i) If the Escrow is not Fully Funded at the time that such a Tax
Benefit Payment for a taxable year is required to be made, then the amount of
such Tax Benefit Payment necessary to cause the Escrow to be Fully Funded
shall be placed in Escrow.
(A) The Escrow shall be considered to be Fully Funded at the time a
Tax Benefit Payment for a taxable year is required to be made if the
amount in the Escrow at such time is equal to the excess (if any) of
(I) the total amount of Tax Benefit Payments other than Basket One
Amounts paid or payable for such taxable year and the four preceding
taxable years over (II) the Escrow Threshold at such time.
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(B) If New Ashland Inc. has a credit rating provided by Moody's or
Standard & Poor (or successors thereto) at the relevant time, the
Escrow Threshold at any time shall equal:
a. If the credit rating of New Ashland Inc. is either a BB+
or Ba1 or higher, unlimited.
b. If the credit rating of New Ashland Inc. is either a BB or
Ba2, $50 million (for the calendar years 2005 through
2009); $55 million (for the calendar years 2010 through
2014); or $60 million (for calendar years after 2014).
c. If the credit rating of New Ashland Inc. is either a BB-
or Ba3, $25 million.
d. If the credit rating of New Ashland Inc. is (A) below BB-
or Ba3, or (B) New Ashland Inc. undergoes a Bankruptcy
Event, $0; provided, however, that this subparagraph (B)
will not apply after the date that any judgment, order,
proceeding or petition that constitutes a Bankruptcy Event
has been dismissed or discharged.
(C) If, at the time any Tax Benefit Payment for a taxable year is
required to be made, New Ashland Inc. does not have a credit rating
provided by Moody's or Standard & Poor (or successors thereto), New
Ashland Inc. will obtain, at its own cost, from Moody's or Standard
& Poor, or both, a pro forma credit rating and provide such rating
to Marathon prior to the time of such Tax Benefit Payment. Such
rating will be updated at least annually.
(ii) In the circumstances described in Section 6.02(d) below.
(d) Certain Changes in Escrow Threshold. If the Escrow Threshold
decreases as a result of a reduction in the credit rating of New Ashland Inc.,
the occurrence of a Bankruptcy Event with respect to New Ashland Inc. or the
payment of Escrowed funds to Marathon in respect of a redetermination of a Tax
Benefit Payment as provided in Section 6.01(b) above, and as a result the
Escrow is not Fully Funded, then all payments to New Ashland Inc. under this
TMA, net of set-off, including all Tax Benefit Payments in respect of Basket
One Amounts and Basket Two Amounts, shall be placed in Escrow until the Escrow
is Fully Funded.
(e) Release of Escrowed Amounts. Except as provided in Section
6.02(d) above, any amounts placed in Escrow in respect of a Tax Benefit
Payment for a taxable year shall be released from Escrow upon the fifth
anniversary of the filing of the corporate income Tax Return for the Marathon
Affiliated Group for such taxable year and shall be paid directly to New
Ashland Inc. If, as a result of an upgrade in New Ashland Inc.'s credit rating
or any other event, the amount in the Escrow exceeds the amount required to
cause the Escrow to be Fully Funded, then the amount of such
27
excess shall be promptly released from the Escrow and paid directly to New
Ashland Inc. Whenever Escrowed Amounts are required to be released to New
Ashland Inc. pursuant to this Section 6.02(e), Marathon and New Ashland Inc.
shall promptly deliver to the escrow agent detailed written instructions
directing the release of such Escrowed Amounts, signed on behalf of both
Marathon and New Ashland Inc.
(f) Other Arrangements. The Escrow arrangements described in this
Section 6.02 may be replaced with other credit support reasonably acceptable
to and approved by Marathon, which approval shall not be unreasonably
withheld.
ARTICLE VII
Covenants, Representations and Warranties
SECTION 7.01. Representations and Warranties of Ashland and New
Ashland Inc. Ashland and New Ashland Inc., jointly and severally, represent
and warrant to Marathon that, as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date:
(a) It knows of no fact that could reasonably be expected to cause
any representation, warranty or other statement contained in the Tax Ruling
Request, the Tax Ruling, a Tax Certificate or the Tax Opinion to be incorrect
(including by omission of a material fact).
(b) No member of the New Ashland Inc. Group has any current plan or
intention to take any action, or fail to take any action, that would be
inconsistent with any representation, warranty or other statement made by, or
that relates primarily to, any member of the New Ashland Inc. Group and is
contained in the Tax Ruling Request, the Tax Ruling, a Tax Certificate or the
Tax Opinion.
(c) New Ashland Inc. will use its reasonable best efforts, with the
assistance and participation of Marathon, to have at least $25 million dollars
on deposit, decreased for any amounts applied against Taxes for Pre-Closing
Tax Periods (other than Federal Income Taxes shown as owing on any Tax Returns
for the Ashland Affiliated Group's 2003, 2004 and 2005 fiscal years), with the
IRS with respect to liabilities for Taxes for Pre-Closing Tax Periods
(including interest on such amounts). This amount shall be used (to the extent
necessary) for the payment or settlement of such Taxes and interest and shall
not be withdrawn prior to a Final Determination with respect to such Taxes and
interest. Any portion of such deposit that is not used for the payment or
settlement of Taxes for such periods (including interest on such amounts)
shall be paid to New Ashland Inc.
(d) Following the Transactions, New Ashland Inc. intends to continue
the active conduct of Valvoline, independently and with its separate officers,
directors, and employees, and New Ashland Inc. does not plan any substantial
reduction in business activity of Valvoline.
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SECTION 7.02. Representations and Warranties of Marathon. Marathon
represents and warrants to Ashland and New Ashland Inc. that, as of the date
of this Agreement and as of the Closing Date as though made on the Closing
Date:
(a) It knows of no fact that could reasonably be expected to cause
any representation, warranty or other statement contained in the Tax Ruling
Request, the Tax Ruling, a Tax Certificate or the Tax Opinion to be incorrect
(including by omission of a material fact).
(b) No current member of the Marathon Group has any current plan or
intention to take any action, or fail to take any action, that would be
inconsistent with any representation, warranty or other statement made by, or
that relates primarily to, any member of the Marathon Group and is contained
in the Tax Ruling Request, the Tax Ruling, a Tax Certificate or the Tax
Opinion.
(c) For the two-year period following the Transactions, Marathon
intends to continue the active conduct of the Acquired Businesses,
independently and, except as described in the Tax Ruling Request, with their
separate officers, directors and employees, and Marathon does not plan any
substantial reduction in business activity for the Acquired Businesses during
such period.
SECTION 7.03. Covenants of New Ashland Inc. and Marathon. (a) (i)
Each of Ashland and New Ashland Inc. agrees that it shall not take or omit to
take, and shall not permit any of the Ashland Group or the New Ashland Inc.
Group, respectively, to take or omit to take, any action that will, or would
reasonably be expected to, cause any written representation contained in the
Tax Ruling Request, Tax Ruling, a Tax Certificate or the Tax Opinion to be
incorrect.
(ii) Each of Ashland and New Ashland Inc. agrees that it shall, and
shall cause each member of the Ashland Group and the New Ashland Inc. Group,
respectively, to prepare and file all Tax Returns on a basis consistent with
the Tax Ruling and the Tax Opinion, except as otherwise required by Article V
or a Final Determination; provided that, to the extent that the Tax Ruling and
the Tax Opinion are inconsistent in any respect, such Tax Returns shall be
prepared and filed on a basis consistent with the Tax Ruling.
(iii) New Ashland Inc. will use its reasonable best efforts, with
the assistance and participation of Marathon, to maintain at least $25 million
dollars, decreased for any amounts applied against Taxes for Pre-Closing Tax
Periods (other than Federal Income Taxes shown as owing on any Tax Returns for
the Ashland Affiliated Group's 2003, 2004 and 2005 fiscal years), on deposit
with the IRS for Taxes for Pre-Closing Tax Periods (including interest on such
amounts). This amount shall be used (to the extent necessary) for the payment
or settlement of such Taxes and interest and shall not be withdrawn prior to a
Final Determination with respect to such Taxes and interest. Any portion of
such deposit that is not used for the payment or settlement of Taxes for such
periods (including interest on such amounts) shall be paid to New Ashland Inc.
29
(b) (i) Marathon agrees that, for a period beginning on the Closing
Date and ending two years after the Closing Date, it shall not take or omit to
take, and shall not permit any member of the Marathon Group to take or omit to
take, any action that will, or would reasonably be expected to, cause any
written representation contained in the Tax Ruling Request, Tax Ruling, or a
Tax Certificate, and that is specified on Schedule 2.04 attached hereto, to be
incorrect.
(ii) Marathon agrees that it shall, and shall cause each member of
the Marathon Group to, prepare and file all Tax Returns on a basis consistent
with the Tax Ruling and the Tax Opinion, except as otherwise required by
Article V or a Final Determination; provided that, to the extent that the Tax
Ruling and the Tax Opinion are inconsistent in any respect, such Tax Returns
shall be prepared and filed on a basis consistent with the Tax Ruling.
(iii) Marathon agrees that, for a period beginning on the Closing
Date and ending two years after the Closing Date, it (A) shall not, and shall
cause each member of the Marathon Group not to, amend the Company Leverage
Policy set forth in Schedule 8.14 to the MAP LLC Agreement, as such Policy is
amended and restated as of March 18, 2004 and (B) shall cause MAP to comply at
all times with such Company Leverage Policy; provided that, Marathon may amend
the Company Leverage Policy to the extent that both Marathon and New Ashland
Inc. reasonably agree is consistent with the Tax Ruling.
(iv) Marathon agrees that, for a period beginning on the Closing
Date and ending two years after the Closing Date, it shall not, and shall
cause each member of the Marathon Group not to, make any capital contribution
of money or other property to MAP or any JV Entity (including any capital
contribution pursuant to Article IV of the MAP LLC Agreement or any other
provision of the MAP LLC Agreement) other than capital contributions (i) that
are the result of, and in response to, Extraordinary Events; or (ii) if the
Tax Ruling includes a ruling that the MAP Partial Redemption does not
constitute a disguised sale, capital contributions for purposes specifically
identified in the Tax Ruling or the Tax Ruling Request.
(v) During the period beginning on October 1, 2004 (or, if earlier,
the day before the Closing Date) and ending on the date two years after the
Closing Date, Marathon shall cause MAP and its subsidiaries not to, and MAP
and its subsidiaries shall not (A) incur any indebtedness owed to Marathon or
any affiliate of Marathon or (B) incur any indebtedness under one or more
revolving credit facilities, uncommitted money market credit facilities or
other comparable debt facilities to the extent such indebtedness is
guaranteed, directly or indirectly, by Marathon or any affiliate of Marathon
(other than such an affiliate that is MAP or any wholly-owned subsidiary of
MAP), except such Marathon guaranteed debt will be permissible if the Tax
Ruling includes a ruling that the MAP Partial Redemption does not constitute a
disguised sale and such ruling or the Tax Ruling Request contemplates debt
guaranteed by Marathon.
(vi) Marathon agrees that during the two-year period beginning on
the Closing Date, it shall cause MAP not to make any sales of
30
receivables except for sales of receivables pursuant to the Receivables Sales
Facility (as such term is defined in the MAP LLC Agreement). Marathon and MAP
agree that if MAP makes any sales of receivables pursuant to the Receivables
Sales Facility they will treat such sales (A) as sales for Federal income tax
purposes and (B) based on the relevant accounting pronouncements, as they
exist on the date of this Agreement, as sales for financial accounting
purposes. If as a result of any change or modification to such accounting
pronouncements between the date of this Agreement and the Closing Date,
Marathon concludes that it and MAP will not be able to treat such sales of
receivables as sales for financial accounting purposes, it shall cause MAP to
use its reasonable best efforts to modify the Receivables Sales Facility in
order to achieve sale treatment for financial accounting purposes, if such
modification can be made in a manner that is (i) acceptable to Marathon from a
tax point of view and otherwise reasonably acceptable to Marathon, and (ii)
acceptable to Ashland from a tax point of view. If such a change in accounting
pronouncements arises and Marathon, after discussions with Ashland, concludes
that it cannot so modify the Receivables Sales Facility, Marathon shall
deliver a written notice to Ashland attesting to this conclusion at least two
business days prior to the Closing Date. The failure of Marathon to deliver
such written notice shall constitute its agreement to the second sentence of
this paragraph (vi) notwithstanding any such change in accounting
pronouncements. Marathon further agrees that if the relevant accounting
pronouncements change after the Closing Date and, as a result of such changes,
Marathon concludes that it and MAP will not be able to treat sales of
receivables pursuant to the Receivables Sales Facility as sales for financial
accounting purposes, Marathon shall cause MAP to modify the Receivables Sales
Facility in order to achieve sale treatment for financial accounting purposes
if it can do so at an insignificant cost (provided that such modification is
acceptable to New Ashland Inc. from a tax point of view) or if New Ashland
Inc. agrees to indemnify Marathon and MAP for any increased costs that result
from such changes.
SECTION 7.04. Valuation Report. Each of Ashland and Marathon shall
use its reasonable best efforts to cause Deloitte & Touche LLP to deliver to
Ashland and Marathon, no later than July 15, 2004, a report, in form and
substance reasonably satisfactory to each of Ashland and Marathon and
consistent with the Engagement Letter dated as of November 24, 2003, among
Ashland, Marathon and Deloitte & Touche LLP. Each of Ashland and Marathon
shall, and shall cause each of its affiliates (including MAP) to, cooperate
with Deloitte & Touche LLP in connection with the preparation of such report,
which cooperation shall include the provision of any relevant books, records,
documentation and other information and the making available of its employees
and facilities as Deloitte & Touche LLP may reasonably request.
SECTION 7.05. Cooperation and Exchange of Information. (a) Each of
Marathon and New Ashland Inc. shall, and shall cause each of its affiliates
to, cooperate fully with all reasonable requests from the other party in all
matters relating to Taxes covered by this Agreement, including without
limitation, in connection with the preparation and filing of Tax Returns, any
amendments or claims for Refund with respect thereto, the conduct and
resolution of Tax Claims and the implementation of this TMA (including,
without limitation, the provisions of Articles V and VI). Such cooperation
shall include (i) provision on a mutually convenient basis upon reasonable
request of Tax
31
Returns, books, records (including information regarding ownership and Tax
basis of property), documentation and other information related to such Tax
Returns and Tax Claims, including accompanying schedules, related work papers,
and documents related to rulings or other determinations by Tax Authorities,
(ii) the execution of any document or the certification of any information
that may be necessary or beneficial in connection with the filing of any Tax
Returns or claims for Refund or the conduct or resolution of any Tax Claim,
(iii) obtaining any document or information that is necessary or beneficial in
connection with the foregoing, (iv) upon reasonable request, the making
available of its employees and facilities on a reasonable and mutually
convenient basis to facilitate the foregoing and (v) the reasonable good faith
effort of New Ashland Inc. to provide to Marathon information reasonably
requested by Marathon for the preparation of its published financial
statements.
(b) Marathon and New Ashland Inc. shall meet regularly to review
major issues with respect to Tax Claims and the status of audits with respect
to Pre-Closing Periods and Straddle Periods as long as the relevant statute of
limitations remains open with respect to any Pre-Closing Period or Straddle
Period. New Ashland Inc. shall make available appropriate personnel to discuss
the foregoing items and shall make available for inspection relevant documents
relating to such audits.
SECTION 7.06. Pre-Filing Agreement. Marathon and New Ashland Inc.
agree that they will pursue a pre-filing agreement in accordance with Rev.
Proc. 2001-22 (or any successor pronouncement), with respect to (i) the amount
of gain, if any, realized by Marathon or the Ashland Group under Code Sections
751(b) and 355(e) as a result of the Transactions described in the Master
Agreement and (ii) to the extent relevant in light of the Tax Ruling, whether
HoldCo shall be deemed to have a "net unrealized built-in loss" within the
meaning of Code Section 382(h)(3). Marathon and New Ashland Inc. shall (and
shall cause their respective affiliates to) provide their reasonable
cooperation and assistance in obtaining any such pre-filing agreement.
SECTION 7.07. Ownership of Tax Records; Retention of Information.
New Ashland Inc. shall own, and have all rights, title and interest in, all
books, records, documentation and other information in existence as of the
Closing Date related to any Tax or Tax Item of Ashland or any of its
subsidiaries. New Ashland Inc. agrees to retain all Tax Returns, related
schedules and workpapers, and all other material records and other documents
as required under Code Section 6001 and the regulations promulgated thereunder
relating thereto existing on the date hereof or created through the Closing
Date, until the expiration of the statute of limitations (including
extensions) of the taxable years to which such Tax Returns and other documents
relate and until the Final Determination of any payments which may be required
in respect of such years under this TMA. New Ashland Inc. shall provide to
Marathon copies of any such documentation or information in existence as of
the Closing Date related to any Marathon Tax Matter or with respect to items
that could result in a Tax Detriment to Marathon and, as reasonably requested
by Marathon, in connection with any Tax Claim. New Ashland Inc. agrees that,
if it intends to dispose of any such documentation or other information, it
shall provide written notice to Marathon describing the documentation or other
information to be disposed of 60 days prior to taking such action. Marathon
shall be entitled to arrange
32
to take delivery of the documentation or other information described in the
notice at its expense during the succeeding 60-day period.
ARTICLE VIII
Tax Claims
SECTION 8.01. Calculation of Losses. The amount of any
indemnification provided under this TMA, other then pursuant to Article V and
VI, shall be (i) increased to take account of any net Tax Loss incurred by the
indemnified party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (ii) reduced to take account of any net Tax
Savings realized by the indemnified party arising from the incurrence or
payment of any such indemnified loss. In computing the amount of any such Tax
Loss or Tax Savings, the indemnified party shall be deemed to recognize all
other Tax Items before recognizing any Tax Item arising from the receipt of
any indemnity payment hereunder or the incurrence or payment of any
indemnified loss.
SECTION 8.02. Procedures. (a) Tax Claims. (i) If a party (the
"indemnified party") receives any written notice of deficiency, claim or
adjustment or other written notice from a Tax Authority that may result in the
indemnified party being entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving an audit proceeding,
audit inquiry, information request, suit, action, contest or similar claim
made by any Tax Authority (a "Tax Claim") such indemnified party shall notify
the indemnifying party in writing (and in reasonable detail) of the Tax Claim
within 10 business days after such indemnified party receives notice or
otherwise becomes aware of the existence of the Tax Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided under this Agreement, except to the extent the indemnifying party
shall have been materially and adversely prejudiced as a result of such
failure. Thereafter, the indemnified party shall keep the indemnifying party
apprised of the status of any investigation or audit and deliver to the
indemnifying party, within five business days' time after the indemnified
party's receipt thereof, copies of all notices and documents received by the
indemnified party related to the Tax Claim. New Ashland Inc. undertakes and
agrees that it will keep Marathon reasonably informed of the existence and
progress of any audit or other proceeding that relates to a Pre-Closing Period
with respect to which Marathon could be liable as a successor, under Treasury
Regulation Section 1.1502-6, or otherwise.
(ii) If any party receives a written notice from a Tax Authority
that may result in an adjustment in the amount of the Specified Liability
Deductions for a taxable year as a result of an audit of the New Ashland
Inc. Affiliated Group or the Marathon Affiliated Group, then for purposes
of this TMA, such audit and related proceeding, to the extent they
concern the amount of the Specified Liability Deductions claimed or
capable of being claimed by Marathon or the Marathon Group as successor
to HoldCo, shall be treated as a Tax Claim with respect to which Marathon
is the indemnified party and New Ashland Inc. is the indemnifying party,
provided, however, that the resolution of such issues shall not
33
preclude Marathon from compromising or settling any other issues in its
Tax Returns administratively with any Tax Authority and Marathon shall
have the right to determine in its sole reasonable discretion the
appropriate forum and location of any judicial proceeding with respect to
Specified Liability Deductions.
(b) Assumption. Except as provided in Section 8.02(c) of this TMA,
if a Tax Claim is made against an indemnified party, the indemnifying party
shall be entitled to participate in the defense thereof and, if it so chooses,
to assume the defense thereof with professional advisors and counsel selected
by the indemnifying party; provided, however, that such professional advisors
or counsel are not reasonably objected to by the indemnified party. Should the
indemnifying party so elect to assume the defense of a Tax Claim, the
indemnifying party shall not be liable to the indemnified party for any fees
or expenses relating to such professional advisors or counsel subsequently
incurred by the indemnified party in connection with the defense thereof. If
the indemnifying party assumes such defense, the indemnified party shall have
the right to participate in the defense thereof and to employ professional
advisors and counsel (not reasonably objected to by the indemnifying party),
at its own expense, separate from the professional advisors and counsel
employed by the indemnifying party, it being understood that the indemnifying
party shall control such defense. The indemnifying party shall be liable for
the fees and expenses of professional advisors and counsel employed by the
indemnified party for any period during which the indemnifying party has not
assumed the defense thereof. If the indemnifying party chooses to defend or
prosecute a Tax Claim, all the indemnified parties shall cooperate in the
defense or prosecution thereof. Such cooperation shall include the retention
and (upon the indemnifying party's request) the provision to the indemnifying
party of records and information that are reasonably relevant to such Tax
Claim, making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder,
cooperating and assisting in the investigation, defense and resolution of such
matters and providing legal and business assistance with respect to such
matters. Whether or not the indemnifying party assumes the defense of a Tax
Claim, the indemnified party shall not admit any liability with respect to, or
settle, compromise or discharge, such Tax Claim without the indemnifying
party's prior written consent. If the indemnifying party assumes the defense
of a Tax Claim, the indemnified party shall agree to any settlement,
compromise, or discharge of a Tax Claim that the indemnifying party may
recommend and that by its terms obligates the indemnifying party to pay the
full amount of the liability in connection with such Tax Claim; provided that
if such settlement, compromise or discharge imposes conditions, costs or other
detriments (in addition to the liability in connection with such Tax Claim)
upon the indemnified party, such indemnified party may use its reasonable
judgment in determining whether to so agree, such agreement not to be
unreasonably withheld.
(c) Joint rights and assumption of control. If a party to this TMA
suffers a Bankruptcy Event, then the party suffering the Bankruptcy Event (the
"Bankruptcy Party") shall vigorously pursue the assertion, or defense (as the
case may be) of all Tax Claims for which any other party to this TMA (the
"Non-Bankruptcy Party") might be jointly and severally, directly or indirectly
liable ("Bankruptcy Tax Claims") and the Non-Bankruptcy Party shall have the
right to participate in the defense of any Bankruptcy
34
Tax Claims and to employ professional advisors and counsel (not reasonably
objected to by the Bankruptcy Party), at its own expense, separate from the
professional advisors and counsel employed by the Bankruptcy Party, it being
understood that the Bankruptcy Party shall control the defense of such claims.
Both parties shall in good faith cooperate with one another and the Bankruptcy
Party shall not unreasonably reject any suggestions made by the Non-Bankruptcy
Party. Such cooperation shall include the retention and (upon the
Non-Bankruptcy Party's request) the provision to the Non-Bankruptcy Party of
records and information that are reasonably relevant to such Bankruptcy Tax
Claims (including copies of all protests, pleadings, briefs, filings,
correspondence and similar materials relative to such claims), making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, cooperating
and assisting in the investigation, defense and resolution of such matters,
and providing legal and business assistance with respect to such matters. The
preceding sentences of this Section 8.02(c) notwithstanding, if the Bankruptcy
Party fails to vigorously pursue such Bankruptcy Tax Claims, or such
Bankruptcy Party is discharged, or otherwise effectively barred from liability
for such Bankruptcy Tax Claims, the Non-Bankruptcy Party shall have the right
to assume full control over the defense of such Bankruptcy Tax Claims and, if
such control is assumed, the Bankruptcy Party shall irrevocably designate, and
agree to cause each of its affiliates to designate irrevocably, the
Non-Bankruptcy Party as the sole and exclusive agent and attorney-in-fact to
take any action as such Non-Bankruptcy Party may deem appropriate, necessary,
or incidental in any and all matters relating to Pre-Closing Period Tax Claims
of the Ashland Group and the Bankruptcy Party shall continue to cooperate
fully in the defense or prosecution thereof, but it shall not have the right
to participate in the proceedings.
(d) Mitigation. New Ashland Inc. and Marathon shall cooperate with
each other with respect to resolving any claim or liability with respect to
which one party is obligated to indemnify the other party hereunder, including
by making reasonable efforts to mitigate or resolve any such claim or
liability, which shall include claiming any indemnified loss as a deduction or
offset on any relevant Tax Return (including any amended Tax Return). In the
event that New Ashland Inc. or Marathon shall fail to make such reasonable
efforts to mitigate or resolve any claim or liability, then notwithstanding
anything else to the contrary contained herein, the other party shall not be
required to indemnify any person for any indemnified loss that could
reasonably be expected to have been avoided if New Ashland Inc. or Marathon,
as the case may be, had made such efforts.
SECTION 8.03. Treatment of Indemnification Payments. The parties
agree that any indemnity payments made pursuant to this Agreement or pursuant
to Article XIII of the Master Agreement shall be treated for all Tax purposes
as distributions or capital contributions, as the case may be, between HoldCo
and New Ashland Inc. made immediately prior to the Spinoff and, accordingly,
not as taxable income to the recipient or as a deductible expense to the
payor, unless otherwise required by a Final Determination.
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ARTICLE IX
Dispute Resolution; Interest
SECTION 9.01. Dispute Resolution. In the event that Marathon or any
member of the Marathon Group, as the case may be, on the one hand, and New
Ashland Inc. or any member of the New Ashland Inc. Group, as the case may be,
on the other hand, disagree as to the amount or calculation of any payment to
be made under this TMA, or the interpretation or application of any provision
under this TMA, the parties shall attempt in good faith to resolve such
dispute. If such dispute is not resolved within sixty (60) business days
following the commencement of the dispute, Marathon and New Ashland Inc. shall
jointly retain a tax attorney who has retired from active practice in a
nationally recognized law firm or independent public accounting firm, which
firm is independent of both parties, or a retired Federal judge experienced in
Tax Matters (the "Independent Entity"), to resolve the dispute. If the parties
are unable to agree on an Independent Entity, then each party shall appoint a
person who would qualify as an Independent Entity (but for the approval of the
other party), and such persons shall then appoint a person who meets the above
description as the Independent Entity and who shall serve as the Independent
Entity. The Independent Entity shall act as an arbitrator to resolve all
points of disagreement and its decision shall be final and binding upon all
parties involved. Following the decision of the Independent Entity, Marathon,
and members of the Marathon Group, and New Ashland Inc. and members of the New
Ashland Inc. Group shall each take or cause to be taken any action necessary
to implement the decision of the Independent Entity. The fees and expenses
relating to the Independent Entity shall be borne equally by Marathon and New
Ashland Inc.
SECTION 9.02. Interest. Any payment required to be made under this
TMA that is not made on or before the date on which such payment is due shall
bear interest computed at the rate specified from time to time pursuant to
Code Section 6621(a)(2).
ARTICLE X
General Provisions
SECTION 10.01. Termination. This Agreement shall terminate
simultaneous with any termination of the Master Agreement pursuant to Article
XI thereof. In the event of termination of this Agreement, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of any party hereto.
SECTION 10.02. Survival. Notwithstanding anything in this TMA to the
contrary apart from Section 10.01, the provisions of this TMA shall survive
for 30 days after the full period of all applicable statutes of limitations
(giving effect to any waiver, mitigation or extension thereof) unless by their
term they expire at an earlier date.
36
SECTION 10.03. Right of Set-off. Either party may set-off any amount
to which it is entitled under this TMA against amounts otherwise payable
hereunder by such party. Neither the exercise of nor the failure to exercise
such right of set-off will constitute an election of remedies or limit such
party in any manner in the enforcement of any other remedies that may be
available to it.
SECTION 10.04. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
if to the Ashland Parties, to:
Ashland Inc.
50 E. RiverCenter Boulevard
Covington, KY 41012-0391
Attention: J. Marvin Quin
David L. Hausrath, Esq.
Facsimile: (859) 815-5053
with a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7474
Attention: Stephen L. Gordon, Esq.
if to the Marathon Parties, to:
Marathon Oil Corporation
5555 San Felipe Road
Houston, TX 77056
Attention: Raja Sahni
Richard L. Horstman, Esq.
Facsimile: (713) 513-4172
with copies to:
Baker Botts L.L.P.
One Shell Plaza
Houston, TX 77002-4995
Attention: Theodore W. Paris, Esq.
37
Miller & Chevalier Chartered
655 Fifteenth Street, N.W.
Washington, DC 20005-5701
Attention: Daniel W. Luchsinger, Esq.
SECTION 10.05. Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". This Agreement is intended to calculate,
allocate and assign certain Tax responsibilities, liabilities and benefits
among the parties to this Agreement, and any situation or circumstance
concerning such calculation, allocation and assignment that is not
specifically contemplated hereby or provided for herein shall be determined in
a manner consistent with the underlying principles of calculation, allocation
and assignment in this Agreement.
SECTION 10.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 10.07. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 10.08. No Third-Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies.
SECTION 10.09. Existing MAP Agreements. To the extent any provision
of this TMA conflicts with the determination of the Tax Liability (as defined
in the MAP LLC Agreement) of Ashland or its successors for any Straddle Period
of MAP as determined under Section 10.03 of the MAP LLC Agreement, such Tax
Liability shall be determined in accordance with this Agreement. In all other
respects, except as expressly modified herein, the terms and conditions of the
MAP LLC Agreement, the ATCA, and the Put/Call Agreement shall continue to
apply to the extent provided in Article XII of the Master Agreement. For the
avoidance of doubt, the term Tax Distribution Amount (as defined in the MAP
LLC Agreement) shall not include the Tax Liability (as defined in the MAP LLC
Agreement) of the Ashland Affiliated Group that is attributable to the MAP
Partial Redemption.
38
SECTION 10.10. Continuing Ashland Participation Rights With Respect
To Pre-Closing Pass-Through Items. Notwithstanding anything to the contrary in
the Master Agreement, this Agreement or the other Transaction Agreements and
Ancillary Agreements (as defined in the Master Agreement), New Ashland Inc.
and its successors shall retain the right (to the extent provided for in
Section 6.08 of the MAP LLC Agreement or any other provision of the MAP LLC
Agreement) to participate in the preparation and filing of all Tax Returns,
and in the defense of any Tax Claim, with respect to all Pass-Through Items
relating to any Pre-Closing Period of MAP or any other JV Entity as if it were
a member of MAP or such JV Entity. Any Tax Claim with respect to any issue
concerning MAP's income, gain, losses, deductions or credits that could result
in additional Taxes for the Pre-Closing Period for Ashland and additional
basis (other than additional basis that is subject to Section 4.03 of the TMA)
or deductions in the Post-Closing Period for Marathon or any member of the
Marathon Group shall be treated under Section 6.08(e)(ii) of the MAP LLC
Agreement as an issue the tax effect of which, if resolved adversely would be,
and the tax effect of settling the issue is, not proportionately the same for
both Members. If an issue is treated as not proportionately the same for both
Members under the preceding sentence, then in applying Section 6.08(e)(iv) of
the MAP LLC Agreement, nationally recognized tax counsel (whose selection
shall be based on the principles of Section 9.01 of the TMA) shall determine
if the settlement is fair to both Members based on the merits of the issue.
Such fees of the nationally recognized tax counsel shall be shared, 62% by
Marathon and 38% by New Ashland Inc.
SECTION 10.11. Prior Tax Sharing Agreements. Except as specifically
provided in Section 10.09, as of the Closing Date, this Agreement supersedes
and terminates all prior agreements as to the allocation of tax liabilities
among the members of the Ashland Group, and after the Closing Date neither
HoldCo nor any member of the Marathon Group, as successor, transferee or
otherwise, shall be bound thereby or have any liability thereunder.
SECTION 10.12. Entire Agreement; Amendments. This Agreement embodies
the entire understanding among the parties relating to its subject matter. Any
and all prior correspondence, conversations, and memoranda are merged herein
and shall be without effect hereon. No promises, covenants, or representations
of any kind, other than those expressly stated herein, have been made to
induce either party to enter into this Agreement. This Agreement shall not be
amended, supplemented, modified, or terminated except by a writing duly signed
by each of the parties hereto, and no waiver of any provisions of this
Agreement shall be effective unless in a writing duly signed by the party
sought to be bound.
SECTION 10.13. Amendments Resulting From Pre-Closing Change In Tax
Structure. If, prior to the Closing, the Tax Structure of the Transactions is
modified, revised or changed in any manner, for any reason (including, but not
limited to, modifications, revisions or changes resulting from changes in law
or in response to communications (written or otherwise) with the IRS or any
other Tax Authority), the parties will negotiate in good faith to amend this
Agreement, to the extent necessary, to
39
reflect the underlying principles of calculation, allocation and assignment in
this Agreement.
SECTION 10.14. Successors. This Agreement shall be binding upon and
inure to the benefit of any successor to any of the parties, by merger,
acquisition of assets or otherwise, to the same extent as if the successor had
been an original party to the Agreement, and in such event, all references
herein to a party shall refer instead to the successor of such party.
SECTION 10.15. Confidentiality. Each party to this Agreement shall
hold, and cause its officers, employees, agents, consultants, and advisors to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other
requirements of law, all information that it or any of its officers,
employees, agents, consultants, and advisors may acquire pursuant to, or in
the course of performing its obligations under, any provision of this
Agreement.
SECTION 10.16. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed by its respective duly authorized officer as of the date first set
forth above.
ASHLAND INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: Chief Executive Officer
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: President
EXM LLC,
by
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: President
NEW EXM INC.,
by /s/ James J. O'Brien
--------------------------------
Name: James J. O'Brien
Title: President
MARATHON OIL CORPORATION,
by /s/ Clarence P. Cazalot, Jr.
--------------------------------
Name: Clarence P. Cazalot, Jr.
Title: President & Chief Executive
Officer
MARATHON OIL COMPANY,
by /s/ Clarence P. Cazalot, Jr.
--------------------------------
Name: Clarence P. Cazalot, Jr.
Title: President
MARATHON DOMESTIC LLC,
by
MARATHON OIL CORPORATION,
by /s/ Clarence P. Cazalot, Jr.
------------------------------------
Name: Clarence P. Cazalot, Jr.
Title: President & Chief Executive
Officer
MARATHON ASHLAND PETROLEUM LLC,
by /s/ Gary R. Heminger
-------------------------------------
Name: Gary R. Heminger
Title: President
EXHIBIT 10.2
================================================================================
ASSIGNMENT AND ASSUMPTION AGREEMENT
(VIOC CENTERS)
Dated as of March 18, 2004,
Between
ASHLAND INC.
And
ATB HOLDINGS INC.
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
VIOC Assignment and Assumption
SECTION 1.01. VIOC Assignment and Assumption...................1
SECTION 1.02. Transferred Assets and Excluded Assets...........1
SECTION 1.03. Assumption of Certain Liabilities................6
SECTION 1.04. Consents of Third Parties.......................10
SECTION 1.05. Tax Matters.....................................12
ARTICLE II
The Closing
SECTION 2.01. Closing Date....................................12
SECTION 2.02. Transactions To Be Effected at the Closing......12
ARTICLE III
Representations and Warranties of Ashland
SECTION 3.01. Financial Statements............................13
SECTION 3.02. Assets Other than Real Property Interests.......13
SECTION 3.03. Real Property...................................13
SECTION 3.04. [Intentionally Omitted].........................14
SECTION 3.05. Contracts.......................................14
SECTION 3.06. Permits.........................................17
SECTION 3.07. Condition of Transferred Assets.................17
SECTION 3.08. Claims..........................................18
SECTION 3.09. Benefit Plans...................................18
SECTION 3.10. Absence of Changes or Events....................19
SECTION 3.11. Compliance with Laws............................19
SECTION 3.12. Employee and Labor Matters......................21
SECTION 3.13. Sufficiency of Transferred Assets...............21
SECTION 3.14. Inventory.......................................22
ARTICLE IV
Covenants
SECTION 4.01. Covenants of Ashland Relating to Conduct of
VIOC Centers..................................22
SECTION 4.02. Refunds and Remittances.........................24
SECTION 4.03. Employee Matters................................25
SECTION 4.04. Post-Closing Information........................29
SECTION 4.05. Records.........................................29
SECTION 4.06. [Intentionally Omitted].........................29
SECTION 4.07. Bulk Transfer Laws..............................29
SECTION 4.08. Supplies........................................29
SECTION 4.09. Mail............................................30
SECTION 4.10. Further Assurances..............................30
SECTION 4.11. Review of Contracts.............................30
SECTION 4.12. List of Permits.................................31
ARTICLE V
Termination
SECTION 5.01. Termination.....................................32
SECTION 5.02. Effect of Termination...........................32
ARTICLE VI
General Provisions
SECTION 6.01. Interpretation; VIOC Centers Disclosure Letter;
Certain Definitions...........................32
SECTION 6.02. Counterparts....................................35
SECTION 6.03. Severability....................................35
SECTION 6.04. Governing Law...................................35
SECTION 6.05. No Third-Party Beneficiaries....................35
SECTION 6.06. Amendment.......................................35
Exhibit A-1 Form of Deed (VIOC Centers) (Ohio)
Exhibit A-2 Form of Deed (VIOC Centers) (Michigan)
Exhibit B Form of Assignment and Assumption (VIOC Centers)
Exhibit C Form of Blanket License Agreement
ii
INDEX OF DEFINED TERMS
-----------------------
Term Section
Active VIOC Centers Employee...................................... 4.03(a)
Agreement......................................................... Preamble
Ashland........................................................... Preamble
Ashland Insurance Policies........................................ 4.01(c)
Ashland Joint Contracts........................................... 4.11
Assigned Contracts................................................ 1.02(a)(v)
Assigned Permits.................................................. 1.02(a)(iv)
Assumed Liabilities............................................... 1.03(a)
Balance Sheet..................................................... 3.01
Blanket License Agreement......................................... 6.01(b)
Claim............................................................. 1.03(b)(iv)
COBRA............................................................. 4.03(b)(ii)
Contracts......................................................... 1.02(a)(v)
Employee Benefits Liability....................................... 3.09(b)
Environmental Claim............................................... 3.11(b)
Environmental Laws................................................ 3.11(b)
Environmental Liability........................................... 6.01(b)
Environmental Tests............................................... 1.03(b)(ix)
ERISA............................................................. 3.09(a)
Excluded Assets................................................... 1.02(b)
Financial Statements.............................................. 3.01
Hazardous Materials............................................... 3.11(b)
HoldCo............................................................ Preamble
HoldCo Retirement Plan............................................ 4.03(d)
HoldCo VIOC Welfare Plans......................................... 4.03(b)(i)
Intellectual Property............................................. 6.01(b)
Inventory......................................................... 1.02(a)(ii)
Leased Property................................................... 3.03(a)
Master Agreement.................................................. Recitals
Owned Property.................................................... 3.03(a)
Permits........................................................... 4.12
Permitted Liens................................................... 6.01(b)
Premises.......................................................... 1.02(a)(i)
Receivables.......................................................1.02(b)(xvi)
Records...........................................................1.02(a)(vii)
Release........................................................... 3.11(b)
Retained Liabilities.............................................. 1.03(b)
Rev. Proc. 96-60.................................................. 4.03(f)
Technology........................................................1.02(b)(xii)
Transferred Assets................................................ 1.02(a)
Transferred VIOC Centers Employee................................. 4.03(a)
VIOC Assignment and Assumption.................................... 1.01
VIOC Benefit Plans................................................ 3.09(a)
VIOC Centers...................................................... 6.01(b)
Term Section
VIOC Centers Disclosure Letter.................................... Article III
VIOC Centers Employee............................................. 3.09(a)
VIOC Centers Material Adverse Effect.............................. 6.01(b)
VIOC Pension Plans................................................ 3.09(a)
ii
ASSIGNMENT AND ASSUMPTION AGREEMENT (VIOC CENTERS)
(this "Agreement") dated as of March 18, 2004, between
Ashland Inc., a Kentucky corporation ("Ashland"), and ATB
Holdings Inc., a Delaware corporation and a wholly owned
subsidiary of Ashland ("HoldCo").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the parties hereto and certain other parties are entering into a
Master Agreement (the "Master Agreement"; terms used but not otherwise defined
herein have the meanings assigned to them in the Master Agreement); and
WHEREAS, in accordance with the terms and conditions of the Master
Agreement, Ashland wishes to transfer to HoldCo, and HoldCo wishes to acquire
and assume, certain assets and liabilities of the VIOC Centers (as defined in
Section 6.01(b)) pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
VIOC Assignment and Assumption
SECTION 1.01. VIOC Assignment and Assumption. On the terms and
subject to the conditions of this Agreement and the Master Agreement, at the
Closing, Ashland shall contribute, assign, transfer, convey and deliver to
HoldCo, and HoldCo shall acquire from Ashland, all the right, title and
interest as of the Closing of Ashland in, to and under the Transferred Assets
(as defined in Section 1.02(a)), and HoldCo shall assume the Assumed
Liabilities (as defined in Section 1.03(a)). The contribution, assignment,
transfer, conveyance and delivery of the Transferred Assets and the assumption
of the Assumed Liabilities and the other Transactions contemplated by this
Agreement are referred to in this Agreement as the "VIOC Assignment and
Assumption".
SECTION 1.02. Transferred Assets and Excluded Assets. (a) The term
"Transferred Assets" means all of
2
Ashland's right, title and interest in, to and under the following assets,
other than the Excluded Assets (as defined in Section 1.02(b)):
(i) all real property, leaseholds and other interests
(including interests in surface rights and mineral interests) in the
real property listed in Section 3.03 of the VIOC Centers Disclosure
Letter (as defined in Article III), in each case together with
Ashland's right, title and interest in all buildings, structures,
improvements, paved parking lots and fixtures thereon and all other
appurtenances thereto (collectively, the "Premises");
(ii) all salable lube oils, greases, automotive fluids,
automotive accessories (including filters), supplies, parts, spare
parts and other inventories of Ashland that on the Closing Date are
located on or are in transit to the Premises (collectively, the
"Inventory");
(iii) all other tangible personal property and interests
therein, including all machinery, equipment, tools, appliances,
telephones, telecommunications equipment, copy machines, fax
machines, computers, hardware that accesses point-of-sale systems,
cash registers, implements, furniture, furnishings and fixtures, of
Ashland that on the Closing Date are located on or are in transit to
the Premises (other than signs and other identification items and
materials, including all exterior pylon, monument, ground and
building signs and all interior signs, banners and reading boards,
in each case that customarily are owned by Ashland (and not by the
franchisee) at its franchised Valvoline Instant Oil Change (VIOC)
quick-lube service centers), in each case together with any rights
or claims of Ashland arising out of the breach of any express or
implied warranty by the manufacturers or sellers of such assets;
(iv) to the extent that such Permits (as defined in Section
4.12) are transferable, all Permits of Ashland that are used, held
for use or intended to be used exclusively in the operation or
conduct of the VIOC Centers (the "Assigned Permits");
3
(v) (A) all contracts, leases, subleases, licenses, indentures,
agreements, commitments and all other legally binding arrangements
("Contracts"), whether oral or written, to which Ashland is a party
or by which Ashland is bound as of the date of this Agreement that
are (1) listed in Sections 3.03 or 3.05 of the VIOC Centers
Disclosure Letter or (2) of the type specified in any of clauses (i)
through (xi) of Section 3.05 but, as a result of the application of
any applicable thresholds set forth therein, are not required to be
listed in Section 3.05 of the VIOC Centers Disclosure Letter, (B)
all other written Contracts (including purchase orders and sales
orders) to which Ashland is a party or by which Ashland is bound, in
the case of this clause (B) that are entered into after the date of
this Agreement, but not in violation or breach of any provision of
this Agreement, and that exclusively relate to, or that arise
exclusively out of, the operation or conduct of the VIOC Centers in
the ordinary course of business and (C) all Contracts to which
Ashland is a party or by which Ashland is bound, in the case of this
clause (C) that are entered into after the date of this Agreement
and that are to be treated as Assigned Contracts pursuant to Section
4.11 (the "Assigned Contracts");
(vi) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items of Ashland, in each
case to the extent used, held for use or intended to be used in, or
to the extent arising out of, the operation or conduct of the VIOC
Centers;
(vii) all books of account, ledgers, general, financial,
accounting and personnel records, files, invoices, suppliers' lists,
billing records, sales and promotional literature, supplier
correspondence, sales records, credit data and other information
relating to present or past customers, cost and pricing information,
equipment maintenance data, purchasing records and information,
business plans, payroll and personnel records, purchase orders,
sales forms, artwork, photography, log books, environmental, health
and safety schedules, reports, protocols and findings pertaining to
the VIOC Centers or the Transferred Assets (including records of
spills or other releases
4
or discharges into the atmosphere, records of environmental, safety
or health reports to or from Governmental Entities regarding the
VIOC Centers or the Transferred Assets (including notices of
violation), and correspondence, notices and orders of an
environmental, safety or health nature regarding the VIOC Centers or
the Transferred Assets) and other similar property, rights and
information of Ashland, in each case that are used, held for use or
intended to be used exclusively in, or that arise exclusively out
of, the operation or conduct of the VIOC Centers (the "Records");
provided, however, that the Records shall not include any property,
rights or information of Ashland that will be licensed to Merger Sub
pursuant to the Blanket License Agreement (as defined in Section
6.01(b));
(viii) all goodwill and going concern value of Ashland
generated exclusively by, or associated exclusively with, the VIOC
Centers; and
(ix) all rights, claims and credits of Ashland to the extent
relating to any other Transferred Asset or any Assumed Liability
(other than any such items arising under insurance policies),
including any such items arising under any guarantee, warranty,
indemnity or similar right in favor of Ashland in respect of any
other Transferred Asset or any Assumed Liability.
(b) The term "Excluded Assets" means:
(i) all assets identified in Section 1.02(b) of the VIOC
Centers Disclosure Letter;
(ii) all cash and cash equivalents of Ashland;
(iii) all rights, claims and credits of Ashland to the extent
relating to any other Excluded Asset or any Retained Liability (as
defined in Section 1.03(b)), including any such items arising under
insurance policies and any guarantee, warranty, indemnity or similar
right in favor of Ashland in respect of any other Excluded Asset or
any Retained Liability;
(iv) all collective bargaining agreements and other Contracts
with any labor union that cover one or more Active VIOC Centers
Employees (as defined in Section 4.03(a)) and all Contracts relating
to
5
compensation, bonus or severance to which any Active VIOC Centers
Employee or any person hired to become a VIOC Centers Employee (as
defined in Section 3.09(a)) is a party;
(v) all the assets of the VIOC Pension Plans (as defined in
Section 3.09(a)) and all the assets of Ashland and its affiliates
under any other VIOC Benefit Plan (as defined in Section 3.09(a));
(vi) all rights of Ashland under the Transaction Agreements and
the Ancillary Agreements;
(vii) all assets relating to corporate-level services of the
type currently provided to the VIOC Centers by Ashland or any of its
affiliates;
(viii) any shares of capital stock of any affiliate of Ashland;
(ix) the names and marks "Ashland", "V Valvoline Instant Oil
Change(R) and design", "Valvoline(R)", "V(R)", "Valvoline Instant
Oil Change(R)", "Instant Oil(R)", "MVP(R) and Design" and "MVP
Maximum Vehicle Performance(R) and Design" (in any style or design),
and any other name or mark either derived from or including any
portion of the foregoing or otherwise used in the operation or
conduct of the VIOC Centers;
(x) all records of Ashland prepared in connection with the
Transactions;
(xi) all financial and tax records relating to the VIOC Centers
to the extent they form part of Ashland's general ledger;
(xii) all trade secrets, confidential information and
inventions, and all proprietary formulae, processes, procedures,
research records, records of inventions, test information, operating
systems, operating manuals, market surveys and marketing know-how of
Ashland that are used, held for use or intended to be used in the
operation or conduct of the VIOC Centers, including the System (as
defined in the form of License Agreement attached to the Blanket
License Agreement and incorporated by reference therein) (the
"Technology");
6
(xiii) all Intellectual Property (as defined in Section
6.01(b)) of Ashland that is used, held for use or intended to be
used in the operation or conduct of the VIOC Centers;
(xiv) all signs and other identification items and materials,
including exterior pylon, monument, ground and building signs and
all interior signs, banners and reading boards, in each case that
customarily are owned by Ashland (and not by the franchisee) at its
franchised Valvoline Instant Oil Change (VIOC) quick-lube service
centers;
(xv) prepaid insurance premiums; and
(xvi) all accounts receivable of Ashland as of the close of
business on the Closing Date that arise out of the operation or
conduct of the VIOC Centers (the "Receivables").
SECTION 1.03. Assumption of Certain Liabilities. (a) Upon the terms
and subject to the conditions of this Agreement, HoldCo shall assume,
effective as of the Closing, and from and after the Closing, HoldCo shall pay,
perform and discharge when due, and indemnify Ashland and its affiliates and
each of their respective Representatives against, and defend and hold them
harmless from, all of the following liabilities, obligations and commitments
of any nature, whether known or unknown, express or implied, primary or
secondary, direct or indirect, liquidated, absolute, accrued, contingent or
otherwise and whether due or to become due, of Ashland (collectively, the
"Assumed Liabilities"), other than any Retained Liabilities:
(i) all liabilities, obligations and commitments of Ashland
under the Assigned Contracts to the extent such liabilities,
obligations and commitments relate to the period from and after the
Closing;
(ii) all liabilities, obligations and commitments of Ashland to
the extent expressly assumed by HoldCo in accordance with Section
4.03;
(iii) all Environmental Liabilities (as defined in Section
6.01(b)) of Ashland to the extent they arise out of both (A) the
operation of any of the Transferred Assets or the operation or
conduct of the VIOC Centers and (B) either (x) events occurring or
7
circumstances or conditions arising from and after the Closing, or
(y) events occurring or circumstances or conditions arising prior to
the Closing, but only, in the case of this clause (B)(y), to the
extent set forth in the table below (provided, however, that to the
extent the same Environmental Liability is described in both clauses
(x) and (y) of this Section 1.03(a)(iv)(B), such Environmental
Liability will be apportioned between HoldCo and Ashland in
proportion to the extent to which the activities of each party
contributed to the cause of the Environmental Liability, taking into
account all pertinent factors, including the length of ownership by
HoldCo and Ashland of the relevant property during the time of the
event or occurrence, or the development of the circumstance or
condition, giving rise to the Environmental Liability and the use
made of such property by the parties hereto):
- ------------------------------------------------------------------------------
If written notice (in Percentage of Environmental
reasonable detail) of such Liability described in clause
Environmental Liability is (B)(y) above that will be an
first received by Ashland Assumed Liability:
during the twelve-month
period ending on the
following anniversary of the
Closing Date (provided,
however, that with respect to
any Environmental Liability
arising from any matter
referred to in Section 3.11(b)
of the VIOC Centers Disclosure
Letter, Ashland shall be
deemed to have received
written notice (in reasonable
detail) of such Environmental
Liability prior to the first
anniversary of the Closing Date):
- ------------------------------------------------------------------------------
First through Fifth 0%
- ------------------------------------------------------------------------------
Sixth 20%
- ------------------------------------------------------------------------------
Seventh 40%
8
- ------------------------------------------------------------------------------
Eighth 60%
- ------------------------------------------------------------------------------
Ninth 80%
- ------------------------------------------------------------------------------
If such notice is not 100%
received by Ashland on or
prior to the ninth
anniversary of the Closing Date
- ------------------------------------------------------------------------------
; and
(iv) all other liabilities, obligations and commitments of
Ashland to the extent such liabilities, obligations and commitments
relate to or arise out of the operation of any of the Transferred
Assets or the operation or conduct of the VIOC Centers, in each case
from and after the Closing.
(b) Notwithstanding Section 1.03(a), or any other provision of this
Agreement, HoldCo shall not assume, and Ashland shall pay, perform and
discharge when due, and indemnify HoldCo and its affiliates and each of their
respective Representatives against, and defend and hold them harmless from,
any liability, obligation or commitment of Ashland or the VIOC Centers of any
nature, whether known or unknown, express or implied, primary or secondary,
direct or indirect, liquidated, absolute, accrued, contingent or otherwise,
and whether due or to become due, except the Assumed Liabilities
(collectively, the "Retained Liabilities"). Without limiting the generality of
the foregoing, the Retained Liabilities include:
(i) any liability, obligation or commitment of Ashland to the extent
arising out of the operation or conduct by Ashland or any of its
affiliates of any business other than the VIOC Centers;
(ii) all accounts payable of Ashland to the extent arising out of
the operation or conduct of the VIOC Centers prior to the Closing;
(iii) any liability, obligation or commitment of Ashland (A) to the
extent arising out of any actual or alleged breach by Ashland of, or
nonperformance by Ashland under, any Contract (including any Assigned
Contract) prior to the Closing or (B) under any Assigned Contract to the
extent such liability,
9
obligation or commitment relates to the period prior to the Closing;
(iv) any liability, obligation or commitment of Ashland arising out
of any warranty claim, suit, action, proceeding, investigation,
governmental action or other cause of action or claim associated with or
relating to the VIOC Centers or the Transferred Assets (a "Claim") to the
extent arising out of actions, omissions or conditions occurring or
existing on or prior to the Closing Date;
(v) any liability, obligation or commitment of Ashland to the extent
such liability, obligation or commitment relates to, or arises out of,
any Excluded Asset, or arises out of the ownership or operation by
Ashland of any of the Excluded Assets;
(vi) except as otherwise expressly provided in Section 4.03, any
liability, obligation or commitment of Ashland arising under any VIOC
Benefit Plan;
(vii) any liability, obligation or commitment of Ashland to any of
its divisions, subsidiaries or affiliates;
(viii) any liability, obligation or commitment of Ashland or any of
its affiliates under any of the Transaction Agreements or any of the
Ancillary Agreements; and
(ix) any Environmental Liability arising out of events occurring or
circumstances or conditions arising prior to the Closing except for
Environmental Liabilities that are Assumed Liabilities pursuant to
Section 1.03(a)(iii); provided, however, an Environmental Liability that
otherwise would be considered a Retained Liability under this Section
1.03(b)(ix) shall be an Assumed Liability and shall not be a Retained
Liability if the event, circumstance or condition that gave rise to such
Environmental Liability (A) is the result of a change in use after the
Closing Date of any of the Premises to a use other than a commercial use
of such Premises similar to its current use, or (B) was discovered as a
result of a Phase II or other intrusive sampling, testing or
investigation conducted after the Closing Date (collectively,
"Environmental Tests") except for
10
Environmental Tests undertaken (x) to respond to, investigate, or
otherwise remediate environmental conditions or contamination that are on
the Closing Date in violation of the standards imposed by applicable
Environmental Laws (as defined in Section 3.11(b)), (y) as required by
Environmental Laws, pursuant to the terms of any lease with respect to
any of the Premises or in response to an inquiry, request, claim or
demand by a Governmental Entity or as a reasonable response to any claim
or demand by any other person that is not an affiliate of HoldCo or (z)
in connection with a condition first discovered as a result of
construction activities, excluding construction activities relating to
the installation of underground storage tanks, commencing after the
Closing Date at, on or beneath any of the Premises, so long as such
construction activities are undertaken in connection with a commercial
use of such Premises similar to its current use.
(c) HoldCo shall acquire the Transferred Assets free and clear of
all liabilities, obligations and commitments of Ashland, other than the
Assumed Liabilities, and free and clear of all Liens, other than Permitted
Liens (as defined in Section 6.01(b)) and other than any Lien pursuant to the
HoldCo Borrowing arrangements or arising from actions or inactions of any of
the Marathon Parties or their affiliates (and not of any of the Ashland
Parties or their affiliates).
SECTION 1.04 Consents of Third Parties. (a) Notwithstanding anything
to the contrary in this Agreement, this Agreement shall not constitute an
agreement to assign any asset or any claim or right or any benefit arising
under or resulting from such asset, or to assume any liability, obligation or
commitment, if an attempted assignment or assumption thereof, without the
Consent of a third party, would constitute a breach or other contravention of
the rights of such third party, would be ineffective with respect to any party
to an agreement concerning such asset, liability, obligation or commitment, or
would in any way adversely affect the rights of Ashland or, upon transfer,
HoldCo with respect to such asset, liability, obligation or commitment. If any
transfer or assignment by Ashland, or any assumption by HoldCo, of any
interest in, or liability, obligation or commitment under, any asset requires
the Consent of a third party, then such
11
transfer or assignment or assumption shall be made subject to such Consent
being obtained. Except as set forth in Section 1.04(b), Ashland shall not have
any liability or obligation under this Agreement arising out of or relating to
the failure to obtain any such Consent that may be required in connection with
the Transactions contemplated by this Agreement or because of any
circumstances resulting therefrom, in each case so long as Ashland shall have
complied with its obligation under Section 9.11 of the Master Agreement to use
its reasonable best efforts to obtain such Consents. Subject to Section
1.04(b), no representation, warranty or covenant of Ashland herein shall be
breached or deemed breached, and no condition shall be deemed not satisfied,
as a result of (i) the failure to obtain any such Consent, (ii) any
circumstances resulting therefrom or (iii) any Claim or investigation
commenced or threatened by or on behalf of any person arising out of or
relating to the failure to obtain any such Consent or any circumstances
resulting therefrom, in each case so long as Ashland shall have complied with
its obligation under Section 9.11 of the Master Agreement to use its
reasonable best efforts to obtain such Consents.
(b) If any such Consent is not obtained prior to the Closing, the
Closing shall nonetheless take place on the terms set forth herein and,
thereafter, Ashland and HoldCo shall cooperate (at their own expense) in any
lawful and reasonable arrangement proposed by HoldCo under which HoldCo shall
obtain the economic claims, rights and benefits under the asset, claim or
right with respect to which the Consent has not been obtained in accordance
with this Agreement. Such reasonable arrangement may include (i) the
subcontracting, sublicensing or subleasing to HoldCo of any and all rights of
Ashland against the other party to such third-party agreement arising out of a
breach or cancellation thereof by the other party and (ii) the enforcement by
Ashland of such rights. With respect to the Assigned Contracts listed in
Section 1.04(b) of the VIOC Centers Disclosure Letter, if the provision of
such economic claims, rights and benefits to HoldCo shall violate the rights
of such other party, Ashland shall otherwise compensate HoldCo for the
reasonable value, if any, of such economic claims, rights and benefits, so
long as HoldCo shall have complied with its obligations under the first
sentence of this Section 1.04(b).
12
SECTION 1.05. Tax Matters. Notwithstanding anything to the contrary
in this Agreement, the rights, responsibilities and obligations of the parties
with respect to any Taxes or Tax Items (in each case as defined in the Tax
Matters Agreement) related to or arising from the ownership or operation of
the VIOC Centers shall be determined pursuant to the Tax Matters Agreement.
ARTICLE II
The Closing
SECTION 2.01. Closing Date. The closing of the VIOC Assignment and
Assumption will occur at the Closing, subject only to the satisfaction or
waiver of the conditions to Closing in accordance with the terms of the Master
Agreement.
SECTION 2.02. Transactions To Be Effected at the Closing. At the
Closing, in accordance with Section 1.01(a) of the Master Agreement:
(a) Ashland shall deliver to HoldCo an executed deed (in recordable
form) with respect to each of the Owned Properties (as defined in Section
3.03(a)) located in Ohio, substantially in the form attached hereto as
Exhibit A-1, and an executed deed (in recordable form) with respect to
each of the Owned Properties located in Michigan, substantially in the
form attached hereto as Exhibit A-2;
(b) Ashland and HoldCo shall enter into an assignment and assumption
document, in the form attached hereto as Exhibit B, providing for the
assignment of the Transferred Assets and the assumption of the Assumed
Liabilities; and
(c) The parties thereto shall enter into the Blanket License
Agreement.
ARTICLE III
Representations and Warranties of Ashland
Ashland hereby represents and warrants to HoldCo that, as of the
date of this Agreement and as of the Closing Date as if made on the Closing
Date (except to the extent any such representations and warranties expressly
13
relate to an earlier date, in which case as of such earlier date), except as
set forth in the letter referencing this Agreement, dated as of the date of
this Agreement, from Ashland to HoldCo (the "VIOC Centers Disclosure Letter"):
SECTION 3.01. Financial Statements. Section 3.01 of the VIOC Centers
Disclosure Letter sets forth the unaudited combined statement of tangible
assets to be sold as of September 30, 2003 (the "Balance Sheet"), the
unaudited combined statement of tangible assets to be sold as of December 31,
2003, the unaudited combined statement of income before taxes for the year
ended September 30, 2003 and the unaudited combined statement of income before
taxes for the three months ended December 31, 2003, together with the notes to
such financial statements, in each case of the VIOC Centers (such financial
statements and the notes thereto, the "Financial Statements"). The Financial
Statements present fairly, in all material respects, the tangible assets to be
sold and income before taxes of the VIOC Centers as of the dates and for the
periods indicated, in conformity with GAAP (subject, in the case of the
interim financial statements as of and for the period ended December 31, 2003,
to normal, recurring year-end adjustments).
SECTION 3.02. Assets Other than Real Property Interests. Ashland
has, or as of the Closing Date will have, and at the Closing Ashland will
transfer (subject to the consummation of the Closing on the Closing Date in
accordance with the terms of Article I of the Master Agreement) to HoldCo,
good and valid title to all Transferred Assets in each case free and clear of
all Liens (other than any Lien pursuant to the HoldCo Borrowing arrangements
or arising from actions or inactions of any of the Marathon Parties or their
affiliates (and not of any of the Ashland Parties or their affiliates)),
except Permitted Liens. This Section 3.02 does not relate to real property or
interests in real property, such items being the subject of Section 3.03.
SECTION 3.03. Real Property. (a) Section 3.03 of the VIOC Centers
Disclosure Letter sets forth a complete list of all real property and
interests in real property owned in fee by Ashland and any of the other
Ashland Parties and used, held for use or intended to be used exclusively in
the operation or conduct of the VIOC Centers, other than any such property or
interest constituting an Excluded Asset (individually, an
14
"Owned Property"). Section 3.03 of the VIOC Centers Disclosure Letter sets
forth a complete list of all real property and interests in real property
leased by Ashland and used, held for use or intended to be used exclusively in
the operation or conduct of the VIOC Centers, other than any such property or
interest constituting an Excluded Asset (individually, a "Leased Property").
(b) Ashland has, or as of the Closing Date will have, and at the
Closing Ashland will transfer (subject to the consummation of the Closing on
the Closing Date in accordance with the terms of Article I of the Master
Agreement) to HoldCo, good and marketable fee title to all Owned Property and
good and valid title to the leasehold estates in all Leased Property, in each
case free and clear of all Liens (other than any Lien pursuant to the HoldCo
Borrowing arrangements or arising from actions or inactions of any of the
Marathon Parties or their affiliates (and not of any of the Ashland Parties or
their affiliates)), except Permitted Liens.
SECTION 3.04. [Intentionally Omitted].
SECTION 3.05. Contracts. (a) Except for Contracts that will not be
binding on the Transferred Assets or any of the VIOC Centers after the
Closing, Ashland is not a party to or bound by any Contract that is used, held
for use or intended to be used exclusively in, or that arises exclusively out
of, the operation or conduct of the VIOC Centers (other than (x) the
Transaction Agreements and the Ancillary Agreements and (y) Assigned Contracts
entered into after the date of this Agreement in the ordinary course of
business and not otherwise in violation of this Agreement) that is:
(i) a covenant not to compete (other than pursuant to the radius
restrictions contained in the agreements listed in Section 3.05(a)(i) of
the VIOC Centers Disclosure Letter) that limits the conduct of business
at any of the VIOC Centers as presently conducted;
(ii) a Contract with (A) Ashland or any affiliate of Ashland or (B)
any officer, director or employee of Ashland or any of its affiliates, in
each case other than Contracts that will be terminated as of the Closing;
15
(iii) a lease, sublease or similar Contract with any person under
which Ashland is a lessor or sublessor of, or makes available for use to
any person, all or any portion of the Premises in any such case that has
an aggregate future receivable in excess of $50,000 and is not terminable
by Ashland by notice of not more than 30 days without payment or penalty
of any kind;
(iv) a lease, sublease or similar Contract with any person under
which (A) Ashland is lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by any
person or (B) Ashland is a lessor or sublessor of, or makes available for
use by any person, any tangible personal property owned or leased by
Ashland, in any such case that has an aggregate future liability or
receivable, as the case may be, in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind;
(v) (A) a continuing Contract for the future purchase of materials,
supplies or equipment (other than purchase orders for inventory in the
ordinary course of business consistent with past practice), (B) a
management, service, consulting or other similar Contract or (C) an
advertising agreement or arrangement, in any such case that has an
aggregate future liability to any person in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind;
(vi) a Contract (including a sales order) involving the obligation
of Ashland to deliver products or services for payment of more than
$100,000 or extending for a term more than 90 days from the date of this
Agreement (unless terminable without payment or penalty of any kind upon
no more than 30 days' notice);
(vii) (A) a Contract under which Ashland has borrowed any money
from, or issued any note, bond, debenture or other evidence of
indebtedness to, any person or (B) any other note, bond, debenture,
letter of credit, financial assurance requirement or other evidence of
indebtedness issued to any person;
16
(viii) a Contract (including any so-called take-or-pay or keepwell
agreement) under which (A) any person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of Ashland or (B)
Ashland has directly or indirectly guaranteed indebtedness, liabilities
or obligations of any other person (in each case other than endorsements
for the purpose of collection in the ordinary course of business);
(ix) a Contract under which Ashland has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution to,
or other investment in, any person (other than extensions of trade credit
in the ordinary course of business of the VIOC Centers), in any such case
that, individually, is in excess of $100,000;
(x) a Contract granting a Lien (other than Permitted Liens) upon the
Premises; or
(xi) any other Contract that has an aggregate future liability to
any person (other than Ashland) in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind (other than purchase orders and sales orders).
As of the date of this Agreement, neither the Transferred Assets nor the VIOC
Centers are bound by or subject to any Contract of any of the types referred
to in clauses (i) through (xi) of this Section 3.05(a), applying the
thresholds set forth therein, that will be binding on any of the Transferred
Assets or the VIOC Centers after the Closing Date.
(b) All Contracts listed in the VIOC Centers Disclosure Letter are
valid, binding and in full force and effect and are enforceable by Ashland in
accordance with their terms subject, as to enforcement, to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and to equitable principles of general
applicability, except for such failures to be valid, binding, in full force
and effect or enforceable that have not had and would not reasonably be
expected to have a VIOC Centers Material Adverse Effect (as defined in Section
6.01(b)). Ashland has performed all obligations required to be performed by
17
it to date under the Assigned Contracts, and it is not in breach or default
thereunder and, to the knowledge of Ashland, no other party to any Assigned
Contract is in breach or default thereunder, in each case except for such
noncompliance, breaches and defaults that have not had and would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. Ashland
has not received any notice of the intention of any party to terminate any
Assigned Contract listed in any section of the VIOC Centers Disclosure Letter.
(c) Section 3.05(c) of the VIOC Centers Disclosure Letter sets forth
each Assigned Contract with respect to which the Consent of the other party or
parties thereto must be obtained by virtue of the execution and delivery of
this Agreement or the consummation of the VIOC Assignment and Assumption to
avoid the invalidity of the transfer of such Contract, the termination
thereof, a breach, violation or default thereunder or any other change or
modification to the terms thereof, other than any such invalidity,
termination, breach, violation, default, change or modification that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect.
SECTION 3.06. Permits. All Assigned Permits are validly held by
Ashland, and Ashland has complied with the terms and conditions thereof,
except for any such invalidity or non-compliance that would not reasonably be
expected to have a VIOC Centers Material Adverse Effect. Ashland has not
received written notice of any Claims relating to the revocation or
modification of any Assigned Permits except for any such Claims that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. None of
the Assigned Permits is subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or the
consummation of the VIOC Assignment and Assumption, except for any such
suspensions, modifications, revocations or nonrenewals that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. This
Section 3.06 does not relate to environmental matters, such items being the
subject of Section 3.11(b).
SECTION 3.07. Condition of Transferred Assets. The Transferred
Assets are in good operating condition and repair (ordinary wear and tear
excepted) and are suitable for their current uses, except where the failure of
the Transferred Assets to be in good operating condition or
18
repair or to be suitable for such uses would not reasonably be expected to
have a VIOC Centers Material Adverse Effect.
SECTION 3.08. Claims. Section 3.08 of the VIOC Centers Disclosure
Letter sets forth a list of each Claim pending or, to the knowledge of
Ashland, threatened against, or as to which a notice has been received as of
the date of this Agreement by, Ashland (and, as to complaints, which have been
served on Ashland) and that involves an amount in controversy of more than
$100,000. This Section 3.08 does not relate to environmental matters, such
items being the subject of Section 3.11(b), or to employee or labor matters,
such items being the subject of Section 3.12.
SECTION 3.09. Benefit Plans. (a) Section 3.09 of the VIOC Centers
Disclosure Letter contains a list of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained or contributed to by Ashland for the
benefit of any officers or employees of the VIOC Centers ("VIOC Pension
Plans") and all "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA), bonus, stock option, stock purchase, deferred compensation plans or
arrangements and other employee fringe benefit plans maintained, or
contributed to, by Ashland or any of its affiliates for the benefit of one or
more current or former employees of the VIOC Centers (other than any former
employee of the VIOC Centers who became employed by MAP or any of its
subsidiaries following termination of employment with Ashland or any of its
affiliates) (each, a "VIOC Centers Employee") (all the foregoing, including
VIOC Pension Plans, being herein called "VIOC Benefit Plans"). Ashland has
provided to Marathon true, complete and correct copies of (i) each VIOC
Benefit Plan (or, in the case of any unwritten VIOC Benefit Plans, fair and
accurate summary descriptions thereof), (ii) the two most recent annual
reports on Form 5500 filed with the Internal Revenue Service with respect to
each VIOC Benefit Plan (if any such report was required), (iii) the most
recent summary plan description for each VIOC Benefit Plan for which such a
summary plan description is required and (iv) each trust agreement, group
annuity contract or other funding and financing arrangement relating to any
VIOC Benefit Plan.
(b) There does not exist as of the date of this Agreement, nor do
any circumstances exist as of the date of
19
this Agreement that would reasonably be expected to result in, any Employee
Benefits Liability (as defined below), whether under any VIOC Benefit Plan or
otherwise, that would reasonably be expected to become a liability of HoldCo
or any of its affiliates at or after the Closing. "Employee Benefits
Liability" means any liability of Ashland or any entity required to be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code with
Ashland prior to the Closing under (i) Sections 302, 405, 409 or Title IV of
ERISA, (ii) Section 412, 4971 or 4975 of the Code or (iii) Sections 601 et.
seq. and 701 et seq. of ERISA and Section 4980B and Sections 9801 et seq. of
the Code.
SECTION 3.10. Absence of Changes or Events. From the date of the
Balance Sheet to the date of this Agreement, there has not been any event,
change, effect or development (i) that, individually or in the aggregate, has
had or would reasonably be expected to have a VIOC Centers Material Adverse
Effect or (ii) that would have been prohibited by Section 4.01 if the terms of
such section had been in effect as of and after the date of the Balance Sheet.
SECTION 3.11. Compliance with Laws. (a) The VIOC Centers are in
compliance with all applicable Laws, including those relating to occupational
health and safety, except for instances of noncompliance that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. To the
knowledge of Ashland, Ashland has not received any written communication from
a Governmental Entity that alleges that the VIOC Centers are not in compliance
in any material respect with any applicable Law that has not been finally
resolved with such Governmental Entity. This Section 3.11(a) does not relate
to matters with respect to Taxes, which are the subject of the Tax Matters
Agreement, or to environmental matters, which are the subject of Section
3.11(b).
(b) There are no underground storage tanks for the storage of
Hazardous Materials (as defined below) in use at any of the VIOC Centers, and
to Ashland's knowledge there are no such tanks located under the Premises.
Except for such matters that would not reasonably be expected to have a VIOC
Centers Material Adverse Effect, (i) to the knowledge of Ashland, Ashland has
not received any written communication from a Governmental Entity that alleges
that the VIOC Centers are in violation of any Environmental Law
20
that has not been finally resolved with such Governmental Entity, (ii) Ashland
holds all Permits required to conduct the VIOC Centers under any applicable
Environmental Law, and is and at all times has been in compliance with all
Environmental Laws and the terms and conditions of such Permits, (iii) there
are no Environmental Claims (as defined below) pending, or to the knowledge of
Ashland, threatened against Ashland and (iv) there have been no Releases (as
defined below) of any Hazardous Material at or originating from the Premises,
and no Hazardous Materials have been handled, generated, stored, transported
or disposed of by the VIOC Centers, in each case that would reasonably be
expected to form the basis of an Environmental Claim against Ashland. The term
"Environmental Claim" means any and all administrative, regulatory or judicial
actions, suits, orders, demands, directives, claims, liens, investigations,
proceedings or written notices of noncompliance or violation by or from any
person alleging liability of whatever kind or nature arising out of, based on
or resulting from (x) the presence or Release of, or exposure to, any
Hazardous Materials; or (y) the failure to comply with any Environmental Law.
The term "Environmental Laws" means all applicable federal, state, local and
foreign laws, rules, regulations, orders, decrees, judgments, legally binding
agreements or environmental Permits issued, promulgated or entered into by or
with any Governmental Entity, relating to the protection of the environment,
the protection of the public welfare from actual or potential exposure, or the
effects from exposure, to any actual or potential release, discharge, disposal
or emission (whether past or present) of any Hazardous Materials or the
manufacture, processing, distribution, use, treatment, labeling, storage,
disposal, transport or handling of any Hazardous Materials. The term
"Hazardous Materials" means all explosive or regulated radioactive materials
or substances, hazardous or toxic substances, wastes or chemicals, petroleum
(including crude oil or any fraction thereof) or petroleum distillates,
asbestos or asbestos containing materials, and any other material, chemical
substance or waste that in relevant form or concentration is prohibited,
limited or regulated (or the cleanup of which can be required) pursuant to any
Environmental Law and all substances that require special handling, storage or
disposal procedures or whose handling, storage or disposal procedures is in
any way regulated, in any case under any applicable Law for the protection of
the health, safety and environment. The term "Release" means
21
any spill, emission, leaking, dumping, injection, deposit, disposal,
discharge, dispersal, leaching, emanation or migration of any Hazardous
Materials into or through the environment (including ambient air, surface
water, ground water, soils, land surface, subsurface strata or workplace).
SECTION 3.12. Employee and Labor Matters. Except as would not
reasonably be expected to have a VIOC Centers Material Adverse Effect (i)
there is not any, and during the past three years there has not been any,
labor strike, dispute, work stoppage or lockout pending against the VIOC
Centers; (ii) to the knowledge of Ashland, no union organizational campaign is
in progress with respect to the VIOC Centers Employees and no question
concerning representation of such employees exists; (iii) Ashland is not
engaged in any unfair labor practice in connection with the conduct of the
VIOC Centers; (iv) there are not any unfair labor practice charges or
complaints against Ashland pending before the National Labor Relations Board
in connection with the conduct of the VIOC Centers; (v) there are not any
pending union grievances against Ashland in connection with the conduct of the
VIOC Centers as to which there is a reasonable possibility of adverse
determination; (vi) there are not any pending charges in connection with the
conduct of the VIOC Centers against Ashland or any VIOC Centers Employee
before the Equal Employment Opportunity Commission or any state or local
agency responsible for the prevention of unlawful employment practices; and
(vii) Ashland has not received written notice during the past three years of
the intent of any Governmental Entity responsible for the enforcement of labor
or employment laws to conduct an investigation of the VIOC Centers.
SECTION 3.13. Sufficiency of Transferred Assets. Except for the
exclusion of the Excluded Assets and assuming that HoldCo has the ability to
provide to the VIOC Centers all corporate-level services of the type that are
currently provided to the VIOC Centers by Ashland or any of its affiliates,
the Transferred Assets, together with the Blanket License Agreement, are
sufficient for the operation and conduct of the business of the VIOC Centers
immediately following the Closing in substantially the same manner as
currently operated and conducted, other than any insufficiency that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect.
22
SECTION 3.14. Inventory. Except as would not reasonably be expected
to have a VIOC Centers Material Adverse Effect, the Inventory is generally of
a quality usable or salable in the ordinary course of business of the VIOC
Centers.
ARTICLE IV
Covenants
SECTION 4.01. Covenants of Ashland Relating to Conduct of VIOC
Centers. (a) Except for matters set forth in Section 4.01 of the VIOC Centers
Disclosure Letter or otherwise contemplated by the Transaction Agreements,
from the date of this Agreement to the Closing, Ashland shall conduct the
business of the VIOC Centers in the usual, regular and ordinary course in
substantially the same manner as previously conducted. Without limiting the
generality of the foregoing, Ashland shall use its reasonable best efforts to
(i) preserve the material business relationships of the VIOC Centers with
customers, suppliers, distributors and others with whom Ashland deals in
connection with the conduct of the VIOC Centers in the ordinary course of
business and retain its present employees who are involved in the operation of
the VIOC Centers, (ii) maintain the Transferred Assets, including those held
under leases, in as good operating condition and repair (ordinary wear and
tear excepted) as at present, and maintain all Permits set forth in Section
3.06 of the VIOC Centers Disclosure Letter, (iii) perform in all material
respects its obligations under Assigned Contracts and (iv) comply in all
material respects with all applicable Laws relating to the VIOC Centers or any
of the Transferred Assets. In addition, except as set forth in Section 4.01 of
the VIOC Centers Disclosure Letter or otherwise contemplated by the
Transaction Agreements, Ashland shall not do any of the following in
connection with the VIOC Centers without the prior written consent of Marathon
(which consent shall not be unreasonably withheld or delayed):
(i) adopt, establish or amend in any material respect any VIOC
Benefit Plan (or any plan that would be a VIOC Benefit Plan if adopted or
established) in a manner affecting any VIOC Centers Employee, except as
required by applicable Law or as would relate to a substantial number of
other similarly situated employees of Ashland and its subsidiaries;
23
(ii) grant to any VIOC Centers Employee any increase in compensation
or benefits, except in the ordinary course of business and consistent
with past practice or as may be required under existing Contracts set
forth in Section 3.05 of the VIOC Centers Disclosure Letter and except
for any increases for which Ashland shall be solely obligated and which
will not result in any incremental compensation that will be payable by
HoldCo after the Closing Date pursuant to Section 4.03(a);
(iii) subject any Transferred Asset to any Lien of any nature
whatsoever that would have been required to be set forth in Sections 3.02
or 3.03 of the VIOC Centers Disclosure Letter if existing on the date of
this Agreement;
(iv) waive any claims or rights of substantial value to the extent
relating to any Transferred Asset;
(v) make or incur any capital expenditures (of a non-emergency
nature) that relate to the VIOC Centers and that are not reflected in the
capital expenditure budget set forth in Section 4.01(a)(v) of the VIOC
Centers Disclosure Letter and that, individually, are in excess of
$100,000 or that, in the aggregate, are in excess of $500,000, except for
any such capital expenditures for which Ashland shall be solely
obligated, provided, however, that if Ashland makes or incurs a capital
expenditure that relates exclusively to the VIOC Centers and is not
reflected in the capital expenditure budget set forth in Section
4.01(a)(v) of the VIOC Centers Disclosure Letter, and if Marathon agrees
in writing to cause HoldCo to reimburse Ashland for such capital
expenditure, then HoldCo shall, promptly after the Closing, reimburse
Ashland for such capital expenditure;
(vi) sell, lease, license or otherwise dispose of any Transferred
Assets, except (A) inventory, supplies and obsolete or excess equipment
sold or disposed of in the ordinary course of business and (B) leases
entered into in the ordinary course of business with aggregate annual
lease payments not in excess of $50,000;
24
(vii) enter into or amend any employee collective bargaining
agreement or other Contract with any labor union;
(viii) commit an intentional material breach of or waive any
material rights under any material Assigned Contract or any material
Permit, or amend or terminate any material Assigned Contract or any
material Permit if the result of any such amendment or termination would
be materially adverse to HoldCo; or
(ix) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Advice of Changes. Ashland shall promptly advise Marathon in
writing of any change or event that has had or would reasonably be expected to
have a VIOC Centers Material Adverse Effect.
(c) Insurance. Ashland shall use its reasonable best efforts to
keep, or to cause to be kept, all insurance policies currently maintained with
respect to the Transferred Assets (the "Ashland Insurance Policies"), or
suitable replacements thereof, in full force and effect without interruption
through the close of business on the Closing Date; it being understood that
any and all Ashland Insurance Policies are owned and maintained by Ashland and
its affiliates (and do not exclusively relate to the VIOC Centers). HoldCo
will not have any rights under the Ashland Insurance Policies from and after
the Closing Date.
(d) Reimbursement of Media Expenditures. After the date of this
Agreement, if Ashland enters into a Contract that is a media placement
agreement that would be an Assigned Contract pursuant to Section
1.02(a)(v)(B), and if Marathon agrees in writing to cause HoldCo to reimburse
Ashland for expenditures made or incurred under such Assigned Contract prior
to the Closing, then HoldCo shall, promptly after the Closing, reimburse
Ashland for such expenditures.
SECTION 4.02. Refunds and Remittances. After the Closing, if Ashland
or any of its affiliates receive any refund or other amount which is a
Transferred Asset or is otherwise properly due and owing to HoldCo or any of
its affiliates in accordance with the terms of this Agreement, Ashland
promptly shall remit, or shall cause to be remitted, such amount to HoldCo.
After the Closing, if
25
HoldCo or any of its affiliates receive any refund or other amount which is an
Excluded Asset or is otherwise properly due and owing to Ashland or any of its
affiliates in accordance with the terms of this Agreement, HoldCo promptly
shall remit, or shall cause to be remitted, such amount to Ashland. After the
Closing, if HoldCo or any of its affiliates receive any refund or other amount
which is related to claims (including workers' compensation), litigation,
insurance or other matters for which Ashland or any of its affiliates is
responsible hereunder, and which amount is not a Transferred Asset, or is
otherwise properly due and owing to Ashland or any of its affiliates in
accordance with the terms of this Agreement, HoldCo promptly shall remit, or
cause to be remitted, such amount to Ashland. After the Closing, if Ashland or
any of its affiliates receive any refund or other amount which is related to
claims (including workers' compensation), litigation, insurance or other
matters for which HoldCo or any of its affiliates is responsible hereunder,
and which amount is not an Excluded Asset, or is otherwise properly due and
owing to HoldCo or any of its affiliates in accordance with the terms of this
Agreement, Ashland promptly shall remit, or cause to be remitted, such amount
to HoldCo.
SECTION 4.03. Employee Matters. (a) Continuation of Employment.
Effective as of the Closing, HoldCo or one or more of its affiliates shall
offer employment (which shall include HoldCo's compliance with its covenants
set forth in this Section 4.03) to all VIOC Centers Employees who on the
Closing Date are actively at work (each, an "Active VIOC Centers Employee").
For purposes of this Agreement, any VIOC Centers Employee who is not actively
at work on the Closing Date due solely to a leave of absence (including due to
vacation, holiday, sick leave, maternity or paternity leave, military leave,
jury duty, bereavement leave, injury or short-term disability), other than
long-term disability, in compliance with applicable policies of Ashland or its
affiliates shall be deemed an Active VIOC Centers Employee. Each VIOC Centers
Employee who accepts such an offer of employment is referred to herein as a
"Transferred VIOC Centers Employee". Immediately following the Closing, HoldCo
shall, or shall cause one or more of its affiliates to, provide each
Transferred VIOC Centers Employee (i) with overall compensation that is at
least equivalent to such Transferred VIOC Centers Employee's overall
compensation in effect immediately prior to the
26
Closing and (ii) subject to the provisions of this Section 4.03, with
appropriate employee benefits as determined by HoldCo or such affiliate.
Without limiting the generality of the foregoing, HoldCo shall maintain
employee benefit plans and programs for the Transferred VIOC Centers
Employees, which shall be competitive in the retail industry.
(b) Certain Welfare Benefits Matters. (i) Immediately following the
Closing, HoldCo or one or more of its affiliates shall allow Transferred VIOC
Centers Employees to participate in benefit plans that provide for group
welfare benefits including, for the avoidance of doubt, vacation and severance
benefits (the "HoldCo VIOC Welfare Plans"). HoldCo shall grant to the
Transferred VIOC Centers Employees credit under the HoldCo VIOC Welfare Plans
for service prior to the Closing with Ashland and its affiliates for all
purposes, other than for purposes of determining eligibility to receive
retiree medical subsidies and for purposes of determining level of benefits
and benefit accruals under any retiree medical plans maintained by HoldCo or
its affiliates. HoldCo or its applicable affiliate shall (A) waive all
limitations as to preexisting conditions, exclusions and waiting periods and
actively-at-work requirements with respect to participation and coverage
requirements applicable to the Transferred VIOC Centers Employees and their
dependents under the HoldCo VIOC Welfare Plans to the extent satisfied or
waived under the applicable corresponding VIOC Benefit Plan immediately prior
to the Closing and (B) provide each Transferred VIOC Centers Employee and his
or her eligible dependents with either pro-rated deductibles and co-payments
for the balance of the year or credit for any co-payments and deductibles paid
prior to the Closing in the calendar year in which the Closing Date occurs
(or, if later, in the calendar year in which Transferred VIOC Centers
Employees and their dependents commence participation in the applicable HoldCo
VIOC Welfare Plan) for purposes of satisfying any applicable deductible or
out-of-pocket requirements under any HoldCo VIOC Welfare Plans in which the
Transferred VIOC Centers Employees participate. If credit for deductibles and
co-payments is provided, Ashland shall provide or cause to be provided
adequate data to implement that credit as HoldCo may reasonably request.
27
(ii) Ashland shall be responsible in accordance with its
applicable welfare plans (and the applicable welfare plans of its
affiliates) in effect prior to the Closing for all reimbursement
claims (such as medical and dental claims) for expenses incurred,
and for all non-reimbursement claims (such as life insurance claims)
incurred, under such plans prior to the Closing by Transferred VIOC
Centers Employees and their dependents, except that HoldCo shall be
responsible for such claims to the extent such claims are reflected
on the Balance Sheet or to the extent insured under an insurance
policy of which HoldCo or its affiliates becomes the beneficiary and
for which Ashland or its affiliates have paid the premium. HoldCo
shall be responsible in accordance with the applicable welfare plans
of HoldCo and its affiliates for all reimbursement claims (such as
medical and dental claims) for expenses incurred, and for all
non-reimbursement claims (such as life insurance claims) incurred,
from and after the Closing by Transferred VIOC Centers Employees and
their dependents. For purposes of this Section 4.03(b)(ii), a claim
shall be deemed to have been incurred on (A) the date of death or
dismemberment in the case of claims under life insurance and
accidental death and dismemberment policies or (B) the date on which
the charge or expense giving rise to such claim is incurred (without
regard to the date of inception of the related illness or injury or
the date of submission of a claim related thereto) in the case of
all other claims; provided, however, that in the event of a hospital
stay that commences prior to the close of business on the Closing
Date and ends after the close of business on the Closing Date, the
cost thereof shall be apportioned between HoldCo and Ashland with
Ashland responsible for that portion of the cost incurred prior to
the close of business on the Closing Date and HoldCo responsible for
the balance of such cost. Effective as of the Closing, HoldCo shall
assume all liabilities, obligations and commitments of Ashland and
its affiliates to Transferred VIOC Centers Employees and their
eligible dependents in respect of health insurance under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), the Health Insurance Portability and Accountability Act
of 1996 and applicable state Law; provided, however, that Ashland
and its affiliates shall remain obligated to
28
provide any applicable COBRA notices in respect of events occurring
on or prior to the Closing Date.
(c) Accrued Vacation. For purposes of determining the number of vacation
days to which each Transferred VIOC Centers Employee shall be entitled
following the Closing, HoldCo shall assume and honor all vacation days accrued
or earned but not yet taken by such Transferred VIOC Centers Employee as of
the Closing. To the extent that a Transferred VIOC Centers Employee is
entitled under any applicable Law or any policy of Ashland or its affiliates
to be paid for any vacation days accrued or earned but not yet taken by such
Transferred VIOC Centers Employee as of the Closing, HoldCo shall discharge
the liability for such vacation days.
(d) Retirement Plan. Immediately following the Closing, HoldCo or one or
more of its affiliates shall have in effect a retirement benefit plan or plans
(as applicable, the "HoldCo Retirement Plan") that shall provide benefits to
the Transferred VIOC Centers Employees. HoldCo or such affiliate shall have
sole discretion in establishing the provisions of the HoldCo Retirement Plan.
(e) Administration. Following the date of this Agreement, Ashland and
HoldCo shall reasonably cooperate in all matters reasonably necessary to
effect the transactions contemplated by this Section 4.03, including
exchanging information and data relating to workers' compensation, employee
benefits and employee benefit plan coverages (except to the extent prohibited
by applicable Law), and in obtaining any governmental approvals required
hereunder.
(f) Employment Tax Reporting Responsibility. HoldCo and Ashland hereby
agree to follow the alternate procedure for employment tax withholding as
provided in Section 5 of Rev. Proc. 96-60, 1996-53 I.R.B. 24 ("Rev. Proc.
96-60"). Ashland shall provide HoldCo with all necessary and accurate payroll
records and such other information relating to the Transferred VIOC Centers
Employees as HoldCo may reasonably request with respect to Transferred VIOC
Centers Employees in order to comply with the provisions of Rev. Proc. 96-60
with respect to the calendar year that includes the Closing Date. HoldCo shall
perform all employment tax reporting responsibilities for such employees from
the Closing Date forward and shall furnish a Form W-2 for such calendar year
to each Transferred VIOC Centers Employee that will include all
29
remuneration earned by such Transferred VIOC Centers Employee from Ashland or
HoldCo during such calendar year.
(g) Intent. It is HoldCo's intent that the HoldCo Retirement Plan shall
provide retirement benefits that are competitive within the retail industry.
SECTION 4.04. Post-Closing Information. After the Closing, upon
reasonable written notice, Ashland and HoldCo shall furnish or cause to be
furnished to each other and their employees and Representatives, during normal
business hours, reasonable access to the personnel, properties, books,
Contracts, commitments, records and other information relating to the VIOC
Centers (and, to the extent reasonably requested, copies of the portions
relating to the VIOC Centers of any such books, Contracts, commitments,
records and other information, in each case to the extent they are available
in written form and they relate to the period prior to the Closing Date) and
assistance relating to the VIOC Centers (to the extent within the control of
such party), in each case for any reasonable business purpose, including in
respect of litigation, insurance matters, financial reporting and accounting
matters.
SECTION 4.05. Records. HoldCo recognizes that certain Records may
contain incidental information relating to subsidiaries, divisions or
businesses of Ashland other than the VIOC Centers and that Ashland may retain
copies thereof. Ashland recognizes that certain documents and information of a
type similar to the Records may be used, held for use or intended to be used
primarily in, or arise primarily out of, the operation or conduct of the VIOC
Centers, and shall provide copies of the relevant portions thereof to HoldCo
at the Closing.
SECTION 4.06. [Intentionally Omitted].
SECTION 4.07. Bulk Transfer Laws. HoldCo hereby waives
compliance by Ashland with the provisions of any so-called "bulk transfer law"
of any jurisdiction in connection with the VIOC Assignment and Assumption.
SECTION 4.08. Supplies. At any time after 20 days after the
Closing Date, HoldCo shall not use stationery, purchase order forms, labels,
material safety data sheets or other similar paper goods or supplies that
state or
30
otherwise indicate thereon that the VIOC Centers are a division or
unit of Ashland.
SECTION 4.09. Mail. From and after the Closing, Ashland and
HoldCo shall cooperate with each other, and shall cause their Representatives
to cooperate with each other, to ensure that (i) HoldCo receives copies of all
mail (including mail sent by private delivery and electronic mail
correspondence) relating to the VIOC Centers or the Transferred Assets and
(ii) Ashland receives all mail addressed to Ashland delivered to the Premises
(which HoldCo is hereby authorized to receive and open) that contains
information relating to, or of importance to, Ashland (including for financial
reporting, accounting or tax purposes) or to subsidiaries, divisions or
businesses of Ashland other than the VIOC Centers.
SECTION 4.10. Further Assurances. From time to time after the
Closing, as and when requested by any party hereto, each party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary or desirable to
consummate the Transactions contemplated by this Agreement, including, (i) in
the case of Ashland, executing and delivering to HoldCo such assignments,
deeds, Consents and other instruments as HoldCo may reasonably request as
necessary or desirable for such purpose and (ii) in the case of HoldCo,
executing and delivering to Ashland such assumptions and other instruments as
Ashland may reasonably request as necessary or desirable for such purpose.
From and after the Closing Date, Ashland will promptly refer all bona fide
written inquiries with respect to ownership of the Transferred Assets after
the Closing or the operation or conduct of the VIOC Centers after the Closing
to HoldCo or its designee.
SECTION 4.11. Review of Contracts. Prior to the Closing Date,
Ashland shall review the terms of each material Contract that relates in part
to the VIOC Centers and in part to any other business of Ashland or any of its
subsidiaries other than those Contracts identified in Section 4.11 of the VIOC
Centers Disclosure Letter (collectively, "Ashland Joint Contracts") in order
to determine whether such Contract should be terminated and replaced on or
prior to the Closing Date by a separate Contract relating to the VIOC Centers
on the one hand (any such separate Contract being an Assigned Contract, so
long
31
as (i) entering into such Contract would not otherwise be in violation of this
Agreement and (ii) such Contract does not contain terms that, in the
aggregate, are materially less advantageous to the VIOC Centers than the terms
under the Contract being terminated and replaced), and a separate Contract
relating to such other business of Ashland or any of its subsidiaries on the
other hand (any such separate Contract not being an Assigned Contract). If
requested by HoldCo or Marathon within 90 days after Ashland notifies HoldCo
and Marathon in writing of the specific terms of the Ashland Joint Contracts,
Ashland shall continue in effect any Ashland Joint Contract not terminated and
replaced in accordance with the immediately preceding sentence, if not
prohibited by the terms of such Ashland Joint Contract, until the stated
expiration thereof (without regard to any available renewal options);
provided, however, that Ashland shall not be prohibited from terminating any
such Ashland Joint Contract that relates to a substantial number of Valvoline
Instant Oil Change (VIOC) quick-lube service centers owned or operated by
Ashland. Each of Ashland and HoldCo shall perform its respective obligations
under all such Ashland Joint Contracts so as not to create a default
thereunder, and Ashland shall provide HoldCo with rights thereunder consistent
with historical practice between the parties with respect thereto, subject to
obtaining any necessary Consents from third parties (which Ashland and HoldCo
mutually agree to use their reasonable best efforts to obtain) and subject to
HoldCo bearing the proportionate expense attributable to such rights
consistent with historical practice between the parties with respect thereto;
provided, however, that neither Ashland nor HoldCo shall be obligated to
extend credit to the other party.
SECTION 4.12. List of Permits. Within 90 days after the date of
this Agreement, Ashland shall provide to HoldCo and Marathon a list setting
forth all material certificates, licenses, permits, authorizations, Consents
and approvals issued or granted to Ashland by, and all material exemptions of,
or registrations or filings with, Governmental Entities ("Permits"), that are
used, held for use or intended to be used in the operation or conduct of the
VIOC Centers.
32
ARTICLE V
Termination
SECTION 5.01. Termination. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall automatically terminate, without
further action by any party, and the VIOC Assignment and Assumption abandoned
at any time prior to the Closing, upon termination of the Master Agreement in
accordance with the terms thereof.
SECTION 5.02. Effect of Termination. In the event of termination of
this Agreement in accordance with Section 5.01, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the
part of any party hereto, other than (i) Section 5.01 and this Section 5.02
and (ii) Article VI (General Provisions), which provisions shall survive such
termination, and except to the extent that such termination results from the
material breach by a party of its representations, warranties or covenants set
forth in the Transaction Agreements.
ARTICLE VI
General Provisions
SECTION 6.01. Interpretation; VIOC Centers Disclosure Letter;
Certain Definitions. (a) When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article of, a
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No item contained in any section of the VIOC Centers
Disclosure Letter shall be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement, unless (i) such item is
included (or expressly incorporated by reference) in a section of the VIOC
Centers Disclosure Letter that is numbered to correspond to the section number
assigned to such representation or warranty in this Agreement or (ii) it is
readily apparent from a reading of such item that it discloses an exception to
such representation or warranty.
33
(b) For all purposes hereof:
"Blanket License Agreement" means the Blanket License Agreement
among the parties thereto in the form attached hereto as Exhibit C, together
with the forms of License Agreement, Licensee Sign and Equipment Lease
Agreement and Licensee Supply Agreement which are attached thereto and
incorporated by reference therein.
"Environmental Liability" means any liability, obligation or
commitment arising under any Environmental Law; provided, however, that
Environmental Liability specifically does not include any liability,
obligation or commitment relating to any Claim brought by any person other
than a Governmental Entity seeking damages, contribution, indemnification,
cost recovery, penalties, compensation or injunctive relief resulting from the
existence or release of, or exposure to, Hazardous Materials, except where
such Claim is brought as a citizen's suit in which no monetary damages are
sought for the account of such person. Anything in this Agreement to the
contrary notwithstanding, any liability, obligation or commitment under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or any comparable state Environmental Law that arises out of, is
based on or is in connection with the disposal or Release by Ashland of
Hazardous Materials at a location other than the Premises shall be treated as
a Retained Liability and shall not be or become an Assumed Liability.
"Intellectual Property" means patents (including all reissues,
divisions, continuations and extensions thereof), patent applications,
trademarks, trademark registrations, trademark applications, servicemarks,
servicemark registrations, servicemark applications, trade names, business
names, brand names, copyrights, copyright registrations and proprietary
designs and design registrations.
"Permitted Liens" means (i) Liens for current Taxes, assessments,
governmental charges or levies not yet due, (ii) workers' or unemployment
compensation Liens arising in the ordinary course of business, (iii)
mechanic's, materialman's, supplier's, vendor's, garnishment or similar Liens
arising in the ordinary course of business for amounts not yet due, (iv) Liens
or other charges or encumbrances as may have arisen in the ordinary course of
business, none of which individually or in the
34
aggregate are material to the ownership, use or operation of the Transferred
Assets, (v) any state of facts which an accurate survey would show which does
not materially detract from the value of or materially interfere with the use
and operation of the Transferred Assets, (vi) any Liens, easements,
rights-of-way, restrictions, rights, leases and other encumbrances affecting
title thereto, whether or not of record, which do not materially detract from
the value of or materially interfere with the use and operation of the
Transferred Assets, (vii) legal highways, zoning and building Laws, ordinances
or regulations, (viii) any Liens for real estate Taxes which are not yet due
and payable, (ix) Liens set forth in Section 3.02 of the VIOC Centers
Disclosure Letter and (x) Liens set forth in Section 3.03 of the VIOC Centers
Disclosure Letter.
"VIOC Centers" means the Valvoline Instant Oil Change (VIOC) service
center business operations (including the marketing and selling of quick
service engine oil change services, lubrication services, certain routine
maintenance check services, preventive automotive maintenance services, and
related products and services) conducted at the locations listed in Section
6.01(b) of the VIOC Centers Disclosure Letter by Ashland, and the supporting
office operations conducted at the locations listed in Section 6.01(b) of the
VIOC Centers Disclosure Letter by Ashland, in each case directly or indirectly
through certain of its subsidiaries, as of the date of this Agreement.
"VIOC Centers Material Adverse Effect" means a material adverse
effect (i) on the business, properties, assets, condition (financial or
otherwise), operations or results of operation of the VIOC Centers, taken as a
whole, (ii) on the ability of Ashland to perform its obligations under this
Agreement and the other agreements and instruments to be executed and
delivered in connection with this Agreement or (iii) on the ability of Ashland
to consummate the VIOC Assignment and Assumption. For purposes of this
Agreement, "VIOC Centers Material Adverse Effect" shall exclude any events,
changes, effects and developments to the extent relating to (A) the economy of
the United States or foreign economies in general, (B) industries in which the
VIOC Centers operate and not specifically relating to the VIOC Centers, (C)
any announcement by Ashland of the Transactions or of its intention to
transfer the VIOC Centers or (D) the execution
35
of the Transaction Agreements and the Ancillary Agreements and the
consummation of the Transactions.
SECTION 6.02. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
SECTION 6.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement (in accordance with the terms of Section 6.06) so as to effect the
original intent of the parties hereto as closely as possible to the end that
the Transactions contemplated hereby are fulfilled to the greatest extent
possible.
SECTION 6.04. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.05. No Third-Party Beneficiaries. This Agreement is not
intended to confer any rights or remedies upon any person other than the
parties hereto and the Marathon Parties, whom the parties hereto expressly
agree are third-party beneficiaries entitled to enforce the provisions of this
Agreement. Ashland acknowledges that the rights, titles and interests provided
to HoldCo pursuant to this Agreement are a material part of the consideration
for the agreements of the Marathon Parties pursuant to the Master Agreement.
It is further understood that, subject to Section 14.09 of the Master
Agreement, the respective successors and assigns of Ashland and HoldCo shall
have all of the rights, interests and obligations of Ashland and HoldCo,
respectively, hereunder.
SECTION 6.06. Amendment. This Agreement may not be amended by
the parties except pursuant to an instrument
36
in writing signed on behalf of Ashland and HoldCo with the written consent of
Marathon.
37
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ James J. O'Brien
-----------------------------
Name: James J. O'Brien
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
-----------------------------
Name: James J. O'Brien
Title: President
EXHIBIT 10.3
==============================================================================
ASSIGNMENT AND ASSUMPTION AGREEMENT
(MALEIC BUSINESS)
Dated as of March 18, 2004,
Between
ASHLAND INC.
And
ATB HOLDINGS INC.
==============================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I
Maleic Assignment and Assumption
SECTION 1.01. Maleic Assignment and Assumption....................1
SECTION 1.02. Transferred Assets and Excluded Assets..............1
SECTION 1.03. Assumption of Certain Liabilities...................6
SECTION 1.04. Consents of Third Parties..........................11
SECTION 1.05. Closing Current Assets Adjustment..................12
SECTION 1.06. Tax Matters........................................15
SECTION 1.07. Neville Island Maleic Assets Provisions............15
ARTICLE II
The Closing
SECTION 2.01. Closing Date.......................................18
SECTION 2.02. Transactions To Be Effected at the Closing.........19
ARTICLE III
Representations and Warranties of Ashland
SECTION 3.01. Financial Statements...............................19
SECTION 3.02. Assets Other than Real Property Interests..........20
SECTION 3.03. Real Property......................................20
SECTION 3.04. Intellectual Property; Technology..................21
SECTION 3.05. Contracts..........................................21
SECTION 3.06. Permits............................................24
SECTION 3.07. Condition of Transferred Assets....................25
SECTION 3.08. Claims.............................................25
SECTION 3.09. Benefit Plans......................................25
SECTION 3.10. Absence of Changes or Events.......................26
SECTION 3.11. Compliance with Laws...............................27
SECTION 3.12. Employee and Labor Matters.........................28
SECTION 3.13. Sufficiency of Transferred Assets..................29
SECTION 3.14. Inventory..........................................29
SECTION 3.15. Receivables........................................29
ARTICLE IV
Covenants
SECTION 4.01. Covenants of Ashland Relating to Conduct of
Maleic Business....................................30
SECTION 4.02. Refunds and Remittances............................32
SECTION 4.03. Employee Matters...................................33
SECTION 4.04. Post-Closing Information...........................38
SECTION 4.05. Records............................................38
SECTION 4.06. Agreement Not To Compete...........................39
SECTION 4.07. Bulk Transfer Laws.................................40
SECTION 4.08. Supplies...........................................41
SECTION 4.09. Mail...............................................41
SECTION 4.10. Further Assurances.................................41
SECTION 4.11. Review of Contracts................................41
ARTICLE V
Termination
SECTION 5.01. Termination........................................43
SECTION 5.02. Effect of Termination..............................43
ARTICLE VI
General Provisions
SECTION 6.01. Interpretation; Maleic Business Disclosure
Letter; Certain Definitions........................43
SECTION 6.02. Counterparts.......................................45
SECTION 6.03. Severability.......................................45
SECTION 6.04. Governing Law......................................46
SECTION 6.05. No Third-Party Beneficiaries.......................46
SECTION 6.06. Amendment..........................................46
Exhibit A Form of Deed (Maleic Business)
Exhibit B Form of Assignment and Assumption (Maleic Business)
Exhibit C Form of Maleic Supply Agreement
Exhibit D Form of Transition Services Agreement
ii
INDEX OF DEFINED TERMS
TERM SECTION
- ---- -------
Accounting Firm................................................... 1.05(b)
Active Maleic Business Employee................................... 4.03(a)
Agreement......................................................... Preamble
Ashland........................................................... Preamble
Ashland Insurance Policies........................................ 4.01(c)
Ashland Joint Contracts........................................... 4.11
Ashland Pension Plan.............................................. 4.03(e)
Assigned Contracts................................................ 1.02(a)(vi)
Assigned Permits.................................................. 1.02(a)(v)
Assumed Liabilities............................................... 1.03(a)
Assigned Technology............................................... 1.02(a)(iv)
Balance Sheet..................................................... 3.01
Balance Sheet Principles.......................................... 1.05(d)
Claim............................................................. 1.03(b)(iv)
Closing Current Assets............................................ 1.05(a)
COBRA............................................................. 4.03(b)(ii)
Competitive Activities............................................ 4.06(a)
Contracts......................................................... 1.02(a)(vi)
Current Assets.................................................... 1.05(d)
Employee Benefits Liability....................................... 3.09(b)
Environmental Claim............................................... 3.11(b)
Environmental Laws................................................ 3.11(b)
Environmental Liability........................................... 6.01(b)
Environmental Tests............................................... 1.03(b)(x)
ERISA............................................................. 3.09(a)
Excluded Assets................................................... 1.02(b)
Exercise Notice................................................... 1.07(b)
Financial Statements.............................................. 3.01
Hazardous Materials............................................... 3.11(b)
HoldCo............................................................ Preamble
HoldCo Maleic Welfare Plans....................................... 4.03(b)(i)
HoldCo Retiree Medical Plan....................................... 4.03(f)
HoldCo Retirement Plan............................................ 4.03(e)
Intellectual Property............................................. 6.01(b)
Inventory......................................................... 1.02(a)(ii)
Leased Property................................................... 3.03(a)
Maleic Assignment and Assumption.................................. 1.01
Maleic Benefit Plans.............................................. 3.09(a)
Maleic Business................................................... 6.01(b)
Maleic Business Disclosure Letter................................. Article III
Maleic Business Employee.......................................... 3.09(a)
Maleic Business Material Adverse Effect........................... 6.01(b)
Maleic Pension Plans.............................................. 3.09(a)
Maleic Supply Agreement........................................... 2.02(c)
TERM SECTION
- ---- -------
Master Agreement.................................................. Recitals
Neville Island Maleic Assets...................................... 1.07(a)
Neville Island Maleic Facility.................................... 1.07(a)
Notice of Disagreement............................................ 1.05(b)
Option Notice..................................................... 1.07(a)
Option Period..................................................... 1.07(a)
Owned Property.................................................... 3.03(a)
Permits........................................................... 3.06
Permitted Liens................................................... 6.01(b)
Plant............................................................. 1.03(b)(x)
Premises.......................................................... 1.02(a)(i)
Proposed Sale Notice.............................................. 1.07(b)
Receivables....................................................... 1.02(a)(x)
Records........................................................... 1.02(a)(ix)
Release........................................................... 3.11(b)
Retained Liabilities.............................................. 1.03(b)
Rev. Proc. 96-60.................................................. 4.03(i)
Statement......................................................... 1.05(a)
Target Current Assets............................................. 1.05(c)
Technology........................................................ 1.02(a)(iv)
Transferred Assets................................................ 1.02(a)
Transferred Maleic Business Employee.............................. 4.03(a)
Transition Services Agreement..................................... 2.02(d)
WARN Act.......................................................... 4.03(g)
ii
ASSIGNMENT AND ASSUMPTION AGREEMENT (MALEIC BUSINESS)
(this "Agreement") dated as of March 18, 2004, between
Ashland Inc., a Kentucky corporation ("Ashland"), and ATB
Holdings Inc., a Delaware corporation and a wholly owned
subsidiary of Ashland ("HoldCo").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the parties hereto and certain other parties are entering into a
Master Agreement (the "Master Agreement"; terms used but not otherwise defined
herein have the meanings assigned to them in the Master Agreement); and
WHEREAS, in accordance with the terms and conditions of the Master
Agreement, Ashland wishes to transfer to HoldCo, and HoldCo wishes to acquire
and assume, certain assets and liabilities of the Maleic Business (as defined
in Section 6.01(b)) pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Maleic Assignment and Assumption
--------------------------------
SECTION 1.01. MALEIC ASSIGNMENT AND ASSUMPTION. On the terms and
subject to the conditions of this Agreement and the Master Agreement, at the
Closing, Ashland shall contribute, assign, transfer, convey and deliver to
HoldCo, and HoldCo shall acquire from Ashland, all the right, title and
interest as of the Closing of Ashland in, to and under the Transferred Assets
(as defined in Section 1.02(a)), and HoldCo shall assume the Assumed
Liabilities (as defined in Section 1.03(a)). The contribution, assignment,
transfer, conveyance and delivery of the Transferred Assets and the assumption
of the Assumed Liabilities and the other Transactions contemplated by this
Agreement are referred to in this Agreement as the "Maleic Assignment and
Assumption".
SECTION 1.02. TRANSFERRED ASSETS AND EXCLUDED ASSETS. (a) The term
"Transferred Assets" means all of Ashland's right, title and interest in, to
and under the
2
following assets, other than the Excluded Assets (as defined in Section
1.02(b)):
(i) (A) all real property, leaseholds and other interests
(including interests in surface rights and mineral interests) in the
real property listed in Section 3.03 of the Maleic Business Disclosure
Letter (as defined in Article III), in each case together with Ashland's
right, title and interest in all buildings, structures, improvements,
paved parking lots and fixtures thereon, and caverns thereunder, and all
other appurtenances thereto (collectively, the "Premises"), and all
bridges leading to or from the Premises (and all easements relating
thereto) and (B) Ashland's right, title and interest, if any, in, to and
under all railroad sidings on the Premises and all pipelines, cabling,
wiring and other conduit leading to or from the Premises (and all
easements, licenses and permits (to the extent transferable) relating
thereto);
(ii) (A) all raw materials, work-in-process, finished goods,
supplies, parts, spare parts and other inventories of Ashland that on
the Closing Date are located on the Premises and (B) all other raw
materials, work-in-process, finished goods, supplies, parts, spare parts
and other inventories of Ashland (including in transit, on consignment
or in the possession of any third party) on the Closing Date, in the
case of this clause (B) that are used, held for use or intended to be
used exclusively in the operation or conduct of the Maleic Business
(collectively, the "Inventory"), including any Inventory to be sold to
Ashland or any of its affiliates after the Closing pursuant to the
Maleic Supply Agreement (as defined in Section 2.02(c)) or otherwise;
(iii) (A) all other tangible personal property and interests
therein, including all machinery, equipment, tools, appliances,
telephones, telecommunications equipment, copy machines, fax machines,
computers, implements, furniture, furnishings and vehicles, of Ashland
that on the Closing Date are located on the Premises and (B) all other
tangible personal property and interests therein, including all
machinery, equipment, tools, appliances, telephones, telecommunications
equipment, copy machines, fax
3
machines, computers, implements, furniture, furnishings and vehicles,
of Ashland (including in transit, on consignment or in the possession
of any third party) on the Closing Date, in the case of this clause (B)
that are used, held for use or intended to be used exclusively in the
operation or conduct of the Maleic Business, in each case under
clause (A) or (B) together with any rights or claims of Ashland arising
out of the breach of any express or implied warranty by the
manufacturers or sellers of such assets;
(iv) all trade secrets, confidential information, inventions,
know-how, formulae, proprietary processes, proprietary procedures,
research records, records of inventions, test information, market
surveys and marketing know-how (collectively, "Technology") of Ashland,
in each case that are used, held for use or intended to be used
exclusively in the operation or conduct of the Maleic Business (the
"Assigned Technology");
(v) to the extent that such Permits (as defined in Section 3.06)
are transferable, all Permits of Ashland that are used, held for use or
intended to be used exclusively in the operation or conduct of the
Maleic Business (the "Assigned Permits");
(vi) (A) all contracts, leases, subleases, licenses, indentures,
agreements, commitments and all other legally binding arrangements
("Contracts"), whether oral or written, to which Ashland is a party or
by which Ashland is bound as of the date of this Agreement that are (1)
listed in Sections 3.03 or 3.05 of the Maleic Business Disclosure Letter
or (2) of the type specified in any of clauses (i) through (xi) of
Section 3.05 but, as a result of the application of any applicable
thresholds set forth therein, are not required to be listed in Section
3.05 of the Maleic Business Disclosure Letter, (B) all other written
Contracts (including purchase orders and sales orders) to which Ashland
is a party or by which Ashland is bound, in the case of this clause (B)
that are entered into after the date of this Agreement, but not in
violation or breach of any provision of this Agreement, and that
exclusively relate to, or that arise exclusively out of, the operation
or conduct of the Maleic Business in the ordinary course of business and
(C) all Contracts to which Ashland is a party or
4
by which Ashland is bound, in the case of this clause (C) that are
entered into after the date of this Agreement and that are to be
treated as Assigned Contracts pursuant to Section 4.11 (the "Assigned
Contracts");
(vii) all rights of Ashland in and to products sold or leased
(including products returned after the Closing and rights of rescission,
replevin and reclamation) to the extent arising in the operation or
conduct of the Maleic Business;
(viii) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items of Ashland, in each case
to the extent used, held for use or intended to be used in, or to the
extent arising out of, the operation or conduct of the Maleic Business;
(ix) all books of account, ledgers, general, financial, accounting
and personnel records, files, invoices, customers' and suppliers' lists,
other distribution lists, billing records, sales and promotional
literature, manuals, customer and supplier correspondence, sales
records, credit data and other information relating to present or past
customers, cost and pricing information, equipment maintenance data,
purchasing records and information, business plans, payroll and
personnel records, purchase orders, sales forms, artwork, photography,
log books, environmental, health and safety audit procedures, schedules,
reports, protocols and findings pertaining to the Maleic Business or the
Transferred Assets (including records of spills or other releases or
discharges into the atmosphere, records of environmental, safety or
health reports to or from Governmental Entities regarding the Maleic
Business or the Transferred Assets (including notices of violation), and
correspondence, notices and orders of an environmental, safety or health
nature regarding the Maleic Business or the Transferred Assets) and
other similar property, rights and information of Ashland, in each case
that are used, held for use or intended to be used exclusively in, or
that arise exclusively out of, the operation or conduct of the Maleic
Business (the "Records");
5
(x) all accounts receivable of Ashland as of the close of business
on the Closing Date to the extent arising out of the operation or
conduct of the Maleic Business (the "Receivables");
(xi) all goodwill and going concern value of Ashland generated
exclusively by, or associated exclusively with, the Maleic Business;
(xii) all rights, claims and credits of Ashland to the extent
relating to any other Transferred Asset or any Assumed Liability (other
than any such items arising under insurance policies), including any
such items arising under any guarantee, warranty, indemnity or similar
right in favor of Ashland in respect of any other Transferred Asset or
any Assumed Liability; and
(xiii) all other or additional privileges, rights, interests,
properties and assets of Ashland of every kind and description and
wherever located, in each case that are used, held for use or intended
to be used exclusively in, or that arise exclusively out of, the
operation or conduct of the Maleic Business.
(b) The term "Excluded Assets" means:
(i) all assets identified in Section 1.02(b) of the Maleic
Business Disclosure Letter;
(ii) all cash and cash equivalents of Ashland;
(iii) all rights, claims and credits of Ashland to the extent
relating to any other Excluded Asset or any Retained Liability (as
defined in Section 1.03(b)), including any such items arising under
insurance policies and any guarantee, warranty, indemnity or similar
right in favor of Ashland in respect of any other Excluded Asset or any
Retained Liability;
(iv) all collective bargaining agreements and other Contracts with
any labor union that cover one or more Active Maleic Business Employees
(as defined in Section 4.03(a)) and all Contracts relating to
compensation, bonus or severance to which any Active Maleic Business
Employee or any person hired to become a Maleic Business Employee (as
defined in Section 3.09(a)) is a party;
6
(v) all the assets of the Maleic Pension Plans (as defined in
Section 3.09(a)) and all the assets of Ashland and its affiliates under
any other Maleic Benefit Plan (as defined in Section 3.09(a));
(vi) all rights of Ashland under the Transaction Agreements and
the Ancillary Agreements;
(vii) all assets relating to corporate-level services of the type
currently provided to the Maleic Business by Ashland or any of its
affiliates;
(viii) any shares of capital stock of any affiliate of Ashland;
(ix) the name and mark "Ashland" (in any style or design), and any
name or mark derived from or including the foregoing;
(x) all records of Ashland prepared in connection with the
Transactions; and
(xi) all financial and tax records relating to the Maleic Business
to the extent they form part of Ashland's general ledger.
SECTION 1.03. ASSUMPTION OF CERTAIN LIABILITIES. (a) Upon the terms
and subject to the conditions of this Agreement, HoldCo shall assume, effective
as of the Closing, and from and after the Closing, HoldCo shall pay, perform
and discharge when due, and indemnify Ashland and its affiliates and each of
their respective Representatives against, and defend and hold them harmless
from, all of the following liabilities, obligations and commitments of any
nature, whether known or unknown, express or implied, primary or secondary,
direct or indirect, liquidated, absolute, accrued, contingent or otherwise
and whether due or to become due, of Ashland (collectively, the "Assumed
Liabilities"), other than any Retained Liabilities:
(i) all liabilities, obligations and commitments of Ashland under
the Assigned Contracts to the extent such liabilities, obligations and
commitments relate to the period from and after the Closing;
(ii) all liabilities, obligations and commitments of Ashland under
any maleic anhydride product exchange agreements that are reflected in
the Statement (as
7
defined in Section 1.05(a)) in accordance with Section 1.05;
(iii) all liabilities, obligations and commitments of Ashland to
the extent expressly assumed by HoldCo in accordance with Section 4.03;
(iv) all Environmental Liabilities (as defined in Section 6.01(b))
of Ashland to the extent they arise out of both (A) the operation of any
of the Transferred Assets or the operation or conduct of the Maleic
Business and (B) either (x) events occurring or circumstances or
conditions arising from and after the Closing, or (y) events occurring
or circumstances or conditions arising prior to the Closing, but only,
in the case of this clause (B)(y), to the extent set forth in the table
below (provided, however, that to the extent the same Environmental
Liability is described in both clauses (x) and (y) of this Section
1.03(a)(iv)(B), such Environmental Liability will be apportioned between
HoldCo and Ashland in proportion to the extent to which the activities
of each party contributed to the cause of the Environmental Liability,
taking into account all pertinent factors, including the length of
ownership by HoldCo and Ashland of the relevant property during the time
of the event or occurrence, or the development of the circumstance or
condition, giving rise to the Environmental Liability and the use made
of such property by the parties hereto):
- ------------------------------------------------------------------------------
If written notice (in Percentage of Environmental
reasonable detail) of such Liability described in clause
Environmental Liability is (B)(y) above that will be an
first received by Ashland Assumed Liability:
during the twelve-month
period ending on the
following anniversary of the
Closing Date (provided,
however, that with respect to
any Environmental Liability
arising from any matter
referred to in Section 3.11(b)
of the Maleic Business
Disclosure Liability Letter,
Ashland shall be deemed to
have received written notice
- ------------------------------------------------------------------------------
8
- ------------------------------------------------------------------------------
(in reasonable detail) of
such Environmental Liability
prior to the first
anniversary of the Closing
Date):
- ------------------------------------------------------------------------------
First through Fifth 0%
- ------------------------------------------------------------------------------
Sixth 20%
- ------------------------------------------------------------------------------
Seventh 40%
- ------------------------------------------------------------------------------
Eighth 60%
- ------------------------------------------------------------------------------
Ninth 80%
- ------------------------------------------------------------------------------
If such notice is not 100%
received by Ashland on or
prior to the ninth
anniversary of the Closing
Date
- ------------------------------------------------------------------------------
; and
(v) all other liabilities, obligations and commitments of Ashland
to the extent such liabilities, obligations and commitments relate to or
arise out of the operation of any of the Transferred Assets or the
operation or conduct of the Maleic Business, in each case from and after
the Closing.
(b) Notwithstanding Section 1.03(a), or any other provision of
this Agreement, HoldCo shall not assume, and Ashland shall pay, perform and
discharge when due, and indemnify HoldCo and its affiliates and each of their
respective Representatives against, and defend and hold them harmless from, any
liability, obligation or commitment of Ashland or the Maleic Business of any
nature, whether known or unknown, express or implied, primary or secondary,
direct or indirect, liquidated, absolute, accrued, contingent or otherwise, and
whether due or to become due, except the Assumed Liabilities (collectively, the
"Retained Liabilities"). Without limiting the generality of the foregoing, the
Retained Liabilities include:
(i) any liability, obligation or commitment of Ashland to the
extent arising out of the operation or
9
conduct by Ashland or any of its affiliates of any business other than
the Maleic Business;
(ii) all accounts payable of Ashland to the extent arising out of
the operation or conduct of the Maleic Business prior to the Closing;
(iii) any liability, obligation or commitment of Ashland (A) to
the extent arising out of any actual or alleged breach by Ashland of, or
nonperformance by Ashland under, any Contract (including any Assigned
Contract) prior to the Closing or (B) under any Assigned Contract to the
extent such liability, obligation or commitment relates to the period
prior to the Closing;
(iv) any liability, obligation or commitment of Ashland arising
out of any warranty claim, suit, action, proceeding, investigation,
governmental action or other cause of action or claim associated with or
relating to the Maleic Business or the Transferred Assets (a "Claim") to
the extent arising out of actions, omissions or conditions occurring or
existing on or prior to the Closing Date;
(v) any liability, obligation or commitment of Ashland to the
extent such liability, obligation or commitment relates to, or arises
out of, any Excluded Asset, or arises out of the ownership or operation
by Ashland of any of the Excluded Assets;
(vi) except as otherwise expressly provided in Section 4.03, any
liability, obligation or commitment of Ashland arising under any Maleic
Benefit Plan;
(vii) any liability, obligation or commitment of Ashland to any of
its divisions, subsidiaries or affiliates;
(viii) any liability, obligation or commitment of Ashland or any
of its affiliates under any of the Transaction Agreements or any of the
Ancillary Agreements;
(ix) the amount, if any, equal to the aggregate book value (as of
the Closing Date) of all Receivables that are not collected after the
Closing Date and remain outstanding for a period of more than 60 days
10
after their respective due dates (as reflected in the books and records
of the Maleic Business) notwithstanding that HoldCo has made reasonable
efforts to collect such Receivables, which amount shall be promptly paid
by Ashland to HoldCo and, until paid, shall be deemed for all purposes
of this Agreement to be a Retained Liability; provided, however, in the
event any one or more of the Receivables become Retained Liabilities
under this clause (ix), promptly following Ashland's payment to HoldCo
with respect to such Receivables under this clause (ix), HoldCo shall
assign all of its rights, title and interests in, to and under such
Receivables and, to the extent HoldCo thereafter receives any payments
from the relevant customers on account of such Receivables, HoldCo shall
promptly forward such payments to Ashland; and
(x) any Environmental Liability arising out of events occurring or
circumstances or conditions arising prior to the Closing except for
Environmental Liabilities that are Assumed Liabilities pursuant to
Section 1.03(a)(iv); provided, however, an Environmental Liability that
otherwise would be considered a Retained Liability under this Section
1.03(b)(x) shall be an Assumed Liability and shall not be a Retained
Liability if the event, circumstance or condition that gave rise to such
Environmental Liability (A) is the result of a change in use after the
Closing Date of (x) any portion of the Premises consisting of the
parcels of real property on which the maleic anhydride plant located in
Neal, West Virginia (the "Plant") is located (which parcels are
identified as such in Section 3.03 of the Maleic Business Disclosure
Letter) to a use substantially unrelated to the use of such Premises as
of the Closing Date or (y) any other portion of the Premises to a use
other than an industrial use or (B) was discovered as a result of a
Phase II or other intrusive sampling, testing or investigation conducted
after the Closing Date (collectively, "Environmental Tests") except for
Environmental Tests undertaken (x) to respond to, investigate, or
otherwise remediate environmental conditions or contamination that are
on the Closing Date in violation of the standards imposed by applicable
Environmental Laws (as defined in Section 3.11(b)), (y) as required by
Environmental Laws
11
or in response to an inquiry, request, claim or demand by a
Governmental Entity or as a reasonable response to any claim or demand
by any other person that is not an affiliate of HoldCo or (z) in
connection with a condition first discovered as a result of
construction activities commencing after the Closing Date at, on or
beneath the Premises, so long as such construction activities are
undertaken in connection with (1) with respect to any portion of the
Premises consisting of the parcels of real property on which the Plant
is located, a use substantially related to the use of such Premises as
of the Closing Date or (2) with respect to any other portion of the
Premises, an industrial use of such Premises.
(c) HoldCo shall acquire the Transferred Assets free and clear of
all liabilities, obligations and commitments of Ashland, other than the
Assumed Liabilities, and free and clear of all Liens, other than Permitted
Liens (as defined in Section 6.01(b)) and other than any Lien pursuant to the
HoldCo Borrowing arrangements or arising from actions or inactions of any of
the Marathon Parties or their affiliates (and not of any of the Ashland
Parties or their affiliates).
SECTION 1.04. CONSENTS OF THIRD PARTIES. (a) Notwithstanding
anything to the contrary in this Agreement, this Agreement shall not
constitute an agreement to assign any asset or any claim or right or any
benefit arising under or resulting from such asset, or to assume any
liability, obligation or commitment, if an attempted assignment or assumption
thereof, without the Consent of a third party, would constitute a breach or
other contravention of the rights of such third party, would be ineffective
with respect to any party to an agreement concerning such asset, liability,
obligation or commitment, or would in any way adversely affect the rights of
Ashland or, upon transfer, HoldCo with respect to such asset, liability,
obligation or commitment. If any transfer or assignment by Ashland, or any
assumption by HoldCo, of any interest in, or liability, obligation or
commitment under, any asset requires the Consent of a third party, then such
transfer or assignment or assumption shall be made subject to such Consent
being obtained. Except as set forth in Section 1.04(b), Ashland shall not have
any liability or obligation under this Agreement arising out of or relating to
the failure to obtain any such Consent that may be
12
required in connection with the Transactions contemplated by this Agreement or
because of any circumstances resulting therefrom, in each case so long as
Ashland shall have complied with its obligation under Section 9.11 of the
Master Agreement to use its reasonable best efforts to obtain such Consents.
Subject to Section 1.04(b), no representation, warranty or covenant of Ashland
herein shall be breached or deemed breached, and no condition shall be deemed
not satisfied, as a result of (i) the failure to obtain any such Consent, (ii)
any circumstances resulting therefrom or (iii) any Claim or investigation
commenced or threatened by or on behalf of any person arising out of or
relating to the failure to obtain any such Consent or any circumstances
resulting therefrom, in each case so long as Ashland shall have complied with
its obligation under Section 9.11 of the Master Agreement to use its
reasonable best efforts to obtain such Consents.
(b) If any such Consent is not obtained prior to the Closing, the
Closing shall nonetheless take place on the terms set forth herein and,
thereafter, Ashland and HoldCo shall cooperate (at their own expense) in any
lawful and reasonable arrangement proposed by HoldCo under which HoldCo shall
obtain the economic claims, rights and benefits under the asset, claim or
right with respect to which the Consent has not been obtained in accordance
with this Agreement. Such reasonable arrangement may include (i) the
subcontracting, sublicensing or subleasing to HoldCo of any and all rights of
Ashland against the other party to such third-party agreement arising out of a
breach or cancellation thereof by the other party and (ii) the enforcement by
Ashland of such rights. With respect to the Assigned Contracts listed in
Section 1.04(b) of the Maleic Business Disclosure Letter, if the provision of
such economic claims, rights and benefits to HoldCo shall violate the rights
of such other party, Ashland shall otherwise compensate HoldCo for the
reasonable value, if any, of such economic claims, rights and benefits, so
long as HoldCo shall have complied with its obligations under the first
sentence of this Section 1.04(b).
SECTION 1.05. CLOSING CURRENT ASSETS ADJUSTMENT. (a) Within 60 days
after the Closing Date, Ashland shall prepare and deliver to HoldCo a
statement (the "Statement"), setting forth Current Assets (as defined in
Section 1.05(d)) as of the close of business on the Closing Date ("Closing
Current Assets"). A physical inventory
13
shall be conducted jointly by Ashland and Marathon on or prior to the Closing
Date, in accordance with Section 1.05(a) of the Maleic Business Disclosure
Letter, for the purpose of preparing the Statement.
(b) During the 30-day period following HoldCo's receipt of the
Statement, HoldCo and its Representatives shall be permitted to review the
working papers relating to the Statement. The Statement shall become final and
binding upon the parties on the 15th day following delivery thereof, unless
HoldCo gives written notice of its disagreement with the Statement (a "Notice
of Disagreement") to Ashland prior to such date. Any Notice of Disagreement
shall (i) specify in reasonable detail the nature of any disagreement so
asserted and (ii) only include disagreements based on mathematical errors or
based on Closing Current Assets not being calculated in accordance with this
Section 1.05. If a Notice of Disagreement is received by Ashland in a timely
manner, then the Statement (as revised in accordance with this sentence) shall
become final and binding upon Ashland and HoldCo on the earlier of (A) the
date Ashland and HoldCo resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (B) the date
any disputed matters are finally resolved in writing by the Accounting Firm
(as defined below). During the 30-day period following the delivery of a
Notice of Disagreement, Ashland and HoldCo shall seek in good faith to resolve
in writing any differences that they may have with respect to the matters
specified in the Notice of Disagreement. At the end of such 30-day period,
Ashland and HoldCo shall submit to an independent accounting firm (the
"Accounting Firm") for arbitration any and all matters that remain in dispute
and were properly included in the Notice of Disagreement, in the form of a
written brief. The Accounting Firm shall be KPMG LLP or, if such firm is
unable or unwilling to act, such other nationally recognized independent
public accounting firm as shall be agreed upon by the parties hereto in
writing. Ashland and HoldCo shall instruct the Accounting Firm to render a
decision resolving the matters submitted to the Accounting Firm within 30 days
following submission. Judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. The cost of any arbitration (including
the fees and expenses of the Accounting Firm and reasonable attorney fees and
expenses
14
of the parties) pursuant to this Section 1.05 shall be borne by HoldCo and
Ashland in inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportionate allocations shall also be determined by
the Accounting Firm at the time the determination of the Accounting Firm is
rendered on the merits of the matters submitted. The fees and disbursements of
Ashland's Representatives incurred in connection with their preparation of the
Statement and their review of any Notice of Disagreement shall be borne by
Ashland, and the fees and disbursements of HoldCo's Representatives incurred
in connection with its review of the Statement shall be borne by HoldCo.
(c) If Closing Current Assets is less than the line item comprising
Current Assets on the Balance Sheet (as defined in Section 3.01) ("Target
Current Assets"), Ashland shall, and if Closing Current Assets is more than
Target Current Assets, HoldCo shall, within 10 business days after the
Statement becomes final and binding on the parties, make payment by wire
transfer in immediately available funds of the amount of such difference,
together with interest thereon at a rate equal to the rate of interest from
time to time announced publicly by Citibank, N.A., as its prime rate,
calculated on the basis of the actual number of days elapsed divided by 365,
from the Closing Date to the date of payment.
(d) The term "Current Assets" means the current assets of the Maleic
Business, calculated in the same way, using the same methods, as the line item
comprising current assets on the Balance Sheet, other than any current assets
relating to any Tax (as defined in the Tax Matters Agreement); provided,
however, that any liabilities, obligations or commitments of Ashland under any
maleic anhydride product exchange agreements in effect as of the Closing Date
shall be deducted, on a dollar for dollar basis, from current assets for
purposes of determining Closing Current Assets under this Section 1.05. The
foregoing principles are referred to in this Agreement as the "Balance Sheet
Principles". The parties acknowledge that the adjustment contemplated by this
Section 1.05 is intended solely to show the change in Current Assets from the
date of the Balance Sheet to the Closing Date, and that such change can only
be measured if the calculation is done in the same way, using the same
methods, for both dates. The scope of the disputes to be resolved by the
Accounting
15
Firm shall be limited to whether Closing Current Assets was calculated in
accordance with the Balance Sheet Principles, and whether there were
mathematical errors in the Statement, and the Accounting Firm is not to make
any other determination, including any determination as to whether GAAP was
followed for the Balance Sheet or the Statement. Any items on or omissions
from the Balance Sheet that are based upon errors of fact or mathematical
errors or that are not in accordance with GAAP shall be retained for purposes
of calculating Closing Current Assets.
(e) Following the Closing, HoldCo shall not modify the accounting
books and records of the Maleic Business on which the Statement is to be based
that would in any way affect the Balance Sheet or the Statement. Without
limiting the generality of the foregoing, no changes shall be made in any
reserve or other account existing as of the date of the Balance Sheet that
would in any way affect the Balance Sheet or the Statement except, in the case
of the Statement, as a result of events occurring after the date of the
Balance Sheet and, in such event, only in a manner consistent with past
practices of the Maleic Business. HoldCo shall cooperate in the preparation of
the Statement. HoldCo acknowledges that Ashland shall have the primary
responsibility and authority for preparing the Statement. During the period of
time from and after the Closing Date through the resolution of any adjustment
with respect to Closing Current Assets contemplated by this Section 1.05,
HoldCo shall afford to Ashland and its Representatives reasonable access
during normal business hours to all the properties, books, contracts,
personnel and records of the Maleic Business relevant to the preparation of
the Statement and the adjustment contemplated by this Section 1.05.
SECTION 1.06. TAX MATTERS. Notwithstanding anything to the
contrary in this Agreement, the rights, responsibilities and obligations of the
parties with respect to any Taxes or Tax Items (in each case as defined in the
Tax Matters Agreement) related to or arising from the ownership or operation of
the Maleic Business shall be determined pursuant to the Tax Matters Agreement.
SECTION 1.07. NEVILLE ISLAND MALEIC ASSETS PROVISIONS.
(a) During the Option Period (as defined below), HoldCo shall be
entitled to elect to purchase from Ashland
16
all of Ashland's right, title and interest in, to and under the assets of the
maleic anhydride portion of the plant (the "Neville Island Maleic Facility")
located at Neville Island, Pennsylvania and the assets that are used, held for
use or intended to be used exclusively in the maintenance or operation of the
Neville Island Maleic Facility (collectively, the "Neville Island Maleic
Assets") by providing written notice to Ashland of such election (the "Option
Notice"). For the avoidance of doubt, the Neville Island Maleic Assets shall
not include any of the assets that are used, held for use or intended to be
used in the unsaturated polyester resin portion of the plant located at
Neville Island, Pennsylvania. If HoldCo exercises its right to purchase
hereunder, (i) the purchase price for the Neville Island Maleic Assets shall
be equal to the fair market value of the Neville Island Maleic Assets,
determined, as of the date on which HoldCo delivers the Option Notice to
Ashland, by Morgan Joseph & Co. Inc. (or such other independent investment
banking or appraisal firm as may be agreed upon by Ashland and HoldCo after
the Closing Date), using the same valuation methodology used by Morgan Joseph
& Co. Inc. for purposes of establishing the value of the Maleic Business in
connection with the Transactions being effected on the Closing Date under the
Master Agreement, (ii) Ashland and HoldCo shall use their reasonable best
efforts to cause the closing of the purchase and sale of the Neville Island
Maleic Assets to occur within 60 days of the date on which HoldCo delivers the
Option Notice to Ashland and (iii) the other terms of the purchase and sale
transaction shall be negotiated in good faith between Ashland and HoldCo,
provided that such terms and conditions shall be substantially consistent with
the terms and conditions applicable to the Transactions effected pursuant to
this Agreement. Ashland shall provide HoldCo at least two months' prior
written notice of the commencement of permanent demolition or disassembly of
the Neville Island Maleic Facility. "Option Period" means the period beginning
on the Closing Date and terminating and expiring upon the earliest to occur of
(i) 60 days after the date of a prior written notice to HoldCo by Ashland of
the commencement of permanent demolition or disassembly of the Neville Island
Maleic Facility (provided that commencement of such permanent demolition or
disassembly of the Neville Island Maleic Facility occurs promptly thereafter),
(ii) the sale of the Neville Island Maleic Assets to HoldCo or a third party
(provided that, in the case of a sale to a third party, Ashland shall have
complied with Section 1.07(b))or (iii) the fifth anniversary of the Closing
Date.
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(b) Ashland shall be free to negotiate with any third party to sell,
transfer or otherwise dispose of all or any portion of the Neville Island
Maleic Assets. Not fewer than 30 days nor more than 90 days prior to any
proposed sale, transfer or other disposition of all or substantially all of
the Neville Island Maleic Assets to a third party prior to the expiration of
the Option Period, Ashland shall provide HoldCo a written notice (the
"Proposed Sale Notice"), which shall (i) set forth the name of the proposed
purchaser and the principal terms and conditions of the proposed transaction,
including the consideration proposed to be received by Ashland in such
transaction and the proposed date for the closing of such transaction, and
(ii) offer to sell the Neville Island Maleic Assets to HoldCo on the same
terms and conditions described in the Proposed Sale Notice (provided, however,
that if any part of the consideration to be received by Ashland described in
the Proposed Sale Notice is in a form other than cash, HoldCo shall be
entitled to pay cash in an amount equal to the fair market value of such
consideration, as determined by an independent investment banking or appraisal
firm agreed upon by HoldCo and Ashland). If HoldCo desires to purchase the
Neville Island Maleic Assets on such terms and conditions, it shall provide
written notice of its election to do so (the "Exercise Notice") to Ashland on
or before the 30th day after the date HoldCo receives the Proposed Sale
Notice, and thereafter Ashland and HoldCo shall use their reasonable best
efforts to cause the closing of HoldCo's purchase on such terms and conditions
to occur on the proposed date for the closing of the transaction set forth in
the Proposed Sale Notice. In the event HoldCo does not give Ashland the
Exercise Notice or an Option Notice on or prior to the 30th day after the date
HoldCo receives the Proposed Sale Notice, then, during the immediately
following 60-day period, Ashland may sell all or substantially all of the
Neville Island Maleic Assets to the proposed purchaser named in the Proposed
Sale Notice on terms and conditions which are not materially less favorable,
taken as a whole, to such proposed purchaser than the terms and conditions set
forth in the Proposed Sale Notice. In the event that Ashland shall not have
consummated the sale of all or substantially all of the Neville Island Maleic
Assets to such proposed purchaser
18
within such 60-day period, any subsequent proposed sale of all or
substantially all of the Neville Island Maleic Assets shall once again be
subject to the terms of this Section 1.07(b).
(c) Notwithstanding anything to the contrary in this Agreement,
HoldCo agrees that the provisions of this Section 1.07 shall be subject in all
respects (i) to the provisions of any Contract relating to the Neville Island
Maleic Assets entered into prior to the date of this Agreement, including each
of the Asset Purchase Agreement, the Services Agreement, the Irrevocable
Easement Agreement and the Confidentiality Agreement (as such Contracts may be
amended, modified or supplemented from time to time) in each case dated as of
April 28, 1995, between Aristech Chemical Corporation and Ashland, (ii) to the
rights, responsibilities and obligations of the parties to each such agreement
and their respective successors and assigns and (iii) to the receipt of all
Consents that must be obtained by virtue of the consummation of the sale,
transfer or other disposition of any of the Neville Island Maleic Assets.
HoldCo acknowledges that the Consent of Sunoco, Inc. shall be required in
order to consummate the sale, transfer or other disposition of any of the
Neville Island Maleic Assets by Ashland to HoldCo. Ashland makes no
representations or warranties of any kind, express or implied, relating to the
receipt of such Consent. Ashland and HoldCo shall each use their reasonable
best efforts to obtain such Consent; provided, however, that they shall not be
required to make any payment to any person in order to obtain such Consent.
Ashland shall not have any liability or obligation whatsoever arising out of
or relating to any failure to obtain such Consent, so long as Ashland shall
have used its reasonable best efforts to obtain such Consent.
ARTICLE II
The Closing
SECTION 2.01. CLOSING DATE. The closing of the Maleic Assignment
and Assumption will occur at the Closing, subject only to the satisfaction or
waiver of the conditions to Closing in accordance with the terms of the Master
Agreement.
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SECTION 2.02. TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the
Closing, in accordance with Section 1.01(a) of the Master Agreement:
(a) Ashland shall deliver to HoldCo an executed deed (in
recordable form) in the form attached hereto as Exhibit A;
(b) Ashland and HoldCo shall enter into an assignment and
assumption document, in the form attached hereto as Exhibit B,
providing for the assignment of the Transferred Assets and the
assumption of the Assumed Liabilities;
(c) The parties thereto shall enter into a supply
agreement in the form attached hereto as Exhibit C (the "Maleic
Supply Agreement"); and
(d) The parties thereto shall enter into a transition
services agreement in the form attached hereto as Exhibit D (the
"Transition Services Agreement").
ARTICLE III
Representations and Warranties of Ashland
-----------------------------------------
Ashland hereby represents and warrants to HoldCo that, as of the
date of this Agreement and as of the Closing Date as if made on the Closing
Date (except to the extent any such representations and warranties expressly
relate to an earlier date, in which case as of such earlier date), except as
set forth in the letter referencing this Agreement, dated as of the date of
this Agreement, from Ashland to HoldCo (the "Maleic Business Disclosure
Letter"):
SECTION 3.01. FINANCIAL STATEMENTS. Section 3.01 of the Maleic
Business Disclosure Letter sets forth the unaudited combined statement of
tangible assets to be sold as of September 30, 2003 (the "Balance Sheet"), the
unaudited combined statement of tangible assets to be sold as of December 31,
2003, the unaudited combined statement of income before taxes for the year
ended September 30, 2003 and the unaudited combined statement of income before
taxes for the three months ended December 31, 2003, together with the notes to
such financial statements, in each case of the Maleic Business (such financial
statements
20
and the notes thereto, the "Financial Statements"). The Financial Statements
present fairly, in all material respects, the tangible assets to be sold (in
each case with Ashland's aggregate liabilities, obligations and commitments
under maleic anhydride product exchange agreements outstanding as of the
applicable balance sheet date being reflected as an offset to Ashland's
aggregate accounts receivable relating to maleic anhydride product exchange
agreements outstanding as of the applicable balance sheet date) and income
before taxes of the Maleic Business as of the dates and for the periods
indicated, in conformity with GAAP (subject, in the case of the interim
financial statements as of and for the period ended December 31, 2003, to
normal, recurring year-end adjustments).
SECTION 3.02. ASSETS OTHER THAN REAL PROPERTY INTERESTS. Ashland
has, or as of the Closing Date will have, and at the Closing Ashland will
transfer (subject to the consummation of the Closing on the Closing Date in
accordance with the terms of Article I of the Master Agreement) to HoldCo,
good and valid title to all Transferred Assets in each case free and clear of
all Liens (other than any Lien pursuant to the HoldCo Borrowing arrangements
or arising from actions or inactions of any of the Marathon Parties or their
affiliates (and not of any of the Ashland Parties or their affiliates)),
except Permitted Liens. This Section 3.02 does not relate to real property or
interests in real property, such items being the subject of Section 3.03.
SECTION 3.03. REAL PROPERTY. (a) Section 3.03 of the Maleic Business
Disclosure Letter sets forth a complete list of all real property and
interests in real property owned in fee by Ashland and any of the other
Ashland Parties and used, held for use or intended to be used exclusively in
the operation or conduct of the Maleic Business, other than any such property
or interest constituting an Excluded Asset (individually, an "Owned
Property"). Section 3.03 of the Maleic Business Disclosure Letter sets forth a
complete list of all real property and interests in real property leased by
Ashland and used, held for use or intended to be used exclusively in the
operation or conduct of the Maleic Business, other than any such property or
interest constituting an Excluded Asset (individually, a "Leased Property").
21
(b) Ashland has, or as of the Closing Date will have, and at the
Closing Ashland will transfer (subject to the consummation of the Closing on
the Closing Date in accordance with the terms of Article I of the Master
Agreement) to HoldCo, good and marketable fee title to all Owned Property and
good and valid title to the leasehold estates in all Leased Property, in each
case free and clear of all Liens (other than any Lien pursuant to the HoldCo
Borrowing arrangements or arising from actions or inactions of any of the
Marathon Parties or their affiliates (and not of any of the Ashland Parties or
their affiliates)), except Permitted Liens.
SECTION 3.04. INTELLECTUAL PROPERTY; TECHNOLOGY. (a) The conduct of
the Maleic Business as presently conducted does not violate, conflict with or
infringe the Intellectual Property (as defined in Section 6.01(b)) of any
other person, except for such violations, conflicts or infringements that have
not had and would not reasonably be expected to have a Maleic Business
Material Adverse Effect (as defined in Section 6.01(b)). During the past 12
months Ashland has not received any written communication alleging that
Ashland has in the conduct of the Maleic Business violated any rights relating
to Intellectual Property of any other person. Except for the Assigned
Technology, there is no material Technology or Intellectual Property of
Ashland that is used, held for use or intended to be used in the operation or
conduct of the Maleic Business.
(b) Except as would not reasonably be expected to have a Maleic
Business Material Adverse Effect, (i) all confidential Assigned Technology has
been maintained in confidence in accordance with protection procedures
customarily used by Ashland to protect rights of like importance; (ii) Ashland
has not granted any license of any kind relating to any Assigned Technology,
except non-exclusive licenses to end-users in the ordinary course of business;
(iii) no Claim against or involving Ashland regarding the ownership, validity,
enforceability, effectiveness or use of any Assigned Technology is pending or,
to the knowledge of Ashland, threatened; and (iv) no Consent of any person
will be required for the use of the Assigned Technology by HoldCo in
connection with the operation or conduct of the Maleic Business immediately
following the Closing as presently conducted by Ashland.
SECTION 3.05. CONTRACTS. (a) Except for Contracts that will not be
binding on the Transferred
22
Assets or the Maleic Business after the Closing, Ashland is not a party to or
bound by any Contract that is used, held for use or intended to be used
exclusively in, or that arises exclusively out of, the operation or conduct of
the Maleic Business (other than (x) the Transaction Agreements and the
Ancillary Agreements and (y) Assigned Contracts entered into after the date of
this Agreement in the ordinary course of business and not otherwise in
violation of this Agreement) that is:
(i) a covenant not to compete that limits the conduct of the
Maleic Business as presently conducted;
(ii) a Contract with (A) Ashland or any affiliate of Ashland or
(B) any officer, director or employee of Ashland or any of its
affiliates, in each case other than Contracts that will be terminated as
of the Closing;
(iii) a lease, sublease or similar Contract with any person under
which Ashland is a lessor or sublessor of, or makes available for use to
any person, all or any portion of the Premises;
(iv) a lease, sublease or similar Contract with any person under
which (A) Ashland is lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by any
person or (B) Ashland is a lessor or sublessor of, or makes available
for use by any person, any tangible personal property owned or leased by
Ashland, in any such case that has an aggregate future liability or
receivable, as the case may be, in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind;
(v) (A) a continuing Contract for the future purchase of
materials, supplies or equipment (other than purchase orders for
inventory in the ordinary course of business consistent with past
practice), (B) a management, service, consulting or other similar
Contract or (C) an advertising agreement or arrangement, in any such
case that has an aggregate future liability to any person in excess of
$100,000 and is not terminable by Ashland by notice of not more than 30
days without payment or penalty of any kind;
23
(vi) a Contract (including a sales order) involving the obligation
of Ashland to deliver products or services for payment of more than
$100,000 or extending for a term more than 90 days from the date of this
Agreement (unless terminable without payment or penalty of any kind upon
no more than 30 days' notice);
(vii) (A) a Contract under which Ashland has borrowed any money
from, or issued any note, bond, debenture or other evidence of
indebtedness to, any person or (B) any other note, bond, debenture,
letter of credit, financial assurance requirement or other evidence of
indebtedness issued to any person;
(viii) a Contract (including any so-called take-or-pay or keepwell
agreement) under which (A) any person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of Ashland or
(B) Ashland has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any other person (in each case other than
endorsements for the purpose of collection in the ordinary course of
business);
(ix) a Contract under which Ashland has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution to,
or other investment in, any person (other than extensions of trade
credit in the ordinary course of the Maleic Business), in any such case
that, individually, is in excess of $100,000;
(x) a Contract granting a Lien (other than Permitted Liens) upon
the Premises; or
(xi) any other Contract that has an aggregate future liability to
any person (other than Ashland) in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind (other than purchase orders and sales orders).
As of the date of this Agreement, neither the Transferred Assets nor the Maleic
Business is bound by or subject to any Contract of any of the types referred to
in clauses (i) through (xi) of this Section 3.05(a), applying the thresholds
set forth therein, that will be binding on any
24
of the Transferred Assets or the Maleic Business after the Closing Date.
(b) All Contracts listed in the Maleic Business Disclosure Letter
are valid, binding and in full force and effect and are enforceable by Ashland
in accordance with their terms subject, as to enforcement, to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and to equitable principles of general
applicability, except for such failures to be valid, binding, in full force
and effect or enforceable that have not had and would not reasonably be
expected to have a Maleic Business Material Adverse Effect. Ashland has
performed all obligations required to be performed by it to date under the
Assigned Contracts, and it is not in breach or default thereunder and, to the
knowledge of Ashland, no other party to any Assigned Contract is in breach or
default thereunder, in each case except for such noncompliance, breaches and
defaults that have not had and would not reasonably be expected to have a
Maleic Business Material Adverse Effect. Ashland has not received any notice
of the intention of any party to terminate any Assigned Contract listed in any
section of the Maleic Business Disclosure Letter.
(c) Section 3.05(c) of the Maleic Business Disclosure Letter sets
forth each Assigned Contract with respect to which the Consent of the other
party or parties thereto must be obtained by virtue of the execution and
delivery of this Agreement or the consummation of the Maleic Assignment and
Assumption to avoid the invalidity of the transfer of such Contract, the
termination thereof, a breach, violation or default thereunder or any other
change or modification to the terms thereof, other than any such invalidity,
termination, breach, violation, default, change or modification that would not
reasonably be expected to have a Maleic Business Material Adverse Effect.
SECTION 3.6. PERMITS. Section 3.06 of the Maleic Business Disclosure
Letter sets forth all certificates, licenses, permits, authorizations,
Consents and approvals issued or granted to Ashland by, and all exemptions of,
or registrations or filings with, Governmental Entities ("Permits"), that are
used, held for use or intended to be used exclusively in the operation or
conduct of the Maleic Business, except for those Permits the absence of which
would not reasonably be expected to have a Maleic Business Material Adverse
Effect. All such Permits are transferable
25
by Ashland to HoldCo. All Assigned Permits are validly held by Ashland, and
Ashland has complied with the terms and conditions thereof, except for any
such invalidity or non-compliance that would not reasonably be expected to
have a Maleic Business Material Adverse Effect. Ashland has not received
written notice of any Claims relating to the revocation or modification of any
Assigned Permits except for any such Claims that would not reasonably be
expected to have a Maleic Business Material Adverse Effect. None of the
Assigned Permits is subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or the
consummation of the Maleic Assignment and Assumption, except for any such
suspensions, modifications, revocations or nonrenewals that would not
reasonably be expected to have a Maleic Business Material Adverse Effect. This
Section 3.06 does not relate to environmental matters, such items being the
subject of Section 3.11(b).
SECTION 3.07. CONDITION OF TRANSFERRED ASSETS. The Transferred
Assets are in good operating condition and repair (ordinary wear and tear
excepted) and are suitable for their current uses, except where the failure of
the Transferred Assets to be in good operating condition or repair or to be
suitable for such uses would not reasonably be expected to have a Maleic
Business Material Adverse Effect.
SECTION 3.08. CLAIMS. Section 3.08 of the Maleic Business Disclosure
Letter sets forth a list of each Claim pending or, to the knowledge of
Ashland, threatened against, or as to which a notice has been received as of
the date of this Agreement by, Ashland (and, as to complaints, which have been
served on Ashland) and that involves an amount in controversy of more than
$100,000. This Section 3.08 does not relate to environmental matters, such
items being the subject of Section 3.11(b), or to employee or labor matters,
such items being the subject of Section 3.12.
SECTION 3.09. BENEFIT PLANS. (a) Section 3.09 of the Maleic Business
Disclosure Letter contains a list of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained or contributed to by Ashland for the
benefit of any officers or employees of the Maleic Business ("Maleic Pension
Plans") and all "employee welfare benefit plans" (as defined in Section
26
3(1) of ERISA), bonus, stock option, stock purchase, deferred compensation
plans or arrangements and other employee fringe benefit plans maintained, or
contributed to, by Ashland or any of its affiliates for the benefit of one or
more current or former employees of the Maleic Business (other than any former
employee of the Maleic Business who became employed by MAP or any of its
subsidiaries following termination of employment with Ashland or any of its
affiliates) (each, a "Maleic Business Employee") (all the foregoing, including
Maleic Pension Plans, being herein called "Maleic Benefit Plans"). Ashland has
provided to Marathon true, complete and correct copies of (i) each Maleic
Benefit Plan (or, in the case of any unwritten Maleic Benefit Plans, fair and
accurate summary descriptions thereof), (ii) the two most recent annual
reports on Form 5500 filed with the Internal Revenue Service with respect to
each Maleic Benefit Plan (if any such report was required), (iii) the most
recent summary plan description for each Maleic Benefit Plan for which such a
summary plan description is required and (iv) each trust agreement, group
annuity contract or other funding and financing arrangement relating to any
Maleic Benefit Plan.
(b) There does not exist as of the date of this Agreement, nor do
any circumstances exist as of the date of this Agreement that would reasonably
be expected to result in, any Employee Benefits Liability (as defined below),
whether under any Maleic Benefit Plan or otherwise, that would reasonably be
expected to become a liability of HoldCo or any of its affiliates at or after
the Closing. "Employee Benefits Liability" means any liability of Ashland or
any entity required to be treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code with Ashland prior to the Closing under (i)
Sections 302, 405, 409 or Title IV of ERISA, (ii) Section 412, 4971 or 4975 of
the Code or (iii) Sections 601 et. seq. and 701 et seq. of ERISA and Section
4980B and Sections 9801 et seq. of the Code.
SECTION 3.10. ABSENCE OF CHANGES OR EVENTS. From the date of the
Balance Sheet to the date of this Agreement, there has not been any event,
change, effect or development (i) that, individually or in the aggregate, has
had or would reasonably be expected to have a Maleic Business Material Adverse
Effect or (ii) that would have been prohibited by Section 4.01 if the terms of
such
27
section had been in effect as of and after the date of the Balance Sheet.
SECTION 3.11. COMPLIANCE WITH LAWS. (a) The Maleic Business is in
compliance with all applicable Laws, including those relating to occupational
health and safety, except for instances of noncompliance that would not
reasonably be expected to have a Maleic Business Material Adverse Effect. To
the knowledge of Ashland, Ashland has not received any written communication
from a Governmental Entity that alleges that the Maleic Business is not in
compliance in any material respect with any applicable Law that has not been
finally resolved with such Governmental Entity. This Section 3.11(a) does not
relate to matters with respect to Taxes, which are the subject of the Tax
Matters Agreement, or to environmental matters, which are the subject of
Section 3.11(b).
(b) Except for such matters that would not reasonably be expected to
have a Maleic Business Material Adverse Effect, (i) to the knowledge of
Ashland, Ashland has not received any written communication from a
Governmental Entity that alleges that the Maleic Business is in violation of
any Environmental Law that has not been finally resolved with such
Governmental Entity, (ii) Ashland holds all Permits required to conduct the
Maleic Business under any applicable Environmental Law, and is and at all
times has been in compliance with all Environmental Laws and the terms and
conditions of such Permits, (iii) there are no Environmental Claims (as
defined below) pending, or to the knowledge of Ashland, threatened against
Ashland and (iv) there have been no Releases (as defined below) of any
Hazardous Material (as defined below) at or originating from the Premises, and
no Hazardous Materials have been handled, generated, stored, transported or
disposed of by the Maleic Business, in each case that would reasonably be
expected to form the basis of an Environmental Claim against Ashland. The term
"Environmental Claim" means any and all administrative, regulatory or judicial
actions, suits, orders, demands, directives, claims, liens, investigations,
proceedings or written notices of noncompliance or violation by or from any
person alleging liability of whatever kind or nature arising out of, based on
or resulting from (x) the presence or Release of, or exposure to, any
Hazardous Materials; or (y) the failure to comply with any Environmental Law.
The term "Environmental Laws" means all applicable federal,
28
state, local and foreign laws, rules, regulations, orders, decrees, judgments,
legally binding agreements or environmental Permits issued, promulgated or
entered into by or with any Governmental Entity, relating to the protection of
the environment, the protection of the public welfare from actual or potential
exposure, or the effects from exposure, to any actual or potential release,
discharge, disposal or emission (whether past or present) of any Hazardous
Materials or the manufacture, processing, distribution, use, treatment,
labeling, storage, disposal, transport or handling of any Hazardous Materials.
The term "Hazardous Materials" means all explosive or regulated radioactive
materials or substances, hazardous or toxic substances, wastes or chemicals,
petroleum (including crude oil or any fraction thereof) or petroleum
distillates, asbestos or asbestos containing materials, and any other
material, chemical substance or waste that in relevant form or concentration
is prohibited, limited or regulated (or the cleanup of which can be required)
pursuant to any Environmental Law and all substances that require special
handling, storage or disposal procedures or whose handling, storage or
disposal procedures is in any way regulated, in any case under any applicable
Law for the protection of the health, safety and environment. The term
"Release" means any spill, emission, leaking, dumping, injection, deposit,
disposal, discharge, dispersal, leaching, emanation or migration of any
Hazardous Materials into or through the environment (including ambient air,
surface water, ground water, soils, land surface, subsurface strata or
workplace).
SECTION 3.12. EMPLOYEE AND LABOR MATTERS. Except as would not
reasonably be expected to have a Maleic Business Material Adverse Effect (i)
there is not any, and during the past three years there has not been any,
labor strike, dispute, work stoppage or lockout pending against the Maleic
Business; (ii) to the knowledge of Ashland, no union organizational campaign
is in progress with respect to the Maleic Business Employees and no question
concerning representation of such employees exists; (iii) Ashland is not
engaged in any unfair labor practice in connection with the conduct of the
Maleic Business; (iv) there are not any unfair labor practice charges or
complaints against Ashland pending before the National Labor Relations Board
in connection with the conduct of the Maleic Business; (v) there are not any
pending union grievances against Ashland in connection with the conduct of the
Maleic
29
Business as to which there is a reasonable possibility of adverse
determination; (vi) there are not any pending charges in connection with the
conduct of the Maleic Business against Ashland or any Maleic Business Employee
before the Equal Employment Opportunity Commission or any state or local
agency responsible for the prevention of unlawful employment practices; and
(vii) Ashland has not received written notice during the past three years of
the intent of any Governmental Entity responsible for the enforcement of labor
or employment laws to conduct an investigation of the Maleic Business.
SECTION 3.13. SUFFICIENCY OF TRANSFERRED ASSETS. Except for the
exclusion of the Excluded Assets and assuming that (i) HoldCo has the ability
to provide to the Maleic Business all corporate-level services of the type
that are currently provided to the Maleic Business by Ashland or any of its
affiliates and (ii) the services to be provided by Ashland to HoldCo pursuant
to the Transition Services Agreement will be provided as contemplated therein,
the Transferred Assets are sufficient for the operation and conduct of the
Maleic Business immediately following the Closing in substantially the same
manner as currently operated and conducted, other than any insufficiency that
would not reasonably be expected to have a Maleic Business Material Adverse
Effect.
SECTION 3.14. INVENTORY. Except as would not reasonably be expected
to have a Maleic Business Material Adverse Effect, the Inventory is generally
of a quality usable or salable in the ordinary course of the Maleic Business.
SECTION 3.15. RECEIVABLES. Except as would not reasonably be
expected to have a Maleic Business Material Adverse Effect, the Receivables
have been collected, or are valid and enforceable claims arising in the
ordinary course of business and are, in the good faith belief of Ashland's
management, collectible, in the aggregate respective amounts so reflected on
the Balance Sheet, net of the applicable reserves (if any) reflected on the
Balance Sheet. Section 3.15 of the Maleic Business Disclosure Letter sets
forth, as of the date of this Agreement, all accounts receivable of Ashland
arising out of the operation or conduct of the Maleic Business which presently
remain unpaid and are owed by a debtor in any case under the Bankruptcy Code
or any other Law relating to bankruptcy or insolvency.
30
ARTICLE IV
Covenants
---------
SECTION 4.01. COVENANTS OF ASHLAND RELATING TO CONDUCT OF MALEIC
BUSINESS. (a) Except for matters set forth in Section 4.01 of the Maleic
Business Disclosure Letter or otherwise contemplated by the Transaction
Agreements, from the date of this Agreement to the Closing, Ashland shall
conduct the Maleic Business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, including completion of
the maintenance "turnaround" of the Plant currently scheduled for June 2004
and, to the extent not included in such turnaround, the item referred to in
Section 3.10 of the Maleic Business Disclosure Letter and items 1, 2, 3, 4
(except to the extent that work with respect to such item is projected to be
conducted during Ashland's 2005 fiscal year), 5, 6 and 7 in the capital
expenditure budget set forth in Section 4.01(a)(v) of the Maleic Business
Disclosure Letter. Without limiting the generality of the foregoing, Ashland
shall use its reasonable best efforts to (i) preserve the material business
relationships of the Maleic Business with customers, suppliers, distributors
and others with whom Ashland deals in connection with the conduct of the
Maleic Business in the ordinary course of business and retain its present
employees who are involved in the operation of the Maleic Business, (ii)
maintain the Transferred Assets, including those held under leases, in as good
operating condition and repair (ordinary wear and tear excepted) as at
present, and maintain all Permits set forth in Section 3.06 of the Maleic
Business Disclosure Letter, (iii) perform in all material respects its
obligations under Assigned Contracts and (iv) comply in all material respects
with all applicable Laws relating to the Maleic Business or any of the
Transferred Assets. In addition, except as set forth in Section 4.01 of the
Maleic Business Disclosure Letter or otherwise contemplated by the Transaction
Agreements, Ashland shall not do any of the following in connection with the
Maleic Business without the prior written consent of Marathon (which consent
shall not be unreasonably withheld or delayed):
(i) adopt, establish or amend in any material respect any Maleic
Benefit Plan (or any plan that would be a Maleic Benefit Plan if adopted
or established) in a manner affecting any Maleic Business
31
Employee, except as required by applicable Law or as would relate to
a substantial number of other similarly situated employees of
Ashland and its subsidiaries;
(ii) grant to any Maleic Business Employee any increase in
compensation or benefits, except in the ordinary course of business and
consistent with past practice or as may be required under existing
Contracts set forth in Section 3.05 of the Maleic Business Disclosure
Letter and except for any increases for which Ashland shall be solely
obligated and which will not result in any incremental compensation that
will be payable by HoldCo after the Closing Date pursuant to
Section 4.03(a);
(iii) subject any Transferred Asset to any Lien of any nature
whatsoever that would have been required to be set forth in
Sections 3.02 or 3.03 of the Maleic Business Disclosure Letter if
existing on the date of this Agreement;
(iv) waive any claims or rights of substantial value to the extent
relating to any Transferred Asset;
(v) make or incur any capital expenditures (of a non-emergency
nature) that relate to the Maleic Business and that are not reflected in
the capital expenditure budget set forth in Section 4.01(a)(v) of the
Maleic Business Disclosure Letter and that, individually, are in excess
of $100,000 or that, in the aggregate, are in excess of $500,000, except
for any such capital expenditures for which Ashland shall be solely
obligated, provided, however, that if Ashland makes or incurs a capital
expenditure that relates exclusively to the Maleic Business and is not
reflected in the capital expenditure budget set forth in Section
4.01(a)(v) of the Maleic Business Disclosure Letter, and if Marathon
agrees in writing to cause HoldCo to reimburse Ashland for such capital
expenditure, then HoldCo shall, promptly after the Closing, reimburse
Ashland for such capital expenditure;
(vi) sell, lease, license or otherwise dispose of any Transferred
Assets, except (A) inventory, supplies and obsolete or excess equipment
sold or disposed of in the ordinary course of business and (B) leases
32
entered into in the ordinary course of business with aggregate annual
lease payments not in excess of $50,000;
(vii) enter into or amend any employee collective bargaining
agreement or other Contract with any labor union;
(viii) commit an intentional material breach of or waive any
material rights under any material Assigned Contract or any material
Permit, or amend or terminate any material Assigned Contract or any
material Permit if the result of any such amendment or termination would
be materially adverse to HoldCo; or
(ix) authorize, or commit or agree to take, any of the foregoing
actions.
(b) ADVICE OF CHANGES. Ashland shall promptly advise Marathon in
writing of any change or event that has had or would reasonably be expected to
have a Maleic Business Material Adverse Effect.
(c) INSURANCE. Ashland shall use its reasonable best efforts to
keep, or to cause to be kept, all insurance policies currently maintained with
respect to the Transferred Assets (the "Ashland Insurance Policies"), or
suitable replacements thereof, in full force and effect without interruption
through the close of business on the Closing Date; it being understood that
any and all Ashland Insurance Policies are owned and maintained by Ashland and
its affiliates (and do not exclusively relate to the Maleic Business). HoldCo
will not have any rights under the Ashland Insurance Policies from and after
the Closing Date.
(d) SURVEY. During the 90-day period following the date of this
Agreement, Ashland shall afford to HoldCo, Marathon and their respective
Representatives reasonable access during normal business hours to the Premises
for the purpose of conducting an ALTA land title survey (at Marathon's
expense) of the Premises and all appurtenant easements. Following the
completion of that survey, a proper legal description of the Premises shall be
prepared and shall be attached to the deed referred to in Section 2.02(a).
SECTION 4.02. REFUNDS AND REMITTANCES. After the Closing, if Ashland
or any of its affiliates receive any
33
refund or other amount which is a Transferred Asset or is otherwise properly
due and owing to HoldCo or any of its affiliates in accordance with the terms
of this Agreement, Ashland promptly shall remit, or shall cause to be
remitted, such amount to HoldCo. After the Closing, if HoldCo or any of its
affiliates receive any refund or other amount which is an Excluded Asset or is
otherwise properly due and owing to Ashland or any of its affiliates in
accordance with the terms of this Agreement, HoldCo promptly shall remit, or
shall cause to be remitted, such amount to Ashland. After the Closing, if
HoldCo or any of its affiliates receive any refund or other amount which is
related to claims (including workers' compensation), litigation, insurance or
other matters for which Ashland or any of its affiliates is responsible
hereunder, and which amount is not a Transferred Asset, or is otherwise
properly due and owing to Ashland or any of its affiliates in accordance with
the terms of this Agreement, HoldCo promptly shall remit, or cause to be
remitted, such amount to Ashland. After the Closing, if Ashland or any of its
affiliates receive any refund or other amount which is related to claims
(including workers' compensation), litigation, insurance or other matters for
which HoldCo or any of its affiliates is responsible hereunder, and which
amount is not an Excluded Asset, or is otherwise properly due and owing to
HoldCo or any of its affiliates in accordance with the terms of this
Agreement, Ashland promptly shall remit, or cause to be remitted, such amount
to HoldCo.
SECTION 4.03. EMPLOYEE MATTERS.
(a) CONTINUATION OF EMPLOYMENT. Effective as of the Closing, subject
to Section 4.03(d), HoldCo or one or more of its affiliates shall offer
employment (which shall include HoldCo's compliance with its covenants set
forth in this Section 4.03) to all Maleic Business Employees who on the
Closing Date are actively at work (each, an "Active Maleic Business
Employee"). For purposes of this Agreement, any Maleic Business Employee who
is not actively at work on the Closing Date due solely to a leave of absence
(including due to vacation, holiday, sick leave, maternity or paternity leave,
military leave, jury duty, bereavement leave, injury or short-term
disability), other than long-term disability, in compliance with applicable
policies of Ashland or its affiliates shall be deemed an Active Maleic
Business Employee. Each Maleic Business
34
Employee who accepts such an offer of employment is referred to herein as a
"Transferred Maleic Business Employee". Immediately following the Closing,
HoldCo shall, or shall cause one or more of its affiliates to, provide each
Transferred Maleic Business Employee (i) with overall compensation that is at
least equivalent to such Transferred Maleic Business Employee's overall
compensation in effect immediately prior to the Closing and (ii) subject to
the provisions of this Section 4.03, with appropriate employee benefits as
determined by HoldCo or such affiliate.
(b) CERTAIN WELFARE BENEFITS MATTERS. (i) Immediately following the
Closing, HoldCo or one or more of its affiliates shall allow Transferred
Maleic Business Employees to participate in benefit plans that provide for
group welfare benefits including, for the avoidance of doubt, vacation and
severance benefits (the "HoldCo Maleic Welfare Plans"). HoldCo shall grant to
the Transferred Maleic Business Employees credit for service prior to the
Closing with Ashland and its affiliates for all purposes under the HoldCo
Maleic Welfare Plans (other than the HoldCo Retiree Medical Plan (as defined
in Section 4.03(f))). HoldCo or its applicable affiliate shall (A) waive all
limitations as to preexisting conditions, exclusions and waiting periods and
actively-at-work requirements with respect to participation and coverage
requirements applicable to the Transferred Maleic Business Employees and their
dependents under the HoldCo Maleic Welfare Plans to the extent satisfied or
waived under the applicable corresponding Maleic Benefit Plan immediately
prior to the Closing and (B) provide each Transferred Maleic Business Employee
and his or her eligible dependents with either pro-rated deductibles and co-
payments for the balance of the year or credit for any co-payments and
deductibles paid prior to the Closing in the calendar year in which the
Closing Date occurs (or, if later, in the calendar year in which Transferred
Maleic Business Employees and their dependents commence participation in the
applicable HoldCo Maleic Welfare Plan) for purposes of satisfying any
applicable deductible or out-of-pocket requirements under any HoldCo Maleic
Welfare Plans in which the Transferred Maleic Business Employees participate.
If credit for deductibles and co-payments is provided, Ashland shall provide
or cause to be provided adequate data to implement that credit as HoldCo may
reasonably request.
35
(ii) Ashland shall be responsible in accordance with its applicable
welfare plans (and the applicable welfare plans of its affiliates) in
effect prior to the Closing for all reimbursement claims (such as
medical and dental claims) for expenses incurred, and for all non-
reimbursement claims (such as life insurance claims) incurred, under
such plans prior to the Closing by Transferred Maleic Business Employees
and their dependents, except that HoldCo shall be responsible for such
claims to the extent such claims are reflected on the Statement or to
the extent insured under an insurance policy of which HoldCo or its
affiliates becomes the beneficiary and for which Ashland or its
affiliates have paid the premium. HoldCo shall be responsible in
accordance with the applicable welfare plans of HoldCo and its
affiliates for all reimbursement claims (such as medical and dental
claims) for expenses incurred, and for all non-reimbursement claims
(such as life insurance claims) incurred, from and after the Closing by
Transferred Maleic Business Employees and their dependents. For
purposes of this Section 4.03(b)(ii), a claim shall be deemed to have
been incurred on (A) the date of death or dismemberment in the case of
claims under life insurance and accidental death and dismemberment
policies or (B) the date on which the charge or expense giving rise to
such claim is incurred (without regard to the date of inception of the
related illness or injury or the date of submission of a claim related
thereto) in the case of all other claims; provided, however, that in the
event of a hospital stay that commences prior to the close of business
on the Closing Date and ends after the close of business on the Closing
Date, the cost thereof shall be apportioned between HoldCo and Ashland
with Ashland responsible for that portion of the cost incurred prior to
the close of business on the Closing Date and HoldCo responsible for the
balance of such cost. Effective as of the Closing, HoldCo shall assume
all liabilities, obligations and commitments of Ashland and its
affiliates to Transferred Maleic Business Employees and their eligible
dependents in respect of health insurance under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), the Health
Insurance Portability and Accountability Act of 1996 and applicable
state Law; provided, however, that Ashland and its affiliates shall
remain obligated to
36
provide any applicable COBRA notices in respect of events occurring on
or prior to the Closing Date.
(c) ACCRUED VACATION. For purposes of determining the number of
vacation days to which each Transferred Maleic Business Employee shall be
entitled following the Closing, HoldCo shall assume and honor all vacation
days accrued or earned but not yet taken by such Transferred Maleic Business
Employee as of the Closing. To the extent that a Transferred Maleic Business
Employee is entitled under any applicable Law or any policy of Ashland or its
affiliates to be paid for any vacation days accrued or earned but not yet
taken by such Transferred Maleic Business Employee as of the Closing, HoldCo
shall discharge the liability for such vacation days.
(d) COLLECTIVELY BARGAINED EMPLOYEES. HoldCo shall comply with all
applicable Laws relating to negotiations with unions in respect of the
Transactions contemplated by this Agreement and shall bear all expenses of any
compensation resulting from such negotiations. HoldCo shall indemnify Ashland
from, and hold it harmless against, any liability arising out of, attributable
to or resulting from HoldCo's nonassumption of any collective bargaining
agreement that covers one or more Transferred Maleic Business Employees;
provided, however, that such indemnification shall not include benefits and
obligations accrued and payable under Ashland's pension plans and employment
practices prior to the Closing.
(e) PENSION BENEFIT. Immediately following the Closing, HoldCo or
one or more of its affiliates shall have in effect a retirement benefit plan
or plans (as applicable, the "HoldCo Retirement Plan") that shall provide
benefits to the Transferred Maleic Business Employees who immediately prior to
the Closing are salaried or non-union hourly employees. HoldCo shall grant
such Transferred Maleic Business Employees credit for service prior to the
Closing with Ashland and its affiliates for purposes of determining
eligibility to participate and vesting under the HoldCo Retirement Plan to the
same extent that such service is recognized for purposes of eligibility to
participate and vesting under the Ashland Inc. and Affiliates Pension Plan
(the "Ashland Pension Plan") as of the Closing Date.
(f) RETIREE MEDICAL BENEFIT. Immediately following the Closing,
HoldCo or one or more of its
37
affiliates shall have in effect a retiree medical plan or plans (as
applicable, the "HoldCo Retiree Medical Plan") that shall provide benefits to
Transferred Maleic Business Employees who immediately prior to the Closing are
salaried or non-union hourly employees that are the same as those offered by
MAP to its employees, subject to MAP's right to amend or modify its retiree
medical plan in the ordinary course of business in accordance with the
reservation of rights provisions of such plan. HoldCo shall grant such
Transferred Maleic Business Employees credit for service prior to the Closing
with Ashland and its affiliates for purposes of determining eligibility to
receive retiree medical subsidies and for purposes of determining level of
benefits and benefit accruals under the HoldCo Retiree Medical Plan to the
same extent that such service is recognized for purposes of eligibility to
participate and vesting under the Ashland Pension Plan as of the Closing Date.
(g) WARN ACT. HoldCo agrees to provide any required notice under the
Worker Adjustment and Retraining Notification Act, as amended (the "WARN
Act"), and any similar state Law that may be applicable to HoldCo, and to
otherwise comply with any such applicable Law with respect to any "plant
closing" or "mass layoff" (in each case as defined in the WARN Act) or group
termination or similar event affecting Maleic Business Employees (including as
a result of the consummation of the Transactions) and occurring on or after
the Closing Date. HoldCo shall notify Ashland after the Closing of any layoffs
of any Transferred Maleic Business Employees in the 90 day period after the
Closing.
(h) ADMINISTRATION. Following the date of this Agreement, Ashland
and HoldCo shall reasonably cooperate in all matters reasonably necessary to
effect the transactions contemplated by this Section 4.03, including
exchanging information and data relating to workers' compensation, employee
benefits and employee benefit plan coverages (except to the extent prohibited
by applicable Law), and in obtaining any governmental approvals required
hereunder.
(i) EMPLOYMENT TAX REPORTING RESPONSIBILITY. HoldCo and Ashland
hereby agree to follow the alternate procedure for employment tax withholding
as provided in Section 5 of Rev. Proc. 96-60, 1996-53 I.R.B. 24 ("Rev. Proc.
96-60"). Ashland shall provide HoldCo with all necessary and accurate payroll
records and such other
38
information relating to the Transferred Maleic Business Employees as HoldCo
may reasonably request with respect to Transferred Maleic Business Employees
in order to comply with the provisions of Rev. Proc. 96-60 with respect to the
calendar year that includes the Closing Date. HoldCo shall perform all
employment tax reporting responsibilities for such employees from the Closing
Date forward and shall furnish a Form W-2 for such calendar year to each
Transferred Maleic Business Employee that will include all remuneration earned
by such Transferred Maleic Business Employee from Ashland or HoldCo during
such calendar year.
(j) INTENT. It is HoldCo's intent that overall compensation and
benefits provided by HoldCo to the Transferred Maleic Business Employees will
have comparable value to those provided to them by Ashland immediately prior
to the Closing. It is HoldCo's intent to provide competitive compensation and
benefits to all employees (including collectively bargained employees) at the
Plant.
SECTION 4.04. POST-CLOSING INFORMATION. After the Closing, upon
reasonable written notice, Ashland and HoldCo shall furnish or cause to be
furnished to each other and their employees and Representatives, during normal
business hours, reasonable access to the personnel, properties, books,
Contracts, commitments, records and other information relating to the Maleic
Business (and, to the extent reasonably requested, copies of the portions
relating to the Maleic Business of any such books, Contracts, commitments,
records and other information, in each case to the extent they are available
in written form and they relate to the period prior to the Closing Date) and
assistance relating to the Maleic Business (to the extent within the control
of such party), in each case for any reasonable business purpose, including in
respect of litigation, insurance matters, financial reporting and accounting
matters.
SECTION 4.05. RECORDS. HoldCo recognizes that certain Records may
contain incidental information relating to subsidiaries, divisions or
businesses of Ashland other than the Maleic Business and that Ashland may
retain copies thereof. Ashland recognizes that certain documents and
information of a type similar to the Records may be used, held for use or
intended to be used primarily in, or arise primarily out of, the operation or
conduct of the Maleic Business, and shall provide copies of the relevant
portions thereof to HoldCo at the Closing.
39
SECTION 4.06. AGREEMENT NOT TO COMPETE. (a) For a period of five
years from the Closing Date, Ashland shall not, and shall cause each of its
subsidiaries (other than Ashland-Suedchemie Kernfest GmbH and Ashland Avebene
S.A., in each case for so long as neither Ashland nor any of its subsidiaries
own, directly or indirectly and individually or collectively, more than 50% of
the equity interests of such entities) not to, directly or indirectly: (i)
engage in the business of manufacturing or marketing maleic anhydride
("Competitive Activities") within North America; provided, however, that this
clause (i) shall not apply to the marketing of briquette maleic anhydride
acquired from Marathon or any of its subsidiaries; (ii) solicit or recruit any
Transferred Maleic Business Employee; provided, however, that this clause (ii)
shall not apply to (A) a general advertisement or solicitation program that is
not specifically targeted at such persons or (B) any employee whose employment
by HoldCo has been terminated prior to such solicitation or recruitment; or
(iii) solicit any customer of the Maleic Business within North America or any
person who, within one year prior to the time of such solicitation, was a
customer of the Maleic Business within North America, for the purpose of
marketing maleic anhydride in competition with the Maleic Business in North
America with the knowledge of such customer relationship; provided, however,
that this clause (iii) shall not apply to the marketing of briquette maleic
anhydride acquired from Marathon or any of its subsidiaries. Notwithstanding
the foregoing, this Section 4.06(a) shall be deemed not breached as a result
of: (i) the ownership by Ashland or any of its subsidiaries of (A) less than
an aggregate of 10% of any class of stock of a person engaged, directly or
indirectly, in Competitive Activities or (B) less than 10% in value of any
instrument of indebtedness of a person engaged, directly or indirectly, in
Competitive Activities; or (ii) the acquisition by Ashland or any of its
subsidiaries of any person that, prior to the acquisition thereof, is not an
affiliate of Ashland and that engages, directly or indirectly, in Competitive
Activities within North America (A) if such Competitive Activities within
North America account for less than 20% of such person's consolidated annual
revenues for its most recently completed fiscal year or (B) if Ashland
disposes of or agrees to dispose of or discontinues such person's business
engaged in Competitive Activities within North America within one year after
the closing of such acquisition.
40
(b) Ashland hereby agrees that the geographic and business scope and
the duration of the covenants and restrictions in this Section 4.06 are fair
and reasonable. However, if any provision of this Agreement is held to be
invalid or unenforceable by reason of the geographic or business scope or
duration thereof, the court or other tribunal is hereby directed to construe
and enforce this Section 4.06 as if the geographic or business scope or the
duration of such provision has been more narrowly drawn as so not to be
invalid or unenforceable, and such invalidity or unenforceability shall not
affect or render invalid or unenforceable any other provision of this
Agreement.
(c) Ashland acknowledges that HoldCo will have no adequate remedy at
law if Ashland violates or breaches any term of this Section 4.06. In such
event, HoldCo shall have the right (upon compliance with any necessary
prerequisites imposed by law upon the availability of such remedies), in
addition to any other rights or remedies that it may have to obtain, in any
court of competent jurisdiction, injunctive relief to restrain any breach or
threatened breach of, or otherwise to specifically enforce the terms of, this
Section 4.06, and to exercise such remedies cumulatively or in conjunction
with all other rights and remedies provided by contract (hereunder or
otherwise, including the right to indemnity under Article XIII of the Master
Agreement), at law or in equity.
(d) All the covenants in this Section 4.06 are intended by each
party hereto to, and shall, be construed as an agreement independent of any
other provision in this Agreement, and the existence of any claim or cause of
action of Ashland against HoldCo, whether predicated on this Agreement or
otherwise (other than a claim or cause of action of Ashland against HoldCo for
a material breach of the Maleic Supply Agreement that is continuing after
written notice by Ashland thereof and the expiration of a reasonable cure
period in accordance with the terms of the Maleic Supply Agreement), shall not
constitute a defense to the enforcement by HoldCo of any covenant in this
Section 4.06.
SECTION 4.07. BULK TRANSFER LAWS. HoldCo hereby waives compliance
by Ashland with the provisions of any so-called "bulk transfer law" of any
jurisdiction in connection with the Maleic Assignment and Assumption.
41
SECTION 4.08. SUPPLIES. At any time after 20 days after the Closing
Date, HoldCo shall not use stationery, purchase order forms, labels, material
safety data sheets or other similar paper goods or supplies that state or
otherwise indicate thereon that the Maleic Business is a division or unit of
Ashland.
SECTION 4.09. MAIL. From and after the Closing, Ashland and HoldCo
shall cooperate with each other, and shall cause their Representatives to
cooperate with each other, to ensure that (i) HoldCo receives copies of all
mail (including mail sent by private delivery and electronic mail
correspondence) relating to the Maleic Business or the Transferred Assets and
(ii) Ashland receives all mail addressed to Ashland delivered to the Premises
(which HoldCo is hereby authorized to receive and open) that contains
information relating to, or of importance to, Ashland (including for financial
reporting, accounting or tax purposes) or to subsidiaries, divisions or
businesses of Ashland other than the Maleic Business.
SECTION 4.10. FURTHER ASSURANCES. From time to time after the
Closing, as and when requested by any party hereto, each party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary or desirable to
consummate the Transactions contemplated by this Agreement, including, (i) in
the case of Ashland, executing and delivering to HoldCo such assignments,
deeds, Consents and other instruments as HoldCo may reasonably request as
necessary or desirable for such purpose and (ii) in the case of HoldCo,
executing and delivering to Ashland such assumptions and other instruments as
Ashland may reasonably request as necessary or desirable for such purpose.
From and after the Closing Date, Ashland will promptly refer all bona fide
written inquiries with respect to ownership of the Transferred Assets after
the Closing or the operation or conduct of the Maleic Business after the
Closing to HoldCo or its designee.
SECTION 4.11. REVIEW OF CONTRACTS. Prior to the Closing Date,
Ashland shall review the terms of each material Contract that relates in part
to the Maleic Business and in part to any other business of Ashland or any of
its subsidiaries (collectively, "Ashland Joint Contracts") in order to
determine whether such Contract
42
should be terminated and replaced on or prior to the Closing Date by a
separate Contract relating to the Maleic Business on the one hand (any such
separate Contract being an Assigned Contract, so long as (i) entering into
such Contract would not otherwise be in violation of this Agreement and (ii)
such Contract does not contain terms that, in the aggregate, are materially
less advantageous to the Maleic Business than the terms under the Contract
being terminated and replaced), and a separate Contract relating to such other
business of Ashland or any of its subsidiaries on the other hand (any such
separate Contract not being an Assigned Contract). If requested by HoldCo or
Marathon within 90 days after Ashland notifies HoldCo and Marathon in writing
of the specific terms of the Ashland Joint Contracts, Ashland shall continue
in effect any Ashland Joint Contract not terminated and replaced in accordance
with the immediately preceding sentence, if not prohibited by the terms of
such Ashland Joint Contract, until the stated expiration thereof (without
regard to any available renewal options); provided, however, that Ashland
shall not be prohibited from terminating any such Ashland Joint Contract
(other than the Car Service Contract dated as of April 16, 1990, between
Ashland and General American Transportation Corporation, the Car Leasing
Agreement dated as of January 3, 1984, between Ashland and General Electric
Railcar Leasing Services Corporation, the Car Service Agreement dated as of
April 1, 1989, between Ashland and Union Tank Car Company and the Master
Supplier Agreement dated as of January 1, 1990, between Ashland and Union Tank
Car Company) that relates to a substantial portion of the business of Ashland
and its subsidiaries. Each of Ashland and HoldCo shall perform its respective
obligations under all such Ashland Joint Contracts so as not to create a
default thereunder, and Ashland shall provide HoldCo with rights thereunder
consistent with historical practice between the parties with respect thereto,
subject to obtaining any necessary Consents from third parties (which Ashland
and HoldCo mutually agree to use their reasonable best efforts to obtain) and
subject to HoldCo bearing the proportionate expense attributable to such
rights consistent with historical practice between the parties with respect
thereto; provided, however, that neither Ashland nor HoldCo shall be obligated
to extend credit to the other party.
43
ARTICLE V
Termination
-----------
SECTION 5.01. TERMINATION. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall automatically terminate,
without further action by any party, and the Maleic Assignment and Assumption
abandoned at any time prior to the Closing, upon termination of the Master
Agreement in accordance with the terms thereof.
SECTION 5.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement in accordance with Section 5.01, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the
part of any party hereto, other than (i) Section 5.01 and this Section 5.02
and (ii) Article VI (General Provisions), which provisions shall survive such
termination, and except to the extent that such termination results from the
material breach by a party of its representations, warranties or covenants set
forth in the Transaction Agreements.
ARTICLE VI
General Provisions
------------------
SECTION 6.01. INTERPRETATION; MALEIC BUSINESS DISCLOSURE LETTER;
CERTAIN DEFINITIONS. (a) When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article of, a
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No item contained in any section of the Maleic Business
Disclosure Letter shall be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement, unless (i) such item is
included (or expressly incorporated by reference) in a section of the Maleic
Business Disclosure Letter that is numbered to correspond to the section
number assigned to such representation or warranty in this Agreement or (ii)
it is readily apparent from a reading of such item
44
that it discloses an exception to such representation or warranty.
(b) For all purposes hereof:
"Environmental Liability" means any liability, obligation or
commitment arising under any Environmental Law; provided, however, that
Environmental Liability specifically does not include any liability,
obligation or commitment relating to any Claim brought by any person other
than a Governmental Entity seeking damages, contribution, indemnification,
cost recovery, penalties, compensation or injunctive relief resulting from the
existence or release of, or exposure to, Hazardous Materials, except where
such Claim is brought as a citizen's suit in which no monetary damages are
sought for the account of such person. Anything in this Agreement to the
contrary notwithstanding, any liability, obligation or commitment under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or any comparable state Environmental Law that arises out of, is
based on or is in connection with the disposal or Release by Ashland of
Hazardous Materials at a location other than the Premises shall be treated as
a Retained Liability and shall not be or become an Assumed Liability.
"Intellectual Property" means patents (including all reissues,
divisions, continuations and extensions thereof), patent applications,
trademarks, trademark registrations, trademark applications, servicemarks,
trade names, business names, brand names, copyrights, copyright registrations
and proprietary designs and design registrations.
"Maleic Business" means the business of (i) manufacturing maleic
anhydride at the Plant, (ii) acquiring maleic anhydride from parties not
affiliated with Ashland and (iii) marketing, distributing and selling the
foregoing, in each case as conducted by Ashland, directly or indirectly
through certain of its subsidiaries, as of the date of this Agreement.
"Maleic Business Material Adverse Effect" means a material adverse
effect (i) on the business, properties, assets, condition (financial or
otherwise), operations or results of operation of the Maleic Business, taken
as a whole, (ii) on the ability of Ashland to perform its obligations under
this Agreement and the other agreements
45
and instruments to be executed and delivered in connection with this Agreement
or (iii) on the ability of Ashland to consummate the Maleic Assignment and
Assumption. For purposes of this Agreement, "Maleic Business Material Adverse
Effect" shall exclude any events, changes, effects and developments to the
extent relating to (A) the economy of the United States or foreign economies
in general, (B) industries in which the Maleic Business operates and not
specifically relating to the Maleic Business, (C) any announcement by Ashland
of the Transactions or of its intention to transfer the Maleic Business or (D)
the execution of the Transaction Agreements and the Ancillary Agreements and
the consummation of the Transactions.
"Permitted Liens" means (i) Liens for current Taxes, assessments,
governmental charges or levies not yet due, (ii) workers' or unemployment
compensation Liens arising in the ordinary course of business, (iii)
mechanic's, materialman's, supplier's, vendor's, garnishment or similar Liens
arising in the ordinary course of business for amounts not yet due, (iv) Liens
or other charges or encumbrances as may have arisen in the ordinary course of
business, none of which individually or in the aggregate are material to the
ownership, use or operation of the Transferred Assets, (v) any state of facts
which an accurate survey would show which does not materially detract from the
value of or materially interfere with the use and operation of the Transferred
Assets, (vi) any Liens, easements, rights-of-way, restrictions, rights, leases
and other encumbrances affecting title thereto, whether or not of record,
which do not materially detract from the value of or materially interfere with
the use and operation of the Transferred Assets, (vii) legal highways, zoning
and building Laws, ordinances or regulations, (viii) any Liens for real estate
Taxes which are not yet due and payable, (ix) Liens set forth in Section 3.02
of the Maleic Business Disclosure Letter and (x) Liens set forth in Section
3.03 of the Maleic Business Disclosure Letter.
SECTION 6.02. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
SECTION 6.03. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public
46
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement (in accordance with the terms of Section 6.06) so as to effect the
original intent of the parties hereto as closely as possible to the end that
the Transactions contemplated hereby are fulfilled to the greatest extent
possible.
SECTION 6.04. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.05. NO THIRD-PARTY BENEFICIARIES. This Agreement is not
intended to confer any rights or remedies upon any person other than the
parties hereto and the Marathon Parties, whom the parties hereto expressly
agree are third-party beneficiaries entitled to enforce the provisions of this
Agreement. Ashland acknowledges that the rights, titles and interests provided
to HoldCo pursuant to this Agreement are a material part of the consideration
for the agreements of the Marathon Parties pursuant to the Master Agreement.
It is further understood that, subject to Section 14.09 of the Master
Agreement, the respective successors and assigns of Ashland and HoldCo shall
have all of the rights, interests and obligations of Ashland and HoldCo,
respectively, hereunder.
SECTION 6.06. AMENDMENT. This Agreement may not be amended by the
parties except pursuant to an instrument in writing signed on behalf of
Ashland and HoldCo with the written consent of Marathon.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ James J. O'Brien
-------------------------------
Name: James J. O'Brien
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
-------------------------------
Name: James J. O'Brien
Title: President
EXHIBIT 10.4
AMENDMENT NO. 2 dated as of March 18, 2004 (this
"Amendment"), to the Amended and Restated Limited
Liability Company Agreement dated as of December 31, 1998
(the "MAP LLC Agreement") of Marathon Ashland Petroleum
LLC (the "Company"), by and between Ashland Inc., a
Kentucky corporation ("Ashland") and Marathon Oil Company,
an Ohio corporation ("Marathon"), a wholly owned
subsidiary of Marathon Oil Corporation, a Delaware
Corporation ("Marathon Corporation").
WHEREAS Ashland and Marathon are the only Members of the Company and
are parties to the MAP LLC Agreement, which sets forth the rights and
responsibilities of each of them with respect to the governance, financing and
operation of the Company (capitalized terms used in this Amendment and not
defined herein shall have the meanings given such terms in the MAP LLC
Agreement);
WHEREAS Marathon Corporation, Marathon, Ashland, New EXM Inc., a
Kentucky Corporation ("New Ashland Inc."), certain of their respective
affiliates and the Company are parties to a Master Agreement (as defined
herein), pursuant to which the parties have agreed to effect the Transactions
described therein;
WHEREAS Marathon Corporation, Marathon, Ashland, New Ashland Inc.
and certain of their respective affiliates are parties to a Tax Matters
Agreement (as defined herein), which sets forth the rights and obligations of
the parties with respect to Taxes in connection with the Transactions (as
defined herein);
WHEREAS in connection with the MAP Partial Redemption (as defined
herein), Marathon and Ashland wish to adjust the Percentage Interests of the
Members;
WHEREAS the Members wish to amend the MAP LLC Agreement to
facilitate the Transactions.
2
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Effective as of the date of this Amendment, Section 1.01 of the MAP
LLC Agreement is amended by adding the following defined terms at the
appropriate alphabetical location:
"Closing Date" has the meaning set forth in the Master Agreement.
"Closing" has the meaning set forth in the Master Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Cold Assets" has the meaning set forth in Section 5.05(b).
"Collection Policies and Procedures" means the policies and
procedures set forth on Schedule 5.05 attached hereto and pursuant to which
the Company shall act as the collection agent on behalf of New Ashland Inc.
with respect to the Distributed Receivables.
"Distributed Receivables" has the meaning set forth in the Master
Agreement.
"Distribution Period" means each of (i) the three-month periods
ended March 31, June 30, September 30 and December 31 of each Fiscal Year, and
(ii) if such Distribution Period would otherwise include the Closing Date,
each of (a) the period beginning on the day after the last day of the Fiscal
Quarter immediately preceding the Closing Date and ending at the close of
business on the Closing Date; and (b) the period beginning on the day after
the Closing Date and ending on the next to occur of March 31, June 30,
September 30 and December 31.
"Excess Section 751 Property" has the meaning set forth in Section
5.05(b).
3
"Final Determination" has the meaning set forth in the Tax Matters
Agreement.
"Form of Receivables Assignment" means the Form of Receivables
Assignment attached as Attachment A hereto.
"Incidental Cash" shall mean (a) petty cash, (b) refining, retail
outlets and transportation ("RMT") working funds, (c) depository account
balances for the RMT business (automated clearinghouse transmissions submitted
on the most recent banking day in the applicable jurisdiction immediately
preceding the Closing Date or later will be for the account of the Company and
its subsidiaries), (d) funds in transit relating to retail outlet deposits,
and (e) uncollected funds in lockboxes and lockbox bank accounts for the RMT
business (automated clearinghouse transmissions submitted on the most recent
banking day in the applicable jurisdiction immediately preceding the Closing
Date or later will be for the account of the Company and its subsidiaries).
"IRS" means the U.S. Internal Revenue Service.
"Master Agreement" means the Master Agreement, dated as of March 18,
2004 among Marathon Corporation, a Delaware Corporation ("Marathon
Corporation"), Marathon, Ashland, New EXM Inc., a Kentucky Corporation ("New
Ashland Inc."), certain of their respective affiliates and the Company
pursuant to which the parties have agreed to effect the Transactions.
"Member Loans" means any loan of cash or other property by the
Company to a Member.
"MAP Partial Redemption" has the meaning set forth in the Master
Agreement.
"MAP Partial Redemption Amount" has the meaning set forth in the
Master Agreement.
"MAP Partial Redemption Date" means the date on which the MAP
Partial Redemption is effected pursuant to Section 1.01 of the Master
Agreement.
"Outstanding Member Loan" means any Member Loan to the extent that
such Member Loan has not been repaid by the borrower to the Company.
4
"Pass-Through Items" has the meaning set forth in the Tax Matters
Agreement.
"Receivables Sales Facility" means the facility for sales of
accounts receivable by the Company to a party unrelated to any Member pursuant
to the Receivables Purchase and Sale Agreement and exhibits thereto, attached
as Attachment B to this Agreement or such additional or other terms as agreed
by the parties, it being understood that Ashland (or, after the Closing, New
Ashland Inc.) shall agree to such additional or other terms proposed by Mexico
or the Company unless in its good faith judgment such terms adversely affect
the treatment of such sales as sales for tax purposes.
"Refund" means any refund of Taxes, including any reduction of Taxes
paid or payable by means of credits, offsets or otherwise.
"Section 704(b) Book-Up" has the meaning set forth in Section 6.19.
"Section 751 Property" means Section 751 property, as such term is
defined in U.S. Treasury Regulation ss. 1.751-1(e).
"Tax" or "Taxes" means all forms of taxation imposed by any
governmental authority, including net income, gross income, alternative
minimum, sales, use, ad valorem, gross receipts, value added, franchise,
license, transfer, withholding, payroll, employment, excise, severance, stamp,
property, custom duty, taxes or governmental charges, together with any
related interest, penalties or other additional amounts imposed by a Tax
Authority, and including all liability for or in respect of any of the
foregoing as a result of being a member of a consolidated or similar group or
a partner in an entity treated as a partnership or other pass-through entity
for Tax purposes or as a result of any tax sharing or similar contractual
agreement.
"Tax Authority" means any governmental authority imposing Taxes and
the agency, if any, charged with the collection of such Taxes for such
authority.
"Tax Matters Agreement" means the Tax Matters Agreement, dated as of
March 18, 2004, among Ashland, New Ashland Inc., Marathon Corporation,
Marathon, certain of
5
their respective affiliates and the Company, that sets forth the rights and
obligations of such parties with respect to Taxes in connection with the
Transactions.
"Transactions" has the meaning set forth in the Master Agreement.
"Undistributed Cash" means any Short Term Investments held by the
Company immediately following the MAP Partial Redemption.
SECTION 2. DEFINITION OF DISTRIBUTABLE CASH
Effective as of the date of this Amendment, Section 1.01 of the MAP
LLC Agreement is amended by amending and replacing the defined term
"Distributable Cash" as follows:
"Distributable Cash" means, for each Distribution Period including a
Distribution Period that includes the Closing Date, without duplication:
(a) the Short-Term Investments of the Company and its subsidiaries
on the last day of such Distribution Period, minus
(b) the Ordinary Course Debt of the Company and its subsidiaries on
the last day of such Distribution Period, minus
(c) the Tax Distribution Amount, if any, to be distributed under
Section 5.01(a) in respect of such Distribution Period, minus
(d) funds held on the last day of such Distribution Period for
financing Special Projects (including the Detroit Clean Fuels/Expansion
Project) or Permitted Capital Projects/Acquisitions, minus
(e) if the notional repayment of principal for Special Project
Indebtedness or Permitted Capital Project/Acquisition Indebtedness during
such Distribution Period calculated using a notional repayment schedule
established and approved by the Board of Managers in accordance with the
Company Leverage Policy was more than the amount of actual principal
repayments for such Special Project Indebtedness or Permitted Capital
Project Acquisition
6
Indebtedness during such Distribution Period, the amount of such excess, plus
(f) if the amount of the actual principal repayments for Special
Project Indebtedness or Permitted Capital Project/Acquisition Indebtedness
during such Distribution Period was more than the notional repayment of
principal for such Special Project Indebtedness or Permitted Capital
Project/Acquisition Indebtedness during such Distribution Period (calculated
in the manner described in clause (e) above), the amount of such excess, plus
or minus
(g) any adjustments or reserves (including any adjustments for
minimum cash balance requirements, including cash reserves for accrued or
withheld Taxes not yet due) in the amounts and for the time periods
established and approved by the Board of Managers pursuant to a vote in
accordance with Section 8.07(b), minus
(h) the proceeds of any asset sales, dispositions or sale leaseback
arrangements, effected pursuant to Section 9.15(b) of the Master Agreement, to
the extent such asset sales, dispositions or sale leaseback arrangements are
not effected in the ordinary course of the Company's business and are not
reflected in the Company's Business/Tactical Plan & Budget 2004-2006, dated
December 16, 2003, plus
(i) with respect to determining the MAP Partial Redemption Amount
(as defined in the Master Agreement), all out of pocket costs and expenses to
the extent paid by the Company prior to the Closing Date in connection with
any asset sales, dispositions, or sale leaseback arrangements described in
clause (h) above, plus
(j) with respect to determining the MAP Partial Redemption Amount
(as defined in the Master Agreement), all out of pocket costs and expenses
paid by the Company to arrange, maintain or terminate any Working Capital
Facilities (as defined in the Company Leverage Policy, set forth in Schedule
8.14) (other than interest), Receivables Sales Facilities or other
arrangements to provide financing to the Company (to the extent such costs and
expenses are paid prior to
7
the Closing Date).
In applying the definition of "Distributable Cash" for purposes of the
definition of "MAP Adjustment Amount" in the Master Agreement, any reduction
in Distributable Cash resulting from the MAP Partial Redemption (as defined in
the Master Agreement) or any payment pursuant to Section 9.09(b) of the Master
Agreement shall be disregarded.
SECTION 3. PERCENTAGE INTEREST AFTER MAP PARTIAL REDEMPTION
Effective as of the date of this Amendment, Section 3.01 of the MAP
LLC Agreement is amended and restated to be Section 3.01(a), and a new Section
3.01(b) is added immediately thereafter as follows:
(b) Immediately following the MAP Partial Redemption, the respective
Percentage Interests of Ashland and Marathon will be determined as follows:
Ashland's Percentage Interest will equal the quotient, expressed as a
percentage, of (x) $2.915 billion plus the MAP Adjustment Amount (as defined
in the Master Agreement) minus the MAP Partial Redemption Amount (as defined
in the Master Agreement) divided by (y) $7.671 billion plus 100% of the
Distributable Cash of the Company as of the Closing Date minus the MAP Partial
Redemption Amount. Marathon's Percentage Interest will equal 100% minus
Ashland's Percentage Interest. The Percentage Interests of the Members will be
appropriately adjusted if the MAP Partial Redemption Amount is increased in
accordance with Sections 1.01 or 1.06 of the Master Agreement.
SECTION 4. DISTRIBUTIONS
Effective as of the date of this Amendment, Section 5.01 of the MAP
LLC Agreement is amended and restated in its entirety as follows:
SECTION 5.01. Distributions. (a) No distribution with respect to a
Tax Distribution Amount shall be made under this Section 5.01 with respect to
a Distribution Period, and the Tax Distribution Amount with respect to such
Distribution Period shall be $0.00, unless the Board of Managers, pursuant to
a vote in accordance with Section 8.07(b), determines that there shall be such
a distribution. If the Board of Managers, pursuant to a vote
8
in accordance with Section 8.07(b), determines that there shall be a
distribution under this Section 5.01 with respect to any Distribution Period
during a Taxable Year, then, within 45 days after the end such Distribution
Period, the Company shall distribute to the Members (the date of such
distribution being a "Distribution Date") an amount in cash (the "Tax
Distribution Amount") determined as follows:
(i) The maximum Tax Liability of each Member with respect to its
allocable portion (as provided in Section 6.03) of the Company's
estimated taxable income for such Distribution Period shall be
determined, based upon the highest aggregate marginal statutory Federal,
state and local income tax rate (determined taking into account the
deductibility, to the extent allowed, of income-based taxes paid to
governmental entities) to which any Member may be subject for the related
Fiscal Year (and excluding any deferred taxes) (the "Aggregate Tax
Rate").
(ii) If the Tax Liability determined in clause (i) is positive with
respect to either Member, there shall be a cash distribution to each of
the Members, in accordance with their Percentage Interests, of an
aggregate amount such that neither Member shall have received
distributions under this clause and subsection (b) below for such portion
of such Fiscal Year in an amount less than its Tax Liability for such
portion of such Fiscal Year.
(b) No distribution of Distributable Cash shall be made under this
Section 5.01(b) with respect to a Distribution Period unless the Board of
Managers, pursuant to a vote in accordance with Section 8.07(b), determines
that there shall be such a distribution. If the Board of Managers, pursuant to
a vote in accordance with Section 8.07(b), determines that there shall be a
distribution under this Section 5.01(b) with respect to any Distribution
Period, the Company shall distribute to the Members such amount of
Distributable Cash as is determined to be distributed by such vote of the
Board of Managers. Subject to Section 5.02(b), each such distribution shall be
allocated between the Members pro rata based upon their respective Percentage
Interests.
(c) The Company shall prepare and distribute to each Member within
45 days after the end of each
9
Distribution Period a statement (a "Distributions Calculation Statement")
setting forth the calculations (in reasonable detail) of (i) the Tax
Distribution Amount for each Member with respect to such Distribution Period
(as if the Board of Managers had determined that there shall be a distribution
under Section 5.01(a) for such Distribution Period, regardless of whether such
a determination was actually made), (ii) the amount of Distributable Cash with
respect to such Distribution Period (as if the Board of Managers had
determined that there shall be a distribution under Section 5.01(b) for such
Distribution Period, regardless of whether such a distribution was actually
made) and (iii) the allocation between the members of distributions, if any,
under Sections 5.01(a) and (b) for such Distribution Period. Such
Distributions Calculations Statements shall be distributed to such Members
regardless of the amount, if any, that is actually distributed to such Members
during such Distribution Period.
(d) Notwithstanding anything to the contrary in this Agreement, any
agreement reached between the Members to distribute any amount of cash
different from the amounts which would be calculated in accordance with the
methodology set forth in Section 5.01(a) and Section 5.01(b) above shall not
alter or waive in any manner the obligations of the Company to prepare and
deliver the Distributions Calculation Statement as set forth in Section
5.01(c) above, and after any such agreement has been reached the Company shall
continue to prepare and deliver such Distributions Calculation Statement with
respect to each Distribution Period as if no such agreement had been reached.
SECTION 5. PARTIAL REDEMPTION OF ASHLAND MEMBERSHIP INTEREST
Effective as of the date of this Amendment, Article V of the MAP LLC
Agreement is amended by adding the following new Section 5.05:
SECTION 5.05. MAP Partial Redemption. (a) On the MAP Partial
Redemption Date, the Company shall effect the MAP Partial Redemption as
described in Section 1.01 of the Master Agreement by distributing to Ashland
the MAP Partial Redemption Amount in redemption of a portion of its Membership
Interest in the Company and by adjusting the Percentage Interests of the
Members as set forth in Section 3.01 of this Agreement. It is understood that
no Tax
10
Distribution shall be made with respect to the MAP Partial Redemption. The MAP
Partial Redemption Amount shall be distributed in cash and by the distribution
by the Company of the Distributed Receivables, each in the amount determined
in accordance with Section 1.01 of the Master Agreement. In connection with
the MAP Partial Redemption, on the Closing Date the Company shall, in
accordance with the Form of Receivables Assignment attached as Attachment A
hereto, (i) assign, transfer, or otherwise convey to Ashland, and Ashland
shall accept from the Company, the Distributed Receivables, together with all
Related Security and all Collections thereof (as such terms are defined in
Schedule 5.05 attached hereto) and (ii) shall distribute to Ashland cash (by
wire transfer of immediately available funds to a bank account, which will be
designated by Ashland at least two Business Days before the Closing Date). The
Company shall act as collection agent with respect to the Distributed
Receivables on behalf of New Ashland Inc. and pay the full amount of all
Collections thereof to New Ashland Inc. in accordance with the Collection
Policies and Procedures set forth in Schedule 5.05. A subsequent distribution
may be made with respect to any adjustments pursuant to Sections 1.06 or 9.13
of the Master Agreement.
(b) If, in accordance with the pre-filing agreement (as referenced
in Section 7.06 of the Tax Matters Agreement) or as a result of any other
Final Determination with respect to the MAP Partial Redemption, Ashland is
determined to have received Section 751 Property in excess of the amount of
Section 751 Property which, had Ashland actually received such amount, would
have resulted in no gain recognition to Ashland under Section 751(b) of the
Code (such excess amount of Section 751 Property, the "Excess Section 751
Property"), the Members agree that Ashland shall be deemed to have exchanged
its share of Undistributed Cash for such Excess Section 751 Property for the
purpose of determining the amount of gain, if any, recognized by Ashland under
Section 751(b) of the Code; provided, however, that
11
if the total amount of Undistributed Cash is less than the fair market value
of the Excess Section 751 Property, then Ashland shall be deemed to have
exchanged, for an amount of Section 751 Property, its share of property other
than Section 751 Property, as designated by Ashland and Marathon prior to the
Closing Date, with a fair market value equal to its tax basis (the "Cold
Assets"); provided further, however, that the fair market value of such Cold
Assets shall equal the difference between the fair market value of the Excess
Section 751 Property and the total amount of Undistributed Cash. The Members
agree that any deemed exchange by Ashland of Undistributed Cash and/or Cold
Assets for Excess Section 751 Property pursuant to this Section 5.05(b) is
intended to be consistent with the principles of U.S. Treasury Regulation ss.
1.751-1(g), Example 3(c) and Example 5(d)(1).
SECTION 6. MEMBER LOANS
Effective as of the date of this Amendment, Article V of the MAP LLC
Agreement is amended by adding the following new Section 5.06:
SECTION 5.06. Member Loans. No Member Loans shall be permitted prior
to January 1, 2005, unless approved by the Board of Managers pursuant to a
vote in accordance with Section 8.07(b). At any time during the period
beginning on January 1, 2005 and ending on the date 45 days prior to the
Closing Date, Member Loans to Ashland shall be permitted on terms and
conditions consistent with the Company's historical practice with respect to
Member Loans, and Member Loans to Marathon shall be permitted pursuant to a
vote in accordance with Section 8.07(b). All Member Loans shall be repaid to
the Company by Ashland or Marathon, as applicable, no later than 30 days prior
to the Closing Date.
SECTION 7. TAX ALLOCATIONS
(a) Effective as of the date of this Amendment, Section 6.02(a) of
the MAP LLC Agreement is amended and restated as follows:
(a) Except as provided in Section 6.02(b), 6.02(c), 6.02(d),
6.02(e) and 6.17, Profit or Loss for any Fiscal Year shall be allocated
between the Members in proportion to their respective Percentage Interests.
(b) Effective as of the date of this Amendment, Article VI of the
MAP LLC Agreement is amended by adding the following new Sections 6.17, 6.18
and 6.19:
SECTION 6.17 Special Allocations. Notwithstanding anything to the
contrary in Article VI of this Agreement or any other provision of this
Agreement,
12
Marathon shall be allocated any Profit and Loss associated with Pass-Through
Items that would be allocable to Ashland in the absence of this Section 6.17
and that are attributable to a payment that is (1) described in Section
12.01(d)(vii) of the Master Agreement, which results in a special non-pro rata
distribution to Ashland, or (2) made with respect to the St. Paul Park QQQ
Project or the Plains Settlement (as both are described in Section 9.09 of the
Master Agreement).
SECTION 6.18. Pre-Closing Allocation of Company Debt. Prior to the
Closing Date, the Company and the Members will take all steps necessary to
ensure that nonrecourse debt (within the meaning of U.S. Treasury Regulation
ss. 1.752-1(a)) is allocated to the Members for purposes of Section 752 of the
Code in a manner that results in each Member's share of aggregate Company debt
after the MAP Partial Redemption being equal to such Member's share of
aggregate Company debt immediately prior to such Redemption. For these
purposes, with respect to nonrecourse debt (within the meaning of U.S.
Treasury Regulation ss. 1.752-1(a)) if any, the Members agree to utilize, if
necessary to satisfy the preceding sentence, U.S. Treasury Regulation ss.ss.
1.752-3(a)(3) and 1.752-3(b).
SECTION 6.19 Section 704(b) Book-Up. The Company shall determine the
value of each item (or class of items, as appropriate) of its assets as of the
MAP Partial Redemption Date, based on the report prepared by Deloitte & Touche
LLP and delivered to Ashland and Marathon in accordance with the definition of
AR Fraction in Section 1.01 of the Master Agreement and shall, immediately
prior to the MAP Partial Redemption, adjust the Capital Accounts of the
Members under Treasury Regulation ss.1.704-1(b)(2)(iv)(f) and (g), based upon
the amount of Profit and Loss that would be allocated to each Member under
Section 6.02 of this Agreement with respect to each such item or class as if
the Company sold all of its assets for such values immediately before the MAP
Partial Redemption (the "Section 704(b) Book-Up"). Any resulting differences
between the book and tax basis of property resulting from such Section 704(b)
Book-Up shall be accounted for under Section 6.03 using a method selected by
the Members.
SECTION 8. ITEMS REQUIRING VOTE OF MEMBERS UNDER SECTION 8.07(b)
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Section 8.08 of the MAP LLC Agreement is hereby amended by adding
the following new Sections 8.08(r)-(t):
(r) the approval of a distribution under Section 5.01(a);
(s) the approval of a distribution under Section 5.01(b);
(t) making a Member Loan, except as otherwise provided in Section
5.06.
SECTION 9. COMPANY LEVERAGE POLICY
The Company Leverage Policy (set forth in Schedule 8.14) is amended
and restated in its entirety. Such policy is set forth in a new Schedule 8.14
attached hereto.
SECTION 10. RECEIVABLES SALES FACILITY
Article VIII of the MAP LLC Agreement is hereby amended by adding
the following new Section 8.20:
SECTION 8.20. Receivables Sales Facility. The Company may enter into
the Receivables Sales Facility.
SECTION 11. TRANSFER OF MEMBERSHIP INTEREST
Effective as of the date of this Amendment, Section 10.01 of the MAP
LLC Agreement is hereby amended by adding the following new Section 10.01(h):
(h) Transfer Pursuant to Master Agreement. Notwithstanding anything
to the contrary in this Agreement, Ashland's contribution, transfer and
conveyance of its Membership Interests to HoldCo (as defined in the Master
Agreement), HoldCo's acceptance of such contribution, transfer and conveyance
and the Transactions as contemplated by and in accordance with the Master
Agreement and the other Transaction Agreements (as defined in the Master
Agreement) are expressly permitted hereunder and shall not require approval
under Section 8.07 or otherwise.
SECTION 12. PARTIES IN INTEREST This Amendment shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors, legal representatives and permitted assigns.
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SECTION 13. COUNTERPARTS This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 14. GOVERNING LAW THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF THIS
AMENDMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS WAIVED.
SECTION 15. NO THIRD-PARTY BENEFICIARIES This Amendment is not
intended to confer upon any person other than the parties hereto any rights or
remedies.
SECTION 16. INTERPRETATION The headings contained in this Amendment
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Amendment. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 17. SEVERABILITY If any term or other provision of this
Amendment is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Amendment
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions and amendments contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Amendment so as to effect the original intent of the parties as
closely as possible to the end that the transactions and amendments
contemplated hereby are fulfilled to the extent possible.
SECTION 18. CONTINUATION OF MAP LLC AGREEMENT The MAP LLC Agreement
continues in full force and effect, except as expressly amended herein.
SECTION 19. CONSEQUENCES OF TERMINATION OF MASTER AGREEMENT In the
event of a termination of the Master Agreement pursuant to Section 11.01 of
the Master
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Agreement, the parties further agree that, as of the date the Master Agreement
is terminated: the definition of "Distributable Cash," sections 5.01 and 8.08,
and the Company Leverage Policy (set forth in Schedule 8.14) shall be amended
and restored to their language existing prior to this Amendment; Sections
5.05, 5.06, 6.17, and 8.20 shall be repealed in their entirety; and
allocations of Profit and Loss for the period or periods between the signing
of this Amendment and the date the Master Agreement is terminated shall be
made without regard to Section 6.17 or, to the extent such allocations have
been made under Section 6.17, the effects of such allocations shall be
reversed with future allocations of Profit and Loss.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first written above.
MARATHON OIL COMPANY,
By /s/ Clarence P. Cazalot, Jr.
_____________________________
Name: Clarence P. Cazalot, Jr.
Title: President
ASHLAND INC.,
By /s/ James J. O'Brien
_____________________________
Name: James J. O'Brien
Title: Chief Executive Officer