Exhibit 10.1
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LIMITED LIABILITY COMPANY AGREEMENT
of
MARATHON ASHLAND PETROLEUM LLC
Dated as of January 1, 1998
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TABLE OF CONTENTS
ARTICLE I
Certain Definitions; Applicable GAAP
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SECTION 1.01. Definitions.................................................. 2
SECTION 1.02. Applicable GAAP.............................................. 24
ARTICLE II
General Provisions
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SECTION 2.01. Formation; Effectiveness..................................... 24
SECTION 2.02. Name......................................................... 25
SECTION 2.03. Term......................................................... 25
SECTION 2.04. Registered Agent and Office.................................. 26
SECTION 2.05. Purpose...................................................... 26
SECTION 2.06. Powers....................................................... 27
ARTICLE III
Members
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SECTION 3.01. Members; Percentage Interests................................ 28
SECTION 3.02. Adjustments in Percentage Interests.......................... 29
ARTICLE IV
Capital Contributions; Assumption of Assumed Liabilities
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SECTION 4.01. Contributions................................................ 29
SECTION 4.02. Additional Contributions..................................... 32
SECTION 4.03. Negative Balances; Withdrawal of Capital;
Interest................................................... 33
2
ARTICLE V
Distributions
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SECTION 5.01. Distributions................................................ 33
SECTION 5.02. Certain General Limitations.................................. 36
SECTION 5.03. Distributions in Kind........................................ 36
SECTION 5.04. Distributions in the Event of an Exercise
of the Marathon Call Right, Ashland
Put Right or the Special Termination
Rights..................................................... 37
ARTICLE VI
Allocations and Other Tax Matters
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SECTION 6.01. Maintenance of Capital Accounts.............................. 37
SECTION 6.02. Allocation of Profit and Loss................................ 38
SECTION 6.03. Tax Allocations.............................................. 38
SECTION 6.04. Entity Classification........................................ 39
SECTION 6.05. Fiscal Year.................................................. 39
SECTION 6.06. Tax Returns.................................................. 39
SECTION 6.07. Tax Matters Partner.......................................... 40
SECTION 6.08. Duties of Tax Matters Partner................................ 41
SECTION 6.09. Survival of Provisions....................................... 43
SECTION 6.10. Section 754 Election......................................... 43
SECTION 6.11. Qualified Income Offset, Minimum Gain
Chargeback................................................. 43
SECTION 6.12. Tax Treatment of Designated Sublease
Agreements................................................. 44
SECTION 6.13. Tax Treatment of Reimbursed Liability
Payments................................................... 44
SECTION 6.14. Tax Treatment of Disproportionate
Payments................................................... 45
ARTICLE VII
Books and Records
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SECTION 7.01. Books and Records; Examination............................... 45
SECTION 7.02. Financial Statements and Reports............................. 46
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SECTION 7.03. Notice of Affiliate Transactions; Annual
List...................................................... 48
ARTICLE VIII
Management of the Company
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SECTION 8.01. Managing Members............................................. 49
SECTION 8.02. Board of Managers............................................ 49
SECTION 8.03. Responsibility of the Board of Managers...................... 50
SECTION 8.04. Meetings..................................................... 50
SECTION 8.05. Compensation................................................. 52
SECTION 8.06. Quorum....................................................... 52
SECTION 8.07. Voting....................................................... 53
SECTION 8.08. Matters Constituting Super Majority
Decisions.................................................. 54
SECTION 8.09. Annual Capital Budget........................................ 61
SECTION 8.10. Business Plan................................................ 62
SECTION 8.11. Requirements as to Affiliate Transactions.................... 62
SECTION 8.12. Review of Certain Affiliate Transactions
Related to Crude Oil Purchases and Shared
Services................................................... 64
SECTION 8.13. Adjustable Amounts........................................... 67
SECTION 8.14. Company Leverage Policy...................................... 68
SECTION 8.15. Company's Investment Guidelines.............................. 68
SECTION 8.16. Requirements as to Operating Leases.......................... 69
SECTION 8.17. Limitations on Actions Relating to the
Calculation of Distributable Cash.......................... 69
SECTION 8.18. Reliance by Third Parties.................................... 69
SECTION 8.19. Integration of Retail Operations............................. 70
ARTICLE IX
Officers
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SECTION 9.01. (a) Election, Appointment and Term of
Office..................................................... 71
SECTION 9.02. Resignation, Removal and Vacancies........................... 72
SECTION 9.03. Duties and Functions of Executive
Officers................................................... 73
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ARTICLE X
Transfers of Membership Interests
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SECTION 10.01. Restrictions on Transfers................................... 74
SECTION 10.02. Conditions for Admission.................................... 78
SECTION 10.03. Allocations and Distributions............................... 79
SECTION 10.04. Right of First Refusal...................................... 79
SECTION 10.05. Restriction on Resignation or Withdrawal.................... 80
ARTICLE XI
Liability, Exculpation and Indemnification
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SECTION 11.01. Liability................................................... 81
SECTION 11.02. Exculpation................................................. 81
SECTION 11.03. Indemnification............................................. 81
ARTICLE XII
Fiduciary Duties
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SECTION 12.01. Duties and Liabilities of Covered
Persons................................................... 82
SECTION 12.02. Fiduciary Duties of Members of the
Company and Members of the Board
of Managers............................................... 82
ARTICLE XIII
Dispute Resolution Procedures
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SECTION 13.01. General..................................................... 83
SECTION 13.02. Dispute Notice and Response................................. 83
SECTION 13.03. Negotiation Between Senior Managers......................... 84
SECTION 13.04. Negotiation Between Chief Executive
Officer and President..................................... 84
SECTION 13.05. Right to Equitable Relief Preserved......................... 85
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ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
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SECTION 14.01. Ability of Company to Borrow
to Fund Disputed Monetary Amounts......................... 86
SECTION 14.02. Interim Payment of Disputed Monetary
Amount.................................................... 87
SECTION 14.03. Liquidated Damages.......................................... 87
SECTION 14.04. Right of Set-Off............................................ 90
SECTION 14.05. Security Interest........................................... 90
ARTICLE XV
Dissolution and Termination
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SECTION 15.01. Dissolution................................................. 92
SECTION 15.02. Winding Up of Company....................................... 93
SECTION 15.03. Distribution of Property.................................... 93
SECTION 15.04. Time Limitation............................................. 93
SECTION 15.05. Termination of Company...................................... 93
ARTICLE XVI
Miscellaneous
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SECTION 16.01. Notices..................................................... 94
SECTION 16.02. Merger and Entire Agreement................................. 95
SECTION 16.03. Assignment.................................................. 95
SECTION 16.04. Parties in Interest......................................... 95
SECTION 16.05. Counterparts................................................ 95
SECTION 16.06. Amendment; Waiver........................................... 96
SECTION 16.07. Severability................................................ 96
SECTION 16.08. GOVERNING LAW............................................... 96
SECTION 16.09. Enforcement................................................. 97
SECTION 16.10. Creditors................................................... 97
SECTION 16.11. No ▇▇▇▇ for Accounting...................................... 98
SECTION 16.12. Waiver of Partition......................................... 98
SECTION 16.13. Table of Contents, Headings and Titles...................... 98
SECTION 16.14. Use of Certain Terms; Rules of
Construction.............................................. 98
SECTION 16.15. Holidays.................................................... 98
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SECTION 16.16. Third Parties............................................... 98
SECTION 16.17. Liability for Affiliates.................................... 99
Appendix A Certain Definitions
Appendix B Procedures for Dispute Resolution
Exhibit A Speedway SuperAmerica LLC Retail Integration Protocol
Schedule 1.01 Financed Properties
Schedule 4.01(c) Subleased Property
Schedule 4.02(a)-1 Marathon Capital Expenditures
Schedule 4.02(a)-2 Ashland Capital Expenditures
Schedule 8.01(k)
(i)(A) Closing Date Affiliate Transactions
Schedule 8.14 Company Leverage Policy
Schedule 8.15 Company Investment Guidelines
Schedule A Calculations re: Normal Annual Capital Budget Amount
Schedule B-1 Adjustments to Historical EBITDA
(Marathon)
Schedule B-2 Adjustments to Historical EBITDA (Ashland)
Schedule C Initial Executive Officers
LIMITED LIABILITY COMPANY AGREEMENT
dated as of [January 1], 1998, of MARATHON
- -
ASHLAND PETROLEUM LLC (the "Company"), by and
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between Marathon Oil Company, an Ohio
corporation ("Marathon"), and Ashland Inc., a
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Kentucky corporation ("Ashland"), as Members.
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Preliminary Statement
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WHEREAS, on June 11, 1997, Marathon and Emro Marketing Company ("Emro
Marketing") formed the Company (formerly known as "Emro Supply, LLC") by filing
a Certificate of Formation of the Company with the Secretary of State of the
State of Delaware and executed the Limited Liability Company Agreement of the
Company pursuant to which Marathon received a 60% interest in the Company and
Emro Marketing received a 40% interest in the Company;
WHEREAS, on July 18, 1997, Emro Marketing assigned its interest in the
Company to Marathon and Fuelgas Company, Inc., a wholly owned subsidiary of
Marathon ("Fuelgas"), with Marathon receiving an additional 39% interest in the
Company and Fuelgas receiving a 1% interest in the Company, which interest will
be transferred to Marathon immediately following the Closing (for purposes of
this Agreement and the other Transaction Documents, all references to Marathon's
interest in the Company shall be deemed to include the 1% interest owned by
Fuelgas);
WHEREAS, on July 18, 1997, Marathon and Fuelgas executed the First
Amended and Restated Limited Liability Company Agreement of the Company and
filed an Amended and Restated Certificate of Formation of the Company with the
Secretary of State of the State of Delaware;
WHEREAS, on October 29, 1997, Marathon and Fuelgas filed a Second
Amended and Restated Certificate of Formation of the Company with the Secretary
of State of the State of Delaware to change the name of the Company to Marathon
Ashland Petroleum LLC;
WHEREAS, on December 8, 1997, Marathon and Fuelgas executed the Second
Amended and Restated Limited Liability
2
Company Agreement of the Company which became effective on December 10, 1997;
WHEREAS the parties hereto desire that the Company (a) be a premier
petroleum supply, refining, marketing and transportation business, (b) create a
highly efficient, cost-effective and competitive petroleum supply, refining,
marketing and transportation system, (c) deliver to the Members the highest
possible economic value added, (d) be customer-focused and market-driven in its
business strategy, (e) be a respected and responsible member of the communities
in which the Company will operate, with a high regard for environmental
responsibility and employee safety, and (f) seek to maximize Distributable Cash
to the Members consistent with the foregoing, including capital spending levels
which over time are expected to be generally equivalent to the level of non-cash
charges; and
WHEREAS the Members desire to enter into this Agreement to set forth
the rights and responsibilities of each of them with respect to the governance,
financing and operation of the Company.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Certain Definitions; Applicable GAAP
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SECTION 1.01. Definitions. Defined terms used in this Agreement
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shall have the meanings ascribed to them by definition in this Agreement or in
Appendix A. In addition, when used herein the following terms have the
following meanings:
"Accounting Determination" has the meaning set forth in Section 1.02.
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"Acquisition Expenditures" means, in connection with any acquisition
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by the Company and its subsidiaries, without duplication (i) the purchase price
paid or to be paid for the net assets or capital stock or other equity
3
interests in connection with such acquisition, (ii) any Indebtedness assumed by
the Company and its subsidiaries in connection with any such acquisition, (iii)
any contingent liabilities assumed or incurred by the Company and its
subsidiaries in connection with any such acquisition to the extent that such
contingent liabilities are required to be reflected on the balance sheet of the
Company and its subsidiaries in accordance with Financial Accounting Standard
Number 5 (or any successor or superseding provision of Applicable GAAP), and
(iv) all other costs and expenses incurred or to be incurred by the Company or
any of its subsidiaries in connection with any such acquisition to the extent
that such costs and expenses would be capitalized if such acquisition were
consummated.
"Adjustable Amount" has the meaning set forth in Section 8.13.
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"Additional Monetary Amount" has the meaning set forth in Section
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14.03(c).
"Additional Required Cash Amount" has the meaning set forth in Section
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14.01(a).
"Adjusted DD&A" means:
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(i) for the twelve-month periods ended December 31, 1995 and 1996,
$348 million and $346 million, respectively;
(ii) for the twelve-month period ended December 31, 1997, the total
combined depreciation, depletion and amortization expense of the Marathon
Business and the Ashland Business during such twelve-month period,
including, without duplication, (a) any gains (deductions from
depreciation, depletion and amortization) or losses (additions to
depreciation, depletion and amortization) on asset retirements during such
period and (b) pro forma depreciation, depletion and amortization expense
related to the Financed Properties during such period (calculated in the
same manner such pro forma depreciation, depletion and amortization expense
was calculated in Schedule A,
4
which considers the placed-in-service dates of the Financed Properties);
(iii) for the twelve-month period ended September 30, 1998, the sum
of:
(a) the total combined depreciation, depletion and amortization
expense of the Marathon Business and the Ashland Business during the
period commencing on October 1, 1997, and ended on the date
immediately preceding the Closing Date, including, without
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duplication, (1) any gains (deductions from depreciation, depletion
and amortization) or losses (additions to depreciation, depletion and
amortization) on asset retirements during such period and (2) pro
forma depreciation, depletion and amortization expense related to the
Financed Properties during such period (calculated in the same manner
such pro forma depreciation, depletion and amortization expense was
calculated in Schedule A, which considers the placed-in-service dates
of the Financed Properties); and
(b) the total depreciation, depletion and amortization expense of
the Company and its subsidiaries for the period commencing on the
Closing Date and ended on September 30, 1998, including (1) any gains
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(deductions from depreciation, depletion and amortization) or losses
(additions to depreciation, depletion and amortization) on asset
retirements during such period, (2) depreciation, depletion and
amortization expense related to the Garyville Propylene Upgrade
Project during such period and (3) depreciation, depletion and
amortization expense related to all Company-funded Capital
Expenditures, but excluding (4) depreciation, depletion and
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amortization expense related to Member-Funded Capital Expenditures and
(5) the increase or decrease in such depreciation, depletion and
amortization expense related to the Ashland Transferred Assets
(including pro forma depreciation, depletion and amortization expense
5
related to the Financed Properties) resulting from the application of
purchase accounting treatment to the transactions contemplated by the
Transaction Documents (such purchase accounting treatment causing an
increase or decrease in the estimated useful lives and the net book
value of the Ashland Transferred Assets); and
(iv) for the twelve-month period ended September 30, 1999, and each
twelve-month period ended September 30 thereafter, the total depreciation,
depletion and amortization expense of the Company and its subsidiaries for
such twelve-month period, including, without duplication, (a) any gains
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(deductions from depreciation, depletion and amortization) or losses
(additions to depreciation, depletion and amortization) on asset
retirements during such period, (b) depreciation, depletion and
amortization expense related to the Garyville Propylene Upgrade Project
during such period and (c) depreciation, depletion and amortization expense
related to Company-funded Capital Expenditures but excluding (d)
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depreciation, depletion and amortization expense related to Member-Funded
Capital Expenditures and (e) the increase or decrease in such depreciation,
depletion and amortization expense related to the Ashland Transferred
Assets (including pro forma depreciation, depletion and amortization
expense related to the Financed Properties) resulting from the application
of purchase accounting treatment to the transactions contemplated by the
Transaction Documents (such purchase accounting treatment causing an
increase or decrease in the estimated useful lives and the net book value
of the Ashland Transferred Assets);
all as determined on a consolidated basis with respect to (x) in the case of any
period ending prior to the Closing Date, Marathon and its subsidiaries or
Ashland and its subsidiaries, as applicable, or (y) in the case of any period
ending on or after the Closing Date, the Company and its subsidiaries, in each
case in accordance with Applicable GAAP.
6
"Adjusted EBITDA" means:
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(i) for the twelve-month periods ended December 31, 1995 and 1996,
$657 million and $600 million, respectively;
(ii) for the twelve-month period ended December 31, 1997, the sum of:
(a) Historical EBITDA for such twelve-month period, plus
(b) $80 million, minus
(c) 38% of an amount equal to (1) the sum of the amounts calculated
pursuant to clauses (a) and (b) above for such twelve-month period less (2)
the Adjusted DD&A for such twelve-month period.
(iii) for the twelve-month period ended September 30, 1998, the sum
of:
(a) for the period commencing on October 1, 1997, and ended on the
date immediately preceding the Closing Date, the sum of:
(1) Historical EBITDA for such period, plus
(2) $20 million, minus
(3) 38% of an amount equal to (A) the sum of the amounts
calculated pursuant to clauses (1) and (2) above with respect to such
period less (B) the Adjusted DD&A for such period; and
(b) for the period commencing on the Closing Date and ended on
September 30, 1998, the sum of:
(1) EBITDA of the Company and its subsidiaries for such period,
plus
(2) $12.4 million, minus
7
(3) the Tax Distribution Amounts paid or to be paid in respect of
each of the three Fiscal Quarters (or portion thereof) included in
such period; and
(iv) for the twelve-month period ended September 30, 1999 and each
twelve-month period ended September 30 thereafter, the sum of:
(a) EBITDA of the Company and its subsidiaries for such twelve-month
period, minus
(b) the Tax Distribution Amounts paid or to be paid in respect of each
of the four Fiscal Quarters included in such twelve-month period;
all as determined on a consolidated basis with respect to (x) in the case of any
period ending prior to the Closing Date, Marathon and its subsidiaries or
Ashland and its subsidiaries, as applicable, or (y) in the case of any period
ending on or after the Closing Date, the Company and its subsidiaries, in each
case in accordance with then Current GAAP (other than Ordinary Course Lease
Expenses which shall be calculated in accordance with Applicable GAAP).
"Advanced Amount" has the meaning set forth in Section 14.01(b).
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"Affiliate Transaction" means any agreement or transaction between the
---------------------
Company or any of its subsidiaries and any Member or any Affiliate of any Member
that:
(a) for purposes of Section 7.03(a)(i), will result or is reasonably
anticipated will result in expenditures, contingent or actual liabilities
or benefits to the Company and its subsidiaries in excess of $2 million;
(b) for purposes of Section 7.03(b), is either (i) outside the
ordinary course of the Company and its subsidiaries' business and results
or will result in contingent or actual liabilities or benefits to the
Company and its subsidiaries in excess of $100,000 in
8
the applicable Fiscal Year or (ii) within the ordinary course of the
Company and its subsidiaries' business and results or will result in
expenditures, contingent or actual liabilities or benefits to the Company
and its subsidiaries (A) in excess of $2 million individually in the
applicable Fiscal Year or (B) when taken together with all other agreements
or transactions entered into the same Fiscal Year as such agreement or
transaction which are either related to such agreement or transaction or
are substantially the same type of agreement or transaction as such
agreement or transaction, in excess of $2 million in the aggregate in the
applicable Fiscal Year; and
(c) for purposes of Section 8.08(k)(i), is either (i) outside the
ordinary course of the Company and its subsidiaries' business and will
result or is reasonably anticipated will result in expenditures, contingent
or actual liabilities or benefits to the Company and its subsidiaries in
excess of $2 million or (ii) within the ordinary course of the Company and
its subsidiaries' business and will result or is reasonably anticipated
will result in expenditures, contingent or actual liabilities or benefits
to the Company and its subsidiaries in excess of $25 million.
For purposes of this definition of Affiliate Transaction, any
guarantee by a Member or any Affiliate of any Member of any obligations of the
Company or any of its subsidiaries that is provided by such Member or such
Affiliate without cost to the Company and its subsidiaries shall not be deemed
to be an Affiliate Transaction. Notwithstanding the foregoing, the term
"Affiliate Transaction" shall not include any distributions of cash or other
property to the Members pursuant to Article V.
"Affiliate Transaction Dispute Notice" has the meaning set forth in
------------------------------------
Section 8.11(b).
"Aggregate Tax Rate" has the meaning set forth in Section 5.01(a)(i).
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"Agreed Additional Capital Contributions" has the meaning set forth in
---------------------------------------
Section 4.02(c).
9
"Agreement" means this Limited Liability Company Agreement of the
---------
Company, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Annual Capital Budget" has the meaning set forth in Section 8.09(a).
---------------------
"Applicable GAAP" has the meaning set forth in Section 1.02.
---------------
"Approved Marathon Crude Oil Purchase Program" has the meaning set
--------------------------------------------
forth in Section 8.12.
"Arbitratable Dispute" has the meaning set forth in Section 13.04(a).
--------------------
"Arbitration Payment Due Date" has the meaning set forth in Section
----------------------------
14.03(a).
"Arbitration Proceeding" has the meaning set forth in Section
----------------------
14.01(a).
"Arbitration Tribunal" has the meaning set forth in Appendix B.
--------------------
"Arm's-Length Transaction" has the meaning set forth in Section
------------------------
8.11(a).
"Ashland Designated Sublease Agreements" shall mean the Ashland
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Sublease Agreements attached as ▇▇▇▇▇▇▇▇ ▇-▇, ▇-▇, ▇-▇ ▇▇▇ ▇-▇ to the Asset
Transfer and Contribution Agreement.
"Ashland-Funded Capital Expenditures" has the meaning set forth in
-----------------------------------
Section 4.02(a).
"Audited Financial Statements" has the meaning set forth in Section
----------------------------
7.02(c).
10
"Average Annual DD&A" means:
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(a) for Fiscal Year 1998, the average of the Adjusted DD&A for the
three twelve-month periods ended December 31, 1995, 1996 and 1997;
(b) for Fiscal Year 1999, the average of the Adjusted DD&A (i) for the
two twelve-month periods ended December 31, 1996 and 1997 and (ii) for the
one twelve-month period ended September 30, 1998;
(c) for Fiscal Year 2000, the average of the Adjusted DD&A (i) for the
twelve-month period ended December 31, 1997 and (ii) for the two twelve-
month periods ending on September 30, 1998 and 1999; and
(d) for Fiscal Year 2001 and each Fiscal Year thereafter, the average
of the Adjusted DD&A for the three twelve-month periods ending on September
30 in each of the three Fiscal Years immediately preceding such Fiscal
Year.
"Average Adjusted EBITDA" means:
-----------------------
(a) for Fiscal Year 1998, the average of the Adjusted EBITDA for the
three twelve-month periods ended December 31, 1995, 1996 and 1997;
(b) for Fiscal Year 1999, the average of the Adjusted EBITDA (i) for
the two twelve-month periods ended December 31, 1996 and 1997 and (ii) for
the one twelve-month period ended September 30, 1998;
(c) for Fiscal Year 2000, the average of the Adjusted EBITDA (i) for
the twelve-month period ended December 31, 1997 and (ii) for the two
twelve-month periods ending on September 30, 1998 and 1999; and
(d) for Fiscal Year 2001 and each Fiscal Year thereafter, the average
of the Adjusted EBITDA for the three twelve-month periods ending on
September 30 in each of the three Fiscal Years immediately preceding such
Fiscal Year.
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"Average Annual Level" means for any twelve-month period ending on
--------------------
September 30 of any calendar year, the average of the level of the Price Index
ascertained by adding the twelve monthly levels of the Price Index during such
twelve-month period and dividing the total by twelve.
"Bareboat Charters" has the meaning set forth in Section 9.3(k) of the
-----------------
Asset Transfer and Contribution Agreement.
"Base Level" means 161.2.
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"Base Rate" has the meaning set forth in Section 1.01 of the Put/Call,
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Registration Rights and Standstill Agreement.
"Board of Managers" has the meaning set forth in Section 8.02(a).
-----------------
"Bulk Motor Oil Business" has the meaning set forth in Section
-----------------------
14.03(h) of the Put/Call, Registration Rights and Standstill Agreement.
"Business Plan" has the meaning set forth in Section 8.10.
-------------
"Capital Account" has the meaning set forth in Section 6.01.
---------------
"Capital Expenditures" means, for any period, the aggregate of all
--------------------
expenditures incurred by the Company and its subsidiaries during such period
that, in accordance with Applicable GAAP, are or should be included in
"additions to property, plant or equipment" or similar items reflected in the
consolidated statement of cash flows of the Company and its subsidiaries;
provided, however, that Capital Expenditures shall not include (a) exchanges of
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such items for other items, (b) expenditures of proceeds of insurance
settlements by the Company or any of its subsidiaries in respect of lost,
destroyed or damaged assets, equipment or other property to the extent such
expenditures are made to replace or repair such lost, destroyed or damaged
assets, equipment or other property within 18 months of such loss, destruction
or damage, (c) funds expended by a Member or an
12
Affiliate of a Member to purchase any Subleased Property that is contributed to
the Company or a subsidiary of the Company pursuant to Section 4.01(c)(i)(A) or
(d) Member-Funded Capital Expenditures; all as determined on a consolidated
basis with respect to the Company and its subsidiaries in accordance with
Applicable GAAP.
"Capital Lease" means any lease of (or other arrangement conveying the
-------------
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a consolidated balance sheet of the Company and its subsidiaries in accordance
with Applicable GAAP.
"Closing Date Affiliate Transactions" has the meaning set forth in
-----------------------------------
Section 8.08(k)(i)(A).
"Company Independent Auditors" has the meaning set forth in Section
----------------------------
7.01.
"Company Investment Guidelines" has the meaning set forth in Section
-----------------------------
8.15.
"Company Leverage Policy" has the meaning set forth in Section 8.14.
-----------------------
"Competitive Business" has the meaning set forth in Section 14.01(a)
--------------------
of the Put/Call, Registration Rights and Standstill Agreement.
"Competitive Third Party" has the meaning set forth in Section
-----------------------
14.01(d) of the Put/Call, Registration Rights and Standstill Agreement.
"Contracting Member" has the meaning set forth in Section 8.11(b).
------------------
"Covered Person" means any Member, any Affiliate of a Member or any
--------------
officers, directors, shareholders, partners, employees, representatives or
agents of a Member or their respective Affiliates, or any Representative, or any
employee, officer or agent of the Company or its Affiliates.
13
"Critical Decision" means each Primary Critical Decision and each
-----------------
Other Critical Decision.
"Critical Decision Termination Date" means (a) in the case of any
----------------------------------
Other Critical Decision, the first anniversary of the Closing Date or (b) in the
case of any Primary Critical Decision, the first anniversary of the Closing Date
or, if the Critical Decision Termination Date shall be extended with respect to
such Primary Critical Decision as provided in Section 8.19(c), the fifteen-month
anniversary of the Closing Date.
"Crude Oil Purchases" means any purchase of crude oil by the Company
-------------------
or any of its subsidiaries from Marathon or any Affiliate of Marathon.
"Current GAAP" means, at any time, GAAP as in effect at such time.
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"Delinquent Member" has the meaning set forth in Section 14.01(a).
-----------------
"Designated Sublease Agreements" means the Ashland Designated Sublease
--------------------------------
Agreements and the Marathon Designated Sublease Agreements.
"Designated Sublease Amount" means any obligation of a Member to the
--------------------------
Company or a subsidiary of the Company under Section 4.01(c) with respect to a
Subleased Property or a Designated Sublease Agreement.
"Dispute" has the meaning set forth in Section 13.01.
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"Dispute Notice" has the meaning set forth in Section 13.02.
--------------
"Disputed Capital Contribution Amount" has the meaning set forth in
------------------------------------
Section 13.04(a).
"Disputed Indemnification Amount" has the meaning set forth in Section
-------------------------------
14.01(a).
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"Disputed Monetary Amount" has the meaning set forth in Section
------------------------
14.01(a).
"Distributable Cash" means, for each Fiscal Quarter, without
------------------
duplication:
(a) the Short-Term Investments of the Company and its subsidiaries on
the last day of such Fiscal Quarter, minus
(b) the Ordinary Course Debt of the Company and its subsidiaries on
the last day of such Fiscal Quarter, minus
(c) the Tax Distribution Amount to be paid in respect of such Fiscal
Quarter, minus
(d) funds held on the last day of such Fiscal Quarter for financing
Special Projects or Permitted Catlettsburg Capital Projects, minus
(e) if the notional repayment of principal for Special Project
Indebtedness or Permitted Catlettsburg Capital Project Indebtedness during
such Fiscal Quarter calculated using a notional repayment schedule
established and approved by the Board of Managers in accordance with the
Company Leverage Policy was more than the amount of actual principal
repayments for such Special Project Indebtedness or Permitted Catlettsburg
Project Indebtedness during such Fiscal Quarter, the amount of such excess,
plus
(f) if the amount of the actual principal repayments for Special
Project Indebtedness or Permitted Catlettsburg Capital Project Indebtedness
during such Fiscal Quarter was more than the notional repayment of
principal for such Special Project Indebtedness or Permitted Catlettsburg
Capital Project Indebtedness during such Fiscal Quarter (calculated in the
manner described in clause (e) above), the amount of such excess, plus or
minus
(g) any adjustments or reserves (including any adjustments for
minimum cash balance requirements,
15
including cash reserves for accrued or withheld Taxes not yet due) in the
amounts and for the time periods established and approved by the Board of
Managers pursuant to a vote in accordance with Section 8.07(b).
"Distribution Date" has the meaning set forth in Section 5.01(a).
-----------------
"Distributions Calculation Statement" has the meaning set forth in
-----------------------------------
Section 5.01(c).
"EBITDA" means for any period:
------
(a) net income, plus
(b) to the extent deducted in computing such net income, the sum of
(i) estimated or actual Federal, state, local and foreign income tax
expense, (ii) interest expense, (iii) depreciation, depletion and
amortization expense, (iv) non-cash charges resulting from the cumulative
effect of changes in accounting principles, and (v) non-cash lower of cost
or market inventory or fixed asset writedowns; minus
(c) to the extent added in computing such net income, (i) any interest
income (excluding interest income on accounts receivable related to
marketing programs), (ii) non-cash gains resulting from the cumulative
effect of changes in accounting principles and (iii) non-cash lower of cost
or market inventory or fixed asset gains;
all as determined on a consolidated basis (x) in the case of any period ended
prior to the Closing Date, Marathon and its subsidiaries or Ashland and its
subsidiaries, as applicable, or (y) in the case of any period ending on or after
the Closing Date, with respect to the Company and its subsidiaries, in each case
in accordance with then Current GAAP. For purposes of this definition,
depreciation, depletion and amortization expense will include any gains
(deductions from depreciation, depletion and amortization) or losses (additions
to depreciation, depletion and amortization) on asset retirements and excess
purchase price amortization adjustments. For the avoidance of doubt,
16
EBITDA shall not include any revenues or expenses constituting Member-Funded
Capital Expenditures or Member-Indemnified Expenditures.
"Executive Officers" has the meaning set forth in Section 9.01(a).
------------------
"Final Monetary Amount" has the meaning set forth in Section 14.03(a).
---------------------
"Financed Properties" means each of the properties listed in Schedule
-------------------
1.01.
"Fiscal Quarter" means the three-month period ended March 31, June 30,
--------------
September 30 and December 31 of each Fiscal Year.
"Fiscal Year" has the meaning set forth in Section 6.05.
-----------
"Fuelgas Interest" means the 1% interest in the Company which is owned
----------------
by Fuelgas.
"GAAP" means United States generally accepted accounting principles
----
applied on a consistent basis.
"Garyville Propylene Upgrade Project" means the propylene splitter
-----------------------------------
with a capacity of approximately 800 million pounds per year that is being
constructed at the Garyville refinery for the production of propylene.
"Historical EBITDA" means for any period ending prior to the Closing
-----------------
Date the sum of:
(a) EBITDA of the Marathon Business for such period as adjusted for
each of the "EBIT Adjustment" items set forth in lines 10-55 of Schedule B-
1 and each of the "Depreciation Adjustment" items set forth in lines 133
through 150 of Schedule B-1, in each case calculated for such period in the
same manner that such adjustments were calculated in Schedule B-1, plus
(b) EBITDA of the Ashland Business for such period as adjusted for
each of the "EBIT Adjustment"
17
items set forth in lines 11-56 of Schedule B-2 and each of the
"Depreciation Adjustment" items set forth in lines 111-120 of Schedule B-2,
in each case calculated for such period in the same manner that such
adjustments were calculated in Schedule B-2;
all determined on a consolidated basis with respect to Marathon and its
subsidiaries or Ashland and its subsidiaries, as applicable, in accordance with
then Current GAAP.
"Initial GAAP" has the meaning set forth in Section 1.02.
------------
"Initial Term" has the meaning set forth in Section 2.03.
------------
"Maralube Express Business" has the meaning set forth in Section
-------------------------
14.03(d)(i) of the Put/Call, Registration Rights and Standstill Agreement.
"Marathon Crude Oil Purchase Program" has the meaning set forth in
-----------------------------------
Section 8.12.
"Marathon Designated Sublease Agreements" shall mean the Marathon
---------------------------------------
Sublease Agreements attached as Exhibits E-1, E-2 and E-3 to the Asset Transfer
and Contribution Agreement.
"Marathon-Funded Capital Expenditures" has the meaning set forth in
------------------------------------
Section 4.02(a).
"Material Adverse Effect" has the meaning set forth in the Asset
-----------------------
Transfer and Contribution Agreement.
"Member-Funded Capital Expenditures" has the meaning set forth in
----------------------------------
Section 4.02(a).
"Member-Indemnified Expenditures" has the meaning set forth in Section
-------------------------------
4.02(b).
"Monetary Dispute" has the meaning set forth in Section 14.01(a).
----------------
18
"Non-Contracting Member" has the meaning set forth in Section 8.11(b).
----------------------
"Non-Delinquent Member" has the meaning set forth in Section 14.01.
---------------------
"Non-Terminating Member" has the meaning set forth in the Put/Call,
----------------------
Registration Rights and Standstill Agreement.
"Normal Annual Capital Budget Amount" means, for each Fiscal Year, an
-----------------------------------
amount equal to the sum of:
(i) an amount equal to 130% of the Average Annual DD&A for such
Fiscal Year, plus
(ii) if, with respect to any Fiscal Year, (a) the Average Adjusted
EBITDA for such Fiscal Year less the amount calculated pursuant to clause
(i) above for such Fiscal Year exceeds (b) $240 million (such excess, the
"Excess EBITDA" for such Fiscal Year), the sum of (1) the lesser of: (x)
--------------
10% of the Average Annual DD&A for such Fiscal Year and (y) the Excess
EBITDA for such Fiscal Year and (2) 50% of the amount by which the Excess
EBITDA for such Fiscal Year exceeds an amount equal to 10% of the Average
Annual DD&A for such Fiscal Year.
An example of the calculation of Adjusted DD&A, Adjusted EBITDA, Average Annual
DD&A, Average Adjusted EBITDA and the Normal Annual Capital Budget Amount is
shown in Schedule A. In the event of any inconsistency between such Schedule A
and the language of this definition of Normal Annual Capital Budget Amount,
neither shall control over the other.
"Offer Notice" has the meaning set forth in Section 10.04(a).
------------
"Ordinary Course Debt" means, without duplication, the aggregate
--------------------
outstanding principal amount of all loans and advances under any committed or
uncommitted credit facilities (including any commercial paper borrowings or
borrowings under the Revolving Credit Agreement, but excluding trade payables),
provided that Ordinary Course
--------
19
Debt shall not include any Permitted Intercompany Debt, any Special Project
Indebtedness or any Permitted Catlettsburg Capital Project Indebtedness.
"Ordinary Course Lease Expense" means, with respect to any Fiscal
-----------------------------
Year, the rental or lease expense for such Fiscal Year of assets rented or
financed by operating leases (as determined in accordance with Applicable GAAP).
"Original Lease" means the lease or charter underlying a Marathon
--------------
Designated Sublease Agreement or an Ashland Designated Sublease Agreement in
which Marathon or Ashland, as applicable, is the lessee or charterer.
"Other Critical Decision" means each of the Level III decisions set
-----------------------
forth in paragraphs 2(c)(iii), (v), (vii), (viii) and (ix) of the Retail
Integration Protocol.
"Packaged Motor Oil Business" has the meaning set forth in Section
---------------------------
14.03(h) of the Put/Call, Registration Rights and Standstill Agreement.
"Percentage Interest" has the meaning set forth in Section 3.01.
-------------------
"Permitted Catlettsburg Capital Project Indebtedness" has the meaning
---------------------------------------------------
set forth in the Company Leverage Policy.
"Permitted Catlettsburg Capital Projects" has the meaning set forth in
---------------------------------------
the Company Leverage Policy.
"Permitted Intercompany Debt" has the meaning set forth in the Company
---------------------------
Leverage Policy.
"Price Index" means the Consumer Price Index for All Urban Consumers
-----------
of the United States Department of Labor Bureau of Labor Statistics for all
Urban Areas (on the 1982-84 equals 100 standard).
"Primary Critical Decision" means each of the Level III decisions set
-------------------------
forth in paragraphs 2(c)(i), (ii), (iv) and (vi) of the Retail Integration
Protocol.
20
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by Citibank, NA, as its prime rate in effect at its principal
office in New York; each change in the Prime Rate shall be effective on the date
such change is publicly announced as being effective.
"Private Label Packaged Motor Oil Business" has the meaning set forth
-----------------------------------------
in Section 14.03(h) of the Put/Call Registration Rights and Standstill
Agreement.
"Profit and Loss", as appropriate, means, for any period, the taxable
---------------
income or tax loss of the Company and its subsidiaries under Code Section 703(a)
and Treasury Regulation Section 1.703-1 for the Fiscal Year, adjusted as
follows:
(a) All items of income, gain, loss or deduction required to be
separately stated pursuant to Code Section 703(a)(1) shall be included;
(b) Tax exempt income as described in Code Section 705(a)(1)(B)
realized by the Company during such Fiscal Year shall be taken into account
as if it were taxable income;
(c) Expenditures of the Company described in Code Section
705(a)(2)(B) for such Fiscal Year, including items treated under Treasury
Regulation Section 1.704-1(b)(2)(iv)(i) as items described in Code Section
705(a)(2)(B), shall be taken into account as if they were deductible items;
(d) With respect to any property (other than money) which has been
contributed to the capital of the Company, "Profit" and "Loss" shall be
computed in accordance with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(g) by computing depreciation, amortization, income, gain,
loss or deduction based upon the fair market value of such property at the
date of contribution;
(e) With respect to any property of the Company which has been
revalued as required or permitted by Treasury Regulations under Code
Section 704(b),
21
"Profit" or "Loss" shall be determined based upon the fair market value of
such property as determined in such revaluation; and
(f) With respect to any property of the Company which (i) is
distributed in kind to a Member, or (ii) has been revalued under Section
6.03 upon the occurrence of any event specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), the difference between the adjusted basis for
federal income tax purposes and the fair market value shall be treated as
gain or loss upon the disposition of such property.
"Qualified Candidate" has the meaning set forth in Section 9.02(c).
-------------------
"Quick Lube Business" has the meaning set forth in Section 14.03(h) of
-------------------
the Put/Call, Registration Rights and Standstill Agreement.
"Refundable Amount" has the meaning set forth in Section 14.03(d).
-----------------
"Representatives" has the meaning set forth in Section 8.01
---------------
"Response" has the meaning set forth in Section 13.02.
--------
"Retail Integration Protocol" means the Speedway SuperAmerica LLC
---------------------------
Retail Integration Protocol attached hereto as Exhibit A.
"Revolving Credit Agreement" has the meaning set forth in Section
--------------------------
2.2(a) of the Master Formation Agreement.
"Section 8.11(b) Affiliate Transaction" has the meaning set forth in
-------------------------------------
Section 8.11(b).
"Security Interest" has the meaning set forth in Section 14.05(a).
-----------------
"Selling Member" has the meaning set forth in Section 10.04(a).
--------------
22
"Senior Manager" has the meaning set forth in Section 13.02.
--------------
"Shared Service" means an administrative service that is provided to
--------------
the Company or its subsidiaries by Marathon, Ashland or any of their respective
Affiliates pursuant to the Shared Services Agreement or provided to Marathon,
Ashland or any of their respective Affiliates by the Company or its subsidiaries
pursuant to the Shared Services Agreement.
"Shared Services Agreement" means the Shared Services Agreement by and
-------------------------
among Marathon, Ashland and the Company, including the Schedules thereto,
attached as Exhibit U to the Asset Transfer and Contribution Agreement.
"Short-Term Investments" means, without duplication, collected or
----------------------
available bank cash balances, the fair market value of any investment made by
the Company or any of its subsidiaries pursuant to the Company's Investment
Guidelines and the fair market value of any investment made by the Company or
any of its subsidiaries that should have been made pursuant to the Company's
Investment Guidelines, but excluding Incidental Cash and any cash balances that
represent uncollected funds.
"Significant Shared Service" means (a) any Shared Service related to
--------------------------
the Treasury and Cash Management function and (b) any Shared Service (or group
of related Shared Services) that results or is reasonably anticipated to result
in the payment by or to the Company or any of its subsidiaries of more than $2
million in any contract year in the period during which such Shared Service will
be provided. For purposes of determining whether the $2 million threshold of
this definition has been satisfied, payments for all Shared Services in each of
the following general administrative areas shall be aggregated within each area
specified below and considered related Shared Services: Human Resources; Health,
Environment and Safety; Law; Public Affairs; Governmental Affairs; Finance and
Accounting (including Internal Audit); Administrative Services; Information
Technology Services; Procurement; Business Development; Aviation; Engineering
and Technology; Economics; and Security.
23
"Sole Arbitrator" has the meaning set forth in Appendix B.
---------------
"Special Project" has the meaning set forth in the Company Leverage
---------------
Policy.
"Special Project Indebtedness" has the meaning set forth in the
----------------------------
Company Leverage Policy.
"Special Termination Right" has the meaning set forth in Section
-------------------------
2.01(a) of the Put/Call, Registration Rights and Standstill Agreement.
"Subleased Property" has the meaning set forth in Section 4.01(c).
------------------
"Super Majority Decision" has the meaning set forth in Section 8.08.
-----------------------
"Surplus Cash" has the meaning assigned to such term in the Company
------------
Leverage Policy.
"Tax Distribution Amount" has the meaning set forth in Section
-----------------------
5.01(a).
"Tax Liability" means, with respect to a Fiscal Year, a Member's
-------------
liability for Federal, state, local and foreign taxes attributable to taxable
income allocated to such Member pursuant to Section 6.03 and Section 10.03,
taking into account any Tax deduction or loss specifically allocated to a Member
pursuant to this Agreement or any other Transaction Document.
"Term of the Company" has the meaning set forth in Section 2.03.
-------------------
"Terminating Member" has the meaning set forth in Section 2.01(a) of
------------------
the Put/Call, Registration Rights and Standstill Agreement.
"Unaudited Financial Statements" has the meaning set forth in Section
------------------------------
7.02(a).
24
"Valvoline Business" has the meaning set forth in Section 14.03(h) of
------------------
the Put/Call, Registration Rights and Standstill Agreement.
SECTION 1.02. Applicable GAAP. In connection with the calculation
----------------
pursuant to this Agreement of Adjusted DD&A, Capital Expenditures or Ordinary
Course Lease Expenses, the determination of whether a lease is a Capital Lease
or the determination of whether the Company has entered into an operating lease
for purposes of Section 8.16 (each such calculation or determination, an
"Accounting Determination"), the Company shall apply then Current GAAP;
-------------------------
provided, however, that if at any time after the date of this Agreement, a
-------- -------
change shall occur in GAAP which would result in any Accounting Determination
being different under Current GAAP than such Accounting Determination would have
been under GAAP as in effect on the date of this Agreement ("Initial GAAP"),
------------
then (a) the Members shall negotiate in good faith to make such amendments to
the relevant provisions of this Agreement as shall be required to preserve the
economic and other results intended by the Members as of the date of this
Agreement with respect to such Accounting Determination and (b) unless and until
such time as the Members shall in good faith mutually agree to such amendments,
Initial GAAP shall be applied to make such Accounting Determination or, if the
Members shall have previously amended the relevant provisions of this Agreement
pursuant to this Section 1.02 in response to a prior change in GAAP, then GAAP
as in effect at the time the most recent such previous amendment was made shall
be used to make such Accounting Determination (the GAAP that is actually applied
by the Company in making any such Accounting Determination pursuant to this
Agreement being the "Applicable GAAP").
---------------
ARTICLE II
General Provisions
------------------
SECTION 2.01. Formation; Effectiveness. The Company has been formed
-------------------------
as a limited liability company pursuant to the provisions of the Delaware Act by
the filing of the Certificate of Formation with the Secretary of State of the
State of Delaware. Pursuant to Section 18-201(d) of
25
the Delaware Act, the provisions of this Agreement shall be effective as of the
Closing Date. Each Member hereby adopts, confirms and ratifies the Certificate
of Formation and all acts taken in connection therewith. Ashland shall be
admitted as a member of the Company upon its execution and delivery of this
Agreement. Except as provided in this Agreement, the rights, duties,
liabilities and powers of the Members shall be as provided in the Delaware Act.
SECTION 2.02. Name. The name of the Company shall be Marathon
-----
Ashland Petroleum LLC. The Board of Managers may adopt such trade or fictitious
names as it may determine.
SECTION 2.03. Term. Subject to the provisions of Article XIV
-----
providing for early termination in certain circumstances and the provisions of
Article IX of the Put/Call, Registration Rights and Standstill Agreement, the
initial term of the Company (the "Initial Term") began on the date the
------------
Certificate of Formation was filed with the Secretary of State of the State of
Delaware, and shall continue until the close of business on December 31, 2022
and, thereafter, the term of the Company shall be automatically extended for
successive 10-year periods unless at least two years prior to the end of the
Initial Term or any succeeding 10-year period, as applicable, a Member notifies
the Board of Managers and the other Member in writing that it wants to terminate
the term of the Company at the end of the Initial Term or such 10-year period,
in which event, the term of the Company shall not thereafter be extended for a
successive ten-year term. The President of the Company shall notify each Member
in writing at least six months prior to each such two-year notification date
that the Term of the Company will be automatically extended unless a Member
provides a notice to the contrary pursuant to this Section 2.03. The failure of
the President of the Company to give such notice, or any defect in any notice so
given, shall not affect the Members' rights to terminate the Term of the Company
pursuant to this Section 2.03, and shall not result in a termination of the Term
of the Company unless a Member provides a notice to the contrary pursuant to
this Section 2.03. The Initial Term, together with any such extensions, is
hereinafter referred to as the "Term of the Company". The existence of the
-------------------
Company as a separate
26
legal entity shall continue until the cancelation of the Certificate of
Formation in the manner provided in the Delaware Act.
SECTION 2.04. Registered Agent and Office. The name of the
----------------------------
registered agent of the Company for service of process on the Company in the
State of Delaware is The Corporation Trust Company, and the address of the
registered agent and the address of the office of the Company in the State of
Delaware is c/o The Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Board of Managers may change such office and such agent
from time to time in its sole discretion.
SECTION 2.05. Purpose. (a) The purpose of the Company is to engage
--------
in any lawful act or activity for which a limited liability company may be
formed under the Delaware Act (either directly or indirectly through one or more
subsidiaries). It is the Members' understanding and intent that (i) the Company
will be an independent, self-funding entity, (ii) no additional capital
contributions are expected to be required by the Members and (iii) the
administrative requirements of the Company will generally be provided by the
Company's own employees. In furtherance of this understanding and intent, and
without limiting the generality of the foregoing, unless the Members shall
mutually agree otherwise, the following administrative functions and services
shall be provided substantially by the Company and its subsidiaries' employees
(or by its unaffiliated third party contractors) under the supervision and
control of the Company's officers: Human Resources; Health, Environment and
Safety; Law; Finance and Accounting; Internal Audit; Treasury and Cash
Management; and Information Technology. For the avoidance of doubt, the Members
acknowledge and agree that the provision at any time of the specific Shared
Services identified and described in Schedule 10.2(e) to the Marathon Asset
Transfer and Contribution Agreement Disclosure Letter and Schedule 10.2(e) to
the Ashland Asset Transfer and Contribution Agreement Disclosure Letter to the
Company and its subsidiaries by the Members shall not be deemed to violate the
requirements of the immediately preceding sentence.
27
(b) The Company, and the President on behalf of the Company, may
enter into and perform the Transaction Documents and the Commercial Documents to
which the Company is a party without any further act, vote or approval of the
Board of Managers or the Members notwithstanding any other provision of this
Agreement, the Delaware Act or other Applicable Law. The President of the
Company is hereby authorized to enter into such Transaction Documents and such
Commercial Documents on behalf of the Company, but such authorization shall not
be deemed a restriction on the power of the Board of Managers to enter into
other agreements on behalf of the Company.
SECTION 2.06. Powers. In furtherance of its purposes, but subject to
-------
all the provisions of this Agreement, the Company shall have the power and is
hereby authorized to:
(a) acquire by purchase, lease, contribution of property or
otherwise, own, operate, hold, sell, convey, transfer or dispose of any
real or personal property which may be necessary, convenient or incidental
to the accomplishment of the purpose of the Company;
(b) act as a trustee, executor, nominee, bailee, director, officer,
agent or in some other fiduciary capacity for any person or entity and to
exercise all the powers, duties, rights and responsibilities associated
therewith;
(c) take any and all actions necessary, convenient or appropriate as
trustee, executor, nominee, bailee, director, officer, agent or other
fiduciary, including the granting or approval of waivers, consents or
amendments of rights or powers relating thereto and the execution of
appropriate documents to evidence such waivers, consents or amendments;
(d) borrow money and issue evidences of indebtedness in furtherance
of any or all of the purposes of the Company, and secure the same by
28
mortgage, pledge or other lien on the assets of the Company;
(e) invest any funds of the Company pending distribution or payment
of the same pursuant to the provisions of this Agreement;
(f) prepay in whole or in part, refinance, recast, increase, modify
or extend any Indebtedness of the Company and, in connection therewith,
execute any extensions, renewals or modifications of any mortgage or
security agreement securing such Indebtedness;
(g) enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any person or entity
affiliated with any of the Members, necessary to, in connection with,
convenient to, or incidental to the accomplishment of the purposes of the
Company;
(h) employ or otherwise engage employees, managers, contractors,
advisors, attorneys and consultants and pay reasonable compensation for
such services;
(i) enter into partnerships, limited liability companies, trusts,
associations, corporations or other ventures with other persons or entities
in furtherance of the purposes of the Company; and
(j) do such other things and engage in such other activities related
to the foregoing as may be necessary, convenient or incidental to the
conduct of the business of the Company, and have and exercise all of the
powers and rights conferred upon limited liability companies formed
pursuant to the Delaware Act.
ARTICLE III
Members
-------
SECTION 3.01. Members; Percentage Interests. The names and addresses
------------------------------
of the Members and their respective
29
percentage interests in the Company ("Percentage Interests") are as follows:
--------------------
Percentage
Members Interests
------- -----------
Marathon Oil Company 62%
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ashland Inc. 38%
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Marathon's Percentage Interest shall be deemed to include the Fuelgas Interest.
Promptly after the Closing, Marathon will cause Fuelgas to merge with and into
Marathon.
SECTION 3.02. Adjustments in Percentage Interests. Marathon's and
------------------------------------
Ashland's Percentage Interests, and the Percentage Interests of each other
Member, if any, shall be adjusted (a) at the time of any Transfer of such
Member's Membership Interests pursuant to Section 10.02 and (b) at the time of
the admission of each new Member pursuant to such terms and conditions as the
Board of Managers from time to time shall determine pursuant to a vote in
accordance with Section 8.07(b), in each case to take into account such Transfer
or admission of a new Member.
ARTICLE IV
Capital Contributions;
----------------------
Assumption of Assumed Liabilities
---------------------------------
SECTION 4.01. Contributions. (a) On or before the Closing Date,
--------------
Marathon shall contribute, convey, transfer, assign and deliver to the Company
or shall have contributed, conveyed, transferred, assigned and delivered to the
Company, the Marathon Transferred Assets, and Ashland shall contribute, convey,
transfer, assign and deliver to the Company or shall have contributed, conveyed,
transferred, assigned and delivered to the Company, the
30
Ashland Transferred Assets, in each case pursuant to terms and conditions of the
Asset Transfer and Contribution Agreement. In addition, any additional assets
that Marathon or Ashland are required to contribute, convey, transfer, assign
and deliver to the Company at a later date pursuant to the terms and conditions
of the Asset Transfer and Contribution Agreement shall be so contributed at such
later date.
(b) The Company shall assume, as of the Closing Date, the Assumed
Liabilities pursuant to the terms of the Asset Transfer and Contribution
Agreement.
(c) Payments or Damages under Designated Sublease Agreements as
-----------------------------------------------------------
Contributions. (i) Each Member has agreed, pursuant to the Designated Sublease
--------------
Agreements to which it is a party, to sublease to the Company or one of its
subsidiaries the assets or property listed on Schedule 4.01(c) ("Subleased
---------
Property") for a nominal consideration in lieu of transferring such property to
--------
the Company or such subsidiary, free of any Liens, other than Permitted
Encumbrances, as a capital contribution.
(A) If at any time after the date of this Agreement a Member in its
capacity as a sublessor shall become the owner of any Subleased Property,
such Member shall promptly contribute, convey, transfer, assign and deliver
to the Company (or, if the Company so directs, to one of its subsidiaries)
at no cost to the Company or such subsidiary, and the Company hereby agrees
to accept, or to cause such subsidiary to accept, such Subleased Property
and the related Designated Sublease Agreement shall be terminated with
respect to such Subleased Property, all as more specifically set forth in
such Designated Sublease Agreement. In addition, if at any time after the
date of this Agreement a Member assigns to the Company (or a subsidiary of
the Company) a purchase option with respect to a Subleased Property
pursuant to a Designated Sublease Agreement and the Company or such
subsidiary exercises such purchase option and pays all or a portion of the
purchase price therefor, such Member shall promptly reimburse the Company
or such subsidiary such amount so paid and, if not so reimbursed, such
amount shall be subject to
31
set-off pursuant to Section 14.04. Any such payment by the Company shall
be treated as a distribution to the appropriate Member for capital account
purposes, and any such amount paid to the Company or such subsidiary by a
Member in connection with such reimbursement obligation, or to the extent
of a set-off applied pursuant to Section 14.04 as a result of such failure
to so reimburse, shall be treated as a capital contribution to the Company.
(B) Any amount paid by the Company or any of its subsidiaries under a
Designated Sublease Agreement to cure or prevent a payment default by the
sublessor Member under the underlying Original Lease shall be reimbursed to
the Company or such subsidiary by such Member, and if not so reimbursed,
shall be subject to set-off pursuant to Section 14.04. Any such payment by
the Company shall be treated as a distribution to the appropriate Member
for capital account purposes, and any such amount paid to the Company or
such subsidiary by a Member in connection with a default of its payment
obligations under its respective Designated Sublease Agreements, or to the
extent of a set-off applied pursuant to Section 14.04 as a result of such
default, shall be treated as a capital contribution to the Company.
(C) None of the capital contributions pursuant to (A) and (B) above
shall result in any adjustment to the Members' respective Percentage
Interests in the Company.
(ii) If (A) a Member commences a voluntary case under any applicable
bankruptcy, insolvency, liquidation, receivership, reorganization or other
similar law now in effect, or an order for relief is entered against such Member
in an involuntary case under any such law and (B) a trustee of such Member
rejects a Designated Sublease Agreement of such Member, then (1) the Member
shall be obligated to reimburse the Company for the Loss to the Company as a
result of such rejected Designated Sublease Agreement, which Loss, if not so
reimbursed, shall be subject to set-off pursuant to Section 14.04 prior to the
interest of such Member in any distributions hereunder and
32
(2) the amount of such Loss shall be deemed to be the loss of use of such
Subleased Property for the economic life thereof rather than any other period.
SECTION 4.02. Additional Contributions. (a) Member-Funded Capital
------------------------- ---------------------
Expenditures. For each Capital Expenditure project identified on Schedule
-------------
4.02(a)-1, Marathon shall contribute to the Company the amount of funds
necessary to comply with its obligations under Section 7.1(j) of the Asset
Transfer and Contribution Agreement with respect to such Capital Expenditure
project as, when and if the Company actually incurs Capital Expenditures related
to such Capital Expenditure project (such Capital Expenditures, as, when and if
they are funded by Marathon, are referred to herein as the "Marathon-Funded
---------------
Capital Expenditures"). For each Capital Expenditure project identified on
--------------------
Schedule 4.02(a)-2, Ashland shall contribute to the Company the amount of funds
necessary to comply with its obligations under Section 7.2(k) of the Asset
Transfer and Contribution Agreement with respect to such Capital Expenditure
project as, when and if the Company actually incurs Capital Expenditures related
to such Capital Expenditure project (such Capital Expenditures, as, when and if
they are funded by Ashland, are referred to herein as the "Ashland-Funded
--------------
Capital Expenditures", and together with the Marathon-Funded Capital
--------------------
Expenditures, the "Member-Funded Capital Expenditures"). Each Member-Funded
----------------------------------
Capital Expenditure shall be treated as a capital contribution to the Company,
but shall not result in any adjustment to the Members' respective Percentage
Interests in the Company. To the extent permitted by applicable Tax law, any
Tax deduction by the Company of a Member-Funded Capital Expenditure shall be
specially allocated so that each Member will have the Tax benefit of its Member-
Funded Capital Expenditures.
(b) Indemnification Payments as Contributions. Any indemnity amount
------------------------------------------
paid by Marathon or Ashland to the Company under Article IX of the Asset
Transfer and Contribution Agreement (each a "Member-Indemnified Expenditure")
------------------------------
shall be treated as a capital contribution to the Company, but shall not result
in any adjustment to the Members' respective Percentage Interests in the
Company. A determination of whether the associated Loss will be deducted or
capitalized by the Company for Tax purposes
33
shall be made by the Company at the direction of the Indemnifying Party. Any
Tax deduction or loss claimed by the Company with respect to the indemnified
amount shall be specially allocated to the Indemnifying Party.
(c) Other Additional Capital Contributions. The Members shall make
---------------------------------------
other additional capital contributions ("Agreed Additional Capital
-------------------------
Contributions") pro rata based on their respective Percentage Interests if and
--- ----
to the extent such capital contributions are approved by the Board of Managers
pursuant to a vote in accordance with Section 8.07(b).
(d) No Third-Party Beneficiaries. The provisions of this Agreement,
-----------------------------
including without limitation, this Section 4.02, are intended solely to benefit
the Members and, to the fullest extent permitted by Applicable Law, shall not be
construed as conferring any benefit upon any creditor of the Company other than
the Members, and no such creditor of the Company other than the Members shall be
a third-party beneficiary of this Agreement, and no Member or member of the
Board of Managers shall have any duty or obligation to any creditor of the
Company to issue any call for capital pursuant to this Agreement.
SECTION 4.03. Negative Balances; Withdrawal of Capital; Interest.
---------------------------------------------------
Neither of the Members shall have any obligation to the Company or to the other
Member to restore any negative balance in its Capital Account. Neither Member
may withdraw capital or receive any distributions from the Company except as
specifically provided herein. No interest shall be paid by the Company on any
capital contributions.
ARTICLE V
Distributions
-------------
SECTION 5.01. Distributions. (a) Within 45 days after the end of
--------------
each Fiscal Quarter, the Company shall
34
distribute to the Members (the date of such distribution being a "Distribution
------------
Date") an amount in cash (the "Tax Distribution Amount") determined as follows:
---- -----------------------
(i) The maximum Tax Liability of each Member with respect to its
allocable portion (as provided in Section 6.03) of the Company's estimated
taxable income for such Fiscal Quarter shall be determined, based upon the
highest aggregate marginal statutory Federal, state and local income tax
rate (determined taking into account the deductibility, to the extent
allowed, of income-based taxes paid to governmental entities) to which any
Member may be subject for the related Fiscal Year (and excluding any
deferred taxes) (the "Aggregate Tax Rate").
------------------
(ii) If the Tax Liability determined in clause (i) is positive with
respect to either Member, there shall be a cash distribution to each of the
Members, in accordance with their Percentage Interests, of an aggregate
amount such that neither Member shall receive less than its Tax Liability.
(iii) In the event that the Tax Liability with respect to a Fiscal
Quarter, determined pursuant to clause (i) above, is negative with respect
to each Member, such negative Tax Liability shall not give rise to a
payment obligation on the part of either Member, but shall be carried
forward and shall offset the positive Tax Liability of the Members in
succeeding Fiscal Quarters.
(iv) Following a determination by the Company of the Company's actual
net taxable income with respect to a Fiscal Year, the maximum Tax Liability
of each Member with respect to its allocable portion (as provided in
Section 6.03) of the Company's net taxable income for such Fiscal Year
shall be determined, based upon the Aggregate Tax Rate. If the maximum Tax
Liability of any Member for the Fiscal Year is in excess of the cash
distributions previously made to the Member for such Fiscal Year under
clause (ii) above and subsection (b) below, the Company shall make a cash
distribution to all the Members, in accordance with their Percentage
35
Interests, of an aggregate amount such that the excess is eliminated for
all the Members. Such distribution shall be made within 45 days of the
date the Company's actual net taxable income is determined.
(v) In the event that the Company Independent Auditors determine
pursuant to Section 7.02(d) that the Company's actual net taxable income
with respect to a Fiscal Year is greater than the amount determined by the
Company pursuant to clause (iv) above, the Company shall make a
determination of the amount of cash, if any, required to be distributed to
the Members, in accordance with their Percentage Interests, such that,
after taking into account cash distributions previously made to a Member
under clause (ii) above and subsection (b) below, no Member shall receive
less than its Tax Liability for such Fiscal Year based on such higher net
taxable income amount. The Company shall, within 15 days after the
determination is made, distribute such additional amount of cash to the
Members, in accordance with their Percentage Interests.
(vi) In the event that the Company Independent Auditors determine
pursuant to Section 7.02(d) that the Company's actual net taxable income
with respect to a Fiscal Year is less than the amount determined by the
Company pursuant to clause (iv) above, a determination shall be made of the
excess Tax Distribution Amount that was distributed to the Members in
respect of such Fiscal Year based on the Company's determination of its
actual net taxable income and the Company shall deduct from the next Tax
Distribution Amount payable to the Members pursuant to this Section 5.01,
the amount of such excess distribution.
(b) In addition to the distributions pursuant to Section 5.01(a), on
each Distribution Date, the Company shall distribute to the Members all
Distributable Cash for the Fiscal Quarter to which such Distribution Date
relates. Subject to Section 5.02(b), each such distribution shall be allocated
between the Members pro rata based upon their respective Percentage Interests.
--- ----
36
(c) The Company shall prepare and distribute to each Member within 45
days after the end of each Fiscal Quarter a statement (a "Distributions
-------------
Calculation Statement") setting forth the calculations (in reasonable detail)
---------------------
used by the Company for purposes of distributions pursuant to this Section 5.01
of (i) the Tax Distribution Amount for each Member for such Fiscal Quarter, (ii)
the amount of Distributable Cash for such Fiscal Quarter and (iii) the
allocation of such Distributable Cash between the Members.
SECTION 5.02. Certain General Limitations. (a) Notwithstanding any
----------------------------
provision to the contrary contained in this Agreement, the Company, and the
Board of Managers on behalf of the Company, shall not be required to make a
distribution to either Member with respect to such Member's Membership Interests
if such distribution would violate Section 18-607 of the Delaware Act or other
applicable law.
(b) Notwithstanding any other provision of this Article V, all
amounts distributed to the Members in connection with a dissolution of the
Company or the sale or other disposition of all or substantially all the assets
of the Company that results in a dissolution of the Company shall be distributed
to the Members in accordance with their respective Capital Account balances, as
adjusted pursuant to Article VI for all Company operations up to and including
the date of such distribution.
SECTION 5.03. Distributions in Kind. The Company shall not
----------------------
distribute to the Members any assets in kind unless approved by the Board of
Managers pursuant to a vote in accordance with Section 8.07(b). If cash and
property in kind are to be distributed simultaneously, the Company shall
distribute such cash and property in kind in the same proportion to each Member,
unless otherwise approved by the Board of Managers pursuant to a vote in
accordance with Section 8.07(b). For purposes of determining amounts
distributable to Members under Section 5.01, for purposes of determining Profit
and Loss under Section 1.01, for purposes of making adjustments to Capital
Accounts under Article VI and for purposes of allocations under Article VI, any
property to be distributed in kind shall have the value assigned to such
property by the Board of Managers pursuant
37
to a vote in accordance with Section 8.07(b) and such value shall be deemed to
be part of and included in Distributable Cash for purposes of determining
distributions to the Members under this Agreement.
SECTION 5.04. Distributions in the Event of an Exercise of the
------------------------------------------------
Marathon Call Right, Ashland Put Right or the Special Termination Rights. In
-------------------------------------------------------------------------
the event of an exercise by Marathon of its Marathon Call Right or its Special
Termination Right or the exercise by Ashland of its Ashland Put Right or its
Special Termination Right pursuant to the Put/Call, Registration Rights and
Standstill Agreement, certain distributions to Ashland or Marathon, as
applicable, will be suspended in accordance with the provisions of Section 5.01
thereof.
ARTICLE VI
Allocations and Other Tax Matters
---------------------------------
SECTION 6.01. Maintenance of Capital Accounts.
--------------------------------
An account (a "Capital Account") shall be established and maintained in the
---------------
Company's books for each Member in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv) and to which the following provisions apply to the extent not
inconsistent with such Regulation:
(a) There shall be credited to each Member's Capital Account (i) the
amount of money contributed by such Member to the Company (including
liabilities of the Company assumed by such Member as provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(c)), (ii) the fair market value of any
property contributed by the Member to the Company (net of liabilities
secured by such contributed property that the Company is considered to
assume or take subject to under Code Section 752), and (iii) such Member's
share of the Company's Profit;
(b) There shall be debited from each Member's Capital Account (i) the
amount of money distributed to such Member by the Company (including
liabilities of
38
such Member assumed by the Company as provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(c)) other than amounts which are in repayment of
debt obligations of the Company to such Member, (ii) the fair market value
of property distributed to such Member (net of liabilities secured by such
property that such Member is considered to assume or take subject to under
Code Section 752), and (iii) such Member's share of the Company's Loss;
(c) To each Member's Capital Account there shall be credited, in the
case of an increase, or debited, in the case of a decrease, such Member's
share of any adjustment to the adjusted basis of Company assets pursuant to
Code Section 734(b) or Code Section 743(b) to the extent provided by
Treasury Regulation Section 1.704-(b)(2)(iv)(m); and
(d) Upon the transfer of all or any part of the Membership Interests
of a Member, the Capital Account of the transferee Member shall include the
portion of the Capital Account of the transferor Member attributable to
such transferred Membership Interest (or portion thereof).
SECTION 6.02. Allocation of Profit and Loss. (a) Except as provided
------------------------------
in Section 6.02(b), Profit or Loss for any Fiscal Year shall be allocated
between the Members in proportion to their respective Percentage Interests.
(b) To the extent any Tax deduction or loss is specifically allocated
to a Member pursuant to this Agreement (other than pursuant to Section 6.03) or
any other Transaction Document, including any deduction or loss indemnified by a
Member, any Member-Funded Capital Expenditure, any Member-Indemnified
Expenditure and any special allocations pursuant to Sections 6.12, 6.13 and
6.14, the associated Profit and Loss shall be allocated to the same Member.
SECTION 6.03. Tax Allocations. For income tax purposes only, each
----------------
item of income, gain, loss, deduction and credit of the Company shall be
allocated between the Members in accordance with their respective shares of
Profit
39
and Loss, subject to the rules of Section 704(c)(1)(A) of the Code and the
Treasury Regulations promulgated thereunder. The allocation of income, gain,
loss and deduction with respect to property contributed by a Member to the
Company shall be pursuant to the method set forth in Treasury Regulation Section
1.704-3(c) (traditional method with curative allocations), with book
depreciation (as that term is used in Treasury Regulation Section 1.704-
1(b)(2)(iv)(g)(3)) for assets fully depreciated for federal income tax purposes
based on the applicable recovery period (as determined in Code Section 168(c))
for new assets of the same type. Any other elections or other decisions
relating to allocations under this Section 6.03, including the determination of
the fair market value of contributed property and the decision to adjust the
Capital Accounts to reflect the fair market value of the Company's assets upon
the occurrence of any event specified in Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), shall be made jointly by the Members in any manner that
reasonably reflects the purpose and intention of this Agreement. Items
described in this Section 6.03 shall neither be credited nor charged to the
Members' Capital Accounts.
SECTION 6.04. Entity Classification. The Members intend that the
----------------------
Company be treated as a partnership for Federal income tax purposes.
Accordingly, neither the Tax Matters Partner nor either Member shall file any
election or return on its own behalf or on behalf of the Company that is
inconsistent with that intent.
SECTION 6.05. Fiscal Year. The fiscal year (the "Fiscal Year") of
------------ -----------
the Company for tax and accounting purposes shall be the 12-month (or shorter)
period ending on the last day of December of each year.
SECTION 6.06. Tax Returns. (a) The Company shall cause to be
------------
prepared and timely filed all Federal, state, local and foreign income tax
returns and reports required to be filed by the Company and its subsidiaries.
The Company shall provide copies of all the Company's Federal, state, local and
foreign tax returns (and any schedules or other required filings related to such
returns) that reflect items of income, gain, deduction, loss or credit that flow
to separate Member returns, to the Members
40
for their review and comment prior to filing, except as otherwise agreed by the
Members. The Members agree in good faith to resolve any difference in the tax
treatment of any item affecting such returns and schedules. However, if the
Members are unable to resolve the dispute, the position of the Tax Matters
Partner shall be followed if nationally recognized tax counsel acceptable to
both Members provides an opinion that substantial authority exists for such
position. Substantial authority shall be given the meaning ascribed to it in
Code Section 6662. If the Members are unable to resolve the dispute prior to
the due date for filing the return, including approved extensions, the position
of the Tax Matters Partner shall be followed, and amended returns shall be filed
if necessary at such time the dispute is resolved. The costs of the dispute
shall be borne by the Company. The Members agree to file their separate Federal
income tax returns in a manner consistent with the Company's return, the
provisions of this Agreement and in accordance with applicable Federal income
tax law.
(b) The Company shall elect the most rapid method of depreciation and
amortization allowed under Applicable Law, unless the Members agree otherwise.
The failure of either Member to agree that the Company should elect a less rapid
method of depreciation or amortization is not subject to any dispute resolution
provisions.
(c) The Members shall provide each other with copies of all
correspondence or summaries of other communications with the Internal Revenue
Service or any state, local or foreign taxing authority (other than routine
correspondence and communications) regarding the tax treatment of the Company's
operations. No Member shall enter into settlement negotiations with the
Internal Revenue Service or any state, local or foreign taxing authority with
respect to any issue concerning the Company's income, gains, losses, deductions
or credits if the tax adjustment attributable to such issue (assuming the then
current Aggregate Tax Rate) would be $2 million or greater, without first giving
reasonable advance notice of such intended action to the other Member.
SECTION 6.07. Tax Matters Partner. (a) Initially, Marathon shall be
--------------------
the "Tax Matters Partner"
41
of the Company within the meaning of Section 6231(a)(7) of the Code, and shall
act in any similar capacity under state, local or foreign law, but only with
respect to returns for which items of income, gain, loss, deduction or credit
flow to the separate returns of the Members. In the event of a transfer of any
Member's interest in the Company, the Tax Matters Partner shall be the Member
with the largest Percentage Interest following such transfer.
(b) The Tax Matters Partner shall incur no liability (except as a
result of the gross negligence or willful misconduct of the Tax Matters Partner)
to the other Member including, but not limited to, liability for any additional
taxes, interest or penalties owed by the other Member due to adjustments of
Company items of income, gain, loss, deduction or credit at the Company level.
SECTION 6.08. Duties of Tax Matters Partner. (a) Except as provided
------------------------------
in Section 6.08(b), the Tax Matters Partner shall cooperate with the other
Member and shall promptly provide the other Member with copies of notices or
other materials from, and inform the other Member of discussions engaged in
with, the Internal Revenue Service or any state, local or foreign taxing
authority and shall provide the other Member with notice of all scheduled
administrative proceedings, including meetings with agents of the Internal
Revenue Service or any state, local or foreign taxing authority, technical
advice conferences, appellate hearings, and similar conferences and hearings, as
soon as possible after receiving notice of the scheduling of such proceedings,
but in any case prior to the date of such scheduled proceedings.
(b) The duties of the Tax Matters Partner under Section 6.08(a) shall
not apply with respect to notices, materials, discussions, proceedings,
meetings, conferences, or hearings involving any issue concerning the Company's
income, gains, losses, deductions or credits if the tax adjustment attributable
to such issue (assuming the then current Aggregate Tax Rate) would be less than
$2 million except as otherwise required under Applicable Law.
(c) The Tax Matters Partner shall not extend the period of
limitations or assessments without the consent of
42
the other Member, which consent shall not be unreasonably withheld.
(d) The Tax Matters Partner shall not file a petition or complaint in
any court, or file any claim, amended return or request for an administrative
adjustment with respect to partnership items, after any return has been filed,
with respect to any issue concerning the Company's income, gains, losses,
deductions or credits if the tax adjustment attributable to such issue (assuming
the then current Aggregate Tax Rate) would be $2 million or greater, unless
agreed by the other Member. If the other Member does not agree, the position of
the Tax Matters Partner shall be followed if nationally recognized tax counsel
acceptable to both Members issues an opinion that a reasonable basis exists for
such position. Reasonable basis shall be given the meaning ascribed to it for
purposes of applying Code Section 6662. The costs of the dispute shall be borne
by the Company.
(e) The Tax Matters Partner shall not enter into any settlement
agreement with the Internal Revenue Service or any state, local or foreign
taxing authority, either before or after any audit of the applicable return is
completed, with respect to any issue concerning the Company's income, gains,
losses, deductions or credits, unless any of the following apply:
(i) both Members agree to the settlement;
(ii) the tax effect of the issue if resolved adversely would be, and the tax
effect of settling the issue is, proportionately the same for both Members
(assuming each otherwise has substantial taxable income);
(iii) the Tax Matters Partner determines that the settlement of the issue is
fair to both Members and the amount of the tax adjustment attributable to such
issue (assuming the then current Aggregate Tax Rate) would be less than $2
million; or
(iv) nationally recognized tax counsel acceptable to both Members determines
that the settlement is fair to both Members and is one it would recommend to the
Company if both
43
Members were owned by the same person and each had substantial taxable income.
In all events, the costs incurred by the Tax Matters Partner in performing its
duties hereunder shall be borne by the Company in accordance with the Shared
Services Agreement.
(f) The Tax Matters Partner may request extensions to file any tax
return or statement without the written consent of, but shall so inform, the
other Member.
SECTION 6.09. Survival of Provisions. The provisions of this
-----------------------
Agreement regarding the Company's tax returns and Tax Matters Partner shall
survive the termination of the Company and the transfer of any Member's interest
in the Company and shall remain in effect for the period of time necessary to
resolve any and all matters regarding the federal, state, local and foreign
taxation of the Company and items of Company income, gain, loss, deduction and
credit.
SECTION 6.10. Section 754 Election. In the event that a Member
---------------------
purchases the Membership Interests of a Selling Member pursuant to Section
10.04, the purchasing Member shall have the right to direct the Tax Matters
Partner to make an election under Section 754 of the Code. The purchasing Member
shall pay all costs incurred by the Company in connection with such election,
including any costs borne by the Company to maintain records required as a
result of such election. The purchasing Member, at its option and expense, may
maintain on behalf of the Company any records required as a result of such
election.
SECTION 6.11. Qualified Income Offset, Minimum Gain Chargeback.
-------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, there is hereby
incorporated a qualified income offset provision which complies with Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and minimum gain chargeback and partner
minimum gain chargeback provisions which comply with the requirements of
Treasury Regulation Section 1.704-2 and such provisions shall apply to the
allocation of Profits and Losses.
44
SECTION 6.12. Tax Treatment of Designated Sublease Agreements. (a)
------------------------------------------------
For purposes of Article VI, Ashland or Marathon, as the case may be, shall be
treated as transferring to the Company all of its interest in Subleased Property
pursuant to an Ashland Designated Sublease Agreement or a Marathon Designated
Sublease Agreement, as if the leasehold interest in such Subleased Property was
an Ashland Transferred Asset or a Marathon Transferred Asset.
(b) Payments under the Original Lease made by Ashland or Marathon, as
the case may be, after the effective date of the Ashland Designated Sublease
Agreement or Marathon Designated Sublease Agreement, as the case may be, shall
be treated as made by the Company or its subsidiaries, and then immediately
reimbursed by Ashland or Marathon, as the case may be.
(c) All items of loss, deduction and credit attributable to payments
under the Original Lease made by Ashland or Marathon, as the case may be,
including payments by the Company or any of its subsidiaries that are charged to
Ashland or Marathon by set-off or other means, shall be allocated entirely to
the Member incurring such payments.
(d) Depreciation and amortization deductions, if any, as well as any
deductions or offsets to taxable income or gain, attributable to property
described in the Ashland Designated Sublease Agreements or the Marathon
Designated Sublease Agreements, as the case may be, shall be allocated entirely
to Ashland or Marathon, as the case may be, except to the extent such deductions
or offsets are attributable to amounts paid by the Company or any of its
subsidiaries and not reimbursed by Ashland or Marathon, as the case may be,
either directly or indirectly.
SECTION 6.13. Tax Treatment of Reimbursed Liability Payments. Any
-----------------------------------------------
tax deduction or loss attributable to payments by the Company or any of its
subsidiaries of Assumed Liabilities, as described in Schedules 2.3(d) and 3.3(d)
to the Asset Transfer and Contribution Agreement, that are reimbursed by a
Member either directly or indirectly, shall be allocated entirely to such
Member.
45
SECTION 6.14. Tax Treatment of Disproportionate Payments. Except as
-------------------------------------------
otherwise provided in this Agreement or in any other Transaction Document, any
Tax deduction or loss reflected on a Tax return, report or other Tax filing by
the Company, attributable to (i) payments made or costs incurred by a Member,
(ii) payments made or costs incurred by the Company and reimbursed or to be
reimbursed by a Member and (iii) payments made or costs incurred by the Company
and not shared among the Members based on their Percentage Interests, shall be
allocated among the Members to take into account the amounts paid, incurred,
reimbursed or shared by each.
ARTICLE VII
Books and Records
-----------------
SECTION 7.01. Books and Records; Examination. The Board of Managers
-------------------------------
shall keep or cause to be kept such books of account and records with respect to
the Company's business as they may deem appropriate. Each Member and its duly
authorized representatives shall have the right at any time to examine, or to
appoint independent certified public accountants (the fees of which shall be
paid by such Member) to examine, the books, records and accounts of the Company
and its subsidiaries, their operations and all other matters that such Member
may wish to examine, including, without limitation, all documentation relating
to actual or proposed transactions with either Member or any Affiliate of either
Member. The Company, and the Board of Managers, shall not have the right to
keep confidential from the Members any information that the Board of Managers
would otherwise be permitted to keep confidential from the Members pursuant to
Section 18-305(c) of the Delaware Act. The Company's books of account shall be
kept using the method of accounting determined by the Board of Managers. The
Company Independent Auditors (the "Company Independent Auditors") shall be an
----------------------------
independent public accounting firm selected by the Board of Managers pursuant to
a vote in accordance with Section 8.07(b) or Section 8.07(c), as applicable, and
shall initially be Price Waterhouse LLP.
46
SECTION 7.02. Financial Statements and Reports. (a) Unaudited
--------------------------------- ---------
Monthly Financial Statements. (i) The Company shall prepare and send to each
-----------------------------
Member (at the same time) promptly, but in no event later than noon on the 15th
Business Day after the last day of each month, the following unaudited financial
statements with respect to the Company and its subsidiaries: a balance sheet, a
statement of operations, a statement of cash flows and a statement of changes in
capital (collectively, "Unaudited Financial Statements") as at the end of and
------------------------------
for such month.
(ii) The Company shall prepare and send to each Member promptly, but
in no event later than noon on the 20th Business Day after the last day of each
month, an unaudited financial summary booklet containing a breakdown of such
operating and financial information by major department or division of the
Company and its subsidiaries as at the end of and for such month as either
Member shall reasonably request; provided that each Member shall be provided
--------
with the same information at the same time as the other Member.
(b) Unaudited Quarterly Financial Statements. The Company shall
-----------------------------------------
prepare and send to each Member (at the same time) promptly, but in no event
later than the 30th day after the last day of each Fiscal Quarter, (i) Unaudited
Financial Statements as at the end of and for such Fiscal Quarter; (ii) a
management's discussion and analysis of financial condition and results of
operations section prepared in accordance with Rule 303 of Regulation S-K of the
Securities Act with respect to such Fiscal Quarter; and (iii) an unaudited
statement of changes in the Members' capital accounts as at the end of and for
such Fiscal Quarter.
(c) Audited Annual Financial Statements. Within 75 days after the
------------------------------------
end of each Fiscal Year, the Board of Managers shall cause (i) an examination to
be made, at the expense of the Company, by the Company Independent Auditors,
covering (A) the assets, liabilities and capital of the Company and its
subsidiaries, and the Company's and its subsidiaries' operations during such
Fiscal Year, (B) an examination of the Distributions Calculation Statement for
such Fiscal Year, and (C) all other matters customarily included in such
examinations and (ii) to be delivered to
47
each Member (at the same time) a copy of the report of such examination, stating
that such examination has been performed in accordance with generally accepted
auditing standards, together with (1) the following financial statements with
respect to the Company and its subsidiaries certified by such accountants as
having been prepared in accordance with GAAP: a balance sheet, a statement of
operations, a statement of cash flows and a statement of changes in capital as
at the end of and for such Fiscal Year (collectively, the "Audited Financial
-----------------
Statements") and (2) a management's discussion and analysis of financial
----------
condition and results of operations section prepared in accordance with Rule 303
of Regulation S-K of the Securities Act with respect to such Fiscal Year. The
Company shall prepare the Audited Financial Statements in such manner and form
as is necessary to enable Ashland to file such Audited Financial Statements with
the Commission in accordance with Item 3-09 of Regulation S-X under the Exchange
Act.
(d) Schedule of Members' Capital Accounts. (i) Preliminary Annual
-------------------------------------- ------------------
Capital Account Schedule. The Company shall prepare and send to each Member (at
-------------------------
the same time) promptly, but in no event later than the 75th day after the last
day of each Fiscal Year, a schedule showing the respective Capital Accounts of
the Members based on the Company's estimated taxable income for such Fiscal
Year.
(ii) Examination. Within 15 days after the date the Company
------------
determines its net taxable income with respect to any Fiscal Year, but in no
event later than 7 months after the end of such Fiscal Year, the Board of
Managers shall cause (i) an examination to be made, at the expense of the
Company, by the Company Independent Auditors, covering (A) the determination of
the Company's taxable income with respect to such Fiscal Year and (B) the
respective Capital Accounts of the Members based on the Company's taxable income
for such Fiscal Year and (ii) to be delivered to each Member (at the same time)
a copy of the report of such examination, stating that such examination has been
performed in accordance with generally accepting auditing standards.
(iii) Final Annual Capital Account Schedule. The Company shall
--------------------------------------
prepare and send to each Member (at the same
48
time) promptly, but in no event later than the 15th day after the date the
Company files its federal income tax return with respect to each Fiscal Year, a
schedule showing the respective Capital Accounts of the Members based on the
Company's actual taxable income for such Fiscal Year.
(e) Other Financial Information. The Company shall prepare and send
----------------------------
to each Member (at the same time) promptly such other financial information as a
Member shall from time to time reasonably request.
SECTION 7.03. Notice of Affiliate Transactions; Annual List. (a)
----------------------------------------------
(i) The Company shall notify each Member of any Affiliate Transaction (other
than an Affiliate Transaction that is a Significant Shared Service) that the
Company or any of its subsidiaries is considering entering into or renewing or
extending the term thereof (whether pursuant to contractual provisions thereof
or otherwise), which notice shall be given, to the extent reasonably possible,
sufficiently in advance of the time that the Company intends to enter into,
renew or extend the term of such Affiliate Transaction so as to provide the
Members with a reasonable opportunity to examine the documentation related to
such Affiliate Transaction.
(ii) The Company shall notify each Member of any Affiliate
Transaction that is a Significant Shared Service that the Company or any of its
subsidiaries is considering entering into or renewing or extending the term
thereof (whether pursuant to contractual provisions thereof or otherwise), which
notice shall be given, to the extent reasonably possible, sufficiently in
advance of the time that the Company intends to enter into, renew or extend the
term of such Affiliate Transaction so as to provide the Members with a
reasonable opportunity to examine the documentation related to such Affiliate
Transaction.
(b) Within 60 days after the end of each Fiscal Year, the Company
shall prepare and distribute to each Member a list setting forth a description
of each Affiliate Transaction entered into by the Company or any of its
subsidiaries during such Fiscal Year and identifying all of the parties to such
Affiliate Transactions; provided that if two or more Affiliate Transactions
--------
either (i) constitute a
49
series of related transactions or agreements or (ii) are substantially the same
type of transaction or agreement, the Company need not separately describe each
such Affiliate Transaction but instead can describe such related or similar
Affiliated Transactions as a group.
ARTICLE VIII
Management of the Company
-------------------------
SECTION 8.01. Managing Members. The business and affairs of the
-----------------
Company shall be managed by the Members acting through their respective
representatives on the Board of Managers ("Representatives"). The President and
---------------
the Representatives shall be deemed "managers" of the Company within the meaning
of the Delaware Act. Except for such matters as may be delegated to a Member
from time to time by the Board of Managers pursuant to a vote in accordance with
Section 8.07(b), and subject to the provisions of Sections 6.07 and 6.08, no
Member shall act unilaterally on behalf of the Company or any of its
subsidiaries without the approval of the other Member and no Member shall have
the power unilaterally to bind the Company or any of its subsidiaries.
SECTION 8.02. Board of Managers. (a) The Members shall exercise
------------------
their management authority through a board of managers (the "Board of Managers")
-----------------
consisting of (i) the President of the Company, who shall not be deemed a
Representative hereunder and who shall not be entitled to vote on any matter
coming before the Board of Managers, and (ii) five Representatives, each of whom
shall be entitled to vote, three of whom shall be designated by Marathon and two
of whom shall be designated by Ashland. In the event of a Transfer by a Member
of its Membership Interests pursuant to Article X, effective at the time of such
Transfer, (i) such Member's Representatives shall automatically be removed from
the Board of Managers and (ii) the transferee of such Membership Interests shall
be permitted to designate the number of Representatives to the Board of Managers
as is equal to the number previously designated by the transferor of such
Membership Interests. Such transferee shall promptly notify the other Member as
to the names of the
50
persons who such transferee has designated as its Representatives on the Board
of Managers.
(b) Each Representative may be removed and replaced, with or without
cause, at any time by the Member designating him or her, but, except as provided
in Section 8.02(a), may not be removed or replaced by any other means. A Member
who removes one or more of its Representatives from the Board of Managers shall
promptly notify the other Member as to the names of its replacement
Representatives.
SECTION 8.03. Responsibility of the Board of Managers. The Board of
----------------------------------------
Managers shall be responsible for overseeing the operations of the Company and
shall, in particular, have sole jurisdiction to approve each of the following
matters:
(i) hiring senior executives of the Company, evaluating their
performance and planning for their succession;
(ii) reviewing and approving Company strategies, Business Plans and
Annual Capital Budgets;
(iii) reviewing and approving significant external business
opportunities for the Company, including acquisitions, mergers and
divestitures;
(iv) reviewing and approving policies of the Company that maintain
high standards in areas of environmental responsibility, employee safety
and health, community, government, employee and customer relations;
(v) reviewing external and internal audits and management responses
thereto; and
(vi) establishing compensation and benefits policies for employees of
the Company.
SECTION 8.04. Meetings. (a) Except as set forth in Section 8.04(h),
---------
all actions of the Board of Managers
51
shall be taken at meetings of the Board of Managers in accordance with this
Section 8.04.
(b) As soon as practicable after the appointment of the
Representatives, the Board of Managers shall meet for the purpose of
organization and the transaction of other business.
(c) Regular meetings of the Board of Managers shall be held at such
times as the Board of Managers shall from time to time determine, but no less
frequently than once each Fiscal Quarter; provided that an annual meeting of the
--------
Board of Managers (which annual meeting shall count as one of the regular
quarterly meetings) shall be held no later than June 30 of each Fiscal Year.
(d) Special meetings of the Board of Managers shall be held whenever
called by any Member. Any and all business may be transacted at a special
meeting that may be transacted at a regular meeting of the Board of Managers.
(e) The Board of Managers may hold its meetings at such place or
places as the Board of Managers may from time to time by resolution determine or
as shall be designated in the respective notices or waivers of notice thereof;
however, the Board of Managers shall consider holding meetings from time to time
at each of the Member's corporate headquarters and at the operational sites of
the Company.
(f) Notices of regular meetings of the Board of Managers or of any
adjourned meeting shall be given at least two weeks prior to such meeting,
unless otherwise agreed by each Member. Notices of special meetings of the
Board of Managers shall be mailed by the Secretary or an Assistant Secretary to
each member of the Board of Managers addressed to him or her at his or her
residence or usual place of business, so as to be received at least two Business
Days before the day on which such meeting is to be held, or shall be sent to him
or her by telegraph, cable, facsimile or other form of recorded communication or
be delivered personally, by overnight courier or by telephone so as to be
received not later than two Business Days before the day on which such meeting
is to be held. Such notice shall include
52
the purpose, time and place of such meeting and shall set forth in reasonable
detail the matters to be considered at such meeting. However, notice of any
such meeting need not be given to any member of the Board of Managers if such
notice is waived by him or her in writing or by telegraph, cable, facsimile or
other form of recorded communication, whether before or after such meeting shall
be held, or if he or she shall be present at such meeting.
(g) Action by Communication Equipment. The members of the Board of
----------------------------------
Managers may participate in a meeting of the Board of Managers by means of video
or telephonic conferencing or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
(h) Unanimous Action by Written Consent. Any action required or
------------------------------------
permitted to be taken at any meeting of the Board of Managers may be taken
without a meeting if all the Representatives consent thereto in writing and such
writing is filed with the minutes of the proceedings of the Board of Managers.
(i) Organization. Meetings of the Board of Managers shall be
-------------
presided over by a chair, who will be a member of the Board of Managers selected
by a majority of the Board of Managers. The Secretary of the Company or, in the
case of his or her absence, any person whom the person presiding over the
meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 8.05. Compensation. Unless the Members otherwise agree, no
-------------
person shall be entitled to any compensation from the Company in connection with
his or her services as a Representative.
SECTION 8.06. Quorum. (a) Quorum for Super Majority Decisions.
------- ------------------------------------
Subject to Section 14.01(e) of the Put/Call, Registration Rights and Standstill
Agreement and Sections 14.01 and 14.05 and Section 5 of Schedule 8.14, at all
meetings of the Board of Managers, the quorum required for the transaction of
any business that constitutes a Super Majority Decision shall be the presence,
either in person or
53
by proxy, of (i) at least one Representative of each Member and (ii) a majority
of all the Representatives on the Board of Managers (which may include the
Representatives referred to in the preceding clause (i)).
(b) Quorum for Other Decisions. Subject to Sections 14.01 and 14.05
---------------------------
and Section 5 of Schedule 8.14, at all meetings of the Board of Managers, the
quorum required for the transaction of any business that does not constitute a
Super Majority Decision shall be (i) in the case of all matters that were
described in the notice in reasonable detail for such meeting delivered to the
members of the Board of Managers pursuant to Section 8.04(f), the presence,
either in person or by proxy, of a majority of all the Representatives on the
Board of Managers and (ii) in the case of all matters that were not described in
the notice in reasonable detail for such meeting delivered to the members of the
Board of Managers pursuant to Section 8.04(f), the presence, either in person or
by proxy, of (A) at least one Representative of each Member and (B) a majority
of all the Representatives on the Board of Managers (which may include the
Representatives referred to in the preceding clause (A)).
(c) Rescheduled Meetings. The Company shall use its reasonable best
---------------------
efforts to schedule the time and place of each meeting of the Board of Managers
so as to ensure that a quorum will be present at each such meeting and that at
least one Representative of each Member will be present at each such meeting.
In the absence of a quorum at any such meeting or any adjournment or
adjournments thereof, a majority in voting interest of those present in person
or by proxy and entitled to vote thereat may reschedule such meeting from time
to time until the Representatives requisite for a quorum, as aforesaid, be
present in person or by proxy. At any such rescheduled meeting at which a
quorum is present, any business may be transacted that might have been
transacted at the meeting as originally called.
SECTION 8.07. Voting. (a) General. Each Representative shall be
------- --------
entitled to cast one vote on all matters coming before the Board of Managers.
In exercising their voting rights under this Agreement, the Representatives may
act by proxy.
54
(b) Super Majority Decisions. Subject to Section 14.01(e) of the
-------------------------
Put/Call, Registration Rights and Standstill Agreement and Sections 14.01 and
14.05 and Section 5 of Schedule 8.14, all Super Majority Decisions to be decided
by the Board of Managers shall be approved by the unanimous affirmative vote of
the votes cast by the Representatives who are present, either in person or by
proxy, at a duly called meeting of the Board of Managers at which a quorum is
present. The parties acknowledge and agree that all references in this
Agreement, any other Transaction Document and any appendices, exhibits or
schedules hereto or thereto to any determination, decision, approval or other
form of authorization by the Board of Managers pursuant to a vote in accordance
with Section 8.07(b) shall be deemed to mean that such determination, decision,
approval or other form of authorization shall constitute a Super Majority
Decision which requires the approval of the Board of Managers in accordance with
this Section 8.07(b).
(c) Other Decisions. Subject to Sections 14.01 and 14.05 and Section
----------------
5 of Schedule 8.14, all matters other than Super Majority Decisions to be
decided by the Board of Managers shall be approved by the affirmative vote of a
majority of the votes cast by the Representatives who are present, either in
person or by proxy, at a duly called meeting of the Board of Managers at which a
quorum is present, unless the vote of a greater number of Representatives is
required by Applicable Law or this Agreement.
SECTION 8.08. Matters Constituting Super Majority Decisions. Subject
----------------------------------------------
to the provisions of Section 8.07(b), each of the following matters, and only
the following matters, shall constitute a "Super Majority Decision" which
-----------------------
requires the approval of the Board of Managers pursuant to Section 8.07(b):
(a) (i) the purchase or investment by the Company or any of its
subsidiaries of or in any assets or securities, or any group of assets
or securities, that have an aggregate purchase price or cost of more
than $20 million, if the purpose or effect of such purchase or
investment is to enable the
55
Company to enter into a line of business other than (A) the Company's
Business as such Business is conducted on the Closing Date or (B) any
other line of business that is approved after the Closing Date by the
Board of Managers as a Super Majority Decision under this Section
8.08(a)(i) pursuant to a vote in accordance with Section 8.07(b),
provided that any such purchase or investment by the Company or any of
its subsidiaries shall not require a Super Majority Decision under
this Section 8.08(a) if and to the extent such purchase or investment
is being made to enable the Company to enter into the Bulk Motor Oil
Business, the Packaged Motor Oil Business, the Private Label Packaged
Motor Oil Business and/or the Quick Lube Business and, at the time of
such purchase or investment, (1) the Company and its subsidiaries are
permitted to engage in such business under Section 14.03(b) of the
Put/Call, Registration Rights and Standstill Agreement and (2) Ashland
and its Affiliates shall own (beneficially or otherwise) 20% or more
of the Valvoline Business (it being understood and agreed that this
proviso shall not limit or constitute an exception to any other
provision of Section 8.08); and
(ii) the determination of whether any new line of business approved by
the Board of Managers as a Super Majority Decision under Section
8.08(a)(i) should constitute a "Competitive Business" for purposes of
Section 14.01 of the Put/Call, Registration Rights and Standstill
Agreement;
(b) any reorganization, merger, consolidation or similar transaction
between the Company or any of its subsidiaries and any person (other than a
direct or indirect Wholly Owned Subsidiary of the Company) or any sale or
lease of all or substantially all of the Company's or any of its
subsidiaries' assets to any person (other than a direct or indirect Wholly
Owned Subsidiary of the Company);
56
(c) the admission of a new Member (other than as a result of a
Transfer of an existing Member's Membership Interests pursuant to Article
X) or the issuance of any additional Membership Interests or other equity
interests to any person, including any existing Member;
(d) except as expressly provided in Sections 4.01(c), 4.02(a) and
4.02(b), the acceptance or requirement of any additional capital
contributions to the Company by either Member;
(e) the initial hiring of the following officers of the Company: the
President; the Executive Vice President; the officers principally in charge
of (i) refining, (ii) wholesale and branded marketing, (iii) retail
marketing (two initially), (iv) supply and transportation and (v)
environmental health and safety and human resources; the Senior Vice
President-Finance and Commercial Services of the Company; and the general
counsel of the Company;
(f) (i) the approval of Acquisition Expenditures, Capital Expenditures
and other expenditures included in the Annual Capital Budget for any
Fiscal Year (other than (A) Ordinary Course Lease Expenses, (B) up to
$100 million in the aggregate for all periods in Capital Expenditures
of the Company and its subsidiaries directly associated with the
Garyville Propylene Upgrade Project, (C) Member-Funded Capital
Expenditures, (D) Member-Indemnified Expenditures and (E) Capital
Expenditures of the Company and its subsidiaries directly associated
with Permitted Catlettsburg Capital Projects that are funded with
Permitted Catlettsburg Capital Project Indebtedness) that exceed the
Normal Annual Capital Budget Amount for such Fiscal Year; and
(ii) the incurrence of rentals or operating leases which result in
aggregate Ordinary Course Lease Expenses (other than Ordinary Course
Lease Expenses incurred under the Bareboat Charters) for any Fiscal
Year that exceed $80 million; provided, however, in the event the
-------- -------
Company or one of its
57
subsidiaries shall make any acquisition or divestiture, the Members
shall negotiate in good faith to adjust the dollar amount set forth in
this Section 8.08(f)(ii) to take into account the effect of such
acquisition or divestiture;
(g) (i) except for any acquisition or capital project related to the
Bulk Motor Oil Business, the Packaged Motor Oil Business, the Private
Label Motor Oil Business and/or the Quick Lube Business, any
acquisition, divestiture or individual capital project (other than (i)
Ordinary Course Lease Expenses, (ii) up to $100 million in the
aggregate for all periods in Capital Expenditures of the Company and
its subsidiaries directly associated with the Garyville Propylene
Upgrade Project, (iii) Member-Funded Capital Expenditures, (iv)
Member-Funded Indemnified Expenditures and (v) Capital Expenditures of
the Company and its subsidiaries directly associated with Permitted
Catlettsburg Capital Projects that are funded with Permitted
Catlettsburg Capital Project Indebtedness) where the liability or
consideration involved is more than $50 million in the aggregate
(including contingent liabilities only to the extent required to be
reflected on the balance sheet of the Company in accordance with
Financial Accounting Standard Number 5 (or any successor or
superseding provision of Current GAAP));
(ii) any acquisitions or individual capital projects related to
the Bulk Motor Oil Business, the Packaged Motor Oil Business, the
Private Label Motor Oil Business and/or the Quick Lube Business during
any Fiscal Year where the liability or consideration involved is more
than $50 million in the aggregate in such Fiscal Year (including
contingent liabilities only to the extent required to be reflected on
the balance sheet of the Company in accordance with Financial
Accounting Standard Number 5 (or any successor or superseding
provision of Current GAAP)); provided that nothing in this Section
--------
8.08(g)(ii) shall be deemed or interpreted to permit the Company or
any of its
58
subsidiaries to engage in any of such businesses except as and to the
extent expressly permitted under Section 14.03 of the Put/Call,
Registration Rights and Standstill Agreement;
(iii) for the avoidance of doubt, acquisitions or individual
capital projects related to the Maralube Express Business shall be
subject to clause (i) of this Section 8.08(g) and not clause (ii) of
this Section 8.08(g);
(h) the initiation or settlement of any action, suit, claim or
proceeding involving (i) an amount in excess of $50 million (with respect
to initiation) or $25 million (with respect to settlement), (ii) material
non-monetary relief (including, without limitation, entering into any
consent decree that has or could reasonably be expected to (A) impose any
material obligation on Ashland or any of its Affiliates or the Company or
any of its subsidiaries or (B) have a material adverse effect on the
business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of Ashland or any of
its Affiliates or the Company or any of its subsidiaries) or (iii) the
initiation or settlement of any criminal action, suit, claim or proceeding
(other than a misdemeanor) if such criminal action, suit or proceeding has
or could reasonably be expected to (A) impose any material obligation on
Ashland or any of its Affiliates or (B) have a material adverse effect on
the business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of Ashland or any of
its Affiliates;
(i) any change in the Company Independent Auditors unless the new firm
is one of the "Big Six" accounting firms (or any successor thereto) or a
firm of comparable stature in Ashland's opinion;
(j) any modification, alteration, amendment or termination of this
Agreement or any other Transaction Document to which the Company or any of
its subsidiaries is a party;
59
(k) (i) in the case of any Affiliate Transaction that is not a Crude
Oil Purchase, a Significant Shared Service or a Designated Sublease
Agreement, (A) any Affiliate Transaction (other than the Affiliate
Transactions listed on Schedule 8.08(k)(i)(A) (the "Closing Date Affiliate
----------------------
Transactions")), (B) any material amendment to or change in the terms or
------------
provisions of any Affiliate Transaction that was either a Closing Date
Affiliate Transaction or previously approved by the Board of Managers
pursuant to Section 8.08(k)(i)(A) (it being understood that a renewal or
extension of the term of an Affiliate Transaction pursuant to contractual
provisions that were previously approved by the Board of Managers pursuant
to this Section 8.08(k)(i) or that were included in a Closing Date
Affiliate Transaction on the Closing Date shall be deemed for purposes of
this Agreement not to constitute a new Affiliate Transaction or a material
amendment to or change in an Affiliate Transaction) or (C) any amendment or
change in the terms or provisions of any agreement or transaction between
the Company or any of its subsidiaries and any Member or any Affiliate of
any Member which causes such agreement or transaction to become an
Affiliate Transaction;
(ii) in the case of Crude Oil Purchases, the approval of such Crude
Oil Purchases in accordance with Section 8.12(a);
(iii) in the case of any Significant Shared Service, (A) any agreement
or transaction constituting a Significant Shared Service (other than the
specific Significant Shared Services identified and described in Schedule
10.2(e) to the Asset Transfer and Contribution Agreement), (B) any material
amendment to or change in the terms and provisions of any Significant
Shared Service identified and described in Schedule 10.2(e) to the Asset
Transfer and Contribution Agreement or thereafter approved by the Board of
Managers in accordance with this Section 8.08(k)(iii), (C) subject to the
provisions of Section 8.11(b) and except as expressly provided in Section
8.12(b), any cancelation or failure by the Company or any of its
subsidiaries to
60
renew any Significant Shared Service provided by Ashland or any Affiliate
of Ashland to the Company or any of its subsidiaries or provided by the
Company or any of its subsidiaries to Ashland or any Affiliate of Ashland
and (D) the periodic review and approval of Significant Shared Services in
accordance with Section 8.12(b); and
(iv) any material amendment to or change in the terms or provisions
of, cancelation, termination or failure to renew, any Designated Sublease
Agreement or any election by the Company to refuse or reject the
contribution of any Subleased Property to the Company or any of its
subsidiaries;
(l) the commencement of a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent to the entry of an order for relief in an involuntary case
under any such law, or the consent to the appointment of or the taking
possession by a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or any of its
subsidiaries or for any substantial part of the Company's or any of its
subsidiaries' property, or the making of any general assignment for the
benefit of creditors;
(m) (i) the modification, alteration or amendment of the amount,
timing, frequency or method of calculation of distributions to the Members
from that provided in Article V or (ii) an adjustment to the amount of
Distributable Cash pursuant to clause (g) of the definition of
"Distributable Cash" in Section 1.01;
(n) (i) the modification, alteration or amendment of the Company
Leverage Policy, or (ii) the approval of any matter which the Company
Leverage Policy provides is to be approved by the Board of Managers as a
Super Majority Decision;
(o) (i) the approval of any distribution by the Company to the Members
of any assets in kind, (ii) the approval of any distribution by the Company
to the Members of cash and property in kind on a non-pro rata
61
basis, and (iii) the determination of the value assigned to such assets in
kind;
(p) each Critical Decision or material amendment thereto made on or
prior to the Critical Decision Termination Date for such Critical Decision;
and
(q) the delegation to a Member of the power to unilaterally bind the
Company or any of its subsidiaries with respect to any matter.
SECTION 8.09. Annual Capital Budget. (a) In Fiscal Year 1999 and in
----------------------
each Fiscal Year thereafter, the Executive Officers of the Company shall timely
prepare or cause to be prepared a draft capital budget (the "Annual Capital
--------------
Budget") for such Fiscal Year, which shall set forth in reasonable line item
------
detail the proposed Acquisition Expenditures, Capital Expenditures and the
Ordinary Course Lease Expenditures of the Company and its subsidiaries for such
Fiscal Year, including all Ordinary Course Lease Expenditures and all Capital
Expenditures of the Company and its subsidiaries directly associated with the
Garyville Propylene Upgrade Project. In addition, to the extent that
information can reasonably be obtained on the nature of assets rented or
financed by operating leases, such information shall be presented along with the
Annual Capital Budget. Copies of the Annual Capital Budget shall be provided to
each Member (at the same time) and to the Board of Managers. No later than
November 15 of each Fiscal Year, the Executive Officers shall present to the
Board of Managers the Annual Capital Budget for their review, consideration and
approval, with such additions, deletions and changes thereto as the Board of
Managers shall deem necessary.
(b) If the Board of Managers shall fail to approve an Annual Capital
Budget for any Fiscal Year, the total expenditures provided for in the Annual
Capital Budget for such Fiscal Year shall be in an amount equal to the Normal
Annual Capital Budget Amount for such Fiscal Year.
(c) No later than July 15 of each Fiscal Year, the Board of Managers
shall review the Annual Capital Budget for such Fiscal Year and shall make such
additions,
62
deletions and changes thereto as the Board of Managers shall deem necessary.
SECTION 8.10. Business Plan. In Fiscal Year 1999 and in each Fiscal
--------------
Year thereafter, the Executive Officers of the Company shall timely prepare or
cause to be prepared a draft business plan (the "Business Plan") for the next
-------------
three Fiscal Years. Copies of the Business Plan shall be provided to each
Member (at the same time) and to the Board of Managers. No later than November
15 of each Fiscal Year, the Executive Officers shall present to the Board of
Managers the Business Plan for their review, consideration and approval, with
such additions, deletions and changes thereto as the Board of Managers shall
deem necessary.
SECTION 8.11. Requirements as to Affiliate Transactions. (a) The
------------------------------------------
Company and its subsidiaries shall only be permitted to enter into or renew or
extend the term thereof (whether pursuant to contractual provisions thereof or
otherwise) an agreement or a transaction with a Member or an Affiliate of a
Member (which, solely for purposes of this Section 8.11, shall be deemed to
include any entity more than 10% of the voting stock or other ownership
interests of, or economic interest in, which is owned by a Member (other than
the Company or any of its subsidiaries)) on the same terms or on terms no less
favorable to the Company or such subsidiary than could be obtained from a third
party on an arm's-length basis (an "Arm's-Length Transaction").
------------------------
(b) (i) If (A) the Company or any subsidiary of the Company enters
into, renews or extends the term of (pursuant to contractual provisions thereof
that were previously approved by the Board of Managers or otherwise) or
materially amends or changes the terms or provisions of, any agreement or
transaction between the Company or any of its subsidiaries and any Member or any
Affiliate of any Member (a "Section 8.11(b) Affiliate Transaction") or proposes
-------------------------------------
to do any of the foregoing and (ii) not later than 90 days after receiving
written notice thereof from the Company pursuant to Section 7.03 or otherwise
(which notice describes the material terms and conditions of such transaction in
reasonable detail), the Member that is not (or whose Affiliate is not) a party
to such Section 8.11(b) Affiliate Transaction (the "Non-Contracting Member")
----------------------
63
notifies the Company and the Member that is (or whose Affiliate is) a party to
such Section 8.11(b) Affiliate Transaction (the "Contracting Member") in writing
------------------
that the Non-Contracting Member believes in good faith that either such
Affiliate Transaction is not an Arm's-Length Transaction or that the quality of
the service being provided or to be provided by the Contracting Member is
inferior to that which the Company and its subsidiaries could otherwise obtain
on comparable terms and conditions, then the Company shall promptly (and, in any
event within 30 days) provide the Non-Contracting Member with a reasonably
detailed explanation of the basis for the Company's determination that such new,
renewed or extended Affiliate Transaction is an Arm's-Length Transaction or the
quality of the service being provided or to be provided to the Company and its
subsidiaries is not inferior.
(ii) If following receipt of such evidence, the Non-Contracting Member
is not reasonably satisfied that such Affiliate Transaction is an Arm's-Length
Transaction or the quality of the service being provided or to be provided to
the Company and its subsidiaries is not inferior, then, at the written request
of the Non-Contracting Member (such written request being an "Affiliate
---------
Transaction Dispute Notice"), the Company shall (A) modify the terms of such
--------------------------
Affiliate Transaction so that it becomes an Arm's-Length Transaction, (B) if the
Company had given the Members written notice pursuant to Section 7.03(a) prior
to entering into, renewing or extending such Affiliate Transaction, not enter
into, renew or extend such Affiliate Transaction or (C) if the Company had given
the Members written notice pursuant to Section 7.03(a) prior to entering into,
renewing or extending such Affiliate Transaction, enter into, renew or extend
such Affiliate Transaction in which event the determination of whether such
Affiliate Transaction is an Arm's Length Transaction and/or whether the quality
of the service being provided is inferior shall be in accordance with the
Dispute Resolution Procedures set forth in Article XIII or (D) if the Company
shall not have given the Members written notice pursuant to Section 7.03(a)
prior to entering into, renewing or extending such Affiliate Transaction,
commence the dispute resolution procedures set forth in Article XIII.
64
(iii) For purposes of Article XIII, a Non-Contracting Member's
delivery of an Affiliate Transaction Dispute Notice to the Company shall
constitute delivery of a Dispute Notice thereunder, and the Company shall be
required to deliver a Response to the Non-Contracting Member within 30 days
thereafter. If it is finally determined pursuant to such Dispute Resolution
Procedures that such Affiliate Transaction is an Arm's-Length Transaction and,
if disputed, that the quality of service being so provided is not inferior, then
the Company shall be permitted to enter into, renew or extend such Affiliate
Transaction. If it is finally determined pursuant to such Dispute Resolution
Procedures that such Affiliate Transaction is not an Arm's-Length Transaction or
that the quality of service being so provided is inferior, then the Company
shall either modify the terms of such Affiliate Transaction so that it becomes
an Arm's-Length Transaction and, if disputed, with an adequate level of quality
of service or not enter into, renew or extend such Affiliate Transaction. In
the event that such Affiliate Transaction has already been entered into, renewed
or extended, then (A) the Company and the Contracting Member shall make such
modifications to the terms of such Affiliate Transaction as are necessary so
that such Affiliate Transaction becomes an Arm's-Length Transaction and, if
disputed, with an adequate level of quality of service and (B) the Contracting
Member shall pay the Company an amount equal to the difference between (I) the
costs incurred by the Company under such Affiliate Transaction since the time of
such entering into, renewal or extension and (II) the costs that the Company
would have incurred under such Affiliate Transaction during such time period had
such Affiliate Transaction been an Arm's-Length Transaction and, if disputed,
with an adequate level of quality of service at the time of such initial
agreement, renewal or extension.
SECTION 8.12. Review of Certain Affiliate Transactions Related to
---------------------------------------------------
Crude Oil Purchases and Shared Services.
----------------------------------------
(a) (i) Not less than 30 days prior to the regular meeting of the
Board of Managers during the fourth Fiscal Quarter of each Fiscal Year (or,
if no regular meeting of the Board of Managers is scheduled during
65
such Fiscal Quarter, at a special meeting of the Board of Managers during
such Fiscal Quarter), the Company shall submit to the Board of Managers a
reasonably detailed description of any proposed transactions or agreements
related to crude oil purchases by the Company and its subsidiaries from
Marathon or any Affiliate of Marathon that are intended to remain in effect
or to be put into effect during such next Fiscal Year (collectively, the
"Marathon Crude Oil Purchase Program"). Following such submission, the
------------------------------------
Company shall provide the Board of Managers promptly with such information
with respect to such Marathon Crude Oil Purchase Program and the Company's
other proposed crude oil purchases and policies for such next Fiscal Year
as any Representative shall reasonably request. At each such regular or
special meeting during the fourth Fiscal Quarter of each Fiscal Year, the
Board of Managers shall review such Marathon Crude Oil Purchase Program.
During such next Fiscal Year, the Company and its subsidiaries shall be
permitted to purchase crude oil from Marathon or any Affiliate of Marathon
only on the terms and conditions of the proposed transactions and
agreements submitted to and approved by the Board of Managers at such
regular or special meeting pursuant to a vote in accordance with Section
8.07(b) (the "Approved Marathon Crude Oil Purchase Program"). Any purchase
--------------------------------------------
(or group of related purchases) of crude oil by the Company or any of its
subsidiaries from Marathon or any Affiliate of Marathon during such Fiscal
Year that is an Affiliate Transaction for purposes of Section 8.08(k) and
is not made under or in accordance with the Approved Marathon Crude Oil
Purchase Program and any material amendment to or change in the Approved
Marathon Crude Oil Purchase Program during such Fiscal Year shall be made
only with the prior approval of the Board of Managers pursuant to a vote in
accordance with Section 8.07(b).
(ii) The Company shall prepare and send to each Member (at the same
time) promptly, but in no event later than the 30th day after the last day
of each Fiscal Quarter, (A) a summary of all Crude Oil Purchases during
such Fiscal Quarter, (B) a description of any amendments to, changes in or
deviations from the
66
Approved Marathon Crude Oil Purchase Program in effect during such Fiscal
Quarter, (C) a description of any then known proposed amendments to,
changes in or deviations from the Approved Marathon Crude Oil Purchase
Program in effect during the remaining balance of the Fiscal Year and (D)
such other information with respect to purchases of crude oil by the
Company and its subsidiaries as either Member shall reasonably request.
(b)(i) All administrative services that Marathon, Ashland and each of
their respective Affiliates provide to the Company or any of its
subsidiaries, and that the Company and its subsidiaries provide to
Marathon, Ashland or any of their respective Affiliates, shall be pursuant
to the Shared Services Agreement. To the extent that there is a conflict
between the Shared Services Agreement, Schedule 10.2(e) to the Marathon
Asset Transfer and Contribution Agreement Disclosure Letter or Schedule
10.2(e) to the Ashland Asset Transfer and Contribution Agreement Disclosure
Letter, on the one hand, and this Agreement, on the other hand, this
Agreement shall control.
(ii) Not less than 90 days prior to each of the annual meetings of
the Board of Managers held in 2000, 2003 and every three years thereafter,
the Company shall submit to the Board of Managers the provisions of the
Shared Services Agreement that relate to each Significant Shared Service
then in effect or that is proposed to be put into effect. Following such
submission, the Company shall provide the Board of Managers promptly with
such information with respect to such Significant Shared Services and with
respect to any other Shared Services then being provided or proposed to be
provided as any Representative shall reasonably request. At each such
annual meeting, unless all the Representatives otherwise agree, the Board
of Managers shall review each such Significant Shared Service and shall
determine pursuant to a vote in accordance with Section 8.07(b) whether
such Significant Shared Service should be continued (or, in the case of any
proposed Significant Shared Service, put into effect). Unless the Board of
Managers
67
approves pursuant to a vote in accordance with Section 8.07(b) the
continuation or effectiveness of a Significant Shared Service, the Shared
Service Agreement to the extent it relates to such Significant Shared
Service shall be terminated effective 90 days after such annual meeting or
at such later date as the Board of Managers shall specify pursuant to a
vote in accordance with Section 8.07(b) and the Company shall be deemed at
the time of such annual meeting to have given notice to the Member
providing or receiving (or whose Affiliate is providing or receiving) such
Significant Shared Service that the Company is terminating the Shared
Service Agreement with respect to such Significant Shared Service.
SECTION 8.13. Adjustable Amounts. Within 30 days following the date
-------------------
on which the United States Department of Labor Bureau of Labor Statistics for
all Urban Areas publishes the Price Index for the month of September of each
Fiscal Year commencing September, 1998, the Company shall determine whether the
Average Annual Level for the immediately preceding twelve-month period exceeds
the Base Level. If the Company determines that the Average Annual Level for
such twelve-month period exceeds the Base Level, then the Company shall increase
or decrease each of the dollar amounts set forth in this Agreement (other than
the $348 million and $346 million amounts set forth in the definition of
Adjusted DD&A, the $657 million, $600 million, $80 million, $20 million and
$12.4 million amounts set forth in the definition of Adjusted EBITDA, the $240
million amount set forth in the definition of "Normal Annual Capital Budget
Amount" in Section 1.01, the $100 million amount set forth in Section 8.08(f)(i)
and any dollar amount set forth in any Appendix, Exhibit or Schedule to this
Agreement, including Schedule 8.14) (each dollar amount that is adjusted
pursuant to this Section 8.13 being an "Adjustable Amount"), including, without
-----------------
limitation, the following amounts, to an amount calculated by multiplying the
relevant Adjustable Amount by a fraction whose numerator is the Average Annual
Level for such twelve-month period and whose denominator is the Base Level: (i)
the $100,000, $2 million and $25 million amounts set forth in the definition of
"Affiliate Transaction" and the $2 million amount set forth in the definition of
"Significant Shared Service" in each
68
case in Section 1.01; (ii) the $2 million amount set forth in Section 6.06(c);
(iii) the $2 million amounts set forth in Sections 6.08(b), (d) and (e); (iv)
the $20 million amount set forth in Section 8.08(a)(i); (v) the $80 million
amount set forth on Section 8.08(f)(ii) (or such other dollar amount as shall be
agreed pursuant to the proviso to Section 8.08(f)(ii)); (vi) the $50 million
amount set forth in Section 8.08(g); (vii) the $50 million and $25 million
amounts set forth in Section 8.08(h)(i); and (viii) each $7.5 million amount set
forth in Section 14.01(a); provided that in no event shall any Adjustable Amount
--------
be decreased below the initial amount thereof set forth herein. Within five
Business Days after making such determinations, the Company shall distribute to
each Member a notice setting forth: (A) the amount by which the Average Annual
Level for such Fiscal Year exceeded the Base Level and (B) the calculations of
any adjustments made to the Adjustable Amounts pursuant to this Section 8.13.
Any adjustment made to the Adjustable Amounts pursuant to this Section 8.13
shall be effective as of January 1st of the next Fiscal Year.
SECTION 8.14. Company Leverage Policy. The leverage policy for the
------------------------
Company shall be the leverage policy set forth on Schedule 8.14, with such
modifications, alterations or amendments thereto as the Board of Managers shall
from time to time approve pursuant to a vote in accordance with Section 8.07(b)
(such leverage policy, as so modified, altered or amended, is referred to herein
as the "Company Leverage Policy").
-----------------------
SECTION 8.15. Company's Investment Guidelines.
--------------------------------
The Company's Senior Vice President-Finance and Commercial Services, Vice
President-Finance and Controller and Treasurer (or Treasury Manager) shall
constitute an Investment Policy Committee of the Company and shall establish
investment guidelines for the Company and its subsidiaries (such investment
guidelines, as they may be modified, altered or amended by such Investment
Policy Committee from time to time, are referred to herein as the "Company
-------
Investment Guidelines"). The initial Company Investment Guidelines is set forth
---------------------
on Schedule 8.15. The Company and its subsidiaries shall only make investments
that are permitted under the Company Investment Guidelines
69
at the time of such investments. In addition, the Company and its subsidiaries
shall invest all Surplus Cash (after meeting daily cash requirements) in
accordance with the Company Investment Guidelines.
SECTION 8.16. Requirements as to Operating Leases. The Company and
------------------------------------
its subsidiaries shall not enter into any operating lease (as determined in
accordance with Applicable GAAP) if the purpose or intent of entering into such
operating lease is to circumvent the Company Leverage Policy or the super
majority voting requirement for Capital Expenditures of the Company set forth in
Section 8.08(f). The lease by the Company and its subsidiaries of vehicles,
railcars and computers in accordance with the historical practices of the
Ashland Business and the Marathon Business shall not be deemed to violate this
Section 8.16, provided, for the avoidance of doubt, that all Ordinary Course
Lease Expenses related to any such leases shall be considered Ordinary Course
Lease Expenses for the purposes of Section 8.08(f)(ii).
SECTION 8.17. Limitations on Actions Relating to the Calculation of
-----------------------------------------------------
Distributable Cash. Notwithstanding anything to the contrary contained in this
-------------------
Agreement, the Company shall not, and shall cause its subsidiaries not to (a)
modify, alter or amend the Company Investment Guidelines, (b) accelerate the
payment of the Company's and its subsidiaries' accounts payable, (c) delay the
collection of the Company's and its subsidiaries' accounts receivable or (d)
take any other action, if the purpose or intent of such action is to reduce the
amount of Distributable Cash in a manner that is inconsistent with the intent of
the Members to maximize the amount of Distributable Cash distributions to the
Members.
SECTION 8.18. Reliance by Third Parties. Persons dealing with the
--------------------------
Company are entitled to rely conclusively upon the power and authority of the
Board of Managers herein set forth. Except as provided in this Agreement,
neither the President, nor a Representative, nor any Member shall have any
authority to bind the Company or any of its subsidiaries.
70
SECTION 8.19. Integration of Retail Operations. (a) Until the
---------------------------------
Critical Decision is made regarding the location of the Company's retail
operations' headquarters, the Company's retail operations' business shall have
headquarters in both Enon, Ohio and Lexington, Kentucky.
(b)(i) The Company shall make a formal recommendation to the Board of
Managers with respect to each Critical Decision not later than the ten-month
anniversary of the Closing Date. Following receipt of a formal recommendation
with respect to any Critical Decision, Marathon and Ashland shall negotiate in
good faith to reach an agreement with respect to such Critical Decision not
later than the first anniversary of the Closing Date.
(ii) Each formal recommendation with respect to any Critical Decision
shall be accompanied by a report on the business and economic analyses used by
the Company to arrive at such recommendation, including but not limited to, a
reasonably detailed description of the risks and benefits of the recommended
decision and the anticipated impact of the recommended decision on the Speedway
and SuperAmerica brand images and business models.
(iii) Following receipt of any formal recommendation with respect to
any Critical Decision, each Member may request, and the Company shall promptly
provide to both Members, such additional information and analyses (including
studies by outside consultants) as such Member may reasonably request; provided,
--------
however, any additional information request shall not extend the Critical
-------
Decision Termination Date.
(c) If any Primary Critical Decision shall not have been agreed by the
Board of Managers pursuant to a vote in accordance with Section 8.07(b) prior to
the first anniversary of the Closing Date, the Critical Decision Termination
Date with respect to such Primary Critical Decision shall be automatically, and
without any further action required by either Member, the Company or the Board
of Managers, extended until the fifteen-month anniversary of the Closing Date.
During the period of such extension, the Company shall provide promptly to each
Member such additional information or analyses (including studies by
71
outside consultants) as either Member shall reasonably request. Not later than
30 days prior to the fifteen-month anniversary of the Closing Date, the Company
shall, if requested by either Member, again make a formal recommendation to the
Board of Managers with respect to such Primary Critical Decision. Such formal
recommendation shall include a report on the supporting business and economic
analyses described in Section 8.19(b)(ii). Any request for additional
information shall not extend the Critical Decision Termination Date.
(d) Until such time as the implementation of any Critical Decision
shall have been completed in all material respects, the President of the Company
shall report to the Board of Managers at each regular meeting of the Board of
Managers on the implementation of such Critical Decision and on any material
modifications or changes to such Critical Decision.
(e) To the extent there is any conflict between the terms and
provisions of this Agreement and the terms and provisions of the Retail
Integration Protocol, the terms and provisions of this Agreement shall control.
ARTICLE IX
Officers
--------
SECTION 9.01. (a) Election, Appointment and Term of Office. The
-----------------------------------------
executive officers of the Company (the "Executive Officers") shall consist
------------------
solely of: a President; an Executive Vice President; an officer principally in
charge of refining; an officer principally in charge of wholesale and branded
marketing; the officer or officers (two initially) principally in charge of
retail marketing; an officer principally in charge of supply and transportation;
an officer who shall be the Senior Vice President-Finance and Commercial
Services of the Company; and an officer who shall be the general counsel of the
Company. Schedule C sets forth a list of (i) the persons who Marathon and
Ashland have chosen to serve initially as the Executive Officers of the Company,
(ii) the executive office for which each such person is to serve and (iii)
whether
72
each such person was designated by Marathon or Ashland. Marathon and Ashland
agree that the composition of the initial Executive Officers is intended to
reflect their respective Percentage Interests in the Company. Accordingly, if
any person identified on Schedule C is for any reason unable or unwilling to
serve as an Executive Officer at the Closing Date, the Member who designated
such person shall have the right to designate a substitute person, subject to
the right of the other Member to consent to such substitute nominee (which
consent shall not be unreasonably withheld). Marathon and Ashland shall cause
their respective Representatives to promptly approve the appointment of each
person listed on Schedule C to the related executive office position listed on
Schedule C.
(b) Except as otherwise determined by the Board of Managers, each
Executive Officer shall hold office until his or her death or until his or her
earlier resignation or removal in the manner hereinafter provided. Except as
otherwise expressly provided herein, the Executive Officers shall have such
powers and duties in the management of the Company as generally pertain to their
respective offices as if the Company were a corporation governed by the General
Corporation Law of the State of Delaware.
(c) The Board of Managers may elect or appoint such other officers to
assist and report to the Executive Officers as it deems necessary. Subject to
the preceding sentence, each such officer shall have such authority and shall
perform such duties as may be provided herein or as the Board of Managers may
prescribe. The Board of Managers may delegate to any Executive Officer the
power to choose such other officers and to prescribe their respective duties and
powers.
(d) Except as otherwise determined by the Board of Managers, if
additional officers are elected or appointed during the year pursuant to Section
9.01(c), each such officer shall hold office until his or her death or until his
or her earlier resignation or removal in the manner hereinafter provided.
SECTION 9.02. Resignation, Removal and Vacancies. (a) Any officer
-----------------------------------
may resign at any time by
73
giving written notice to the President or the Secretary of the Company, and such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, when accepted by
action of the Board of Managers. Except as aforesaid, the acceptance of such
resignation shall not be necessary to make it effective.
(b) All officers and agents elected or appointed by the Board of
Managers shall be subject to removal at any time by the Board of Managers with
or without cause.
(c) Vacancies in all Executive Officer positions may only be filled
by the majority vote of the Representatives on the Board of Managers. In each
instance where a vacant Executive Officer position is to be filled, Marathon,
after consultation with the Company, shall first send Ashland a notice which
discloses the name and details of the candidate for the vacant Executive Officer
position that the Representatives of Marathon will nominate and vote in favor of
for such position. Ashland shall thereafter have the right, by notice to the
Company and Marathon within ten days after receipt of such notice from Marathon,
to veto such candidate. Each candidate that Marathon proposes for a vacant
Executive Officer position shall be a bona fide candidate who is willing and
able to serve and who Marathon in good faith believes is qualified to fill such
vacant Executive Officer position (a "Qualified Candidate"). In the event
-------------------
Ashland exercises its veto with respect to a Qualified Candidate, the vacancy
will be filled by the majority vote of the Representatives on the Board of
Managers.
SECTION 9.03. Duties and Functions of Executive Officers. (a)
------------------------------------------
President. The President of the Company, who shall be a non-voting member of
----------
the Board of Managers, shall be in charge of the day-to-day operations of the
Company and shall preside at all meetings of the Board of Managers and shall
perform such other duties and exercise such powers, as may from time to time be
prescribed by the Board of Managers.
(b) Executive Vice President. The Executive Vice President of the
-------------------------
Company initially shall report to the
74
President and be the officer principally in charge of all supply, refining,
marketing and transportation operations of the Company other than the Company's
retail operations.
(c) Other Executive Officers. The Executive Officers of the Company
-------------------------
other than the President and the Executive Vice President shall perform such
duties and exercise such powers, as may from time to time be prescribed by the
President or the Board of Managers.
ARTICLE X
Transfers of Membership Interests
---------------------------------
SECTION 10.01. Restrictions on Transfers. (a) General. Except as
-------------------------- --------
expressly provided by this Article X, neither Member shall Transfer all or any
part of its Membership Interests to any person without first obtaining the
written approval of the other Member, which approval may be granted or withheld
in its sole discretion. Notwithstanding anything to the contrary contained in
this Agreement, no Transfer by a Member of its Membership Interests to any
person shall be made except to a permitted assignee under Article XV of the
Put/Call, Registration Rights and Standstill Agreement.
(b) Transfer by Operation of Law. In the event a Member shall be
-----------------------------
party to a merger, consolidation or similar business combination transaction
with a third party or sell all or substantially all its assets to a third party,
such Member may Transfer all (but not part) of its Membership Interests to such
third party; provided, however, that such Member shall not be permitted to
-------- -------
Transfer its Membership Interests to such third party as aforesaid if the
purpose or intent of such merger, consolidation, similar business combination
transaction or sale is to circumvent or avoid the application of Sections
10.01(c) and 10.04 to the Transfer of such Member's Membership Interests to such
third party.
(c) Transfer by Sale to Third Party. At any time after December 31,
--------------------------------
2002, a Member may sell all (but not part) of its Membership Interests (and, in
the case of
75
Ashland, the Ashland LOOP/LOCAP Interest) to any person (other than a Transfer
by operation of law pursuant to Section 10.01(b), a Transfer to a Wholly Owned
Subsidiary pursuant to Section 10.01(d) or a Transfer by Ashland to Marathon
pursuant to Section 10.01(e)) if (i) it shall first have offered the other
Member the opportunity to purchase such Membership Interests (and, in the case
of Ashland, the Ashland LOOP/LOCAP Interest) pursuant to the right of first
refusal procedures set forth in Section 10.04, (ii) such sale is completed
within the time periods specified in Section 10.04, (iii) the other Member shall
have approved the purchaser of such Membership Interests (and, in the case of
Ashland, the Ashland LOOP/LOCAP Interest), which approval shall not be
unreasonably withheld or delayed and (iv) it shall use its commercially
reasonable best efforts to (A) terminate the outstanding Original Lease
underlying each of its Designated Sublease Agreements on or prior to the date of
such Transfer and (B) contribute the related Subleased Property to the Company
or one of its subsidiaries at no cost to the Company or such subsidiary on or
prior to the date of such Transfer; provided, however, that (i) such Member
-------- -------
shall not be obligated to pay more than a reasonable amount as consideration
therefor to, or make more than a reasonable financial accommodation in favor of,
or commence litigation against, a third party lessor with respect to any such
underlying Original Lease in order to obtain any consent required from such
lessor and (ii) any additional cost associated with exercising an option under
the Original Lease to purchase Subleased Property or to terminate the Original
Lease shall be deemed not to constitute an obligation to pay more than a
reasonable amount. In the event that such Member is unable to terminate an
outstanding Original Lease in accordance with this Section 10.02(b), then (i)
the Company shall be entitled to continue to sublease the Subleased Property
pursuant to the related Designated Sublease Agreement until the term of the
Original Lease expires, (ii) the Member shall continue to use its commercially
reasonable best efforts to terminate the Original Lease and contribute the
Subleased Property to the Company as provided above; provided, however that (A)
-------- -------
such Member shall not be obligated to pay more than a reasonable amount as
consideration therefor to, or make more than a reasonable financial
accommodation in favor of, or commence litigation against, a third party lessor
with respect to any
76
such Original Lease in order to obtain any consent required from such lessor and
(b) any additional cost associated with exercising an option under the Original
Lease to purchase Subleased Property or to terminate the Original Lease shall be
deemed not to constitute an obligation to pay more than a reasonable amount and
(iii) if such Member subsequently acquires fee title to the Subleased Property,
such Member shall contribute such Subleased Property to the Company or one of
its subsidiaries at no cost to the Company or such subsidiary at such time. It
is expressly understood and agreed that, in determining whether to reasonably
withhold its approval of a proposed purchaser of Marathon's Membership Interests
pursuant to this Section 10.01(c), Ashland shall be entitled to consider the
creditworthiness of such proposed purchaser, including whether such proposed
purchaser is likely to be able to perform all of Marathon's and USX's respective
obligations under the Put/Call, Registration Rights and Standstill Agreement.
(d) Transfer to Wholly Owned Subsidiary. A Member may Transfer all
------------------------------------
(but not part) of its Membership Interests at any time to a Wholly Owned
Subsidiary of such Member if (i) such Member shall have received an opinion from
nationally recognized tax counsel acceptable to both Members that such Transfer
will not result in a termination of the status of the Company as a partnership
for Federal income tax purposes and (ii) the transferring Member enters into an
agreement with the other Member providing that so long as such Wholly Owned
Subsidiary holds such transferring Member's Membership Interests, such Wholly
Owned Subsidiary shall remain a Wholly Owned Subsidiary of such transferring
Member.
(e) Transfer Pursuant to Put/Call, Registration Rights and Standstill
-----------------------------------------------------------------
Agreement. Ashland may Transfer all of its Membership Interests to Marathon in
----------
connection with the exercise by Marathon of its Marathon Call Right or its
Special Termination Right or the exercise by Ashland of its Ashland Put Right.
In addition, Marathon may Transfer all of its Membership Interests to Ashland in
connection with the exercise by Ashland of its Special Termination Right.
(f) Consequences of Permitted Transfers. (i) In connection with any
------------------------------------
Transfer by a Member to a third party
77
transferee pursuant to Section 10.01(b), (A) such third party transferee shall
at the time of such Transfer become subject to all of such transferring Member's
obligations hereunder and shall succeed to all of such transferring Member's
rights hereunder and (B) such transferring Member shall be relieved of all of
its obligations hereunder other than with respect to any default hereunder by
such transferring Member or any of its Affiliates hereunder that occurred prior
to the time of such Transfer.
(ii) In connection with any Transfer by a Member to a third party
transferee or to the other Member pursuant to Section 10.01(c), (A) such third
party transferee or such other Member shall at the time of such Transfer become
subject to all of such transferring Member's obligations hereunder and shall
succeed to all of such transferring Member's rights hereunder and (B) such
transferring Member shall at the time of such Transfer be relieved of all of its
obligations hereunder other than with respect to any default hereunder by such
transferring Member or any of its Affiliates that occurred prior to the time of
such Transfer.
(iii) In connection with any Transfer by a Member to a Wholly Owned
Subsidiary of such Member pursuant to Section 10.01(d), (A) such Wholly Owned
Subsidiary shall at the time of such Transfer become subject to all of such
Member's obligations hereunder and shall succeed to all of such Member's rights
hereunder and (B) such Member shall not be relieved of its obligations hereunder
without the prior written consent of the other Member, which consent shall not
be unreasonably withheld or delayed.
(iv) In connection with any Transfer by Ashland to Marathon pursuant
to Section 10.01(e), (A) Marathon shall at the time of such Transfer become
subject to all of Ashland's obligations hereunder and shall succeed to all of
Ashland's rights hereunder and (B) Ashland shall at the time of such Transfer be
relieved of all of its obligations hereunder other than with respect to any
default hereunder by Ashland or any of its Affiliates that occurred prior to the
Exercise Date (as such term is defined in the Put/Call, Registration Rights and
Standstill Agreement).
78
(v) In connection with any Transfer by Marathon to Ashland pursuant
to Section 10.01(e), (A) Ashland shall at the time of such Transfer become
subject to all of Marathon's obligations hereunder and shall succeed to all of
Marathon's rights hereunder and (B) Marathon shall at the time of such Transfer
be relieved of all of its obligations hereunder other than with respect to any
default hereunder by Marathon or any of its Affiliates that occurred prior to
the Special Termination Exercise Date (as such term is defined in the Put/Call,
Registration Rights and Standstill Agreement).
(vi) In connection with any Transfer by Ashland to a third party
transferee pursuant to Section 10.01(b), 10.01(c) or 10.01(d), such third party
transferee shall at the time of such Transfer succeed to all of Ashland's veto
rights under Section 9.02(c); provided, that if Ashland Transfers its Membership
--------
Interests to a third party transferee pursuant to Section 10.01(c), such third
party transferee shall not thereafter be permitted to transfer its veto rights
under Section 9.02(c) to another third party transferee pursuant to Section
10.01(c).
(vii) In connection with any Transfer by a Member to a third party
transferee pursuant to this Article X, such transferring Member shall retain all
of the rights granted to a Member under Article VII to examine the books and
records of the Company and to receive financial statements and reports prepared
by the Company until such time following such Transfer as such transferring
Member ceases to have any liability under Article IX of the Asset Transfer and
Contribution Agreement.
(g) Consequences of an Unpermitted Transfer. Any Transfer of a
----------------------------------------
Member's Membership Interests made in violation of the applicable provisions of
this Agreement shall be void and without legal effect.
SECTION 10.02. Conditions for Admission. No transferee of all of the
-------------------------
Membership Interests of any Member shall be admitted as a Member hereunder
unless (a) such Membership Interests are Transferred to a person in compliance
with the applicable provisions of this Agreement, (b) such transferee shall have
executed and delivered to the
79
Company such instruments as the Board of Managers deems necessary or desirable
in its reasonable discretion to effectuate the admission of such transferee as a
Member and to confirm the agreement of such transferee or recipient to be bound
by all the terms and provisions of this Agreement with respect to the Membership
Interests acquired by such transferee and (c) such transferee shall have
executed and delivered an assignment and assumption agreement pursuant to
Section 15.04 of the Put/Call, Registration Rights and Standstill Agreement.
SECTION 10.03. Allocations and Distributions. Subject to applicable
------------------------------
Treasury Regulations, upon the Transfer of all the Membership Interests of a
Member as herein provided, the Profit or Loss of the Company attributable to the
Membership Interests so transferred for the Fiscal Year during which such
Transfer occurs shall be allocated between the transferor and transferee as of
the date set forth on the written assignment, and such allocation shall be based
upon any permissible method agreed to by the Members that is provided for in
Code Section 706 and the Treasury Regulations issued thereunder. Except as
otherwise expressly provided in Section 5.01 of the Put/Call, Registration
Rights and Standstill Agreement, distributions shall be made to the holder of
record of the Membership Interests on the date of distribution.
SECTION 10.04. Right of First Refusal. (a) If a Member (the
-----------------------
"Selling Member") shall desire to sell all (but not part) of its Membership
---------------
Interests (which, for purposes of this Section 10.04, shall be deemed to
include, in the case of Ashland, the Ashland LOOP/LOCAP Interest) pursuant to
Section 10.01(c), then the Selling Member shall give notice (the "Offer Notice")
------------
to the other Member, identifying the proposed purchaser from whom it has
received a bona fide offer and setting forth the proposed sale price (which
shall be payable only in cash or purchase money obligations secured solely by
the Membership Interests being sold) and the other material terms and conditions
upon which the Selling Member is proposing to sell such Membership Interests to
such proposed purchaser. No such sale shall encompass or be conditioned upon
the sale or purchase of any property other than such Membership Interests (other
than, in the case of Ashland, the Ashland LOOP/LOCAP Interest).
80
The other Member shall have 30 days from receipt of the Offer Notice to elect,
by notice to the Selling Member, to purchase the Membership Interests offered
for sale on the terms and conditions set forth in the Offer Notice.
(b) If a Member makes such election, the notice of election shall
state a closing date not later than 60 days after the date of the Offer Notice.
If such Member breaches its obligation to purchase the Membership Interests of
the Selling Member on the same terms and conditions as those contained in the
Offer Notice after giving notice of its election to make such purchase (other
than where such breach is due to circumstances beyond such Member's reasonable
control), then, in addition to all other remedies available, the Selling Member
may, at any time for a period of 270 days after such default, sell such
Membership Interests to any person at any price and upon any other terms without
further compliance with the procedures set forth in Section 10.04.
(c) If the other Member gives notice within the 30-day period
following the Offer Notice from the Selling Member that it elects not to
purchase the Membership Interests, the Selling Member may, within 120 days after
the end of such 30-day period (or 270 days in the case where such parties have
received a second request under HSR), sell such Membership Interests to the
identified purchaser (subject to clause (iii) of Section 10.01(c)) on terms and
conditions no less favorable to the Selling Member than the terms and conditions
set forth in such Offer Notice. In the event the Selling Member shall desire to
offer the Membership Interests for sale on terms and conditions less favorable
to it than those previously set forth in an Offer Notice, the procedures set
forth in this Section 10.04 must again be initiated and applied with respect to
the terms and conditions as modified.
SECTION 10.05. Restriction on Resignation or Withdrawal. Except in
-----------------------------------------
connection with a Transfer permitted pursuant to Section 10.01, neither Member
shall resign or withdraw from the Company without the consent of the other
Member. Any purported resignation or withdrawal from the Company in violation
of this Section 10.05 shall be null and void and of no force or effect.
81
ARTICLE XI
Liability, Exculpation and Indemnification
------------------------------------------
SECTION 11.01. Liability. Except as otherwise provided by the
----------
Delaware Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Covered Person.
SECTION 11.02. Exculpation. (a) No Covered Person shall be liable
------------
to the Company or any other Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such Covered
Person in good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of authority conferred on such Covered Person by
this Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person's gross negligence,
wilful misconduct or breach of Section 12.02.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any person as to any matters
the Covered Person reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to Members might properly be paid.
SECTION 11.03. Indemnification. To the fullest extent permitted by
----------------
Applicable Law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person by reason
of any act or omission performed or omitted by such
82
Covered Person in good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of authority conferred on such Covered Person by
this Agreement, except that no Covered Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Covered
Person by reason of gross negligence, wilful misconduct or breach of Section
12.02 with respect to such acts or omissions; provided, however, that any
-------- -------
indemnity under this Section 11.03 shall be provided out of and to the extent of
Company assets only, and no Covered Person shall have any personal liability on
account thereof.
ARTICLE XII
Fiduciary Duties
----------------
SECTION 12.01. Duties and Liabilities of Covered Persons. To the
------------------------------------------
extent that, at law or in equity, a Covered Person has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to any
other Covered Person, a Covered Person acting under this Agreement shall not be
liable to the Company or to any other Covered Person for its good faith reliance
on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they expand or restrict the duties and liabilities of a Covered
Person otherwise existing at law or in equity, are agreed by the parties hereto
to replace such other duties and liabilities of such Covered Person.
SECTION 12.02. Fiduciary Duties of Members of the Company and Members
------------------------------------------------------
of the Board of Managers. Each Member and each member of the Board of Managers
-------------------------
shall have the fiduciary duties of loyalty and care (similar to the fiduciary
duties of loyalty and care of directors of a business corporation governed by
the General Corporation Law of the State of Delaware) to the Company and all of
the Members. Notwithstanding any provision of this Agreement to the contrary,
each Member and each member of the Board of Managers agrees to and shall
exercise good faith, fairness and loyalty to the Company and to all of the
Members, and shall make all decisions in a manner that such Member or such
member of the Board of Managers reasonably believes to
83
be in the best interest of the Company and all of the Members. Notwithstanding
the foregoing, this Section 12.02 is not intended to limit a Member's ability to
exercise or enforce any of its rights and remedies under this Agreement and the
other Transaction Documents in good faith, including, without limitation,
Article IX of the Asset Transfer and Contribution Agreement.
ARTICLE XIII
Dispute Resolution Procedures
-----------------------------
SECTION 13.01. General. All controversies, claims or disputes
--------
between the Members or between the Company and either Member that arise out of
or relate to this Agreement or the construction, interpretation, performance,
breach, termination, enforceability or validity of this Agreement, or the
commercial, economic or other relationship of the parties hereto, whether such
claim is based on rights, privileges or interests recognized by or based upon
statute, contract, tort, common law or otherwise and whether such claim existed
prior to or arises on or after the date of this Agreement (a "Dispute") shall be
-------
resolved in accordance with the provisions of this Article XIII (except as
otherwise expressly provided in Sections 6.06 and 6.08). Notwithstanding
anything to the contrary contained in this Article XIII, nothing in this Article
XIII shall limit the ability of the directors and officers of either Member from
communicating directly with the directors and officers of the other Member.
SECTION 13.02. Dispute Notice and Response. Either Member may give
----------------------------
the other Member written notice (a "Dispute Notice") of any Dispute which has
--------------
not been resolved in the normal course of business. Within fifteen Business
Days after delivery of the Dispute Notice, the receiving Member shall submit to
the other Member a written response (the "Response"). The Dispute Notice and
--------
the Response shall each include (i) a statement setting forth the position of
the Member giving such notice, a summary of the arguments supporting such
position and, if applicable, the relief sought and (ii) the name and title of a
senior manager of such Member who has authority to settle the
84
Dispute and will be responsible for the negotiations related to the settlement
of the Dispute (the "Senior Manager").
--------------
SECTION 13.03. Negotiation Between Senior Managers. (a) Within 10
------------------------------------
days after delivery of the Response provided for in Section 13.02, the Senior
Managers of both Members shall meet or communicate by telephone at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, and shall negotiate in good faith to attempt to resolve the Dispute
that is the subject of such Dispute Notice. If such Dispute has not been
resolved within 45 days after delivery of the Dispute Notice, then the Members
shall attempt to settle the Dispute pursuant to Section 13.04.
(b) All negotiations between the Senior Managers pursuant to this
Section 13.03 shall be treated as compromise and settlement negotiations.
Nothing said or disclosed, nor any document produced, in the course of such
negotiations which is not otherwise independently discoverable shall be offered
or received as evidence or used for impeachment or for any other purpose in any
current or future arbitration or litigation.
SECTION 13.04. Negotiation Between Chief Executive Officer and
-----------------------------------------------
President. (a) If the Dispute has not been resolved by negotiation between the
----------
Senior Managers pursuant to Section 13.03, then within 10 Business Days after
the expiration of the 45 day period provided in Section 13.03, the Chief
Executive Officer of Ashland and the President of Marathon shall meet or
communicate by telephone at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, and shall negotiate in good faith to
attempt to resolve the Dispute that is the subject of such Dispute Notice. If
such Dispute has not been resolved within 20 Business Days after the expiration
of the 45 day period provided in Section 13.03, then (i) if the Dispute relates
solely to (A) a claim by a Member or the Board of Managers that the other Member
has failed to pay the Company a Designated Sublease Amount or an amount in
respect of a Member-Funded Capital Expenditure, a Member-Funded Indemnity
Expenditure or an Agreed Additional Capital Contribution required to be made by
it pursuant to Section 4.02 (a "Disputed Capital
----------------
85
Contribution Amount"), (B) the determination of any of the following amounts
-------------------
with respect to any period: distributions pursuant to Article V; the Aggregate
Tax Rate; Adjusted DD&A; Adjusted EBITDA; EBITDA; Distributable Cash; the
Average Annual Level and adjustments to Adjustable Amounts; the Normal Annual
Capital Budget Amount; Ordinary Course Lease Expenses; Profit and Loss; the Tax
Distribution Amount; the Tax Liability of any Member; and the determination of
fair market value of property distributed in kind under Section 15.03, (C) the
resolution of any dispute arising under Section 8.11(b) with respect to
Affiliate Transactions or (D) the resolution of any dispute arising under
Section 8.12 with respect to certain Affiliate Transactions related to Crude Oil
Purchases and Shared Services (any Dispute relating to any of the matters set
forth in clause (A), (B), (C) or (D) above being referred to herein as an
"Arbitratable Dispute"), such Dispute shall be settled pursuant to the
---------------------
arbitration procedures set forth in Appendix B and (ii) if the Dispute does not
relate primarily to an Arbitratable Dispute, each party hereto shall be
permitted to take such actions at law or in equity as it is otherwise permitted
to take or as may be available under Applicable Law.
(b) All negotiations between the Chief Executive Officer of Ashland
and the President of Marathon pursuant to this Section 13.04 shall be treated
as compromise and settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of such negotiations which is not otherwise
independently discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration or
litigation.
SECTION 13.05. Right to Equitable Relief Preserved. Notwithstanding
------------------------------------
anything in this Agreement or Appendix B to the contrary, either Member or the
Company may at any time seek from any court of the United States located in the
State of Delaware or from any Delaware state court, any interim, provisional or
injunctive relief that may be necessary to protect the rights or property of
such party or maintain the status quo before, during or after the pendency of
the negotiation process or the arbitration proceeding or any other proceeding
contemplated by Section 13.03 or 13.04.
86
ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
-----------------------------------------------------
SECTION 14.01. Ability of Company to Borrow to Fund Disputed Monetary
------------------------------------------------------
Amounts. (a) If the Company or a Member on behalf of the Company (a "Non-
-------- ---
Delinquent Member") claims that the other Member (a "Delinquent Member") owes
----------------- -----------------
the Company a monetary amount in respect of either (i) a Disputed Capital
Contribution Amount or (ii) an indemnification obligation under Article IX of
the Asset Transfer and Contribution Agreement that the Company or the Non-
Delinquent Member claims the Delinquent Member owes the Company and is either
(A) past due or (B) in dispute (a "Disputed Indemnification Amount") (each such
-------------------------------
claim described in clauses (i) and (ii) above being a "Monetary Dispute", and
----------------
each such claimed amount being a "Disputed Monetary Amount"), and if (1) the
------------------------
Disputed Monetary Amount itself, or when added together all other Disputed
Monetary Amounts, exceeds $7.5 million; (2) the Board of Managers (by vote of a
majority of the Representatives of the Non-Delinquent Member at a special or
regular meeting of the Board of Managers (which majority shall constitute a
quorum for purposes of the transaction of such business)) has determined that an
out-of-pocket disbursement of such Disputed Monetary Amount or any portion
thereof by the Company or one of its subsidiaries within the next twelve months
is reasonably necessary for the operation and conduct of the Company's Business
and, accordingly, that such amount should be paid within the next twelve months;
(3) the aggregate amount of all Disputed Monetary Amounts (or portions thereof)
that the Board of Managers shall have determined pursuant to clause (2) above
should be paid within the next twelve months (such aggregate amount being the
"Additional Required Cash Amount") exceeds $7.5 million; (4) postponement by the
--------------------------------
Company or such subsidiary of such disbursement until such time as the Monetary
Dispute is reasonably likely to be finally resolved pursuant to an arbitration
proceeding in accordance with Appendix B to this Agreement or Appendix B to the
Asset Transfer and Contribution Agreement, as applicable (an "Arbitration
-----------
Proceeding"), would have, or would reasonably be expected to have, a Material
----------
Adverse Effect on the Company's Business;
87
and (5) the Delinquent Member has not paid the Company the Disputed Monetary
Amount pursuant to Section 14.02 or otherwise, then the Board of Managers (by
vote of a majority of the Representatives of the Non-Delinquent Member at a
special or regular meeting of the Board of Managers (which majority shall
constitute a quorum for purposes of the transaction of such business)) shall be
permitted to cause the Company to incur an amount of Indebtedness equal to such
Additional Required Cash Amount, which Indebtedness may be borrowed from a third
party or the Non-Delinquent Member.
(b) If the Non-Delinquent Member lends the Company the Additional
Required Cash Amount pursuant to Section 14.01(a), then (i) the amount actually
lent by the Non-Delinquent Member (the "Advanced Amount") and all accrued
---------------
interest thereon shall be due and payable on the Arbitration Payment Due Date
(provided that the Company shall be permitted to prepay the Advanced Amount in
---------
whole or in part at any time prior to such date); and (ii) the Advanced Amount
shall bear interest at the Base Rate from the date on which such advance is made
until the date that the Advanced Amount, together with all interest accrued
thereon, is repaid to the Non-Delinquent Member.
SECTION 14.02. Interim Payment of Disputed Monetary Amount. In order
--------------------------------------------
to reduce the amount of liquidated damages that a Delinquent Member would be
required to pay to the Company pursuant to Section 14.03 in the event that such
Delinquent Member loses in an Arbitration Proceeding with respect to a Monetary
Dispute, the Delinquent Member shall be permitted to pay the Company the related
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding. The Arbitration Tribunal or Sole Arbitrator, as applicable, shall
not take into consideration in determining the liability of the Delinquent
Member, a decision by such Delinquent Member to pay the Disputed Monetary Amount
prior to the commencement of the Arbitration Proceeding.
SECTION 14.03. Liquidated Damages. (a) No Interim Payment of
------------------- ---------------------
Disputed Monetary Amount--Delinquent Member is Found Liable for Final Monetary
------------------------------------------------------------------------------
Amount. If (i) it is finally determined in an Arbitration Proceeding that a
-------
Delinquent Member owes the Company a monetary amount in
88
respect of (A) a Disputed Capital Contribution Amount or (B) a Disputed
Indemnification Amount (each such finally determined amount being a "Final
-----
Monetary Amount") and (ii) the Delinquent Member had not paid the Company the
---------------
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then the Delinquent Member shall promptly,
and in any event on or before the tenth Business Day following the date on which
the Arbitration Tribunal or Sole Arbitrator makes its final determination (such
tenth Business Day being the "Arbitration Payment Due Date"), pay to the Company
----------------------------
(A) the Final Monetary Amount, together with interest, accrued from the
commencement of the Arbitration Proceeding to the date that the Delinquent
Member pays the Final Monetary Amount to the Company, on the Final Monetary
Amount, at a rate per annum equal to (1) during the period from the commencement
of the Arbitration Proceeding to the Arbitration Payment Due Date, the Prime
Rate and (2) at any time thereafter, 150% of the Prime Rate, in each case, with
daily accrual of interest, plus (B) an amount equal to 25% of the Final Monetary
Amount.
(b) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Liable for the Same Amount. If (i) it is finally determined in an
---------------------------------
Arbitration Proceeding that a Delinquent Member owes the Company a Final
Monetary Amount, (ii) the Final Monetary Amount is equal to the Disputed
Monetary Amount and (iii) the Delinquent Member had paid the Company the
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then if the Final Monetary Amount is equal
to the Disputed Monetary Amount, the Delinquent Member shall not owe the Company
any other amount in respect of the Monetary Dispute.
(c) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Liable for a Greater Amount. If (i) it is finally determined in an
----------------------------------
Arbitration Proceeding that a Delinquent Member owes the Company a Final
Monetary Amount, (ii) the Final Monetary Amount is greater than the Disputed
Monetary Amount and (iii) the Delinquent Member had paid the Company the
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then the Delinquent Member shall
89
promptly, and in any event on or before the Arbitration Payment Due Date, pay to
the Company an amount (an "Additional Monetary Amount") equal to (A) the Final
--------------------------
Monetary Amount less (B) the Disputed Monetary Amount, together with interest,
accrued from the commencement of the Arbitration Proceeding to the date that the
Delinquent Member pays the Additional Monetary Amount to the Company, on the
Additional Monetary Amount, at a rate per annum equal to (1) during for the
period from the commencement of the Arbitration Proceeding to the Arbitration
Payment Due Date, the Prime Rate and (2) at any time thereafter, 150% of the
Prime Rate, in each case, with daily accrual of interest.
(d) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Liable for a Lesser Amount. If (i) it is finally determined in an
---------------------------------
Arbitration Proceeding that a Delinquent Member owes the Company a Final
Monetary Amount, (ii) the Final Monetary Amount is less than the Disputed
Monetary Amount and (iii) the Delinquent Member had paid the Company the
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding, then the Company shall promptly, and in any event on or before the
Arbitration Payment Due Date, repay to the Delinquent Member an amount (a
"Refundable Amount") equal to (A) the Disputed Monetary Amount less (B) the
------------------
Final Monetary Amount, together with interest, accrued from the commencement of
the Arbitration Proceeding to the date that the Company repays the Refundable
Amount to the Delinquent Member, on the Refundable Amount, at a rate per annum
equal to (1) during the period from the commencement of the Arbitration
Proceeding to the Arbitration Payment Due Date, the Prime Rate and (2) at any
time thereafter, 150% of the Prime Rate, in each case, with daily accrual of
interest.
(e) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Not Liable for Disputed Monetary Amount. If (i) it is finally determined
----------------------------------------------
in an Arbitration Proceeding that a Delinquent Member does not owe the Company
the related Disputed Monetary Amount and (ii) the Delinquent Member had paid the
Company the Disputed Monetary Amount prior to the commencement of such
Arbitration Proceeding, then the Company shall promptly, and in any event on or
before the Arbitration Payment Due Date, repay to the Delinquent Member an
amount equal to the
90
Disputed Monetary Amount, together with interest, accrued from the commencement
of the Arbitration Proceeding to the date that the Company repays the Disputed
Monetary Amount to the Delinquent Member, on the Disputed Monetary Amount, at a
rate per annum equal to (A) during the period from the commencement of the
Arbitration Proceeding to the Arbitration Payment Due Date, the Prime Rate and
(B) at any time thereafter, 150% of the Prime Rate, in each case, with daily
accrual of interest.
SECTION 14.04. Right of Set-Off. Notwithstanding any provision to
-----------------
the contrary contained in this Agreement, if at the time of a Distribution Date
a Delinquent Member has failed to pay the Company an amount that it was required
pursuant to Section 14.03 to pay to the Company on or before such Distribution
Date, then on such Distribution Date, the Company shall be permitted to set off
from the distribution that it would otherwise be required to make to such
Delinquent Member pursuant to Section 5.01 on such Distribution Date, an amount
equal to such unpaid amount. If the amount of the distribution that such
Delinquent Member was otherwise entitled to receive pursuant to Section 5.01 on
such Distribution Date is less than the aggregate amount that such Delinquent
Member owes to the Company pursuant to Section 14.03, then the Company shall be
permitted to set off from subsequent distributions that it would otherwise make
to such Delinquent Member pursuant to Section 5.01 the remaining unpaid amount
until such time as such remaining unpaid amount shall have been paid in full. A
Delinquent Member's interest in distributions to be made to such Delinquent
Member pursuant to Section 5.01 shall be reduced by any amount set off by the
Company against such distributions pursuant to this Section 14.04(a).
SECTION 14.05. Security Interest. (a) Each Member hereby agrees
------------------
that if (i) it has failed to pay the Company an amount that it was required to
pay to the Company pursuant to Section 14.03 on or prior to the related
Arbitration Payment Due Date, and (ii) the Board of Managers (by vote of a
majority of the Representatives of the other Member at a special or regular
meeting of the Board of Managers (which majority shall constitute a quorum for
purposes of the transaction of such business) so requests, such Member shall (A)
on the Business Day next following
91
such Arbitration Payment Due Date, grant to the Company, as security for the
performance of its obligation to pay the Company such amount owed (but for no
other amount), a first priority security interest in its Membership Interests
and the proceeds thereof (a "Security Interest"), all under the Uniform
-----------------
Commercial Code of the State of Delaware and (ii) promptly thereafter, execute
and deliver to the Company all financing statements and other instruments that
the Board of Managers (by vote of a majority of the Representatives of the other
Member at a special or regular meeting of the Board of Managers (which majority
shall constitute a quorum for purposes of the transaction of such business)) may
request to effectuate and carry out the preceding provisions of this Section
14.05(a). The Company shall be entitled to all the rights and remedies of a
secured party under the Uniform Commercial Code of the State of Delaware with
respect to any Security Interest granted by such Member. At the option of the
Company, this Agreement or a carbon, photographic, or other copy hereof may
serve as a financing statement with respect to any such Security Interest. For
purposes of perfecting a Security Interest, a Member's Membership Interests
shall be deemed to be a "security" governed by Chapter 8 of the Delaware Uniform
Commercial Code and as such term is therein defined in Section 8-102(c)
thereunder.
(b) If the Company incurs Indebtedness pursuant to Section 14.01 by
borrowing from a Non-Delinquent Member, the Company shall be permitted to assign
all its rights with respect to a Security Interest granted to it pursuant to
Section 14.05(a) to such Non-Delinquent Member as security for such
Indebtedness; provided that such Non-Delinquent Member shall not be permitted to
--------
assign such Security Interest to a third party.
92
ARTICLE XV
Dissolution and Termination
---------------------------
SECTION 15.01. Dissolution. The Company shall be dissolved and its
------------
business and affairs wound up upon the earliest to occur of any one of the
following events:
(a) the expiration of the Term of the Company;
(b) the sale or other disposition of all or substantially all the
property of the Company;
(c) the written consent of both Members;
(d) the unanimous agreement of all Representatives on the Board of
Managers;
(e) the bankruptcy, involuntary liquidation or dissolution of either
Member; or
(f) the entry of a decree of judicial dissolution pursuant to Section
18-802 of the Delaware Act.
The bankruptcy, involuntary liquidation of dissolution of a Member shall cause a
Member to cease to be a member of the Company. Notwithstanding the foregoing,
the Company shall not be dissolved and its business and affairs shall not be
wound up upon the occurrence of any event specified in (i) clause (e) above if
within 90 days after the date on which such event occurs, the remaining Member
elects in writing to continue the business of the Company or (ii) clause (a)
above if a Non-Terminating Member purchases the Membership Interests of the
Terminating Member pursuant to its Special Termination Right. Except as
provided in this paragraph and Section 15.01(e), and to the fullest extent
permitted by the Delaware Act, the occurrence of an event that causes a Member
to cease to be a member of the Company shall not cause the Company to be
dissolved or its business or affairs to be wound up, and upon the occurrence of
such an event, the business of the Company shall continue without dissolution.
93
SECTION 15.02. Winding Up of Company. Upon dissolution, the
----------------------
Company's business shall be liquidated in an orderly manner. The Board of
Managers shall act as the liquidating trustee (unless the Board of Managers
elects to appoint a liquidating trustee) to wind up the affairs of the Company
pursuant to this Agreement. In performing its duties, the liquidating trustee
is authorized to sell, distribute, exchange or otherwise dispose of the assets
of the Company in accordance with the Delaware Act and in any reasonable manner
that the liquidating trustee shall determine to be in the best interest of the
Members or their successors-in-interest.
SECTION 15.03. Distribution of Property. In the event the Board of
-------------------------
Managers determines that it is necessary in connection with the liquidation of
the Company to make a distribution of property in kind, such property shall be
transferred and conveyed to the Members so as to vest in each of them as a
tenant in common an undivided interest in the whole of such property equal to
their interests in the property based upon the amount of cash that would be
distributed to each of the Members in accordance with Article V if such property
were sold for an amount of cash equal to the fair market value of such property,
as determined and approved by the Board of Managers pursuant to a vote in
accordance with Section 8.07(b).
SECTION 15.04. Time Limitation. Any liquidating distribution
----------------
pursuant to this Article XV shall be made no later than the later of (a) the end
of the taxable year during which such liquidation occurs and (b) 90 days after
the date of such liquidation.
SECTION 15.05. Termination of Company. The Company shall terminate
-----------------------
when all assets of the Company, after payment of or due provision for all debts,
liabilities and obligations of the Company, shall have been distributed to the
Members in the manner provided for in this Agreement, and the Certificate of
Formation shall have been canceled in the manner provided by the Delaware Act.
94
ARTICLE XVI
Miscellaneous
-------------
SECTION 16.01. Notices. Any notice, consent or approval to be given
--------
under this Agreement shall be in writing and shall be deemed to have been given
if delivered: (i) personally by a reputable courier service that requires a
signature upon delivery; (ii) by mailing the same via registered or certified
first-class mail, postage prepaid, return receipt requested; or (iii) by
telecopying the same with receipt confirmation (followed by a first-class
mailing of the same) to the intended recipient. Any such writing will be deemed
to have been given: (a) as of the date of personal delivery via courier as
described above; (b) as of the third calendar day after depositing the same into
the custody of the postal service as evidenced by the date-stamped receipt
issued upon deposit of the same into the mails as described above; and (c) as of
the date and time electronically transmitted in the case of telecopy delivery as
described above, in each case addressed to the intended party at the address set
forth below:
To the Board of Managers:
Marathon Ashland Petroleum LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Marathon:
Marathon Oil Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
95
To Ashland:
Ashland Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may designate different addresses or telecopy numbers by notice to the
other parties.
SECTION 16.02. Merger and Entire Agreement. This Agreement
----------------------------
(including the Exhibits, Schedules and Appendices attached hereto), together
with the other Transaction Documents (including the exhibits, schedules and
appendices thereto) and certain other agreements executed contemporaneously with
the Master Formation Agreement constitutes the entire Agreement of the parties
hereto and supersedes any prior understandings, agreements, or representations
by or among the parties hereto, written or oral, to the extent they relate in
any way to the subject matter hereof.
SECTION 16.03. Assignment. A party hereto shall not assign all or
-----------
any of its rights, obligations or benefits under this Agreement to any third
party otherwise than (i) in connection with a Transfer of its Membership
Interests pursuant to Article X, (ii) with the prior written consent of the
other party hereto, which consent may be withheld in such party's sole
discretion, (iii) the granting by a Member of a Security Interest to the Company
pursuant to Section 14.05 or (iv) pursuant to Article V of the Put/Call,
Registration Rights and Standstill Agreement, and any attempted assignment not
in compliance with this Section 16.03 shall be void ab initio.
-- ------
SECTION 16.04. Parties in Interest. This Agreement shall inure to
--------------------
the benefit of, and be binding upon, the parties hereto and their respective
successors, legal representatives and permitted assigns.
SECTION 16.05. Counterparts. This Agreement may be executed in
-------------
counterparts, each of which shall be deemed
96
an original, but all of which together shall constitute one and the same
instrument.
SECTION 16.06. Amendment; Waiver. This Agreement may not be amended
------------------
except in a written instrument signed by each of the parties hereto and
expressly stating it is an amendment to this Agreement. Any failure or delay on
the part of any party hereto in exercising any power or right hereunder shall
not operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power preclude any other or further exercise thereof or the
exercise of any other right or power hereunder or otherwise available at law or
in equity.
SECTION 16.07. Severability. If any term, provision, covenant, or
-------------
restriction of this Agreement or the application thereof to any person or
circumstance, at any time or to any extent, is held by a court of competent
jurisdiction or other Governmental Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement (or the application of such provision in other
jurisdictions or to persons or circumstances other than those to which it was
held invalid or unenforceable) shall in no way be affected, impaired or
invalidated, and to the extent permitted by Applicable Law, any such term,
provision, covenant or restriction shall be restricted in applicability or
reformed to the minimum extent required for such to be enforceable. This
provision shall be interpreted and enforced to give effect to the original
written intent of the parties hereto prior to the determination of such
invalidity or unenforceability.
SECTION 16.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
--------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH SECTION 18-1101 OF THE DELAWARE ACT. ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR
ARISING OUT OF THIS AGREEMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION
HEREWITH, IS WAIVED.
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SECTION 16.09. Enforcement. The parties hereto agree that
------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in the
Delaware Chancery Court; provided that if the Delaware Chancery Court does not
--------
have jurisdiction with respect to such matter, the parties hereto shall be
entitled to enforce specifically the terms and provisions of this Agreement in
any court of the United States located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of the Delaware Chancery
Court in the event that any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement; provided that if the Delaware
--------
Chancery Court does not have jurisdiction with respect to any such dispute, such
party consents to submit itself to the personal jurisdiction of any Federal
court located in the State of Delaware or any Delaware state court, (ii) agrees
to appoint and maintain an agent in the State of Delaware for service of legal
process, (iii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iv)
agrees that it will not plead or claim in any such court that any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any such court has been brought in an inconvenient forum and (v)
agrees that it will not initiate any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than (1) the
Delaware Chancery Court, or (2) if the Delaware Chancery Court does not have
jurisdiction with respect to such action, a Federal court sitting in the State
of Delaware or a Delaware state court.
SECTION 16.10. Creditors. None of the provisions of this Agreement
----------
shall be for the benefit of or enforceable by any creditor of the Company or of
any Member.
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SECTION 16.11. No ▇▇▇▇ for Accounting. In no event shall either
-----------------------
Member have any right to file a ▇▇▇▇ for an accounting or any similar
proceeding.
SECTION 16.12. Waiver of Partition. Each Member hereby waives any
--------------------
right to partition of the Company property.
SECTION 16.13. Table of Contents, Headings and Titles. The table of
---------------------------------------
contents and section headings of this Agreement and titles given to Exhibits and
Schedules to this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
SECTION 16.14. Use of Certain Terms; Rules of Construction. As used
--------------------------------------------
in this Agreement, the words "herein", "hereof" and "hereunder" and other words
------ ------ ---------
of similar import refer to this Agreement as a whole and not to any particular
paragraph, subparagraph, section, subsection or other subdivision. Whenever the
context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa. Each party
hereto agrees that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation or construction of this Agreement or any Transaction Document.
SECTION 16.15. Holidays. Notwithstanding any deadline for payment,
---------
performance, notice or election under this Agreement, if such deadline falls on
a date that is not a Business Day, then the deadline for such payment, perform-
ance, notice or election will be extended to the next succeeding Business Day.
SECTION 16.16. Third Parties. Nothing herein expressed or implied is
--------------
intended or shall be construed to confer upon or give any person and their
respective successors, legal representatives and permitted assigns any rights,
remedies or basis for reliance upon, under or by reason of this Agreement.
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SECTION 16.17. Liability for Affiliates. Except where and to the
-------------------------
extent that a contrary intention otherwise appears, where a Member undertakes to
cause its Affiliates to take or abstain from taking any action, such undertaking
shall mean (i) in the case of any Affiliate that is controlled by such Member,
that such Member shall cause such Affiliate to take or abstain from taking such
action and (ii) in the case of an Affiliate that controls or is under common
control with such Member, that such Member shall use its commercially reasonable
best efforts to cause such Affiliates to take or abstain from taking such
action; provided, however, that such Member shall not be required to violate, or
-------- -------
cause any director of such Affiliate to violate, any fiduciary duty to minority
shareholders of such Affiliate.
IN WITNESS WHEREOF, this Agreement has been duly
executed by the Members as of the day and year first above written.
MARATHON OIL COMPANY
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
ASHLAND INC.
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board
and Chief Executive
Officer