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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): January 1, 1998
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.)
1000 Ashland Drive, Russell, Kentucky 41169
(Address of principal executive offices) (Zip Code)
P.O. Box 391, Ashland, Kentucky 41114
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (606) 329-3333
Item 2. Acquisition or Disposition of Assets
Effective January 1, 1998, Ashland Inc. (the "Registrant") and
Marathon Oil Company ("Marathon") completed a transaction to form
Marathon Ashland Petroleum LLC, a Delaware limited liability company
(the "Company"). On January 2, 1998, the Registrant and Marathon
jointly announced the closing of the transaction. Definitive agreements
creating the venture were signed December 12, 1997. Plans to pursue the
combination were announced May 15, 1997, when the parties executed a
Letter of Intent. The foregoing summary of the attached January 2, 1998
press release is qualified in its entirety by the complete text of such
document, a copy of which is attached hereto as Exhibit 99.1.
Pursuant to a Master Formation Agreement between the Registrant
and Marathon; an Asset Transfer and Contribution Agreement by and among
the Registrant, Marathon and the Company; a Parent Agreement by and
among USX Corporation, the parent of Marathon ("USX"), Marathon and the
Registrant; and certain other conveyancing documents, the Registrant
and Marathon contributed the major elements of their respective
petroleum supply, refining, marketing and transportation businesses to
the Company in exchange for, in the case of the Registrant, a 38%
ownership interest in the Company and, in the case of Marathon, a 62%
ownership interest in the Company. The Registrant's and Marathon's
other businesses, including their respective exploration, production
and chemical businesses (other than the Registrant's refinery-produced
chemicals) were not contributed to the Company. Other exclusions
include the Registrant's Valvoline division and APAC construction
subsidiary, along with equity investments in certain pipelines for both
companies.
In connection with the formation of the Company, the Registrant
and Marathon entered into a Limited Liability Company Agreement dated
as of January 1, 1998 (the "LLC Agreement"). The LLC Agreement provides
that the Company will be managed by a Board of Managers consisting of
the President of the Company (with no voting power), three
representatives designated by Marathon, and two representatives
designated by the Registrant. The LLC Agreement provides for an initial
term of the Company expiring on December 31, 2022 (25 years from its
formation). The term will automatically be extended for successive ten
year periods unless at least two years prior to the end of a term,
either the Registrant or Marathon gives notice to the other party that
it wants to terminate the term of the Company.
The foregoing description of the LLC Agreement is qualified in its
entirety by reference to the provisions of such agreement, which is
attached hereto as Exhibit No. 10.1
In connection with the formation of the Company, Marathon, the
Registrant, the Company and USX Corporation also entered into a
Put/Call, Registration Rights and Standstill Agreement (the "Put/Call
Agreement"). The Put/Call Agreement provides that at any time after
December 31, 2004, Marathon will have the right to purchase from
Registrant for cash, and the Registrant will have the right to sell to
Marathon for cash and/or, at Marathon's option (subject to certain
limitations), Marathon or USX debt or equity securities, all the
Registrant's ownership interests in the Company, on the terms provided
in the Put/Call Agreement. The Put/Call Agreement contains registration
rights with respect to any debt or equity securities of Marathon or USX
that the Registrant receives. The Put/Call Agreement also sets forth
various standstill agreements between certain of the parties and
limitations on each party's ability to engage in activities that are
competitive with certain businesses of one or more of the other
parties.
The foregoing description of the Put/Call Agreement is qualified
in its entirety by reference to the provisions of such agreement, which
is attached hereto as Exhibit No. 10.2.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Any required financial statements will be filed under cover of
Form 8K/A as soon as practicable, but not later than March 17, 1998.
(b) Pro Forma Financial Information
Since the Registrant has a 38% ownership interest in the Company,
it will account for its investment using the equity method of accounting.
Although this method of accounting has no effect on Registrant's net income
or stockholders' equity, it will reduce Registrant's consolidated assets,
liabilities, revenues and costs. Financial information follows with respect
to the businesses contributed to the Company as of September 30, 1997, and
for the year then ended.
(In millions)
FINANCIAL POSITION
Current assets $ 868
Investments and other assets 66
Property, plant and equipment 1,715
------------
Total assets 2,649
Current liabilities (738)
Noncurrent liabilities (186)
------------
Net assets $ 1,725
============
RESULTS OF OPERATIONS
Revenues $ 6,700
Operating income 215
Net income 136
Registrant's condensed financial statements included in its
Quarterly Report on Form 10-Q for the three months ending March 31, 1998
will reflect the change in accounting method for its businesses contributed
to the Company, retroactive to October 1, 1997, the beginning of the
Registrant's current fiscal year.
Since the values assigned to the assets contributed to the Company
by the Registrant have not yet been determined, it is impracticable to
provide pro forma financial information related to the effects of the
transaction at this time. Any required pro forma financial information will
be filed under cover of Form-8K/A as soon as practicable, but not later
than March 17, 1998.
(c) Exhibits
10.1 Limited Liability Company Agreement of Marathon Ashland
Petroleum LLC dated as of January 1, 1998.
10.2 Put/Call, Registration Rights and Standstill Agreement dated
as of January 1, 1998 among Marathon Oil Company, USX
Corporation, Ashland Inc. and Marathon Ashland Petroleum LLC.
99.1 Press Release dated January 2, 1998.
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: January 16, 1998 /s/ Thomas L. Feazell
--------------------------------
Name: Thomas L. Feazell
Title: Senior Vice President,
General Counsel and Secretary
Exhibit Index
Exhibit No.
10.1 Limited Liability Company Agreement of Marathon Ashland
Petroleum LLC dated as of January 1, 1998.
10.2 Put/Call, Registration Rights and Standstill Agreement dated
as of January 1, 1998 among Marathon Oil Company, USX
Corporation, Ashland Inc. and Marathon Ashland Petroleum LLC.
99.1 Press Release dated January 2, 1998.
=====================================================================
LIMITED LIABILITY COMPANY AGREEMENT
of
MARATHON ASHLAND PETROLEUM LLC
Dated as of January 1, 1998
=====================================================================
TABLE OF CONTENTS
ARTICLE I
Certain Definitions; Applicable GAAP
SECTION 1.01. Definitions................................................2
SECTION 1.02. Applicable GAAP...........................................24
ARTICLE II
General Provisions
SECTION 2.01. Formation; Effectiveness..................................24
SECTION 2.02. Name......................................................25
SECTION 2.03. Term......................................................25
SECTION 2.04. Registered Agent and Office...............................26
SECTION 2.05. Purpose...................................................26
SECTION 2.06. Powers....................................................27
ARTICLE III
Members
SECTION 3.01. Members; Percentage Interests.............................28
SECTION 3.02. Adjustments in Percentage Interests.......................29
ARTICLE IV
Capital Contributions;Assumption of Assumed Liabilities
SECTION 4.01. Contributions.............................................29
SECTION 4.02. Additional Contributions..................................32
SECTION 4.03. Negative Balances; Withdrawal of Capital;
Interest....................................33
ARTICLE V
Distributions
SECTION 5.01. Distributions.............................................33
SECTION 5.02. Certain General Limitations...............................36
SECTION 5.03. Distributions in Kind.....................................36
SECTION 5.04. Distributions in the Event of an Exercise
of the Marathon Call Right, Ashland
Put Right or the Special Termination
Rights......................................37
ARTICLE VI
Allocations and Other Tax Matters
SECTION 6.01. Maintenance of Capital Accounts...........................37
SECTION 6.02. Allocation of Profit and Loss.............................38
SECTION 6.03. Tax Allocations...........................................38
SECTION 6.04. Entity Classification.....................................39
SECTION 6.05. Fiscal Year...............................................39
SECTION 6.06. Tax Returns...............................................39
SECTION 6.07. Tax Matters Partner.......................................40
SECTION 6.08. Duties of Tax Matters Partner.............................41
SECTION 6.09. Survival of Provisions....................................43
SECTION 6.10. Section 754 Election......................................43
SECTION 6.11. Qualified Income Offset, Minimum Gain
Chargeback..................................43
SECTION 6.12. Tax Treatment of Designated Sublease
Agreements..................................44
SECTION 6.13. Tax Treatment of Reimbursed Liability
Payments....................................44
SECTION 6.14. Tax Treatment of Disproportionate
Payments....................................45
ARTICLE VII
Books and Records
SECTION 7.01. Books and Records; Examination............................45
SECTION 7.02. Financial Statements and Reports..........................46
SECTION 7.03. Notice of Affiliate Transactions; Annual
List.......................................48
ARTICLE VIII
Management of the Company
SECTION 8.01. Managing Members..........................................49
SECTION 8.02. Board of Managers.........................................49
SECTION 8.03. Responsibility of the Board of Managers...................50
SECTION 8.04. Meetings..................................................50
SECTION 8.05. Compensation..............................................52
SECTION 8.06. Quorum....................................................52
SECTION 8.07. Voting....................................................53
SECTION 8.08. Matters Constituting Super Majority
Decisions...................................54
SECTION 8.09. Annual Capital Budget.....................................61
SECTION 8.10. Business Plan.............................................62
SECTION 8.11. Requirements as to Affiliate Transactions.................62
SECTION 8.12. Review of Certain Affiliate Transactions
Related to Crude Oil Purchases and Shared
Services....................................64
SECTION 8.13. Adjustable Amounts........................................67
SECTION 8.14. Company Leverage Policy...................................68
SECTION 8.15. Company's Investment Guidelines...........................68
SECTION 8.16. Requirements as to Operating Leases.......................69
SECTION 8.17. Limitations on Actions Relating to the
Calculation of Distributable Cash...........69
SECTION 8.18. Reliance by Third Parties.................................69
SECTION 8.19. Integration of Retail Operations. ........................70
ARTICLE IX
Officers
SECTION 9.01. (a) Election, Appointment and Term of
Office......................................71
SECTION 9.02. Resignation, Removal and Vacancies........................72
SECTION 9.03. Duties and Functions of Executive
Officers....................................73
ARTICLE X
Transfers of Membership Interests
SECTION 10.01. Restrictions on Transfers................................74
SECTION 10.02. Conditions for Admission.................................78
SECTION 10.03. Allocations and Distributions............................79
SECTION 10.04. Right of First Refusal...................................79
SECTION 10.05. Restriction on Resignation or Withdrawal.................80
ARTICLE XI
Liability, Exculpation and Indemnification
SECTION 11.01. Liability................................................81
SECTION 11.02. Exculpation..............................................81
SECTION 11.03. Indemnification..........................................81
ARTICLE XII
Fiduciary Duties
SECTION 12.01. Duties and Liabilities of Covered
Persons....................................82
SECTION 12.02. Fiduciary Duties of Members of the
Company and Members of the Board
of Managers................................82
ARTICLE XIII
Dispute Resolution Procedures
SECTION 13.01. General..................................................83
SECTION 13.02. Dispute Notice and Response..............................83
SECTION 13.03. Negotiation Between Senior Managers......................84
SECTION 13.04. Negotiation Between Chief Executive
Officer and President......................84
SECTION 13.05. Right to Equitable Relief Preserved......................85
ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
SECTION 14.01. Ability of Company to Borrow
to Fund Disputed Monetary Amounts..........86
SECTION 14.02. Interim Payment of Disputed Monetary
Amount.....................................87
SECTION 14.03. Liquidated Damages.......................................87
SECTION 14.04. Right of Set-Off.........................................90
SECTION 14.05. Security Interest........................................90
ARTICLE XV
Dissolution and Termination
SECTION 15.01. Dissolution..............................................92
SECTION 15.02. Winding Up of Company....................................93
SECTION 15.03. Distribution of Property.................................93
SECTION 15.04. Time Limitation..........................................93
SECTION 15.05. Termination of Company...................................93
ARTICLE XVI
Miscellaneous
SECTION 16.01. Notices..................................................94
SECTION 16.02. Merger and Entire Agreement..............................95
SECTION 16.03. Assignment...............................................95
SECTION 16.04. Parties in Interest......................................95
SECTION 16.05. Counterparts.............................................95
SECTION 16.06. Amendment; Waiver........................................96
SECTION 16.07. Severability.............................................96
SECTION 16.08. GOVERNING LAW............................................96
SECTION 16.09. Enforcement..............................................97
SECTION 16.10. Creditors................................................97
SECTION 16.11. No Bill for Accounting...................................98
SECTION 16.12. Waiver of Partition......................................98
SECTION 16.13. Table of Contents, Headings and Titles...................98
SECTION 16.14. Use of Certain Terms; Rules of
Construction...............................98
SECTION 16.15. Holidays.................................................98
SECTION 16.16. Third Parties............................................98
SECTION 16.17. Liability for Affiliates.................................99
Appendix A Certain Definitions
Appendix B Procedures for Dispute Resolution
Exhibit A Speedway SuperAmerica LLC Retail
Integration Protocol
Schedule 1.01 Financed Properties
Schedule 4.01(c) Subleased Property
Schedule 4.02(a)-1 Marathon Capital Expenditures
Schedule 4.02(a)-2 Ashland Capital Expenditures
Schedule 8.01(k)
(i)(A) Closing Date Affiliate Transactions
Schedule 8.14 Company Leverage Policy
Schedule 8.15 Company Investment Guidelines
Schedule A Calculations re: Normal Annual Capital Budget
Amount
Schedule B-1 Adjustments to Historical EBITDA
(Marathon)
Schedule B-2 Adjustments to Historical EBITDA (Ashland)
Schedule C Initial Executive Officers
LIMITED LIABILITY COMPANY AGREEMENT
dated as of January 1, 1998, of MARATHON
ASHLAND PETROLEUM LLC (the "Company"), by and
between Marathon Oil Company, an Ohio
corporation ("Marathon"), and Ashland Inc., a
Kentucky corporation ("Ashland"), as Members.
Preliminary Statement
WHEREAS, on June 11, 1997, Marathon and Emro Marketing
Company ("Emro Marketing") formed the Company (formerly known as "Emro
Supply, LLC") by filing a Certificate of Formation of the Company with the
Secretary of State of the State of Delaware and executed the Limited
Liability Company Agreement of the Company pursuant to which Marathon
received a 60% interest in the Company and Emro Marketing received a 40%
interest in the Company;
WHEREAS, on July 18, 1997, Emro Marketing assigned its
interest in the Company to Marathon and Fuelgas Company, Inc., a wholly
owned subsidiary of Marathon ("Fuelgas"), with Marathon receiving an
additional 39% interest in the Company and Fuelgas receiving a 1% interest
in the Company, which interest will be transferred to Marathon immediately
following the Closing (for purposes of this Agreement and the other
Transaction Documents, all references to Marathon's interest in the Company
shall be deemed to include the 1% interest owned by Fuelgas);
WHEREAS, on July 18, 1997, Marathon and Fuelgas executed
the First Amended and Restated Limited Liability Company Agreement of the
Company and filed an Amended and Restated Certificate of Formation of the
Company with the Secretary of State of the State of Delaware;
WHEREAS, on October 29, 1997, Marathon and Fuelgas filed
a Second Amended and Restated Certificate of Formation of the Company with
the Secretary of State of the State of Delaware to change the name of the
Company to Marathon Ashland Petroleum LLC;
WHEREAS, on December 8, 1997, Marathon and Fuelgas
executed the Second Amended and Restated Limited Liability
2
Company Agreement of the Company which became effective on December 10,
1997;
WHEREAS the parties hereto desire that the Company (a) be
a premier petroleum supply, refining, marketing and transportation
business, (b) create a highly efficient, cost-effective and competitive
petroleum supply, refining, marketing and transportation system, (c)
deliver to the Members the highest possible economic value added, (d) be
customer-focused and market-driven in its business strategy, (e) be a
respected and responsible member of the communities in which the Company
will operate, with a high regard for environmental responsibility and
employee safety, and (f) seek to maximize Distributable Cash to the Members
consistent with the foregoing, including capital spending levels which over
time are expected to be generally equivalent to the level of non-cash
charges; and
WHEREAS the Members desire to enter into this Agreement
to set forth the rights and responsibilities of each of them with respect
to the governance, financing and operation of the Company.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
ARTICLE I
Certain Definitions; Applicable GAAP
Certain Definitions; Applicable GAAP
SECTION 1.01. Definitions. Defined terms used in this
Agreement shall have the meanings ascribed to them by definition in this
Agreement or in Appendix A. In addition, when used herein the following
terms have the following meanings:
"Accounting Determination" has the meaning set forth in
Section 1.02.
"Acquisition Expenditures" means, in connection with any
acquisition by the Company and its subsidiaries, without duplication (i)
the purchase price paid or to be paid for the net assets or capital stock
or other equity
3
interests in connection with such acquisition, (ii) any Indebtedness
assumed by the Company and its subsidiaries in connection with any such
acquisition, (iii) any contingent liabilities assumed or incurred by the
Company and its subsidiaries in connection with any such acquisition to the
extent that such contingent liabilities are required to be reflected on the
balance sheet of the Company and its subsidiaries in accordance with
Financial Accounting Standard Number 5 (or any successor or superseding
provision of Applicable GAAP), and (iv) all other costs and expenses
incurred or to be incurred by the Company or any of its subsidiaries in
connection with any such acquisition to the extent that such costs and
expenses would be capitalized if such acquisition were consummated.
"Adjustable Amount" has the meaning set forth in Section
8.13.
"Additional Monetary Amount" has the meaning set forth in
Section 14.03(c).
"Additional Required Cash Amount" has the meaning set
forth in Section 14.01(a).
"Adjusted DD&A" means:
(i) for the twelve-month periods ended December 31, 1995
and 1996, $348 million and $346 million, respectively;
(ii) for the twelve-month period ended December 31, 1997,
the total combined depreciation, depletion and amortization
expense of the Marathon Business and the Ashland Business during
such twelve-month period, including, without duplication, (a) any
gains (deductions from depreciation, depletion and amortization)
or losses (additions to depreciation, depletion and amortization)
on asset retirements during such period and (b) pro forma
depreciation, depletion and amortization expense related to the
Financed Properties during such period (calculated in the same
manner such pro forma depreciation, depletion and amortization
expense was calculated in Schedule A,
4
which considers the placed-in-service dates of the Financed
Properties);
(iii) for the twelve-month period ended September 30,
1998, the sum of:
(a) the total combined depreciation, depletion
and amortization expense of the Marathon Business and the
Ashland Business during the period commencing on October
1, 1997, and ended on the date immediately preceding the
Closing Date, including, without duplication, (1) any
gains (deductions from depreciation, depletion and
amortization) or losses (additions to depreciation,
depletion and amortization) on asset retirements during
such period and (2) pro forma depreciation, depletion and
amortization expense related to the Financed Properties
during such period (calculated in the same manner such
pro forma depreciation, depletion and amortization
expense was calculated in Schedule A, which considers the
placed-in-service dates of the Financed Properties); and
(b) the total depreciation, depletion and
amortization expense of the Company and its subsidiaries
for the period commencing on the Closing Date and ended
on September 30, 1998, including (1) any gains
(deductions from depreciation, depletion and
amortization) or losses (additions to depreciation,
depletion and amortization) on asset retirements during
such period, (2) depreciation, depletion and amortization
expense related to the Garyville Propylene Upgrade
Project during such period and (3) depreciation,
depletion and amortization expense related to all
Company-funded Capital Expenditures, but excluding (4)
depreciation, depletion and amortization expense related
to Member-Funded Capital Expenditures and (5) the
increase or decrease in such depreciation, depletion and
amortization expense related to the Ashland Transferred
Assets (including pro forma depreciation, depletion and
amortization expense
5
related to the Financed Properties) resulting from the
application of purchase accounting treatment to the
transactions contemplated by the Transaction Documents
(such purchase accounting treatment causing an increase
or decrease in the estimated useful lives and the net
book value of the Ashland Transferred Assets); and
(iv) for the twelve-month period ended September 30,
1999, and each twelve-month period ended September 30 thereafter,
the total depreciation, depletion and amortization expense of the
Company and its subsidiaries for such twelve-month period,
including, without duplication, (a) any gains (deductions from
depreciation, depletion and amortization) or losses (additions to
depreciation, depletion and amortization) on asset retirements
during such period, (b) depreciation, depletion and amortization
expense related to the Garyville Propylene Upgrade Project during
such period and (c) depreciation, depletion and amortization
expense related to Company-funded Capital Expenditures but
excluding (d) depreciation, depletion and amortization expense
related to Member-Funded Capital Expenditures and (e) the increase
or decrease in such depreciation, depletion and amortization
expense related to the Ashland Transferred Assets (including pro
forma depreciation, depletion and amortization expense related to
the Financed Properties) resulting from the application of
purchase accounting treatment to the transactions contemplated by
the Transaction Documents (such purchase accounting treatment
causing an increase or decrease in the estimated useful lives and
the net book value of the Ashland Transferred Assets);
all as determined on a consolidated basis with respect to (x) in the case
of any period ending prior to the Closing Date, Marathon and its
subsidiaries or Ashland and its subsidiaries, as applicable, or (y) in the
case of any period ending on or after the Closing Date, the Company and its
subsidiaries, in each case in accordance with Applicable GAAP.
6
"Adjusted EBITDA" means:
(i) for the twelve-month periods ended December 31, 1995
and 1996, $657 million and $600 million, respectively;
(ii) for the twelve-month period ended December 31, 1997,
the sum of:
(a) Historical EBITDA for such twelve-month period, plus
(b) $80 million, minus
(c) 38% of an amount equal to (1) the sum of the amounts
calculated pursuant to clauses (a) and (b) above for such
twelve-month period less (2) the Adjusted DD&A for such
twelve-month period.
(iii) for the twelve-month period ended September 30,
1998, the sum of:
(a) for the period commencing on October 1, 1997, and
ended on the date immediately preceding the Closing Date, the sum
of:
(1) Historical EBITDA for such period, plus
(2) $20 million, minus
(3) 38% of an amount equal to (A) the sum of the
amounts calculated pursuant to clauses (1) and (2) above
with respect to such period less (B) the Adjusted DD&A
for such period; and
(b) for the period commencing on the Closing Date and
ended on September 30, 1998, the sum of:
(1) EBITDA of the Company and its subsidiaries
for such period, plus
(2) $12.4 million, minus
7
(3) the Tax Distribution Amounts paid or to be
paid in respect of each of the three Fiscal Quarters (or
portion thereof) included in such period; and
(iv) for the twelve-month period ended September 30, 1999
and each twelve-month period ended September 30 thereafter, the sum of:
(a) EBITDA of the Company and its subsidiaries for such
twelve-month period, minus
(b) the Tax Distribution Amounts paid or to be paid in
respect of each of the four Fiscal Quarters included in such
twelve-month period;
all as determined on a consolidated basis with respect to (x) in the case
of any period ending prior to the Closing Date, Marathon and its
subsidiaries or Ashland and its subsidiaries, as applicable, or (y) in the
case of any period ending on or after the Closing Date, the Company and its
subsidiaries, in each case in accordance with then Current GAAP (other than
Ordinary Course Lease Expenses which shall be calculated in accordance with
Applicable GAAP).
"Advanced Amount" has the meaning set forth in Section
14.01(b).
"Affiliate Transaction" means any agreement or
transaction between the Company or any of its subsidiaries and any Member
or any Affiliate of any Member that:
(a) for purposes of Section 7.03(a)(i), will result or is
reasonably anticipated will result in expenditures, contingent or
actual liabilities or benefits to the Company and its subsidiaries
in excess of $2 million;
(b) for purposes of Section 7.03(b), is either (i)
outside the ordinary course of the Company and its subsidiaries'
business and results or will result in contingent or actual
liabilities or benefits to the Company and its subsidiaries in
excess of $100,000 in
8
the applicable Fiscal Year or (ii) within the ordinary course of
the Company and its subsidiaries' business and results or will
result in expenditures, contingent or actual liabilities or
benefits to the Company and its subsidiaries (A) in excess of $2
million individually in the applicable Fiscal Year or (B) when
taken together with all other agreements or transactions entered
into the same Fiscal Year as such agreement or transaction which
are either related to such agreement or transaction or are
substantially the same type of agreement or transaction as such
agreement or transaction, in excess of $2 million in the aggregate
in the applicable Fiscal Year; and
(c) for purposes of Section 8.08(k)(i), is either (i)
outside the ordinary course of the Company and its subsidiaries'
business and will result or is reasonably anticipated will result
in expenditures, contingent or actual liabilities or benefits to
the Company and its subsidiaries in excess of $2 million or (ii)
within the ordinary course of the Company and its subsidiaries'
business and will result or is reasonably anticipated will result
in expenditures, contingent or actual liabilities or benefits to
the Company and its subsidiaries in excess of $25 million.
For purposes of this definition of Affiliate Transaction,
any guarantee by a Member or any Affiliate of any Member of any obligations
of the Company or any of its subsidiaries that is provided by such Member
or such Affiliate without cost to the Company and its subsidiaries shall
not be deemed to be an Affiliate Transaction. Notwithstanding the
foregoing, the term "Affiliate Transaction" shall not include any
distributions of cash or other property to the Members pursuant to Article
V.
"Affiliate Transaction Dispute Notice" has the meaning
set forth in Section 8.11(b).
"Aggregate Tax Rate" has the meaning set forth in Section
5.01(a)(i).
"Agreed Additional Capital Contributions" has the meaning
set forth in Section 4.02(c).
9
"Agreement" means this Limited Liability Company
Agreement of the Company, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Annual Capital Budget" has the meaning set forth in
Section 8.09(a).
"Applicable GAAP" has the meaning set forth in Section
1.02.
"Approved Marathon Crude Oil Purchase Program" has the
meaning set forth in Section 8.12.
"Arbitratable Dispute" has the meaning set forth in
Section 13.04(a).
"Arbitration Payment Due Date" has the meaning set forth
in Section 14.03(a).
"Arbitration Proceeding" has the meaning set forth in
Section 14.01(a).
"Arbitration Tribunal" has the meaning set forth in
Appendix B.
"Arm's-Length Transaction" has the meaning set forth in
Section 8.11(a).
"Ashland Designated Sublease Agreements" shall mean the
Ashland Sublease Agreements attached as Exhibits L-1, L-2, L-3 and L-4 to
the Asset Transfer and Contribution Agreement.
"Ashland-Funded Capital Expenditures" has the meaning set
forth in Section 4.02(a).
"Audited Financial Statements" has the meaning set forth
in Section 7.02(c).
10
"Average Annual DD&A" means:
(a) for Fiscal Year 1998, the average of the Adjusted
DD&A for the three twelve-month periods ended December 31, 1995,
1996 and 1997;
(b) for Fiscal Year 1999, the average of the Adjusted
DD&A (i) for the two twelve-month periods ended December 31, 1996
and 1997 and (ii) for the one twelve-month period ended September
30, 1998;
(c) for Fiscal Year 2000, the average of the Adjusted
DD&A (i) for the twelve-month period ended December 31, 1997 and
(ii) for the two twelve-month periods ending on September 30, 1998
and 1999; and
(d) for Fiscal Year 2001 and each Fiscal Year thereafter,
the average of the Adjusted DD&A for the three twelve-month
periods ending on September 30 in each of the three Fiscal Years
immediately preceding such Fiscal Year.
"Average Adjusted EBITDA" means:
(a) for Fiscal Year 1998, the average of the Adjusted
EBITDA for the three twelve-month periods ended December 31, 1995,
1996 and 1997;
(b) for Fiscal Year 1999, the average of the Adjusted
EBITDA (i) for the two twelve-month periods ended December 31,
1996 and 1997 and (ii) for the one twelve-month period ended
September 30, 1998;
(c) for Fiscal Year 2000, the average of the Adjusted
EBITDA (i) for the twelve-month period ended December 31, 1997 and
(ii) for the two twelve-month periods ending on September 30, 1998
and 1999; and
(d) for Fiscal Year 2001 and each Fiscal Year thereafter,
the average of the Adjusted EBITDA for the three twelve-month
periods ending on September 30 in each of the three Fiscal Years
immediately preceding such Fiscal Year.
11
"Average Annual Level" means for any twelve-month period
ending on September 30 of any calendar year, the average of the level of
the Price Index ascertained by adding the twelve monthly levels of the
Price Index during such twelve-month period and dividing the total by
twelve.
"Bareboat Charters" has the meaning set forth in Section
9.3(k) of the Asset Transfer and Contribution Agreement.
"Base Level" means 161.2.
"Base Rate" has the meaning set forth in Section 1.01 of
the Put/Call, Registration Rights and Standstill Agreement.
"Board of Managers" has the meaning set forth in Section
8.02(a).
"Bulk Motor Oil Business" has the meaning set forth in
Section 14.03(h) of the Put/Call, Registration Rights and Standstill
Agreement.
"Business Plan" has the meaning set forth in Section 8.10.
"Capital Account" has the meaning set forth in Section 6.01.
"Capital Expenditures" means, for any period, the
aggregate of all expenditures incurred by the Company and its subsidiaries
during such period that, in accordance with Applicable GAAP, are or should
be included in "additions to property, plant or equipment" or similar items
reflected in the consolidated statement of cash flows of the Company and
its subsidiaries; provided, however, that Capital Expenditures shall not
include (a) exchanges of such items for other items, (b) expenditures of
proceeds of insurance settlements by the Company or any of its subsidiaries
in respect of lost, destroyed or damaged assets, equipment or other
property to the extent such expenditures are made to replace or repair such
lost, destroyed or damaged assets, equipment or other property within 18
months of such loss, destruction or damage, (c) funds expended by a Member
or an
12
Affiliate of a Member to purchase any Subleased Property that is
contributed to the Company or a subsidiary of the Company pursuant to
Section 4.01(c)(i)(A) or (d) Member-Funded Capital Expenditures; all as
determined on a consolidated basis with respect to the Company and its
subsidiaries in accordance with Applicable GAAP.
"Capital Lease" means any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for
as capital leases on a consolidated balance sheet of the Company and its
subsidiaries in accordance with Applicable GAAP.
"Closing Date Affiliate Transactions" has the meaning set
forth in Section 8.08(k)(i)(A).
"Company Independent Auditors" has the meaning set forth
in Section 7.01.
"Company Investment Guidelines" has the meaning set forth
in Section 8.15.
"Company Leverage Policy" has the meaning set forth in
Section 8.14.
"Competitive Business" has the meaning set forth in
Section 14.01(a) of the Put/Call, Registration Rights and Standstill
Agreement.
"Competitive Third Party" has the meaning set forth in
Section 14.01(d) of the Put/Call, Registration Rights and Standstill
Agreement.
"Contracting Member" has the meaning set forth in Section
8.11(b).
"Covered Person" means any Member, any Affiliate of a
Member or any officers, directors, shareholders, partners, employees,
representatives or agents of a Member or their respective Affiliates, or
any Representative, or any employee, officer or agent of the Company or its
Affiliates.
13
"Critical Decision" means each Primary Critical Decision
and each Other Critical Decision.
"Critical Decision Termination Date" means (a) in the
case of any Other Critical Decision, the first anniversary of the Closing
Date or (b) in the case of any Primary Critical Decision, the first
anniversary of the Closing Date or, if the Critical Decision Termination
Date shall be extended with respect to such Primary Critical Decision as
provided in Section 8.19(c), the fifteen-month anniversary of the Closing
Date.
"Crude Oil Purchases" means any purchase of crude oil by
the Company or any of its subsidiaries from Marathon or any Affiliate of
Marathon.
"Current GAAP" means, at any time, GAAP as in effect at
such time.
"Delinquent Member" has the meaning set forth in Section
14.01(a).
"Designated Sublease Agreements" means the Ashland
Designated Sublease Agreements and the Marathon Designated Sublease
Agreements.
"Designated Sublease Amount" means any obligation of a
Member to the Company or a subsidiary of the Company under Section 4.01(c)
with respect to a Subleased Property or a Designated Sublease Agreement.
"Dispute" has the meaning set forth in Section 13.01.
"Dispute Notice" has the meaning set forth in Section
13.02.
"Disputed Capital Contribution Amount" has the meaning
set forth in Section 13.04(a).
"Disputed Indemnification Amount" has the meaning set
forth in Section 14.01(a).
14
"Disputed Monetary Amount" has the meaning set forth in
Section 14.01(a).
"Distributable Cash" means, for each Fiscal Quarter,
without duplication:
(a) the Short-Term Investments of the Company and its
subsidiaries on the last day of such Fiscal Quarter, minus
(b) the Ordinary Course Debt of the Company and its
subsidiaries on the last day of such Fiscal Quarter, minus
(c) the Tax Distribution Amount to be paid in respect of
such Fiscal Quarter, minus
(d) funds held on the last day of such Fiscal Quarter for
financing Special Projects or Permitted Catlettsburg Capital
Projects, minus
(e) if the notional repayment of principal for Special
Project Indebtedness or Permitted Catlettsburg Capital Project
Indebtedness during such Fiscal Quarter 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 Catlettsburg Project
Indebtedness during such Fiscal Quarter, the amount of such
excess, plus
(f) if the amount of the actual principal repayments for
Special Project Indebtedness or Permitted Catlettsburg Capital
Project Indebtedness during such Fiscal Quarter was more than the
notional repayment of principal for such Special Project
Indebtedness or Permitted Catlettsburg Capital Project
Indebtedness during such Fiscal Quarter (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,
15
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).
"Distribution Date" has the meaning set forth in Section
5.01(a).
"Distributions Calculation Statement" has the meaning set
forth in Section 5.01(c).
"EBITDA" means for any period:
(a) net income, plus
(b) to the extent deducted in computing such net income,
the sum of (i) estimated or actual Federal, state, local and
foreign income tax expense, (ii) interest expense, (iii)
depreciation, depletion and amortization expense, (iv) non-cash
charges resulting from the cumulative effect of changes in
accounting principles, and (v) non-cash lower of cost or market
inventory or fixed asset writedowns; minus
(c) to the extent added in computing such net income, (i)
any interest income (excluding interest income on accounts
receivable related to marketing programs), (ii) non-cash gains
resulting from the cumulative effect of changes in accounting
principles and (iii) non-cash lower of cost or market inventory or
fixed asset gains;
all as determined on a consolidated basis (x) in the case of any period
ended prior to the Closing Date, Marathon and its subsidiaries or Ashland
and its subsidiaries, as applicable, or (y) in the case of any period
ending on or after the Closing Date, with respect to the Company and its
subsidiaries, in each case in accordance with then Current GAAP. For
purposes of this definition, depreciation, depletion and amortization
expense will include any gains (deductions from depreciation, depletion and
amortization) or losses (additions to depreciation, depletion and
amortization) on asset retirements and excess purchase price amortization
adjustments. For the avoidance of doubt,
16
EBITDA shall not include any revenues or expenses constituting
Member-Funded Capital Expenditures or Member-Indemnified Expenditures.
"Executive Officers" has the meaning set forth in Section
9.01(a).
"Final Monetary Amount" has the meaning set forth in
Section 14.03(a).
"Financed Properties" means each of the properties listed
in Schedule 1.01.
"Fiscal Quarter" means the three-month period ended March
31, June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" has the meaning set forth in Section 6.05.
"Fuelgas Interest" means the 1% interest in the Company
which is owned by Fuelgas.
"GAAP" means United States generally accepted accounting
principles applied on a consistent basis.
"Garyville Propylene Upgrade Project" means the propylene
splitter with a capacity of approximately 800 million pounds per year that
is being constructed at the Garyville refinery for the production of
propylene.
"Historical EBITDA" means for any period ending prior to
the Closing Date the sum of:
(a) EBITDA of the Marathon Business for such period as
adjusted for each of the "EBIT Adjustment" items set forth in
lines 10-55 of Schedule B-1 and each of the "Depreciation
Adjustment" items set forth in lines 133 through 150 of Schedule
B-1, in each case calculated for such period in the same manner
that such adjustments were calculated in Schedule B-1, plus
(b) EBITDA of the Ashland Business for such period as
adjusted for each of the "EBIT Adjustment"
17
items set forth in lines 11-56 of Schedule B-2 and each of the
"Depreciation Adjustment" items set forth in lines 111-120 of
Schedule B-2, in each case calculated for such period in the same
manner that such adjustments were calculated in Schedule B-2;
all determined on a consolidated basis with respect to Marathon and its
subsidiaries or Ashland and its subsidiaries, as applicable, in accordance
with then Current GAAP.
"Initial GAAP" has the meaning set forth in Section 1.02.
"Initial Term" has the meaning set forth in Section 2.03.
"Maralube Express Business" has the meaning set forth in
Section 14.03(d)(i) of the Put/Call, Registration Rights and Standstill
Agreement.
"Marathon Crude Oil Purchase Program" has the meaning set
forth in Section 8.12.
"Marathon Designated Sublease Agreements" shall mean the
Marathon Sublease Agreements attached as Exhibits E-1, E-2 and E-3 to the
Asset Transfer and Contribution Agreement.
"Marathon-Funded Capital Expenditures" has the meaning
set forth in Section 4.02(a).
"Material Adverse Effect" has the meaning set forth in
the Asset Transfer and Contribution Agreement.
"Member-Funded Capital Expenditures" has the meaning set
forth in Section 4.02(a).
"Member-Indemnified Expenditures" has the meaning set
forth in Section 4.02(b).
"Monetary Dispute" has the meaning set forth in Section
14.01(a).
18
"Non-Contracting Member" has the meaning set forth in
Section 8.11(b).
"Non-Delinquent Member" has the meaning set forth in
Section 14.01.
"Non-Terminating Member" has the meaning set forth in the
Put/Call, Registration Rights and Standstill Agreement.
"Normal Annual Capital Budget Amount" means, for each
Fiscal Year, an amount equal to the sum of:
(i) an amount equal to 130% of the Average Annual DD&A
for such Fiscal Year, plus
(ii) if, with respect to any Fiscal Year, (a) the Average
Adjusted EBITDA for such Fiscal Year less the amount calculated
pursuant to clause (i) above for such Fiscal Year exceeds (b) $240
million (such excess, the "Excess EBITDA" for such Fiscal Year),
the sum of (1) the lesser of: (x) 10% of the Average Annual DD&A
for such Fiscal Year and (y) the Excess EBITDA for such Fiscal
Year and (2) 50% of the amount by which the Excess EBITDA for such
Fiscal Year exceeds an amount equal to 10% of the Average Annual
DD&A for such Fiscal Year.
An example of the calculation of Adjusted DD&A, Adjusted EBITDA, Average
Annual DD&A, Average Adjusted EBITDA and the Normal Annual Capital Budget
Amount is shown in Schedule A. In the event of any inconsistency between
such Schedule A and the language of this definition of Normal Annual
Capital Budget Amount, neither shall control over the other.
"Offer Notice" has the meaning set forth in Section 10.04(a).
"Ordinary Course Debt" means, without duplication, the
aggregate outstanding principal amount of all loans and advances under any
committed or uncommitted credit facilities (including any commercial paper
borrowings or borrowings under the Revolving Credit Agreement, but
excluding trade payables), provided that Ordinary Course
19
Debt shall not include any Permitted Intercompany Debt, any Special Project
Indebtedness or any Permitted Catlettsburg Capital Project Indebtedness.
"Ordinary Course Lease Expense" means, with respect to
any Fiscal Year, the rental or lease expense for such Fiscal Year of assets
rented or financed by operating leases (as determined in accordance with
Applicable GAAP).
"Original Lease" means the lease or charter underlying a
Marathon Designated Sublease Agreement or an Ashland Designated Sublease
Agreement in which Marathon or Ashland, as applicable, is the lessee or
charterer.
"Other Critical Decision" means each of the Level III
decisions set forth in paragraphs 2(c)(iii), (v), (vii), (viii) and (ix) of
the Retail Integration Protocol.
"Packaged Motor Oil Business" has the meaning set forth
in Section 14.03(h) of the Put/Call, Registration Rights and Standstill
Agreement.
"Percentage Interest" has the meaning set forth in
Section 3.01.
"Permitted Catlettsburg Capital Project Indebtedness" has
the meaning set forth in the Company Leverage Policy.
"Permitted Catlettsburg Capital Projects" has the meaning
set forth in the Company Leverage Policy.
"Permitted Intercompany Debt" has the meaning set forth
in the Company Leverage Policy.
"Price Index" means the Consumer Price Index for All
Urban Consumers of the United States Department of Labor Bureau of Labor
Statistics for all Urban Areas (on the 1982-84 equals 100 standard).
"Primary Critical Decision" means each of the Level III
decisions set forth in paragraphs 2(c)(i), (ii), (iv) and (vi) of the
Retail Integration Protocol.
20
"Prime Rate" means the rate of interest per annum
publicly announced from time to time by Citibank, NA, as its prime rate in
effect at its principal office in New York; each change in the Prime Rate
shall be effective on the date such change is publicly announced as being
effective.
"Private Label Packaged Motor Oil Business" has the
meaning set forth in Section 14.03(h) of the Put/Call Registration Rights
and Standstill Agreement.
"Profit and Loss", as appropriate, means, for any period,
the taxable income or tax loss of the Company and its subsidiaries under
Code Section 703(a) and Treasury Regulation Section 1.703-1 for the Fiscal
Year, adjusted as follows:
(a) All items of income, gain, loss or deduction required
to be separately stated pursuant to Code Section 703(a)(1) shall
be included;
(b) Tax exempt income as described in Code Section
705(a)(1)(B) realized by the Company during such Fiscal Year shall
be taken into account as if it were taxable income;
(c) Expenditures of the Company described in Code Section
705(a)(2)(B) for such Fiscal Year, including items treated under
Treasury Regulation Section 1.704-1(b)(2)(iv)(i) as items
described in Code Section 705(a)(2)(B), shall be taken into
account as if they were deductible items;
(d) With respect to any property (other than money) which
has been contributed to the capital of the Company, "Profit" and
"Loss" shall be computed in accordance with the provisions of
Treasury Regulation Section 1.704-1(b)(2)(iv)(g) by computing
depreciation, amortization, income, gain, loss or deduction based
upon the fair market value of such property at the date of
contribution;
(e) With respect to any property of the Company which has
been revalued as required or permitted by Treasury Regulations
under Code Section 704(b),
21
"Profit" or "Loss" shall be determined based upon the fair market
value of such property as determined in such revaluation; and
(f) With respect to any property of the Company which (i)
is distributed in kind to a Member, or (ii) has been revalued
under Section 6.03 upon the occurrence of any event specified in
Treasury Regulation Section 1.704-1(b)(2)(iv)(f), the difference
between the adjusted basis for federal income tax purposes and the
fair market value shall be treated as gain or loss upon the
disposition of such property.
"Qualified Candidate" has the meaning set forth in Section
9.02(c).
"Quick Lube Business" has the meaning set forth in
Section 14.03(h) of the Put/Call, Registration Rights and Standstill
Agreement.
"Refundable Amount" has the meaning set forth in Section
14.03(d).
"Representatives" has the meaning set forth in Section 8.01
"Response" has the meaning set forth in Section 13.02.
"Retail Integration Protocol" means the Speedway
SuperAmerica LLC Retail Integration Protocol attached hereto as Exhibit A.
"Revolving Credit Agreement" has the meaning set forth in
Section 2.2(a) of the Master Formation Agreement.
"Section 8.11(b) Affiliate Transaction" has the meaning
set forth in Section 8.11(b).
"Security Interest" has the meaning set forth in Section
14.05(a).
"Selling Member" has the meaning set forth in Section
10.04(a).
22
"Senior Manager" has the meaning set forth in Section
13.02.
"Shared Service" means an administrative service that is
provided to the Company or its subsidiaries by Marathon, Ashland or any of
their respective Affiliates pursuant to the Shared Services Agreement or
provided to Marathon, Ashland or any of their respective Affiliates by the
Company or its subsidiaries pursuant to the Shared Services Agreement.
"Shared Services Agreement" means the Shared Services
Agreement by and among Marathon, Ashland and the Company, including the
Schedules thereto, attached as Exhibit U to the Asset Transfer and
Contribution Agreement.
"Short-Term Investments" means, without duplication,
collected or available bank cash balances, the fair market value of any
investment made by the Company or any of its subsidiaries pursuant to the
Company's Investment Guidelines and the fair market value of any investment
made by the Company or any of its subsidiaries that should have been made
pursuant to the Company's Investment Guidelines, but excluding Incidental
Cash and any cash balances that represent uncollected funds.
"Significant Shared Service" means (a) any Shared Service
related to the Treasury and Cash Management function and (b) any Shared
Service (or group of related Shared Services) that results or is reasonably
anticipated to result in the payment by or to the Company or any of its
subsidiaries of more than $2 million in any contract year in the period
during which such Shared Service will be provided. For purposes of
determining whether the $2 million threshold of this definition has been
satisfied, payments for all Shared Services in each of the following
general administrative areas shall be aggregated within each area specified
below and considered related Shared Services: Human Resources; Health,
Environment and Safety; Law; Public Affairs; Governmental Affairs; Finance
and Accounting (including Internal Audit); Administrative Services;
Information Technology Services; Procurement; Business Development;
Aviation; Engineering and Technology; Economics; and Security.
23
"Sole Arbitrator" has the meaning set forth in Appendix
B.
"Special Project" has the meaning set forth in the
Company Leverage Policy.
"Special Project Indebtedness" has the meaning set forth
in the Company Leverage Policy.
"Special Termination Right" has the meaning set forth in
Section 2.01(a) of the Put/Call, Registration Rights and Standstill
Agreement.
"Subleased Property" has the meaning set forth in Section
4.01(c).
"Super Majority Decision" has the meaning set forth in
Section 8.08.
"Surplus Cash" has the meaning assigned to such term in
the Company Leverage Policy.
"Tax Distribution Amount" has the meaning set forth in
Section 5.01(a).
"Tax Liability" means, with respect to a Fiscal Year, a
Member's liability for Federal, state, local and foreign taxes attributable
to taxable income allocated to such Member pursuant to Section 6.03 and
Section 10.03, taking into account any Tax deduction or loss specifically
allocated to a Member pursuant to this Agreement or any other Transaction
Document.
"Term of the Company" has the meaning set forth in
Section 2.03.
"Terminating Member" has the meaning set forth in Section
2.01(a) of the Put/Call, Registration Rights and Standstill Agreement.
"Unaudited Financial Statements" has the meaning set
forth in Section 7.02(a).
24
"Valvoline Business" has the meaning set forth in Section
14.03(h) of the Put/Call, Registration Rights and Standstill Agreement.
SECTION 1.02. Applicable GAAPSECTION 1.02. Applicable
GAAP. In connection with the calculation pursuant to this Agreement of
Adjusted DD&A, Capital Expenditures or Ordinary Course Lease Expenses, the
determination of whether a lease is a Capital Lease or the determination of
whether the Company has entered into an operating lease for purposes of
Section 8.16 (each such calculation or determination, an "Accounting
Determination"), the Company shall apply then Current GAAP; provided,
however, that if at any time after the date of this Agreement, a change
shall occur in GAAP which would result in any Accounting Determination
being different under Current GAAP than such Accounting Determination would
have been under GAAP as in effect on the date of this Agreement ("Initial
GAAP"), then (a) the Members shall negotiate in good faith to make such
amendments to the relevant provisions of this Agreement as shall be
required to preserve the economic and other results intended by the Members
as of the date of this Agreement with respect to such Accounting
Determination and (b) unless and until such time as the Members shall in
good faith mutually agree to such amendments, Initial GAAP shall be applied
to make such Accounting Determination or, if the Members shall have
previously amended the relevant provisions of this Agreement pursuant to
this Section 1.02 in response to a prior change in GAAP, then GAAP as in
effect at the time the most recent such previous amendment was made shall
be used to make such Accounting Determination (the GAAP that is actually
applied by the Company in making any such Accounting Determination pursuant
to this Agreement being the "Applicable GAAP").
ARTICLE II
General Provisions
SECTION 2.01. Formation; Effectiveness. The Company has
been formed as a limited liability company pursuant to the provisions of
the Delaware Act by the filing of the Certificate of Formation with the
Secretary of State of the State of Delaware. Pursuant to Section 18-201(d)
of
25
the Delaware Act, the provisions of this Agreement shall be effective as of
the Closing Date. Each Member hereby adopts, confirms and ratifies the
Certificate of Formation and all acts taken in connection therewith.
Ashland shall be admitted as a member of the Company upon its execution and
delivery of this Agreement. Except as provided in this Agreement, the
rights, duties, liabilities and powers of the Members shall be as provided
in the Delaware Act.
SECTION 2.02. Name. The name of the Company shall be
Marathon Ashland Petroleum LLC. The Board of Managers may adopt such trade
or fictitious names as it may determine.
SECTION 2.03. Term. Subject to the provisions of Article
XIV providing for early termination in certain circumstances and the
provisions of Article IX of the Put/Call, Registration Rights and
Standstill Agreement, the initial term of the Company (the "Initial Term")
began on the date the Certificate of Formation was filed with the Secretary
of State of the State of Delaware, and shall continue until the close of
business on December 31, 2022 and, thereafter, the term of the Company
shall be automatically extended for successive 10-year periods unless at
least two years prior to the end of the Initial Term or any succeeding
10-year period, as applicable, a Member notifies the Board of Managers and
the other Member in writing that it wants to terminate the term of the
Company at the end of the Initial Term or such 10-year period, in which
event, the term of the Company shall not thereafter be extended for a
successive ten-year term. The President of the Company shall notify each
Member in writing at least six months prior to each such two-year
notification date that the Term of the Company will be automatically
extended unless a Member provides a notice to the contrary pursuant to this
Section 2.03. The failure of the President of the Company to give such
notice, or any defect in any notice so given, shall not affect the Members'
rights to terminate the Term of the Company pursuant to this Section 2.03,
and shall not result in a termination of the Term of the Company unless a
Member provides a notice to the contrary pursuant to this Section 2.03. The
Initial Term, together with any such extensions, is hereinafter referred to
as the "Term of the Company". The existence of the Company as a separate
26
legal entity shall continue until the cancelation of the Certificate of
Formation in the manner provided in the Delaware Act.
SECTION 2.04. Registered Agent and Office. The name of
the registered agent of the Company for service of process on the Company
in the State of Delaware is The Corporation Trust Company, and the address
of the registered agent and the address of the office of the Company in the
State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801. The Board of Managers may change such office
and such agent from time to time in its sole discretion.
SECTION 2.05. Purpose. (a) The purpose of the Company is
to engage in any lawful act or activity for which a limited liability
company may be formed under the Delaware Act (either directly or indirectly
through one or more subsidiaries). It is the Members' understanding and
intent that (i) the Company will be an independent, self-funding entity,
(ii) no additional capital contributions are expected to be required by the
Members and (iii) the administrative requirements of the Company will
generally be provided by the Company's own employees. In furtherance of
this understanding and intent, and without limiting the generality of the
foregoing, unless the Members shall mutually agree otherwise, the following
administrative functions and services shall be provided substantially by
the Company and its subsidiaries' employees (or by its unaffiliated third
party contractors) under the supervision and control of the Company's
officers: Human Resources; Health, Environment and Safety; Law; Finance and
Accounting; Internal Audit; Treasury and Cash Management; and Information
Technology. For the avoidance of doubt, the Members acknowledge and agree
that the provision at any time of the specific Shared Services identified
and described in Schedule 10.2(e) to the Marathon Asset Transfer and
Contribution Agreement Disclosure Letter and Schedule 10.2(e) to the
Ashland Asset Transfer and Contribution Agreement Disclosure Letter to the
Company and its subsidiaries by the Members shall not be deemed to violate
the requirements of the immediately preceding sentence.
27
(b) The Company, and the President on behalf of the
Company, may enter into and perform the Transaction Documents and the
Commercial Documents to which the Company is a party without any further
act, vote or approval of the Board of Managers or the Members
notwithstanding any other provision of this Agreement, the Delaware Act or
other Applicable Law. The President of the Company is hereby authorized to
enter into such Transaction Documents and such Commercial Documents on
behalf of the Company, but such authorization shall not be deemed a
restriction on the power of the Board of Managers to enter into other
agreements on behalf of the Company.
SECTION 2.06. Powers. In furtherance of its purposes, but
subject to all the provisions of this Agreement, the Company shall have the
power and is hereby authorized to:
(a) acquire by purchase, lease, contribution of property
or otherwise, own, operate, hold, sell, convey, transfer or
dispose of any real or personal property which may be necessary,
convenient or incidental to the accomplishment of the purpose of
the Company;
(b) act as a trustee, executor, nominee, bailee,
director, officer, agent or in some other fiduciary capacity for
any person or entity and to exercise all the powers, duties,
rights and responsibilities associated therewith;
(c) take any and all actions necessary, convenient or
appropriate as trustee, executor, nominee, bailee, director,
officer, agent or other fiduciary, including the granting or
approval of waivers, consents or amendments of rights or powers
relating thereto and the execution of appropriate documents to
evidence such waivers, consents or amendments;
(d) borrow money and issue evidences of indebtedness in
furtherance of any or all of the purposes of the Company, and
secure the same by
28
mortgage, pledge or other lien on the assets of the Company;
(e) invest any funds of the Company pending distribution
or payment of the same pursuant to the provisions of this
Agreement;
(f) prepay in whole or in part, refinance, recast,
increase, modify or extend any Indebtedness of the Company and, in
connection therewith, execute any extensions, renewals or
modifications of any mortgage or security agreement securing such
Indebtedness;
(g) enter into, perform and carry out contracts of any
kind, including, without limitation, contracts with any person or
entity affiliated with any of the Members, necessary to, in
connection with, convenient to, or incidental to the
accomplishment of the purposes of the Company;
(h) employ or otherwise engage employees, managers,
contractors, advisors, attorneys and consultants and pay
reasonable compensation for such services;
(i) enter into partnerships, limited liability companies,
trusts, associations, corporations or other ventures with other
persons or entities in furtherance of the purposes of the Company;
and
(j) do such other things and engage in such other
activities related to the foregoing as may be necessary,
convenient or incidental to the conduct of the business of the
Company, and have and exercise all of the powers and rights
conferred upon limited liability companies formed pursuant to the
Delaware Act.
ARTICLE III
Members
SECTION 3.01. Members; Percentage Interests. The names
and addresses of the Members and their respective
29
percentage interests in the Company ("Percentage Interests") are as
follows:
Percentage
Members Interests
------- ----------
Marathon Oil Company 62%
5555 San Felipe
P.O. Box 3128
Houston, TX 77056-2723
Ashland Inc. 38%
P.O. Box 391
Ashland, KY 41114
Marathon's Percentage Interest shall be deemed to include the Fuelgas
Interest. Promptly after the Closing, Marathon will cause Fuelgas to merge
with and into Marathon.
SECTION 3.02. Adjustments in Percentage Interests.
Marathon's and Ashland's Percentage Interests, and the Percentage Interests
of each other Member, if any, shall be adjusted (a) at the time of any
Transfer of such Member's Membership Interests pursuant to Section 10.02
and (b) at the time of the admission of each new Member pursuant to such
terms and conditions as the Board of Managers from time to time shall
determine pursuant to a vote in accordance with Section 8.07(b), in each
case to take into account such Transfer or admission of a new Member.
ARTICLE IV
Capital Contributions;
Assumption of Assumed Liabilities
SECTION 4.01. Contributions. (a) On or before the Closing
Date, Marathon shall contribute, convey, transfer, assign and deliver to
the Company or shall have contributed, conveyed, transferred, assigned and
delivered to the Company, the Marathon Transferred Assets, and Ashland
shall contribute, convey, transfer, assign and deliver to the Company or
shall have contributed, conveyed, transferred, assigned and delivered to
the Company, the
30
Ashland Transferred Assets, in each case pursuant to terms and conditions
of the Asset Transfer and Contribution Agreement. In addition, any
additional assets that Marathon or Ashland are required to contribute,
convey, transfer, assign and deliver to the Company at a later date
pursuant to the terms and conditions of the Asset Transfer and Contribution
Agreement shall be so contributed at such later date.
(b) The Company shall assume, as of the Closing Date, the
Assumed Liabilities pursuant to the terms of the Asset Transfer and
Contribution Agreement.
(c) Payments or Damages under Designated Sublease
Agreements as Contributions. (i) Each Member has agreed, pursuant to the
Designated Sublease Agreements to which it is a party, to sublease to the
Company or one of its subsidiaries the assets or property listed on
Schedule 4.01(c) ("Subleased Property") for a nominal consideration in lieu
of transferring such property to the Company or such subsidiary, free of
any Liens, other than Permitted Encumbrances, as a capital contribution.
(A) If at any time after the date of this Agreement a
Member in its capacity as a sublessor shall become the owner of
any Subleased Property, such Member shall promptly contribute,
convey, transfer, assign and deliver to the Company (or, if the
Company so directs, to one of its subsidiaries) at no cost to the
Company or such subsidiary, and the Company hereby agrees to
accept, or to cause such subsidiary to accept, such Subleased
Property and the related Designated Sublease Agreement shall be
terminated with respect to such Subleased Property, all as more
specifically set forth in such Designated Sublease Agreement. In
addition, if at any time after the date of this Agreement a Member
assigns to the Company (or a subsidiary of the Company) a purchase
option with respect to a Subleased Property pursuant to a
Designated Sublease Agreement and the Company or such subsidiary
exercises such purchase option and pays all or a portion of the
purchase price therefor, such Member shall promptly reimburse the
Company or such subsidiary such amount so paid and, if not so
reimbursed, such amount shall be subject to
31
set-off pursuant to Section 14.04. Any such payment by the Company
shall be treated as a distribution to the appropriate Member for
capital account purposes, and any such amount paid to the Company
or such subsidiary by a Member in connection with such
reimbursement obligation, or to the extent of a set-off applied
pursuant to Section 14.04 as a result of such failure to so
reimburse, shall be treated as a capital contribution to the
Company.
(B) Any amount paid by the Company or any of its
subsidiaries under a Designated Sublease Agreement to cure or
prevent a payment default by the sublessor Member under the
underlying Original Lease shall be reimbursed to the Company or
such subsidiary by such Member, and if not so reimbursed, shall be
subject to set-off pursuant to Section 14.04. Any such payment by
the Company shall be treated as a distribution to the appropriate
Member for capital account purposes, and any such amount paid to
the Company or such subsidiary by a Member in connection with a
default of its payment obligations under its respective Designated
Sublease Agreements, or to the extent of a set-off applied
pursuant to Section 14.04 as a result of such default, shall be
treated as a capital contribution to the Company.
(C) None of the capital contributions pursuant to (A) and
(B) above shall result in any adjustment to the Members'
respective Percentage Interests in the Company.
(ii) If (A) a Member commences a voluntary case under any
applicable bankruptcy, insolvency, liquidation, receivership,
reorganization or other similar law now in effect, or an order for relief
is entered against such Member in an involuntary case under any such law
and (B) a trustee of such Member rejects a Designated Sublease Agreement of
such Member, then (1) the Member shall be obligated to reimburse the
Company for the Loss to the Company as a result of such rejected Designated
Sublease Agreement, which Loss, if not so reimbursed, shall be subject to
set-off pursuant to Section 14.04 prior to the interest of such Member in
any distributions hereunder and
32
(2) the amount of such Loss shall be deemed to be the loss of use of such
Subleased Property for the economic life thereof rather than any other
period.
SECTION 4.02. Additional Contributions. (a) Member-Funded
Capital Expenditures. For each Capital Expenditure project identified on
Schedule 4.02(a)-1, Marathon shall contribute to the Company the amount of
funds necessary to comply with its obligations under Section 7.1(j) of the
Asset Transfer and Contribution Agreement with respect to such Capital
Expenditure project as, when and if the Company actually incurs Capital
Expenditures related to such Capital Expenditure project (such Capital
Expenditures, as, when and if they are funded by Marathon, are referred to
herein as the "Marathon-Funded Capital Expenditures"). For each Capital
Expenditure project identified on Schedule 4.02(a)-2, Ashland shall
contribute to the Company the amount of funds necessary to comply with its
obligations under Section 7.2(k) of the Asset Transfer and Contribution
Agreement with respect to such Capital Expenditure project as, when and if
the Company actually incurs Capital Expenditures related to such Capital
Expenditure project (such Capital Expenditures, as, when and if they are
funded by Ashland, are referred to herein as the "Ashland-Funded Capital
Expenditures", and together with the Marathon-Funded Capital Expenditures,
the "Member-Funded Capital Expenditures"). Each Member-Funded Capital
Expenditure shall be treated as a capital contribution to the Company, but
shall not result in any adjustment to the Members' respective Percentage
Interests in the Company. To the extent permitted by applicable Tax law,
any Tax deduction by the Company of a Member-Funded Capital Expenditure
shall be specially allocated so that each Member will have the Tax benefit
of its Member-Funded Capital Expenditures.
(b) Indemnification Payments as Contributions. Any
indemnity amount paid by Marathon or Ashland to the Company under Article
IX of the Asset Transfer and Contribution Agreement (each a
"Member-Indemnified Expenditure") shall be treated as a capital
contribution to the Company, but shall not result in any adjustment to the
Members' respective Percentage Interests in the Company. A determination of
whether the associated Loss will be deducted or capitalized by the Company
for Tax purposes
33
shall be made by the Company at the direction of the Indemnifying Party.
Any Tax deduction or loss claimed by the Company with respect to the
indemnified amount shall be specially allocated to the Indemnifying Party.
(c) Other Additional Capital Contributions. The Members
shall make other additional capital contributions ("Agreed Additional
Capital Contributions") pro rata based on their respective Percentage
Interests if and to the extent such capital contributions are approved by
the Board of Managers pursuant to a vote in accordance with Section
8.07(b).
(d) No Third-Party Beneficiaries. The provisions of this
Agreement, including without limitation, this Section 4.02, are intended
solely to benefit the Members and, to the fullest extent permitted by
Applicable Law, shall not be construed as conferring any benefit upon any
creditor of the Company other than the Members, and no such creditor of the
Company other than the Members shall be a third-party beneficiary of this
Agreement, and no Member or member of the Board of Managers shall have any
duty or obligation to any creditor of the Company to issue any call for
capital pursuant to this Agreement.
SECTION 4.03. Negative Balances; Withdrawal of Capital;
Interest. Neither of the Members shall have any obligation to the Company
or to the other Member to restore any negative balance in its Capital
Account. Neither Member may withdraw capital or receive any distributions
from the Company except as specifically provided herein. No interest shall
be paid by the Company on any capital contributions.
ARTICLE V
Distributions
SECTION 5.01. Distributions. (a) Within 45 days after the
end of each Fiscal Quarter, the Company shall
34
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 Fiscal Quarter 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 receive less than its Tax Liability.
(iii) In the event that the Tax Liability with respect to
a Fiscal Quarter, determined pursuant to clause (i) above, is
negative with respect to each Member, such negative Tax Liability
shall not give rise to a payment obligation on the part of either
Member, but shall be carried forward and shall offset the positive
Tax Liability of the Members in succeeding Fiscal Quarters.
(iv) Following a determination by the Company of the
Company's actual net taxable income with respect to a Fiscal Year,
the maximum Tax Liability of each Member with respect to its
allocable portion (as provided in Section 6.03) of the Company's
net taxable income for such Fiscal Year shall be determined, based
upon the Aggregate Tax Rate. If the maximum Tax Liability of any
Member for the Fiscal Year is in excess of the cash distributions
previously made to the Member for such Fiscal Year under clause
(ii) above and subsection (b) below, the Company shall make a cash
distribution to all the Members, in accordance with their
Percentage
35
Interests, of an aggregate amount such that the excess is
eliminated for all the Members. Such distribution shall be made
within 45 days of the date the Company's actual net taxable income
is determined.
(v) In the event that the Company Independent Auditors
determine pursuant to Section 7.02(d) that the Company's actual
net taxable income with respect to a Fiscal Year is greater than
the amount determined by the Company pursuant to clause (iv)
above, the Company shall make a determination of the amount of
cash, if any, required to be distributed to the Members, in
accordance with their Percentage Interests, such that, after
taking into account cash distributions previously made to a Member
under clause (ii) above and subsection (b) below, no Member shall
receive less than its Tax Liability for such Fiscal Year based on
such higher net taxable income amount. The Company shall, within
15 days after the determination is made, distribute such
additional amount of cash to the Members, in accordance with their
Percentage Interests.
(vi) In the event that the Company Independent Auditors
determine pursuant to Section 7.02(d) that the Company's actual
net taxable income with respect to a Fiscal Year is less than the
amount determined by the Company pursuant to clause (iv) above, a
determination shall be made of the excess Tax Distribution Amount
that was distributed to the Members in respect of such Fiscal Year
based on the Company's determination of its actual net taxable
income and the Company shall deduct from the next Tax Distribution
Amount payable to the Members pursuant to this Section 5.01, the
amount of such excess distribution.
(b) In addition to the distributions pursuant to Section
5.01(a), on each Distribution Date, the Company shall distribute to the
Members all Distributable Cash for the Fiscal Quarter to which such
Distribution Date relates. Subject to Section 5.02(b), each such
distribution shall be allocated between the Members pro rata based upon
their respective Percentage Interests.
36
(c) The Company shall prepare and distribute to each
Member within 45 days after the end of each Fiscal Quarter a statement (a
"Distributions Calculation Statement") setting forth the calculations (in
reasonable detail) used by the Company for purposes of distributions
pursuant to this Section 5.01 of (i) the Tax Distribution Amount for each
Member for such Fiscal Quarter, (ii) the amount of Distributable Cash for
such Fiscal Quarter and (iii) the allocation of such Distributable Cash
between the Members.
SECTION 5.02. Certain General Limitations. (a)
Notwithstanding any provision to the contrary contained in this Agreement,
the Company, and the Board of Managers on behalf of the Company, shall not
be required to make a distribution to either Member with respect to such
Member's Membership Interests if such distribution would violate Section
18-607 of the Delaware Act or other applicable law.
(b) Notwithstanding any other provision of this Article
V, all amounts distributed to the Members in connection with a dissolution
of the Company or the sale or other disposition of all or substantially all
the assets of the Company that results in a dissolution of the Company
shall be distributed to the Members in accordance with their respective
Capital Account balances, as adjusted pursuant to Article VI for all
Company operations up to and including the date of such distribution.
SECTION 5.03. Distributions in Kind. The Company shall
not distribute to the Members any assets in kind unless approved by the
Board of Managers pursuant to a vote in accordance with Section 8.07(b). If
cash and property in kind are to be distributed simultaneously, the Company
shall distribute such cash and property in kind in the same proportion to
each Member, unless otherwise approved by the Board of Managers pursuant to
a vote in accordance with Section 8.07(b). For purposes of determining
amounts distributable to Members under Section 5.01, for purposes of
determining Profit and Loss under Section 1.01, for purposes of making
adjustments to Capital Accounts under Article VI and for purposes of
allocations under Article VI, any property to be distributed in kind shall
have the value assigned to such property by the Board of Managers pursuant
37
to a vote in accordance with Section 8.07(b) and such value shall be deemed
to be part of and included in Distributable Cash for purposes of
determining distributions to the Members under this Agreement.
SECTION 5.04. Distributions in the Event of an Exercise
of the Marathon Call Right, Ashland Put Right or the Special Termination
Rights. In the event of an exercise by Marathon of its Marathon Call Right
or its Special Termination Right or the exercise by Ashland of its Ashland
Put Right or its Special Termination Right pursuant to the Put/Call,
Registration Rights and Standstill Agreement, certain distributions to
Ashland or Marathon, as applicable, will be suspended in accordance with
the provisions of Section 5.01 thereof.
ARTICLE VI
Allocations and Other Tax Matters
SECTION 6.01. Maintenance of Capital Accounts. An account
(a "Capital Account") shall be established and maintained in the Company's
books for each Member in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv) and to which the following provisions apply to the extent
not inconsistent with such Regulation:
(a) There shall be credited to each Member's Capital
Account (i) the amount of money contributed by such Member to the
Company (including liabilities of the Company assumed by such
Member as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(c)), (ii) the fair market value of any property
contributed by the Member to the Company (net of liabilities
secured by such contributed property that the Company is
considered to assume or take subject to under Code Section 752),
and (iii) such Member's share of the Company's Profit;
(b) There shall be debited from each Member's Capital
Account (i) the amount of money distributed to such Member by the
Company (including liabilities of
38
such Member assumed by the Company as provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(c)) other than amounts which
are in repayment of debt obligations of the Company to such
Member, (ii) the fair market value of property distributed to such
Member (net of liabilities secured by such property that such
Member is considered to assume or take subject to under Code
Section 752), and (iii) such Member's share of the Company's Loss;
(c) To each Member's Capital Account there shall be
credited, in the case of an increase, or debited, in the case of a
decrease, such Member's share of any adjustment to the adjusted
basis of Company assets pursuant to Code Section 734(b) or Code
Section 743(b) to the extent provided by Treasury Regulation
Section 1.704-(b)(2)(iv)(m); and
(d) Upon the transfer of all or any part of the
Membership Interests of a Member, the Capital Account of the
transferee Member shall include the portion of the Capital Account
of the transferor Member attributable to such transferred
Membership Interest (or portion thereof).
SECTION 6.02. Allocation of Profit and Loss. (a) Except
as provided in Section 6.02(b), Profit or Loss for any Fiscal Year shall be
allocated between the Members in proportion to their respective Percentage
Interests.
(b) To the extent any Tax deduction or loss is
specifically allocated to a Member pursuant to this Agreement (other than
pursuant to Section 6.03) or any other Transaction Document, including any
deduction or loss indemnified by a Member, any Member-Funded Capital
Expenditure, any Member-Indemnified Expenditure and any special allocations
pursuant to Sections 6.12, 6.13 and 6.14, the associated Profit and Loss
shall be allocated to the same Member.
SECTION 6.03. Tax Allocations. For income tax purposes
only, each item of income, gain, loss, deduction and credit of the Company
shall be allocated between the Members in accordance with their respective
shares of Profit
39
and Loss, subject to the rules of Section 704(c)(1)(A) of the Code and the
Treasury Regulations promulgated thereunder. The allocation of income,
gain, loss and deduction with respect to property contributed by a Member
to the Company shall be pursuant to the method set forth in Treasury
Regulation Section 1.704-3(c) (traditional method with curative
allocations), with book depreciation (as that term is used in Treasury
Regulation Section 1.704-1(b)(2)(iv)(g)(3)) for assets fully depreciated
for federal income tax purposes based on the applicable recovery period (as
determined in Code Section 168(c)) for new assets of the same type. Any
other elections or other decisions relating to allocations under this
Section 6.03, including the determination of the fair market value of
contributed property and the decision to adjust the Capital Accounts to
reflect the fair market value of the Company's assets upon the occurrence
of any event specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
shall be made jointly by the Members in any manner that reasonably reflects
the purpose and intention of this Agreement. Items described in this
Section 6.03 shall neither be credited nor charged to the Members' Capital
Accounts.
SECTION 6.04. Entity Classification. The Members intend
that the Company be treated as a partnership for Federal income tax
purposes. Accordingly, neither the Tax Matters Partner nor either Member
shall file any election or return on its own behalf or on behalf of the
Company that is inconsistent with that intent.
SECTION 6.05. Fiscal Year. The fiscal year (the "Fiscal
Year") of the Company for tax and accounting purposes shall be the 12-month
(or shorter) period ending on the last day of December of each year.
SECTION 6.06. Tax Returns. (a) The Company shall cause to
be prepared and timely filed all Federal, state, local and foreign income
tax returns and reports required to be filed by the Company and its
subsidiaries. The Company shall provide copies of all the Company's
Federal, state, local and foreign tax returns (and any schedules or other
required filings related to such returns) that reflect items of income,
gain, deduction, loss or credit that flow to separate Member returns, to
the Members
40
for their review and comment prior to filing, except as otherwise agreed by
the Members. The Members agree in good faith to resolve any difference in
the tax treatment of any item affecting such returns and schedules.
However, if the Members are unable to resolve the dispute, the position of
the Tax Matters Partner shall be followed if nationally recognized tax
counsel acceptable to both Members provides an opinion that substantial
authority exists for such position. Substantial authority shall be given
the meaning ascribed to it in Code Section 6662. If the Members are unable
to resolve the dispute prior to the due date for filing the return,
including approved extensions, the position of the Tax Matters Partner
shall be followed, and amended returns shall be filed if necessary at such
time the dispute is resolved. The costs of the dispute shall be borne by
the Company. The Members agree to file their separate Federal income tax
returns in a manner consistent with the Company's return, the provisions of
this Agreement and in accordance with applicable Federal income tax law.
(b) The Company shall elect the most rapid method of
depreciation and amortization allowed under Applicable Law, unless the
Members agree otherwise. The failure of either Member to agree that the
Company should elect a less rapid method of depreciation or amortization is
not subject to any dispute resolution provisions.
(c) The Members shall provide each other with copies of
all correspondence or summaries of other communications with the Internal
Revenue Service or any state, local or foreign taxing authority (other than
routine correspondence and communications) regarding the tax treatment of
the Company's operations. No Member shall enter into settlement
negotiations with the Internal Revenue Service or any state, local or
foreign taxing authority with respect to any issue concerning the Company's
income, gains, losses, deductions or credits if the tax adjustment
attributable to such issue (assuming the then current Aggregate Tax Rate)
would be $2 million or greater, without first giving reasonable advance
notice of such intended action to the other Member.
SECTION 6.07. Tax Matters Partner. (a) Initially,
Marathon shall be the "Tax Matters Partner"
41
of the Company within the meaning of Section 6231(a)(7) of the Code, and
shall act in any similar capacity under state, local or foreign law, but
only with respect to returns for which items of income, gain, loss,
deduction or credit flow to the separate returns of the Members. In the
event of a transfer of any Member's interest in the Company, the Tax
Matters Partner shall be the Member with the largest Percentage Interest
following such transfer.
(b) The Tax Matters Partner shall incur no liability
(except as a result of the gross negligence or willful misconduct of the
Tax Matters Partner) to the other Member including, but not limited to,
liability for any additional taxes, interest or penalties owed by the other
Member due to adjustments of Company items of income, gain, loss, deduction
or credit at the Company level.
SECTION 6.08. Duties of Tax Matters Partner. (a) Except
as provided in Section 6.08(b), the Tax Matters Partner shall cooperate
with the other Member and shall promptly provide the other Member with
copies of notices or other materials from, and inform the other Member of
discussions engaged in with, the Internal Revenue Service or any state,
local or foreign taxing authority and shall provide the other Member with
notice of all scheduled administrative proceedings, including meetings with
agents of the Internal Revenue Service or any state, local or foreign
taxing authority, technical advice conferences, appellate hearings, and
similar conferences and hearings, as soon as possible after receiving
notice of the scheduling of such proceedings, but in any case prior to the
date of such scheduled proceedings.
(b) The duties of the Tax Matters Partner under Section
6.08(a) shall not apply with respect to notices, materials, discussions,
proceedings, meetings, conferences, or hearings involving any issue
concerning the Company's income, gains, losses, deductions or credits if
the tax adjustment attributable to such issue (assuming the then current
Aggregate Tax Rate) would be less than $2 million except as otherwise
required under Applicable Law.
(c) The Tax Matters Partner shall not extend the period
of limitations or assessments without the consent of
42
the other Member, which consent shall not be unreasonably withheld.
(d) The Tax Matters Partner shall not file a petition or
complaint in any court, or file any claim, amended return or request for an
administrative adjustment with respect to partnership items, after any
return has been filed, with respect to any issue concerning the Company's
income, gains, losses, deductions or credits if the tax adjustment
attributable to such issue (assuming the then current Aggregate Tax Rate)
would be $2 million or greater, unless agreed by the other Member. If the
other Member does not agree, the position of the Tax Matters Partner shall
be followed if nationally recognized tax counsel acceptable to both Members
issues an opinion that a reasonable basis exists for such position.
Reasonable basis shall be given the meaning ascribed to it for purposes of
applying Code Section 6662. The costs of the dispute shall be borne by the
Company.
(e) The Tax Matters Partner shall not enter into any
settlement agreement with the Internal Revenue Service or any state, local
or foreign taxing authority, either before or after any audit of the
applicable return is completed, with respect to any issue concerning the
Company's income, gains, losses, deductions or credits, unless any of the
following apply:
(i) both Members agree to the settlement;
(ii) the tax effect of the issue if resolved adversely would be,
and the tax effect of settling the issue is, proportionately the same for
both Members (assuming each otherwise has substantial taxable income);
(iii) the Tax Matters Partner determines that the settlement of
the issue is fair to both Members and the amount of the tax adjustment
attributable to such issue (assuming the then current Aggregate Tax Rate)
would be less than $2 million; or
(iv) nationally recognized tax counsel acceptable to both Members
determines that the settlement is fair to both Members and is one it would
recommend to the Company if both
43
Members were owned by the same person and each had substantial taxable
income.
In all events, the costs incurred by the Tax Matters Partner in performing
its duties hereunder shall be borne by the Company in accordance with the
Shared Services Agreement.
(f) The Tax Matters Partner may request extensions to
file any tax return or statement without the written consent of, but shall
so inform, the other Member.
SECTION 6.09. Survival of Provisions. The provisions of
this Agreement regarding the Company's tax returns and Tax Matters Partner
shall survive the termination of the Company and the transfer of any
Member's interest in the Company and shall remain in effect for the period
of time necessary to resolve any and all matters regarding the federal,
state, local and foreign taxation of the Company and items of Company
income, gain, loss, deduction and credit.
SECTION 6.10. Section 754 Election. In the event that a
Member purchases the Membership Interests of a Selling Member pursuant to
Section 10.04, the purchasing Member shall have the right to direct the Tax
Matters Partner to make an election under Section 754 of the Code. The
purchasing Member shall pay all costs incurred by the Company in connection
with such election, including any costs borne by the Company to maintain
records required as a result of such election. The purchasing Member, at
its option and expense, may maintain on behalf of the Company any records
required as a result of such election.
SECTION 6.11. Qualified Income Offset, Minimum Gain
Chargeback. Notwithstanding anything to the contrary in this Agreement,
there is hereby incorporated a qualified income offset provision which
complies with Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and minimum
gain chargeback and partner minimum gain chargeback provisions which comply
with the requirements of Treasury Regulation Section 1.704-2 and such
provisions shall apply to the allocation of Profits and Losses.
44
SECTION 6.12. Tax Treatment of Designated Sublease
Agreements. (a) For purposes of Article VI, Ashland or Marathon, as the
case may be, shall be treated as transferring to the Company all of its
interest in Subleased Property pursuant to an Ashland Designated Sublease
Agreement or a Marathon Designated Sublease Agreement, as if the leasehold
interest in such Subleased Property was an Ashland Transferred Asset or a
Marathon Transferred Asset.
(b) Payments under the Original Lease made by Ashland or
Marathon, as the case may be, after the effective date of the Ashland
Designated Sublease Agreement or Marathon Designated Sublease Agreement, as
the case may be, shall be treated as made by the Company or its
subsidiaries, and then immediately reimbursed by Ashland or Marathon, as
the case may be.
(c) All items of loss, deduction and credit attributable
to payments under the Original Lease made by Ashland or Marathon, as the
case may be, including payments by the Company or any of its subsidiaries
that are charged to Ashland or Marathon by set-off or other means, shall be
allocated entirely to the Member incurring such payments.
(d) Depreciation and amortization deductions, if any, as
well as any deductions or offsets to taxable income or gain, attributable
to property described in the Ashland Designated Sublease Agreements or the
Marathon Designated Sublease Agreements, as the case may be, shall be
allocated entirely to Ashland or Marathon, as the case may be, except to
the extent such deductions or offsets are attributable to amounts paid by
the Company or any of its subsidiaries and not reimbursed by Ashland or
Marathon, as the case may be, either directly or indirectly.
SECTION 6.13. Tax Treatment of Reimbursed Liability
Payments. Any tax deduction or loss attributable to payments by the Company
or any of its subsidiaries of Assumed Liabilities, as described in
Schedules 2.3(d) and 3.3(d) to the Asset Transfer and Contribution
Agreement, that are reimbursed by a Member either directly or indirectly,
shall be allocated entirely to such Member.
45
SECTION 6.14. Tax Treatment of Disproportionate Payments.
Except as otherwise provided in this Agreement or in any other Transaction
Document, any Tax deduction or loss reflected on a Tax return, report or
other Tax filing by the Company, attributable to (i) payments made or costs
incurred by a Member, (ii) payments made or costs incurred by the Company
and reimbursed or to be reimbursed by a Member and (iii) payments made or
costs incurred by the Company and not shared among the Members based on
their Percentage Interests, shall be allocated among the Members to take
into account the amounts paid, incurred, reimbursed or shared by each.
ARTICLE VII
Books and Records
SECTION 7.01. Books and Records; Examination. The Board
of Managers shall keep or cause to be kept such books of account and
records with respect to the Company's business as they may deem
appropriate. Each Member and its duly authorized representatives shall have
the right at any time to examine, or to appoint independent certified
public accountants (the fees of which shall be paid by such Member) to
examine, the books, records and accounts of the Company and its
subsidiaries, their operations and all other matters that such Member may
wish to examine, including, without limitation, all documentation relating
to actual or proposed transactions with either Member or any Affiliate of
either Member. The Company, and the Board of Managers, shall not have the
right to keep confidential from the Members any information that the Board
of Managers would otherwise be permitted to keep confidential from the
Members pursuant to Section 18-305(c) of the Delaware Act. The Company's
books of account shall be kept using the method of accounting determined by
the Board of Managers. The Company Independent Auditors (the "Company
Independent Auditors") shall be an independent public accounting firm
selected by the Board of Managers pursuant to a vote in accordance with
Section 8.07(b) or Section 8.07(c), as applicable, and shall initially be
Price Waterhouse LLP.
46
SECTION 7.02. Financial Statements and Reports. (a)
Unaudited Monthly Financial Statements. (i) The Company shall prepare and
send to each Member (at the same time) promptly, but in no event later than
noon on the 15th Business Day after the last day of each month, the
following unaudited financial statements with respect to the Company and
its subsidiaries: a balance sheet, a statement of operations, a statement
of cash flows and a statement of changes in capital (collectively,
"Unaudited Financial Statements") as at the end of and for such month.
(ii) The Company shall prepare and send to each Member
promptly, but in no event later than noon on the 20th Business Day after
the last day of each month, an unaudited financial summary booklet
containing a breakdown of such operating and financial information by major
department or division of the Company and its subsidiaries as at the end of
and for such month as either Member shall reasonably request; provided that
each Member shall be provided with the same information at the same time as
the other Member.
(b) Unaudited Quarterly Financial Statements. The Company
shall prepare and send to each Member (at the same time) promptly, but in
no event later than the 30th day after the last day of each Fiscal Quarter,
(i) Unaudited Financial Statements as at the end of and for such Fiscal
Quarter; (ii) a management's discussion and analysis of financial condition
and results of operations section prepared in accordance with Rule 303 of
Regulation S-K of the Securities Act with respect to such Fiscal Quarter;
and (iii) an unaudited statement of changes in the Members' capital
accounts as at the end of and for such Fiscal Quarter.
(c) Audited Annual Financial Statements. Within 75 days
after the end of each Fiscal Year, the Board of Managers shall cause (i) an
examination to be made, at the expense of the Company, by the Company
Independent Auditors, covering (A) the assets, liabilities and capital of
the Company and its subsidiaries, and the Company's and its subsidiaries'
operations during such Fiscal Year, (B) an examination of the Distributions
Calculation Statement for such Fiscal Year, and (C) all other matters
customarily included in such examinations and (ii) to be delivered to
47
each Member (at the same time) a copy of the report of such examination,
stating that such examination has been performed in accordance with
generally accepted auditing standards, together with (1) the following
financial statements with respect to the Company and its subsidiaries
certified by such accountants as having been prepared in accordance with
GAAP: a balance sheet, a statement of operations, a statement of cash flows
and a statement of changes in capital as at the end of and for such Fiscal
Year (collectively, the "Audited Financial Statements") and (2) a
management's discussion and analysis of financial condition and results of
operations section prepared in accordance with Rule 303 of Regulation S-K
of the Securities Act with respect to such Fiscal Year. The Company shall
prepare the Audited Financial Statements in such manner and form as is
necessary to enable Ashland to file such Audited Financial Statements with
the Commission in accordance with Item 3-09 of Regulation S-X under the
Exchange Act.
(d) Schedule of Members' Capital Accounts. (i)
Preliminary Annual Capital Account Schedule. The Company shall prepare and
send to each Member (at the same time) promptly, but in no event later than
the 75th day after the last day of each Fiscal Year, a schedule showing the
respective Capital Accounts of the Members based on the Company's estimated
taxable income for such Fiscal Year.
(ii) Examination. Within 15 days after the date the
Company determines its net taxable income with respect to any Fiscal Year,
but in no event later than 7 months after the end of such Fiscal Year, the
Board of Managers shall cause (i) an examination to be made, at the expense
of the Company, by the Company Independent Auditors, covering (A) the
determination of the Company's taxable income with respect to such Fiscal
Year and (B) the respective Capital Accounts of the Members based on the
Company's taxable income for such Fiscal Year and (ii) to be delivered to
each Member (at the same time) a copy of the report of such examination,
stating that such examination has been performed in accordance with
generally accepting auditing standards.
(iii) Final Annual Capital Account Schedule. The Company
shall prepare and send to each Member (at the same
48
time) promptly, but in no event later than the 15th day after the date the
Company files its federal income tax return with respect to each Fiscal
Year, a schedule showing the respective Capital Accounts of the Members
based on the Company's actual taxable income for such Fiscal Year.
(e) Other Financial Information. The Company shall
prepare and send to each Member (at the same time) promptly such other
financial information as a Member shall from time to time reasonably
request.
SECTION 7.03. Notice of Affiliate Transactions; Annual
List. (a) (i) The Company shall notify each Member of any Affiliate
Transaction (other than an Affiliate Transaction that is a Significant
Shared Service) that the Company or any of its subsidiaries is considering
entering into or renewing or extending the term thereof (whether pursuant
to contractual provisions thereof or otherwise), which notice shall be
given, to the extent reasonably possible, sufficiently in advance of the
time that the Company intends to enter into, renew or extend the term of
such Affiliate Transaction so as to provide the Members with a reasonable
opportunity to examine the documentation related to such Affiliate
Transaction.
(ii) The Company shall notify each Member of any
Affiliate Transaction that is a Significant Shared Service that the Company
or any of its subsidiaries is considering entering into or renewing or
extending the term thereof (whether pursuant to contractual provisions
thereof or otherwise), which notice shall be given, to the extent
reasonably possible, sufficiently in advance of the time that the Company
intends to enter into, renew or extend the term of such Affiliate
Transaction so as to provide the Members with a reasonable opportunity to
examine the documentation related to such Affiliate Transaction.
(b) Within 60 days after the end of each Fiscal Year, the
Company shall prepare and distribute to each Member a list setting forth a
description of each Affiliate Transaction entered into by the Company or
any of its subsidiaries during such Fiscal Year and identifying all of the
parties to such Affiliate Transactions; provided that if two or more
Affiliate Transactions either (i) constitute a
49
series of related transactions or agreements or (ii) are substantially the
same type of transaction or agreement, the Company need not separately
describe each such Affiliate Transaction but instead can describe such
related or similar Affiliated Transactions as a group.
ARTICLE VIII
Management of the Company
SECTION 8.01. Managing Members. The business and affairs
of the Company shall be managed by the Members acting through their
respective representatives on the Board of Managers ("Representatives").
The President and the Representatives shall be deemed "managers" of the
Company within the meaning of the Delaware Act. Except for such matters as
may be delegated to a Member from time to time by the Board of Managers
pursuant to a vote in accordance with Section 8.07(b), and subject to the
provisions of Sections 6.07 and 6.08, no Member shall act unilaterally on
behalf of the Company or any of its subsidiaries without the approval of
the other Member and no Member shall have the power unilaterally to bind
the Company or any of its subsidiaries.
SECTION 8.02. Board of Managers. (a) The Members shall
exercise their management authority through a board of managers (the "Board
of Managers") consisting of (i) the President of the Company, who shall not
be deemed a Representative hereunder and who shall not be entitled to vote
on any matter coming before the Board of Managers, and (ii) five
Representatives, each of whom shall be entitled to vote, three of whom
shall be designated by Marathon and two of whom shall be designated by
Ashland. In the event of a Transfer by a Member of its Membership Interests
pursuant to Article X, effective at the time of such Transfer, (i) such
Member's Representatives shall automatically be removed from the Board of
Managers and (ii) the transferee of such Membership Interests shall be
permitted to designate the number of Representatives to the Board of
Managers as is equal to the number previously designated by the transferor
of such Membership Interests. Such transferee shall promptly notify the
other Member as to the names of the
50
persons who such transferee has designated as its Representatives on the
Board of Managers.
(b) Each Representative may be removed and replaced, with
or without cause, at any time by the Member designating him or her, but,
except as provided in Section 8.02(a), may not be removed or replaced by
any other means. A Member who removes one or more of its Representatives
from the Board of Managers shall promptly notify the other Member as to the
names of its replacement Representatives.
SECTION 8.03. Responsibility of the Board of Managers.
The Board of Managers shall be responsible for overseeing the operations of
the Company and shall, in particular, have sole jurisdiction to approve
each of the following matters:
(i) hiring senior executives of the Company, evaluating
their performance and planning for their succession;
(ii) reviewing and approving Company strategies, Business
Plans and Annual Capital Budgets;
(iii) reviewing and approving significant external
business opportunities for the Company, including acquisitions,
mergers and divestitures;
(iv) reviewing and approving policies of the Company that
maintain high standards in areas of environmental responsibility,
employee safety and health, community, government, employee and
customer relations;
(v) reviewing external and internal audits and management
responses thereto; and
(vi) establishing compensation and benefits policies for
employees of the Company.
SECTION 8.04. Meetings. (a) Except as set forth in
Section 8.04(h), all actions of the Board of Managers
51
shall be taken at meetings of the Board of Managers in accordance with this
Section 8.04.
(b) As soon as practicable after the appointment of the
Representatives, the Board of Managers shall meet for the purpose of
organization and the transaction of other business.
(c) Regular meetings of the Board of Managers shall be
held at such times as the Board of Managers shall from time to time
determine, but no less frequently than once each Fiscal Quarter; provided
that an annual meeting of the Board of Managers (which annual meeting shall
count as one of the regular quarterly meetings) shall be held no later than
June 30 of each Fiscal Year.
(d) Special meetings of the Board of Managers shall be
held whenever called by any Member. Any and all business may be transacted
at a special meeting that may be transacted at a regular meeting of the
Board of Managers.
(e) The Board of Managers may hold its meetings at such
place or places as the Board of Managers may from time to time by
resolution determine or as shall be designated in the respective notices or
waivers of notice thereof; however, the Board of Managers shall consider
holding meetings from time to time at each of the Member's corporate
headquarters and at the operational sites of the Company.
(f) Notices of regular meetings of the Board of Managers
or of any adjourned meeting shall be given at least two weeks prior to such
meeting, unless otherwise agreed by each Member. Notices of special
meetings of the Board of Managers shall be mailed by the Secretary or an
Assistant Secretary to each member of the Board of Managers addressed to
him or her at his or her residence or usual place of business, so as to be
received at least two Business Days before the day on which such meeting is
to be held, or shall be sent to him or her by telegraph, cable, facsimile
or other form of recorded communication or be delivered personally, by
overnight courier or by telephone so as to be received not later than two
Business Days before the day on which such meeting is to be held. Such
notice shall include
52
the purpose, time and place of such meeting and shall set forth in
reasonable detail the matters to be considered at such meeting. However,
notice of any such meeting need not be given to any member of the Board of
Managers if such notice is waived by him or her in writing or by telegraph,
cable, facsimile or other form of recorded communication, whether before or
after such meeting shall be held, or if he or she shall be present at such
meeting.
(g) Action by Communication Equipment. The members of the
Board of Managers may participate in a meeting of the Board of Managers by
means of video or telephonic conferencing or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and such participation shall constitute presence in person
at such meeting.
(h) Unanimous Action by Written Consent. Any action
required or permitted to be taken at any meeting of the Board of Managers
may be taken without a meeting if all the Representatives consent thereto
in writing and such writing is filed with the minutes of the proceedings of
the Board of Managers.
(i) Organization. Meetings of the Board of Managers shall
be presided over by a chair, who will be a member of the Board of Managers
selected by a majority of the Board of Managers. The Secretary of the
Company or, in the case of his or her absence, any person whom the person
presiding over the meeting shall appoint, shall act as secretary of such
meeting and keep the minutes thereof.
SECTION 8.05. Compensation. Unless the Members otherwise
agree, no person shall be entitled to any compensation from the Company in
connection with his or her services as a Representative.
SECTION 8.06. Quorum. (a) Quorum for Super Majority
Decisions. Subject to Section 14.01(e) of the Put/Call, Registration Rights
and Standstill Agreement and Sections 14.01 and 14.05 and Section 5 of
Schedule 8.14, at all meetings of the Board of Managers, the quorum
required for the transaction of any business that constitutes a Super
Majority Decision shall be the presence, either in person or
53
by proxy, of (i) at least one Representative of each Member and (ii) a
majority of all the Representatives on the Board of Managers (which may
include the Representatives referred to in the preceding clause (i)).
(b) Quorum for Other Decisions. Subject to Sections 14.01
and 14.05 and Section 5 of Schedule 8.14, at all meetings of the Board of
Managers, the quorum required for the transaction of any business that does
not constitute a Super Majority Decision shall be (i) in the case of all
matters that were described in the notice in reasonable detail for such
meeting delivered to the members of the Board of Managers pursuant to
Section 8.04(f), the presence, either in person or by proxy, of a majority
of all the Representatives on the Board of Managers and (ii) in the case of
all matters that were not described in the notice in reasonable detail for
such meeting delivered to the members of the Board of Managers pursuant to
Section 8.04(f), the presence, either in person or by proxy, of (A) at
least one Representative of each Member and (B) a majority of all the
Representatives on the Board of Managers (which may include the
Representatives referred to in the preceding clause (A)).
(c) Rescheduled Meetings. The Company shall use its
reasonable best efforts to schedule the time and place of each meeting of
the Board of Managers so as to ensure that a quorum will be present at each
such meeting and that at least one Representative of each Member will be
present at each such meeting. In the absence of a quorum at any such
meeting or any adjournment or adjournments thereof, a majority in voting
interest of those present in person or by proxy and entitled to vote
thereat may reschedule such meeting from time to time until the
Representatives requisite for a quorum, as aforesaid, be present in person
or by proxy. At any such rescheduled meeting at which a quorum is present,
any business may be transacted that might have been transacted at the
meeting as originally called.
SECTION 8.07. Voting. (a) General. Each Representative
shall be entitled to cast one vote on all matters coming before the Board
of Managers. In exercising their voting rights under this Agreement, the
Representatives may act by proxy.
54
(b) Super Majority Decisions. Subject to Section 14.01(e)
of the Put/Call, Registration Rights and Standstill Agreement and Sections
14.01 and 14.05 and Section 5 of Schedule 8.14, all Super Majority
Decisions to be decided by the Board of Managers shall be approved by the
unanimous affirmative vote of the votes cast by the Representatives who are
present, either in person or by proxy, at a duly called meeting of the
Board of Managers at which a quorum is present. The parties acknowledge and
agree that all references in this Agreement, any other Transaction Document
and any appendices, exhibits or schedules hereto or thereto to any
determination, decision, approval or other form of authorization by the
Board of Managers pursuant to a vote in accordance with Section 8.07(b)
shall be deemed to mean that such determination, decision, approval or
other form of authorization shall constitute a Super Majority Decision
which requires the approval of the Board of Managers in accordance with
this Section 8.07(b).
(c) Other Decisions. Subject to Sections 14.01 and 14.05
and Section 5 of Schedule 8.14, all matters other than Super Majority
Decisions to be decided by the Board of Managers shall be approved by the
affirmative vote of a majority of the votes cast by the Representatives who
are present, either in person or by proxy, at a duly called meeting of the
Board of Managers at which a quorum is present, unless the vote of a
greater number of Representatives is required by Applicable Law or this
Agreement.
SECTION 8.08. Matters Constituting Super Majority
Decisions. Subject to the provisions of Section 8.07(b), each of the
following matters, and only the following matters, shall constitute a
"Super Majority Decision" which requires the approval of the Board of
Managers pursuant to Section 8.07(b):
(a) (i) the purchase or investment by the Company or any
of its subsidiaries of or in any assets or securities, or
any group of assets or securities, that have an aggregate
purchase price or cost of more than $20 million, if the
purpose or effect of such purchase or investment is to
enable the
55
Company to enter into a line of business other than (A)
the Company's Business as such Business is conducted on
the Closing Date or (B) any other line of business that
is approved after the Closing Date by the Board of
Managers as a Super Majority Decision under this Section
8.08(a)(i) pursuant to a vote in accordance with Section
8.07(b), provided that any such purchase or investment by
the Company or any of its subsidiaries shall not require
a Super Majority Decision under this Section 8.08(a) if
and to the extent such purchase or investment is being
made to enable the Company to enter into the Bulk Motor
Oil Business, the Packaged Motor Oil Business, the
Private Label Packaged Motor Oil Business and/or the
Quick Lube Business and, at the time of such purchase or
investment, (1) the Company and its subsidiaries are
permitted to engage in such business under Section
14.03(b) of the Put/Call, Registration Rights and
Standstill Agreement and (2) Ashland and its Affiliates
shall own (beneficially or otherwise) 20% or more of the
Valvoline Business (it being understood and agreed that
this proviso shall not limit or constitute an exception
to any other provision of Section 8.08); and
(ii) the determination of whether any new line of
business approved by the Board of Managers as a Super
Majority Decision under Section 8.08(a)(i) should
constitute a "Competitive Business" for purposes of
Section 14.01 of the Put/Call, Registration Rights and
Standstill Agreement;
(b) any reorganization, merger, consolidation or similar
transaction between the Company or any of its subsidiaries and any
person (other than a direct or indirect Wholly Owned Subsidiary of
the Company) or any sale or lease of all or substantially all of
the Company's or any of its subsidiaries' assets to any person
(other than a direct or indirect Wholly Owned Subsidiary of the
Company);
56
(c) the admission of a new Member (other than as a result
of a Transfer of an existing Member's Membership Interests
pursuant to Article X) or the issuance of any additional
Membership Interests or other equity interests to any person,
including any existing Member;
(d) except as expressly provided in Sections 4.01(c),
4.02(a) and 4.02(b), the acceptance or requirement of any
additional capital contributions to the Company by either Member;
(e) the initial hiring of the following officers of the
Company: the President; the Executive Vice President; the officers
principally in charge of (i) refining, (ii) wholesale and branded
marketing, (iii) retail marketing (two initially), (iv) supply and
transportation and (v) environmental health and safety and human
resources; the Senior Vice President-Finance and Commercial
Services of the Company; and the general counsel of the Company;
(f) (i) the approval of Acquisition Expenditures, Capital
Expenditures and other expenditures included in the
Annual Capital Budget for any Fiscal Year (other than (A)
Ordinary Course Lease Expenses, (B) up to $100 million in
the aggregate for all periods in Capital Expenditures of
the Company and its subsidiaries directly associated with
the Garyville Propylene Upgrade Project, (C)
Member-Funded Capital Expenditures, (D)
Member-Indemnified Expenditures and (E) Capital
Expenditures of the Company and its subsidiaries directly
associated with Permitted Catlettsburg Capital Projects
that are funded with Permitted Catlettsburg Capital
Project Indebtedness) that exceed the Normal Annual
Capital Budget Amount for such Fiscal Year; and
(ii) the incurrence of rentals or operating leases which
result in aggregate Ordinary Course Lease Expenses (other
than Ordinary Course Lease Expenses incurred under the
Bareboat Charters) for any Fiscal Year that exceed $80
million; provided, however, in the event the Company or
one of its
57
subsidiaries shall make any acquisition or divestiture,
the Members shall negotiate in good faith to adjust the
dollar amount set forth in this Section 8.08(f)(ii) to
take into account the effect of such acquisition or
divestiture;
(g) (i) except for any acquisition or capital project
related to the Bulk Motor Oil Business, the Packaged
Motor Oil Business, the Private Label Motor Oil Business
and/or the Quick Lube Business, any acquisition,
divestiture or individual capital project (other than (i)
Ordinary Course Lease Expenses, (ii) up to $100 million
in the aggregate for all periods in Capital Expenditures
of the Company and its subsidiaries directly associated
with the Garyville Propylene Upgrade Project, (iii)
Member-Funded Capital Expenditures, (iv) Member-Funded
Indemnified Expenditures and (v) Capital Expenditures of
the Company and its subsidiaries directly associated with
Permitted Catlettsburg Capital Projects that are funded
with Permitted Catlettsburg Capital Project Indebtedness)
where the liability or consideration involved is more
than $50 million in the aggregate (including contingent
liabilities only to the extent required to be reflected
on the balance sheet of the Company in accordance with
Financial Accounting Standard Number 5 (or any successor
or superseding provision of Current GAAP));
(ii) any acquisitions or individual capital
projects related to the Bulk Motor Oil Business, the
Packaged Motor Oil Business, the Private Label Motor Oil
Business and/or the Quick Lube Business during any Fiscal
Year where the liability or consideration involved is
more than $50 million in the aggregate in such Fiscal
Year (including contingent liabilities only to the extent
required to be reflected on the balance sheet of the
Company in accordance with Financial Accounting Standard
Number 5 (or any successor or superseding provision of
Current GAAP)); provided that nothing in this Section
8.08(g)(ii) shall be deemed or interpreted to permit the
Company or any of its
58
subsidiaries to engage in any of such businesses except
as and to the extent expressly permitted under Section
14.03 of the Put/Call, Registration Rights and Standstill
Agreement;
(iii) for the avoidance of doubt, acquisitions
or individual capital projects related to the Maralube
Express Business shall be subject to clause (i) of this
Section 8.08(g) and not clause (ii) of this Section
8.08(g);
(h) the initiation or settlement of any action, suit,
claim or proceeding involving (i) an amount in excess of $50
million (with respect to initiation) or $25 million (with respect
to settlement), (ii) material non-monetary relief (including,
without limitation, entering into any consent decree that has or
could reasonably be expected to (A) impose any material obligation
on Ashland or any of its Affiliates or the Company or any of its
subsidiaries or (B) have a material adverse effect on the
business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of
Ashland or any of its Affiliates or the Company or any of its
subsidiaries) or (iii) the initiation or settlement of any
criminal action, suit, claim or proceeding (other than a
misdemeanor) if such criminal action, suit or proceeding has or
could reasonably be expected to (A) impose any material obligation
on Ashland or any of its Affiliates or (B) have a material adverse
effect on the business, operations, assets, liabilities, results
of operations, cash flows, condition (financial or otherwise) or
prospects of Ashland or any of its Affiliates;
(i) any change in the Company Independent Auditors unless
the new firm is one of the "Big Six" accounting firms (or any
successor thereto) or a firm of comparable stature in Ashland's
opinion;
(j) any modification, alteration, amendment or
termination of this Agreement or any other Transaction Document to
which the Company or any of its subsidiaries is a party;
59
(k) (i) in the case of any Affiliate Transaction that is
not a Crude Oil Purchase, a Significant Shared Service or a
Designated Sublease Agreement, (A) any Affiliate Transaction
(other than the Affiliate Transactions listed on Schedule
8.08(k)(i)(A) (the "Closing Date Affiliate Transactions")), (B)
any material amendment to or change in the terms or provisions of
any Affiliate Transaction that was either a Closing Date Affiliate
Transaction or previously approved by the Board of Managers
pursuant to Section 8.08(k)(i)(A) (it being understood that a
renewal or extension of the term of an Affiliate Transaction
pursuant to contractual provisions that were previously approved
by the Board of Managers pursuant to this Section 8.08(k)(i) or
that were included in a Closing Date Affiliate Transaction on the
Closing Date shall be deemed for purposes of this Agreement not to
constitute a new Affiliate Transaction or a material amendment to
or change in an Affiliate Transaction) or (C) any amendment or
change in the terms or provisions of any agreement or transaction
between the Company or any of its subsidiaries and any Member or
any Affiliate of any Member which causes such agreement or
transaction to become an Affiliate Transaction;
(ii) in the case of Crude Oil Purchases, the approval of
such Crude Oil Purchases in accordance with Section 8.12(a);
(iii) in the case of any Significant Shared Service, (A)
any agreement or transaction constituting a Significant Shared
Service (other than the specific Significant Shared Services
identified and described in Schedule 10.2(e) to the Asset Transfer
and Contribution Agreement), (B) any material amendment to or
change in the terms and provisions of any Significant Shared
Service identified and described in Schedule 10.2(e) to the Asset
Transfer and Contribution Agreement or thereafter approved by the
Board of Managers in accordance with this Section 8.08(k)(iii),
(C) subject to the provisions of Section 8.11(b) and except as
expressly provided in Section 8.12(b), any cancelation or failure
by the Company or any of its subsidiaries to
60
renew any Significant Shared Service provided by Ashland or any
Affiliate of Ashland to the Company or any of its subsidiaries or
provided by the Company or any of its subsidiaries to Ashland or
any Affiliate of Ashland and (D) the periodic review and approval
of Significant Shared Services in accordance with Section 8.12(b);
and
(iv) any material amendment to or change in the terms or
provisions of, cancelation, termination or failure to renew, any
Designated Sublease Agreement or any election by the Company to
refuse or reject the contribution of any Subleased Property to the
Company or any of its subsidiaries;
(l) the commencement of a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent to the entry of an order for
relief in an involuntary case under any such law, or the consent
to the appointment of or the taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or
similar official) of the Company or any of its subsidiaries or for
any substantial part of the Company's or any of its subsidiaries'
property, or the making of any general assignment for the benefit
of creditors;
(m) (i) the modification, alteration or amendment of the
amount, timing, frequency or method of calculation of
distributions to the Members from that provided in Article V or
(ii) an adjustment to the amount of Distributable Cash pursuant to
clause (g) of the definition of "Distributable Cash" in Section
1.01;
(n) (i) the modification, alteration or amendment of the
Company Leverage Policy, or (ii) the approval of any matter which
the Company Leverage Policy provides is to be approved by the
Board of Managers as a Super Majority Decision;
(o) (i) the approval of any distribution by the Company
to the Members of any assets in kind, (ii) the approval of any
distribution by the Company to the Members of cash and property in
kind on a non-pro rata
61
basis, and (iii) the determination of the value assigned to such
assets in kind;
(p) each Critical Decision or material amendment thereto
made on or prior to the Critical Decision Termination Date for
such Critical Decision; and
(q) the delegation to a Member of the power to
unilaterally bind the Company or any of its subsidiaries with
respect to any matter.
SECTION 8.09. Annual Capital Budget. (a) In Fiscal Year
1999 and in each Fiscal Year thereafter, the Executive Officers of the
Company shall timely prepare or cause to be prepared a draft capital budget
(the "Annual Capital Budget") for such Fiscal Year, which shall set forth
in reasonable line item detail the proposed Acquisition Expenditures,
Capital Expenditures and the Ordinary Course Lease Expenditures of the
Company and its subsidiaries for such Fiscal Year, including all Ordinary
Course Lease Expenditures and all Capital Expenditures of the Company and
its subsidiaries directly associated with the Garyville Propylene Upgrade
Project. In addition, to the extent that information can reasonably be
obtained on the nature of assets rented or financed by operating leases,
such information shall be presented along with the Annual Capital Budget.
Copies of the Annual Capital Budget shall be provided to each Member (at
the same time) and to the Board of Managers. No later than November 15 of
each Fiscal Year, the Executive Officers shall present to the Board of
Managers the Annual Capital Budget for their review, consideration and
approval, with such additions, deletions and changes thereto as the Board
of Managers shall deem necessary.
(b) If the Board of Managers shall fail to approve an
Annual Capital Budget for any Fiscal Year, the total expenditures provided
for in the Annual Capital Budget for such Fiscal Year shall be in an amount
equal to the Normal Annual Capital Budget Amount for such Fiscal Year.
(c) No later than July 15 of each Fiscal Year, the Board
of Managers shall review the Annual Capital Budget for such Fiscal Year and
shall make such additions, deletions and changes thereto as the Board of
Managers shall deem necessary.
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SECTION 8.10. Business Plan. In Fiscal Year 1999 and in
each Fiscal Year thereafter, the Executive Officers of the Company shall
timely prepare or cause to be prepared a draft business plan (the "Business
Plan") for the next three Fiscal Years. Copies of the Business Plan shall
be provided to each Member (at the same time) and to the Board of Managers.
No later than November 15 of each Fiscal Year, the Executive Officers shall
present to the Board of Managers the Business Plan for their review,
consideration and approval, with such additions, deletions and changes
thereto as the Board of Managers shall deem necessary.
SECTION 8.11. Requirements as to Affiliate Transactions.
(a) The Company and its subsidiaries shall only be permitted to enter into
or renew or extend the term thereof (whether pursuant to contractual
provisions thereof or otherwise) an agreement or a transaction with a
Member or an Affiliate of a Member (which, solely for purposes of this
Section 8.11, shall be deemed to include any entity more than 10% of the
voting stock or other ownership interests of, or economic interest in,
which is owned by a Member (other than the Company or any of its
subsidiaries)) on the same terms or on terms no less favorable to the
Company or such subsidiary than could be obtained from a third party on an
arm's-length basis (an "Arm's-Length Transaction").
(b) (i) If (A) the Company or any subsidiary of the
Company enters into, renews or extends the term of (pursuant to contractual
provisions thereof that were previously approved by the Board of Managers
or otherwise) or materially amends or changes the terms or provisions of,
any agreement or transaction between the Company or any of its subsidiaries
and any Member or any Affiliate of any Member (a "Section 8.11(b) Affiliate
Transaction") or proposes to do any of the foregoing and (ii) not later
than 90 days after receiving written notice thereof from the Company
pursuant to Section 7.03 or otherwise (which notice describes the material
terms and conditions of such transaction in reasonable detail), the Member
that is not (or whose Affiliate is not) a party to such Section 8.11(b)
Affiliate Transaction (the "Non-Contracting Member")
63
notifies the Company and the Member that is (or whose Affiliate is) a party
to such Section 8.11(b) Affiliate Transaction (the "Contracting Member") in
writing that the Non-Contracting Member believes in good faith that either
such Affiliate Transaction is not an Arm's-Length Transaction or that the
quality of the service being provided or to be provided by the Contracting
Member is inferior to that which the Company and its subsidiaries could
otherwise obtain on comparable terms and conditions, then the Company shall
promptly (and, in any event within 30 days) provide the Non-Contracting
Member with a reasonably detailed explanation of the basis for the
Company's determination that such new, renewed or extended Affiliate
Transaction is an Arm's-Length Transaction or the quality of the service
being provided or to be provided to the Company and its subsidiaries is not
inferior.
(ii) If following receipt of such evidence, the
Non-Contracting Member is not reasonably satisfied that such Affiliate
Transaction is an Arm's-Length Transaction or the quality of the service
being provided or to be provided to the Company and its subsidiaries is not
inferior, then, at the written request of the Non-Contracting Member (such
written request being an "Affiliate Transaction Dispute Notice"), the
Company shall (A) modify the terms of such Affiliate Transaction so that it
becomes an Arm's-Length Transaction, (B) if the Company had given the
Members written notice pursuant to Section 7.03(a) prior to entering into,
renewing or extending such Affiliate Transaction, not enter into, renew or
extend such Affiliate Transaction or (C) if the Company had given the
Members written notice pursuant to Section 7.03(a) prior to entering into,
renewing or extending such Affiliate Transaction, enter into, renew or
extend such Affiliate Transaction in which event the determination of
whether such Affiliate Transaction is an Arm's Length Transaction and/or
whether the quality of the service being provided is inferior shall be in
accordance with the Dispute Resolution Procedures set forth in Article XIII
or (D) if the Company shall not have given the Members written notice
pursuant to Section 7.03(a) prior to entering into, renewing or extending
such Affiliate Transaction, commence the dispute resolution procedures set
forth in Article XIII.
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(iii) For purposes of Article XIII, a Non-Contracting
Member's delivery of an Affiliate Transaction Dispute Notice to the Company
shall constitute delivery of a Dispute Notice thereunder, and the Company
shall be required to deliver a Response to the Non-Contracting Member
within 30 days thereafter. If it is finally determined pursuant to such
Dispute Resolution Procedures that such Affiliate Transaction is an
Arm's-Length Transaction and, if disputed, that the quality of service
being so provided is not inferior, then the Company shall be permitted to
enter into, renew or extend such Affiliate Transaction. If it is finally
determined pursuant to such Dispute Resolution Procedures that such
Affiliate Transaction is not an Arm's-Length Transaction or that the
quality of service being so provided is inferior, then the Company shall
either modify the terms of such Affiliate Transaction so that it becomes an
Arm's-Length Transaction and, if disputed, with an adequate level of
quality of service or not enter into, renew or extend such Affiliate
Transaction. In the event that such Affiliate Transaction has already been
entered into, renewed or extended, then (A) the Company and the Contracting
Member shall make such modifications to the terms of such Affiliate
Transaction as are necessary so that such Affiliate Transaction becomes an
Arm's-Length Transaction and, if disputed, with an adequate level of
quality of service and (B) the Contracting Member shall pay the Company an
amount equal to the difference between (I) the costs incurred by the
Company under such Affiliate Transaction since the time of such entering
into, renewal or extension and (II) the costs that the Company would have
incurred under such Affiliate Transaction during such time period had such
Affiliate Transaction been an Arm's-Length Transaction and, if disputed,
with an adequate level of quality of service at the time of such initial
agreement, renewal or extension.
SECTION 8.12. Review of Certain Affiliate Transactions
Related to Crude Oil Purchases and Shared Services.
(a) (i) Not less than 30 days prior to the regular
meeting of the Board of Managers during the fourth Fiscal Quarter
of each Fiscal Year (or, if no regular meeting of the Board of
Managers is scheduled during
65
such Fiscal Quarter, at a special meeting of the Board of Managers
during such Fiscal Quarter), the Company shall submit to the Board
of Managers a reasonably detailed description of any proposed
transactions or agreements related to crude oil purchases by the
Company and its subsidiaries from Marathon or any Affiliate of
Marathon that are intended to remain in effect or to be put into
effect during such next Fiscal Year (collectively, the "Marathon
Crude Oil Purchase Program"). Following such submission, the
Company shall provide the Board of Managers promptly with such
information with respect to such Marathon Crude Oil Purchase
Program and the Company's other proposed crude oil purchases and
policies for such next Fiscal Year as any Representative shall
reasonably request. At each such regular or special meeting during
the fourth Fiscal Quarter of each Fiscal Year, the Board of
Managers shall review such Marathon Crude Oil Purchase Program.
During such next Fiscal Year, the Company and its subsidiaries
shall be permitted to purchase crude oil from Marathon or any
Affiliate of Marathon only on the terms and conditions of the
proposed transactions and agreements submitted to and approved by
the Board of Managers at such regular or special meeting pursuant
to a vote in accordance with Section 8.07(b) (the "Approved
Marathon Crude Oil Purchase Program"). Any purchase (or group of
related purchases) of crude oil by the Company or any of its
subsidiaries from Marathon or any Affiliate of Marathon during
such Fiscal Year that is an Affiliate Transaction for purposes of
Section 8.08(k) and is not made under or in accordance with the
Approved Marathon Crude Oil Purchase Program and any material
amendment to or change in the Approved Marathon Crude Oil Purchase
Program during such Fiscal Year shall be made only with the prior
approval of the Board of Managers pursuant to a vote in accordance
with Section 8.07(b).
(ii) The Company shall prepare and send to each Member
(at the same time) promptly, but in no event later than the 30th
day after the last day of each Fiscal Quarter, (A) a summary of
all Crude Oil Purchases during such Fiscal Quarter, (B) a
description of any amendments to, changes in or deviations from
the
66
Approved Marathon Crude Oil Purchase Program in effect during such
Fiscal Quarter, (C) a description of any then known proposed
amendments to, changes in or deviations from the Approved Marathon
Crude Oil Purchase Program in effect during the remaining balance
of the Fiscal Year and (D) such other information with respect to
purchases of crude oil by the Company and its subsidiaries as
either Member shall reasonably request.
(b)(i) All administrative services that Marathon, Ashland
and each of their respective Affiliates provide to the Company or
any of its subsidiaries, and that the Company and its subsidiaries
provide to Marathon, Ashland or any of their respective
Affiliates, shall be pursuant to the Shared Services Agreement. To
the extent that there is a conflict between the Shared Services
Agreement, Schedule 10.2(e) to the Marathon Asset Transfer and
Contribution Agreement Disclosure Letter or Schedule 10.2(e) to
the Ashland Asset Transfer and Contribution Agreement Disclosure
Letter, on the one hand, and this Agreement, on the other hand,
this Agreement shall control.
(ii) Not less than 90 days prior to each of the annual
meetings of the Board of Managers held in 2000, 2003 and every
three years thereafter, the Company shall submit to the Board of
Managers the provisions of the Shared Services Agreement that
relate to each Significant Shared Service then in effect or that
is proposed to be put into effect. Following such submission, the
Company shall provide the Board of Managers promptly with such
information with respect to such Significant Shared Services and
with respect to any other Shared Services then being provided or
proposed to be provided as any Representative shall reasonably
request. At each such annual meeting, unless all the
Representatives otherwise agree, the Board of Managers shall
review each such Significant Shared Service and shall determine
pursuant to a vote in accordance with Section 8.07(b) whether such
Significant Shared Service should be continued (or, in the case of
any proposed Significant Shared Service, put into effect). Unless
the Board of Managers
67
approves pursuant to a vote in accordance with Section 8.07(b) the
continuation or effectiveness of a Significant Shared Service, the
Shared Service Agreement to the extent it relates to such
Significant Shared Service shall be terminated effective 90 days
after such annual meeting or at such later date as the Board of
Managers shall specify pursuant to a vote in accordance with
Section 8.07(b) and the Company shall be deemed at the time of
such annual meeting to have given notice to the Member providing
or receiving (or whose Affiliate is providing or receiving) such
Significant Shared Service that the Company is terminating the
Shared Service Agreement with respect to such Significant Shared
Service.
SECTION 8.13. Adjustable Amounts. Within 30 days
following the date on which the United States Department of Labor Bureau of
Labor Statistics for all Urban Areas publishes the Price Index for the
month of September of each Fiscal Year commencing September, 1998, the
Company shall determine whether the Average Annual Level for the
immediately preceding twelve-month period exceeds the Base Level. If the
Company determines that the Average Annual Level for such twelve-month
period exceeds the Base Level, then the Company shall increase or decrease
each of the dollar amounts set forth in this Agreement (other than the $348
million and $346 million amounts set forth in the definition of Adjusted
DD&A, the $657 million, $600 million, $80 million, $20 million and $12.4
million amounts set forth in the definition of Adjusted EBITDA, the $240
million amount set forth in the definition of "Normal Annual Capital Budget
Amount" in Section 1.01, the $100 million amount set forth in Section
8.08(f)(i) and any dollar amount set forth in any Appendix, Exhibit or
Schedule to this Agreement, including Schedule 8.14) (each dollar amount
that is adjusted pursuant to this Section 8.13 being an "Adjustable
Amount"), including, without limitation, the following amounts, to an
amount calculated by multiplying the relevant Adjustable Amount by a
fraction whose numerator is the Average Annual Level for such twelve-month
period and whose denominator is the Base Level: (i) the $100,000, $2
million and $25 million amounts set forth in the definition of "Affiliate
Transaction" and the $2 million amount set forth in the definition of
"Significant Shared Service" in each
68
case in Section 1.01; (ii) the $2 million amount set forth in Section
6.06(c); (iii) the $2 million amounts set forth in Sections 6.08(b), (d)
and (e); (iv) the $20 million amount set forth in Section 8.08(a)(i); (v)
the $80 million amount set forth on Section 8.08(f)(ii) (or such other
dollar amount as shall be agreed pursuant to the proviso to Section
8.08(f)(ii)); (vi) the $50 million amount set forth in Section 8.08(g);
(vii) the $50 million and $25 million amounts set forth in Section
8.08(h)(i); and (viii) each $7.5 million amount set forth in Section
14.01(a); provided that in no event shall any Adjustable Amount be
decreased below the initial amount thereof set forth herein. Within five
Business Days after making such determinations, the Company shall
distribute to each Member a notice setting forth: (A) the amount by which
the Average Annual Level for such Fiscal Year exceeded the Base Level and
(B) the calculations of any adjustments made to the Adjustable Amounts
pursuant to this Section 8.13. Any adjustment made to the Adjustable
Amounts pursuant to this Section 8.13 shall be effective as of January 1st
of the next Fiscal Year.
SECTION 8.14. Company Leverage Policy. The leverage
policy for the Company shall be the leverage policy set forth on Schedule
8.14, with such modifications, alterations or amendments thereto as the
Board of Managers shall from time to time approve pursuant to a vote in
accordance with Section 8.07(b) (such leverage policy, as so modified,
altered or amended, is referred to herein as the "Company Leverage
Policy").
SECTION 8.15. Company's Investment Guidelines. The
Company's Senior Vice President-Finance and Commercial Services, Vice
President-Finance and Controller and Treasurer (or Treasury Manager) shall
constitute an Investment Policy Committee of the Company and shall
establish investment guidelines for the Company and its subsidiaries (such
investment guidelines, as they may be modified, altered or amended by such
Investment Policy Committee from time to time, are referred to herein as
the "Company Investment Guidelines"). The initial Company Investment
Guidelines is set forth on Schedule 8.15. The Company and its subsidiaries
shall only make investments that are permitted under the Company Investment
Guidelines
69
at the time of such investments. In addition, the Company and its
subsidiaries shall invest all Surplus Cash (after meeting daily cash
requirements) in accordance with the Company Investment Guidelines.
SECTION 8.16. Requirements as to Operating Leases. The
Company and its subsidiaries shall not enter into any operating lease (as
determined in accordance with Applicable GAAP) if the purpose or intent of
entering into such operating lease is to circumvent the Company Leverage
Policy or the super majority voting requirement for Capital Expenditures of
the Company set forth in Section 8.08(f). The lease by the Company and its
subsidiaries of vehicles, railcars and computers in accordance with the
historical practices of the Ashland Business and the Marathon Business
shall not be deemed to violate this Section 8.16, provided, for the
avoidance of doubt, that all Ordinary Course Lease Expenses related to any
such leases shall be considered Ordinary Course Lease Expenses for the
purposes of Section 8.08(f)(ii).
SECTION 8.17. Limitations on Actions Relating to the
Calculation of Distributable Cash. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall not, and shall cause its
subsidiaries not to (a) modify, alter or amend the Company Investment
Guidelines, (b) accelerate the payment of the Company's and its
subsidiaries' accounts payable, (c) delay the collection of the Company's
and its subsidiaries' accounts receivable or (d) take any other action, if
the purpose or intent of such action is to reduce the amount of
Distributable Cash in a manner that is inconsistent with the intent of the
Members to maximize the amount of Distributable Cash distributions to the
Members.
SECTION 8.18. Reliance by Third Parties. Persons dealing
with the Company are entitled to rely conclusively upon the power and
authority of the Board of Managers herein set forth. Except as provided in
this Agreement, neither the President, nor a Representative, nor any Member
shall have any authority to bind the Company or any of its subsidiaries.
70
SECTION 8.19. Integration of Retail Operations. (a) Until
the Critical Decision is made regarding the location of the Company's
retail operations' headquarters, the Company's retail operations' business
shall have headquarters in both Enon, Ohio and Lexington, Kentucky.
(b)(i) The Company shall make a formal recommendation to
the Board of Managers with respect to each Critical Decision not later than
the ten-month anniversary of the Closing Date. Following receipt of a
formal recommendation with respect to any Critical Decision, Marathon and
Ashland shall negotiate in good faith to reach an agreement with respect to
such Critical Decision not later than the first anniversary of the Closing
Date.
(ii) Each formal recommendation with respect to any
Critical Decision shall be accompanied by a report on the business and
economic analyses used by the Company to arrive at such recommendation,
including but not limited to, a reasonably detailed description of the
risks and benefits of the recommended decision and the anticipated impact
of the recommended decision on the Speedway and SuperAmerica brand images
and business models.
(iii) Following receipt of any formal recommendation with
respect to any Critical Decision, each Member may request, and the Company
shall promptly provide to both Members, such additional information and
analyses (including studies by outside consultants) as such Member may
reasonably request; provided, however, any additional information request
shall not extend the Critical Decision Termination Date.
(c) If any Primary Critical Decision shall not have been
agreed by the Board of Managers pursuant to a vote in accordance with
Section 8.07(b) prior to the first anniversary of the Closing Date, the
Critical Decision Termination Date with respect to such Primary Critical
Decision shall be automatically, and without any further action required by
either Member, the Company or the Board of Managers, extended until the
fifteen-month anniversary of the Closing Date. During the period of such
extension, the Company shall provide promptly to each Member such
additional information or analyses (including studies by
71
outside consultants) as either Member shall reasonably request. Not later
than 30 days prior to the fifteen-month anniversary of the Closing Date,
the Company shall, if requested by either Member, again make a formal
recommendation to the Board of Managers with respect to such Primary
Critical Decision. Such formal recommendation shall include a report on the
supporting business and economic analyses described in Section 8.19(b)(ii).
Any request for additional information shall not extend the Critical
Decision Termination Date.
(d) Until such time as the implementation of any Critical
Decision shall have been completed in all material respects, the President
of the Company shall report to the Board of Managers at each regular
meeting of the Board of Managers on the implementation of such Critical
Decision and on any material modifications or changes to such Critical
Decision.
(e) To the extent there is any conflict between the terms
and provisions of this Agreement and the terms and provisions of the Retail
Integration Protocol, the terms and provisions of this Agreement shall
control.
ARTICLE IX
Officers
SECTION 9.01. (a) Election, Appointment and Term of
Office. The executive officers of the Company (the "Executive Officers")
shall consist solely of: a President; an Executive Vice President; an
officer principally in charge of refining; an officer principally in charge
of wholesale and branded marketing; the officer or officers (two initially)
principally in charge of retail marketing; an officer principally in charge
of supply and transportation; an officer who shall be the Senior Vice
President-Finance and Commercial Services of the Company; and an officer
who shall be the general counsel of the Company. Schedule C sets forth a
list of (i) the persons who Marathon and Ashland have chosen to serve
initially as the Executive Officers of the Company, (ii) the executive
office for which each such person is to serve and (iii) whether
72
each such person was designated by Marathon or Ashland. Marathon and
Ashland agree that the composition of the initial Executive Officers is
intended to reflect their respective Percentage Interests in the Company.
Accordingly, if any person identified on Schedule C is for any reason
unable or unwilling to serve as an Executive Officer at the Closing Date,
the Member who designated such person shall have the right to designate a
substitute person, subject to the right of the other Member to consent to
such substitute nominee (which consent shall not be unreasonably withheld).
Marathon and Ashland shall cause their respective Representatives to
promptly approve the appointment of each person listed on Schedule C to the
related executive office position listed on Schedule C.
(b) Except as otherwise determined by the Board of
Managers, each Executive Officer shall hold office until his or her death
or until his or her earlier resignation or removal in the manner
hereinafter provided. Except as otherwise expressly provided herein, the
Executive Officers shall have such powers and duties in the management of
the Company as generally pertain to their respective offices as if the
Company were a corporation governed by the General Corporation Law of the
State of Delaware.
(c) The Board of Managers may elect or appoint such other
officers to assist and report to the Executive Officers as it deems
necessary. Subject to the preceding sentence, each such officer shall have
such authority and shall perform such duties as may be provided herein or
as the Board of Managers may prescribe. The Board of Managers may delegate
to any Executive Officer the power to choose such other officers and to
prescribe their respective duties and powers.
(d) Except as otherwise determined by the Board of
Managers, if additional officers are elected or appointed during the year
pursuant to Section 9.01(c), each such officer shall hold office until his
or her death or until his or her earlier resignation or removal in the
manner hereinafter provided.
SECTION 9.02. Resignation, Removal and Vacancies. (a) Any
officer may resign at any time by
73
giving written notice to the President or the Secretary of the Company, and
such resignation shall take effect at the time specified therein or, if the
time when it shall become effective shall not be specified therein, when
accepted by action of the Board of Managers. Except as aforesaid, the
acceptance of such resignation shall not be necessary to make it effective.
(b) All officers and agents elected or appointed by the
Board of Managers shall be subject to removal at any time by the Board of
Managers with or without cause.
(c) Vacancies in all Executive Officer positions may only
be filled by the majority vote of the Representatives on the Board of
Managers. In each instance where a vacant Executive Officer position is to
be filled, Marathon, after consultation with the Company, shall first send
Ashland a notice which discloses the name and details of the candidate for
the vacant Executive Officer position that the Representatives of Marathon
will nominate and vote in favor of for such position. Ashland shall
thereafter have the right, by notice to the Company and Marathon within ten
days after receipt of such notice from Marathon, to veto such candidate.
Each candidate that Marathon proposes for a vacant Executive Officer
position shall be a bona fide candidate who is willing and able to serve
and who Marathon in good faith believes is qualified to fill such vacant
Executive Officer position (a "Qualified Candidate"). In the event Ashland
exercises its veto with respect to a Qualified Candidate, the vacancy will
be filled by the majority vote of the Representatives on the Board of
Managers.
SECTION 9.03. Duties and Functions of Executive Officers.
(a) President. The President of the Company, who shall be a non-voting
member of the Board of Managers, shall be in charge of the day-to-day
operations of the Company and shall preside at all meetings of the Board of
Managers and shall perform such other duties and exercise such powers, as
may from time to time be prescribed by the Board of Managers.
(b) Executive Vice President. The Executive Vice
President of the Company initially shall report to
74
the President and be the officer principally in charge of all supply,
refining, marketing and transportation operations of the Company other than
the Company's retail operations.
(c) Other Executive Officers. The Executive Officers of
the Company other than the President and the Executive Vice President shall
perform such duties and exercise such powers, as may from time to time be
prescribed by the President or the Board of Managers.
ARTICLE X
Transfers of Membership Interests
SECTION 10.01. Restrictions on Transfers. (a) General.
Except as expressly provided by this Article X, neither Member shall
Transfer all or any part of its Membership Interests to any person without
first obtaining the written approval of the other Member, which approval
may be granted or withheld in its sole discretion. Notwithstanding anything
to the contrary contained in this Agreement, no Transfer by a Member of its
Membership Interests to any person shall be made except to a permitted
assignee under Article XV of the Put/Call, Registration Rights and
Standstill Agreement.
(b) Transfer by Operation of Law. In the event a Member
shall be party to a merger, consolidation or similar business combination
transaction with a third party or sell all or substantially all its assets
to a third party, such Member may Transfer all (but not part) of its
Membership Interests to such third party; provided, however, that such
Member shall not be permitted to Transfer its Membership Interests to such
third party as aforesaid if the purpose or intent of such merger,
consolidation, similar business combination transaction or sale is to
circumvent or avoid the application of Sections 10.01(c) and 10.04 to the
Transfer of such Member's Membership Interests to such third party.
(c) Transfer by Sale to Third Party. At any time after
December 31, 2002, a Member may sell all (but not part) of its Membership
Interests (and, in the case of
75
Ashland, the Ashland LOOP/LOCAP Interest) to any person (other than a
Transfer by operation of law pursuant to Section 10.01(b), a Transfer to a
Wholly Owned Subsidiary pursuant to Section 10.01(d) or a Transfer by
Ashland to Marathon pursuant to Section 10.01(e)) if (i) it shall first
have offered the other Member the opportunity to purchase such Membership
Interests (and, in the case of Ashland, the Ashland LOOP/LOCAP Interest)
pursuant to the right of first refusal procedures set forth in Section
10.04, (ii) such sale is completed within the time periods specified in
Section 10.04, (iii) the other Member shall have approved the purchaser of
such Membership Interests (and, in the case of Ashland, the Ashland
LOOP/LOCAP Interest), which approval shall not be unreasonably withheld or
delayed and (iv) it shall use its commercially reasonable best efforts to
(A) terminate the outstanding Original Lease underlying each of its
Designated Sublease Agreements on or prior to the date of such Transfer and
(B) contribute the related Subleased Property to the Company or one of its
subsidiaries at no cost to the Company or such subsidiary on or prior to
the date of such Transfer; provided, however, that (i) such Member 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, a third party lessor with respect
to any such underlying Original Lease in order to obtain any consent
required from such lessor and (ii) any additional cost associated with
exercising an option under the Original Lease to purchase Subleased
Property or to terminate the Original Lease shall be deemed not to
constitute an obligation to pay more than a reasonable amount. In the event
that such Member is unable to terminate an outstanding Original Lease in
accordance with this Section 10.02(b), then (i) the Company shall be
entitled to continue to sublease the Subleased Property pursuant to the
related Designated Sublease Agreement until the term of the Original Lease
expires, (ii) the Member shall continue to use its commercially reasonable
best efforts to terminate the Original Lease and contribute the Subleased
Property to the Company as provided above; provided, however that (A) such
Member 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, a third party
lessor with respect to any
76
such Original Lease in order to obtain any consent required from such
lessor and (b) any additional cost associated with exercising an option
under the Original Lease to purchase Subleased Property or to terminate the
Original Lease shall be deemed not to constitute an obligation to pay more
than a reasonable amount and (iii) if such Member subsequently acquires fee
title to the Subleased Property, such Member shall contribute such
Subleased Property to the Company or one of its subsidiaries at no cost to
the Company or such subsidiary at such time. It is expressly understood and
agreed that, in determining whether to reasonably withhold its approval of
a proposed purchaser of Marathon's Membership Interests pursuant to this
Section 10.01(c), Ashland shall be entitled to consider the
creditworthiness of such proposed purchaser, including whether such
proposed purchaser is likely to be able to perform all of Marathon's and
USX's respective obligations under the Put/Call, Registration Rights and
Standstill Agreement.
(d) Transfer to Wholly Owned Subsidiary. A Member may
Transfer all (but not part) of its Membership Interests at any time to a
Wholly Owned Subsidiary of such Member if (i) such Member shall have
received an opinion from nationally recognized tax counsel acceptable to
both Members that such Transfer will not result in a termination of the
status of the Company as a partnership for Federal income tax purposes and
(ii) the transferring Member enters into an agreement with the other Member
providing that so long as such Wholly Owned Subsidiary holds such
transferring Member's Membership Interests, such Wholly Owned Subsidiary
shall remain a Wholly Owned Subsidiary of such transferring Member.
(e) Transfer Pursuant to Put/Call, Registration Rights
and Standstill Agreement. Ashland may Transfer all of its Membership
Interests to Marathon in connection with the exercise by Marathon of its
Marathon Call Right or its Special Termination Right or the exercise by
Ashland of its Ashland Put Right. In addition, Marathon may Transfer all of
its Membership Interests to Ashland in connection with the exercise by
Ashland of its Special Termination Right.
(f) Consequences of Permitted Transfers. (i) In
connection with any Transfer by a Member to a third party
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transferee pursuant to Section 10.01(b), (A) such third party transferee
shall at the time of such Transfer become subject to all of such
transferring Member's obligations hereunder and shall succeed to all of
such transferring Member's rights hereunder and (B) such transferring
Member shall be relieved of all of its obligations hereunder other than
with respect to any default hereunder by such transferring Member or any of
its Affiliates hereunder that occurred prior to the time of such Transfer.
(ii) In connection with any Transfer by a Member to a
third party transferee or to the other Member pursuant to Section 10.01(c),
(A) such third party transferee or such other Member shall at the time of
such Transfer become subject to all of such transferring Member's
obligations hereunder and shall succeed to all of such transferring
Member's rights hereunder and (B) such transferring Member shall at the
time of such Transfer be relieved of all of its obligations hereunder other
than with respect to any default hereunder by such transferring Member or
any of its Affiliates that occurred prior to the time of such Transfer.
(iii) In connection with any Transfer by a Member to a
Wholly Owned Subsidiary of such Member pursuant to Section 10.01(d), (A)
such Wholly Owned Subsidiary shall at the time of such Transfer become
subject to all of such Member's obligations hereunder and shall succeed to
all of such Member's rights hereunder and (B) such Member shall not be
relieved of its obligations hereunder without the prior written consent of
the other Member, which consent shall not be unreasonably withheld or
delayed.
(iv) In connection with any Transfer by Ashland to
Marathon pursuant to Section 10.01(e), (A) Marathon shall at the time of
such Transfer become subject to all of Ashland's obligations hereunder and
shall succeed to all of Ashland's rights hereunder and (B) Ashland shall at
the time of such Transfer be relieved of all of its obligations hereunder
other than with respect to any default hereunder by Ashland or any of its
Affiliates that occurred prior to the Exercise Date (as such term is
defined in the Put/Call, Registration Rights and Standstill Agreement).
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(v) In connection with any Transfer by Marathon to
Ashland pursuant to Section 10.01(e), (A) Ashland shall at the time of such
Transfer become subject to all of Marathon's obligations hereunder and
shall succeed to all of Marathon's rights hereunder and (B) Marathon shall
at the time of such Transfer be relieved of all of its obligations
hereunder other than with respect to any default hereunder by Marathon or
any of its Affiliates that occurred prior to the Special Termination
Exercise Date (as such term is defined in the Put/Call, Registration Rights
and Standstill Agreement).
(vi) In connection with any Transfer by Ashland to a
third party transferee pursuant to Section 10.01(b), 10.01(c) or 10.01(d),
such third party transferee shall at the time of such Transfer succeed to
all of Ashland's veto rights under Section 9.02(c); provided, that if
Ashland Transfers its Membership Interests to a third party transferee
pursuant to Section 10.01(c), such third party transferee shall not
thereafter be permitted to transfer its veto rights under Section 9.02(c)
to another third party transferee pursuant to Section 10.01(c).
(vii) In connection with any Transfer by a Member to a third
party transferee pursuant to this Article X, such transferring Member shall
retain all of the rights granted to a Member under Article VII to examine
the books and records of the Company and to receive financial statements
and reports prepared by the Company until such time following such Transfer
as such transferring Member ceases to have any liability under Article IX
of the Asset Transfer and Contribution Agreement.
(g) Consequences of an Unpermitted Transfer. Any Transfer
of a Member's Membership Interests made in violation of the applicable
provisions of this Agreement shall be void and without legal effect.
SECTION 10.02. Conditions for Admission. No transferee of
all of the Membership Interests of any Member shall be admitted as a Member
hereunder unless (a) such Membership Interests are Transferred to a person
in compliance with the applicable provisions of this Agreement, (b) such
transferee shall have executed and delivered to the
79
Company such instruments as the Board of Managers deems necessary or
desirable in its reasonable discretion to effectuate the admission of such
transferee as a Member and to confirm the agreement of such transferee or
recipient to be bound by all the terms and provisions of this Agreement
with respect to the Membership Interests acquired by such transferee and
(c) such transferee shall have executed and delivered an assignment and
assumption agreement pursuant to Section 15.04 of the Put/Call,
Registration Rights and Standstill Agreement.
SECTION 10.03. Allocations and Distributions. Subject to
applicable Treasury Regulations, upon the Transfer of all the Membership
Interests of a Member as herein provided, the Profit or Loss of the Company
attributable to the Membership Interests so transferred for the Fiscal Year
during which such Transfer occurs shall be allocated between the transferor
and transferee as of the date set forth on the written assignment, and such
allocation shall be based upon any permissible method agreed to by the
Members that is provided for in Code Section 706 and the Treasury
Regulations issued thereunder. Except as otherwise expressly provided in
Section 5.01 of the Put/Call, Registration Rights and Standstill Agreement,
distributions shall be made to the holder of record of the Membership
Interests on the date of distribution.
SECTION 10.04. Right of First Refusal.(a) If a Member
(the "Selling Member") shall desire to sell all (but not part) of its
Membership Interests (which, for purposes of this Section 10.04, shall be
deemed to include, in the case of Ashland, the Ashland LOOP/LOCAP Interest)
pursuant to Section 10.01(c), then the Selling Member shall give notice
(the "Offer Notice") to the other Member, identifying the proposed
purchaser from whom it has received a bona fide offer and setting forth the
proposed sale price (which shall be payable only in cash or purchase money
obligations secured solely by the Membership Interests being sold) and the
other material terms and conditions upon which the Selling Member is
proposing to sell such Membership Interests to such proposed purchaser. No
such sale shall encompass or be conditioned upon the sale or purchase of
any property other than such Membership Interests (other than, in the case
of Ashland, the Ashland LOOP/LOCAP Interest).
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The other Member shall have 30 days from receipt of the Offer Notice to
elect, by notice to the Selling Member, to purchase the Membership
Interests offered for sale on the terms and conditions set forth in the
Offer Notice.
(b) If a Member makes such election, the notice of
election shall state a closing date not later than 60 days after the date
of the Offer Notice. If such Member breaches its obligation to purchase the
Membership Interests of the Selling Member on the same terms and conditions
as those contained in the Offer Notice after giving notice of its election
to make such purchase (other than where such breach is due to circumstances
beyond such Member's reasonable control), then, in addition to all other
remedies available, the Selling Member may, at any time for a period of 270
days after such default, sell such Membership Interests to any person at
any price and upon any other terms without further compliance with the
procedures set forth in Section 10.04.
(c) If the other Member gives notice within the 30-day
period following the Offer Notice from the Selling Member that it elects
not to purchase the Membership Interests, the Selling Member may, within
120 days after the end of such 30-day period (or 270 days in the case where
such parties have received a second request under HSR), sell such
Membership Interests to the identified purchaser (subject to clause (iii)
of Section 10.01(c)) on terms and conditions no less favorable to the
Selling Member than the terms and conditions set forth in such Offer
Notice. In the event the Selling Member shall desire to offer the
Membership Interests for sale on terms and conditions less favorable to it
than those previously set forth in an Offer Notice, the procedures set
forth in this Section 10.04 must again be initiated and applied with
respect to the terms and conditions as modified.
SECTION 10.05. Restriction on Resignation or Withdrawal.
Except in connection with a Transfer permitted pursuant to Section 10.01,
neither Member shall resign or withdraw from the Company without the
consent of the other Member. Any purported resignation or withdrawal from
the Company in violation of this Section 10.05 shall be null and void and
of no force or effect.
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ARTICLE XI
Liability, Exculpation and Indemnification
SECTION 11.01. Liability. Except as otherwise provided by
the Delaware Act, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Covered Person shall be
obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Covered Person.
SECTION 11.02. Exculpation. (a) No Covered Person shall
be liable to the Company or any other Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be
liable for any such loss, damage or claim incurred by reason of such
Covered Person's gross negligence, wilful misconduct or breach of Section
12.02.
(b) A Covered Person shall be fully protected in relying
in good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by any person as
to any matters the Covered Person reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which distributions to Members might properly be
paid.
SECTION 11.03. Indemnification. To the fullest extent
permitted by Applicable Law, a Covered Person shall be entitled to
indemnification from the Company for any loss, damage or claim incurred by
such Covered Person by reason of any act or omission performed or omitted
by such
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Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred
by such Covered Person by reason of gross negligence, wilful misconduct or
breach of Section 12.02 with respect to such acts or omissions; provided,
however, that any indemnity under this Section 11.03 shall be provided out
of and to the extent of Company assets only, and no Covered Person shall
have any personal liability on account thereof.
ARTICLE XII
Fiduciary Duties
SECTION 12.01. Duties and Liabilities of Covered Persons.
To the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to the
Company or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person
for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they expand or restrict
the duties and liabilities of a Covered Person otherwise existing at law or
in equity, are agreed by the parties hereto to replace such other duties
and liabilities of such Covered Person.
SECTION 12.02. Fiduciary Duties of Members of the Company
and Members of the Board of Managers. Each Member and each member of the
Board of Managers shall have the fiduciary duties of loyalty and care
(similar to the fiduciary duties of loyalty and care of directors of a
business corporation governed by the General Corporation Law of the State
of Delaware) to the Company and all of the Members. Notwithstanding any
provision of this Agreement to the contrary, each Member and each member of
the Board of Managers agrees to and shall exercise good faith, fairness and
loyalty to the Company and to all of the Members, and shall make all
decisions in a manner that such Member or such member of the Board of
Managers reasonably believes to
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be in the best interest of the Company and all of the Members.
Notwithstanding the foregoing, this Section 12.02 is not intended to limit
a Member's ability to exercise or enforce any of its rights and remedies
under this Agreement and the other Transaction Documents in good faith,
including, without limitation, Article IX of the Asset Transfer and
Contribution Agreement.
ARTICLE XIII
Dispute Resolution Procedures
SECTION 13.01. General. All controversies, claims or
disputes between the Members or between the Company and either Member that
arise out of or relate to this Agreement or the construction,
interpretation, performance, breach, termination, enforceability or
validity of this Agreement, or the commercial, economic or other
relationship of the parties hereto, whether such claim is based on rights,
privileges or interests recognized by or based upon statute, contract,
tort, common law or otherwise and whether such claim existed prior to or
arises on or after the date of this Agreement (a "Dispute") shall be
resolved in accordance with the provisions of this Article XIII (except as
otherwise expressly provided in Sections 6.06 and 6.08). Notwithstanding
anything to the contrary contained in this Article XIII, nothing in this
Article XIII shall limit the ability of the directors and officers of
either Member from communicating directly with the directors and officers
of the other Member.
SECTION 13.02. Dispute Notice and Response. Either Member
may give the other Member written notice (a "Dispute Notice") of any
Dispute which has not been resolved in the normal course of business.
Within fifteen Business Days after delivery of the Dispute Notice, the
receiving Member shall submit to the other Member a written response (the
"Response"). The Dispute Notice and the Response shall each include (i) a
statement setting forth the position of the Member giving such notice, a
summary of the arguments supporting such position and, if applicable, the
relief sought and (ii) the name and title of a senior manager of such
Member who has authority to settle the
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Dispute and will be responsible for the negotiations related to the
settlement of the Dispute (the "Senior Manager").
SECTION 13.03. Negotiation Between Senior Managers. (a)
Within 10 days after delivery of the Response provided for in Section
13.02, the Senior Managers of both Members shall meet or communicate by
telephone at a mutually acceptable time and place, and thereafter as often
as they reasonably deem necessary, and shall negotiate in good faith to
attempt to resolve the Dispute that is the subject of such Dispute Notice.
If such Dispute has not been resolved within 45 days after delivery of the
Dispute Notice, then the Members shall attempt to settle the Dispute
pursuant to Section 13.04.
(b) All negotiations between the Senior Managers pursuant
to this Section 13.03 shall be treated as compromise and settlement
negotiations. Nothing said or disclosed, nor any document produced, in the
course of such negotiations which is not otherwise independently
discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration
or litigation.
SECTION 13.04. Negotiation Between Chief Executive
Officer and President. (a) If the Dispute has not been resolved by
negotiation between the Senior Managers pursuant to Section 13.03, then
within 10 Business Days after the expiration of the 45 day period provided
in Section 13.03, the Chief Executive Officer of Ashland and the President
of Marathon shall meet or communicate by telephone at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary,
and shall negotiate in good faith to attempt to resolve the Dispute that is
the subject of such Dispute Notice. If such Dispute has not been resolved
within 20 Business Days after the expiration of the 45 day period provided
in Section 13.03, then (i) if the Dispute relates solely to (A) a claim by
a Member or the Board of Managers that the other Member has failed to pay
the Company a Designated Sublease Amount or an amount in respect of a
Member-Funded Capital Expenditure, a Member-Funded Indemnity Expenditure or
an Agreed Additional Capital Contribution required to be made by it
pursuant to Section 4.02 (a "Disputed Capital
85
Contribution Amount"), (B) the determination of any of the following
amounts with respect to any period: distributions pursuant to Article V;
the Aggregate Tax Rate; Adjusted DD&A; Adjusted EBITDA; EBITDA;
Distributable Cash; the Average Annual Level and adjustments to Adjustable
Amounts; the Normal Annual Capital Budget Amount; Ordinary Course Lease
Expenses; Profit and Loss; the Tax Distribution Amount; the Tax Liability
of any Member; and the determination of fair market value of property
distributed in kind under Section 15.03, (C) the resolution of any dispute
arising under Section 8.11(b) with respect to Affiliate Transactions or (D)
the resolution of any dispute arising under Section 8.12 with respect to
certain Affiliate Transactions related to Crude Oil Purchases and Shared
Services (any Dispute relating to any of the matters set forth in clause
(A), (B), (C) or (D) above being referred to herein as an "Arbitratable
Dispute"), such Dispute shall be settled pursuant to the arbitration
procedures set forth in Appendix B and (ii) if the Dispute does not relate
primarily to an Arbitratable Dispute, each party hereto shall be permitted
to take such actions at law or in equity as it is otherwise permitted to
take or as may be available under Applicable Law.
(b) All negotiations between the Chief Executive Officer
of Ashland and the President of Marathon pursuant to this Section 13.04
shall be treated as compromise and settlement negotiations. Nothing said or
disclosed, nor any document produced, in the course of such negotiations
which is not otherwise independently discoverable shall be offered or
received as evidence or used for impeachment or for any other purpose in
any current or future arbitration or litigation.
SECTION 13.05. Right to Equitable Relief Preserved.
Notwithstanding anything in this Agreement or Appendix B to the contrary,
either Member or the Company may at any time seek from any court of the
United States located in the State of Delaware or from any Delaware state
court, any interim, provisional or injunctive relief that may be necessary
to protect the rights or property of such party or maintain the status quo
before, during or after the pendency of the negotiation process or the
arbitration proceeding or any other proceeding contemplated by Section
13.03 or 13.04.
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ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
SECTION 14.01. Ability of Company to Borrow to Fund
Disputed Monetary Amounts. (a) If the Company or a Member on behalf of the
Company (a "Non-Delinquent Member") claims that the other Member (a
"Delinquent Member") owes the Company a monetary amount in respect of
either (i) a Disputed Capital Contribution Amount or (ii) an
indemnification obligation under Article IX of the Asset Transfer and
Contribution Agreement that the Company or the Non-Delinquent Member claims
the Delinquent Member owes the Company and is either (A) past due or (B) in
dispute (a "Disputed Indemnification Amount") (each such claim described in
clauses (i) and (ii) above being a "Monetary Dispute", and each such
claimed amount being a "Disputed Monetary Amount"), and if (1) the Disputed
Monetary Amount itself, or when added together all other Disputed Monetary
Amounts, exceeds $7.5 million; (2) the Board of Managers (by vote of a
majority of the Representatives of the Non-Delinquent Member at a special
or regular meeting of the Board of Managers (which majority shall
constitute a quorum for purposes of the transaction of such business)) has
determined that an out-of-pocket disbursement of such Disputed Monetary
Amount or any portion thereof by the Company or one of its subsidiaries
within the next twelve months is reasonably necessary for the operation and
conduct of the Company's Business and, accordingly, that such amount should
be paid within the next twelve months; (3) the aggregate amount of all
Disputed Monetary Amounts (or portions thereof) that the Board of Managers
shall have determined pursuant to clause (2) above should be paid within
the next twelve months (such aggregate amount being the "Additional
Required Cash Amount") exceeds $7.5 million; (4) postponement by the
Company or such subsidiary of such disbursement until such time as the
Monetary Dispute is reasonably likely to be finally resolved pursuant to an
arbitration proceeding in accordance with Appendix B to this Agreement or
Appendix B to the Asset Transfer and Contribution Agreement, as applicable
(an "Arbitration Proceeding"), would have, or would reasonably be expected
to have, a Material Adverse Effect on the Company's Business;
87
and (5) the Delinquent Member has not paid the Company the Disputed
Monetary Amount pursuant to Section 14.02 or otherwise, then the Board of
Managers (by vote of a majority of the Representatives of the
Non-Delinquent Member at a special or regular meeting of the Board of
Managers (which majority shall constitute a quorum for purposes of the
transaction of such business)) shall be permitted to cause the Company to
incur an amount of Indebtedness equal to such Additional Required Cash
Amount, which Indebtedness may be borrowed from a third party or the
Non-Delinquent Member.
(b) If the Non-Delinquent Member lends the Company the
Additional Required Cash Amount pursuant to Section 14.01(a), then (i) the
amount actually lent by the Non-Delinquent Member (the "Advanced Amount")
and all accrued interest thereon shall be due and payable on the
Arbitration Payment Due Date (provided that the Company shall be permitted
to prepay the Advanced Amount in whole or in part at any time prior to such
date); and (ii) the Advanced Amount shall bear interest at the Base Rate
from the date on which such advance is made until the date that the
Advanced Amount, together with all interest accrued thereon, is repaid to
the Non-Delinquent Member.
SECTION 14.02. Interim Payment of Disputed Monetary
Amount. In order to reduce the amount of liquidated damages that a
Delinquent Member would be required to pay to the Company pursuant to
Section 14.03 in the event that such Delinquent Member loses in an
Arbitration Proceeding with respect to a Monetary Dispute, the Delinquent
Member shall be permitted to pay the Company the related Disputed Monetary
Amount prior to the commencement of such Arbitration Proceeding. The
Arbitration Tribunal or Sole Arbitrator, as applicable, shall not take into
consideration in determining the liability of the Delinquent Member, a
decision by such Delinquent Member to pay the Disputed Monetary Amount
prior to the commencement of the Arbitration Proceeding.
SECTION 14.03. Liquidated Damages. (a) No Interim Payment
of Disputed Monetary Amount--Delinquent Member is Found Liable for Final
Monetary Amount. If (i) it is finally determined in an Arbitration
Proceeding that a Delinquent Member owes the Company a monetary amount in
88
respect of (A) a Disputed Capital Contribution Amount or (B) a Disputed
Indemnification Amount (each such finally determined amount being a "Final
Monetary Amount") and (ii) the Delinquent Member had not paid the Company
the Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then the Delinquent Member shall
promptly, and in any event on or before the tenth Business Day following
the date on which the Arbitration Tribunal or Sole Arbitrator makes its
final determination (such tenth Business Day being the "Arbitration Payment
Due Date"), pay to the Company (A) the Final Monetary Amount, together with
interest, accrued from the commencement of the Arbitration Proceeding to
the date that the Delinquent Member pays the Final Monetary Amount to the
Company, on the Final Monetary Amount, at a rate per annum equal to (1)
during the period from the commencement of the Arbitration Proceeding to
the Arbitration Payment Due Date, the Prime Rate and (2) at any time
thereafter, 150% of the Prime Rate, in each case, with daily accrual of
interest, plus (B) an amount equal to 25% of the Final Monetary Amount.
(b) Interim Payment of Disputed Monetary Amount--Delinquent
Member is Found Liable for the Same Amount. If (i) it is finally determined
in an Arbitration Proceeding that a Delinquent Member owes the Company a
Final Monetary Amount, (ii) the Final Monetary Amount is equal to the
Disputed Monetary Amount and (iii) the Delinquent Member had paid the
Company the Disputed Monetary Amount prior to the commencement of such
Arbitration Proceeding pursuant to Section 14.02, then if the Final
Monetary Amount is equal to the Disputed Monetary Amount, the Delinquent
Member shall not owe the Company any other amount in respect of the
Monetary Dispute.
(c) Interim Payment of Disputed Monetary Amount--Delinquent
Member is Found Liable for a Greater Amount. If (i) it is finally
determined in an Arbitration Proceeding that a Delinquent Member owes the
Company a Final Monetary Amount, (ii) the Final Monetary Amount is greater
than the Disputed Monetary Amount and (iii) the Delinquent Member had paid
the Company the Disputed Monetary Amount prior to the commencement of such
Arbitration Proceeding pursuant to Section 14.02, then the Delinquent
Member shall
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promptly, and in any event on or before the Arbitration Payment Due Date,
pay to the Company an amount (an "Additional Monetary Amount") equal to (A)
the Final Monetary Amount less (B) the Disputed Monetary Amount, together
with interest, accrued from the commencement of the Arbitration Proceeding
to the date that the Delinquent Member pays the Additional Monetary Amount
to the Company, on the Additional Monetary Amount, at a rate per annum
equal to (1) during for the period from the commencement of the Arbitration
Proceeding to the Arbitration Payment Due Date, the Prime Rate and (2) at
any time thereafter, 150% of the Prime Rate, in each case, with daily
accrual of interest.
(d) Interim Payment of Disputed Monetary
Amount--Delinquent Member is Found Liable for a Lesser Amount. If (i) it is
finally determined in an Arbitration Proceeding that a Delinquent Member
owes the Company a Final Monetary Amount, (ii) the Final Monetary Amount is
less than the Disputed Monetary Amount and (iii) the Delinquent Member had
paid the Company the Disputed Monetary Amount prior to the commencement of
such Arbitration Proceeding, then the Company shall promptly, and in any
event on or before the Arbitration Payment Due Date, repay to the
Delinquent Member an amount (a "Refundable Amount") equal to (A) the
Disputed Monetary Amount less (B) the Final Monetary Amount, together with
interest, accrued from the commencement of the Arbitration Proceeding to
the date that the Company repays the Refundable Amount to the Delinquent
Member, on the Refundable Amount, at a rate per annum equal to (1) during
the period from the commencement of the Arbitration Proceeding to the
Arbitration Payment Due Date, the Prime Rate and (2) at any time
thereafter, 150% of the Prime Rate, in each case, with daily accrual of
interest.
(e) Interim Payment of Disputed Monetary
Amount--Delinquent Member is Found Not Liable for Disputed Monetary Amount.
If (i) it is finally determined in an Arbitration Proceeding that a
Delinquent Member does not owe the Company the related Disputed Monetary
Amount and (ii) the Delinquent Member had paid the Company the Disputed
Monetary Amount prior to the commencement of such Arbitration Proceeding,
then the Company shall promptly, and in any event on or before the
Arbitration Payment Due Date, repay to the Delinquent Member an amount
equal to the
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Disputed Monetary Amount, together with interest, accrued from the
commencement of the Arbitration Proceeding to the date that the Company
repays the Disputed Monetary Amount to the Delinquent Member, on the
Disputed Monetary Amount, at a rate per annum equal to (A) during the
period from the commencement of the Arbitration Proceeding to the
Arbitration Payment Due Date, the Prime Rate and (B) at any time
thereafter, 150% of the Prime Rate, in each case, with daily accrual of
interest.
SECTION 14.04. Right of Set-Off. Notwithstanding any
provision to the contrary contained in this Agreement, if at the time of a
Distribution Date a Delinquent Member has failed to pay the Company an
amount that it was required pursuant to Section 14.03 to pay to the Company
on or before such Distribution Date, then on such Distribution Date, the
Company shall be permitted to set off from the distribution that it would
otherwise be required to make to such Delinquent Member pursuant to Section
5.01 on such Distribution Date, an amount equal to such unpaid amount. If
the amount of the distribution that such Delinquent Member was otherwise
entitled to receive pursuant to Section 5.01 on such Distribution Date is
less than the aggregate amount that such Delinquent Member owes to the
Company pursuant to Section 14.03, then the Company shall be permitted to
set off from subsequent distributions that it would otherwise make to such
Delinquent Member pursuant to Section 5.01 the remaining unpaid amount
until such time as such remaining unpaid amount shall have been paid in
full. A Delinquent Member's interest in distributions to be made to such
Delinquent Member pursuant to Section 5.01 shall be reduced by any amount
set off by the Company against such distributions pursuant to this Section
14.04(a).
SECTION 14.05. Security Interest. (a) Each Member hereby
agrees that if (i) it has failed to pay the Company an amount that it was
required to pay to the Company pursuant to Section 14.03 on or prior to the
related Arbitration Payment Due Date, and (ii) the Board of Managers (by
vote of a majority of the Representatives of the other Member at a special
or regular meeting of the Board of Managers (which majority shall
constitute a quorum for purposes of the transaction of such business) so
requests, such Member shall (A) on the Business Day next following
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such Arbitration Payment Due Date, grant to the Company, as security for
the performance of its obligation to pay the Company such amount owed (but
for no other amount), a first priority security interest in its Membership
Interests and the proceeds thereof (a "Security Interest"), all under the
Uniform Commercial Code of the State of Delaware and (ii) promptly
thereafter, execute and deliver to the Company all financing statements and
other instruments that the Board of Managers (by vote of a majority of the
Representatives of the other Member at a special or regular meeting of the
Board of Managers (which majority shall constitute a quorum for purposes of
the transaction of such business)) may request to effectuate and carry out
the preceding provisions of this Section 14.05(a). The Company shall be
entitled to all the rights and remedies of a secured party under the
Uniform Commercial Code of the State of Delaware with respect to any
Security Interest granted by such Member. At the option of the Company,
this Agreement or a carbon, photographic, or other copy hereof may serve as
a financing statement with respect to any such Security Interest. For
purposes of perfecting a Security Interest, a Member's Membership Interests
shall be deemed to be a "security" governed by Chapter 8 of the Delaware
Uniform Commercial Code and as such term is therein defined in Section
8-102(c) thereunder.
(b) If the Company incurs Indebtedness pursuant to
Section 14.01 by borrowing from a Non-Delinquent Member, the Company shall
be permitted to assign all its rights with respect to a Security Interest
granted to it pursuant to Section 14.05(a) to such Non-Delinquent Member as
security for such Indebtedness; provided that such Non-Delinquent Member
shall not be permitted to assign such Security Interest to a third party.
92
ARTICLE XV
Dissolution and Termination
SECTION 15.01. Dissolution. The Company shall be
dissolved and its business and affairs wound up upon the earliest to occur
of any one of the following events:
(a) the expiration of the Term of the Company;
(b) the sale or other disposition of all or substantially
all the property of the Company;
(c) the written consent of both Members;
(d) the unanimous agreement of all Representatives on the
Board of Managers;
(e) the bankruptcy, involuntary liquidation or
dissolution of either Member; or
(f) the entry of a decree of judicial dissolution
pursuant to Section 18-802 of the Delaware Act.
The bankruptcy, involuntary liquidation of dissolution of a Member shall
cause a Member to cease to be a member of the Company. Notwithstanding the
foregoing, the Company shall not be dissolved and its business and affairs
shall not be wound up upon the occurrence of any event specified in (i)
clause (e) above if within 90 days after the date on which such event
occurs, the remaining Member elects in writing to continue the business of
the Company or (ii) clause (a) above if a Non-Terminating Member purchases
the Membership Interests of the Terminating Member pursuant to its Special
Termination Right. Except as provided in this paragraph and Section
15.01(e), and to the fullest extent permitted by the Delaware Act, the
occurrence of an event that causes a Member to cease to be a member of the
Company shall not cause the Company to be dissolved or its business or
affairs to be wound up, and upon the occurrence of such an event, the
business of the Company shall continue without dissolution.
93
SECTION 15.02. Winding Up of Company. Upon dissolution,
the Company's business shall be liquidated in an orderly manner. The Board
of Managers shall act as the liquidating trustee (unless the Board of
Managers elects to appoint a liquidating trustee) to wind up the affairs of
the Company pursuant to this Agreement. In performing its duties, the
liquidating trustee is authorized to sell, distribute, exchange or
otherwise dispose of the assets of the Company in accordance with the
Delaware Act and in any reasonable manner that the liquidating trustee
shall determine to be in the best interest of the Members or their
successors-in-interest.
SECTION 15.03. Distribution of Property. In the event the
Board of Managers determines that it is necessary in connection with the
liquidation of the Company to make a distribution of property in kind, such
property shall be transferred and conveyed to the Members so as to vest in
each of them as a tenant in common an undivided interest in the whole of
such property equal to their interests in the property based upon the
amount of cash that would be distributed to each of the Members in
accordance with Article V if such property were sold for an amount of cash
equal to the fair market value of such property, as determined and approved
by the Board of Managers pursuant to a vote in accordance with Section
8.07(b).
SECTION 15.04. Time Limitation. Any liquidating
distribution pursuant to this Article XV shall be made no later than the
later of (a) the end of the taxable year during which such liquidation
occurs and (b) 90 days after the date of such liquidation.
SECTION 15.05. Termination of Company. The Company shall
terminate when all assets of the Company, after payment of or due provision
for all debts, liabilities and obligations of the Company, shall have been
distributed to the Members in the manner provided for in this Agreement,
and the Certificate of Formation shall have been canceled in the manner
provided by the Delaware Act.
94
ARTICLE XVI
Miscellaneous
SECTION 16.01. Notices. Any notice, consent or approval
to be given under this Agreement shall be in writing and shall be deemed to
have been given if delivered: (i) personally by a reputable courier service
that requires a signature upon delivery; (ii) by mailing the same via
registered or certified first-class mail, postage prepaid, return receipt
requested; or (iii) by telecopying the same with receipt confirmation
(followed by a first-class mailing of the same) to the intended recipient.
Any such writing will be deemed to have been given: (a) as of the date of
personal delivery via courier as described above; (b) as of the third
calendar day after depositing the same into the custody of the postal
service as evidenced by the date-stamped receipt issued upon deposit of the
same into the mails as described above; and (c) as of the date and time
electronically transmitted in the case of telecopy delivery as described
above, in each case addressed to the intended party at the address set
forth below:
To the Board of Managers:
Marathon Ashland Petroleum LLC
539 South Main Street
Findlay, Ohio 45840
Attn: General Counsel
Phone: (419) 422-2121
Fax: (419) 421-4115
To Marathon:
Marathon Oil Company
5555 San Felipe
P.O. Box 3128
Houston, TX 77056-2723
Attn: General Counsel
Phone: (713) 296-4137
Fax: (713) 296-4171
95
To Ashland:
Ashland Inc.
1000 Ashland Drive
Russell, KY 41169
Attn: General Counsel
Phone: (606) 329-3333
Fax: (606) 329-3823
Any party may designate different addresses or telecopy numbers by notice
to the other parties.
SECTION 16.02. Merger and Entire Agreement. This
Agreement (including the Exhibits, Schedules and Appendices attached
hereto), together with the other Transaction Documents (including the
exhibits, schedules and appendices thereto) and certain other agreements
executed contemporaneously with the Master Formation Agreement constitutes
the entire Agreement of the parties hereto and supersedes any prior
understandings, agreements, or representations by or among the parties
hereto, written or oral, to the extent they relate in any way to the
subject matter hereof.
SECTION 16.03. Assignment. A party hereto shall not
assign all or any of its rights, obligations or benefits under this
Agreement to any third party otherwise than (i) in connection with a
Transfer of its Membership Interests pursuant to Article X, (ii) with the
prior written consent of the other party hereto, which consent may be
withheld in such party's sole discretion, (iii) the granting by a Member of
a Security Interest to the Company pursuant to Section 14.05 or (iv)
pursuant to Article V of the Put/Call, Registration Rights and Standstill
Agreement, and any attempted assignment not in compliance with this Section
16.03 shall be void ab initio.
SECTION 16.04. Parties in Interest. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors, legal representatives and permitted assigns.
SECTION 16.05. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed
96
an original, but all of which together shall constitute one and the same
instrument.
SECTION 16.06. Amendment; Waiver. This Agreement may not
be amended except in a written instrument signed by each of the parties
hereto and expressly stating it is an amendment to this Agreement. Any
failure or delay on the part of any party hereto in exercising any power or
right hereunder shall not operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power
hereunder or otherwise available at law or in equity.
SECTION 16.07. Severability. If any term, provision,
covenant, or restriction of this Agreement or the application thereof to
any person or circumstance, at any time or to any extent, is held by a
court of competent jurisdiction or other Governmental Authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement (or the application of such
provision in other jurisdictions or to persons or circumstances other than
those to which it was held invalid or unenforceable) shall in no way be
affected, impaired or invalidated, and to the extent permitted by
Applicable Law, any such term, provision, covenant or restriction shall be
restricted in applicability or reformed to the minimum extent required for
such to be enforceable. This provision shall be interpreted and enforced to
give effect to the original written intent of the parties hereto prior to
the determination of such invalidity or unenforceability.
SECTION 16.08. GOVERNING LAW. THIS AGREEMENT 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. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH SECTION
18-1101 OF THE DELAWARE ACT. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF THIS AGREEMENT, OR ANY
TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS WAIVED.
97
SECTION 16.09. Enforcement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in the Delaware Chancery Court; provided that
if the Delaware Chancery Court does not have jurisdiction with respect to
such matter, the parties hereto shall be entitled to enforce specifically
the terms and provisions of this Agreement in any court of the United
States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of the Delaware Chancery Court in the
event that any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement; provided that if the Delaware
Chancery Court does not have jurisdiction with respect to any such dispute,
such party consents to submit itself to the personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state court,
(ii) agrees to appoint and maintain an agent in the State of Delaware for
service of legal process, (iii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court, (iv) agrees that it will not plead or claim in any such
court that any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any such court has been brought in an
inconvenient forum and (v) agrees that it will not initiate any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than (1) the Delaware Chancery Court, or (2)
if the Delaware Chancery Court does not have jurisdiction with respect to
such action, a Federal court sitting in the State of Delaware or a Delaware
state court.
SECTION 16.10. Creditors. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any creditor of the
Company or of any Member.
98
SECTION 16.11. No Bill for Accounting. In no event shall
either Member have any right to file a bill for an accounting or any
similar proceeding.
SECTION 16.12. Waiver of Partition. Each Member hereby
waives any right to partition of the Company property.
SECTION 16.13. Table of Contents, Headings and Titles.
The table of contents and section headings of this Agreement and titles
given to Exhibits and Schedules to this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
SECTION 16.14. Use of Certain Terms; Rules of
Construction. As used in this Agreement, the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular paragraph, subparagraph, section,
subsection or other subdivision. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa. Each party hereto agrees
that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation or construction of this Agreement or any Transaction
Document.
SECTION 16.15. Holidays. Notwithstanding any deadline for
payment, performance, notice or election under this Agreement, if such
deadline falls on a date that is not a Business Day, then the deadline for
such payment, performance, notice or election will be extended to the next
succeeding Business Day.
SECTION 16.16. Third Parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person
and their respective successors, legal representatives and permitted
assigns any rights, remedies or basis for reliance upon, under or by reason
of this Agreement.
99
SECTION 16.17. Liability for Affiliates. Except where and
to the extent that a contrary intention otherwise appears, where a Member
undertakes to cause its Affiliates to take or abstain from taking any
action, such undertaking shall mean (i) in the case of any Affiliate that
is controlled by such Member, that such Member shall cause such Affiliate
to take or abstain from taking such action and (ii) in the case of an
Affiliate that controls or is under common control with such Member, that
such Member shall use its commercially reasonable best efforts to cause
such Affiliates to take or abstain from taking such action; provided,
however, that such Member shall not be required to violate, or cause any
director of such Affiliate to violate, any fiduciary duty to minority
shareholders of such Affiliate.
IN WITNESS WHEREOF, this Agreement has been duly executed
by the Members as of the day and year first above written.
MARATHON OIL COMPANY
by /s/ Victor G. Beghini
----------------------------
Name: Victor G. Beghini
Title: President
ASHLAND INC.
by /s/ Paul W. Chellgren
----------------------------
Name: Paul W. Chellgren
Title: Chairman of the Board
and Chief Executive
Officer
[85244.6]
100
Each of the undersigned persons hereby accepts
his rights and authority as a Representative and agrees to perform
and discharge his duties and obligations as a member of the Board
of Managers, in each case until such person's successor as a
Representative is designated or until such person's resignation or
removal as a Representative in accordance with this Agreement.
/s/ Thomas J. Usher /s/ Paul W. Chellgren
------------------------ -------------------------
Name: Thomas J. Usher Name: Paul W. Chellgren
/s/ Victor G. Beghini /s/ J.A. Fred Brothers
----------------------- -------------------------
Name: Victor G. Beghini Name: J. A. Fred Brothers
/s/ John P. Surma
-----------------------
Name: John P. Surma
=====================================================================
PUT/CALL, REGISTRATION RIGHTS
AND
STANDSTILL AGREEMENT
Dated as of January 1, 1998
among
MARATHON OIL COMPANY,
USX CORPORATION,
ASHLAND INC.
and
MARATHON ASHLAND PETROLEUM LLC
=====================================================================
Contents, p. 1
TABLE OF CONTENTS
Page
ARTICLE I
Certain Definitions; Adjustable Amounts;Representations and Warranties
SECTION 1.01. Definitions........................................2
SECTION 1.02. Adjustable Amounts................................17
SECTION 1.03. Representations and Warranties....................18
ARTICLE II
Special Termination Right
SECTION 2.01. Special Termination Right.........................20
SECTION 2.02. Special Termination Price.........................20
SECTION 2.03. Method of Exercise................................21
ARTICLE III
Marathon Call Right
SECTION 3.01. Marathon Call Right...............................21
SECTION 3.02. Marathon Call Price...............................21
SECTION 3.03. Method of Exercise................................22
SECTION 3.04. Limitation on Marathon's Ability To Exercise
its Marathon Call Right..........................22
ARTICLE IV
Ashland Put Right
SECTION 4.01. Ashland Put Right.................................22
SECTION 4.02. Ashland Put Price.................................23
SECTION 4.03. Method of Exercise................................26
SECTION 4.04. Ashland Put Price Election Notice.................26
SECTION 4.05. Limitation on Ashland's Ability To Exercise
its Ashland Put Right............................27
Contents, p. 2
ARTICLE V
Termination of Certain Distributions; Revocable Proxies
SECTION 5.01. Termination of Certain Distributions..............27
SECTION 5.02. Revocable Proxies.................................30
ARTICLE VI
Determination of the Appraised Value of the Company
SECTION 6.01. Determination of Appraised Value of the
Company..........................................31
ARTICLE VII
Determination of the Fair Market Value of Securities
SECTION 7.01. General...........................................35
SECTION 7.02. Determination of Fair Market Value of
Marathon Debt Securities.........................35
SECTION 7.03. Determination of Fair Market Value of
Actively Traded Marathon Equity Securities.......35
SECTION 7.04. Determination of Fair Market Value of Non-
Actively Traded Marathon Equity Securities.......39
ARTICLE VIII
Certain Matters Relating to Securities
SECTION 8.01. Certain Requirements with Respect to
Marathon Debt Securities.........................42
SECTION 8.02. Procedures with Respect to the Issuance of
Securities.......................................42
SECTION 8.03. Holding Period....................................45
SECTION 8.04. Manner of Sale of Marathon Equity
Securities.......................................45
ARTICLE IX
Closing; Conditions to Closing; Consequences of Delay
SECTION 9.01. Closing...........................................46
SECTION 9.02. Conditions to Closing.............................49
SECTION 9.03. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right
Where Ashland Is at Fault........................54
Contents, p. 3
SECTION 9.04. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right
Where Marathon or USX Is at Fault................55
SECTION 9.05. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right
Where No Party Is at Fault.......................57
SECTION 9.06. Consequences of Delayed Second or Third
Scheduled Installment Payment....................58
SECTION 9.07. Consequences of a Delayed Closing of the
Special Termination Right Where Terminating
Member Is at Fault...............................58
SECTION 9.08. Consequences of a Delayed Closing of the
Special Termination Right Where Non-
Terminating Member Is at Fault...................60
SECTION 9.09. Consequences of Delayed Closing of Special
Termination Right Where No Party Is at
Fault............................................62
ARTICLE X
Registration Rights
SECTION 10.01. Registration upon Request........................63
SECTION 10.02. Covenants of the Issuer..........................67
SECTION 10.03. Fees and Expenses................................72
SECTION 10.04. Indemnification and Contribution.................73
SECTION 10.05. Underwriting Agreement; Purchase
Agreement.......................................77
SECTION 10.06. Undertaking To File Reports......................78
ARTICLE XI
Covenants
SECTION 11.01. Cooperation; Commercially Reasonable Best
Efforts.........................................78
SECTION 11.02. Antitrust Notification; FTC or DOJ
Investigation...................................78
SECTION 11.03. Governmental Filings re: Ashland LOOP/LOCAP
Interest........................................80
SECTION 11.04. Designated Sublease Agreements...................81
Contents, p. 4
ARTICLE XII
Standstill Agreement
SECTION 12.01. Restrictions of Certain Actions by Marathon
and USX.........................................83
SECTION 12.02. Restrictions of Certain Actions by
Ashland.........................................86
ARTICLE XIII
Indemnification
SECTION 13.01. Indemnification re: Ashland Representatives'
Revocable Proxies and the Ashland LOOP/LOCAP
Revocable Proxy.................................88
SECTION 13.02. Indemnification re: Marathon Representatives
Revocable Proxies...............................89
SECTION 13.03. Indemnification re: Transfer of Economic
Interests in the Ashland LOOP/LOCAP Interest
to Marathon, the Company or a Person
Designated by Marathon..........................89
SECTION 13.04. Procedures Relating to Indemnification Under
This Article XIII...............................90
ARTICLE XIV
Company Competitive Businesses; Detrimental Activities; Limitations on the
Company Entering into Valvoline's Business
SECTION 14.01. Competitive Businesses...........................90
SECTION 14.02. Detrimental Activities...........................94
SECTION 14.03. Limitations on the Company Entering into the
Valvoline Business..............................96
SECTION 14.04. Purchase Price of Competitive Business
Assets.........................................103
Contents, p. 5
ARTICLE XV
Survival; Assignment
SECTION 15.01. Survival and Assignment re: Marathon and
USX...........................................106
SECTION 15.02. Survival and Assignment re: Ashland...........107
SECTION 15.03. Survival and Assignment re: the
Company.......................................109
SECTION 15.04. Assignment and Assumption Agreements...........109
SECTION 15.05. Consequences of Unpermitted Assignments........110
ARTICLE XVI
Dispute Resolution Procedures
SECTION 16.01. General........................................110
SECTION 16.02. Dispute Notice and Response....................110
SECTION 16.03. Negotiation Between Chief Executive
Officers......................................110
SECTION 16.04. Right to Equitable Relief Preserved............111
ARTICLE XVII
Miscellaneous
SECTION 17.01. Notices........................................111
SECTION 17.02. Merger and Entire Agreement....................113
SECTION 17.03. Parties in Interest............................113
SECTION 17.04. Counterparts...................................113
SECTION 17.05. Amendment; Waiver..............................113
SECTION 17.06. Severability...................................113
SECTION 17.07. GOVERNING LAW..................................114
SECTION 17.08. Enforcement....................................114
SECTION 17.09. Table of Contents, Headings and Titles.........115
SECTION 17.10. Use of Certain Terms; Rules of Construction....115
SECTION 17.11. Holidays.......................................115
SECTION 17.12. Third Parties..................................115
SECTION 17.13. Liability for Affiliates.......................115
SECTION 17.14. Schedules......................................116
Contents, p. 6
APPENDIX A Certain Definitions
SCHEDULE 1.03(c) Conflicts
SCHEDULE 1.03(d) Consents
SCHEDULE 14.01(a) Competitive Businesses
PUT/CALL, REGISTRATION RIGHTS AND STANDSTILL
AGREEMENT dated as of January 1, 1998 by
and among MARATHON OIL COMPANY, an Ohio
corporation ("Marathon"), USX CORPORATION, a
Delaware corporation ("USX"), ASHLAND INC., a
Kentucky corporation ("Ashland"), and MARATHON
ASHLAND PETROLEUM LLC, a Delaware limited
liability company (the "Company").
Preliminary Statement
WHEREAS Marathon and Ashland have previously entered into
a Master Formation Agreement dated as of December 12, 1997, relating to the
formation of the Company, which will own and operate certain of Marathon's
and Ashland's respective petroleum supply, refining, marketing, and
transportation businesses;
WHEREAS Marathon and Ashland have previously entered into
an Asset Transfer and Contribution Agreement dated as of December 12, 1997,
pursuant to which, among other things, Marathon and Ashland will transfer
their respective Businesses (as defined below) to the Company;
WHEREAS Marathon, USX and Ashland have previously entered
into a Parent Agreement dated as of December 12, 1997;
WHEREAS Marathon and Ashland have entered into an LLC
Agreement dated as of the date hereof in order to establish the rights and
responsibilities of each of them with respect to the governance, financing
and operation of the Company;
WHEREAS Marathon and Ashland have agreed that under
certain circumstances, Ashland will sell to Marathon and Marathon will
purchase from Ashland all of Ashland's Membership Interests and the Ashland
LOOP/LOCAP Interest (each as defined below), upon the terms and subject to
the conditions set forth herein;
2
WHEREAS Marathon and Ashland have agreed that if Marathon
or Ashland elects to terminate the Term of the Company pursuant to Section
2.03 of the LLC Agreement, then the non-terminating Member shall have the
right to purchase from the terminating Member all of the terminating
Member's Membership Interests, upon the terms and subject to the conditions
set forth herein;
WHEREAS Marathon and USX have agreed that Marathon and
USX will grant Ashland certain registration rights with respect to any
Securities (as defined below) that Marathon or USX issues to Ashland
pursuant to this Agreement in connection with the purchase by Marathon of
Ashland's Membership Interests and the Ashland LOOP/LOCAP Interest, upon
the terms and subject to the conditions set forth herein;
WHEREAS Marathon and USX have agreed to certain
restrictions with respect to actions relating to Ashland Voting Securities
(as defined below), upon the terms and subject to the conditions set forth
herein;
WHEREAS Ashland has agreed to certain restrictions with
respect to actions relating to USX Voting Securities (as defined below),
upon the terms and subject to the conditions set forth herein; and
WHEREAS Marathon, USX and Ashland have agreed to certain
restrictions with respect to certain of their business activities, upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
ARTICLE I
Certain Definitions; Adjustable Amounts;
Representations and Warranties
SECTION 1.01. Definitions. Defined terms used in this
Agreement shall have the meanings ascribed to them by definition in this
Agreement or in Appendix A. In addition,
3
when used herein the following terms have the following meanings:
"Actively Traded Marathon Equity Securities" means
Marathon Equity Securities for which there is an active trading market on
the National Market System of the NASDAQ or on a National Securities
Exchange during the period commencing 30 days prior to the Closing Date or
applicable Installment Payment Date and ending on the Closing Date or such
Installment Payment Date.
"Adjustable Amount" has the meaning set forth in Section 1.02.
"Adjustable Amounts Notice" has the meaning set forth in
Section 1.02.
"Adjustment Year" has the meaning set forth in Section 1.02.
"Agreement" means this Put/Call, Registration Rights, and
Standstill Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Appraised Value Determination Date" has the meaning set
forth in Section 6.01(c).
"Appraised Value of the Company" has the meaning set
forth in Section 6.01(c).
"Ashland Designated Sublease Agreements" means the
Ashland Sublease Agreements attached as Exhibits L-1, L-2, L-3 and L-4 to
the Asset Transfer and Contribution Agreement.
"Ashland Exercise Period Distributions" has the meaning
set forth in Section 5.01(a)(i).
"Ashland LOOP/LOCAP Interest" means (i) the 4.0% interest
in LOOP LLC owned by Ashland on the date hereof pursuant to the limited
liability company agreement of LOOP LLC dated as of October 18, 1996, among
Ashland, Marathon Pipe Line Company, Murphy Oil Corporation, Shell Oil
Company and Texaco Inc. and (ii) the 86.20 shares of common stock of LOCAP,
Inc. owned by Ashland, which shares on the date hereof represent an 8.6%
interest in LOCAP, Inc.; provided
4
that in the event there is a reclassification of the LOOP, LLC membership
interests or the common stock of LOCAP, Inc. into one or more different
types or classes of securities, the "Ashland LOOP/LOCAP Interest" shall
instead include such different types or classes of securities.
"Ashland LOOP/LOCAP Irrevocable Proxy" has the meaning
set forth in Section 9.02(e).
"Ashland LOOP/LOCAP Revocable Proxy" has the meaning set
forth in Section 5.02(c).
"Ashland Material Adverse Effect" means, for purposes of
Section 1.03, either (i) a material adverse effect on the ability of
Ashland to perform its obligations under this Agreement or (ii) an effect
on the business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of Ashland's
Business which results in a Loss of two million dollars ($2,000,000) or
more, or, if such Loss is not susceptible to being measured in monetary
terms, is otherwise materially adverse to Ashland's Business; provided that
any such effect relating to or resulting from any change in the price of
petroleum or petroleum byproducts, general economic conditions or local,
regional, national or international industry conditions (including changes
in financial or market conditions) shall be deemed not to constitute an
Ashland Material Adverse Effect.
"Ashland Membership Interests" means the initial
Membership Interests of Ashland on the date hereof, together with any
additional Membership Interests that Ashland may hereafter acquire.
"Ashland Put Exercise Date" has the meaning set forth in
Section 4.03.
"Ashland Put Exercise Notice" has the meaning set forth
in Section 4.03.
"Ashland Put Price" has the meaning set forth in Section
4.01.
"Ashland Put Price Election Date" has the meaning set
forth in Section 4.04(b).
5
"Ashland Put Price Election Notice" has the meaning set
forth in Section 4.04(a).
"Ashland Put Right" has the meaning set forth in Section
4.01.
"Ashland Representatives Revocable Proxies" has the
meaning set forth in Section 5.02(a).
"Ashland Special Termination Right" means the Special
Termination Right granted to Ashland pursuant to Section 2.01.
"Ashland Voting Securities" means the securities of
Ashland (i) having the power under ordinary circumstances to elect at least
a majority of the board of directors of Ashland (whether or not any senior
class of stock has voting power by reason of any contingency) or (ii)
convertible into or exchangeable for securities of Ashland having the power
under ordinary circumstances to elect at least a majority of the board of
directors of Ashland (whether or not any senior class of stock has voting
power by reason of any contingency).
"Average Annual Level" means for any twelve-month period
ending on December 31 of any calendar year, the average of the level of the
Price Index ascertained by adding the twelve monthly levels of the Price
Index during such twelve-month period and dividing the total by twelve.
"Base Level" has the meaning set forth in the LLC Agreement.
"Base Rate" means a rate of interest closely
approximating that of comparable term senior debt securities or debt
obligations priced to trade at par issued by USX or issued by Marathon and
fully guaranteed by USX, or issued by a firm of comparable credit standing.
"Blackout Period" has the meaning set forth in Section
10.01(b).
"Bulge Bracket Investment Banking Firm" means an
investment banking firm that is listed as one of the top 10 investment
banking firms for all domestic equity issues in terms of the aggregate
dollar amount of such issues (with full credit given to the lead manager)
as reported in the
6
latest issue of Investment Dealers' Digest or a publication (or otherwise)
of similar national repute which provides rankings of investment banking
firms by size of domestic issues.
"Bulk Motor Oil Business" has the meaning set forth in
Section 14.03(h).
"Cash" means United States dollars or immediately
available funds in United States dollars.
"Closing" has the meaning set forth in Section 9.01(a).
"Closing Date" has the meaning set forth in Section 9.01(a).
"Commission" means the Securities and Exchange Commission
or any successor agency having jurisdiction under the Securities Act.
"Company Competitive Business" has the meaning set forth
in Section 14.01(a).
"Company Competitive Business Assets" has the meaning set
forth in Section 14.01(d).
"Company Competitive Third Party" has the meaning set
forth in Section 14.01(d).
"Company Material Adverse Effect" means, for purposes of
Section 1.03, an effect on the business, operations, assets, liabilities,
results of operations, cash flows, condition (financial or otherwise) or
prospects of the Company's Business which results in a Loss of two million
dollars ($2,000,000) or more, or, if such Loss is not susceptible to being
measured in monetary terms, is otherwise materially adverse to the
Company's Business; provided that any such effect relating to or resulting
from any change in the price of petroleum or petroleum byproducts, general
economic conditions or local, regional, national or international industry
conditions (including changes in financial or market conditions) shall be
deemed not to constitute a Company Material Adverse Effect.
"Competitive Business Purchase Price" has the meaning set
forth in Section 14.04.
7
"Confidential Information" has the meaning set
forth in Section 14.02(b).
"Confidentiality Agreement" has the meaning set forth in
Section 14.02(b).
"Delayed Closing Date" has the meaning set forth in
Section 9.03(b).
"Delayed Closing Date Interest Period" has the meaning
set forth in Section 9.03(b).
"Delayed Installment Payment Date" has the meaning set
forth in Section 9.06.
"Delayed Installment Payment Date Interest Period" has
the meaning set forth in Section 9.06.
"Demand Registration" has the meaning set forth in
Section 10.01(a).
"Designated Sublease Agreements" means the Ashland
Designated Sublease Agreements and the
Marathon Designated Sublease Agreements.
"Disclosing Party" has the meaning set forth in Section
14.02(b).
"Dispute" has the meaning set forth in Section 16.01.
"Dispute Notice" has the meaning set forth in Section 16.02.
"Distributable Cash" has the meaning set forth in the LLC
Agreement.
"Escrow Account" has the meaning set forth in Section
5.01(a)(ii)(B).
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Exercise Date" means the Special Termination Exercise
Date, the Marathon Call Exercise Date or the Ashland Put Exercise Date, as
applicable.
8
"Exercise Period Distributions" means Ashland Exercise
Period Distributions or Marathon Exercise Period Distributions, as
applicable.
"Fair Market Value" has the meaning set forth in Section
7.01.
"14.01(d) Presentation Meeting" has the meaning set forth
in Section 14.01(d).
"14.01(d) Scheduled Closing Date" has the meaning set
forth in Section 14.01(d).
"14.03(d) Offer Notice" has the meaning set forth in
Section 14.03(d).
"14.03(d) Purchase Election Notice" has the meaning set
forth on Section 14.03(d).
"14.03(d) Scheduled Closing Date" has the meaning set
forth in Section 14.03(d).
"14.03(f) Offer Notice" has the meaning set forth in
Section 14.03(f)(i).
"14.03(f) Purchase Election Notice" has the meaning set
forth in Section 14.03(f)(i).
"14.04 Appraisal Process Commencement Date" has the
meaning set forth in Section 14.04.
"14.04 Appraisal Report" has the meaning set forth in
Section 14.04.
"14.04 Initial Opinion Values" has the meaning set forth
in Section 14.04.
"14.04 Subsequent Appraisal Process Commencement Date"
has the meaning set forth in Section 14.04.
"14.04 Third Opinion Value" has the meaning set forth in
Section 14.04.
"Fully Distributed Sale" has the meaning set forth in
Section 8.04.
9
"Holding Period" has the meaning set forth in Section 8.03.
"Installment Payment" has the meaning set forth in
Section 4.02(b).
"Installment Payment Date" means a Scheduled Installment
Payment Date or a Delayed Installment Payment Date, as applicable.
"Investment Grade Rating" means a rating of BBB- or
higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating
by S&P and Moody's.
"Issuer" has the meaning set forth in Section 10.01(a).
"Issuer Material Adverse Effect" means either (i) a
material adverse effect on the ability of the Issuer to perform its
obligations under this Agreement or (ii) a material adverse effect on the
business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of the Issuer and
its subsidiaries, taken as a whole; provided, however, that any such effect
relating to or resulting from any change in the price of petroleum or
petroleum byproducts, general economic conditions or local, regional,
national or international industry conditions (including changes in
financial or market conditions) or any change in applicable tax laws or
regulations shall be deemed not to constitute an Issuer Material Adverse
Effect.
"LIBOR Rate" means, for any one-month period or portion
thereof, the per annum rate (rounded to the nearest 1/10,000 of 1%) for
U.S. dollar deposits for such one-month period which appears on Bloomberg
Page DG522a Equity GPGX as of 11:00 a.m. London time on the second London
business day preceding the first day of such one-month period. "Bloomberg
Page DG522a Equity GPGX" means the display page designated "DG522a Equity
GPGX" on the Bloomberg, L.P. quotation service (or replacement page or
successor service for displaying comparable rates).
"Losses" has the meaning set forth in Section 10.04.
10
"Long Term Debt" means Indebtedness with a maturity of
one year or longer.
"Maralube Express Business" has the meaning set forth in
Section 14.03(d)(i).
"Marathon Call Exercise Date" has the meaning set forth
in Section 3.03.
"Marathon Call Exercise Notice" has the meaning set forth
in Section 3.03.
"Marathon Call Price" has the meaning set forth in
Section 3.01.
"Marathon Call Right" has the meaning set forth in
Section 3.01.
"Marathon Debt Securities" has the meaning set forth in
Section 8.01.
"Marathon Designated Sublease Agreements" means the
Marathon Sublease Agreements attached as Exhibits E-1, E-2 and E-3 to the
Asset Transfer and Contribution Agreement.
"Marathon Equity Securities" means any of (i) the class
of common stock of USX designated as USX-Marathon Group Common Stock, par
value $1.00 per share, (ii) the class of common equity securities of
Marathon or, if USX has transferred all of the assets and liabilities of
the Marathon Group to a Marathon Group Subsidiary (as such term is defined
in the Certificate of Incorporation of USX) pursuant to Section 2(a) of
Division I of Article Fourth of the Certificate of Incorporation of USX and
the Board of Directors of USX has declared that all of the outstanding
shares of USX-Marathon Group Common Stock be exchanged for shares of common
stock of the Marathon Group Subsidiary, the Marathon Group Subsidiary;
provided, that so long as Marathon shall be a subsidiary of USX, such
common equity securities shall constitute Marathon Equity Securities only
if such class accounts for USX's primary ownership interest in Marathon, or
(iii) the common equity securities of USX (but only if a single class of
common equity securities of USX exists), in each case (1) registered
pursuant to Section 12 of the Exchange Act and (2) issued to Ashland
pursuant to Section 4.02(c); provided that in the event there is a
11
reclassification of any of the foregoing classes of common stock into one
or more different types or classes of securities, "Marathon Equity
Securities" shall instead include such different types or classes of
securities.
"Marathon Exercise Period Distributions" has the meanings
set forth in Section 5.01(b)(i).
"Marathon Material Adverse Effect" means, for purposes of
Section 1.03, either (i) a material adverse effect on the ability of
Marathon to perform its obligations under this Agreement or (ii) an effect
on the business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of Marathon's
Business which results in a Loss of two million dollars ($2,000,000) or
more, or, if such Loss is not susceptible to being measured in monetary
terms, is otherwise materially adverse to Marathon's Business; provided
that any such effect relating to or resulting from any change in the price
of petroleum or petroleum byproducts, general economic conditions or local,
regional, national or international industry conditions (including changes
in financial or market conditions) shall be deemed not to constitute a
Marathon Material Adverse Effect.
"Marathon Membership Interests" means the initial
Membership Interests of Marathon on the date hereof, together with any
additional Membership Interests that Marathon may hereafter acquire.
"Marathon Representatives Revocable Proxies" has the
meaning set forth in Section 5.02(b).
"Marathon Special Termination Right" means the Special
Termination Right granted to Marathon pursuant to Section 2.01.
"Market Value of the Company" has the meaning set forth
in Section 6.01(c).
"Maximum Offering Size" has the meaning set forth in
Section 10.01(e).
"Mid-Level Employee" has the meaning set forth in Section
14.02(a)(ii).
12
"Minimum Lube Oil Purchase Amount" has the meaning set
forth in Section 14.03(h).
"Moody's" means Moody's Investors Service Inc. and any
successor thereto.
"National Securities Exchange" means a securities
exchange registered as a national securities exchange under Section 6 of
the Exchange Act.
"9.04(b) Post-Scheduled Closing Date Distribution Amount"
has the meaning set forth in Section 9.04(b).
"9.08(b) Post-Scheduled Closing Date Distribution Amount"
has the meaning set forth in Section 9.08(b).
"Non-Terminating Member" has the meaning set forth in
Section 2.01(a).
"Offering Memorandum" means any offering memorandum
prepared in connection with a sale of Securities effected in accordance
with Section 4(2) or Rule 144A under the Securities Act, including all
amendments and supplements to such offering memorandum, all exhibits
thereto and all materials incorporated by reference in such offering
memorandum.
"Other Holders" has the meaning set forth in Section
10.01(e).
"Packaged Motor Oil Business" has the meaning set forth
in Section 14.03(h).
"Percentage Interest" has the meaning set forth in the
LLC Agreement.
"Permitted Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or
any agency thereof; (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 180 days of the date
of acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America having capital,
surplus and undivided profits
13
aggregating in excess of $250,000,000 (or the foreign currency equivalent
thereof) and whose Long Term debt is rated "A" (or higher) by Moody's or
S&P; (iii) repurchase agreements having terms of not more than 30 days that
are (A) collateralized by underlying securities of the types described in
clause (i) above having a fair market value at the time the Company enters
into such repurchase agreements of at least 102% of the principal amount of
such repurchase agreements and (B) entered into with a bank meeting the
qualifications described in clause (ii) above; (iv) investments in
commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an Affiliate of any of the
parties hereto) organized and in existence under the laws of the United
States of America, any state thereof or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of both "P-1" (or higher) according to Moody's
and "A-1" (or higher) according to S&P; and (v) investments in securities
with maturities of six months or less from the date of acquisition issued
or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority
thereof, and rated at least "A" by S&P or "A" by Moody's.
"Price Index" has the meaning set forth in the LLC Agreement.
"Private Label Packaged Motor Oil Business" has the
meaning set forth in Section 14.03(h).
"Qualifying Public Offering" has the meaning set forth in
Section 8.04.
"Quick Lube Business" has the meaning set forth in
Section 14.03(h).
"Registration Statement" means any registration statement
under the Securities Act which permits the public offering of Securities,
including the prospectus included therein, all amendments and supplements
to such registration statement or prospectus, including post-effective
amendments, all exhibits thereto and all materials incorporated by
reference in such registration statement.
"Representatives" has the meaning set forth in Section
14.02(b).
14
"Response" has the meaning set forth in Section 16.02.
"Required Disclosure" has the meaning set forth in
Section 7.03(a).
"Required Disclosure Date" has the meaning set forth in
Section 7.03(a).
"Scheduled Closing Date" has the meaning set forth in
Section 9.01(a).
"Scheduled Installment Payment Date" has the meaning set
forth in Section 4.02(b).
"Securities" means Marathon Debt Securities and/or
Marathon Equity Securities.
"Securities Act" means the Securities Act of 1933.
"Securities Document" has the meaning set forth in
Section 8.02.
"Senior Employee" has the meaning set forth in Section
14.02(a)(ii).
"S&P" means Standard & Poor's Corporation and any
successor thereto.
"7.03(b) Appraisal Process Commencement Date" has the
meaning set forth in Section 7.03(b).
"7.03(b) Appraisal Report" has the meaning set forth in
Section 7.03(b).
"7.03(b) Discount Amount" has the meaning set forth in
Section 7.03(b).
"7.03(b) Initial Opinion Values" has the meaning set
forth in Section 7.03(b).
"7.03(b) Subsequent Appraisal Process Commencement Date"
has the meaning set forth in Section 7.03(b).
"7.03(b) Third Opinion Value" has the meaning set forth
in Section 7.03(b).
15
"7.04 Appraisal Process Commencement Date" has the
meaning set forth in Section 7.04(b).
"7.04 Appraisal Report" has the meaning set forth in
Section 7.04(b).
"7.04 Discount Amount" has the meaning set forth in
Section 7.04(b).
"7.04 Initial Opinion Values" has the meaning set forth
in Section 7.04(b).
"7.04 Subsequent Appraisal Process Commencement Date" has
the meaning set forth in Section 7.04(b).
"7.04 Third Opinion Value" has the meaning set forth in
Section 7.04(b).
"6.01 Appraisal Process Commencement Date" has the
meaning set forth in Section 6.01(b).
"6.01 Appraisal Report" has the meaning set forth in
Section 6.01(b).
"6.01 Initial Opinion Values" has the meaning set forth
in Section 6.01(b).
"6.01 Subsequent Appraisal Process Commencement Date" has
the meaning set forth in Section 6.01(b).
"6.01 Third Opinion Value" has the meaning set forth in
Section 6.01(b).
"Special Termination Exercise Date" has the meaning set
forth in Section 2.03.
"Special Termination Exercise Notice" has the meaning set
forth in Section 2.03.
"Special Termination Price" has the meaning set forth in
Section 2.01(a).
"Special Termination Right" has the meaning set forth in
Section 2.01(a).
"Tax Liability" has the meaning set forth in the LLC
Agreement.
16
"Tax Liability Distributions" means the cash
distributions to which a Member is entitled pursuant to Section 5.01(a) of
the LLC Agreement.
"Terminating Member" has the meaning set forth in Section
2.01(a).
"Terminating Member's Membership Interests" means, if
Ashland is the Terminating Member, the Ashland Membership Interests and, if
Marathon is the Terminating Member, the Marathon Membership Interests.
"Terminating Member's Percentage Interest" means, if
Ashland is the Terminating Member, the Ashland Percentage Interest and, if
Marathon is the Terminating Member, the Marathon Percentage Interest.
"Termination Notice" has the meaning set forth in Section
2.01(a).
"Trading Day" means any day on which the New York Stock
Exchange is open for business.
"Underwritten Public Offering" means an underwritten
public offering of Securities pursuant to an effective Registration
Statement under the Securities Act.
"USX Material Adverse Effect" means, for purposes of
Section 1.03, a material adverse effect on the ability of USX to perform
its obligations under this Agreement.
"USX Voting Securities" means the securities of USX (i)
having the power under ordinary circumstances to elect at least a majority
of the board of directors of USX (whether or not any senior class of stock
has voting power by reason of any contingency) or (ii) convertible into or
exchangeable for securities of USX having the power under ordinary
circumstances to elect at least a majority of the board of directors of USX
(whether or not any senior class of stock has voting power by reason of any
contingency); provided, that each class of common equity securities of USX,
and any securities of USX convertible into or exchangeable for any such
class, shall constitute USX Voting Securities regardless of whether such
class has the power under ordinary circumstances to elect at least a
majority of the board of directors of USX.
17
"Valvoline" has the meaning set forth in Section 14.03(h).
"Valvoline Business" has the meaning set forth in Section
14.03(h).
"Valvoline Competitive Business Assets" has the meaning
set forth in Section 14.03(d).
"Valvoline Competitive Third Party" has the meaning set
forth in Section 14.03(d).
"Weighted Average Price" has the meaning set forth in
Section 7.03(a).
SECTION 1.02. Adjustable Amounts. Within 30 days
following the date on which the United States Department of Labor Bureau of
Labor Statistics for all Urban Areas publishes the Price Index for (a) the
month of December, 2002 and (b) thereafter, the month of December in each
five year anniversary of the year 2002 (the year 2002 and each such five
year anniversary being an "Adjustment Year"), the Company shall determine
whether the Average Annual Level for the applicable Adjustment Year exceeds
the Base Level. If the Company determines that the Average Annual Level for
such Adjustment Year exceeds the Base Level, then the Company shall
increase or decrease each of the following amounts (each, an "Adjustable
Amount") to an amount calculated by multiplying the relevant Adjustable
Amount by a fraction whose numerator is the Average Annual Level for such
Adjustment Year and whose denominator is the Base Level: (i) the two
million dollars ($2,000,000) amount set forth in the definition of "Ashland
Material Adverse Effect"; (ii) the two million dollars ($2,000,000) amount
set forth in the definition of "Company Material Adverse Effect"; (iii) the
two million dollars ($2,000,000) amount set forth in the definition of
"Marathon Material Adverse Effect"; (iv) the $250 million amount set forth
in clause (ii) of the definition of "Permitted Investments" in Section
1.01; and (v) the $100 million and $25 million amounts set forth in Section
10.01(a); provided that in no event shall any Adjustable Amount be
decreased below the initial amount thereof set forth herein. Within five
Business Days after making such determinations, the Company shall
distribute to each Member a notice (an "Adjustable Amounts Notice") setting
forth: (A) the amount by which the Average Annual Level for such Adjustment
Year exceeded the
18
Base Level and (B) the calculations of any adjustments made to the
Adjustable Amounts pursuant to this Section 1.02. Any adjustment made to
the Adjustable Amounts pursuant to this Section 1.02 shall be effective as
of the date on which the Company delivers to the Members the related
Adjustable Amounts Notice.
SECTION 1.03. Representations and Warranties. Each of
Marathon and USX represents and warrants to Ashland, and Ashland represents
and warrants to each of Marathon and USX, in each case as of the date
hereof and will be required to represent and warrant as of any Closing
Date, as follows:
(a) Due Organization, Good Standing and Power. It is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation with the
power and authority to own, lease and operate its assets and to
conduct the business now being or to be conducted by it. It is
duly authorized, qualified or licensed to do business as a foreign
corporation or other organization in good standing in each of the
jurisdictions in which its right, title or interest in or to any
of the assets held by it or the business conducted by it requires
such authorization, qualification or licensing, except where the
failure to be so authorized, qualified, licensed or in good
standing would not have and would not reasonably be expected to
have, individually or in the aggregate, a Marathon Material
Adverse Effect, a USX Material Adverse Effect or an Ashland
Material Adverse Effect, as the case may be. It has all requisite
power and authority to enter into this Agreement and to perform
its obligations hereunder.
(b) Authorization and Validity of Agreements. The
execution and delivery by it of this Agreement and the
consummation by it of the transactions contemplated hereby have
been duly authorized and approved by all necessary corporate or
other action on its part. This Agreement has been duly executed
and delivered by it. This Agreement is its legal, valid and
binding obligation, enforceable against it in accordance with its
terms.
(c) Lack of Conflicts. Except as set forth on Schedule
1.03(c) to the Marathon, USX or Ashland Put/Call, Registration
Rights and Standstill Disclosure
19
Letter, as applicable, neither the execution and delivery by it of
this Agreement nor the consummation by it of the transactions
contemplated hereby does or will (i) conflict with, or result in
the breach of any provision of, its charter or by-laws or similar
governing or organizational documents or any of its subsidiaries,
(ii) violate any Applicable Law or any permit, order, award,
injunction, decree or judgment of any Governmental Authority
applicable to or binding upon it or any of its subsidiaries or to
which any of their respective properties or assets is subject,
(iii) violate, conflict with or result in the breach or
termination of, or otherwise give any other person the right to
terminate, or constitute a default, an event of default or an
event which with notice, lapse of time or both, would constitute a
default or an event of default under the terms of, any mortgage,
indenture, deed of trust or lease or other agreement or instrument
to which it or any of its subsidiaries is a party or by which any
of their respective properties or assets is subject, except, in
the case of clauses (ii) or (iii), for such violations, conflicts,
breaches, terminations and defaults which would not have and would
not reasonably be expected to have, individually, a Company
Material Adverse Effect.
(d) No Consents. Except as set forth on Schedule 1.03(d)
to the Marathon, USX or Ashland Put/Call, Registration Rights and
Standstill Disclosure Letter, as applicable, no Governmental
Approval or other consent is required by it for the execution and
delivery by it of this Agreement or for the consummation of the
transactions contemplated hereby except (a) for such Governmental
Approvals or other consents as have been obtained or are
contemplated hereby to be obtained after Closing or (b) where the
failure to obtain such Governmental Approvals or other consents
would not have and would not reasonably be expected to have,
individually, a Company Material Adverse Effect.
20
ARTICLE II
Special Termination Right
SECTION 2.01. Special Termination Right. (a) If Ashland
or Marathon (the "Terminating Member") notifies the Board of Managers of
the Company and the other Member (the "Non-Terminating Member") in writing
pursuant to Section 2.03 of the LLC Agreement that it wants to terminate
the term of the Company at the end of the Initial Term or any succeeding
10-year period (any such notice being a "Termination Notice"), then,
subject to Section 2.01(b), the Non-Terminating Member shall have the
right, exercisable at any time during the 180-day period following its
receipt from the Terminating Member of a Termination Notice, to purchase
from the Terminating Member on the Scheduled Closing Date (the "Special
Termination Right"), and the Terminating Member shall thereupon be required
to sell to the Non-Terminating Member on the Scheduled Closing Date, all of
its Membership Interests and, in the circumstance where Ashland is the
Terminating Member, the Ashland LOOP/LOCAP Interest, for an aggregate
amount equal to the purchase price (the "Special Termination Price") set
forth in Section 2.02(a), plus interest on the Special Termination Price at
a rate per annum equal to the Base Rate, with daily accrual of interest,
for the period commencing on the Special Termination Exercise Date and
ending on the Scheduled Closing Date. The Special Termination Right shall
automatically terminate at the close of business on the 180th day following
the Non-Terminating Member's receipt of a Termination Notice, unless
previously exercised by the Non-Terminating Member in accordance with the
provisions of Section 2.03.
(b) Notwithstanding anything to the contrary contained in
Section 2.01(a), if Marathon and Ashland each deliver a Terminating Notice
to the Board of Managers of the Company and the other Member, then neither
Marathon nor Ashland shall have a Special Termination Right.
SECTION 2.02. Special Termination Price. (a) Amount. The
Special Termination Price shall be an amount equal to the product of (i)
100% of the Appraised Value of the Company multiplied by (ii) the
Terminating Member's Percentage Interest.
21
(b) Timing of Payment. The Non-Terminating Member shall
pay the entire Special Termination Price, together with accrued interest
calculated as set forth in Section 2.01, on the Scheduled Closing Date.
(c) Form of Consideration. The Non-Terminating Member
shall pay the Special Termination Price, and all accrued interest, in Cash.
SECTION 2.03. Method of Exercise. The Non-Terminating
Member shall exercise its Special Termination Right by delivering to the
Terminating Member a notice of such exercise (the "Special Termination
Exercise Notice"). The date of the Terminating Member's receipt of the
Special Termination Exercise Notice shall be deemed to be the date of the
Non-Terminating Member's exercise of its Special Termination Right (the
"Special Termination Exercise Date") and, except as expressly provided in
Sections 9.08(a) and 9.09, the Non-Terminating Member's exercise of its
Special Termination Right shall thereafter be irrevocable.
ARTICLE III
Marathon Call Right
SECTION 3.01. Marathon Call Right. Subject to Section
3.04, at any time on and after December 31, 2004, Marathon shall have the
right to purchase from Ashland on the Scheduled Closing Date (the "Marathon
Call Right"), and Ashland shall thereupon be required to sell to Marathon
on the Scheduled Closing Date, all of Ashland's Membership Interests and
the Ashland LOOP/LOCAP Interest, for an aggregate amount equal to the
purchase price (the "Marathon Call Price") set forth in Section 3.02(a),
plus interest on the Marathon Call Price at a rate per annum equal to the
Base Rate, with daily accrual of interest, for the period commencing on the
Marathon Call Exercise Date and ending on the Scheduled Closing Date.
SECTION 3.02. Marathon Call Price. (a) Amount. The
Marathon Call Price shall be an amount equal to the product of (i) 115% of
the Appraised Value of the Company multiplied by (ii) Ashland's Percentage
Interest.
22
(b) Timing of Payment. Marathon shall pay the entire
Marathon Call Price, together with accrued interest calculated as set forth
in Section 3.01, on the Scheduled Closing Date.
(c) Form of Consideration. Marathon shall pay the
Marathon Call Price, and all accrued interest, in Cash.
SECTION 3.03. Method of Exercise. Marathon shall exercise
its Marathon Call Right by delivering to Ashland a notice of such exercise
(the "Marathon Call Exercise Notice"). The date of Ashland's receipt of the
Marathon Call Exercise Notice shall be deemed to be the date of Marathon's
exercise of its Marathon Call Right (the "Marathon Call Exercise Date")
and, except as expressly provided in Sections 9.03(a), 9.04(a) and 9.05,
Marathon's exercise of its Marathon Call Right shall thereafter be
irrevocable.
SECTION 3.04. Limitation on Marathon's Ability To
Exercise its Marathon Call Right. If prior to the Marathon Call Exercise
Date, Ashland elects to Transfer its Membership Interests to a third party
pursuant to Section 10.01(c) of the LLC Agreement, and in connection
therewith delivers to Marathon the requisite Offer Notice pursuant to
Section 10.04 of the LLC Agreement, Marathon shall not be permitted to
exercise its Marathon Call Right for a period commencing on the date of
Marathon's receipt of such Offer Notice and ending on the earliest of (i)
120 days (or 270 days if a second request has been made under HSR)
following such receipt, (ii) the closing of such Transfer, and (iii) the
date such proposed Transfer by Ashland shall have been finally abandoned.
After such period, Marathon shall be entitled to exercise its Marathon Call
Right.
ARTICLE IV
Ashland Put Right
SECTION 4.01. Ashland Put Right. Subject to Section 4.05,
at any time after December 31, 2004, Ashland shall have the right to sell
to Marathon on the Scheduled Closing Date (the "Ashland Put Right"), and
Marathon shall thereupon be required to purchase from Ashland on the
Scheduled Closing Date, all of Ashland's Membership Interests and the
Ashland LOOP/LOCAP Interest, for an
23
aggregate amount equal to the purchase price (the "Ashland Put Price") set
forth in Section 4.02, plus interest on the Ashland Put Price (or, in the
event that Marathon elects to pay the Ashland Put Price in installments,
any unpaid portion of the Ashland Put Price) at a rate per annum equal to
the Base Rate, with daily accrual of interest, for the period commencing on
the Ashland Put Exercise Date and ending on the Scheduled Closing Date (or,
in the event that Marathon elects to pay the Ashland Put Price in
installments, on the applicable Scheduled Installment Payment Date).
SECTION 4.02. Ashland Put Price. (a) Amount. The Ashland
Put Price shall be an amount equal to the sum of (i) for that portion of
the Ashland Put Price to be paid to Ashland in Cash or in Marathon Debt
Securities, an amount equal to the product of (x) 85% of the Appraised
Value of the Company multiplied by (y) Ashland's Percentage Interest
multiplied by (z) the percentage of the Ashland Put Price to be paid to
Ashland in Cash and/or in Marathon Debt Securities, plus (ii) for that
portion of the Ashland Put Price to be paid to Ashland in Marathon Equity
Securities, an amount equal to the product of (x) 90% of the Appraised
Value of the Company multiplied by (y) Ashland's Percentage Interest
multiplied by (z) the percentage of the Ashland Put Price to be paid to
Ashland in Marathon Equity Securities.
(b) Timing of Payment. Subject to Section 4.02(d),
Marathon shall have the right to elect, by specifying in the Ashland Put
Price Election Notice, to (i) pay the entire Ashland Put Price on the
Scheduled Closing Date or (ii) pay the Ashland Put Price in three equal
installments (each an "Installment Payment"), in either case, together with
accrued interest calculated as set forth in Section 4.01. If Marathon
elects to pay the Ashland Put Price in installments, Marathon shall pay
Ashland (x) the first Installment Payment on the Scheduled Closing Date;
(y) the second Installment Payment on the first anniversary of the
Scheduled Closing Date; and (z) the third Installment Payment on the second
anniversary of the Scheduled Closing Date (each such date being a
"Scheduled Installment Payment Date"), in each case, together with accrued
interest calculated as set forth in Section 4.01.
(c) Form of Consideration. Subject to Section 4.02(d),
Marathon shall have the right to elect, by specifying in an Ashland Put
Price Election Notice, to pay
24
the Ashland Put Price (i) entirely in Cash or (ii) in a combination of Cash
and Securities; provided that at least 50% of the Ashland Put Price (and at
least 50% of each Installment Payment if Marathon elects to pay in
installments) shall consist of Cash; provided further, that the sum of (x)
the Fair Market Value of any Securities issued to Ashland on the Closing
Date (or on any Installment Payment Date) plus (y) the amount of Cash paid
to Ashland on the Closing Date (or on such Installment Payment Date) in
respect of the Ashland Put Price, in each case exclusive of any interest
paid thereon, shall equal the Ashland Put Price (or the applicable
Installment Payment); and provided further, that in no event shall Marathon
or USX issue to Ashland an amount of Marathon Equity Securities that would
cause Ashland to own, directly or indirectly, at the Closing or on any
Scheduled Installment Payment Date in the aggregate 10% or more of the
number of shares of such class of Marathon Equity Securities that are
outstanding on the Closing Date and are publicly held (it being understood
and agreed that for purposes of this Section 4.02(c), any shares of such
class of Marathon Equity Securities that are either held by Marathon or any
of its Affiliates or subject to restrictions on transfer shall not be
considered publicly held). Marathon shall pay all accrued interest in Cash.
(d) Consequences of Failure to Make Certain Elections.
Notwithstanding anything to the contrary in this Agreement:
(i) if Marathon fails to deliver to Ashland an Ashland
Put Price Election Notice within the requisite time period set
forth in Section 4.04(a) or if Marathon delivers to Ashland an
Ashland Put Price Election Notice that states that the entire
Ashland Put Price will be paid at Closing but does not state
whether any portion of the Ashland Put Price will be paid in
Securities, Marathon shall thereafter be required to pay Ashland
the entire Ashland Put Price in Cash on the Closing Date;
(ii) if Marathon delivers to Ashland an Ashland Put Price
Election Notice pursuant to Section 4.04(a) that does not indicate
whether it is electing to pay the Ashland Put Price in
installments, Marathon shall thereafter be required to pay Ashland
the entire Ashland Put Price on the Closing Date;
25
(iii) if Marathon delivers to Ashland an Ashland Put
Price Election Notice pursuant to Section 4.04(a) that does not
indicate the form of consideration regarding the Ashland Put Price
(or, if such Ashland Put Price Election Notice states that
Marathon has elected to pay the Ashland Put Price in installments,
the first Installment Payment), Marathon shall thereafter be
required to pay Ashland the entire Ashland Put Price (or first
Installment Payment) in Cash on the Closing Date;
(iv) if Marathon has elected in its Ashland Put Price
Election Notice delivered pursuant to Section 4.04(b) to pay the
Ashland Put Price in installments and thereafter if Marathon fails
to deliver to Ashland an Ashland Put Price Election Notice within
the requisite time period set forth in Section 4.04(b) for any
Scheduled Installment Payment Date, Marathon shall thereafter be
required to pay Ashland the entire Installment Payment in Cash on
the applicable Installment Payment Date;
(v) if Marathon elects in any Ashland Put Price Election
Notice to issue (or to have USX issue) to Ashland Actively Traded
Marathon Equity Securities on the Closing Date (or applicable
Installment Payment Date) and at any time prior to the Closing
Date (or such Installment Payment Date), such Securities cease for
whatever reason to be Actively Traded Marathon Equity Securities,
Marathon shall thereafter be required to pay Ashland the entire
Ashland Put Price (or the applicable Installment Payment) in Cash
on the Closing Date (or applicable Installment Payment Date); and
(vi) if Marathon elects in any Ashland Put Price Election
Notice to issue (or to have USX issue) to Ashland Actively Traded
Marathon Equity Securities on the Closing Date (or applicable
Installment Payment Date) and Marathon fails to give the related
Required Disclosure on the applicable Required Disclosure Date,
Marathon shall thereafter be required to pay to Ashland the entire
Ashland Put Price (or the applicable Installment Payment) in Cash
on the Closing Date (or on such Installment Payment Date).
26
SECTION 4.03. Method of Exercise. Ashland may exercise
its Ashland Put Right by delivering to Marathon a notice of such exercise
(the "Ashland Put Exercise Notice"). The date of Marathon's receipt of the
Ashland Put Exercise Notice shall be deemed to be the date of Ashland's
exercise of its Ashland Put Right (the "Ashland Put Exercise Date") and,
except as expressly provided in Sections 9.03(a), 9.04(a) and 9.05,
Ashland's exercise of its Ashland Put Right shall thereafter be
irrevocable.
SECTION 4.04. Ashland Put Price Election Notice. (a)
Notice re: Closing. Within five Business Days after the Appraised Value
Determination Date, Marathon shall notify Ashland (a "Ashland Put Price
Election Notice") as to (i) whether it elects to pay the Ashland Put Price
(A) entirely at Closing or (B) in three equal installments and (ii) whether
Marathon elects to pay part of the Ashland Put Price or first Installment
Payment, as applicable, at Closing in Securities, and, if so, (A) the name
of the issuer of such Securities, (B) the type of such Securities, (C) the
portion of the Ashland Put Price or first Installment Payment, as
applicable, which will be comprised of such Securities, (D) whether it
elects to impose a Holding Period with respect to any of such Securities
and (E) the length of any such Holding Period.
(b) Notices re: Second and Third Scheduled Installment
Payment Dates. Within 45 days prior to each of the second and third
Scheduled Installment Payment Dates, if applicable, Marathon shall deliver
to Ashland an Ashland Put Price Election Notice as to whether Marathon
elects to pay part of the applicable Installment Payment in Securities,
and, if so, (i) the name of the issuer of such Securities, (ii) the type of
Securities, (iii) the portion of the applicable Installment Payment which
will be comprised of such Securities, (iv) whether it elects to impose a
Holding Period with respect to any of such Securities and (v) the length of
any such Holding Period. The date of Ashland's receipt of any Ashland Put
Price Election Notice is referred to herein as the "Ashland Put Price
Election Date" with respect to such Ashland Put Price Election Notice.
(c) Additional Information With Respect to Securities. If
Marathon elects to pay any part of the Ashland Put Price in Securities,
then in addition to the information provided to Ashland in the Ashland Put
Price Election Notice pursuant to Section 4.04(a) or 4.04(b),
27
Marathon shall provide Ashland and its advisors with any other information
concerning such Securities that Ashland or its advisors may reasonably
request.
(d) Irrevocability of Elections. Marathon's elections as
set forth in an Ashland Put Price Election Notice shall be irrevocable upon
Ashland's receipt of such Ashland Put Price Election Notice; provided that
at any time prior to the date that is ten Business Days prior to the
Closing Date (or applicable Installment Payment Date) Marathon shall have
the right to change a previous election to pay part of the Ashland Put
Price (or applicable Installment Payment) in Securities to an election to
pay a greater portion of or the entire Ashland Put Price (or applicable
Installment Payment) in Cash, or to change a previous election to pay the
Ashland Put Price in installments to an election to pay the entire or
remaining Ashland Put Price on the Closing Date (or applicable Installment
Payment Date).
SECTION 4.05. Limitation on Ashland's Ability To Exercise
its Ashland Put Right. If prior to the Ashland Put Exercise Date, Marathon
elects to Transfer all of its Membership Interests to a third party
pursuant to Section 10.01(c) of the LLC Agreement, and in connection
therewith delivers to Ashland the requisite Offer Notice pursuant to
Section 10.04 of the LLC Agreement, Ashland shall not be permitted to
exercise its Ashland Put Right for a period commencing on the date of
Ashland's receipt of such Offer Notice and ending on the earlier of (i) 120
days (270 days if a second request has been made under HSR) following such
receipt, (ii) the closing of such Transfer, and (iii) the date such
proposed Transfer by Marathon shall have been finally abandoned. After such
period, Ashland shall be entitled to exercise its Ashland Put Right.
ARTICLE V
Termination of Certain Distributions; Revocable Proxies
SECTION 5.01. Termination of Certain Distributions. (a)
Distributions to Ashland. (i) Subject to Sections 9.04(a), 9.05, 9.08(a)
and 9.09, in the event that Marathon exercises its Marathon Call Right or
its Special Termination Right, or in the event that Ashland exercises its
Ashland Put Right, then on the relevant
28
Exercise Date, Ashland shall cause each of its Representatives to authorize
Marathon's Representatives to cause the Company to withhold from Ashland
all distributions of Distributable Cash and all Tax Liability Distributions
that Ashland would otherwise be entitled to receive pursuant to Article V
of the LLC Agreement during the period from the relevant Exercise Date to
the Closing Date, other than (i) all distributions of Distributable Cash
and Tax Liability Distributions that are attributable to any Fiscal Quarter
that ends on or prior to the close of business on the relevant Exercise
Date, (ii) a pro rata portion of all distributions of Distributable Cash
and Tax Liability Distributions that are attributable to the portion of a
Fiscal Quarter that begins prior to the relevant Exercise Date and that
ends after such Exercise Date and (iii) all Tax Liability Distributions
that are attributable to the period from the relevant Exercise Date to the
Closing Date to the extent that Ashland has any Tax Liability during such
period ("Ashland Exercise Period Distributions").
(ii) Any Ashland Exercise Period Distributions withheld
from Ashland pursuant to Section 5.01(a)(i) shall be distributed by the
Company as follows:
(A) if at the time such distribution is so withheld,
either (1) USX's Long Term Debt has an Investment Grade Rating and
USX has agreed in writing to guarantee (which guarantee shall be a
guarantee of payment) Marathon's obligations to pay to Ashland in
the circumstances set forth in Sections 9.04(a) and 9.05 (pursuant
to a guarantee agreement in form and substance reasonably
satisfactory to Ashland and its counsel) or (2) Marathon's Long
Term Debt has an Investment Grade Rating, then the Company shall
pay such Ashland Exercise Period Distributions directly to
Marathon; and
(B) if at the time such distribution is so withheld, (1)
Marathon's Long Term Debt does not have an Investment Grade Rating
and (2) either (x) USX's Long Term Debt does not have an
Investment Grade Rating or (y) USX's Long Term Debt has an
Investment Grade Rating but USX has not agreed in writing to
guarantee Marathon's payment obligations described in clause (2)
of subparagraph (A) above, then Marathon's Representatives shall
cause the Company to, and the Company shall, deposit all Ashland
Exercise Period
29
Distributions into an escrow account to be established by the
Company (the "Escrow Account") and to release such deposits from
the Escrow Account only in accordance with this Agreement. All
amounts in the Escrow Account shall be invested only in Permitted
Investments.
(b) Distributions to Marathon. (i) Subject to Sections
9.08(a) and 9.09, in the event that Ashland exercises its Special
Termination Right in accordance with the terms hereof, then on the Special
Termination Exercise Date, Marathon shall cause each of its Representatives
to authorize Ashland's Representatives to cause the Company to withhold
from Marathon all distributions of Distributable Cash and all Tax Liability
Distributions that Marathon would otherwise be entitled to receive pursuant
to Article V of the LLC Agreement during the period from the Special
Termination Exercise Date to the Closing Date, other than (A) all
distributions of Distributable Cash and Tax Liability Distributions that
are attributable to any Fiscal Quarter that ends on or prior to the close
of business on the Special Termination Exercise Date, (B) a pro rata
portion of all distributions of Distributable Cash and Tax Liability
Distributions that are attributable to the portion of a Fiscal Quarter that
begins prior to the Special Termination Exercise Date and that ends after
the Special Termination Exercise Date and (C) all Tax Liability
Distributions that are attributable to the period from the Special
Termination Exercise Date to the Closing Date to the extent that Marathon
has any Tax Liability during such period ("Marathon Exercise Period
Distributions").
(ii) Any Marathon Exercise Period Distributions withheld
from Ashland pursuant to Section 5.01(a) shall be distributed by the
Company as follows:
(A) if at the time such distribution is so withheld,
Ashland's Long Term Debt has an Investment Grade Rating, then the
Company shall pay such Marathon Exercise Period Distributions
directly to Ashland; and
(B) if at the time such distribution is so withheld,
Ashland's Long Term Debt does not have an Investment Grade Rating,
then Ashland's Representatives shall cause the Company to, and the
Company shall, deposit all Marathon Exercise Period Distributions
into an Escrow Account and to release such deposits from the
30
Escrow Account only in accordance with this Agreement. All amounts
in the Escrow Account shall be invested only in Permitted
Investments.
SECTION 5.02. Revocable Proxies. (a) Ashland
Representatives Revocable Proxies. Subject to Sections 9.04(a), 9.05,
9.08(a) and 9.09, in the event that Marathon exercises its Marathon Call
Right or its Special Termination Right, or in the event that Ashland
exercises its Ashland Put Right, then on the relevant Exercise Date,
Ashland shall cause each of its Representatives to grant to Marathon's
Representatives a proxy (the "Ashland Representatives Revocable Proxies")
which shall authorize Marathon's Representatives to cast each Ashland
Representative's vote at a Board of Managers' meeting (but not by written
consent in lieu of a meeting in accordance with Section 8.04(h) of the LLC
Agreement unless Marathon shall have given Ashland prior written notice of
the specific action to be taken by such written consent) in favor of or
against any of the Super Majority Decisions described in Sections 8.08 of
the LLC Agreement, as Marathon's Representatives shall, in their sole
discretion, determine, other than any vote with respect to a Super Majority
Decision described in Sections 8.08(c) (admission of a new Member; issuance
of additional Membership Interests), 8.08(d) (additional capital
contributions), 8.08(i) (change in Company's independent auditors), 8.08(j)
(amendments to LLC Agreement or other Transaction Documents to which
Company or its subsidiaries is a party), 8.08(l) (bankruptcy), 8.08(m)
(modification of provisions re: distributions of Distributable Cash) or
8.08(q) (delegation to a Member of power to unilaterally bind the Company),
with respect to which Ashland's Representatives shall retain all of their
rights and authority to vote; provided that Marathon shall not, and shall
cause each of its Representatives not to, take any action through the
exercise of the Ashland Representatives Revocable Proxies to cause the
Company's status as a partnership for Federal income tax purposes to
terminate prior to the Closing Date.
(b) Marathon Representative Revocable Proxy. Subject to
Sections 9.08(a) and 9.09, in the event that Ashland exercises its Special
Termination Right, then on the Special Exercise Date, Marathon shall cause
each of its Representatives to grant to Ashland's Representatives a proxy
(the "Marathon Representatives Revocable Proxies") which shall authorize
Ashland's Representatives to cast each
31
Marathon Representative's vote at a Board of Managers' meeting (but not by
written consent in lieu of a meeting in accordance with Section 8.04(h) of
the LLC Agreement unless Ashland shall have given Marathon prior written
notice of the specific action to be taken by such written consent) in favor
of or against any of the Super Majority Decisions described in Sections
8.08 of the LLC Agreement, as Ashland's Representatives shall, in their
sole discretion, determine, other than any vote with respect to a Super
Majority Decision described in Section 8.08(c), 8.08(d), 8.08(i), 8.08(j),
8.08(l), 8.08(m) or 8.08(q) (except as expressly provided in Section 5.01),
with respect to which Marathon's Representatives shall retain all of their
rights and authority to vote; provided that Ashland shall not, and shall
cause each of its Representatives not to, take any action through the
exercise of the Marathon Representatives Revocable Proxies to cause the
Company's status as a partnership for Federal income tax purposes to
terminate prior to the Closing Date.
(c) Ashland LOOP/LOCAP Revocable Proxy. Subject to
Sections 9.04(a), 9.05, 9.08(a) and 9.09, in the event that Marathon
exercises its Marathon Call Right or its Special Termination Right, or in
the event that Ashland exercises its Ashland Put Right, then on the
relevant Exercise Date, Ashland shall grant to Marathon, or such other
person as Marathon shall designate, a proxy (the "Ashland LOOP/LOCAP
Revocable Proxy") which shall authorize Marathon and its Representatives
(or such other person) to exercise on Ashland's behalf, all of Ashland's
voting rights with respect to the Ashland LOOP/LOCAP Interest.
ARTICLE VI
Determination of the Appraised Value of the Company
SECTION 6.01. Determination of Appraised Value of the
Company. (a) Negotiation Period. If Marathon exercises its Special
Termination Right or its Marathon Call Right or if Ashland exercises its
Special Termination Right or its Ashland Put Right, then for a period of 60
days following the relevant Exercise Date, Marathon and Ashland shall
negotiate in good faith to seek to reach agreement as to the Market Value
of the Company. If Marathon and Ashland reach such an agreement, then the
Market Value of the Company shall be deemed to be the amount so agreed upon
by Marathon and Ashland.
32
(b) Appraisal Process. In the event Marathon and Ashland
are unable to reach an agreement as to the Market Value of the Company
within the 60-day period referred to in Section 6.01(a), then within five
Business Days after the expiration of such 60-day period (such fifth
Business Day being referred to herein as the "6.01 Appraisal Process
Commencement Date"), Marathon and Ashland each shall select a nationally
recognized investment banking firm to (i) prepare a report which (A) sets
forth such investment banking firm's determination of the Market Value of
the Company (which shall be a single amount as opposed to a range) and (B)
includes work papers which indicate the basis for and calculation of the
Market Value of the Company (a "6.01 Appraisal Report") and (ii) deliver to
Marathon or Ashland, as the case may be, an oral and written opinion
addressed to such party as to the Market Value of the Company. The fees and
expenses of each investment banking firm shall be paid by the party
selecting such investment banking firm. Each of Marathon and Ashland shall
instruct its respective investment banking firm to (i) not consult with the
other investment banking firm with respect to its view as to the Market
Value of the Company prior to the time that both investment banking firms
have delivered their respective opinions to Marathon or Ashland, as
applicable, (ii) determine the Market Value of the Company in accordance
with Section 6.01(c), (iii) deliver their respective 6.01 Appraisal
Reports, together with their oral and written opinions as to the Market
Value of the Company (the "6.01 Initial Opinion Values"), within 60 days
after the 6.01 Appraisal Process Commencement Date, and (iv) deliver a copy
of its written opinion and its 6.01 Appraisal Report to the Company, the
other party and the other party's investment banking firm at the time it
delivers its oral and written opinion to Marathon or Ashland, as
applicable.
If the 6.01 Initial Opinion Values differ and the lesser
6.01 Initial Opinion Value equals or exceeds 90% of the greater 6.01
Initial Opinion Value, the Market Value of the Company shall be deemed to
be an amount equal to (i) the sum of the 6.01 Initial Opinion Values
divided by (ii) two.
33
If the 6.01 Initial Opinion Values differ and the lesser
6.01 Initial Opinion Value is less than 90% of the greater 6.01 Initial
Opinion Value, then:
(i) within two Business Days after both investment
banking firms have delivered their respective opinions to Marathon
or Ashland, as applicable, each investment banking firm shall, at
a single meeting at which Marathon, Ashland, the Company and the
other investment banking firm are present, make a presentation
with respect to its 6.01 Initial Opinion Value. At such
presentation, Marathon, Ashland, the Company and the other
investment banking firm shall be entitled to ask questions as to
the basis for and the calculation of such investment banking
firm's 6.01 Initial Opinion Value; and
(ii) Marathon and Ashland shall, within five Business
Days after the date Marathon and Ashland receive the 6.01 Initial
Opinion Values (such fifth Business Day being referred to herein
as the "6.01 Subsequent Appraisal Process Commencement Date"),
jointly select a third nationally recognized investment banking
firm to (A) prepare a 6.01 Appraisal Report and (B) deliver an
oral and written opinion addressed to Marathon and Ashland as to
the Market Value of the Company. The fees and expenses of such
third investment banking firm shall be paid 50% by Marathon and
50% by Ashland. Such third investment banking firm shall not be
provided with the 6.01 Initial Opinion Values and shall not
consult with the initial investment banking firms with respect
thereto. During such five-Business Day period, Marathon and
Ashland shall negotiate in good faith to independently reach an
agreement as to the Market Value of the Company. If Marathon and
Ashland reach such an agreement, then the Market Value of the
Company shall be deemed to be the amount so agreed upon by
Marathon and Ashland. If Marathon and Ashland are unable to reach
such an agreement, then Marathon and Ashland shall instruct such
third investment banking firm to (A) determine the Market Value of
the Company in accordance with Section 6.01(c) and (B) deliver its
6.01 Appraisal Report, together with its oral and written opinion
(the "6.01 Third Opinion Value"), within 60 days after the 6.01
Subsequent Appraisal Process Commencement Date. The Market Value
of the Company in such circumstance shall
34
be deemed to be an amount equal to (A) the sum of (x) the 6.01
Third Opinion Value plus (y) whichever of the two 6.01 Initial
Opinion Values is closer to the 6.01 Third Opinion Value (or, if
the 6.01 Third Opinion Value is exactly halfway between the two
6.01 Initial Opinion Values, the 6.01 Third Opinion Value),
divided by (B) two.
(c) Definition of Market Value of the Company. For
purposes of this Agreement, the Market Value of the Company (the "Market
Value of the Company") means the fair market value of the combined common
equity of the Company as of the relevant Exercise Date, (including, in the
circumstance where Marathon has exercised its Marathon Call Right or its
Special Termination Right or Ashland has exercised its Ashland Put Right,
the Ashland LOOP/LOCAP Interest) assuming the consummation of a transaction
designed to achieve the highest value of such combined common equity. In
determining the Market Value of the Company, (i) consideration should be
given as to (A) all possible transaction participants (other than Marathon
or Ashland or their respective Affiliates) and categories of possible
transactions; (B) a range of analytical methodologies, potentially
including, but not limited to, the following: comparable trading analysis,
comparable transaction analysis, discounted cash flow analysis, leveraged
buyout analysis and break-up analysis; and (C) the value to the Company of
all indemnification obligations of Marathon, USX and Ashland in favor of
the Company pursuant to any Transaction Document (including, without
limitation, Article IX of the Asset Transfer and Contribution Agreement),
to the extent such indemnification obligations remain in effect after the
Closing and (ii) no separate incremental value will be attributed to the
Ashland LOOP/LOCAP Interest. In determining the Market Value of the
Company, no consideration should be given to the values that are initially
assigned to assets of the Company for purchase accounting or tax accounting
purposes. The Market Value of the Company as determined pursuant to this
Section 6.01 is referred to herein as the "Appraised Value of the Company",
and the date on which the Market Value of the Company is so determined is
referred to herein as the "Appraised Value Determination Date".
35
ARTICLE VII
Determination of the Fair Market Value of Securities
SECTION 7.01. General. The fair market value of any
Securities to be issued to Ashland on the Closing Date and on any
subsequent Installment Payment Date, shall be determined pursuant to the
following procedures (the fair market value of such Securities as so
determined being the "Fair Market Value" of such Securities).
SECTION 7.02. Determination of Fair Market Value of
Marathon Debt Securities. The Fair Market Value of any Marathon Debt
Securities shall be deemed to be an amount equal to the aggregate stated
principal amount of such Marathon Debt Securities.
SECTION 7.03. Determination of Fair Market Value of
Actively Traded Marathon Equity Securities. (a) Fair Market Value Where
There is No Holding Period. The Fair Market Value of any Actively Traded
Marathon Equity Securities to be issued to Ashland on the Closing Date or
applicable Installment Payment Date for which Marathon has not elected a
Holding Period shall be deemed to be an amount equal to the product of (i)
the aggregate number of such Actively Traded Marathon Equity Securities to
be issued to Ashland multiplied by (ii) the Weighted Average Price (as
defined below) of such Actively Traded Marathon Equity Securities on the
National Market System of the NASDAQ or the relevant National Securities
Exchange, as reported by The Wall Street Journal or, if not reported
thereby, as reported by any other authoritative source, for the ten full
Trading Days immediately preceding the Business Day immediately preceding
the Closing Date or applicable Installment Payment Date; provided that at
least five Trading Days prior to the commencement of such ten full Trading
Day period (the "Required Disclosure Date"), Marathon shall have made
appropriate public disclosure (including by issuing a press release and
filing a copy of such press release with the Commission) of (A) the
existence of the Transaction, (B) the Ashland Put Price and (C) the
information required to be included in the Ashland Put Price Election
Notice (each such public disclosure being a "Required Disclosure").
Marathon shall provide Ashland with a copy of each Required Disclosure
prior to Marathon making such disclosure public. Any such Required
Disclosure shall be in form and substance reasonably satisfactory to
Ashland
36
and its counsel. For purposes of this Section 7.03(a), the "Weighted
Average Price" means the quotient of (1) the product of (x) the number of
shares in each trade in such Actively Traded Marathon Equity Securities
that occurred during such ten full Trading Day period multiplied by (y) the
price at which each such trade occurred, divided by (2) the total number of
shares traded in such Actively Traded Marathon Equity Securities that
occurred during such ten full Trading Day period. In the event of (i) any
split, combination or reclassification of the class of Actively Traded
Marathon Equity Securities to be issued to Ashland on the Closing Date or
applicable Installment Payment Date, (ii) any issuance or the authorization
of any issuance of any other securities in exchange or in substitution for
the shares of such class of Actively Traded Marathon Equity Securities or
(iii) any issuance or declaration of cash or stock dividends or other
distributions with respect to such class of Actively Traded Marathon Equity
Securities, in each case at any time during the ten full Trading Day period
referred to above, Marathon and Ashland shall make such adjustment to the
Fair Market Value of such Actively Traded Equity Securities determined
pursuant to this Section 7.03(a) as Marathon and Ashland shall mutually
agree so as to preserve the economic benefits to Ashland expected on the
date of this Agreement as a result of the issuance to it of such Actively
Traded Marathon Equity Securities as part of the Ashland Put Price.
(b) Fair Market Value Where There is a Holding Period. In
the event that Marathon elects pursuant to Section 4.04(a) or 4.04(b) to
impose a Holding Period on any Actively Traded Marathon Equity Securities,
the Fair Market Value of such Actively Traded Marathon Equity Securities
shall be deemed to be an amount equal to (i) the Fair Market Value of such
Actively Traded Marathon Equity Securities as determined pursuant to
Section 7.03(a), minus (ii) a discount factor that takes into account such
limitation on Ashland's ability to freely trade such Actively Traded
Marathon Equity Securities (a "7.03(b) Discount Amount"). The 7.03(b)
Discount Amount with respect to the Fair Market Value of such Actively
Traded Marathon Equity Securities shall be determined pursuant to the
following procedures:
(i) Negotiation Period. For a period of 15 days following
the applicable Ashland Put Price Election Date, Marathon and
Ashland will negotiate in good faith to seek to reach an agreement
as to the 7.03(b) Discount Amount. If Marathon and Ashland reach
such an agreement, then the 7.03(b)
37
Discount Amount shall be deemed to be the amount so agreed upon by
Marathon and Ashland.
(ii) Appraisal Process. In the event Marathon and Ashland
are unable to reach an agreement as to the 7.03(b) Discount Amount
within the 15-day period referred to in clause (i) above, then
within five Business Days after the expiration of such 15-day
period (such fifth Business Day being referred to herein as the
"7.03(b) Appraisal Process Commencement Date"), Marathon and
Ashland each shall select a nationally recognized investment
banking firm to (A) prepare a report which (1) sets forth such
investment banking firm's determination of the 7.03(b) Discount
Amount (which shall be a single amount as opposed to a range) and
(2) includes work papers which indicate the basis for and the
calculation of the 7.03(b) Discount Amount (a "7.03(b) Appraisal
Report") and (B) deliver to Marathon or Ashland, as the case may
be, an oral and written opinion addressed to such party as to the
7.03(b) Discount Amount. The fees and expenses of each investment
banking firm shall be paid by the party selecting such investment
banking firm. Each of Marathon and Ashland shall instruct its
respective investment banking firm to (i) not consult with the
other investment banking firm with respect to its view as to the
7.03(b) Discount Amount prior to the time that both investment
banking firms have delivered their respective opinions to Marathon
and Ashland, as applicable, (ii) deliver their respective 7.03(b)
Appraisal Reports, together with their oral and written opinions
as to the 7.03(b) Discount Amount (the "7.03(b) Initial Opinion
Values"), within 15 days after the 7.03(b) Appraisal Process
Commencement Date, and (iii) deliver a copy of its written opinion
and its 7.03(b) Appraisal Report to the Company, the other party
and the other party's investment banking firm at the time it
delivers its oral and written opinion to Marathon or Ashland, as
applicable.
If the 7.03(b) Initial Opinion Values differ and
the lesser 7.03(b) Initial Opinion Value equals or exceeds 90% of
the greater 7.03(b) Initial Opinion Value, the 7.03(b) Discount
Amount shall be deemed to
38
be an amount equal to (1) the sum of the 7.03(b) Initial Opinion
Values divided by (2) two.
If the 7.03(b) Initial Opinion Values differ and
the lesser 7.03(b) Initial Opinion Value is less than 90% of the
greater 7.03(b) Initial Opinion Value, then:
(i) within two Business Days after both investment
banking firms have delivered their respective opinions to Marathon
or Ashland, as applicable, each investment banking firm shall, at
a single meeting at which Marathon, Ashland, the Company and the
other investment banking firm are present, make a presentation
with respect to its 7.03(b) Initial Opinion Value. At such
presentation, Marathon, Ashland, the Company and the other
investment banking firm shall be entitled to ask questions as to
the basis for and the calculation of such investment banking
firm's 7.03(b) Initial Opinion Value; and
(ii) Marathon and Ashland shall, within five Business
Days after the date Marathon and Ashland receive the 7.03(b)
Initial Opinion Values (such fifth Business Day being referred to
herein as the "7.03(b) Subsequent Appraisal Process Commencement
Date"), jointly select a third nationally recognized investment
banking firm to (i) prepare a 7.03(b) Appraisal Report and (ii)
deliver an oral and written opinion addressed to Marathon and
Ashland as to the 7.03(b) Discount Amount. The fees and expenses
of such third investment banking firm shall be paid 50% by
Marathon and 50% by Ashland. Such third investment banking firm
shall not be provided with the 7.03(b) Initial Opinion Values and
shall not consult with the initial investment banking firms with
respect thereto. During such five-Business Day period, Marathon
and Ashland shall negotiate in good faith to independently reach
an agreement as to the 7.03(b) Discount Amount. If Marathon and
Ashland reach such an agreement, then the 7.03(b) Discount Amount
shall be deemed to be the amount so agreed upon by Marathon and
Ashland. If Marathon and Ashland are unable to reach such an
agreement, then Marathon and Ashland shall instruct such third
investment banking firm to deliver its 7.03(b) Appraisal Report,
together with its oral and written opinion as to the 7.03(b)
Discount Amount (the "7.03(b) Third Opinion Value"),
39
within 15 days after the 7.03(b) Subsequent Appraisal Process
Commencement Date. The 7.03(b) Discount Amount in such
circumstance shall be deemed to be an amount equal to (1) the sum
of (x) the 7.03(b) Third Opinion Value plus (y) whichever of the
two 7.03(b) Initial Opinion Values is closer to the 7.03(b) Third
Opinion Value (or, if the 7.03(b) Third Opinion Value is exactly
halfway between the two 7.03(b) Initial Opinion Values, the
7.03(b) Third Opinion Value), divided by (2) two.
SECTION 7.04. Determination of Fair Market Value of
Non-Actively Traded Marathon Equity Securities. (a) Negotiation Period. If
Marathon proposes to issue (or to have issued) to Ashland Marathon Equity
Securities that are not Actively Traded Marathon Equity Securities, then
for a period of 15 days following the applicable Ashland Put Price Election
Date, Marathon and Ashland will negotiate in good faith to seek to reach an
agreement as to the Fair Market Value of such Marathon Equity Securities,
taking into account, if there is a Holding Period, a discount factor that
takes into account such limitation on Ashland's ability to freely trade
such Marathon Equity Securities (a "7.04 Discount Amount"). If Marathon and
Ashland reach such an agreement, then the Fair Market Value of such
Marathon Equity Securities shall be deemed to be the amount so agreed upon
by Marathon and Ashland.
(b) Appraisal Process. In the event Marathon and Ashland
are unable to reach an agreement as to such Fair Market Value of Marathon
Equity Securities and such 7.04 Discount Amount, if any, within the 15-day
period referred to in clause (a) above, then within five Business Days
after the expiration of such 15-day period (such fifth Business Day being
referred to herein as the "7.04 Appraisal Process Commencement Date"),
Marathon and Ashland each shall select a nationally recognized investment
banking firm to (i) prepare a report which (1) sets forth such investment
banking firm's determination of the Fair Market Value of such Marathon
Equity Securities (which shall be a single amount as opposed to a range),
taking into account, if there is a Holding Period, a 7.04 Discount Amount,
which is determined by such investment banking firm, and (2) includes work
papers which separately indicate the basis for and the calculation of the
Fair Market Value of such Marathon Equity Securities and, if there is a
Holding Period, the basis for and the calculation of the 7.04 Discount
Amount (a "7.04
40
Appraisal Report") and (ii) deliver to Marathon or Ashland, as the case may
be, an oral and written opinion addressed to such party as to the Fair
Market Value of such Marathon Equity Securities (which opinion shall take
into account a 7.04 Discount Amount if there is a Holding Period with
respect to such Marathon Equity Securities). The fees and expenses of each
investment banking firm shall be paid by the party selecting such
investment banking firm. Each of Marathon and Ashland shall instruct its
respective investment banking firm to (i) not consult with the other
investment banking firm with respect to its view as to the Fair Market
Value of such Marathon Equity Securities and the 7.04 Discount Amount prior
to the time that both investment banking firms have delivered their
respective opinions to Marathon and Ashland, as applicable, (ii) deliver
their respective 7.04 Appraisal Reports, together with their oral and
written opinions as to the Fair Market Value of such Marathon Equity
Securities (the "7.04 Initial Opinion Values"), within 15 days after the
7.04 Appraisal Process Commencement Date, and (iii) deliver a copy of its
written opinion and its 7.04 Appraisal Report to the Company, the other
party and the other party's investment banking firm at the time it delivers
its oral and written opinion to Marathon or Ashland, as applicable.
If the 7.04 Initial Opinion Values differ and the lesser
7.04 Initial Opinion Value equals or exceeds 90% of the greater 7.04
Initial Opinion Value, the Fair Market Value of such Marathon Equity
Securities shall be deemed to be an amount equal to (1) the sum of the 7.04
Initial Opinion Values divided by (2) two.
If the 7.04 Initial Opinion Values differ and the lesser
7.04 Initial Opinion Value is less than 90% of the greater 7.04 Initial
Opinion Value, then:
(i) within two Business Days after both investment
banking firms have delivered their respective opinions to Marathon
or Ashland, as applicable, each investment banking firm shall, at
a single meeting at which Marathon, Ashland, the Company and the
other investment banking firm are present, make a presentation
with respect to its 7.04 Initial Opinion Value. At such
presentation, Marathon, Ashland, the Company and the other
investment banking firm shall be entitled to ask questions as to
the basis for and the calculation of
41
such investment banking firm's 7.04 Initial Opinion Value; and
(ii) Marathon and Ashland shall, within five Business
Days after the date Marathon and Ashland receive the 7.04 Initial
Opinion Values (such fifth Business Day being referred to herein
as the "7.04 Subsequent Appraisal Process Commencement Date"),
jointly select a third nationally recognized investment banking
firm to (i) prepare a 7.04 Appraisal Report and (ii) deliver an
oral and written opinion addressed to Marathon and Ashland as to
the Fair Market Value of such Marathon Equity Securities (which
opinion shall take into account a 7.04 Discount Amount if there is
a Holding Period with respect to such Marathon Equity Securities).
The fees and expenses of such third investment banking firm shall
be paid 50% by Marathon and 50% by Ashland. Such third investment
banking firm shall not be provided with the 7.04 Initial Opinion
Values and shall not consult with the initial investment banking
firms with respect thereto. During such five-Business Day period,
Marathon and Ashland shall negotiate in good faith to
independently reach an agreement as to the Fair Market Value of
such Marathon Equity Securities. If Marathon and Ashland reach
such an agreement, then the Fair Market Value of such Marathon
Equity Securities shall be deemed to be the amount so agreed upon
by Marathon and Ashland. If Marathon and Ashland are unable to
reach such an agreement, then Marathon and Ashland shall instruct
such third investment banking firm to deliver its 7.04 Appraisal
Report, together with its oral and written opinion as to the Fair
Market Value of such Marathon Equity Securities (the "7.04 Third
Opinion Value"), within 15 days after the 7.04 Subsequent
Appraisal Process Commencement Date. The Fair Market Value of such
Marathon Equity Securities in such circumstance shall be deemed to
be an amount equal to (i) the sum of (x) the 7.04 Third Opinion
Value plus (y) whichever of the two 7.04 Initial Opinion Values is
closer to the 7.04 Third Opinion Value (or, if the 7.04 Third
Opinion Value is exactly halfway between the two 7.04 Initial
Opinion Values, the 7.04 Third Opinion Value), divided by (ii)
two.
42
ARTICLE VIII
Certain Matters Relating to Securities
SECTION 8.01. Certain Requirements with Respect to
Marathon Debt Securities. All debt securities issued to Ashland pursuant to
Section 4.02(c) shall (i) be unsecured senior public fixed income debt
securities of (a) USX or (b) Marathon and fully guaranteed as to
performance by USX; (ii) have maturities of 5 to 7 years; (iii) have yields
which are comparable to those of 5 to 7 year public debt instruments issued
by companies whose Long Term Debt at the time of the issuance of such debt
securities to Ashland is rated by S&P and Moody's at least equal to the
respective ratings by S&P and Moody's of USX's Long Term Debt; (iv) be
priced to trade at par initially; and (v) have covenants substantially the
same as those included in other outstanding senior publicly traded debt
instruments of USX, including a negative pledge providing for pari passu
security rights and usual and customary successorship provisions concerning
changes in USX's ownership (all such debt securities are referred to herein
as "Marathon Debt Securities").
SECTION 8.02. Procedures with Respect to the Issuance of
Securities. All Securities to be issued hereunder shall be accompanied on
the Closing Date or applicable Installment Payment Date by (i) a
certificate from an authorized officer of the Issuer and (ii) an opinion
from such Issuer's counsel, in each case as to such matters as Ashland may
reasonably request, including, but not limited to the matters substantially
as follows (which shall be made as of the Closing Date or applicable
Installment Payment Date):
(i) the Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation with the power and authority to own, lease
and operate its assets and to conduct the business now being or to
be conducted by it. The Issuer is duly authorized, qualified or
licensed to do business as a foreign corporation or other
organization in good standing in each of the jurisdictions in
which its right, title or interest in or to any of the assets held
by it or the business conducted by it requires such authorization,
qualification or licensing, except where the failure to
43
be so authorized, qualified, licensed or in good standing would
not, individually or in the aggregate, result in an Issuer
Material Adverse Effect;
(ii) the Issuer's authorized capitalization is as set
forth in its Exchange Act filings (or, in the circumstance where
Ashland has made a Demand Registration, as set forth in the
Registration Statement or Offering Memorandum, as applicable, with
respect to such Securities). All of the outstanding equity
securities of the Issuer are duly and validly authorized and
issued, are fully paid and nonassessable and were not issued in
violation of or subject to any preemptive rights or other
contractual rights to purchase securities;
(iii) if such Securities are Marathon Equity Securities,
such Securities are duly authorized, validly issued and
outstanding, are fully paid and nonassessable, and were not issued
in violation of or subject to any preemptive rights or other
contractual rights to purchase securities;
(iv) if such Securities are Marathon Debt Securities,
such Securities have been duly authorized and validly issued by
the Issuer and constitute legal, valid and binding obligations of
the Issuer enforceable against the Issuer in accordance with their
terms, except as such enforcement is subject to the effect of any
applicable bankruptcy, insolvency, reorganization or other law
relating to or affecting creditors' rights generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(v) such Securities conform in all material respects to
the description thereof contained in the Issuer's Exchange Act
filings (or, in the circumstance where Ashland has made a Demand
Registration, to the description thereof contained in the
Registration Statement or Offering Memorandum, as applicable, with
respect to such Securities) and the certificates evidencing such
Securities will be, upon issuance, in due and proper form;
(vi) if such Securities are Marathon Equity Securities,
such Securities have been authorized
44
conditionally for listing on each national securities exchange on
which the other securities of the Issuer of the same class are
listed at the time of the Closing Date or Installment Payment
Date, subject to issuance and certain other conditions that are
not material;
(vii) if such Securities are Marathon Debt Securities,
the execution and delivery by the Issuer of each agreement
pursuant to which such Securities have been issued or which relate
to such Securities (each, a "Securities Document") and the
consummation by it of the transactions contemplated thereby have
been duly authorized and approved by all necessary corporate or
other action on the part of the Issuer. Each Securities Document
has been duly executed and delivered by the Issuer and constitutes
its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforcement is subject
to the effect of any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors'
rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law);
(viii) neither the execution and delivery by the Issuer
of the Securities Documents (in the case of Marathon Debt
Securities), nor the issuance of the Securities pursuant to this
Agreement and/or such Securities Documents will (a) conflict with,
or results in the breach of any provision of, the charter or
by-laws or similar governing or organizational documents of the
Issuer or any of its subsidiaries, (b) violate any Applicable Law
or any permit, order, award, injunction, decree or judgment of any
Governmental Authority applicable to or binding upon the Issuer or
any of its subsidiaries or to which any of their respective
properties is subject or (c) violate, conflict with or result in
the breach or termination of, or otherwise give any other person
the right to terminate, or constitute a default, event of default
or an event which with notice, lapse of time or both, would
constitute a default or event of default under the terms of, any
mortgage, indenture, deed of trust or lease or other agreement or
instrument to which the Issuer or any of its subsidiaries is a
party or by which any of their respective properties or
45
assets is subject, except, in the case of clauses (b) and (c) for
such violations, conflicts, breaches, terminations and defaults
which would not, individually or in the aggregate, result in an
Issuer Material Adverse Effect; and
(ix) except as set forth on a schedule to such
certificate or opinion, no Governmental Approval or other consent
is required by the Issuer for the execution and delivery by it of
the Securities Documents (in the case of Marathon Debt Securities)
or the issuance of the Securities pursuant to this Agreement
and/or such Securities Documents, except (a) for such Governmental
Approvals or other consents as have been obtained or (b) where the
failure to obtain such Governmental Approvals or other consents
would not, individually or in the aggregate, result in an Issuer
Material Adverse Effect.
If any Securities are issued by Marathon and guaranteed by USX, each of
Marathon and USX shall provide Ashland with a certificate and an opinion of
counsel in accordance with this Section 8.02.
SECTION 8.03. Holding Period. If Marathon elects (by so
notifying Ashland in the Ashland Put Price Election Notice) to impose a
Holding Period with respect to sales by Ashland of Marathon Equity
Securities issued to Ashland on the Closing Date or on an Installment
Payment Date, as applicable, then Ashland shall not be permitted to sell
such Marathon Equity Securities during such Holding Period. The term
"Holding Period", with respect to any Marathon Equity Securities, means the
period commencing on the Closing Date or applicable Installment Payment
Date and ending on such later date as Marathon shall state in the Ashland
Put Price Election Notice; provided that the length of a Holding Period
with respect to any Marathon Equity Securities shall in no event exceed 30
days.
SECTION 8.04. Manner of Sale of Marathon Equity
Securities. Ashland agrees to sell all Marathon Equity Securities (i)
pursuant to a bona fide Underwritten Public Offering managed by one or more
Bulge Bracket Investment Banking Firms selected by Ashland, or by one or
more other investment banking firms selected by Ashland and to which
Marathon or USX shall not have reasonably objected, in a manner reasonably
designed to effect a broad distribution of
46
such Marathon Equity Securities (a "Qualifying Public Offering"), (ii) to
any person, provided that after giving effect to such sale such person
beneficially owns, together with such person's Affiliates, no more than 5%
of the Marathon Equity Securities of the relevant issuer then outstanding
on a fully diluted basis (a "Fully Distributed Sale") or (iii) to a broker
or underwriter selected by Ashland who agrees to effect any subsequent
transfer by it of such Marathon Equity Securities in a Qualifying Public
Offering or a Fully Distributed Sale.
ARTICLE IX
Closing; Conditions to Closing; Consequences of Delay
SECTION 9.01. Closing. (a) Closing Date. The closing (the
"Closing") of (i) the purchase and sale of Ashland's Membership Interests
and the Ashland LOOP/LOCAP Interest pursuant to Marathon's exercise of its
Special Termination Right or Marathon Call Right or Ashland's exercise of
its Ashland Put Right or (ii) the purchase and sale of Marathon's
Membership Interests pursuant to Ashland's exercise of its Special
Termination Right, shall be held at the offices of Marathon, at 10:00 a.m.
on the later of (x) the 60th day after the Appraised Value Determination
Date (or at such other place or at such other time or such other date as
Marathon and Ashland shall mutually agree) (the "Scheduled Closing Date")
and (y) the fifth Business Day following the satisfaction or waiver of all
conditions to the obligations of Marathon and Ashland set forth in Section
9.02. The date on which the Closing actually occurs is referred to herein
as the "Closing Date".
(b) Purchase Procedures in the Event of the Exercise by
Marathon of its Special Termination Right or its Marathon Call Right. In
the event that Marathon exercises its Special Termination Right or Marathon
Call Right, at the Closing:
(i) Marathon shall deliver to Ashland, in Cash or by wire
transfer to a bank account designated in writing by Ashland,
immediately available funds in an amount equal to the sum of (x)
the Special Termination Price or Marathon Call Price, as
applicable, plus (y) the amount of interest payable pursuant to
Section 3.01, plus (z) the amount of interest, if any,
47
payable pursuant to Section 9.04(b), 9.05, 9.08(b) or 9.09;
(ii) Ashland shall Transfer to Marathon (or, if Marathon
so elects by written notice to Ashland, a Wholly Owned Subsidiary
of Marathon or USX) in accordance with Article X of the LLC
Agreement, all of Ashland's Membership Interests;
(iii) Ashland shall Transfer to Marathon or, if Marathon
so elects by written notice to Ashland, to the Company or such
other person as Marathon shall direct, the Ashland LOOP/LOCAP
Interest; and
(iv) the Company shall release to Marathon any amounts
held in the Escrow Account, including any income earned thereon.
(c) Purchase Procedures in the Event of the Exercise by
Ashland of its Ashland Put Right. In the event that Ashland exercises its
Ashland Put Right, at the Closing:
(i) Marathon shall deliver to Ashland, in Cash or by wire
transfer to a bank account designated in writing by Ashland,
immediately available funds in an amount equal to the sum of (x)
the Cash portion of the Ashland Put Price or first Installment
Payment, as applicable, plus (y) the amount of interest payable
pursuant to Section 4.01, plus (z) the amount of interest, if any,
payable pursuant to Section 9.04(b), 9.05, 9.08(b) or 9.09;
(ii) Marathon and/or USX, as applicable, shall issue the
Securities to be issued on the Closing Date, if any, which
Securities shall be accompanied by the certificate(s) and
opinion(s) referred to in Section 8.02;
(iii) Ashland shall Transfer to Marathon or, if Marathon
so elects by written notice to Ashland, a Wholly Owned Subsidiary
of Marathon or USX in accordance with Article X of the LLC
Agreement, all of Ashland's Membership Interests;
(iv) Ashland shall Transfer to Marathon or, if Marathon
so elects by written notice to Ashland, to the
48
Company or such other person as Marathon shall direct, the Ashland
LOOP/LOCAP Interest; and
(v) the Company shall release to Marathon any amounts
held in the Escrow Account, including any income earned thereon.
In addition, on each of two remaining Scheduled Installment Payment Dates,
if any, (i) Marathon shall deliver to Ashland, in Cash or by wire transfer
to a bank account (which bank account has been designated in writing by
Ashland at least two Business Days prior to the applicable Installment
Payment Date), immediately available funds in an amount equal to the sum of
(x) the Cash portion of the second and third Installment Payments,
respectively, plus (y) the amount of interest payable pursuant to Section
4.01, plus (z) the amount of interest, if any, payable pursuant to Section
9.04(b) or 9.05; and (ii) Marathon and/or USX, as applicable, shall issue
the Securities to be issued on such Installment Payment Dates, if any,
which Securities shall be accompanied by the certificate(s) and opinion(s)
referred to in Section 8.02.
(d) Purchase Procedures in the Event of the Exercise by
Ashland of its Special Termination Right. In the event that Ashland
exercises its Special Termination Right at the Closing:
(i) Ashland shall deliver to Marathon, in Cash or by wire
transfer to a bank account designated in writing by Marathon,
immediately available funds in an amount equal to the sum of (x)
the Special Termination Price plus (y) the amount of interest
payable pursuant to Section 2.01, plus (z) the amount of interest,
if any, payable pursuant to Section 9.08(b) or 9.09;
(ii) Marathon shall Transfer to Ashland (or, if Ashland
so elects by written notice to Marathon, a Wholly Owned Subsidiary
of Ashland) in accordance with Article X of the LLC Agreement, all
of Marathon's Membership Interests; and
(iii) the Company shall release to Ashland any amounts
held in the Escrow Account, including any income earned thereon.
49
SECTION 9.02. Conditions to Closing. (a) Marathon's
Obligation in the Event of an Exercise by Marathon of its Special
Termination Right or its Marathon Call Right or an Exercise by Ashland of
its Ashland Put Right. Marathon's obligation to purchase and pay for
Ashland's Membership Interests and the Ashland LOOP/LOCAP Interest pursuant
to this Agreement in the event of an exercise by Marathon of its Special
Termination Right or its Marathon Call Right or in the event of an exercise
by Ashland of its Ashland Put Right is subject in each case to the
satisfaction (or waiver by Marathon) as of the Closing of the following
conditions:
(i) As of the Closing Date, there shall be no (i)
injunction or restraining order of any nature issued by any
Governmental Authority which directs, or which has the effect of
directing, that the Closing shall not be consummated as herein
provided or (ii) investigation, action or other proceeding that
shall have been brought by any Governmental Authority and be
pending on the Closing Date, or that shall have been threatened by
any Governmental Authority, in any such case against Marathon or
Ashland in connection with the consummation of the transactions
contemplated by this Agreement which is reasonably likely to
result in an injunction or restraining order which directs, or
which has the effect of directing, that the Closing shall not be
consummated as herein provided;
(ii) the waiting period under the HSR Act, if applicable
to the purchase and sale of Ashland's Membership Interests
pursuant to this Agreement shall have expired or been terminated;
and
(iii) Ashland shall have Transferred to Marathon (or, if
Marathon shall have so elected by written notice to Ashland, a
Wholly Owned Subsidiary of Marathon or USX) all of its Membership
Interests on the Closing Date free and clear of all Liens.
It is understood and agreed that a breach by Ashland of any of its
representations or warranties in this Agreement shall not constitute a
condition to Marathon's obligation to purchase and pay for Ashland's
Membership Interests and the Ashland LOOP/LOCAP Interest pursuant to this
Agreement in the circumstances set forth above; provided that Marathon
shall not be deemed to have waived any right to make a Claim
50
against Ashland with respect to any Loss that Marathon suffers as a result
of any such breach.
(b) Ashland's Obligation in the Event of an Exercise by
Marathon of its Special Termination Right or its Marathon Call Right or an
Exercise by Ashland of its Ashland Put Right. Ashland's obligation to sell
its Membership Interests and the Ashland LOOP/LOCAP Interest to Marathon
pursuant to this Agreement in the event of an exercise by Marathon of its
Special Termination Right or its Marathon Call Right or in the event of an
exercise by Ashland of its Ashland Put Right is subject in each case to the
satisfaction (or waiver by Ashland) as of the Closing of the following
conditions:
(i) As of the Closing Date, there shall be no (i)
injunction or restraining order of any nature issued by any
Governmental Authority which directs, or which has the effect of
directing, that the Closing shall not be consummated as herein
provided or (ii) investigation, action or other proceeding that
shall have been brought by any Governmental Authority and be
pending on the Closing Date, or threatened by any Governmental
Authority, in any such case against Marathon or Ashland in
connection with the consummation of the transactions contemplated
by this Agreement which is reasonably likely to result in an
injunction or restraining order which directs, or which has the
effect of directing, that the Closing shall not be consummated as
herein provided;
(ii) the waiting period under HSR Act, if applicable to
the purchase and sale of Ashland's Membership Interests pursuant
to this Agreement shall have expired or been terminated;
(iii) Marathon shall have delivered to Ashland, in Cash
or by wire transfer to a bank account designated in writing by
Ashland, immediately available funds in an amount equal to (x) the
Special Termination Price or Marathon Call Price, as applicable,
or the Cash portion of the Ashland Put Price or applicable
Installment Payment, plus (y) the amount of interest payable
pursuant to Section 3.01 or 4.01, as applicable, plus (z) the
amount of interest, if any, payable pursuant to Section 9.04(b) or
9.05; and
51
(iv) Marathon or USX, as applicable, shall have issued
the Securities to be issued on the Closing Date, if any,
accompanied by the certificate(s) and opinion(s) referred to in
Section 8.02.
It is understood and agreed that a breach by Marathon or USX of any of its
respective representations or warranties in this Agreement shall not
constitute a condition to Ashland's obligation to sell its Membership
Interests and the Ashland LOOP/LOCAP Interest to Marathon pursuant to this
Agreement in the circumstances set forth above; provided that Ashland shall
not be deemed to have waived any right to make a Claim against Marathon or
USX with respect to any Loss that Ashland suffers as a result of any such
breach.
(c) Ashland's Obligation in the Event of an Exercise by
Ashland of its Special Termination Right. Ashland's obligation to purchase
and pay for Marathon's Membership Interests pursuant to this Agreement in
the event of an exercise by Ashland of its Special Termination Right is
subject to the satisfaction (or waiver by Ashland) as of the Closing of the
following conditions:
(i) As of the Closing Date, there shall be no (i)
injunction or restraining order of any nature issued by any
Governmental Authority which directs, or which has the effect of
directing, that the Closing shall not be consummated as herein
provided or (ii) investigation, action or other proceeding that
shall have been brought by any Governmental Authority and be
pending on the Closing Date, or that shall have been threatened by
any Governmental Authority, in any such case against Marathon or
Ashland in connection with the consummation of the transactions
contemplated by this Agreement which is reasonably likely to
result in an injunction or restraining order which directs, or
which has the effect of directing, that the Closing shall not be
consummated as herein provided;
(ii) the waiting period under the HSR Act, if applicable
to the purchase and sale of Marathon's Membership Interests
pursuant to this Agreement shall have expired or been terminated;
and
(iii) Marathon shall have Transferred to Ashland (or, if
Ashland shall have so elected by written notice to Marathon, a
Wholly Owned Subsidiary of Ashland) all
52
of its Membership Interests on the Closing Date free and clear of
all Liens.
It is understood and agreed that a breach by Marathon or USX of any of its
respective representations or warranties in this Agreement shall not
constitute a condition to Ashland's obligation to purchase and pay for
Marathon's Membership Interests pursuant to this Agreement in the
circumstances set forth above; provided that Ashland shall not be deemed to
have waived any right to make a Claim against Marathon or USX with respect
to any Loss that Ashland suffers as a result of any such breach.
(d) Marathon's Obligation in the Event of an Exercise by
Ashland of its Special Termination Right. Marathon's obligation to sell its
Membership Interests to Ashland pursuant to this Agreement in the event of
an exercise by Ashland of its Special Termination Right is subject to the
satisfaction (or waiver by Marathon) as of the Closing of the following
conditions:
(i) As of the Closing Date, there shall be no (i)
injunction or restraining order of any nature issued by any
Governmental Authority which directs, or which has the effect of
directing, that the Closing shall not be consummated as herein
provided or (ii) investigation, action or other proceeding that
shall have been brought by any Governmental Authority and be
pending on the Closing Date, or threatened by any Governmental
Authority, in any such case against Marathon or Ashland in
connection with the consummation of the transactions contemplated
by this Agreement which is reasonably likely to result in an
injunction or restraining order which directs, or which has the
effect of directing, that the Closing shall not be consummated as
herein provided;
(ii) the waiting period under HSR Act, if applicable to
the purchase and sale of Marathon's Membership Interests pursuant
to this Agreement shall have expired or been terminated; and
(iii) Ashland shall have delivered to Marathon, in Cash
or by wire transfer to a bank account designated in writing by
Marathon, immediately available funds in an amount equal to (x)
the Special Termination Price plus (y) the amount of interest
payable pursuant to
53
Section 2.01 plus (z) the amount of interest, if any, payable
pursuant to Section 9.08(b) or 9.09.
It is understood and agreed that a breach by Ashland of any of its
representations or warranties in this Agreement shall not constitute a
condition to Marathon's obligation to sell its Membership Interests to
Ashland pursuant to this Agreement in the circumstances set forth above;
provided that Marathon shall not be deemed to have waived any right to make
a Claim against Ashland with respect to any Loss that Marathon suffers as a
result of any such breach.
(e) Consequences of Inability To Transfer the Ashland
LOOP/LOCAP Interest on the Closing Date. It shall not be a condition to the
Closing of the Marathon Call Right, the Ashland Put Right or the Marathon
Special Termination Right, as applicable, that Ashland shall have
Transferred the Ashland LOOP/LOCAP Interest to Marathon, the Company or
such other person as Marathon shall direct. In the event that any consents
or approvals required for such Transfer are not obtained prior to the
Closing of the Marathon Call Right, the Ashland Put Right or the Marathon
Special Termination Right, as applicable, and as a consequence Ashland is
not able to Transfer the Ashland LOOP/LOCAP Interest to Marathon, the
Company or such other person as Marathon shall direct, as applicable, on
the Closing Date, the parties hereto shall use their commercially
reasonable best efforts to achieve any lawful and reasonable (including
with respect to the costs and expenses to be borne by Ashland) arrangement
proposed by Marathon under which Marathon or the Company, as applicable,
shall obtain the economic claims, rights and benefits under the Ashland
LOOP/LOCAP Interest. Such reasonable arrangement may include (i) Ashland
subcontracting, sublicensing or subleasing to Marathon, the Company or such
other person as Marathon shall direct, as applicable, any and all of
Ashland's rights, and delegating all of Ashland's obligations, under the
Ashland LOOP/LOCAP Interest, and (ii) Ashland granting to Marathon, the
Company or such other person as Marathon shall direct, as applicable, a
proxy (the "Ashland LOOP/LOCAP Irrevocable Proxy") which shall authorize
such party to exercise on Ashland's behalf, all of Ashland's voting rights
with respect to the Ashland LOOP/LOCAP Interest. The costs and expenses
incurred in connection with any such arrangements shall be borne 62% by
Marathon and 38% by Ashland.
54
SECTION 9.03. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right Where Ashland Is at Fault. (a)
Right to Revoke Ashland Put Exercise Notice or Marathon Call Exercise
Notice. If the Closing of the Marathon Call Right or the Ashland Put Right
shall not have occurred on or prior to the date that is 180 days after the
Scheduled Closing Date, and (i) the delay is due to (x) a failure by
Ashland to timely perform in any material respect any of its covenants and
agreements contained herein or (y) the fact that any of Ashland's
representations and warranties contained herein have ceased to be true and
correct in any material respect, and (ii) neither Marathon nor USX shall
have (x) failed to timely perform in any material respect any of its
covenants and agreements contained herein or (y) breached any of its
representations and warranties contained herein in any material respect,
then Marathon shall thereafter have the right, exercisable at any time
prior to the Closing by written notice to Ashland, to revoke Ashland's
Ashland Put Exercise Notice or its Marathon Call Exercise Notice, as
applicable.
(b) Adjustment to Ashland Put Price or Marathon Call
Price. If the Closing of the Marathon Call Right or the Ashland Put Right
does not occur on the Scheduled Closing Date, and (i) the delay is due to
(x) a failure by Ashland to timely perform in any material respect any of
its covenants and agreements contained herein or (y) the fact that any of
Ashland's representations and warranties contained herein have ceased to be
true and correct in any material respect, and (ii) neither Marathon nor USX
shall have (x) failed to timely perform in any material respect any of its
covenants and agreements contained herein or (y) breached any of its
representations and warranties contained herein in any material respect,
then on such later date on which the Closing actually takes place (such
later date being the "Delayed Closing Date") Marathon shall deduct from the
Marathon Call Price or the Ashland Put Price (or the first Installment
Payment, as applicable) payable to Ashland on the Delayed Closing Date, an
amount equal to the amount of interest accrued during the period commencing
at 12:01 a.m. on the day immediately following the Scheduled Closing Date
and ending on and including the Delayed Closing Date (the "Delayed Closing
Date Interest Period") on the Marathon Call Price, or the Ashland Put Price
(or the first Installment Payment thereof, as applicable), at a rate per
55
annum equal to the 30-day LIBOR Rate multiplied by 1.5, with daily accrual
of interest.
(c) Other Consequences. In the event that Marathon
revokes Ashland's Ashland Put Exercise Notice or its Marathon Call Exercise
Notice pursuant to Section 9.03(a), each of Marathon and Ashland shall
thereafter have the right to exercise their respective Marathon Call Right
and Ashland Put Right in accordance with the terms of this Agreement. Any
such revocation shall not operate as a release of Ashland from any
liability it may have to Marathon for any breach of its obligations under
this Agreement and such revocation shall not in any way preclude Marathon
from exercising any right or power hereunder or otherwise available to it
at law or in equity as a result of any such breach.
SECTION 9.04. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right Where Marathon or USX Is at
Fault. (a) Revocation of Proxies; Payment of Distributions to Ashland;
Right To Revoke Ashland Put Exercise Notice or Marathon Call Exercise
Notice. If the Closing of the Marathon Call Right or the Ashland Put Right
does not occur on the Scheduled Closing Date, and (i) the delay is due to
(x) a failure by Marathon or USX to timely perform in any material respect
any of its respective covenants and agreements contained herein or (y) the
fact that any of Marathon's or USX's respective representations and
warranties contained herein (or in any certificate required to be delivered
to Ashland pursuant to Section 9.02(b)(iv)) have ceased to be true and
correct in any material respect, and (ii) Ashland shall not have (x) failed
to timely perform in any material respect any of its covenants and
agreements contained herein or (y) breached any of its representations and
warranties contained herein in any material respect, then (i) effective as
of 12:01 a.m. on the day immediately following the Scheduled Closing Date,
all Ashland Representatives Revocable Proxies and the Ashland LOOP/LOCAP
Revocable Proxy shall automatically be revoked; (ii) Marathon shall, and
shall cause each of its Representatives to, promptly take all such actions
as are necessary to provide that the Company shall thereupon resume making
distributions of Distributable Cash and Tax Liability Distributions
directly to Ashland pursuant to Article V of the LLC Agreement; (iii)
Marathon shall immediately pay to Ashland an amount equal to all Exercise
Period Distributions received by
56
Marathon from the Company in accordance with the provisions of Section
5.01(a)(ii), together with interest on each such Exercise Period
Distribution at a rate per annum equal to the Base Rate, with daily accrual
of interest, from (but excluding) the date such amount was otherwise
payable to Ashland (or, if earlier, the date such amount was paid to
Marathon) to (and including) the date such amount is paid to Ashland in
accordance with the provisions of this clause (iii); (iv) the Company shall
immediately release to Ashland all amounts then held in the Escrow Account,
including any income earned thereon; and (v) if the Closing shall not have
occurred on or prior to the date that is 180 days after the Scheduled
Closing Date, Ashland thereafter shall have the right, exercisable at any
time prior to the Closing by written notice to Marathon, to revoke its
Ashland Put Exercise Notice or Marathon's Marathon Call Exercise Notice, as
applicable.
(b) Adjustments to Ashland Put Price or Marathon Call
Price. In addition, if the Closing of the Marathon Call Right or the
Ashland Put Right does not occur on the Scheduled Closing Date, and (i) the
delay is due to (x) a failure by Marathon or USX to timely perform in any
material respect any of its respective covenants and agreements contained
herein or (y) the fact that any of Marathon's or USX's respective
representations and warranties contained herein have ceased to be true and
correct in any material respect, and (ii) Ashland shall not have (x) failed
to timely perform in any material respect any of its covenants and
agreements contained herein or (y) breached any of its representations and
warranties contained herein in any material respect, then Marathon shall be
entitled to deduct from the Marathon Call Price or from the Ashland Put
Price (or the first Installment Payment, as applicable) payable to Ashland
on the Delayed Closing Date, an amount (the "9.04(b) Post-Scheduled Closing
Date Distribution Amount") equal to the amount of any Ashland Exercise
Period Distributions that Ashland shall have received from the Company in
Cash during the Delayed Closing Date Interest Period and, on the Delayed
Closing Date, Marathon shall pay to Ashland in addition to the Marathon
Call Price or the Ashland Put Price (or the first Installment Payment, as
applicable) and related accrued interest payable pursuant to Section 3.01
or 4.01, as applicable, an amount in Cash equal to the amount of interest
accrued during the Delayed Closing Interest Period on an amount equal to
(1) the Marathon Call Price or the Ashland Put Price (or the first
Installment Payment thereof,
57
as applicable) minus (2) the 9.04(b) Post-Scheduled Closing Date
Distribution Amount, at a rate per annum equal to the 30-day LIBOR Rate
multiplied by 1.5, with daily accrual of interest.
(c) Other Consequences. In the event that Ashland revokes
its Ashland Put Exercise Notice or Marathon's Marathon Call Exercise Notice
pursuant to clause (v) of Section 9.03(a), each of Ashland and Marathon
shall thereafter have the right to exercise their respective Ashland Put
Right and Marathon Call Right in accordance with the terms of this
Agreement. Any such revocation shall not operate as a release of Marathon
or USX from any liability it may have to Ashland for any breach of its
obligations under this Agreement and such revocation shall not in any way
preclude Ashland from exercising any right or power hereunder or otherwise
available to it at law or in equity as a result of any such breach.
SECTION 9.05. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right Where No Party Is at Fault. If
the Closing of the Marathon Call Right or the Ashland Put Right does not
occur on the Scheduled Closing Date, and the delay is not due to a failure
by any party hereto to timely perform in any material respect any of its
respective covenants and agreements contained herein or to the fact that
any party's representations and warranties contained herein have ceased to
be true and correct in any material respect, then Marathon shall pay to
Ashland on the Delayed Closing Date, in addition to the Marathon Call Price
or the Ashland Put Price (or the first Installment Payment, as applicable)
and related accrued interest payable pursuant to Section 3.01 or 4.01, as
applicable, an amount in Cash equal to the amount of interest accrued
during the Delayed Closing Interest Period on the Marathon Call Price or
the Ashland Put Price (or the first Installment Payment, as applicable), at
a rate per annum equal to the Base Rate, with daily accrual of interest. If
the Delayed Closing Date does not occur on or prior to the date that is 180
days after the Scheduled Closing Date and the delay is not due to an action
or failure to act by any of Marathon, USX or Ashland, then (i) effective as
of 12:01 a.m. on the day immediately following the last day of such 180-day
period, all Ashland Representatives Revocable Proxies and the Ashland
LOOP/LOCAP Revocable Proxy shall automatically be revoked; (ii) Marathon
shall, and shall cause each of its
58
Representatives to, promptly take all such actions as are necessary to
provide that the Company shall resume making distributions of Distributable
Cash and Tax Liability Distributions directly to Ashland pursuant to
Article V of the LLC Agreement; (iii) Marathon shall immediately pay to
Ashland an amount equal to all Exercise Period Distributions received by
Marathon from the Company in accordance with the provisions of Section
5.01(a)(ii), together with interest on each such Exercise Period
Distribution at a rate per annum equal to the Base Rate, with daily accrual
of interest, from (but excluding) the date such amount was otherwise
payable to Ashland (or, if earlier, the date such amount was paid to
Marathon) to (and including) the date such amount is paid to Ashland in
accordance with the provisions of this clause (iii); (iv) the Company shall
immediately release to Ashland all amounts then held in the Escrow Account,
including any income earned thereon; and (v) the parties shall be restored
to their rights as though the Ashland Put Right or the Marathon Call Right
had never been exercised, without liability to any party and without any
effect on the ability of Ashland to exercise its Ashland Put Right or
Marathon to exercise its Marathon Call Right in accordance with the terms
of this Agreement in the future.
SECTION 9.06. Consequences of Delayed Second or Third
Scheduled Installment Payment. If Marathon shall fail to make an
Installment Payment on the second or third Scheduled Installment Payment
Date, if applicable, then on such later date on which the applicable
Installment Payment is actually made (such later date being a "Delayed
Installment Payment Date"), Marathon shall pay to Ashland, in addition to
the applicable Installment Payment and related accrued interest payable
pursuant to Section 3.01 or 4.01, as applicable, an amount in Cash equal to
the amount of interest accrued during the period commencing on the day
immediately following the Scheduled Installment Payment Date and ending on
and including the date of the payment of the relevant Installment Payment
(the "Delayed Installment Payment Date Interest Period") on the applicable
Installment Payment, at a rate per annum equal to the 30 day LIBOR Rate
multiplied by 1.5, with daily accrual of interest.
SECTION 9.07. Consequences of a Delayed Closing of the
Special Termination Right Where Terminating Member Is at Fault. (a)
Continuation of Term of the Company; Right to Specific Performance. If the
Closing of the Special Termination Right shall not have occurred on or
prior to the
59
Scheduled Closing Date, and (i) the delay is due to (x) a failure by the
Terminating Member (or, if Marathon is the Terminating Member, Marathon or
USX) to timely perform in any material respect any of its covenants and
agreements contained herein or (y) the fact that any of the Terminating
Member's (or, if Marathon is the Terminating Member, Marathon's or USX's)
representations and warranties contained herein have ceased to be true and
correct in any material respect, and (ii) the Non-Terminating Member (or,
if Marathon is the Non-Terminating Member, Marathon or USX) shall not have
(x) failed to timely perform in any material respect any of its covenants
and agreements contained herein or (y) breached any of its representations
and warranties contained herein in any material respect, then the
Non-Terminating Member shall have the right to elect, by written notice to
the Company and the Terminating Member, to either (i) terminate the Term of
the Company at the end of the Initial Term or the then-current 10-year
extension thereof, as applicable (in which case the Term of the Company
shall automatically terminate upon the expiration of the Initial Term or
the then-current 10-year extension thereof), or (ii) extend the Term of the
Company for two additional years following the expiration of the Initial
Term or the then-current 10-year extension thereof, as applicable (in which
case the Term of the Company shall automatically be extended for such
additional two-year period).
(b) Adjustment to Special Termination Price. If the
Closing of the Special Termination Right does not occur on the Scheduled
Closing Date, and (i) the delay is due to (x) a failure by the Terminating
Member (or, if Marathon is the Terminating Member, Marathon or USX) to
timely perform in any material respect any of its covenants and agreements
contained herein or (y) the fact that any of the Terminating Member's (or,
if Marathon is the Terminating Member, Marathon's or USX's) representations
and warranties contained herein have ceased to be true and correct in any
material respect, and (ii) the Non-Terminating Member (or, if Marathon is
the Terminating Member, Marathon or USX) shall not have (x) failed to
timely perform in any material respect any of its covenants and agreements
contained herein or (y) breached any of its representations and warranties
contained herein in any material respect, then on the Delayed Closing Date
the Non-Terminating Member shall deduct from the Special Termination Price
payable to the Terminating Member on the Delayed Closing Date, an amount
equal to the amount of interest accrued during the Delayed
60
Closing Date Interest Period on the Special Termination Price, at a rate
per annum equal to the 30-day LIBOR Rate multiplied by 1.5, with daily
accrual of interest.
SECTION 9.08. Consequences of a Delayed Closing of the
Special Termination Right Where Non-Terminating Member Is at Fault. (a)
Revocation of Proxies; Payment of Distributions to Terminating Member;
Right to Revoke Special Termination Exercise Notice. If the Closing of the
Special Termination Right does not occur on the Scheduled Closing Date, and
(i) the delay is due to a failure by the Non-Terminating Member (or, if
Marathon is the Non-Terminating Member, Marathon or USX) to timely perform
in any material respect any of its covenants and agreements contained
herein or (y) the fact that any of the Non-Terminating Member's (or, if
Marathon is the Non-Terminating Member, Marathon's or USX's)
representations and warranties contained herein have ceased to be true and
correct in any material respect, and (ii) the Terminating Member (or, if
Marathon is the Terminating Member, Marathon or USX) shall not have (x)
failed to timely perform in any material respect any of its covenants and
agreements contained herein or (y) breached any of its representations and
warranties contained herein in any material respect, then (i) effective as
of 12:01 a.m. on the day immediately following the Scheduled Closing Date,
all Marathon Representative Revocable Proxies (in the circumstance where
Marathon is the Terminating Member) or all Ashland Representative Revocable
Proxies and the Ashland LOOP/LOCAP Revocable Proxy (in the circumstance
where Ashland is the Terminating Member) shall automatically be revoked;
(ii) the Non-Terminating Member shall, and shall cause each of its
Representatives to, promptly take all such actions as are necessary to
provide that the Company shall thereupon resume making distributions of
Distributable Cash and Tax Liability Distributions directly to the
Terminating Member pursuant to Article V of the LLC Agreement; (iii) the
Non-Terminating Member shall immediately pay to the Terminating Member an
amount equal to all Exercise Period Distributions received by the
Non-Terminating Member from the Company in accordance with the provisions
of Section 5.01(a)(ii) or Section 5.01(b)(ii), as applicable, together with
interest on each such Exercise Period Distribution at a rate per annum
equal to the Base Rate, with daily accrual of interest, from (but
excluding) the date such amount was otherwise payable to the Terminating
Member (or, if earlier, the date such amount was paid to the
Non-Terminating Member) to (and including) the
61
date such amount is paid to the Terminating Member in accordance with the
provisions of this clause (iii); (iv) the Company shall immediately release
to the Terminating Member all amounts then held in the Escrow Account,
including any income earned thereon; and (v) if the Closing shall not have
occurred on or prior to the date that is 120 days before the expiration of
the Initial Term or the then-current 10-year extension thereof, each of the
Terminating Member and the Non-Terminating Member thereafter shall have the
right, exercisable at any time prior to the Closing by written notice to
the other party, to revoke the Non-Terminating Member's Special Termination
Exercise Notice, in which event the Term of the Company shall automatically
terminate upon the expiration of the Initial Term or the then-current
10-year extension thereof.
(b) Adjustments to Special Termination Price. In
addition, if the Closing of the Special Termination Right does not occur on
the Scheduled Closing Date, and (i) the delay is due to (x) a failure by
the Non-Terminating Member (or, if Marathon is the Non-Terminating Member,
Marathon or USX) to timely perform in any material respect any of its
covenants and agreements contained herein or (y) the fact that any of the
Non-Terminating Member's (or, if Marathon is the Non-Terminating Member,
Marathon's or USX's) representations and warranties contained herein have
ceased to be true and correct in any material respect, and (ii) the
Terminating Member (or, if Marathon is the Terminating Member, Marathon or
USX) shall not have (x) failed to timely perform in any material respect
any of its covenants and agreements contained herein or (y) breached any of
its representations and warranties contained herein in any material
respect, then the Non-Terminating Member shall be entitled to deduct from
the Special Termination Price payable to the Terminating Member on the
Delayed Closing Date, an amount (the "9.08(b) Post-Scheduled Closing Date
Distribution Amount") equal to the amount of any Exercise Period
Distributions that the Terminating Member shall have received from the
Company in Cash during the Delayed Closing Date Interest Period and, on the
Delayed Closing Date, the Non-Terminating Member shall pay to the
Terminating Member in addition to the Special Termination Price and related
accrued interest payable pursuant to Section 2.01, an amount in Cash equal
to the amount of interest accrued during the Delayed Closing Interest
Period on an amount equal to (1) the Special Termination Price minus (2)
the 9.08(b) Post-Scheduled Closing Date Distribution Amount, at a rate
62
per annum equal to the 30-day LIBOR Rate multiplied by 1.5, with daily
accrual of interest.
(c) Other Consequences. In the event that the Terminating
Member revokes the Non-Terminating Member's Special Termination Exercise
Notice, then the Non-Terminating Member shall not thereafter have the right
to exercise its Special Termination Right. Any such revocation shall not
operate as a release of the Non-Terminating Member from any liability it
may have to the Terminating Member for any breach of its obligations under
this Agreement and such revocation shall not in any way preclude the
Terminating Member from exercising any right or power hereunder or
otherwise available to it at law or in equity as a result of any such
breach.
SECTION 9.09. Consequences of Delayed Closing of Special
Termination Right Where No Party Is at Fault. If the Closing of the Special
Termination Right does not occur on the Scheduled Closing Date, and the
delay is not due to a failure by any party hereto to timely perform in any
material respect any of its respective covenants and agreements contained
herein or to the fact that any party's representations and warranties
contained herein have ceased to be true and correct in any material
respect, then the Non-Terminating Member shall pay to the Terminating
Member on the Delayed Closing Date, in addition to the Special Termination
Price and related accrued interest payable pursuant to Section 2.01, an
amount in Cash equal to the amount of interest accrued during the Delayed
Closing Interest Period on the Special Termination Price, at a rate per
annum equal to the Base Rate, with daily accrual of interest. If the
Delayed Closing Date does not occur on or prior to the date that is 120
days before the expiration of the Initial Term or the then-current 10-year
extension thereof and the delay is not due to an action or failure to act
by the Terminating Member or the Non-Terminating Member, then (i) effective
as of 12:01 a.m. on the day immediately following such 120th day before the
expiration of the Initial Term or the then-current 10-year extension
thereof, all Marathon Representative Revocable Proxies (in the circumstance
where Marathon is the Terminating Member) or all Ashland Representative
Revocable Proxies and the Ashland LOOP/LOCAP Revocable Proxy (in the
circumstance where Ashland is the Terminating Member) shall be revoked;
(ii) the Non-Terminating Member shall, and shall cause each of its
Representatives to, promptly take all such actions
63
as are necessary to provide that the Company shall resume making
distributions of Distributable Cash and Tax Liability Distributions
directly to the Terminating Member pursuant to Article V of the LLC
Agreement; (iii) the Non-Terminating Member shall immediately pay to the
Terminating Member an amount equal to all Exercise Period Distributions
received by the Non-Terminating Member from the Company in accordance with
the provisions of Section 5.01(a)(ii) or Section 5.01(b)(ii), as
applicable, together with interest on each such Exercise Period
Distribution at a rate per annum equal to the Base Rate, with daily accrual
of interest, from (but excluding) the date such amount was otherwise
payable to the Terminating Member (or, if earlier, the date such amount was
paid to the Non-Terminating Member) to (and including) the date such amount
is paid to the Terminating Member in accordance with the provisions of this
clause (iii); (iv) the Company shall immediately release to the Terminating
Member all amounts then held in the Escrow Account, including any income
earned thereon; and (v) the Term of the Company shall automatically
terminate upon the expiration of the Initial Term or the then-current
10-year extension thereof.
ARTICLE X
Registration Rights
SECTION 10.01. Registration upon Request. (a) Ashland
shall have the right to make a written demand upon the issuer or, in the
case of any Marathon Debt Securities issued by Marathon and guaranteed by
USX, issuers of any class of Securities delivered or to be delivered to
Ashland as payment of any portion of the Ashland Put Price (both parties
hereinafter referred to collectively as the "Issuer"), on not more than six
separate occasions (subject to the provisions of this Section 10.01), to
either, at Ashland's option, (i) register under the Securities Act all or a
portion of such Securities for purposes of a public offering by Ashland of
such Securities or (ii) prepare an Offering Memorandum that covers all or a
portion of such Securities for purposes of a private placement by Ashland
of such Securities (either of such requests being referred to herein as a
"Demand Registration") that were not registered under the Securities Act at
the time of issuance thereof to Ashland on the Closing Date or Installment
Payment Date, as the case may be, and the Issuer shall use its best efforts
64
to file a Registration Statement and cause such Securities to be registered
under the Securities Act (in the case of a Demand Registration for a public
offering) or to prepare a final Offering Memorandum (in the case of a
Demand Registration for a private placement) (i) in the case of any
Securities to be delivered to Ashland on the Closing Date or any
Installment Payment Date, not later than the Scheduled Closing Date or
applicable Scheduled Installment Payment Date or (ii) in the case of any
Securities that have been delivered to Ashland on the Closing Date or any
Installment Payment Date, in each case not later than 60 days after such
written demand by Ashland; provided that each Demand Registration shall
cover Securities having an aggregate fair market value (based on the
then-current market value of such Securities or, if such market value
cannot be determined, based on the expected offering price of such
Securities) equal to (i) in the case of a public offering, $100 million or
more, unless Ashland shall hold less than $100 million of Securities, in
which event, the remaining Securities held by Ashland and (ii) in the case
of a private placement, $25 million or more, unless Ashland shall hold less
than $25 million of Securities, in which event, the remaining Securities
held by Ashland.
(b) Notwithstanding the provisions of Section 10.01(a),
the Issuer (i) shall not be obligated to prepare or file more than one
Registration Statement pursuant to this Section 10.01 during any six month
period (measured from the effective date (or, in the case of a private
placement, the closing date) of the most recently requested Demand
Registration to the date of the demand by Ashland for a subsequent Demand
Registration) and (ii) shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by it
pursuant to Section 10.01(a), and to prevent Ashland from initially
distributing any Offering Memorandum required to be prepared by the Issuer
pursuant to Section 10.01(a), in each case (x) if the Issuer is actively
pursuing an Underwritten Public Offering, for a period of up to 90 days
following the closing of any Underwritten Public Offering; provided that
the Issuer is advised by its managing underwriter or underwriters in
writing (with a copy to Ashland), that the price at which securities would
be offered in such offering would, in its or in their opinion, be
materially adversely affected by the registration or the initial
dissemination of the Offering Memorandum so requested, or (y) for a period
of up to 90 days if the
65
Issuer determines in its reasonable judgment and in good faith that the
registration and distribution of such Securities (or the private placement
thereof, in the case of a sale by Ashland of such securities pursuant to
Section 4(2) or Rule 144A of the Securities Act) would materially adversely
impair or interfere with in any material respect any contemplated material
financing, acquisition, disposition, corporate reorganization or other
similar transaction involving the Issuer or any of its subsidiaries or
Affiliates ((x) or (y) being hereinafter referred to as a "Blackout
Period"), provided, however, that the aggregate number of days included in
all Blackout Periods during any consecutive 12 months shall not exceed 180
days, and; provided further, however, that a period of at least 30 days
shall elapse between the termination of any Blackout Period and the
commencement of the immediately succeeding Blackout Period. In the event of
such postponement, Ashland shall have the right to withdraw such request
for registration or request for preparation of an Offering Memorandum by
giving written notice to the Issuer within 20 days after receipt of notice
of postponement and, in the event of such withdrawal, such request shall
not be counted for purposes of determining the number of Demand
Registrations to which Ashland is entitled pursuant to Section 10.01(a).
(c) A registration requested pursuant to this Section
10.01 shall not be deemed to have been effected unless the Registration
Statement relating thereto (i) has become effective under the Securities
Act and (ii) has remained effective for a period of at least 90 days (or
such shorter period in which all Securities included in such registration
have actually been sold thereunder); provided, however, that if after any
Registration Statement requested pursuant to this Section 10.01 becomes
effective such Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
Governmental Authority solely due to the actions or omissions to act of the
Issuer prior to being effective for 90 days and less than 75% of the
Securities have been sold thereunder, such Registration Statement shall be
at the sole expense of the Issuer and shall not constitute a Demand
Registration. In addition, a request for the preparation of an Offering
Memorandum pursuant to this Section 10.01 shall not be deemed to have been
effected unless the information contained in such Offering Memorandum has
remained "reasonably current" (as such term is defined in Rule 144A
66
under the Securities Act) for a period of at least 90 days (or such shorter
period in which all Securities covered by such Offering Memorandum have
actually been sold thereunder); provided, however, that if such Offering
Memorandum is interfered with by any stop order, injunction or other order
or requirement of the Commission or other Governmental Authority solely due
to the actions or omissions to act of the Issuer prior to such Offering
Memorandum being made available to Ashland for 90 days and less than 75% of
the Securities have been sold pursuant thereto, such Offering Memorandum
shall be at the sole expense of the Issuer and shall not constitute a
Demand Registration.
(d) On or after the date hereof, the Issuer shall not
grant to any other holder of its securities, whether currently outstanding
or issued in the future, any incidental or "piggy-back" registration rights
with respect to any Registration Statement filed or Offering Memorandum
prepared pursuant to a Demand Registration under this Section 10.01 and,
without the prior consent of Ashland, will not permit any holder of its
securities to participate in any offering or private placement made
pursuant to a Demand Registration under this Section 10.01.
(e) If a Demand Registration involves an Underwritten
Public Offering and the managing underwriter or underwriters shall advise
the Issuer and Ashland in writing that, in its view, the number of
securities requested to be included in such registration (including,
without limitation, Securities requested to be included by Ashland,
securities which the Issuer proposes to be included, and securities
proposed to be included by other holders of securities entitled to include
securities in such registration pursuant to incidental or "piggy-back"
registration rights other than those pursuant to this Article X (the "Other
Holders")) exceeds the largest number of shares of securities which can be
sold without having an adverse effect on such offering, including the price
at which such securities can be sold (the "Maximum Offering Size"), the
Issuer shall include in such registration, in the priority listed below, up
to the Maximum Offering Size:
(i) first, all Securities requested to be registered by
Ashland;
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(ii) second, all securities requested to be included in
such registration by any Other Holder (allocated, if necessary,
for the offering not to exceed the Maximum Offering Size, pro rata
among such Other Holders on the basis of the relative number of
securities requested to be included in such registration); and
(iii) third, any securities proposed to be registered by
the Issuer or by any Other Holders pursuant to incidental or
"piggy-back" registration rights.
(f) Ashland may, at any time, prior to the effective date
of the Registration Statement or the initial distribution of the Offering
Memorandum relating to such request, revoke such request by providing a
written notice to the Issuer, in which case such request, as so revoked,
shall not constitute a Demand Registration.
SECTION 10.02. Covenants of the Issuer. (a) Registration
Statement Covenants. In the event that any Securities are to be registered
pursuant to Section 10.01, the Issuer covenants and agrees that it shall
(i) use its best efforts to effect the registration, (ii) cooperate in the
sale of the Securities and (iii) as expeditiously as possible:
(1) prepare and file with the Commission a Registration
Statement with respect to such Securities on Form S-3, if
permitted, or otherwise on any form for which the Issuer then
qualifies or which counsel for the Issuer shall deem appropriate,
and which form shall be available for the sale of the Securities
in accordance with the intended methods of distribution thereof,
and use its best efforts to cause such Registration Statement to
become and remain effective;
(2) prepare and file with the Commission amendments and
supplements to such Registration Statement and prospectus used in
connection therewith as may be necessary to maintain the
effectiveness of such registration and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement until the
earlier of (i) such time as all of such securities have been
disposed of in accordance with the
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intended methods of disposition by Ashland set forth in such
Registration Statement and (ii) the expiration of 90 days after
the date such Registration Statement becomes effective; provided
that before filing a Registration Statement or prospectus, or any
amendments or supplements thereto, the Issuer shall furnish to
Ashland and its counsel, copies of all documents proposed to be
filed;
(3) furnish to Ashland such number of copies of such
Registration Statement and of each amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus and prospectus supplement, as applicable,
in conformity with the requirements of the Securities Act, and
such other documents as Ashland may reasonably request in order to
facilitate the disposition of the Securities by Ashland;
(4) use its best efforts to register or qualify such
Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as Ashland shall
reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable Ashland to
consummate the disposition in such jurisdictions of the Securities
owned by Ashland, except that the Issuer shall not for any such
purpose be required to (i) qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the
requirements of this Section 10.04(a)(4), it would not be
obligated to be so qualified, (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(5) use its best efforts to cause such Securities covered
by such Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be
necessary to enable Ashland to consummate the disposition of such
Securities;
(6) notify Ashland at any time when a prospectus relating
to a Registration Statement is required to be delivered under the
Securities Act within the appropriate period mentioned in Section
10.02(a)(2), of the happening of any event as a result of which
such Registration Statement contains an untrue statement of a
69
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and at the
request of Ashland, prepare and furnish to Ashland a reasonable
number of copies of an amended or supplemental prospectus as may
be necessary so that, as thereafter delivered to the purchasers of
such Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing;
(7) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to Ashland, as soon as reasonably practicable (but not
more than eighteen months) after the effective date of the
Registration Statement, an earnings statement which shall satisfy
the provisions of Section 11(a) of the Securities Act and the
rules and regulations promulgated thereunder;
(8) use its best efforts to cause all such Securities
that are Marathon Equity Securities to be listed on any securities
exchange on which the securities of the Issuer are then listed, if
such Securities are not already so listed and if such listing is
then permitted under the rules of such exchange, and to provide a
transfer agent and registrar for such Securities covered by such
Registration Statement no later than the effective date of such
Registration Statement;
(9) use its best efforts to obtain a "cold comfort"
letter or letters from the Issuer's independent public accountants
in customary form; and
(10) cooperate with Ashland and the managing underwriter
or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends)
representing the Securities to be sold under such Registration
Statement, and enable such Securities to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Ashland may request.
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(b) Offering Memorandum Covenants. In the event that any
Securities are to be sold by Ashland by means of an Offering Memorandum
prepared by the Issuer pursuant to Sections 10.01, the Issuer covenants and
agrees that it shall (i) cooperate in the sale of the Securities and (ii)
as expeditiously as possible:
(1) prepare the Offering Memorandum;
(2) prepare amendments and supplements to such Offering
Memorandum as may be necessary to keep the information in such
Offering Memorandum "reasonably current" (as such term is defined
in Rule 144A under the Securities Act) and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such Offering Memorandum until the
earlier of (i) such time as all of such securities have been
disposed of in accordance with the intended methods of disposition
by Ashland set forth in such Offering Memorandum and (ii) the
expiration of 90 days after the date such Offering Memorandum (in
definitive form) is circulated to the initial purchasers; provided
that before making any amendments or supplements thereto, the
Issuer shall furnish to Ashland and its counsel, copies of all
proposed amendments or supplements;
(3) furnish to Ashland such number of copies of such
Offering Memorandum and of each amendment and supplement thereto
(in each case including all exhibits), and such other documents as
Ashland may reasonably request in order to facilitate the
disposition of the Securities by Ashland;
(4) use its best efforts to register or qualify such
Securities covered by such Offering Memorandum under such other
securities or blue sky laws of such jurisdictions as Ashland shall
reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable Ashland to
consummate the disposition in such jurisdictions of the Securities
owned by Ashland, except that the Issuer shall not for any such
purpose be required to (i) qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the
requirements of this Section 10.02(b)(4), it would not be
obligated to be so qualified, (ii) subject itself to
71
taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction);
(5) use its best efforts to cause such Securities covered
by such Offering Memorandum to be registered with or approved by
such other governmental agencies or authorities as may be
necessary to enable Ashland to consummate the disposition of such
Securities;
(6) notify Ashland at any time prior to the completion of
the sale of the Securities by Ashland that are covered by the
Offering Memorandum, of the happening of any event as a result of
which such Offering Memorandum contains an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and at the
request of Ashland, prepare and furnish to Ashland a reasonable
number of copies of an amended or supplemental Offering Memorandum
as may be necessary so that, as thereafter delivered to the
purchasers of such Securities, such Offering Memorandum shall not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing;
(7) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission;
(8) use its best efforts to cause all such Securities
that are Marathon Equity Securities to be listed on any securities
exchange on which the securities of the Issuer are then listed, if
such Securities are not already so listed and if such listing is
then permitted under the rules of such exchange, and to provide a
transfer agent and registrar for such Securities covered by such
Offering Memorandum no later than the effective date of such
Offering Memorandum;
(9) use its best efforts to obtain a "cold comfort"
letter or letters from the Issuer's independent public accountants
in customary form; and
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(10) cooperate with Ashland and the initial purchasers,
if any, to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold under such
Offering Memorandum, and enable such Securities to be in such
denominations and registered in such names as the initial
purchasers, if any, or Ashland may request.
The Issuer may require Ashland to furnish the Issuer with
such information regarding Ashland and pertinent to the disclosure
requirements relating to the registration and/or the distribution of such
Securities pursuant to this Article X as the Issuer may from time to time
reasonably request in writing.
Ashland agrees that, upon receipt of any notice from the
Issuer of the happening of any event of the kind described in Section
10.02(a)(6) or 10.02(b)(6), or of the imposition by the Issuer of a
Blackout Period of the type described in clause (y) of 10.01(b)(ii),
Ashland shall forthwith discontinue such disposition of such Securities
pursuant to the Registration Statement or Offering Memorandum covering such
Securities until Ashland's receipt of the copies of the supplemented or
amended prospectus or Offering Memorandum contemplated by Section
10.02(a)(6) and 10.02(b)(6), respectively, or the expiration of such
Blackout Period, as applicable, and, if so directed by the Issuer, Ashland
shall deliver to the Issuer (at the Issuer's expense) all copies, other
than permanent file copies then in Ashland's possession, of the prospectus
or Offering Memorandum covering such Securities current at the time of
receipt of such notice. In the event the Issuer shall give any such notice,
the period mentioned in Section 10.02(a)(2) or 10.02(b)(2), as applicable,
shall be extended by the number of days during the period from the date of
the giving of such notice pursuant to Section 10.02(a)(6) or 10.02(b)(6),
as applicable, and through the date when Ashland shall have received the
copies of the supplemented or amended prospectus or Offering Memorandum
contemplated by Section 10.02(a)(6) or 10.02(b)(6), respectively, or the
expiration of such Blackout Period, as applicable.
SECTION 10.03. Fees and Expenses. In connection with any
registration pursuant to this Article X or the preparation of any Offering
Memorandum pursuant to this Article X, (i) Ashland shall pay all agent fees
and commissions and underwriting discounts and commissions
73
related to the Securities being sold by Ashland and the fees and
disbursements of its counsel and accountants and (ii) the Issuer shall pay
all fees and disbursements of its counsel and accountants and the expenses,
including fees incurred in the preparation of a cold comfort letter
requested by Ashland pursuant to Section 10.02(a)(9) or 10.02(b)(9), as
applicable. All others fees and expenses in connection with any
Registration Statement or Offering Memorandum (including, without
limitation, all registration and filing fees, all printing costs, all fees
and expenses of complying with securities or blue sky laws) shall be borne
by Ashland; provided that Ashland shall not pay any expenses relating to
work that would otherwise be incurred by the Issuer including, but not
limited to, the preparation and filing of periodic reports with the
Commission.
SECTION 10.04. Indemnification and Contribution. In the
case of any offering registered pursuant to this Article X or any private
placement pursuant to an Offering Memorandum prepared by the Issuer
pursuant to this Article X, the Issuer agrees to indemnify and hold
Ashland, each underwriter or initial purchaser, if any, of the Securities
under such registration or covered by such Offering Memorandum and each
person who controls any of the foregoing within the meaning of Section 15
of the Securities Act, and any director, officer, employee, stockholder,
partner, agent or representative, of the foregoing, harmless against any
and all losses, claims, damages or liabilities (including reasonable legal
fees and other reasonable expenses incurred in the investigation and
defense thereof) (collectively "Losses") to which they or any of them may
become subject under the Securities Act or otherwise, insofar as any such
Losses shall arise out of or shall be based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (as amended if the Issuer shall have filed with the
Commission any amendment thereof) or Offering Memorandum (as amended if the
Issuer shall have prepared and delivered to Ashland for private
distribution any amendment to such Offering Memorandum), or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
prospectus relating to the sale of such Securities (as amended or
supplemented if the Issuer shall have filed with the Commission any
amendment
74
thereof or supplement thereto), or the omission or alleged omission to
state therein a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that the indemnification contained in this Section
10.04 shall not apply to such Losses which shall arise out of or shall be
based upon any such untrue statement or alleged untrue statement, or any
such omission or alleged omission, which shall have been made in reliance
upon and in conformity with information furnished in writing to the Issuer
by Ashland or such underwriter or initial purchaser, as the case may be,
specifically for use in connection with the preparation of the Registration
Statement, the prospectus contained in the Registration Statement or the
Offering Memorandum, as applicable, or any such amendment thereof or
supplement therein.
Notwithstanding the foregoing provisions of this Section
10.04, the Issuer shall not be liable to Ashland, any person who
participates as an underwriter in the offering or sale of such Securities,
any person who participates as an initial purchaser in the private
placement of such Securities or any other person, if any, who controls
Ashland or any underwriter or initial purchaser (within the meaning of the
Securities Act), under the indemnity agreement in this Section 10.04 for
any such Losses that arise out of Ashland's or such other person's failure
to send or give a copy of the final prospectus or final Offering Memorandum
to the person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the
sale of the Securities to such person if such statement or omission was
corrected in such final prospectus or final Offering Memorandum and the
Issuer has previously furnished copies thereof in accordance with this
Agreement.
In the case of each offering registered pursuant to this
Article X and each private placement pursuant to this Article X, Ashland
shall agree, and each underwriter or initial purchaser, if any,
participating therein shall agree, substantially in the same manner and to
the same extent as set forth in the preceding paragraph, severally to
indemnify and hold harmless the Issuer and each person who controls the
Issuer within the meaning of Section 15 of the Securities Act, and any
director, officer, employee, stockholder, partner, agent or representative
of the Issuer, with respect to any statement in or omission from such
75
Registration Statement (as amended or as supplemented, if amended or
supplemented as aforesaid) or Offering Memorandum (as amended or as
supplemented, if amended or supplemented as aforesaid), as applicable, if
such statement or omission shall have been made in reliance upon and in
conformity with information furnished in writing to the Issuer by Ashland
or such underwriter or initial purchaser, as the case may be, specifically
for use in connection with the Registration Statement, the prospectus
contained in such Registration Statement or the Offering Memorandum, as
applicable, or any such amendment thereof or supplement thereto.
Each party indemnified under this Section 10.04 shall,
promptly after receipt of notice of the commencement of any claim against
any such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement
thereof. The failure of any indemnified party to so notify an indemnifying
party of any action shall not relieve the indemnifying party from any
liability in respect of such action which it may have to such indemnified
party on account of the indemnity contained in this Section 10.04, unless
(and only to the extent) the indemnifying party was prejudiced by such
failure, and in no event shall such failure relieve the indemnifying party
from any other liability which it may have to such indemnified party. In
case any action in respect of which indemnification may be sought hereunder
shall be brought against any indemnified party and it shall notify an
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may
desire, jointly with any other indemnifying party similarly notified, to
assume the defense thereof through counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 10.04 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than
reasonable costs of investigation (unless (i) such indemnified party
reasonably objects to such assumption on the grounds that there may be
defenses available to it which are different from or in addition to those
available to such indemnifying party, (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such
counsel or (iii) in the reasonable opinion
76
of such indemnified party representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding, in which
case the indemnified party shall be reimbursed by the indemnifying party
for the reasonable expenses incurred in connection with retaining one firm
of separate legal counsel; provided that (i) in circumstances where Ashland
or an underwriter or initial purchaser is the indemnifying party, the
indemnifying party shall not be liable for more than one firm of legal
counsel for all indemnified parties and (ii) in circumstances where the
Issuer is the indemnifying party, the indemnifying party shall not be
liable for more than (A) one firm of legal counsel for Ashland, each person
who controls Ashland within the meaning of Section 15 of the Securities
Act, and any director, officer, employee, stockholder, partner, agent or
representative of Ashland, and (B) one firm of legal counsel for the
underwriters or initial purchasers, if any, indemnified under this Section
10.04, each person who controls such underwriters or initial purchasers
within the meaning of Section 15 of the Securities Act, and any director,
officer, employee, stockholder, partner, agent or representative of such
underwriters or initial purchasers). No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement
of any claim or pending or threatened proceeding in respect of which the
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability arising out of such claim or proceeding. If an indemnifying party
shall have expressly acknowledged its indemnification obligations with
respect to a claim or pending or threatened proceeding, then the
indemnified party with respect to such claim or pending or threatened
proceeding shall not, without the prior written consent of the indemnifying
party, effect any settlement of such claim or pending or threatened
proceeding.
If the indemnification provided for in this Section 10.04
is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless from any Losses in respect of which this Section
10.04 would otherwise apply by its terms (other than by reason of
exceptions provide herein), then each applicable
77
indemnifying party, in lieu of indemnifying such indemnified party, shall
have a joint and several obligation to contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative benefits received by
and fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the offering or private
placement to which such contribution relates as well as any other relevant
equitable considerations. The relative benefit shall be determined by
reference to, among other things, the amount of proceeds received by each
party from the offering or private placement to which such contribution
relates. The relative fault shall be determined by reference to, among
other things, each party's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, and the
opportunity to correct and prevent any statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in
connection with any investigation or proceeding, to the extent such party
would have been indemnified for such expenses if the indemnification
provided for in this Section 10.04 was available to such party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 10.04 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 10.05. Underwriting Agreement; Purchase
Agreement. In connection with any underwritten offering or private
placement of Securities pursuant to a Demand Registration under Section
10.01, the Issuer and Ashland shall enter into an underwriting agreement
with the underwriters for such offering or a purchase agreement with the
initial purchasers for such private placement, such underwriting agreement
or purchase agreement to contain such representations and warranties by the
Issuer and Ashland and such other terms and provisions as are customarily
contained
78
in underwriting agreements with respect to secondary distributions or
purchase agreements with respect to private placements, including, without
limitation, indemnities and contribution to the effect and to the extent
provided in Section 10.04 (and customary provisions with respect to
indemnities and contribution by such underwriters or initial purchasers).
SECTION 10.06. Undertaking To File Reports. For as long
as Ashland holds Securities, the Issuer shall use its best efforts to file,
on a timely basis, all annual, quarterly and other reports required to be
filed by it under Sections 13 and 15(d) of the Exchange Act and the rules
and regulations of the Commission thereunder, as amended from time to time,
or any successor statute or provisions.
ARTICLE XI
Covenants
SECTION 11.01. Cooperation; Commercially Reasonable Best
Efforts. Each of the parties hereto shall cooperate with each other in good
faith, and shall cause their respective officers, employees, agents,
auditors and representatives to cooperate with each other in good faith, to
cause the Closing to occur. In addition, each of the parties hereto shall
use its commercially reasonable best efforts to cause the Closing to occur.
SECTION 11.02. Antitrust Notification; FTC or DOJ
Investigation. (a) Each of Marathon, USX and Ashland shall as promptly as
practicable, but in no event later than 30 days following the relevant
Exercise Date, file with the FTC and the DOJ the notification and report
form, if any, required for the transactions contemplated hereby and any
supplemental information requested in connection therewith pursuant to the
HSR Act. Any such notification and report form and supplemental information
shall be in substantial compliance with the requirements of the HSR Act.
Each of Marathon, USX and Ashland shall furnish to the other such necessary
information and reasonable assistance as the other may request in
connection with its preparation of any filing or submission which is
necessary under the HSR Act. Each of Marathon, USX and Ashland shall keep
each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC and the
79
DOJ and shall comply promptly with any such inquiry or request.
(b) In the event that Marathon, USX and Ashland are not
required to file with the FTC and the DOJ any notification and report form
pursuant to the HSR Act, but the FTC or the DOJ nevertheless commences an
investigation with respect to the transactions contemplated hereby, each of
Marathon, USX and Ashland shall comply promptly with any inquiry or request
made by the DOJ or the FTC in connection with such investigation.
(c) In the event that Marathon, USX and Ashland file
notification and report forms with the FTC and the DOJ pursuant to Section
11.02(a) or the FTC or the DOJ commences an investigation with respect to
the transactions contemplated hereby, then, in addition to the obligations
of Marathon, USX and Ashland set forth in Section 11.02(a) and 11.02(b), as
applicable, Marathon, USX and Ashland agree as follows:
(i) In the case of Marathon's exercise of its Marathon
Call Right, each of Marathon and USX shall take all such actions
as are necessary to obtain any clearance required under the HSR
Act or from the FTC or DOJ in connection with any such
investigation, as applicable, for the purchase and sale of
Ashland's Membership Interests and the Ashland LOOP/LOCAP Interest
pursuant to this Agreement, including divesting or holding
separate any assets or commencing or defending litigation;
provided, however, that neither Marathon nor USX shall be required
to take any action proposed by the FTC or the DOJ that would or
would reasonably be expected to have a material adverse effect on
the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) or
prospects of the Company and its subsidiaries, taken as a whole.
(ii) In the case of (A) Ashland's exercise of its Ashland
Put Right or (B) Marathon's exercise of its Special Termination
Right, each of Marathon and USX shall take all such actions as are
necessary to obtain any clearance required under the HSR Act or
from the FTC or DOJ in connection with any such investigation, as
applicable, for the purchase and sale of Ashland's Membership
Interests and the Ashland LOOP/LOCAP
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Interest pursuant to this Agreement, including divesting or
holding separate any assets or commencing or defending litigation;
provided, however, that neither Marathon nor USX shall be required
to take any action proposed by the FTC or the DOJ that would or
would reasonably be expected to have a material adverse effect on
the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) or
prospects of (A) the Company and its subsidiaries, taken as a
whole, (B) Marathon and its subsidiaries, taken as a whole, or (C)
USX and its subsidiaries, taken as a whole.
(iii) In the case of Ashland's exercise of its Special
Termination Right, Ashland shall take all such actions as are
necessary to obtain any clearance required under the HSR Act or
from the FTC or DOJ in connection with any such investigation, as
applicable, for the purchase and sale of Marathon's Membership
Interests pursuant to this Agreement, including divesting or
holding separate any assets or commencing or defending litigation;
provided, however, that Ashland shall not be required to take any
action proposed by the FTC or the DOJ that would or would
reasonably be expected to have a material adverse effect on the
business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of (A)
the Company and its subsidiaries, taken as a whole or (B) Ashland
and its subsidiaries, taken as a whole.
SECTION 11.03. Governmental Filings re: Ashland
LOOP/LOCAP Interest. (a) Each of the parties hereto shall as promptly as
practical, but in no event later than five Business Days following the
relevant Exercise Date, file all documentation with all relevant
Governmental Entities that is required to be filed with such Governmental
Entities in connection with the purchase and sale of the Ashland LOOP/LOCAP
Interest on the Scheduled Closing Date. Each of the parties hereto shall
keep the other apprised of the status of any communications with, and any
inquiries or requests for additional information from, such Governmental
Entities and shall comply promptly with any such inquiry or request.
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(b) In addition to the obligations of the parties hereto
set forth in Section 11.03(a), Marathon and USX agree as follows:
(i) In the case of Marathon's exercise of its Marathon
Call Right, each of Marathon and USX shall take all such actions
as are necessary to obtain any requisite approvals from such
Governmental Entities as are required in connection with the
purchase and sale of the Ashland LOOP/LOCAP Interest pursuant to
this Agreement, including commencing or defending litigation;
provided, however, that neither Marathon nor USX shall be required
to take any such action that would or would reasonably be expected
to have a material adverse effect on the business, operations,
assets, liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole.
(ii) In the case of Marathon's exercise of its Special
Termination Right or Ashland's exercise of its Ashland Put Right,
each of Marathon and USX shall take all such actions as are
necessary to obtain any requisite approvals from such Governmental
Entities as are required in connection with the purchase and sale
of the Ashland LOOP/LOCAP Interest pursuant to this Agreement,
including commencing or defending litigation; provided, however,
that neither Marathon nor USX shall be required to take any such
action that would or would reasonably be expected to have a
material adverse effect on the business, operations, assets,
liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of (A) the Company and its
subsidiaries, taken as a whole, (B) Marathon and its subsidiaries,
taken as a whole, or (C) USX and its subsidiaries, taken as a
whole.
SECTION 11.04. Designated Sublease Agreements. (a)
Ashland Designated Sublease Agreements. In the event of (i) Marathon's
exercise of its Marathon Call Right, (ii) Ashland's exercise of its Ashland
Put Right or (iii) Marathon's exercise of its Special Termination Right,
Ashland shall use its commercially reasonable best efforts to (A) terminate
the outstanding Original Lease underlying each Ashland Designated Sublease
Agreement on or prior to Closing and (B) contribute the related Subleased
Property to the Company or one of its subsidiaries at no cost to the
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Company or such subsidiary on or prior to Closing; provided, however, that
(i) 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, a third party
lessor with respect to any such underlying Original Lease in order to
obtain any consent required from such lessor and (ii) any additional cost
associated with exercising an option under the Original Lease to purchase
Subleased Property shall be deemed not to constitute an obligation to pay
more than a reasonable amount. In the event that Ashland is unable to
terminate an outstanding Original Lease in accordance with this Section
11.04(a), then (i) the Company shall be entitled to continue to sublease
the Subleased Property pursuant to the related Ashland Designated Sublease
Agreement until the term of the Original Lease expires, (ii) Ashland shall
continue to use its commercially reasonable best efforts to terminate the
Original Lease and contribute the Subleased Property to the Company as
provided above; provided, however, that (A) 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, a third party lessor with respect to any such
underlying Original Lease in order to obtain any consent required from such
lessor and (B) any additional cost associated with exercising an option
under the Original Lease to purchase Subleased Property shall be deemed not
to constitute an obligation to pay more than a reasonable amount and (iii)
if Ashland subsequently acquires fee title to the Subleased Property,
Ashland shall contribute such Subleased Property to the Company or one of
its subsidiaries at no cost to the Company or such subsidiary at such time.
(b) Marathon Designated Sublease Agreements. In the event
of Ashland's exercise of its Special Termination Right, Marathon shall use
its commercially reasonable best efforts to (A) terminate the outstanding
Original Lease underlying each Marathon Designated Sublease Agreement on or
prior to Closing and (B) contribute the related Subleased Property to the
Company or one of its subsidiaries at no cost to the Company or such
subsidiary on or prior to Closing; provided, however, that (i) Marathon
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, a third party
lessor with respect to any such
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underlying Original Lease in order to obtain any consent required from such
lessor and (ii) any additional cost associated with exercising an option
under the Original Lease to purchase Subleased Property shall be deemed not
to constitute an obligation to pay more than a reasonable amount. In the
event that Marathon is unable to terminate an outstanding Original Lease in
accordance with this Section 11.04(b), then (i) the Company shall be
entitled to continue to sublease the Subleased Property pursuant to the
related Marathon Designated Sublease Agreement until the term of the
Original Lease expires, (ii) Marathon shall continue to use its
commercially reasonable best efforts to terminate the Original Lease and
contribute the Subleased Property to the Company as provided above;
provided, however, that (A) Marathon 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, a third party lessor with respect to any such underlying Original
Lease in order to obtain any consent required from such lessor and (B) any
additional cost associated with exercising an option under the Original
Lease to purchase Subleased Property shall be deemed not to constitute an
obligation to pay more than a reasonable amount and (iii) if Marathon
subsequently acquires fee title to the Subleased Property, Marathon shall
contribute such Subleased Property to the Company or one of its
subsidiaries at no cost to the Company or such subsidiary at such time.
ARTICLE XII
Standstill Agreement
SECTION 12.01. Restrictions of Certain Actions by
Marathon and USX. Each of Marathon and USX covenants and agrees that, from
the date hereof through the six-month anniversary of the earlier to occur
of (a) the date that Ashland and its Affiliates do not own any Membership
Interests, and (b) the date that Marathon and its Affiliates do not own any
Membership Interests, it shall not, and it shall cause each of its
Affiliates (including, for the avoidance of doubt, Employee Benefit Plans
of USX, Marathon and their respective Affiliates) not to, singly or as part
of a partnership, limited partnership, syndicate or other group
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(as those terms are defined in Section 13(d)(3) of the Exchange Act),
directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire, by
purchase, gift or otherwise, more than 1% of any class of any
Ashland Voting Securities, except (A) pursuant to a stock split,
stock dividend, rights offering, recapitalization,
reclassification or similar transaction, (B) in connection with
the transfer of Ashland Voting Securities to a Marathon or USX
Employee Benefit Plan as contemplated by Section 3.1(v) of the
Asset Transfer and Contribution Agreement or (C) the ownership by
any Employee Benefit Plan of USX, Marathon or any of their
respective Affiliates of any interest in any diversified index,
mutual or pension fund managed by an independent investment
advisor, which fund in turn holds, directly or indirectly, Ashland
Voting Securities; provided that not more than 5% of such fund's
assets are comprised of Ashland Voting Securities;
(ii) make, or in any way participate in any
"solicitation" of "proxies" to vote (as such terms are defined in
Rule 14a-1 under the Exchange Act), solicit any consent or
communicate with or seek to advise or influence any person or
entity with respect to the voting of any Ashland Voting Securities
or become a "participant" in any "election contest" (as such terms
are defined or used in Rule 14a-11 under the Exchange Act) with
respect to Ashland;
(iii) form, join, encourage or in any way participate in
the formation of, any "person" within the meaning of Section
13(d)(3) of the Exchange Act with respect to any Ashland Voting
Securities;
(iv) deposit any Ashland Voting Securities into a voting
trust or subject any such Ashland Voting Securities to any
arrangement or agreement with respect to the voting thereof;
(v) initiate, propose or otherwise solicit shareholders
for the approval of one or more shareholder proposals with respect
to Ashland as described in Rule 14a-8 under the Exchange Act, or
induce or attempt to induce any other person to initiate any
shareholder proposal;
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(vi) seek election to or seek to place a representative
on the Board of Directors of Ashland or seek the removal of any
member of the Board of Directors of Ashland;
(vii) except with the approval of management of Ashland,
call or seek to have called any meeting of the shareholders of Ashland;
(viii) otherwise act to seek to control, disrupt or
influence the management, business, operations, policies or affairs of
Ashland;
(ix) (A) solicit, seek to effect, negotiate with or
provide any information to any other person with respect to, (B)
make any statement or proposal, whether written or oral, to the
Board of Directors of Ashland or any director or officer of
Ashland with respect to, or (C) otherwise make any public
announcement or proposal whatsoever with respect to, any form of
business combination transaction involving Ashland (other than the
Transaction), including, without limitation, a merger, exchange
offer, or liquidation of Ashland's assets, or any restructuring,
recapitalization or similar transaction with respect to Ashland;
(x) seek to have Ashland waive, amend or modify any of
the provisions contained in this Section 12.01;
(xi) disclose or announce any intention, plan or
arrangement inconsistent with the foregoing; or
(xii) advise, assist, instigate or encourage any third
party to do any of the foregoing.
If either Marathon or USX or any of their respective
Affiliates owns or acquires any Ashland Voting Securities in violation of
this Section 12.01, such Ashland Voting Securities shall immediately be
disposed of to persons who (i) are not Marathon or USX or Affiliates
thereof and (ii) do not own, individually or as part of a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act), more than 5% of the
then outstanding Ashland Voting Securities; provided that Ashland may also
pursue any other available remedy to which it may be entitled as a result
of such violation.
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SECTION 12.02. Restrictions of Certain Actions by
Ashland. Ashland covenants and agrees that, from the date hereof through
the later to occur of (a) the six-month anniversary of the earlier to occur
of (i) the date that Marathon and its Affiliates do not own any Membership
Interests and (ii) the date that Ashland and its Affiliates do not own any
Membership Interests and (b) in the event that Ashland or its Affiliates
acquires USX Voting Securities pursuant to the Closing of the Ashland Put
Right, the date on which Ashland and its Affiliates do not own more than 5%
of the then outstanding USX Voting Securities, it shall not, and it shall
cause each of its Affiliates (including, for the avoidance of doubt,
Employee Benefit Plans of Ashland and its Affiliates) not to, singly or as
part of a partnership, limited partnership, syndicate or other group (as
those terms are defined in Section 13(d)(3) of the Exchange Act), directly
or indirectly:
(i) acquire, offer to acquire, or agree to acquire, by
purchase, gift or otherwise, more than 1% of any class of USX
Voting Securities, except (A) pursuant to a stock split, stock
dividend, rights offering, recapitalization, reclassification or
similar transaction and except for any issuance of USX Voting
Securities to Ashland as payment of any portion of the Ashland Put
Price in accordance with the provisions of this Agreement or (B)
the ownership by any Employee Benefit Plan of Ashland or any of
its Affiliates of any interest in any diversified index, mutual or
pension fund managed by an independent investment advisor, which
fund in turn holds, directly or indirectly, USX Voting Securities;
provided that not more than 5% of such fund's assets are comprised
of USX Voting Securities;
(ii) make, or in any way participate in any
"solicitation" of "proxies" to vote (as such terms are defined in
Rule 14a-1 under the Exchange Act), solicit any consent or
communicate with or seek to advise or influence any person or
entity with respect to the voting of any USX Voting Securities or
become a "participant" in any "election contest" (as such terms
are defined or used in Rule 14a-11 under the Exchange Act) with
respect to USX;
(iii) form, join, encourage or in any way participate in
the formation of, any "person" within
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the meaning of Section 13(d)(3) of the Exchange Act with respect
to any USX Voting Securities;
(iv) deposit any USX Voting Securities into a voting
trust or subject any such USX Voting Securities to any arrangement
or agreement with respect to the voting thereof;
(v) initiate, propose or otherwise solicit shareholders
for the approval of one or more shareholder proposals with respect
to USX as described in Rule 14a-8 under the Exchange Act, or
induce or attempt to induce any other person to initiate any
shareholder proposal;
(vi) seek election to or seek to place a representative
on the Board of Directors of USX or seek the removal of any member
of the Board of Directors of USX or seek the removal of any member
of the Board of Directors of USX;
(vii) except with the approval of management of USX, call
or seek to have called any meeting of the shareholders of USX;
(viii) otherwise act to seek to control, disrupt or
influence the management, business, operations, policies or
affairs of USX;
(ix) (A) solicit, seek to effect, negotiate with or
provide any information to any other person with respect to, (B)
make any statement or proposal, whether written or oral, to the
Board of Directors of USX or any director or officer of USX with
respect to, or (C) otherwise make any public announcement or
proposal whatsoever with respect to, any form of business
combination transaction involving USX (other than the
Transaction), including, without limitation, a merger, exchange
offer, or liquidation of USX's assets, or any restructuring,
recapitalization or similar transaction with respect to USX;
(x) seek to have USX waive, amend or modify any of the
provisions contained in this Section 12.02;
(xi) disclose or announce any intention, plan or
arrangement inconsistent with the foregoing; or
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(xii) advise, assist, instigate or encourage any third
party to do any of the foregoing.
If Ashland or any of its Affiliates owns or acquires any
USX Voting Securities in violation of this Section 12.02, such USX Voting
Securities shall immediately be disposed of to persons who (i) are not
Ashland or Affiliates thereof and (ii) do not own, individually or as part
of a "group" (within the meaning of Section 13(d)(3) of the Exchange Act),
more than 5% of the then outstanding USX Voting Securities; provided that
USX may also pursue any other available remedy to which it may be entitled
as a result of such violation.
ARTICLE XIII
Indemnification
SECTION 13.01. Indemnification re: Ashland
Representatives' Revocable Proxies and the Ashland LOOP/LOCAP Revocable
Proxy. In the event that Ashland's Representatives grant Marathon's
Representatives the Ashland Representatives Revocable Proxies pursuant to
Section 5.02(a) and Ashland grants to Marathon or a person designated by
Marathon, as applicable, the Ashland LOOP/LOCAP Revocable Proxy pursuant to
Section 5.02(c), each of Marathon, USX and the Company agree to indemnify
and hold Ashland, its Representatives, their respective Affiliates and any
director, officer, employee, stockholder, partner, agent or representative
of Ashland or its Affiliates harmless against any and all Losses to which
they or any of them may become subject, insofar as any such Losses shall
arise out of, are based upon or relate to any obligations or liabilities of
whatever kind and nature, primary or secondary, direct or indirect,
absolute or contingent, known or unknown, whether or not accrued, which
arise on or after the relevant Exercise Date and which are attributable to
(i) in the event that the Closing occurs, (A) the Company and its
subsidiaries or LOOP, LLC or LOCAP, Inc., (B) Ashland's ownership interest
in the Company or the Ashland LOOP/LOCAP Interest, (C) actions taken by
Marathon's Representatives pursuant to the Ashland Representatives
Revocable Proxies or (D) actions taken by Marathon or the Company, as
applicable, pursuant to the Ashland LOOP/LOCAP Revocable Proxy, and (ii) in
the event that Ashland or Marathon revokes Ashland's Ashland Put Exercise
Notice or Marathon's Marathon Call
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Exercise Notice pursuant to Section 9.03(a), 9.04(a), 9.05, 9.08(a) or
9.09, or Ashland revokes Marathon's Special Termination Exercise Notice
pursuant to Section 9.08(a) or 9.09 (A) actions taken by Marathon's
Representatives pursuant to the Ashland Representatives Revocable Proxies
or (B) actions taken by Marathon or the Company, as applicable, pursuant to
the Ashland LOOP/LOCAP Revocable Proxy.
SECTION 13.02. Indemnification re: Marathon
Representatives Revocable Proxies. In the event that Marathon's
Representatives grant Ashland's Representatives the Marathon
Representatives Revocable Proxies pursuant to Section 5.02(b), each of
Ashland and the Company agree to indemnify and hold Marathon, its
Representatives, their respective Affiliates and any director, officer,
employee, stockholder, partner, agent or representative of Marathon or its
Affiliates harmless against any and all Losses to which they or any of them
may become subject, insofar as any such Losses shall arise out of, are
based upon or relate to any obligations or liabilities of whatever kind and
nature, primary or secondary, direct or indirect, absolute or contingent,
known or unknown, whether or not accrued, which arise on or after the
Special Termination Exercise Date and which are attributable to (i) in the
event that the Closing occurs, (A) the Company and its subsidiaries or (B)
actions taken by Ashland's Representatives pursuant to the Marathon
Representatives Revocable Proxies and (ii) in the event that Marathon
revokes Ashland's Special Termination Exercise Notice pursuant to Section
9.08(a) or 9.09, actions taken by Ashland's Representatives pursuant to the
Marathon Representatives Revocable Proxies.
SECTION 13.03. Indemnification re: Transfer of Economic
Interests in the Ashland LOOP/LOCAP Interest to Marathon, the Company or a
Person Designated by Marathon. To the extent that Ashland is unable to
Transfer the Ashland LOOP/LOCAP Interest to Marathon, the Company or a
person designated by Marathon, as applicable, at Closing, and as a result
thereof, Ashland enters into any arrangement under which Marathon, the
Company or such other person shall obtain the economic claims, rights and
benefits under the Ashland LOOP/LOCAP interest, including a grant to
Marathon, the Company or such other person, as applicable, of the Ashland
LOOP/LOCAP Irrevocable Proxy, each of Marathon, USX and the Company agree
to indemnify and hold Ashland, its Representatives, their respective
Affiliates and any director, officer, employee, stockholder, partner, agent
or
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representative of Ashland or its Affiliates harmless against any and all
Losses to which they or any of them may become subject, insofar as any such
Losses shall arise out of, be based upon or relate to any obligations or
liabilities of whatever kind and nature, primary or secondary, direct or
indirect, absolute or contingent, known or unknown, whether or not accrued,
which arise on or after the relevant Exercise Date and which are
attributable to (i) LOOP, LLC, (ii) LOCAP, Inc., (iii) Ashland's ownership
interest in LOOP, LLC and LOCAP, Inc., (iv) any such arrangements between
Ashland and Marathon, the Company or such other person or (v) actions taken
by Marathon, the Company or such other person, as applicable, pursuant to
the Ashland LOOP/LOCAP Irrevocable Proxies.
SECTION 13.04. Procedures Relating to Indemnification
Under This Article XIII. The procedures for Indemnification under this
Article XIII shall be the procedures for indemnification set forth in
Section 9.7 of the Asset Transfer and Contribution Agreement.
ARTICLE XIV
Company Competitive Businesses;
Detrimental Activities; Limitations on the
Company Entering into Valvoline's Business
SECTION 14.01. Competitive Businesses. (a) Subject to
Sections 14.01(b), 14.01(d) and 14.03(c), and except to the extent
otherwise provided in Schedule 14.01(a), each of Marathon, USX and Ashland
hereby agrees that during the Term of the Company, it shall not, and it
shall cause its Affiliates not to, engage in any business within North
America which is substantially in competition with (i) the Company's
Business conducted on the date hereof or (ii) any new line of business of
the Company that the Board of Managers has approved in accordance with
Section 8.07(b) of the LLC Agreement (but only if and to the extent that
the Board of Managers specifically determined pursuant to Section 8.07(b)
of the LLC Agreement that such new line of business should also constitute
a Company Competitive Business) (each such business in clauses (i) and
(ii), a "Company Competitive Business"); provided, however, that nothing in
this Section 14.01 shall be deemed or interpreted to prohibit Ashland or
any of its Affiliates from engaging in the Valvoline Business.
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(b) Notwithstanding any limitation contained in Section
14.01(a), Marathon, USX and Ashland and their respective Affiliates shall
be permitted to engage in a Company Competitive Business if: (i) Marathon
or Ashland, as applicable, shall have first presented the Company, at a
meeting of the Board of Managers at which at least one of the
Representatives of the other Member was present, with the opportunity to
pursue or engage in such Company Competitive Business and (ii) one or more
of the Representatives of the other Member on the Board of Managers shall
have voted against the Company pursuing such Company Competitive Business.
(c) If Marathon, USX or Ashland or any of their
respective Affiliates is permitted pursuant to Section 14.01(b) to engage
in a Company Competitive Business and, in connection therewith, wishes to
use any of the properties, facilities or other assets of the Company or any
of its subsidiaries, Marathon or Ashland and their respective
Representatives will negotiate in good faith with the Company to reach a
reasonable agreement as to the nature and scope of any agreement between
the Company or any such subsidiary and such Member with respect to the use
of such property, facility or other assets. Any transaction relating to
such property, facility or assets shall be deemed for purposes of the LLC
Agreement to constitute an Affiliate Transaction that was entered into
outside the ordinary course of the Company's business.
(d) Notwithstanding any limitation contained in Section
14.01(a), Marathon, USX and Ashland and their respective Affiliates shall
be permitted to purchase: (i) less than an aggregate of 10% of any class of
stock of a person engaged, directly or indirectly, in one or more
Competitive Businesses (a "Company Competitive Third Party"); provided that
such stock is listed on a national securities exchange or is quoted on the
National Market System of NASDAQ; (ii) less than 10% in value of any
instrument of Indebtedness of a Company Competitive Third Party; (iii) a
Company Competitive Third Party (whether by merger or purchase of all or
substantially all of such Company Competitive Third Party's assets) which
engages, directly or indirectly, in one or more Company Competitive
Businesses which accounted for less than 20% of such Company Competitive
Third Party's consolidated revenues for the most recently completed fiscal
quarter; and (iv) a Company Competitive Third Party (whether by merger or
purchase of
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all or substantially all of such Company Competitive Third Party's assets
or otherwise) which engages, directly or indirectly, in one or more Company
Competitive Businesses which accounted for greater than 20% of such Company
Competitive Third Party's consolidated revenues for the most recently
completed fiscal quarter; provided that a purchase by Marathon, USX or
Ashland or any of their respective Affiliates of a Company Competitive
Third Party pursuant to this clause (iv) shall only be permitted if within
30 Business Days after the earlier to occur of (A) the execution of
definitive agreements with respect to such purchase or (B) the closing of
such purchase, Marathon, USX, Ashland or such Affiliate, as applicable,
shall present the Company with the opportunity to purchase the portion of
such Company Competitive Third Party's business that is in substantial
competition with the Company in North America (the "Company Competitive
Business Assets") at a purchase price determined in accordance with Section
14.04, at a special or regular meeting of the Board of Managers (such
meeting, a "14.01(d) Presentation Meeting").
(e) If the Board of Managers determines at the 14.01(d)
Presentation Meeting (by a vote of a majority of the Representatives of the
Member not purchasing such Company Competitive Third Party's business at a
special or regular meeting of the Board of Managers (which majority shall
constitute a quorum for purposes of the transaction of business)) to
purchase the Company Competitive Business Assets, the closing date with
respect to such purchase shall not be later than 60 days after the date of
the determination of the Purchase Price pursuant to Section 14.04 or, if
later, 30 days after the Company has received any antitrust clearance or
other Governmental Approval required in connection with such purchase (the
"14.01(d) Scheduled Closing Date"). If the Company breaches its obligation
to purchase the Company Competitive Business Assets on the 14.01(d)
Scheduled Closing Date after the Board of Managers shall have determined to
make such purchase as provided in the immediately preceding sentence (other
than where such breach is due to circumstances beyond the Company's
reasonable control), then Marathon, USX, Ashland or such Affiliate, as
applicable, shall be permitted to retain such Company Competitive Business
Assets and the Company shall cease to have the right to purchase such
Company Competitive Business Assets. If the Company breaches its obligation
to purchase the Company Competitive Business Assets on the 14.01(d)
Scheduled Closing Date after
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the Board of Managers shall have determined to make such purchase as
provided in the first sentence of this Section 14.01(e)and such breach is
due to circumstances beyond the Company's reasonable control, then, if the
closing of the purchase by the Company of the Company Competitive Business
Assets does not occur within 270 days after the Scheduled Closing Date,
Marathon, USX, Ashland or such Affiliate, as applicable, shall be permitted
to retain such Company Competitive Business Assets and the Company shall
cease to have the right to purchase such Company Competitive Business
Assets. If the Board of Managers determines at the 14.01(d) Presentation
Meeting not to purchase such Company Competitive Business Assets, then
Marathon, USX, Ashland or such Affiliate, as applicable, shall be permitted
to retain such Company Competitive Business Assets and the Company shall
cease to have the right to purchase such Company Competitive Business
Assets.
(f) It is the intention of each of the parties hereto
that if any of the restrictions or covenants contained in this Section
14.01 is held by a court of competent jurisdiction to cover a geographic
area or to be for a length of time that is not permitted by Applicable Law,
or is in any way construed by a court of competent jurisdiction to be too
broad or to any extent invalid, such provision shall not be construed to be
null, void and of no effect, but to the extent such provision would be
valid or enforceable under Applicable Law, a court of competent
jurisdiction shall construe and interpret or reform this Section 14.01 to
provide for a covenant having the maximum enforceable geographic area, time
period and other provisions (not greater than those contained in this
Section 14.01) as shall be valid and enforceable under such Applicable Law.
Each of the parties hereto acknowledges that any breach of the terms,
conditions or covenants set forth in this Section 14.01 shall be
competitively unfair and may cause irreparable damage to the Company
because of the special, unique, unusual, extraordinary and intellectual
character of the Company's business, and the Company's recovery of damages
at law will not be an adequate remedy. Accordingly, each of the parties
hereto agrees that for any breach of the terms, covenants or agreements of
this Section 14.01, a restraining order or an injunction or both may be
issued against such person, in addition to any other rights or remedies the
Company or the other parties hereto may have.
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SECTION 14.02. Detrimental Activities. (a) Solicitation,
Recruiting or Hiring of Employees. Each of Marathon, USX and Ashland hereby
agrees that during the Term of the Company, without the consent of each of
the Members, it shall not, and it shall cause its Affiliates not to,
solicit, recruit or hire any employee of the Company or any of its
subsidiaries (other than solicitations that are directed at the public in
general in publications available to the public in general) if:
(i) such employee is an Executive Officer or the officer
principally in charge of environmental health and safety and human
resources, unless, subject to clauses (iii) and (iv) below, such
solicitation, recruitment or hiring is consented to in advance by
Ashland (in the case of a solicitation, recruitment or hiring by
Marathon, USX or any of their respective Affiliates) or by
Marathon (in the case of a solicitation, recruitment or hiring by
Ashland or any of its Affiliates), which consent shall not be
unreasonably withheld;
(ii) such employee reports directly to (A) an Executive
Officer or the officer principally in charge of environmental
health and safety and human resources(a "Senior Employee") or (B)
a Senior Employee (a "Mid-Level Employee"), unless, subject to
clauses (iii) and (iv) below, at the time of such solicitation,
recruitment or hiring, the total number of Senior Employees and
Mid-Level Employees that have been hired by Marathon, USX, Ashland
and their respective Affiliates during the then preceding
twenty-four months is less than 10% of the total number of Senior
Employees and Mid-Level Employees employed by the Company at the
time Marathon, USX, Ashland or an Affiliate thereof wishes to
solicit, recruit or hire such Senior Employee or Mid-Level
Employee (based on the average number of Senior Employees and
Mid-Level Employees employed by the Company during such
twenty-four-month period);
(iii) the hiring of such employee, when considered
together with all other employees hired by Marathon, USX, Ashland
and their respective Affiliates during the then preceding
twenty-four months, would have or would reasonably be expected to
have, a significant
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detrimental impact on the department of the Company in which such
employee is then working; or
(iv) such employee is being solicited, recruited or hired
for a position in a Competitive Business of such person or such
person's Affiliates.
Notwithstanding the foregoing, the employees of the Company shall not be
required to accept any job offer by Marathon, USX, Ashland or any of their
respective Affiliates and a refusal to accept such a job offer shall not
negatively affect an employee's career opportunities at the Company.
(b) Disclosure of Confidential Information. Each of
Marathon, USX and Ashland (each, a "Disclosing Party") hereby agrees that
during the Term of the Company, it shall not, and it shall cause its
Affiliates not to, disclose or furnish to anyone any confidential
information relating to the Company and its subsidiaries ("Confidential
Information") except pursuant to a confidentiality agreement in form and
substance reasonably satisfactory to the other parties hereto which
expressly provides that the other parties hereto shall be a beneficiary
thereof (a "Confidentiality Agreement"). The foregoing restriction on
disclosure of Confidential Information shall not apply to (i) information
which is or becomes part of the public domain through no fault or breach of
the Disclosing Party; (ii) information which at the time of disclosure is
already in the possession of the Disclosing Party in written form and was
not received directly or indirectly from the Company or any of its
subsidiaries under a requirement of confidentiality; (iii) information
received by the Disclosing Party from a third party; provided that the
Disclosing Party, after reasonable inquiry, has no reason to believe that
the third party obtained the information directly or indirectly from the
Company or any of its subsidiaries under a requirement of confidentiality;
(iv) information required to be disclosed under subpoena or other mandatory
legal process; provided, that the Disclosing Party shall give the Company
timely notice of the service of the subpoena or other process so that the
Company may seek a protective order or other legal remedy to prevent such
disclosure; (v) information which has been subsequently and independently
acquired or developed by the Disclosing Party without violating any of its
obligations under this Section 14.02(b) or under any Confidentiality
Agreement; and (vi) information which is required or advisable to be
disclosed
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under the Securities Act or the Exchange Act. Notwithstanding the
foregoing, a Disclosing Party shall be permitted to disclose Confidential
Information to its directors, officers, employees, auditors, agents,
advisors and representatives (such persons being collectively referred as
its "Representatives") if the Disclosing Party informs its Representatives
of the confidential nature of the Confidential Information and obtains
their agreement to be bound by this Section 14.02(b) and not to disclose
such Confidential Information to any other person. Each Disclosing Party
shall be responsible for any breach of this Section 14.02 by its
Representatives.
SECTION 14.03. Limitations on the Company Entering into
the Valvoline Business. (a) Subject to Sections 14.03(b) and 14.03(d), the
Company hereby agrees that it shall not, and it shall cause its Affiliates
(other than Marathon, Ashland and their respective subsidiaries (other than
the Company and its subsidiaries)) not to, engage in any business worldwide
which is substantially in competition with the Valvoline Business.
Notwithstanding the foregoing, the provisions of this Section 14.03(a)
shall terminate on the first date on which Ashland and its Affiliates shall
own (beneficially or otherwise) less than 20% of the Valvoline Business.
(b)(i) Notwithstanding any limitation contained in
Section 14.03(a), if in any two consecutive calendar years, (A)
Valvoline shall not have purchased from the Company and its
subsidiaries a quantity of lube oil at least equal to the Minimum
Lube Oil Purchase Amount and (B)(1) such failure to purchase was
due to the fact that the Company and Valvoline could not in good
faith agree to mutually acceptable terms and conditions for the
sale by the Company and its subsidiaries to Valvoline of at least
such quantity of lube oil and (2) such failure was not due, in
whole or in part, to the failure of the Company and its
subsidiaries to produce and offer for sale to Valvoline the
Minimum Lube Oil Purchase Amount during either such calendar year,
the failure of the Company and its subsidiaries to produce and
offer for sale to Valvoline lube oil satisfying contractual
specifications or any other failure of the Company or its
subsidiaries to satisfy in any material respect any of its then
existing material contractual obligations to Valvoline, then the
Company and its subsidiaries shall be permitted to
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engage in a business which is substantially in competition with
Valvoline's Bulk Motor Oil Business and/or Valvoline's Packaged
Motor Oil Business (but, except as expressly permitted in Section
14.03(a), no other business that constitutes part of the Valvoline
Business); provided that, notwithstanding the foregoing, the
Company and its subsidiaries shall not be permitted to enter into
or engage in any such business if the Company and its subsidiaries
shall have substantially ceased production at the Catlettsburg,
Kentucky refinery of lube oil for sale to third parties (other
than due to a force majeure or an inability to find a willing
buyer for its lube oil) for any period of 90 consecutive days or
more prior to the time the Company and its subsidiaries shall
first enter or propose to enter into such business.
(ii) Notwithstanding any limitation contained in Section
14.03(a), if in each of the four calendar years following the
consecutive two-year period provided for in Section 14.03(b)(i),
(A) Valvoline shall not have purchased from the Company and its
subsidiaries a quantity of lube oil at least equal to the Minimum
Lube Oil Purchase Amount and (B)(1) such failure to purchase was
due to the fact that the Company and Valvoline could not in good
faith agree to mutually acceptable terms and conditions for the
sale by the Company and its subsidiaries to Valvoline of at least
such quantity of lube oil and (2) such failure was not due, in
whole or in part, to the failure of the Company and its
subsidiaries to produce and offer for sale to Valvoline the
Minimum Lube Oil Purchase Amount during any such calendar year,
the failure of the Company and its subsidiaries to produce and
offer for sale to Valvoline lube oil satisfying contractual
specifications or any other failure of the Company or its
subsidiaries to satisfy in any material respect any of its
existing material contractual obligations to Valvoline, then at
any time after the conclusion of such consecutive four-year
period, the Company and its subsidiaries shall be permitted to
engage in a business which is substantially in competition with
Valvoline's Private Label Packaged Motor Oil Business and/or
Valvoline's Quick Lube Business; provided that, notwithstanding
the foregoing, the Company and its subsidiaries shall not be
permitted to enter into or engage in any such business if the
Company and its subsidiaries shall have
98
substantially ceased production at the Catlettsburg, Kentucky
refinery of lube oil for sale to third parties (other than due to
a force majeure or an inability to find a willing buyer for its
lube oil) for any period of 90 consecutive days or more prior to
the time the Company and its subsidiaries shall first enter or
propose to enter into such business.
(iii) The provisions set forth in this Section 14.03(b)
permitting the Company and its subsidiaries to engage in a new
business in competition with the Valvoline Business if certain
conditions are satisfied shall be an exception only to the super
majority vote requirement in Section 8.08(a) of the LLC Agreement,
and shall not be an exception to any other supermajority vote
requirements of Section 8.08 of the LLC Agreement.
(c) Notwithstanding any limitation contained in Section
14.01(a), if at any time the Company or any of its subsidiaries enters
into, other than as expressly permitted in Section 14.03(d), either the
Bulk Motor Oil Business, the Packaged Motor Oil Business, the Private Label
Packaged Motor Oil Business or the Quick Lube Business, Ashland and its
subsidiaries thereafter shall be permitted to enter into a business which
is substantially in competition with the Company's lube oil production
business.
(d) Notwithstanding any limitation contained in Section
14.03(a), subject to Section 8.08 of the LLC Agreement, the Company and its
subsidiaries shall be permitted to (i) engage, directly or through its own
dealers, jobbers or jobber dealers, in the business currently conducted
under the brand name "Maralube Express" (the "Maralube Express Business");
(ii) engage, directly or through its own dealers, jobbers or jobber
dealers, in the truck stop oil change business; (iii) engage, directly or
through its own dealers, jobbers, or jobber dealers, in the oil,
lubricants, antifreeze and other, in each case automotive fluid change
business and auto and light truck maintenance service, in each case
incidental to operating their service stations or other retail units; (iv)
engage, directly or through its own dealers, jobbers, or jobber dealers, in
the sale of lubricants to farm, government, school and other similar
commercial accounts; (v) engage, directly or through its own dealers,
jobbers, or jobber dealers, in the sale of car care products and chemicals,
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antifreeze and rust preventatives in service stations or similar retail
units that are owned or operated by them, in each case incidental to
operating their service stations or other retail units; (vi) engage,
directly or through its own dealers, jobbers, or jobber dealers, in the
collection of used lubricants at service stations or similar retail units
that are owned or operated by them, in each case incidental to operating
their service stations or other retail units; (vii) enter into contractual
agreements with Valvoline or other third party packagers with respect to
the packaging by Valvoline or such other third party packagers of lube oil
products for sale (A) in service stations or similar retail units that are
owned or operated by the Company and its subsidiaries or its dealers,
jobbers or jobber dealers or to farm, government, school or other similar
commercial accounts pursuant to clause (iv) above and (B) solely under the
brandnames or trademarks of such service stations; and (viii) purchase a
Person (whether by merger or purchase of all or substantially all the
assets or otherwise) which engages, directly or indirectly, in a business
that is substantially in competition with the Valvoline Business (a
"Valvoline Competitive Third Party") provided that less than 33% of such
Valvoline Competitive Third Party's consolidated revenues for the most
recently completed fiscal quarter are derived from businesses which are
substantially in competition with Valvoline's Business; provided further
that a purchase by the Company or one of its subsidiaries of a Valvoline
Competitive Third Party shall be permitted only if within 30 Business Days
after the earlier to occur of (A) the execution of definitive agreements
with respect to such purchase or (B) the closing of such purchase, the
Company shall give notice (a "14.03(d) Offer Notice") to Ashland,
identifying the portion of such Valvoline Competitive Third Party's
business that is substantially in competition with the Valvoline Business
(the "Valvoline Competitive Business Assets") and offering to sell to
Ashland such Valvoline Competitive Business Assets at a purchase price
determined in accordance with Section 14.04.
(e) Ashland shall have 90 days from receipt of the
14.03(d) Offer Notice to elect, by notice to the Company (a "14.3(d)
Purchase Election Notice"), to purchase such Valvoline Competitive Business
Assets. If Ashland makes such election, the notice of election shall state
a closing date not later than 60 days after the date of the Section
14.03(d) Purchase Election Notice or, if later, 30 days after Ashland has
received any antitrust clearance or other
100
Governmental Approval required in connection with such purchase (a
"14.03(d) Scheduled Closing Date"). If Ashland breaches its obligation to
purchase the Valvoline Competitive Business Assets on the 14.03(d)
Scheduled Closing Date after giving notice of its election to make such
purchase (other than where such breach is due to circumstances beyond
Ashland's reasonable control), then the Company shall be permitted to
retain such Valvoline Competitive Business Assets. If Ashland breaches its
obligation to purchase the Valvoline Competitive Business Assets on the
14.03(d) Scheduled Closing Date after giving notice of its election to make
such purchase and such breach is due to circumstances beyond Ashland's
reasonable control, then, if the closing of the purchase by Ashland of the
Valvoline Competitive Business Assets does not occur within 270 days after
the Scheduled Closing Date, the Company shall be permitted to retain such
Valvoline Competitive Business Assets. If Ashland elects not to purchase
such Valvoline Competitive Business Assets, then the Company shall be
permitted to retain such Valvoline Competitive Business Assets.
(f) (i) If the Company and its subsidiaries are permitted
under Section 14.03(d) to retain any Valvoline Competitive Business Assets
and, at any time thereafter, the Company or any such subsidiary shall
determine to sell such Valvoline Competitive Business Assets (or any
portion thereof), then the Company shall give notice (a "14.03(f) Valvoline
Offer Notice") to Ashland, identifying the proposed purchaser from whom it
has received a bona fide offer and setting forth the proposed sale price
(which shall be payable only in cash or purchase money obligations secured
solely by such Valvoline Competitive Business Assets (or portion thereof)
being sold) and the other material terms and conditions upon which the
Company is proposing to sell such Valvoline Competitive Business Assets to
such identified purchaser (or portion thereof). No such sale shall
encompass or be conditioned upon the sale or purchase of any property other
than such Valvoline Competitive Business Assets (or portion thereof).
Ashland shall have 90 days from receipt of the Valvoline Offer Notice to
elect, by notice to the Company (a "14.03(f) Valvoline Purchase Election
Notice"), to purchase such Valvoline Competitive Business Assets (or
portion thereof) on the terms and conditions set forth in the 14.03(f)
Valvoline Offer Notice.
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(ii) If Ashland makes such election, the notice of election
shall state a closing date not later than 60 days after the date of the
14.03(f) Valvoline Purchase Election Notice. If Ashland breaches its
obligation to purchase such Valvoline Competitive Business Assets (or
portion thereof) on the same terms and conditions as those contained in the
14.03(f) Valvoline Offer Notice after giving notice of its election to make
such purchase (other than where such breach is due to circumstances beyond
Ashland's reasonable control), then the Company may, at any time for a
period of 270 days after such default, sell such Valvoline Competitive
Business Assets (or portion thereof) to any person at any price and upon
any other terms without further compliance with the procedures set forth in
this Section 14.03(f).
(iii) If Ashland gives notice within the 90-day period
following the 14.03(f) Valvoline Offer Notice from the Company that it
elects not to purchase such Valvoline Competitive Business Assets (or
portion thereof), the Company may, within 120 days after the end of such
90-day period (or 270 days in the case where such parties have received a
second request under HSR), sell such Valvoline Competitive Business Assets
to the identified purchaser on terms and conditions no less favorable to
the Company than the terms and conditions set forth in such 14.03(f)
Valvoline Offer Notice. In the event the Company shall desire to offer such
Valvoline Competitive Business Assets (or portion thereof) for sale to such
identified purchaser or to any other person on terms and conditions less
favorable to it than those previously set forth in a 14.03(f) Valvoline
Offer Notice, the procedures set forth in this Section 14.03(f) must again
be initiated and applied with respect to the terms and conditions as
modified.
(g) It is the intention of each of the parties hereto
that if any of the restrictions or covenants contained in this Section
14.03 is held by a court of competent jurisdiction to cover a geographic
area or to be for a length of time that is not permitted by Applicable Law,
or is in any way construed by a court of competent jurisdiction to be too
broad or to any extent invalid, such provision shall not be construed to be
null, void and of no effect, but to the extent such provision would be
valid or enforceable under Applicable Law, a court of competent
jurisdiction shall construe and interpret or reform this Section 14.03 to
provide for a covenant having the maximum enforceable geographic area, time
period and other
102
provisions (not greater than those contained in this Section 14.03) as
shall be valid and enforceable under such Applicable Law. Each of the
parties hereto acknowledges that any breach of the terms, conditions or
covenants set forth in this Section 14.03 shall be competitively unfair and
may cause irreparable damage because of the special, unique, unusual,
extraordinary and intellectual character of the applicable business, and
recovery of damages at law will not be an adequate remedy. Accordingly,
each of the parties hereto agrees that for any breach of the terms,
covenants or agreements of this Section 14.03, a restraining order or an
injunction or both may be issued against such person, in addition to any
other rights or remedies the aggrieved party may have.
(h) For purposes of this Agreement, the following terms
shall have the following meanings:
(i) "Bulk Motor Oil Business" means sales of blended
(finished) motor oil in tanker truck, barge and tanker railcar
quantities.
(ii) "Minimum Lube Oil Purchase Amount" means a quantity
of lube oil at least equal to 70% of the quantity of lube oil that
Valvoline purchased from the Catlettsburg, Kentucky refinery in
the 1997 calendar year.
(iii) "Packaged Motor Oil Business" means the ownership,
use and/or operation (including toll processing through a third
party's plant) of packaging facilities for the sale of packaged
motor oil under third party brandnames or trademarks.
(iv) "Private Label Packaged Motor Oil Business" means
the sale of packaged motor oil under third party and/or the
Company's brand names or trademarks.
(v) "Quick Lube Business" means the provision of services
for changing oil, lubricants, antifreeze and other automotive
fluids for passenger car and light commercial trucks and the
provision of maintenance checks and related services.
(vi) "Valvoline" means the Valvoline division of Ashland.
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(vii) "Valvoline Business" means the business currently
engaged in by Valvoline, including (A) the production and
marketing of automotive and industrial oils, automotive car care
products and chemicals, antifreeze, rust preventives, (B)
automotive services and (C) environmental recycling services
(including collection of used oil, filters and related items). For
the avoidance of doubt, the Valvoline Business includes the Bulk
Motor Oil Business, the Packaged Motor Oil Business, the Private
Label Packaged Motor Oil Business and the Quick Lube Business.
SECTION 14.04. Purchase Price of Competitive Business
Assets. In the event that (x) the Company elects to purchase any Company
Competitive Business Assets pursuant to the proviso to Section 14.01(d)(iv)
or (y) Ashland elects to purchase any Valvoline Competitive Business Assets
pursuant to the second proviso to Section 14.03(d)(viii), the purchase
price of such Company Competitive Business Assets or Valvoline Competitive
Business Assets (the "Competitive Business Purchase Price") shall be
determined pursuant to the following procedures:
(a) Negotiation Period. For a period of 15 days following
the date the Board of Managers approves such purchase, Marathon
and Ashland will negotiate in good faith to seek to reach an
agreement as to the Competitive Business Purchase Price. If
Marathon and Ashland reach such an agreement, then the Competitive
Business Purchase Price shall be deemed to be the amount so agreed
upon by Marathon and Ashland.
(b) Appraisal Process. (i) In the event Marathon and
Ashland are unable to reach an agreement as to the Competitive
Business Purchase Price within the 15 day period referred to in
clause (a) above, then within five Business Days after the
expiration of such 15-day period (such fifth Business Day being
referred to herein as the "14.04 Appraisal Process Commencement
Date"), Marathon and Ashland each shall select a nationally
recognized investment banking firm to (A) prepare a report which
(1) sets forth such investment banking firm's determination of the
Competitive Business Purchase Price (which shall be a single
amount as opposed to a range) and (2) includes work papers which
indicate the basis for the calculations of the Competitive
Business Purchase Price
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(a "14.04 Appraisal Report") and (B) deliver to Marathon or
Ashland, as the case may be, an oral and written opinion addressed
to such party as to the Competitive Business Purchase Price.
(ii) The fees and expenses of each investment banking
firm shall be paid by the party selecting such investment banking
firm.
(iii) Each of Marathon and Ashland shall instruct its
respective investment banking firm to (A) not consult with the
other investment banking firm with respect to its view as to the
Competitive Business Purchase Price prior to the time that both
investment banking firms have delivered their respective opinions
to Marathon and Ashland, as applicable, (B) deliver their
respective 14.04 Appraisal Reports, together with their oral and
written opinions as to the Competitive Business Purchase Price
(the "14.04 Initial Opinion Values"), within 15 days after the
14.04 Appraisal Process Commencement Date, and (C) deliver a copy
of its written opinion and its 14.04 Appraisal Report to the
Company, the other party and the other party's investment banking
firm at the time it delivers its oral and written opinion to
Marathon or Ashland, as applicable.
(iv) If the 14.04 Initial Opinion Values differ and the
lesser 14.04 Initial Opinion Value equals or exceeds 90% of the
greater 14.04 Initial Opinion Value, the Competitive Business
Purchase Price shall be deemed to be an amount equal to (A) the
sum of the 14.04 Initial Opinion Values divided by (B) two.
(v) If the 14.04 Initial Opinion Values differ and the
lesser 14.04 Initial Opinion Value is less than 90% of the greater
14.04 Initial Opinion Value then:
(A) within two Business Days after both
investment banking firms have delivered their respective
opinions to Marathon or Ashland, as applicable, each
investment banking firm shall, at a single meeting at
which Marathon, Ashland, the Company and the other
investment banking firm are present, make a presentation
with respect to its 14.04 Initial Opinion Value. At such
presentation, Marathon, Ashland, the Company and the
other
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investment banking firm shall be entitled to ask
questions as to the basis for and the calculation of such
investment banking firm's 14.04 Initial Opinion Value;
and
(B) Marathon and Ashland shall, within five
Business Days after the date Marathon and Ashland receive
the 14.04 Initial Opinion Values (such fifth Business Day
being referred to herein as the "14.04 Subsequent
Appraisal Process Commencement Date"), jointly select a
third nationally recognized investment banking firm to
(1) prepare a 14.04 Appraisal Report and (2) deliver an
oral and written opinion addressed to Marathon and
Ashland as to the Competitive Business Purchase Price.
The fees and expenses of such third investment banking
firm shall be paid 50% by Marathon and 50% by Ashland.
Such third investment banking firm shall not be provided
with the 14.04 Initial Opinion Values and shall not
consult with the initial investment banking firms with
respect thereto. During such five-Business Day period,
Marathon and Ashland shall negotiate in good faith to
independently reach an agreement as to the Competitive
Business Purchase Price. If Marathon and Ashland reach
such an agreement, then the Competitive Business Purchase
Price shall be deemed to be the amount so agreed upon by
Marathon and Ashland. If Marathon and Ashland are unable
to reach such an agreement, then Marathon and Ashland
shall instruct such third investment banking firm to
deliver its 14.04 Appraisal Report, together with its
oral and written opinion as to the Competitive Business
Purchase Price (the "14.04 Third Opinion Value"), within
15 days after the 14.04 Subsequent Appraisal Process
Commencement Date. The Competitive Business Purchase
Price in such circumstances shall be deemed to be an
amount equal to (I) the sum of (x) the 14.04 Third
Opinion Value plus (y) whichever of the two 14.04 Initial
Opinion Values is closer to the 14.04 Third Opinion Value
(or, if the 14.04 Third Opinion Value is exactly halfway
between the two 14.04 Initial Opinion Values, the 14.04
Third Opinion Value), divided by (II) two.
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ARTICLE XV
Survival; Assignment
SECTION 15.01. Survival and Assignment re: Marathon and
USX. (a) General. Except as expressly permitted by this Section 15.01,
neither Marathon nor USX shall assign all or any part of its rights and
obligations hereunder to any person without first obtaining the written
approval of each of the other parties hereto, which approval may be granted
or withheld in such parties' sole discretion.
(b) Merger or Sale of Substantially All of Marathon's or
USX's Assets. In the event that Marathon or USX shall be a party to a
merger, consolidation or other similar business combination transaction
with a third party or sell all or substantially all its assets to a third
party, Marathon's or USX's, as the case may be, rights and obligations
hereunder shall be assignable to such third party in connection with such
transaction; provided, however, that Marathon or USX shall not be permitted
to assign its rights and obligations hereunder to such third party as
aforesaid if the purpose or intent of such merger, consolidation, similar
business combination transaction or sale is to circumvent or avoid the
application of Sections 10.01(c) and 10.04 of the LLC Agreement to the
related Transfer of Marathon's Membership Interests to such third party.
(c) Transfer of Marathon's Membership Interests Pursuant
to Section 10.01(c) of the LLC Agreement. In the event that Marathon
Transfers all of its Membership Interests to a third party pursuant to
Section 10.01(c) of the LLC Agreement, then:
(i) such third party shall at the time of such Transfer
become subject to all of Marathon's and USX's respective
obligations hereunder and shall succeed to all of Marathon's and
USX's respective rights hereunder;
(ii) such third party and its ultimate parent, if any,
shall each become subject to the same standstill obligations that
apply to Marathon and USX under Section 12.01, which standstill
provisions shall remain in effect with respect to such third party
and its ultimate parent, if any, through the six-month
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anniversary of the earlier to occur of (a) the date that Ashland
and its Affiliates do not own any Membership Interests and (b) the
date that such third party and its Affiliates do not own any
Membership Interests;
(iii) such third party and its ultimate parent, if any,
shall each become subject to the same non-compete covenants that
apply to Marathon and USX under Article XIV; and
(iv) Marathon and USX shall each be relieved of all of
its obligations hereunder other than (1) any default hereunder by
Marathon or USX or any of their respective Affiliates that
occurred prior to the time of such Transfer; (2) Marathon's and
USX's respective obligations under Section 12.01 (which are in
addition to, and not in lieu of such third party's obligations
under Section 12.01); (3) Marathon's and USX's respective
obligations under Article X with respect to any Securities that
Marathon and/or USX issued to Ashland pursuant to Section 4.02(c)
prior to such Transfer or that Marathon and/or USX intends to
issue to Ashland pursuant to Section 4.02(c) after such Transfer;
and (4) Marathon's and USX's respective obligations under Article
XIV (which shall survive for six months from the date of such
Transfer and which are in addition to, and not in lieu of such
third party's obligations under Article XIV).
(d) Assignment of Marathon's Marathon Call Right and
Special Termination Right. In the event of an assignment by Marathon of its
rights and obligations under this Agreement to a third party pursuant to
this Section 15.01, Marathon's rights and obligations related to its
Marathon Call Right and its Special Termination Right shall also be
assigned to such third party; provided, that such third party shall not be
permitted to exercise the Marathon Call Right until the third anniversary
of the date of such assignment.
SECTION 15.02. Survival and Assignment re: Ashland. (a)
General. Except as expressly permitted by this Section 15.02, Ashland shall
not assign all or any part of its rights and obligations hereunder to any
person without first obtaining the prior written approval of each
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of the other parties hereto, which approval may be granted in such parties'
sole discretion.
(b) Merger or Sale of Substantially all of Ashland's
Assets. In the event that Ashland shall be a party to a merger,
consolidation or other similar business combination transaction with a
third party or sell all or substantially all of its assets to a third
party, Ashland's rights and obligations hereunder shall be assignable to
such third party in connection with such transaction; provided, however,
that Ashland shall not be permitted to assign its rights and obligations
hereunder to such third party as aforesaid if the purpose or intent of such
merger, consolidation, similar business combination transaction or sale is
to circumvent or avoid the application of Sections 10.01(c) and 10.04 of
the LLC Agreement to the related Transfer of Ashland's Membership Interests
to such third party.
(c) Transfer of Membership Interests Pursuant to Section
10.01(c) of the LLC Agreement. In the event that Ashland Transfers all of
its Membership Interests to a third party pursuant to Section 10.01(c) of
the LLC Agreement, then:
(i) such third party shall at the time of such Transfer
become subject to all of Ashland's obligations hereunder and shall
succeed to all of Ashland's rights hereunder;
(ii) such third party and its ultimate parent, if any,
shall each become subject to the same standstill obligations that
apply to Ashland under Section 12.02, which standstill provisions
shall remain in effect with respect to such third party and its
ultimate parent, if any, through the later to occur of (i) the
six-month anniversary of the earlier to occur of (A) the date that
Marathon and its Affiliates do not own any Membership Interests
and (B) the date that such third party and its Affiliates do not
own any Membership Interests and (ii) in the event that such third
party or its Affiliates acquires USX Voting Securities pursuant to
the Closing of the Ashland Put Right, the date on which such third
party and its Affiliates do not own more than 5% of the then
outstanding USX Voting Securities;
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(iii) such third party and its ultimate parent, if any,
shall each become subject to the same non-compete covenants that
apply to Ashland under Article XIV;
(iv) Ashland shall be relieved of all of its obligations
hereunder other than (1) any default hereunder by Ashland or any
of its Affiliates that occurred prior to the time of such
Transfer; (2) Ashland's obligations under Section 12.02 (which are
in addition to, and not in lieu of such third party's obligations
under Section 12.02); and (3) Ashland's obligations under Article
XIV (which shall survive for six months from the date of such
Transfer and which are in addition to, and not in lieu of such
third party's obligations under Article XIV); and
(v) Ashland shall retain all of its rights under Article
X with respect to any Securities that are issued to Ashland
pursuant to Section 4.02(c) prior to or after the date of such
Transfer (which rights shall be in addition to and not in lieu of
the rights that the third party of Ashland's Membership Interests
is entitled to under Article X).
(d) Assignment of Ashland's Ashland Put Right and Special
Termination Right. In the event of an assignment by Ashland of its rights
and obligations under this Agreement to a third party pursuant to this
Section 15.02, Ashland's rights and obligations related to its Ashland Put
Right and its Special Termination Right shall also be assigned to such
third party; provided that such third party shall not be permitted to
exercise the Ashland Put Right until the third anniversary of the date of
such assignment.
SECTION 15.03. Survival and Assignment re: the Company.
The Company shall not be permitted to assign its rights and obligations
hereunder without the prior written consent of each of the other parties
hereto, which consent shall not be unreasonably withheld.
SECTION 15.04. Assignment and Assumption Agreements. Any
assignment of Marathon's, USX's, Ashland's or the Company's respective
rights and obligations hereunder pursuant to this Article XV shall be
pursuant to an assignment and assumption agreement by and among the third
party, such third party's ultimate parent, if any, and each of the parties
hereto, in such form as the parties hereto shall reasonably approve.
110
SECTION 15.05. Consequences of Unpermitted Assignments.
Any attempted assignment in violation of this Article XV shall be void and
without legal effect.
ARTICLE XVI
Dispute Resolution Procedures
SECTION 16.01. General. All controversies, claims or
disputes that arise out of or relate to the Agreement or the construction,
interpretation, performance, breach, termination, enforceability or
validity of the Agreement, or the commercial economic or other relationship
of the parties thereto, whether such claim is based on rights, privileges
or interests recognized by or based upon statute, contract, tort, common
law or otherwise and whether such claim existed prior to or arises on or
after the date of the Agreement (a "Dispute") shall be resolved in
accordance with the provisions of this Article XVI. Notwithstanding
anything to the contrary contained in this Article XVI, nothing in this
Article XVI shall limit the ability of the directors and officers of a
party hereto from communicating directly with the directors and officers of
any other party hereto.
SECTION 16.02. Dispute Notice and Response. A party
hereto may give another party hereto written notice (a "Dispute Notice") of
any Dispute which has not been resolved in the normal course of business.
Within fifteen Business Days after delivery of the Dispute Notice, the
receiving party shall submit to the other party a written response (the
"Response"). The Dispute Notice and the Response shall each include a
statement setting forth the position of the party giving such notice, a
summary of the arguments supporting such position and, if applicable, the
relief sought.
SECTION 16.03. Negotiation Between Chief Executive
Officers. (a) If a Dispute Notice is delivered prior to the Closing, within
10 Business Days after delivery of the Response provided for in Section
16.02, the Chief Executive Officer (in the case of Ashland and USX) and/or
the President (in the case of Marathon and the Company) of
111
each party to such Dispute shall meet or communicate by telephone at a
mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, and shall negotiate in good faith to attempt to
resolve the Dispute that is the subject of such Dispute Notice. If such
Dispute has not been resolved within 20 Business Days after the delivery of
the Response as provided for in Section 16.02, then each party shall be
permitted to take such actions at law or in equity as it is otherwise
permitted to take or as may be available under Applicable Law.
(b) All negotiations between the Chief Executive
Officer(s) and/or the President(s) pursuant to this Section 16.03 shall be
treated as compromise and settlement negotiations. Nothing said or
disclosed, nor any document produced, in the course of such negotiations
which is not otherwise independently discoverable shall be offered or
received as evidence or used for impeachment or for any other purpose in
any current or future arbitration or litigation.
SECTION 16.04. Right to Equitable Relief Preserved.
Notwithstanding anything in this Agreement to the contrary, any party
hereto may at any time seek from any court of the United States located in
the State of Delaware or from any Delaware state court, any interim,
provisional or injunctive relief that may be necessary to protect the
rights or property of such party or maintain the status quo before, during
or after the pendency of the negotiation process or any other proceeding
contemplated by Section 16.03.
ARTICLE XVII
Miscellaneous
SECTION 17.01. Notices. Any notice, consent or approval
to be given under this Agreement shall be in writing and shall be deemed to
have been given if delivered: (i) personally by a reputable courier service
that requires a signature upon delivery; (ii) by mailing the same via
registered or certified first-class mail, postage prepaid, return receipt
requested; or (iii) by telecopying the same with receipt confirmation
(followed by a first-class mailing of the same) to the intended recipient.
Any such writing will be deemed to have been given: (a) as of the date of
112
personal delivery via courier as described above; (b) as of the third
calendar day after depositing the same into the custody of the postal
service as evidenced by the date-stamped receipt issued upon deposit of the
same into the mails as described above; and (c) as of the date and time
electronically transmitted in the case of telecopy delivery as described
above, in each case addressed to the intended party at the address set
forth below:
To Marathon:
Marathon Oil Company
5555 San Felipe
P.O. Box 3128
Houston, TX 77056
Attn: General Counsel
Phone: (713) 296-4137
Fax: (713) 296-4171
To USX:
USX Corporation
600 Grant Street
Pittsburgh, PA, 15219-4776
Attn: General Counsel
Phone: (412) 433-1121
Fax: (412) 433-2015
To Ashland:
Ashland Inc.
1000 Ashland Drive
Russell, KY 41169
Attn: General Counsel
Phone: (606) 329-3333
Fax: (606) 329-3823
To the Company:
Marathon Ashland Petroleum LLC
539 South Main Street
Findlay, Ohio 45840
Attn: General Counsel
Phone: (419) 421-4115
Fax: (419) 422-2121
113
Any party may designate different addresses or telecopy numbers by notice
to the other parties.
SECTION 17.02. Merger and Entire Agreement. This
Agreement (including the Schedules and Appendices attached hereto),
together with the other Transaction Documents (including the exhibits,
schedules and appendices thereto) and certain other agreements executed
contemporaneously with the Master Formation Agreement constitutes the
entire Agreement of the parties hereto and supersedes any prior
understandings, agreements, or representations by or among the parties
hereto, written or oral, to the extent they relate in any way to the
subject matter hereof.
SECTION 17.03. Parties in Interest. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors, legal representatives and permitted assigns.
SECTION 17.04. Counterparts. This Agreement 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 17.05. Amendment; Waiver. This Agreement may not
be amended except in a written instrument signed by each of the parties
hereto and expressly stating it is an amendment to this Agreement. Any
failure or delay on the part of any party hereto in exercising any power or
right hereunder shall not operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power
hereunder or otherwise available at law or in equity.
SECTION 17.06. Severability. If any term, provision,
covenant, or restriction of this Agreement or the application thereof to
any Person or circumstance, at any time or to any extent, is held by a
court of competent jurisdiction or other Governmental Authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement (or the application of such
provision in other jurisdictions or to Persons or circumstances other than
those to which it was held invalid or unenforceable) shall in no way be
affected, impaired or invalidated, and to the extent permitted by
Applicable Law, any such term, provision, covenant or
114
restriction shall be restricted in applicability or reformed to the minimum
extent required for such to be enforceable. This provision shall be
interpreted and enforced to give effect to the original written intent of
the parties hereto prior to the determination of such invalidity or
unenforceability.
SECTION 17.07. GOVERNING LAW. THIS AGREEMENT 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 AGREEMENT, OR ANY TRANSACTION OR CONDUCT
IN CONNECTION HEREWITH, IS WAIVED.
SECTION 17.08. Enforcement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in the Delaware Chancery Court; provided that
if the Delaware Chancery Court does not have jurisdiction with respect to
such matter, the parties hereto shall be entitled to enforce specifically
the terms and provisions of this Agreement in any court of the United
States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of the Delaware Chancery Court in the
event that any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement; provided that if the Delaware
Chancery Court does not have jurisdiction with respect to any such dispute,
such party consents to submit itself to the personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state court,
(ii) agrees to appoint and maintain an agent in the State of Delaware for
service of legal process, (iii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court, (iv) agrees that it will not plead or claim in any such
court that any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any such court has been brought in an
inconvenient forum and (v) agrees that it will not initiate
115
any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than (1) the Delaware
Chancery Court, or (2) if the Delaware Chancery Court does not have
jurisdiction with respect to such action, a Federal court sitting in the
State of Delaware or a Delaware state court.
SECTION 17.09. Table of Contents, Headings and Titles.
The table of contents and section headings of this Agreement and titles
given to Schedules and Appendices to this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
SECTION 17.10. Use of Certain Terms; Rules of
Construction. As used in this Agreement, the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular paragraph, subparagraph, section,
subsection or other subdivision. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa. Each party hereto agrees
that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation or construction of this Agreement or any Transaction
Document.
SECTION 17.11. Holidays. Notwithstanding any deadline for
payment, performance, notice or election under this Agreement, if such
deadline falls on a date that is not a Business Day, then the deadline for
such payment, performance, notice or election will be extended to the next
succeeding Business Day.
SECTION 17.12. Third Parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person
and their respective successors, legal representatives and permitted
assigns any rights, remedies or basis for reliance upon, under or by reason
of this Agreement.
SECTION 17.13. Liability for Affiliates. Except where and
to the extent that a contrary intention otherwise appears, where any party
hereto undertakes to cause its Affiliates to take or abstain from taking
any action, such undertaking shall mean (i) in the case of an Affiliate
that is controlled by such party, that such party shall cause such
Affiliate to take or abstain from taking such
116
action and (ii) in the case of an Affiliate that controls or is under
common control with such party, that such party shall use its commercially
reasonable best efforts to cause such Affiliates to take or abstain from
taking such action; provided, however, that such party shall not be
required to violate, or cause any director of an Affiliate to violate, any
fiduciary duty to minority shareholders of such Affiliate.
SECTION 17.14. Schedules. No representation or warranty
hereunder shall be deemed to be inaccurate if the actual situation is
disclosed pursuant to another representation or warranty herein or in a
schedule to a Put/Call, Registration Rights and Standstill Agreement
Disclosure Letter or in any other Transaction Document or any exhibit,
schedule or appendix thereto, whether or not an explicit cross-reference
appears. Neither the specification of any dollar amount in any
representation, warranty or covenant contained in this Agreement nor the
inclusion of any specific item in a schedule to a Put/Call, Registration
Rights and Standstill Agreement Disclosure Letter is intended to imply that
such amount, or higher or lower amounts, or the item so included or other
items, are or are not material, and neither party shall use the fact of the
setting forth of any such amount or the inclusion of any such item in any
dispute or controversy involving the parties as to whether any obligation,
item or matter not described herein or included in a schedule to a
Put/Call,
Registration Rights and Standstill Agreement Disclosure Letter is or is not
material for purposes of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed
by the parties as of the day and year first above written.
MARATHON OIL COMPANY
by /s/ Victor G. Beghini
--------------------------
Name: Victor G. Beghini
Title: President
USX CORPORATION
by /s/ Thomas J. Usher
--------------------------
Name: Thomas J. Usher
Title: Chairman of the Board
and Chief Executive Officer
ASHLAND INC.
by /s/ Paul W. Chellgren
--------------------------
Name: Paul W. Chellgren
Title: Chairman of the Board
and Chief Executive Officer
MARATHON ASHLAND PETROLEUM LLC
by /s/ J. L. Frank
--------------------------
Name: J. L. Frank
Title: President
[85257.5]
FOR FURTHER INFORMATION
USX Ashland Inc.
William E. Keslar Dan Lacy
(412) 433-6870 (606) 329-3148
January 2, 1998
Marathon and Ashland close joint venture transaction
Findlay, Ohio -- USX Corporation's Marathon Oil Company and Ashland Inc.
today jointly announced that they have closed the transaction that
officially creates the refining and marketing company, Marathon Ashland
Petroleum LLC.
The close of the transaction was effective Jan. 1, 1998.
Marathon has a 62 percent in the new company and Ashland holds a
38 percent interest.
USX, Marathon and Ashland officials signed definitive agreements
to create the venture Dec. 12. Plans to pursue the combination were first
announced May 15 when a letter of intent to seek a combination of the major
elements of the two firms' downstream operations was signed.
Marathon Ashland Petroleum will operate seven refineries with a
combined capacity of 935,000 barrels per day, or six percent of the total
U.S. refining capacity. The refineries are located at Garyville, La.,
(255,000 b/d); Catlettsburg, Ky., (220,000 b/d), Robinson, Ill., (180,000
b/d); St. Paul Park, Minn., (70,000 b/d); Texas City, Texas (70,000 b/d);
Detroit, Mich., (70,000 b/d); and Canton, Ohio (70,000 b/d). The new
company will have 84 light products and asphalt terminals in the Midwest
and Southeast United States, 5,400 retail marketing outlets in 20 states,
and significant pipeline holdings.
Marathon Oil Company is a part of the USX-Marathon Group
(NYSE:MRO). Ashland Inc. (NYSE:ASH) is a large energy and chemical company
engaged in petroleum refining and marketing; coal and highway construction.
For more information on Marathon see www.marathon.com or www.usx.com For
more information on Ashland see www.ashland.com
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