EXHIBIT 2.1
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MASTER AGREEMENT
Dated as of March 18, 2004,
Among
ASHLAND INC.,
ATB HOLDINGS INC.,
EXM LLC,
NEW EXM INC.,
MARATHON OIL CORPORATION,
MARATHON OIL COMPANY,
MARATHON DOMESTIC LLC
And
MARATHON ASHLAND PETROLEUM LLC
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TABLE OF CONTENTS
PAGE
ARTICLE I
TRANSACTIONS AND CLOSING
SECTION 1.01. MAP Parital Redemption......................................4
SECTION 1.02. Maleic/VIOC Contribution; MAP/LOOP/LOCAP Contribution;
Reorganization Merger.....................................5
SECTION 1.03. HoldCo Borrowing; Capital Contribution; Conversion
Merger....................................................6
SECTION 1.04. Acquisition Merger; Distribution............................7
SECTION 1.05. Closing.....................................................8
SECTION 1.06. Post-Closing True-Up........................................8
ARTICLE II
THE REORGANIZATION MERGER
SECTION 2.01. Parties to the Reorganization Merger........................9
SECTION 2.02. Reorganization Merger Effective Time........................9
SECTION 2.03. Effects....................................................10
SECTION 2.04. Conversion of Ashland Securities...........................10
SECTION 2.05. Dissenters' Rights.........................................11
SECTION 2.06. Limited Liability..........................................12
SECTION 2.07. Articles of Organization...................................12
SECTION 2.08. Operating Agreement........................................12
SECTION 2.09. Reorganization Plan of Merger..............................12
ARTICLE III
THE CONVERSION MERGER
SECTION 3.01. Parties to the Conversion Merger...........................12
SECTION 3.02. Conversion Merger Effective Time...........................13
SECTION 3.03. Effects....................................................13
SECTION 3.04. Conversion of New Ashland Securities.......................13
SECTION 3.05. Limited Liability..........................................14
SECTION 3.06. Articles of Incorporation and By-laws......................14
SECTION 3.07. Directors..................................................14
SECTION 3.08. Officers...................................................14
SECTION 3.09. Conversion Plan of Merger..................................14
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ARTICLE IV
THE ACQUISITION MERGER
SECTION 4.01. Acquisition Merger; Acquisition Merger Effective Time......15
SECTION 4.02. Effects....................................................15
SECTION 4.03. Effect on Capital Stock....................................16
SECTION 4.04. Limited Liability Company Agreement........................18
SECTION 4.05. Tax Treatment..............................................18
ARTICLE V
EXCHANGE OF HOLDCO CERTIFICATES
SECTION 5.01. Exchange of Certificates...................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ASHLAND PARTIES
SECTION 6.01. Organization, Standing and Power...........................26
SECTION 6.02. Ashland Subsidiaries; Equity Interests.....................27
SECTION 6.03. Capital Structure..........................................27
SECTION 6.04. Authority; Execution and Delivery; Enforceability..........30
SECTION 6.05. No Conflicts; Consents.....................................32
SECTION 6.06. SEC Documents; Undisclosed Liabilities.....................34
SECTION 6.07. Absence of Certain Changes or Events.......................35
SECTION 6.08. Information Supplied.......................................36
SECTION 6.09. Brokers....................................................36
SECTION 6.10. Opinion of Financial Advisor...............................37
SECTION 6.11. Solvency Matters...........................................37
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE MARATHON PARTIES
SECTION 7.01. Organization, Standing and Power...........................40
SECTION 7.02. Marathon Subsidiaries; Equity Interests....................41
SECTION 7.03. Capital Structure..........................................41
SECTION 7.04. Authority; Execution and Delivery; Enforceability..........42
SECTION 7.05. No Conflicts; Consents.....................................43
SECTION 7.06. SEC Documents; Undisclosed Liabilities.....................45
SECTION 7.07. Absence of Certain Changes or Events.......................46
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SECTION 7.08. Information Supplied.......................................47
SECTION 7.09. Brokers....................................................47
SECTION 7.10. Opinion of Financial Advisor...............................47
SECTION 7.11. Solvency Opinions..........................................48
SECTION 7.12. MAP Accounts Receivable....................................48
SECTION 7.13. Employee Benefits..........................................48
ARTICLE VIII
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 8.01. Conduct of Business........................................48
SECTION 8.02. No Solicitation............................................52
SECTION 8.03. Post-Closing Dividends, Distributions and Share
Repurchases..............................................55
SECTION 8.04. Offerings of Marathon Common Stock.........................55
ARTICLE IX
ADDITIONAL AGREEMENTS
SECTION 9.01. Preparation of the Forms S-4 and the Proxy Statement;
Shareholders Meeting; Form 8-A or Form 10................56
SECTION 9.02. Access to Information; Confidentiality.....................59
SECTION 9.03. Reasonable Best Efforts; Notification......................60
SECTION 9.04. Fees and Expenses..........................................67
SECTION 9.05. Public Announcements.......................................70
SECTION 9.06. Affiliates.................................................70
SECTION 9.07. Stock Exchange Listings....................................70
SECTION 9.08. Rights Agreements; Consequences if Rights Triggered........71
SECTION 9.09. St. ▇▇▇▇ Park Judgment and Plea Agreement; Plains
Settlement...............................................72
SECTION 9.10. Consequences of Inability To Transfer the Ashland
LOOP/LOCAP Interest on the Closing Date..................73
SECTION 9.11. Consents Under Assigned Contracts..........................73
SECTION 9.12. Administrative Proceedings.................................74
SECTION 9.13. Replacement of Distributed Receivables.....................74
SECTION 9.14. Transition Services........................................75
SECTION 9.15. MAP Partial Redemption Amount..............................75
SECTION 9.16. Ashland Debt Obligation Amount.............................77
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ARTICLE X
CONDITIONS PRECEDENT
SECTION 10.01. Conditions to the Ashland Parties' and the Marathon
Parties' Obligations to Effect the Transactions..........78
SECTION 10.02. Conditions to Obligations of the Ashland Parties..........80
SECTION 10.03. Conditions to Obligations of the Marathon Parties.........81
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
SECTION 11.01. Termination...............................................83
SECTION 11.02. Effect of Termination.....................................86
SECTION 11.03. Amendment.................................................86
SECTION 11.04. Extension; Waiver.........................................87
SECTION 11.05. Procedure for Termination, Amendment, Extension or
Waiver...................................................87
ARTICLE XII
AMENDMENT OF EXISTING MAP AGREEMENTS
SECTION 12.01. Asset Transfer and Contribution Agreement.................88
SECTION 12.02. Designated Subleases......................................95
SECTION 12.03. The MAP LLC Agreement....................................100
SECTION 12.04. The Put/Call Agreement...................................100
SECTION 12.05. Ancillary Agreements.....................................101
SECTION 12.06. Other Provisions of the MAP Governing Documents..........101
SECTION 12.07. Post-Closing Access......................................102
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnification by New Ashland Inc.......................102
SECTION 13.02. Indemnification by Marathon..............................108
SECTION 13.03. Calculation of Losses....................................113
SECTION 13.04. Procedures...............................................115
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ARTICLE XIV
GENERAL PROVISIONS
SECTION 14.01. Notices..................................................119
SECTION 14.02. Definitions..............................................120
SECTION 14.03. Interpretation; Disclosure Letters.......................126
SECTION 14.04. Severability.............................................126
SECTION 14.05. Counterparts.............................................126
SECTION 14.06. Entire Agreement; No Third-Party Beneficiaries...........127
SECTION 14.07. Exercise of Rights and Remedies..........................127
SECTION 14.08. Governing Law............................................128
SECTION 14.09. Assignment...............................................128
SECTION 14.10. Enforcement..............................................128
Exhibit A Accounts Receivable Selection Protocol
Exhibit B Form of Amendments to New Ashland Inc. Articles of
Incorporation
Exhibit C Form of Affiliate Letter
Exhibit D Tax Matters
Exhibit E Form of LOCAP T&D Assumption Agreement
Exhibit F Form of LOOP T&D Assumption Agreement
Exhibit G Form of MAP Contribution Agreement
Exhibit H Form of LOOP Contribution Agreement
Exhibit I Form of LOCAP Contribution Agreement
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INDEX OF DEFINED TERMS
TERM SECTION
---- -------
AAA.....................................................................6.11(a)
Acquisition Certificate of Merger..........................................4.01
Acquisition Merger......................................................1.04(a)
Acquisition Merger Consideration........................................4.03(b)
Acquisition Merger Effective Time..........................................4.01
Administrative Proceeding..................................................9.12
affiliate.................................................................14.02
Ancillary Agreements....................................................6.04(a)
AR Amount..................................................................1.01
AR Fraction...............................................................14.02
Ashland................................................................Preamble
Ashland Board..............................................................2.09
Ashland By-laws............................................................6.01
Ashland Capital Stock...................................................6.03(a)
Ashland Charter............................................................6.01
Ashland Common Stock...................................................Recitals
Ashland Debt Obligation Amount............................................14.02
Ashland Disclosure Letter............................................ARTICLE VI
Ashland Employee Stock Option.............................................14.02
Ashland Form S-4........................................................6.05(b)
Ashland LESOP.....................................................12.01(d)(iii)
Ashland LOOP/LOCAP Interest...............................................14.02
Ashland Material Adverse Effect.........................................6.05(a)
Ashland Parties...........................................................14.02
Ashland Pension Plan..............................................12.01(d)(iii)
Ashland Preferred Stock.................................................6.03(a)
Ashland Public Debt.....................................................9.03(b)
Ashland Rights..........................................................6.03(a)
Ashland Rights Agreement................................................6.03(a)
Ashland SAR...............................................................14.02
Ashland SEC Documents...................................................6.06(a)
Ashland Series A Preferred Stock........................................6.03(a)
Ashland Shareholder Approval............................................6.04(b)
Ashland Shareholders Meeting............................................9.01(e)
Ashland Stock Plan........................................................14.02
Ashland Subsidiary......................................................6.02(a)
ATCA...................................................................12.01(a)
Averaging Period........................................................4.03(b)
Bankruptcy Code.........................................................6.11(d)
Bring-Down AAA Opinions................................................10.01(g)
Bring-Down HLHZ Opinion................................................10.01(g)
Bring-Down Opinions....................................................10.01(g)
Capital Contribution....................................................1.03(b)
Cash Amount................................................................1.01
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Certificates............................................................5.01(b)
Closing....................................................................1.05
Closing Date...............................................................1.05
Code....................................................................1.04(b)
Competing Ashland Proposal..............................................8.02(e)
Confidentiality Agreement..................................................9.02
Consent.................................................................6.05(b)
Contract................................................................6.05(a)
Conversion Articles of Merger..............................................3.02
Conversion Merger.......................................................1.03(c)
Conversion Merger Effective Time...........................................3.02
Conversion Plan of Merger..................................................3.09
Cutoff Date.............................................................8.02(a)
Debt Consent Measurement Date...........................................9.03(b)
Designated Sublease....................................................12.02(a)
DGCL....................................................................1.04(a)
Dissenters' Shares.........................................................2.05
Distributed Receivables....................................................1.01
DLLCA...................................................................1.04(a)
DOD....................................................................12.01(c)
DOD Claims.............................................................12.01(c)
D&T........................................................................9.15
Estimated MAP Partial Redemption Amount...................................14.02
Exchange Act............................................................6.05(b)
Exchange Act Registration Statement.....................................9.01(h)
Exchange Agent.......................................................5.01(a)(i)
Exchange Fund.......................................................5.01(a)(ii)
Exchange Ratio..........................................................4.03(b)
Excess Shares.......................................................5.01(e)(ii)
Ex-Date.................................................................4.03(b)
Fair Market Value.......................................................4.03(b)
Forms S-4...............................................................6.05(b)
GAAP....................................................................6.06(b)
Governmental Entity.....................................................6.05(b)
HLHZ.......................................................................6.09
HoldCo.................................................................Preamble
HoldCo Borrowing..........................................................14.02
HoldCo Common Stock..................................................2.04(a)(i)
HoldCo Share Issuance...................................................6.05(b)
HSR Act.................................................................6.05(b)
Indentures..............................................................9.03(b)
Initial AAA Opinions....................................................6.11(a)
Initial HLHZ Opinion....................................................6.11(a)
Initial Opinions........................................................6.11(a)
IRS........................................................................9.16
Judgment................................................................6.05(a)
KBCA....................................................................1.02(c)
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KLLCA...................................................................1.02(c)
Law.....................................................................6.05(a)
Leased Property........................................................12.02(a)
Liens...................................................................6.02(a)
LOCAP T&D Agreement.......................................................14.02
LOCAP T&D Assumption Agreement............................................14.02
LOOP T&D Agreement........................................................14.02
LOOP T&D Assumption Agreement.............................................14.02
Losses.................................................................13.01(a)
Maleic Agreement.......................................................Recitals
Maleic Business........................................................Recitals
Maleic/VIOC Contribution................................................1.02(a)
MAP....................................................................Preamble
MAP Adjustment Amount.....................................................14.02
MAP Governing Documents...................................................14.02
MAP LLC Agreement.........................................................14.02
MAP LLC Agreement Amendment............................................Recitals
MAP/LOOP/LOCAP Contribution ............................................1.02(b)
MAP/LOOP/LOCAP Contribution Agreements....................................14.02
MAP Partial Redemption.....................................................1.01
MAP Partial Redemption Amount.............................................14.02
MAP Qualified Pension Plan.............................................12.01(d)
Marathon...............................................................Preamble
Marathon Board..........................................................4.03(b)
Marathon By-laws...........................................................7.01
Marathon Capital Stock..................................................7.03(a)
Marathon Charter...........................................................7.01
Marathon Common Stock..................................................Recitals
Marathon Company.......................................................Preamble
Marathon Company Board..................................................7.04(c)
Marathon Disclosure Letter..........................................ARTICLE VII
Marathon Employee Stock Option............................................14.02
Marathon Form S-4.......................................................6.05(b)
Marathon Material Adverse Effect........................................7.05(a)
Marathon Parties..........................................................14.02
Marathon Preferred Stock................................................7.03(a)
Marathon Rights Agreement...............................................7.05(c)
Marathon SAR..............................................................14.02
Marathon SEC Documents..................................................7.06(a)
Marathon Share Issuance.................................................6.05(b)
Marathon Stock Plan.......................................................14.02
Marathon Subsidiary.....................................................7.02(a)
Market MAC Condition......................................................14.02
Market MAC Event..........................................................14.02
Maximum Annual Permitted Payment.......................................12.01(d)
Membership Interest.......................................................14.02
Merger Sub.............................................................Preamble
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NASDAQ..................................................................9.07(b)
New Ashland Board..........................................................3.09
New Ashland Inc. ......................................................Preamble
New Ashland Inc. Common Stock.............................................14.02
New Ashland Inc. Share Issuance.........................................6.05(b)
New Ashland LLC........................................................Preamble
New Ashland LLC Interests...............................................2.04(a)
NYSE....................................................................4.03(b)
Outside Date........................................................11.01(b)(i)
PBGC...................................................................12.01(d)
Pension Funding Relief.................................................12.01(d)
Permitted Payments.....................................................12.01(d)
person....................................................................14.02
Pitney ▇▇▇▇▇ Transaction Documents.....................................12.02(d)
Plains Settlement.........................................................14.02
Prior Payments..........................................................9.09(b)
Private Letter Rulings.................................................10.01(f)
Proxy Statement.........................................................6.05(b)
Put/Call Agreement........................................................12.04
Reimbursement Agreement.................................................1.03(a)
Reorganization Articles of Merger..........................................2.02
Reorganization Merger...................................................1.02(c)
Reorganization Merger Consideration..................................2.04(a)(i)
Reorganization Merger Effective Time.......................................2.02
Reorganization Plan of Merger..............................................2.09
Representatives.........................................................8.02(a)
Rule 145 Affiliate......................................................5.01(d)
SEC.....................................................................6.05(b)
Securities Act..........................................................5.01(d)
Significant Ashland Subsidiary.............................................6.01
Significant Marathon Subsidiary............................................7.01
St. ▇▇▇▇ Park Judgment and Plea Agreement.................................14.02
St. ▇▇▇▇ Park QQQ Project...............................................9.09(a)
St. ▇▇▇▇ Park QQQ Project Payment Amount................................9.09(b)
subsidiary................................................................14.02
Subtitle 13................................................................2.05
SuperAmerica Transaction Documents.....................................12.02(d)
Superior Proposal.......................................................8.02(e)
Tax.......................................................................14.02
Tax Authority.............................................................14.02
Tax Matter................................................................14.02
Tax Matters Agreement..................................................Recitals
Tax Opinions...........................................................10.01(f)
Termination Fee.........................................................9.04(c)
Third Party Claim......................................................13.04(a)
Third Party Lenders.....................................................1.03(a)
Third Party Provisions....................................................14.06
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Transaction Agreements.................................................Recitals
Transactions...........................................................Recitals
Transferred MAP Employees...........................................12.01(d)(i)
UFCA....................................................................6.11(d)
UFTA....................................................................6.11(d)
Value.....................................................................14.02
VIOC Agreement.........................................................Recitals
VIOC Centers...........................................................Recitals
Voting Ashland Debt.....................................................6.03(a)
Voting Marathon Debt....................................................7.03(a)
Working Papers............................................................14.02
MASTER AGREEMENT dated as of March 18, 2004, among
Ashland Inc., a Kentucky corporation ("Ashland"), ATB
Holdings Inc., a Delaware corporation and wholly owned
subsidiary of Ashland ("HoldCo"), EXM LLC, a Kentucky
limited liability company and wholly owned subsidiary of
HoldCo ("New Ashland LLC"), New EXM Inc., a Kentucky
corporation and wholly owned subsidiary of HoldCo ("New
Ashland Inc."), Marathon Oil Corporation, a Delaware
corporation ("Marathon"), Marathon Oil Company, an Ohio
corporation and wholly owned subsidiary of Marathon
("Marathon Company"), Marathon Domestic LLC, a Delaware
limited liability company and wholly owned subsidiary of
Marathon ("Merger Sub"), and Marathon Ashland Petroleum
LLC, a Delaware limited liability company owned by Marathon
Company and Ashland as set forth below ("MAP").
WHEREAS the Marathon Parties (as defined in Section 14.02) wish to
acquire from Ashland, and Ashland wishes to transfer to the Marathon Parties,
Ashland's maleic anhydride business and associated plant in ▇▇▇▇, West
Virginia (the "Maleic Business") and a number of Valvoline Instant Oil Change
centers owned by Ashland (the "VIOC Centers") located in the states of Ohio
and Michigan;
WHEREAS, on January 1, 1998, Ashland and Marathon Company
contributed certain petroleum supply, refining, marketing and transportation
businesses to MAP and entered into a limited liability company agreement to
set forth their rights and responsibilities with respect to the governance,
financing and operation of MAP;
WHEREAS Ashland owns a 38% interest in MAP and Marathon Company owns
a 62% interest in MAP;
WHEREAS Ashland holds a 4% interest in LOOP LLC and an 8.62%
interest in LOCAP LLC;
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WHEREAS the parties hereto have structured the transfers described
above as a series of transactions, as a result of which:
(i) Ashland will transfer to HoldCo the Maleic Business, the VIOC
Centers and Ashland's interests in MAP, LOOP LLC and LOCAP LLC, and
HoldCo will assume certain related liabilities of Ashland;
(ii) the Marathon Parties will acquire HoldCo;
(iii) New Ashland Inc. will succeed to all the assets and
liabilities of Ashland (other than those transferred to or assumed by
HoldCo or any Marathon Party under this Agreement or any of the other
Transaction Agreements (as defined below)), including the proceeds of a
partial redemption of Ashland's interest in MAP; and
(iv) the issued and outstanding shares of Ashland common stock, par
value $1.00 per share, including the associated Ashland Rights (as
defined in Section 6.03(a)) (the "Ashland Common Stock"), will be
canceled and Ashland's shareholders will receive, with respect to each
share of Ashland Common Stock, one share of New Ashland Inc. Common Stock
(as defined in Section 14.02), to be issued by New Ashland Inc. in
consideration of the assets acquired by it in the Conversion Merger and
the benefits to be derived therefrom, and a number of shares of Marathon
common stock, par value $1.00 per share (the "Marathon Common Stock"), to
be determined as set forth in this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, certain of the parties hereto are entering into:
(i) an Assignment and Assumption Agreement providing for the
transfer of the Maleic Business to HoldCo and the assumption by HoldCo of
certain related liabilities (the "Maleic Agreement");
(ii) an Assignment and Assumption Agreement providing for the
transfer of the VIOC Centers to HoldCo and the assumption by HoldCo of
certain related liabilities (the "VIOC Agreement");
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(iii) a Tax Matters Agreement (the "Tax Matters Agreement"); and
(iv) Amendment No. 2 to the MAP LLC Agreement (as defined in Section
14.02) (the "MAP LLC Agreement Amendment" and, together with this
Agreement, the Maleic Agreement, the VIOC Agreement and the Tax Matters
Agreement, the "Transaction Agreements");
WHEREAS the Board of Directors of Ashland has unanimously: (i)
adopted and approved the Transaction Agreements, the Ancillary Agreements (as
defined in Section 6.04(a)) and the transactions contemplated thereby (the
"Transactions") and (ii) recommended that Ashland's shareholders approve the
Transaction Agreements and the Transactions;
WHEREAS the Board of Directors of Marathon has unanimously adopted
and approved the Transaction Agreements and the Ancillary Agreements and
approved the Transactions;
WHEREAS it is intended that the Transactions to be consummated on
the Closing Date will generally be Tax-free to the parties and their
respective shareholders for Federal income Tax purposes (as Tax is defined in
Section 14.02); and
WHEREAS the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Transactions and
also to prescribe various conditions to the Transactions.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Transactions and Closing
-------------------------
Upon the terms and subject to the conditions set forth herein, at
the Closing (as defined in Section 1.05), the parties shall consummate the MAP
Partial Redemption and each of the other Transactions set forth in Sections
1.02, 1.03 and 1.04 as follows. Subject to Section 9.10, the parties hereto
intend that none of the Transactions that this Article I contemplates will be
effected on the Closing
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Date (as defined in Section 1.05) shall be effective
unless all of such Transactions are effected on the Closing Date.
SECTION 1.01. MAP PARTIAL REDEMPTION. As part of the Transactions,
but prior to consummating the other Transactions set forth in Sections 1.02,
1.03 and 1.04, MAP shall redeem a portion of the 38% Membership Interest (as
defined in Section 14.02) owned by Ashland for a redemption price payable as
follows: (i) accounts receivable of MAP, each with a Federal income Tax basis
no less than its face amount, selected in accordance with the protocol set
forth in Exhibit A, with a total Value (as defined in Section 14.02) equal to
the product of (x) the Estimated MAP Partial Redemption Amount (as defined in
Section 14.02) and (y) the AR Fraction (as defined in Section 14.02) (such
product, the "AR Amount") (the "Distributed Receivables") and (ii) cash in an
amount equal to the Estimated MAP Partial Redemption Amount minus the AR
Amount (such difference, the "Cash Amount"), by wire transfer of immediately
available funds to an Ashland bank account which shall be designated in
writing by Ashland at least two business days prior to the Closing Date (the
"MAP Partial Redemption"). MAP shall increase the MAP Partial Redemption
Amount (as defined in Section 14.02) payable in the MAP Partial Redemption as
directed by Marathon if Marathon determines, in its sole judgment after giving
due consideration to the requirements of any potentially applicable fraudulent
transfer or conveyance Law, that the aggregate amount of the MAP Partial
Redemption Amount (before giving effect to such increase) and the Capital
Contribution (as defined in Section 1.03(b)) is not reasonably equivalent to
the aggregate value immediately prior to the consummation of the Transactions,
as determined by Marathon in its sole discretion, of (i) Ashland's Membership
Interest, (ii) the Maleic Business and (iii) the VIOC Centers. In the event
that Marathon makes the determination contemplated by the immediately
preceding sentence, any resulting increase in the MAP Partial Redemption
Amount shall be payable in any combination of cash and accounts receivable of
MAP as determined by Marathon. If at any time Marathon determines that it is
reasonably likely to direct MAP to increase the MAP Partial Redemption Amount
pursuant to the second sentence of this Section 1.01, Marathon shall provide
prompt notice of such determination to Ashland, including a good faith
estimate of any such increase.
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SECTION 1.02. MALEIC/VIOC CONTRIBUTION; MAP/LOOP/LOCAP CONTRIBUTION;
REORGANIZATION MERGER. Promptly following the consummation of the MAP Partial
Redemption pursuant to Section 1.01, and prior to consummating the
Transactions set forth in Sections 1.03 and 1.04, the parties shall consummate
each of the following Transactions:
(a) MALEIC/VIOC CONTRIBUTION. Ashland shall cause the transactions
contemplated by the Maleic Agreement and the VIOC Agreement, including the
contribution by Ashland to HoldCo of the Maleic Business and the VIOC Centers
and the assumption by HoldCo of certain related liabilities, to be consummated
in accordance with the Maleic Agreement and the VIOC Agreement (the
"Maleic/VIOC Contribution").
(b) MAP/LOOP/LOCAP CONTRIBUTION. Promptly following the consummation
of the Maleic/VIOC Contribution pursuant to Section 1.02(a), (i) Ashland shall
cause the MAP/LOOP/LOCAP Contribution Agreements (as defined in Section 14.02)
to be executed and delivered by the parties specified therein to be parties
thereto, and Ashland shall contribute to HoldCo Ashland's remaining Membership
Interest and, subject to Section 9.10, the Ashland LOOP/LOCAP Interest (as
defined in Section 14.02), and HoldCo shall assume certain related liabilities
and obligations, in accordance with the MAP/LOOP/LOCAP Contribution
Agreements, (ii) if Ashland has not been released from all liabilities,
obligations and commitments under the LOCAP T&D Agreement in accordance with
Section 9.03(g), Ashland shall cause the LOCAP T&D Assumption Agreement (as
defined in Section 14.02) to be executed and delivered by the parties
specified therein to be parties thereto and (iii) if Ashland has not been
released from all liabilities, obligations and commitments under the LOOP T&D
Agreement in accordance with Section 9.03(g), Ashland shall cause the LOOP T&D
Assumption Agreement (as defined in Section 14.02) to be executed and
delivered by the parties specified therein to be parties thereto
(collectively, the "MAP/LOOP/LOCAP Contribution").
(c) THE REORGANIZATION MERGER. Promptly following the consummation
of the MAP/LOOP/LOCAP Contribution pursuant to Section 1.02(b), Ashland shall,
pursuant to Article II and in accordance with the Kentucky
6
Business Corporation Act (the "KBCA") and the Kentucky Limited Liability
Company Act (the "KLLCA"), be merged with and into New Ashland LLC (the
"Reorganization Merger") at the Reorganization Merger Effective Time (as
defined in Section 2.02), which, if not the time of filing of the
Reorganization Articles of Merger (as defined in Section 2.02) in accordance
with Section 2.02, shall be a time mutually agreed upon by Ashland and
Marathon.
SECTION 1.03. HOLDCO BORROWING; CAPITAL CONTRIBUTION; CONVERSION
MERGER. Promptly following the consummation of the Maleic/VIOC Contribution,
the MAP/LOOP/LOCAP Contribution and the Reorganization Merger pursuant to
Section 1.02, the parties shall consummate each of the following Transactions:
(a) HOLDCO BORROWING. Promptly following the Reorganization Merger
Effective Time, the Marathon Parties shall cause the HoldCo Borrowing (as
defined in Section 14.02) to be advanced to HoldCo by one or more lenders that
are not affiliates of MAP, any Marathon Party or any Ashland Party ("Third
Party Lenders") and HoldCo shall accept the HoldCo Borrowing. If Marathon
guarantees or otherwise provides credit support for the HoldCo Borrowing,
Marathon and HoldCo shall enter into a reimbursement agreement (the
"Reimbursement Agreement"), pursuant to which HoldCo shall commit to pay a
guarantee fee to Marathon after the Closing and, if requested by Marathon
prior to the Closing Date, shall grant to Marathon on the Closing Date a
security interest in all the property and other assets (including the
Membership Interest) that HoldCo owns to secure its reimbursement obligations
to Marathon, to the fullest extent permitted by Contracts (as defined in
Section 6.05(a)) to which Ashland or any Ashland Subsidiary is a party or by
which any of their respective properties or assets is bound. Such security
interest shall be released (other than with respect to assets of the surviving
entity of the Acquisition Merger (as defined in Section 1.04(a)) at the
Acquisition Merger Effective Time (or, if earlier, upon the New Ashland Inc.
Share Issuance). The Reimbursement Agreement shall provide that: (i) the
guarantee fee shall be payable after Closing; and (ii) the reimbursement
obligations to Marathon shall not exceed the net amount of the HoldCo
Borrowing actually received by HoldCo.
7
(b) CAPITAL CONTRIBUTION. Promptly following the consummation of the
HoldCo Borrowing pursuant to Section 1.03(a), HoldCo shall contribute to New
Ashland LLC cash in the amount equal to the total amount of the HoldCo
Borrowing, by wire transfer of immediately available funds to a New Ashland
LLC bank account designated in writing by Ashland at least two business days
prior to the Closing Date (the "Capital Contribution").
(c) CONVERSION MERGER. Promptly following the consummation of the
Capital Contribution pursuant to Section 1.03(b), pursuant to Article III and
in accordance with the KLLCA and the KBCA, New Ashland LLC shall be merged
with and into New Ashland Inc. (the "Conversion Merger") at the Conversion
Merger Effective Time (as defined in Section 3.02), which, if not the time of
filing of the Conversion Articles of Merger (as defined in Section 3.02) in
accordance with Section 3.02, shall be a time mutually agreed upon by Ashland
and Marathon.
SECTION 1.04. ACQUISITION MERGER; DISTRIBUTION. (a) Promptly
following the Conversion Merger Effective Time, pursuant to Article IV and in
accordance with the Delaware General Corporation Law (the "DGCL") and the
Delaware Limited Liability Company Act (the "DLLCA"), HoldCo shall be merged
with and into Merger Sub (the "Acquisition Merger") at the Acquisition Merger
Effective Time.
(b) In the event that the Private Letter Rulings (as defined in
Section 10.01(f)) do not provide that the Acquisition Merger will be treated
as a distribution by HoldCo of all the stock of New Ashland Inc. under Section
355 of the Internal Revenue Code of 1986, as amended (the "Code"), followed by
a merger of HoldCo into Merger Sub, then the parties hereto shall execute an
appropriate amendment to this Agreement to provide that the New Ashland Inc.
Share Issuance (as defined in Section 6.05(b)) shall not be effected as part
of the Acquisition Merger but instead the shares of New Ashland Inc. to be
issued thereunder shall be issued to HoldCo as part of the Conversion Merger,
followed by the distribution thereof by HoldCo to the holders of HoldCo Common
Stock (as defined in Section 2.04(a)(i)), on the basis of one share of New
Ashland Inc. Common Stock for each outstanding share of HoldCo Common Stock,
immediately prior to the Acquisition Merger.
8
SECTION 1.05. CLOSING. The closing of the Transactions (the
"Closing") shall take place at the offices of MAP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (Eastern time) on the last business day of
the calendar month in which the last to be satisfied (or, to the extent
permitted by Law (as defined in Section 6.05(a)), waived by the parties
entitled to the benefits thereof) of the conditions set forth in Article X
(other than those conditions that by their nature are to be satisfied on the
Closing Date, but subject to the satisfaction or waiver of those conditions)
has been so satisfied or waived, or, if the last such condition is satisfied
or waived on one of the last two business days of a calendar month, on the
last business day of the following calendar month, or at such other place,
time and date as shall be agreed in writing between Ashland and Marathon. The
date on which the Closing occurs is referred to in this Agreement as the
"Closing Date". If Ashland and Marathon agree that the Closing is expected to
occur on December 31, 2004, the parties shall use their reasonable best
efforts to agree on closing mechanics to effect the Transactions on such date,
which may include: (i) the filing of the Reorganization Articles of Merger,
the Conversion Articles of Merger and the Acquisition Certificate of Merger
prior to December 31, 2004, in each case specifying an effective time on
December 31, 2004 and (ii) advancement of the HoldCo Borrowing to an escrow
account for the benefit of HoldCo at a pre-closing prior to December 31, 2004
to ensure that the proceeds of the Capital Contribution will be available to
New Ashland Inc. on the Closing Date for consummation of the tender offer
and/or consent solicitation contemplated by Section 9.03(b).
SECTION 1.06. POST-CLOSING TRUE-UP. Within 90 days after the Closing
Date (subject to extension with the prior written consent of New Ashland Inc.,
such consent not to be unreasonably withheld), MAP shall prepare and deliver
to Ashland a statement setting forth the MAP Partial Redemption Amount. If the
MAP Partial Redemption Amount exceeds the Estimated MAP Partial Redemption
Amount, MAP shall, and if the Estimated MAP Partial Redemption Amount exceeds
the MAP Partial Redemption Amount, New Ashland Inc. shall, make payment to the
other party of the amount of such excess, together with interest thereon at a
rate equal to the rate of interest from time to time
9
announced publicly by Citibank, N.A., as its prime rate, calculated on the
basis of the actual number of days elapsed divided by 365, from the Closing
Date to the date of payment. Payment by MAP to New Ashland Inc. under this
Section 1.06 shall be in an amount of cash and accounts receivable of MAP
(such accounts receivable to be selected in accordance with the protocol set
forth in Exhibit A) within 30 days of the determination by MAP of the MAP
Partial Redemption Amount. The total Value of the accounts receivable payable
by MAP under this Section 1.06 shall equal the product of (i) the total amount
of the payment owed by MAP to New Ashland Inc. under this Section 1.06 and
(ii) the AR Fraction. Payment made by New Ashland Inc. to MAP under this
Section 1.06 shall be made in cash within 30 days after receipt by New Ashland
Inc. of the statement setting forth the MAP Partial Redemption Amount. All
cash payments under this Section 1.06 shall be made by wire transfer in
immediately available funds to an Ashland bank account or a MAP bank account,
as applicable, which shall be designated in writing by Ashland or MAP, as
applicable, at least two business days prior to the date for such payment.
ARTICLE II
THE REORGANIZATION MERGER
-------------------------
SECTION 2.01. PARTIES TO THE REORGANIZATION MERGER. The names of the
constituent business entities that are parties to the Reorganization Merger
are Ashland Inc. (referred to herein as "Ashland") and EXM LLC (referred to
herein as "New Ashland LLC"). Upon the terms and subject to the conditions set
forth herein, at the Reorganization Merger Effective Time, Ashland shall merge
with and into New Ashland LLC, the separate corporate existence of Ashland
shall cease and New Ashland LLC shall be the surviving business entity of the
Reorganization Merger. The name of the surviving business entity of the
Reorganization Merger shall be EXM LLC.
SECTION 2.02 REORGANIZATION MERGER EFFECTIVE TIME. Prior to the
Closing, Ashland shall prepare, and on the Closing Date, New Ashland LLC shall
file with the Secretary of State of the Commonwealth of Kentucky, articles of
merger or other appropriate documents (in any
10
such case, the "Reorganization Articles of Merger") executed in accordance
with the relevant provisions of the KBCA and the KLLCA and shall make all
other filings or recordings required under the KBCA and the KLLCA. The
Reorganization Merger shall become effective at such time as the
Reorganization Articles of Merger are duly filed with such Secretary of State,
or at such later time on the Closing Date as specified in the Reorganization
Articles of Merger (the time the Reorganization Merger becomes effective being
the "Reorganization Merger Effective Time").
SECTION 2.03. EFFECTS. The Reorganization Merger shall have the
effects set forth in KRS 271B.11-060 of the KBCA and KRS 275.365 of the KLLCA.
Without limiting the generality of the foregoing, and subject thereto, at the
Reorganization Merger Effective Time, all the properties, rights, privileges
and powers of Ashland immediately prior to the Reorganization Merger Effective
Time shall rest in New Ashland LLC, and all debts, liabilities, obligations
and duties of Ashland immediately prior to the Reorganization Merger Effective
Time shall become the debts, liabilities, obligations and duties of New
Ashland LLC.
SECTION 2.04. CONVERSION OF ASHLAND SECURITIES. (a) At the
Reorganization Merger Effective Time, by virtue of the Reorganization Merger
and without any action on the part of any holder of any shares of Ashland
Common Stock or any limited liability company interests in New Ashland LLC
("New Ashland LLC Interests"):
(i) subject to Section 2.05, each share of Ashland Common Stock
issued and outstanding immediately prior to the Reorganization Merger
Effective Time shall be converted into and thereafter represent one duly
issued, fully paid and nonassessable share of common stock, par value
$1.00 per share, of HoldCo (the "HoldCo Common Stock") (the
"Reorganization Merger Consideration"); and
(ii) all New Ashland LLC Interests shall remain outstanding without
change.
(b) As of the Reorganization Merger Effective Time, all shares of
Ashland Common Stock shall no longer be
11
outstanding, shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate formerly evidencing shares of Ashland
Common Stock shall, subject to Section 2.05, cease to have any rights with
respect thereto except the right to receive the number of shares of HoldCo
Common Stock into which such shares of Ashland Common Stock were converted
pursuant to the provisions of Section 2.04(a) hereof.
(c) The Reorganization Merger Consideration issued (and paid) upon
conversion of any shares of Ashland Common Stock in accordance with the terms
of this Article II shall be deemed to have been issued (and paid) at the
Reorganization Merger Effective Time in full satisfaction of all rights
pertaining to such shares of Ashland Common Stock, and after the
Reorganization Merger Effective Time there shall be no further registration of
transfers on the stock transfer books of the business entity surviving the
Reorganization Merger, New Ashland LLC, of shares of Ashland Common Stock that
were outstanding immediately prior to the Reorganization Merger Effective
Time.
SECTION 2.05. DISSENTERS' RIGHTS. Notwithstanding anything in this
Agreement to the contrary, shares of Ashland Common Stock that are outstanding
immediately prior to the Reorganization Merger Effective Time and that are
held by any person who is entitled to demand and properly demands payment of
the fair value of such shares ("Dissenters' Shares") pursuant to, and who
complies in all respects with, Subtitle 13 of the KBCA ("Subtitle 13") shall
not be converted into Reorganization Merger Consideration as provided in
Section 2.04(a), but rather the holders of Dissenters' Shares shall be
entitled to payment of the fair value of such Dissenters' Shares in accordance
with Subtitle 13; provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to receive
payment of fair value under Subtitle 13, then the right of such holder to be
paid the fair value of such holder's Dissenters' Shares shall cease and such
Dissenters' Shares shall be deemed to have been converted as of the
Reorganization Merger Effective Time into, and to have become exchangeable
solely for, Reorganization Merger Consideration as provided in Section
2.04(a).
12
SECTION 2.06. LIMITED LIABILITY. Limited liability shall be retained
with respect to the business entity surviving the Reorganization Merger, New
Ashland LLC.
SECTION 2.07. ARTICLES OF ORGANIZATION. No changes to the Articles
of Organization of New Ashland LLC shall be effected by the Reorganization
Merger.
SECTION 2.08. OPERATING AGREEMENT. The operating agreement of New
Ashland LLC as in effect immediately prior to the Reorganization Merger
Effective Time shall be the operating agreement of the business entity
surviving the Reorganization Merger, New Ashland LLC, until thereafter changed
or amended as provided therein or by applicable Law.
SECTION 2.09. REORGANIZATION PLAN OF MERGER. The provisions
contained in Sections 2.01 through 2.08 constitute the "plan of merger", as
that term is used in KRS 271B.11-010 and KRS 271B.11-080 of the KBCA and KRS
275.355 of the KLLCA, for the Reorganization Merger (the "Reorganization Plan
of Merger"). The adoption of this Agreement by the Board of Directors of
Ashland (the "Ashland Board") constitutes the adoption, and the approval of
this Agreement by the shareholders of Ashland will constitute the approval, of
the Reorganization Plan of Merger by Ashland as required by KRS 271B.11-030.
The approval of this Agreement by HoldCo, as the sole member of New Ashland
LLC, constitutes the approval of the Reorganization Plan of Merger by New
Ashland LLC as required by KRS 275.350.
ARTICLE III
THE CONVERSION MERGER
---------------------
SECTION 3.01. PARTIES TO THE CONVERSION MERGER. The names of the
constituent business entities that are parties to the Conversion Merger are EXM
LLC (referred to herein as "New Ashland LLC") and New EXM Inc. (referred to
herein as "New Ashland Inc."). Upon the terms and subject to the conditions
set forth herein, at the Conversion Merger Effective Time, New Ashland LLC
shall merge with and into New Ashland Inc., the separate existence of New
13
Ashland LLC shall cease and New Ashland Inc. will be the surviving business
entity of the Conversion Merger. Pursuant to the amendment referred to in
Section 3.06(a), the name of the surviving business entity of the Conversion
Merger shall be changed to Ashland Inc.
SECTION 3.02. CONVERSION MERGER EFFECTIVE TIME. Prior to the
Closing, Ashland shall prepare, and on the Closing Date, New Ashland Inc.
shall file with the Secretary of State of the Commonwealth of Kentucky,
articles of merger or other appropriate documents (in any such case, the
"Conversion Articles of Merger") executed in accordance with the relevant
provisions of the KLLCA and the KBCA and shall make all other filings or
recordings required under the KLLCA and the KBCA. The Conversion Merger shall
become effective at such time as the Conversion Articles of Merger are duly
filed with such Secretary of State, or at such later time on the Closing Date
as specified in the Conversion Articles of Merger (the time the Conversion
Merger becomes effective being the "Conversion Merger Effective Time").
SECTION 3.03. EFFECTS. The Conversion Merger shall have the effects
set forth in KRS 271B.11-060 of the KBCA and KRS 275.365 of the KLLCA. Without
limiting the generality of the foregoing, and subject thereto, at the
Conversion Merger Effective Time, all the properties, rights, privileges and
powers of New Ashland LLC immediately prior to the Conversion Merger Effective
Time shall rest in New Ashland Inc., and all debts, liabilities, obligations
and duties of New Ashland LLC immediately prior to the Conversion Merger
Effective Time shall become the debts, liabilities, obligations and duties of
New Ashland Inc.
SECTION 3.04. CONVERSION OF NEW ASHLAND SECURITIES. At the
Conversion Merger Effective Time, by virtue of the Conversion Merger and
without any action on the part of HoldCo:
(i) all New Ashland LLC Interests issued and outstanding immediately
prior to the Conversion Merger Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor; and
14
(ii) each share of New Ashland Inc. Common Stock issued and
outstanding immediately prior to the Conversion Merger Effective Time
shall remain outstanding without change.
SECTION 3.05. LIMITED LIABILITY. Limited liability shall be retained
with respect to the business entity surviving the Conversion Merger, New
Ashland Inc.
SECTION 3.06. ARTICLES OF INCORPORATION AND BY-LAWS. (a) At the
Conversion Merger Effective Time, the articles of incorporation of New Ashland
Inc. shall be amended as set out in Exhibit B, and, as so amended, such
articles of incorporation shall be the articles of incorporation of the
business entity surviving the Conversion Merger, New Ashland Inc., until
thereafter changed or amended as provided therein or by applicable Law.
(b) The by-laws of New Ashland Inc. as in effect immediately prior
to the Conversion Merger Effective Time shall be the by-laws of the
business entity surviving the Conversion Merger, New Ashland Inc., until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 3.07. DIRECTORS. The directors of New Ashland Inc.
immediately prior to the Conversion Merger Effective Time shall be the
directors of the business entity surviving the Conversion Merger, New Ashland
Inc., until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 3.08. OFFICERS. The officers of New Ashland Inc. immediately
prior to the Conversion Merger Effective Time shall be the officers of the
business entity surviving the Conversion Merger, New Ashland Inc., until the
earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
SECTION 3.09. CONVERSION PLAN OF MERGER. The provisions contained in
Sections 3.01 through 3.08 constitute the "plan of merger", as that term is
used in KRS 271B.11-010 and KRS 271B.11-080 of the KBCA and KRS 275.355 of the
KLLCA, for the Conversion Merger (the
15
"Conversion Plan of Merger"). The adoption of this Agreement by the Board of
Directors of New Ashland Inc. (the "New Ashland Board") constitutes the
adoption, and the approval of this Agreement by HoldCo, as the sole
shareholder of New Ashland Inc., constitutes the approval, of the Conversion
Plan of Merger by New Ashland Inc. as required by KRS 271B.11-030 of the KBCA.
The approval of this Agreement by HoldCo, as the sole member of New Ashland
LLC, constitutes the approval of the Conversion Plan of Merger by New Ashland
LLC as required by KRS 275.350 of the KLLCA.
ARTICLE IV
THE ACQUISITION MERGER
----------------------
SECTION 4.01. ACQUISITION MERGER; ACQUISITION MERGER EFFECTIVE TIME.
Upon the terms and subject to the conditions set forth herein, at the
Acquisition Merger Effective Time, HoldCo shall be merged with and into Merger
Sub, the separate corporate existence of HoldCo shall cease and Merger Sub
shall be the surviving business entity of the Acquisition Merger. Prior to the
Closing, Ashland and Marathon shall jointly prepare, and on the Closing Date,
Merger Sub shall file with the Secretary of State of the State of Delaware, a
certificate of merger or other appropriate documents (in any such case, the
"Acquisition Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and the DLLCA and shall make all other filings or
recordings required under the DGCL and the DLLCA. The Acquisition Merger shall
become effective at such time as the Acquisition Certificate of Merger is duly
filed with such Secretary of State, or at such later time on the Closing Date
as Ashland and Marathon shall agree and specify in the Acquisition Certificate
of Merger (the time the Acquisition Merger becomes effective being the
"Acquisition Merger Effective Time").
SECTION 4.02. EFFECTS. The Acquisition Merger shall have the effects
set forth in Section 18-209(g) of the DLLCA. Without limiting the generality
of the foregoing, and subject thereto, at the Acquisition Merger Effective
Time, all the properties, rights, privileges and powers of HoldCo immediately
prior to the Acquisition Merger Effective Time shall vest in Merger Sub, and
all
16
debts, liabilities, obligations and duties of HoldCo immediately prior to the
Acquisition Merger Effective Time shall become the debts, liabilities,
obligations and duties of Merger Sub.
SECTION 4.03. EFFECT ON CAPITAL STOCK. (a) At the Acquisition Merger
Effective Time, by virtue of the Acquisition Merger and without any action on
the part of the holder of any shares of HoldCo Common Stock or any membership
interests in Merger Sub:
(i) subject to Section 5.01(e), each issued and outstanding share of
HoldCo Common Stock shall be converted into the right to receive (x) one
duly issued, fully paid and nonassessable share of New Ashland Inc.
Common Stock and (y) a number of duly issued, fully paid and
nonassessable shares of Marathon Common Stock equal to the Exchange Ratio
(as defined in Section 4.03(b));
(ii) all of the limited liability company interests in Merger Sub
issued and outstanding immediately prior to the Acquisition Merger
Effective Time shall remain outstanding without change; and
(iii) each share of New Ashland Inc. Common Stock held by HoldCo
immediately prior to the Acquisition Merger Effective Time shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(b) The shares of New Ashland Inc. Common Stock and Marathon Common
Stock to be issued upon the conversion of shares of HoldCo Common Stock
pursuant to Section 4.03(a)(i) and cash in lieu of fractional shares of
Marathon Common Stock as contemplated by Section 5.01(e) are referred to
collectively as "Acquisition Merger Consideration". As of the Acquisition
Merger Effective Time, all such shares of HoldCo Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate formerly representing the right to
receive any such shares of HoldCo Common Stock pursuant to Section 2.04(b)
shall cease to have any rights with respect
17
thereto, except the right to receive, upon surrender of such certificate in
accordance with Section 5.01, the Acquisition Merger Consideration, without
interest. "Exchange Ratio" means $315,000,000 divided by the product of (x)
the Fair Market Value and (y) the total number of shares of Ashland Common
Stock issued and outstanding immediately prior to the Reorganization Merger
Effective Time. "Fair Market Value" means an amount equal to the average of
the closing sale prices per share for the Marathon Common Stock on the New
York Stock Exchange (the "NYSE"), as reported in The Wall Street Journal,
Northeastern edition, for each of the twenty consecutive trading days ending
with the third complete trading day prior to the Closing Date (not counting
the Closing Date) (the "Averaging Period"). Notwithstanding the foregoing, if
the Board of Directors of Marathon (the "Marathon Board") declares a dividend
on the outstanding shares of Marathon Common Stock having a record date before
the Closing Date but an ex- dividend date (based on "regular way" trading on
the NYSE of shares of Marathon Common Stock) (the "Ex-Date") that occurs after
the first trading day of the Averaging Period, then for purposes of computing
the Fair Market Value, the closing price on any trading day before the Ex-Date
will be adjusted by subtracting therefrom the amount of such dividend. For
purposes of the immediately preceding sentence, the amount of any noncash
dividend will be the fair market value thereof on the payment date for such
dividend as determined in good faith by mutual agreement of Ashland and
Marathon.
(c) If, prior to the Acquisition Merger Effective Time, the
outstanding shares of Marathon Common Stock shall have been reclassified or
changed into, or exchanged for, securities other than Marathon Common Stock
(including as a result of a merger), then, notwithstanding Section 4.03(a)(i)
but subject to Section 5.01(e), each issued and outstanding share of HoldCo
Common Stock shall be converted into the right to receive such other
securities with the exchange ratio determined in accordance with Section
4.03(b), subject to such appropriate adjustments as shall be determined in
good faith by mutual agreement of Ashland and Marathon.
(d) If, after the first trading day of the Averaging Period and
prior to the Acquisition Merger Effective Time, the outstanding shares of
Marathon Common
18
Stock shall have been increased, decreased, changed into or exchanged for a
different number of shares of Marathon Common Stock in any case as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, combination or exchange of shares or other similar
change in capitalization, then an appropriate and proportionate adjustment
shall be made to the Exchange Ratio.
SECTION 4.04. LIMITED LIABILITY COMPANY AGREEMENT. The limited
liability company agreement of Merger Sub as in effect immediately prior to
the Acquisition Merger Effective Time shall be the limited liability company
agreement of the business entity surviving the Acquisition Merger, Merger Sub,
until thereafter changed or amended as provided therein or by applicable Law.
SECTION 4.05. TAX TREATMENT. The parties intend that (a) the
Acquisition Merger will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and the rules and regulations promulgated
thereunder, (b) HoldCo and Marathon will each be a "party" to such
reorganization within the meaning of Section 368(b) of the Code and (c) this
Agreement is intended to constitute a "plan of reorganization" for U.S.
Federal income Tax purposes.
ARTICLE V
EXCHANGE OF HOLDCO CERTIFICATES
-------------------------------
SECTION 5.01. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. (i)
Promptly following the Acquisition Merger, New Ashland Inc. shall issue and
deposit with an exchange agent designated by Ashland and reasonably acceptable
to Marathon (the "Exchange Agent"), for the benefit of the holders of shares
of HoldCo Common Stock, for exchange in accordance with this Article V,
through the Exchange Agent, certificates representing the shares of New
Ashland Inc. Common Stock issuable pursuant to Section 4.03 in exchange for
outstanding shares of HoldCo Common Stock. New Ashland Inc. shall provide to
the Exchange Agent following the Acquisition Merger Effective Time all the
cash necessary to pay any dividends or other
19
distributions with respect to New Ashland Inc. Common Stock in accordance with
Section 5.01(c)(i).
(ii) Promptly following the Acquisition Merger Effective Time,
Marathon shall issue and deposit with the Exchange Agent, for the benefit
of the holders of shares of HoldCo Common Stock, for exchange in
accordance with this Article V, through the Exchange Agent, certificates
representing a number of shares of Marathon Common Stock equal to the
product of (x) the total number of shares of Ashland Common Stock issued
and outstanding immediately prior to the Reorganization Merger Effective
Time and (y) the Exchange Ratio, rounded up to the nearest whole share.
Marathon shall provide to the Exchange Agent (or, following the
termination of the Exchange Fund pursuant to Section 5.01(f), to New
Ashland Inc. so long as it is the record holder on the applicable record
date of shares of Marathon Common Stock delivered to New Ashland Inc.
upon such termination) following the Acquisition Merger Effective Time
all the cash necessary to pay any dividends or other distributions in
accordance with Section 5.01(c)(ii) (the shares of New Ashland Inc.
Common Stock, together with the cash provided to pay any dividends or
distributions with respect thereto, and the shares of Marathon Common
Stock, together with the cash provided to pay any dividends or
distributions with respect thereto, deposited with the Exchange Agent
being hereinafter referred to as the "Exchange Fund"). For the purposes
of such deposit, Marathon shall assume that there will not be any
fractional shares of Marathon Common Stock.
(iii) The Exchange Agent shall, pursuant to irrevocable instructions
delivered by New Ashland Inc. and Marathon, deliver the New Ashland Inc.
Common Stock and the Marathon Common Stock contemplated to be issued
pursuant to Section 4.03 and this Article V out of the Exchange Fund. The
Exchange Fund shall not be used for any other purpose.
20
(b) EXCHANGE PROCEDURES. As promptly as reasonably practicable after
the Acquisition Merger Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates (each, a "Certificate") that
immediately prior to the Reorganization Merger Effective Time represented
outstanding shares of Ashland Common Stock (other than holders of Dissenters'
Shares), (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificate or Certificates
shall pass, only upon delivery of the Certificate or Certificates to the
Exchange Agent and shall be in such form and have such other provisions as New
Ashland Inc. and Marathon may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificate or Certificates in exchange
for Acquisition Merger Consideration. Upon surrender of a Certificate or
Certificates for cancelation to the Exchange Agent or, following termination
of the Exchange Fund pursuant to Section 5.01(f), New Ashland Inc., together
with such letter of transmittal, duly executed and completed in accordance
with the instructions thereto, and such other documents as may reasonably be
required by the Exchange Agent or New Ashland Inc., as applicable, the holder
of such Certificate or Certificates shall be entitled to receive in exchange
therefor (i) a certificate or certificates representing the number of shares
of New Ashland Inc. Common Stock that such holder has the right to receive
pursuant to the provisions of Section 4.03 and this Article V, (ii) a
certificate or certificates representing that number of whole shares of
Marathon Common Stock that such holder has the right to receive pursuant to
the provisions of Section 4.03 and this Article V, (iii) cash in lieu of
fractional shares of Marathon Common Stock that such holder has the right to
receive pursuant to Section 5.01(e) and (iv) any dividends or other
distributions such holder has the right to receive pursuant to Section
5.01(c), and the Certificate or Certificates so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Ashland Common Stock or
HoldCo Common Stock that is not registered in the transfer records of Ashland
or HoldCo, (i) a certificate or certificates representing the appropriate
number of shares of New Ashland Inc. Common Stock and (ii) a certificate or
certificates representing the appropriate number of shares of Marathon Common
Stock, together with a check for cash to be paid in lieu of fractional shares,
may be issued and
21
paid to a person other than the person in whose name the Certificate or
Certificates so surrendered is registered, if such Certificate or Certificates
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance and payment shall pay any transfer or other
Taxes required by reason of the issuance of shares of New Ashland Inc. Common
Stock and Marathon Common Stock to a person other than the registered holder
of such Certificate or Certificates or establish to the satisfaction of New
Ashland Inc. that such Tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 5.01, each Certificate shall be
deemed at any time after the Acquisition Merger Effective Time to represent
only the right to receive upon such surrender Acquisition Merger Consideration
as contemplated by this Section 5.01. No interest shall be paid or accrue on
any cash in lieu of fractional shares or accrued and unpaid dividends or
distributions, if any, payable upon surrender of any Certificate.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. (i) No
dividends or other distributions with respect to shares of New Ashland Inc.
Common Stock with a record date on or after the Closing Date shall be paid to
the holder of any Certificate with respect to the shares of New Ashland Inc.
Common Stock issuable upon surrender of such Certificate until the surrender
of such Certificate in accordance with this Article V. Subject to applicable
Law, following surrender of any such Certificate, there shall be paid to the
holder of the certificate representing shares of New Ashland Inc. Common Stock
issued in exchange therefor, without interest, (A) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Closing Date theretofore paid with respect to such shares of New
Ashland Inc. Common Stock, and (B) at the appropriate payment date, the amount
of dividends or other distributions with a record date on or after the Closing
Date but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of New Ashland Inc. Common
Stock.
(ii) No dividends or other distributions with respect to shares of
Marathon Common Stock with a record date on or after the Closing Date
shall be paid to the holder of any Certificate with respect to the shares
of Marathon Common
22
Stock issuable upon surrender thereof, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
5.01(e), until the surrender of such Certificate in accordance with this
Article V. Subject to applicable Law, following surrender of any such
Certificate, there shall be paid to the holder of the certificate representing
whole shares of Marathon Common Stock issued in exchange therefor, without
interest, (A) at the time of such surrender, the amount of any cash payable in
lieu of a fractional share of Marathon Common Stock to which such holder is
entitled pursuant to Section 5.01(e) and the amount of dividends or other
distributions with a record date on or after the Closing Date theretofore paid
with respect to such whole shares of Marathon Common Stock and (B) at the
appropriate payment date, the amount of dividends or other distributions with
a record date on or after the Closing Date but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such whole
shares of Marathon Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN HOLDCO COMMON STOCK. The
Acquisition Merger Consideration issued (and paid) upon conversion of any
shares of HoldCo Common Stock in accordance with the terms of this Article V
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to such shares of HoldCo Common Stock, and after the
Acquisition Merger Effective Time there shall be no further registration of
transfers on the stock transfer books of the business entity surviving the
Acquisition Merger, Merger Sub, of shares of HoldCo Common Stock that were
outstanding immediately prior to the Acquisition Merger Effective Time. If,
after the Acquisition Merger Effective Time, any Certificates are presented to
New Ashland Inc. or the Exchange Agent for any reason, they shall be canceled
and exchanged as provided in this Article V except as otherwise provided by
applicable Law. Unless Marathon otherwise consents, the Acquisition Merger
Consideration shall not be issued to any person who is an "affiliate" of
Ashland for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), on the date of the Ashland Shareholders Meeting, as
23
determined from representations contained in the letters of transmittal to be
delivered by former holders of shares of Ashland Common Stock pursuant to the
provisions of Section 5.01(b) (a "Rule 145 Affiliate"), until Marathon has
received a written agreement from such Rule 145 Affiliate substantially in the
form attached hereto as Exhibit C; provided, however, that Marathon shall be
solely responsible for any Losses (as defined in Section 13.01(a)) of any of
the Ashland Parties and their respective affiliates and Representatives (in
each case other than such Rule 145 Affiliate) to the extent resulting from,
arising out of, or relating to, directly or indirectly, any refusal by
Marathon to consent to the issuance of Acquisition Merger Consideration to any
such Rule 145 Affiliate pursuant to this sentence.
(e) NO FRACTIONAL SHARES. (i) No certificates or scrip representing
fractional shares of Marathon Common Stock shall be issued upon the conversion
of HoldCo Common Stock pursuant to Section 4.03, and such fractional share
interests shall not entitle the owner thereof to vote or to any rights of a
holder of Marathon Common Stock. For purposes of this Section 5.01(e), all
fractional shares to which a single record holder would be entitled shall be
aggregated and calculations shall be rounded to three decimal places.
Notwithstanding any other provision of this Agreement, each holder of
Certificates who otherwise would be entitled to receive a fraction of a share
of Marathon Common Stock (determined after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to the product of such fractional part
of a share of Marathon Common Stock multiplied by the Fair Market Value.
(ii) As promptly as practicable following the Acquisition Merger
Effective Time, the Exchange Agent shall determine the excess of (A) the
number of shares of Marathon Common Stock delivered to the Exchange Agent
by Marathon pursuant to Section 5.01(a) over (B) the aggregate number of
whole shares of Marathon Common Stock to be issued to holders of HoldCo
Common Stock pursuant to Section 5.01(b) (such excess being herein called
the "Excess Shares"). As promptly as practicable after such
determination, Marathon shall deposit an amount
24
into the Exchange Fund equal to the product of the number of Excess Shares
multiplied by the Fair Market Value, and the Exchange Agent shall return
certificates representing such Excess Shares to Marathon.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to the holders of Certificates for six months after
the Acquisition Merger Effective Time shall be delivered to or in accordance
with the instructions of New Ashland Inc., upon demand, and any holder of a
Certificate who has not theretofore complied with this Article V shall
thereafter look only to New Ashland Inc. for payment of its claim for
Acquisition Merger Consideration and any dividends or distributions with
respect to New Ashland Inc. Common Stock or Marathon Common Stock, as
applicable, as contemplated by Section 5.01(c).
(g) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by New Ashland Inc., the execution of an indemnity reasonably
satisfactory to New Ashland Inc. (and, if required by New Ashland Inc., the
posting by such person of a bond in such reasonable amount as New Ashland Inc.
may direct, as indemnity) against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will deliver in exchange for
such lost, stolen or destroyed Certificate the applicable Acquisition Merger
Consideration with respect to the shares of HoldCo Common Stock formerly
represented thereby, and any dividends or other distributions such holder has
the right to receive in respect thereof, pursuant to this Agreement.
(h) WITHHOLDING RIGHTS. Each of New Ashland Inc. and Marathon shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates and any holder of
Dissenters' Shares such amounts as may be required to be deducted and withheld
by New Ashland Inc. or Marathon, as applicable, with respect to the making of
such payment under the Code or under any provision of state, local or foreign
Tax Law. To the extent that amounts are so withheld and paid over to the
appropriate Tax Authority (as defined in Section 14.02), New Ashland Inc. or
Marathon, as
25
applicable, will be treated as though it withheld an appropriate amount of the
type of consideration otherwise payable pursuant to this Agreement to any
holder of Certificates or Dissenters' Shares, sold such consideration for an
amount of cash equal to the fair market value of such consideration at the
time of such deemed sale and paid such cash proceeds to the appropriate Tax
Authority. Such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares represented by the
Certificates or Dissenters' Shares, as the case may be, in respect of which
such deduction and withholding was made.
(i) NO LIABILITY. None of the Ashland Parties, the Marathon Parties
or the Exchange Agent shall be liable to any person in respect of any shares
of New Ashland Inc. Common Stock (or dividends or distributions with respect
thereto), Marathon Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law. If any
Certificate has not been surrendered prior to five years after the Acquisition
Merger Effective Time (or immediately prior to such earlier date on which
Acquisition Merger Consideration or any dividends or distributions with
respect to New Ashland Inc. Common Stock or Marathon Common Stock as
contemplated by Section 5.01(c) in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 6.05(b))), any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable Law,
become the property of New Ashland Inc., free and clear of all claims or
interest of any person previously entitled thereto.
(j) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by New Ashland Inc., on a
daily basis. Any interest and other income resulting from such investments
shall be paid to New Ashland Inc.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE ASHLAND PARTIES
------------------------------
Ashland and New Ashland Inc., jointly and severally, represent and
warrant to the Marathon Parties that, as of the date of this Agreement and as
of the Closing Date as if made on the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date), except as set forth in the disclosure letter,
dated as of the date of this Agreement, from Ashland to Marathon (the "Ashland
Disclosure Letter"); provided, however, that no item contained in any section
of the Ashland Disclosure Letter shall be deemed to qualify, or disclose any
exception to, any representation or warranty made in the last sentence of
Section 6.03(e) or in Sections 6.04 or 6.11:
SECTION 6.01. ORGANIZATION, STANDING AND POWER. Ashland is duly
organized, validly existing and in good standing under the Laws of the
Commonwealth of Kentucky and has full corporate power and authority to own,
lease and otherwise hold its properties and to conduct its businesses as
presently conducted. Each Significant Ashland Subsidiary (as defined in this
Section 6.01) is duly organized, validly existing and, to the extent such
concept or a similar concept exists in the relevant jurisdiction, in good
standing under the Laws of the jurisdiction in which it is organized and has
full corporate or other entity power and authority to own, lease or otherwise
hold its properties and to conduct its businesses as presently conducted. Each
of Ashland and each Significant Ashland Subsidiary is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction where
the nature of its business or its ownership or leasing of its properties makes
such qualification necessary, except in such jurisdictions where the failure
to be so qualified or in good standing has not had and would not reasonably be
expected to have an Ashland Material Adverse Effect (as defined in Section
6.05(a)). Ashland has provided to Marathon true and complete copies of the
articles of incorporation of Ashland, as amended to the date of this Agreement
(as so amended, the "Ashland Charter"), and the by-laws of Ashland, as amended
to the date of this
27
Agreement (as so amended, the "Ashland By- laws"), and the comparable charter
and organizational documents of each Significant Ashland Subsidiary, in each
case as amended to the date of this Agreement. For purposes of this Agreement,
a "Significant Ashland Subsidiary" means New Ashland LLC, New Ashland Inc.,
any subsidiary of Ashland that constitutes a significant subsidiary within the
meaning of Rule 1-02 of Regulation S-X of the SEC and, prior to the
Acquisition Merger Effective Time, HoldCo.
SECTION 6.02. ASHLAND SUBSIDIARIES; EQUITY INTERESTS. (a) All the
outstanding shares of capital stock of, or other equity interests in, each
Significant Ashland Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable and are as of the date of this Agreement
owned by Ashland, by another subsidiary of Ashland (an "Ashland Subsidiary")
or by Ashland and another Ashland Subsidiary, free and clear of all pledges,
liens, charges, mortgages, security interests, encumbrances and adverse claims
of any kind or nature whatsoever (collectively, "Liens").
(b) Each of HoldCo, New Ashland LLC and New Ashland Inc., since the
date of its formation, has not carried on any business or conducted any
operations other than the execution of this Agreement, the other Transaction
Agreements and the Ancillary Agreements to which it is a party, the
performance of its obligations hereunder and thereunder and matters ancillary
thereto. Except for any indebtedness for borrowed money and other liabilities
assumed by HoldCo pursuant to the Transaction Agreements or the Ancillary
Agreements, and except as otherwise expressly contemplated by the Transaction
Agreements or the Ancillary Agreements, immediately prior to the Acquisition
Merger, HoldCo will not have any indebtedness for borrowed money or any other
liabilities (whether accrued, absolute, liquidated, unliquidated, fixed,
contingent, disputed, undisputed, legal or equitable).
SECTION 6.03. CAPITAL STRUCTURE. (a) The authorized capital stock of
Ashland consists of 300,000,000 shares of Common Stock and 30,000,000 shares
of Cumulative Preferred Stock ("Ashland Preferred Stock" and, together with
the Ashland Common Stock, the "Ashland Capital Stock"). At the close of
business on February 29, 2004, (i) 69,599,791 shares of Ashland Common Stock
were issued and outstanding, (ii) 9,926,276 shares of
28
Ashland Common Stock were reserved for issuance pursuant to Ashland Stock
Plans (as defined in Section 14.02) and (iii) 500,000 shares of Series A
Participating Cumulative Preferred Stock ("Ashland Series A Preferred Stock")
were reserved for issuance in connection with the rights (the "Ashland
Rights") issued pursuant to the Rights Agreement dated as of May 16, 1996 (as
amended from time to time, the "Ashland Rights Agreement"), between Ashland
and National City Bank, as Rights Agent. Except as set forth above, at the
close of business on February 29, 2004, no shares of capital stock or other
voting securities of Ashland were issued, reserved for issuance or
outstanding. There are no outstanding Ashland SARs (as defined in Section
14.02) that were not granted in tandem with a related Ashland Employee Stock
Option. No shares of Ashland Capital Stock are held by Ashland as treasury
stock. All outstanding shares of Ashland Capital Stock are, and all such
shares that may be issued prior to the Closing will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the KBCA, the Ashland Charter, the Ashland By-laws or any
Contract (as defined in Section 6.05(a)) to which Ashland is a party or
otherwise bound. As of the date of this Agreement, there are not any bonds,
debentures, notes or other indebtedness of Ashland having the right to vote
(or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which holders of Ashland Common Stock may vote
("Voting Ashland Debt"). None of HoldCo, New Ashland Inc. or New Ashland LLC
owns or holds any shares of Ashland Capital Stock or any Voting Ashland Debt.
Except as set forth above, as of the date of this Agreement, there are not any
options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which
Ashland or any Ashland Subsidiary is a party or by which any of them is bound
(i) obligating Ashland or any Ashland Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, Ashland or
any Ashland Subsidiary or any Voting Ashland Debt or
29
(ii) obligating Ashland or any Ashland Subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations or commitments of Ashland or
any Ashland Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Ashland or any Ashland Subsidiary.
(b) The authorized capital stock of HoldCo consists of 300,000,000
shares of HoldCo Common Stock, 100 shares of which have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by Ashland
free and clear of any Lien. No shares of capital stock of HoldCo are held by
HoldCo as treasury stock.
(c) As of the date of this Agreement, the authorized capital stock
of New Ashland Inc. consists of 1,000 shares of Common Stock, of which 100
shares of Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by HoldCo free and clear of any Lien.
Immediately prior to the Acquisition Merger Effective Time, the authorized
capital stock of New Ashland Inc. will consist of 300,000,000 shares of Common
Stock and 30,000,000 shares of preferred stock, of which 100 shares of Common
Stock will have been duly authorized and validly issued, fully paid and
nonassessable and owned by HoldCo free and clear of any Lien, other than any
Lien (i) pursuant to the HoldCo Borrowing arrangements or (ii) in favor of any
Marathon Party or any of their respective subsidiaries or affiliates.
(d) All of the membership interests in New Ashland LLC are owned by
HoldCo free and clear of any Lien, other than any Lien (i) pursuant to the
HoldCo Borrowing arrangements or (ii) in favor of any Marathon Party or any of
their respective subsidiaries or affiliates.
(e) Immediately prior to the MAP Partial Redemption, all of
Ashland's Membership Interest will be owned by Ashland free and clear of any
Lien. Immediately prior to the Acquisition Merger, all of Ashland's Membership
Interest that has not been redeemed pursuant to the MAP Partial Redemption
will be owned by HoldCo free and clear of any Lien, other than any Lien (i)
pursuant to the HoldCo Borrowing arrangements or (ii) in favor of any
30
Marathon Party or any of their respective subsidiaries or affiliates. Upon
consummation of the Transactions, all of Ashland's Membership Interest shall
be vested in one or more of the Marathon Parties and shall thereafter be the
property of one or more of the Marathon Parties (assuming such Marathon
Parties have the requisite power and authority to be the lawful owners of
Ashland's Membership Interest), free and clear of any Lien, other than any
Lien (i) pursuant to the HoldCo Borrowing arrangements, (ii) in favor of any
Marathon Party or any of their respective subsidiaries or affiliates or (iii)
arising from actions or inactions of any of the Marathon Parties or their
affiliates (and not of any of the Ashland Parties or their affiliates).
SECTION 6.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a)
Each Ashland Party has all requisite corporate or limited liability company
power and authority to execute and deliver the Transaction Agreements, and the
other agreements and instruments to be executed and delivered in connection
with the Transaction Agreements (the "Ancillary Agreements"), to which it is,
or is specified to be, a party and to consummate the Transactions. The
execution and delivery by each Ashland Party of each Transaction Agreement and
Ancillary Agreement to which it is, or is specified to be, a party and the
consummation by each Ashland Party of the Transactions to be consummated by it
under the Transaction Agreements and the Ancillary Agreements have been duly
authorized by all necessary corporate or limited liability company action on
the part of each Ashland Party subject to receipt of the Ashland Shareholder
Approval (as defined in Section 6.04(b)). Each Ashland Party has duly executed
and delivered each Transaction Agreement to which it is a party, and each
Transaction Agreement to which it is a party constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms. As of
the Closing Date, each Ashland Party will have duly executed and delivered
each Ancillary Agreement to which it is a party, and each Ancillary Agreement
to which it is a party will constitute its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
(b) The Ashland Board, at a meeting duly called and held, duly and
unanimously adopted resolutions:
31
(i) adopting and approving the Transaction Agreements, the Ancillary
Agreements and the Transactions; (ii) determining that the terms of the
Transactions are fair to and in the best interests of Ashland and its
shareholders; and (iii) recommending that Ashland's shareholders approve the
Transaction Agreements and the Transactions (including the plan of merger for
the Reorganization Merger and the proposed transfer of Ashland's interests in
MAP, LOOP LLC and LOCAP LLC, as well as the Maleic Business and the VIOC
Centers, provided for in the Transaction Agreements). The only vote of holders
of any class or series of Ashland Capital Stock necessary to approve and adopt
the Transaction Agreements and the Transactions is the approval of the
Transaction Agreements and the Transactions (including the plan of merger for
the Reorganization Merger and the proposed transfer of Ashland's interests in
MAP, LOOP LLC and LOCAP LLC, as well as the Maleic Business and the VIOC
Centers, provided for in the Transaction Agreements) by the holders of a
majority of the outstanding Ashland Common Stock (the "Ashland Shareholder
Approval").
(c) The Board of Directors of HoldCo has duly and unanimously
adopted resolutions: (i) approving and declaring advisable the Transaction
Agreements and the Ancillary Agreements to which HoldCo is a party, and
approving the Transactions; (ii) determining that the terms of the
Transactions to which HoldCo is a party are fair to and in the best interests
of HoldCo and Ashland, its sole shareholder; and (iii) recommending that
Ashland, HoldCo's sole shareholder, adopt the Transaction Agreements to which
HoldCo is a party. Ashland, as the sole shareholder of HoldCo, has duly
approved and adopted the Transaction Agreements to which HoldCo is a party.
(d) The New Ashland Board has duly and unanimously adopted
resolutions: (i) adopting and approving the Transaction Agreements and the
Ancillary Agreements to which New Ashland Inc. is a party, and adopting and
approving the Transactions; (ii) determining that the terms of the
Transactions to which New Ashland Inc. is a party are fair to and in the best
interests of New Ashland Inc. and HoldCo, its sole shareholder; and (iii)
recommending that HoldCo, New Ashland Inc.'s sole shareholder, approve the
Transaction Agreements to which New Ashland Inc. is a party. HoldCo, as the
sole shareholder of New Ashland Inc., has duly approved the
32
Transaction Agreements to which New Ashland Inc. is a party.
(e) HoldCo, as the sole member of New Ashland LLC, has approved the
Transaction Agreements to which New Ashland LLC is a party.
SECTION 6.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by each Ashland Party of each Transaction Agreement to which it is a party do
not, the execution and delivery of each Ancillary Agreement to which it is
specified to be a party will not, and the consummation of the Transactions to
be consummated by it under the Transaction Agreements and the Ancillary
Agreements and compliance with the terms of the Transaction Agreements and the
Ancillary Agreements will not, conflict with, or result in any breach or
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Ashland or any
Ashland Subsidiary under, any provision of (i) the Ashland Charter, the
Ashland By-laws or the comparable charter or organizational documents of any
Ashland Subsidiary, (ii) any contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a "Contract") to
which Ashland or any Ashland Subsidiary is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 6.05(b), any judgment, order or decree
("Judgment") or statute, law, ordinance, rule or regulation ("Law") applicable
to Ashland or any Ashland Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on the ability of any Ashland Party
to perform its obligations under the Transaction Agreements and the Ancillary
Agreements or on the ability of any Ashland Party to consummate the
Transactions (an "Ashland Material Adverse Effect").
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from,
any Federal, state, local or foreign government or any court of
33
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (each, a
"Governmental Entity"), is required to be obtained or made by or with respect
to Ashland or any Ashland Subsidiary in connection with the execution,
delivery and performance of any Transaction Agreement or Ancillary Agreement
or the consummation of the Transactions, other than (i) compliance with and
filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a joint registration statement on Form S-4 (the
"Ashland Form S- 4") in connection with the issuance by HoldCo of HoldCo
Common Stock in connection with the Reorganization Merger (the "HoldCo Share
Issuance") and the issuance by New Ashland Inc. of New Ashland Inc. Common
Stock in the Acquisition Merger (the "New Ashland Inc. Share Issuance"), (B) a
registration statement on Form S-4 (the "Marathon Form S-4" and, together with
the Ashland Form S-4, the "Forms S-4") in connection with the issuance by
Marathon of Marathon Common Stock in connection with the Acquisition Merger
(the "Marathon Share Issuance"), (C) a proxy or information statement relating
to the approval of the Transaction Agreements and the Transactions by
Ashland's shareholders (the "Proxy Statement") and (D) such reports under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with the Transaction
Agreements, the Ancillary Agreements or the Transactions, (iii) (A) the filing
of the Reorganization Articles of Merger with the Secretary of State of the
Commonwealth of Kentucky, (B) the filing of the Conversion Articles of Merger
with the Secretary of State of the Commonwealth of Kentucky, (C) the filing of
the Acquisition Certificate of Merger with the Secretary of State of the State
of Delaware and (D) appropriate documents with the relevant authorities of the
other jurisdictions in which Ashland is qualified to do business, (iv) such
filings as may be required in connection with Taxes and (v) such other
Consents, registrations, declarations, filings and permits (A) required solely
by reason of the participation of any Marathon Party (as opposed to any third
party) in the Transactions or (B) the failure of which to obtain or make that,
individually or in the aggregate, have not had and would not reasonably be
expected to have an Ashland Material Adverse Effect.
34
(c) Ashland and the Ashland Board have taken all action necessary to
(i) render the Ashland Rights inapplicable to the Transaction Agreements, the
Ancillary Agreements and the Transactions; and (ii) ensure that (A) none of
the Marathon Parties, nor any of their affiliates or associates, is or will
become an "Acquiring Person" (as defined in the Ashland Rights Agreement) by
reason of the Transaction Agreements, the Ancillary Agreements or the
Transactions and (B) a "Distribution Date" (as defined in the Ashland Rights
Agreement) shall not occur by reason of the Transaction Agreements, the
Ancillary Agreements or the Transactions.
SECTION 6.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) Ashland
has filed all reports, schedules, forms, statements and other documents
(including exhibits and amendments thereto) required to be filed by Ashland
with the SEC since October 1, 2003, pursuant to Sections 13(a), 14(a) and
15(d) of the Exchange Act (the "Ashland SEC Documents").
(b) As of its respective date, each Ashland SEC Document complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to such Ashland
SEC Document, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Except to the extent that information
contained in any Ashland SEC Document has been revised or superseded by a
later filed Ashland SEC Document, none of the Ashland SEC Documents contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Ashland included in the
Ashland SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved
35
(except as may be indicated in the notes thereto) and on that basis fairly
present in all material respects the consolidated financial position of
Ashland and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited interim financial statements, to normal
year-end audit adjustments).
(c) Except as disclosed in the Ashland SEC Documents, as of the date
of this Agreement neither Ashland nor any Ashland Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
liquidated, unliquidated, fixed, contingent, disputed, undisputed, legal or
equitable) required by GAAP to be set forth on a consolidated balance sheet of
Ashland and its consolidated subsidiaries or disclosed in the notes thereto
and that, individually or in the aggregate, would reasonably be expected to
have an Ashland Material Adverse Effect.
(d) Notwithstanding anything to the contrary contained in this
Section 6.06, the Ashland Parties do not make any representation or warranty
as to the financial statements, financial position, results of operations or
cash flows of MAP, as to any other statement, omission or information relating
to MAP included or incorporated by reference in the Ashland SEC Documents, or
as to the business, assets, liabilities, condition (financial or otherwise),
operations or prospects of MAP.
SECTION 6.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent financial statements included in the Ashland SEC Documents
filed and publicly available prior to the date of this Agreement, to the date
of this Agreement, there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have an
Ashland Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividends on,
or any other distributions in respect of, any Ashland Capital Stock,
other than regular quarterly cash dividends with respect to the Ashland
Common Stock, not in excess of 27.5 cents per
36
share, with usual declaration, record and payment dates and in accordance with
Ashland's past dividend policy; or
(iii) any repurchase, redemption or other acquisition for value by
Ashland of any Ashland Capital Stock.
SECTION 6.08. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by or on behalf of any Ashland Party for inclusion or
incorporation by reference in (i) the Forms S-4 will, at the time the Forms
S-4 are filed with the SEC, at any time the Forms S-4 are amended or
supplemented or at the time the same become effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to Ashland's shareholders or at the time of the
Ashland Shareholders Meeting (as defined in Section 9.01(e), contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Ashland Form S-4 will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder, and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, in each case except that no representation is made by
any Ashland Party with respect to statements made or incorporated by reference
therein based on information supplied by or on behalf of any Marathon Party
for inclusion or incorporation by reference therein.
SECTION 6.09. BROKERS. No broker, investment banker, financial
advisor or other person, other than Credit Suisse First Boston LLC and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ("HLHZ"), the fees and expenses of which will be
paid by Ashland (except as otherwise contemplated by Section 9.03(d)(i)), and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc., the fees and expenses of which will be paid in
accordance with Section 9.04(b), is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of any Ashland
Party.
37
SECTION 6.10. OPINION OF FINANCIAL ADVISOR. Ashland has received the
opinion of Credit Suisse First Boston LLC, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received in the
Acquisition Merger by the holders of Ashland Common Stock (other than Marathon
and its affiliates) is fair to such holders from a financial point of view.
SECTION 6.11. SOLVENCY MATTERS. (a) Ashland has received two
solvency opinions of American Appraisal Associates, Inc. ("AAA"), copies of
which are included in Section 7.11 of the Marathon Disclosure Letter (the
"Initial AAA Opinions"), and the solvency opinion of HLHZ, a copy of which is
included in Section 6.11 of the Ashland Disclosure Letter (the "Initial HLHZ
Opinion" and, together with the Initial AAA Opinions, the "Initial Opinions").
(b) As of the date of this Agreement, Ashland does not, and as of
the Closing Date New Ashland Inc. will not, have any intention to declare a
dividend or distribution or to complete a share repurchase using, directly or
indirectly, proceeds received from the MAP Partial Redemption or the Capital
Contribution; provided, however, that it is understood that New Ashland Inc.
may pay cash dividends after the Closing consistent with historical cash
dividends paid by Ashland prior to the Closing.
(c) As of the date of this Agreement, Ashland intends, and as of the
Closing Date New Ashland Inc. will intend, to use the cash proceeds of the
Capital Contribution pursuant to Section 1.03(b) only (i) for the uses
described in the definition of Ashland Debt Obligation Amount or (ii) to pay
other obligations owed to any of their respective creditors, and to use the
cash proceeds of the MAP Partial Redemption pursuant to Section 1.01 only for
the purposes described in clauses (i) and (ii) of this Section 6.11(c) and for
general corporate purposes (including, potentially, business acquisitions) not
inconsistent with Section 6.11(b).
(d) As of the Closing Date, Ashland, before consummation of the
Transactions, and New Ashland Inc., after giving effect to the Transactions,
will not be insolvent, as insolvency is defined under any of the Uniform
Fraudulent Transfer Act, as approved by the National Conference of
Commissioners on Uniform State Laws
38
in 1984, as amended (the "UFTA"), the Uniform Fraudulent Conveyance Act, as
approved by the National Conference of Commissioners on Uniform State Laws in
1918, as amended (the "UFCA"), and the U.S. Bankruptcy Code, Title 11 of the
U.S.C., as amended (the "Bankruptcy Code"). Without limiting the generality of
the foregoing, as of the Closing Date, with respect to each of Ashland, before
consummation of the Transactions, and New Ashland Inc., after giving effect to
the Transactions: (i) the sum of such entity's debts will not be greater than
all of such entity's assets at a fair valuation (as such terms are defined in
the UFTA), and the sum of such entity's debts will not be greater than all of
such entity's property, at a fair valuation (as such terms are defined in the
Bankruptcy Code); (ii) the present fair saleable value of such entity's assets
will not be less than the amount that will be required to pay such entity's
probable liability on its existing debts as they become absolute and matured
(as such terms are defined in the UFCA); (iii) such entity will not intend to
incur, or believe or reasonably should believe that it would incur, debts
beyond its ability to pay as they become due (as such terms are defined in the
UFTA), such entity will not intend or believe that it will incur debts beyond
its ability to pay as they mature (as such terms are defined in the UFCA), and
such entity will not intend to incur, or believe that it would incur, debts
that would be beyond its ability to pay as such debts mature (as such terms
are defined in the Bankruptcy Code); and (iv) such entity will not be engaged
and will not be about to engage in a business or transaction for which the
remaining assets of such entity are unreasonably small in relation to such
business or transaction (as such terms are defined in the UFTA), such entity
will not be engaged and will not be about to engage in a business or
transaction for which the property remaining in such entity's hands is an
unreasonably small capital (as such terms are defined in the UFCA), and such
entity will not be engaged in business or a transaction, and will not be about
to engage in business or a transaction, for which any property remaining with
such entity is an unreasonably small capital (as such terms are defined in the
Bankruptcy Code).
(e) To Ashland's knowledge, the information provided orally or in
writing to AAA by or on behalf of any Ashland Party relating to the Ashland
Parties in connection with the delivery by AAA to Ashland and Marathon of the
39
Initial AAA Opinions and the Bring-Down AAA Opinions (as defined in Section
10.01(g)) (including the information contained in the data rooms identified in
the Initial AAA Opinions and any similar data rooms made available to AAA
after the date of this Agreement), together with the information in the
Ashland SEC Documents (as such information has been revised or superseded by a
later filed Ashland SEC Document or other information that has been provided
to AAA), taken as a whole, does not and will not contain any untrue statement
of material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, in any case in which AAA would be led to deliver
the Bring-Down AAA Opinions when AAA would not do so in the absence of such
untrue statement or omission. Notwithstanding the foregoing, while Ashland and
New Ashland Inc. represent and warrant that the projections, forecasts and
other forward-looking materials relating to the Ashland Parties and so
provided to AAA have been prepared and furnished to AAA in good faith and were
based on facts and assumptions believed by Ashland and New Ashland Inc. to be
reasonable, the parties acknowledge that: (i) there may be differences between
actual results and the results indicated in such projections, forecasts and
other forward-looking materials; (ii) those differences may be material; and
(iii) Ashland and New Ashland Inc. do not represent or warrant that there will
be no such differences. Notwithstanding anything to the contrary contained in
this Section 6.11(e), the Ashland Parties do not make any representation or
warranty as to the financial statements, financial position, results of
operations or cash flows of MAP, as to any other statement, omission or
information relating to MAP, or as to the business, assets, liabilities,
condition (financial or otherwise), operations or prospects of MAP.
(f) All Working Papers (as defined in Section 14.02) of HLHZ,
relating to its engagement by Ashland have been made available to Marathon and
its Representatives.
40
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF THE MARATHON PARTIES
------------------------------
Marathon represents and warrants to the Ashland Parties that, as of
the date of this Agreement and as of the Closing Date as if made on the
Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such earlier date),
except as set forth in the disclosure letter, dated as of the date of this
Agreement, from Marathon to Ashland (the "Marathon Disclosure Letter");
provided, however, that no item contained in any section of the Marathon
Disclosure Letter shall be deemed to qualify, or disclose any exception to,
any representation or warranty made in Sections 7.04 or 7.11:
SECTION 7.01. ORGANIZATION, STANDING AND POWER. Marathon is duly
organized, validly existing and in good standing under the Laws of the State
of Delaware and has full corporate power and authority to own, lease and
otherwise hold its properties and to conduct its businesses as presently
conducted. Each Significant Marathon Subsidiary (as defined in this Section
7.01) is duly organized, validly existing and, to the extent such concept or a
similar concept exists in the relevant jurisdiction, in good standing under
the Laws of the jurisdiction in which it is organized and has full corporate
or other entity power and authority to own, lease or otherwise hold its
properties and to conduct its businesses as presently conducted. Each of
Marathon and each Significant Marathon Subsidiary is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction where
the nature of its business or its ownership or leasing of its properties makes
such qualification necessary, except in such jurisdictions where the failure
to be so qualified or in good standing has not had and would not reasonably be
expected to have a Marathon Material Adverse Effect (as defined in Section
7.05(a)). Marathon has provided to Ashland true and complete copies of the
certificate of incorporation of Marathon, as amended to the date of this
Agreement (as so amended, the "Marathon Charter"), and the by-laws of
Marathon, as amended to the date of this Agreement (as so amended, the
"Marathon By-laws"), and the comparable charter and organizational documents
of each
41
Significant Marathon Subsidiary, in each case as amended to the date of this
Agreement. For purposes of this Agreement, a "Significant Marathon Subsidiary"
means Marathon Company, Merger Sub, MAP and any subsidiary of Marathon that
constitutes a significant subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
SECTION 7.02. MARATHON SUBSIDIARIES; EQUITY INTERESTS. (a) All the
outstanding shares of capital stock of, or other equity interests in, each
Significant Marathon Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable and are as of the date of this Agreement
owned by Marathon, by another subsidiary of Marathon (a "Marathon Subsidiary")
or by Marathon and another Marathon Subsidiary, free and clear of all Liens.
(b) Merger Sub, since the date of its formation, has not carried on
any business or conducted any operations other than the execution of this
Agreement, the other Transaction Agreements and the Ancillary Agreements to
which it is a party, the performance of its obligations hereunder and
thereunder and matters ancillary thereto.
SECTION 7.03. CAPITAL STRUCTURE. (a) The authorized capital stock of
Marathon consists of 550,000,000 shares of Marathon Common Stock and
26,000,000 shares of preferred stock, without par value ("Marathon Preferred
Stock" and, together with the Marathon Common Stock, the "Marathon Capital
Stock"). At the close of business on February 29, 2004, (i) 310,740,454 shares
of Marathon Common Stock were issued and outstanding, (ii) 1,425,524 shares of
Marathon Common Stock were held by Marathon in its treasury and (iii)
37,788,193 shares of Marathon Common Stock were reserved for issuance pursuant
to Marathon Stock Plans (as defined in Section 14.02). Except as set forth
above, at the close of business on February 29, 2004, no shares of capital
stock or other voting securities of Marathon were issued, reserved for
issuance or outstanding. There are no outstanding Marathon SARs (as defined in
Section 14.02) that were not granted in tandem with a related Marathon
Employee Stock Option. All outstanding shares of Marathon Capital Stock are,
and all such shares that may be issued prior to the Acquisition Merger
Effective Time will be when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any
purchase option,
42
call option, right of first refusal, preemptive right, subscription right or
any similar right under any provision of the DGCL, the Marathon Charter, the
Marathon By-laws or any Contract to which Marathon is a party or otherwise
bound. As of the date of this Agreement, there are not any bonds, debentures,
notes or other indebtedness of Marathon having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which holders of Marathon Common Stock may vote ("Voting
Marathon Debt"). Except as set forth above, as of the date of this Agreement,
there are not any options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of any
kind to which Marathon or any Marathon Subsidiary is a party or by which any
of them is bound (i) obligating Marathon or any Marathon Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, Marathon or any Marathon Subsidiary or any Voting Marathon Debt
or (ii) obligating Marathon or any Marathon Subsidiary to issue, grant, extend
or enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations or commitments of Marathon or
any Marathon Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Marathon or any Marathon Subsidiary.
(b) All of the membership interests in Merger Sub are owned by
Marathon free and clear of any Lien.
SECTION 7.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a)
Each Marathon Party has all requisite corporate or limited liability company
power and authority to execute and deliver the Transaction Agreements and the
Ancillary Agreements to which it is, or is specified to be, a party and to
consummate the Transactions. For all purposes of the Put/Call Agreement (as
defined in Section 12.04) and the Insurance Indemnity Agreement referred to in
Section 12.05, including for purposes of amending the Put/Call Agreement as
provided in Section 12.04 of this
43
Agreement and terminating the Insurance Indemnity Agreement as provided in
Section 12.05, Marathon is a party to the Put/Call Agreement and the Insurance
Indemnity Agreement as the successor and assign of USX (as defined in the
Put/Call Agreement). The execution and delivery by each Marathon Party of each
Transaction Agreement and Ancillary Agreement to which it is, or is specified
to be, a party and the consummation by each Marathon Party of the Transactions
to be consummated by it under the Transaction Agreements and the Ancillary
Agreements have been duly authorized by all necessary corporate or limited
liability company action on the part of each Marathon Party. Each Marathon
Party has duly executed and delivered each Transaction Agreement to which it
is a party, and each Transaction Agreement to which it is a party constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms. As of the Closing Date, each Marathon Party will have duly
executed and delivered each Ancillary Agreement to which it is a party, and
each Ancillary Agreement to which it is a party will constitute its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
(b) The Marathon Board duly and unanimously adopted resolutions: (i)
approving the Transaction Agreements, the Ancillary Agreements and the
Transactions; and (ii) determining that the terms of the Transactions are fair
to and in the best interests of Marathon and its shareholders.
(c) The Board of Directors of Marathon Company (the "Marathon
Company Board"), at a meeting duly called and held or by written consent, duly
and unanimously adopted resolutions: (i) approving the Transaction Agreements,
the Ancillary Agreements and the Transactions; and (ii) determining that the
terms of the Transactions are fair to and in the best interests of Marathon
Company and Marathon, its sole shareholder.
(d) Marathon, as the sole member of Merger Sub, has approved the
Transaction Agreements, the Ancillary Agreements and the Transactions to which
Merger Sub is, or is specified to be, a party.
SECTION 7.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by each Marathon Party of each Transaction Agreement to which it is a party do
not,
44
the execution and delivery of each Ancillary Agreement to which it is
specified to be a party will not, and the consummation of the Transactions to
be consummated by it under the Transaction Agreements and the Ancillary
Agreements and compliance with the terms of the Transaction Agreements and the
Ancillary Agreements will not, conflict with, or result in any breach or
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Marathon or any
Marathon Subsidiary under, any provision of (i) the Marathon Charter, the
Marathon By-laws or the comparable charter or organizational documents of any
Marathon Subsidiary, (ii) any Contract to which Marathon or any Marathon
Subsidiary is a party or by which any of their respective properties or assets
is bound or (iii) subject to the filings and other matters referred to in
Section 7.05(b), any Judgment or Law applicable to Marathon or any Marathon
Subsidiary or their respective properties or assets, other than, in the case
of clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
material adverse effect on the ability of any Marathon Party to perform its
obligations under the Transaction Agreements and the Ancillary Agreements or
on the ability of any Marathon Party to consummate the Transactions (a
"Marathon Material Adverse Effect").
(b) No Consent of, or registration, declaration or filing with, or
permit from, any Governmental Entity is required to be obtained or made by or
with respect to Marathon or any Marathon Subsidiary in connection with the
execution, delivery and performance of any Transaction Agreement or Ancillary
Agreement or the consummation of the Transactions, other than (i) compliance
with and filings under the HSR Act, (ii) the filing with the SEC of (A) the
Forms S-4 and (B) such reports under Sections 13 and 16 of the Exchange Act as
may be required in connection with the Transaction Agreements, the Ancillary
Agreements or the Transactions, (iii) the filing of the Acquisition
Certificate of Merger with the Secretary of State of the State of Delaware,
(iv) such filings as may be required in connection with Taxes and (v) such
other Consents, registrations, declarations, filings and permits
45
(A) required solely by reason of the participation of any Ashland Party (as
opposed to any third party) in the Transactions or (B) the failure of which to
obtain or make that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Marathon Material Adverse Effect.
(c) The Rights Agreement between Marathon and National City Bank, as
Rights Agent, dated as of September 28, 1998, as amended on July 2, 2001 and
January 29, 2003 (the "Marathon Rights Agreement"), expired on January 31,
2003, and Marathon has not, as of the date of this Agreement, entered into or
adopted any other rights agreement.
SECTION 7.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) Marathon
has filed all reports, schedules, forms, statements and other documents
(including exhibits and amendments thereto) required to be filed by Marathon
with the SEC since January 1, 2004 pursuant to Sections 13(a), 14(a) and 15(d)
of the Exchange Act (the "Marathon SEC Documents").
(b) As of its respective date, each Marathon SEC Document complied
in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to such
Marathon SEC Document, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Marathon SEC Document has been revised or
superseded by a later filed Marathon SEC Document, none of the Marathon SEC
Documents contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Marathon
included in the Marathon SEC Documents comply as to form in all material
respects with applicable accounting requirements, and the published rules and
regulations of the SEC, with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
46
(except as may be indicated in the notes thereto) and on that basis fairly
present in all material respects the consolidated financial position of
Marathon and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited interim financial statements, to normal
year-end audit adjustments).
(c) Except as disclosed in the Marathon SEC Documents, as of the
date of this Agreement neither Marathon nor any Marathon Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
liquidated, unliquidated, fixed, contingent, disputed, undisputed, legal or
equitable) required by GAAP to be set forth on a consolidated balance sheet of
Marathon and its consolidated subsidiaries or disclosed in the notes thereto
and that, individually or in the aggregate, would reasonably be expected to
have a Marathon Material Adverse Effect.
(d) Notwithstanding anything to the contrary contained in this
Section 7.06, the Marathon Parties do not make any representation or warranty
as to the financial statements, financial position, results of operations or
cash flows of MAP, as to any other statement, omission or information relating
to MAP included or incorporated by reference in the Marathon SEC Documents, or
as to the business, assets, liabilities, condition (financial or otherwise),
operations or prospects of MAP.
SECTION 7.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent financial statements included in the Marathon SEC Documents
filed and publicly available prior to the date of this Agreement, to the date
of this Agreement, there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have a
Marathon Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividends on,
or any other distributions in respect of, any Marathon Capital Stock,
other than regular quarterly cash dividends with respect to the Marathon
Common Stock, not in excess of 25 cents per
47
share, with usual declaration, record and payment dates and in accordance
with Marathon's past dividend policy; or
(iii) any repurchase, redemption or other acquisition for value by
Marathon of any Marathon Capital Stock.
SECTION 7.08. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by or on behalf of any Marathon Party for inclusion
or incorporation by reference in (i) the Forms S-4 will, at the time the
Forms S-4 are filed with the SEC, at any time the Forms S-4 are amended or
supplemented or at the time the same become effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Proxy Statement will, at the date it is first
mailed to Ashland's shareholders or at the time of the Ashland Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. The Marathon Form S-4 will comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations thereunder, except that no representation is made by any Marathon
Party with respect to statements made or incorporated by reference therein
based on information supplied by or on behalf of any Ashland Party for
inclusion or incorporation by reference therein.
SECTION 7.09. BROKERS. No broker, investment banker, financial
advisor or other person, other than Citigroup Global Markets Inc. and AAA, the
fees and expenses of which will be paid by Marathon (except as otherwise
contemplated by Section 9.03(d)(i)), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc., the fees
and expenses of which will be paid in accordance with Section 9.04(b), is
entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of any Marathon Party.
SECTION 7.10. OPINION OF FINANCIAL ADVISOR. Marathon has received
the opinion of Citigroup Global
48
Markets Inc., dated the date of this Agreement, to the effect that, as of
such date, the consideration to be provided by the Marathon Parties in
the Transactions is fair to Marathon from a financial point of view.
SECTION 7.11. SOLVENCY OPINIONS. Marathon has received the Initial
Opinions. All Working Papers of AAA relating to the Initial AAA Opinions have
been made available to Ashland.
SECTION 7.12. MAP ACCOUNTS RECEIVABLE. To the knowledge of Marathon
and MAP, the information provided orally or in writing to Ashland and its
Representatives by or on behalf of MAP relating to MAP accounts receivable in
connection with Ashland's evaluation of the Distributed Receivables, taken as
a whole, does not and will not contain any untrue statement of material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. At the Closing, MAP will transfer to Ashland all of MAP's rights,
title and interests in and to the Distributed Receivables.
SECTION 7.13. EMPLOYEE BENEFITS. Marathon intends to, or to cause
one or more of its subsidiaries to, provide to the Transferred Maleic Business
Employees (as defined in the Maleic Agreement) compensation and benefits in
accordance with Section 4.03(j) of the Maleic Agreement and to the Transferred
VIOC Centers Employees (as defined in the VIOC Agreement) retirement benefits
in accordance with Section 4.03(g) of the VIOC Agreement.
ARTICLE VIII
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
SECTION 8.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
ASHLAND. Except for matters set forth in the Ashland Disclosure Letter or
otherwise expressly contemplated or permitted by the Transaction Agreements or
the Ancillary Agreements, from the date of this Agreement to the Acquisition
Merger Effective Time, Ashland shall not, and shall not permit any Ashland
Subsidiary to, without the prior written consent of Marathon, take any action
(including amending its
49
certificate of incorporation, by-laws or other comparable charter or
organizational documents, or authorizing, or committing or agreeing to make,
any such amendment) that would reasonably be expected to have an Ashland
Material Adverse Effect. In addition, and without limiting the generality of
the foregoing, from the date of this Agreement to the Closing Date, Ashland
shall not, and shall not permit any Ashland Subsidiary to, do any of the
following without the prior written consent of Marathon:
(i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock, property or otherwise)
in respect of, any Ashland Capital Stock, other than regular
quarterly cash dividends with respect to the Ashland Common Stock,
not in excess of 27.5 cents per share, with usual declaration,
record and payment dates and in accordance with Ashland's past
dividend policy, in each case other than pursuant to the Ashland
Rights Agreement;
(ii) repurchase, redeem or otherwise acquire for value any
Ashland Capital Stock;
(iii) reclassify any Ashland Capital Stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Ashland Capital Stock, in
any such case that would (A) have an Ashland Material Adverse Effect
or (B) require an amendment to this Agreement, other than, in the
case of clause (B), pursuant to the Ashland Rights Agreement;
(iv) issue, grant, deliver, sell, pledge or dispose of any
Voting Ashland Debt or any securities convertible or exchangeable
into or exercisable for, or any rights, warrants, calls or options
to acquire, any shares of Ashland Common Stock or Voting Ashland
Debt, in any such case that would (A) have an Ashland Material
Adverse Effect or (B) require an amendment to this Agreement; or
(v) authorize, or commit or agree to take, any of the foregoing
actions.
50
(b) Conduct of Business by Marathon. Except for matters set forth in
the Marathon Disclosure Letter or otherwise expressly contemplated or
permitted by the Transaction Agreements or the Ancillary Agreements, from the
date of this Agreement to the Acquisition Merger Effective Time, Marathon
shall not, and shall not permit any Marathon Subsidiary to, without the prior
written consent of Ashland, take any action (including amending its
certificate of incorporation, by-laws or other comparable charter or
organizational documents, or authorizing, or committing or agreeing to make,
any such amendment) that would reasonably be expected to have a Marathon
Material Adverse Effect.
(c) Conduct of Business by MAP. Except as otherwise expressly
contemplated or permitted by the Transaction Agreements or the Ancillary
Agreements, from the date of this Agreement to the Closing Date, the Ashland
Parties and the Marathon Parties shall cause MAP and its subsidiaries to, and
MAP and its subsidiaries shall, conduct their business in the ordinary course,
in substantially the same manner as previously conducted (including with
respect to cash distributions, capital expenditures, inventory levels, terms
and conditions of receivables and payables, collection of receivables and
payment of payables), and in accordance with the MAP Governing Documents (as
defined in Section 14.02). In addition, and without limiting the generality of
the foregoing, from the date of this Agreement to the Closing Date, the
Ashland Parties and the Marathon Parties shall cause MAP and its subsidiaries
not to, and MAP and its subsidiaries shall not, do any of the following
without the prior written consent of Ashland:
(i) incur or assume any liabilities, obligations or
indebtedness for borrowed money, or guarantee any such liabilities,
obligations or indebtedness, other than in the ordinary course of
business consistent with past practice;
(ii) buy out any lease, license or similar payment obligation
or change any existing practices with respect to leasing, licensing
or similar arrangements; or
(iii) authorize, or commit or agree to take, any of the
foregoing actions.
51
The parties hereto acknowledge that the approval of Acquisition Expenditures,
Capital Expenditures and such other expenditures of the type to be included in
the Annual Capital Budget for any Fiscal Year that when taken together with
(x) the other expenditures already approved as part of the Annual Capital
Budget for such Fiscal Year and (y) all other expenditures already made in
such Fiscal Year, would reasonably be expected to exceed the Normal Annual
Capital Budget Amount for such Fiscal Year, constitutes a "Super Majority
Decision" which requires the approval of the Board of Managers (as such terms
are defined in the MAP LLC Agreement) pursuant to Section 8.07(b) of the MAP
LLC Agreement (subject to certain exceptions set forth in the MAP LLC
Agreement). Accordingly, from the date of this Agreement to the Closing Date,
the approval of any such expenditures shall require the approval of the Board
of Managers pursuant to Section 8.07(b) of the MAP LLC Agreement.
(d) POST-CLOSING EXAMINATION AND DISPUTE RESOLUTION. After the
Closing, Ashland shall continue to have all the rights of a Member under
Section 7.01 of the MAP LLC Agreement, as amended through the date of this
Agreement (including pursuant to the MAP LLC Agreement Amendment), for
purposes of auditing compliance with Sections 1.06 (Post-Closing True-Up),
8.01(c) (Conduct of Business by MAP), 9.09 (St. ▇▇▇▇ Park Judgment and Plea
Agreement; Plains Settlement) and 9.15 (MAP Partial Redemption Amount) of this
Agreement and (ii) the provisions of the MAP LLC Agreement relating to
distributions and loans to Ashland and Marathon Company. Any dispute regarding
such compliance shall be resolved in accordance with the provisions of Article
XIII of the MAP LLC Agreement, as in effect on the date of this Agreement. Any
payment required as a result of such resolution shall not be subject to the
limitations set forth in Sections 13.01(b) or 13.02(b) of this Agreement.
(e) OTHER ACTIONS.
(i) Prior to the Closing, Ashland shall not, and shall not
permit any of its subsidiaries to, take any action that would, or
that is reasonably expected to, result in (A) the representations
and warranties of the Ashland Parties set forth in this Agreement or
any other Transaction Agreement becoming untrue or
52
incorrect, other than such failures to be true and correct that, in
the aggregate, have not had and would not reasonably be expected to
have an Ashland Material Adverse Effect or (B) except as otherwise
permitted by Section 8.02, any condition set forth in Article X not
being satisfied.
(ii) Prior to the Closing, Marathon shall not, and shall not
permit any of its subsidiaries to, take any action that would, or
that is reasonably expected to, result in (A) the representations
and warranties of the Marathon Parties set forth in this Agreement
or any other Transaction Agreement becoming untrue or incorrect,
other than such failures to be true and correct that, in the
aggregate, have not had and would not reasonably be expected to have
a Marathon Material Adverse Effect or (B) any condition set forth in
Article X not being satisfied.
(f) ADVICE OF CHANGES. Prior to the Closing, Ashland shall promptly
advise Marathon in writing of any change or event that has had or would
reasonably be expected to have an Ashland Material Adverse Effect and Marathon
shall promptly advise Ashland in writing of any change or event that has had
or would reasonably be expected to have a Marathon Material Adverse Effect.
SECTION 8.02. NO SOLICITATION. (a) Ashland shall not, nor shall it
authorize or permit any Ashland Subsidiary to, nor shall it authorize or
permit any officer, director or employee of, or any investment banker,
attorney, auditor or other advisor, agent or representative (collectively,
"Representatives") of, Ashland or any Ashland Subsidiary to, and on becoming
aware of it will use its reasonable best efforts to stop such Ashland
Subsidiary or Representative from continuing to, directly or indirectly, (i)
solicit, initiate or encourage the submission of any Competing Ashland
Proposal (as defined in Section 8.02(e)), (ii) enter into any agreement with
respect to any Competing Ashland Proposal or (iii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or cooperate with or take any
other action knowingly to facilitate any inquiries or the
53
making of any proposal that constitutes, or would reasonably be expected to
lead to, any Competing Ashland Proposal; provided, however, that, prior to
receipt of the Ashland Shareholder Approval (the "Cutoff Date"), Ashland and
its Representatives may, in response to a bona fide written Competing Ashland
Proposal that the Ashland Board determines, in good faith (after consultation
with its financial advisor, inside counsel and outside counsel), constitutes
or is reasonably likely to result in a Superior Proposal (as defined in
Section 8.02(e)) that was not solicited by Ashland and that did not otherwise
result from a breach or a deemed breach of this Section 8.02(a), and subject
to compliance with Section 8.02(c), (x) furnish to the person making such
Competing Ashland Proposal and its Representatives information with respect to
Ashland, pursuant to a customary confidentiality agreement that does not
contain terms that prevent Ashland from complying with its obligations under
this Section 8.02, and information with respect to MAP in accordance with the
MAP Governing Documents and (y) participate in discussions or negotiations
with such person and its Representatives regarding any Competing Ashland
Proposal.
(b) Neither the Ashland Board nor any committee thereof shall (i)
withdraw or modify in a manner adverse to the Marathon Parties, or propose
publicly to withdraw or modify in a manner adverse to the Marathon Parties,
the adoption, approval or recommendation by the Ashland Board or any such
committee of the Transaction Agreements or the Transactions or (ii) adopt,
approve or recommend, or propose publicly to adopt, approve or recommend, any
Competing Ashland Proposal. Notwithstanding the foregoing, if, prior to the
Cutoff Date, the Ashland Board determines in good faith, after consultation
with inside and outside counsel, that the failure to take such action would be
reasonably likely to result in a breach of its fiduciary obligations under
applicable Law, the Ashland Board may withdraw its adoption, approval or
recommendation of the Transaction Agreements and the Transactions.
(c) Ashland promptly shall advise Marathon in writing of any
Competing Ashland Proposal or any inquiry with respect to or that would
reasonably be expected to lead to any Competing Ashland Proposal and the
identity of the person making any such Competing Ashland Proposal or inquiry
and, in the case of a Competing Ashland Proposal
54
referred to in clause (i) or (ii) of the definition of "Competing Ashland
Proposal", the material terms and conditions of such Competing Ashland
Proposal or inquiry, if any, that would reasonably be expected to prevent or
materially delay the Transactions or, in the case of a Competing Ashland
Proposal referred to in clause (iii) of the definition of "Competing Ashland
Proposal", all material terms and conditions of such Competing Ashland
Proposal or inquiry, if any. Ashland shall keep Marathon reasonably informed
on a timely basis of the status and, in the case of a Competing Ashland
Proposal referred to in clause (i) or (ii) of the definition of "Competing
Ashland Proposal", the details of such Competing Ashland Proposal or inquiry,
if any, that would reasonably be expected to prevent or materially delay the
Transactions or, in the case of a Competing Ashland Proposal referred to
clause (iii) of the definition of "Competing Ashland Proposal", all the
details of any such Competing Ashland Proposal or inquiry, if any. After the
Cutoff Date, Ashland shall not be required to comply with this Section 8.02(c)
in any instance to the extent that the Ashland Board determines in good faith,
after consultation with inside and outside counsel, that such compliance would
in such instance be reasonably likely to result in a breach of its fiduciary
obligations under applicable Law.
(d) Nothing contained in this Agreement shall prohibit Ashland from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act (other than a position
recommending acceptance under Rule 14e-2(a)(1) of a tender offer constituting
a Competing Ashland Proposal) if, in the good faith judgment of the Ashland
Board, after consultation with inside and outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable Law.
(e) For purposes of this Agreement:
"COMPETING ASHLAND PROPOSAL" means (i) any proposal or offer for a
merger, consolidation, share exchange, dissolution, recapitalization or
other business combination involving Ashland, (ii) any proposal or offer
to acquire in any manner, directly or indirectly, a majority of the
equity securities or consolidated total assets of Ashland or (iii) any
other proposal or offer to acquire any of Ashland's
55
Membership Interest, in any such case other than the Transactions and, in
the case of clause (i) or (ii), that would reasonably be expected to
prevent or materially delay the consummation of the Transactions.
"SUPERIOR PROPOSAL" means any bona fide written Competing Ashland
Proposal (other than a Competing Ashland Proposal referred to in clause
(iii) of the definition thereof) which (i) the Ashland Board determines
in good faith to be superior from a financial point of view to the
holders of Ashland Common Stock than the Transactions (after consultation
with Ashland's financial advisor), taking into account all the terms and
conditions of such Competing Ashland Proposal and the Transaction
Agreements (including any proposal by Marathon to amend the terms of the
Transaction Agreements) and (ii) that is reasonably capable of being
completed, taking into account all legal, financial, regulatory, timing
and other aspects of such Competing Ashland Proposal.
SECTION 8.03. POST-CLOSING DIVIDENDS, DISTRIBUTIONS AND SHARE
REPURCHASES. From the Closing through the sixth anniversary of the Closing
Date, New Ashland Inc. shall not authorize, pay or make any payment of a
dividend or other distribution to its stockholders or repurchases of shares
using, directly or indirectly, proceeds received from any aspect of the
Transactions without the prior written consent of Marathon if, at the time of
declaration or payment, New Ashland Inc. is or would be (after giving effect
thereto) insolvent under any applicable fraudulent conveyance or transfer Law,
as determined in good faith by the New Ashland Board in accordance with the
fiduciary duties applicable to the New Ashland Board under any applicable Law,
including KRS 271B.8-300 of the KBCA.
SECTION 8.04. OFFERINGS OF MARATHON COMMON STOCK. During the period
beginning five business days prior to the first trading day of the Averaging
Period and ending 30 days after the Closing Date, without the prior written
consent of Ashland: (a) Marathon will not offer or sell any shares of Marathon
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of Marathon Common Stock; (b) file with the SEC any registration
statement under the Securities Act relating to any such offer or sale (other
than a registration statement
56
on Form S-8); or (c) publicly disclose, except as required by applicable Law,
the intention to make any such offer, sale or filing; provided, however, that
the provisions of this Section 8.04 shall not restrict or limit (i) issuances
of Marathon Common Stock pursuant to the conversion or exchange of convertible
or exchangeable securities or the exercise of warrants or options, in each
case outstanding on the fifth business day prior to the first trading day of
the Averaging Period, (ii) grants of stock options to directors, officers,
employees or consultants or (iii) issuances of Marathon Common Stock pursuant
to the exercise of such options or otherwise pursuant to the Marathon Stock
Plans. To the extent practicable, Marathon shall promptly notify Ashland if
Marathon intends to make a public disclosure required by applicable Law as
permitted by clause (c) of this Section 8.04.
ARTICLE IX
ADDITIONAL AGREEMENTS
---------------------
SECTION 9.01. PREPARATION OF THE FORMS S-4 AND THE PROXY STATEMENT;
SHAREHOLDERS MEETING; FORM 8-A OR FORM 10. (a) As promptly as practicable
following the date of this Agreement, Ashland and Marathon shall jointly
prepare, and Ashland shall file with the SEC, the Proxy Statement in
preliminary form, and New Ashland Inc. and HoldCo shall prepare and file with
the SEC the Ashland Form S-4 and Marathon shall prepare and file with the SEC
the Marathon Form S-4, in each of which the Proxy Statement will be included
as a prospectus. Each of Ashland and Marathon shall use its reasonable best
efforts to respond as promptly as practicable to any comments of the SEC with
respect to the Proxy Statement and the Forms S-4.
(b) Each of Ashland and Marathon shall use its reasonable best
efforts to have the Forms S-4 declared effective under the Securities Act as
promptly as practicable and on the same date. Ashland shall use its reasonable
best efforts to cause the Proxy Statement to be mailed to Ashland's
shareholders as promptly as practicable
57
after the Forms S-4 are declared effective under the Securities Act. The
parties shall also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified) required to be taken
under any applicable state securities Laws in connection with the Marathon
Share Issuance, the HoldCo Share Issuance and the New Ashland Inc. Share
Issuance, and Ashland shall furnish all information concerning Ashland and the
holders of Ashland Common Stock and rights to acquire Ashland Common Stock
pursuant to the Ashland Stock Plans as may be reasonably requested in
connection with any such action. The parties shall notify each other promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or
the Forms S-4, or for additional information and shall promptly supply each
other with copies of all written correspondence and written or oral summaries
of all material oral comments between such party or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement, the Forms S-4 and the Transactions. Each
of Ashland, Marathon, New Ashland Inc. and HoldCo shall cooperate and provide
the other parties with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement and the Forms S-4 prior to
filing such with the SEC, and each will provide the other parties with a copy
of all such filings made with the SEC. Notwithstanding any other provision
herein to the contrary, no amendment or supplement (including by incorporation
by reference) to the Proxy Statement or the Forms S-4 shall be made without
the approval of both Ashland and Marathon, which approval shall not be
unreasonably withheld or delayed; provided that, with respect to documents
filed by a party hereto that are incorporated by reference therein, this right
of approval shall apply only with respect to information relating to (i) the
other party or its business, financial condition or results of operations or
(ii) the Transactions. Each of the parties shall promptly provide each other
party with drafts of all written correspondence intended to be sent to the SEC
in connection with the Transactions and, to the extent practicable, allow each
such party the opportunity to comment thereon prior to delivery to the SEC.
(c) If prior to the Closing, any event occurs with respect to
Ashland or any Ashland Subsidiary, or any
58
change occurs with respect to other information supplied by or on behalf of
Ashland for inclusion in the Proxy Statement or the Forms S-4 which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the Forms S-4, Ashland shall promptly notify Marathon of such
event, and Ashland and Marathon shall cooperate in the prompt filing with the
SEC of any necessary amendment or supplement to the Proxy Statement or the
Forms S-4 and, as required by Law, in disseminating the information contained
in such amendment or supplement to Ashland's shareholders.
(d) If prior to the Closing, any event occurs with respect to
Marathon or any Marathon Subsidiary, or any change occurs with respect to
other information supplied by or on behalf of Marathon for inclusion in the
Proxy Statement or the Forms S-4 which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the Forms S-4,
Marathon shall promptly notify Ashland of such event, and Marathon and Ashland
shall cooperate in the prompt filing with the SEC of any necessary amendment
or supplement to the Proxy Statement or the Forms S-4, as required by Law, in
disseminating the information contained in such amendment or supplement to
Ashland's Shareholders.
(e) Ashland shall, as promptly as practicable following the
effectiveness of the Forms S-4, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Ashland Shareholders Meeting") for the
purpose of seeking the Ashland Shareholder Approval. Without limiting the
generality of the foregoing, Ashland agrees that, to the fullest extent
permitted by applicable Law, its obligations pursuant to the first sentence of
this Section 9.01(e) shall not be affected by (i) the commencement, public
proposal, public disclosure or other communication to Ashland of any Competing
Ashland Proposal or (ii) the withdrawal of the Ashland Board's adoption,
approval or recommendation of the Transaction Agreements and the Transactions.
(f) Ashland shall use its reasonable best efforts to cause to be
delivered to Marathon a letter of Ernst & Young LLP, Ashland's independent
public accountants, dated as of the date on which the Ashland Form S-4 shall
become effective and addressed to Marathon, in form and substance reasonably
satisfactory to Marathon
59
and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Ashland Form S-4.
(g) Marathon shall use its reasonable best efforts to cause to be
delivered to Ashland a letter of PricewaterhouseCoopers LLP, Marathon's
independent public accountants, dated as of the date on which the Marathon
Form S-4 shall become effective and addressed to Ashland, in form and
substance reasonably satisfactory to Ashland and customary in scope and
substance for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Marathon Form S-4.
(h) Ashland shall use its reasonable best efforts promptly to
prepare and file with the SEC a registration statement on Form 8-A or Form 10,
as applicable, under the Exchange Act in connection with the New Ashland Inc.
Common Stock, including the associated Ashland Rights (the "Exchange Act
Registration Statement").
SECTION 9.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Prior to the
Closing, each of Ashland and Marathon shall furnish promptly to the other
party such information concerning its business, properties, assets,
liabilities and personnel, and shall provide such other party and such other
party's officers, employees, agents and representatives, including personnel
of MAP, access, at all reasonable times upon reasonable notice, to its and its
subsidiaries' facilities, records and personnel, as such other party may
reasonably request; provided, however, that either party may withhold (i) any
document or information that is subject to the terms of a confidentiality
agreement with a third party, (ii) such portions of documents or information
relating to pricing or other matters that are highly sensitive if the exchange
of such documents (or portions thereof) or information, as determined by such
party's counsel, might reasonably result in antitrust difficulties for such
party (or any of its affiliates) and/or (iii) any document or information that
it reasonably believes constitutes information protected by attorney/client
privilege if such privilege would be adversely affected by reason of being so
provided. If any material is withheld by such party pursuant to the proviso to
the preceding sentence, such party shall inform the
60
other party as to the general nature of what is being withheld and otherwise
make reasonable and appropriate substitute disclosure arrangements under the
circumstances. All information exchanged pursuant to this Section 9.02 shall
be subject to the confidentiality agreement dated March 28, 2003, between
Ashland and Marathon (the "Confidentiality Agreement").
SECTION 9.03. REASONABLE BEST EFFORTS; NOTIFICATION. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties shall use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents, orders, authorizations and approvals from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including filings with Governmental Entities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or any other Transaction Agreement or the consummation of the
Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed
and (iv) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of the
Transaction Agreements. In connection with and without limiting the foregoing,
the Ashland Parties and the Marathon Parties shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to any Transaction Agreement, any
Ancillary Agreement or any Transaction and (ii) if any state takeover statute
or similar statute or regulation becomes applicable to any Transaction
Agreement, any Ancillary Agreement or any Transaction, take all action
necessary to ensure that the Transactions may be consummated as promptly as
practicable on the terms contemplated by the Transaction Agreements.
61
Notwithstanding the foregoing, Ashland and its Representatives shall not be
prohibited under this Section 9.03(a) from taking any action permitted by
Section 8.02. Nothing in this Section 9.03(a) shall be deemed to require
Marathon to waive any rights or agree to any limitation on the operations of
Marathon or any of its subsidiaries or to dispose of any asset or collection
of assets of any Marathon Party or any of their respective subsidiaries or
affiliates, in each case that would have a material adverse effect on the
business, condition (financial or other) or results of operations of (i) MAP,
the Maleic Business and the VIOC Centers, taken as a whole, or (ii) Marathon
and its subsidiaries, taken as a whole.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, Ashland shall use its reasonable best efforts to cause the
condition set forth in Section 10.02(c) (Specified Consents) to be satisfied.
The parties, together with their financial advisors, shall consult
periodically regarding the scope of "reasonable best efforts," which will not
require Ashland to incur commercially unreasonable costs to satisfy such
condition. With respect to the Ashland Public Debt (as defined in this Section
9.03(b)), the parties acknowledge that Ashland may obtain consents through a
tender offer or consent solicitation (or combination thereof), to be
consummated on the Closing Date and to be commenced on a date mutually agreed
by Ashland and Marathon but in any event no later than five business days
after the satisfaction of the last to be satisfied of the conditions set forth
in Sections 10.01(a) (Ashland Shareholder Approval), 10.01(c) (Antitrust) and
10.01(f) (Receipt of Private Letter Rulings; Tax Opinions) to expressly permit
the Transactions and eliminate indenture covenants, certain events of default
and other relevant provisions, all as reasonably deemed by Ashland necessary
to consummate the Transactions (or, in the case of a combined tender offer and
consent solicitation, otherwise desirable). "Ashland Public Debt" means
securities outstanding as of the last day of the month immediately preceding
the month in which the tender offer and/or consent solicitation is commenced
(the "Debt Consent Measurement Date"), issued under the Indenture dated as of
August 15, 1989, between Ashland and Citibank, N.A. and the Amendment and
Restatement thereof dated as of August 15, 1990 (the "Indentures"), other than
any such securities issued after the date of this Agreement. For
62
purposes of this Section 9.03(b) and Section 10.02(c), receipt of consents
from the holders of not less than 66-2/3% in principal amount of the
Outstanding Securities (as defined in the Indentures) of any series
constitutes a consent with respect to the entire principal amount as of the
Debt Consent Measurement Date, of such series. For the avoidance of doubt,
receipt of consents from the holders of less than 66-2/3% in principal amount
of the Outstanding Securities of any series shall not constitute a consent
with respect to any portion of such series.
(c) The Marathon Parties shall use their reasonable best efforts
(not including the payment of any consideration) to obtain, prior to the
Closing, the written consent of Pilot Corporation, as contemplated by the
Global Obligations Agreement among MAP, Speedway SuperAmerica LLC, USX
Corporation, Pilot Corporation, Ashland, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
III, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Pilot Travel Centers LLC, dated as of September 1,
2001, to the release of Ashland from its obligations contained in Article XIV
of the Put/Call Agreement in accordance with Section 12.04 or, if such consent
has not been obtained prior to the Closing, as promptly as possible
thereafter.
(d) (i) The Ashland Parties and the Marathon Parties shall use their
reasonable best efforts to cause AAA to deliver to Ashland and Marathon the
Bring-Down AAA Opinions (as defined in Section 10.01(g)) and to cause HLHZ to
deliver to Ashland and Marathon the Bring-Down HLHZ Opinion (as defined in
Section 10.01(g)). It is understood that (A) the Ashland Board may rely upon
the Initial AAA Opinions and the Bring-Down AAA Opinions if the Ashland Board
determines that such reliance is appropriate (subject to the indemnification
and expense reimbursement arrangements previously agreed between Ashland and
AAA) and (B) the Marathon Board may rely upon the Initial HLHZ Opinion and the
Bring-Down HLHZ Opinion if the Marathon Board determines that such reliance is
appropriate (subject to indemnification and expense reimbursement arrangements
agreed between Marathon and HLHZ).
(ii) The Ashland Parties and the Marathon Parties acknowledge that
the sole purpose of the Bring-Down Opinions is to update the Initial
Opinions based on events occurring or facts being disclosed to AAA or
HLHZ, as applicable, after the date of this Agreement and prior to the
63
Closing. Therefore, the parties intend that (A) each Bring-Down Opinion
shall be based on the same valuation methodologies as the corresponding
Initial Opinion, except for changes in methodology required as a result
of events occurring or facts being disclosed to AAA or HLHZ, as
applicable, after the date of this Agreement and prior to the Closing,
and (B) events that are contemplated by AAA or HLHZ, as applicable, in
the assumptions identified in its Initial Opinion should not be
considered to have occurred after the date of this Agreement in
determining whether to deliver the corresponding Bring-Down Opinion.
(iii) Prior to the Closing, the Ashland Parties and MAP shall meet
periodically with personnel of AAA and HLHZ and shall provide AAA and
HLHZ access at all reasonable times upon reasonable prior request to
their respective personnel, properties, books and records to the extent
reasonably required for the purpose of delivering the Bring-Down
Opinions.
(iv) At any time prior to the Closing, either Ashland or Marathon
may request that AAA or HLHZ (A) update its Working Papers and analysis
based on events occurring or facts disclosed to it after the date of this
Agreement and prior to the date of such request and (B) based on such
update, advise Ashland and Marathon of any facts or circumstances that
are expected to result in it being unable to deliver its Bring-Down
Opinion as of such date. The Ashland Parties and the Marathon Parties
shall be deemed to have jointly requested AAA or HLHZ to comply with any
such request as promptly as practicable.
(v) In the event that AAA or HLHZ shall notify Ashland and Marathon
of any facts or circumstances that are expected to result in it being
unable to deliver its Bring-Down Opinion, Ashland or MAP, as applicable,
shall have the right for a period of three months, or such shorter period
as Ashland or MAP, as applicable, may elect, to meet and confer with, and
provide
64
additional information to, AAA or HLHZ, as applicable, for purposes of
resolving any concerns relating to such facts and circumstances. The
Ashland Parties and the Marathon Parties shall use their reasonable best
efforts to cause AAA or HLHZ, as applicable (based on such information
and any efforts by Ashland or MAP, as applicable, to cure or otherwise
address such facts and circumstances), to advise Ashland and Marathon as
promptly as practicable after the expiration of such period whether it
would be able to deliver its Bring-Down Opinion as of such date.
(vi) The Working Papers of AAA and HLHZ relating to the Bring-Down
Opinions, and any other Working Papers of AAA and HLHZ prepared pursuant
to this Section 9.03(d) or otherwise relating to the Transactions, shall
be made available to the Ashland Parties and the Marathon Parties upon
request at any time prior to or after the Closing. The Ashland Parties
and the Marathon Parties shall use their reasonable best efforts to cause
AAA and HLHZ to provide the Ashland Parties and the Marathon Parties
reasonable access to the personnel of AAA and HLHZ involved in the
Bring-Down Opinions, during normal business hours upon reasonable prior
request, at any time prior to the Closing to discuss matters relating to
such Working Papers.
(vii) At any time after August 1, 2004, or such earlier date as
Ashland and Marathon may agree, and prior to the Closing, either Ashland
or Marathon may request that AAA prepare a draft of the Bring-Down AAA
Opinions or that HLHZ prepare a draft of the Bring-Down HLHZ Opinion, in
each case marked to show any proposed changes from the applicable form
included in Section 10.01(g) of the Marathon Disclosure Letter or in
Section 10.01(g) of the Ashland Disclosure Letter, respectively, based on
events occurring or facts disclosed to AAA or HLHZ after the date of this
Agreement. The Ashland Parties and the Marathon Parties shall be deemed
to have jointly requested AAA or HLHZ to comply with any such
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request as promptly as practicable. Ashland and Marathon may review and
comment on any such proposed changes and may meet and confer with AAA and
HLHZ for purposes of resolving any such comments prior to the Closing.
(e) Prior to the Closing, Ashland shall give prompt notice to
Marathon of: (i) any representation or warranty made by the Ashland Parties
contained in the Transaction Agreements becoming untrue or incorrect, other
than such failures to be true and correct that, in the aggregate, have not had
and would not reasonably be expected to have an Ashland Material Adverse
Effect; provided that, for purposes of determining whether notice is required
under this clause (i), the representations and warranties of the Ashland
Parties shall be deemed not qualified by any references therein to (A)
materiality generally or (B) whether or not any breach, circumstance or other
item has resulted or would reasonably be expected to result in an Ashland
Material Adverse Effect; (ii) the failure by any of the Ashland Parties to
perform in all material respects their respective obligations under the
Transaction Agreements; (iii) any notice or other communication any Ashland
Party receives from any Governmental Entity or other person alleging, to the
knowledge of Ashland, with reasonable specificity, that a Consent of, or
registration, declaration or filing with, or permit from, such Governmental
Entity or other person is or may be required in connection with the execution
and delivery of or performance under any Transaction Agreement or the
consummation of the Transactions, or that any such action would violate any
applicable Law or breach or otherwise conflict with any material agreement to
which any of the Ashland Parties are parties or are otherwise bound; or (iv)
any action, suit, claim, investigation or proceeding commenced or, to its
knowledge, threatened, in each case seeking to restrain or prohibit or
otherwise materially affecting the Transactions; provided, however, that no
such notification shall affect the representations, warranties or obligations
of the Ashland Parties or the conditions to the obligations of the Ashland
Parties or the Marathon Parties under the Transaction Agreements.
(f) Prior to the Closing, Marathon shall give prompt notice to
Ashland of: (i) any representation or warranty made by the Marathon Parties
contained in
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the Transaction Agreements becoming untrue or incorrect, other than such
failures to be true and correct that, in the aggregate, have not had and would
not reasonably be expected to have a Marathon Material Adverse Effect;
provided that, for purposes of determining whether notice is required under
this clause (i), the representations and warranties of the Marathon Parties
shall be deemed not qualified by any references therein to (A) materiality
generally or (B) whether or not any breach, circumstance or other item has
resulted or would reasonably be expected to result in a Marathon Material
Adverse Effect; (ii) the failure by any of the Marathon Parties to perform in
all material respects their respective obligations under the Transaction
Agreements; (iii) any notice or other communication any Marathon Party
receives from any Governmental Entity or other person alleging, to the
knowledge of Marathon, with reasonable specificity, that a Consent of, or
registration, declaration or filing with, or permit from, such Governmental
Entity or other person is or may be required in connection with the execution
and delivery of or performance under any Transaction Agreement or the
consummation of the Transactions, or that any such action would violate any
applicable Law or breach or otherwise conflict with any material agreement to
which any of the Marathon Parties are parties or are otherwise bound; or (iv)
any action, suit, claim, investigation or proceeding commenced or, to its
knowledge, threatened, in each case seeking to restrain or prohibit or
otherwise materially affecting the Transactions; provided, however, that no
such notification shall affect the representations, warranties or obligations
of the Marathon Parties or the conditions to the obligations of the Ashland
Parties or the Marathon Parties under the Transaction Agreements. Marathon
shall give prompt notice to Ashland of: (i) any commitment referred to in the
definition of Market MAC Event contained in Section 14.02 ceasing to be in
full force and effect or (ii) any assertion by one or more Third Party Lenders
who have provided such commitment with respect to the HoldCo Borrowing that a
market disruption or other similar event has occurred that would result in the
non-satisfaction of the Market MAC Condition to the HoldCo Borrowing.
(g) The Ashland Parties and the Marathon Parties shall comply with
the obligations set forth in Sections 11.03(a) and 11.03(b) of the Put/Call
Agreement
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with respect to the transfer of the Ashland LOOP/LOCAP Interest as if Marathon
Company had exercised the Marathon Call Right (as defined in the Put/Call
Agreement) thereunder on the date of this Agreement. The Ashland Parties and
the Marathon Parties shall use their reasonable best efforts (not including
the payment of any consideration) to obtain (i) any consents or approvals (in
addition to those contemplated by Sections 11.03(a) and 11.03(b) of the
Put/Call Agreement) required for the transfer of the Ashland LOOP/LOCAP
Interest to HoldCo and the acquisition of the Ashland LOOP/LOCAP Interest by
Merger Sub in the Acquisition Merger as contemplated by this Agreement and
(ii) express releases of Ashland, executed and delivered by all parties to the
LOOP T&D Agreement or the LOCAP T&D Agreement, as applicable, effective as of
the Closing, from all liabilities, obligations and commitments under the LOOP
T&D Agreement and the LOCAP T&D Agreement, regardless of whether such
liabilities, obligations or commitments arose before or after the Closing.
Merger Sub shall execute such further instruments of assumption as may be
required as a result of the acquisition of the Ashland LOOP/LOCAP Interest by
Merger Sub in the Acquisition Merger as contemplated by this Agreement. If
Ashland is not released from all liabilities, obligations and commitments
under the LOCAP T&D Agreement in accordance with clause (ii) of the second
immediately preceding sentence, Ashland shall cause the LOCAP T&D Assumption
Agreement (as defined in Section 14.02) to be executed and delivered by the
parties specified therein to be parties thereto, and if Ashland has not been
released from all liabilities, obligations and commitments under the LOOP T&D
Agreement in accordance with this Section 9.03(g), Ashland shall cause the
LOOP T&D Assumption Agreement (as defined in Section 14.02) to be executed and
delivered by the parties specified therein to be parties thereto, in each case
as contemplated by Section 1.02(b).
SECTION 9.04. FEES AND EXPENSES. (a) Except as provided below, all
fees and expenses (including any broker's or finder's fees and the expenses of
representatives and counsel) incurred in connection with the Transactions
shall be paid by the party incurring such fees or expenses, whether or not the
Transactions are consummated.
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(b) Ashland and Marathon shall share equally (i) fees and expenses
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. in connection with its appraisal of the Maleic
Business and the VIOC Centers, (ii) fees and expenses of D&T for purposes of
allocating the value of MAP to its assets in anticipation of the MAP Partial
Redemption and for use by Marathon for GAAP reporting purposes, (iii) fees and
expenses of ▇▇▇▇▇▇ ▇▇▇▇▇ LLP in connection with obtaining the consent from the
Department of Transportation with respect to the transfer of Ashland's
interest in LOOP LLC, as required by the permit issued by the Department of
Transportation relating to LOOP LLC, (iv) fees and expenses incurred in
connection with filing, printing and mailing of the Proxy Statement and the
Forms S-4, including the SEC filing fees associated with the Proxy Statement,
the Marathon Form S-4 and the Ashland Form S-4; provided, however, that each
of Ashland and Marathon shall pay the fees and expenses of their respective
counsel and independent auditors in connection with the preparation and filing
of such documents and (v) fees and expenses of one firm engaged by Ashland,
and reasonably acceptable to Marathon, with respect to the solicitation of
proxies in connection with the Ashland Shareholders Meeting. Except as set
forth in Section 9.03(d)(i), Marathon shall pay the fees and expenses of AAA
in connection with the Initial AAA Opinions and the Bring-Down AAA Opinions
and Ashland shall pay the fees and expenses of HLHZ in connection with the
Initial HLHZ Opinion and the Bring-Down HLHZ Opinion. Marathon shall pay the
fees (other than any guarantee fee payable after Closing pursuant to the
Reimbursement Agreement) and expenses relating to the HoldCo Borrowing. Merger
Sub shall pay any guarantee fee payable after Closing pursuant to the
Reimbursement Agreement. Ashland shall pay the fees and expenses relating to
obtaining the consents referred to in Section 10.02(c) (Specified Consents).
Costs and expenses incurred in connection with the arrangements described in
Section 9.02(e) of the Put/Call Agreement, if applicable, shall be allocated
in accordance with such section.
(c) Ashland shall pay to Marathon a fee of $30,000,000 (the
"Termination Fee") if: (i) Marathon terminates this Agreement pursuant to
Section 11.01(d); (ii) Ashland terminates this Agreement pursuant to Section
11.01(f); or (iii) any person makes a Competing Ashland Proposal that was
publicly disclosed prior to the
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Ashland Shareholders Meeting and not withdrawn by the date of the Ashland
Shareholders Meeting and thereafter this Agreement is terminated pursuant to
Section 11.01(b)(iii) and within 15 months of such termination Ashland enters
into a definitive agreement to consummate, or consummates, any transaction
(other than a transaction involving Marathon or any of its affiliates, or any
successor thereto under the Put/Call Agreement, as a party thereto) of a kind
described in clause (i), (ii) or (iii) of the definition of "Competing Ashland
Proposal" (solely for purposes of this Section 9.04(c), the term "Competing
Ashland Proposal" shall have the meaning set forth in the definition of
Competing Ashland Proposal contained in Section 8.02(e) except that the
reference to "any of Ashland's Membership Interest" in clause (iii) thereof
shall be deemed a reference to "a majority of Ashland's Membership Interest").
Any fee due under this Section 9.04(c) shall be paid by wire transfer of
same-day funds (A) in the case of clause (i) or (ii) of the preceding
sentence, on the date of termination of this Agreement, and (B) in the case of
clause (iii) of the preceding sentence, on the date of execution of such
definitive agreement or, if earlier, consummation of such transactions.
(d) Ashland shall pay to Marathon $10,000,000 (which shall be in
addition to any Termination Fee payable pursuant to Section 9.04(c)), which
Ashland and Marathon agree is a reasonable estimate of Marathon's expenses
incurred in connection with this Agreement, if (i) this Agreement is
terminated pursuant to Section 11.01(c) or (ii) Ashland is obligated to pay
the Termination Fee under Section 9.04(c). Any fee due under Section
9.04(d)(i) shall be payable upon demand following such termination. Any fee
due under Section 9.04(d)(ii) shall be paid by wire transfer of same-day funds
on the date of payment of the Termination Fee. The payment by Ashland to
Marathon under this Section 9.04(d) following termination of this Agreement
pursuant to Section 11.01(c) shall not impair any claim for damages or any
other right or remedy available to Marathon (other than for expenses incurred
in connection with this Agreement), at law or in equity, arising out of or
resulting from any breach or failure to perform which gave rise to Marathon's
right to terminate this Agreement pursuant to Section 11.01(c).
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(e) Marathon shall pay to Ashland $10,000,000, which Ashland and
Marathon agree is a reasonable estimate of Ashland's expenses incurred in
connection with this Agreement, if this Agreement is terminated pursuant to
Section 11.01(e), payable upon demand following such termination. The payment
by Marathon to Ashland under this Section 9.04(e) following termination of
this Agreement pursuant to Section 11.01(e) shall not impair any claim for
damages or any other right or remedy available to Ashland (other than for
expenses incurred in connection with this Agreement), at law or in equity,
arising out of or resulting from any breach or failure to perform which gave
rise to Ashland's right to terminate this Agreement pursuant to Section
11.01(e).
SECTION 9.05. PUBLIC ANNOUNCEMENTS. The Ashland Parties, on the one
hand, and the Marathon Parties, on the other hand, shall consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other similar written or scripted public
statements (including communications to employees generally of MAP, the Maleic
Business or the VIOC Centers) with respect to the Transactions and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law, court process or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange.
SECTION 9.06. AFFILIATES. Prior to the date of the Ashland
Shareholders Meeting, Ashland shall deliver to Marathon a letter identifying
all persons who are expected by Ashland to be, at the date of the Ashland
Shareholders Meeting, "affiliates" of Ashland for purposes of Rule 145 under
the Securities Act, and Ashland shall update such list if necessary prior to
the Closing to identify all persons Ashland reasonably believes may have been
"affiliates" of Ashland for purposes of Rule 145 under the Securities Act on
the date of the Ashland Shareholders Meeting. Ashland shall use its reasonable
best efforts (not including the payment of any consideration) to cause each
such person to deliver to Marathon on or prior to the Closing Date a written
agreement substantially in the form attached hereto as Exhibit C.
SECTION 9.07. STOCK EXCHANGE LISTINGS. (a) Marathon shall prepare
and submit to the NYSE an
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application (or amendment thereto) for listing on the NYSE of the Marathon
Common Stock to be issued in the Acquisition Merger, and shall use its
reasonable best efforts to obtain, prior to the Ashland Shareholders Meeting,
approval for the listing of such shares, subject to official notice of
issuance.
(b) Ashland and New Ashland Inc. shall prepare and submit to the
NYSE or The Nasdaq Stock Market ("NASDAQ") an application (or amendment
thereto) for listing on the NYSE or NASDAQ of the New Ashland Inc. Common
Stock to be issued to holders of Ashland Common Stock in the Acquisition
Merger, and shall use their reasonable best efforts to obtain, prior to the
Ashland Shareholders Meeting, approval for the listing of such shares, subject
to official notice of issuance.
SECTION 9.08. RIGHTS AGREEMENTS; CONSEQUENCES IF RIGHTS TRIGGERED.
(a) If any Distribution Date occurs under the Ashland Rights Agreement at any
time during the period from the date of this Agreement to the Acquisition
Merger Effective Time, Ashland and Marathon shall make such adjustment to
Articles II, III and IV as Ashland and Marathon shall mutually agree so as to
preserve the economic benefits that Ashland and Marathon each reasonably
expected on the date of this Agreement to receive as a result of the
consummation of the Transactions.
(b) In the event that Marathon enters into or adopts a rights
agreement and, at any time from the date of this Agreement to the Closing
Date, a "distribution date", "share acquisition date", "triggering event" or
similar event occurs thereunder, the Marathon Board shall take such actions as
are necessary under such rights agreement to provide that rights certificates
representing an appropriate number of Marathon rights are issued to former
Ashland shareholders who receive Marathon Common Stock pursuant to the
Acquisition Merger. If Marathon is not permitted under such rights agreement
to provide rights certificates to such former Ashland shareholders, Ashland
and Marathon shall make such adjustment to Article IV as Ashland and Marathon
shall mutually agree so as to preserve the economic benefits that Ashland and
Marathon each reasonably expected on the date of this Agreement to receive as
a result of the consummation of the Transactions.
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SECTION 9.09. ST. ▇▇▇▇ PARK JUDGMENT AND PLEA AGREEMENT; PLAINS
SETTLEMENT. (a) After the Closing, (i) MAP shall complete the St. ▇▇▇▇ Park
QQQ Project (as defined in this Section 9.09(a))(if it has not been completed
prior to the Closing) and (ii) the Marathon Parties shall allow New Ashland
Inc., the United States Probation Office and their respective consultants and
advisors appropriate access to the St. ▇▇▇▇ Park refinery to allow them to
monitor and ascertain completion of the St. ▇▇▇▇ Park QQQ Project and assure
compliance of the "systems" (as defined in the St. ▇▇▇▇ Park Judgment and Plea
Agreement (as defined in Section 14.02)) with the St. ▇▇▇▇ Park Judgment and
Plea Agreement. The "St. ▇▇▇▇ Park QQQ Project" means the upgrade of all
process sewers, junction boxes and drains at the St. ▇▇▇▇ Park refinery to
comply with Subpart QQQ of the New Source Performance Standards of the Clean
Air Act, 42 U.S.C. {section} 7413(c)(1), in accordance with the St. ▇▇▇▇ Park
Judgment and Plea Agreement.
(b) Ashland or New Ashland Inc. shall bear the cost of the St. ▇▇▇▇
Park QQQ Project incurred after January 1, 2003 not to exceed $9,670,000 (if
the Closing occurs on or before December 31, 2004) or the amount of the Price
Reduction (as defined in Amendment No. 1 to the Put/Call Agreement) (if the
Closing occurs after December 31, 2004) (the "St. ▇▇▇▇ Park QQQ Project
Payment Amount"). The following amounts shall be credited against the St. ▇▇▇▇
Park QQQ Project Payment Amount: (i) 38% of (A) all out-of-pocket costs
incurred after January 1, 2003 by MAP and (B) internal engineering costs of
MAP incurred after January 1, 2003, in each case for which MAP has not been
reimbursed by Ashland, prior to the Closing, in each case arising out of or
relating to the St. ▇▇▇▇ Park QQQ Project, (ii) all out-of-pocket costs
incurred after January 1, 2003 by MAP and internal engineering costs of MAP
incurred after January 1, 2003, for which MAP has been reimbursed by Ashland,
prior to the Closing, in each case arising out of or relating to the St. ▇▇▇▇
Park QQQ Project, and (iii) $1,569,400, which amount represents 38% of the
$4,130,000 paid by MAP as part of the Plains Settlement (the sum of the amount
referred to in clauses (i), (ii) and (iii) being the "Prior Payments"). MAP
shall provide to Ashland, at least two business days prior to the Closing
Date, a written statement setting forth in reasonable detail its calculation
of the amounts referred
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to in clauses (i) and (ii) of the preceding sentence. Promptly following the
Closing, if the St. ▇▇▇▇ Park QQQ Project Payment Amount exceeds the Prior
Payments, New Ashland Inc. shall, and if the Prior Payments exceed the St.
▇▇▇▇ Park QQQ Project Payment Amount, MAP shall, make payment to the other
party of the amount of such excess, by wire transfer of immediately available
funds to a bank account designated in writing by MAP or New Ashland Inc., as
applicable, at least two business days prior to the Closing Date.
SECTION 9.10. CONSEQUENCES OF INABILITY TO TRANSFER THE ASHLAND
LOOP/LOCAP INTEREST ON THE CLOSING DATE. The parties acknowledge that,
pursuant to the MAP Governing Documents, Ashland is obligated to pay to MAP an
amount equal to any dividends or distributions that Ashland receives in
respect of the Ashland LOOP/LOCAP Interest net of certain Taxes imposed on
Ashland or withheld from such dividends or distributions, and accordingly, the
economic benefits of the foregoing have already been effectively transferred
to MAP. Accordingly, notwithstanding anything to the contrary contained
herein, it shall not be a condition to the Closing or the effectiveness of any
of the Transactions that Ashland shall have contributed the Ashland LOOP/LOCAP
Interest to HoldCo in accordance with Section 1.02(b) and the MAP/LOOP/LOCAP
Contribution Agreements. In the event that any consents or approvals required
for the transfer of the Ashland LOOP/LOCAP Interest are not obtained prior to
the Closing, and as a consequence Ashland is not able to contribute the
Ashland LOOP/LOCAP Interest to HoldCo on the Closing Date, the provisions set
forth in Sections 9.02(e), 13.03 and 13.04 of the Put/Call Agreement shall
apply; provided, however, that, from and after the Closing, any payments
described in the first sentence of this Section 9.10 shall be made by New
Ashland Inc. to Merger Sub for the benefit of MAP.
SECTION 9.11. CONSENTS UNDER ASSIGNED CONTRACTS. Ashland and
Marathon shall use their reasonable best efforts (not including the payment of
any consideration) to obtain any Consents of third parties necessary to effect
the assignment to and assumption by HoldCo of, and the release of Ashland
from, the Assigned Contracts (as defined in each of the Maleic Agreement and
the VIOC Agreement), including in the case of the Marathon Parties by
providing such assurances regarding performance by Merger Sub (as
74
successor to HoldCo) after the Closing as may be reasonably required to obtain
such Consents.
SECTION 9.12. ADMINISTRATIVE PROCEEDINGS. After the Closing, if the
Marathon Parties receive notice or become aware of any consent decree or
order, notice of violation, administrative enforcement action or similar
administrative action (each, an "Administrative Proceeding") relating to MAP
and naming Ashland as a responsible party, the Marathon Parties shall promptly
notify Ashland of such Administrative Proceeding. Ashland may take, and MAP
shall provide Ashland with such cooperation as Ashland may reasonably request
in connection with, any reasonable action to remove Ashland's name from such
Administrative Proceeding, so long as such removal is appropriate under the
circumstances (taking into consideration the applicable provisions of the
Transaction Agreements, the Ancillary Agreements, the MAP Governing Documents
and applicable Law). Nothing in this Section 9.12 is intended to affect MAP's
right to control its defense of such Administrative Proceedings.
SECTION 9.13. REPLACEMENT OF DISTRIBUTED RECEIVABLES. To the extent
any Distributed Receivable is reduced or canceled (other than as a result of a
breach by the obligor thereof of its payment obligation), or to the extent
Ashland makes any payment in respect of proceeds of any Distributed Receivable
to the holder of any Lien referred to in clause (iv) below after the
collection of such Distributed Receivable in order to satisfy such Lien,
including as a result of (i) defective or rejected goods or services, any cash
discount or governmental or regulatory action, (ii) a setoff in respect of any
claim by the obligor thereof, (iii) an obligation of MAP to pay the obligor
thereof any rebate or refund or (iv) any Lien with respect to such Distributed
Receivable, other than any Lien arising from actions or inactions of any of
the Ashland Parties or their affiliates (and not any of the Marathon Parties
or their affiliates), then MAP shall promptly assign to Ashland accounts
receivable of MAP, selected in accordance with the protocol set forth in
Exhibit A, with a total Value equal to, in the case of a reduction, the Value
of such reduction, in the case of a payment, the amount of such payment, or,
in the case of a cancelation, the Value of such Distributed Receivable.
Ashland shall assign back
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to MAP any Distributed Receivables that have been replaced pursuant to this
Section 9.13.
SECTION 9.14. TRANSITION SERVICES. Within 120 days after the date of
this Agreement, Marathon shall provide written notice to Ashland specifying
which of the services currently being performed by Ashland for the Maleic
Business that Marathon requests New Ashland Inc. to continue to perform during
the transition period after the Closing specified in, and in accordance with
the terms of, the Transition Services Agreement (as defined in the Maleic
Agreement). Prior to the Closing, Ashland and Marathon shall agree on the
scope of such transition services and shall prepare appropriate schedules to
the Transition Services Agreement to reflect such transition services. Unless
otherwise agreed by Ashland and Marathon, the fees for such transition
services shall be as specified in Section 2.1 (without regard to clause (i) of
the first sentence thereof) of the form of Transition Services Agreement
attached as an exhibit to the Maleic Agreement. Such transition services shall
be provided during the term specified in Section 2.2 of such form of
Transition Services Agreement, subject to the termination and notice
provisions specified therein.
SECTION 9.15. MAP PARTIAL REDEMPTION AMOUNT. (a) Ashland shall use its
reasonable best efforts to cause Deloitte & Touche LLP ("D&T") to provide
Ashland and Marathon, on or prior to August 15, 2004, (i) a preliminary report
prepared by D&T setting forth D&T's good faith estimate as to the respective
amounts of accounts receivable and cash to be distributed by MAP in the MAP
Partial Redemption and (ii) any supporting schedules and other information
prepared by D&T in connection with such report as Marathon may reasonably
request. Ashland shall use its reasonable best efforts to cause D&T to provide
Ashland and Marathon any updates to such report, schedules and other
information from time to time as Marathon may reasonably request.
(b) The Marathon Parties shall cause MAP to have available for
distribution at Closing in the MAP Partial Redemption cash in an amount, and
accounts receivable with a Value, which in the aggregate equal the Estimated
MAP Partial Redemption Amount. The Ashland Parties and the Marathon Parties
shall use their reasonable best efforts to cause MAP to have available for
distribution at Closing in
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the MAP Partial Redemption cash in an amount equal to the Cash Amount and
accounts receivable with a total Value equal to the AR Amount. Notwithstanding
the provisions of Section 8.01(c) or any provision of the MAP LLC Agreement
(as amended by the MAP LLC Agreement Amendment or otherwise amended
hereafter), and without requiring a vote pursuant to Section 8.07(b) of the
MAP LLC Agreement (as amended by the MAP LLC Agreement Amendment or otherwise
amended hereafter), in the event Marathon reasonably expects that MAP will not
have sufficient cash and accounts receivable available for distribution to
Ashland to fund the payment of the Estimated MAP Partial Redemption Amount
(after taking into account MAP's reasonably anticipated working capital
requirements) on the expected Closing Date, MAP shall be permitted to sell or
otherwise dispose of assets, or enter into sale/leaseback arrangements, in
each case in arm's-length transactions with unaffiliated third parties, that
are treated for Federal income Tax purposes as dispositions, not borrowings,
in order to raise funds to satisfy such funding requirement.
(c) If the Closing occurs, all Tax Items (as defined in the Tax
Matters Agreement) from any sale, disposition or sale/leaseback arrangement
effected pursuant to Section 9.15(b) that is not effected in the ordinary
course of MAP's business and is not reflected in MAP's "Business/Tactical Plan
& Budget 2004-2006" dated December 16, 2003 shall be allocated to Marathon
Company. The Marathon Parties shall (i) promptly notify Ashland of any written
proposal made or received by any of the Marathon Parties relating to such a
sale, disposition or sale/leaseback arrangement, and in any event shall notify
Ashland of any such proposed sale, disposition or sale/leaseback arrangement
not less than five days prior to entering into an agreement to effect any such
sale, disposition or sale/leaseback arrangement; (ii) in connection with any
such proposal, advise Ashland in writing of the assets to be transferred, the
identity of the proposed transferee and the material terms and conditions of
the proposed sale, disposition or sale/leaseback arrangement; (iii) keep
Ashland reasonably informed on a timely basis of the status and details of
such proposed sale, disposition or sale/leaseback arrangement, prior to and
after entering into an agreement to effect any such sale, disposition or
sale/leaseback arrangement, including any details that may affect the
77
timing of the Transactions, and provide Ashland with copies of all material
documents related to such proposed sale, disposition or sale/leaseback
arrangement; and (iv) use its reasonable best efforts to effect the closing of
any such sale, disposition or sale/leaseback arrangement substantially
concurrently with the Closing.
(d) Ashland shall provide Marathon not less than 90 days notice if
Ashland intends to waive the condition set forth in Section 10.02(f), in which
case the Marathon Parties shall cause MAP to have available for distribution
at Closing in the MAP Partial Redemption such additional cash as may be
required to comply with the first sentence of Section 9.15(b).
SECTION 9.16. ASHLAND DEBT OBLIGATION AMOUNT. No later than August
1, 2004, Ashland shall provide to Marathon a schedule setting forth estimates,
prepared in good faith by Ashland in light of any communications with the
Internal Revenue Service (the "IRS"), written or otherwise, of the Ashland
Debt Obligation Amounts based on assumed Closing Dates occurring on the last
day of each month from August of 2004 through June of 2005. Ashland shall
update such schedule promptly following any communication with the IRS,
written or otherwise, that would materially affect the Ashland Debt Obligation
Amount for any assumed Closing Date. Within five business days of Ashland's
receipt of the Private Letter Rulings, Ashland shall provide to Marathon a
schedule setting forth the Ashland Debt Obligation Amount for each such
assumed Closing Date after the date of such schedule. Ashland shall not,
without the prior written consent of Marathon, effect any repurchase,
repayment or defeasance prior to the Closing Date of any debt outstanding as
of the date of this Agreement (and any refinancings of such debt by Ashland or
any of its affiliates) that would reduce the Ashland Debt Obligation Amount
(taking into consideration any refinancing of such debt by Ashland or any of
its affiliates), except to the extent required by the terms of such debt
(including, with respect to obligations other than (i) the Ashland Public
Debt, (ii) any other debt issued after the date of this Agreement to refinance
any portion of the Ashland Debt Obligation Amount and (iii) Ashland's
industrial revenue bonds, as a result of any notice of Ashland's intent to
repurchase, repay or
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defease such obligations on an expected Closing Date; provided, that such
notice is delivered by Ashland after the satisfaction of the last to be
satisfied of the conditions set forth in Sections 10.01(a) (Ashland
Shareholder Approval), 10.01(c) (Antitrust) and 10.01(f) (Receipt of Private
Letter Rulings; Tax Opinions)).
ARTICLE X
CONDITIONS PRECEDENT
SECTION 10.01. CONDITIONS TO THE ASHLAND PARTIES' AND THE MARATHON
PARTIES' OBLIGATIONS TO EFFECT THE TRANSACTIONS. The respective obligation of
the Ashland Parties and the Marathon Parties to effect the Transactions is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) ASHLAND SHAREHOLDER APPROVAL. Ashland shall have obtained the
Ashland Shareholder Approval.
(b) LISTING. The shares of Marathon Common Stock issuable in the
Marathon Share Issuance shall have been approved for listing on the NYSE,
subject to official notice of issuance, and the shares of New Ashland Inc.
Common Stock issuable in the New Ashland Inc. Share Issuance shall have been
approved for listing on the NYSE or NASDAQ, subject to official notice of
issuance.
(c) ANTITRUST. Any waiting period (and any extension thereof)
applicable to the Transactions under the HSR Act shall have been terminated or
shall have expired. Any consents, approvals and filings under any foreign
antitrust Law, the absence of which would prohibit the consummation of the
Transactions, shall have been obtained or made.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Governmental Entity or other legal restraint
or prohibition preventing or making unlawful the consummation of the
Transactions shall be in effect; provided, however, that prior to asserting
this condition, subject to Section 9.03, each of the parties shall have used
its reasonable best efforts to prevent the entry of any such
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injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered or otherwise have any such
injunction or other order lifted or vacated.
(e) FORMS S-4 AND EXCHANGE ACT REGISTRATION STATEMENT. The Forms S-4
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order, and Marathon
shall have received any state securities or "blue sky" authorizations
necessary to effect the Marathon Share Issuance. Ashland shall have received
any state securities or "blue sky" authorizations necessary to effect the
HoldCo Share Issuance and the New Ashland Inc. Share Issuance. The Exchange
Act Registration Statement shall have become effective under the Exchange Act
and shall not be the subject of any stop order or proceedings seeking a stop
order.
(f) RECEIPT OF PRIVATE LETTER RULINGS; TAX OPINIONS. Ashland and
Marathon shall have received the private letter rulings from the Internal
Revenue Service, in form and substance reasonably satisfactory to the Ashland
Board and the Marathon Board, and the Tax opinions, dated as of the Closing
Date, set forth in Exhibit D (such private letter rulings, the "Private Letter
Rulings", and such Tax opinions, the "Tax Opinions") with respect to the
Transactions, and the Private Letter Rulings shall be in effect as of the
Closing Date.
(g) SOLVENCY OPINIONS. Ashland and Marathon shall have received two
"bring-down" solvency opinions of AAA dated as of the Closing Date and in
substantially the form included in Section 10.01(g) of the Marathon Disclosure
Letter (the "Bring-Down AAA Opinions") and a "bring-down" solvency opinion of
HLHZ dated as of the Closing Date and in substantially the form included in
Section 10.01(g) of the Ashland Disclosure Letter (the "Bring-Down HLHZ
Opinion" and, together with the Bring-Down AAA Opinion, the "Bring-Down
Opinions").
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SECTION 10.02. CONDITIONS TO OBLIGATIONS OF THE ASHLAND PARTIES. The
obligations of the Ashland Parties to effect the Transactions are further
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Marathon Parties in the Transaction Agreements shall be true
and correct as of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct as of such earlier date), other than such failures to be true and
correct that, individually and in the aggregate, have not had and would not
reasonably be expected to have a Marathon Material Adverse Effect. Ashland
shall have received a certificate signed on behalf of Marathon by the chief
executive officer or the chief financial officer of Marathon to such effect.
For purposes of determining the satisfaction of this condition only, the
representations and warranties of the Marathon Parties shall be deemed not
qualified by any references therein to (A) materiality generally or (B)
whether or not any breach, circumstance or other item has resulted or would
reasonably be expected to result in a Marathon Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE MARATHON PARTIES. The Marathon
Parties shall have performed in all material respects the obligations required
to be performed by them under the Transaction Agreements at or prior to the
Closing Date, and Ashland shall have received a certificate signed on behalf
of Marathon by the chief executive officer or the chief financial officer of
Marathon to such effect.
(c) SPECIFIED CONSENTS. Ashland shall have received irrevocable
consents (which shall be in full force and effect) to the Transactions with
respect to series of Ashland Public Debt with an aggregate principal amount as
of the Debt Consent Measurement Date representing at least 90% of the
aggregate principal amount of all series of Ashland Public Debt as of such
date.
(d) DISTRIBUTIONS TO FORMER ASHLAND SHAREHOLDERS. If the New Ashland
Inc. Share Issuance is to be effected through a distribution in accordance
with Section 1.04(b), the Ashland Board and the Board of Directors of HoldCo
shall have determined in good faith
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that such distribution will be in compliance with all applicable Law relating
to such distribution.
(e) ABSENCE OF UNDISCLOSED MATERIAL ADVERSE EFFECT. Except as
disclosed in documents filed by Marathon with the SEC and publicly available
on or before the date that is five business days prior to the first trading
day of the Averaging Period, and except for such events, changes, effects or
developments relating to the economy of the United States or foreign economies
in general or generally affecting any industry in which Marathon or any of its
subsidiaries operate, from the date of this Agreement to the Closing Date,
there shall not have been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a material adverse effect on the business, properties, assets, condition
(financial or otherwise), operations or results of operation of Marathon and
its subsidiaries, taken as a whole, and Ashland shall have received a
certificate signed on behalf of Marathon by the chief executive officer or the
chief financial officer of Marathon to such effect. Failure to deliver such
certificate, or the occurrence of any such event, change, effect or
development, shall not give rise to a right to terminate this Agreement under
Section 11.01(e).
(f) MAP ACCOUNTS RECEIVABLE. In order to effect the MAP Partial
Redemption, MAP shall have available for distribution at Closing accounts
receivable, each with a Federal income Tax basis no less than its face amount,
of MAP with a total Value equal to the AR Amount (calculated without giving
effect to any increase in the MAP Partial Redemption Amount pursuant to the
second sentence of Section 1.01).
(g) RECEIVABLES SALES FACILITY. Ashland shall have received a
certificate dated the Closing Date and signed on behalf of Marathon by the
chief executive officer or the chief financial officer of Marathon to the
effect (A) that Marathon has not delivered the notice referred to in Section
7.03(b)(vi) of the Tax Matters Agreement or (B) that MAP will not make any
sales of receivables during the two-year period beginning on the Closing Date.
SECTION 10.03. CONDITIONS TO OBLIGATIONS OF THE MARATHON PARTIES.
The obligations of the Marathon Parties
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to effect the Transactions are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Ashland Parties in the Transaction Agreements shall be true
and correct as of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct as of such earlier date), other than such failures to be true and
correct that, individually and in the aggregate, have not had and would not
reasonably be expected to have an Ashland Material Adverse Effect. Marathon
shall have received a certificate signed on behalf of Ashland by the chief
executive officer or the chief financial officer of Ashland to such effect.
For purposes of determining the satisfaction of this condition only: (i) the
representations and warranties of the Ashland Parties shall be deemed not
qualified by any references therein to (A) materiality generally or (B)
whether or not any breach, circumstance or other item has resulted or would
reasonably be expected to result in an Ashland Material Adverse Effect; and
(ii) the representations and warranties set forth in Section 6.11(d) shall be
deemed to be true and correct if the condition set forth in Section 10.01(g)
is satisfied.
(b) PERFORMANCE OF OBLIGATIONS OF THE ASHLAND PARTIES. The Ashland
Parties shall have performed in all material respects the obligations required
to be performed by them under the Transaction Agreements at or prior to the
Closing Date, and Marathon shall have received a certificate signed on behalf
of Ashland by the chief executive officer or the chief financial officer of
Ashland to such effect.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
SECTION 11.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing, whether before or after receipt of the Ashland
Shareholder Approval:
(a) by mutual written consent of Ashland and Marathon;
(b) by either Ashland or Marathon:
(i) if the Transactions are not consummated during the period
ending on June 30, 2005 (such date, as extended in accordance with
this Section 11.01(b)(i), the "Outside Date"), unless the failure to
consummate the Transactions is the result of a material breach of
the Transaction Agreements by the party seeking to terminate this
Agreement; provided, however, that the passage of such period shall
be tolled for any period (not to exceed three months):
(A) during which any party shall be subject to a nonfinal
order, decree, ruling or action of any court of competent
jurisdiction or other Governmental Entity restraining,
enjoining or otherwise prohibiting the consummation of the
Transactions;
(B) referred to in Section 9.03(d)(v); and
(C) referred to in the final proviso to Section 11.01(e);
and
(D) beginning on June 30, 2005 if, on such date, all
conditions set forth in Article X have been satisfied (or, to
the extent permitted by Law, waived by the parties entitled to
the benefit thereof) other than the condition set forth in
Section 10.02(f) (and other than those
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conditions that by their nature are to be satisfied on the
Closing Date) unless, at any time during the three month period
from June 30, 2005 through September 30, 2005, Ashland
determines, after consultation with Marathon, that the
condition set forth in Section 10.02(f) is not reasonably
expected to be satisfied during such three month period;
provided further however, that in no event will the Outside Date be
extended beyond September 30, 2005;
(ii) if any Governmental Entity issues an order, decree, ruling
or judgment or takes any other action permanently enjoining,
restraining or otherwise prohibiting any of the Transactions and
such order, decree, ruling, judgment or other action becomes final
and nonappealable;
(iii) if, upon a vote at the Ashland Shareholder Meeting (or
any adjournment or postponement thereof), the Ashland Shareholder
Approval is not obtained; or
(iv) if the party seeking to terminate this Agreement
reasonably determines that the condition set forth in Section
10.01(f) has become incapable of satisfaction based on either: (A)
amendments or modifications to Federal income Tax Law effective
after the date of this Agreement, (B) a private letter ruling
received by Ashland and Marathon from the IRS or (C) an official,
written communication from the IRS regarding the matters set forth
in Exhibit D;
(c) by Marathon, if any one or more of the Ashland Parties breach or
fail to perform their representations, warranties or covenants contained in
the Transaction Agreements, which breach or breaches or failure or failures to
perform (i) would, individually or in the aggregate, give rise to the failure
of a condition set forth in Section 10.03(a) or 10.03(b) and (ii) cannot be
cured or, if curable, is not or are not cured within 60 days after written
notice from Marathon (provided that the Marathon Parties are not then in
breach of their
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representations, warranties or covenants contained in the Transaction
Agreements, which breaches would give rise to the failure of a condition set
forth in Section 10.02(a) or 10.02(b));
(d) by Marathon, prior to the Cutoff Date, if:
(i) the Ashland Board withdraws or modifies, in a manner
adverse to Marathon, or proposes publicly to withdraw or modify, in
a manner adverse to Marathon, its approval or recommendation of the
Transaction Agreements or the Transactions, fails to recommend to
Ashland's shareholders that they give the Ashland Shareholder
Approval or adopts, approves or recommends, or proposes publicly to
adopt, approve or recommend, any Competing Ashland Proposal; or
(ii) the Ashland Board fails to reaffirm its recommendation to
Ashland's shareholders that they give the Ashland Shareholder
Approval within 10 business days of Marathon's written request to do
so (which request may be made at any time prior to the Ashland
Shareholders Meeting if a Competing Ashland Proposal has been
publicly disclosed and not withdrawn);
(e) by Ashland, if any one or more of the Marathon Parties breach or
fail to perform their representations, warranties or covenants contained in
the Transaction Agreements which breach or breaches or failure or failures to
perform (i) would, individually or in the aggregate, give rise to the failure
of a condition set forth in Section 10.02(a) or 10.02(b) and (ii) cannot be
cured or, if curable, is not or are not cured within 60 days after written
notice from Ashland (provided that the Ashland Parties are not then in breach
of their representations, warranties or covenants contained in the Transaction
Agreements, which breaches would give rise to the failure of a condition set
forth in Section 10.03(a) or 10.03(b)); provided, however, for purposes of
this Section 11.01(e), the Marathon Parties shall be deemed not to have
breached or failed to perform their covenant to cause the HoldCo Borrowing to
be advanced to HoldCo in accordance with Section 1.03(a) for up to three
months following the day on which the Closing Date would otherwise
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occur but for the failure of the Marathon Parties to cause the HoldCo
Borrowing to be advanced to HoldCo if (A) such failure results from a Market
MAC Event and (B) the Marathon Parties use their reasonable best efforts to
cause the HoldCo Borrowing to be advanced to HoldCo as soon as practicable
thereafter, including, to the extent necessary, by providing guarantees or
other credit support from the Marathon Parties (to the extent they have not
otherwise agreed to do so), agreeing to modifications in the pricing, terms or
structure of the HoldCo Borrowing (reasonably acceptable to Ashland) or
arranging alternative Third Party Lenders; or
(f) by Ashland in accordance with Section 11.05(b); provided,
however, that Ashland shall have complied with all provisions thereof,
including the notice provisions therein.
SECTION 11.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Ashland or Marathon as provided in Section 11.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of any party hereto, other than Section
6.09 (Brokers), Section 7.09 (Brokers), the last sentence of Section 9.02
(Access to Information; Confidentiality), Section 9.04 (Fees and Expenses),
this Section 11.02 and Article XIV (General Provisions), which provisions
shall survive such termination, and except to the extent that such termination
results from the material breach by a party of its representations, warranties
or covenants set forth in the Transaction Agreements. Without limiting the
generality of the foregoing, in the event of termination of this Agreement by
either Ashland or Marathon as provided in Section 11.01, none of the MAP
Governing Documents shall be terminated, amended or modified as specified in
the Transaction Agreements.
SECTION 11.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after receipt of the Ashland Shareholder
Approval; provided, however, that after receipt of the Ashland Shareholder
Approval, there shall be made no amendment that by Law requires further
approval by the shareholders of Ashland without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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SECTION 11.04. EXTENSION; WAIVER. At any time prior to the Closing,
Ashland or Marathon may, to the extent permitted by Law, (a) extend the time
for the performance of any of the obligations or other acts of the Marathon
Parties (in the case of an extension granted by Ashland) or the Ashland
Parties (in the case of an extension granted by Marathon), (b) waive any
inaccuracies in the representations and warranties contained in the
Transaction Agreements or in any document delivered pursuant to the
Transaction Agreements, (c) waive compliance with any of the agreements of the
Marathon Parties (in the case of a waiver granted by Ashland) or the Ashland
Parties (in the case of a waiver granted by Marathon) or (d) waive any
condition to the obligations of the Ashland Parties (in the case of a waiver
granted by Ashland) or the Marathon Parties (in the case of a waiver granted
by Marathon); provided, however, that after receipt of the Ashland Shareholder
Approval, there shall be made no extension or waiver that by Law requires
further approval by the shareholders of Ashland without the further approval
of such shareholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
SECTION 11.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. (a) A termination of this Agreement pursuant to Section 11.01, an
amendment pursuant to Section 11.03 or an extension or waiver pursuant to
Section 11.04 shall, in order to be effective, require action by the Ashland
Board or the Marathon Board, as applicable, or the duly authorized designee of
the Ashland Board or the Marathon Board, as applicable.
(b) Ashland may terminate this Agreement pursuant to Section
11.01(f) only if, prior to the Cutoff Date, (i) the Ashland Board (or, if
applicable, a majority of the disinterested members thereof) has received a
Superior Proposal, (ii) in light of such Superior Proposal the Ashland Board
shall have determined in good faith, after consultation with inside and
outside counsel, that the failure to take such action would be reasonably
likely to result in a breach of its fiduciary obligations under applicable
Law, (iii) Ashland has notified Marathon in writing of the determination
described in clause (ii) above, (iv) at least five business days have elapsed
88
following receipt by Marathon of the notice referred to in clause (iii) above,
(v) Ashland is in compliance in all material respects with Section 8.02 (No
Solicitation) and (vi) Marathon is not at such time entitled to terminate this
Agreement pursuant to Section 11.01(c). Written confirmation by an executive
officer of Marathon that expressly states that Marathon accepts the fees due
and paid by Ashland under Section 9.04 shall constitute acceptance by Marathon
of the validity of any termination of this Agreement under Section 11.01(f)
and this Section 11.05(b); provided that, if such written confirmation is not
provided within five business days after Marathon's receipt of payment of such
fees, Marathon shall promptly refund such payment to Ashland without setoff.
It is understood and agreed that a valid termination of this Agreement in
compliance with the provisions of this Section 11.05(b) shall not constitute a
breach of any provision of this Agreement.
ARTICLE XII
AMENDMENT OF EXISTING MAP AGREEMENTS
SECTION 12.01. ASSET TRANSFER AND CONTRIBUTION AGREEMENT. (a)
ENVIRONMENTAL INDEMNITY. After the Closing, subject to and in accordance with
all terms, conditions, restrictions and limitations contained in Section 9.8
of the Asset Transfer and Contribution Agreement among Marathon Company,
Ashland and MAP dated as of December 12, 1997, as amended (the "ATCA"), MAP
shall direct and control all Remediation Activities (as defined in the ATCA)
undertaken in connection with any Ashland Environmental Loss associated with
the Ashland Transferred Assets (as such terms are defined in the ATCA). The
Ashland Parties and the Marathon Parties shall cooperate in transferring the
direction and control of such Remediation Activities to MAP. In addition,
notwithstanding anything to the contrary contained in the ATCA, if the Closing
occurs, New Ashland Inc. shall not have any liabilities or obligations:
(i) in excess of $50,000,000 in the aggregate for Ashland
Environmental Losses under Section 9.2(c) of the ATCA incurred on or
after January 1, 2004, except as otherwise provided in
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the last sentence of this Section 12.01(a);
(ii) arising out of the St. ▇▇▇▇ Park QQQ Project to the extent
incurred on or after January 1, 2003 other than the amounts to be
paid pursuant to Section 9.09(b);
(iii) arising out of the Plains Settlement (as defined in
Section 14.02) regardless of when incurred; or
(iv) under Section 9.8(f) of the ATCA.
From and after the Closing, MAP shall continue to treat and process any and
all impacted groundwater associated with Remediation Activities undertaken in
connection with any Ashland Environmental Loss (as defined in the ATCA)
relating to the Catlettsburg, Canton and St. ▇▇▇▇ Park refineries.
Notwithstanding anything to the contrary contained in this Section 12.01(a),
such treatment and processing shall be at MAP's sole cost and expense. MAP
shall have title to any and all hydrocarbons recovered during the treatment
and processing of such impacted groundwater. Ashland shall retain all Ashland
Excluded Liabilities (as defined in the ATCA) as well as all liabilities and
obligations associated with the Scharbauer and ▇▇▇▇ Ranch S-P project and the
S-P projects described on Schedule 9.2(c) to the Ashland Asset Transfer and
Contribution Agreement Disclosure Letter (as defined in the ATCA).
(b) OTHER INDEMNIFICATION. After the Closing, the Ashland Parties
shall not have any liabilities or obligations for breaches of representations
or warranties under Section 9.2(a) of the ATCA, including the Claims (as
defined in the ATCA) identified in Section 12.01(b) of the Ashland Disclosure
Letter, regardless of whether any Claim thereunder has been asserted on or
prior to the Closing Date.
(c) DEPARTMENT OF DEFENSE CLAIM. Notwithstanding anything to the
contrary contained in the ATCA or the other MAP Governing Documents, (i) MAP
shall pursue the claims that MAP has asserted against the U.S. Department of
Defense (the "DOD") relating to alleged illegal price adjustments for jet fuel
and other aviation fuel sold to the DOD by Ashland Petroleum Company from 1980
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through 1990 (the "DOD Claims") and (ii) New Ashland Inc. shall have the right
to participate in the pursuit of the DOD Claims and to employ counsel, at its
own expense, separate from the counsel employed by MAP, it being understood
that MAP shall control, in consultation with New Ashland Inc., the pursuit of
the DOD Claims. MAP shall use its reasonable best efforts to prosecute the DOD
Claims in accordance with this Section 12.01(c) until the DOD Claims are
finally determined pursuant to one or more final and nonappealable orders,
decrees or judgments by a court of competent jurisdiction or by one or more
settlement agreements approved by New Ashland Inc. (such approval not to be
unreasonably withheld or delayed). If MAP shall receive any recovery under the
DOD Claims, whether by judgment, settlement or otherwise, Marathon or Merger
Sub shall promptly pay to New Ashland Inc. an amount equal to (A) 38% of such
recovery minus (B) 38% of MAP's reasonable out-of-pocket costs and expenses in
pursuing the DOD Claims. If and to the extent MAP's reasonable out-of-pocket
costs and expenses incurred in the pursuit of the DOD Claims exceeds the
ultimate recovery under the DOD Claims, New Ashland Inc. shall pay to Marathon
an amount equal to 38% of such excess.
(d) EMPLOYEE BENEFIT MATTERS. (i) As of the Closing, except as
expressly modified herein, the terms and conditions of Article X of the ATCA
shall continue to apply with respect to all employees and former employees of
MAP and its subsidiaries who were Ashland Transferred Employees (as defined in
the ATCA) (the "Transferred MAP Employees").
(ii) Without limiting the generality of Section 12.01(d)(i),
from and after the Closing, MAP and its successors shall be solely
responsible for all liabilities, obligations and commitments
(including any costs and expenses) in connection with the provision
of retiree medical and retiree life insurance benefits to the
Transferred MAP Employees. Such benefits shall be determined taking
into account the combined service of each Transferred MAP Employee
with Ashland and its subsidiaries and MAP and its subsidiaries. For
the avoidance of doubt, Ashland shall not have any liability,
obligation or commitment in respect of retiree medical or retiree
life insurance benefits for MAP
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employees, including Transferred MAP Employees, from and after the
Closing.
(iii) Ashland shall remain solely responsible for any benefits
under the Ashland & Affiliates Pension Plan (the "Ashland Pension
Plan") and for any benefits under the Ashland Leveraged Employee
Stock Ownership Plan (the "Ashland LESOP") accrued by each
Transferred MAP Employee as of immediately prior to such employee's
Employment Transfer Date (as defined in the ATCA). Solely for
purposes of qualifying for distributions and early retirement
benefits pursuant to the Ashland Pension Plan and the Ashland LESOP,
Ashland will continue to treat the Transferred MAP Employees as
employed by an affiliated employer for so long as they remain
actively employed by MAP or its successors or their affiliates.
(iv) In accordance with the terms of the Ashland Employee
Savings Plan, as of the Closing, Ashland agrees to facilitate the
ability of each Transferred MAP Employee who is currently employed
by MAP and its subsidiaries immediately prior to the Closing to
effect a "direct rollover" (within the meaning of Section 401(a)(31)
of the Code) of his or her account balances under the Ashland
Employee Savings Plan if such rollover is elected in accordance with
applicable Law by such Transferred MAP Employee. Marathon agrees to
cause the Marathon Thrift Plan to accept a "direct rollover" to the
Marathon Thrift Plan of such Transferred MAP Employees' account
balances (including promissory notes evidencing all outstanding
loans) under the Ashland Employee Savings Plan.
(v) Except as provided in this Section 12.01(d), Ashland shall
remain solely responsible for any individual contractual obligations
with any Transferred MAP Employees (including any obligations to
such employees pursuant to the Ashland Stock Plans, the Ashland
Salary Continuation Plan and any other severance, change in control
or incentive compensation plan or arrangement) to the extent that
Ashland was
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liable for such obligations immediately prior to the Closing.
(vi) Subject to applicable Law, Ashland shall reasonably
cooperate in providing MAP with complete data for any Transferred
MAP Employees.
(vii) The parties agree that, in the event that MAP and its
subsidiaries make any contributions to, or payments in respect of,
any pension plans, post-retirement health and life insurance plans
or any other post-employment benefit arrangements, other than the
Permitted Payments (as defined below), then MAP shall make a special
non-pro rata distribution to Ashland in an amount equal to 38% of
the amount by which any such contributions or payments exceed the
Permitted Payments. Any such distribution to Ashland pursuant to
this Section 12.01(d)(vii) shall be effected through an increase in
the MAP Partial Redemption Amount or through such other means as
Ashland and MAP may mutually agree. For purposes of this Section
12.01(d)(vii), "Permitted Payments" means:
(A) any benefit payments made in the ordinary course of
business consistent with past practice to beneficiaries of such
pension plans, post-retirement health and life insurance plans
or post-employment benefit arrangements;
(B) contributions to the MAP Retirement Plan (the "MAP
Qualified Pension Plan") in an amount not in excess of the
minimum amount necessary to avoid the required filing of
information with the Pension Benefit Guaranty Corporation
("PBGC") pursuant to Section 4010 of ERISA with respect to the
2003 information year, which filing would otherwise be due on
April 15, 2004 (which amounts shall be contributed at the
latest possible time to avoid such required filing);
(C) in the case of the MAP Qualified Pension Plan (1) if
the pension funding
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relief (including relief related to the determination of the
PBGC variable-rate premium (within the meaning of 29 C.F.R.
4006.3)) contemplated by H.R. 3108 (or any substantially
similar legislation) (the "Pension Funding Relief") is enacted
into law on or prior to September 15, 2004, contributions in
calendar year 2004 in an amount not in excess of the minimum
amount necessary to avoid payment of the variable-rate premium
for such plan for the 2004 plan year (taking into account any
amounts previously contributed to the MAP Qualified Pension
Plan, including pursuant to the immediately preceding clause
(B) and clause (C)(3) below), provided that such contributions
shall not be made before the latest possible time that such
contributions may be made and still be taken into account in
determining whether any variable-rate premium is due for the
2004 plan year, using the method that produces the lowest
variable-rate premium and reflects any exemptions and special
rules under 29 C.F.R. 4006.5 and the highest discount rate
permitted for the calculation of such variable-rate premium and
such other actuarial assumptions as set forth in 29 C.F.R. 4006
or otherwise required under PBGC regulations and (2) if the
Pension Funding Relief is enacted into law on or prior to
September 15, 2005, contributions in calendar year 2005 in an
amount not in excess of the minimum amount necessary to avoid
payment of the variable-rate premium for such plan for the 2005
plan year (taking into account any amounts previously
contributed to the MAP Qualified Pension Plan, including
pursuant to the immediately preceding clauses (B) and (C)(1)
and clause (C)(3) below), provided that such contributions
shall not be made before the latest possible time that such
contributions may be made and still be taken into account in
determining whether any variable-rate premium is due for the
2005 plan year, using
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the method that produces the lowest variable-rate premium and
reflects any exemptions and special rules under 29 C.F.R.
4006.5 and the highest discount rate permitted for the
calculation of such variable-rate premium and such other
actuarial assumptions as set forth in 29 C.F.R. 4006 or
otherwise required under PBGC regulations and (3) until the
Pension Funding Relief is enacted into law, contributions (made
in amounts and at such times consistent with past practice) not
in excess of $120,000,000 in each of calendar year 2004 and
2005; and
(D) in the case of the MAP Qualified Pension Plan,
contributions not in excess of the minimum additional amounts
required (which amounts shall be contributed at the latest
possible time) for such plan to satisfy the minimum funding
requirements of Section 412 of the Code;
it being understood that any amounts previously contributed to the
MAP Qualified Pension Plan (including under the immediately
preceding clause (B), (C) (1)-(3) or (D)) shall be taken into
account in determining any subsequent amounts permitted to be
contributed under the immediately preceding clause (B), (C)(1)-(3)
or (D) so as to avoid duplication of contributions. Notwithstanding
the foregoing, in no event may Permitted Payments under the
immediately preceding clauses (B), (C)(1)-(3) and (D) in the
aggregate exceed, for each of calendar years 2004 and 2005, an
amount (the "Maximum Annual Permitted Payment") equal to the greater
of (x) the minimum contributions required to be paid in such year to
satisfy the minimum funding requirements of Section 412 of the Code
(based on the required due dates for such contributions) and (y)
$120,000,000. With respect to the 2005 calendar year, the Maximum
Annual Permitted Payment shall be pro-rated by multiplying the
Maximum Annual Permitted Payment by a fraction, the numerator of
which is the number of months
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elapsed in such year through and including the Closing Date, and the
denominator of which is 12. At least 30 days in advance of any
Permitted Payment described under clauses (B), (C)(1)-(3) or (D) of
the definition thereof to be contributed by MAP or its subsidiaries
to the MAP Qualified Pension Plan, MAP and/or its actuary shall
provide Ashland with a good-faith estimate of such Permitted
Payment, and with all information reasonably requested by Ashland
(and any actuary designated by Ashland) to review and independently
verify such Permitted Payment.
(e) OTHER PROVISIONS. After the Closing, the Ashland Parties and
their affiliates shall not have any liabilities or obligations under Section
7.2(h) (Guarantees) or 7.2(l) (Marine Preservation Association) of the ATCA.
For the avoidance of doubt, the other liabilities and obligations of the
Ashland Parties and their affiliates, and the liabilities and obligations of
Marathon Company, MAP and MAP's subsidiaries, under the ATCA, including those
under Article IX thereof, shall continue in full force and effect after the
Closing, except as provided in the Transaction Agreements. After the Closing,
Ashland shall not have any liabilities or obligations under the Parent Company
Guarantee dated May 28, 2003 relating to a Crude Oil Sales Agreement with
Saudi Arabian Oil Company effective June 1, 2003, as amended; provided,
however, that nothing in the Transaction Agreements or the Ancillary
Agreements shall prohibit Marathon from continuing to be a guarantor
thereunder.
SECTION 12.02. DESIGNATED SUBLEASES. (a) With respect to the ▇▇▇▇▇▇▇
▇▇▇▇▇ Master Sublease Agreement dated as of January 1, 1998, between Ashland
Oil, Inc. and Speedway SuperAmerica LLC and the Pitney ▇▇▇▇▇ Credit
Corporation Master Subcharter Agreement, dated as of January 1, 1998, between
Ashland and MAP (each, a "Designated Sublease"), Ashland shall use its
reasonable best efforts to (i) purchase or otherwise acquire the property then
leased under the Original Lease (as defined in the MAP LLC Agreement) and
subleased to MAP pursuant to each Designated Sublease (the "Leased Property")
on or prior to the Closing and (ii) upon such purchase or other acquisition,
contribute its interest in such Leased Property to MAP or one of its
subsidiaries at no cost to
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MAP or such subsidiary on or prior to the Closing; provided, however, that (A)
with respect to any such Original Lease, Ashland shall not be obligated to pay
more than a reasonable amount as consideration to, or make more than a
reasonable financial accommodation in favor of, or commence litigation
against, any person (including in order to obtain any agreement, consent or
cooperation of or from such person) in order to purchase or otherwise acquire
the related Leased Property as contemplated by, and in accordance with, this
Section 12.02(a) and (B) any additional cost associated with exercising an
option under any such Original Lease to purchase the related Leased Property
as described above shall be deemed not to constitute an obligation to pay more
than a reasonable amount.
(b) In the event that Ashland is unable to purchase or otherwise
acquire the Leased Property related to a Designated Sublease in accordance
with Section 12.02(a), then the Ashland Parties and the Marathon Parties shall
use their reasonable best efforts (including entering into customary
documentation reasonably acceptable in form and substance to the Ashland
Parties and the Marathon Parties) to cause (i) all Ashland's existing rights
under such Original Lease and, as applicable, either the SuperAmerica
Transaction Documents (as defined below) or Pitney ▇▇▇▇▇ Transaction Documents
(as defined below), to be assigned to MAP, effective as of the Closing Date,
(ii) MAP to assume, effective as of the Closing Date, all liabilities and
obligations required to be performed or discharged after the Closing under
such Original Lease (including the obligation to pay rent and any additional
cost associated with exercising an option under such Original Lease to
purchase the related Leased Property) and, as applicable, either the
SuperAmerica Transaction Documents or Pitney ▇▇▇▇▇ Transaction Documents and
(iii) the Ashland Parties and their affiliates to be released, effective as of
the Closing Date, from all liabilities and obligations required to be
performed or discharged after the Closing under such Original Lease and, as
applicable, either the SuperAmerica Transaction Documents or Pitney ▇▇▇▇▇
Transaction Documents. If the Ashland Parties and the Marathon Parties are
able to effect the assignment, assumption and release in accordance with this
Section 12.02(b) in connection with an Original Lease related to a Designated
Sublease, on the Closing Date, New
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Ashland Inc. shall pay to MAP cash, by wire transfer of immediately available
funds to a MAP bank account designated in writing by MAP at least two business
days prior to the Closing Date, in an amount equal to the present value,
discounted at a rate equal to the yield to average life of Marathon public
debt having an average life similar to the remaining average life of such
Original Lease, and based on such other assumptions as the parties shall
reasonably agree upon, of the lowest cost alternative of (x) the payment of
all rent required to be paid thereafter under such Original Lease (including
for all renewal periods available under the terms of such Original Lease) or
(y) the payment of all rent required to be paid thereafter under such Original
Lease until the date of any available option under such Original Lease to
purchase the related Leased Property and the cost associated with exercising
any such option. Ashland shall reimburse Marathon for any reasonable
out-of-pocket expenses incurred by Marathon relating to such assignment,
assumption and release; provided, however, that, with respect to any Original
Lease, Ashland shall not be obligated to pay more than a reasonable amount as
consideration to, or make more than a reasonable financial accommodation in
favor of, or commence litigation against, any person (including in order to
obtain any agreement, consent or cooperation of or from such person) in order
to effect the assignment, assumption, and release contemplated by, and in
accordance with, this Section 12.02(b) with respect to such Original Lease
and, as applicable, either the SuperAmerica Transaction Documents or Pitney
▇▇▇▇▇ Transaction Documents. If the Ashland Parties and the Marathon Parties
are able to effect the assignment, assumption and release in accordance with
this Section 12.02(b) with respect to any Original Lease related to a
Designated Sublease, such Designated Sublease shall thereupon terminate and
none of the Ashland Parties or the Marathon Parties shall have any liabilities
or obligations thereunder other than liabilities and obligations required to
be performed or discharged before the Closing.
(c) In the event that, on or prior to the Closing, (x) Ashland is
unable to purchase and contribute the Leased Property related to a Designated
Sublease as contemplated by, and in accordance with, Section 12.02(a), and (y)
the Ashland Parties and the Marathon Parties are unable to effect the
assignment, assumption and release as
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contemplated by, and in accordance with, Section 12.02(b) with respect to such
Original Lease and, as applicable, either the SuperAmerica Transaction
Documents or Pitney ▇▇▇▇▇ Transaction Documents, then (i) MAP shall be
entitled to continue to sublease the Leased Property pursuant to such
Designated Sublease until the term of such Original Lease expires, (ii)
Ashland shall use its reasonable best efforts to purchase or otherwise acquire
the related Leased Property under such Original Lease and convey title to such
Leased Property to MAP or one of its subsidiaries; provided, however, that (A)
with respect to any such Original Lease, Ashland shall not be obligated to pay
more than a reasonable amount as consideration therefor to, or make more than
a reasonable financial accommodation in favor of, or commence litigation
against, any person (including in order to obtain any agreement, consent or
cooperation of or from such person) in order to purchase or otherwise acquire
the related Leased Property and (B) any additional cost associated with
exercising an option under any Original Lease to purchase related Leased
Property shall be deemed not to constitute an obligation to pay more than a
reasonable amount and (iii) if Ashland subsequently acquires such Leased
Property, Ashland shall convey title to such Leased Property to MAP or one of
its subsidiaries at no cost (including transfer Tax expense) to MAP or such
subsidiary at such time.
(d) For purposes of this Agreement:
"SUPERAMERICA TRANSACTION DOCUMENTS" means the following documents:
(i) Participation Agreement, dated as of December 31, 1990, among Ford Motor
Credit Company, as owner participant; State Street Bank and Trust Company of
Connecticut, National Association, as trust company and as owner trustee;
Ashland Oil, Inc. (now known as "Ashland Inc."), as lessee; SuperAmerica
Group, Inc., as seller; First Colony Life Insurance Company, as initial
lender; and SuperAsh Remainderman Limited Partnership, as remainderman; (ii)
Three Party Agreement, dated as of December 31, 1990, among SuperAsh
Remainderman Limited Partnership, as remainderman; Ashland Oil, Inc., as
lessee; and State Street Bank and Trust Company of Connecticut, National
Association, as lessor; (iii) Tax Indemnification Agreement, dated December
31, 1990, among Ford Motor Credit Company, State Street Bank and Trust Company
of Connecticut, National Association and Ashland Oil, Inc.;
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(iv) Guarantee, dated as of December 31, 1990, by State Street Bank and Trust
Company to Ford Motor Credit Company, Ashland Oil, Inc., SuperAmerica Group,
Inc., First Colony Life Insurance Company and SuperAsh Remainderman Limited
Partnership; (v) Guaranty of Ford Motor Credit Company, dated as of September
21, 1996, given by Ford Motor Credit Company to State Street Bank and Trust
Company of Connecticut, National Association, Ashland Oil, Inc., SuperAmerica
Group, Inc., First Colony Life Insurance Company, and SuperAsh Remainderman
Limited Partnership; and (vi) Consent to the First Amendment of SuperAsh
Remainderman Limited Partnership Agreement of Limited Partnership.
"PITNEY ▇▇▇▇▇ TRANSACTION DOCUMENTS" means the following documents:
(i) Financing Agreement, among Pitney ▇▇▇▇▇ Credit Corporation, PNC Leasing
Corp., Ashland, and PNC Bank, Kentucky, Inc., dated as of January 19, 1996;
(ii) Assignment of Builder Contracts between Ashland, Pitney ▇▇▇▇▇ Credit
Corporation and PNC Leasing Corp., Kentucky, dated January 19, 1996; (iii)
Letter Agreement, dated December 31, 1996, among Pitney ▇▇▇▇▇ Credit
Corporation, Ashland, First Security Bank, National Association, and
Prudential Securities Incorporated acknowledging the Assignment of Builder
Contracts; (iv) Letter Agreement, dated January 16, 1997, between Pitney ▇▇▇▇▇
Credit Corporation and Ashland acknowledging the understanding of certain
definitions in connection with Schedule A attached thereto; (v) Letter
Agreement, dated January 21, 1997, among Pitney ▇▇▇▇▇ Credit Corporation,
Ashland, First Security Bank, National Association, and Prudential Securities
Incorporated acknowledging the Charter Assignment; (vi) Letter Agreement,
dated June 19, 1997, among Pitney ▇▇▇▇▇ Credit Corporation, Ashland, First
Security Bank, National Association, and Prudential Securities Incorporated
acknowledging the Assignment of Builder Contracts; (vii) Letter Agreement,
dated June 19, 1997, between Pitney ▇▇▇▇▇ Credit Corporation and Ashland
acknowledging the understanding of certain definitions in connection with
Schedule A attached thereto; (viii) Letter Agreement, dated June 19, 1997,
among Pitney ▇▇▇▇▇ Credit Corporation, Ashland, First Security Bank, National
Association, and Prudential Securities Incorporated acknowledging the Charter
Assignment; (ix) Amendment to Charter Supplement, dated as of June 19, 1997,
between Pitney ▇▇▇▇▇ Credit Corporation and Ashland; (x) First
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Amendment to Charter Agreement dated as of October 28, 1997, between Pitney
▇▇▇▇▇ Credit Corporation and Ashland; (xi) First Amendment to Charter
Supplements Nos. 1-16, dated as of October 28, 1997, between Pitney ▇▇▇▇▇
Credit Corporation and Ashland; (xii) Letter Agreement, dated November 24,
1997, between Pitney ▇▇▇▇▇ Credit Corporation and Ashland, regarding ownership
of specified barges; (xiii) Termination of Charter Supplements Nos. 16-21,
dated as of December 2, 1997, between Pitney ▇▇▇▇▇ Credit Corporation and
Ashland; (xiv) Letter, dated December 2, 1997, from Ashland to Pitney ▇▇▇▇▇
Credit Corporation acknowledging the sale of specified vessels from Pitney
▇▇▇▇▇ Credit Corporation to Ashland; (xv) Letter, dated December 9, 1997, from
Ashland to Pitney ▇▇▇▇▇ Credit Corporation notifying Pitney ▇▇▇▇▇ of the
intention to form a joint venture and subcharter barges and requesting Pitney
Bowes's consent to the subcharter; (xvi) Consent Letter, dated December 31,
1997, among Pitney ▇▇▇▇▇ Credit Corporation, Ashland, and MAP, regarding
Pitney ▇▇▇▇▇ Credit Corporation's consent to the Master Subcharter Agreement.
SECTION 12.03. THE MAP LLC AGREEMENT. After the Closing, (i) except
as contemplated by the Tax Matters Agreement, New Ashland Inc. shall not have
any liabilities or obligations to any of the Marathon Parties or any of their
affiliates under the MAP LLC Agreement other than with respect to any breach
or default under the MAP LLC Agreement by Ashland that occurred prior to the
Closing and (ii) except as contemplated by Section 12.06(b) or the Tax Matters
Agreement, neither Marathon Company nor MAP shall have any liabilities or
obligations to any of the Ashland Parties or any of their affiliates under the
MAP LLC Agreement other than with respect to any breach or default thereunder
by Marathon Company or any of its affiliates that occurred prior to the
Closing.
SECTION 12.04. THE PUT/CALL AGREEMENT. Unless and until this
Agreement is terminated in accordance with the provisions of Article XI,
notwithstanding anything to the contrary contained in the Put/Call,
Registration Rights and Standstill Agreement dated as of January 1, 1998 among
Marathon Company, Marathon (as successor and assign of USX Corporation),
Ashland and MAP, as amended (the "Put/Call Agreement"), Ashland shall not have
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the right to exercise the Ashland Put Right and Marathon Company shall not
have the right to exercise the Marathon Call Right (as such terms are defined
in the Put/Call Agreement). After the Closing, except as expressly
contemplated by this Agreement or any of the other Transaction Agreements, (i)
New Ashland Inc. shall not have any liabilities or obligations under the
Put/Call Agreement other than (A) with respect to any breach or default
thereunder by Ashland that occurred prior to the Closing and (B) Ashland's
obligations under Section 12.02 thereof (which shall survive for six months
after the Closing Date); and (ii) none of the Marathon Parties shall have any
liabilities or obligations under the Put/Call Agreement other than (A) with
respect to any breach or default thereunder by Marathon, Marathon Company or
MAP that occurred prior to the Closing, (B) the obligations of Marathon and
Marathon Company under Section 12.01 thereof (which shall survive for six
months after the Closing Date) and (iii) the obligations of Marathon, Marathon
Company and MAP under Section 13.03 thereof (which shall survive pursuant to
the terms of the Put/Call Agreement). For the avoidance of doubt, the Ashland
Parties and the Marathon Parties shall not have any obligations under Article
XIV of the Put/Call Agreement after the Closing Date. The parties hereto agree
that the Price Reduction (as defined in Amendment No. 1 to the Put/Call
Agreement) shall not apply to the Transactions.
SECTION 12.05. ANCILLARY AGREEMENTS. After the Closing, the
Insurance Indemnity Agreement among Marathon Company, Ashland, Marathon (as
successor and assign of USX Corporation) and MAP, dated as of January 1, 1998,
shall terminate and no party to any such agreement shall have any rights or
obligations thereunder, other than those rights or obligations arising prior
to the Closing.
SECTION 12.06. OTHER PROVISIONS OF THE MAP GOVERNING DOCUMENTS. (a)
Except as the same may have been amended prior to the date of this Agreement
and except as expressly amended or assigned pursuant to the Transaction
Agreements or the Ancillary Agreements, the MAP Governing Documents, to the
extent the same are in existence as of the date of this Agreement, shall
continue in full force and effect. For the avoidance of doubt, after the
Closing, New Ashland Inc. shall be deemed to be a successor of Ashland for
purposes of the ATCA and the Transaction Documents (as defined in the ATCA).
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(b) The obligations of MAP under Article XI (Liability, Exculpation
and Indemnification) of the MAP LLC Agreement as in effect on the date of this
Agreement shall continue in effect and shall not be amended, repealed or
otherwise modified after the Closing in any manner that would adversely affect
the rights thereunder of any Covered Person (as defined in the MAP LLC
Agreement) in respect of acts or omissions occurring at or prior to the
Closing and, in the case of such obligations to all Representatives (as
defined in the MAP LLC Agreement) who have been designated from time to time
prior to the Closing Date by Ashland to the Board of Managers (as defined in
the MAP LLC Agreement) of MAP, shall be guaranteed by Marathon. This Section
12.06(b) shall survive the Closing, is intended to benefit each Covered Person
and shall be enforceable by the Covered Persons and their successors.
SECTION 12.07. POST-CLOSING ACCESS. After the Closing, upon
reasonable written notice, the Marathon Parties shall furnish or cause to be
furnished to the Ashland Parties and their Representatives, during normal
business hours, reasonable access to the personnel, properties, books,
contracts, commitments, records and other information and assistance relating
to MAP for the purpose of auditing compliance by MAP with Section 12.01(a) and
for such other purposes as the Ashland Parties may reasonably request.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY NEW ASHLAND INC. (a) Subject to
the limitations set forth in this Article XIII, from and after the Closing,
New Ashland Inc. shall defend and indemnify each of the Marathon Parties and
their respective affiliates and each of their respective Representatives
against, and hold them harmless from, any and all claims, demands, suits,
actions, causes of action, investigations, losses, damages, liabilities,
obligations, penalties, fines, costs and expenses (including costs of
litigation and reasonable attorneys' and experts' fees and expenses, but
excluding a party's indirect corporate and administrative overhead costs)
("Losses") to the extent
103
resulting from, arising out of or relating to, directly or indirectly:
(i) any breach of any representation or warranty of any of the
Ashland Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement (other than the
representations and warranties contained in: the first sentence of
Section 6.01 of this Agreement; Sections 6.03, 6.04, 6.05, 6.08 and
6.11 of this Agreement; Sections 3.03(b), 3.09, 3.11(b) and 3.12 of
the Maleic Agreement; and Sections 3.03(b), 3.09, 3.11(b) and 3.12
of the VIOC Agreement);
(ii) any breach or nonfulfillment of any covenant of any of the
Ashland Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance prior to the Closing;
(iii) any breach of any representation or warranty of any of
the Ashland Parties contained in (A) Section 6.08 of this Agreement
or (B) Section 3.11(b) of the Maleic Agreement or Section 3.11(b) of
the VIOC Agreement;
(iv) any breach of any representation or warranty of any of the
Ashland Parties contained in (A) Section 6.03 (except the last
sentence of 6.03(e)) of this Agreement, (B) Section 3.09 or 3.12 of
the Maleic Agreement or Section 3.09 or 3.12 of the VIOC Agreement
or (C) Section 6.05 of this Agreement;
(v) any breach of any representation or warranty of any of the
Ashland Parties contained in (A) the first sentence of Section 6.01
of this Agreement, Section 3.03(b) of the Maleic Agreement or
Section 3.03(b) of the VIOC Agreement or (B) Section 6.04 or 6.11 of
this Agreement;
(vi) (A) any breach of any representation or warranty of any of
the Ashland Parties contained in the last sentence of Section
6.03(e) of this
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Agreement, (B) any breach or nonfulfillment of any covenant of any
of the Ashland Parties (other than HoldCo) contained in this
Agreement (other than Section 8.03 of this Agreement), the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement, in each
case to the extent it relates to performance after the Closing
(including New Ashland's obligations to pay Reorganization Merger
Consideration or amounts in respect of Dissenters' Shares) or (C)
any breach or nonfulfillment of any covenant of any of the Ashland
Parties contained in Section 8.03 of this Agreement;
(vii) any liabilities or obligations (contingent or otherwise)
of any of the Ashland Parties (or any of their respective
subsidiaries) that are not expressly assumed by one or more of the
Marathon Parties pursuant to this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement (including any
asbestos-related liabilities or obligations of the Ashland Parties,
or any of their respective subsidiaries, associated with the
operations of ▇▇▇▇▇ ▇▇▇▇▇▇ Corporation);
(viii) any liabilities or obligations of any of the Ashland
Parties to Transferred MAP Employees, Transferred Maleic Business
Employees (as defined in the Maleic Agreement) or Transferred VIOC
Centers Employees (as defined in the VIOC Agreement) under any
pension, retirement or other employee benefit plan or arrangement
established or participated in by any Ashland Party or any of its
subsidiaries that is not expressly assumed by one or more Marathon
Parties pursuant to this Agreement, the Maleic Agreement, the VIOC
Agreement or any Ancillary Agreement;
(ix) any failure by any of the Ashland Parties to comply with
the St. ▇▇▇▇ Park Judgment and Plea Agreement, other than the
obligations expressly assumed by the Marathon Parties in Section
9.09 of this Agreement; or
(x) any liabilities and obligations (contingent or otherwise)
of any of the Marathon
105
Parties (or any of their respective subsidiaries) that are expressly
assumed by one or more Ashland Parties pursuant to this Agreement,
the Maleic Agreement, the VIOC Agreement or any Ancillary Agreement.
(b) New Ashland Inc. shall not be required to indemnify any person,
and shall not have any liability:
(i) under clauses (i) and (ii) of Section 13.01(a), unless a
claim therefor is asserted in writing within three years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(ii) under clause (iii) of Section 13.01(a), unless a claim
therefor is asserted in writing within five years after the Closing
Date, failing which such claim shall be waived and extinguished;
(iii) under clause (iv) of Section 13.01(a), unless a claim
therefor is asserted in writing within six years after the Closing
Date, failing which such claim shall be waived and extinguished;
(iv) under clause (v) of Section 13.01(a), unless a claim
therefor is asserted in writing within ten years after the Closing
Date, failing which such claim shall be waived and extinguished;
(v) under clause (i), (ii), (iii), (iv), (v) or (vi) of Section
13.01(a) for any punitive or exemplary damages (other than punitive
or exemplary damages asserted by any person who is not a Marathon
Party, or an affiliate or a Representative of a Marathon Party, in a
Third Party Claim (as defined in Section 13.04));
(vi) under clause (i), (ii), (iii), (iv), (v)(A) or (vi)(B) of
Section 13.01(a) for any indirect consequential or special damages
(other than indirect consequential or special damages asserted by
any person who is not a Marathon
106
Party, or an affiliate or a Representative of a Marathon Party, in a
Third Party Claim);
(vii) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.01(a) unless the aggregate of all Losses for which the Ashland
Parties would, but for this clause (vii), be liable exceeds on a
cumulative basis an amount equal to $2,000,000, and then only to the
extent of any such excess;
(viii) under clauses (i), (ii), (iii), (iv), (v) and (vi)(A) of
Section 13.01(a) for any individual items where the Loss or alleged
Loss relating thereto is less than $100,000 and such items shall not
be aggregated for purposes of clause (vii) of this Section 13.01(b);
(ix) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.01(a) with respect to breaches of representations, warranties or
covenants referred to therein that are contained in (A) the Maleic
Agreement to the extent they result in indemnification payments
hereunder in excess of $59,785,000 in the aggregate or (B) the VIOC
Agreement to the extent they result in indemnification payments
hereunder in excess of $39,385,000 in the aggregate;
(x) under clauses (i), (ii), (iii), (iv), (v) and (vi)(A) of
Section 13.01(a) in the aggregate in excess of the amount equal to
the sum of (A) the MAP Partial Redemption Amount, (B) the Capital
Contribution, (C) $315,000,000 and (D) all post- Closing recoveries
by Ashland of distributions or profits from MAP with respect to any
period after the Closing Date; and
(xi) under clauses (i), (ii), (iii) and (iv)(A) of Section
13.01(a) for breaches of representations, warranties or covenants
referred to therein that are contained in this Agreement to the
extent they result in indemnification payments hereunder in excess
of $400,000,000 in the aggregate;
107
provided, however, that in determining the scope of New Ashland Inc.'s
indemnification obligations under this Section 13.01(a), any qualification as
to materiality or references to Ashland Material Adverse Effect, Maleic
Business Material Adverse Effect (as defined in the Maleic Agreement) or VIOC
Centers Material Adverse Effect (as defined in the VIOC Agreement) in any of
the representations or warranties referred to in Section 13.01(a) shall be
disregarded (it being understood that such qualifications as to materiality or
Ashland Material Adverse Effect, Maleic Business Material Adverse Effect or
VIOC Centers Material Adverse Effect shall apply for purposes of determining
whether there has been a breach in the first place). Solely for purposes of
this Article XIII, any Loss to the extent arising out of any event or
occurrence on or prior to, or circumstance existing on or prior to, the
Closing Date (and not to the extent arising out of any event, occurrence or
circumstance existing after the Closing Date, other than the discovery of a
pre-closing condition or the making or commencement of any claim, demand,
suit, action, proceeding or investigation after the Closing Date to the extent
relating to any event, occurrence or circumstance existing on or prior to the
Closing Date) shall be considered in determining whether there shall have
occurred (or there was reasonably expected to occur) an Ashland Material
Adverse Effect, a Maleic Business Material Adverse Effect or a VIOC Centers
Material Adverse Effect, as applicable, as of the Closing Date. The parties
acknowledge that (x) the indemnification obligations referred to in clauses
(vi) through (x) of Section 13.01(a) shall not be subject to any time
limitations and (y) none of the indemnification obligations referred to in
clauses (vi)(B), (vi)(C), or any of clauses (vii) through (x) of Section
13.01(a) shall be subject to any dollar limitations. The preceding sentence is
not intended to eliminate or amend any limitations on the indemnification
obligations of any Ashland Party under the ATCA or any other agreement that is
not a Transaction Agreement or an Ancillary Agreement.
(c) Except as otherwise expressly contemplated or provided in the
Transaction Agreements and the Ancillary Agreements, the Ashland Parties make
no representations or warranties of any kind, either express or implied.
Except as otherwise contemplated or provided in the Tax Matters Agreement, any
of the other Transaction Agreements or any
108
of the Ancillary Agreements, the Marathon Parties acknowledge that their sole
and exclusive remedy after the Closing with respect to any and all claims
(other than (i) claims arising from covenants to the extent such covenants are
to be performed after the Closing and (ii) claims of fraud) relating to the
Transaction Agreements, the Ancillary Agreements and the Transactions shall be
pursuant to the indemnification provisions set forth in this Article XIII. In
furtherance of the foregoing, except as otherwise contemplated or provided in
the Tax Matters Agreement, any of the other Transaction Agreements or any of
the Ancillary Agreements, the Marathon Parties hereby waive, from and after
the Closing, any and all rights, claims and causes of action under any
applicable Law (other than claims of, or causes of action arising from, (i)
covenants to the extent such covenants are to be performed after the Closing
and (ii) fraud) they may have against the Ashland Parties arising under or
based upon the Transaction Agreements, the Ancillary Agreements and the
Transactions (except pursuant to the indemnification provisions set forth in
this Section 13.01). The Marathon Parties shall take reasonable actions to
mitigate Losses for which indemnification may be sought under this Section
13.01, as and to the extent a party is required to mitigate damages for breach
of contract under the Laws of the State of New York.
SECTION 13.02. INDEMNIFICATION BY MARATHON. (a) Subject to the
limitations set forth in this Article XIII, from and after the Closing,
Marathon shall defend and indemnify each of the Ashland Parties and their
respective affiliates and each of their respective Representatives against,
and hold them harmless from, any Losses to the extent resulting from, arising
out of or relating to, directly or indirectly:
(i) any breach of any representation or warranty of any of the
Marathon Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement (other than the
representations and warranties contained in the first sentence of
Section 7.01 of this Agreement and in Sections 7.03, 7.04, 7.05,
7.08 and 7.11 of this Agreement);
(ii) any breach or nonfulfillment of any covenant of any of the
Marathon Parties contained
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in this Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance prior to the Closing;
(iii) any breach of any representation or warranty of any of
the Marathon Parties contained in Section 7.08 of this Agreement;
(iv) any breach of any representation or warranty of any of the
Marathon Parties contained in (A) Section 7.03 of this Agreement or
(B) Section 7.05 of this Agreement;
(v) any breach of any representation or warranty of any of the
Marathon Parties contained in (A) the first sentence of Section 7.01
of this Agreement or (B) Section 7.04 or 7.11 of this Agreement;
(vi) any breach or nonfulfillment of any covenant of any of the
Marathon Parties contained in this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance after the Closing (including
Marathon's obligations to issue and deposit with the Exchange Agent
the number of shares of Marathon Common Stock specified in Section
5.01(a)(ii) and to provide the cash necessary to pay any dividends
or distributions in accordance with Section 5.01(c)(ii));
(vii) any liabilities or obligations (contingent or otherwise)
of any of the Ashland Parties (or any of their respective
subsidiaries) that are expressly assumed by one or more of the
Marathon Parties pursuant to this Agreement, the Maleic Agreement,
the VIOC Agreement or any Ancillary Agreement, including any such
liabilities and obligations for which Ashland would otherwise have
been liable under the ATCA but for the application of Section 12.01
(Asset Transfer and Contribution Agreement);
(viii) any liabilities or obligations of any of the Ashland
Parties to Transferred MAP Employees, Transferred Maleic Business
Employees
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or Transferred VIOC Centers Employees under any pension, retirement
or other employee benefit plan or arrangement established or
participated in by any Ashland Party or any of its subsidiaries that
is expressly assumed by one or more Marathon Parties pursuant to
this Agreement, the Maleic Agreement, the VIOC Agreement or any
Ancillary Agreement, including any such liabilities and obligations
for which Ashland would otherwise have been liable under the ATCA
but for the application of Section 12.01 (Asset Transfer and
Contribution Agreement);
(ix) any failure by any of the Marathon Parties to comply with
Section 9.09 of this Agreement; or
(x) any liabilities and obligations (contingent or otherwise)
of any of the Marathon Parties (or any of their respective
subsidiaries) that are not expressly assumed by one or more Ashland
Parties pursuant to this Agreement, the Maleic Agreement, the VIOC
Agreement or any Ancillary Agreement.
(b) Marathon shall not be required to indemnify any person, and
shall not have any liability:
(i) under clauses (i) and (ii) of Section 13.02(a), unless a
claim therefor is asserted in writing within three years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(ii) under clause (iii) of Section 13.02(a), unless a claim
therefor is asserted in writing within five years after the Closing
Date, failing which such claim shall be waived and extinguished;
(iii) under clause (iv) of Section 13.02(a), unless a claim
therefor is asserted in writing within six years after the Closing
Date, failing which such claim shall be waived and extinguished;
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(iv) under clause (v) of Section 13.02(a), unless a claim
therefor is asserted in writing within ten years after the Closing
Date, failing which such claim shall be waived and extinguished;
(v) under clause (i), (ii), (iii), (iv), (v) or (vi) of Section
13.02(a) for any punitive or exemplary damages (other than punitive
or exemplary damages asserted by any person who is not an Ashland
Party, or an affiliate or a Representative of an Ashland Party, in a
Third Party Claim);
(vi) under clause (i), (ii), (iii), (iv), (v)(A) or (vi) of
Section 13.02(a) for any indirect consequential or special damages
(other than indirect consequential or special damages asserted by
any person who is not an Ashland Party, or an affiliate or a
Representative of an Ashland Party, in a Third Party Claim);
(vii) under clauses (i), (ii), (iii), (iv) or (v) of Section
13.02(a) unless the aggregate of all Losses for which the Marathon
Parties would, but for this clause (vi), be liable exceeds on a
cumulative basis an amount equal to $2,000,000, and then only to the
extent of any such excess;
(viii) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.02(a) for any individual items where the Loss or alleged Loss
relating thereto is less than $100,000 and such items shall not be
aggregated for purposes of clause (vii) of this Section 13.02(b);
(ix) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.02(a) in the aggregate in excess of the amount equal to the sum
of (A) the MAP Partial Redemption Amount, (B) the Capital
Contribution and (C) $315,000,000; and
(x) under clauses (i), (ii), (iii) and (iv)(A) of Section
13.02(a) for breaches of representations, warranties or covenants
referred to therein that are contained in this Agreement to the
extent they result in indemnification
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payments hereunder in excess of $400,000,000 in the aggregate;
provided, however, that in determining the scope of Marathon's indemnification
obligations under this Section 13.02(a), any qualification as to materiality
or references to Marathon Material Adverse Effect in any of the
representations or warranties referred to in Section 13.02(a) shall be
disregarded (it being understood that such qualifications as to materiality or
Marathon Material Adverse Effect shall apply for purposes of determining
whether there has been a breach in the first place). Solely for purposes of
this Article XIII, any Loss to the extent arising out of any event or
occurrence on or prior to, or circumstance existing on or prior to, the
Closing Date (and not to the extent arising out of any event, occurrence or
circumstance existing after the Closing Date, other than the discovery of a
pre-closing condition or the making or commencement of any claim, demand,
suit, action, proceeding or investigation after the Closing Date to the extent
relating to any event, occurrence or circumstance existing on or prior to the
Closing Date) shall be considered in determining whether there shall have
occurred (or there was reasonably expected to occur) a Marathon Material
Adverse Effect as of the Closing Date. The parties acknowledge that (x) the
indemnification obligations referred to in clauses (vi) through (x) of Section
13.02(a) shall not be subject to any time limitations and (y) none of the
indemnification obligations referred to in clauses (vi) through (x) of Section
13.02(a) shall be subject to any dollar limitations. The preceding sentence is
not intended to eliminate or amend any limitations on the indemnification
obligations of any Marathon Party under the ATCA or any other agreement that
is not a Transaction Agreement or an Ancillary Agreement.
(c) Except as otherwise expressly contemplated or provided in the
Transaction Agreements and the Ancillary Agreements, the Marathon Parties make
no representations or warranties of any kind, either express or implied.
Except as otherwise contemplated or provided in the Tax Matters Agreement, any
of the other Transaction Agreements or any of the Ancillary Agreements, the
Ashland Parties acknowledge that their sole and exclusive remedy after the
Closing with respect to any and all claims (other than
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(i) claims arising from covenants to the extent such covenants are to be
performed after the Closing and (ii) claims of fraud) relating to the
Transaction Agreements, the Ancillary Agreements and the Transactions shall be
pursuant to the indemnification provisions set forth in this Article XIII. In
furtherance of the foregoing, except as otherwise contemplated or provided in
the Tax Matters Agreement, any of the other Transaction Agreements or any of
the Ancillary Agreements, the Ashland Parties hereby waive, from and after the
Closing, any and all rights, claims and causes of action under any applicable
Law (other than claims of, or causes of action arising from, (i) covenants to
the extent such covenants are to be performed after the Closing and (ii)
fraud) they may have against the Marathon Parties arising under or based upon
the Transaction Agreements, the Ancillary Agreements and the Transactions
(except pursuant to the indemnification provisions set forth in this Section
13.02). The Ashland Parties shall take reasonable actions to mitigate Losses
for which indemnification may be sought under this Section 13.02, as and to
the extent a party is required to mitigate damages for breach of contract
under the Laws of the State of New York.
SECTION 13.03. CALCULATION OF LOSSES. (a) The amount of any Loss for
which indemnification is provided in clause (i), (ii), (iii), (iv) or (v)(A)
of Section 13.01(a) of this Agreement or clause (i), (ii), (iii), (iv) or
(v)(A) of Section 13.02(a) of this Agreement shall be net of any amounts
actually recovered by the indemnified party under the True Insurance Policies
(as such term is defined in the ATCA) with respect to such Loss; provided,
however, that the indemnified party shall not have any obligation to seek any
such recovery under any True Insurance Policy. The amount of any Loss for
which indemnification is provided pursuant to Section 13.01(a) or Section
13.02(a) of this Agreement shall be (i) increased to take account of any net
Tax cost incurred by the indemnified party arising from the receipt or accrual
of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax Benefit (as defined in the ATCA)
realized by the indemnified party arising from the deductibility of any such
Loss. In computing the amount of any such Tax cost or Tax Benefit, the
indemnified party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit
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before recognizing any item arising from the receipt or accrual of any
indemnity payment hereunder or the deductibility of any indemnified Loss. Any
indemnification payment hereunder shall initially be made without regard to
clauses (i) and (ii) in the second sentence of this Section 13.03, and shall
be increased or reduced to reflect any such net Tax cost (including gross-up)
or net Tax Benefit only after the indemnified party has actually realized such
cost or benefit. For purposes of this Agreement, an indemnified party shall be
deemed to have "actually realized" a net Tax cost or a net Tax Benefit to the
extent that, and at such time as, the amount of Taxes payable by such
indemnified party is increased above or reduced below, as the case may be, the
amount of Taxes, that such indemnified party would be required to pay but for
the receipt or accrual of the indemnity payment or the deductibility of such
Loss, as the case may be. The amount of any increase or reduction hereunder
shall be adjusted to reflect any final determination (which shall include the
execution of Form 870 AD or successor form) with respect to the indemnified
party's liability for Taxes, and payments between the indemnified party and
the indemnifying party to reflect such adjustment shall be made if necessary.
(b) No indemnified party shall be entitled to indemnification
pursuant to Section 13.01(a) with respect to any Loss that has been taken
account of in any adjustment pursuant to Section 1.05 of the Maleic Agreement.
If the amount of any Loss, at any time subsequent to the making of any payment
for indemnification pursuant to Section 13.01(a) or 13.02(a), is reduced by
recovery, settlement or otherwise under or pursuant to any claim, recovery,
settlement or payment by or against any other person that is not an affiliate
of the indemnified party, the amount of such reduction, less any costs,
expenses, premiums or other offsets incurred in connection therewith, shall
promptly be repaid by the indemnified party to the indemnifying party. Upon
making any payment for indemnification pursuant to Section 13.01(a) or
13.02(a), the indemnifying party shall, to the extent of such payment, be
subrogated to all rights of the indemnified party (other than any rights of
such indemnified party under any insurance policies) against any third party
that is not an affiliate of the indemnified party in respect of the
indemnifiable Loss to which such payment relates. Each such indemnified party
shall duly
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execute upon request all instruments reasonably necessary to evidence and
perfect the above described subrogation rights.
SECTION 13.04. PROCEDURES. (a) NOTICE OF THIRD PARTY CLAIMS. If any
claim is asserted by any person not a party, or an affiliate or a
Representative of a party, to this Agreement against an indemnified party
under this Agreement (any such claim being a "Third Party Claim") and such
indemnified party intends to seek indemnification hereunder from a party to
this Agreement, then, such indemnified party shall give notice of the Third
Party Claim to the indemnifying party as soon as practicable after the
indemnified party has reason to believe that the indemnifying party will have
an indemnification obligation with respect to such Third Party Claim,
accompanied by copies of all papers that have been served on the indemnified
party with respect to such Third Party Claim. Such notice shall describe in
reasonable detail the nature of the Third Party Claim, an estimate of the
amount of damages attributable to the Third Party Claim (if reasonably
attainable) and the basis of the indemnified party's request for
indemnification under this Agreement. The failure of the indemnified party to
so notify the indemnifying party of the Third Party Claim shall not relieve
the indemnifying party from any duty to indemnify hereunder unless and only to
the extent that the indemnifying party demonstrates that the failure of the
indemnified party to promptly notify it of such Third Party Claim prejudiced
its ability to defend such Third Party Claim; provided, that the failure of
the indemnified party to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to the indemnified
party otherwise than under this Agreement. Thereafter, the indemnified party
shall deliver to the indemnifying party, within five business days after the
indemnified party's receipt thereof, copies of all written notices and
documents (including court papers but excluding any materials that are subject
to any applicable privilege or that constitute attorney work product) received
by the indemnified party relating to the Third Party Claim.
(b) RIGHT OF INDEMNIFYING PARTY TO CONTROL DEFENSE OF THIRD PARTY
CLAIMS. The indemnifying party shall have the right to participate in, or
assume control of, the defense of the Third Party Claim at its own expense
116
using counsel of its choice reasonably acceptable to the indemnified party, by
giving prompt written notice to the indemnified party. If it elects to assume
control of the defense of such Third Party Claim, the indemnifying party shall
defend such Third Party Claim by promptly and vigorously prosecuting all
appropriate proceedings to a final conclusion or settlement. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such Third Party Claim, the indemnified party shall have the right
to participate in the defense of the Third Party Claim using counsel of its
choice, but the indemnifying party shall not be liable to the indemnified
party hereunder for any legal or other expenses subsequently incurred by the
indemnified party in connection with its participation in the defense thereof
unless (i) the employment thereof has been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party fails to assume the
defense in accordance with the first sentence of this Section 13.04(b) or
diligently prosecute the defense of the Third Party Claim or (iii) there shall
exist or develop a conflict that would ethically prohibit counsel to the
indemnifying party from representing the indemnified party. The indemnified
party agrees to provide such reasonable cooperation to the indemnifying party
and its counsel as the indemnifying party may reasonably request in contesting
any Third Party Claim that the indemnifying party elects to contest, including
the making of any related counterclaim against the Third Party asserting the
Third Party Claim or any cross-complaint against any person who is not an
affiliate or Representative of the indemnified party, in each case only if and
to the extent that any such counterclaim or cross-complaint arises from the
same actions or facts giving rise to the Third Party Claim. The indemnifying
party shall have the right, acting in good faith and with due regard to the
interests of the indemnified party, to control all decisions regarding the
handling of the defense without the consent of the indemnified party, but
shall not have the right to admit liability with respect to, or compromise,
settle or discharge any Third Party Claim or consent to the entry of any
judgment with respect to such Third Party Claim without the consent of the
indemnified party, which consent shall not be unreasonably withheld, unless
such settlement, compromise or consent includes an unconditional release of
the indemnified party from all liability and obligations arising out of such
Third Party
117
Claim and would not otherwise adversely affect the indemnified party.
(c) CONTROL OF THIRD PARTY CLAIM BY THE INDEMNIFIED PARTY. If the
indemnifying party fails to assume the defense of a Third Party Claim within
thirty (30) days after receipt of written notice of the Third Party Claim in
accordance with the provisions of Section 13.04(b), then the indemnified party
shall have the right to defend the Third Party Claim by promptly and
vigorously prosecuting all appropriate proceedings to a final conclusion or
settlement. The indemnifying party shall have the right to participate in the
defense of the Third Party Claim using counsel of its choice, but the
indemnified party shall not be liable to the indemnifying party hereunder for
any legal or other expenses incurred by the indemnifying party in connection
with its participation in the defense thereof. If requested by the indemnified
party, the indemnifying party agrees to provide such reasonable cooperation to
the indemnified party and its counsel as the indemnified party may reasonably
request in contesting any Third Party Claim that the indemnified party elects
to contest, including the making of any related counterclaim against the third
party asserting the Third Party Claim or any cross-complaint against any
person who is not an affiliate or Representative of the indemnifying party, in
each case only if and to the extent that any such counterclaim or
cross-complaint arises from the same actions or facts giving rise to the Third
Party Claim. The indemnified party shall have the right, acting in good faith
and with due regard to the interests of the indemnifying party, to control all
decisions regarding the handling of the defense without the consent of the
indemnifying party, but shall not have the right to compromise or settle any
Third Party Claim or consent to the entry of any judgment with respect to such
Third Party Claim without the consent of the indemnifying party, which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the indemnifying party from all
liability and obligations arising out of such Third Party Claim.
(d) OTHER CLAIMS. In the event any indemnified party should have a
claim against any indemnifying party under Section 13.01 or 13.02 that does
not involve a Third Party Claim being asserted against or sought to be
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collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party.
Subject to Sections 13.01(b) and 13.02(b), the failure by any indemnified
party so to notify the indemnifying party shall not relieve the indemnifying
party from any liability that it may have to such indemnified party under
Section 13.01 or 13.02, except to the extent that the indemnifying party
demonstrates that it has been prejudiced by such failure. The indemnifying
party shall have 60 calendar days following its receipt of such notice to
dispute its liability to the indemnified party under Section 13.01 or 13.02.
The indemnified party shall reasonably cooperate with and assist the
indemnifying party in determining the validity of any claim for indemnity by
the indemnified party and in otherwise resolving such matters. Such
cooperation and assistance shall include retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records that are
reasonably relevant to such matters, making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder, and providing such reasonable cooperation and
assistance in the investigation and resolution of such matters as the
indemnifying party may reasonably request. If the indemnifying party does not
notify the indemnified party within 60 days from its receipt of a notice
pursuant to the first sentence of this Section 13.04(d) that the indemnifying
party disputes the claim specified by the indemnified party in such notice,
that claim shall be deemed a liability of the indemnifying party hereunder. If
the indemnifying party has timely disputed that claim, as provided above, that
dispute may be resolved by proceedings in an appropriate court of competent
jurisdiction in accordance with Section 14.10 if the parties do not reach a
settlement of that dispute within 30 days after notice of that dispute is
given. Payment of the amount set forth in a notice of a claim pursuant to the
first sentence of this Section 13.04(d) that has not been disputed shall be
made within 30 days after the expiration of the applicable 60 day notice
period. If the payment obligation has been disputed, payment shall be made 30
days after the expiration of the period for appeal of a final adjudication of
the indemnifying party's liability under this Agreement to the indemnified
party with respect to such payment obligation.
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(e) The foregoing provisions of this Article XIII shall not be
applicable to any Tax Matters, it being understood that the indemnification
obligations of New Ashland Inc. and Marathon with respect to all Tax Matters
are set forth in the Tax Matters Agreement.
(f) The foregoing provisions of this Article XIII shall not be
applicable to any Losses to the extent indemnification for such Losses is
provided under the Franchise Agreements (as defined in the VIOC Agreement).
ARTICLE XIV
GENERAL PROVISIONS
SECTION 14.01. NOTICES. All notices, requests, claims, demands and
other communications under the Transaction Agreements shall be in writing and
shall be deemed to be delivered and received if personally delivered or if
delivered by facsimile or courier service, when actually received by the party
to whom notice is sent at the address of such party or parties set forth below
(or at such other address as such party may designate by written notice to all
other parties in accordance herewith):
(a) if to the Ashland Parties, to
Ashland Inc.
▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which will not constitute notice for purposes of
this Agreement) to:
Cravath, Swaine & ▇▇▇▇▇ LLP
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Marathon Parties, to
Marathon Oil Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which will not constitute notice for purposes of
this Agreement) to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. Paris, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 14.02. DEFINITIONS. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person. As used in this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a person (whether
through ownership of capital stock of that person, by contract or otherwise).
For the avoidance of doubt, MAP shall be deemed to be an affiliate of Marathon
Company and not Ashland at all times, whether prior to or after the Closing.
"AR Fraction" means the fraction of the MAP Partial Redemption
Amount to be distributed in the form of accounts receivable of MAP such that,
in the opinions of Cravath, Swaine & ▇▇▇▇▇ LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Chartered, the MAP Partial Redemption will not result in any gain recognition
under Section 751(b) of the Code. Such fraction shall be determined based upon
the final allocation report prepared by D&T and delivered to Ashland and
Marathon on or within 10 days prior to the Closing Date.
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"Ashland Debt Obligation Amount" means an amount, determined in good
faith by Ashland, in light of the Private Letter Rulings and any
communications with the IRS, written or otherwise, that is sufficient to (i)
pay the outstanding principal amount of debt that is shown on Ashland's
balance sheet; (ii) pay repurchase premium and other costs to repay,
repurchase or defease debt that is shown on Ashland's balance sheet or
obligations referred to in clause (iii) below; (iii) repay and terminate
obligations that are treated as debt for tax purposes but not for financial
statement purposes; and (iv) terminate or renegotiate Ashland's obligations as
lessee under real estate leases that are treated as true leases for tax
purposes, in each case to the extent that such amounts, if paid by New Ashland
Inc. with the proceeds of the HoldCo Borrowing, would result in no gain
recognition to HoldCo under Section 357 of the Code.
"Ashland Employee Stock Option" means any option to purchase Ashland
Common Stock granted under any Ashland Stock Plan.
"Ashland LOOP/LOCAP Interest" shall have the meaning assigned
thereto in the Put/Call Agreement.
"Ashland Parties" means Ashland, New Ashland LLC, New Ashland Inc.
and, prior to the Acquisition Merger Effective Time, HoldCo.
"Ashland SAR" means any stock appreciation right linked to the price
of Ashland Common Stock and granted under any Ashland Stock Plan.
"Ashland Stock Plan" means the Amended Stock Incentive Plan for Key
Employees of Ashland and its subsidiaries, Ashland 1993 Stock Incentive Plan,
Ashland Deferred Compensation Plan for Non-Employee Directors, Ashland 1997
Stock Incentive Plan, Ashland Deferred Compensation Plan, Ashland Stock Option
Plan for Employees of Joint Ventures, Ashland Employee Savings Plan, Amended
and Restated Ashland Incentive Plan, and any other stock option, stock
purchase or other plan or agreement pursuant to which shares of Ashland Common
Stock may be acquired as compensation by employees, consultants or any other
person.
"Estimated MAP Partial Redemption Amount" means a good faith
estimate, prepared jointly by MAP, Marathon and
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Ashland at least two business days prior to the Closing Date, of the MAP
Partial Redemption Amount, which estimate shall include Marathon's good faith
estimate of any increase pursuant to the second sentence of Section 1.01.
"Holdco Borrowing" means a new unsecured borrowing or borrowings by
HoldCo with total proceeds in an amount equal to the Ashland Debt Obligation
Amount. The HoldCo Borrowing shall be expressly non-recourse to Ashland and
its affiliates (other than HoldCo) and shall otherwise be made on terms and
conditions reasonably acceptable to Ashland.
"LOCAP T&D Agreement" means the Initial Facility Throughput and
Deficiency Agreement among Ashland, Marathon, Shell Oil Company, Texaco Inc.
and LOCAP LLC (as successor to LOCAP Inc.), dated March 1, 1979, as amended.
"LOCAP T&D Assumption Agreement" means an assumption agreement,
substantially in the form attached hereto as Exhibit E, pursuant to Section
7.2 of the LOCAP T&D Agreement.
"LOOP T&D Agreement" means the First Stage Throughput and Deficiency
Agreement among Ashland, Marathon, ▇▇▇▇▇▇ Oil Corporation, Shell Oil Company,
Texaco Inc. and LOOP LLC (as successor to LOOP Inc.), dated as of December 1,
1977, as amended.
"LOOP T&D Assumption Agreement" means an assumption agreement,
substantially in the form attached hereto as Exhibit F, pursuant to Section
7.2 of the LOOP T&D Agreement.
"MAP Adjustment Amount" means 38% of the Distributable Cash of MAP
(as such term is defined in the MAP LLC Agreement) as of the close of business
on the Closing Date.
"MAP Governing Documents" means the Transaction Documents, as
amended, as defined in the ATCA.
"MAP LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of MAP dated as of December 31, 1998, as amended.
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"MAP/LOOP/LOCAP Contribution Agreements" means assignment and
assumption agreements in the form of Exhibits G, H and I hereto.
"MAP Partial Redemption Amount" means $2,699,170,000 minus the
Ashland Debt Obligation Amount plus the MAP Adjustment Amount, plus any
increases effected pursuant to the second sentence of Section 1.01 or clause
(vii) of Section 12.01(d).
"Marathon Employee Stock Option" means any option to purchase
Marathon Common Stock granted under any Marathon Stock Plan.
"Marathon Parties" means Marathon, Marathon Company, Merger Sub and,
after the Acquisition Merger Effective Time, MAP.
"Marathon SAR" means any stock appreciation right linked to the
price of Marathon Common Stock and granted under any Marathon Stock Plan.
"Marathon Stock Plan" means the Marathon Oil Corporation 2003
Incentive Compensation Plan, 1990 Marathon Oil Company Stock Plan, The
Marathon Oil Company Thrift Plan, the Marathon Oil Company Deferred
Compensation Plan, the Marathon Oil Corporation Non-Officer Restricted Stock
Plan, the Marathon Ashland Petroleum LLC Deferred Compensation Plan and any
other stock option, stock purchase or other plan or agreement pursuant to
which shares of Marathon Common Stock may be acquired as compensation by
employees, consultants or any other person.
"Market MAC Condition" means a condition for the benefit of Third
Party Lenders to the effect that their obligation to lend shall not be
enforceable due to market disruption or other similar event.
"Market MAC Event" means (i) Marathon shall have obtained a firm
commitment (subject to customary conditions) to provide the HoldCo Borrowing
from Third Party Lenders that are nationally recognized commercial banks, (ii)
such commitment shall be in full force and effect prior to the date on which
the Closing would otherwise occur pursuant to Section 1.05 but for the failure
of the Marathon Parties to cause the HoldCo Borrowing to be advanced to HoldCo
and (iii) as of such
124
date such Third Party Lenders shall have declined to make the HoldCo Borrowing
available to HoldCo solely based upon the non- satisfaction of a Market MAC
Condition.
"Membership Interest" shall have the meaning assigned thereto in
Appendix A to the MAP LLC Agreement.
"New Ashland Inc. Common Stock" means New Ashland Inc. common stock,
par value $0.01 per share, and, with respect to such shares issued at and
after the Acquisition Merger Effective Time, includes the associated Ashland
Rights.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
"Plains Settlement" means the Mutual Release and Settlement
Agreement between MAP and Plains Marketing, L.P. dated as of May 16, 2003.
"St. ▇▇▇▇ Park Judgment and Plea Agreement" means (i) the amended
judgment in the matter of United States of America v. Ashland Inc., No. 02-CR-
152(01)(JMR) (D. Minn. Dec. 23, 2002), as such judgment may be further
amended, supplemented, modified or replaced, and (ii) the plea agreement and
sentencing stipulations in the matter of United States of America v. Ashland
Inc., No. 02- CR-152(JEL) (D. Minn. May 13, 2002).
A "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person.
"Tax" or "Taxes" means all forms of taxation imposed by any federal,
state, local or foreign jurisdiction (including any subdivision and any
revenue agency of such a jurisdiction), including net income, gross income,
alternative minimum, sales, use, ad valorem, gross receipts, value added,
franchise, license, transfer, withholding, payroll, employment, excise,
severance, stamp,
125
property, custom duty, Taxes or governmental charges, together with any
related interest, penalties or other additional amounts imposed by a
Governmental Entity, and including all liability for or in respect of any of
the foregoing as a result of being a member of a consolidated or similar group
or a partner in an entity treated as a partnership or other pass- through
entity for Tax purposes or as a result of any Tax sharing or similar
contractual agreement.
"Tax Authority" means any federal, state, local or foreign
jurisdiction (including any subdivision and any revenue agency of such a
jurisdiction) imposing Taxes.
"Tax Matter" means any matter relating to Taxes.
"Value" means, with respect to any account receivable of MAP, the
product of (A) the outstanding balance of such account receivable on the
Closing Date, multiplied by (B) one minus the applicable discount factor set
forth in Exhibit A.
"Working Papers" means, with respect to AAA or HLHZ: (i) documents
prepared or assembled by such firm setting forth the valuation assumptions
used in connection with the Transactions to determine the fair value or
present fair saleable value of the subject assets or businesses, including, as
applicable, (A) representative financial statement data, (B) any adjustments
made or considered by such firm to historical and projected financial data of
Ashland or New Ashland Inc., (C) lists of comparable companies selected by
such firm for valuation purposes and their relevant operating statistics and
trading multiples, (D) lists of comparable transactions considered by such
firm and (E) valuation multiples, discount rates and capitalization rates
selected by such firm; (ii) lists of stated and contingent liabilities
utilized by such firm, including any adjustments made or considered by such
firm to information provided by Ashland or its Representatives; (iii)
projected income statement, balance sheet and cash flow statements used or
considered by such firm to assess the projected cash flows, debt capacity
levels, summary of covenants tests and other factors impacting liquidity and
(iv) analyses performed to determine if the subject company has or would have
adequate capital remaining after giving effect to the Transaction,
126
including similar calculations done for the selected comparable companies.
SECTION 14.03. INTERPRETATION; DISCLOSURE LETTERS. When a reference
is made in this Agreement to a Section or Article, such reference shall be to
a Section or Article of this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No item contained in any section of either the Ashland
Disclosure Letter or the Marathon Disclosure Letter shall be deemed adequate
to disclose an exception to a representation or warranty made in this
Agreement, unless (i) such item is included (or expressly incorporated by
reference) in a section of the applicable disclosure letter that is numbered
to correspond to the section number assigned to such representation or
warranty in this Agreement or (ii) it is readily apparent from a reading of
such item that it discloses an exception to such representation or warranty.
SECTION 14.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties hereto as closely
as possible to the end that the transactions contemplated hereby are fulfilled
to the greatest extent possible.
SECTION 14.05. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
127
SECTION 14.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. The
Transaction Agreements, taken together with the exhibits hereto and thereto,
the Ashland Disclosure Letter and the Marathon Disclosure Letter, the
Confidentiality Agreement, and the other agreements and instruments of the
parties hereto delivered in connection herewith, (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the Transactions and (b) except
for the provisions of Section 2.05, Article V, Section 12.06(b) and Article
XIII (the "Third Party Provisions"), are not intended to confer upon any
person other than the parties hereto any rights or remedies. The Third Party
Provisions may be enforced by the beneficiaries thereof; provided, however,
that the shareholders of Ashland in their capacities as such shall not have
any rights or remedies under this Agreement, and shall not be entitled to
enforce the Third Party Provisions or make any Claims with respect thereto,
unless and until the Closing shall have occurred. For avoidance of doubt, (i)
the shareholders of Marathon in their capacities as such shall not have any
rights or remedies under this Agreement, (ii) after the Closing, holders of
Dissenters' Shares shall have the rights and remedies specified in Section
2.05 only and (iii) after the Closing, the holders entitled to receive HoldCo
Common Stock in the Reorganization Merger shall have the rights and remedies
specified in Article V only. Notwithstanding the foregoing, the
Confidentiality Agreement shall remain in effect in accordance with its terms
and, except as expressly amended hereby, the MAP Governing Documents are
ratified and affirmed and shall remain in full force and effect.
SECTION 14.07. EXERCISE OF RIGHTS AND REMEDIES. Except as this
Agreement otherwise provides, no delay or omission in the exercise of, or
failure to assert, any right, power or remedy accruing to any party hereto as
a result of any breach or default hereunder by any other party hereto will
impair any such right, power or remedy, nor will it be construed, deemed or
interpreted as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor will any waiver of any
single breach or default be construed, deemed or interpreted as a waiver of
any other breach or default hereunder occurring before or after that waiver.
The
128
failure of any party to this Agreement to assert any of its rights under the
Transaction Agreements or otherwise shall not constitute a waiver of such
rights.
SECTION 14.08. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York,
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of Laws thereof, except to the extent the Laws of Kentucky are
mandatorily applicable to the Reorganization Merger and the Conversion Merger
and to the extent the Laws of Delaware are mandatorily applicable to the
Acquisition Merger.
SECTION 14.09. ASSIGNMENT. Neither the Transaction Agreements nor
any of the rights, interests or obligations under the Transaction Agreements
shall be assigned, in whole or in part, by any of the parties without the
prior written consent of the other parties, except that the rights, interests
and obligations of any party under this Agreement or any of the other
Transaction Agreements may be assigned by operation of law pursuant to a
merger, consolidation or other business combination involving such party that
would not reasonably expected to prevent or materially delay the consummation
of the Transactions; provided, however, that any assignment pursuant to the
exception set forth in this sentence shall not operate to release any party
from its obligations under this Agreement or any of the other Transaction
Agreements. Subject to the preceding sentences, the Transaction Agreements
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 14.10. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of the Transaction
Agreements were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that, subject to Sections
13.01(c) and 13.02(c), the parties shall be entitled to an injunction or
injunctions to prevent breaches of the Transaction Agreements and to enforce
specifically the terms and provisions of the Transaction Agreements in any New
York state court or any Federal court located in the Borough of Manhattan, The
City of New York in the State of New York, this being in addition to any other
remedy to which they are entitled at law or in
129
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any New York state court or any Federal court
located in the Borough of Manhattan, The City of New York in the State of New
York in the event any dispute arises out of the Transaction Agreements or any
Transaction, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, (c) agrees that it will not bring any action relating to any
Transaction Agreement or any Transaction in any court other than any New York
state court or any Federal court sitting in the Borough of Manhattan, The City
of New York in the State of New York (provided, however, that this clause (c)
shall not limit the ability of any party hereto to (i) file a proof of claim
or bring any action in any court in which a bankruptcy or reorganization
proceeding involving another party hereto is pending, (ii) file a
counter-claim or cross-claim against another party hereto in any court in
which a proceeding involving both such parties is pending or (iii) implead
another party hereto in respect of a Third Party Claim in any court in which a
proceeding relating to such Third Party Claim is then pending) and (d) waives
any right to trial by jury with respect to any action related to or arising
out of any Transaction Agreement or any Transaction.
130
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name:
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
EXM LLC,
by
ATB HOLDINGS INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
NEW EXM INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
131
MARATHON OIL CORPORATION,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President & Chief
Executive Officer
MARATHON OIL COMPANY,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
MARATHON DOMESTIC LLC,
by
MARATHON OIL CORPORATION,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President & Chief
Executive Officer
MARATHON ASHLAND PETROLEUM LLC,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
EXHIBIT D
TAX RULING/OPINION CLOSING CONDITIONS
Structure
1. The IRS issues a private letter ruling (a "Ruling") holding that the
Maleic/VIOC Contribution described in Section 1.02(a), the MAP/LOOP/LOCAP
Contribution described in Section 1.02(b) and the Reorganization Merger
described in Section 1.02(c), taken together, qualify as a reorganization
under Section 368(a)(1)(F) of the Code.
2. The IRS issues a Ruling holding that the Capital Contribution
described in Section 1.03(b) and the Conversion Merger described in Section
1.03(c), taken together with the Acquisition Merger described in Section
1.04(a) or the distribution by HoldCo of shares of New Ashland Inc. Common
Stock described in Section 1.04(b), as the case may be, qualify as a
reorganization under Section 368(a)(1)(D) of the Code.
3. The IRS issues a Ruling holding that the Acquisition Merger described
in Section 1.04(a) or the distribution by HoldCo of shares of New Ashland Inc.
Common Stock described in Section 1.04(b), as the case may be, qualifies as a
distribution described in Section 355(a) of the Code and, accordingly, no gain
or loss will be recognized by (and no amount will otherwise be included in the
income of) the shareholders of HoldCo upon the receipt of such New Ashland
Inc. Common Stock.
4. Either:
(a) The IRS issues a Ruling holding that the Acquisition Merger
described in Section 1.04(a) will qualify as a reorganization under Section
368(a)(1)(A) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
4(a) above, Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written opinion to Ashland,
in form and substance reasonably satisfactory to the Ashland Board, concluding
that the Acquisition Merger described in Section 1.04(a) will qualify as a
reorganization under Section 368(a)(1)(A) of the Code; and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Chartered delivers a written opinion to Marathon, in form and substance
reasonably satisfactory to the Marathon Board,
2
that such Acquisition Merger qualifies as a reorganization under Section
368(a)(1)(A) of the Code.
5. The IRS issues a Ruling holding that the shares of New Ashland Inc.
Common Stock distributed to shareholders of HoldCo in the Acquisition Merger
described in Section 1.04(a) or the distribution described in Section 1.04(b),
as the case may be, will not be treated as "other property", within the
meaning of Section 356(a) of the Code, received in exchange for HoldCo stock
in the Acquisition Merger.
Section 357
6. The IRS issues a Ruling holding that the assumption by Marathon and/or
Merger Sub of liabilities of HoldCo in the Acquisition Merger will not be
treated as money or other property under Section 357 of the Code.
Contingent Liabilities
7. Either:
(a) The IRS issues a Ruling holding that New Ashland Inc. is
entitled to deduct the Specified Liability Deductions (as defined in the Tax
Matters Agreement); or
(b) The IRS issues a Ruling holding that (i) HoldCo, and Marathon or
an affiliate of Marathon that is the "acquiring corporation" of HoldCo in the
Acquisition Merger within the meaning of Section 381(a) of the Code, is
entitled to deduct the Specified Liability Deductions, (ii) such deduction
will not be limited under Section 382 or Section 384 of the Code or Treasury
Regulation section 1.1502-15; (iii) such deduction is determined on the Net
Deduction Method (as defined in the Tax Matters Agreement); (iv) the accrual
or receipt of insurance reimbursements in respect of Specified Liability
Deductions will not result in recognition of income or gain to any member of
the New Ashland Group (as defined in the Tax Matters Agreement) (other than
recognition of such income or gain by a member of the New Ashland Group in
respect of Specified Liability Deductions claimed before the Closing Date by a
member of the Ashland Group (as defined in the Tax Matters Agreement) or the
New Ashland Group); and (v) any payment of Specified Liability Deductions by
any member of the New Ashland Group
3
will not result in recognition of income or gain to any member of the Marathon
Group (as defined in the Tax Matters Agreement).
8. Either:
(a) The IRS issues a Ruling holding that the effect of the
assumption by New Ashland, Inc. of the Ashland Residual Operations Liabilities
(as defined in the Tax Matters Agreement) on the basis of the New Ashland Inc.
Common Stock in the hands of HoldCo will be determined under Section 358(h)(1)
of the Code, or will be excluded from such application solely by reason of
Section 358(h)(2) of the Code; or
(b) (i) The IRS issues a Ruling holding that the effect of such
assumption on such basis will be determined under Section 358(d)(1) of the
Code; (ii) such Ruling sets forth with specificity a method of determining the
amount of the resulting reduction to basis under Section 358(d)(1) of the
Code; and (iii) based on such method, on representations as to the basis of
the New Ashland Inc. Common Stock before such reduction, and on
representations as to the value of the New Ashland Inc. Common Stock to be
distributed by HoldCo as of the date of such distribution (and on any other
date that might be relevant), Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written
opinion to Ashland, in form and substance reasonably satisfactory to the
Ashland Board, that the distribution of the New Ashland Inc. Common Stock by
HoldCo will not result in the recognition of gain by HoldCo under Section
355(e) of the Code in an amount greater than would be so recognized if the
effect on such basis had been determined under Section 358(h)(1) of the Code
rather than Section 358(d)(1) of the Code; and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Chartered
delivers a written opinion to Marathon, in form and substance reasonably
satisfactory to the Marathon Board, concluding that the distribution of the
New Ashland Inc. Common Stock by HoldCo does not result in the recognition of
gain by HoldCo under Section 355(e) of the Code in an amount greater than
would be so recognized if the effect on such basis had been determined under
Section 358(h)(1) of the Code rather than Section 358(d)(1) of the Code.
4
Partnership
9. Either:
(a) The IRS issues a Ruling that the MAP Partial Redemption does not
constitute a disguised sale of a partnership interest under Section
707(a)(2)(B) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
9(a) above, Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written opinion to Ashland,
in form and substance reasonably satisfactory to the Ashland Board, concluding
that the MAP Partial Redemption will not constitute a disguised sale of a
partnership interest under Section 707(a)(2)(B) of the Code; and ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ Chartered delivers a written opinion to Marathon, in form and
substance reasonably satisfactory to the Marathon Board, concluding that the
MAP Partial Redemption does not constitute a disguised sale of a partnership
interest under Section 707(a)(2)(B) of the Code.
10. Either:
(a) The IRS issues a Ruling that the MAP Partial Redemption will not
be treated as a sale or exchange of property between Ashland and MAP under
Section 751(b) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
10(a) above, Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written opinion to
Ashland, in form and substance reasonably satisfactory to the Ashland Board,
concluding that the MAP Partial Redemption will not constitute a sale or
exchange of property between Ashland and MAP under Section 751(b) of the Code;
and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Chartered delivers a written opinion to Marathon, in
form and substance reasonably satisfactory to the Marathon Board, concluding
that the MAP Partial Redemption does not constitute a sale or exchange of
property between Ashland and MAP under Section 751(b) of the Code.
