EXHIBIT 2.2
CONFORMED COPY
AMENDED AND RESTATED TAX MATTERS AGREEMENT dated
as of April 27, 2005 (the "TMA" or "Agreement") among
Ashland Inc., a Kentucky corporation ("Ashland"), ATB
Holdings, Inc., a Delaware corporation ("HoldCo"), EXM
LLC, a Kentucky limited liability company ("New Ashland
LLC"), New EXM Inc., a Kentucky corporation ("New
Ashland Inc."), Marathon Oil Company, an Ohio Company
("Marathon Company"), Marathon Oil Corporation, a
Delaware corporation ("Marathon"), Marathon Domestic
LLC, a Delaware limited liability company ("Merger
Sub") and Marathon Ashland Petroleum LLC, a Delaware
limited liability company owned by Marathon Company and
Ashland ("MAP").
WHEREAS, Ashland is the common parent of an affiliated
group of domestic corporations that has elected to file consolidated
Federal income tax returns.
WHEREAS, Marathon is the common parent of an affiliated
group of domestic corporations that has elected to file consolidated
Federal income tax returns (the "Marathon Affiliated Group").
WHEREAS, Ashland and Marathon Company, a wholly-owned
subsidiary of Marathon, own all the limited liability company interests in
MAP, which is treated for Federal income tax purposes as a partnership.
WHEREAS, Ashland and Marathon and certain of their
respective related parties have entered into the Master Agreement pursuant
to which they have agreed to engage in the transactions contemplated by the
Transaction Agreements and the Ancillary Agreements, as those terms are
defined in the Master Agreement (collectively, the "Transactions").
WHEREAS, as part of the Transactions, HoldCo will become
the common parent of the Ashland Affiliated Group in a series of steps
which are intended to qualify as a reorganization described in Code Section
368(a)(1)(F) (the "F Reorganization").
WHEREAS, as part of the F Reorganization, Ashland will
contribute its Membership Interest and the Acquired Businesses to HoldCo
and will merge with and into New Ashland LLC, which will assume all
obligations of Ashland, including the obligations of Ashland under this TMA
(the "F Reorganization Merger").
WHEREAS, as part of the Transactions, MAP will redeem a
portion of Ashland's interest in MAP in exchange for a distribution of cash
and MAP accounts receivable, as set forth in the Master Agreement (the "MAP
Partial Redemption").
WHEREAS, as part of the Transactions, New Ashland LLC
will merge with and into New Ashland Inc., which will assume all
obligations of New Ashland LLC, including the obligations that New Ashland
LLC assumed from Ashland (the "Conversion Merger").
WHEREAS, as part of the Transactions, (i) HoldCo will
distribute, to the former holders of the stock of Ashland, all the stock of
New Ashland Inc. in a transaction intended to qualify as a distribution
described in Code Section 355 (the "Spinoff"), and (ii) HoldCo will merge
with and into Merger Sub in a transaction intended to qualify as a
reorganization described in Code Section 368(a)(1)(A) (the "Acquisition
Merger") and as a result of such merger, HoldCo will cease to exist.
WHEREAS after the Acquisition Merger, Marathon may cause
Merger Sub to contribute all or a portion of the assets and liabilities
that it acquired in the Acquisition Merger to a newly formed corporation
that is a wholly-owned, direct subsidiary of Merger Sub or, alternatively
Marathon may contribute Merger Sub to a wholly-owned subsidiary of
Marathon.
WHEREAS, immediately after the Spinoff, New Ashland Inc.
will be the common parent of an affiliated group of domestic corporations
that elects to file consolidated Federal income tax returns, which will not
include HoldCo (the "New Ashland Inc. Affiliated Group").
WHEREAS the parties to this TMA wish to allocate and
assign certain Tax responsibilities, liabilities and benefits among
themselves and to provide for certain other Tax matters.
WHEREAS the parties entered into the original TMA on
March 18, 2004.
WHEREAS the parties have entered into Amendment No. 1 to
the Master Agreement, dated April 27, 2005 ("Amendment No. 1"), amending
certain terms of the Master Agreement.
WHEREAS the parties wish to amend and restate in its
entirety this TMA.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements contained in this TMA, the parties agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have
the following meaning:
"Acquired Businesses" means the "Maleic Business" and the
"VIOC Centers", as each such term is defined in the Master Agreement.
"Acquisition Merger" has the meaning set forth in the
ninth WHEREAS clause of this TMA.
"affiliate" has the meaning ascribed to such term in the
Master Agreement.
"affiliated group" means an affiliated group of
corporations within the meaning of Code Section 1504(a) for the taxable
period in question.
"Ashland Affiliated Group" means the affiliated group of
domestic corporations that has elected to file consolidated Federal income
tax returns of which Ashland (and immediately after the F Reorganization,
HoldCo) is the common parent.
"Ashland Group" means (i) the corporations that are
members of the Ashland Affiliated Group and (ii) the corporations that
would be members of the Ashland Affiliated Group but for the fact that they
are not includible corporations under Code Section 1504(b).
"Ashland Asbestos Liabilities" means any obligation of
Ashland or any of its present or former subsidiaries (including but not
limited to Xxxxx Xxxxxx Inc.) relating to claims made at any time that are
attributable to allegations of exposure to asbestos on or before the
Closing Date with respect to Residual Business Operations, to the extent
that New Ashland Inc. or any member of the New Ashland Inc. Group is liable
for such obligation after the Closing Date.
"Ashland Employee Liabilities" means (i) any obligation
of Ashland or any of its present or former subsidiaries for any Employee
Benefit Obligation to be provided to or on behalf of present or former
employees of Ashland or any such subsidiaries for services that are
attributable to Residual Business Operations or to the HoldCo Businesses,
in each case that are performed on or before the Closing Date, to the
extent that New Ashland Inc. or any member of the New Ashland Inc. Group is
liable for such obligation after the Closing Date and (ii) any obligation
pursuant to the exercise of any Option by any current or former employees
of HoldCo Businesses or Residual Business Operations with respect to the
capital stock of Ashland, HoldCo or New Ashland Inc.
"Ashland Environmental Liabilities" means any obligation
of Ashland or any of its present or former subsidiaries relating to claims
made at any time for environmental damages or remediation or similar
expenses arising from acts, omissions or conditions occurring or existing
on or before the Closing Date that are attributable to Residual Business
Operations or to the HoldCo Businesses, to the extent that New Ashland Inc.
or any member of the New Ashland Inc. Group is liable for such obligation
after the Closing Date.
"Ashland Residual Operations Liabilities" means any
obligation of Ashland or any of its present or former subsidiaries that is
attributable to Residual Business Operations or to the HoldCo Businesses,
including but not limited to Ashland Asbestos Liabilities, Ashland Employee
Liabilities and Ashland Environmental Liabilities, but shall not include
any associated defense costs incurred by New Ashland Inc. after the
Closing.
"Bankruptcy Event" means, with respect to any Person, the
occurrence or existence of any of the following events or conditions: such
Person (1) is dissolved (other than the dissolution of a transferor in
connection with a transfer to a successor as contemplated by Section
10.15); (2) admits in writing its inability generally to pay its debts; (3)
makes a general assignment for the benefit of its creditors; (4) institutes
or has instituted against it a proceeding seeking a judgment of insolvency
or bankruptcy or any similar relief under any bankruptcy or insolvency law
or other similar law affecting creditors' rights, or a petition is
presented for its winding up or liquidation and, in the case of any such
proceeding or petition instituted or presented against it, such proceeding
or petition (A) results in a judgment of insolvency or bankruptcy or the
entry of an order for similar relief or the making of an order for its
winding up or liquidation or (B) is not dismissed or discharged within 60
days of the institution or filing thereof; (5) has a resolution passed by
its Board of Directors for its winding up or liquidation (other than the
winding up or liquidation of a transferor in connection with a transfer to
a successor as contemplated by Section 10.15); (6) consents to, or becomes
subject to an order or judgment providing for, the appointment of an
administrator, receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets and, in the case of an order
or judgment, such judgment or order is not dismissed, discharged, stayed or
restrained in each case within sixty (60) days of the entry or making
thereof; or (7) takes any action in furtherance of, or expressly indicates
its consent to, approval of, or acquiescence in, any of the foregoing.
"Bankruptcy Party" has the meaning set forth in Section
8.02(c) of this TMA.
"Bankruptcy Tax Claims" has the meaning set forth in
Section 8.02(c) of this TMA.
"Basket One Amount" has the meaning set forth in Section
5.02(b)(i) of this TMA.
"Basket One Cap" has the meaning set forth in Section
5.02(b)(ii)(C) of this TMA.
"Basket One Cap Base Amount" has the meaning set forth in
Section 5.02(b)(ii)(C).
"Basket One Cap Carryforward" has the meaning set forth
in Section 5.02(b)(ii)(C) of this TMA.
"Basket One Deductions" has the meaning set forth in
Section 5.02(b)(ii)(B) of this TMA.
"Basket One Tax Rate" has the meaning set forth in
Section 5.02(b)(ii)(A) of this TMA.
"Basket Two Amount" has the meaning set forth in Section
5.02(c)(i) of this TMA.
"Basket Two Carryovers" has the meaning set forth in
Section 5.02(c)(ii)(B) of this TMA.
"Basket Two Deductions" has the meaning set forth in
Section 5.02(c)(ii)(A) of this TMA.
"Closing" and Closing Date" have the meanings set forth
in the Master Agreement.
"Closing Agreement" means the closing agreement to be
entered into by Marathon, Ashland, New Ashland Inc. and certain related
parties and the IRS with respect to the Transactions pursuant to Code
Section 7121 and described in Section 5.01 of this Tax Matters Agreement
received by Ashland and Marathon with respect to the Transactions on or
before the Closing Date.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Conversion Merger" has the meaning set forth in the
eighth WHEREAS clause of this TMA.
"Detroit Facility" means MAP's $325 million borrowing
facility provided by Marathon Company as lender, the proceeds of which
facility are used for the sole purpose of funding an expansion and clean
fuels modification project at MAP's Detroit refinery.
"Employee Benefit Obligation" means any obligation
(whether current or deferred) for any compensation, pension, severance
payment, medical, retirement or disability benefit, life insurance or any
similar employee benefit.
"Escrow" means the escrow created under the Escrow
Agreement.
"Escrow Agreement" has the meaning set forth in Section
6.02(a) of this TMA.
"Escrow Threshold" has the meaning set forth in Section
6.02(c)(i)(B) of this TMA.
"Excess Section 355(e) Taxes" means the excess, if any of
the total amount of Section 358(d)(1) Adjustment Taxes over $75 million.
"Extraordinary Events" means (i) unforeseen funding
requirements resulting from damage to MAP properties by storm, fire, or
similar catastrophic events, or (ii) unforeseen expenditures that are
mandated by law, regulation or administrative ruling, in each case that are
promulgated after the Closing Date.
"F Reorganization Merger" has the meaning set forth in
the sixth WHEREAS clause of this TMA.
"Federal Tax Benefit Payments" has the meaning set forth
in Section 5.02(a)(i) of this TMA.
"Final Determination" means the final resolution of
liability for any Tax for any taxable period by or as a result of: (i) a
final and unappealable decision, judgment, decree or other order by any
court of competent jurisdiction; (ii) a final closing agreement (other than
the Closing Agreement) or accepted offer in compromise under Code Sections
7121 or 7122, or a comparable agreement under the laws of any other
jurisdiction, which resolves the entire Tax liability for the entire
taxable period; (iii) a duly executed IRS Form 870 or 870-AD (or any
successor forms thereto), on the date such form is effective, or by a
comparable form under the laws of other jurisdictions; except that a Form
870 or 870-AD or comparable form that reserves (whether by its terms or by
operation of law) the right of the taxpayer to file a claim for Refund
and/or the right of the Tax Authority to assert a further deficiency shall
not constitute a Final Determination with respect to the right so reserved;
(iv) any allowance of a Refund or credit in respect of an overpayment of
such Tax, but only after the expiration of all periods during which such
Refund may be recovered (including by way of offset) by the jurisdiction
imposing such Tax; (v) the execution of a closing agreement with respect to
a pre-filing agreement described in Rev. Proc. 2001-22, or (vi) any other
final disposition by reason of the expiration of the applicable statute of
limitations or by mutual agreement of the parties hereto.
"Fully Funded" has the meaning set forth in Section
6.02(c)(i)(A) of this TMA.
"HoldCo Businesses" means the Acquired Businesses and the
JV Interests.
"Income Taxes" means any Taxes imposed on or determined
by reference to gross or net income or profits or any other measure of
income or profits.
"Independent Entity" has the meaning set forth in Section
9.01 of this TMA.
"Inflation Factor" means the U.S. GDP Implicit Price
Deflator, which shall be applied annually to adjust prices to constant
dollar amounts beginning with the calendar year following the year of the
Closing Date.
"IRS" means the U.S. Internal Revenue Service.
"JV Interests" means the "Membership Interest" and the
"LOOP/LOCAP Interests", as each such term is defined in the Master
Agreement.
"JV Entities" means the entities wholly or partially
owned, directly or indirectly, through the ownership of the JV Interests.
"MAP LLC Agreement" means the Amended and Restated
Limited Liability Company Agreement of MAP, dated as of December 31, 1998,
as amended to the date of this TMA.
"Marathon Affiliated Group" has the meaning set forth in
the second WHEREAS clause of this TMA.
"Marathon Group" means (i) the corporations that are
members of the Marathon Affiliated Group and (ii) the corporations that
would be members of the Marathon Affiliated Group but for the fact that
they are not includible corporations under Code Section 1504(b), including
in both cases, beginning on the day after the Closing Date, former members
of the Ashland Group that become members of the Marathon Group by reason of
the Acquisition Merger.
"Marathon Portion" has the meaning set forth in Section
2.05 of this TMA.
"Marathon Tax Matter" means any Tax Item arising from or
related to the ownership or operation of HoldCo or the HoldCo Businesses
attributable to a Post-Closing Period.
"Master Agreement" means the Master Agreement dated as of
March 18, 2004, among Ashland, HoldCo, New Ashland LLC, New Ashland Inc.,
Marathon, Marathon Company, Merger Sub and MAP, as amended by Amendment No.
1.
"Net Deduction Method" means, with respect to Specified
Liability Deductions, the deduction of such amounts as they are accrued and
recognized under the accrual method of accounting, net of actual and
anticipated insurance recoveries determined under the accrual method of
accounting, in each case applied consistently from year to year.
"New Ashland Inc. Affiliated Group" has the meaning set
forth in the eleventh WHEREAS clause of this TMA.
"New Ashland Inc. Group" means (i) the corporations that
are members of the New Ashland Inc. Affiliated Group and (ii) the
corporations that would be members of the New Ashland Inc. Affiliated Group
but for the fact that they are not includible corporations under Code
Section 1504(b).
"New Ashland Inc. Portion" has the meaning set forth in
Section 2.05 of this TMA.
"New Ashland Inc. Tax Matter" means any Tax Item (i)
arising during a Pre-Closing Period or (ii) from or related to a
Post-Closing Period that is not a Marathon Tax Matter.
"Non-Bankruptcy Party" has the meaning set forth in
Section 8.02(c) of this TMA.
"Non-Federal Tax Benefit Payment" has the meaning set
forth in Section 5.02(a)(i) of this TMA.
"Option" means any compensatory stock option, stock
appreciation right, restricted stock or similar instrument.
"Other Taxes" means any Taxes other than Income Taxes.
"Pass-Though Items" mean any Tax Items that are passed
through to, and reportable on the Tax Returns of, one or more of the owners
of MAP or any other JV Entity and that could result in an increase or
decrease in any such owner's liability for Taxes.
"Post-Closing Period" means any taxable period, and in
the case of a Straddle Period the portion of any such period, beginning
after the Closing Date.
"Pre-Closing Period" means the Pre-Closing Taxable
Periods, and the portion of any Straddle Period ending on the Closing Date.
"Pre-Closing Taxable Period" means any taxable period
ending on or before the Closing Date.
"Refund" means any refund of Taxes, including any
reductions of Taxes paid or payable by means of credits, offsets or
otherwise.
"Residual Business Operations" means former business
operations of Ashland or any current or former member of the Ashland Group,
in each case determined as of the date of this Agreement, that will not be
transferred or deemed to be transferred to New Ashland Inc. pursuant to the
Conversion Merger.
"Section 355(e) Tax Claim" has the meaning set forth in
Section 8.02(e) of this TMA.
"Section 355(e) Taxes" means any Taxes, arising in any
taxable period, resulting from the application of Code Section 355(e) or
any similar provision under state or local law to the Spinoff, including
any Taxes attributable to an adjustment to the tax basis of the stock of
New Ashland Inc. resulting from any audit by any Tax Authority or any Final
Determination.
"Section 355(e) Schedule" has the meaning set forth in
Section 3.07(a) of this TMA.
"Section 358(d)(1) Adjustment" means the reduction in the
tax basis of New Ashland Inc. stock under Section 358(d)(1) resulting from
the assumption by New Ashland Inc. of the Ashland Residual Operations
Liabilities pursuant to the Conversion Merger.
"Section 358(d)(1) Adjustment Taxes" means, with respect
to any calculation of Section 355(e) Taxes the excess, if any, of (i) any
such Section 355(e) Taxes over (ii) the amount of any such Section 355(e)
Taxes that would exist if the Section 358(d)(1) Adjustment were $0.
"Specified Liability Deductions" means the amount, in any
taxable period, allowable as deductible expenses for Federal income tax
purposes in respect of Ashland Residual Operations Liabilities (after
applying the applicable limitations, if any, under Code Sections 382 and
384 and Treasury Regulation Section 1.1502-15).
"Spinoff" has the meaning set forth in the ninth WHEREAS
clause of this TMA.
"Straddle Period" means any taxable period that includes,
but does not end on, the Closing Date.
"subsidiary" has the meaning ascribed to such term in the
Master Agreement.
"Tax" or "Taxes" means all forms of taxation imposed by
any federal, state, local or foreign jurisdiction (including any
subdivision and any revenue agency of such a jurisdiction), including
without limitation net income, gross income, alternative minimum, sales,
use, ad valorem, gross receipts, value added, franchise, license, transfer,
withholding, payroll, employment, excise, severance, stamp, property,
custom duty, taxes or governmental charges, together with any related
interest, penalties or other additional amounts imposed by any federal,
state, local or foreign jurisdiction (including any subdivision and any
revenue agency of such a jurisdiction), and including all liability for or
in respect of any of the foregoing as a result of being a member of a
consolidated or similar group or a partner in an entity treated as a
partnership or other pass-through entity for Tax purposes or as a result of
any tax sharing or similar contractual agreement.
"Tax Authority" means any federal, state, local or
foreign jurisdiction (including any subdivision and any revenue agency of
such a jurisdiction) imposing Taxes and the agency, if any, charged with
the collection of such Taxes for such authority.
"Tax Benefit" means any item of loss, deduction, credit,
or any other Tax Item that decreases Taxes paid or payable.
"Tax Benefit Payments" has the meaning set forth in
Section 5.02(a)(i) of this TMA.
"Tax Certificate" means any letter or certificate that is
referred to in, and forms a basis for, a Tax Opinion.
"Tax Claim" has the meaning set forth in Section
8.02(a)(i) of this TMA.
"Tax Detriment" means any item of income, gain, recapture
of credit or any other Tax Item that increases Taxes paid or payable, or
any reduction in or limitation of, any Tax Item due to the application of
Code Sections 382, 384 or Treasury Regulation Section 1.1502-15.
"Tax Item" means any item of income, gain, loss,
deduction, credit, recapture of credit, or other similar item, that may
have the effect of increasing or decreasing any Tax paid or payable,
including any adjustment to tax basis, capitalized interest or any
adjustment under Code Section 481.
"Tax Loss" means the increase in Tax paid or payable to
the relevant Tax Authority (or, without duplication, the reduction in any
Refund) attributable to a Tax Detriment.
"Tax Opinion" means the opinions of Cravath, Swaine &
Xxxxx LLP and Xxxxxx & Xxxxxxxxx Chartered concerning certain Federal
income tax issues related to the Transactions to be delivered to Ashland
and Marathon, respectively, pursuant to Section 10.01(f) of the Master
Agreement.
"Tax Return" means any return, filing, questionnaire,
information statement, or other document required to be filed, including
amended returns that may be filed for any period or portion thereof with
any Tax Authority in connection with any Tax (whether or not a payment is
required to be made with respect to such filing).
"Tax Savings" means the decrease in Tax paid or payable
to the relevant Tax Authority (or, without duplication, the increase in any
Refund) attributable to a Tax Benefit.
"Tax Structure" means the manner, order or form in which
the Transactions (currently as contemplated or as amended prior to the
Closing) are effected pursuant to the Master Agreement or any Transaction
Agreement.
"Transactions" has the meaning set forth in the fourth
WHEREAS clause of this TMA.
"Transaction Taxes" means Taxes, other than Transfer
Taxes and Section 355(e) Taxes, of any member of the Ashland Group for any
Pre-Closing Period or the New Ashland Inc. Group or the Marathon Group for
any taxable period resulting from, or arising in connection with any
portion of the Transactions.
"Transfer Taxes" has the meaning set forth in Section
2.03 of this TMA.
"Valvoline" means the active trade or business conducted
by the business division of Ashland (and immediately following the
Transactions, of New Ashland Inc.) of the same name.
All capitalized terms used but not defined in this TMA
shall have the meanings ascribed to such terms in the Master Agreement.
ARTICLE II
Indemnification for Taxes
SECTION 2.01. General. (a) Indemnification by New Ashland
Inc. Except as otherwise provided in Sections 2.03, 2.04, 2.05, 2.06 and
Articles V and VI of this TMA, New Ashland Inc. and each member of the New
Ashland Inc. Group shall be liable for, shall indemnify each member of the
Marathon Group against, and shall be entitled to all Refunds of, less
reasonable out-of-pocket costs and expenses incurred in connection with
such Refund, (i) all Taxes for all Pre-Closing Periods of each member of
the Ashland Group and the Acquired Businesses; (ii) all Taxes for all
Post-Closing Periods that are imposed on or collected from any member of
the Marathon Affiliated Group as a transferee of or successor to HoldCo,
pursuant to any law, rule or regulation, imposed on taxable income or gain
that is attributable, in whole or in part, to events or transactions that
occur on or before the Closing Date but that is recognized for tax purposes
in a Post-Closing Period as a result of the installment method of
accounting, completed contract method of accounting, the long-term contract
method of accounting, the recapture of a dual consolidated loss, Section
481 of the Code (other than any such Taxes imposed by reason of a change in
accounting method by HoldCo or a successor to HoldCo made or applied for by
Marathon or a Member of the Marathon Group after the Closing Date, unless
such change was contemplated by this TMA, or made or applied for by New
Ashland Inc. or a member of the New Ashland Inc. Group, or made by Marathon
with New Ashland Inc.'s consent, or required as a condition of the
Transactions by the Closing Agreement or otherwise), or other provisions of
Federal, state, local or foreign tax law that have a similar effect and all
Taxes attributable to the adoption by HoldCo of the Net Deduction Method
with respect to Specified Liability Deductions; (iii) all Taxes for all
taxable periods of each member of the New Ashland Inc. Group; (iv) all
Taxes imposed on any member of the Marathon Group with respect to insurance
recoveries received by any member of the New Ashland Inc. Group that are
attributable to Residual Business Operations; (v) all Taxes for which any
current or former member of the Ashland Group or the New Ashland Inc. Group
is liable under Treasury Regulation Section 1.1502-6 (or any analogous
provision of state, local or foreign law); (vi) all Taxes payable by
Ashland or HoldCo that are attributable to Pass-Through Items of MAP or any
other JV Entity with respect to any Pre-Closing Period; (vii) all
Transaction Taxes; and (viii) all Tax Losses of any member of the Marathon
Group resulting from the failure by any member of the Ashland Group or the
New Ashland Inc. Group, as the case may be, to use a consistent position as
described in the last sentence of Section 3.04 of this TMA.
(b) Indemnification by Marathon. Except as otherwise
provided in Sections 2.03, 2.04, 2.05, 2.06 and Articles V and VI of this
TMA, Marathon and each member of the Marathon Group shall be liable for,
and shall indemnify each member of the New Ashland Inc. Group against, and
shall be entitled to all Refunds of, less reasonable out-of-pocket costs
and expenses incurred in connection with such Refund, (i) all Taxes for all
taxable periods of each member of the Marathon Group, other than as a
successor to or transferee of a former member of the Ashland Affiliated
Group by reason of the Acquisition Merger, and (ii) all Taxes for all
taxable periods that are imposed on and payable by MAP or any JV Entities.
SECTION 2.02. Apportionment of Items for Straddle
Periods. (a) Taxes. Taxes and Refunds of any entity or with respect to the
Acquired Businesses for any Straddle Period shall be apportioned between
the Pre-Closing Period and the Post-Closing Period on the basis of a
"closing of the books" as of the end of the Closing Date, provided that
Other Taxes that are not based on revenues, sales or a similar measure
shall be apportioned between the Pre-Closing Period and the Post-Closing
Period based on the number of days of the relevant taxable period that are
in the Pre-Closing Period and the Post-Closing Period respectively.
(b) Apportionment of Pass-Through Items of MAP and
certain other JV Entities. For purposes of determining the Taxes payable by
the owner of a JV Interest in MAP or any other JV Entity that is treated
for purposes of the relevant Tax as a pass-through entity, the Pass-Through
Items for any Straddle Period of such JV Entity shall be apportioned
between the Pre-Closing Period and the Post-Closing Period on the basis of
a "closing of the books" as of the end of the Closing Date in accordance
with Code Section 706(c)(2)(A) and Treasury Regulation Section
1.706-1(c)(2)(i) (or corresponding principles of state, local or foreign
laws, rules or regulations); provided that Other Taxes of MAP or such JV
Entity that are not based on revenues, sales or a similar measure shall be
apportioned between the Pre-Closing and the Post-Closing Period based on
the number of days of the relevant taxable period that are in the
Pre-Closing Period and the Post-Closing Period respectively.
SECTION 2.03. Transfer Taxes. New Ashland Inc. shall be
liable for, shall indemnify each member of the Marathon Group against, and
shall be entitled to retain all Refunds of, less reasonable out-of-pocket
costs and expenses incurred in connection with such Refund, all transfer,
documentary, sales, use, registration and similar Taxes and related fees
incurred in connection with the Transactions (collectively "Transfer
Taxes"). New Ashland Inc., with Marathon's cooperation, shall timely
prepare and file all Tax Returns relating to Transfer Taxes as may be
required to comply with the provisions of such Tax laws.
SECTION 2.04. Certain Transaction Taxes. Marathon shall
be liable for, shall indemnify each member of the New Ashland Inc. Group
against, and shall be entitled to retain all Refunds of, less reasonable
out-of-pocket costs and expenses incurred in connection with such Refund,
any Transaction Taxes to the extent that such Taxes are primarily
attributable to:
(a) any inaccurate, written representation or warranty of
fact or intent specifically made by, or specifically attributed
to, any member of the Marathon Group (other than HoldCo) in the
Closing Agreement or a Tax Certificate and that is specified on
Schedule 2.04 attached hereto (as amended from time to time by the
unanimous agreement of Marathon and Ashland).
(b) any breach by any member of the Marathon Group of a
covenant in Section 7.03(b) of this TMA,
unless such Transaction Taxes would have been imposed without regard to
such inaccuracy or breach.
SECTION 2.05. Section 355(e) Taxes. With respect to any
estimate or any other calculation of Section 355(e) Taxes,
(a) The "Marathon Portion" of such Section 355(e) Taxes
means:
(i) 100% of the Section 355(e) Taxes in excess of $0
and to and including the sum of (A) $200 million and (B) all
Excess Section 355(e) Taxes; and
(ii) 50% of the Section 355(e) Taxes in excess of
the sum of (A) $375 million and (B) all Excess Section 355(e)
Taxes.
(b) The "New Ashland Inc. Portion" of such Section 355(e)
Taxes means:
(i) 100% of the Section 355(e) Taxes in excess of
the amount included in the Marathon Portion under Section
2.05(a)(i) and to and including the sum of (A) $375 million and
(B) all Excess Section 355(e) Taxes; and
(ii) 50% of the Section 355(e) Taxes in excess of
the sum of (A) $375 million; and (B) all Excess Section 355(e)
Taxes.
(c) Marathon and each member of the Marathon Group shall
be liable for, and shall indemnify each member of the New Ashland
Inc. Group against, and shall be entitled to all Refunds of, the
Marathon Portion of all Section 355(e) Taxes. New Ashland Inc. and
each member of the New Ashland Inc. Group shall be liable for, and
shall indemnify each member of the Marathon Group against, and
shall be entitled to all Refunds of, the New Ashland Inc. Portion
of the Section 355(e) Taxes.
SECTION 2.06. Gain Recognition Agreement Taxes. Each
member of the New Ashland Inc. Group shall comply with the terms of any
Section 367 "gain recognition agreement" executed by a member of the
Ashland Group during a Pre-Closing Period, including, without limitation,
by including the gain, if any, required to be recognized pursuant to the
terms of any such agreement (or by virtue of the application of any
provision of Treasury Regulation Section 1.367(a)-8) and the payment of any
Tax that is required to be paid pursuant to Treasury Regulation Section
1.367(a)-8(b)(3). If a Tax Authority determines that any member of the
Ashland Group or the New Ashland Inc. Group has failed to comply with the
terms of any such agreement or any provision of Treasury Regulation Section
1.367(a)-8, the New Ashland Inc. Group shall be liable for any resulting
liability for Taxes and each member of the New Ashland Inc. Group shall
indemnify each member of the Marathon Group against any such Tax liability.
ARTICLE III
Preparation and Filing of Tax Returns
SECTION 3.01. Preparation and Filing of Original Tax
Returns. (a) Ashland (before the F Reorganization Merger), and New Ashland
Inc. LLC and New Ashland Inc. (after the F Reorganization Merger), shall
prepare and file, or cause to be prepared and filed, all Tax Returns (i) of
each member of the Ashland Group (including any Tax Returns related to the
Acquired Businesses) for all Pre-Closing Periods, (ii) of each member of
the New Ashland Inc. Group for all taxable periods and (iii) that it is
required to file pursuant to Section 3.02. Ashland and New Ashland Inc., as
the case may be, shall timely pay all Taxes with respect to such Tax
Returns.
(b) Marathon shall prepare and file, or cause to be
prepared and filed, all Tax Returns (i) of former members of the Ashland
Group and successors thereof that become members of the Marathon Group by
reason of the Acquisition Merger for all Post-Closing Periods, (ii) of each
other member of the Marathon Group for all taxable periods, and (iii) that
it is required to prepare and file pursuant to Section 3.02. Marathon shall
timely pay all Taxes with respect to such Tax Returns.
(c) MAP shall prepare and file, or cause to be prepared
and filed, all Tax Returns of MAP and its subsidiaries for any Pre-Closing
Period and any Straddle Period, and such Tax Returns shall be prepared and
filed in a manner consistent with past practice and in accordance with the
MAP LLC Agreement as in effect immediately prior to the Closing. On or
before August 15, 2005, MAP shall provide to New Ashland Inc. (i) the final
IRS Schedule K-1 with respect to the taxable year for MAP ending on
December 31, 2004; and (ii) a pro forma IRS Schedule K-1 with respect to
the taxable year or portion thereof ending on the Closing Date, showing the
estimated Pass-Through Items that will be apportioned to Ashland for the
Pre-Closing Period. In addition, on or before February 1, 2006, MAP shall
provide to New Ashland Inc. the final IRS Schedule K-1 with respect to the
taxable year for MAP ending on the Closing Date.
SECTION 3.02. Straddle Period Tax Returns. (a) Following
the Closing Date, Marathon and New Ashland Inc. shall meet and prepare a
written schedule that allocates the responsibility for preparing and filing
Straddle Period Tax Returns in each jurisdiction of former members of the
Ashland Group and successors thereof that become members of the Marathon
Group by reason of the Acquisition Merger. If the parties are unable to
agree, the party with the most substantial presence in the jurisdiction,
taking into account their respective assets or businesses, shall have
preparation and filing responsibility. If Marathon and New Ashland Inc. are
not able to agree upon the party with the most substantial presence in a
jurisdiction within 60 days after the Closing Date, the preparation and
filing responsibility for the disputed jurisdictions shall be determined by
a mutually acceptable certified public accounting firm. The filing party
shall timely pay all Taxes with respect to such Straddle Period Tax
Returns.
(b) For each Straddle Period Tax Return described in
Section 3.01(a) of this TMA that includes any Marathon Tax Matter, Marathon
shall promptly prepare and provide to New Ashland Inc. any information or
documentation reasonably requested by New Ashland Inc. to facilitate the
preparation and filing of such Tax Return. For each Straddle Period Tax
Return described in Section 3.01(c) of this TMA that includes any New
Ashland Inc. Tax Matter, New Ashland Inc. shall promptly prepare and
provide to Marathon any information or documentation reasonably requested
by Marathon to facilitate the preparation and filing of such Tax Return.
(c) All Straddle Period Tax Returns shall be submitted to
the other party not later than 30 days prior to the due date, including
extensions, for the filing of such Tax Returns (or if such due date is
within 45 days following the Closing Date, as promptly as practicable
following the Closing Date). Such other party shall have the right to
review such Tax Returns and to review all workpapers and procedures used to
prepare any such Tax Return. If the nonfiling party, within 10 business
days after delivery of any such Tax Return, notifies the filing party in
writing that it objects to any of the Tax Items in such Tax Return, both
parties shall attempt in good faith to resolve the dispute and, if they are
unable to do so, the disputed items shall be resolved within a reasonable
time, taking into account the deadline for filing such Tax Return, by a
mutually acceptable certified public accounting firm. Upon resolution of
all such Tax Items, the filing party shall file the relevant Straddle
Period Tax Return on that basis. The accounting firm shall treat all Tax
Returns of the parties as confidential, and shall not reveal any
information contained in, or any part of, the Tax Returns of one party to
the other without prior written consent. The costs, fees, and expenses of
such certified public accounting firm shall be borne equally by Marathon
and New Ashland Inc.
(d) Marathon and New Ashland Inc., as the case may be,
shall provide the other party with a calculation and determination of the
amount of the Straddle Period Taxes that are included in any returns filed
by the other party under Sections 3.01(a) and 3.01(c) of this TMA. In the
absence of a Final Determination, all such determinations shall be prepared
in a manner consistent with past practice. If either party disputes such a
determination, it may make a written request that the other party obtain
written confirmation from a mutually acceptable certified public accounting
firm that the determination is consistent with the preceding sentence. If
the accounting firm issues a confirmation, then such determination shall be
binding upon the parties. If the accounting firm does not issue a
confirmation, then the determination in the returns shall be amended to
permit a confirmation to be issued by the accounting firm in respect of the
amended determination. If a dispute is not resolved prior to the due date
of a Tax Return, the Tax Return shall be filed in accordance with the
determination made by the filing party, and both parties hereby agree to
file or cause to be filed an amended Tax Return, if necessary, reflecting
the resolution of the issue by the accounting firm. The accounting firm
shall treat all Tax Returns of the parties as confidential, and shall not
reveal any information contained in, or any part of, the Tax Returns of one
party to the other without prior written consent. The costs, fees, and
expenses of such certified public accounting firm shall be borne equally by
Marathon and New Ashland Inc.
SECTION 3.03. Amended Tax Returns. (a) New Ashland Inc.
shall be entitled to amend any Tax Return described in Section 3.01(a) of
this TMA; provided that, to the extent that such an amendment with respect
to a Straddle Period Tax Return adversely affects any Marathon Tax Matter
or would result in a Tax Detriment to Marathon, such amendment may not be
made without the prior written consent of Marathon, which may not be
unreasonably withheld or delayed. New Ashland Inc. may request that
Marathon amend any Straddle Period Tax Return described in Section 3.01(c)
of this TMA that Marathon is obligated to file, but only to the extent that
such amendment affects a New Ashland Inc. Tax Matter; provided that such an
amendment shall be filed only with the prior written consent of Marathon,
which may not be unreasonably withheld or delayed.
(b) Marathon shall be entitled to amend any Tax Return
described in Section 3.01(c) of this TMA; provided that, to the extent that
such an amendment with respect to a Straddle Period Tax Return adversely
affects any New Ashland Inc. Tax Matter or would result in a Tax Detriment
to New Ashland Inc., such amendment may not be made without the prior
written consent of New Ashland Inc., which may not be unreasonably withheld
or delayed. Marathon may request that New Ashland Inc. amend any Straddle
Period Tax Return described in Section 3.01(a) of this TMA, but only to the
extent that such amendment affects a Marathon Tax Matter or a Tax Item that
could result in a Tax Detriment to Marathon; provided that such an
amendment shall be filed only with the prior written consent of New Ashland
Inc., which may not be unreasonably withheld or delayed.
(c) MAP shall not, and Marathon shall not permit MAP to,
amend any Tax Return of MAP or any of its subsidiaries for any Pre-Closing
Period or any Straddle Period if such amendment would result in a Tax
Detriment to New Ashland Inc. without the prior written consent of New
Ashland Inc., which may not be unreasonably withheld or delayed.
(d) In the event that a party refuses to consent to an
amendment to a Tax Return to which such consent is required pursuant to
this Section 3.03 and the parties are unable to resolve their disagreements
after good faith attempts to do so, the parties shall engage a mutually
acceptable certified public accounting firm to estimate the present value
of the realizable Tax Savings of the amendment to the party proposing such
amendment and the present value of the realizable Tax Loss of the amendment
to the party withholding its consent to such amendment. If the accounting
firm determines that the present value of such estimated Tax Savings
exceeds the present value of such estimated Tax Loss, the party proposing
such amendment shall be entitled to so amend the applicable Tax Return,
provided that such party agrees to pay to the party withholding its consent
an amount equal to the present value of any such Tax Loss. The accounting
firm shall treat all Tax Returns of the parties as confidential, and shall
not reveal any information contained in, or any part of, the Tax Returns of
one party to the other without prior written consent. The fees and expenses
of the accounting firm shall be borne by the party proposing such
amendment.
SECTION 3.04. Manner of Preparation and Filing. All Tax
Returns, and amendments thereto, described in this Article III shall be
filed on a timely basis by the party responsible for filing such Tax
Returns under this Agreement. Except as provided in this Section 3.04,
Section 5.01 and Section 7.03, and except as otherwise required by a Final
Determination, all Tax Returns, and amendments thereto, shall be prepared
and filed in a manner consistent with the provisions of this TMA, the
Closing Agreement, and the Tax Opinion. If any Tax Return of a member of
the Ashland Group or the New Ashland Inc. Group (including any Tax Return
related to the Acquired Businesses) for any Pre-Closing Period or any
Straddle Period is prepared and filed in a manner inconsistent with the
elections (other than elections relating to carrybacks and carryforwards
described in Section 4.01), accounting methods, conventions and principles
of taxation used for the most recent taxable period of members of the
Ashland Group or New Ashland Inc. Group, as the case may be, for which Tax
Returns involving similar Tax Items have been filed, New Ashland Inc. and
each member of the New Ashland Inc. Group shall indemnify each member of
the Marathon Group against all Tax Detriments and reductions in Tax
Benefits that result from the failure to use a consistent position as
provided in Section 2.01(a) of this TMA and shall pay to Marathon the
amount of any resulting Tax Loss within 30 days of the date of that such
Tax Loss is considered to arise under the principles of Section 4.01(c)
below.
SECTION 3.05. Agent for Filing Tax Returns. (a) Subject
to Section 8.02(c), Marathon, Ashland and HoldCo each hereby designates New
Ashland Inc. as its agent to take any and all actions necessary or
incidental to the preparation and filing by New Ashland Inc. of any Tax
Return described in Section 3.01(a). In addition, Ashland and HoldCo agree
that they shall designate 565 Corporation as the "substitute agent" (as
such term is used in Treasury Regulation Section 1.1502-77(d)) for the
Ashland Affiliated Group. Marathon shall take any and all actions necessary
or incidental to obtain the approval of such designation by the IRS.
(b) Marathon shall be the "Tax Matters Partner" (as
defined under Code Section 6231(a)(7)) of MAP for all Pre-Closing Periods
and all Post-Closing Periods and shall manage the audits of MAP conducted
by the IRS or any other Tax Authority.
SECTION 3.06. Payments And Refunds. (a) To the extent
that Marathon is responsible for filing Straddle Period or other Tax
Returns that include Taxes for which New Ashland Inc. has indemnified
Marathon, New Ashland Inc. shall pay to Marathon the amount of any such
Taxes two days prior to the due date of the Tax Return. To the extent that
New Ashland Inc. is responsible for filing Straddle Period or other Tax
Returns that include Taxes for which Marathon has indemnified New Ashland
Inc., Marathon shall pay to New Ashland Inc. the amount of any such Taxes
two days prior to the due date of such Tax Return.
(b) At any time, either party in its sole discretion may
make a payment to a Tax Authority with respect to Straddle Period Tax
Return to stop the running of interest in whole or in part. The paying
party shall provide the other party with a calculation and determination of
the amount of non-paying party's share of such payment and the non-paying
party shall pay such amount to the paying party within two days after
receipt of such notice.
(c) To the extent that Marathon receives a Refund of
Taxes for which New Ashland Inc. has indemnified Marathon, Marathon shall
pay to New Ashland Inc. the amount of such Refund (including any interest
received by Marathon) within ten days. To the extent that New Ashland Inc.
receives a Refund of Taxes for which Marathon has indemnified New Ashland
Inc., New Ashland Inc. shall pay to Marathon the amount of such Refund
(including any interest received by New Ashland Inc.) within ten days.
SECTION 3.07. Section 355(e) Taxes. (a) Payment of
Section 355(e) Taxes. At least (i) 30 days before filing any Tax Return due
after the Closing Date (including an estimated, final or amended return) on
which any Section 355(e) Taxes are required to be reported by the Ashland
Group or the New Ashland Inc. Group: or (ii) upon a reasonable request by
Marathon for purposes of preparing its financial accounting statements or
otherwise, within 20 days of such request, New Ashland Inc. shall deliver
to Marathon a schedule prepared by Deloitte & Touche LLP (the "Section
355(e) Schedule") setting forth New Ashland Inc.'s estimate of the amounts
of the Section 355(e) Taxes, the Section 358(d)(1) Adjustment Taxes, and
the Marathon Portion and the New Ashland Inc. Portion of the Section 355(e)
Taxes. Such estimated Section 355(e) Schedule shall show separately the
Federal, state, local and total amounts of the Section 355(e) Taxes. The
Section 355(e) Schedule shall be prepared using a trading price for the New
Ashland Inc. stock equal to the average of the high and low trading prices
of such stock on the New York Stock Exchange on the Closing Date and shall
set forth the estimated tax basis of the stock of New Ashland Inc. as of
the Closing Date. Marathon shall have the right to review the Section
355(e) Schedule and to review all workpapers and procedures used to prepare
such schedule. If Marathon, within five business days after delivery of
such schedule, notifies New Ashland Inc. in writing that it objects to any
of the amounts set forth on the Section 355(e) Schedule, both parties shall
attempt in good faith to resolve the dispute and, if they are unable to do
so, the disputed items shall be resolved within a reasonable time by a
mutually acceptable certified public accounting firm and the Section 355(e)
Schedule shall be amended accordingly. If a dispute is not resolved at
least two business days prior to the due date of the Tax Return, the Tax
Return shall be filed in accordance with the Section 355(e) Schedule
prepared by Deloitte & Touche LLP, and both parties hereby agree to prepare
an amended Section 355(e) Schedule, if necessary, reflecting the resolution
of the issue by the accounting firm. The costs, fees, and expenses of such
certified public accounting firm shall be borne equally by Marathon and New
Ashland Inc. Marathon, as the successor to and on behalf of HoldCo, shall
pay to New Ashland Inc. the Marathon Portion of the Section 355(e) Taxes
shown on the Section 355(e) Schedule two business days prior to the date on
which such Tax Return is due. New Ashland Inc. shall timely pay the Section
355(e) Taxes shown on the Section 355(e) Schedule to the relevant Tax
Authorities and shall provide written evidence to Marathon that it has done
so.
(b) True-up Upon Filing Amended Schedules, Filing Tax
Returns or Final Determinations. New Ashland Inc. shall deliver to Marathon
an updated Section 355(e) Schedule at least 30 days (i) before the filing
of any Tax Return (including any estimated, final or amended return) on
which any Section 355(e) Taxes are reported; (ii) before making any payment
of Section 355(e) Taxes; or (iii) after any Final Determination with
respect to Section 355(e) Taxes (other than a Final Determination described
in parts (i) or (ii) of this sentence). To the extent that the Marathon
Portion shown on such updated Section 355(e) Schedule is greater than (or
less than) the Marathon Portion shown on the Section 355(e) Schedule
described in paragraph (a) above (or, if a true-up payment has previously
been made under this paragraph (b), the updated Section 355(e) Schedule
that served as the basis for such true-up payment), Marathon shall promptly
pay to New Ashland Inc. (or New Ashland Inc. shall promptly pay to
Marathon, as the case may be) the amount of such excess (or deficiency),
together with interest (at the rate specified in Section 6.01(a)(i) of this
TMA) from the date of the prior payment made under paragraph (a) or this
paragraph (b). The procedures set forth in paragraph (a) for Marathon's
review of the Section 355(e) Schedule and the dispute resolution process
shall apply for purposes of the updated Section 355(e) Schedules under this
paragraph (b).
ARTICLE IV
Certain Tax Items and Tax Positions
SECTION 4.01. Carrybacks and Carryforwards. (a) To the
extent permissible by the applicable Tax law, Marathon shall cause each
member of the Marathon Group (including former members of the Ashland
Group) not to carryback any Tax Item attributable to a Post-Closing Tax
Period to a Pre-Closing Tax Period of a member of the Ashland Group or of
the New Ashland Inc. Group. To the extent that Marathon is not permitted by
applicable law to forgo such carryback and requests that New Ashland Inc.
obtain a Refund of Tax with respect to such carryback, then New Ashland
Inc. shall take all reasonable measures to obtain a Refund with respect to
the carryback (including by filing an amended return) and shall pay to
Marathon the Tax Savings realized by any member of the New Ashland Inc.
Group by reason of such carryback, including any interest received thereon
(provided, further, that the out-of-pocket costs associated with claiming
any such carryback shall be borne by Marathon). To the extent that a
carryback of a Tax Item attributable to a Post-Closing Tax Period to a
Pre-Closing Tax Period of a member of the New Ashland Inc. Group (including
a former member of the Ashland Group) results in a Tax Detriment to any
member of the New Ashland Inc. Group (or former member of the Ashland
Group), Marathon shall pay to New Ashland Inc. the Tax Loss realized by the
New Ashland Inc. Group by reason of such carryback.
(b) To the extent permissible by the applicable Tax law,
with respect to any Tax Item attributable to a Pre-Closing Tax Period that
may be carried forward to a Post-Closing Tax Period of a member of the
Marathon Group (including a former member of the Ashland Group), New
Ashland Inc. shall cause each member of the New Ashland Inc. Group or of
the Ashland Group to carry back any such Tax Item and not to carry forward
any such Tax Item to such a Post-Closing Tax Period of a member of the
Marathon Group (including a former member of the Ashland Group). To the
extent that New Ashland Inc. is not permitted by applicable law to carry
back such Tax Item or to forgo such carry forward of such Tax Item and
requests that Marathon obtain a Refund, reduction or offset of Tax with
respect to such carry forward, then Marathon shall take all reasonable
measures to obtain such a Refund, reduction or offset with respect to the
carry forward (including by filing an amended return) and shall pay to New
Ashland Inc. the Tax Savings realized by any member of the Marathon Group
by reason of such carry forward, including any interest received thereon
(provided, further, that the out-of-pocket costs associated with claiming
any such carryforward shall be borne by New Ashland Inc.). To the extent
that a carry forward of a Tax Item, including without limitation, a foreign
oil extraction loss as defined in Code Section 907(c), attributable to a
Pre-Closing Tax Period to a Post-Closing Tax Period of a member of the
Marathon Group (including a former member of the Ashland Group) results in
a Tax Detriment to any member of the Marathon Group, New Ashland Inc. shall
pay to Marathon the Tax Loss realized by the Marathon Group by reason of
such carry forward.
(c) A party shall be considered to realize a Tax Savings
with respect to a Tax Benefit, or a Tax Loss with respect to a Tax
Detriment, to the extent, and only to the extent, that the amount of Taxes
it is actually required to pay to the applicable Tax Authority for a
taxable period is decreased or increased (respectively) from the amount of
Taxes it would have actually been required to pay to such Tax Authority for
such taxable period in the absence of such Tax Benefit or Tax Detriment.
Such Tax Savings or Tax Loss shall be considered to arise at the time that
such party's decreased or increased payment (respectively) for such taxable
period is first due or otherwise actually realized as a change in the
amount of Tax or Refund, reductions or credit of Tax then due and payable.
If any party is considered under subsection (a) or (b) of this Section 4.01
to realize a Tax Savings for which it is required to make a payment, or Tax
Loss with respect to which the other party is required to make a payment,
the party required to make such payment shall make such payment within 30
days of the date such Tax Savings or Tax Loss is considered to arise.
(d) For purposes of this Section 4.01, a Tax Item is
deemed to be attributable to the taxable period in which it first accrued
or was otherwise taken into account for Tax purposes. For the avoidance of
doubt, a net operating loss, foreign tax credit or similar Tax Item is
deemed to be attributable to the taxable period in which the loss, foreign
tax or equivalent event giving rise to such Tax Item first accrued or was
otherwise taken into account for Tax purposes.
SECTION 4.02. Special Allocation of Certain Deductions.
Ashland and Marathon Company shall execute and deliver an amendment to the
MAP LLC Agreement, in the form attached hereto as Exhibit A, that shall
specially allocate to Marathon Company any Pass-Through Items that would be
allocable to New Ashland Inc. in the absence of such amendment and that are
attributable to a payment that is (1) described in Section 12.01(d)(vii) of
the Master Agreement, which results in a special non-pro rata distribution
to Ashland, or (2) made with respect to the St. Xxxx Park QQQ Project or
the Plains Settlement (as both are described in Section 9.09 of the Master
Agreement). If any such payment produces a Tax Benefit for any member of
the New Ashland Inc. Group, then New Ashland Inc. shall pay to Marathon the
amount of any resulting Tax Savings actually realized by such member of the
New Ashland Inc. Group within 30 days of the date that such Tax Savings is
realized. Such Tax Savings shall be considered to be realized by a member
of the New Ashland Inc. Group or the Marathon Group, as the case may be,
pursuant to the principles of Section 4.01(c) above.
SECTION 4.03. Increase in Tax Basis of Certain MAP
Deductions for Post-Closing Payments. If as a result of a Final
Determination with respect to whether certain refinery assets contributed
by Ashland to MAP are considered to be asset class 13.3 (Petroleum
Refining) or 28.0 (Manufacture of Chemicals and Allied Products), New
Ashland Inc. pays any additional Tax with respect to a Pre-Closing Tax
Period, and such Final Determination results in the increase in the
adjusted Tax basis as of the date of such contribution of any asset or
property of MAP that was contributed by Ashland to MAP, Marathon shall
cause MAP to take depreciation deductions with respect to such additional
Tax basis to the maximum extent allowed, and as promptly as permitted, by
applicable law, which shall include Marathon causing MAP to amend any
relevant Tax Return of MAP. Marathon shall pay to New Ashland Inc. the
amount of any Tax Savings realized by a member of the Marathon Group as a
result of the use of such additional Tax basis within 30 days of the date
that such Tax Savings is realized under the principles of Section 4.01(c)
above.
ARTICLE V
Specified Liability Deductions
SECTION 5.01. Deduction of Specified Liability
Deductions; Request for Closing Agreement. The parties will request the IRS
to enter into the Closing Agreement with Marathon, Ashland and New Ashland
Inc with respect to the Transactions. If the IRS enters into such Closing
Agreement, the Specified Liability Deductions shall be claimed by HoldCo on
the Marathon Affiliated Group's consolidated Federal income tax return for
each taxable period in which the Closing Agreement is in effect and not by
New Ashland Inc. or any member of the New Ashland Inc. Group. The amount of
the Specified Liability Deductions claimed by Marathon shall be determined
under the Net Deduction Method unless a different method is specified in
the Closing Agreement. If a different method is specified in the Closing
Agreement, the parties will negotiate in good faith to amend this TMA to
provide adequate protections to each of the parties' respective interests.
Unless explicitly provided to the contrary in this Article V, Marathon
shall retain full control over all Tax Items on its Tax Returns.
SECTION 5.02 Tax Benefit Payments from Marathon to New
Ashland Inc. (a) (i) If the IRS enters into the Closing Agreement, then for
each taxable year for which HoldCo claims the Specified Liability
Deductions it shall make a payment to New Ashland Inc. in respect of the
Federal Tax Benefits attributable to such Specified Liability Deductions
(the "Federal Tax Benefit Payment") and one or more payments to New Ashland
Inc. in respect of the state, local or foreign Tax Benefits attributable to
such Specified Liability Deductions (the "Non-Federal Tax Benefit Payment"
and, together with the Federal Tax Benefit Payment, the "Tax Benefit
Payments").
(ii) The Federal Tax Benefit Payment for a taxable year
shall equal the sum of the Basket One Amount and the Basket Two Amount for
such taxable year. The Non-Federal Tax Benefit Payment for a taxable year
shall be determined with respect to the entire amount of Specified
Liability Deductions for such taxable year on a "with and without" basis
under the methodology and principles applicable solely to the Basket Two
Amount, with appropriate adjustments to reflect the differences between the
Code and the applicable Tax law for such purpose, and there shall be no
Basket One Amount or Basket One Deductions for such purpose. For purposes
of calculating the Tax Benefit Payments, the amount of the Specified
Liability Deductions shall be determined using the Net Deduction Method
unless another method is specified in the Closing Agreement.
(iii) The Tax Benefit Payments shall be paid directly to
New Ashland Inc. or placed in escrow as provided in Article VI below.
(b) (i) Basket One Amount. For each taxable year of
HoldCo ending on or before January 1, 2025, the Basket One Amount shall
equal the Basket One Tax Rate multiplied by the Basket One Deductions for
such taxable year. For each taxable year ending on or after January 1,
2025, the Basket One Amount, and the Basket One Deductions, shall be $0.00.
(ii) Definitions.
(A) The Basket One Tax Rate for a taxable year shall
equal the highest marginal Federal income tax rate applicable to
corporations for such taxable year minus 3 percentage points. As
of the date of this TMA, the Basket One Tax Rate is 32% (35% --
currently the highest marginal Federal income tax rate applicable
to corporations (Section 11 of the Code) -- minus 3 percentage
points).
(B) The Basket One Deductions for a taxable year shall
equal the lesser of (I) the Specified Liability Deductions for
such taxable year and (II) the Basket One Cap for such taxable
year.
(C) The Basket One Cap for a taxable year shall equal (I)
$30 million adjusted by the Inflation Factor, but in no event more
than $60 million (the "Basket One Cap Base Amount"), plus (II) the
unused Basket One Cap Carryforward, if any, from each of the two
preceding taxable years. The Basket One Cap Carryforward
originating in a taxable year shall equal the excess, if any, of
the Basket One Cap Base Amount for such taxable year over the
Specified Liability Deductions for such taxable year. Specified
Liability Deductions for a taxable year shall be considered to be
used first against, and to the extent of, the Basket One Cap Base
Amount for such taxable year. For purposes of determining the
amount of the Basket One Cap Carryforward "used" in a particular
taxable year, the excess, if any, of the Specified Liability
Deductions for that taxable year over the Basket One Cap Base
Amount for such taxable year shall be considered to be used first
against, and the extent of, the Basket One Cap Carryforward
originating in the second preceding taxable year; and next
against, and to the extent of, the Basket One Cap Carryforward
originating in the immediately preceding taxable year.
(c) (i) Basket Two Amount. The Basket Two Amount for a
taxable year shall be determined on a "with and without" basis to measure
the actual Tax savings realized by the Marathon Affiliated Group from its
use of Basket Two Deductions and Basket Two Carryovers, and shall equal the
excess (if any) of (A) the amount of Federal income tax that the Marathon
Affiliated Group would have been required to pay with respect to such
taxable year if there were no Basket Two Deductions for, and no Basket Two
Carryovers to, such taxable year over (B) the amount of Federal income tax
that the Marathon Affiliated Group was actually required to pay with
respect to such taxable year.
(ii) Definitions.
(A) The Basket Two Deductions for a taxable year shall
equal the excess, if any, of (I) the total Specified Liability
Deductions for such taxable year over (II) the Basket One
Deductions for such taxable year.
(B) The Basket Two Carryovers to a taxable year shall
equal the amount of Basket Two Carryovers originating in other
taxable years and carried forward or carried back to such taxable
year. The Basket Two Carryovers originating in a taxable year are
the carryovers of net operating losses, excess foreign tax
credits, minimum tax credits or other Tax Items of the Marathon
Affiliated Group, if any, that originate in such year under the
principles of the Code, but only to the extent such carryovers are
greater than the amount of such carryovers that would have
originated in such taxable year if the Marathon Affiliated Group
had no Basket Two Deductions for such taxable year and no Basket
Two Carryovers to such taxable year. Carryovers of all Tax Items
shall be considered to be subject to the rules of the Internal
Revenue Code and the Treasury Regulations governing the carry
forward, carryback, use, limitation and expiration of carryovers
of the relevant type of Tax Item. If the carryover of a Tax Item
originating in a taxable year includes a portion that is a Basket
Two Carryover and another portion that is not a Basket Two
Carryover, such portions shall be considered to be used on a "with
and without basis" as described in Section 5.02(c)(i) above.
(d) Redeterminations. The Basket One Amount for a taxable
year, once determined, shall not be redetermined for any reason other than
an adjustment in the amount of the Specified Liability Deductions for such
taxable year resulting from a Tax Claim with respect to the New Ashland
Inc. Affiliated Group or the Marathon Affiliated Group by a Tax Authority.
The Basket Two Amount for a taxable year shall be redetermined at
appropriate times (e.g., payment, refund, or Final Determination), taking
into account actual adjustments with respect to Tax Claims and subsequent
events that affect the calculation of the Basket Two Amount, including
carry forwards and carrybacks. Payments of the increased or decreased
amount of any Tax Benefit Payments for any taxable year shall be made as
provided in Article VI below.
(e) Verification by Accounting Firm. For each taxable
year, unless Marathon and New Ashland Inc. otherwise agree, New Ashland
Inc. at its own expense will cause a nationally recognized accounting firm
to prepare and deliver to Marathon a certificate, in a form acceptable to
Marathon, verifying the amount and deductibility of the Specified Liability
Deductions for such taxable year (taking into account any issues raised by
the IRS from time to time), which verification shall include the amount of
actual and accruable insurance recoveries for such year. New Ashland Inc.
will at its own expense provide to Marathon a written opinion of Cravath,
Swaine & Xxxxx LLP or any other law firm acceptable to Marathon, which
opinion shall be addressed to New Ashland Inc. and may rely on the Closing
Agreement, to the effect that Marathon will be entitled to deduct the
Specified Liability Deductions on its Tax Return. Such opinion shall be
updated or amended, from time to time, as Marathon may reasonably request
to take into account material changes in facts or in law. For each taxable
year, unless Marathon and New Ashland Inc. otherwise agree, Marathon at its
own expense will cause a nationally recognized accounting firm to prepare
and deliver to New Ashland Inc. a certificate verifying the amount of Tax
Benefit Payments for such taxable year, provided that no such verification
shall be required with respect to Non-Federal Tax Benefit Payments with
respect to any jurisdiction in which the Tax liability of Marathon and the
other members of the Marathon Group for such taxable year is less than
$500,000 unless New Ashland Inc. agrees to bear the cost of such
verification.
(f) (i) Principles and Examples. The parties have set
forth the examples in Exhibit B attached hereto to illustrate the
application of this Article V and of Article VI below. The parties have
also agreed that Tax Benefit Payments in respect of the Basket One Amount
shall be payable without regard to whether Marathon or any member of the
Marathon Group realizes an actual Tax savings from the use of the Basket
One Deductions; that Tax Benefit Payments in respect of the Basket Two
Amount shall be payable only to the extent that the Marathon Affiliated
Group realizes an actual Tax savings from the use of the Basket Two
Deductions on a "with and without" basis; and that any Specified Liability
Deduction shall potentially give rise to a single Basket One Amount or
Basket Two Amount and shall not be double-counted. Any uncertainties or
ambiguities in the computation of the Tax Benefit Payments for any taxable
year shall be resolved in a manner that is consistent with the examples in
Exhibit B and with such principles.
(ii) Short Taxable Years. The provisions of Article V and
Article VI are based on taxable years of twelve full months. The
application of such provisions shall be appropriately adjusted in the event
of one or more taxable years of less than 12 months to effectuate the goals
and principles of Article V and Article VI.
(iii) Successors. In the event that there is a successor
to the New Ashland Inc. Affiliated Group or the Marathon Affiliated Group,
the provisions of this Article V shall be applied to such successors as if
they were the New Ashland Inc. Affiliated Group or the Marathon Affiliated
Group, respectively.
ARTICLE VI
Payments of Tax Benefit Amounts; Escrow
SECTION 6.01 Time of Tax Benefit Payments. (a) Original
Payments. Subject to Section 6.02 below, Marathon shall pay to New Ashland
Inc. or place in Escrow, as the case may be, the amount of the Tax Benefit
Payment as follows:
(i) Federal Tax Benefit Payments. If New Ashland Inc.
provides to Marathon a good faith estimate of the amount of the Specified
Liability Deductions for a calendar year by November 30th of such year, and
verification of the Specified Liability Deductions as required in Section
5.02(e) for such calendar year by February 28th of the following year, then
Marathon shall pay to New Ashland Inc. or Escrow, as the case may be, the
amount of the Federal Tax Benefit Payment for the taxable year
corresponding to such calendar year either (A) within 10 days after the due
date of the Marathon corporate income Tax Return without extensions for
such taxable year (generally March 15th), or (B) within 10 days after the
due date of the corporate income Tax Return for the Marathon Affiliated
Group, with extensions for such calendar year (generally September 15th),
with interest from the due date of such Tax Return without extension to the
date of payment at the Marathon short-term borrowing rate for the
applicable period. If New Ashland Inc. does not provide to Marathon the
estimate and the actual determination of the Specified Liability Deductions
within the time requirements of the preceding sentence, then Marathon shall
pay to New Ashland Inc. or Escrow, as the case may be, the amount of the
Federal Tax Benefit Payment for such taxable year within 10 days of the
later of (A) the date on which New Ashland Inc. provides such determination
to Marathon and (B) the due date of the Federal corporate income Tax Return
for the Marathon Affiliated Group, with extensions for such taxable year
(generally September 15th), in each case without interest.
(ii) Non-Federal Tax Benefit Payments. Marathon shall pay
to New Ashland Inc. or Escrow, as the case may be, in each case without
interest, the amount of the Non-Federal Tax Benefit Payments for a taxable
year within 30 days after the due date of the relevant HoldCo separate or
combined, as the case may be, state, local or foreign Tax Returns, with
extensions.
(b) Redeterminations. If an event giving rise to the
redetermination of a Tax Benefit Payment for any taxable year occurs as
provided in Section 5.02(d) above, the party becoming aware of such event
shall promptly notify the other party.
(i) If such redetermination increases the amount of such
Tax Benefit Payment, then within 30 days after the receipt by Marathon of a
Refund corresponding to such Tax Benefit Payment, or, if there is no such
Refund, then within 30 days after such redetermination, Marathon shall pay
to New Ashland Inc. or Escrow, as the case may be, the amount of such
increase, together with the corresponding amount of interest (if any)
payable by the relevant Tax Authority with respect to such redetermination.
(ii) If such redetermination decreases the amount of such
Tax Benefit Payment, then, within 30 days after the payment by Marathon of
the Tax corresponding to such redetermination, or, if there is no such Tax
payment, then within 30 days after such redetermination, the amount of such
decrease (including any interest, penalty or addition to Tax resulting from
such redetermination) shall be paid to Marathon as provided in this Section
6.01(b)(ii). Such decrease shall be paid first by paying to Marathon
amounts in Escrow up to the amount of such decrease (and all future
payments to New Ashland Inc. under this TMA for the current taxable year
and subsequent taxable years shall be escrowed until the Escrow is Fully
Funded, as provided in Section 6.02(c) below). If such decrease exceeds the
amount so paid to Marathon from the Escrow, New Ashland Inc. shall pay such
excess to Marathon; provided that if the total amount that New Ashland Inc.
would be required to pay to Marathon in a particular calendar year under
this Section 6.01(b)(ii) as a result of any and all redeterminations
exceeds $25 million, then New Ashland Inc. may pay such excess over $25
million in eight equal semi-annual payments, with the first payment due six
months from the date of such redetermination, with interest computed at an
interest rate as reasonably determined by Marathon to be the market rate
for four-year amortizing loans available to companies with credit ratings
similar to that of New Ashland Inc.; provided further that if New Ashland
Inc. undergoes a Bankruptcy Event, all such amounts shall be immediately
due and payable to Marathon.
SECTION 6.02 Escrow. (a) Escrow Agreement. In the event
that any Tax Benefit Payments are required under this Agreement to be
placed in Escrow, the parties will execute an Escrow Agreement in the form
as to be agreed to by the parties and attached hereto as Exhibit C to this
TMA. Unless otherwise agreed by the parties, The Bank of New York shall
serve as escrow agent under the Escrow Agreement. The out-of-pocket costs
and expenses of creating and maintaining the Escrow, including the fees of
the escrow agent, shall be shared equally by Marathon and New Ashland Inc.
(b) Basket One Benefits. Except as otherwise provided in
this Section 6.02(b), all Tax Benefit Payments in respect of Basket One
Amounts shall be paid by Marathon directly to New Ashland Inc. and shall
not be placed in Escrow. Notwithstanding the foregoing, Tax Benefit
Payments in respect of Basket One Amounts shall be placed in Escrow in the
following circumstances:
(i) If New Ashland Inc. has undergone a Bankruptcy Event,
all Tax Benefit Payments in respect of Basket One Amounts otherwise payable
by Marathon to New Ashland Inc. on or after the date of such Bankruptcy
Event shall be placed in Escrow as if they were in respect of Basket Two
Amounts until such time that any judgment, order, proceeding or petition
that constitutes a Bankruptcy Event has been dismissed or discharged.
(ii) In the circumstances described in Section 6.02(d)
below.
(c) Basket Two Benefits. Except as otherwise provided in
this Section 6.02(c) all Tax Benefit Payments in respect of Basket Two
Amounts shall be paid by Marathon directly to New Ashland Inc. and shall
not be placed in Escrow. Notwithstanding the foregoing, Tax Benefit
Payments in respect of Basket Two Amounts shall be placed in Escrow in the
following circumstances:
(i) If the Escrow is not Fully Funded at the time that
such a Tax Benefit Payment for a taxable year is required to be made, then
the amount of such Tax Benefit Payment necessary to cause the Escrow to be
Fully Funded shall be placed in Escrow.
(A) The Escrow shall be considered to be Fully Funded at
the time a Tax Benefit Payment for a taxable year is
required to be made if the amount in the Escrow at such
time is equal to the excess (if any) of (I) the total
amount of Tax Benefit Payments other than Basket One
Amounts paid or payable for such taxable year and the
four preceding taxable years over (II) the Escrow
Threshold at such time.
(B) If New Ashland Inc. has a credit rating provided by
Xxxxx'x or Standard & Poor (or successors thereto) at the
relevant time, the Escrow Threshold at any time shall
equal:
a. If the credit rating of New Ashland Inc. is
either a BB+ or Ba1 or higher, unlimited.
b. If the credit rating of New Ashland Inc. is
either a BB or Ba2, $50 million (for the
calendar years 2005 through 2009); $55 million
(for the calendar years 2010 through 2014); or
$60 million (for calendar years after 2014).
c. If the credit rating of New Ashland Inc. is
either a BB- or Ba3, $25 million.
d. If the credit rating of New Ashland Inc. is (A)
below BB- or Ba3, or (B) New Ashland Inc.
undergoes a Bankruptcy Event, $0; provided,
however, that this subparagraph (B) will not
apply after the date that any judgment, order,
proceeding or petition that constitutes a
Bankruptcy Event has been dismissed or
discharged.
(C) If, at the time any Tax Benefit Payment for a taxable
year is required to be made, New Ashland Inc. does not
have a credit rating provided by Xxxxx'x or Standard &
Poor (or successors thereto), New Ashland Inc. will
obtain, at its own cost, from Xxxxx'x or Standard & Poor,
or both, a pro forma credit rating and provide such
rating to Marathon prior to the time of such Tax Benefit
Payment. Such rating will be updated at least annually.
(ii) In the circumstances described in Section 6.02(d)
below.
(d) Certain Changes in Escrow Threshold. If the Escrow
Threshold decreases as a result of a reduction in the credit rating of New
Ashland Inc., the occurrence of a Bankruptcy Event with respect to New
Ashland Inc. or the payment of Escrowed funds to Marathon in respect of a
redetermination of a Tax Benefit Payment as provided in Section 6.01(b)
above, and as a result the Escrow is not Fully Funded, then all payments to
New Ashland Inc. under this TMA, net of set-off, including all Tax Benefit
Payments in respect of Basket One Amounts and Basket Two Amounts, shall be
placed in Escrow until the Escrow is Fully Funded.
(e) Release of Escrowed Amounts. Except as provided in
Section 6.02(d) above, any amounts placed in Escrow in respect of a Tax
Benefit Payment for a taxable year shall be released from Escrow upon the
fifth anniversary of the filing of the corporate income Tax Return for the
Marathon Affiliated Group for such taxable year and shall be paid directly
to New Ashland Inc. If, as a result of an upgrade in New Ashland Inc.'s
credit rating or any other event, the amount in the Escrow exceeds the
amount required to cause the Escrow to be Fully Funded, then the amount of
such excess shall be promptly released from the Escrow and paid directly to
New Ashland Inc. Whenever Escrowed Amounts are required to be released to
New Ashland Inc. pursuant to this Section 6.02(e), Marathon and New Ashland
Inc. shall promptly deliver to the escrow agent detailed written
instructions directing the release of such Escrowed Amounts, signed on
behalf of both Marathon and New Ashland Inc.
(f) Other Arrangements. The Escrow arrangements
described in this Section 6.02 may be replaced with other credit support
reasonably acceptable to and approved by Marathon, which approval shall not
be unreasonably withheld.
ARTICLE VII
Covenants, Representations and Warranties
SECTION 7.01. Representations and Warranties of Ashland
and New Ashland Inc. Ashland and New Ashland Inc., jointly and severally,
represent and warrant to Marathon that, as of the date of this Agreement
and as of the Closing Date as though made on the Closing Date:
(a) It knows of no fact that could reasonably be expected
to cause any representation, warranty or other statement contained in the
Closing Agreement, a Tax Certificate or the Tax Opinion to be incorrect
(including by omission of a material fact).
(b) No member of the New Ashland Inc. Group has any
current plan or intention to take any action, or fail to take any action,
that would be inconsistent with any representation, warranty or other
statement made by, or that relates primarily to, any member of the New
Ashland Inc. Group and is contained in the Closing Agreement, a Tax
Certificate or the Tax Opinion.
(c) New Ashland Inc. will use its reasonable best
efforts, with the assistance and participation of Marathon, to have at
least $21 million dollars on deposit, decreased for any amounts applied
against Taxes for Pre-Closing Tax Periods (other than Federal Income Taxes
shown as owing on any Tax Returns for the Ashland Affiliated Group's 2003,
2004 and 2005 fiscal years), with the IRS with respect to liabilities for
Taxes for Pre-Closing Tax Periods (including interest on such amounts).
This amount shall be used (to the extent necessary) for the payment or
settlement of such Taxes and interest and shall not be withdrawn prior to a
Final Determination with respect to such Taxes and interest. Any portion of
such deposit that is not used for the payment or settlement of Taxes for
such periods (including interest on such amounts) shall be paid to New
Ashland Inc.
(d) Following the Transactions, New Ashland Inc. intends
to continue the active conduct of Valvoline, independently and with its
separate officers, directors, and employees, and New Ashland Inc. does not
plan any substantial reduction in business activity of Valvoline.
(e) To the best of the knowledge of Ashland and New
Ashland Inc., there are no material Ashland Residual Operations Liabilities
other than those that Ashland has disclosed to the IRS and Marathon.
(f) Ashland and New Ashland Inc. have prepared their
estimate of the adjusted tax basis of the New Ashland Inc. common stock in
good faith.
SECTION 7.02. Representations and Warranties of Marathon.
Marathon represents and warrants to Ashland and New Ashland Inc. that, as
of the date of this Agreement and as of the Closing Date as though made on
the Closing Date:
(a) It knows of no fact that could reasonably be expected
to cause any representation, warranty or other statement contained in the
Closing Agreement, a Tax Certificate or the Tax Opinion to be incorrect
(including by omission of a material fact).
(b) No current member of the Marathon Group has any
current plan or intention to take any action, or fail to take any action,
that would be inconsistent with any representation, warranty or other
statement made by, or that relates primarily to, any member of the Marathon
Group and is contained in the Closing Agreement, a Tax Certificate or the
Tax Opinion.
(c) For the two-year period following the Transactions,
Marathon intends to continue the active conduct of the Acquired Businesses,
independently and, except as described in the Closing Agreement, with their
separate officers, directors and employees, and Marathon does not plan any
substantial reduction in business activity for the Acquired Businesses
during such period.
SECTION 7.03. Covenants of New Ashland Inc. and Marathon.
(a) (i) Each of Ashland and New Ashland Inc. agrees that it shall not take
or omit to take, and shall not permit any of the Ashland Group or the New
Ashland Inc. Group, respectively, to take or omit to take, any action that
will, or would reasonably be expected to, cause any written representation
contained in the Closing Agreement, a Tax Certificate or the Tax Opinion to
be incorrect.
(ii) Each of Ashland and New Ashland Inc. agrees that it
shall, and shall cause each member of the Ashland Group and the New Ashland
Inc. Group, respectively, to prepare and file all Tax Returns on a basis
consistent with the Closing Agreement and the Tax Opinion, except as
otherwise required by Article V or a Final Determination; provided that, to
the extent that the Closing Agreement and the Tax Opinion are inconsistent
in any respect, such Tax Returns shall be prepared and filed on a basis
consistent with the Closing Agreement.
(iii) New Ashland Inc. will use its reasonable best
efforts, with the assistance and participation of Marathon, to maintain at
least $21 million dollars, decreased for any amounts applied against Taxes
for Pre-Closing Tax Periods (other than Federal Income Taxes shown as owing
on any Tax Returns for the Ashland Affiliated Group's 2003, 2004 and 2005
fiscal years), on deposit with the IRS for Taxes for Pre-Closing Tax
Periods (including interest on such amounts). This amount shall be used (to
the extent necessary) for the payment or settlement of such Taxes and
interest and shall not be withdrawn prior to a Final Determination with
respect to such Taxes and interest. Any portion of such deposit that is not
used for the payment or settlement of Taxes for such periods (including
interest on such amounts) shall be paid to New Ashland Inc.
(iv) New Ashland Inc. will forgo the use of bonus
depreciation on all Ashland property eligible for bonus depreciation and
will elect to use straight line depreciation on such property on its fiscal
2004 Tax Return and its Tax Return for the taxable year ending on the
Closing Date. New Ashland Inc. will use its reasonable best efforts, with
the assistance and participation of Marathon, to consider all reasonable
steps to maximize the tax basis of the New Ashland Inc. common stock;
provided, however, New Ashland Inc. in its sole discretion may determine
that it will not adopt or implement any such steps.
(b) (i) Marathon agrees that, for a period beginning on
the Closing Date and ending two years after the Closing Date, it shall not
take or omit to take, and shall not permit any member of the Marathon Group
to take or omit to take, any action that will, or would reasonably be
expected to, cause any written representation contained in the Closing
Agreement, or a Tax Certificate, and that is specified on Schedule 2.04
attached hereto, to be incorrect.
(ii) Marathon agrees that it shall, and shall cause each
member of the Marathon Group to, prepare and file all Tax Returns on a
basis consistent with the Closing Agreement and the Tax Opinion, except as
otherwise required by Article V or a Final Determination; provided that, to
the extent that the Closing Agreement and the Tax Opinion are inconsistent
in any respect, such Tax Returns shall be prepared and filed on a basis
consistent with the Closing Agreement.
(iii) Marathon agrees that, for a period beginning on the
Closing Date and ending two years after the Closing Date, it (A) shall not,
and shall cause each member of the Marathon Group not to, amend the Company
Leverage Policy set forth in Schedule 8.14 to the MAP LLC Agreement, as
such Policy is amended and restated as of the date of this Agreement and
(B) shall cause MAP to comply at all times with such Company Leverage
Policy; provided that, Marathon may amend the Company Leverage Policy to
the extent that both Marathon and New Ashland Inc. reasonably agree is
consistent with the Closing Agreement.
(iv) Marathon agrees that, for a period beginning on the
Closing Date and ending two years after the Closing Date, it shall not, and
shall cause each member of the Marathon Group not to, make any capital
contribution of money or other property to MAP or any JV Entity (including
any capital contribution pursuant to Article IV of the MAP LLC Agreement or
any other provision of the MAP LLC Agreement) other than capital
contributions (i) that are the result of, and in response to, Extraordinary
Events; or (ii) if the Closing Agreement provides that the MAP Partial
Redemption does not constitute a disguised sale, capital contributions for
purposes specifically identified in the Closing Agreement.
(v) During the period beginning on October 1, 2004 (or,
if earlier, the day before the Closing Date) and ending on the date two
years after the Closing Date, Marathon shall cause MAP and its subsidiaries
not to, and MAP and its subsidiaries shall not (A) incur any indebtedness
owed to Marathon or any affiliate of Marathon (other than borrowings under
the Detroit Facility) or (B) incur any indebtedness under one or more
revolving credit facilities, uncommitted money market credit facilities or
other comparable debt facilities to the extent such indebtedness is
guaranteed, directly or indirectly, by Marathon or any affiliate of
Marathon (other than such an affiliate that is MAP or any wholly-owned
subsidiary of MAP), except such Marathon guaranteed debt will be
permissible if the Closing Agreement provides that the MAP Partial
Redemption does not constitute a disguised sale and the Closing Agreement
contemplates debt guaranteed by Marathon.
(vi) Marathon agrees that during the two-year period
beginning on the Closing Date, it shall cause MAP not to make any sales of
receivables except for sales of receivables pursuant to the Receivables
Sales Facility (as such term is defined in the MAP LLC Agreement). Marathon
and MAP agree that if MAP makes any sales of receivables pursuant to the
Receivables Sales Facility they will treat such sales (A) as sales for
Federal income tax purposes and (B) based on the relevant accounting
pronouncements, as they exist on the date of this Agreement, as sales for
financial accounting purposes. If as a result of any change or modification
to such accounting pronouncements between the date of this Agreement and
the Closing Date, Marathon concludes that it and MAP will not be able to
treat such sales of receivables as sales for financial accounting purposes,
it shall cause MAP to use its reasonable best efforts to modify the
Receivables Sales Facility in order to achieve sale treatment for financial
accounting purposes, if such modification can be made in a manner that is
(i) acceptable to Marathon from a tax point of view and otherwise
reasonably acceptable to Marathon, and (ii) acceptable to Ashland from a
tax point of view. If such a change in accounting pronouncements arises and
Marathon, after discussions with Ashland, concludes that it cannot so
modify the Receivables Sales Facility, Marathon shall deliver a written
notice to Ashland attesting to this conclusion at least two business days
prior to the Closing Date. The failure of Marathon to deliver such written
notice shall constitute its agreement to the second sentence of this
paragraph (vi) notwithstanding any such change in accounting
pronouncements. Marathon further agrees that if the relevant accounting
pronouncements change after the Closing Date and, as a result of such
changes, Marathon concludes that it and MAP will not be able to treat sales
of receivables pursuant to the Receivables Sales Facility as sales for
financial accounting purposes, Marathon shall cause MAP to modify the
Receivables Sales Facility in order to achieve sale treatment for financial
accounting purposes if it can do so at an insignificant cost (provided that
such modification is acceptable to New Ashland Inc. from a tax point of
view) or if New Ashland Inc. agrees to indemnify Marathon and MAP for any
increased costs that result from such changes.
SECTION 7.04. Valuation Report. Each of Ashland and
Marathon shall use its reasonable best efforts to cause Deloitte & Touche
LLP to deliver to Ashland and Marathon, no later than June 15, 2005, a
report, in form and substance reasonably satisfactory to each of Ashland
and Marathon and consistent with the Engagement Letter dated as of November
24, 2003, among Ashland, Marathon and Deloitte & Touche LLP. Each of
Ashland and Marathon shall, and shall cause each of its affiliates
(including MAP) to, cooperate with Deloitte & Touche LLP in connection with
the preparation of such report, which cooperation shall include the
provision of any relevant books, records, documentation and other
information and the making available of its employees and facilities as
Deloitte & Touche LLP may reasonably request.
SECTION 7.05. Cooperation and Exchange of Information.
(a) Each of Marathon and New Ashland Inc. shall, and shall cause each of
its affiliates to, cooperate fully with all reasonable requests from the
other party in all matters relating to Taxes covered by this Agreement,
including without limitation, in connection with the preparation and filing
of Tax Returns, any amendments or claims for Refund with respect thereto,
the conduct and resolution of Tax Claims and the implementation of this TMA
(including, without limitation, the provisions of Articles V and VI). Such
cooperation shall include (i) provision on a mutually convenient basis upon
reasonable request of Tax Returns, books, records (including information
regarding ownership and Tax basis of property), documentation and other
information related to such Tax Returns and Tax Claims, including
accompanying schedules, related work papers, and documents related to
rulings or other determinations by Tax Authorities, (ii) the execution of
any document or the certification of any information that may be necessary
or beneficial in connection with the filing of any Tax Returns or claims
for Refund or the conduct or resolution of any Tax Claim, (iii) obtaining
any document or information that is necessary or beneficial in connection
with the foregoing, (iv) upon reasonable request, the making available of
its employees and facilities on a reasonable and mutually convenient basis
to facilitate the foregoing and (v) the reasonable good faith effort of New
Ashland Inc. to provide to Marathon information reasonably requested by
Marathon for the preparation of its published financial statements.
(b) Marathon and New Ashland Inc. shall meet regularly to
review major issues with respect to Tax Claims and the status of audits
with respect to Pre-Closing Periods and Straddle Periods as long as the
relevant statute of limitations remains open with respect to any
Pre-Closing Period or Straddle Period. New Ashland Inc. shall make
available appropriate personnel to discuss the foregoing items and shall
make available for inspection relevant documents relating to such audits.
SECTION 7.06. [Intentionally Omitted]
SECTION 7.07. Ownership of Tax Records; Retention of
Information. New Ashland Inc. shall own, and have all rights, title and
interest in, all books, records, documentation and other information in
existence as of the Closing Date related to any Tax or Tax Item of Ashland
or any of its subsidiaries. New Ashland Inc. agrees to retain all Tax
Returns, related schedules and workpapers, and all other material records
and other documents as required under Code Section 6001 and the regulations
promulgated thereunder relating thereto existing on the date hereof or
created through the Closing Date, until the expiration of the statute of
limitations (including extensions) of the taxable years to which such Tax
Returns and other documents relate and until the Final Determination of any
payments which may be required in respect of such years under this TMA. New
Ashland Inc. shall provide to Marathon copies of any such documentation or
information in existence as of the Closing Date related to any Marathon Tax
Matter or with respect to items that could result in a Tax Detriment to
Marathon and, as reasonably requested by Marathon, in connection with any
Tax Claim. New Ashland Inc. agrees that, if it intends to dispose of any
such documentation or other information, it shall provide written notice to
Marathon describing the documentation or other information to be disposed
of 60 days prior to taking such action. Marathon shall be entitled to
arrange to take delivery of the documentation or other information
described in the notice at its expense during the succeeding 60-day period.
ARTICLE VIII
Tax Claims
SECTION 8.01. Calculation of Losses. The amount of any
indemnification provided under this TMA, other then pursuant to Article V
and VI, shall be (i) increased to take account of any net Tax Loss incurred
by the indemnified party arising from the receipt of indemnity payments
hereunder (grossed up for such increase) and (ii) reduced to take account
of any net Tax Savings realized by the indemnified party arising from the
incurrence or payment of any such indemnified loss. In computing the amount
of any such Tax Loss or Tax Savings, the indemnified party shall be deemed
to recognize all other Tax Items before recognizing any Tax Item arising
from the receipt of any indemnity payment hereunder or the incurrence or
payment of any indemnified loss.
SECTION 8.02. Procedures. (a) Tax Claims. (i) If a party
(the "indemnified party") receives any written notice of deficiency, claim
or adjustment or other written notice from a Tax Authority that may result
in the indemnified party being entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving an audit
proceeding, audit inquiry, information request, suit, action, contest or
similar claim made by any Tax Authority (a "Tax Claim") such indemnified
party shall notify the indemnifying party in writing (and in reasonable
detail) of the Tax Claim within 10 business days after such indemnified
party receives notice or otherwise becomes aware of the existence of the
Tax Claim; provided, however, that failure to give such notification shall
not affect the indemnification provided under this Agreement, except to the
extent the indemnifying party shall have been materially and adversely
prejudiced as a result of such failure. Thereafter, the indemnified party
shall keep the indemnifying party apprised of the status of any
investigation or audit and deliver to the indemnifying party, within five
business days' time after the indemnified party's receipt thereof, copies
of all notices and documents received by the indemnified party related to
the Tax Claim. New Ashland Inc. undertakes and agrees that it will keep
Marathon reasonably informed of the existence and progress of any audit or
other proceeding that relates to a Pre-Closing Period with respect to which
Marathon could be liable as a successor, under Treasury Regulation Section
1.1502-6, or otherwise.
(ii) If any party receives a written notice from a Tax
Authority that may result in an adjustment in the amount of the
Specified Liability Deductions for a taxable year as a result of
an audit of the New Ashland Inc. Affiliated Group or the Marathon
Affiliated Group, then for purposes of this TMA, such audit and
related proceeding, to the extent they concern the amount of the
Specified Liability Deductions claimed or capable of being claimed
by Marathon or the Marathon Group as successor to HoldCo, shall be
treated as a Tax Claim with respect to which Marathon is the
indemnified party and New Ashland Inc. is the indemnifying party,
provided, however, that the resolution of such issues shall not
preclude Marathon from compromising or -------- ------- settling
any other issues in its Tax Returns administratively with any Tax
Authority and Marathon shall have the right to determine in its
sole reasonable discretion the appropriate forum and location of
any judicial proceeding with respect to Specified Liability
Deductions.
(b) Assumption. Except as provided in Section 8.02(c) and
(e) of this TMA, if a Tax Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with professional
advisors and counsel selected by the indemnifying party; provided, however,
that such professional advisors or counsel are not reasonably objected to
by the indemnified party. Should the indemnifying party so elect to assume
the defense of a Tax Claim, the indemnifying party shall not be liable to
the indemnified party for any fees or expenses relating to such
professional advisors or counsel subsequently incurred by the indemnified
party in connection with the defense thereof. If the indemnifying party
assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ professional advisors and
counsel (not reasonably objected to by the indemnifying party), at its own
expense, separate from the professional advisors and counsel employed by
the indemnifying party, it being understood that the indemnifying party
shall control such defense. The indemnifying party shall be liable for the
fees and expenses of professional advisors and counsel employed by the
indemnified party for any period during which the indemnifying party has
not assumed the defense thereof. If the indemnifying party chooses to
defend or prosecute a Tax Claim, all the indemnified parties shall
cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the
provision to the indemnifying party of records and information that are
reasonably relevant to such Tax Claim, making employees available on a
mutually convenient basis to provide additional information and explanation
of any material provided hereunder, cooperating and assisting in the
investigation, defense and resolution of such matters and providing legal
and business assistance with respect to such matters. Whether or not the
indemnifying party assumes the defense of a Tax Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise
or discharge, such Tax Claim without the indemnifying party's prior written
consent. If the indemnifying party assumes the defense of a Tax Claim, the
indemnified party shall agree to any settlement, compromise, or discharge
of a Tax Claim that the indemnifying party may recommend and that by its
terms obligates the indemnifying party to pay the full amount of the
liability in connection with such Tax Claim; provided that if such
settlement, compromise or discharge imposes conditions, costs or other
detriments (in addition to the liability in connection with such Tax Claim)
upon the indemnified party, such indemnified party may use its reasonable
judgment in determining whether to so agree, such agreement not to be
unreasonably withheld.
(c) Joint rights and assumption of control. If a party to
this TMA suffers a Bankruptcy Event, then the party suffering the
Bankruptcy Event (the "Bankruptcy Party") shall vigorously pursue the
assertion, or defense (as the case may be) of all Tax Claims for which any
other party to this TMA (the "Non-Bankruptcy Party") might be jointly and
severally, directly or indirectly liable ("Bankruptcy Tax Claims") and the
Non-Bankruptcy Party shall have the right to participate in the defense of
any Bankruptcy Tax Claims and to employ professional advisors and counsel
(not reasonably objected to by the Bankruptcy Party), at its own expense,
separate from the professional advisors and counsel employed by the
Bankruptcy Party, it being understood that the Bankruptcy Party shall
control the defense of such claims. Both parties shall in good faith
cooperate with one another and the Bankruptcy Party shall not unreasonably
reject any suggestions made by the Non-Bankruptcy Party. Such cooperation
shall include the retention and (upon the Non-Bankruptcy Party's request)
the provision to the Non-Bankruptcy Party of records and information that
are reasonably relevant to such Bankruptcy Tax Claims (including copies of
all protests, pleadings, briefs, filings, correspondence and similar
materials relative to such claims), making employees available on a
mutually convenient basis to provide additional information and explanation
of any material provided hereunder, cooperating and assisting in the
investigation, defense and resolution of such matters, and providing legal
and business assistance with respect to such matters. The preceding
sentences of this Section 8.02(c) notwithstanding, if the Bankruptcy Party
fails to vigorously pursue such Bankruptcy Tax Claims, or such Bankruptcy
Party is discharged, or otherwise effectively barred from liability for
such Bankruptcy Tax Claims, the Non-Bankruptcy Party shall have the right
to assume full control over the defense of such Bankruptcy Tax Claims and,
if such control is assumed, the Bankruptcy Party shall irrevocably
designate, and agree to cause each of its affiliates to designate
irrevocably, the Non-Bankruptcy Party as the sole and exclusive agent and
attorney-in-fact to take any action as such Non-Bankruptcy Party may deem
appropriate, necessary, or incidental in any and all matters relating to
Pre-Closing Period Tax Claims of the Ashland Group and the Bankruptcy Party
shall continue to cooperate fully in the defense or prosecution thereof,
but it shall not have the right to participate in the proceedings.
(d) Mitigation. New Ashland Inc. and Marathon shall
cooperate with each other with respect to resolving any claim or liability
with respect to which one party is obligated to indemnify the other party
hereunder, including by making reasonable efforts to mitigate or resolve
any such claim or liability, which shall include claiming any indemnified
loss as a deduction or offset on any relevant Tax Return (including any
amended Tax Return). In the event that New Ashland Inc. or Marathon shall
fail to make such reasonable efforts to mitigate or resolve any claim or
liability, then notwithstanding anything else to the contrary contained
herein, the other party shall not be required to indemnify any person for
any indemnified loss that could reasonably be expected to have been avoided
if New Ashland Inc. or Marathon, as the case may be, had made such efforts.
(e) Marathon Participation Rights with respect to Section
355(e) Tax Claims. Unless otherwise agreed to by the parties, New Ashland
Inc. shall control the defense of all Tax Claims made with respect to
Section 355(e) Taxes (a "Section 355(e) Tax Claim") and shall vigorously
pursue the defense of such claims. Marathon shall have the right to
participate in the defense of all Section 355(e) Tax Claims and to employ
professional advisors and counsel (not reasonably objected to by New
Ashland Inc.), at its own expense, separate from the professional advisors
and counsel employed by New Ashland Inc. Both parties shall in good faith
cooperate with one another and New Ashland Inc. shall not unreasonably
reject any suggestions made by Marathon. Such cooperation shall include the
retention and (upon Marathon's request) the provision to the Marathon of
records and information that are reasonably relevant to such Section 355(e)
Tax Claims (including copies of all protests, pleadings, briefs, filings,
correspondence and similar materials relative to such claims), making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, cooperating
and assisting in the investigation, defense and resolution of such matters,
and providing legal and business assistance with respect to such matters.
New Ashland Inc. shall not admit any liability with respect to, or settle,
compromise or discharge any Section 355(e) Tax Claim without the prior
written consent of Marathon, such consent not to be unreasonably withheld.
SECTION 8.03. Treatment of Indemnification Payments. The
parties agree that any indemnity payments made pursuant to this Agreement
or pursuant to Article XIII of the Master Agreement shall be treated for
all Tax purposes as distributions or capital contributions, as the case may
be, between HoldCo and New Ashland Inc. made immediately prior to the
Spinoff and, accordingly, not as taxable income to the recipient or as a
deductible expense to the payor, unless otherwise required by a Final
Determination or the Closing Agreement.
ARTICLE IX
Dispute Resolution; Interest
SECTION 9.01. Dispute Resolution. In the event that
Marathon or any member of the Marathon Group, as the case may be, on the
one hand, and New Ashland Inc. or any member of the New Ashland Inc. Group,
as the case may be, on the other hand, disagree as to the amount or
calculation of any payment to be made under this TMA, or the interpretation
or application of any provision under this TMA, the parties shall attempt
in good faith to resolve such dispute. If such dispute is not resolved
within sixty (60) business days following the commencement of the dispute,
Marathon and New Ashland Inc. shall jointly retain a tax attorney who has
retired from active practice in a nationally recognized law firm or
independent public accounting firm, which firm is independent of both
parties, or a retired Federal judge experienced in Tax Matters (the
"Independent Entity"), to resolve the dispute. If the parties are unable to
agree on an Independent Entity, then each party shall appoint a person who
would qualify as an Independent Entity (but for the approval of the other
party), and such persons shall then appoint a person who meets the above
description as the Independent Entity and who shall serve as the
Independent Entity. The Independent Entity shall act as an arbitrator to
resolve all points of disagreement and its decision shall be final and
binding upon all parties involved. Following the decision of the
Independent Entity, Marathon, and members of the Marathon Group, and New
Ashland Inc. and members of the New Ashland Inc. Group shall each take or
cause to be taken any action necessary to implement the decision of the
Independent Entity. The fees and expenses relating to the Independent
Entity shall be borne equally by Marathon and New Ashland Inc.
SECTION 9.02. Interest. Any payment required to be made
under this TMA that is not made on or before the date on which such payment
is due shall bear interest computed at the rate specified from time to time
pursuant to Code Section 6621(a)(2).
ARTICLE X
General Provisions
SECTION 10.01. Termination. This Agreement shall
terminate simultaneous with any termination of the Master Agreement
pursuant to Article XI thereof. In the event of termination of this
Agreement, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of any party hereto.
SECTION 10.02. Survival. Notwithstanding anything in this
TMA to the contrary apart from Section 10.01, the provisions of this TMA
shall survive for 30 days after the full period of all applicable statutes
of limitations (giving effect to any waiver, mitigation or extension
thereof) unless by their term they expire at an earlier date.
SECTION 10.03. Right of Set-off. Either party may set-off
any amount to which it is entitled under this TMA against amounts otherwise
payable hereunder by such party. Neither the exercise of nor the failure to
exercise such right of set-off will constitute an election of remedies or
limit such party in any manner in the enforcement of any other remedies
that may be available to it.
SECTION 10.04. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in writing
and shall be deemed given upon receipt by the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
if to the Ashland Parties, to:
Ashland Inc.
00 X. XxxxxXxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: J. Xxxxxx Xxxx
Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
if to the Marathon Parties, to:
Marathon Oil Corporation
0000 Xxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
with copies to:
Xxxxx Xxxxx L.L.P.
Xxx Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Paris, Esq.
Xxxxxx & Xxxxxxxxx Chartered
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
SECTION 10.05. Interpretation. When a reference is made
in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation". This Agreement
is intended to calculate, allocate and assign certain Tax responsibilities,
liabilities and benefits among the parties to this Agreement, and any
situation or circumstance concerning such calculation, allocation and
assignment that is not specifically contemplated hereby or provided for
herein shall be determined in a manner consistent with the underlying
principles of calculation, allocation and assignment in this Agreement.
SECTION 10.06. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule or law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 10.07. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 10.08. No Third-Party Beneficiaries. This
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies.
SECTION 10.09. Existing MAP Agreements. To the extent any
provision of this TMA conflicts with the determination of the Tax Liability
(as defined in the MAP LLC Agreement) of Ashland or its successors for any
Straddle Period of MAP as determined under Section 10.03 of the MAP LLC
Agreement, such Tax Liability shall be determined in accordance with this
Agreement. In all other respects, except as expressly modified herein, the
terms and conditions of the MAP LLC Agreement, the ATCA, and the Put/Call
Agreement shall continue to apply to the extent provided in Article XII of
the Master Agreement. For the avoidance of doubt, the term Tax Distribution
Amount (as defined in the MAP LLC Agreement) shall not include the Tax
Liability (as defined in the MAP LLC Agreement) of the Ashland Affiliated
Group that is attributable to the MAP Partial Redemption.
SECTION 10.10. Continuing Ashland Participation Rights
With Respect To Pre-Closing Pass-Through Items. Notwithstanding anything to
the contrary in the Master Agreement, this Agreement or the other
Transaction Agreements and Ancillary Agreements (as defined in the Master
Agreement), New Ashland Inc. and its successors shall retain the right (to
the extent provided for in Section 6.08 of the MAP LLC Agreement or any
other provision of the MAP LLC Agreement) to participate in the preparation
and filing of all Tax Returns, and in the defense of any Tax Claim, with
respect to all Pass-Through Items relating to any Pre-Closing Period of MAP
or any other JV Entity as if it were a member of MAP or such JV Entity. Any
Tax Claim with respect to any issue concerning MAP's income, gain, losses,
deductions or credits that could result in additional Taxes for the
Pre-Closing Period for Ashland and additional basis (other than additional
basis that is subject to Section 4.03 of the TMA) or deductions in the
Post-Closing Period for Marathon or any member of the Marathon Group shall
be treated under Section 6.08(e)(ii) of the MAP LLC Agreement as an issue
the tax effect of which, if resolved adversely would be, and the tax effect
of settling the issue is, not proportionately the same for both Members. If
an issue is treated as not proportionately the same for both Members under
the preceding sentence, then in applying Section 6.08(e)(iv) of the MAP LLC
Agreement, nationally recognized tax counsel (whose selection shall be
based on the principles of Section 9.01 of the TMA) shall determine if the
settlement is fair to both Members based on the merits of the issue. Such
fees of the nationally recognized tax counsel shall be shared, 62% by
Marathon and 38% by New Ashland Inc.
SECTION 10.11. Prior Tax Sharing Agreements. Except as
specifically provided in Section 10.09, as of the Closing Date, this
Agreement supersedes and terminates all prior agreements as to the
allocation of tax liabilities among the members of the Ashland Group, and
after the Closing Date neither HoldCo nor any member of the Marathon Group,
as successor, transferee or otherwise, shall be bound thereby or have any
liability thereunder.
SECTION 10.12. Entire Agreement; Amendments. This
Agreement embodies the entire understanding among the parties relating to
its subject matter. Any and all prior correspondence, conversations, and
memoranda are merged herein and shall be without effect hereon. No
promises, covenants, or representations of any kind, other than those
expressly stated herein, have been made to induce either party to enter
into this Agreement. This Agreement shall not be amended, supplemented,
modified, or terminated except by a writing duly signed by each of the
parties hereto, and no waiver of any provisions of this Agreement shall be
effective unless in a writing duly signed by the party sought to be bound.
SECTION 10.13. Amendments Resulting From Pre-Closing
Change In Tax Structure. If, prior to the Closing, the Tax Structure of the
Transactions is modified, revised or changed in any manner, for any reason
(including, but not limited to, modifications, revisions or changes
resulting from changes in law or in response to communications (written or
otherwise) with the IRS or any other Tax Authority), the parties will
negotiate in good faith to amend this Agreement, to the extent necessary,
to reflect the underlying principles of calculation, allocation and
assignment in this Agreement.
SECTION 10.14. Payments. All payments under this TMA
shall be made by wire transfer in immediately available funds.
SECTION 10.15. Successors. This Agreement shall be
binding upon and inure to the benefit of any successor to any of the
parties, by merger, acquisition of assets or otherwise, to the same extent
as if the successor had been an original party to the Agreement, and in
such event, all references herein to a party shall refer instead to the
successor of such party.
SECTION 10.16. Confidentiality. Each party to this
Agreement shall hold, and cause its officers, employees, agents,
consultants, and advisors to hold, in strict confidence, unless compelled
to disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information that it or any of
its officers, employees, agents, consultants, and advisors may acquire
pursuant to, or in the course of performing its obligations under, any
provision of this Agreement.
SECTION 10.17. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by its respective duly authorized officer as of
the date first set forth above.
ASHLAND INC.,
by /s/ Xxxxx X. X'Xxxxx
---------------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Chief Executive Officer
ATB HOLDINGS INC.,
by /s/ Xxxxx X. X'Xxxxx
---------------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: President
EXM LLC,
by
---------------------------------------------
ATB HOLDINGS INC.,
by /s/ Xxxxx X. X'Xxxxx
---------------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: President
NEW EXM INC.,
by /s/ Xxxxx X. X'Xxxxx
---------------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: President
MARATHON OIL CORPORATION,
by /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
MARATHON OIL COMPANY,
by /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
MARATHON DOMESTIC LLC,
by
---------------------------------------------
MARATHON OIL CORPORATION,
by /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President and Chief
Financial Officer
MARATHON ASHLAND PETROLEUM LLC,
by /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
